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WINDSOR COAL COMPANY
QUARTERLY REPORT PER REQUIREMENTS
OF HOLDING COMPANY ACT RELEASE NO. 22179
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
CONTENTS
Page
Statements of Income 1
Balance Sheets 2-3
Statements of Retained Earnings 4
Statements of Cost of Commercial Coal Sold and Shipped 5
Analysis of Operating Reserves and Deferred Credits 6
Information Concerning Capital Improvements 7
Analysis of Mining Plant in Service 8
Information Concerning Operations 9
Statements of Cost of Operation 10
Construction Expenditure Budget - 1995 11
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<TABLE>
WINDSOR COAL COMPANY
STATEMENTS OF INCOME
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES -
Sales to Affiliated Companies . $5,596 $7,716 $4,275 $17,587
COST OF OPERATION (including
Depreciation, Depletion and
Amortization of Mining Plant of
$122,000 in October and $111,000
in both November and December). 5,403 7,553 4,262 17,218
OPERATING INCOME. . . . . . . . . 193 163 13 369
NONOPERATING INCOME . . . . . . . 2 2 2 6
INCOME BEFORE INTEREST CHARGES. . 195 165 15 375
INTEREST CHARGES -
(to Parent Company) . . . . . . 1 2 1 4
INCOME BEFORE FEDERAL
INCOME TAXES. . . . . . . . . . 194 163 14 371
FEDERAL INCOME TAX
EXPENSE (CREDIT). . . . . . . . 80 49 (99) 30
NET INCOME. . . . . . . . . . . . $ 114 $ 114 $ 113 $ 341
The common stock of the Company is
wholly owned by Ohio Power Company.
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WINDSOR COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
October 31, November 30, December 31,
1994 1994 1994
(in thousands)
ASSETS
<S> <C> <C> <C>
MINING PLANT:
Mining Plant in Service . . . . . . . . . . . $66,110 $66,432 $66,430
Construction Work in Progress . . . . . . . . 383 401 415
Total Mining Plant. . . . . . . . . . 66,493 66,833 66,845
Accumulated Depreciation and Amortization . . 26,002 26,334 26,665
NET MINING PLANT. . . . . . . . . . . 40,491 40,499 40,180
CURRENT ASSETS:
Cash and Cash Equivalents . . . . . . . . . . 64 49 18
Accounts Receivable:
General . . . . . . . . . . . . . . . . . . 22 41 155
Affiliated Companies. . . . . . . . . . . . - 680 815
Coal. . . . . . . . . . . . . . . . . . . . . 1,102 764 390
Materials and Supplies. . . . . . . . . . . . 3,800 3,904 4,021
Other . . . . . . . . . . . . . . . . . . . . 289 255 241
TOTAL CURRENT ASSETS. . . . . . . . . 5,277 5,693 5,640
REGULATORY ASSETS . . . . . . . . . . . . . . . 4,012 655 655
DEFERRED CHARGES. . . . . . . . . . . . . . . . 583 416 494
TOTAL . . . . . . . . . . . . . . . $50,363 $47,263 $46,969
</TABLE>
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<TABLE>
WINDSOR COAL COMPANY
BALANCE SHEETS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
October 31, November 30, December 31,
1994 1994 1994
(in thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
SHAREOWNER'S EQUITY:
Common Stock - Par Value $100:
Authorized - 5,000 Shares
Outstanding - 4,064 Shares. . . . . . . . . $ 406 $ 406 $ 406
Paid-in Capital . . . . . . . . . . . . . . . 10,470 10,470 10,470
Retained Earnings . . . . . . . . . . . . . . 1,156 1,270 1,383
TOTAL SHAREOWNER'S EQUITY . . . . . . 12,032 12,146 12,259
LONG-TERM DEBT:
Finance Obligations . . . . . . . . . . . . . 8,864 8,817 8,769
Advances from Parent Company. . . . . . . . . 225 225 225
TOTAL LONG-TERM DEBT. . . . . . . . . 9,089 9,042 8,994
OTHER NONCURRENT LIABILITIES:
Obligations Under Capital Leases. . . . . . . 2,942 3,043 2,876
Operating Reserves. . . . . . . . . . . . . . 5,564 5,828 5,777
TOTAL OTHER NONCURRENT LIABILITIES. . 8,506 8,871 8,653
CURRENT LIABILITIES:
Long-term Debt Due Within One Year. . . . . . 570 570 570
Accounts Payable:
General . . . . . . . . . . . . . . . . . . 681 730 786
Affiliated Companies. . . . . . . . . . . . 273 745 633
