<PAGE>
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File No. 33-7591
____________
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-1211925
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
POST OFFICE BOX 1349
2100 EAST EXCHANGE PLACE
TUCKER, GEORGIA 30085-1349
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 270-7600
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 of such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. The Registrant is a
membership corporation and has no authorized or outstanding equity securities.
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
OGLETHORPE POWER CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1994
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of June 30, 1994 (Unaudited)
and December 31, 1993 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months and Six Months Ended
June 30, 1994 and 1993 5
Condensed Statements of Cash Flows (Unaudited)
for the Six Months Ended June 30, 1994 and 1993 6
Notes to the Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II - OTHER INFORMATION
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
AT AT
JUNE 30, DECEMBER 31,
1994 1993
----------- ------------
(UNAUDITED)
<S> <C> <C>
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $5,071,109 $5,047,739
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,174,805) (1,110,296)
---------- ----------
3,896,304 3,937,443
NUCLEAR FUEL, AT AMORTIZED COST 104,625 110,177
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,806 7,336
CONSTRUCTION WORK IN PROGRESS 508,050 450,965
---------- ----------
4,515,785 4,505,921
---------- ----------
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 78,976 110,390
DECOMMISSIONING FUND, AT MARKET 54,725 56,911
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 18,523 19,123
OTHER 486 486
---------- ----------
152,710 186,910
---------- ----------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 100,131 244,173
RECEIVABLES 92,233 82,274
INVENTORIES, AT AVERAGE COST 95,968 86,468
PREPAYMENTS AND OTHER CURRENT ASSETS 18,047 14,763
---------- ----------
306,379 427,678
---------- ----------
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 163,464 91,981
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 75,846 71,559
DEFERRED DEBT EXPENSE, BEING AMORTIZED 19,503 21,527
DISCONTINUED PROJECT, BEING AMORTIZED 17,609 18,314
---------- ----------
276,422 203,381
---------- ----------
$5,251,296 $5,323,890
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed statements.
3
<PAGE>
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
EQUITY AND LIABILITIES
<TABLE>
<CAPTION>
AT AT
JUNE 30, DECEMBER 31,
1994 1993
------------ -------------
(UNAUDITED)
<S> <C> <C>
CAPITALIZATION:
PATRONAGE CAPITAL AND MEMBERSHIP FEES (NET OF
UNREALIZED LOSSES OF $ 2,583 ON
AVAILABLE-FOR-SALE SECURITIES) $ 321,094 $ 289,982
LONG-TERM DEBT 4,101,657 4,058,251
OBLIGATION UNDER CAPITAL LEASES 303,604 303,458
---------- ----------
4,726,355 4,651,691
---------- ----------
CURRENT LIABILITIES:
LONG-TERM DEBT DUE WITHIN ONE YEAR 68,379 78,644
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 13,494 26,777
ACCOUNTS PAYABLE 57,267 62,186
ACCRUED INTEREST 26,751 108,702
ACCRUED AND WITHHELD TAXES 14,655 9,401
ENERGY COSTS BILLED IN EXCESS OF ACTUALS 7,361 11,456
OTHER CURRENT LIABILITIES 11,420 40,234
---------- ----------
199,327 337,400
---------- ----------
DEFFERED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 64,380 65,550
GAIN ON SALE OF SCHERER COMMON FACILITIES,
BEING AMORTIZED 2,548 7,644
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 62,787 66,838
ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510
DEFERRED MARGINS AND VOGTLE SURCHARGE 21,083 21,083
DECOMMISSIONING RESERVE 91,842 90,476
OTHER 17,464 17,698
---------- ----------
325,614 334,799
---------- ----------
$5,251,296 $5,323,890
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed statements.
