SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 15, 1995
------------------
SAVANNAH ELECTRIC AND POWER COMPANY
- -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 1-5072 58-0418070
- -------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Bay Street, East, Savannah, Georgia 31401
- -------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (912) 232-7171
--------------
N/A
- ------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
23 - Consent of Arthur Andersen LLP.
27 - Financial Data Schedule.
99 - Audited Financial Statements of Savannah Electric
and Power Company as of December 31, 1994.
SIGNATURE
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.
SAVANNAH ELECTRIC AND POWER COMPANY
/s/ Wayne Boston
By Wayne Boston
Assistant Secretary
Date: March 1, 1995
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 15, 1995 on the financial statements of Savannah
Electric and Power Company, included in this Form 8-K, into Savannah Electric
and Power Company's previously filed Registration Statement File Nos. 33-45757
and 33-52509.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 1, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from
the financial statements filed as Exhibit 99 and is qualified in its
entiretyby reference to such financial statements.
</LEGEND>
<CIK> 0000086940
<NAME> SAVANNAH ELECTRIC AND POWER COMPANY
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 431,772
<OTHER-PROPERTY-AND-INVEST> 1,790
<TOTAL-CURRENT-ASSETS> 45,863
<TOTAL-DEFERRED-CHARGES> 38,880
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 518,305
<COMMON> 54,223
<CAPITAL-SURPLUS-PAID-IN> 8,688
<RETAINED-EARNINGS> 98,670
<TOTAL-COMMON-STOCKHOLDERS-EQ> 161,581
0
35,000
<LONG-TERM-DEBT-NET> 148,513
<SHORT-TERM-NOTES> 2,500
<LONG-TERM-NOTES-PAYABLE> 8,500
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (1,350)
0
<CAPITAL-LEASE-OBLIGATIONS> 1,488
<LEASES-CURRENT> (1,229)
<OTHER-ITEMS-CAPITAL-AND-LIAB> 163,302
<TOT-CAPITALIZATION-AND-LIAB> 518,305
<GROSS-OPERATING-REVENUE> 211,785
<INCOME-TAX-EXPENSE> 16,289
<OTHER-OPERATING-EXPENSES> 159,327
<TOTAL-OPERATING-EXPENSES> 175,616
<OPERATING-INCOME-LOSS> 36,169
<OTHER-INCOME-NET> 717
<INCOME-BEFORE-INTEREST-EXPEN> 36,886
<TOTAL-INTEREST-EXPENSE> 12,452
<NET-INCOME> 24,434
2,324
<EARNINGS-AVAILABLE-FOR-COMM> 22,110
<COMMON-STOCK-DIVIDENDS> 16,300
<TOTAL-INTEREST-ON-BONDS> 12,859
<CASH-FLOW-OPERATIONS> 44,958
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
1
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1994 Annual Report
The management of Savannah Electric and Power Company has prepared -- and is
responsible for -- the financial statements and related information included in
this report. These statements were prepared in accordance with generally
accepted accounting principles appropriate in the circumstances and necessarily
include amounts that are based on the best estimates and judgments of
management. Financial information throughout this annual report is consistent
with the financial statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The Company believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the Company's internal audit staff. The Company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of four directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls and financial reporting matters. The internal
auditors and the independent public accountants have access to the members of
the audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted according to a high
standard of business ethics. In management's opinion, the financial statements
present fairly, in all material respects, the financial position, results of
operations, and cash flows of Savannah Electric and Power Company in conformity
with generally accepted accounting principles.
/s/ Arthur M. Gignilliat, Jr.
Arthur M. Gignilliat, Jr.
President and Chief Executive Officer
/s/ K. R. Willis
K. R. Willis
Vice-President Treasurer and Chief Financial Officer
<PAGE>
2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Savannah Electric and Power Company 1994 Annual Report
To the Board of Directors
of Savannah Electric and Power Company:
We have audited the accompanying balance sheets and statements of capitalization
of Savannah Electric and Power Company (a Georgia corporation and a wholly owned
subsidiary of The Southern Company) as of December 31, 1994 and 1993, and the
related statements of income, retained earnings, paid-in capital, and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages 9-22) referred to above
present fairly, in all material respects, the financial position of Savannah
Electric and Power Company as of December 31, 1994 and 1993, and the results of
its operations and its cash flows for the periods stated, in conformity with
generally accepted accounting principles.
As explained in Notes 2 and 7 to the financial statements, effective
January 1, 1993, the Company changed its methods of accounting for
postretirement benefits other than pensions and for income taxes.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 15, 1995
<PAGE>
3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Savannah Electric and Power Company 1994 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred
stock for 1994 totaled $22.1 million, representing a $0.6 million (3.0 percent)
increase over the prior year. This increase was primarily due to a decrease in
operating expenses, offset somewhat by an increase in interest expense.
In 1993, earnings were $21.5 million, representing a $1.0 million (4.6
percent) increase from the prior year. The revenue impact of an increase in
retail energy sales due to exceptionally hot summer weather was partially offset
by the implementation of a work force reduction program which resulted in a
one-time charge to operating expenses of approximately $4.5 million.
Revenues
Total revenues for 1994 were $211.8 million, reflecting a 3.0 percent decrease
compared to 1993. The revenue impact of an expanding customer base was offset by
moderate weather, reduced industrial energy sales, and an associated decrease in
fuel cost recovery revenues.
The following table summarizes revenue increases and decreases compared to
prior years:
==============================================================
Increase (Decrease)
From Prior Years
--------------------------------
1994 1993 1992
--------------------------------
Retail -- (in thousands)
Change in base rates $ - $(1,450) $(1,350)
Sales growth 7,884 5,980 5,467
Weather (6,589) 4,567 (3,116)
Fuel cost recovery
and other (9,214) 12,404 7,270
- --------------------------------------------------------------
Total retail (7,919) 21,501 8,271
- --------------------------------------------------------------
Sales for resale--
Non-affiliates (1,235) (1,800) 8
Affiliates 4,013 928 75
- --------------------------------------------------------------
Total sales for resale 2,778 (872) 83
- --------------------------------------------------------------
Other operating revenues (1,516) 52 (239)
- --------------------------------------------------------------
Total operating revenues $(6,657) $20,681 $ 8,115
==============================================================
Percent change (3.0)% 10.5% 4.3%
- -------------------------------------------------------------
Retail revenues decreased 3.8 percent in 1994, compared to an increase of
11.5 percent in 1993. The decrease in 1994 retail revenues is attributable to
milder summer weather, reduced industrial energy sales, and substantially lower
fuel cost recovery revenues, offset somewhat by customer growth. Industrial
energy sales turned down in the fourth quarter of 1994 when operations of a
large industrial customer were temporarily curtailed due to a mechanical failure
of a machine which was a major part of the customer's manufacturing operation.
Under the Company's fuel cost recovery provisions, fuel revenues --including
purchased energy-- generally equal fuel expense and have no effect on earnings.
The $1.5 million decrease in other operating revenues reflects deferral of over
recovery of demand-side management rider revenues during 1994. Revenues from
demand-side management riders (included in retail revenues) recover demand-side
management program costs and have little impact on earnings.
The increase in 1993 retail revenues resulted from customer growth and an
increase in the average annual kilowatt-hour use per customer which was
substantially increased due to hot summer weather.
Revenues from sales to utilities outside the service area under long-term
contracts consist of capacity and energy components. Capacity revenues reflect
the recovery of fixed costs and a return on investment under the contracts.
Energy is generally sold at variable cost. Capacity and energy revenues
decreased in 1994 due to reductions in sales to Florida Power Corporation. The
capacity and energy components were as follows:
========================================================
1994 1993 1992
- --------------------------------------------------------
(in thousands)
Capacity $ 448 $ 978 $ 537
Energy 3,052 4,262 7,040
- --------------------------------------------------------
Total $3,500 $5,240 $7,577
========================================================
Sales to affiliated companies within the Southern electric system vary from
year to year depending on demand and the availability and cost of generating
resources at each company. These sales have little impact on earnings.
<PAGE>
4
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
Kilowatt-hour sales for 1994 and the percent change by year were as
follows:
==============================================================
Percent Change
------------------------
1994
KWH 1994 1993 1992
---------- ------------------------
(in millions)
Residential 1,298 (2.3)% 9.2% 1.8%
Commercial 1,046 2.9 6.5 3.0
Industrial 800 (6.4) (0.8) 4.3
Other 119 3.1 5.2 3.4
------
Total retail 3,263 (1.6) 5.5 2.9
Sales for resale -
Non-affiliates 202 (18.4) (32.7) (1.3)
Affiliates 93 23.4 100.3 15.5
------
Total 3,558 (2.2)% 2.6% 2.6%
======
===============================================================
Expenses
Total operating expenses for 1994 were $175.6 million, reflecting an $8.6
million decrease from 1993. This decrease includes a $5.8 million reduction in
fuel and purchased power expenses, reflecting a decrease in total energy
requirements. The $4.9 million reduction in 1994 in other operation and
maintenance expenses reflects the $4.5 million work force reduction charge in
1993 and a $1.1 million reduction in power generation expenses in 1994. This was
offset by an increase in depreciation expense because of additions to utility
plant, principally two combustion turbine units. Interest expense increased $1.9
million primarily due to the sale in June 1993 of $45 million of first mortgage
bonds.
