SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(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, 1994
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
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Commission File Number 1-2578
OHIO EDISON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 34-0437786
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
76 SOUTH MAIN STREET, AKRON, OHIO 44308
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-736-3402
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Each registered on
Common Stock, $9 par value New York Stock Exchange
Rights to Purchase Common Stock and
Chicago Stock Exchange
Cumulative Preferred Stock, $100 par value
3.90% Series 7.24% Series
4.40% Series 7.36% Series All series registered on
4.44% Series 8.20% Series New York Stock Exchange
4.56% Series and
Chicago Stock Exchange
Cumulative Preferred Stock, $25 par value Registered on
7.75% Series New York Stock Exchange
and
Chicago Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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 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
---
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
--- ---
State the aggregate market value of the voting stock held by non-
affiliates of the registrant: $2,992,557,650 as of March 7, 1995.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date:
CLASS OUTSTANDING AT MARCH 21, 1995
----- -----------------------------
Common Stock, $9 par value 152,569,437
Documents incorporated by reference (to the extent indicated
herein):
PART OF FORM 10-K INTO WHICH
DOCUMENT DOCUMENT IS INCORPORATED
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Annual Report to Stockholders for the
fiscal year ended December 31, 1994
(Pages 12-30) Part II
Proxy Statement for 1995 Annual Meeting
of Stockholders to be held April 27, 1995 Part III
TABLE OF CONTENTS
Page
----
Part I
Item 1. Business 1
The Company 1
Central Area Power Coordination Group 1
Financing and Construction 2
Future Financing 2
Coverage Requirements 3
Utility Regulation 4
PUCO Rate Matters 4
FERC Rate Matters 4
Fuel Recovery Procedures 4
Nuclear Regulation 5
Nuclear Insurance 5
Environmental Matters 7
Air Regulation 7
Water Regulation 7
Waste Disposal 8
Summary 8
Fuel Supply 8
Nuclear Fuel 9
System Capacity and Reserves 10
Regional Reliability 10
Competition 10
Research and Development 10
Executive Officers 11
Item 2. Properties 12
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security
Holders 13
Part II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure 13
Part III
Item 10. Directors and Executive Officers of the
Registrant 14
Item 11. Executive Compensation 14
Item 12. Security Ownership of Certain Beneficial
Owners and Management 14
Item 13. Certain Relationships and Related Transactions 14
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 14
PART I
ITEM 1. BUSINESS
The Company
Ohio Edison Company (Company) was organized under the laws
of the State of Ohio in 1930 and owns property and does business as
an electric public utility in that state. The Company also has
ownership interests in certain generating facilities located in the
Commonwealth of Pennsylvania.
The Company furnishes electric service to communities in
a 7,500 square mile area of central and northeastern Ohio. It also
provides transmission services and electric energy for resale to
certain municipalities in the Company's service area and
transmission services to certain rural cooperatives. The Company
also engages in the sale, purchase and interchange of electric
energy with other electric companies. The area it serves has a
population of approximately 2,530,000.
The Company owns all of the outstanding common stock of
Pennsylvania Power Company (Penn Power), a Pennsylvania
corporation, which furnishes electric service to communities in a
1,500 square mile area of western Pennsylvania. Penn Power also
provides transmission services and electric energy for resale to
certain municipalities in Pennsylvania. The area served by Penn
Power has a population of approximately 340,000.
The Company has three additional wholly owned subsidiaries.
OES Fuel, Incorporated (OES Fuel) provides advantages in nuclear
fuel financing and procurement, including greater fuel management
flexibility. OES Capital, Incorporated (OES Capital) provides a
specifically tailored financing structure which achieves cost
savings in financing certain of the Company's electric service
accounts receivable and assists in loans to commercial and
industrial customers for energy efficiency improvements. OES
Finance, Incorporated (OES Finance) provides the collateral
securing reimbursement obligations relating to certain letters of
credit supporting the Company's obligations to lessors under the
Beaver Valley Unit 2 sale and leaseback arrangements.
Central Area Power Coordination Group (CAPCO)
In September 1967, the CAPCO companies, consisting of the
Company, Penn Power, The Cleveland Electric Illuminating Company
(CEI), Duquesne Light Company (Duquesne) and The Toledo Edison
Company (Toledo), announced a program for joint development of
power generation and transmission facilities. Included in the
program are Unit 7 at the W. H. Sammis Plant, Units 1, 2 and 3 at
the Bruce Mansfield Plant, Units 1 and 2 at the Beaver Valley Power
Station and Unit 1 at the Perry Nuclear Power Plant, each now in
service.
The present CAPCO Basic Operating Agreement provides, among
other things, for coordinated maintenance responsibilities among
the CAPCO companies, a limited and qualified mutual backup
arrangement in the event of outage of CAPCO units and certain
capacity and energy transactions among the CAPCO companies.
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The agreements among the CAPCO companies generally treat
the Company and Penn Power (Companies) as a single system as
between them and the other three CAPCO companies, but, in
agreements between the CAPCO companies and others, all five
companies are treated as separate entities. Subject to any rights
that might arise among the CAPCO companies as such, each member
company, severally and not jointly, is obligated to pay only its
proportionate share of the costs associated with the facilities and
the cost of required fuel. The CAPCO companies have agreed that any
modification of their arrangements or of their agreed-upon programs
requires their unanimous consent. Should any member become unable
to continue to pay its share of the costs associated with a CAPCO
facility, each of the other CAPCO companies could be adversely
affected in varying degrees because it may become necessary for the
remaining members to assume such costs for the account of the
defaulting member.
Under the agreements governing the construction and
operation of CAPCO generating units, the responsibility is assigned
to a specific CAPCO company. CEI has such responsibilities for
Perry Unit 1 and Duquesne is responsible for Beaver Valley Units 1
and 2. The Company monitors activities in connection with these
units but must rely to a significant degree on the operating
company for necessary information. The Company in its oversight
role as a practical matter cannot be privy to every detail; it is
the operating company that must directly supervise activities and
then exercise its reporting responsibilities to the co-owners. The
Company critically reviews the information given to it by the
operating company, but it cannot be absolutely certain that things
that it would have considered significant have been reported or
that it would always have reached exactly the same conclusion about
matters that are reported. In addition, the time that is
necessarily part of the compiling and analyzing process creates a
lag between the occurrence of events and the time the Company
becomes aware of their significance. The Companies have similar
responsibilities to the other CAPCO companies with respect to W.H.
Sammis Unit 7 and Bruce Mansfield Units 1, 2 and 3.
Financing and Construction
The Companies access the capital markets from time to time
to provide funds for their construction programs and to refinance
existing securities.
Future Financing
The Companies' total construction costs, excluding nuclear
fuel, amounted to approximately $227,000,000 in 1994. Such costs
included expenditures for the betterment of existing facilities and
for the construction of transmission lines, distribution lines,
substations and other additions. For the years 1995-1999, such
construction costs are estimated to be approximately $800,000,000,
of which approximately $180,000,000 is applicable to 1995. See
"Environmental Matters" below with regard to possible environment-
related expenditures not included in this estimate.
During the 1995-1999 period, maturities of, and sinking
fund requirements for, long-term debt and preferred stock will
require expenditures by the Companies of approximately
$1,301,000,000, of which approximately $227,000,000 is applicable
to 1995.
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Nuclear fuel purchases are financed through OES Fuel
commercial paper and loans, both of which are supported by a
$225,000,000 long-term bank credit agreement. Investments for
additional nuclear fuel during the 1995-1999 period are estimated
to be approximately $172,000,000, of which approximately
$30,000,000 applies to 1995. During the same periods, the
Companies' nuclear fuel investments are expected to be reduced by
approximately $225,000,000 and $56,000,000, respectively, as the
nuclear fuel is consumed. Also, the Companies have operating lease
commitments of approximately $575,000,000 for the 1995-1999 period,
of which approximately $106,000,000 relates to 1995. The Companies
recover the cost of nuclear fuel consumed and operating leases
through their electric rates.
Short-term borrowings of $174,642,000 at December 31, 1994,
included $104,642,000 of OES Capital debt, which is secured by
customer accounts receivable. OES Capital can borrow up to
$120,000,000 under a receivables financing agreement at rates based
on certain bank commercial paper. The Companies also had
$55,000,000 of unused short-term bank lines of credit as of
December 31, 1994. In addition, $72,000,000 was available through
bank facilities that provide for borrowings on a short-term basis
at the banks' discretion. OES Fuel had approximately $30,000,000
of unused borrowing capability at the end of 1994 that was
available for reloan to the Company.
OES Finance was established during the third quarter of
1994 for the sole purpose of maintaining deposits pledged as
collateral to secure reimbursement obligations relating to certain
letters of credit supporting the Company's obligations to lessors
under the Beaver Valley Unit 2 sale and leaseback arrangements. The
deposits pledged to the financial institution providing those
letters of credit are the sole property of OES Finance. In the
event of liquidation, OES Finance, as a separate corporate entity,
would have to satisfy its obligations to creditors before any of
its assets could be made available to the Company as sole owner of
OES Finance common stock.
Based on their present plans, the Companies could provide
for their cash requirements in 1995 from the following sources:
funds to be received from operations; available cash and temporary
cash investments (approximately $23,000,000 as of December 31,
1994); the issuance of long-term debt (for refunding purposes) and
funds available under short-term bank credit arrangements.
For the period 1995-1999, external financings may be used
to provide a portion of the Companies' cash requirements. The
extent and type of future financings will depend on the need for
external funds as well as market conditions, the maintenance of an
appropriate capital structure and the ability of the Companies to
comply with coverage requirements in order to issue first mortgage
bonds and preferred stock. The Companies will continue to monitor
financial market conditions and, where appropriate, may take
advantage of economic opportunities to refund debt and preferred
stock to the extent that their financial resources permit.
Except as otherwise indicated, the foregoing statements
with respect to construction expenditures are based on estimates
made in February 1995 and are subject to change based upon the
progress of and changes required in the construction program,
including periodic reviews of costs, changing customer requirements
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for electric energy, the level of earnings and resulting changes in
applicable coverage requirements, conditions in capital markets,
changes in regulatory requirements and other relevant factors.
Coverage Requirements
The coverage requirements contained in the first mortgage
indentures under which the Companies issue first mortgage bonds
provide that, except for certain refunding purposes, the Companies
may not issue first mortgage bonds unless applicable net earnings
(before income taxes), calculated as provided in the indentures,
for any period of twelve consecutive months within the fifteen
calendar months preceding the month in which such additional bonds
are issued, are at least twice annual interest requirements on
outstanding first mortgage bonds, including those being issued. The
Companies' respective articles of incorporation prohibit the sale
of preferred stock unless applicable gross income, calculated as
provided in the articles of incorporation, is equal to at least 1-
1/2 times the aggregate of the annual interest requirements on
indebtedness and annual dividend requirements on preferred stock
outstanding immediately thereafter.
With respect to the issuance of first mortgage bonds under
the Company's first mortgage indenture, the availability of
property additions is more restrictive than the earnings test at
the present time and would limit the amount of first mortgage bonds
issuable against property additions to $447,000,000. The Company is
currently able to issue $1,044,000,000 principal amount of first
mortgage bonds against previously retired bonds without the need to
meet the above restrictions. Based upon earnings for 1994, the
Company would be permitted, under the earnings coverage test
contained in its charter, to issue at least $1,089,000,000 of
preferred stock at an assumed dividend rate of 9.50%. If the
Company were to issue additional debt at or prior to the time it
issued preferred stock, the amount of preferred stock which would
be issuable would be reduced.
To the extent that coverage requirements or market
conditions restrict the Companies' abilities to issue desired
amounts of first mortgage bonds or preferred stock, the Companies
may seek other methods of financing. Such financings could include
the sale of common stock and preference stock in amounts greater
than otherwise planned, or of such other types of securities as
might be authorized by applicable regulatory authorities which
would not otherwise be sold and could result in annual interest
charges and/or dividend requirements in excess of those that would
otherwise be incurred.
Utility Regulation
The Companies are subject to broad regulation as to rates
and other matters by the Public Utilities Commission of Ohio (PUCO)
and the Pennsylvania Public Utility Commission (PPUC). With respect
to their wholesale and interstate electric operations and rates,
the Companies are subject to regulation, including regulation of
their accounting policies and practices, by the Federal Energy
Regulatory Commission (FERC). Under Ohio law, municipalities may
regulate rates, subject to appeal to the PUCO if not acceptable to
the utility.
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In 1986, a law was passed which extended the jurisdiction
of the PUCO to nonutility affiliates of holding companies exempt
under Section 3(a)(1) and 3(a)(2) of the Public Utility Holding
Company Act of 1935 (1935 Act) to the extent that the activities of
such affiliates affect or relate to the cost of providing electric
utility service in Ohio. The law, among other things, requires PUCO
approval of investments in, or the transfer of assets to,
nonutility affiliates. Investments in such affiliates are limited
to 15% of the aggregate capitalization of the holding company on a
consolidated basis. The Company is an exempt holding company under
Section 3(a)(2) of the 1935 Act, but the law has not had any effect
on its operations as they are currently conducted.
The Energy Policy Act of 1992 (1992 Act) amends portions
of the 1935 Act, providing independent power producers and other
nonregulated generating facilities easier entry into the electric
generation markets. The 1992 Act also amends portions of the
Federal Power Act, authorizing the FERC, under certain
circumstances, to mandate access to utility-owned transmission
facilities. The Companies are currently unable to predict the
ultimate effects on their operations resulting from this
legislation.
PUCO Rate Matters
The Company's Rate Stabilization and Service Area
Development Program provides for base electric rates to remain at
1990 levels until at least 1997, absent any significant changes in
regulatory, environmental or tax requirements. Among other things,
the program also provides for the adoption of demand side
management programs and a tariff option for customer retention and
service area stabilization.
FERC Rate Matters
Rates for the Companies' respective wholesale customers are
regulated by the FERC. The Company's tariff for its customers was
approved by the FERC in 1989. Penn Power sells power to four
wholesale customers under agreements which were extended in 1994;
two of the agreements expire in March 1997, and the other two will
be in effect until September 1999. Penn Power also sells power to
a fifth municipality which received bids from third parties for
power and filed a request with the FERC in September 1994 to
require Penn Power to provide transmission services. On January 25,
1995, FERC ordered Penn Power to provide transmission services to
the municipality and directed both parties to resolve the pricing,
terms and conditions of this service. If Penn Power cannot reach an
agreement with the municipality on these issues by April 5, 1995,
FERC will establish the final terms.
Fuel Recovery Procedures
Under the laws of the State of Ohio, an electric utility
is required to have annual hearings before the PUCO with respect to
its fuel and net purchased power policies and practices. At these
hearings a utility is required to show that its electric fuel
component (EFC) charges are "fair, just and reasonable". The law
also requires additional auditing of, and additional reporting by,
the utility with respect to its fuel costs and fuel procurement
policies and practices. The law provides for the recovery of fuel
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costs, including any over or under collection of fuel costs
applicable to a prior six month period, by adjusting an electric
utility's EFC rate every six months.
Penn Power uses a "levelized" energy cost rate (ECR) for
the recovery of fuel and net purchased power costs from its
customers. The ECR, which includes adjustment for any over or under
collection from customers, is recalculated each year.
Nuclear Regulation
The construction and operation of nuclear generating units
are subject to the regulatory jurisdiction of the Nuclear
Regulatory Commission (NRC) including the issuance by it of
construction permits and operating licenses. The NRC's procedures
with respect to application for construction permits and operating
licenses afford opportunities for interested parties to request
public hearings on health, safety, environmental and antitrust
issues. In this connection, the NRC may require substantial changes
in operation or the installation of additional equipment to meet
safety or environmental standards with resulting delay and added
costs. The possibility also exists for modification, denial or
revocation of licenses or permits. Full power operating licenses
were issued for Beaver Valley Unit 1, Perry Unit 1 and Beaver
Valley Unit 2 on July 1, 1976, November 13, 1986 and August 14,
1987, respectively.
The construction permit and operating license issued by the
NRC applicable to Perry Unit 1 is conditioned to require, among
other things: (i) maintenance, emergency, economy and wholesale
power and reserve sharing to be made available to, (ii)
interconnections to be made with, and (iii) wheeling to be provided
for, electric generating and/or distribution systems (or
municipalities or cooperatives with the right to engage in such
functions) if such entities so request and to permit such entities
to become members of CAPCO (subject to certain prerequisites with
respect to size), or to acquire a share of the capacity of Perry
Unit 1 or any other future nuclear units, if they so desire. In
September 1987, the Company asked the NRC to suspend these license
conditions. In April 1991, the NRC Staff denied the Company's
application; accordingly, the Company petitioned the NRC for a
hearing. Pursuant to this request the matter was referred to the
Atomic Safety and Licensing Board (ASLB). The ASLB ruled against
the Company in November 1992. The Company petitioned the NRC to
review the ASLB decision in December 1992. On August 3, 1993, the
NRC ruled that the license conditions will not be suspended. On
October 1, 1993, the Company appealed the NRC decision in the
United States Court of Appeals for the District of Columbia
Circuit. If these license conditions are not suspended, they could
have a materially adverse but presently undeterminable effect on
the Companies' future business operations.
The NRC has promulgated and continues to promulgate
additional regulations related to the safe operation of nuclear
power plants. The Companies cannot predict what additional
regulations will be promulgated or design changes required or the
effect that any such regulations or design changes, or the
consideration thereof, may have upon the Beaver Valley and Perry
plants. Although the Companies have no reason to anticipate an
accident at any nuclear plant in which they have an interest, if
such an accident did happen, it could have a material but presently
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undeterminable adverse effect on the Company's consolidated
financial position. In addition, such an accident at any operating
nuclear plant, whether or not owned by the Companies, could result
in regulations or requirements that could affect the operation or
licensing of plants that the Companies do own with a consequent but
presently undeterminable adverse impact, and could affect the
Companies' abilities to raise funds in the capital markets.
Nuclear Insurance
The Price-Anderson Act limits the public liability which
can be assessed with respect to a nuclear power plant to
$8,920,000,000 (assuming 110 units licensed to operate) for a
single nuclear incident, which amount is covered by: (i) private
insurance amounting to $200,000,000; and (ii) $8,720,000,000
provided by an industry retrospective rating plan required by the
NRC pursuant thereto. Under such retrospective rating plan, in the
event of a nuclear incident at any unit in the United States
resulting in losses in excess of private insurance, up to
$75,500,000 (but not more than $10,000,000 per unit per year in the
event of more than one incident) must be contributed for each
nuclear unit licensed to operate in the country by the licensees
thereof to cover liabilities arising out of the incident. Based on
their present ownership and leasehold interests in the Beaver
Valley Station and the Perry Plant, the Companies' maximum
potential assessment under these provisions (assuming the other
CAPCO companies were to contribute their proportionate share of any
assessments under the retrospective rating plan) would be
$102,800,000 per incident but not more than $13,000,000 in any one
year for each incident.
In addition to the public liability insurance provided
pursuant to the Price-Anderson Act, the Companies have also
obtained insurance coverage in limited amounts for economic loss
and property damage arising out of nuclear incidents. The Companies
are members of Nuclear Electric Insurance Limited (NEIL) which
provides coverage (NEIL I) for the extra expense of replacement
power incurred due to prolonged accidental outages of nuclear
units. Under NEIL I, the Companies have policies, renewable yearly,
corresponding to their respective interests in the Beaver Valley
Station and the Perry Plant, which provide an aggregate indemnity
of up to approximately $345,000,000 for replacement power costs
incurred during an outage after an initial 21-week waiting period.
Members of NEIL I pay annual premiums and are subject to
assessments if losses exceed the accumulated funds available to the
insurer. The Companies' present maximum aggregate assessment for
incidents at any covered nuclear facility occurring during a policy
year would be approximately $3,200,000.
The Companies are insured as to their respective interests
in the Beaver Valley Station and Perry Plant under property damage
insurance provided by American Nuclear Insurers (ANI) and Mutual
Atomic Energy Liability Underwriters (MAELU) to the operating
company for each plant. Under the ANI/MAELU arrangements,
$500,000,000 of primary coverage and $850,000,000 of excess
coverage for decontamination costs, debris removal and repair
and/or replacement of property is provided for the Beaver Valley
Station and the Perry Plant. The Companies pay annual premiums for
this coverage and are not liable for retrospective assessments.
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A secondary level of coverage for the Beaver Valley Station
and Perry Plant over and above the ANI/MAELU policy is provided by
a decontamination liability, excess property and decommissioning
liability insurance policy issued to each operating company by NEIL
(NEIL II). Under NEIL II a minimum of $1,400,000,000 of coverage is
available to pay costs required for decontamination operations in
excess of the $1,350,000,000 provided by the primary ANI/MAELU
policy. Additionally, a maximum of $250,000,000, as provided by
NEIL II, would cover decommissioning costs in excess of funds
already collected for decommissioning. Any remaining portion of the
NEIL II proceeds after payment of decontamination costs will be
available to pay excess property damage losses. Members of NEIL II
pay annual premiums and are subject to assessments if losses exceed
the accumulated funds available to the insurer. The Companies'
present maximum assessment for NEIL II coverage for accidents at
any covered nuclear facility occurring during a policy year would
be approximately $12,000,000. The NEIL II policy is renewable
yearly.
The Companies intend to maintain insurance against nuclear
risks as described above as long as it is available. To the extent
that replacement power, property damage, decontamination,
decommissioning, repair and replacement costs and other such costs
arising from a nuclear incident at any of the Companies' plants
exceed the policy limits of the insurance from time to time in
effect with respect to that plant, to the extent a nuclear incident
is determined not to be covered by the Companies' insurance
policies, or to the extent such insurance becomes unavailable in
the future, the Companies would remain at risk for such costs.