4
<PAGE>
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES & EXPENSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
SALES TO MEMBERS $229,157 $223,807 $454,615 $435,921
SALES TO NON-MEMBERS 33,878 59,512 76,038 119,541
-------- -------- -------- --------
TOTAL OPERATING REVENUES 263,035 283,319 530,653 555,462
-------- -------- -------- --------
OPERATING EXPENSES:
FUEL 48,600 42,444 99,832 78,318
PRODUCTION 30,937 37,316 63,055 66,152
PURCHASED POWER 57,652 70,175 111,192 136,068
DEPRECIATION AND AMORTIZATION 33,222 32,358 66,273 64,612
TAXES OTHER THAN INCOME TAXES 5,927 6,014 12,032 12,076
OTHER OPERATING EXPENSES 10,993 9,067 20,684 18,484
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 187,331 197,374 373,068 375,710
-------- -------- -------- --------
OPERATING MARGIN 75,704 85,945 157,585 179,752
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
INTEREST INCOME 2,183 5,729 5,134 9,446
AMORTIZATION OF DEFERRED MARGINS 4,632 1,035 11,273 2,070
ALLOWANCE FOR EQUITY FUNDS USED
DURING CONSTRUCTION 675 520 1,356 967
OTHER 5,819 5,265 11,295 10,913
-------- -------- -------- --------
TOTAL OTHER INCOME 13,309 12,549 29,058 23,396
-------- -------- -------- --------
INTEREST CHARGES:
INTEREST ON LONG-TERM OBLIGATIONS 83,888 95,054 170,190 189,300
ALLOWANCE FOR DEBT FUNDS USED
DURING CONSTRUCTION (8,386) (6,580) (17,242) (12,922)
-------- -------- -------- --------
NET INTEREST CHARGES 75,502 88,474 152,948 176,378
-------- -------- -------- --------
MARGIN BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 13,511 10,020 33,695 26,770
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES -- -- -- 13,340
-------- -------- -------- --------
NET MARGIN $ 13,511 $ 10,020 $ 33,695 $ 40,110
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these condensed statements.
5
<PAGE>
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET MARGIN $ 33,695 $ 40,110
---------- ----------
ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES -- (13,340)
DEPRECIATION AND AMORTIZATION 93,318 91,135
DEFERRED MARGINS AND AMORTIZATION OF DEFERRED MARGINS (11,273) (2,070)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (1,356) (967)
OTHER (9,718) (6,829)
DECREASE (INCREASE) IN NET CURRENT ASSETS, EXCLUDING
LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS
AND VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR:
RECEIVABLES (9,959) (11,594)
INVENTORIES (9,500) (9,523)
PREPAYMENTS AND OTHER CURRENT ASSETS (3,284) 3,828
ACCOUNTS PAYABLE (4,919) (13,277)
ACCRUED INTEREST (81,951) (9,878)
ACCRUED AND WITHHELD TAXES 5,254 11,301
ENERGY COST BILLED IN EXCESS OF ACTUAL (4,095) (6,036)
OTHER CURRENT LIABILITIES (28,814) (1,197)
---------- ----------
TOTAL ADJUSTMENTS (66,297) 31,553
---------- ----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (32,602) 71,663
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONS (100,213) (102,159)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 28,831 31,422
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 600 212
DECREASE IN OTHER SHORT-TERM INVESTMENTS -- 20,105
DECREASE (INCREASE) IN DECOMMISSIONING FUND 48 (2,856)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (70,734) (53,276)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NET 293,731 36,066
DEBT PAYMENTS (337,176) (121,040)
REFUND OF VOGTLE SURCHARGE (2,010) (1,000)
OTHER 4,749 (2,541)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (40,706) (88,515)
---------- ----------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (144,042) (70,128)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 244,173 275,624
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 100,131 $ 205,496
---------- ----------
---------- ----------
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED) $ 230,599 $ 180,431
INCOME TAXES (REFUND) -- (43)
</TABLE>
The accompanying notes are an integral part of these condensed statements.