Total operating expenses for 1993 increased $20.3 million (12.4 percent)
over the prior year. This increase includes a $10.8 million increase in fuel
expense, and an $8.7 million increase in other operation expenses. Fuel expenses
increased primarily because of higher generation due to extremely hot summer
weather and the higher cost of fuel. The increase in other operation expenses
reflects $4.5 million associated with the work force reduction program. The
Company also recognized higher employee benefit costs under new accounting rules
adopted in 1993. See Note 2 to the financial statements for additional
information on these new rules.
Fuel and purchased power costs constitute the single largest expense for
the Company. The mix of energy supply is determined primarily by system load,
the unit cost of fuel consumed and the availability of units.
The amount and sources of energy supply, the average cost of fuel per net
kilowatt-hour generated, and the total average cost of energy supply (including
purchased power) were as follows:
===============================================================
1994 1993 1992
-----------------------
Total energy supply
(millions of kilowatt-hours) 3,768 3,863 3,764
Sources of energy supply
(percent)
Coal 18 21 12
Oil 1 2 1
Gas 1 3 2
Purchased Power 80 74 85
Average cost of fuel per net
kilowatt-hour generated
(cents)
Coal 2.19 2.02 2.28
Oil 3.89 4.11 2.40
Gas 5.19 4.87 4.28
Total average cost of
energy supply 2.02 2.12 1.78
===============================================================
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic loss
because the Company is recovering its costs of investments in dollars that have
less purchasing power. While the inflation rate has been relatively low in
recent years, it continues to have an adverse effect on the Company because of
the large investment in long-lived utility plant. Conventional accounting for
historical cost does not recognize this economic loss nor the partially
offsetting gain that arises through financing facilities with fixed-money
obligations such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
<PAGE>
5
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
Future Earnings Potential
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings depends on
numerous factors ranging from growth in energy sales to a less regulated, more
competitive environment.
Future earnings in the near term will depend upon growth in energy sales,
which is subject to a number of factors. Traditionally, these factors included
changes in contracts with neighboring utilities, energy conservation practiced
by customers, the elasticity of demand, weather, competition, and the rate of
economic growth in the Company's service area. However, the Energy Policy Act of
1992 (Energy Act) is beginning to have a dramatic effect on the future of the
electric utility industry. The Energy Act promotes energy efficiency,
alternative fuel use, and increased competition for electric utilities. The
Company is posturing the business to meet the challenge of this major change in
the traditional practice of selling electricity. The Energy Act allows
independent power producers (IPPs) to access a utility's transmission network to
sell electricity to other utilities. This may enhance the incentives for IPPs to
build cogeneration plants for the Company's large industrial and commercial
customers. Although the Energy Act does not require transmission access to
retail customers, retail wheeling initiatives are rapidly evolving and becoming
very prominent issues in several states. In order to address these initiatives,
numerous questions must be resolved with the most complex ones relating to
transmission pricing and recovery of stranded investments. As the initiatives
become a reality, the structure of the utility industry could radically change.
Therefore, unless the Company remains a low-cost producer and provides quality
service, the Company's retail energy sales growth could be limited, and this
could significantly erode earnings. Conversely, being the low-cost producer
could provide significant opportunities to increase market share and
profitability.
Demand-side options -- programs that enable customers to lower or alter
their peak energy requirements -- have been initiated by the Company and are a
significant part of integrated resource planning. Customers can receive cash
incentives for participating in these programs in addition to reducing their
energy requirements. Besides promoting energy efficiency, another benefit of
these programs could be the ability to defer the need to construct costly
baseload generating facilities further into the future. The ability to defer
major construction projects in conjunction with regulatory precertification
approval processes for both new plant additions and purchase power contracts
should minimize the possibility of not being able to fully recover additional
costs.
The Company is subject to the provisions of Financial Accounting Standards
Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of
Regulation. In the event that a portion of the Company's operations is no longer
subject to these provisions, the Company would be required to write off related
regulatory assets and liabilities. See Note 1 to the financial statements under
"Regulatory Assets and Liabilities" for additional information.
Compliance costs related to the Clean Air Act Amendments of 1990 (Clean Air
Act) could reduce earnings if such costs are not fully recovered. The Clean Air
Act is discussed later under "Environmental Matters."
Rates to retail customers served by the Company are regulated by the
Georgia Public Service Commission (GPSC). In May 1992, the Company requested,
and subsequently received, approval by the GPSC to reduce annual base revenues
by $2.8 million, effective June 1992. The reduction included a base rate
reduction of approximately $2.5 million spread among all classes of retail
customers. An additional $0.3 million reduction resulted from the implementation
of an experimental, time-of-use rate for certain commercial customers. As part
of this rate settlement, it was informally agreed that the Company's earned rate
of return on common equity should be 12.95 percent.
FINANCIAL CONDITION
Overview
The principal change in the Company's financial condition in 1994 was the
addition of $30 million to utility plant. The majority of funds needed for gross
property additions since 1992 have been provided from operating activities,
<PAGE>
6
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
principally from earnings and non-cash charges to income such as depreciation
and deferred income taxes. See Statements of Cash Flows for additional
information.
Capital Structure
As of December 31, 1994, the Company's capital structure consisted of 45.8
percent common equity, 9.9 percent preferred stock and 44.3 percent long-term
debt, excluding amounts due within one year. The Company's long-term financial
objective for capitalization ratios is to maintain a capital structure of common
equity at 45 percent, preferred stock at 10 percent and debt at 45 percent.
Maturities and retirements of long-term debt were $5 million in 1994, $4
million in 1993 and $53 million in 1992.
The composite interest rates and dividend rates for the years 1992 through
1994 as of year-end were as follows:
===================================================================
1994 1993 1992
-----------------------------
Composite interest rates
on long-term debt 8.0% 8.0% 8.5%
Composite preferred stock
dividend rate 6.6% 6.6% 9.5%
===================================================================
The Company's current securities ratings are as follows:
===================================================================
Standard
Moody's & Poor's
------------------------
First Mortgage Bonds A1 A
Preferred Stock "a2" A-
-- --
===================================================================
Capital Requirements for Construction
The Company's projected construction expenditures for the next three years total
$87 million ($34 million in 1995, $27 million in 1996, and $26 million in 1997).
Actual construction costs may vary from this estimate because of such factors as
changes in environmental regulations; revised load projections; the cost and
efficiency of construction labor, equipment and materials; and the cost of
capital. In addition, there can be no assurance that costs related to capital
expenditures will be fully recovered.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately $2.9
million will be needed by the end of 1997 for present sinking fund requirements
and a capital lease buyout.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean
Air Act -- the acid rain compliance provision of the new law --may have a
significant impact on the Company and other subsidiaries of the Southern
electric system. Specific reductions in sulfur dioxide and nitrogen oxide
emissions from fossil-fired generating plants will be required in two phases.
Phase I compliance began in 1995, and affects eight generating plants -- some
10,000 megawatts of capacity or 35 percent of total capacity -- in the Southern
electric system. Phase II compliance is required in 2000, and all fossil-fired
generating plants in the Southern electric system will be affected.
In 1995, the Environmental Protection Agency (EPA) began issuing annual
sulfur dioxide emission allowances through the allowance trading program. An
emission allowance is the authority to emit one ton of sulfur dioxide during a
calendar year. The method for issuing allowances is based on the fossil fuel
consumed from 1985 through 1987 for each affected generating unit. Emission
allowances are transferable and can be bought, sold, or banked and used in the
future.
The sulfur dioxide emission allowance program is expected to minimize the
cost of compliance. The Southern Company's sulfur dioxide compliance strategy is
designed to use allowances as a compliance option.
