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 21, 1996
--------------------------
SAVANNAH ELECTRIC AND POWER COMPANY
(Exact name of registrant as specified in its charter)
Savannah 1-5072 58-0418070
- ---------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer)
of incorporation) File Number) (Identification No.)
600 East Bay Street, 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, 1995.
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, 1996
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 21, 1996 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 No. 33-52509.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 28, 1996
<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 entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000086940
<NAME> SAVANNAH ELECTRIC AND POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 434,849
<OTHER-PROPERTY-AND-INVEST> 1,788
<TOTAL-CURRENT-ASSETS> 48,115
<TOTAL-DEFERRED-CHARGES> 39,910
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 524,662
<COMMON> 54,223
<CAPITAL-SURPLUS-PAID-IN> 8,688
<RETAINED-EARNINGS> 104,901
<TOTAL-COMMON-STOCKHOLDERS-EQ> 167,812
0
35,000
<LONG-TERM-DEBT-NET> 134,601
<SHORT-TERM-NOTES> 4,000
<LONG-TERM-NOTES-PAYABLE> 20,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (1,200)
0
<CAPITAL-LEASE-OBLIGATIONS> 485
<LEASES-CURRENT> (207)
<OTHER-ITEMS-CAPITAL-AND-LIAB> 164,171
<TOT-CAPITALIZATION-AND-LIAB> 524,662
<GROSS-OPERATING-REVENUE> 225,729
<INCOME-TAX-EXPENSE> 17,378
<OTHER-OPERATING-EXPENSES> 170,073
<TOTAL-OPERATING-EXPENSES> 187,451
<OPERATING-INCOME-LOSS> 38,278
<OTHER-INCOME-NET> 360
<INCOME-BEFORE-INTEREST-EXPEN> 38,638
<TOTAL-INTEREST-EXPENSE> 12,919
<NET-INCOME> 25,719
2,324
<EARNINGS-AVAILABLE-FOR-COMM> 23,395
<COMMON-STOCK-DIVIDENDS> 17,600
<TOTAL-INTEREST-ON-BONDS> 11,916
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<EPS-PRIMARY> 0
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</TABLE>
<PAGE>
1
EXHIBIT 99
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1995 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
February 21, 1996
<PAGE>
2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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, 1995 and 1994, and the
related statements of income, retained earnings, and cash flows for each of the
three years in the period ended December 31, 1995. 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 9-21) referred to above
present fairly, in all material respects, the financial position of Savannah
Electric and Power Company as of December 31, 1995 and 1994, and the results of
its operations and its cash flows for the periods stated, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 21, 1996
<PAGE>
3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Savannah Electric and Power Company 1995 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred
stock for 1995 totaled $23.4 million, representing a $1.3 million increase over
the prior year. This 5.8 percent improvement in earnings over 1994 is
principally the result of increased retail energy sales, primarily attributable
to exceptionally hot summer weather.
In 1994, earnings were $22.1 million, representing a $0.6 million (3.0
percent) increase from the prior year. This increase was primarily due to a
decrease in operating expenses, offset somewhat by an increase in interest
expense.
Revenues
Total revenues for 1995 were $225.7 million, reflecting a 6.6 percent increase
compared to 1994. The following table summarizes revenue increases and decreases
compared to prior years:
Increase (Decrease)
From Prior Years
--------------------------------------
1995 1994 1993
--------------------------------------
Retail -- (in thousands)
Change in base rates $ - $ - $(1,450)
Sales growth 1,068 7,884 5,980
Weather 6,232 (6,589) 4,567
Fuel cost recovery
and other 6,177 (9,214) 12,404
-------------------------------------------------------------------
Total retail 13,477 (7,919) 21,501
-------------------------------------------------------------------
Sales for resale--
Non-affiliates (2,935) (1,235) (1,800)
Affiliates 754 4,013 928
-------------------------------------------------------------------
Total sales for resale (2,181) 2,778 (872)
-------------------------------------------------------------------
Other operating revenues 2,648 (1,516) 52
-------------------------------------------------------------------
Total operating revenues $13,944 $(6,657) $20,681
===================================================================
Percent change 6.6% (3.0)% 10.5%
-------------------------------------------------------------------
Retail revenues increased 6.7 percent in 1995, compared to a decrease of
3.8 percent in 1994. The increase in 1995 retail revenues is attributable to hot
summer weather, an increase in the number of customers served, higher demand in
the industrial sector, and an increase in fuel cost recovery revenues.