6
<PAGE>
OGLETHORPE POWER CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1994 AND 1993
(A) The condensed financial statements included herein have been prepared by
Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC). In
the opinion of management, the information furnished herein reflects all
adjustments (which included only normal recurring adjustments) necessary to
present fairly, in all material respects, the results for the periods ended
June 30, 1994 and 1993. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such SEC rules and regulations, although Oglethorpe believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in Oglethorpe's latest Annual Report on Form 10-K, as filed with
the SEC.
(B) Oglethorpe adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", as of
January 1, 1994. Under this Statement, investment securities held by
Oglethorpe are classified as either available-for-sale or held-to-maturity.
Available-for-sale securities are carried at market value with unrealized
gains and losses, net of any tax effect, added to or deducted from
patronage capital. Unrealized gains and losses from investment securities
held in the decommissioning fund, which are also classified as
available-for-sale, are directly added to or deducted from the
decommissioning reserve. Held-to-maturity securities are carried at cost.
All realized and unrealized gains and losses are determined using the
specific identification method. In accordance with the provisions of this
Statement, the amounts classified as bond, reserve and construction funds
and decommissioning fund on the accompanying Condensed Balance Sheets are
carried at cost as of December 31, 1993.
(C) Oglethorpe's share of the undiscounted cost of decommissioning co-owned
nuclear facilities, assuming decommissioning occurs promptly after the unit
is taken out of service, is estimated at approximately $254 million for
Hatch Unit No. 1, $356 million for Hatch Unit No. 2, $416 million for
Vogtle Unit No. 1 and $543 million for Vogtle Unit No. 2. The years in
which the above plants are expected to begin decommissioning are 2014,
2018, 2027 and 2029, respectively.
The annual provision for decommissioning, which totaled $5.9 million in
1993, is currently recovered from Members as depreciation expense. In
developing the amount of the annual provision, the escalation rate was
assumed to be 4% and return on trust assets was assumed to be 8%.
Oglethorpe's management is of the opinion that any changes in cost
estimates of decommissioning will be fully recovered in future rates.
7
<PAGE>
Beginning in the years noted above in which the units begin
decommissioning, the expected timing of payments for decommissioning costs
will extend for a period of 9 to 14 years. Oglethorpe's management does
not expect such payments to have an adverse impact on liquidity or capital
resources.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Oglethorpe's net margin for the quarter ended June 30, 1994 was $13.5 million as
compared to $10.0 million for the same period of 1993. Oglethorpe's net margin
for the six months ended June 30, 1994 was $33.7 million as compared to $40.1
million for the first six months of 1993. Net margin was higher in the first
six months of 1993 because of the implementation of Statement of Financial
Accounting Standards No. 109, which resulted in the reversal of $13.3 million of
accumulated deferred income taxes which had been previously expensed. This
amount is reflected in the Condensed Statements of Revenues and Expenses as the
cumulative effect of a change in accounting principle.
OPERATING REVENUES
The increases in Member revenues for the three month and six month periods ended
June 30, 1994 as compared to the same periods of 1993 were due, for the most
part, to increased billings of fixed costs resulting from the decline in
Sell-back revenues from Georgia Power Company (GPC) under the plant operating
agreements (as discussed below). Oglethorpe implemented a new rate in January
1994 which has increased revenues to address the Members' increasing share of
fixed costs. These higher capacity revenues were partially offset by lower
energy revenues derived from the flow through to the Members of reduced energy
costs. (See "Operating Expenses" below for a discussion of average fuel costs.)
For the three months and six months ended June 30, 1994, energy revenues from
Members declined by 9.9% and 2.8%, respectively, compared to the prior year
despite increases in megawatt-hour (MWh) sales of 7.2% and 11.7%, respectively.
