<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER Section 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996 Commission File Number 0-17736
ESELCO, INC.
-------------------
(Name of Registrant)
MICHIGAN 38-2785176
- --------------------- ----------------------
(State of Incorporation) (I. R. S. Employer
Identification Number)
725 East Portage Avenue
Sault Ste. Marie, Michigan 49783
---------------------------------
(Principal executive office)
(906) 632-2221
------------------
(Telephone Number)
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 twelve months (or for such shorter period that the registrant was
required to file such report) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- ----
1,534,894 shares of Common Stock, par value $.007 per share,
outstanding as of September 30, 1996
<PAGE>
E S E L C O, INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
September 30, December 31,
1 9 9 6 1 9 9 5
ASSETS: ------------ ------------
ELECTRIC PLANT, at original cost $71,113,554 $68,027,994
Less - Accumulated depreciation 29,284,334 27,465,011
------------ ------------
$41,829,220 $40,562,983
Asset acquired under capital lease 2,868,980 2,917,609
------------ ------------
$44,698,200 $43,480,592
CURRENT ASSETS: ------------ ------------
Cash $114,044 $302,845
Accounts receivable, less reserve of $18,570
and $32,000 respectively 3,481,047 3,396,213
Unbilled revenue 1,451,140 1,789,655
Materials and supplies, at average cost 1,249,354 1,191,419
Prepayments 1,189,578 1,765,406
------------ ------------
$7,485,163 $8,445,538
OTHER ASSETS: ------------ ------------
Debt expense, being amortized $31,718 $38,018
Regulatory asset 3,450,000 2,850,000
Other 739,410 508,106
------------ ------------
$4,221,128 $3,396,124
------------ ------------
$56,404,491 $55,322,254
------------ ------------
------------ ------------
STOCKHOLDERS' INVESTMENT AND LIABILITIES:
CAPITALIZATION (See Statement):
Common equity $19,604,377 $18,363,998
Preferred stock 0 0
Long-term debt (less current portion) 13,797,999 13,935,889
------------ ------------
$33,402,376 $32,299,887
OTHER NONCURRENT LIABILITIES: ------------ ------------
Obligation under capital lease $2,795,821 $2,851,622
Other 3,450,000 2,850,000
------------ ------------
$6,245,821 $5,701,622
CURRENT LIABILITIES: ------------ ------------
Notes payable $2,965,500 $3,652,000
Current portion of long-term debt 2,636,613 1,435,206
Current portion of lease obligation 73,159 65,987
Accounts payable 1,814,753 2,121,036
Dividends declared 414,421 373,873
Accrued taxes 245,463 2,115,320
Current deferred income taxes 66,108 81,108
Accrued interest 416,081 257,973
Other 265,471 243,993
------------ ------------
$8,897,569 $10,346,496
DEFERRED CREDITS: ------------ ------------
Deferred income taxes $4,154,997 $3,199,515
Net regulatory liability 1,144,361 1,292,861
Unamortized investment tax credit 890,598 940,998
Other 1,668,769 1,540,875
------------ ------------
$7,858,725 $6,974,249
------------ ------------
$56,404,491 $55,322,254
------------ ------------
------------ ------------
<PAGE>
E S E L C O, INC.