Industrial energy sales were higher primarily because a major customer performed
maintenance on its cogeneration facility during 1995 and purchased replacement
energy from the Company. Under the Company's fuel cost recovery provisions, fuel
revenues--including purchased energy--generally equal fuel expense and have no
effect on earnings. The $2.6 million increase in other operating revenues
reflects a decrease in the demand-side management rider in October 1994 and an
increase in demand-side management program costs during 1995. Revenues from
demand-side management riders (included in retail revenues) recover demand-side
management program costs and have little impact on earnings. See Note 3 to the
financial statements for further information on the Company's demand-side
management programs.
The decrease in 1994 retail revenues as compared to 1993 resulted from mild
summer weather, reduced industrial energy sales, and substantially lower fuel
cost recovery revenues, offset somewhat by customer growth.
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
continued to decrease in 1995 and 1994 primarily as a result of the scheduled
decline in megawatts of capacity under contract. The capacity and energy
components were as follows:
1995 1994 1993
------------------------------------
(in thousands)
Capacity $ 3 $ 448 $ 978
Energy 1,250 3,052 4,262
- ---------------------------------------------------------
Total $ 1,253 $3,500 $5,240
=========================================================
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 1995 Annual Report
Changes in revenues are influenced heavily by the amount of energy sold
each year. Kilowatt-hour sales for 1995 and the percent change by year were as
follows:
Percent Change
------------------------------
1995
KWH 1995 1994 1993
--------- ------------------------------
(in millions)
Residential 1,402 8.0% (2.3)% 9.2%
Commercial 1,100 5.1 2.9 6.5
Industrial 887 11.0 (6.4) (0.8)
Other 126 5.4 3.1 5.2
---------
Total retail 3,515 7.7 (1.6) 5.5
Sales for resale -
Non-affiliates 87 (56.5) (18.4) (32.7)
Affiliates 64 (31.5) 23.4 100.3
---------
Total 3,666 3.1% (2.2)% 2.6%
=========
=================================================================
Expenses
Total operating expenses for 1995 were $187.5 million, reflecting an $11.8
million increase over 1994. Major components of this increase include $6.8
million in fuel, $3.6 million in other operation, $1.1 million in maintenance,
and $1.1 million in depreciation and amortization, partially offset by a $2.6
million reduction in purchased power from affiliates. The increase in fuel
expense is primarily attributable to the exceptionally hot summer weather, which
not only increased generation but also necessitated greater use of more costly
gas-fired sources of generation. The increase in other operation expense is due
to increased expenses related to demand-side management programs and employee
incentive compensation programs. The increase in maintenance expense reflects
maintenance performed at Plants Kraft and McIntosh during 1995, and the increase
in depreciation and amortization reflects the completion in 1994 of two
combustion turbine units.
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 discussed above. Interest expense increased $1.9 million primarily due to
the sale in June 1993 of $45 million of first mortgage bonds.
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, the average cost of purchased power per net
kilowatt-hour, and the total average cost of energy supply were as follows:
1995 1994 1993
--------------------------
Total energy supply
(millions of kilowatt-hours) 3,908 3,768 3,863
Sources of energy supply
(percent) --
Coal 24 18 21
Oil - 1 2
Gas 6 1 3
Purchased Power 70 80 74
Average cost of fuel per net
kilowatt-hour generated
(cents) --
Coal 1.77 2.19 2.02
Oil 5.14 3.89 4.11
Gas 3.76 5.19 4.87
Average cost of purchased
power per net kilowatt-
hour (cents) 2.02 1.92 2.00
Total average cost of
energy supply 2.07 2.02 2.12
===============================================================
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
<PAGE>
5
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1995 Annual Report
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.
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 energy sales growth 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
weather, competition, changes in contracts with neighboring utilities, energy
conservation practiced by customers, the elasticity of demand, 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 positioning 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 enhances the incentive for IPPs to
build cogeneration plants for a utility's large industrial and commercial
customers and sell excess energy generation to other utilities.
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. New federal legislation is being discussed,
and legislation allowing customer choice has already been introduced in Georgia.
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 by seeking new markets that evolve
with the changing regulation.
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 and determine if any other assets have been
impaired. 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 affect 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). As part of the Company's most recent
rate settlement in 1992, it was informally agreed that the Company's earned rate
of return on common equity should be 12.95 percent. The Company is currently
undergoing an earnings review by the GPSC, and to date, the GPSC has made no
determination.
In August 1995, the GPSC ordered the phase out of the Company's demand-side
management programs effective December 31, 1995 and the elimination of
demand-side management rate riders effective October 1, 1995. The Company will
refund to customers approximately $0.2 million which had been overcollected from
the rate riders as of December 31, 1995.