The Southern Company expects to achieve Phase I sulfur dioxide compliance
at the eight affected plants by switching to low-sulfur coal, and this would
require some equipment upgrades. This compliance strategy is expected to result
in unused emission allowances being banked for later use. Additional
<PAGE>
7
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
construction expenditures are required to install equipment for the control of
nitrogen oxide emissions at these eight plants. Also, continuous emissions
monitoring equipment has been installed on all fossil-fired units. Construction
expenditures for Phase I compliance are estimated to total approximately $300
million through 1995 for The Southern Company, of which the Company's portion is
approximately $2 million.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I and increase fuel switching, install
flue gas desulfurization equipment at selected plants, and/or purchase more
allowances, depending on the price and availability of allowances. Also, in
Phase II, equipment to control nitrogen oxide emissions will be installed on
additional system fossil-fired plants as required to meet anticipated Phase II
limits. Therefore, during the period 1996 through 2000, current compliance
strategy could require total estimated construction expenditures of
approximately $150 million. No construction expenditures are expected to be
required of the Company to comply with Phase II requirements. However, the full
impact of Phase II compliance cannot now be determined with certainty, pending
the continuing development of a market for emission allowances, the completion
of EPA regulations, and the possibility of new emission reduction technologies.
An increase of up to 2 percent in annual revenue requirements from
customers could be necessary to fully recover the Company's costs of compliance
for both Phase I and II of the Clean Air Act. Compliance costs include
construction expenditures, increased costs for switching to low-sulfur coal, and
costs related to emission allowances.
Title III of the Clean Air Act requires a multi-year EPA study of power
plant emissions of hazardous air pollutants. The EPA is scheduled to submit a
report to Congress on the results of this study by November 1995. The report
will include a decision on whether additional regulatory control of these
substances is warranted. Compliance with any new control standards could result
in significant additional costs. The impact of new standards -- if any -- will
depend on the development and implementation of applicable regulations.
A significant portion of costs related to the acid rain provision of the
Clean Air Act is expected to be recovered through existing ratemaking
provisions. However, there can be no assurance that all Clean Air Act costs will
be recovered.
The EPA continues to evaluate the need for a new short-term ambient air
quality standard for sulfur dioxide. Preliminary results from an EPA study on
the impact of a new standard indicate that a number of plants could be required
to install sulfur dioxide controls. These controls would be in addition to the
controls already required to meet the acid rain provision of the Clean Air Act.
The EPA issued proposed rules in November 1994 and is required to take final
action on this issue in 1996. The impact of any new standard will depend on the
level chosen for the standard and cannot be determined at this time.
In addition, the EPA is evaluating the need to revise the ambient air
quality standards for particulate matter, nitrogen oxides, and ozone. The impact
of any new standard will depend on the level chosen for the standard and cannot
be determined at this time.
In 1995, the EPA may issue revised rules on air quality control regulations
related to stack height requirements of the Clean Air Act. The full impact of
the final rules cannot be determined at this time, pending their development and
implementation.
In 1993, the EPA issued a ruling confirming the non-hazardous status of
coal ash. However, the EPA has until 1998 to classify co-managed utility
wastes--coal ash and other utility wastes--as either non-hazardous or hazardous.
If the EPA classifies the co-managed wastes as hazardous, then substantial
additional costs for the management of such wastes may be required. The full
impact of any change in the regulatory status will depend on the subsequent
development of co-managed waste requirements.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
<PAGE>
8
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1994 Annual Report
regulations, the Company could incur substantial costs to clean up properties
currently or previously owned. The Company conducts studies to determine the
extent of any required cleanup costs and will recognize in the financial
statements any costs to clean up known sites.
Several major pieces of environmental legislation are being considered for
reauthorization or amendment by Congress. These include: the Clean Water Act;
the Comprehensive Environmental Response, Compensation, and Liability Act; the
Resource Conservation and Recovery Act; and the Endangered Species Act. Changes
to these laws could affect many areas of The Southern Company's operations. The
full impact of these requirements cannot be determined at this time, pending the
development and implementation of applicable regulations.
Compliance with possible new legislation related to global climate change,
electromagnetic fields, and other environmental and health concerns could
significantly affect The Southern Company. The impact of new legislation -- if
any -- will depend on the subsequent development and implementation of
applicable regulations. In addition, the potential exists for liability as the
result of lawsuits alleging damages caused by electromagnetic fields.
Sources of Capital
At December 31, 1994, the Company had $1.6 million of cash and $18 million of
unused credit arrangements with banks to meet its short-term cash needs. The
Company had $2.5 million of short-term bank borrowings at December 31, 1994. In
December 1994, the Company renegotiated a two-year revolving credit arrangement
with three of its existing banks for a total credit line of $20 million. The
primary purpose of this additional credit is to provide interim funding for the
Company's construction program.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulations, will also be
derived from operations and the sale of additional first mortgage bonds and
preferred stock and capital contributions from The Southern Company. The Company
is required to meet certain coverage requirements specified in its mortgage
indenture and corporate charter to issue new first mortgage bonds and preferred
stock. The Company's coverage ratios are sufficiently high enough to permit, at
present interest levels, any foreseeable security sales. The amount of
securities which the Company will be permitted to issue in the future will
depend upon market conditions and other factors prevailing at that time.
<PAGE>
9
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, and 1992
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1994 1993 1992
- ---------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Revenues (Notes 1, 3, and 6):
Revenues $ 205,339 $ 216,009 $ 196,256
Revenues from affiliates 6,446 2,433 1,505
- ---------------------------------------------------------------------------------------------
Total operating revenues 211,785 218,442 197,761
- ---------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 18,555 24,976 14,162
Purchased power from non-affiliates 1,839 793 494
Purchased power from affiliates 55,822 56,274 56,492
Other (Note 2) 41,623 45,610 36,884
Maintenance 12,560 13,516 14,232
Depreciation and amortization (Notes 1 and 7) 17,854 16,467 16,829
Taxes other than income taxes 11,074 11,136 10,231
Federal and state income taxes (Notes 1 and 7) 16,289 15,436 14,566
- ---------------------------------------------------------------------------------------------
Total operating expenses 175,616 184,208 163,890
- ---------------------------------------------------------------------------------------------
Operating Income 36,169 34,234 33,871
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) 831 958 446
Interest income 54 209 276
Other, net (Note 2) (1,032) (1,841) (1,450)
Income taxes applicable to other income (Notes 1 and 7) 864 1,117 758
- ---------------------------------------------------------------------------------------------
Income Before Interest Charges 36,886 34,677 33,901
- ---------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 12,585 10,696 10,870
Allowance for debt funds used during construction (Note 1) (1,225) (699) (289)
Interest on notes payable 205 240 15
Amortization of debt discount, premium, and expense, net 550 535 427
Other interest charges 337 340 466
- ---------------------------------------------------------------------------------------------
Net interest charges 12,452 11,112 11,489
- ---------------------------------------------------------------------------------------------
Net Income 24,434 23,565 22,412
Dividends on Preferred Stock 2,324 2,106 1,900
- ---------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 22,110 $ 21,459 $ 20,512
=============================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
10
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1994, 1993, and 1992
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==============================================================================================
1994 1993 1992
- ----------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 24,434 $ 23,565 $ 22,412
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 19,353 17,482 17,757
Deferred income taxes and investment tax credits 1,625 607 5,947
Allowance for equity funds used during construction (831) (958) (446)
Other, net 826 2,853 (1,312)
Changes in certain current assets and liabilities --
Receivables, net 18,481 (16,839) (4,107)
Special deposits - - 350
Inventories 1,144 (3,947) 4,435
Payables (19,957) 18,742 351
Other (117) 3,282 2,083
- ----------------------------------------------------------------------------------------------
Net cash provided from operating activities 44,958 44,787 47,470
- ----------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (30,078) (72,858) (30,132)
Other (841) 1,676 (1,073)
- -----------------------------------------------------------------------------------------------
Net cash used for investing activities (30,919) (71,182) (31,205)
- -----------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
First mortgage bonds - 45,000 30,000
Preferred stock - 35,000 -
Pollution control bonds - 4,085 13,870
Other long-term debt 8,500 10,000 -
Retirements:
Preferred stock - (20,000) -
First mortgage bonds (5,065) - (38,750)
Pollution control bonds - (4,085) (14,550)
Other long-term debt (823) (10,356) (217)
Notes payable, net (500) (4,500) 7,500
Payment of preferred stock dividends (2,129) (2,222) (1,900)
Payment of common stock dividends (16,300) (21,000) (22,000)
Miscellaneous (74) (3,400) (3,985)
- -----------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (16,391) 28,522 (30,032)
- -----------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (2,352) 2,127 (13,767)
Cash and Cash Equivalents at Beginning of Year 3,915 1,788 15,555
- -----------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,563 $ 3,915 $ 1,788
===============================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for-