CONSOLIDATED STATEMENT OF CAPITALIZATION
<TABLE>
<CAPTION>
September 30, December 31,
1 9 9 6 1 9 9 5
------------------- -------------------
AMOUNT % AMOUNT %
---------- ---- ---------- ----
<S> <C> <C> <C> <C> <C> <C>
COMMON EQUITY:
Common stock, par value $.007 per share
1996 1995
--------- ---------
Authorized Shares 3,000,000 3,000,000
--------- ---------
--------- ---------
Outstanding Shares 1,534,894 1,437,975 $10,744 $10,066
--------- ---------
--------- ---------
Capital surplus 17,194,475 14,545,412
Retained earnings 3,817,920 4,250,891
Unearned compensation - ESOP and
Restricted Stock Bonus Plan (1,418,762) (442,371)
----------- -----------
$19,604,377 59% $18,363,998 57%
----------- -----------
PREFERRED STOCK, value $.01 per share,
authorized 160,000 shares $0 0% $0 0%
----------- -----------
LONG-TERM DEBT of Subsidiaries (less current portion)
First Mortgage Bonds:
Series D, 7.00%, due 1998 $855,000 $867,000
Series F, 10.31%, due 2001 1,200,000 1,500,000
Series G, 10.25%, due 2009 4,440,000 4,810,000
Series H, 7.90%, due 2002 1,500,000 1,800,000
Energy Thrift Notes, 5.8%-10%, due 1998-2006 5,177,000 4,414,000
Equipment Loan, Floating Rate, due 1998 161,571 200,724
Floating Rate ESOP Loans of the Corporation
due 2000-2001 464,428 344,165
----------- -----------
$13,797,999 41% $13,935,889 43%
----------- --- ----------- ---
Total Capitalization $33,402,376 100% $32,299,887 100%
----------- --- ----------- ---
----------- --- ----------- ---
</TABLE>
<PAGE>
E S E L C O, INC.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
The Three Months The Nine Months The Twelve Months
Ended September 30, Ended September 30, Ended September 30,
------------------------- -------------------------- --------------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES $9,045,070 $9,399,018 $27,770,257 $27,465,372 $37,149,373 $35,947,020
---------- ---------- ----------- ----------- ----------- -----------
OPERATING EXPENSES:
Operation - Purchased power $4,326,233 $5,062,014 $13,994,190 $14,680,026 $18,845,612 $18,966,517
- Other 1,594,720 1,426,967 4,904,080 4,564,810 6,503,301 6,115,322
Maintenance 544,151 522,310 1,693,327 1,575,144 2,101,531 2,057,510
Depreciation and amortization 645,193 627,950 1,961,019 1,890,054 2,569,738 2,444,522
Property and other taxes 405,770 383,531 1,172,006 1,150,825 1,581,677 1,482,338
Income taxes 344,400 301,200 869,800 730,800 1,255,784 1,022,527
---------- ---------- ----------- ----------- ----------- -----------
Total operating expense $7,860,467 $8,323,972 $24,594,422 $24,591,659 $32,857,643 $32,088,736
---------- ---------- ----------- ----------- ----------- -----------
Net operating income $1,184,603 $1,075,046 $3,175,835 $2,873,713 $4,291,730 $3,858,284
---------- ---------- ----------- ----------- ----------- -----------
OTHER INCOME (DEDUCTIONS), NET ($8,452) ($25,692) ($55,174) ($82,619) ($41,328) ($50,541)
---------- ---------- ----------- ----------- ----------- -----------
ALLOWANCE FOR FUNDS USED
DURING CONSTRUCTION $0 $0 $0 $0 $0 $0
---------- ---------- ----------- ----------- ----------- -----------
INTEREST CHARGES:
Interest on long-term debt $347,092 $311,735 $1,012,290 $908,295 $1,347,949 $1,227,605
Other interest 49,597 83,928 112,911 251,409 173,417 323,250
---------- ---------- ----------- ----------- ----------- -----------
Total interest charges $396,689 $395,663 $1,125,201 $1,159,704 $1,521,366 $1,550,855
---------- ---------- ----------- ----------- ----------- -----------
NET INCOME AVAILABLE FOR COMMON
STOCK $779,462 $653,691 $1,995,460 $1,631,390 $2,729,036 $2,256,888
---------- ---------- ----------- ----------- ----------- -----------
---------- ---------- ----------- ----------- ----------- -----------
EARNINGS PER AVERAGE SHARE OF
COMMON STOCK $0.51 $0.44 $1.33 $1.11 $1.82 $1.54
----- ----- ----- ----- ------ -----
----- ----- ----- ----- ------ -----
CASH DIVIDENDS DECLARED PER
SHARE OF COMMON STOCK $0.27 $0.25 $0.80 $0.75 $1.05 $0.99
----- ----- ----- ----- ------ -----
----- ----- ----- ----- ------ -----
AVERAGE COMMON SHARES OUTSTANDING 1,523,800 1,472,200 1,502,571 1,466,152 1,496,637 1,463,535
---------- ---------- ----------- ----------- ----------- -----------
---------- ---------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
E S E L C O, INC.