New Accounting Standards
The FASB has issued Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of. This statement
requires that long-lived assets be reviewed for impairment whenever events or
<PAGE>
6
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1995 Annual Report
changes in circumstances indicate that the carrying amount for an asset may not
be recoverable. This statement also imposes stricter criteria for regulatory
assets by requiring that such assets be probable of future recovery at each
balance sheet date. The Company adopted the new rules January 1, 1996, with no
material effect on the financial statements. However, this conclusion may change
in the future as competitive factors influence wholesale and retail pricing in
the utility industry.
FINANCIAL CONDITION
Overview
The principal change in the Company's financial condition in 1995 was the
addition of $27 million to utility plant. The funds needed for gross property
additions are currently provided from operating activities, 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, 1995, the Company's capital structure consisted of 47.1
percent common equity, 9.8 percent preferred stock and 43.1 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 48 percent, preferred stock at 10 percent and debt at 42 percent.
In May 1995, the Company issued $15 million of first mortgage bonds
maturing in 2025 and $20 million of term notes maturing in 1998. Maturities and
retirements of long-term debt were $29 million in 1995, $5 million in 1994 and
$4 million in 1993.
The composite interest rates and dividend rate for the years 1993 through
1995 as of year-end were as follows:
1995 1994 1993
-------------------------------
Composite interest rates
on long-term debt 7.5% 8.0% 8.0%
Preferred stock dividend rate 6.6% 6.6% 6.6%
===============================================================
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
$86 million ($33 million in 1996, $30 million in 1997, and $23 million in 1998).
Actual construction costs may vary from this estimate because of factors such as
changes in: business conditions; environmental regulations; 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
$21.7 million will be needed by the end of 1998 for maturities of long-term debt
and present sinking fund requirements.
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 law--has significantly
impacted the Company and other subsidiaries of The Southern Company. Specific
reductions in sulfur dioxide and nitrogen oxide emissions from fossil-fired
generating plants are required in two phases. Phase I compliance began in 1995
and initially affected 28 generating units of The Southern Company. As a result
of The Southern Company's compliance strategy, an additional 22 generating
units, which included four of the Company's units, were brought into compliance
with Phase I requirements. Phase II compliance is required in 2000, and all
fossil-fired generating plants will be affected.
In 1995, the Environmental Protection Agency (EPA) began issuing annual
sulfur dioxide emission allowances through the allowance trading program. An
<PAGE>
7
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1995 Annual Report
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 achieved Phase I sulfur dioxide compliance at the
affected plants by switching to low-sulfur coal, which required some equipment
upgrades. This compliance strategy resulted in unused emission allowances being
banked for later use. Compliance with nitrogen oxide emission limits was
achieved by the installation of new control equipment at 22 of the original 28
affected generating units. Construction expenditures for Phase I compliance
totaled approximately $320 million through 1995 for The Southern Company, of
which the Company's portion was approximately $2 million.
For Phase II sulfur dioxide compliance, The Southern Company could use
emission allowances banked during Phase I, 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 Phase II limits.
Therefore, during the period 1996 to 2000, current compliance strategy could
require total estimated construction expenditures of approximately $150 million
for The Southern Company, of which the Company's portion is approximately $4.1
million. 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 0.7 percent in annual revenue requirements from
customers could be necessary to fully recover the Company's costs of compliance
for both Phase I and Phase II of Title IV of the Clean Air Act. Compliance costs
include construction expenditures, increased costs for switching to low-sulfur
coal, and costs related to emission allowances.
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.
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 during 1996. 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.
The EPA is evaluating the need to revise the ambient air quality standards
for particulate matter 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 1996, 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 1995 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 Air Act; the
Clean Water Act; the Comprehensive Environmental Response, Compensation, and
Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances
Control 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 additional 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, 1995, the Company had $0.9 million of cash and $20.5 million of
unused short-term credit arrangements with banks to meet its short-term cash
needs. Revolving credit arrangements of $20 million, which expire December 31,
1998, are also used to meet short-term cash needs and to provide additional
interim funding for the Company's construction program. Of the revolving credit
arrangements, $16 million remained unused at December 31, 1995.