Sales to non-Members are primarily made pursuant to three different types of
contractual arrangements with GPC and from energy sales to other non-Member
utilities. The following table summarizes the amounts of non-Member revenues
from these sources for the three months and six months ended June 30, 1994 and
1993:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- -------------------------
1994 1993 1994 1993
---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C>
Plant operating agreements $14,425 $31,211 $33,519 $ 66,175
Power supply arrangements 6,222 13,912 15,459 31,083
Transmission agreements 2,533 4,003 5,732 9,314
Other utilities 10,698 10,386 21,328 12,969
------- ------- ------- --------
Total $33,878 $59,512 $76,038 $119,541
------- ------- ------- --------
------- ------- ------- --------
</TABLE>
9
<PAGE>
The decreases in revenues from non-Members for both comparable periods were
primarily attributable to lower revenues from GPC pursuant to plant operating
agreements. Under the plant operating agreements, GPC purchases capacity and
energy from Oglethorpe on a declining scale in the early years of operation of
certain co-owned generating units. The decreases in revenues of this type were
due to scheduled reductions in sell-back percentages for both of the Plant
Vogtle units and for Plant Scherer Unit No. 2.
The second source of non-Member revenues is derived pursuant to power supply
arrangements with GPC. These revenues are derived, for the most part, from
energy sales arising from dispatch situations whereby GPC causes co-owned
coal-fired generating resources to be operated when Oglethorpe's system does not
require all of its contractual entitlement to the generation. These revenues
essentially represent reimbursement of costs to Oglethorpe since, under the
operating agreements, Oglethorpe is responsible for its share of fuel costs any
time a unit operates. See the discussion under "Operating Expenses" below of
the lower average fuel costs of the coal-fired generating units in 1994.
Revenues from sales of this type to GPC were lower in both comparable periods
due to the fact that Oglethorpe retained much of its share of the output from
the Plant Scherer and Wansley units because the lower average fuel costs made
those units more attractive than certain purchased resources.
Revenues from other non-Member utilities increased substantially in the six
months ended June 30, 1994 as compared to the same period of 1993. Oglethorpe
is continuing to pursue energy and capacity sales to other utilities as a means
of reducing amounts that must be recovered from Members.
OPERATING EXPENSES
The decreases in total operating expenses for the three months and six months
ended June 30, 1994 as compared to the same periods of 1993 were primarily
attributable to reductions in purchased power expenses and production expenses
which were partially offset by increases in fuel expenses.
Most of the increases in fuel expenses for both comparable periods were
attributable to substantially greater generation from Plant Scherer Units No. 1
and 2. Output from these units was approximately 520,000 and 1.5 million MWh
higher, respectively, for the three months and six months ended June 30, 1994.
Oglethorpe began receiving shipments at Plant Scherer of lower-priced coal from
the mining regions of the western United States in the last quarter of 1993.
Due primarily to the use of this lower-priced coal, the average fuel cost for
the Scherer units decreased by approximately 11% from last year's second quarter
and from the first six months of 1993. The average fuel cost for the Plant
Wansley units also decreased, by almost 18%, in the second quarter of 1994.
This decrease was the result of increased spot purchases of coal.
The significant increase in coal-fired generation (prompted by declining average
fuel costs) as well as declining sales from these coal-fired resources to GPC
pursuant to power supply arrangements (see discussion under "Operating Revenues"
above) have resulted in substantially lower utilization
10
<PAGE>
of purchased power resources. Energy purchases decreased by 47% and 44%,
respectively, in the three months and six months ended June 30, 1994 as compared
to the same periods of 1993.
The decrease in production expenses in the second quarter of 1994 was due to a
lower number of nuclear refueling outages. One of Oglethorpe's nuclear units
underwent a scheduled outage during the spring of 1994 as compared to two
scheduled outages during the same period of 1993.
OTHER INCOME
Other income was higher for the second quarter of 1994 primarily as a result of
an increase in the amount of deferred margins being amortized. Oglethorpe's
Board of Directors authorizes the amount of deferred margins to be returned to
the Members each year. For 1994, the annual amount authorized was $19.0 million
as compared to $4.1 million for 1993. Interest income declined due to lower
average cash balances. (See "Assets" under FINANCIAL CONDITION for a discussion
of the change in cash balances.)