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
NET CASH FLOWS FROM (USED BY):
OPERATING ACTIVITIES:
Net income $1,995,460 $1,631,390
Noncash expenses, revenue, losses and gains
included in income
Depreciation and amortization 2,031,084 1,972,042
Deferred taxes and charge equivalent to
investment tax credit, net of amortization 741,582 (71,100)
Net decrease (increase) in receivables and
unbilled revenue 253,681 (325,274)
Net decrease (increase) in materials and
supplies and prepayments 517,893 600,330
Net increase (decrease) in accounts payable,
accrued taxes, and other current liabilities (2,154,662) (1,190,867)
Increase (decrease)in interest accrued
but not paid 158,108 77,112
Other (12,476) (240,830)
------------ ------------
Net cash from operating activities $3,530,670 $2,452,803
------------ ------------
INVESTING ACTIVITIES:
Acquisition of property, plant and equipment ($3,314,233) ($2,529,050)
Proceeds from disposals of property, plant
and equipment 23,212 64,332
------------ ------------
Net cash used by investing activities ($3,291,021) ($2,464,718)
------------ ------------
FINANCING ACTIVITIES:
Proceeds of short-term debt $9,131,500 $13,655,500
Payments to settle short-term debt (9,818,000) (13,379,000)
Issuance of long-term debt (net) 2,123,000 1,486,000
Payments on long-term debt (1,216,153) (1,189,717)
Proceeds from sale of common stock 569,084 382,673
Dividends paid (1,217,881) (1,101,555)
------------ ------------
Net cash used by financing activities ($428,450) ($146,099)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ($188,801) ($158,014)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 302,845 268,288
------------ ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $114,044 $110,274
------------ ------------
------------ ------------
INTEREST PAID $1,030,118 $1,090,893
------------ ------------
------------ ------------
INCOME TAXES PAID $645,000 $745,000
------------ ------------
------------ ------------
</TABLE>
<PAGE>
ESELCO, INC.
NOTES TO FINANCIAL STATEMENTS
(1) These consolidated financial statements include the accounts of
ESELCO, Inc. and its wholly owned subsidiaries, Edison Sault Electric
Company (Company) and Northern Tree Service, Inc. All significant
intercompany balances and transactions have been eliminated in
consolidation. The consolidated financial statements as of September 30,
1996 and 1995 included herein, which are unaudited, reflecting the opinion
of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results of operations for the
periods presented. Sales of electricity, of the ESELCO's major subsidiary,
are affected to some degree by variations in weather conditions, and
results of operations for interim periods are not necessarily indicative of
results to be expected for the entire year.
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 rules and
regulations of the Securities and Exchange Commission, although ESELCO
believes that the disclosures which are made are adequate to make the
information presented not misleading. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in ESELCO, Inc. 1995 Annual
Report on Form 10K, which incorporates by reference the financial
statements in the 1995 Annual Report to Shareholders.
(2) On August 22, 1995, the Company filed an application with the MPSC for
authority to implement price cap regulation. In the application the
Company proposed that its base rates be capped at present levels, that its
existing power supply cost recovery (PSCR) factor be rolled into base
rates, and that its existing PSCR Clause be suspended. The Company
published the required notice of opportunity to comment or request a
hearing. No comments were received and on September 21, 1995, the MPSC
approved the Company's application subject to the modification that the
Company give 30 days notice rather than 2 weeks notice for rate decreases
and that the Company file an application by October 1, 2000, to address its
experience under the price cap mechanism. With the latter modification the
price cap authorization represents an experimental regulatory mechanism.
The order also allows the Company to file an application seeking an
increase in rates only under extraordinary circumstances.
On October 23, 1995, the Attorney General for the State of Michigan
filed an intervention and petition for rehearing in the Company's price cap
order. The Attorney General's intervention was based on the grounds that
the MPSC did not have authority to approve price cap regulation. On
December 21, 1995, the MPSC rejected the Attorney General's petition for
rehearing. On January 19, 1996, the Attorney General filed an appeal with
the Michigan Court of Appeals.
Legal counsel for the Company believes that the Attorney General's
appeal is without merit and that the Company will prevail. A decision in
this case is not expected until early to mid 1997. The Company implemented
the price cap order on January 1,
<PAGE>
1996.