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 earnings 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 rate 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
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
For the Years Ended December 31, 1995, 1994, and 1993
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
========================================================================================================
1995 1994 1993
- --------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues (Notes 1, 3, and 6):
Revenues $218,529 $205,339 $216,009
Revenues from affiliates 7,200 6,446 2,433
- --------------------------------------------------------------------------------------------------------
Total operating revenues 225,729 211,785 218,442
- --------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 25,386 18,555 24,976
Purchased power from non-affiliates 2,139 1,839 793
Purchased power from affiliates 53,252 55,822 56,274
Other (Notes 1 and 2) 45,214 41,623 45,610
Maintenance 13,668 12,560 13,516
Depreciation and amortization (Note 1) 18,949 17,854 16,467
Taxes other than income taxes 11,465 11,074 11,136
Federal and state income taxes (Notes 1 and 7) 17,378 16,289 15,436
- --------------------------------------------------------------------------------------------------------
Total operating expenses 187,451 175,616 184,208
- --------------------------------------------------------------------------------------------------------
Operating Income 38,278 36,169 34,234
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) 163 831 958
Interest income 164 54 209
Other, net (Note 2) (618) (1,032) (1,841)
Income taxes applicable to other income (Notes 1 and 7) 651 864 1,117
- --------------------------------------------------------------------------------------------------------
Income Before Interest Charges 38,638 36,886 34,677
- --------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 12,380 12,585 10,696
Allowance for debt funds used during construction (Note 1) (450) (1,225) (699)
Interest on notes payable 135 205 240
Amortization of debt discount, premium, and expense, net 448 550 535
Other interest charges 406 337 340
- --------------------------------------------------------------------------------------------------------
Net interest charges 12,919 12,452 11,112
- --------------------------------------------------------------------------------------------------------
Net Income 25,719 24,434 23,565
Dividends on Preferred Stock 2,324 2,324 2,106
- --------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 23,395 $ 22,110 $ 21,459
========================================================================================================
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1995, 1994, and 1993
========================================================================================================
1995 1994 1993
- --------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 99,216 $ 93,479 $ 95,155
Net income after dividends on preferred stock 23,395 22,110 21,459
Cash dividends on common stock (17,600) (16,300) (21,000)
Preferred stock transactions, net 22 (73) (2,135)
- --------------------------------------------------------------------------------------------------------
Balance at End of Period (Note 11) $105,033 $ 99,216 $ 93,479
========================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995, 1994, and 1993
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
============================================================================================================================
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Activities:
Net income $ 25,719 $ 24,434 $ 23,565
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 20,535 19,353 17,482
Deferred income taxes and investment tax credits 4,359 1,625 607
Allowance for equity funds used during construction (163) (831) (958)
Other, net 35 826 2,853
Changes in certain current assets and liabilities --
Receivables, net (6,241) 18,481 (16,839)
Inventories 2,318 1,144 (3,947)
Payables 2,213 (19,957) 18,742
Other (1,848) (117) 3,282
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 46,927 44,958 44,787
- ----------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (26,503) (30,078) (72,858)
Other 3,198 (841) 1,676
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (23,305) (30,919) (71,182)
- ----------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
First mortgage bonds 15,000 - 45,000
Preferred stock - - 35,000
Pollution control bonds - - 4,085
Other long-term debt 33,500 8,500 10,000
Retirements:
Preferred stock - - (20,000)
First mortgage bonds (29,250) (5,065) -
Pollution control bonds - - (4,085)
Other long-term debt (23,003) (823) (10,356)
Notes payable, net 1,500 (500) (4,500)
Payment of preferred stock dividends (2,324) (2,129) (2,222)
Payment of common stock dividends (17,600) (16,300) (21,000)
Miscellaneous (2,131) (74) (3,400)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (24,308) (16,391) 28,522
- ----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (686) (2,352) 2,127
Cash and Cash Equivalents at Beginning of Year 1,563 3,915 1,788
- ----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 877 $ 1,563 $ 3,915
============================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for-
Interest (net of amount capitalized) $12,775 $11,579 $10,712
Income taxes 11,316 14,441 13,947
- -----------------------------------------------------------------------------------------------------------------------------
() Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
11
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1995 and 1994
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C>
============================================================================================================
Assets 1995 1994
- ------------------------------------------------------------------------------------------------------------
(in thousands)
Utility Plant:
Plant in service, at original cost (Notes 1, 4, 5, and 9) $715,146 $693,432
Less accumulated provision for depreciation 287,004 267,590
- ------------------------------------------------------------------------------------------------------------
428,142 425,842
Construction work in progress 6,707 5,930
- ------------------------------------------------------------------------------------------------------------
Total 434,849 431,772
- ------------------------------------------------------------------------------------------------------------
Other Property and Investments 1,788 1,790