INTEREST CHARGES
The decrease in net interest charges resulted from the refinancing efforts
completed during 1993 and in the first quarter of 1994. For a discussion of the
refinancing transactions, see the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Oglethorpe's Annual Report on
Form 10-K for the year ended December 31, 1993. As a result of Oglethorpe's
refinancing transactions, the average interest rate on long-term debt declined
from 8.10% at June 30, 1993 to 7.15% at June 30, 1994. Allowance for debt funds
used during construction continues to increase in proportion to the level of
investment at the Rocky Mountain Project, a pumped storage hydroelectric
facility.
FINANCIAL CONDITION
Total assets and total equity and liabilities as of June 30, 1994 were $5.3
billion which was
$73 million less than the total at December 31, 1993.
ASSETS
The increase in construction work in progress is primarily the result of
property additions during the six-month period of $40.6 million for Rocky
Mountain Project construction.
The decrease in bond, reserve and construction funds primarily resulted from the
utilization of a portion of the debt service reserve funds for debt service
payments. The available funds resulted from refinancing projects which did not
require a debt service reserve fund or which required a lower debt service
reserve fund than the refunded bonds.
11
<PAGE>
The decrease in cash and temporary cash investments is partly due to the
December 31, 1993 Federal Financing Bank (FFB) interest payment being made as
due on January 3, 1994 and partly due to premiums paid in connection with FFB
note modifications and a pollution control bond (PCB) refunding. For a
discussion of the refinancing transactions, see the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Oglethorpe's
Annual Report on Form 10-K for the year ended December 31, 1993.
The increase in receivables resulted primarily from a $6.5 million higher
billing to Oglethorpe's Members for the month of June 1994 compared to December
1993.
Inventories increased primarily as a result of coal inventories for Plants
Scherer and Wansley returning to normal levels at June 30, 1994 from lower
levels at year-end.
Prepayments and other current assets increased primarily due to a $2.3 million
increase in the payment made to GPC for estimates of Plant Wansley and Plant
Hatch production expenses and Plant Wansley coal purchases for August 1994
compared to the estimate paid for January 1994.
The increase in the premium and loss on reacquired debt resulted from premiums
paid in connection with both FFB note modifications and the PCB refunding.
EQUITY AND LIABILITIES
For a discussion of unrealized losses on available-for-sale securities see Note
B of Notes to the Condensed Financial Statements.
Long-term debt due within one year decreased due to normal maturities of PCBs
and mortgage notes payable to the FFB.
Deferred margins and Vogtle surcharge to be refunded within one year decreased
by $13.3 million, which is the amount that was refunded to Members for the six
months ended June 30, 1994. See "Other Income" under RESULTS OF OPERATIONS for
a discussion of the 1994 amortization of deferred margins. For a description of
the Vogtle Surcharge, see Note 1 of Notes to Financial Statements in
Oglethorpe's Annual Report on Form 10-K for the year ended December 31, 1993.
Accrued interest decreased as discussed under cash and temporary investments
above.
Accrued and withheld taxes increased as a result of the normal monthly accruals
of property taxes, which are generally paid in the last quarter of the year.
Energy costs billed in excess of actuals decreased as a net result of the
refunding to Members of amounts over-collected in 1993 and the realization of
energy cost savings compared to budgeted amounts.
12
<PAGE>
The decrease in other current liabilities is partly due to an $11 million refund
to GPC of an option payment related to the canceled Pickens County Pumped
Storage Hydroelectric Project and partly due to normal timing variations.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
As stated in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, the electric utility industry is becoming increasingly
competitive, and this increasing competition presents a challenge to companies
in the electric utility industry, including Oglethorpe and its Members, to
reduce costs and improve the management of resources. The 1993 Form
10-K reports a number of actions taken and being taken by Oglethorpe to
accomplish these objectives.
