<PAGE>
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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 SEPTEMBER 30, 1995
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 (770) 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 SEPTEMBER 30, 1995
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets at September 30, 1995 (Unaudited)
and December 31, 1994 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months and Nine Months Ended
September 30, 1995 and 1994 5
Condensed Statements of Cash Flows (Unaudited)
for the Nine Months Ended September 30, 1995 and 1994 6
Notes to the Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(UNAUDITED)
<S> <C> <C>
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $5,681,416 $5,100,299
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,329,698) (1,231,818)
----------- -----------
4,351,718 3,868,481
NUCLEAR FUEL, AT AMORTIZED COST 94,095 105,683
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 5,479 6,275
CONSTRUCTION WORK IN PROGRESS 36,329 538,789
----------- -----------
4,487,621 4,519,228
----------- -----------
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 52,942 64,163
DECOMMISSIONING FUND, AT MARKET 68,980 59,164
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 16,161 17,371
----------- -----------
138,083 140,698
----------- -----------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 183,574 190,642
OTHER SHORT-TERM INVESTMENTS, AT MARKET 69,239 -
RECEIVABLES 81,734 90,998
INVENTORIES, AT AVERAGE COST 86,340 95,076
PREPAYMENTS AND OTHER CURRENT ASSETS 16,772 14,857
----------- -----------
437,659 391,573
----------- -----------
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 202,861 161,889
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 85,615 80,132
DISCONTINUED PROJECT, BEING AMORTIZED 24,814 26,342
DEFERRED DEBT EXPENSE, BEING AMORTIZED 21,116 20,936
OTHER 8,730 7,657
----------- -----------
343,136 296,956
----------- -----------
$5,406,499 $5,348,455
=========== ===========
</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
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(UNAUDITED)
<S> <C> <C>
CAPITALIZATION:
PATRONAGE CAPITAL (NET OF UNREALIZED LOSSES OF
$ 1,391 AT SEPTEMBER 30, 1995 AND $ 3,567 AT DECEMBER 31, 1994
ON AVAILABLE-FOR-SALE SECURITIES) $ 351,084 $ 309,496
LONG-TERM DEBT 4,169,025 4,128,080
OBLIGATION UNDER CAPITAL LEASES 300,799 303,749
---------- ----------
4,820,908 4,741,325
---------- ----------
CURRENT LIABILITIES:
LONG-TERM DEBT AND CAPITAL LEASES DUE WITHIN ONE YEAR 102,347 90,086
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 4,827 21,476
ACCOUNTS PAYABLE 33,164 52,921
ACCRUED INTEREST 80,275 100,010
ACCRUED AND WITHHELD TAXES 22,687 1,566
ENERGY COSTS BILLED IN EXCESS OF ACTUALS (615) 2,125
OTHER CURRENT LIABILITIES 12,292 18,177
---------- ----------
254,977 286,361
---------- ----------
DEFFERED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 61,454 63,209
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 52,201 58,236
ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510
DEFERRED MARGINS AND VOGTLE SURCHARGE 15,568 15,568
DECOMMISSIONING RESERVE 111,199 96,291
OTHER 24,682 21,955
---------- ----------
330,614 320,769
---------- ----------
$5,406,499 $5,348,455
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
4
<PAGE>
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES & EXPENSES
(DOLLARS IN THOUSAND)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
SALES TO MEMBERS $284,476 $244,390 $764,793 $699,005
SALES TO NON-MEMBERS 33,060 22,428 91,519 98,466
-------- -------- -------- --------
TOTAL OPERATING REVENUES 317,536 266,818 856,312 797,471
-------- -------- -------- --------
OPERATING EXPENSES:
FUEL 62,813 57,887 164,484 157,719
PRODUCTION 30,578 28,719 92,443 91,774
PURCHASED POWER 85,706 60,905 207,220 172,097
DEPRECIATION AND AMORTIZATION 35,820 32,375 102,959 98,648
TAXES OTHER THAN INCOME TAXES 7,181 5,920 19,601 17,952
OTHER OPERATING EXPENSES 12,489 12,925 35,924 33,609
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 234,587 198,731 622,631 571,799
-------- -------- -------- --------
OPERATING MARGIN 82,949 68,087 233,681 225,672
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
INTEREST INCOME 4,806 2,842 12,717 7,976
AMORTIZATION OF DEFERRED MARGINS 5,229 4,011 16,649 15,284
ALLOWANCE FOR EQUITY FUNDS USED
DURING CONSTRUCTION 68 718 1,635 2,074
OTHER 3,242 5,157 9,505 16,452
-------- -------- -------- --------
TOTAL OTHER INCOME 13,345 12,728 40,506 41,786
-------- -------- -------- --------
INTEREST CHARGES:
INTEREST ON LONG-TERM OBLIGATIONS 86,429 85,127 254,961 255,317
ALLOWANCE FOR DEBT FUNDS USED
DURING CONSTRUCTION (791) (8,698) (20,186) (25,940)
-------- -------- -------- --------