The NRC requires nuclear power plant licensees to obtain
minimum property insurance coverage of $1,060,000,000 or the amount
generally available from private sources, whichever is less. The
proceeds of this insurance are required to be used first to ensure
that the licensed reactor is in a safe and stable condition and can
be maintained in that condition so as to prevent any significant
risk to the public health and safety. Within 30 days of
stabilization, the licensee is required to prepare and submit to
the NRC a cleanup plan for approval. The plan is required to
identify all cleanup operations necessary to decontaminate the
reactor sufficiently to permit the resumption of operations or to
commence decommissioning. Any property insurance proceeds not
already expended to place the reactor in a safe and stable
condition must be used first to complete those decontamination
operations that are ordered by the NRC. The Companies are unable to
predict what effect these requirements may have on the availability
of insurance proceeds to the Companies for the Companies'
bondholders.
Environmental Matters
Various federal, state and local authorities regulate the
Companies with regard to air and water quality and other
environmental matters. The Companies have estimated capital
expenditures for environmental compliance of approximately
$70,000,000, which is included in the construction estimate given
under "Financing and Construction - Future Financing" for 1995
through 1999.
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Air Regulation
Under the provisions of the Clean Air Act of 1970, both the
State of Ohio and the Commonwealth of Pennsylvania adopted ambient
air quality standards, and related emission limits, including
limits for sulfur dioxide (SO2) and particulates. In addition, the
U.S. Environmental Protection Agency (EPA) promulgated an SO2
regulatory plan for Ohio which became effective for the Company's
plants in 1977. Generating plants to be constructed in the future
and some future modifications of existing facilities will be
covered not only by the applicable state standards but also by EPA
emission performance standards for new sources. In both Ohio and
Pennsylvania the construction or modification of emission sources
requires approval from appropriate environmental authorities, and
the facilities involved may not be operated unless a permit or
variance to do so has been issued by those same authorities.
The Clean Air Act Amendments of 1990 require significant
reductions of SO2 and nitrogen oxides (NOx) from the Companies'
coal-fired generating units by 1995 and additional emission
reductions by 2000. Compliance options include, but are not limited
to, installing additional pollution control equipment, burning
less-polluting fuel, purchasing emission allowances, operating
facilities in a manner that minimizes pollution, and retiring
facilities. In compliance plans submitted to the PUCO and to the
EPA, the Company stated that SO2 reductions for the years 1995
through 1999 likely will be achieved by burning lower-sulfur fuel,
generating more electricity from lower-emitting plants, and/or
purchasing emission allowances. Equipment already installed, or to
be installed by May 1995, is expected to provide NOx reductions
sufficient to meet 1995 requirements. Plans for complying with the
year 2000 and later reductions have not been finalized. EPA is
conducting additional studies which could indicate the need for
additional NOx reductions from the Companies' Pennsylvania
facilities by the year 2003. The cost of such reductions, if
required, may be substantial. The Company continues to evaluate its
compliance plans and other compliance options.
The Companies are required to meet federally approved SO2
regulations. Violations of such regulations can result in shutdown
of the generating unit involved and/or civil or criminal penalties
of up to $25,000 for each day the unit is in violation. The EPA has
an interim enforcement policy for SO2 regulations in Ohio that
allows for compliance based on a 30-day averaging period. The EPA
has proposed regulations that could change the interim enforcement
policy, including the method of determining compliance with
emission limits. The Companies cannot predict what action the EPA
may take in the future with respect to proposed regulations or the
interim enforcement policy.
Water Regulation
Various water quality regulations, the majority of which
are the result of the federal Clean Water Act and its amendments,
apply to the Companies' plants. In addition, Ohio and Pennsylvania
have water quality standards applicable to the Companies'
operations. As provided in the Clean Water Act, authority to grant
federal National Pollutant Discharge Elimination System (NPDES)
water discharge permits can be assumed by a state. Ohio and
Pennsylvania have assumed such authority.
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The Ohio Environmental Protection Agency (Ohio EPA) has
issued NPDES Permits for the R.E. Burger, Edgewater, Niles, W.H.
Sammis and West Lorain plants and has proposed a water discharge
permit for the Mad River Plant. The West Lorain Plant is in
compliance with all permit conditions. The other plants are in
compliance with chemical limitations of the permits. The permit
conditions would have required the addition of cooling towers at
all of the above plants except West Lorain. However, the EPA and
Ohio EPA have approved variance requests for the W.H. Sammis, R.E.
Burger, Edgewater and Niles plants, eliminating the current need
for cooling towers at those plants.
Waste Disposal
As a result of the Resource Conservation and Recovery Act
of 1976, as amended, and the Toxic Substances Control Act of 1976,
federal and state hazardous waste regulations have been
promulgated. These regulations may result in significantly
increased costs to dispose of waste materials. The ultimate effect
of these requirements cannot presently be determined.
The Pennsylvania Department of Environmental Resources has
issued regulations dealing with the storage, treatment,
transportation and disposal of residual waste such as coal ash and
scrubber sludge. These regulations impose additional requirements
relating to permitting, ground water monitoring, leachate
collection systems, closure, liability insurance and operating
matters. The Companies are considering various compliance options
but are presently unable to determine the ultimate increase in
capital and operating costs at existing sites.
Summary
Environmental controls are still in the process of
development and require, in many instances, balancing the needs for
additional quantities of energy in future years and the need to
protect the environment. As a result, the Companies cannot now
estimate the precise effect of existing and potential regulations
and legislation upon any of their existing and proposed facilities
and operations or upon their ability to issue additional first
mortgage bonds under their respective mortgages. These mortgages
contain covenants by the Companies to observe and conform to all
valid governmental requirements at the time applicable unless in
course of contest, and provisions which, in effect, prevent the
issuance of additional bonds if there is a completed default under
the mortgage. The provisions of each of the mortgages, in effect,
also require, in the opinion of counsel for the respective
Companies, that certification of property additions as the basis
for the issuance of bonds or other action under the mortgages be
accompanied by an opinion of counsel that the company certifying
such property additions has all governmental permissions at the
time necessary for its then current ownership and operation of such
property additions. The Companies intend to contest any
requirements they deem unreasonable or impossible for compliance or
otherwise contrary to the public interest. Developments in these
and other areas of regulation may require the Companies to modify,
supplement or replace equipment and facilities, and may delay or
impede the construction and operation of new facilities, at costs
which could be substantial. The Companies expect that the impact of
any such costs would eventually be reflected in their rate
schedules.
- 10 -
Fuel Supply
The Companies' sources of generation during 1994 were 76.2%
coal and 23.8% nuclear. Over two-thirds of the Company's annual
coal purchase requirements are supplied under long-term contracts.
These contracts have minimum annual tonnage levels of approximately
5,300,000 tons (including the Company's portion of the coal
purchase contract relating to the Bruce Mansfield Plant discussed
below). This contract coal is produced primarily from mines located
in Ohio, Pennsylvania, Kentucky and West Virginia; the contracts
expire at various times through February 28, 2003.
The Companies estimate their 1995 coal requirements to be
approximately 9,700,000 tons (including their respective shares of
the coal requirements of CAPCO's W. H. Sammis Unit 7 and the Bruce
Mansfield Plant). See "Environmental Matters" for factors
pertaining to meeting environmental regulations affecting coal-
fired generating units.
The Companies, together with the other CAPCO companies,
have each severally guaranteed (the Company's and Penn Power's
composite percentages being approximately 46.8% and 6.7%,
respectively) certain debt and lease obligations in connection with
a coal supply contract for the Bruce Mansfield Plant (see Note 7 of
Notes to Consolidated Financial Statements). As of December 31,
1994, the Companies' shares of the guarantees were $87,159,000. The
price under the coal supply contract, which includes certain
minimum payments, has been determined to be sufficient to satisfy
the debt and lease obligations. This contract extends to December
31, 1999.
The Companies' fuel costs (excluding disposal costs) for
each of the five years ended December 31, 1994, were as follows:
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Cost of fuel consumed
per million BTUs:
Coal $1.36 $1.37 $1.40 $1.40 $1.39
Nuclear $ .75 $ .76 $ .83 $ .87 $ .84
Average fuel cost per
kilowatt-hour
generated (cents) 1.26 1.31 1.31 1.34 1.34
Nuclear Fuel
OES Fuel is the sole lessor for the Companies' nuclear fuel
requirements (see "Financing and Construction - Future Financing"
and Note 5E of Notes to Consolidated Financial Statements).
The Companies and OES Fuel have contracts for the supply
of uranium sufficient to meet projected needs through 2000 and
conversion services sufficient to meet projected needs through
2001. Fabrication services for fuel assemblies have been contracted
by the CAPCO companies for the next four reloads for Beaver Valley
Unit 1, three reloads for Beaver Valley Unit 2 (through
approximately 2000 and 1998, respectively), and the next six
reloads for Perry Unit 1 (through approximately 2004). The CAPCO
companies have a contract with the U.S. Enrichment Corporation for
enrichment services for all CAPCO nuclear units through 2014.
- 11 -
Prior to the expiration of existing commitments, the
Companies intend to make additional arrangements for the supply of
uranium and for the subsequent conversion, enrichment, fabrication,
reprocessing and/or waste disposal services, the specific prices
and availability of which are not known at this time. Due to the
present lack of availability of domestic reprocessing services, to
the continuing absence of any program to begin development of such
reprocessing capability and questions as to the economics of
reprocessing, the Companies are calculating nuclear fuel costs
based on the assumption that spent fuel will not be reprocessed.
On-site spent fuel storage facilities for the Perry Plant are
expected to be adequate through 2010; facilities at Beaver Valley
Units 1 and 2 are expected to be adequate through 2011 and 2005,
respectively. After on-site storage capacity is exhausted,
additional storage capacity will have to be obtained which could
result in significant additional costs unless reprocessing services
or permanent waste disposal facilities become available. The
Federal Nuclear Waste Policy Act of 1982 provides for the
construction of facilities for the disposal of high-level nuclear
wastes, including spent fuel from nuclear power plants operated by
electric utilities; however, the selection of a suitable site has
become embroiled in the political process. Duquesne and CEI have
each previously entered into contracts with the U.S. Department of
Energy for the disposal of spent fuel from the Beaver Valley Power
Station and the Perry Plant, respectively.
System Capacity and Reserves
The 1994 net maximum hourly demand on the Companies of
5,744,000 kilowatts (kW) (including 450,000 kW of firm power sales
which extend through 2005 as discussed under "Competition")
occurred on July 20, 1994. The seasonal capability of the Companies
on that day was 5,980,000 kW. Of that system capability, 3.9% was
available to serve additional load, after giving effect to net firm
purchases at that hour of 443,000 kW and term power sales to other
utilities. Based on existing capacity plans, the load forecast made
in November 1994 and anticipated term power sales to other
utilities, the capacity margins during the 1995-1999 period are
expected to range from about 6% to 10%.
Regional Reliability
The Company participates with 26 other electric companies
operating in nine states in the East Central Area Reliability
Coordination Agreement (ECAR), which was organized for the purpose
of furthering the reliability of bulk power supply in the area
through coordination of the planning and operation by the ECAR
members of their bulk power supply facilities. The ECAR members
have established principles and procedures regarding matters
affecting the reliability of the bulk power supply within the ECAR
region. Procedures have been adopted regarding: i) the evaluation
and simulated testing of systems' performance; ii) the
establishment of minimum levels of daily operating reserves; iii)
the development of a program regarding emergency procedures during
conditions of declining system frequency; and iv) the basis for
uniform rating of generating equipment.
Competition
The Companies compete with other utilities for intersystem
bulk power sales and for sales to municipalities and cooperatives.
- 12 -
The Companies compete with suppliers of natural gas and other forms
of energy in connection with their industrial and commercial sales
and in the home climate control market, both with respect to new
customers and conversions, and with all other suppliers of
electricity. To date, there has been no substantial cogeneration by
the Companies' customers.
Technological advances and regulatory changes are driving
forces toward increasing competition in the energy market. In
addition, many large electricity users continue to push for some
form of retail wheeling, which would enable retail customers to
purchase electricity from producers other than the local utility.
While regulators appear to be increasingly reluctant to move in
this direction (primarily because of the adverse impact retail
wheeling would have on small users) the debate is expected to place
downward pressure on the Companies' prices in the future.
In an effort to more fully utilize their facilities and
hold down rates to their other customers, the Companies have
entered into a long-term power sales agreement with another
utility. Currently, the Companies are selling 450,000 kW annually
under this contract through December 31, 2005. The Companies have
the option to reduce this commitment by 150,000 kW, with three
years advance notice.
Research and Development
The Company participates in funding the Electric Power
Research Institute (EPRI), which was formed for the purpose of
expanding electric research and development under the voluntary
sponsorship of the nation's electric utility industry - public,
private and cooperative. Its goal is to mutually benefit utilities
and their customers by promoting the development of new and
improved technologies to help the utility industry meet present and
future electric energy needs in environmentally and economically
acceptable ways. EPRI conducts research on all aspects of electric
power production and use, including fuels, generating, delivery,
energy management and conservation, environmental effects and
energy analysis. The major portion of EPRI research and development
projects is directed toward practical solutions and their
applications to problems currently facing the electric utility
industry. In 1994, approximately 86% of the Company's research and
development expenditures were related to EPRI.
The Company also participates in various research and
development efforts by sponsoring clean coal technology
demonstration projects at Company-owned coal-fired units. These
projects are designed to derive alternate ways of using coal that
would otherwise be environmentally unacceptable. In addition to
researching environmentally acceptable ways of burning coal, the
Company is also researching technology which will produce ash waste
with properties and characteristics different from present fly ash
and bottom ash, with the initial goal of producing marketable
products for use in agronomy applications.
Executive Officers
The executive officers are elected at the annual
organization meeting of the Board of Directors, held immediately
after the annual meeting of stockholders, and hold office until the
next such organization meeting, unless the Board of Directors shall
- 13 -
otherwise determine, or unless a resignation is submitted.
Position Held During
Name Age Past Five Years Dates
- --------------- --- --------------------------- ------------
W. R. Holland 58 President and Chief
Executive Officer 1993-present
President and Chief
Operating Officer 1991-1993
Senior Vice President of
Detroit Edison Company *-1991
A. J. Alexander 43 Senior Vice President and
General Counsel 1991-present
Vice President and General
Counsel *-1991
H. P. Burg 48 Senior Vice President and
Chief Financial Officer *-present
A. N. Gorant 64 Senior Vice President-
Division Operations
and Customer Service 1994-present
Vice President-Division
Operations and Customer
Service *-1994
R. J. McWhorter 62 Senior Vice President-
Generating Plant and
Transmission Operations *-present
E. T. Carey 52 Vice President-Marketing
and Customer Service
Support 1994-present
Manager, Performance
Initiatives 1993-1994
Division Manager *-1993
A. R. Garfield 56 Vice President-System
Operations 1991-present
Manager, System Operations *-1991
J. A. Gill 57 Vice President-
Administration *-present
B. M. Miller 62 Vice President-Engineering
and Construction *-present
D. L. Yeager 60 Vice President-Special
Projects *-present
D. P. Zeno 64 Vice President-Governmental
Affairs 1991-present
Manager, Governmental
Affairs *-1991
N. C. Brink 47 Secretary 1994-present
Assistant Secretary *-1994
- 14 -
Position Held During
Name Age Past Five Years Dates
- --------------- --- --------------------------- ------------
R. H. Marsh 44 Treasurer 1991-present
Manager, Assets
Administration *-1991
H. L. Wagner 42 Comptroller 1990-present
Assistant Comptroller *-1990
* Indicates position held at least since January 1, 1990.
At December 31, 1994, the Company had 3,911 employees and
Penn Power had 1,255 employees for a total of 5,166 employees for
the Companies.
ITEM 2. PROPERTIES
The Companies' respective first mortgage indentures
constitute, in the opinion of the Companies' counsel, direct first
liens on substantially all of the respective Companies' physical
property, subject only to excepted encumbrances, as defined in the
Indentures. See Notes 4 and 5 to the Consolidated Financial
Statements for information concerning leases and financing
encumbrances affecting certain of the Companies' properties.
The Companies own, individually or, together with one or more
of the other CAPCO companies as tenants in common, and/or lease,
the generating units in service as of March 1, 1995, shown on the
table below.
- 15 -
Net Demonstrated Interest
------------------
Capacity (kW)
------------------ Penn
Companies Ohio Edison Power
------------
Plant-Location Unit Total Entitlement Owned Leased Owned
- ------------------- ---- ------- ----------- ------ ------ -----
Coal-Fired Units
R.E. Burger- 3-5 406,000 406,000 100.00% - -
Shadyside, OH
B. Mansfield- 1 780,000 501,000 60.00% - 4.20%
Shippingport, PA 2 780,000 360,000 39.30% - 6.80%
3 800,000 335,000 35.60% - 6.28%
New Castle- 3-5 333,000 333,000 - - 100.00%
W. Pittsburg, PA
Niles-Niles, OH 1-2 216,000 216,000 100.00% - -
W.H. Sammis- 1-6 1,620,000 1,620,000 100.00% - -
Stratton, OH 7 600,000 413,000 48.00% - 20.80%
Nuclear Units
Beaver Valley- 1 810,000 425,000 35.00% - 17.50%
Shippingport, PA 2 820,000 343,000 20.22% 21.66% -
Perry- 1 1,194,000 421,000 17.42% 12.58% 5.24%
N. Perry Village,
OH
Oil/Gas-Fired Units
Edgewater-
Lorain, OH 4 100,000 100,000 100.00% - -
Other 164,000 164,000 84.82% - 15.18%
---------
Total 5,637,000
=========
Prolonged outages of existing generating units might make it
necessary for the Companies, depending upon the state of demand
from time to time for electric service upon their system, to use to
a greater extent than otherwise, less efficient and less economic
generating units, or purchased power, and in some cases may require
the reduction of load during peak periods under the Companies'
interruptible programs, all to an extent not presently
determinable.
The Companies' generating plants and load centers are
connected by a transmission system consisting of elements having
various voltage ratings ranging from 23 kilovolts (kV) to 345 kV.
The Companies' overhead and underground transmission lines
aggregate 4,565 miles.
The Companies' electric distribution systems include 26,002
miles of overhead pole line and underground conduit carrying
primary, secondary and street lighting circuits. They own,
individually or, together with one or more of the other CAPCO
companies as tenants in common, 434 substations with a total
installed transformer capacity of 23,867,749 kilovolt-amperes, of
- 16 -
which 64 are transmission substations, including 8 located at
generating plants.
The Company's transmission lines also interconnect with those
of CEI, Columbus Southern Power Company, The Dayton Power and Light
Company, Duquesne, Monongahela Power Company, Ohio Power Company
and Toledo; Penn Power's interconnect with those of Duquesne and
West Penn Power Company. These interconnections make possible
utilization by the Company and Penn Power of generating capacity
constructed as a part of the CAPCO program, as well as providing
opportunities for the sale of power to other utilities.
ITEM 3. LEGAL PROCEEDINGS
In 1991, the CAPCO companies, as co-plaintiffs, filed suit
against Westinghouse Electric Corporation in the United States
District Court for the Western District of Pennsylvania, for design
flaws relating to Beaver Valley Units 1 and 2 steam generators
supplied by Westinghouse. The suit principally alleged that the
Westinghouse steam generators contain serious design defects
causing such problems as tube corrosion and cracking, which has led
to higher maintenance costs and the possible replacement of the
steam generators earlier than the 40-year design life. The Court
rejected the claims of the CAPCO companies in December 1994. The
CAPCO companies have appealed the verdict to the United States
Court of Appeals for the Third Circuit.
See "Item 1 - Business - Nuclear Regulation" for information
with respect to legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by Items 5 through 8 is
incorporated herein by reference to the Common Stock Data,
Classification of Holders of Common Stock as of December 31, 1994,
Selected Financial Data, Management's Discussion and Analysis of
Results of Operations and Financial Condition, and Consolidated
Financial Statements included on pages 12 through 30 in the
Company's 1994 Annual Report to Stockholders (Exhibit 13).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
- 17 -
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10, with respect to
Identification of Directors and with respect to reports required to
be filed under Section 16 of the Securities Exchange Act of 1934,
is incorporated herein by reference to the Company's 1995 Proxy
Statement filed with the Securities and Exchange Commission (SEC)
pursuant to Regulation 14A and, with respect to Identification of
Executive Officers, to "Part I, Item 1. Business- Executive
Officers" herein.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Items 11, 12 and 13 is
incorporated herein by reference to the Company's 1995 Proxy
Statement filed with the SEC pursuant to Regulation 14A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
Included in Part II of this report and incorporated herein by
reference to the Company's 1994 Annual Report to Stockholders
(Exhibit 13 below) at the pages indicated.
Page No.
--------
Report of Independent Public Accountants 12
Consolidated Statements of Income-
Three Years Ended December 31, 1994 17
Consolidated Balance Sheets-
December 31, 1994 and 1993 18
Consolidated Statements of Retained Earnings-
Three Years Ended December 31, 1994 19
Consolidated Statements of Capital Stock and
Other Paid-In Capital-
Three Years Ended December 31, 1994 19
Consolidated Statements of Capitalization-
December 31, 1994 and 1993 20-21
Consolidated Statements of Cash Flows-
Three Years Ended December 31, 1994 22
Consolidated Statements of Taxes-
Three Years Ended December 31, 1994 23
Notes to Consolidated Financial Statements 24-30
- 18 -
2. Financial Statement Schedules
Included in Part IV of this report:
Page No.
--------
Report of Independent Public Accountants 29
Schedule - Three Years Ended December 31, 1994:
II-Consolidated Valuation and Qualifying Accounts 30
Schedules other than the schedule listed above are omitted for
the reason that they are not required or are not applicable, or the
required information is shown in the financial statements or notes
thereto.
3. Exhibits
Exhibit
Number
- -------
(A) 3-1 - Amended Articles of Incorporation, Effective June 21,
1994, constituting the Company's Articles of
Incorporation.
3-2 - Code of Regulations of the Company as amended April 24,
1986. (Registration No. 33-5081, Exhibit (4)(d).)
(B) 4-1 - Indenture dated as of August 1, 1930 between the Company
and Bankers Trust Company, as Trustee, as amended and
supplemented by Supplemental Indentures:
Dated as of File Reference Exhibit No.