(3) The Company has received notification from the U.S. Environmental
Protection Agency (U.S. EPA) that it is being named a "Potentially
Responsible Party" at the Manistique River/ Harbor Area in Manistique,
Michigan. There are a number of other potentially responsible parties,
some of whom have been notified by the U.S. EPA.
The U.S. EPA, in conjunction with the Michigan Department of Natural
Resources, has identified the Manistique River and Harbor as an "Area of
Concern" (AOC), due to PCBs which have been found in that area. An
Environmental Engineering/Cost Analysis (EECA) was submitted to the U.S.
EPA which provided an analysis of various methods of remediation for the
harbor. The EECA presented six alternatives of remediation action and
ultimately recommended a remediation method of in-place capping. At that
time, Management believed this to be the most prudent course of action.
Since then, the Company has entered into a formal settlement with the
U.S. EPA concerning the PCBs found in the Manistique Harbor. The Company
will pay $3.2 million dollars either in late 1996 or early 1997 and will
receive a release from future liability at the site. The Company has also
expended approximately $250,000 in other costs on this project which have
not been reimbursed by our insurance carrier.
The Company believes that the above payments would be a legitimate
cost of doing business and would be recoverable through utility rates.
Further, in November 1993 the MPSC issued an order authorizing the Company
to defer and amortize, over a period not to exceed ten-years, environmental
assessment and remediation costs associated with the Manistique River AOC.
Therefore, the Company has also recorded a regulatory asset in the amount
of $3.45 million.
The Company will be amortizing this amount charged to the regulatory
asset over an amortization period of three to ten years. This amortization
will be reflected in future reported earnings.
The Company is in the process of attempting to recover all these costs
from various liability insurance carriers who have been identified as
possibly providing coverage for the situation in question. Amounts
recovered through this process will reduce the amount amortized in future
years. The likelihood of recovery of these costs from the insurance
companies is unknown at this time.
The price cap order discussed previously allows the Company to seek
rate increases for costs incurred under extraordinary circumstances. The
Company believes that costs related to this U.S. EPA matter could be
considered extraordinary. As a result, management believes that future
U.S. EPA actions will not have a material adverse effect on its financial
position or results of operation.
<PAGE>
ESELCO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Total operating revenues for the third quarter of 1996 were 4% below a year
ago while total kilowatt hour sales increased 2%.
During the third quarter of 1996, sales to residential and commercial
customers were the same as last year. Industrial sales increased 1%. However,
industrial revenue was 6% less than last year due to a rate reduction to one of
our customers in exchange for a six year contract.
Purchased power costs for the third quarter of 1996 decreased 15% over the
1995 period. This decrease reflects lower average costs along with purchases
from a new supplier.
Total other operating and maintenance expenses increased 10% during the
third quarter of 1996 due to an increase in payroll and associated employee
benefits costs charged to operating and maintenance expense, an increase in
water costs and higher major maintenance expenses.
Depreciation and amortization and property and other taxes are both higher
than last year because of the Company's construction programs.
Income taxes are 14% higher due to higher taxable income.
Based on the above changes net income available for common stock increased
19% for the third quarter of 1996.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Operating revenues during 1996 were 1% above a year ago while total
kilowatthour sales increased 4%.
Sales to residential and commercial customers increased 4% and 3%
respectively due to an increase in both use per customer and the number of
customers. Industrial sales increased 1%. However, industrial revenue was 2%
less than last year due to a rate reduction to one of our customers in exchange
for a six year contract. Resale sales to Cloverland Electric increased 10%.
Purchased power expense decreased 5% due to lower average costs from power
suppliers. In addition, the Company is purchasing some of its requirements from
a new supplier this year.
<PAGE>
Other operating and maintenance expenses increased 8% during this period
primarily because of an increase in payroll and associated employee benefits
costs, an increase in water costs and higher major maintenance expense.
Depreciation and amortization charges increased 4% during the period due to
the Company's construction programs which resulted in higher depreciable assets.
Interest expense decreased 3% due to decreased short-term borrowings and lower
rates.
Income taxes increased 19% during the period because of higher taxable
income.
Based on the above changes, net income available for common stock has
increased 22% for the period. This increase is equal to 22 CENTS per average
share of common stock outstanding.
TWELVE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Operating revenues during the current twelve month period have increased 3%
while total sales have increased 6%.