Taxes Accrued . . . . . . . . . . . . . . . . 136 473 167
Accrued Vacation Pay. . . . . . . . . . . . . 720 685 617
Workers' Compensation Claims. . . . . . . . . 2,072 2,028 2,290
Obligations Under Capital Leases. . . . . . . 2,045 2,089 2,079
Other . . . . . . . . . . . . . . . . . . . . 1,401 1,534 1,928
TOTAL CURRENT LIABILITIES . . . . . . 7,898 8,854 9,070
REGULATORY LIABILITIES:
Amounts Due to Customers From Future
Federal Income Tax Benefits . . . . . . . . 3,959 3,945 3,795
West Liberty Portal Regulatory Liability. . . 195 198 201
TOTAL REGULATORY LIABILITIES. . . . . 4,154 4,143 3,996
DEFERRED CREDITS. . . . . . . . . . . . . . . . 8,684 4,207 3,997
TOTAL . . . . . . . . . . . . . . . $50,363 $47,263 $46,969
/TABLE
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WINDSOR COAL COMPANY
STATEMENTS OF RETAINED EARNINGS
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
Three
Months
Month Ended Ended
October 31, November 30, December 31, December 31,
1994 1994 1994 1994
(in thousands)
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD. . $1,042 $1,156 $1,270 $1,042
NET INCOME. . . . . . . . . . . . 114 114 113 341
BALANCE AT END OF PERIOD. . . . . $1,156 $1,270 $1,383 $1,383
</TABLE>
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<TABLE>
WINDSOR COAL COMPANY
STATEMENTS OF COST OF COMMERCIAL COAL SOLD AND SHIPPED
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
October November December
1994 1994 1994
(in thousands, except as noted)
<S> <C> <C> <C>
I. Calculation of Cost-of-Capital Compensation:
A. Equity Investment at Beginning of Month:
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . $ 406 $ 406 $ 406
Paid-in Capital (excluding item D). . . . . . . . . . . . . 8,353 8,353 8,353
Excess of Acquisition Cost Over Net Book Value. . . . . . . 172 172 172
8,931 8,931 8,931
B. Rate of Return Allowable per HCAR No. 22179:
12.04% per annum, 1.0033% per month (a) . . . . . . . . . . .010033 .010033 .010033
C. Earnings Allowable on Equity Investment
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 90 $ 90 $ 89
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 896 $ 986 $ 1,075
D. Equity Investment for the month of December 1982. . . . . . . $ 2,117 $ 2,117 $ 2,117
E. Rate of Return Allowable per HCAR No. 22179:
13.58% per annum, 1.1317% per month . . . . . . . . . . . . .011317 .011317 .011317
F. Earnings Allowable: (re investment in item D)
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 24 $ 24 $ 24
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 240 $ 264 $ 288
G. Total Earnings Allowable:
1. Current Month (C.1. + F.1.). . . . . . . . . . . . . . . $ 114 $ 114 $ 113
2. Year-to-Date (C.2. + F.2.) . . . . . . . . . . . . . . . $ 1,136 $ 1,250 $ 1,363
H. Net Income per Statements of Income . . . . . . . . . . . . . $ 114 $ 114 $ 113
Add: Interest Charges . . . . . . . . . . . . . . . . . . . 1 2 1
Less: Nonoperating Income . . . . . . . . . . . . . . . . . 2 2 2
I. Applied Cost-of-Capital Billing Adder:
1. Current Month. . . . . . . . . . . . . . . . . . . . . . $ 113 $ 114 $ 112
2. Year-to-Date . . . . . . . . . . . . . . . . . . . . . . $ 1,151 $ 1,265 $ 1,377
II. Monthly Billing Calculation:
A. Total Operating Expense (b) . . . . . . . . . . . . . . . . . $ 5,483 $ 7,602 $ 4,163
B. Add: Monthly Cost-of-Capital Billing
Adder as Applied per I. 1. of Section I . . . . . . . . . . 113 114 112
C. Cost Applicable to Coal Sold and Shipped (c). . . . . . . . . $ 5,596 $ 7,716 $ 4,275
D. Coal Sold and Shipped in Current Month (in tons) (c). . . . . 91,387 115,407 118,246
E. Average Price per Ton Sold and Shipped (in dollars) (C/D) (c) $61.23 $66.85 $36.15
(a) HCAR No. 22179 pertains to only a portion of the equity investment ($7,497,000), however, the approved
rate is being applied to Ohio Power Company's full equity investment, excluding retained earnings.