NET INTEREST CHARGES 85,638 76,429 234,775 229,377
-------- -------- -------- --------
NET MARGIN $ 10,656 $ 4,386 $ 39,412 $ 38,081
======== ======== ======== ========
</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 NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET MARGIN $ 39,412 $ 38,081
-------- --------
ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 149,588 141,986
AMORTIZATION OF DEFERRED GAINS (1,756) --
AMORTIZATION OF DEFERRED MARGINS (16,649) (15,284)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (1,635) (2,074)
OTHER 1,340 (14,216)
CHANGE 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 9,264 (8,037)
INVENTORIES 8,736 (4,132)
PREPAYMENTS AND OTHER CURRENT ASSETS (1,915) (1,498)
ACCOUNTS PAYABLE (19,757) (8,597)
ACCRUED INTEREST (19,735) (85,541)
ACCRUED AND WITHHELD TAXES 21,121 11,999
ENERGY COST BILLED IN EXCESS OF ACTUAL (2,740) (5,143)
OTHER CURRENT LIABILITIES (5,885) (28,368)
-------- --------
TOTAL ADJUSTMENTS 119,977 (18,905)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 159,389 19,176
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONS (107,989) (152,136)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 13,397 29,190
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 1,210 1,176
INCREASE IN OTHER SHORT-TERM INVESTMENTS (69,239) --
(INCREASE) DECREASE IN DECOMMISSIONING FUND (5,254) 38
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (167,875) (121,732)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NET 142,341 294,092
DEBT PAYMENTS (139,730) (350,233)
REFUND OF VOGTLE SURCHARGE -- (2,031)
OTHER (1,193) 3,209
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,418 (54,963)
-------- --------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (7,068) (157,519)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 190,642 244,173
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $183,574 $ 86,654
======== ========
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED) $239,485 $308,003
INCOME TAXES -- --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
6
<PAGE>
OGLETHORPE POWER CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
(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 September 30, 1995 and 1994. 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) In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". This Statement imposes stricter criteria for regulatory assets by
requiring that such assets be probable of future recovery at each
balance sheet date. Oglethorpe anticipates adopting this standard on
January 1, 1996 and does not expect that adoption will have a material
impact on the financial position or results of operations based on the
current regulatory structure in which Oglethorpe operates. See Note 1.m.
of Notes to Financial Statements in Oglethorpe's Annual Report on Form
10-K for the year ending December 31, 1994 for a summary of Oglethorpe's
regulatory assets and liabilities.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995
Oglethorpe's net margin for the quarter ended September 30, 1995 was $10.7
million compared to $4.4 million for the same period of 1994. Net margin was
higher in the third quarter of 1995 compared to the third quarter of 1994
primarily due to increased capacity revenues from Members resulting from the
unusually warm weather and to savings in purchased power capacity and
decommissioning expenses. Oglethorpe's net margin for the nine months ended
September 30, 1995 was $39.4 million compared to $38.1 million for the first
nine months of 1994. Net margin for the first nine months of 1995 exceeded
the net margin goal by $23 million resulting from, in addition to those
savings mentioned above, unbudgeted savings from continued capitalization of
fixed costs of the Rocky Mountain Project (Rocky Mountain) due to the delay
in commercial operation of the initial unit from April 1995 to June 1995 and
savings in fixed production costs. Net margin for the same period of 1994 was
higher than the 1994 net margin goal due to savings in interest expense as a
result of debt refinancing efforts.
OPERATING REVENUES
- ------------------
The increases in Member revenues for the three-month and nine-month periods
ended September 30, 1995 compared to the same periods of 1994 were due
primarily 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) and due to the additional fixed costs of
Rocky Mountain. Energy revenues from sales to Members for the three-month and
nine-month periods of 1995 were 15.5% and 4.5% higher than the same period of
the prior year, however, megawatt-hour (MWh) sales increased 25.2% and
12.5%, respectively. The lower percentage increase in revenues compared to
MWhs was due to the pass-through of lower net energy costs in 1995, as
discussed under "Operating Expenses" below.