Interest (net of amount capitalized) $11,579 $10,712 $9,932
Income taxes 14,441 13,947 6,646
- -----------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
11
BALANCE SHEETS
At December 31, 1994 and 1993
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=================================================================================================
Assets 1994 1993
- -------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Utility Plant:
Plant in service, at original cost (Notes 1, 4, 5, 7, and 9) $ 693,432 $ 622,521
Less accumulated provision for depreciation 267,590 251,565
- -------------------------------------------------------------------------------------------------
425,842 370,956
Construction work in progress 5,930 49,797
- -------------------------------------------------------------------------------------------------
Total 431,772 420,753
- -------------------------------------------------------------------------------------------------
Other Property and Investments 1,790 1,793
- -------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,563 3,915
Receivables-
Customer accounts receivable 17,581 18,551
Other accounts and notes receivable 216 790
Affiliated companies 177 12,924
Accumulated provision for uncollectible accounts (866) (762)
Fuel cost under recovery 3,113 7,112
Fossil fuel stock, at average cost 7,557 8,419
Materials and supplies, at average cost (Note 1) 9,076 9,358
Prepayments 7,446 4,849
- -------------------------------------------------------------------------------------------------
Total 45,863 65,156
- -------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 7) 23,521 24,890
Premium on reacquired debt, being amortized 3,295 3,792
Cash surrender value of life insurance for deferred compensation plan 7,028 5,907
Miscellaneous 5,036 4,896
- -------------------------------------------------------------------------------------------------
Total 38,880 39,485
- -------------------------------------------------------------------------------------------------
Total Assets $ 518,305 $ 527,187
=================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
12
BALANCE SHEETS
At December 31, 1994 and 1993
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
================================================================================================
Capitalization and Liabilities 1994 1993
- ------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity $ 161,581 $ 154,269
Preferred stock 35,000 35,000
Long-term debt 155,922 151,338
- -------------------------------------------------------------------------------------------------
Total 352,503 340,607
- -------------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year (Note 10) 2,579 4,499
Notes payable (Note 5) 2,500 3,000
Accounts payable-
Affiliated companies 5,162 6,041
Other 3,829 24,401
Customer deposits 4,698 4,714
Taxes accrued-
Federal and state income 272 342
Other 861 1,187
Interest accrued 6,830 6,730
Vacation pay accrued 1,823 1,638
Pensions accrued (Note 2) 4,783 5,718
Miscellaneous 3,499 2,985
- -------------------------------------------------------------------------------------------------
Total 36,836 61,255
- -------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 7) 70,786 66,947
Accumulated deferred investment tax credits (Note 7) 14,637 15,301
Deferred credits related to income taxes (Note 7) 25,487 26,173
Deferred compensation plans 6,807 6,117
Deferred under-funded accrued benefit obligation (Note 2) 3,022 5,855
Postretirement benefits 3,808 2,074
Miscellaneous 4,419 2,858
- -------------------------------------------------------------------------------------------------
Total 128,966 125,325
- -------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 4, 5, and 9)
Total Capitalization and Liabilities $ 518,305 $ 527,187
=================================================================================================
The accompanying notes are an integral part of these statements.
<PAGE>
13
STATEMENTS OF CAPITALIZATION
At December 31, 1994 and 1993
Savannah Electric and Power Company 1994 Annual Report
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================
1994 1993 1994 1993
- --------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
Common Stock Equity (Notes 2 and 11):
Common stock, par value $5 per share --
Authorized -- 16,000,000 shares
Outstanding -- 10,844,635 shares in
1994 and 1993 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688
Additional minimum liability
for under-funded pension obligations (546) (2,121)
Retained Earnings 99,216 93,479
- --------------------------------------------------------------------------------------------------
Total common stock equity 161,581 154,269 45.8 % 45.3 %
- --------------------------------------------------------------------------------------------------
Cumulative Preferred Stock (Note 8):
$25 par value --
Authorized -- 2,200,000 shares
6.64% Series -- Outstanding -- 1,400,000 shares 35,000 35,000
- -------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $2,324,000) 35,000 35,000 9.9 10.3
- -------------------------------------------------------------------------------------------------
Long-Term Debt (Note 9):
First mortgage bonds --
Maturity Interest Rates
-------- --------------
April 1, 1994 4 5/8% - 3,715
July 1, 2003 6 3/8% 20,000 20,000
October 1, 2019 9 1/4% 28,950 30,000
July 1, 2021 9 3/8% 29,700 30,000
July 1, 2022 8.30% 30,000 30,000
July 1, 2023 7.40% 25,000 25,000
- --------------------------------------------------------------------------------------------------
Total first mortgage bonds 133,650 138,715
Pollution control obligations (Note 9) 17,955 17,955
Other long-term debt (Note 9) 9,988 2,311
Unamortized debt premium (discount), net (3,092) (3,144)
- --------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $12,859,000) 158,501 155,837
Less amount due within one year (Note 10) 2,579 4,499
- --------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 155,922 151,338 44.3 44.4
- --------------------------------------------------------------------------------------------------
Total Capitalization $ 352,503 $ 340,607 100.0% 100.0%
==================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
14
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1994, 1993, and 1992
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=======================================================================================
1994 1993 1992
- ---------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Balance at Beginning of Period $ 93,479 $ 95,155 $ 96,643
Net income after dividends on preferred stock 22,110 21,459 20,512
Cash dividends on common stock (16,300) (21,000) (22,000)
Preferred stock transactions, net (73) (2,135) -
- ---------------------------------------------------------------------------------------
Balance at End of Period (Note 11) $ 99,216 $ 93,479 $ 95,155
=======================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1994, 1993, and 1992
=========================================================================================
1994 1993 1992
- -----------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 8,688 $ 8,688 $ 8,665
Contributions to capital by parent company - - 23
- -----------------------------------------------------------------------------------------
Balance at End of Period $ 8,688 $ 8,688 $ 8,688
=========================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
15
NOTES TO FINANCIAL STATEMENTS
Savannah Electric and Power Company 1994 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Savannah Electric and Power Company is a wholly owned subsidiary of The Southern
Company, which is the parent company of five operating companies, a system
service company, Southern Communications Services (Southern Communications),
Southern Electric International (Southern Electric), Southern Nuclear Operating
Company (Southern Nuclear), and The Southern Development and Investment Group
(SDIG). The operating companies provide electric service in four southeastern
states. Contracts among the companies -- dealing with jointly owned generating
facilities, interconnecting transmission lines, and the exchange of electric
power -- are regulated by the Federal Energy Regulatory Commission (FERC) or the
Securities and Exchange Commission (SEC). The system service company provides,
at cost, specialized services to The Southern Company and subsidiary companies.
Southern Communications, beginning in mid-1995, will provide digital wireless
communications services -- over the 800-megahertz frequency band -- to The
Southern Company's subsidiaries and also will market these services to the
public within the Southeast. Southern Electric designs, builds, owns, and
operates power production facilities and provides a broad range of technical
services to industrial companies and utilities in the United States and a number
of international markets. Southern Nuclear provides services to The Southern
Company's nuclear power plants. SDIG develops new business opportunities related
to energy products and services.
The Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both The Southern Company and its
subsidiaries are subject to the regulatory provisions of the PUHCA. The Company
also is subject to regulation by the FERC and the Georgia Public Service
Commission (GPSC). The Company follows generally accepted accounting principles
and complies with the accounting policies and practices prescribed by the GPSC.
Certain prior years' data presented in the financial statements have been
reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The Company is subject to the provisions of FASB Statement No. 71, Accounting
for the Effects of Certain Types of Regulation. Regulatory assets represent
probable future revenues to the Company associated with certain costs that are
expected to be recovered from customers through the ratemaking process.
Regulatory liabilities represent probable future reductions in revenues
associated with amounts that are to be credited to customers through the
ratemaking process. Regulatory assets and (liabilities) reflected in the Balance
Sheets at December 31 relate to:
===============================================================
1994 1993
--------------------
(in thousands)
Deferred income taxes $23,521 $24,890
Premium on reacquired debt 3,295 3,792
Deferred income tax credits (25,487) (26,173)
- ---------------------------------------------------------------
Total $ 1,329 $ 2,509
===============================================================
In the event that a portion of the Company's operations is no longer
subject to the provisions of Statement No. 71, the Company would be required to
write off related regulatory assets and liabilities. In addition, the Company
would be required to determine any impairment to other assets, including plant,
and write down the assets to their fair value.
Revenues and Fuel Costs
The Company accrues revenues for service rendered but unbilled at the end of
each fiscal period. Fuel costs are expensed as the fuel is used. The Company's
electric rates include provisions to adjust billings for fluctuations in fuel
and purchased power costs. Revenues are adjusted for differences between
recoverable fuel and demand-side management program costs and amounts actually
recovered in current rates.
The Company has a diversified base of customers. No single customer or
industry comprises 10 percent or more of revenues. In 1994, uncollectible
accounts continued to average less than 1 percent of revenues.