Oglethorpe and the Members believe that the changes in the industry, along with
the growing diversity of needs of the Members, make it beneficial to study the
feasibility of altering certain aspects of the relationship between Oglethorpe
and the Members, so as to allow for the possibility that the Members could
satisfy some or all of their additional future needs from sources other than
Oglethorpe. The Members currently discussing these matters with Oglethorpe have
stated their commitment to Oglethorpe and the Rural Electrification
Administration (REA) to honor their current financial obligations to
Oglethorpe under the Wholesale Power Contracts.
The study of these matters has recently been initiated. The results of the
study and any action Oglethorpe and the Members might take based thereon cannot
be predicted at this time. However, Oglethorpe's Board of Directors must
approve any changes to the current Wholesale Power Contracts and intends that
any new arrangement be structured so as not to have an adverse effect on
Oglethorpe or the other Members. REA must also approve any changes to these
contracts.
Recently, one of the Members prepaid all of its REA indebtedness, and thus, is
no longer an REA borrower. This prepayment does not affect this Member's
relationship with Oglethorpe under its Wholesale Power Contract. Certain other
Members may prepay all of their REA indebtedness in the future.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Number Description
- - ------ -----------
10.11(a) Amendment No. 1 to Interconnection Agreement between Alabama
Electric Cooperative, Inc. and Oglethorpe, dated as of April 22,
1994.
14
<PAGE>
Number Description
- - ----- -----------
10.11(b) Letter of Commitment (Firm Power Sale) Under Service Schedule J -
Negotiated Interchange Service between Alabama Electric
Cooperative, Inc. and Oglethorpe, dated March 31, 1994.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended
June 30, 1994.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Oglethorpe Power Corporation
(An Electric Membership
Generation & Transmission
Corporation)
Date: AUGUST 12, 1994 By: /s/ T. D. Kilgore
---------------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: AUGUST 12, 1994 /s/ John S. Dean, Sr.
---------------------------------------
John S. Dean, Sr.
Secretary-Treasurer
(Principal Financial Officer)
Date: AUGUST 12, 1994 /s/ Eugen Heckl
---------------------------------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
16
<PAGE>
EXHIBIT 10.11(a)
AMENDMENT NO. 1
TO INTERCONNECTION AGREEMENT BETWEEN
ALABAMA ELECTRIC COOPERATIVE, INC. AND
OGLETHORPE POWER CORPORATION
This agreement is made and entered into as of April 22, 1994, by and
between Alabama Electric Cooperative, Inc. ("AEC"), P.O. Box 550, Andalusia,
Alabama 36420 and Oglethorpe Power Corporation (An Electric Membership
Generation & Transmission Corporation) ("OPC"), P.O. Box 1349, Tucker, Georgia
30085-1349.
WITNESSETH:
WHEREAS, AEC and OPC entered into an Interconnection Agreement dated
November 12, 1990; and
WHEREAS, the parties desire to amend their Interconnection Agreement to add
Service Schedule "J" Negotiated Interchange Service for OPC to provide 100
megawatts of capacity and energy and AEC to take such power and energy for the
period of June 1, 1998 through December 31, 2005; and
WHEREAS, the parties desire to further amend their Interconnection
Agreement to extend the term from December 31, 1999 through December 31, 2005,
and to modify the present Assignment clause; and
WHEREAS, the parties desire the Interconnection Agreement, as amended, to
remain in full force and effect.
NOW, THEREFORE, in consideration of the premises and terms and conditions
set forth herein, the parties agree further to amend the Interconnection
Agreement as follows:
1. Service Schedule "J" Negotiated Interchange Service attached is added
to the Agreement dated November 12, 1990.
2. Section 2.01. Term of Agreement is amended by adding an additional
sentence as follows:
"The initial term ending December 31, 1999, is extended through
December 31, 2005."
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3. Delete Section 7.03. Assignment. Add a new "Section 7.03. Successors
and Assigns."