- ------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 877 1,563
Receivables-
Customer accounts receivable 19,574 17,581
Other accounts and notes receivable 7,251 216
Affiliated companies 614 177
Accumulated provision for uncollectible accounts (983) (866)
Fuel cost under recovery - 3,113
Fossil fuel stock, at average cost 6,076 7,557
Materials and supplies, at average cost (Note 1) 8,239 9,076
Prepayments 6,467 7,446
- ------------------------------------------------------------------------------------------------------------
Total 48,115 45,863
- ------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 7) 21,557 23,521
Premium on reacquired debt, being amortized 5,316 3,295
Cash surrender value of life insurance for deferred compensation plans 8,560 7,028
Miscellaneous 4,477 5,036
- ------------------------------------------------------------------------------------------------------------
Total 39,910 38,880
- ------------------------------------------------------------------------------------------------------------
Total Assets $524,662 $518,305
============================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
12
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1995 and 1994
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C>
=======================================================================================================================
Capitalization and Liabilities 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See accompanying statements):
Common stock equity $167,812 $161,581
Preferred stock 35,000 35,000
Long-term debt 153,679 155,922
- -----------------------------------------------------------------------------------------------------------------------
Total 356,491 352,503
- -----------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year (Note 10) 1,407 2,579
Notes payable (Note 5) 4,000 2,500
Accounts payable-
Affiliated companies 5,742 5,162
Other 5,620 3,829
Fuel cost over recovery 865 -
Customer deposits 5,054 4,698
Taxes accrued-
Federal and state income 570 272
Other 1,014 861
Interest accrued 6,331 6,830
Vacation pay accrued 1,916 1,823
Pensions accrued (Note 2) 685 4,783
Miscellaneous 5,185 3,499
- -----------------------------------------------------------------------------------------------------------------------
Total 38,389 36,836
- -----------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 7) 74,152 70,786
Accumulated deferred investment tax credits (Note 7) 13,934 14,637
Deferred credits related to income taxes (Note 7) 24,419 25,487
Deferred compensation plans 7,690 6,807
Deferred under-funded accrued benefit obligation (Note 2) 2,123 3,022
Postretirement benefits 4,728 3,808
Miscellaneous 2,736 4,419
- -----------------------------------------------------------------------------------------------------------------------
Total 129,782 128,966
- -----------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 4, 5, and 9)
Total Capitalization and Liabilities $524,662 $518,305
=======================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
13
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION
At December 31, 1995 and 1994
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C> <C>
=========================================================================================================================
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
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
1995 and 1994 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688
Additional minimum liability
for under-funded pension obligations (132) (546)
Retained earnings 105,033 99,216
- -------------------------------------------------------------------------------------------------------------------------
Total common stock equity 167,812 161,581 47.1% 45.8%
- -------------------------------------------------------------------------------------------------------------------------
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 9.8 9.9
- -------------------------------------------------------------------------------------------------------------------------
Long-Term Debt (Note 9):
First mortgage bonds --
Maturity Interest Rates
July 1, 2003 6 3/8% 20,000 20,000
October 1, 2019 9 1/4% - 28,950
July 1, 2021 9 3/8% 29,400 29,700
July 1, 2022 8.30% 30,000 30,000
July 1, 2023 7.40% 25,000 25,000
May 1, 2025 7 7/8% 15,000 -
- -------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 119,400 133,650
Pollution control obligations (Note 9) 17,955 17,955
Other long-term debt (Note 9) 20,485 9,988
Unamortized debt premium (discount), net (2,754) (3,092)
- -------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $11,916,000) 155,086 158,501
Less amount due within one year (Note 10) 1,407 2,579
- -------------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 153,679 155,922 43.1 44.3
- -------------------------------------------------------------------------------------------------------------------------
Total Capitalization $356,491 $352,503 100.0% 100.0%
=========================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
14
NOTES TO FINANCIAL STATEMENTS
Savannah Electric and Power Company 1995 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), The Southern Development and Investment Group
(Southern Development) and other direct and indirect subsidiaries. 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 provides digital wireless communications services to the
operating companies and also markets these services to the public within the
Southeast. Southern Electric designs, builds, owns, and operates power
production and delivery 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. Southern Development 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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates, and the actual results may
differ from those estimates.
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 Financial Accounting Standards Board
(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:
1995 1994
---------------------------
(in thousands)
Deferred income taxes $ 21,557 $ 23,521
Premium on reacquired debt 5,316 3,295
Deferred income tax credits (24,419) (25,487)
- ---------------------------------------------------------------
Total $ 2,454 $ 1,329
===============================================================
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, if impaired, 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 the energy component of 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 1995, uncollectible
accounts continued to average less than 1 percent of revenues.