<PAGE>
16
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
Depreciation and Amortization
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
2.9 percent in 1994, 2.9 percent in 1993, and 3.2 percent in 1992. The decrease
in rates following 1992 reflects the Company's implementation of new
depreciation rates approved by the GPSC. These new rates provide for a timely
recovery of the investments in the Company's depreciable properties.
When property subject to depreciation is retired or otherwise disposed of
in the normal course of business, its cost -- together with the cost of removal,
less salvage -- is charged to the accumulated provision for depreciation. Minor
items of property included in the original cost of the plant are retired when
the related property unit is retired.
Income Taxes
The Company, which is included in the consolidated federal income tax return
filed by The Southern Company, provides deferred income taxes for all
significant income tax temporary differences. Investment tax credits utilized
are deferred and amortized to income over the average lives of the related
property.
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. Statement No. 109 required, among other things,
conversion to the liability method of accounting for accumulated deferred income
taxes. See Note 7 for additional information about Statement No. 109.
Allowance for Funds Used During Construction (AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are
necessary to finance the construction of new facilities. While cash is not
realized currently from such allowance, it increases the revenue requirement
over the service life of the plant through a higher rate base and higher
depreciation expense. The composite rates used by the Company to calculate AFUDC
were 8.04 percent in 1994, 8.77 percent in 1993, and 11.27 percent in 1992.
Utility Plant
Utility plant is stated at original cost, which includes: materials; labor;
minor items of property; appropriate administrative and general costs;
payroll-related costs such as taxes, pensions, and other benefits; and the
estimated cost of funds used during construction. The cost of maintenance,
repairs, and replacement of minor items of property is charged to maintenance
expense. The cost of replacements of property (exclusive of minor items of
property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are
considered cash equivalents. Temporary cash investments are securities with
original maturities of 90 days or less.
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Value of
Financial Instruments, the Company's only financial instrument that the carrying
amount did not approximate fair value at December 31 was as follows:
================================================================
Long-Term Debt
-----------------------
Carrying Fair
Year Amount Value
- ---- ----------------------
(in millions)
1994 $157 $153
1993 154 164
================================================================
The fair value for long-term debt was based on either closing market prices
or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission,
distribution, and generating plant materials. Materials are charged to inventory
when purchased and then expensed or capitalized to plant, as appropriate, when
installed.
<PAGE>
17
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Benefits are based on the greater of
amounts resulting from two different formulas: years of service and final
average pay or years of service and a flat-dollar benefit. The Company uses the
"projected unit credit" actuarial method for funding purposes, subject to
limitations under federal income tax regulations. Amounts funded to the pension
trust are primarily invested in equity and fixed-income securities. FASB
Statement No. 87, Employers' Accounting for Pensions, requires use of the
"projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
The Company also provides certain medical care and life insurance benefits for
retired employees. Substantially all employees may become eligible for these
benefits when they retire. A qualified trust for medical benefits is funded to
the extent deductible under federal income tax regulations. Amounts funded are
primarily invested in debt and equity securities.
Effective January 1, 1993, the Company adopted FASB Statement No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, on a
prospective basis. Statement No. 106 requires that medical care and life
insurance benefits for retired employees be accounted for on an accrual basis
using a specified actuarial method, "benefit/years-of-service." The cost of
postretirement benefits is reflected in rates on a current basis.
Prior to 1993, consistent with regulatory treatment, the Company recognized
costs on a cash basis as payments were made. The total cost of such benefits
recognized by the Company in 1992 was $375 thousand.
Funded Status and Cost of Benefits
Shown in the following tables are actuarial results and assumptions for pension
and postretirement medical and life insurance benefits as computed under the
requirements of FASB Statement Nos. 87 and 106, respectively. The funded status
of the plans at December 31 was as follows:
==================================================================
Pension
-------------------
1994 1993
-------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $35,227 $35,818
Non-vested benefits 2,069 1,992
- ------------------------------------------------------------------
Accumulated benefit obligation 37,296 37,810
Additional amounts related to
projected salary increases 7,393 5,974
- ------------------------------------------------------------------
Projected benefit obligation 44,689 43,784
Less:
Fair value of plan assets 27,165 26,446
Unrecognized net loss 10,950 9,449
Unrecognized prior service cost 1,510 1,685
Unrecognized net transition
obligation 621 710
Adjustment required to
recognize additional
minimum liability 5,688 5,871
- ------------------------------------------------------------------
Accrued pension cost recognized
in the Balance Sheets $10,131 $11,365
===================================================================
The weighted average rates assumed in the actuarial calculations for the
pension plan were:
==================================================================
1994 1993 1992
------------------------------
Discount 8.00% 7.50% 8.00%
Annual salary increase 5.25 4.75 5.00
Long-term return on plan assets 9.00 9.25 9.25
===================================================================
In accordance with Statement No. 87, an additional liability related to
under-funded accumulated benefit obligations was reflected at December 31, 1994
and December 31, 1993. Corresponding net-of-tax balances of $0.5 million and
$2.1 million were recognized as separate components of Common Stock Equity in
the 1994 and 1993 Statements of Capitalization.
<PAGE>
18
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
================================================================
Postretirement
Medical
---------------------
1994 1993
---------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $ 8,480 $ 8,632
Employees eligible to retire 825 898
Other employees 6,840 6,489
- -----------------------------------------------------------------
Accumulated benefit obligation 16,145 16,019
Less:
Fair value of plan assets 393 -
Unrecognized net loss 3,106 4,124
Unrecognized transition
obligation 9,817 10,362
- -----------------------------------------------------------------
Accrued liability recognized in the
Balance Sheets $ 2,829 $ 1,533
================================================================
Postretirement Life
----------------------
1994 1993
----------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $2,514 $2,536
Employees eligible to retire 59 -
Other employees 1,645 1,577
- -------------------------------------------------------------------
Accumulated benefit obligation 4,218 4,113
Less:
Fair value of plan assets - -
Unrecognized net loss 91 262
Unrecognized transition
obligation 3,204 3,382
- -------------------------------------------------------------------
Accrued liability recognized in the
Balance Sheets $ 923 $ 469
===================================================================
The weighted average rates assumed in the actuarial calculations for the
postretirement medical and life plans were:
=======================================================
1994 1993
------------------
Discount 8.00% 7.50%
Annual salary increase 5.50 5.00
Long-term return on plan assets 8.50 8.50
=======================================================
An additional assumption used in measuring the accumulated postretirement
medical benefit obligation was a weighted average medical care cost trend rate
of 10.5 percent for 1994, decreasing gradually to 6.0 percent through the year
2000 and remaining at that level thereafter. An annual increase in the assumed
medical care cost trend rate of 1 percent would increase the accumulated medical
benefit obligation at December 31, 1994, by $2.3 million and the aggregate of
the service and interest cost components of the net retiree medical cost by $0.3
million.
Components of the plans' net costs are shown below:
===================================================================
Pension
---------------------------
1994 1993 1992
---------------------------
(in thousands)
Benefits earned during the year $ 1,192 $1,188 $1,053
Interest cost on projected
benefit obligation 3,279 2,741 2,429
Actual (return) loss on plan assets 27 (2,199) (1,266)
Net amortization and deferral (1,474) 716 (227)
- -------------------------------------------------------------------
Net pension cost $ 3,024 $2,446 $1,989
===================================================================
Of the above net pension amounts, $2.6 million in 1994, $2.0 million in
1993 and $1.7 million in 1992 were recorded in operating expenses, and the
remainder was recorded in construction and other accounts.
================================================================
Postretirement
Medical
------------------
1994 1993
------------------
(in thousands)
Benefits earned during the year $ 528 346
Interest cost on accumulated
benefit obligation 1,185 855
Amortization of transition obligation 545 545
Actual (return) loss on plan assets 6 -
Net amortization and deferral 111 -
- ----------------------------------------------------------------
Net postretirement cost $2,375 $1,746
================================================================
==================================================================
Postretirement Life
----------------------
1994 1993
----------------------
(in thousands)
Benefits earned during the year $104 $ 97
Interest cost on accumulated
benefit obligation 307 279
Amortization of transition obligation 178 178
- ------------------------------------------------------------------
Net postretirement cost $589 $554
==================================================================
<PAGE>
19
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
Of the above net postretirement medical and life insurance costs, $2.4
million in 1994 and $1.8 million in 1993 were charged to operating expenses, and
the remainder was recorded in construction and other accounts.
The Company has a supplemental retirement plan for certain executive
employees. The plan is unfunded and payable from the general funds of the
Company. The Company has purchased life insurance on participating executives,
and plans to use these policies to satisfy this obligation. Benefit costs
associated with this plan for 1994, 1993 and 1992 were $377 thousand, $980
thousand and $316 thousand, respectively. The 1993 benefit costs reflect a
one-time expense related to employees who were part of the work force reduction
program.