(b) As represented by "Cost of Operation" plus "Federal Income Taxes" reported in Statements of Income.
(c) Sales were to an affiliated company for the Cardinal Plant.
/TABLE
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WINDSOR COAL COMPANY
ANALYSIS OF OPERATING RESERVES AND DEFERRED CREDITS
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
October 31, November 30, December 31,
1994 1994 1994
(in thousands)
<S> <C> <C> <C>
Operating Reserves:
Workers' Compensation . . . . . . . . . . . . $ 919 $ 982 $ 731
Postemployment Benefits . . . . . . . . . . . 655 655 655
Accrued Postretirement Benefits
Other Than Pensions . . . . . . . . . . . . 3,987 4,188 4,388
Public Liability Insurance. . . . . . . . . . 3 3 3
Total Operating Reserves. . . . . . . $5,564 $5,828 $5,777
Deferred Credits:
Federal Income Taxes. . . . . . . . . . . . . $4,316 $4,207 $3,997
Receipts for Future Coal Deliveries . . . . . 4,368 - -
Total Deferred Credits. . . . . . . . $8,684 $4,207 $3,997
</TABLE>
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WINDSOR COAL COMPANY
INFORMATION CONCERNING CAPITAL IMPROVEMENTS
FOR THE QUARTER ENDED DECEMBER 31, 1994
There were no significant changes with regard to the Company's mining
plant during the quarter.
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WINDSOR COAL COMPANY
ANALYSIS OF MINING PLANT IN SERVICE
AND RELATED ACCUMULATED PROVISIONS FOR
DEPRECIATION AND AMORTIZATION
BY MONTH-END, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
October 31, 1994 November 30, 1994 December 31, 1994
Net Net Net
Gross Accumulated Carrying Gross Accumulated Carrying Gross Accumulated Carrying
Cost Provisions Amount Cost Provisions Amount Cost Provisions Amount
(in thousands)
Description
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Surface Lands. . . . . . . . . $ 638 $ - $ 638 $ 638 $ - $ 638 $ 638 $ - $ 638
Mining Structures
and Equipment. . . . . . . . 53,125 22,981 30,144 53,448 23,289 30,159 53,448 23,596 29,852
Coal Interests
(net of depletion) . . . . . 2,306 - 2,306 2,305 - 2,305 2,303 - 2,303
Mine Development Costs . . . . 10,041 3,021 7,020 10,041 3,045 6,996 10,041 3,069 6,972
Total Mining Plant in
Service. . . . . . . . . $66,110 $26,002 $40,108 $66,432 $26,334 $40,098 $66,430 $26,665 $39,765
</TABLE>
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WINDSOR COAL COMPANY
INFORMATION CONCERNING OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1994
Recovery of Coal Costs
The Clean Air Act Amendments of 1990 (CAAA) require significant
reductions in sulfur dioxide and nitrogen oxides emitted from Ohio Power
Company's (OPCo's) generating plants. In November 1992 the Public Utilities
Commission of Ohio (PUCO) approved OPCo's compliance plan setting forth
compliance measures for affected generating units, including switching
Cardinal Plant unit 1, which is supplied by the Company, to lower
sulfur coal from unaffiliated sources in 2001.
In February 1995 OPCo and certain other parties to a base rate
proceeding entered into a Settlement Agreement to resolve, among other issues,
the pending base rate case and the current electric fuel component (EFC)
proceeding. Under the terms of the Settlement Agreement the EFC rate is
fixed at 1.465 cents per kwh from June 1995 through November 1998; OPCo is
provided with the opportunity to recover its Ohio jurisdictional share of
the investment in and the liabilities and the future shut-down costs of its
affiliated mining operations including the Company's Windsor mine as well
as any fuel costs incurred above the fixed rate; and OPCo may proceed with
its CAAA compliance plan as filed with the PUCO. The Settlement Agreement
was approved by the PUCO on March 23, 1995.