---------------- -------------- ------------------
March 3, 1931 2-1725 B-1,B-1(a),B-1(b)
November 1, 1935 2-2721 B-4
January 1, 1937 2-3402 B-5
September 1, 1937 Form 8-A B-6
June 13, 1939 2-5462 7(a)-7
August 1, 1974 Form 8-A, August 28, 1974 2(b)
July 1, 1976 Form 8-A, July 28, 1976 2(b)
December 1, 1976 Form 8-A, December 15, 1976 2(b)
June 15, 1977 Form 8-A, June 27, 1977 2(b)
Supplemental Indentures:
Dated as of File Reference Exhibit No.
------------------ -------------- ------------------
September 1, 1944 2-61146 2(b)(2)
April 1, 1945 2-61146 2(b)(2)
September 1, 1948 2-61146 2(b)(2)
May 1, 1950 2-61146 2(b)(2)
January 1, 1954 2-61146 2(b)(2)
May 1, 1955 2-61146 2(b)(2)
August 1, 1956 2-61146 2(b)(2)
March 1, 1958 2-61146 2(b)(2)
- 19 -
Exhibit
Number
- -------
Supplemental Indentures: (Cont'd)
Dated as of File Reference Exhibit No.
--------------- ---------------------- --------------
April 1, 1959 2-61146 2(b)(2)
June 1, 1961 2-61146 2(b)(2)
September 1, 1969 2-34351 2(b)(2)
May 1, 1970 2-37146 2(b)(2)
September 1, 1970 2-38172 2(b)(2)
June 1, 1971 2-40379 2(b)(2)
August 1, 1972 2-44803 2(b)(2)
September 1, 1973 2-48867 2(b)(2)
May 15, 1978 2-66957 2(b)(4)
February 1, 1980 2-66957 2(b)(5)
April 15, 1980 2-66957 2(b)(6)
June 15, 1980 2-68023 (b)(4)(b)(5)
October 1, 1981 2-74059 (4)(d)
October 15, 1981 2-75917 (4)(e)
February 15, 1982 2-75917 (4)(e)
July 1, 1982 2-89360 (4)(d)
March 1, 1983 2-89360 (4)(e)
March 1, 1984 2-89360 (4)(f)
September 15, 1984 2-92918 (4)(d)
September 27, 1984 33-2576 (4)(d)
November 8, 1984 33-2576 (4)(d)
December 1, 1984 33-2576 (4)(d)
December 5, 1984 33-2576 (4)(e)
January 30, 1985 33-2576 (4)(e)
February 25, 1985 33-2576 (4)(e)
July 1, 1985 33-2576 (4)(e)
October 1, 1985 33-2576 (4)(e)
January 15, 1986 33-8791 (4)(d)
May 20, 1986 33-8791 (4)(d)
June 3, 1986 33-8791 (4)(e)
October 1, 1986 33-29827 (4)(d)
July 15, 1989 33-34663 (4)(d)
August 25, 1989 33-34663 (4)(d)
February 15, 1991 33-39713 (4)(d)
May 1, 1991 33-45751 (4)(d)
May 15, 1991 33-45751 (4)(d)
September 15, 1991 33-45751 (4)(d)
April 1, 1992 33-48931 (4)(d)
June 15, 1992 33-48931 (4)(d)
September 15, 1992 33-48931 (4)(e)
April 1, 1993 33-51139 (4)(d)
June 15, 1993 33-51139 (4)(d)
September 15, 1993 33-51139 (4)(d)
November 15, 1993 1-2578 (4)(2)
10-1 - Administration Agreement between the CAPCO Group
dated as of September 14, 1967. (Registration No.
2-43102, Exhibit 5(c)(2).)
- 20 -
Exhibit
Number
- -------
10-2 - Amendment No. 1 dated January 4, 1974 to
Administration Agreement between the CAPCO Group
dated as of September 14, 1967. (Registration No.
2-68906, Exhibit 5(c)(3).)
10-3 - Transmission Facilities Agreement between the
CAPCO Group dated as of September 14, 1967.
(Registration No. 2-43102, Exhibit 5(c)(3).)
10-4 - Amendment No. 1 dated as of January 1, 1993 to
Transmission Facilities Agreement between the
CAPCO Group dated as of September 14, 1967. (1993
Form 10-K, Exhibit 10-4.)
10-5 - Agreement for the Termination or Construction of
Certain Agreements effective September 1, 1980
among the CAPCO Group. (Registration No. 2-68906,
Exhibit 10-4.)
10-6 - Amendment dated as of December 23, 1993 to
Agreement for the Termination or Construction of
Certain Agreements effective September 1, 1980
among the CAPCO Group. (1993 Form 10-K, Exhibit
10-6.)
10-7 - CAPCO Basic Operating Agreement, as amended
September 1, 1980. (Registration No. 2-68906,
Exhibit 10-5.)
10-8 - Amendment No. 1 dated August 1, 1981, and
Amendment No. 2 dated September 1, 1982 to CAPCO
Basic Operating Agreement, as amended September 1,
1980. (September 30, 1981 Form 10-Q, Exhibit 20-1
and 1982 Form 10-K, Exhibit 19-3, respectively.)
10-9 - Amendment No. 3 dated July 1, 1984 to CAPCO Basic
Operating Agreement, as amended September 1, 1980.
(1985 Form 10-K, Exhibit 10-7.)
10-10 - Basic Operating Agreement between the CAPCO
Companies as amended October 1, 1991. (1991 Form
10-K, Exhibit 10-8.)
10-11 - Basic Operating Agreement between the CAPCO
Companies as amended January 1, 1993. (1993 Form
10-K, Exhibit 10-11.)
10-12 - Memorandum of Agreement effective as of September
1, 1980 among the CAPCO Group. (1982 Form 10-K,
Exhibit 19-2.)
10-13 - Operating Agreement for Beaver Valley Power
Station Units Nos. 1 and 2 as Amended and Restated
September 15, 1987, by and between the CAPCO
Companies. (1987 Form 10-K, Exhibit 10-15.)
10-14 - Construction Agreement with respect to Perry Plant
between the CAPCO Group dated as of July 22, 1974.
- 21 -
Exhibit
Number
- -------
(Registration No. 2-52251 of Toledo Edison
Company, Exhibit 5(yy).)
10-15 - Participation Agreement No. 1 relating to the
financing of the development of certain coal
mines, dated as of October 1, 1973, among Quarto
Mining Company, the CAPCO Group, Energy
Properties, Inc., General Electric Credit
Corporation, the Loan Participants listed in
Schedules A and B thereto, Central National Bank
of Cleveland, as Owner Trustee, National City
Bank, as Loan Trustee, and Owner Trustee, National
City Bank, as Loan Trustee, and National City
Bank, as Bond Trustee. (Registration No. 2-61146,
Exhibit 5(e)(1).)
10-16 - Amendment No. 1 dated as of September 15, 1978 to
Participation Agreement No. 1 dated as of October
1, 1973 among Quarto Mining Company, the CAPCO
Group, Energy Properties, Inc., General Electric
Credit Corporation, the Loan Participants listed
in Schedules A and B thereto, Central National
Bank of Cleveland as Owner Trustee, National City
Bank as Loan Trustee and National City Bank as
Bond Trustee. (Registration No. 2-68906 of
Pennsylvania Power Company, Exhibit 5(e)(2).)
10-17 - Participation Agreement No. 2 relating to the
financing of the development of certain coal
mines, dated as of August 1, 1974, among Quarto
Mining Company, the CAPCO Group, Energy
Properties, Inc., General Electric Credit
Corporation, the Loan Participants listed in
Schedules A and B thereto, Central National Bank
of Cleveland, as Owner Trustee, National City
Bank, as Loan Trustee, and National City Bank, as
Bond Trustee. (Registration No. 2-53059, Exhibit
5(h)(2).)
10-18 - Amendment No. 1 dated as of September 15, 1978 to
Participation Agreement No. 2 dated as of August
1, 1974 among Quarto Mining Company, the CAPCO
Group, Energy Properties, Inc., General Electric
Credit Corporation, the Loan Participants listed
in Schedules A and B thereto, Central National
Bank of Cleveland as Owner Trustee, National City
Bank as Loan Trustee and National City Bank as
Bond Trustee. (Registration No. 2-68906 of
Pennsylvania Power Company, Exhibit 5(e)(4).)
10-19 - Participation Agreement No. 3 dated as of
September 15, 1978 among Quarto Mining Company,
the CAPCO Companies, Energy Properties, Inc.,
General Electric Credit Corporation, the Loan
Participants listed in Schedules A and B thereto,
Central National Bank of Cleveland as Owner
Trustee, and National City Bank as Loan Trustee
- 22 -
Exhibit
Number
- -------
and Bond Trustee. (Registration No. 2-68906 of
Pennsylvania Power Company, Exhibit 5(e)(5).)
10-20 - Participation Agreement No. 4 dated as of
October 31, 1980 among Quarto Mining Company, the
CAPCO Group, the Loan Participants listed in
Schedule A thereto and National City Bank as Bond
Trustee. (Registration No. 2- 68906 of
Pennsylvania Power Company, Exhibit 10-16.)
10-21 - Participation Agreement dated as of May 1, 1986,
among Quarto Mining Company, the CAPCO Companies,
the Loan Participants thereto, and National City
Bank as Bond Trustee. (1986 Form 10-K, Exhibit
10-22.)
10-22 - Participation Agreement No. 6 dated as of
December 1, 1991 among Quarto Mining Company, The
Cleveland Electric Illuminating Company, Duquesne
Light Company, Ohio Edison Company, Pennsylvania
Power Company, the Toledo Edison Company, the Loan
Participants listed in Schedule A thereto,
National City Bank, as Mortgage Bond Trustee and
National City Bank, as Refunding Bond Trustee.
(1991 Form 10-K, Exhibit 10-19.)
10-23 - Agreement entered into as of October 20, 1981
among the CAPCO Companies regarding the use of
Quarto coal at Mansfield Units 1, 2 and 3. (1981
Form 10-K, Exhibit 20-1.)
10-24 - Restated Option Agreement dated as of May 1, 1983
by and between the North American Coal Corporation
and the CAPCO Companies. (1983 Form 10-K, Exhibit
19-1.)
10-25 - Trust Indenture and Mortgage dated as of
October 1, 1973 between Quarto Mining Company and
National City Bank, as Bond Trustee, together with
Guaranty dated as of October 1, 1973 with respect
thereto by the CAPCO Group. (Registration No. 2-
61146, Exhibit 5(e)(5).)
10-26 - Amendment No. 1 dated August 1, 1974 to Trust
Indenture and Mortgage dated as of October 1, 1973
between Quarto Mining Company and National City
Bank, as Bond Trustee, together with Amendment
No.1 dated August 1, 1974 to Guaranty dated as of
October 1, 1973 with respect thereto by the CAPCO
Group. (Registration No. 2-53059, Exhibit
5(h)(2).)
10-27 - Amendment No. 2 dated as of September 15, 1978 to
the Trust Indenture and Mortgage dated as of
October 1, 1973, as amended, between Quarto Mining
Company and National City Bank, as Bond Trustee,
together with Amendment No. 2 dated as of
September 15, 1978 to Guaranty dated as of
- 23 -
Exhibit
Number
- -------
October 1, 1973 with respect to the CAPCO Group.
(Registration No. 2-68906 of Pennsylvania Power
Company, Exhibits 5(e)(11) and 5(e)(12).)
10-28 - Amendment No. 3 dated as of October 31, 1980, to
Trust Indenture and Mortgage dated as of
October 1, 1973, as amended between Quarto Mining
Company and National City Bank as Bond Trustee.
(Registration No. 2-68906 of Pennsylvania Power
Company, Exhibit 10-16.)
10-29 - Amendment No. 4 dated as of July 1, 1985 to the
Trust Indenture and Mortgage dated as of
October 1, 1973, as amended between Quarto Mining
Company and National City Bank as Bond Trustee.
(1985 Form 10-K, Exhibit 10-28.)
10-30 - Amendment No. 5 dated as of May 1, 1986, to the
Trust Indenture and Mortgage between Quarto and
National City Bank as Bond Trustee. (1986 Form
10-K, Exhibit 10-30.)
10-31 - Amendment No. 6 dated as of December 1, 1991, to
the Trust Indenture and Mortgage dated as of
October 1, 1973, between Quarto Mining Company and
National City Bank, as Bond Trustee. (1991 Form
10-K, Exhibit 10-28.)
10-32 - Trust Indenture dated as of December 1, 1991,
between Quarto Mining Company and National City
Bank, as Bond Trustee. (1991 Form 10-K, Exhibit
10-29.)
10-33 - Amendment No. 3 dated as of October 31, 1980 to
the Bond Guaranty dated as of October 1, 1973, as
amended, with respect to the CAPCO Group.
(Registration No. 2- 68906 of Pennsylvania Power
Company, Exhibit 10-16.)
10-34 - Amendment No. 4 dated as of July 1, 1985 to the
Bond Guaranty dated as of October 1, 1973, as
amended, by the CAPCO Companies to National City
Bank as Bond Trustee. (1985 Form 10-K, Exhibit
10-30.)
10-35 - Amendment No. 5 dated as of May 1, 1986, to the
Bond Guaranty by the CAPCO Companies to National
City Bank as Bond Trustee. (1986 Form 10-K,
Exhibit 10-33.)
10-36 - Amendment No. 6A dated as of December 1, 1991, to
the Bond Guaranty dated as of October 1, 1973, by
The Cleveland Electric Illuminating Company,
Duquesne Light Company, Ohio Edison Company,
Pennsylvania Power Company, the Toledo Edison
Company to National City Bank, as Bond Trustee.
(1991 Form 10-K, Exhibit 10-33.)
- 24 -
Exhibit
Number
- -------
10-37 - Amendment No. 6B dated as of December 30, 1991, to
the Bond Guaranty dated as of October 1, 1973 by
The Cleveland Electric Illuminating Company,
Duquesne Light Company, Ohio Edison Company,
Pennsylvania Power Company, the Toledo Edison
Company to National City Bank, as Bond Trustee.
(1991 Form 10-K, Exhibit 10-34.)
10-38 - Bond Guaranty dated as of December 1, 1991, by The
Cleveland Electric Illuminating Company, Duquesne
Light Company, Ohio Edison Company, Pennsylvania
Power Company, the Toledo Edison Company to
National City Bank, as Bond Trustee. (1991 Form
10-K, Exhibit 10-35.)
10-39 - Open end Mortgage dated as of October 1, 1973
between Quarto Mining Company and the CAPCO
Companies and Amendment No. 1 thereto, dated as of
September 15, 1978. (Registration No. 2-68906 of
Pennsylvania Power Company, Exhibit 10-23.)
10-40 - Repayment and Security Agreement and Assignment of
Lease dated as of October 1, 1973 between Quarto
Mining Company and Ohio Edison Company as Agent
for the CAPCO Companies and Amendment No. 1
thereto, dated as of September 15, 1978. (1980
Form 10-K, Exhibit 20-2.)
10-41 - Restructuring Agreement dated as of April 1, 1985
among Quarto Mining Company, the Company and the
other CAPCO Companies, Energy Properties, Inc.,
General Electric Credit Corporation, the Loan
Participants signatories thereto, Central National
Bank of Cleveland, as Owner Trustee and National
City Bank as Loan Trustee and Bond Trustee. (1985
Form 10-K, Exhibit 10-33.)
10-42 - Unsecured Note Guaranty dated as of July 1, 1985
by the CAPCO Companies to General Electric Credit
Corporation. (1985 Form 10-K, Exhibit 10-34.)
10-43 - Memorandum of Understanding dated March 31, 1985
among the CAPCO Companies. (1985 Form 10-K,
Exhibit 10-35.)
(C) 10-44 - Ohio Edison Company Executive Incentive
Compensation Plan. (1984 Form 10-K, Exhibit 19-2.)
(C) 10-45 - Ohio Edison Company Executive Incentive
Compensation Plan as amended February 16, 1987.
(1986 Form 10-K, Exhibit 10-40.)
(C) 10-46 - Restated and Amended Executive Deferred
Compensation Plan. (1989 Form 10-K, Exhibit
10-36.)
(C) 10-47 - Restated and Amended Supplemental Executive
Retirement Plan. (1989 Form 10-K, Exhibit 10-37).
- 25 -
Exhibit
Number
- -------
(D) 10-48 - Participation Agreement dated as of March 16, 1987
among Perry One Alpha Limited Partnership, as
Owner Participant, the Original Loan Participants
listed in Schedule 1 Hereto, as Original Loan
Participants, PNPP Funding Corporation, as Funding
Corporation, The First National Bank of Boston, as
Owner Trustee, Irving Trust Company, as Indenture
Trustee and Ohio Edison Company, as Lessee. (1986
Form 10-K, Exhibit 28-1.)
(D) 10-49 - Amendment No. 1 dated as of September 1, 1987 to
Participation Agreement dated as of March 16, 1987
among Perry One Alpha Limited Partnership, as
Owner Participant, the Original Loan Participants
listed in Schedule 1 thereto, as Original Loan
Participants, PNPP Funding Corporation, as Funding
Corporation, The First National Bank of Boston, as
Owner Trustee, Irving Trust Company (now The Bank
of New York), as Indenture Trustee, and Ohio
Edison Company, as Lessee. (1991 Form 10-K,
Exhibit 10-46.)
(D) 10-50 - Amendment No. 3 dated as of May 16, 1988 to
Participation Agreement dated as of March 16,
1987, as amended among Perry One Alpha Limited
Partnership, as Owner Participant, PNPP Funding
Corporation, The First National Bank of Boston, as
Owner Trustee, Irving Trust Company, as Indenture
Trustee, and Ohio Edison Company, as Lessee. (1992
Form 10-K, Exhibit 10-47.)
(D) 10-51 - Amendment No. 4 dated as of November 1, 1991 to
Participation Agreement dated as of March 16, 1987
among Perry One Alpha Limited Partnership, as
Owner Participant, PNPP Funding Corporation, as
Funding Corporation, PNPP II Funding Corporation,
as New Funding Corporation, The First National
Bank of Boston, as Owner Trustee, The Bank of New
York, as Indenture Trustee and Ohio Edison
Company, as Lessee. (1991 Form 10-K, Exhibit 10-
47.)
(D) 10-52 - Amendment No. 5 dated as of November 24, 1992 to
Participation Agreement dated as of March 16,
1987, as amended, among Perry One Alpha Limited
Partnership, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPPII
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company as Lessee. (1992
Form 10-K, Exhibit 10-49.)
(D) 10-53 - Amendment No. 6 dated as of January 12, 1993 to
Participation Agreement dated as of March 16, 1987
among Perry One Alpha Limited Partnership, as
Owner Participant, PNPP Funding Corporation, as
Funding Corporation, PNPP II Funding Corporation,
- 26 -
Exhibit
Number
- -------
as New Funding Corporation, The First National
Bank of Boston, as Owner Trustee, The Bank of New
York, as Indenture Trustee and Ohio Edison
Company, as Lessee. (1992 Form 10-K, Exhibit 10-
50.)
(A)(D) 10-54 - Amendment No. 7 dated as of October 12, 1994 to
Participation Agreement dated as of March 16, 1987
as amended, among Perry One Alpha Limited
Partnership, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPP II
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee.
(D) 10-55 - Facility Lease dated as of March 16, 1987 between
The First National Bank of Boston, as Owner
Trustee, with Perry One Alpha Limited Partnership,
Lessor, and Ohio Edison Company, Lessee. (1986
Form 10-K, Exhibit 28-2.)
(D) 10-56 - Amendment No. 1 dated as of September 1, 1987 to
Facility Lease dated as of March 16, 1987 between
The First National Bank of Boston, as Owner
Trustee, Lessor and Ohio Edison Company, Lessee.
(1991 Form 10-K, Exhibit 10-49.)
(D) 10-57 - Amendment No. 2 dated as of November 1, 1991, to
Facility Lease dated as of March 16, 1987, between
The First National Bank of Boston, as Owner
Trustee, Lessor and Ohio Edison Company, Lessee.
(1991 Form 10-K, Exhibit 10-50.)
(D) 10-58 - Amendment No. 3 dated as of November 24, 1992 to
Facility Lease dated as of March 16, 1987, as
amended, between The First National Bank of
Boston, as Owner Trustee, with Perry One Alpha
Limited Partnership, as Owner Participant and Ohio
Edison Company, as Lessee. (1992 Form 10-K,
Exhibit 10-54.)
(A)(D) 10-59 - Amendment No. 4 dated as of January 12, 1993 to
Facility Lease dated as of March 16, 1987 as
amended, between, The First National Bank of
Boston, as Owner Trustee, with Perry One Alpha
Limited Partnership, as Owner Participant, and
Ohio Edison Company, as Lessee.
(A)(D) 10-60 - Amendment No. 5 dated as of October 12, 1994 to
Facility Lease dated as of March 16, 1987 as
amended, between, The First National Bank of
Boston, as Owner Trustee, with Perry One Alpha
Limited Partnership, as Owner Participant, and
Ohio Edison Company, as Lessee.
(D) 10-61 - Letter Agreement dated as of March 19, 1987
between Ohio Edison Company, Lessee, and The First
- 27 -
Exhibit
Number
- -------
National Bank of Boston, as Owner Trustee under a
Trust dated March 16, 1987 with Chase Manhattan
Realty Leasing Corporation, required by Section
3(d) of the Facility Lease. (1986 Form 10-K,
Exhibit 28-3.)
(D) 10-62 - Ground Lease dated as of March 16, 1987 between
Ohio Edison Company, Ground Lessor, and The First
National Bank of Boston, as Owner Trustee under a
Trust Agreement, dated as of March 16, 1987, with
the Owner Participant, Tenant. (1986 Form 10-K,
Exhibit 28-4.)
(D) 10-63 - Trust Agreement dated as of March 16, 1987 between
Perry One Alpha Limited Partnership, as Owner
Participant, and The First National Bank of
Boston. (1986 Form 10-K, Exhibit 28-5.)