Work Force Reduction Program
In 1993, the Company incurred additional costs for a one-time charge related to
the implementation of a work force reduction program. In 1993, $4.5 million was
charged to operating expenses and $0.6 million was charged to other income
(expense).
3. REGULATORY MATTERS
In May 1992, the Company filed for, and subsequently received, GPSC approval to
implement new base rates designed to decrease base operating revenues by $2.8
million annually. The reduction included a base rate reduction of approximately
$2.5 million spread among all classes of customers, effective June 1992. An
additional $0.3 million reduction resulted from the implementation of an
experimental, time-of-use rate for certain commercial customers in August 1992.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently estimated
to total $34 million in 1995, $27 million in 1996 and $26 million in 1997. The
estimates include AFUDC of $0.7 million in 1995 and 1996, and $0.6 million in
1997. The construction program is subject to periodic review and revision, and
actual construction costs may vary from the above estimates because of numerous
factors. These factors include: changes in business conditions; revised load
growth estimates; changes in environmental regulations; increasing cost of
labor, equipment and materials; and changes in cost of capital. The construction
of two combustion turbine peaking units totaling 160 megawatts was completed
during 1994. In addition, construction will continue related to transmission and
distribution facilities and the upgrading and extension of the useful lives of
generating plants.
5. FINANCING AND COMMITMENTS
General
To the extent possible, the Company's construction program is expected to be
financed from internal sources and from the issuance of additional long-term
debt and preferred stock and capital contributions from The Southern Company.
Should the Company be unable to obtain funds from these sources, the Company
would have to use short-term indebtedness or other alternative, and possibly
costlier, means of financing.
The amounts of long-term debt and preferred stock that can be issued in the
future will be contingent on market conditions, the maintenance of adequate
earnings levels, regulatory authorizations and other factors. See Management's
Discussion and Analysis for information regarding the Company's earnings
coverage requirements.
Bank Credit Arrangements
At the beginning of 1995, unused credit arrangements with five banks totaled $18
million and expire at various times during 1995 and 1996.
The Company's revolving credit arrangements of $20 million, of which $11.5
million remained unused as of December 31, 1994, expire in December 1996. These
agreements allow short-term borrowings to be converted into term loans, payable
in 12 equal quarterly installments, with the first installment due at the end of
<PAGE>
20
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
the first calendar quarter after the applicable termination date or at an
earlier date at the Company's option.
In connection with these credit arrangements, the Company agrees to pay
commitment fees based on the unused portions of the commitments.
Assets Subject to Lien
As amended and supplemented, the Company's Indenture of Mortgage, which secures
the first mortgage bonds issued by the Company, constitutes a direct first lien
on substantially all of the Company's fixed property and franchises.
Operating Leases
The Company has rental agreements with various terms and expiration dates.
Rental expenses totaled $1.5 million for 1994, 1993, and 1992. At December 31,
1994, estimated future minimum lease payments for non-cancelable operating
leases were as follows:
========================================================
Amounts
---------
(in millions)
1995 $1.1
1996 0.9
1997 0.7
1998 0.5
========================================================
6. LONG-TERM POWER SALES AGREEMENTS
The operating subsidiaries of The Southern Company, including the Company, have
entered into long-term contractual agreements for the sale of capacity and
energy to certain non-affiliated utilities located outside the system's service
area. The agreements for non-firm capacity expired in 1994. Other
agreements--expiring at various dates discussed below-- are firm and pertain to
capacity related to specific generating units. Because energy is generally sold
at cost under these agreements, revenues from capacity sales primarily affect
profitability. The Company's portion of capacity revenues has been as follows:
=================================================================
Unit Other
Year Power Long-Term Total
- ---- -----------------------------------
(in thousands)
1994 $3 $445 $448
1993 2 976 978
1992 3 534 537
=================================================================
7. INCOME TAXES
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption resulted in the recording of
additional deferred income taxes and related regulatory assets and liabilities.
At December 31, 1994, the tax-related regulatory assets and liabilities were $24
million and $25 million, respectively. These assets are attributable to tax
benefits flowed through to customers in prior years and to taxes applicable to
capitalized AFUDC. These liabilities are attributable to deferred taxes
previously recognized at rates higher than current enacted tax law and to
unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
===============================================================
1994 1993 1992
----------------------------
(in thousands)
Total provision for income taxes
Federal --
Currently payable $11,736 $11,663 $ 6,630
Deferred - current year 2,106 1,906 7,407
- reversal of
prior years (755) (1,383) (2,347)
- ---------------------------------------------------------------
13,087 12,186 11,690
- ---------------------------------------------------------------
State --
Currently payable 2,064 2,049 1,231
Deferred - current year 188 119 1,079
- reversal of
prior years 86 (35) (192)
- ---------------------------------------------------------------
2,338 2,133 2,118
- ---------------------------------------------------------------
Total 15,425 14,319 13,808
Less income taxes charged
(credited) to other income (864) (1,117) (758)
- ---------------------------------------------------------------
Federal and state income taxes
charged to operations $16,289 $15,436 $14,566
===============================================================
<PAGE>
21
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases, which give rise to deferred tax assets and liabilities, are as follows:
================================================================
1994 1993
-----------------
(in thousands)
Deferred tax liabilities:
Accelerated depreciation $57,830 $53,585
Property basis differences 12,956 13,871
Other 2,449 3,922
- ----------------------------------------------------------------
Total 73,235 71,378
- ---------------------------------------------------------------
Deferred tax assets:
Pension and other benefits 4,816 4,237
Other 3,959 4,616
- ----------------------------------------------------------------
Total 8,775 8,853
- ----------------------------------------------------------------
Net deferred tax liabilities 64,460 62,525
Portions included in current assets, net 6,326 4,422
- ----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $70,786 $66,947
================================================================
Deferred investment tax credits are amortized over the life of the related
property with such amortization normally applied as a credit to reduce
depreciation in the Statements of Income. Credits amortized in this manner
amounted to $0.7 million in 1994, 1993, and 1992. At December 31, 1994, all
investment tax credits available to reduce federal income taxes payable had been
utilized.
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
==============================================================
1994 1993 1992
----------------------------
Statutory federal tax rate 35% 35% 34%
State income tax, net of
federal income tax benefit 4 4 4
Other - (1) -
- ---------------------------------------------------------------
Total effective tax rate 39% 38% 38%
===============================================================
The Southern Company and its subsidiaries file a consolidated federal
income tax return. Under a joint consolidated income tax agreement, each
company's current and deferred tax expense is computed on a stand-alone basis,
and consolidated tax savings are allocated to each company based on its ratio of
taxable income to total consolidated taxable income.
8. CUMULATIVE PREFERRED STOCK
In 1993, the Company issued 1,400,000 shares of 6.64% Series Preferred Stock
which has redemption provisions of $26.66 per share plus accrued dividends if on
or prior to November 1, 1998, and redemption provisions of $25 per share plus
accrued dividends thereafter.
In December 1993, the Company redeemed all 800,000 shares outstanding of
its 9.5% Series Preferred Stock at the prescribed redemption price of $26.57
plus accrued dividends. Cumulative preferred stock dividends are preferential to
the payment of dividends on common stock.
9. LONG-TERM DEBT
The Company's Indenture related to its First Mortgage Bonds is unlimited as to
the authorized amount of bonds which may be issued, provided that required
property additions, earnings and other provisions of such Indenture are met.
In April 1994, the Company retired the remaining outstanding principal
amount of $3.7 million of its 4 5/8 percent series First Mortgage Bonds due
April 1994.
The sinking fund requirements of first mortgage bonds were satisfied by
certification of property additions in 1993 and by cash redemption in 1994. See
Note 10 "Long-Term Debt Due Within One Year" for details.
Details of pollution control obligations and other long-term debt at
December 31 are as follows:
==================================================================
1994 1993
------------------
(in thousands)
Collateralized obligations incurred
in connection with the sale by public
authorities of tax-exempt pollution
control revenue bonds --
Variable rate (5.65% at 1/1/95)
due 2016 $ 4,085 $ 4,085
6 3/4% due 2022 13,870 13,870
- -----------------------------------------------------------------
Total pollution control obligations $17,955 $17,955
- -----------------------------------------------------------------
Capital lease obligations --
Combustion turbine equipment $ 980 $ 1,403
Transportation fleet 508 908
Notes Payable:
6.04% due 1995 3,500 -
6.035% due 1995 5,000 -
- -----------------------------------------------------------------
Total other long-term debt $ 9,988 $ 2,311
=================================================================
<PAGE>
22
NOTES (continued)
Savannah Electric and Power Company 1994 Annual Report
Sinking fund requirements and/or maturities through 1999 applicable to
long-term debt are as follows: $2.6 million in 1995; $0.2 million in 1996; $0.1
million in 1997; and no requirement is needed in 1998 and 1999.