(a). Permitted Assignments. This Agreement shall be binding upon
and inure to the benefit of the permitted successors and
assigns of the parties hereto. The Parties may assign,
transfer, mortgage or pledge this Agreement to create a
security interest for the benefit of the United States of
America, acting through the Administrator of the Rural
Electrification Administration (the Administrator).
Thereafter, the Administrator, without the approval of
parties, may (i) cause this Agreement to be sold, assigned,
transferred or otherwise disposed of to a third party
pursuant to the terms governing such security interest, or
(ii) if the Administrator first acquires this Agreement
pursuant to 7 U.S.C. Section 907, sell, assign, transfer, or
otherwise dispose of this Agreement to a third party;
provided, however, that in either case (a) the Cooperative
is in default of its obligations to the Administrator that
are secured by such security interest and the Administrator
has given the non-defaulting party notice of such default;
and (b) the Administrator has given the non-defaulting party
thirty days' prior notice of its intention to sell, assign,
transfer or otherwise dispose of this Agreement indicating
the identity of the intended third-party assignee or
purchaser. No permitted sale, assignment, transfer or other
disposition shall release or discharge the Cooperative from
its obligations under this Agreement.
4. Add a new "Section 7.03(b). Other Assignment."
(b). Other Assignment. Except as provided in subsection 7.03(a) above,
neither party shall assign its interest in the Agreement in whole
or in part without the prior written consent of the other party.
Such consent shall not be unreasonably withheld.
5. All of the other terms and conditions of the Interconnection
Agreement, as amended, between AEC and OPC shall remain in full force
and effect.
This Amendment No. 1 shall not be effective until approved by the
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Administrator of the Rural Electrification Administration.
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IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to the
Interconnection Agreement to be executed by their undersigned officers.
ALABAMA ELECTRIC COOPERATIVE, INC.
BY:/s/ JAMES A. VANN, JR.
President and Chief Executive Officer
ATTEST:
/s/ ELMER MCDANIEL
Secretary
OGLETHORPE POWER CORPORATION
BY:/s/ CHARLES T. AUTRY
Corporate Contracts Officer
Senior Vice President and
General Counsel
ATTEST:
/s/ PATRICIA N. NASH
Assistant Secretary
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SERVICE SCHEDULE J
NEGOTIATED INTERCHANGE SERVICE
Under Agreement dated November 12, 1990 as amended April 22 , 1994 between
Oglethorpe Power Corporation and Alabama Electric Cooperative, Inc.:
All of the services contemplated by this schedule are as agreed to by the
parties in a letter of commitment.
1.1 The terms of this Service Schedule "J" shall commence on the date
shown above and shall continue in effect for the term stipulated in
Section 2 of the Agreement; provided, however, that this Service
Schedule "J" shall continue in effect for so long as any letter of
commitment hereunder is in effect.
2.1 Negotiated Interchange Service shall mean that quantity of power
and/or energy supplied by the seller to the buyer in accordance with a
specific negotiated letter of commitment.
3.1 Each party shall determine its needs for any availability of
Negotiated Interchange Service from time to time. To the extent that
such service is requested by one party and is desired to be made
available by the other party, a written commitment shall be made for
such service. Such letter of commitment shall contain terms and
conditions of delivery of the capacity and energy and also may contain
special provisions which shall take precedence over the provisions of
the Agreement.
4.1 The buyer shall pay the seller for Negotiated Interchange Service as
set forth in the letter of commitment.
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EXHIBIT 10.11(b)
March 31, 1994
Mr. Jeff Parish
Vice President, Bulk Power and Delivery
Alabama Electric Cooperative, Inc.
PO Box 550
Andalusia, AL 36420
Dear Mr. Parish:
Subject: Letter of Commitment - Firm Power Sale
Oglethorpe Power Corporation ("OPC") and Alabama Electric Cooperative, Inc.