(D) 10-64 - Trust Indenture, Mortgage, Security Agreement and
Assignment of Facility Lease dated as of March 16,
1987 between The First National Bank of Boston, as
Owner Trustee under a Trust Agreement dated as of
March 16, 1987 with Perry One Alpha Limited
Partnership, and Irving Trust Company, as
Indenture Trustee. (1986 Form 10-K, Exhibit 28-6.)
(D) 10-65 - Supplemental Indenture No. 1 dated as of
September 1, 1987 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The First
National Bank of Boston as Owner Trustee and
Irving Trust Company (now The Bank of New York),
as Indenture Trustee. (1991 Form 10-K, Exhibit 10-
55.)
(D) 10-66 - Supplemental Indenture No. 2 dated as of
November 1, 1991 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The First
National Bank of Boston, as Owner Trustee and The
Bank of New York, as Indenture Trustee. (1991 Form
10-K, Exhibit 10-56.)
(D) 10-67 - Tax Indemnification Agreement dated as of
March 16, 1987 between Perry One, Inc. and PARock
Limited Partnership as General Partners and Ohio
Edison Company, as Lessee. (1986 Form 10-K,
Exhibit 28-7.)
(D) 10-68 - Amendment No. 1 dated as of November 1, 1991 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Perry One, Inc. and Parock
Limited Partnership and Ohio Edison Company. (1991
Form 10-K, Exhibit 10-58.)
(A)(D) 10-69 - Amendment No. 2 dated as of January 12, 1993 to
Tax Indemnification Agreement dated as of
- 28 -
Exhibit
Number
- -------
March 16, 1987 between Perry One, Inc. and Parock
Limited Partnership and Ohio Edison Company.
(A)(D) 10-70 - Amendment No. 3 dated as of October 12, 1994 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Perry One, Inc. and Parock
Limited Partnership and Ohio Edison Company.
(D) 10-71 - Partial Mortgage Release dated as of March 19,
1987 under the Indenture between Ohio Edison
Company and Bankers Trust Company, as Trustee,
dated as of the 1st day of August, 1930. (1986
Form 10-K, Exhibit 28-8.)
(D) 10-72 - Assignment, Assumption and Further Agreement dated
as of March 16, 1987 among The First National Bank
of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with Perry
One Alpha Limited Partnership, The Cleveland
Electric Illuminating Company, Duquesne Light
Company, Ohio Edison Company, Pennsylvania Power
Company and Toledo Edison Company. (1986 Form
10-K, Exhibit 28-9.)
(D) 10-73 - Additional Support Agreement dated as of March 16,
1987 between The First National Bank of Boston, as
Owner Trustee under a Trust Agreement, dated as of
March 16, 1987, with Perry One Alpha Limited
Partnership, and Ohio Edison Company. (1986 Form
10-K, Exhibit 28-10.)
(D) 10-74 - Bill of Sale, Instrument of Transfer and Severance
Agreement dated as of March 19, 1987 between Ohio
Edison Company, Seller, and The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with Perry
One Alpha Limited Partnership. (1986 Form 10-K,
Exhibit 28- 11.)
(D) 10-75 - Easement dated as of March 16, 1987 from Ohio
Edison Company, Grantor, to The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with Perry
One Alpha Limited Partnership, Grantee. (1986 Form
10-K, File Exhibit 28-12.)
10-76 - Participation Agreement dated as of March 16, 1987
among Security Pacific Capital Leasing
Corporation, as Owner Participant, the Original
Loan Participants listed in Schedule 1 Hereto, as
Original Loan Participants, PNPP Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Ohio
Edison Company, as Lessee. (1986 Form 10-K, as
Exhibit 28-13.)
- 29 -
Exhibit
Number
- -------
10-77 - Amendment No. 1 dated as of September 1, 1987 to
Participation Agreement dated as of March 16, 1987
among Security Pacific Capital Leasing
Corporation, as Owner Participant, The Original
Loan Participants Listed in Schedule 1 thereto, as
Original Loan Participants, PNPP Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Ohio
Edison Company, as Lessee. (1991 Form 10-K,
Exhibit 10-65.)
10-78 - Amendment No. 4 dated as of November 1, 1991, to
Participation Agreement dated as of March 16, 1987
among Security Pacific Capital Leasing
Corporation, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPP II
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee. (1991
Form 10-K, Exhibit 10-66.)
10-79 - Amendment No. 5 dated as of November 24, 1992 to
Participation Agreement dated as of March 16, 1987
as amended among Security Pacific Capital Leasing
Corporation, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPP II
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee. (1992
Form 10-K, Exhibit 10-71.)
(A) 10-80 - Amendment No. 6 dated as of January 12, 1993 to
Participation Agreement dated as of March 16, 1987
as amended among Security Pacific Capital Leasing
Corporation, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPP II
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee.
(A) 10-81 - Amendment No. 7 dated as of October 12, 1994 to
Participation Agreement dated as of March 16, 1987
as amended among Security Pacific Capital Leasing
Corporation, as Owner Participant, PNPP Funding
Corporation, as Funding Corporation, PNPP II
Funding Corporation, as New Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee.
10-82 - Facility Lease dated as of March 16, 1987 between
The First National Bank of Boston, as Owner
Trustee, with Security Pacific Capital Leasing
- 30 -
Exhibit
Number
- -------
Corporation, Lessor, and Ohio Edison Company, as
Lessee. (1986 Form 10-K, Exhibit 28-14.)
10-83 - Amendment No. 1 dated as of September 1, 1987 to
Facility Lease dated as of March 16, 1987 between
The First National Bank of Boston as Owner
Trustee, Lessor and Ohio Edison Company, Lessee.
(1991 Form 10-K, Exhibit 10-68.)
10-84 - Amendment No. 2 dated as of November 1, 1991 to
Facility Lease dated as of March 16, 1987 between
The First National Bank of Boston as Owner
Trustee, Lessor and Ohio Edison Company, Lessee.
(1991 Form 10-K, Exhibit 10-69.)
10-85 - Amendment No. 3 dated as of November 24, 1992 to
Facility Lease dated as of March 16, 1987, as
amended, between, The First National Bank of
Boston, as Owner Trustee, with Security Pacific
Capital Leasing Corporation, as Owner Participant
and Ohio Edison Company, as Lessee. (1992 Form
10-K, Exhibit 10-75.)
10-86 - Amendment No. 4 dated as of January 12, 1993 to
Facility Lease dated as of March 16, 1987 as
amended between, The First National Bank of
Boston, as Owner Trustee, with Security Pacific
Capital Leasing Corporation, as Owner Participant,
and Ohio Edison Company, as Lessee. (1992 Form
10-K, Exhibit 10-76.)
(A) 10-87 - Amendment No. 5 dated as of October 12, 1994 to
Facility Lease dated as of March 16, 1987 as
amended between, The First National Bank of
Boston, as Owner Trustee, with Security Pacific
Capital Leasing Corporation, as Owner Participant,
and Ohio Edison Company, as Lessee.
10-88 - Letter Agreement dated as of March 19, 1987
between Ohio Edison Company, as Lessee, and The
First National Bank of Boston, as Owner Trustee
under a Trust, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation,
required by Section 3(d) of the Facility Lease.
(1986 Form 10-K, Exhibit 28-15.)
10-89 - Ground Lease dated as of March 16, 1987 between
Ohio Edison Company, Ground Lessor, and The First
National Bank of Boston, as Owner Trustee under a
Trust Agreement, dated as of March 16, 1987, with
Perry One Alpha Limited Partnership, Tenant. (1986
Form 10-K, Exhibit 28-16.)
10-90 - Trust Agreement dated as of March 16, 1987 between
Security Pacific Capital Leasing Corporation, as
Owner Participant, and The First National Bank of
Boston. (1986 Form 10-K, Exhibit 28-17.)
- 31 -
Exhibit
Number
- -------
10-91 - Trust Indenture, Mortgage, Security Agreement and
Assignment of Facility Lease dated as of March 16,
1987 between The First National Bank of Boston, as
Owner Trustee under a Trust Agreement, dated as of
March 16, 1987, with Security Pacific Capital
Leasing Corporation, and Irving Trust Company, as
Indenture Trustee. (1986 Form 10-K, Exhibit 28-
18.)
10-92 - Supplemental Indenture No. 1 dated as of
September 1, 1987 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The First
National Bank of Boston, as Owner Trustee and
Irving Trust Company (now The Bank of New York),
as Indenture Trustee. (1991 Form 10-K, Exhibit 10-
74.)
10-93 - Supplemental Indenture No. 2 dated as of
November 1, 1991 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of March 16, 1987 between The First
National Bank of Boston, as Owner Trustee and The
Bank of New York, as Indenture Trustee. (1991 Form
10-K, Exhibit 10-75.)
10-94 - Tax Indemnification Agreement dated as of
March 16, 1987 between Security Pacific Capital
Leasing Corporation, as Owner Participant, and
Ohio Edison Company, as Lessee. (1986 Form 10-K,
Exhibit 28-19.)
10-95 - Amendment No. 1 dated as of November 1, 1991 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Security Pacific Capital
Leasing Corporation and Ohio Edison Company. (1991
Form 10-K, Exhibit 10-77.)
(A) 10-96 - Amendment No. 2 dated as of January 12, 1993 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Security Pacific Capital
Leasing Corporation and Ohio Edison Company.
(A) 10-97 - Amendment No. 3 dated as of October 12, 1994 to
Tax Indemnification Agreement dated as of
March 16, 1987 between Security Pacific Capital
Leasing Corporation and Ohio Edison Company.
10-98 - Assignment, Assumption and Further Agreement dated
as of March 16, 1987 among The First National Bank
of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation, The
Cleveland Electric Illuminating Company, Duquesne
Light Company, Ohio Edison Company, Pennsylvania
Power Company and Toledo Edison Company. (1986
Form 10-K, Exhibit 28-20.)
- 32 -
Exhibit
Number
- -------
10-99 - Additional Support Agreement dated as of March 16,
1987 between The First National Bank of Boston, as
Owner Trustee under a Trust Agreement, dated as of
March 16, 1987, with Security Pacific Capital
Leasing Corporation, and Ohio Edison Company.
(1986 Form 10-K, Exhibit 28-21.)
10-100 - Bill of Sale, Instrument of Transfer and Severance
Agreement dated as of March 19, 1987 between Ohio
Edison Company, Seller, and The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation,
Buyer. (1986 Form 10-K, Exhibit 28-22.)
10-101 - Easement dated as of March 16, 1987 from Ohio
Edison Company, Grantor, to The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of March 16, 1987, with
Security Pacific Capital Leasing Corporation,
Grantee. (1986 Form 10-K, Exhibit 28-23.)
10-102 - Refinancing Agreement dated as of November 1, 1991
among Perry One Alpha Limited Partnership, as
Owner Participant, PNPP Funding Corporation, as
Funding Corporation, PNPP II Funding Corporation,
as New Funding Corporation, The First National
Bank of Boston, as Owner Trustee, The Bank of New
York, as Indenture Trustee, The Bank of New York,
as Collateral Trust Trustee, The Bank of New York,
as New Collateral Trust Trustee and Ohio Edison
Company, as Lessee. (1991 Form 10-K, Exhibit 10-
82.)
10-103 - Refinancing Agreement dated as of November 1, 1991
among Security Pacific Leasing Corporation, as
Owner Participant, PNPP Funding Corporation, as
Funding Corporation, PNPP II Funding Corporation,
as New Funding Corporation, The First National
Bank of Boston, as Owner Trustee, The Bank of New
York, as Indenture Trustee, The Bank of New York,
as Collateral Trust Trustee, The Bank of New York,
as New Collateral Trust Trustee and Ohio Edison
Company, as Lessee. (1991 Form 10-K, Exhibit 10-
83.)
10-104 - Ohio Edison Company Master Decommissioning Trust
Agreement for Perry Nuclear Power Plant Unit One,
Perry Nuclear Power Plant Unit Two, Beaver Valley
Power Station Unit One and Beaver Valley Power
Station Unit Two dated July 1, 1993. (1993
Form 10-K, Exhibit 10-94.)
10-105 - Nuclear Fuel Lease dated as of March 31, 1989,
between OES Fuel, Incorporated, as Lessor, and
Ohio Edison Company, as Lessee. (1989 Form 10-K,
Exhibit 10-62.)
- 33 -
Exhibit
Number
- -------
(A) 10-106 - Receivables Purchase Agreement dated as
November 28, 1989, as amended and restated as of
April 23, 1993, between OES Capital, Incorporated,
Corporate Asset Funding Company, Inc. and Citicorp
North America, Inc.
10-107 - Guarantee Agreement entered into by Ohio Edison
Company dated as of January 17, 1991. (1990 Form
10-K, Exhibit 10-64).
10-108 - Transfer and Assignment Agreement among Ohio
Edison Company and Chemical Bank, as trustee under
the OE Power Contract Trust. (1990 Form 10-K,
Exhibit 10-65).
10-109 - Renunciation of Payments and Assignment among Ohio
Edison Company, Monongahela Power Company, West
Penn Power Company, and the Potomac Edison Company
dated as of January 4, 1991. (1990 Form 10-K,
Exhibit 10-66).
(A) 10-110 - Transfer and Assignment Agreement dated May 20,
1994 among Ohio Edison Company and Chemical Bank,
as trustee under the OE Power Contract Trust.
(A) 10-111 - Renunciation of Payments and Assignment among Ohio
Edison Company, Monongahela Power Company, West
Penn Power Company, and the Potomac Edison Company
dated as of May 20, 1994.
(A) 10-112 - Transfer and Assignment Agreement dated
October 12, 1994 among Ohio Edison Company and
Chemical Bank, as trustee under the OE Power
Contract Trust.
(A) 10-113 - Renunciation of Payments and Assignment among Ohio
Edison Company, Monongahela Power Company, West
Penn Power Company, and the Potomac Edison Company
dated as of October 12, 1994.
(E) 10-114 - Participation Agreement dated as of September 15,
1987, among Beaver Valley Two Pi Limited
Partnership, as Owner Participant, the Original
Loan Participants listed in Schedule 1 Thereto, as
Original Loan Participants, BVPS Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Ohio
Edison Company, as Lessee. (1987 Form 10-K,
Exhibit 28-1.)
(E) 10-115 - Amendment No. 1 dated as of February 1, 1988, to
Participation Agreement dated as of September 15,
1987, among Beaver Valley Two Pi Limited
Partnership, as Owner Participant, the Original
Loan Participants listed in Schedule 1 Thereto, as
Original Loan Participants, BVPS Funding
Corporation, as Funding Corporation, The First
- 34 -
Exhibit
Number
- -------
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Ohio
Edison Company, as Lessee. (1987 Form 10-K,
Exhibit 28-2.)
(E) 10-116 - Amendment No. 3 dated as of March 16, 1988 to
Participation Agreement dated as of September 15,
1987, as amended, among Beaver Valley Two Pi
Limited Partnership, as Owner Participant, BVPS
Funding Corporation, The First National Bank of
Boston, as Owner Trustee, Irving Trust Company, as
Indenture Trustee and Ohio Edison Company, as
Lessee. (1992 Form 10-K, Exhibit 10-99.)
(E) 10-117 - Amendment No. 4 dated as of November 5, 1992 to
Participation Agreement dated as of September 15,
1987, as amended, among Beaver Valley Two Pi
Limited Partnership, as Owner Participant, BVPS
Funding Corporation, BVPS II Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee. (1992
Form 10-K, Exhibit 10-100.)
(A)(E) 10-118 - Amendment No. 5 dated as of September 30, 1994 to
Participation Agreement dated as of September 15,
1987, as amended, among Beaver Valley Two Pi
Limited Partnership, as Owner Participant, BVPS
Funding Corporation, BVPS II Funding Corporation,
The First National Bank of Boston, as Owner
Trustee, The Bank of New York, as Indenture
Trustee and Ohio Edison Company, as Lessee.
(E) 10-119 - Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
Owner Trustee, with Beaver Valley Two Pi Limited
Partnership, Lessor, and Ohio Edison Company,
Lessee. (1987 Form 10-K, Exhibit 28-3.)
(E) 10-120 - Amendment No. 1 dated as of February 1, 1988, to
Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
Owner Trustee, with Beaver Valley Two Pi Limited
Partnership, Lessor, and Ohio Edison Company,
Lessee. (1987 Form 10-K, Exhibit 28-4.)
(E) 10-121 - Amendment No. 2 dated as of November 5, 1992 to
Facility Lease dated as of September 15, 1987, as
amended, between The First National Bank of
Boston, as Owner Trustee, with Beaver Valley Two
Pi Limited Partnership, as Owner Participant, and
Ohio Edison Company, as Lessee. (1992 Form 10-K,
Exhibit 10-103.)
(A)(E) 10-122 - Amendment No. 3 dated as of September 30, 1994 to
Facility Lease dated as of September 15, 1987, as
amended, between The First National Bank of
- 35 -
Exhibit
Number
- -------
Boston, as Owner Trustee, with Beaver Valley Two
Pi Limited Partnership, as Owner Participant, and
Ohio Edison Company, as Lessee.
(E) 10-123 - Ground Lease and Easement Agreement dated as of
September 15, 1987, between Ohio Edison Company,
Ground Lessor, and The First National Bank of
Boston, as Owner Trustee under a Trust Agreement,
dated as of September 15, 1987, with Beaver Valley
Two Pi Limited Partnership, Tenant. (1987 Form
10-K, Exhibit 28- 5.)
(E) 10-124 - Trust Agreement dated as of September 15, 1987,
between Beaver Valley Two Pi Limited Partnership,
as Owner Participant, and The First National Bank
of Boston. (1987 Form 10-K, Exhibit 28-6.)
(E) 10-125 - Trust Indenture, Mortgage, Security Agreement and
Assignment of Facility Lease dated as of
September 15, 1987, between The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement dated as of September 15, 1987, with
Beaver Valley Two Pi Limited Partnership, and
Irving Trust Company, as Indenture Trustee. (1987
Form 10-K, Exhibit 28-7.)
(E) 10-126 - Supplemental Indenture No. 1 dated as of
February 1, 1988 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of September 15, 1987 between The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement dated as of September 15,
1987 with Beaver Valley Two Pi Limited Partnership
and Irving Trust Company, as Indenture Trustee.
(1987 Form 10-K, Exhibit 28-8.)
(E) 10-127 - Tax Indemnification Agreement dated as of
September 15, 1987, between Beaver Valley Two Pi
Inc. and PARock Limited Partnership as General
Partners and Ohio Edison Company, as Lessee. (1987
Form 10-K, Exhibit 28-9.)
(A)(E) 10-128 - Amendment No. 1 dated as of November 5, 1992 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Beaver Valley Two Pi
Inc. and PARock Limited Partnership as General
Partners and Ohio Edison Company, as Lessee.
(A)(E) 10-129 - Amendment No. 2 dated as of September 30, 1994 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Beaver Valley Two Pi
Inc. and PARock Limited Partnership as General
Partners and Ohio Edison Company, as Lessee.
(E) 10-130 - Tax Indemnification Agreement dated as of
September 15, 1987, between HG Power Plant, Inc.,
as Limited Partner and Ohio Edison Company, as
Lessee. (1987 Form 10-K, Exhibit 28-10.)
- 36 -
Exhibit
Number
- -------
(A)(E) 10-131 - Amendment No. 1 dated as of November 5, 1992 to
Tax Indemnification Agreement dated as of
September 15, 1987, between HG Power Plant, Inc.,
as Limited Partner and Ohio Edison Company, as
Lessee.
(A)(E) 10-132 - Amendment No. 2 dated as of September 30, 1994 to
Tax Indemnification Agreement dated as of
September 15, 1987, between HG Power Plant, Inc.,
as Limited Partner and Ohio Edison Company, as
Lessee.
(E) 10-133 - Assignment, Assumption and Further Agreement dated
as of September 15, 1987, among The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Beaver Valley Two Pi Limited Partnership, The
Cleveland Electric Illuminating Company, Duquesne
Light Company, Ohio Edison Company, Pennsylvania
Power Company and Toledo Edison Company. (1987
Form 10-K, Exhibit 28-11.)
(E) 10-134 - Additional Support Agreement dated as of
September 15, 1987, between The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Beaver Valley Two Pi Limited Partnership, and Ohio
Edison Company. (1987 Form 10-K, Exhibit 28-12.)
(F) 10-135 - Participation Agreement dated as of September 15,
1987, among Chrysler Consortium Corporation, as
Owner Participant, the Original Loan Participants
listed in Schedule 1 Thereto, as Original Loan
Participants, BVPS Funding Corporation, as Funding
Corporation, The First National Bank of Boston, as
Owner Trustee, Irving Trust Company, as Indenture
Trustee and Ohio Edison Company, as Lessee. (1987
Form 10-K, Exhibit 28-13.)
(F) 10-136 - Amendment No. 1 dated as of February 1, 1988, to
Participation Agreement dated as of September 15,
1987, among Chrysler Consortium Corporation, as
Owner Participant, the Original Loan Participants
listed in Schedule I Thereto, as Original Loan
Participants, BVPS Funding Corporation, as Funding
Corporation, The First National Bank of Boston, as
Owner Trustee, Irving Trust Company, as Indenture
Trustee, and Ohio Edison Company, as Lessee. (1987
Form 10-K, Exhibit 28-14.)
(F) 10-137 - Amendment No. 3 dated as of March 16, 1988 to
Participation Agreement dated as of September 15,
1987, as amended, among Chrysler Consortium
Corporation, as Owner Participant, BVPS Funding
Corporation, The First National Bank of Boston, as
Owner Trustee, Irving Trust Company, as Indenture
Trustee, and Ohio Edison Company, as Lessee. (1992
Form 10-K, Exhibit 10-114.)