Assets acquired under capital leases are recorded as utility plant in
service, and the related obligation is classified as other long-term debt.
Leases are capitalized at the net present value of the future lease payments.
However, for ratemaking purposes, these obligations are treated as operating
leases, and as such, lease payments are charged to expense as incurred.
The Company leases combustion turbine generating equipment under a
non-cancelable lease expiring in December 1995, with renewal options extending
until 2010. The Company also leases a portion of its transportation fleet. Under
the terms of these leases, the Company is responsible for taxes, insurance and
other expenses.
10. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund/sinking fund requirements and scheduled
maturities and redemptions of long-term debt due within one year at December 31
is as follows:
=================================================================
1994 1993
--------------------
(in thousands)
Bond sinking fund requirements $1,350 $1,350
Less:
Portion to be satisfied by
certifying property additions - 1,350
- -----------------------------------------------------------------
Cash sinking fund requirements 1,350 -
Other long-term debt maturities 1,229 4,499
- -----------------------------------------------------------------
Total $2,579 $4,499
=================================================================
The first mortgage bond improvement (sinking) fund requirements amount to 1
percent of each outstanding series of bonds authenticated under the indentures
prior to January 1 of each year, other than those issued to collateralize
pollution control and other obligations. The requirements may be satisfied by
depositing cash or reacquiring bonds, or by pledging additional property equal
to 1 2/3 times the requirements.
11. COMMON STOCK DIVIDEND RESTRICTIONS
The Company's Charter and Indentures contain certain limitations on the payment
of cash dividends on preferred and common stocks. At December 31, 1994,
approximately $57 million of retained earnings was restricted against the
payment of cash dividends on common stock under the terms of the Mortgage
Indenture.
12. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized quarterly financial data for 1994 and 1993 are as follows (in
thousands):
==================================================================
Net Income After
Operating Operating Dividends on
Quarter Ended Revenue Income Preferred Stock
- ------------------------------------------------------------------
March 1994 $46,717 $ 7,130 $ 3,898
June 1994 56,377 9,555 6,051
September 1994 63,674 13,495 9,547
December 1994 45,017 5,989 2,614
March 1993 $42,873 $ 6,123 $ 3,019
June 1993 52,875 9,301 6,211
September 1993 74,420 13,326 10,214
December 1993 48,274 5,484 2,015
==================================================================
The Company's business is influenced by seasonal weather conditions and a
seasonal rate structure, among other factors.
<PAGE>
23
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1994 1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $211,785 $218,442 $197,761
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $22,110 $21,459 $20,512
Cash Dividends on Common Stock (in thousands) $16,300 $21,000 $22,000
Return on Average Common Equity (percent) 14.00 13.73 12.89
Total Assets (in thousands) $518,305 $527,187 $352,175
Gross Property Additions (in thousands) $30,078 $72,858 $30,132
- ---------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $161,581 $154,269 $158,376
Preferred stock 35,000 35,000 20,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 155,922 151,338 110,767
- ---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $352,503 $340,607 $289,143
=============================================================================================
Capitalization Ratios (percent):
Common stock equity 45.8 45.3 54.8
Preferred and preference stock 9.9 10.3 6.9
Long-term debt 44.3 44.4 38.3
- ---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=============================================================================================
First Mortgage Bonds (in thousands):
Issued - 45,000 30,000
Retired 5,065 - 38,750
Preferred and Preference Stock (in thousands):
Issued - 35,000 -
Retired - 20,000 -
- ---------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's "a2" "a2" "a2"
Standard and Poor's A- A- A-
- ---------------------------------------------------------------------------------------------
Customers (year-end):
Residential 103,199 101,032 99,164
Commercial 13,015 12,702 12,416
Industrial 65 69 73
Other 1,007 957 940
- ---------------------------------------------------------------------------------------------
Total 117,286 114,760 112,593
=============================================================================================
Employees (year-end) 616 665 688
Note:
NR = Not Rated
</TABLE>
<PAGE>
24A
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1991 1990 1989
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $189,646 $205,635 $201,799
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,030 $26,254 $25,535
Cash Dividends on Common Stock (in thousands) $22,000 $22,000 $20,000
Return on Average Common Equity (percent) 15.13 16.85 16.88
Total Assets (in thousands) $352,505 $340,050 $349,887
Gross Property Additions (in thousands) $19,478 $20,086 $18,831
- ---------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $159,841 $157,811 $153,737
Preferred stock 20,000 20,000 22,300
Preferred and preference stock subject
to mandatory redemption - - 2,884
Long-term debt 119,280 112,377 117,522
- ---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $299,121 $290,188 $296,443
=============================================================================================
Capitalization Ratios (percent):
Common stock equity 53.4 54.4 51.9
Preferred and preference stock 6.7 6.9 8.5
Long-term debt 39.9 38.7 39.6
- ---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==============================================================================================
First Mortgage Bonds (in thousands):
Issued 30,000 - 30,000
Retired 22,500 9,135 18,275
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - 5,374 6,591
- ---------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's "a2" "a2" "a2"
Standard and Poor's A- A- A-
- ---------------------------------------------------------------------------------------------
Customers (year-end):
Residential 97,446 96,452 94,766
Commercial 12,153 12,045 12,298
Industrial 73 76 69
Other 897 867 856
- ---------------------------------------------------------------------------------------------
Total 110,569 109,440 107,989
=============================================================================================
Employees (year-end) 672 648 643
Note:
NR = Not Rated
</TABLE>
<PAGE>
24B
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1988 1987 1986
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $182,440 $174,707 $174,847
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,272 $22,086 $20,452
Cash Dividends on Common Stock (in thousands) $11,700 $10,741 $9,353
Return on Average Common Equity (percent) 17.03 17.03 17.52
Total Assets (in thousands) $347,051 $340,109 $341,826
Gross Property Additions (in thousands) $23,254 $32,276 $26,800
- ---------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $148,883 $136,207 $123,133
Preferred stock 22,300 2,300 2,300
Preferred and preference stock subject
to mandatory redemption 3,075 9,665 10,256
Long-term debt 98,285 129,329 137,821
- ---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $272,543 $277,501 $273,510
=============================================================================================
Capitalization Ratios (percent):
Common stock equity 54.6 49.1 45.0
Preferred and preference stock 9.3 4.3 4.6
Long-term debt 36.1 46.6 50.4
- ---------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==============================================================================================
First Mortgage Bonds (in thousands):
Issued - - 25,000
Retired 12,231 10,239 10,160
Preferred and Preference Stock (in thousands):
Issued 20,000 - -
Retired 553 588 610
- ---------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A3 A3
Standard and Poor's A- A- A-
Preferred Stock -
Moody's "a2" NR NR
Standard and Poor's BBB+ BBB+ BBB+
- ---------------------------------------------------------------------------------------------
Customers (year-end):
Residential 93,486 92,094 89,951
Commercial 12,135 11,812 11,405
Industrial 69 67 67
Other 828 762 731
- ---------------------------------------------------------------------------------------------
Total 106,518 104,735 102,154
=============================================================================================
Employees (year-end) 655 655 658
Note:
NR = Not Rated
</TABLE>
<PAGE>
24C
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==================================================================================
1985 1984
- ----------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands) $158,643 $148,721
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $15,279 $14,907
Cash Dividends on Common Stock (in thousands) $8,387 $8,010
Return on Average Common Equity (percent) 14.41 15.31
Total Assets (in thousands) $323,686 $323,318
Gross Property Additions (in thousands) $30,700 $29,724
- ----------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $110,385 $101,664
Preferred stock 2,300 2,300
Preferred and preference stock subject
to mandatory redemption 10,848 11,446
Long-term debt 128,850 136,709
- ----------------------------------------------------------------------------------
Total (excluding amounts due within one year) $252,383 $252,119
==================================================================================
Capitalization Ratios (percent):
Common stock equity 43.7 40.3
Preferred and preference stock 5.2 5.5
Long-term debt 51.1 54.2
- ----------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
==================================================================================
First Mortgage Bonds (in thousands):
Issued 20,000 -
Retired 5,592 10,532
Preferred and Preference Stock (in thousands):