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 nine months ended September 30,
1995 and 1994:
<TABLE>
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
1995 1994 1995 1994
---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C>
Plant operating agreements $ 89 $ 5,557 $10,096 $39,076
Power supply arrangements 12,139 4,237 30,712 19,696
Transmission agreements 3,770 2,771 9,377 8,503
Other utilities 17,062 9,863 41,334 31,191
------- ------- ------- -------
Total $33,060 $22,428 $91,519 $98,466
======= ======= ======= =======
</TABLE>
8
<PAGE>
The increase in revenues from non-Members for the three months ended
September 30, 1995 compared to 1994 was primarily attributable to higher
revenues from power supply arrangements and from sales to other utilities.
For the nine months ended September 30, 1995 compared to 1994, revenues from
non-Members decreased due 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. Effective June 1, 1995, revenues from GPC pursuant to plant operating
agreements ended.
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 arising from dispatch situations whereby GPC causes Plant Wansley to
be operated when Oglethorpe's system does not require all of its contractual
entitlement to the generation. These revenues compensate Oglethorpe for its
costs since, under the operating agreements, Oglethorpe is responsible for
its share of fuel costs any time a unit operates. Such sales were
significantly higher in the third quarter of 1995 compared to the same period
of 1994.
Revenues from other non-Member utilities increased substantially due to a 16%
increase in MWh sales in the three months ended September 30, 1995 and a 33%
increase in MWh sales in the nine months ended September 30, 1995 compared to
the same period of 1994. 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 increase in operating expenses for the three months and nine months ended
September 30, 1995 compared to the same period of 1994 was primarily
attributable to an increase in purchased power required due to the additional
Member and non-Member sales.
Purchased power expenses increased in 1995 partly as the result of capacity
and energy purchases from Hartwell Energy Limited Partnership (Hartwell). The
agreement to purchase capacity and energy from Hartwell commenced in April
1994; therefore, there were no corresponding purchases for the first three
months of 1994. Additionally, there was a significant increase in purchases
from utilities other than GPC. Overall, there was a 39% increase in MWh
purchases from all sources in 1995 compared to the first nine months of 1994.
However, the net per unit variable costs of fuel, production and purchased
power was 4.7% lower in the first nine months of 1995 compared to 1994. Such
decrease arose from lower prices of purchased power and savings in fuel costs
and maintenance expenses.
OTHER INCOME
- ------------
Other income for the three-month and nine-month periods ended September 30,
1995 varied
9
<PAGE>
slightly compared to the same periods of 1994. However, the caption "other"
decreased due to the completion of amortization in October 1994 of a gain on
the sale of Plant Scherer common facilities. For a discussion of the gain on
the sale of Plant Scherer common facilities, see Note 6 of Notes to Financial
Statements in Oglethorpe's Annual Report on Form 10-K for the year ending
December 31, 1994. Interest income throughout the nine-month period ended
September 30, 1995 increased due to higher earnings from the decommissioning
fund.
INTEREST CHARGES
- ----------------
The increase in net interest charges for the three-month and nine-month
periods of 1995 compared to 1994 resulted from the three units of Rocky
Mountain becoming commercially operable in June and July 1995; therefore,
allowance for debt funds used during construction decreased, accordingly.
MEMBER CONTRACTS AND WITHDRAWAL ACTIVITIES
As previously reported, in response to an increasingly competitive utility
environment, Oglethorpe has taken actions to provide its Members with various
options for meeting their power supply needs. During June and July 1995,
Oglethorpe's Board of Directors approved a plan that allows for substantial
changes to the Corporation's contractual relationship with its Members to
provide them with greater flexibility in their power supply arrangements and,
at the same time, established the method by which Oglethorpe will recover the
costs of existing resources.
The new plan offers the Members a choice of service options that can help
them better meet the individual needs and load characteristics of their
systems. Options offered to the Members range from having Oglethorpe continue
to perform all power supply functions, to performing some or all of those
functions themselves, or to withdrawing from membership in accordance with
the process, provisions and conditions approved by the Board of Directors.
Members who sign the new wholesale power contract will have the option to own
dispersed generation for customer reliability and competitive advantage and
to engage in bilateral transactions with other power suppliers so long as all
of their load and resources are committed to the dispatch of a new power
pool. Oglethorpe's and any Member-secured resources will be committed to
economic dispatch (pooled) for the benefit of all the pool participants. The
pool cost settlement methodology will price at market rates the hourly
differences between a participating EMC's allocation of power supply
resources and its load. This power pool arrangement will also allow the
participants to pool resource reserves. The pool participants will invite
other utilities to participate in the pool and will pursue additional
customers.