<PAGE>
15
NOTES (continued)
Savannah Electric and Power Company 1995 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 1995, 1994 and 1993. 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. Depreciation expense includes an amount for the expected cost of
removal of certain facilities.
Income Taxes
The Company, which is included in the consolidated federal income tax return
filed by The Southern Company, uses the liability method of accounting for
deferred income taxes and 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.
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 7.42 percent in 1995, 8.04 percent in 1994 and 8.77 percent in 1993.
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 AFUDC.
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 financial instruments that the carrying
amounts did not approximate fair value at December 31 were as follows:
Long-Term Debt
--------------------------
Carrying Fair
Year Amount Value
- ---- --------------------------
(in millions)
1995 $154 $165
1994 157 153
==============================================================
The fair values for long-term debt were 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.
Storm Damage Reserve
In December 1995, in response to a request by the Company, the GPSC issued an
order allowing the Company to establish a Storm Damage Reserve. As of December
31, 1995, the accumulated provision amounted to $0.3 million. Regulatory
treatment by the GPSC allows the Company to accrue up to $0.6 million per year.
<PAGE>
16
NOTES (continued)
Savannah Electric and Power Company 1995 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. Trusts are funded to the extent deductible under
federal income tax regulations and to the extent required by the GPSC and the
FERC. Amounts funded are primarily invested in debt and equity securities.
FASB Statement No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions, 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.
Funded Status and Cost of Benefits
The following tables show actuarial results and assumptions for pension and
postretirement 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
------------------------
1995 1994
------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $38,169 $35,227
Non-vested benefits 2,585 2,069
- ----------------------------------------------------------------
Accumulated benefit obligation 40,754 37,296
Additional amounts related to
projected salary increases 7,786 7,393
- ----------------------------------------------------------------
Projected benefit obligation 48,540 44,689
Less:
Fair value of plan assets 36,836 27,165
Unrecognized net loss 9,606 10,950
Unrecognized prior service cost 1,375 1,510
Unrecognized net transition
obligation 532 621
Adjustment required to
recognize additional
minimum liability 3,727 5,688
- ----------------------------------------------------------------
Accrued liability recognized
in the Balance Sheets $ 3,918 $10,131
================================================================
The weighted average rates assumed in the actuarial calculations for the
pension plan were:
1995 1994 1993
------------------------
Discount 7.25% 8.00% 7.50%
Annual salary increase 4.75 5.25 4.75
Long-term return on plan assets 8.75 9.00 9.25
============================================================
In accordance with Statement No. 87, an additional liability related to
under-funded accumulated benefit obligations was reflected at December 31, 1995
and December 31, 1994. Corresponding net-of-tax balances of $0.1 million and
$0.5 million were recognized as separate components of Common Stock Equity in
the 1995 and 1994 Statements of Capitalization.
<PAGE>
17
NOTES (continued)
Savannah Electric and Power Company 1995 Annual Report
Postretirement
Benefits
------------------------
1995 1994
------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $13,560 $10,994
Employees eligible to retire 1,471 884
Other employees 5,966 8,485
- -------------------------------------------------------------
Accumulated benefit obligation 20,997 20,363
Less:
Fair value of plan assets 1,443 393
Unrecognized net loss 5,719 3,197
Unrecognized transition
obligation 9,135 13,021
- -------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $ 4,700 $ 3,752
=============================================================
In 1995, the Company announced a cost sharing program for postretirement
benefits. The program establishes limits on amounts the Company will pay to
provide future retiree postretirement benefits. This change reduced the 1995
accumulated postretirement benefit obligation by approximately $3.1 million.
The weighted average rates assumed in the actuarial calculations for the
postretirement benefit plans were:
1995 1994
------------------
Discount 7.25% 8.00%
Annual salary increase 4.75 5.50
Long-term return on plan assets 8.50 8.50
===========================================================
An additional assumption used in measuring the accumulated postretirement
benefit obligation was a weighted average medical care cost trend rate of 9.8
percent for 1995, decreasing gradually to 5.3 percent through the year 2005 and
remaining at that level thereafter. An annual increase in the assumed medical
care cost trend rate of 1 percent would increase the accumulated benefit
obligation at December 31, 1995, by $1.3 million and the aggregate of the
service and interest cost components of the net postretirement cost by $0.2
million.