- 37 -
Exhibit
Number
- -------
(F) 10-138 - Amendment No. 4 dated as of November 5, 1992 to
Participation Agreement dated as of September 15,
1987, as amended, among Chrysler Consortium
Corporation, as Owner Participant, BVPS Funding
Corporation, BVPS II Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
The Bank of New York, as Indenture Trustee and
Ohio Edison Company, as Lessee. (1992 Form 10-K,
Exhibit 10-115.)
(A)(F) 10-139 - Amendment No. 5 dated as of January 12, 1993 to
Participation Agreement dated as of September 15,
1987, as amended, among Chrysler Consortium
Corporation, as Owner Participant, BVPS Funding
Corporation, BVPS II Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
The Bank of New York, as Indenture Trustee and
Ohio Edison Company, as Lessee.
(A)(F) 10-140 - Amendment No. 6 dated as of September 30, 1994 to
Participation Agreement dated as of September 15,
1987, as amended, among Chrysler Consortium
Corporation, as Owner Participant, BVPS Funding
Corporation, BVPS II Funding Corporation, The
First National Bank of Boston, as Owner Trustee,
The Bank of New York, as Indenture Trustee and
Ohio Edison Company, as Lessee.
(F) 10-141 - Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
Owner Trustee, with Chrysler Consortium
Corporation, Lessor, and Ohio Edison Company, as
Lessee. (1987 Form 10-K, Exhibit 28-15.)
(F) 10-142 - Amendment No. 1 dated as of February 1, 1988, to
Facility Lease dated as of September 15, 1987,
between The First National Bank of Boston, as
Owner Trustee, with Chrysler Consortium
Corporation, Lessor, and Ohio Edison Company,
Lessee. (1987 Form 10-K, Exhibit 28-16.)
(F) 10-143 - Amendment No. 2 dated as of November 5, 1992 to
Facility Lease dated as of September 15, 1987, as
amended, between The First National Bank of
Boston, as Owner Trustee, with Chrysler Consortium
Corporation, as Owner Participant and Ohio Edison
Company, as Lessee. (1992 Form 10-K, Exhibit 118.)
(F) 10-144 - Amendment No. 3 dated as of January 12, 1993 to
Facility Lease dated as of September 15, 1987, as
amended, between The First National Bank of
Boston, as Owner Trustee, with Chrysler Consortium
Corporation, as Owner Participant, and Ohio Edison
Company, as Lessee. (1992 Form 10-K, Exhibit 10-
119.)
(A)(F) 10-145 - Amendment No. 4 dated as of September 30, 1994 to
Facility Lease dated as of September 15, 1987, as
- 38 -
Exhibit
Number
- -------
amended, between The First National Bank of
Boston, as Owner Trustee, with Chrysler Consortium
Corporation, as Owner Participant, and Ohio Edison
Company, as Lessee.
(F) 10-146 - Ground Lease and Easement Agreement dated as of
September 15, 1987, between Ohio Edison Company,
Ground Lessor, and The First National Bank of
Boston, as Owner Trustee under a Trust Agreement,
dated as of September 15, 1987, with Chrysler
Consortium Corporation, Tenant. (1987 Form 10-K,
Exhibit 28-17.)
(F) 10-147 - Trust Agreement dated as of September 15, 1987,
between Chrysler Consortium Corporation, as Owner
Participant, and The First National Bank of
Boston. (1987 Form 10-K, Exhibit 28-18.)
(F) 10-148 - Trust Indenture, Mortgage, Security Agreement and
Assignment of Facility Lease dated as of
September 15, 1987, between the First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Chrysler Consortium Corporation and Irving Trust
Company, as Indenture Trustee. (1987 Form 10-K,
Exhibit 28-19.)
(F) 10-149 - Supplemental Indenture No. 1 dated as of
February 1, 1988 to Trust Indenture, Mortgage,
Security Agreement and Assignment of Facility
Lease dated as of September 15, 1987 between The
First National Bank of Boston, as Owner Trustee
under a Trust Agreement dated as of September 15,
1987 with Chrysler Consortium Corporation and
Irving Trust Company, as Indenture Trustee. (1987
Form 10-K, Exhibit 28-20.)
(F) 10-150 - Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
Corporation, as Owner Participant, and Ohio Edison
Company, as Lessee. (1987 Form 10-K, Exhibit 28-
21.)
(A)(F) 10-151 - Amendment No. 1 dated as of November 5, 1992 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
Corporation, as Owner Participant, and Ohio Edison
Company, as Lessee.
(A)(F) 10-152 - Amendment No. 2 dated as of January 12, 1993 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
Corporation, as Owner Participant, and Ohio Edison
Company, as Lessee.
(A)(F) 10-153 - Amendment No. 3 dated as of September 30, 1994 to
Tax Indemnification Agreement dated as of
September 15, 1987, between Chrysler Consortium
- 39 -
Exhibit
Number
- -------
Corporation, as Owner Participant, and Ohio Edison
Company, as Lessee.
(F) 10-154 - Assignment, Assumption and Further Agreement dated
as of September 15, 1987, among The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Chrysler Consortium Corporation, The Cleveland
Electric Illuminating Company, Duquesne Light
Company, Ohio Edison Company, Pennsylvania Power
Company, and Toledo Edison Company. (1987 Form
10-K, Exhibit 28-22.)
(F) 10-155 - Additional Support Agreement dated as of
September 15, 1987, between The First National
Bank of Boston, as Owner Trustee under a Trust
Agreement, dated as of September 15, 1987, with
Chrysler Consortium Corporation, and Ohio Edison
Company. (1987 Form 10-K, Exhibit 28-23.)
10-156 - Operating Agreement dated March 10, 1987 with
respect to Perry Unit No. 1 between the CAPCO
Companies. (1987 Form 10-K, Exhibit 28-24.)
10-157 - Operating Agreement for Bruce Mansfield Units Nos.
1, 2 and 3 dated as of June 1, 1976, and executed
on September 15, 1987, by and between the CAPCO
Companies. (1987 Form 10-K, Exhibit 28-25.)
10-158 - Operating Agreement for W. H. Sammis Unit No. 7
dated as of September 1, 1971 by and between the
CAPCO Companies. (1987 Form 10-K, Exhibit 28-26.)
10-159 - OE-APS Power Interchange Agreement dated March 18,
1987, by and among Ohio Edison Company and
Pennsylvania Power Company, and Monongahela Power
Company and West Penn Power Company and The
Potomac Edison Company. (1987 Form 10-K, Exhibit
28-27.)
10-160 - OE-PEPCO Power Supply Agreement dated March 18,
1987, by and among Ohio Edison Company and
Pennsylvania Power Company and Potomac Electric
Power Company. (1987 Form 10-K, Exhibit 28-28.)
10-161 - Supplement No. 1 dated as of April 28, 1987, to
the OE-PEPCO Power Supply Agreement dated
March 18, 1987, by and among Ohio Edison Company,
Pennsylvania Power Company, and Potomac Electric
Power Company. (1987 Form 10-K, Exhibit 28-29.)
10-162 - APS-PEPCO Power Resale Agreement dated March 18,
1987, by and among Monongahela Power Company, West
Penn Power Company, and The Potomac Edison Company
and Potomac Electric Power Company. (1987 Form
10-K, Exhibit 28-30.)
- 40 -
Exhibit
Number
- -------
11 - Calculation of fully diluted earnings per common
share.
12 - Consolidated fixed charge ratios.
(A) 13 - 1994 Annual Report to Stockholders. (Only those
portions expressly incorporated by reference in
this Form 10-K are to be deemed "filed" with the
SEC.)
21 - List of Subsidiaries of the Registrant at
December 31, 1994.
23 - Consent of Independent Public Accountants.
27 - Financial Data Schedule.
(A) Provided herein in electronic format as an exhibit.
(B) Pursuant to paragraph (b)(4)(iii)(A) of Item 601 of
Regulation S-K, the Company has not filed as an exhibit to
this Form 10-K any instrument with respect to long-term debt
if the total amount of securities authorized thereunder does
not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis, but hereby agrees to
furnish to the SEC on request any such instruments.
(C) Management contract or compensatory plan contract or
arrangement filed pursuant to Item 601 of Regulation S-K.
(D) Substantially similar documents have been entered into
relating to three additional Owner Participants.
(E) Substantially similar documents have been entered into
relating to five additional Owner Participants.
(F) Substantially similar documents have been entered into
relating to two additional Owner Participants.
Note: Reports of the Company on Forms 10-Q and 10-K are on
file with the SEC under number 1-2578.
Pursuant to Rule 14a - 3 (10) of the Securities Exchange Act
of 1934, the Company will furnish any exhibit in this Report
upon the payment of the Company's expenses in furnishing
such exhibit.
(b) Reports on Form 8-K
None.
- 41 -
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of Ohio Edison Company:
We have audited, in accordance with generally accepted
auditing standards, the consolidated financial statements included
in Ohio Edison Company's Annual Report to Stockholders incorporated
by reference in this Form 10-K and have issued our report thereon
dated February 3, 1995. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The
schedule listed in Item 14 is the responsibility of the Company's
management and is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the
basic consolidated financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the
basic consolidated financial statements and, in our opinion, fairly
states in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
February 3, 1995
- 42 -
<TABLE> SCHEDULE II
OHIO EDISON COMPANY
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
Additions
Charged Charged
(Credited) (Credited)
Beginning to to Other Ending
Description Balance Income Accounts Deductions Balance
- --------------------------- --------- ---------- ---------- ---------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994:
Accumulated provision for
uncollectible accounts $6,907 $ (32) $1,998 (a) $ 6,356 (b) $2,517
====== ======== ====== ========= ======
Year Ended December 31, 1993:
Accumulated provision for
uncollectible accounts $6,432 $ 8,002 $1,751 (a) $ 9,278 (b) $6,907
====== ======== ====== ======== ======
Year Ended December 31, 1992:
Accumulated provision for
uncollectible accounts $5,312 $ 20,034 $1,875 (a) $ 20,789 (b) $6,432
====== ======== ====== ======== ======
<FN>
- -----------------
(a) Represents recoveries and reinstatements of accounts previously written off.
(b) Represents the write-off of accounts considered to be uncollectible.
</TABLE>
- 43 -
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.
OHIO EDISON COMPANY
BY /s/W. R. Holland
----------------------------------------
W. R. Holland
President and Chief Executive Officer
Date: March 21, 1995
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 date
indicated:
/s/W. R. Holland /s/H. P. Burg
- --------------------------------- --------------------------
W. R. Holland H. P. Burg
President and Chief Senior Vice President
Executive Officer and Director and Director
(Principal Executive Officer) (Principal Financial
Officer and Principal
Accounting Officer)
/s/Donald C.Blasius /s/Glenn H. Meadows
- --------------------------------- --------------------------
Donald C. Blasius Glenn H. Meadows
Director Director
/s/Robert H.Carlson /s/Paul J. Powers
- --------------------------------- --------------------------
Robert H. Carlson Paul J. Powers
Director Director
/s/Robert M. Carter /s/Charles W. Rainger
- --------------------------------- --------------------------
Robert M. Carter Charles W. Rainger
Director Director
/s/Carol A.Cartwright /s/George M. Smart
- -------------------------------- --------------------------
Carol A. Cartwright George M. Smart
Director Director
/s/R. L.Loughhead /s/Jesse T. Williams, Sr.
- -------------------------------- --------------------------
R. L. Loughhead Jesse T. Williams, Sr.
Director Director
Date: March 21, 1995
- 44 -
EXHIBIT 11
OHIO EDISON COMPANY
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE
Year Ended December 31,
-----------------------------
1992 1993 1994
-------- -------- --------
(In thousands, except
per share amounts)
EARNINGS
- --------
Income before cumulative effect ..... $276,986 $ 24,523 $303,531
Add: Tax benefit from employee stock
ownership plan dividends ...... 5,592 - -
Less: Preferred and preference stock
dividend requirements ......... 23,926 23,707 21,679
-------- -------- --------
Earnings before cumulative effect ... 258,652 816 281,852
Cumulative effect of a change
in accounting ..................... - 58,201 -
-------- -------- --------
Earnings after cumulative effect .... $258,652 $ 59,017 $281,852
======== ======== ========
SHARES
- ------
Weighted average number of
common shares outstanding ......... 152,569 152,569 143,237
======== ======== ========
Earnings per share of Common Stock:
Before cumulative effect of a change
in accounting ..................... $1.70 $ .01 $1.97
Cumulative effect of a change
in accounting ..................... - .38 -
----- ----- -----
Earnings per share of Common Stock .. $1.70 $ .39 $1.97
===== ===== =====
NOTE: These calculations are submitted in accordance with Securities
Exchange Act of 1934 Release No. 9083 although not required by
footnote 2 to paragraph 14 of APB Opinion No. 15 because they
result in dilution of less than 3%.
Statement of Differences
------------------------
Exhibit Number 11, Calculation of fully diluted earnings per
common share, is not included in the printed document.
<TABLE>
EXHIBIT 12
Page 1
OHIO EDISON COMPANY
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED IN REGULATION S-K:
Income before extraordinary items $281,676 $264,823 $276,986 $ 24,523 $303,531
Interest and other charges, before reduction
for amounts capitalized 329,520 324,017 296,292 285,169 283,849
Provision for income taxes 170,804 173,725 147,407 32,431 188,886
Interest element of rentals charged to income (a) 126,804 125,777 117,224 104,700 108,463
-------- -------- -------- -------- --------
Earnings as defined $908,804 $888,342 $837,909 $446,823 $884,729
======== ======== ======== ======== ========
FIXED CHARGES AS DEFINED IN REGULATION S-K:
Interest on long-term debt $293,993 $288,599 $275,835 $262,861 $259,554
Other interest expense 25,545 27,696 13,958 16,445 18,931
Subsidiary's preferred stock dividend requirements 9,982 7,722 6,499 5,863 5,364
Adjustment to subsidiary's preferred stock
dividends to state on a pre-income tax basis 6,009 5,018 3,420 7,659 3,294
Interest element of rentals charged to income (a) 126,804 125,777 117,224 104,700 108,463
-------- -------- -------- -------- --------
Fixed charges as defined $462,333 $454,812 $416,936 $397,528 $395,606
======== ======== ======== ======== ========
CONSOLIDATED RATIO OF EARNINGS TO FIXED
CHARGES (b) 1.97 1.95 2.01 1.12 2.24
==== ==== ==== ==== ====
<FN>
- ---------------------
(a) Includes the interest element of rentals where determinable
plus 1/3 of rental expense where no readily defined interest
element can be determined.
(b) These ratios exclude fixed charges applicable to the guarantee
of the debt of a coal supplier aggregating $16,922,000, $13,298,000,
$9,762,000, $8,565,000 and $7,424,000 for each of the five years
ended December 31, 1994, respectively.
</TABLE>
- 1 -
<TABLE>
EXHIBIT 12
Page 2
OHIO EDISON COMPANY
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES PLUS PREFERRED AND
PREFERENCE STOCK DIVIDEND REQUIREMENTS (PRE-INCOME TAX BASIS)
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED IN REGULATION S-K:
Income before extraordinary items $281,676 $264,823 $276,986 $ 24,523 $303,531
Add-
Interest and other charges, before reduction
for amounts capitalized 329,520 324,017 296,292 285,169 283,849
Provision for income taxes 170,804 173,725 147,407 32,431 188,886
Interest element of rentals charged to income (a) 126,804 125,777 117,224 104,700 108,463
-------- -------- -------- -------- --------
Earnings as defined $908,804 $888,342 $837,909 $446,823 $884,729
======== ======== ======== ======== ========
FIXED CHARGES AS DEFINED IN REGULATION S-K PLUS
PREFERRED AND PREFERENCE STOCK DIVIDEND
REQUIREMENTS (PRE-INCOME TAX BASIS):
Interest on long-term debt $293,993 $288,599 $275,835 $262,861 $259,554
Other interest expense 25,545 27,696 13,958 16,445 18,931
Preferred and preference stock dividend
requirements 37,610 32,476 30,425 29,570 27,043
Adjustment to preferred and preference stock
dividends to state on a pre-income tax basis 22,421 20,887 15,854 38,265 16,444
Interest element of rentals charged to income (a) 126,804 125,777 117,224 104,700 108,463
-------- -------- -------- -------- --------
Fixed charges as defined plus preferred and
preference stock dividend requirements
(pre-income tax basis) $506,373 $495,435 $453,296 $451,841 $430,435
======== ======== ======== ======== ========
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED AND PREFERENCE STOCK DIVIDEND
REQUIREMENTS (PRE-INCOME TAX BASIS) (b) 1.79 1.79 1.85 0.99 (c) 2.06
==== ==== ==== ==== ====
- ----------------------
<FN>
(a) Includes the interest element of rentals where determinable
plus 1/3 of rental expense where no readily defined interest
element can be determined.
(b) These ratios exclude fixed charges applicable to the guarantee
of the debt of a coal supplier aggregating $16,922,000, $13,298,000,
$9,762,000, $8,565,000 and $7,424,000 for each of the five years
ended December 31, 1994, respectively.
(c) Earnings were deficient in 1993 by $5,018,000 to cover fixed charges
plus preferred stock dividend requirements.
</TABLE>
- 2 -
Report of Independent Public Accountants
To the Stockholders and Board of Directors of Ohio Edison Company:
We have audited the accompanying consolidated balance sheets
and consolidated statements of capitalization of Ohio Edison
Company (an Ohio corporation) and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of income,
retained earnings, capital stock and other paid-in capital, cash
flows and taxes for each of the three years in the period ended
December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Ohio Edison Company and subsidiaries as of December 31, 1994 and
1993, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
As discussed in Notes 1 and 2 to the consolidated financial
statements, effective January 1, 1993, the Company changed its
method of accounting for unbilled revenues, income taxes and
postretirement benefits other than pensions.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
February 3, 1995
- 1 -
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
We accomplished a great deal in 1994 as we continued preparing
for the significant changes expected to take place in the electric
utility industry.
For the second straight year, the Companies achieved record
retail sales. This accomplishment, in combination with our
aggressive cost control efforts, raised earnings on common stock to
$1.97 per share in 1994 compared to $1.82 a year earlier. The 1993
amount, up from $1.70 per share in 1992, excludes nonrecurring
charges of $1.43 per share, which included a $276,578,000 after-tax
write-off of Perry Unit 2, the expected resolution of fuel cost
recovery issues in Pennsylvania and certain costs associated with
our Performance Initiatives program. The effect of the write-off
was partially offset by a $58,201,000 credit from the cumulative
effect of a change in accounting to accrue metered but unbilled
revenue (see Note 2).
Our ongoing commitment to cost control is producing good
results. Although total revenues dropped slightly in 1994, lower
operation and maintenance expenses pushed operating income to its
highest level in our history. A review of the work we do was an
integral part of the Performance Initiatives program that began in
1993. As a result of this review, efficiencies were identified and
the workforce has been reduced by 812 employees since the beginning
of 1994 through voluntary retirements, layoffs and normal
attrition. This 14% reduction is expected to produce annual savings
of at least $40,000,000.
Operating revenues decreased 0.1% from 1993 levels, which were
1.6% higher than 1992. The following table summarizes the sources
of changes in operating revenues for 1994 and 1993 as compared to
the previous year:
1994 1993
------ ------
(In millions)
Change in retail kilowatt-hour sales $ 2.4 $ 95.9
Change in average retail electric price ( 3.1) (37.8)
Sales to utilities 2.2 (17.0)
Other (3.2) (3.5)
------ ------
Net Increase (Decrease) $ (1.7) $ 37.6
====== ======
An improving local economy helped us achieve record retail
sales of 25.1 billion kilowatt-hours in 1994, which occurred
despite milder weather conditions during the second half of the
year as compared to 1993. More importantly, we added more than
13,100 new retail customers in 1994 after gaining approximately
14,500 customers the previous year. Commercial sales rose 1.4% in
1994, which follows a 4.7% gain in the previous year. Residential
sales fell slightly in 1994 after posting a healthy 7.2% increase
in 1993. Industrial sales were also down slightly in 1994 because
of reduced production (until mid-1995) by a major steel customer
- 2 -
that is modernizing its facilities. Sales to all other industrial
customers were up 3.5% for the year, following a 1.3% increase in
1993. Reduced demand for bulk power and capacity constraints
reduced our opportunity sales to other utilities in 1994 and 1993,
falling 18.2% and 11.7%, respectively. As a result of these
factors, total kilowatt-hour sales were down 3.9% compared with
sales in 1993, which were up slightly over 1992.
Because of lower total kilowatt-hour sales, we spent 3.4% less
on fuel and purchased power in 1994. However, we experienced higher
nuclear expenses in 1994 and 1993 mainly due to corrective
maintenance work at the Perry Plant. Due to mechanical failures and
an extended refueling outage in 1994, Perry's availability was
below expected levels during both years. The plant's operator has
developed a comprehensive plan that is expected to improve Perry's
performance. A major portion of the corrective action plan was
completed during the 1994 outage, and the remainder will be
implemented during Perry's next refueling, which is scheduled for
early 1996. The plant returned to service on August 14, 1994, and
ran continuously for the remainder of the year.
Our other operating costs were down markedly in 1994 compared
with the two previous years. Costs in 1993 included a one-time
$39,000,000 charge related to the Performance Initiatives program.
Both 1994 and 1993 include higher expenses associated with the
January 1, 1993, adoption of Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." These comparative increases were
partially offset in 1993 by the previous year's additional
provision for uncollectible accounts. Our cost-containment efforts
resulting from the initiatives also contributed to lower operation
and maintenance expenses in 1994.
Lower general taxes in 1994 resulted primarily from property
taxes recognized in 1993 related to prior years. Penn Power
provided an $8,728,000 reserve for deferred postretirement benefit
costs (see Note 1) in 1994, which was responsible for the majority
of the change in net amortization of regulatory assets compared to
1993. The change between 1993 and 1992 was due to the deferral of
incremental costs resulting from the adoption of SFAS No. 106 and
the amortization of regulatory liabilities.