Issued - -
Retired 588 525
- ----------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A3 A3
Standard and Poor's A- BBB+
Preferred Stock -
Moody's NR NR
Standard and Poor's BBB+ BBB+
- ----------------------------------------------------------------------------------
Customers (year-end):
Residential 88,101 86,366
Commercial 10,985 10,659
Industrial 66 76
Other 699 637
- ----------------------------------------------------------------------------------
Total 99,851 97,738
==================================================================================
Employees (year-end) 653 632
Note:
NR = Not Rated
</TABLE>
<PAGE>
25
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1994 1993 1992
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $89,195 $93,883 $82,670
Commercial 71,227 71,320 64,756
Industrial 32,906 36,180 33,171
Other 7,946 7,810 7,095
- ---------------------------------------------------------------------------------------------
Total retail 201,274 209,193 187,692
Sales for resale - non-affiliates 4,786 6,021 7,821
Sales for resale - affiliates 6,446 2,433 1,505
- ---------------------------------------------------------------------------------------------
Total revenues from sales of electricity 212,506 217,647 197,018
Other revenues (721) 795 743
- ---------------------------------------------------------------------------------------------
Total $211,785 $218,442 $197,761
=============================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,298,122 1,329,362 1,216,993
Commercial 1,045,831 1,015,935 953,840
Industrial 799,543 854,324 861,121
Other 119,593 115,969 110,270
- ---------------------------------------------------------------------------------------------
Total retail 3,263,089 3,315,590 3,142,224
Sales for resale - non-affiliates 201,716 247,203 367,066
Sales for resale - affiliates 93,001 75,384 37,632
- ---------------------------------------------------------------------------------------------
Total 3,557,806 3,638,177 3,546,922
=============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.87 7.06 6.79
Commercial 6.81 7.02 6.79
Industrial 4.12 4.23 3.85
Total retail 6.17 6.31 5.97
Sale for resale 3.81 2.62 2.30
Total sales 5.97 5.98 5.55
Residential Average Annual Kilowatt-Hour Use Per Customer 12,686 13,269 12,369
Residential Average Annual Revenue Per Customer $871.68 $937.07 $840.23
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 628 628
Maximum Peak-Hour Demand (megawatts):
Winter 617 524 533
Summer 729 747 695
Annual Load Factor (percent) 54.3 54.1 55.0
Plant Availability - Fossil-Steam (percent) 81.0 90.2 89.1
- ---------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 18.6 21.5 12.0
Oil and gas 1.8 4.5 2.9
Purchased power -
From non-affiliates 1.5 0.9 1.0
From affiliates 78.1 73.1 84.1
- ---------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,786 11,515 12,547
Cost of fuel per million BTU (cents) 205.03 215.97 201.50
Average cost of fuel per net kilowatt-hour generated (cents) 2.42 2.49 2.53
=============================================================================================
</TABLE>
<PAGE>
26A
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1991 1990 1989
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $80,541 $87,063 $85,113
Commercial 61,827 65,462 65,474
Industrial 30,492 30,237 28,304
Other 6,561 6,782 6,892
- ---------------------------------------------------------------------------------------------
Total retail 179,421 189,544 185,783
Sales for resale - non-affiliates 7,813 9,482 8,814
Sales for resale - affiliates 1,430 5,566 6,025
Total revenues from sales of electricity 188,664 204,592 200,622
Other revenues 982 1,043 1,177
- ---------------------------------------------------------------------------------------------
Total $189,646 $205,635 $201,799
=============================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,195,005 1,183,486 1,109,976
Commercial 925,757 892,931 839,756
Industrial 825,862 644,704 561,063
Other 106,683 103,539 101,164
- ---------------------------------------------------------------------------------------------
Total retail 3,053,307 2,824,660 2,611,959
Sales for resale - non-affiliates 372,085 441,090 437,943
Sales for resale - affiliates 32,581 294,042 303,142
- ---------------------------------------------------------------------------------------------
Total 3,457,973 3,559,792 3,353,044
==============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.74 7.36 7.67
Commercial 6.68 7.33 7.80
Industrial 3.69 4.69 5.04
Total retail 5.88 6.71 7.11
Sale for resale 2.28 2.05 2.00
Total sales 5.46 5.75 5.98
Residential Average Annual Kilowatt-Hour Use Per Customer 12,323 12,339 11,781
Residential Average Annual Revenue Per Customer $830.54 $907.68 $903.37
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 526 428 548
Summer 691 648 613
Annual Load Factor (percent) 54.1 53.2 52.4
Plant Availability - Fossil-Steam (percent) 76.9 89.6 94.7
- ---------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 16.3 52.8 63.5
Oil and gas 1.7 3.4 1.4
Purchased power -
From non-affiliates 0.4 0.8 1.5
From affiliates 81.6 43.0 33.6
- ---------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,917 10,741 10,611
Cost of fuel per million BTU (cents) 199.42 188.18 180.48
Average cost of fuel per net kilowatt-hour generated (cents) 2.18 2.02 1.92
=============================================================================================
</TABLE>
<PAGE>
26B
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
=============================================================================================
1988 1987 1986
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $81,098 $79,785 $80,348
Commercial 62,640 60,285 59,547
Industrial 26,865 27,422 27,694
Other 6,557 6,315 6,300
- ---------------------------------------------------------------------------------------------
Total retail 177,160 173,807 173,889
Sales for resale - non-affiliates 808 - -
Sales for resale - affiliates 3,567 - -
- ---------------------------------------------------------------------------------------------
Total revenues from sales of electricity 181,535 173,807 173,889
Other revenues 905 900 958
- ---------------------------------------------------------------------------------------------
Total $182,440 $174,707 $174,847
=============================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,067,411 1,044,554 1,021,905
Commercial 806,687 775,643 746,133
Industrial 533,604 557,281 515,544
Other 97,072 94,949 92,471
- ---------------------------------------------------------------------------------------------
Total retail 2,504,774 2,472,427 2,376,053
Sales for resale - non-affiliates 24,168 - -
Sales for resale - affiliates 156,106 - -
- ---------------------------------------------------------------------------------------------
Total 2,685,048 2,472,427 2,376,053
=============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.60 7.64 7.86
Commercial 7.77 7.77 7.98
Industrial 5.03 4.92 5.37
Total retail 7.07 7.03 7.32
Sale for resale 2.43 - -
Total sales 6.76 7.03 7.32
Residential Average Annual Kilowatt-Hour Use Per Customer 11,489 11,481 11,514
Residential Average Annual Revenue Per Customer $872.87 $876.95 $905.27
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 471 414 464
Summer 574 562 565
Annual Load Factor (percent) 53.4 53.6 51.1
Plant Availability - Fossil-Steam (percent) 77.1 81.2 86.9
- ---------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 79.8 74.3 81.9
Oil and gas 5.4 4.4 6.8
Purchased power -
From non-affiliates 5.9 19.9 11.3
From affiliates 8.9 1.4 -
- ---------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,683 10,551 10,607
Cost of fuel per million BTU (cents) 178.31 176.10 186.30
Average cost of fuel per net kilowatt-hour generated (cents) 1.90 1.86 1.98
=============================================================================================
</TABLE>
<PAGE>
26C
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1994 Annual Report
<TABLE>
<CAPTION>
==================================================================================
1985 1984
- ----------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues (in thousands):
Residential $70,377 $65,059
Commercial 53,696 50,538
Industrial 28,335 27,233
Other 5,823 5,505
- ----------------------------------------------------------------------------------
Total retail 158,231 148,335
Sales for resale - non-affiliates - -
Sales for resale - affiliates - -
- ----------------------------------------------------------------------------------
Total revenues from sales of electricity 158,231 148,335
Other revenues 412 386
- ----------------------------------------------------------------------------------
Total $158,643 $148,721
==================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 926,988 883,498
Commercial 694,168 668,309
Industrial 513,270 518,118
Other 87,238 84,798
- ----------------------------------------------------------------------------------
Total retail 2,221,664 2,154,723
Sales for resale - non-affiliates - -
Sales for resale - affiliates - -
- ----------------------------------------------------------------------------------
Total 2,221,664 2,154,723
==================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.59 7.36
Commercial 7.74 7.56
Industrial 5.52 5.26
Total retail 7.12 6.88
Sale for resale - -
Total sales 7.12 6.88
Residential Average Annual Kilowatt-Hour Use Per Customer 10,536 10,357
Residential Average Annual Revenue Per Customer $799.90 $762.67
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 440 360
Summer 498 481
Annual Load Factor (percent) 54.7 54.1
Plant Availability - Fossil-Steam (percent) 92.0 86.1
- ----------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 87.5 91.8
Oil and gas 2.6 2.2
Purchased power -
From non-affiliates 9.9 6.0
From affiliates - -
- ----------------------------------------------------------------------------------
Total 100.0 100.0
==================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,581 10,498
Cost of fuel per million BTU (cents) 198.80 196.20
Average cost of fuel per net kilowatt-hour generated (cents) 2.10 2.06
==================================================================================
</TABLE>