Sales to residential and commercial customers increased 6% and 4%
respectively. Sales to industrial customers increased 3%. Sales to Cloverland
Electric increased 11%.
Purchased power expense decreased 1% during the period due to lower average
costs.
Other operating and maintenance expenses increased 5% during the current
twelve month period.
Depreciation increased 5% due to the Company's construction assets and
higher rates while property and other taxes increased 7% due to the increase in
assets.
Income taxes increased 23% due to higher taxable income.
Based on the above changes, net income available for common stock has
increased 21% or 28CENTS per average share of common stock outstanding.
LIQUIDITY AND CAPITAL COMMITMENTS
INVESTING ACTIVITIES ESELCO invested $3,314,000 in property, plant, and
equipment in the nine-month period ending September 30, 1996. For the same
period in 1995, ESELCO invested approximately $2,529,000 in property, plant, and
equipment.
Investment expenditures during the 1996 period include initial costs
associated with the planned construction of a new 138 KV interconnection with
Wisconsin Electric Power Company. It now appears that the interconnect project
will be delayed due to siting considerations. Therefore, expenditures during
1996 will be substantially less than what was anticipated. This project now has
a planned completion date in mid 1998. The Company's projected share of the
cost of this project increased from $7.3 million to $9.4 million with the
planned addition of a second circuit. Most of these expenditures are expected
to be made in 1997 and 1998.
CASH PROVIDED BY OPERATING AND FINANCE ACTIVITIES Cash provided by operating
activities for
<PAGE>
the nine-month period ending September 30, 1996, and September 30, 1995,
totalled $3,531,000 and $2,453,000, respectively. After payment of dividends,
internal sources of funds exceeded the capital requirements of ESELCO for the
quarter ending September 30, 1996. Dividend payments for the nine months ending
September 30, 1996, totalled $1,218,000 which represented a 61% payout ratio.
For the same period in 1995, dividends totalled $1,102,000 which represented a
68% dividend payout ratio.
During 1995, Edison Sault had clauses in all of its retail sales tariffs
which recovered changes in the cost of purchased power and water for generation.
Michigan Public Act 304 allowed the Company to regularly file a Power Supply
Cost Recovery (PSCR) Plan which provided a mechanism for the recovery of
projected purchased power and fuel costs. In addition to reconciling actual
costs to projected costs, the law allowed for the refunding of overcollections
or charging for undercollections, both with interest. While the clause applied
specifically to residential and commercial customers, industrial customers were
covered under a like arrangement through a separate recovery clause mechanism.
During 1996, the Company began regulation under a price cap order as discussed
in Note 2.
Edison Sault has authority to issue up to $10 million in short-term
obligations. Included in this authority is a line of credit in the amount of $4
million at the prime rate. In addition, Edison Sault has authority to issue
short-term thrift notes to Michigan residents. The Company's short-term
financing requirements relate primarily to financing customer accounts
receivable, unbilled revenue resulting from cycle billing, and capital
expenditures until permanently financed.
At September 30, 1996, the Company had approximately $7.0 million of unused
bank line of credit and additional energy thrift notes. These two sources of
short-term financing have been sufficient to meet the Company's short-term
capital requirements.
ESELCO's shareholders reinvested approximately $569,000 through the
dividend reinvestment plan (DRP) in the nine months of 1996. For the nine-month
period ending September 30, 1995, the DRP provided $383,000 of capital.
At September 30, 1996, the long-term portion of first mortgage bonds
totalled $7,995,000 which is a decrease of $982,000 from the December 31, 1995,
amount. First mortgage bonds are secured by the utility plant of Edison Sault.
Edison Sault also has authority to issue up to $10 million in long-term
energy thrift notes to Michigan residents. At September 30, 1996, the long-term
portion of energy thrift notes outstanding was $5,177,000 which is an increase
of $763,000 over the December 31, 1995, amount.
Edison Sault has a $4.0 million bank term loan available for the purpose of
financing costs associated with the Manistique Harbor environmental problem. At
September 30, 1996, this source of financing had not yet been utilized.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits.