Other income was lower in 1994 than in 1993 because of a change
in accounting for interest income from the Employee Stock Ownership
Plan Trust (see Note 1). The effect of this accounting change on
other income was partially offset by increased income from other
investments. These include deposits by OES Finance as collateral
for reimbursement obligations relating to certain letters of credit
supporting our obligations to lessors under the Beaver Valley 2
sale and leaseback arrangements (see Note 4). The decrease in 1993
resulted from 1992's amortization of investment tax credits
associated with disallowed Perry Unit 1 and Beaver Valley Unit 2
construction costs (see Note 1).
The electric utility industry is subject to the same
inflationary pressures as those experienced by other industries. To
the extent that we incur additional costs or receive benefits
resulting from the effects of inflation, those effects are
generally reflected in our electric rates through the traditional
rate making process.
- 3 -
CAPITAL RESOURCES AND LIQUIDITY
Over the past decade, we have improved our financial position
significantly. Because of higher revenues and aggressive cost
controls, cash generated from operations was 42% higher in 1994
than it was ten years ago. By the end of 1994, we were serving
about 104,000 more customers than at the end of 1984, with
approximately 2,400 fewer employees. In 1984, our customer-employee
ratio was 129 to 1. That ratio has improved significantly over the
years, standing at 210 customers per employee at the end of 1994.
In addition, capital expenditures have dropped significantly during
that period. Expenditures in 1994 were less than one-third of what
they were in 1984, and annual depreciation charges have exceeded
property additions since the end of 1987.
We have also taken advantage of opportunities in the financial
markets to reduce our embedded capital costs during the past
decade. Through refinancing activities, we have reduced the average
cost of outstanding debt from 11.04% at the end of 1984 to 8.17% at
the end of 1994. Also, the cost of outstanding preferred and
preference stock was reduced from 9.87% at the end of 1984 to 7.15%
at the end of 1994. As a result of these actions, we have improved
our financial position. For example, we have enhanced our coverage
ratios and the percentage of common equity to total capitalization.
Our indenture ratio, which is used to determine the ability to
issue first mortgage bonds, improved from 3.18 at the end of 1984
to 5.34 at the end of 1994. Over the same period, our charter
ratio, a measure of the ability to issue preferred stock, improved
from 1.72 to 2.11, and, our common equity percentage of
capitalization rose from approximately 33% at the end of 1984 to
about 40% at the end of 1994.
At the end of 1994, we had the capability to issue
$1,461,000,000 principal amount of first mortgage bonds and
$1,089,000,000 of preferred stock. However, our projections for
1995 indicate no need to issue new long-term securities during the
year.
We had about $23,000,000 of cash and temporary investments and
$175,000,000 of short-term indebtedness on December 31, 1994. OES
Fuel had approximately $30,000,000 of unused borrowing capability
at the end of 1994 that was available for reloan to the Company. We
also had $55,000,000 of unused short-term bank lines of credit, and
$72,000,000 of bank facilities that provide for borrowings on a
short-term basis at the banks' discretion. OES Capital had
approximately $15,000,000 of unused, short-term borrowing
capability on December 31, 1994.
During the past five years, we spent approximately
$1,100,000,000 on our construction programs (excluding nuclear
fuel). During that period, the Employee Stock Ownership Plan Trust
was also funded with $200,000,000. We estimate our construction
programs and capital lease requirements for the period 1995-1999 to
be about $800,000,000 (excluding nuclear fuel), of which
approximately $180,000,000 applies to 1995. We also have cash
requirements of approximately $1,301,000,000 for the 1995-1999
period to meet maturities of, and sinking fund requirements for,
long-term debt and preferred stock. Of that amount, approximately
$227,000,000 applies to 1995.
- 4 -
Investments for additional nuclear fuel during the 1995-1999
period are estimated to be approximately $172,000,000, of which
about $30,000,000 applies to 1995. During the same periods, our
nuclear fuel investments are expected to be reduced by
approximately $225,000,000 and $56,000,000, respectively, as the
nuclear fuel is consumed. Also, we have operating lease commitments
of approximately $575,000,000 for the 1995-1999 period, of which
approximately $106,000,000 relates to 1995. We recover the cost of
nuclear fuel consumed and operating leases through our electric
rates.
Reference is made to Note 1 for a discussion of regulatory
assets. Although the recoverable amounts are significant, about 83%
of these deferred costs are already reflected in our rates, and are
being recovered over approximately 22 years. Recovery of the
remaining amounts will be requested in a future rate proceeding.
The Central Area Power Coordination Group (CAPCO) companies
filed suit against Westinghouse Electric Corporation in 1991,
alleging that six steam generators supplied by Westinghouse for the
Beaver Valley Plant are defective and that replacement could be
required earlier than the 40-year design life. A federal court
rejected the claims of the CAPCO companies in December 1994, after
a three-month trial. The CAPCO companies have appealed the
verdict. The plant's operator has no current plans to replace the
steam generators and is evaluating the feasibility of applying new
technologies to repair the generators. If the generators need to be
replaced and the companies decide to do so, the capital costs to
the CAPCO companies could range from $100,000,000 to $150,000,000
per unit. That estimate is based upon costs other utilities have
experienced. We have a 52.5% interest in Beaver Valley Unit 1 and
a 41.88% interest in Unit 2.
OUTLOOK
We will be facing many competitive challenges in the years
ahead as the electric utility industry becomes more deregulated and
more energy suppliers enter the marketplace. Retail wheeling, which
would allow retail customers to purchase electricity from other
energy producers, would be one of those challenges if legislators
choose to move in that direction. In any event, changing market
forces make it imperative that we continue to find ways to reduce
costs, increase revenues and enhance shareholder value. The
Company's Rate Stabilization and Service Area Development Program
will help respond to these market forces by freezing base electric
rates at 1990 levels until at least 1997, absent any significant
changes in regulatory, environmental or tax requirements. In
addition, we have a corporate goal of extending the rate freeze
until the year 2000.
Effective operation of the nuclear facilities we jointly own
will also help meet these competitive challenges. Proper planning
to eventually decommission those facilities is also important to
our competitive position. Beginning in 1995, we plan to increase
our annual funding of the decommissioning obligation. Also, the
staff of the Securities and Exchange Commission (SEC) has raised
questions regarding the recognition, measurement and classification
of decommissioning costs in the financial statements of electric
utilities. Any future SEC actions are uncertain at this time (see
Note 1).
- 5 -
The Clean Air Act Amendments of 1990, discussed in Note 7,
require significant reductions of sulfur dioxide and nitrogen
oxides from our coal-fired generating units by 1995 and additional
emission reductions by 2000. We are well-positioned to meet the
1995 requirements at minimal costs, and we are pursuing cost-
effective compliance strategies for meeting the reduction
requirements that begin in 2000.
Through the Performance Initiatives program, we have identified
substantial savings that will better position us to successfully
compete in the future. In addition, the program ensures that an
economic value added-based justification will be required for
capital expenditures. We are also conducting studies to identify
other opportunities to increase revenues and operating efficiency.
The focus of the entire organization is to improve our competitive
position in order to maximize the value of our shareholders'
investment in the Company.
- 6 -<PAGE>
<TABLE>
OHIO EDISON COMPANY
SELECTED FINANCIAL DATA
<CAPTION>
1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Operating Revenues $2,368,191 $2,369,940 $2,332,378 $2,358,946 $2,240,646
------------------------------------------------------------------
Operating Income $557,254 $525,330 $522,115 $550,452 $510,279
------------------------------------------------------------------
Net Income $303,531 $ 82,724 $276,986 $264,823 $281,676
------------------------------------------------------------------
Earnings on Common Stock $281,852 $ 59,017 $253,060 $240,069 $254,048
------------------------------------------------------------------
Earnings per Share of Common Stock $1.97 $0.39 $1.70 $1.60 $1.67
Dividends Declared per Share of Common Stock $1.50 $1.50 $1.50 $1.50 $1.73
------------------------------------------------------------------
Total Assets $8,993,964 $8,918,267 $7,830,026 $7,812,345 $7,841,621
------------------------------------------------------------------
Capitalization at December 31:
Common Stockholders' Equity $2,317,197 $2,243,292 $2,408,164 $2,371,946 $2,545,159
Preferred and Preference Stock:
Not Subject to Mandatory Redemption 328,240 328,240 354,240 354,240 354,240
Subject to Mandatory Redemption 40,000 45,500 59,862 65,582 62,822
Long-Term Debt 3,166,593 3,039,263 3,121,647 3,243,167 3,105,248
------------------------------------------------------------------
Total Capitalization $5,852,030 $5,656,295 $5,943,913 $6,034,935 $6,067,469
------------------------------------------------------------------
COMMON STOCK DATA
The Company's Common Stock is listed on the New York and Chicago stock
exchanges and is traded on other registered exchanges.
PRICE RANGE OF COMMON STOCK 1994 1993
- ---------------------------- ---- ----
<S> <C> <C> <C> <C>
First Quarter High-Low 22-3/4 18-7/8 25-3/8 22-1/8
-------------------------------------
Second Quarter High-Low 19-1/4 16-1/2 26 22-3/4
-------------------------------------
Third Quarter High-Low 19-5/8 17-1/2 25-7/8 24-3/8
-------------------------------------
Fourth Quarter High-Low 19-1/4 17-7/8 25-1/4 21
-------------------------------------
Yearly High-Low 22-3/4 16-1/2 26 21
-------------------------------------
Prices are based on reports published in The Wall Street Journal for
-----------------------
New York Stock Exchange Composite Transactions.
- 7 -
CLASSIFICATION OF HOLDERS OF COMMON STOCK AS OF DECEMBER 31, 1994
Holders of Record Shares Held
Number % Number %
------- ------- -------- -------
<S> <C> <C> <C> <C>
Individuals 121,289 82.87 53,849,390 35.30
Fiduciaries 23,167 15.83 9,510,404 6.23
Nominees 68 .05 87,448,432 57.32
All Others 1,834 1.25 1,761,211 1.15
----------------------------------------
Total 146,358 100.00 152,569,437 100.00
----------------------------------------
<FN>
As of January 31, 1995, there were 145,578 holders of 152,569,437 shares
of the Company's Common Stock. Quarterly dividends of 37.5 cents per share
were paid on the Company's Common Stock during 1994 and 1993. Information
regarding retained earnings available for payment of cash dividends is given
in Note 5A.
</TABLE>
- 8 -<PAGE>
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
- --------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES $2,368,191 $2,369,940 $2,332,378
---------- ---------- ----------
OPERATING EXPENSES AND TAXES:
Fuel and purchased power 440,936 456,494 463,599
Nuclear operating costs 304,716 290,321 274,719
Other operating costs 427,133 474,241 440,425
---------- ---------- ----------
Total operation and maintenance expenses 1,172,785 1,221,056 1,178,743
Provision for depreciation 220,502 217,980 223,497
General taxes 237,020 245,554 229,332
Amortization (deferral) of net regulatory assets (884) (6,753) 18,333
Income taxes 181,514 166,773 160,358
---------- ---------- ----------
Total operating expenses and taxes 1,810,937 1,844,610 1,810,263
---------- ---------- ----------
OPERATING INCOME 557,254 525,330 522,115
---------- ---------- ----------
OTHER INCOME AND EXPENSE:
Perry Unit 2 termination (Note 3) - (390,835) -
Income tax benefit from Perry Unit 2 termination - 142,092 -
Other 16,459 19,921 36,283
---------- ---------- ----------
Total other income (expense) 16,459 (228,822) 36,283
---------- ---------- ----------
TOTAL INCOME 573,713 296,508 558,398
---------- ---------- ----------
NET INTEREST AND OTHER CHARGES:
Interest on long-term debt 259,554 262,861 275,835
Deferred nuclear unit interest (8,511) (8,518) (8,392)
Allowance for borrowed funds used during
construction and capitalized interest (5,156) (4,666) (6,488)
Other interest expense 18,931 16,445 13,958
Subsidiary's preferred stock dividend requirements 5,364 5,863 6,499
---------- ---------- ----------
Net interest and other charges 270,182 271,985 281,412
---------- ---------- ----------
INCOME BEFORE CUMULATIVE EFFECT OF A
CHANGE IN ACCOUNTING 303,531 24,523 276,986
Cumulative effect to January 1, 1993 of a change
in accounting for unbilled revenues (net of
income taxes of $33,632,000) (Note 2) - 58,201 -
---------- ---------- ----------
NET INCOME 303,531 82,724 276,986
- 9 -
PREFERRED AND PREFERENCE STOCK DIVIDEND
REQUIREMENTS 21,679 23,707 23,926
---------- ---------- ----------
EARNINGS ON COMMON STOCK $ 281,852 $ 59,017 $ 253,060
========== ========== ==========
EARNINGS PER SHARE OF COMMON STOCK:
Before cumulative effect of a change in accounting $1.97 $ .01 $1.70
Cumulative effect to January 1, 1993 of a change
in accounting for unbilled revenues (Note 2) - .38 -
----- ----- -----
EARNINGS PER SHARE OF COMMON STOCK $1.97 $ .39 $1.70
===== ===== =====
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $1.50 $1.50 $1.50
===== ===== =====
<FN>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
- 10 -<PAGE>
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
At December 31, 1994 1993
- -----------------------------------------------------------------------------------------------
(In thousands)
ASSETS
<S> <C> <C>
UTILITY PLANT:
In service, at original cost $8,518,050 $8,380,430
Less--Accumulated provision for depreciation 2,910,587 2,732,527
---------- ----------
5,607,463 5,647,903
---------- ----------
Construction work in progress--
Electric plant 174,970 182,894
Nuclear fuel 52,470 46,879
---------- ----------
227,440 229,773
---------- ----------
5,834,903 5,877,676
---------- ----------
OTHER PROPERTY AND INVESTMENTS:
Letter of credit collateralization (Note 4) 277,763 -
Other 197,546 181,815
---------- ----------
475,309 181,815
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents 23,291 159,690
Receivables--
Customers (less accumulated provisions of
$2,517,000 and $6,907,000, respectively,
for uncollectible accounts) 254,515 298,913
Other 54,713 42,428
Materials and supplies, at average cost--
Fuel 40,528 41,513
Other 81,809 87,689
Prepayments 71,836 72,889
---------- ----------
526,692 703,122
---------- ----------
DEFERRED CHARGES:
Regulatory assets 2,005,333 1,993,795
Unamortized sale and leaseback costs 106,883 110,656
Other 44,844 51,203
---------- ----------
2,157,060 2,155,654
---------- ----------
$8,993,964 $8,918,267
========== ==========
- 11 -
CAPITALIZATION AND LIABILITIES
CAPITALIZATION (See Consolidated Statements of Capitalization):
Common stockholders' equity $2,317,197 $2,243,292
Preferred stock--
Not subject to mandatory redemption 277,335 277,335
Subject to mandatory redemption 25,000 25,000
Preferred stock of consolidated subsidiary--
Not subject to mandatory redemption 50,905 50,905
Subject to mandatory redemption 15,000 20,500
Long-term debt 3,166,593 3,039,263
---------- ----------
5,852,030 5,656,295
---------- ----------
CURRENT LIABILITIES:
Currently payable preferred stock and long-term debt 227,496 444,170
Short-term borrowings (Note 6) 174,642 104,126
Accounts payable 100,884 127,895
Accrued taxes 140,629 107,687
Accrued interest 65,743 72,667
Other 152,856 141,251
---------- ----------
862,250 997,796
---------- ----------
DEFERRED CREDITS:
Accumulated deferred income taxes 1,799,324 1,798,551
Accumulated deferred investment tax credits 223,827 231,863
Property taxes 106,458 101,182
Other 150,075 132,580
---------- ----------
2,279,684 2,264,176
---------- ----------
COMMITMENTS, GUARANTEES AND CONTINGENCIES
(Notes 4 and 7) ---------- ----------
$8,993,964 $8,918,267
========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part of these
balance sheets.