("AEC") enter into this Letter of Commitment under Service Schedule J -
Negotiated Interchange Service dated April 22, 1994 to provide for OPC's sale of
100 MW firm base capacity and associated energy to AEC. This letter sets forth
the terms and conditions governing such sale and constitutes the entire
understanding of the parties.
Amount of Capacity to be Sold
OPC shall sell and AEC shall purchase one hundred megawatts
(100 MW) of firm base capacity and associated energy.
Term of Sale
The term of the sale shall commence on June 1, 1998 and end
on December 31, 2005.
Charges for Capacity and Energy
The capacity charge during each calendar year is as follows:
Year $/kW/month
1998 7.00
1999 7.00
2000 7.00
2001 7.25
2002 7.50
2003 7.75
2004 8.00
2005 8.25
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The energy charge per kilowatt-hour for energy scheduled and delivered for the
current delivery month shall be fixed prior to the beginning of the month, and
be calculated based on the prior actual 12 month rolling average fuel and
variable operations and maintenance rate attributed to OPC's Plant Robert W.
Scherer Units No. 1 and 2, plus ten percent (10%).
Cost of Emission Allowances
Costs, if any, associated with emissions allowance as currently contemplated by
the implementation of the Clean Air Act of 1992 shall be borne by OPC.
OPC shall have the right to recover any new legitimate cost, fee, tax, or
assessment not now in existence that shall be imposed due to the production or
supply of the energy associated with the sale. Such new costs shall not
be subject to the ten percent energy charge adder.
Schedule and Delivery
Delivery and scheduling of the capacity and energy shall be in accordance with
the terms and conditions of the Interconnection Agreement between the parties
dated November 12, 1990 as amended April 22, 1994.
It is the parties' intent that the capacity and energy delivered by OPC and
received by AEC shall be firm. As such, OPC shall not curtail the delivery of
the power except in a system emergency and only then after other OPC firm and
non-firm off-system deliveries have been curtailed. Further, any curtailment to
AEC shall be on a pro rata basis with any curtailment of deliveries to OPC's
Member Systems, unless agreed to otherwise.
Delivery Point
The delivery and receipt of the capacity and energy shall be at the transmission
system of AEC, unless agreed to otherwise. OPC shall deliver the capacity and
energy at the Delivery Point without reduction for capacity and energy losses.
OPC shall be solely responsible for obtaining sufficient interface capacity
transfer capability rights on the ITS and any other transmission service that
may be required.
AEC's obligations hereunder to purchase 100 MW of capacity and energy shall be
contingent upon OPC resolving any ITS interface limits or obtaining any other
transmission agreements necessary to deliver subject capacity and energy. AEC
may cancel this letter of commitment if OPC does not have such firm transmission
arrangements in place by April 1, 1995. This date may be extended by mutual
agreement.
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AEC Option for Additional Capacity
AEC shall have the option to increase the amount of capacity and energy to be
purchased up to an additional 150 MW during the term of this sale by providing
two (2) years' prior written notice to OPC, subject to OPC's determination that
such capacity and ITS transfer capability is available. OPC shall use its best
reasonable efforts to notify AEC if it believes such additional capacity may not
be available.
The capacity charge for such additional capacity during a calendar year shall be
at the rate set out above for the initial capacity plus an adder of
$2.00/kW/month.
Required Approvals
The effectiveness of this Letter of Commitment is contingent upon approval by
the parties' respective Board of Directors and by the Administrator of the Rural
Electrification Administration.
Please signify AEC's agreement with the terms and conditions of this Letter of
Commitment by signing below and returning two (2) signed originals to me.
Very truly yours,
/s/ CHARLES T. AUTRY
Charles T. Autry
Corporate Contracts Officer
Senior Vice President and
General Counsel
ACCEPTED AND AGREED:
ALABAMA ELECTRIC COOPERATIVE, INC.
By:/s/ JAMES A. VANN, JR.
Title: President and CEO
Date: April 22, 1994
RPC:ll
cc: Mr. R. P. Carlton