Components of the plans' net costs are shown below:
Pension
------------------------------
1995 1994 1993
------------------------------
(in thousands)
Benefits earned during the year $1,188 $1,192 $1,188
Interest cost on projected
benefit obligation 3,395 3,279 2,741
Actual (return) loss on plan assets (5,791) 27 (2,199)
Net amortization and deferral 4,125 (1,474) 716
- --------------------------------------------------------------------
Net pension cost $2,917 $3,024 $2,446
====================================================================
Of the above net pension costs, $2.4 million in 1995, $2.6 million in 1994
and $2.0 million in 1993 were recorded in operating expenses, and the remainder
was recorded in construction and other accounts.
Postretirement
Benefits
------------------------------
1995 1994 1993
------------------------------
(in thousands)
Benefits earned during the year $ 504 $ 632 $ 443
Interest cost on accumulated
benefit obligation 1,638 1,492 1,134
Amortization of transition
obligation 723 723 723
Actual (return) loss on plan assets (34) 6 -
Net amortization and deferral 93 111 -
- --------------------------------------------------------------------
Net postretirement costs $2,924 $2,964 $2,300
====================================================================
Of the above net postretirement costs, $2.4 million in 1995, $2.4 million
in 1994 and $1.8 million in 1993 were recorded in 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 1995, 1994 and 1993 were $0.4 million, $0.4
million and $1.0 million, respectively. The 1993 benefit costs reflect a
one-time expense related to employees who were part of the work force reduction
program.
<PAGE>
18
NOTES (continued)
Savannah Electric and Power Company 1995 Annual Report
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
Rates to retail customers served by the Company are regulated by the GPSC. As
part of the Company's most recent rate settlement in 1992, it was informally
agreed that the Company's earned rate of return on common equity should be 12.95
percent. The Company is currently undergoing an earnings review by the GPSC, and
to date, the GPSC has made no determination.
In August 1995, the GPSC ordered the phase out of the Company's demand-side
management programs effective December 31, 1995 and the elimination of
demand-side management rate riders effective October 1, 1995. The Company will
refund to customers approximately $0.2 million which had been overcollected from
the rate riders as of December 31, 1995.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently estimated
to total $33 million in 1996, $30 million in 1997 and $23 million in 1998. The
estimates include AFUDC of $1.0 million in 1996, $0.9 million in 1997 and $0.2
million in 1998. 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. The Company does not have any new baseload
generating plants under construction. However, construction related to
transmission and distribution facilities and the upgrading and extension of the
useful lives of generating plants will continue.
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, preferred stock and capital contributions from The Southern Company.
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.
Bank Credit Arrangements
At the beginning of 1996, unused credit arrangements with five banks totaled
$20.5 million and expire at various times during 1996.
The Company's revolving credit arrangements of $20 million, of which $16
million remained unused as of December 31, 1995, expire December 31, 1998. 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
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.
<PAGE>
19
NOTES (continued)
Savannah Electric and Power Company 1995 Annual Report
Operating Leases
The Company has rental agreements with various terms and expiration dates.
Rental expenses totaled $1.3 million for 1995 and $1.5 million for 1994 and
1993. The Company entered into a 22.5 year lease agreement effective December 1,
1995 for 100 new aluminum rail cars at an annual cost of approximately $0.5
million. The rail cars are used to transport coal to the Company's generating
plants.
At December 31, 1995, estimated future minimum lease payments for
non-cancelable operating leases were as follows:
Amounts
--------------------
(in millions)
1996 $1.6
1997 1.4
1998 1.1
1999 0.5
2000 0.5
2001 and thereafter 8.4
=============================================================
6. LONG-TERM POWER SALES AGREEMENTS
The operating subsidiaries of The Southern Company, including the Company, have
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 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)
1995 $3 $ - $ 3
1994 3 445 448
1993 2 976 978
===============================================================
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, 1995, the tax-related regulatory assets and liabilities were $22
million and $24 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:
1995 1994 1993
--------------------------------
(in thousands)
Total provision for income taxes
Federal --
Currently payable $10,427 $11,736 $11,663
Deferred -- current year 5,290 2,106 1,906
-- reversal of
prior years (1,661) (755) (1,383)
- -----------------------------------------------------------------
14,056 13,087 12,186
- -----------------------------------------------------------------
State --
Currently payable 1,941 2,064 2,049
Deferred -- current year 695 188 119
-- reversal of
prior years 35 86 (35)
- -----------------------------------------------------------------
2,671 2,338 2,133
- -----------------------------------------------------------------
Total 16,727 15,425 14,319
Less income taxes charged
(credited) to other income (651) (864) (1,117)
- -----------------------------------------------------------------