Operation of the power pool will be directed by the Pool Operation
Consultants or "the POC". The POC will determine operating policies for the
pool, such as targets for planning reserves, the energy cost settlement
methodology and other administrative functions.
The pool participants have selected the following individuals for the POC:
- - Newton A. Campbell, retired Chairman and CEO, Burns & McDonnell Engineering
Company
- - John A. Casazza, Chairman, CSA Energy Consultants
- - Duejean C. Garrett, partner in the law firm of Baker & Daniels
- - Thomas N. Hand, retired Executive Manager, East Central Area Reliability
Coordination Agreement (ECAR)
- - Royce Lyles, retired Chief Executive Officer, Jacksonville Electric
Authority
10
<PAGE>
Under each of the service options approved by the Board of Directors, each
Member or withdrawing Member would remain financially responsible for the
costs of, and required to purchase, all capacity and related energy from
Oglethorpe's existing plants and power supply contracts based on a fixed
percentage allocation and a formulary rate approved by the Board to recover
all of Oglethorpe's costs for existing commitments. Under this approved
methodology, a withdrawing Member could satisfy its existing financial
obligation to Oglethorpe by entering into a 30-year power sale agreement.
Since the Members and any withdrawing Member must maintain responsibility for
their allocated portions of all current financial obligations to Oglethorpe,
Oglethorpe's future revenues associated with its current obligations would be
unaffected. However, to the extent the Members or any withdrawing Member
choose to secure their projected load growth from sources other than
Oglethorpe, the growth in Oglethorpe's revenues would decrease as would the
growth in related expenses.
To date, Oglethorpe has received signed new wholesale power contracts from 25
Members and four Members have indicated by resolution of their Board of
Directors they intend to maintain their current all-requirements wholesale
power contract. Seven Members, including, as previously reported, Cobb EMC,
Snapping Shoals EMC and Walton EMC, have indicated by resolution of their
Board of Directors their desire to withdraw from membership. Some of the
Members that have given withdrawal notices and several other EMCs are
continuing to evaluate their options. It is not certain at this time how many
Members will withdraw from Oglethorpe or how many will remain Members.
Several of the Members who are desiring to withdraw have proposed a concept
for withdrawal in lieu of the one approved by Oglethorpe's Board of
Directors. These Members desire to acquire a percentage interest in
Oglethorpe's assets equal to their allocated share of costs responsibility
and to assume the same share of Oglethorpe's debt. Oglethorpe's management
has serious questions as to whether the conceptual approach put forward by
these Members is feasible but has indicated a willingness to discuss such a
concept as well as other options. The parties are utilizing the services of a
mediator to facilitate their discussions and to assist in reaching a mutually
agreeable solution. Representatives of the Rural Utilities Service (RUS) are
also participating in these discussions and have expressed a willingness to
explore alternative concepts, including a transfer of assets and assumption
of debt.
Due to unresolved issues relating to Member withdrawal, RUS has indicated
that it may not approve for implementation as of January 1, 1996 the new
energy pool settlement process and its cost allocation methodology. RUS
desires that Oglethorpe and all Members achieve a stronger consensus before
it will take action on the new arrangements. It is uncertain what effect the
delay in implementing the new power supply arrangements and the disagreements
among the Members will have on Oglethorpe and its Members.
11
<PAGE>
POWER PURCHASE ARRANGEMENTS
Oglethorpe currently purchases 1,250 megawatts (MW) of capacity and
associated energy from GPC under the Block Power Sale Agreement. Because
Oglethorpe intends to obtain more economical alternatives, it has, pursuant
to the terms of the Agreement, given notice (in August 1994 and 1995) of its
election to reduce its purchases from GPC by 250 MW beginning September 1,
1996, and by an additional 250 MW beginning September 1, 1997.
FINANCIAL CONDITION
Total assets and total equity plus liabilities as of September 30, 1995 were
$5.4 billion which was $58 million more than the total at December 31, 1994.
ASSETS
- ------
The increase in electric plant in service resulted from the commercial
operation of the three units of Rocky Mountain totaling $546 million during
June and July 1995. Construction work in progress decreased by this amount.
Property additions for the nine months ended September 30, 1995 totaled $108
million. Construction of Rocky Mountain accounted for $52 million of this
amount Borrowings under the loan commitment for Rocky Mountain totaled $98
million in the first nine months of 1995.