</TABLE>
- 12 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
- -------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Balance at beginning of year $322,821 $490,564 $462,087
Net income 303,531 82,724 276,986
Tax benefit from ESOP dividends - 5,256 5,592
-------- -------- --------
626,352 578,544 744,665
- -------------------------------------------------------------------------------------
Cash dividends on preferred and
preference stock 21,926 23,275 23,874
Cash dividends on common stock 214,826 228,855 228,855
Premium on redemption of preferred stock - 3,593 1,372
-------- -------- --------
236,752 255,723 254,101
-------- -------- --------
Balance at end of year (Note 5A) $389,600 $322,821 $490,564
- -------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND OTHER PAID-IN CAPITAL
Preferred and Preference Stock
------------------------------------------
Not Subject to Subject to
Common Stock Mandatory Redemption Mandatory Redemption
------------------------ Unallocated ------------------------------------------
Other ESOP Par or Par or
Number Par Paid-In Common Number Stated Number Stated
of Shares Value Capital Stock of Shares Value of Shares Value
----------- ---------- -------- ---------- --------- ------ --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1992 152,569,437 $1,373,125 $731,793 $(195,059) 3,542,399 $354,240 636,216 $70,102
Allocation of ESOP Shares 7,741
Sale of 7.625% Preferred Stock 150,000 15,000
Redemptions--
$102.50 Series (1,800) (1,800)
8.24% Series (5,000) (500)
11.00% Series (8,000) (800)
15.00% Series (54,400) (5,440)
10.50% Series (100,000) (10,000)
11.50% Series (15,000) (1,500)
13.00% Series (10,000) (1,000)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 152,569,437 1,373,125 731,793 (187,318) 3,542,399 354,240 592,016 64,062
Allocation of ESOP Shares 6,799
Sale of 7.75% Class A
Preferred Stock (3,361) 4,000,000 100,000
Sale of 7.75% Preferred Stock (345) 250,000 25,000
- 13 -
Redemptions--
$102.50 Series (216) (5,400) (5,400)
8.24% Series (45,000) (4,500)
8.48% Series (6) (80,000) (8,000)
8.64% Series (400,000) (40,000)
9.12% Series (450,000) (45,000)
9.16% eries (80,000) (8,000)
11.00% Series (8,000) (800)
11.50% Series (60,000) (6,000)
13.00% Series (10,000) (1,000)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 152,569,437 1,373,125 727,865 (180,519) 6,782,399 378,240 463,616 46,362
Minimum liability for unfunded
retirement benefits (3,053)
Allocation of ESOP Shares 36 10,143
Redemptions--
Market Auction Series (500,000) (50,000)
11.00% Series (3,616) (362)
13.00% Series (60,000) (6,000)
- ----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 152,569,437 $1,373,125 $724,848 $(170,376) 6,282,399 $328,240 400,000 $40,000
============================================================================================================================
<FN>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
- 14 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<CAPTION>
At December 31, 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C>
COMMON STOCKHOLDERS' EQUITY:
Common stock, $9 par value, authorized 175,000,000 shares-
l52,569,437 shares outstanding $1,373,125 $1,373,125
Other paid-in capital 724,848 727,865
Retained earnings (Note 5A) 389,600 322,821
Unallocated employee stock ownership plan common stock-
9,076,489 and 9,608,739 shares, respectively (Note 5B) (170,376) (180,519)
---------- ----------
Total common stockholders' equity 2,317,197 2,243,292
---------- ----------
Number of Shares Optional
Outstanding Redemption Price
---------------- ---------------------
1994 1993 Per Share Aggregate
<S> <C> <C> <C> <C> <C> <C>
PREFERRED STOCK (Note 5C):
Cumulative, $100 par value-
Authorized 6,000,000 shares
Not Subject to Mandatory Redemption:
3.85% -- 500,000 $ -- $ -- -- 50,000
3.90% 152,510 152,510 103.63 15,804 15,251 15,251
4.40% 176,280 176,280 108.00 19,038 17,628 17,628
4.44% 136,560 136,560 103.50 14,134 13,656 13,656
4.56% 144,300 144,300 103.38 14,917 14,430 14,430
7.24% 363,700 363,700 101.98 37,090 36,370 36,370
7.36% 350,000 350,000 101.74 35,609 35,000 35,000
8.20% 450,000 450,000 102.07 45,932 45,000 45,000
Optional Redemption-February 1994 -- (50,000)
--------- --------- -------- --------- ----------
1,773,350 2,273,350 182,524 177,335 177,335
Cumulative, $25 par value-
Authorized 8,000,000 shares
Not Subject to Mandatory Redemption:
7.75% 4,000,000 4,000,000 25.00 100,000 100,000 100,000
--------- --------- -------- --------- ----------
Total not subject to
mandatory redemption 5,773,350 6,273,350 $282,524 277,335 277,335
========= ========= ======== --------- ----------
Cumulative, $100 par value-
Subject to Mandatory Redemption (Note 5D):
8.45% 250,000 250,000 25,000 25,000
========= ========= --------- ----------
- 15 -
PREFERRED STOCK OF CONSOLIDATED
SUBSIDIARY (Note 5C):
Cumulative, $100 par value-
Authorized 1,200,000 shares
Not Subject to Mandatory Redemption:
4.24% 40,000 40,000 $103.13 $ 4,125 4,000 4,000
4.25% 41,049 41,049 105.00 4,310 4,105 4,105
4.64% 60,000 60,000 102.98 6,179 6,000 6,000
7.64% 60,000 60,000 101.42 6,085 6,000 6,000
7.75% 250,000 250,000 100.00 25,000 25,000 25,000
8.00% 58,000 58,000 102.07 5,920 5,800 5,800
--------- --------- ---------- ---------- ----------
Total not subject to mandatory
redemption 509,049 509,049 $ 51,619 50,905 50,905
========= ========= ========== ---------- ----------
Subject to Mandatory Redemption (Note 5D):
7.625% 150,000 150,000 $107.63 $ 16,144 15,000 15,000
11.00% -- 3,616 -- -- -- 362
13.00% -- 60,000 -- -- -- 6,000
Redemption within one year -- (862)
---------- --------- ---------- ---------- ----------
Total subject to mandatory
redemption 150,000 213,616 $ 16,144 15,000 20,500
========== ========= ========== ---------- ----------
</TABLE>
- 16 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION (Cont'd)
<CAPTION>
At December 31, 1994 1993 1994 1993 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM DEBT (Note 5E):
First mortgage bonds:
Ohio Edison Company- Pennsylvania Power Company-
8.800% due 1994-96 -- 27,600 9.000% due 1996 50,000 50,000
13.430% due 1994 -- 30,000 9.740% due 1999-2019 20,000 20,000
12.740% due 1995 30,000 30,000 7.500% due 2003 40,000 40,000
8.500% due 1996 150,000 150,000 6.375% due 2004 50,000 50,000
8.750% due 1998 150,000 150,000 6.625% due 2004 20,000 20,000
6.875% due 1999 150,000 150,000 8.500% due 2022 50,000 50,000
6.375% due 2000 80,000 80,000 7.625% due 2023 40,000 40,000
------- -------
7.375% due 2002 120,000 120,000
7.500% due 2002 34,265 34,265
8.250% due 2002 125,000 125,000
8.625% due 2003 150,000 150,000
6.875% due 2005 80,000 80,000
9.750% due 2019 35,300 150,000
8.750% due 2022 100,000 100,000
7.625% due 2023 75,000 75,000
7.875% due 2023 100,000 100,000
--------- ---------
Total first mortgage bonds 1,379,565 1,551,865 270,000 270,000 1,649,565 1,821,865
--------- --------- ------- ------- --------- ---------
Secured notes:
Ohio Edison Company- Pennsylvania Power Company-
9.345% due 1994 -- 50,000 4.750% due 1998 850 850
8.380% due 1996 53,718 87,987 6.080% due 2000 23,000 23,000
7.930% due 2002 77,997 -- 5.400% due 2013 1,000 1,000
7.680% due 2005 200,000 -- 12.000% due 2014 -- 12,700
9.200% due 2014 -- 50,000 8.125% due 2015 14,250 14,250
10.500% due 2015 60,000 60,000 5.400% due 2017 10,600 10,600
10.625% due 2015 40,000 40,000 7.150% due 2017 17,925 17,925
7.450% due 2016 47,725 47,725 5.900% due 2018 16,800 16,800
7.100% due 2018 26,000 26,000 8.100% due 2018 10,300 10,300
7.000% due 2021 69,500 69,500 8.100% due 2020 5,200 5,200
7.150% due 2021 443 443 7.150% due 2021 14,482 14,482
7.625% due 2023 50,000 50,000 6.150% due 2023 12,700 --
8.100% due 2023 30,000 30,000 6.450% due 2027 14,500 14,500
7.750% due 2024 108,000 108,000 5.450% due 2028 6,950 6,950
5.625% due 2029 50,000 50,000 5.950% due 2029 238 238
------- -------
5.950% due 2029 56,212 56,212
5.450% due 2033 14,800 14,800
-------- --------
884,395 740,667 148,795 148,795 1,033,190 889,462
-------- -------- ------- -------
- 17 -
OES Fuel-
5.72% weighted average
interest rate 124,984 131,611
---------- ----------
Total secured notes 1,158,174 1,021,073
---------- ----------
Unsecured notes:
Ohio Edison Company-
9.440% due 1995 75,000 75,000
7.380% due 1997 100,000 100,000
8.635% due 1997 50,000 50,000
4.900% due 2012 50,000 50,000
4.250% due 2014 50,000 50,000
3.450% due 2015 50,000 50,000
4.250% due 2018 56,000 56,000
4.750% due 2018 57,100 57,100
3.450% due 2032 53,400 53,400
-------- --------
Total unsecured notes 541,500 541,500 541,500 541,500
-------- -------- ---------- ----------
Capital lease obligations (Note 4) 54,180 59,312
---------- ----------
Net unamortized discount on debt (9,330) (11,179)
---------- ----------
Long-term debt due within one year (227,496) (393,308)
---------- ----------
Total long-term debt 3,166,593 3,039,263
---------- ----------
TOTAL CAPITALIZATION $5,852,030 $5,656,295
============================================================================================================================
<FN>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
- 18 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $303,531 $ 82,724 $ 276,986
Adjustments to reconcile net income to net
cash from operating activities:
Provision for depreciation 220,502 217,980 223,497
Nuclear fuel and lease amortization 72,141 59,858 85,419
Deferred income taxes, net 21,156 (26,233) 18,221
Investment tax credits, net (8,036) (8,345) (17,857)
Deferred revenue - - 19,517
Allowance for equity funds used
during construction (5,277) (4,257) (3,025)
Deferred fuel costs, net (2,656) (1,078) 5,130
Perry Unit 2 termination - 390,835 -
Cumulative effect of a change in
accounting for unbilled revenues - (58,201) -
Other amortization, net 8,422 1,184 9,941
-------- -------- ----------
Internal cash before dividends 609,783 654,467 617,829
Receivables 32,113 (1,962) 2,278
Materials and supplies 6,865 41,467 (14,889)
Accounts payable (18,261) 9,823 (19,986)
Other 64,564 19,088 4,727
-------- -------- ----------
Net cash provided from operating activities 695,064 722,883 589,959
-------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
New Financing--
Preferred stock - 121,294 15,000
Long-term debt 434,759 765,358 937,797
Short-term borrowings, net 70,516 - 56,716
Redemptions and Repayments--
Preferred and preference stock 56,362 122,502 22,412
Long-term debt 483,347 773,128 1,065,377
Short-term borrowings, net - 47,445 -
Dividend Payments--
Common stock 216,782 224,943 234,188
Preferred and preference stock 21,483 20,926 23,786
-------- -------- ----------
Net cash used for financing activities 272,699 302,292 336,250
-------- -------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions 258,249 256,746 241,508
Letter of credit collateralization deposit 277,763 - -
Sale and leaseback restructuring fees 1,507 10,417 37,654
Other 21,245 7,950 14,133
-------- -------- ----------
- 19 -
Net cash used for investing activities 558,764 275,113 293,295
-------- -------- ----------
Net increase (decrease) in cash and cash
equivalents (136,399) 145,478 (39,586)
Cash and cash equivalents at beginning of year 159,690 14,212 53,798
-------- -------- ----------
Cash and cash equivalents at end of year $ 23,291 $159,690 $ 14,212
======== ======== ==========
SUPPLEMENTAL CASH FLOWS INFORMATION:
Cash Paid During the Year--
Interest (net of amounts capitalized) $267,319 $262,410 $ 290,420
Income taxes 143,202 94,272 134,768
<FN>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
- 20 -
<TABLE>
OHIO EDISON COMPANY
CONSOLIDATED STATEMENTS OF TAXES
<CAPTION>
For the Years Ended December 31, 1994 1993 1992
(In thousands)
<S> <C> <C> <C>
GENERAL TAXES:
Real and personal property $113,484 $124,709 $111,533
State gross receipts 100,996 97,348 94,415
Social security and unemployment 14,822 15,626 15,166
Other 7,718 7,871 8,218
-------- -------- --------
Total general taxes $237,020 $245,554 $229,332
======== ======== ========
PROVISION FOR INCOME TAXES:
Currently payable-
Federal $161,219 $ 61,920 $132,712
State 14,547 5,544 14,331
-------- -------- --------
175,766 67,464 147,043
-------- -------- --------
Deferred, net-
Federal 20,796 489 17,586
State 360 6,455 635
-------- -------- --------
21,156 6,944 18,221
-------- -------- --------
Investment tax credits, net of amortization (8,036) (8,345) (17,857)
-------- -------- --------
Total provision for income taxes $188,886 $ 66,063 $147,407
======== ======== ========
INCOME STATEMENT CLASSIFICATION
OF PROVISION FOR INCOME TAXES:
Operating income $181,514 $166,773 $160,358
Other income 7,372 (134,342) (12,951)
Cumulative effect of a change in accounting - 33,632 -
-------- -------- --------
Total provision for income taxes $188,886 $ 66,063 $147,407
======== ======== ========
RECONCILIATION OF FEDERAL INCOME TAX EXPENSE AT
STATUTORY RATE TO TOTAL PROVISION FOR INCOME TAXES:
Book income before provision for income taxes $492,417 $148,787 $424,393
======== ======== ========
Federal income tax expense at statutory rate $172,346 $ 52,075 $144,294
Increases (reductions) in taxes resulting from-
Excess of book over tax depreciation - - 19,741
Amortization of investment tax credits (8,036) (8,345) (32,092)
State income taxes net of federal income tax benefit 9,690 7,799 9,878
Amortization of tax regulatory assets 14,503 15,412 -
Other, net 383 (878) 5,586
-------- -------- --------
Total provision for income taxes $188,886 $ 66,063 $147,407
======== ======== ========
- 21 -
SOURCES OF DEFERRED TAX EXPENSE:
Excess of tax over book depreciation, net $ 27,627
Difference between tax and book revenue, net (9,084)
Alternative minimum tax credits utilized 12,467
Other, net (12,789)
--------
Net deferred tax expense $ 18,221
========
ACCUMULATED DEFERRED INCOME TAXES AT DECEMBER 31:
Property basis differences $1,024,737 $ 972,501
Allowance for equity funds used during construction 278,172 282,525
Deferred nuclear expense 272,516 277,555
Customer receivables for future income taxes 237,826 244,540
Deferred sale and leaseback costs 87,068 90,878
Unamortized investment tax credits (82,491) (85,459)
Other (18,504) 16,011
---------- ----------
Net deferred income tax liability $1,799,324 $1,798,551
========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
</TABLE>
- 22 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The consolidated financial statements include Ohio Edison
Company (Company) and its wholly owned subsidiaries, Pennsylvania
Power Company (Penn Power), OES Capital, Incorporated (OES
Capital), OES Finance, Incorporated (OES Finance) and OES Fuel,
Incorporated (OES Fuel). All significant intercompany transactions
have been eliminated. The Company and Penn Power (Companies) follow
the accounting policies and practices prescribed by the Public
Utilities Commission of Ohio (PUCO), the Pennsylvania Public
Utility Commission (PPUC) and the Federal Energy Regulatory
Commission (FERC).
REVENUES-
The Companies' retail customers are metered on a cycle
basis. Revenue was recognized for electric service based on meters
read through the end of the year for years prior to 1993. Beginning
in 1993, revenue is recognized to include unbilled sales through
the end of the year (see Note 2).
Receivables from customers include sales to residential,
commercial and industrial customers located in the Companies'
service area and sales to wholesale customers. There was no
material concentration of receivables at December 31, 1994 or 1993,
with respect to any particular segment of the Companies' customers.
FUEL COSTS-
The Companies recover fuel-related costs not otherwise
included in base rates from retail customers through separate
energy rates. Any over or under collection resulting from the
operation of these rates are included as adjustments to subsequent
energy rates. Accordingly, the Companies defer the difference
between actual fuel-related costs incurred and the amounts
currently recovered from their customers.
UTILITY PLANT AND DEPRECIATION-
Utility plant reflects the original cost of construction,
including payroll and related costs such as taxes, employee
benefits, administrative and general costs and financing costs
(allowance for funds used during construction).
The Companies provide for depreciation on a straight-line
basis at various rates over the estimated lives of property
included in plant in service. The annual composite rate for
electric plant was approximately 3.0% in 1994, 1993 and 1992.
The Companies recognize approximately $5,000,000 annually
(as depreciation expense) for future decommissioning costs
applicable to their ownership and leasehold interests in three
nuclear generating units. The Companies' share of the future
obligation to decommission these units is approximately
$388,000,000 in current dollars and (using a 2.8% escalation rate)
approximately $865,000,000 in future dollars. The estimated
obligation (based on site specific studies) and the escalation rate
were developed using information obtained from consultants.
Payments for decommissioning are expected to begin in 2016, when
- 23 -
actual decommissioning work begins. The Companies have recovered
approximately $48,000,000 for decommissioning through their
electric rates from customers through December 31, 1994; such
amounts are reflected in the reserve for depreciation on the
Consolidated Balance Sheet. If the actual costs of decommissioning
the units exceed the accumulated amounts recovered from customers,
the Companies expect that difference will be recoverable from their
customers. The Companies have approximately $34,400,000 invested in
external decommissioning trust funds as of December 31, 1994.
Earnings on these funds are reinvested with a corresponding
increase to the depreciation reserve. The Companies have also
recognized an estimated liability of approximately $19,900,000
related to decontamination and decommissioning of nuclear
enrichment facilities operated by the United States Department of
Energy (DOE), as required by the Energy Policy Act of 1992. The
Companies recover these costs through their respective energy
rates.
The staff of the Securities and Exchange Commission has
raised questions regarding the recognition, measurement and
classification of decommissioning costs for nuclear generating
stations in the financial statements of electric utilities. In
response to these questions, the Financial Accounting Standards
Board (FASB) has agreed to review the accounting for nuclear
decommissioning costs. If current electric utility industry
accounting practices for decommissioning are changed: (1) annual
provisions for decommissioning could increase; (2) the full
estimated cost for decommissioning could be recorded as a liability
rather than as accumulated depreciation; and (3) income from the
external decommissioning trusts could be reported as investment
income. The FASB's review is expected to be completed in 1995.
COMMON OWNERSHIP OF GENERATING FACILITIES-
The Companies and other Central Area Power Coordination
Group (CAPCO) companies own, as tenants in common, various power
generating facilities. Each of the companies is obligated to pay a
share of the costs associated with any jointly owned facility in
the same proportion as its interest. The Companies' portions of
operating expenses associated with jointly owned facilities are
included in the corresponding operating expenses on the
Consolidated Statements of Income. The amounts reflected on the
Consolidated Balance Sheet under utility plant at December 31,
1994, include the following:
Companies'
Utility Accumulated Construction Ownership/
Plant Provision for Work in Leasehold
Generating Units in Service Depreciation Progress Interest
- -------------------------------------------------------------------
(In thousands)
W.H. Sammis #7 $ 308,000 $ 88,200 $ 3,300 68.80%
Bruce Mansfield
#1,#2 and #3 762,800 335,000 9,600 50.68%
Beaver Valley
#1 and #2 1,847,400 544,500 2,900 47.11%
Perry #1 1,623,000 281,700 4,300 35.24%
- -----------------------------------------------------------------
Total $4,541,200 $1,249,400 $20,100
- -----------------------------------------------------------------
- 24 -
NUCLEAR FUEL-
Nuclear fuel is recorded at original cost, which includes
material, enrichment, fabrication and interest costs incurred prior
to reactor load. The Companies amortize the cost of nuclear fuel
based on the rate of consumption. The Companies' electric rates
include amounts for the future disposal of spent nuclear fuel based
upon the formula used to compute payments to the DOE.
INCOME TAXES-
Details of the total provision for income taxes are shown on
the Consolidated Statements of Taxes. Deferred income taxes result
from timing differences in the recognition of revenues and expenses
for tax and accounting purposes. Investment tax credits (ITC),
which were deferred when utilized, are being amortized over the
estimated life of the related property. ITC amortization in 1992
included $21,300,000 associated with portions of the Company's
investments in Perry Unit 1 and Beaver Valley Unit 2 which are not
recoverable from retail customers.
The Companies adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," on January
1, 1993, which requires the liability method to be used to account
for deferred income taxes. Under this standard, deferred income tax
liabilities related to tax and accounting basis differences are
recognized at the statutory income tax rates in effect when the
liabilities are expected to be paid. The components of accumulated
deferred income taxes as of December 31, 1994 and 1993, are
disclosed on the Consolidated Statements of Taxes.
RETIREMENT BENEFITS-
The Companies' trusteed, noncontributory defined benefit
pension plans cover almost all full-time employees. Upon
retirement, employees receive a monthly pension based on length of
service and compensation. The Companies use the projected unit
credit method for funding purposes and were not required to make
pension contributions during the three years ended December 31,
1994.
The following sets forth the funded status of the plans and
amounts recognized on the Consolidated Balance Sheets as of
December 31:
- 25 -
1994 1993
- ---------------------------------------------------------------
(In thousands)
Actuarial present value of benefit
obligations:
Vested benefits $483,850 $471,205
Nonvested benefits 27,312 28,180
- ---------------------------------------------------------------
Accumulated benefit obligation $511,162 $499,385
===============================================================
Plan assets at fair value $719,310 $770,240
Actuarial present value of projected
benefit obligation 593,931 605,848
- ---------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 125,379 164,392
Unrecognized net loss (gain) 8,868 (6,743)
Unrecognized prior service cost 12,755 14,074
Unrecognized net transition asset (49,775) (57,719)
- ---------------------------------------------------------------
Net pension asset $ 97,227 $114,004
===============================================================
The assets of the plans consist primarily of common stocks,
United States government bonds and corporate bonds. Net pension
costs for the three years ended December 31, 1994, were computed as
follows:
1994 1993 1992
- ----------------------------------------------------------------
(In thousands)
Service cost-benefits earned
during the period $ 15,159 $ 13,171 $ 13,278
Interest on projected benefit
obligation 45,299 42,723 40,291
Return on plan assets 8,344 (97,849) (59,297)
Net deferral (amortization) (89,324) 14,954 (22,378)
Voluntary early retirement
program expense 37,299 6,014 7,289
- ----------------------------------------------------------------
Net pension cost $16,777 $(20,987) $(20,817)
================================================================
The assumed discount rate used in determining the actuarial
present value of the projected benefit obligation was 8.5% in 1994,
7.5% in 1993 and 9% in 1992. The assumed rate of increase in future
compensation levels used to measure this obligation was 4.5% in
each year. Expected long-term rates of return on plan assets were
assumed to be 10% in 1994 and 11% in 1993 and 1992.
The Companies provide a minimum amount of noncontributory life
insurance to retired employees in addition to optional contributory
insurance. Health care benefits, which include certain employee
deductibles and copayments, are also available to retired
employees, their dependents and, under certain circumstances, their
survivors. The Companies pay insurance premiums to cover a portion
of these benefits in excess of set limits; all amounts up to the
limits are paid by the Companies.
In 1993 the Companies adopted SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions," which
- 26 -
requires companies to recognize the expected cost of providing
other postretirement benefits to employees and their beneficiaries
and covered dependents from the time employees are hired until they
become eligible to receive those benefits. The Companies do not
currently fund these future benefits. Costs paid by the Companies
for retiree health care and life insurance benefits of $9,689,000
were charged to income in 1992.
The following sets forth the accrued postretirement benefit
cost on the Consolidated Balance Sheets as of December 31:
1994 1993
- -----------------------------------------------------------------
(In thousands)
Accumulated postretirement benefit
obligation allocation:
Retirees $165,386 $136,288
Fully eligible active plan
participants 12,381 36,827
Other active plan participants 77,599 67,597
-------- --------
Accumulated postretirement benefit
obligation 255,366 240,712
Unrecognized transition obligation (183,196) (193,374)
Unrecognized net loss (23,425) (25,048)
-------- --------
Accrued postretirement benefit cost $ 48,745 $ 22,290
==================================================================
Net periodic postretirement benefit costs for the years ended
December 31, 1994 and 1993, were computed as follows:
1994 1993
- -----------------------------------------------------------------
(In thousands)
Service cost-benefits attributed to
the period $ 4,865 $ 3,929
Interest cost on accumulated benefit
obligation 19,332 18,039
Amortization of transition obligation 10,178 10,178
Amortization of loss 787 -
Voluntary early retirement program expense 2,815 1,533
-------- -------
Net periodic postretirement benefit cost 37,977 33,679
Benefits paid 11,522 11,389
-------- -------
Increase in accrued postretirement
benefit cost $26,455 $22,290
=================================================================
The health care trend rate assumption is 7.89% in the first
year gradually decreasing to 3.5% for the year 2008 and later. The
discount rates used to compute the accumulated postretirement
benefit obligation in 1994 and 1993 were 8.5% and 7.5%,
respectively. An increase in the health care trend rate assumption
by one percentage point in all years would increase the accumulated
postretirement benefit obligation by approximately $33,200,000 and
the aggregate annual service and interest costs by approximately
$3,700,000.
- 27 -
The PUCO and PPUC have authorized the Companies to defer the
incremental costs resulting from adopting SFAS No. 106 (compared to
costs computed under the former accounting basis) for future
recovery from their retail customers. Similar authorizations
relating to other utilities regulated by the PPUC were appealed by
the Office of Consumer Advocate to the Commonwealth Court of
Pennsylvania. The Commonwealth Court has issued conflicting
opinions and both cases have been appealed to the Pennsylvania
Supreme Court. Due to the uncertainty resulting from these
conflicting opinions, Penn Power provided a reserve in 1994 against
the full amount deferred.
EARNINGS PER SHARE OF COMMON STOCK-
The American Institute of Certified Public Accountants issued
its Statement of Position 93-6 (SOP) in late 1993, which changes
generally accepted accounting principles relating to employee stock
ownership plans (ESOP) for shares purchased after December 31,
1992. The Company's ESOP shares were purchased prior to that date,
but the Company elected to adopt the SOP effective January 1, 1994.
This change in accounting reduced net income by approximately
$8,700,000 in 1994; the net effect to earnings per common share
resulting from this change was an increase of six cents after
eliminating unallocated ESOP shares from the computation.
Earnings per share of common stock shown on the Consolidated
Statements of Income for the three years ended December 31, 1994,
were computed as follows:
1994 1993 1992
- ---------------------------------------------------------------
(In thousands, except per share amounts)
Earnings:
Income before cumulative
effect $303,531 $ 24,523 $276,986
Preferred and preference
stock dividend requirements (21,679) (23,707) (23,926)
Tax benefit from employee
stock ownership plan dividends - - 5,592
- ---------------------------------------------------------------
Earnings before cumulative
effect 281,852 816 258,652
Cumulative effect of a change
in accounting - 58,201 -
- ---------------------------------------------------------------
Earnings after cumulative
effect $281,852 $ 59,017 $258,652
- ---------------------------------------------------------------
Shares:
Weighted average number
of common shares
outstanding 143,237 152,569 152,569
Earnings per share of
Common Stock:
Before cumulative effect of
a change in accounting $1.97 $.01 $1.70
Cumulative effect of a change
in accounting - .38 -
- ---------------------------------------------------------------
Earnings per share of Common
Stock $1.97 $.39 $1.70
===============================================================
- 28 -
SUPPLEMENTAL CASH FLOWS INFORMATION-
All temporary cash investments purchased with an initial
maturity of three months or less are reported as cash equivalents
on the Consolidated Balance Sheets. The Companies reflect temporary
cash investments at cost, which approximates their market value.