<TABLE>
<CAPTION>
Exhibit Filed
No. Description of Exhibit Herewith By Reference
------ ---------------------------------------------------------------- -------- ------------
<S> <C> <C> <C>
(2) Plan of acquisitions, reorganization, arrangement
liquidations or succession N/A N/A
(4) Instruments defining the rights of security holders, including
indentures:
(a) Mortgage and Deed of Trust as of March 1, 1952 - (a) *
(b) Supplemental Indenture dated as of February 1, 1957 - (a) *
(c) Second Supplemental Indenture dated as of January 1,
1964 - (a) *
(d) Third Supplemental Indenture dated as of February 1,
1968 - (a) *
(e) Fourth Supplemental Indenture dated as of September 15,
1975 - (a) *
(f) Fifth Supplemental Indenture dated as of October 1,
1986 - (b) *
(g) Sixth Supplemental Indenture dated as of April 1, 1989
- (d) *
(h) Seventh Supplemental Indenture dated as of February
15, 1992 - (e) *
(i) Debenture Indenture dated as of August 1, 1973 - (a) *
(j) Articles of Incorporation of registrant as filed on January 6,
1989 - (d) *
(k) Form of Long-Term Energy Thrift Note - (c) *
(11) Statement re computation of per share earnings N/A N/A
(15) Letters re unaudited interim financial information N/A N/A
(18) Letter re change in accounting principles N/A N/A
(19) Previously unfiled documents None None
(20) Report furnished to security holders N/A N/A
(23) Published report regarding matters submitted to vote of
security holders N/A N/A
(24) Consents of experts and counsel N/A N/A
(25) Power of attorney N/A N/A
(28) Additional exhibits N/A N/A
</TABLE>
<PAGE>
Key to Exhibits Incorporated by Reference:
(a) Filed with the Company's Registration Statement, Form S-16, No.
2-67191, filed April 2, 1980.
(b) Filed with the Company's Form 10-K for 1986, dated March 30, 1987,
File No. 0-1158.
(c) Filed with the Company's Registration Statement, Amendment No. 2 to
Form S-3, No. 2-67191, filed February 16, 1988.
(d) Filed with the Company's Form 10-Q for June 30, 1989, dated August 11,
1989, File No. 0-17736.
(e) Filed with the Company's Form 10-Q for March 31, 1992, dated May 13,
1992, File No. 0-17736.
Item 6. (b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended September 30, 1996.
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.
ESELCO, INC.
(Registrant)
/s/ William R. Gregory
Date November 7, 1996 ----------------------------------
WILLIAM R. GREGORY
Its President
/s/ David R. Hubbard
Date November 7, 1996 ----------------------------------
DAVID R. HUBBARD
Its Vice President - Finance
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 44,698,200
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 7,485,163
<TOTAL-DEFERRED-CHARGES> 4,221,128
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 56,404,491
<COMMON> 10,744
<CAPITAL-SURPLUS-PAID-IN> 17,194,475
<RETAINED-EARNINGS> 3,817,920
<TOTAL-COMMON-STOCKHOLDERS-EQ> 19,604,377
0
0
<LONG-TERM-DEBT-NET> 8,620,999
<SHORT-TERM-NOTES> 2,965,500
<LONG-TERM-NOTES-PAYABLE> 5,177,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,636,613
0
<CAPITAL-LEASE-OBLIGATIONS> 2,795,821
<LEASES-CURRENT> 73,159
<OTHER-ITEMS-CAPITAL-AND-LIAB> 14,531,022
<TOT-CAPITALIZATION-AND-LIAB> 56,404,491
<GROSS-OPERATING-REVENUE> 27,770,257
<INCOME-TAX-EXPENSE> 869,800
<OTHER-OPERATING-EXPENSES> 23,724,622
<TOTAL-OPERATING-EXPENSES> 24,594,422
<OPERATING-INCOME-LOSS> 3,175,835
<OTHER-INCOME-NET> (55,174)
<INCOME-BEFORE-INTEREST-EXPEN> 3,120,661
<TOTAL-INTEREST-EXPENSE> 1,125,201
<NET-INCOME> 1,995,460
0
<EARNINGS-AVAILABLE-FOR-COMM> 1,995,460
<COMMON-STOCK-DIVIDENDS> 1,217,881
<TOTAL-INTEREST-ON-BONDS> 850,565
<CASH-FLOW-OPERATIONS> 3,530,670
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 0.00
</TABLE>