Under the terms of a 1992 stipulation agreement the cost of coal
burned at OPCo's Gavin Plant beginning December 1, 1994 is subject to a
15-year predetermined price of $1.575 per million Btu's with quarterly
escalation adjustments. As discussed above the February 1995 Settlement
Agreement fixes the EFC factor at 1.465 cents per kwh for the period
June 1, 1995 through November 30, 1998. The predetermined Gavin Plant
agreement, in conjunction with the above-referenced Settlement Agreement,
provides OPCo with an opportunity to recover its investment in and the
liabilities and closing costs of its affiliated mining operations
attributable to its Ohio jurisdiction including the Company's Windsor mine
as well as any operating losses incurred under the fixed EFC factor to the
extent the actual cost of coal burned at the Gavin Plant is below the
predetermined price.
Based on the estimated future cost of coal supplied to the Gavin
Plant, management believes that OPCo will recover the PUCO jurisdictional
portion of the cost of the Windsor mining operations including eventual mine
closure liabilities under the terms of the Settlement Agreement. In the
event OPCo does not recover its costs, the Company would still recover
from OPCo all of its costs of mining operations under the terms of
the coal supply agreement.
As a result of clean air compliance efforts at the Cardinal Plant,
it may be necessary to shutdown the Company's mining operations in the year
2000 or earlier. If the predetermined price limitations are not adequate
to recover mining cost from PUCO jurisdictional fuel clause customers the
mines could close even sooner. The cost of a shutdown would be substantial
and would include not only any possible loss on disposition of assets but
also employee benefits, lease commitments, reclamation and other shutdown
costs. If a shutdown should become necessary, results of operations are not
expected to be affected since shutdown costs are recoverable from OPCo under
the coal supply agreement.
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WINDSOR COAL COMPANY
STATEMENTS OF COST OF OPERATION
BY MONTH, FOR THE QUARTER ENDED DECEMBER 31, 1994
<CAPTION>
Three
Months
October November December Ended
1994 1994 1994 12/31/94
(in thousands)
<S> <C> <C> <C> <C>
Direct Labor-UMW* . . . . . . . . . . . . . . . . $ 168 $ 138 $ 137 $ 443
Indirect Labor-UMW* . . . . . . . . . . . . . . . 468 372 405 1,245
Benefits-UMW* . . . . . . . . . . . . . . . . . . 567 699 635 1,901
Salaries and Benefits-Nonunion. . . . . . . . . . 546 517 325 1,388
Operating Supplies. . . . . . . . . . . . . . . . 216 236 267 719
Repair Parts and Materials. . . . . . . . . . . . 265 (368) 15 (88)
Electricity and Other Utilities . . . . . . . . . 138 159 178 475
Outside Services-Maintenance, Haulage
and Reclamation . . . . . . . . . . . . . . . . 317 308 397 1,022
Taxes Other Than Federal Income Taxes** . . . . . 339 418 408 1,165
Rental of Equipment . . . . . . . . . . . . . . . 422 420 473 1,315
Depreciation, Depletion and Amortization. . . . . 122 111 111 344
Royalties . . . . . . . . . . . . . . . . . . . . 100 192 188 480
Mining Cost Normalization***. . . . . . . . . . . 1,904 3,385 - 5,289
Other Production Costs. . . . . . . . . . . . . . 339 628 349 1,316
Subtotal. . . . . . . . . . . . . . . . . . . . . 5,911 7,215 3,888 17,014
Transfers of Production Costs (to)/from
Coal Inventory. . . . . . . . . . . . . . . . . (508) 338 374 204
Total . . . . . . . . . . . . . . . . . $5,403 $7,553 $4,262 $17,218
* United Mine Workers of America.
** Excludes FICA, Federal Unemployment and State Unemployment. These costs are reflected
in employee benefits.
*** Represents the deferral/accrual required to establish a selling price based on
forecasted results for the remainder of the year. The amount of mining cost
normalization is established on an "overall" company basis (i.e., not itemized) and
is eliminated by year-end.
</TABLE>
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WINDSOR COAL COMPANY
CONSTRUCTION EXPENDITURE BUDGET - 1995*
<CAPTION>
Description Budgeted Amount
(in thousands)
<S> <C>
Upgrade Clean Coal Belt $1,030
Subsidence Blanket 110
Mine Plant Blanket 41
$1,181
* This budget does not include any possible lease transactions.
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