The decrease in bond, reserve and construction funds resulted primarily from
the utilization of a portion of the debt service reserve funds for debt
service payments. The available funds resulted from an interest rate swap
refinancing project in early 1995 which did not require a debt service
reserve fund.
12
<PAGE>
The increase in total cash and investments was primarily due to the effects
of the rate options selected by 11 Members which resulted in planned
over-collections of capacity revenues of $41 million during the third quarter
of 1995. For a discussion of this rate option, see "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, 1994.
Other short-term investments represent investments whose maturity periods
exceed Oglethorpe's policy of three months or less for classification as cash
equivalents. There were no corresponding investments at the end of 1994.
Prepayments and other current assets increased primarily due to a $3.7
million increase in the payment made to GPC for estimates of Plant Hatch O&M
for October 1995 compared to the estimate paid for January 1995.
The increase in the premium and loss on reacquired debt resulted from
premiums paid in connection with Federal Financing Bank (FFB) note
modifications and prepayments, and from a pollution control bond (PCB)
refunding.
EQUITY AND LIABILITIES
- ----------------------
Long-term debt due within one year increased 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 $16.6 million which is the amount that was refunded to the
Members for the first nine months of 1995.
Accounts payable declined as of September 30, 1995 as a result of normal
variations in the timing of payables activity.
Accrued interest decreased primarily due to normal payments and accruals of
interest.
Accrued and withheld taxes increased as a result of the normal monthly
accruals of property taxes, which are generally paid in the fourth quarter of
the year.
Energy costs billed in excess of actuals decreased as a result of actual
energy costs exceeding billed costs by $2.7 million during the nine months
ended September 30, 1995.
Other current liabilities decreased partly due to the year-end accrual for
performance pay (subsequently paid in March 1995) and partly due to normal
activity.
The increase in other liabilities resulted primarily from normal accruals
for Oglethorpe's portion of GPC's post-retirement benefits related to the
co-owned plants.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
CHANGE IN MANAGEMENT
- --------------------
The Board of Directors has been advised by Tom Kilgore, its President and
Chief Executive Officer, that he intends to leave Oglethorpe to pursue other
business opportunities. While Kilgore has not resigned and continues in his
position, he requested that the Board begin the process for selecting his
successor. Kilgore has placed no time limit on his continued tenure and
intends to remain with Oglethorpe to assist in the transition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
Number Description
- ---------- -----------
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
-------------------
A report on Form 8-K describing a change in Oglethorpe's certifying
accountant from Arthur Andersen LLP to Coopers & Lybrand L.L.P. was filed by
Oglethorpe on September 14, 1995.
14
<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: November 14, 1995 By: /s/ T. D. KILGORE
------------------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 14, 1995 /s/ GARY M. BULLOCK
------------------------------------------
Gary M. Bullock
Secretary-Treasurer
(Principal Financial Officer)
Date: November 14, 1995 /s/ EUGEN HECKL
------------------------------------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OGLETHORPE
POWER CORPORATION'S CONDENSED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND
RELATED STATEMENTS OF REVENUES AND EXPENSES AND CASH FLOWS FOR THE PERIOD
ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK<F1>
<TOTAL-NET-UTILITY-PLANT> 4,487,621
<OTHER-PROPERTY-AND-INVEST> 138,083
<TOTAL-CURRENT-ASSETS> 437,659
<TOTAL-DEFERRED-CHARGES> 343,136
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,406,499
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 351,084
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 4,169,025
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 100,125
0
<CAPITAL-LEASE-OBLIGATIONS> 300,799
<LEASES-CURRENT> 2,222
<OTHER-ITEMS-CAPITAL-AND-LIAB> 483,244
<TOT-CAPITALIZATION-AND-LIAB> 5,406,499
<GROSS-OPERATING-REVENUE> 856,312
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 622,631
<TOTAL-OPERATING-EXPENSES> 622,631
<OPERATING-INCOME-LOSS> 233,681
<OTHER-INCOME-NET> 40,506
<INCOME-BEFORE-INTEREST-EXPEN> 274,187
<TOTAL-INTEREST-EXPENSE> 234,775
<NET-INCOME> 39,412
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 55,124
<CASH-FLOW-OPERATIONS> 159,389
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>$351,084 represents total retained patronage capital. The Registrant is a
membership corporation and has no authorized or outstanding equity securities.
</FN>
</TABLE>