Noncash financing and investing activities included capital lease
transactions amounting to $3,613,000, $1,487,000 and $5,831,000 for
the years 1994, 1993 and 1992, respectively. OES Fuel commercial
paper transactions have initial maturity periods of three months or
less, are reported net within financing activities under long-term
debt and are reflected as long-term debt on the Consolidated
Balance Sheets (see Note 5E).
All borrowings with initial maturities of less than one year
are defined as financial instruments under generally accepted
accounting principles and are reported on the Consolidated Balance
Sheets at cost which approximates their fair market value. The
following sets forth the approximate fair value and related
carrying amounts of all other long-term debt, preferred stock
subject to mandatory redemption and investments other than cash and
cash equivalents as of December 31:
1994 1993
- ----------------------------------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- ------ -------- ------
(In Millions)
Long-term debt $3,224 $3,062 $3,253 $3,451
Preferred stock $ 40 $ 38 $ 46 $ 48
Investments other than cash
and cash equivalents $ 320 $ 317 $ 37 $ 37
The fair values of long-term debt and preferred stock reflect the
present value of the cash outflows relating to those securities
based on the current call price, the yield to maturity or the yield
to call, as deemed appropriate at the end of each respective year.
The yields assumed were based on securities with similar
characteristics offered by a corporation with credit ratings
similar to the Companies' ratings. The fair value of investments
other than cash and cash equivalents represent cost (which
approximates fair value) or the present value of the cash inflows
based on the yield to maturity. The yields assumed were based on
financial instruments with similar characteristics and terms. All
of the Companies' financial instruments are for purposes other than
trading.
REGULATORY ASSETS-
The Companies recognize, as regulatory assets, costs which the
FERC, PUCO and PPUC have authorized for recovery from customers in
future periods. Without such authorization, the costs would have
been charged to income as incurred. Amounts shown below as being
recovered currently would be recovered over approximately 22 years
based upon amounts amortized during 1994. Amortization of the
remaining assets, which are deferred for recovery in future rate
proceedings, would increase revenues by less than 2% on an annual
basis.
- 29 -
Regulatory assets on the Consolidated Balance Sheets are
comprised of the following:
1994 1993
- ----------------------------------------------------------------
(In thousands)
Currently being recovered through rates:
Nuclear unit expenses $ 503,625 $ 519,533
Customer receivables for future
income taxes 639,592 658,115
Sale and leaseback costs 242,033 252,625
Property taxes 106,458 101,182
Loss on reacquired debt 99,384 103,158
DOE decommissioning and
decontamination costs 21,170 19,275
Uncollectible customer accounts 44,368 13,425
Other 15,669 12,987
- ----------------------------------------------------------------
1,672,299 1,680,300
- ----------------------------------------------------------------
Not currently recovered through rates:
Nuclear unit interest expense 267,913 259,402
Employee postretirement benefit costs 27,055 16,456
Perry Unit 2 termination 38,066 37,637
- ----------------------------------------------------------------
333,034 313,495
- ----------------------------------------------------------------
Total $2,005,333 $1,993,795
================================================================
2. CHANGE IN ACCOUNTING FOR UNBILLED REVENUES:
On January 1, 1993, the Companies changed their accounting
policies to recognize revenue relating to metered sales which
remain unbilled at the end of the accounting period. This change
was made to more closely match the Companies' revenues with the
costs of services provided. The effect of this change increased net
income for the year ended December 31, 1993 (before the cumulative
effect from periods prior to 1993) by approximately $4,600,000
($.03 per share of common stock). The cumulative effect to
January 1, 1993 was $58,201,000 (net of $33,632,000 of income
taxes) or $.38 per share. The reported results of operations for
the year ended December 31, 1992, would not have been materially
different if this new accounting policy had been in effect during
that year.
3. PERRY UNIT 2 TERMINATION:
In December 1993, the Companies announced that they would not
participate in further construction of Perry Unit 2 and abandoned
Perry Unit 2 as a possible electric generating plant. The Company
determined that recovery from customers of its Perry Unit 2
investment was not probable, resulting in a $366,377,000 write-off
of its investment in 1993. Penn Power expects its Perry Unit 2
investment to be recoverable from its retail customers. However,
due to the anticipated delay in commencement of recovery and taking
into account the expected rate treatment, Penn Power recognized an
impairment to its Perry Unit 2 investment of $24,458,000 in 1993.
As a result, net income for the year ended December 31, 1993, was
reduced by $248,743,000 ($1.63 per share of common stock).
- 30 -
4. LEASES:
The Companies lease a portion of their nuclear generating
facilities, certain transmission facilities, computer equipment,
office space and other property and equipment under cancelable and
noncancelable leases.
In 1987, the Company sold portions of its ownership interests
in Perry Unit 1 and Beaver Valley Unit 2 and simultaneously entered
into operating leases on the portions sold for basic lease terms of
approximately 29 years. During the terms of the leases the Company
continues to be responsible, to the extent of its combined
ownership and leasehold interest, for costs associated with the
units including construction expenditures, operation and
maintenance expenses, insurance, nuclear fuel, property taxes and
decommissioning. The basic rental payments are adjusted when
applicable federal tax law changes. The Company has the right, at
the end of the respective basic lease terms, to renew the leases
for up to two years. The Company also has the right to purchase the
facilities at the expiration of the basic lease term or renewal
term (if elected) at a price equal to the fair market value of the
facilities.
OES Finance was established during the third quarter of 1994
for the sole purpose of maintaining deposits pledged as collateral
to secure reimbursement obligations relating to certain letters of
credit supporting the Company's obligations to lessors under the
Beaver Valley Unit 2 sale and leaseback arrangements. The deposits
pledged to the financial institution providing those letters of
credit are the sole property of OES Finance. In the event of
liquidation, OES Finance, as a separate corporate entity, would
have to satisfy its obligations to creditors before any of its
assets could be made available to the Company as sole owner of OES
Finance common stock.
Consistent with the regulatory treatment, the rental payments
for capital and operating leases are charged to operating expenses
on the Consolidated Statements of Income. Such costs for the three
years ended December 31, 1994, are summarized as follows:
1994 1993 1992
- --------------------------------------------------------------
(In thousands)
Operating leases
Interest element $100,980 $ 96,804 $108,870
Other 14,530 15,418 13,308
Capital leases
Interest element 7,483 7,896 8,354
Other 6,960 6,843 6,985
- --------------------------------------------------------------
Total rental payments $129,953 $126,961 $137,517
==============================================================
- 31 -
The future minimum lease payments as of December 31, 1994, are:
Capital Operating
Leases Leases
- ---------------------------------------------------------------
(In thousands)
1995 $ 16,744 $ 106,073
1996 15,076 108,501
1997 13,540 113,826
1998 12,434 120,741
1999 11,117 125,595
Years thereafter 103,858 2,362,768
- ---------------------------------------------------------------
Total minimum lease payments 172,769 $2,937,504
==========
Executory costs 43,086
- ------------------------------------------------
Net minimum lease payments 129,683
Interest portion 75,503
- ------------------------------------------------
Present value of net minimum
lease payments 54,180
Less current portion 6,573
- ------------------------------------------------
Noncurrent portion $ 47,607
================================================
5. CAPITALIZATION:
(A) RETAINED EARNINGS-
Under the Company's first mortgage indenture, the Company's
consolidated retained earnings unrestricted for payment of cash
dividends on the Company's common stock were $322,781,000 at
December 31, 1994.
(B) EMPLOYEE STOCK OWNERSHIP PLAN-
The Companies fund the matching contribution for their 401(k)
savings plan through an ESOP Trust. All full-time employees
eligible for participation in the 401(k) savings plan are covered
by the ESOP. The ESOP borrowed $200,000,000 from the Company and
acquired 10,654,114 shares of the Company's common stock on the
open market. Dividends on ESOP shares are used to service the debt.
Shares are released from the ESOP on a pro-rata basis as debt
service payments are made. In 1994, 1993 and 1992, 532,250 shares,
369,956 shares and 412,167 shares, respectively, were allocated to
employees with the corresponding expense recognized based on the
shares allocated method. The fair value of 9,076,489 shares
unallocated as of December 31, 1994, was approximately
$168,000,000. Total ESOP related compensation expense was
calculated as follows:
- 32 -
1994 1993 1992
- ---------------------------------------------------------------
(In thousands)
Base compensation $ 10,179 $ 6,799 $ 7,741
Interest on ESOP debt - 19,985 19,985
Dividends on common stock
held by the ESOP and
used to service debt (1,966) (15,944) (15,970)
Interest earned by the ESOP - (275) (317)
- ---------------------------------------------------------------
Total expense $ 8,213 $ 10,565 $ 11,439
===============================================================
(C) PREFERRED STOCK-
Penn Power's 7.625% and 7.75% series of preferred stock have
restrictions which prevent early redemption prior to October 1997
and July 2003, respectively. The Company's 8.45% series of
preferred stock has no optional redemption provision, and its 7.75%
series is not redeemable before April 1998. All other preferred
stock may be redeemed by the Companies in whole, or in part, with
30-60 days' notice. The optional redemption price for Penn Power's
7.625% series shown on the Consolidated Statements of
Capitalization will decline to $100 per share by 2007.
(D) PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION-
The Company's 8.45% series of preferred stock has an annual
sinking fund requirement for 50,000 shares beginning on
September 16, 1997. Penn Power's 7.625% series has an annual
sinking fund requirement for 7,500 shares beginning on October 1,
2002.
Preferred shares are retired at $100 per share plus accrued
dividends. Sinking fund requirements for the next five years are
$5,000,000 in each year from 1997 through 1999.
(E) LONG-TERM DEBT-
The first mortgage indentures and their supplements, which
secure all of the Companies' first mortgage bonds, serve as direct
first mortgage liens on substantially all property and franchises,
other than specifically excepted property, owned by the Companies.
Based on the amount of bonds authenticated by the Trustee
through December 31, 1994, the Company's annual sinking and
improvement fund requirement for all bonds issued under the
mortgage amounts to $30,056,000. The Company expects to deposit
funds in 1995 which will be withdrawn upon the surrender for
cancellation of a like principal amount of bonds, which are
specifically authenticated for such purposes against unfunded
property additions or against previously retired bonds. This method
can result in minor increases in the amount of the annual sinking
fund requirement.
Sinking fund requirements for first mortgage bonds and maturing
long-term debt (excluding capital leases) for the next five years
are:
- 33 -
- ------------------------------------------------------------------
1995 $220,923,000
1996 382,675,000
1997 334,845,000
1998 161,521,000
1999 162,036,000
- ------------------------------------------------------------------
The Companies' obligations to repay certain pollution control
revenue bonds are secured by several series of first mortgage bonds
and, in some cases, by subordinate liens on the related pollution
control facilities. Certain pollution control revenue bonds are
entitled to the benefit of irrevocable bank letters of credit of
$338,831,000. To the extent that drawings are made under those
letters of credit to pay principal of, or interest on, the
pollution control revenue bonds, the Company is entitled to a
credit against its obligation to repay those bonds. The Company
pays an annual fee of 0.625% to 0.925% of the amounts of the
letters of credit to the issuing banks and is obligated to
reimburse the banks for any drawings thereunder.
Nuclear fuel purchases are financed through the issuance of OES
Fuel commercial paper and loans, both of which are supported by a
$225,000,000 long-term bank credit agreement which expires March
31, 1997. Accordingly, the commercial paper and loans are reflected
as long-term debt on the Consolidated Balance Sheets. OES Fuel must
pay an annual facility fee of 0.1875% on the total line of credit
and an annual commitment fee of 0.0625% on any unused amount.
6. SHORT-TERM BORROWINGS AND BANK LINES OF CREDIT:
Short-term borrowings outstanding at December 31, 1994, include
OES Capital debt which is secured by customer accounts receivable.
OES Capital can borrow up to $120,000,000 under a receivables
financing agreement at rates based on certain bank commercial
paper. OES Capital is required to pay an annual fee of 0.46% on the
amount of the entire finance limit. The receivables financing
agreement expires April 23, 1996.
The Companies have lines of credit with domestic banks that
provide for borrowings of up to $55,000,000 under various interest
rate options. Short-term borrowings may be made under these lines
of credit on the Companies' unsecured notes. To assure the
availability of these lines, the Companies are required to pay
annual commitment fees that vary from 0.22% to 0.50%. These lines
expire at various times during 1995. The weighted average interest
rates on short-term borrowings outstanding at December 31, 1994 and
1993, were 5.76% and 3.23%, respectively.
7. COMMITMENTS, GUARANTEES AND CONTINGENCIES:
CONSTRUCTION PROGRAM-
The Companies' current forecasts reflect expenditures of
approximately $800,000,000 for property additions and improvements
from 1995-1999, of which approximately $180,000,000 is applicable
to 1995. Investments for additional nuclear fuel during the 1995-
1999 period are estimated to be approximately $172,000,000, of
which approximately $30,000,000 applies to 1995. During the same
periods, the Companies' nuclear fuel investments are expected to be
- 34 -
reduced by approximately $225,000,000 and $56,000,000,
respectively, as the nuclear fuel is consumed.
NUCLEAR INSURANCE-
The Price-Anderson Act limits the public liability relative to
a single incident at a nuclear power plant to $8,920,000,000. The
amount is covered by a combination of private insurance and an
industry retrospective rating plan. Based on their present
ownership and leasehold interests in the Beaver Valley Station and
the Perry Plant, the Companies' maximum potential assessment under
the industry retrospective rating plan (assuming the other CAPCO
companies were to contribute their proportionate share of any
assessments under the retrospective rating plan) would be
$102,800,000 per incident but not more than $13,000,000 in any one
year for each incident.
The Companies are also insured as to their respective interests
in the Beaver Valley Station and the Perry Plant under policies
issued to the operating company for each plant. Under these
policies, up to $2,750,000,000 is provided for property damage and
decontamination and decommissioning costs. The Companies have also
obtained approximately $345,000,000 of insurance coverage for
replacement power costs for their respective interests in Perry and
Beaver Valley. Under these policies, the Companies can be assessed
a maximum of approximately $15,200,000 for accidents at any covered
nuclear facility occurring during a policy year which are in excess
of accumulated funds available to the insurer for paying losses.
The Companies intend to maintain insurance against nuclear
risks as described above as long as it is available. To the extent
that replacement power, property damage, decontamination,
decommissioning, repair and replacement costs and other such costs
arising from a nuclear incident at any of the Companies' plants
exceed the policy limits of the insurance from time to time in
effect with respect to that plant, to the extent a nuclear incident
is determined not to be covered by the Companies' insurance
policies, or to the extent such insurance becomes unavailable in
the future, the Companies would remain at risk for such costs.
GUARANTEES-
The Companies, together with the other CAPCO companies, have
each severally guaranteed certain debt and lease obligations in
connection with a coal supply contract for the Bruce Mansfield
Plant. As of December 31, 1994, the Companies' shares of the
guarantees (which approximate fair market value) were $87,159,000.
The price under the coal supply contract, which includes certain
minimum payments, has been determined to be sufficient to satisfy
the debt and lease obligations. The Companies' total payments under
the coal supply contract were $99,774,000, $114,572,000 and
$103,657,000 during 1994, 1993 and 1992, respectively. Under the
coal supply contract, the Companies' minimum payments in each year
during the period 1995 through 1999 are approximately $35,000,000.
ENVIRONMENTAL MATTERS-
Various federal, state and local authorities regulate the
Companies with regard to air and water quality and other
environmental matters. The Companies have estimated additional
capital expenditures for environmental compliance of approximately
- 35 -
$70,000,000, which is included in the construction forecast given
above under "Construction Program" for 1995 through 1999.
The Clean Air Act Amendments of 1990 require significant
reductions of sulfur dioxide (SO2) and nitrogen oxides (NOx) from
the Companies' coal-fired generating units by 1995 and additional
emission reductions by 2000. Compliance options include, but are
not limited to, installing additional pollution control equipment,
burning less-polluting fuel, purchasing emission allowances,
operating facilities in a manner that minimizes pollution, and
retiring facilities. In compliance plans submitted to the PUCO and
to the Environmental Protection Agency (EPA), the Company stated
that SO2 reductions for the years 1995 through 1999 likely will be
achieved by burning lower-sulfur fuel, generating more electricity
from lower-emitting plants, and/or purchasing emission allowances.
Equipment already installed, or to be installed by May 1995, is
expected to provide NOx reductions sufficient to meet 1995
requirements. Plans for complying with the year 2000 and later
reductions have not been finalized. EPA is conducting additional
studies which could indicate the need for additional NOx reductions
from the Companies' Pennsylvania facilities by the year 2003. The
cost of such reductions, if required, may be substantial. The
Company continues to evaluate its compliance plans and other
compliance options.
The Companies are required to meet federally approved SO2
regulations. Violations of such regulations can result in shutdown
of the generating unit involved and/or civil or criminal penalties
of up to $25,000 for each day the unit is in violation. The EPA has
an interim enforcement policy for SO2 regulations in Ohio that
allows for compliance based on a 30-day averaging period. The EPA
has proposed regulations that could change the interim enforcement
policy, including the method of determining compliance with
emission limits. The Companies cannot predict what action the EPA
may take in the future with respect to proposed regulations or the
interim enforcement policy.
The Pennsylvania Department of Environmental Resources has
issued regulations dealing with the storage, treatment,
transportation and disposal of residual waste such as coal ash and
scrubber sludge. These regulations impose additional requirements
relating to permitting, ground water monitoring, leachate
collection systems, closure, liability insurance and operating
matters. The Companies are considering various compliance options
but are presently unable to determine the ultimate increase in
capital and operating costs at existing sites.
Legislative, administrative and judicial actions will continue
to change the way that the Companies must operate in order to
comply with environmental laws and regulations. With respect to any
such changes and to the environmental matters described above, the
Companies expect that any resulting additional capital costs which
may be required, as well as any required increase in operating
costs, would ultimately be recovered from their customers.
8.SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED):
The following summarizes certain consolidated operating results
by quarter for 1994 and 1993.
- 36 -
March 31, June 30, September 30, December 31,
Three Months Ended 1994 1994 1994 1994
- ------------------------------------------------------------------
(In thousands, except per share amounts)
Operating Revenues $601,248 $585,428 $614,390 $567,125
Operating Expenses
and Taxes 468,850 447,353 462,573 432,161
- ------------------------------------------------------------------
Operating Income 132,398 138,075 151,817 134,964
Other Income 2,255 3,534 5,032 5,638
Net Interest and
Other Charges 66,723 67,569 68,624 67,266
- ------------------------------------------------------------------
Net Income $ 67,930 $ 74,040 $ 88,225 $ 73,336
- ------------------------------------------------------------------
Earnings on Common
Stock $ 62,329 $ 68,681 $ 82,869 $ 67,973
- ------------------------------------------------------------------
Earnings per Share
of Common Stock $.44 $.48 $.58 $.47
- ------------------------------------------------------------------
- 37 -
March 31, June 30, September 30, December 31,
Three Months Ended 1993 1993 1993 1993
- ------------------------------------------------------------------
(In thousands, except per share amounts)
Operating Revenues $593,214 $563,349 $624,524 $588,853
Operating Expenses
and Taxes 461,719 425,354 472,341 485,196
- ------------------------------------------------------------------
Operating Income 131,495 137,995 152,183 103,657
Other Income
(Expense) 4,016 4,988 4,079 (241,905)
Net Interest and
Other Charges 68,287 68,438 68,041 67,219
- ------------------------------------------------------------------
Income (Loss) Before
Cumulative Effect
of a Change in
Accounting 67,224 74,545 88,221 (205,467)
Cumulative Effect of
a Change in
Accounting 58,201 - - -
- ------------------------------------------------------------------
Net Income (Loss) $125,425 $ 74,545 $ 88,221 $(205,467)
- ------------------------------------------------------------------
Earnings (Loss)
Applicable to
Common Stock $119,520 $ 68,310 $ 82,462 $(211,275)
- ------------------------------------------------------------------
Earnings (Loss)
per Share of
Common Stock
Before Cumulative
Effect of a Change
in Accounting $.40 $.45 $.54 $(1.38)
Cumulative Effect
of a Change in
Accounting .38 - - -
- ------------------------------------------------------------------
Earnings (Loss) per
Share of Common
Stock $.78 $.45 $.54 $(1.38)
- ------------------------------------------------------------------
- 38 -
EXHIBIT 21
LIST OF SUBSIDIARIES OF THE REGISTRANT
AT DECEMBER 31, 1994
Pennsylvania Power Company - Incorporated in Pennsylvania
OES Fuel, Incorporated - Incorporated in Ohio
OES Capital, Incorporated - Incorporated in Ohio
OES Finance, Incorporated - Incorporated in Ohio
Statement of Differences
------------------------
Exhibit Number 21, List of Subsidiaries of the
Registrant at December 31, 1994, is not included
in the printed document.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by reference
in this Form 10-K, into the Company's previously filed Registration
Statements, File No. 33-49135, No. 33-49259, No. 33-49413 and No.
33-51139.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
March 21, 1995
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
(Amounts in 1,000's, except earnings per share)
Income tax expense includes $7,372,000 related to other income.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
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40,000
328,240
<LONG-TERM-DEBT-NET> 3,166,593
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0
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<INCOME-TAX-EXPENSE> 188,886
<OTHER-OPERATING-EXPENSES> 1,629,423
<TOTAL-OPERATING-EXPENSES> 1,810,937
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<INCOME-BEFORE-INTEREST-EXPEN> 573,713
<TOTAL-INTEREST-EXPENSE> 270,182
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21,679
<EARNINGS-AVAILABLE-FOR-COMM> 281,852
<COMMON-STOCK-DIVIDENDS> 214,826
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