Federal and state income taxes
charged to operations $17,378 $16,289 $15,436
=================================================================
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:
<PAGE>
20
NOTES (continued)
Savannah Electric and Power Company 1995 Annual Report
1995 1994
--------- ----------
Deferred tax liabilities: (in thousands)
Accelerated depreciation $62,822 $57,830
Property basis differences 11,330 12,956
Other 1,511 2,449
- ----------------------------------------------------------------
Total 75,663 73,235
- ----------------------------------------------------------------
Deferred tax assets:
Pension and other benefits 3,660 4,816
Other 3,818 3,959
- ----------------------------------------------------------------
Total 7,478 8,775
- ----------------------------------------------------------------
Net deferred tax liabilities 68,185 64,460
Portions included in current assets, net 5,967 6,326
- ----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $74,152 $70,786
================================================================
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 1995, 1994 and 1993. At December 31, 1995, 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:
1995 1994 1993
----------------------------
Federal statutory tax rate 35% 35% 35%
State income tax, net of
federal income tax benefit 4 4 4
Other - - (1)
-------------------------------------------------------------
Effective income tax rate 39% 39% 38%
=============================================================
The Southern Company files a consolidated federal income tax return. Under
a joint consolidated income tax agreement, each subsidiary's current and
deferred tax expense is computed on a stand-alone basis. Tax benefits from
losses of the parent company are allocated to each subsidiary based on the 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. 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 May 1995, the Company issued $15 million of first mortgage bonds
maturing in 2025 and $20 million of term notes maturing in 1998. Using the
proceeds from such sales, the Company redeemed in June 1995 all of its remaining
outstanding 9 1/4% Series First Mortgage Bonds due October 2019.
The sinking fund requirements of first mortgage bonds were satisfied by
cash redemption in 1994 and 1995. Sinking fund requirements and/or maturities
through 2000 applicable to long-term debt are as follows: $1.4 million in 1996;
$0.2 million in 1997; $20.1 million in 1998; and no requirements in 1999 and
2000.
Details of pollution control obligations and other long-term debt at
December 31 are as follows:
1995 1994
---------------------
(in thousands)
Collateralized obligations incurred
in connection with the sale by public
authorities of tax-exempt pollution
control revenue bonds --
Variable rate (5.15% at 1/1/96)
due 2016 $ 4,085 $ 4,085
6 3/4% due 2022 13,870 13,870
Capital lease obligations --
Combustion turbine equipment - 980
Transportation fleet 485 508
Notes Payable --
6.04% due 1995 - 3,500
6.035% due 1995 - 5,000
Variable rate (5.85% at 1/1/96)
due 1998 15,000
Variable rate (5.84% at 1/1/96)
due 1998 5,000
- ----------------------------------------------------------------
Total $38,440 $27,943
================================================================
<PAGE>
21
NOTES (continued)
Savannah Electric and Power Company 1995 Annual Report
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 leased combustion turbine generating equipment under a
non-cancelable lease that expired in 1995. In December 1995, the Company
exercised its option to purchase this equipment. The Company currently 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 sinking fund requirements and scheduled maturities and
redemptions of long-term debt due within one year at December 31 is as follows:
1995 1994
----------------------
(in thousands)
Bond sinking fund requirement $1,200 $1,350
Less:
Portion to be satisfied by
certifying property additions - -
- --------------------------------------------------------------------
Cash sinking fund requirement 1,200 1,350
Other long-term debt maturities (Note 9) 207 1,229
- --------------------------------------------------------------------
Total $1,407 $2,579
====================================================================
The first mortgage bond improvement (sinking) fund requirements amount to 1
percent of each outstanding series of bonds authenticated under the Indenture
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. In January 1996, the Company satisfied its 1996
sinking fund requirement of $1.2 million by cash redemption.
11. COMMON STOCK DIVIDEND RESTRICTIONS
The Company's Charter and Indenture contain certain limitations on the payment
of cash dividends on preferred and common stocks. At December 31, 1995,
approximately $62 million of retained earnings was restricted against the
payment of cash dividends on common stock under the terms of the Indenture.
12. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized quarterly financial data for 1995 and 1994 are as follows (in
thousands):
Net Income After
Operating Operating Dividends on
Quarter Ended Revenue Income Preferred Stock
- ------------------- ------------ ------------ -------------------
March 1995 $46,743 $ 6,468 $ 2,420
June 1995 57,673 9,920 6,041
September 1995 73,449 16,438 12,693
December 1995 47,864 5,452 2,241
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
=================================================================
The Company's business is influenced by seasonal weather conditions and a
seasonal rate structure, among other factors.
<PAGE>
22
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
==================================================================================================================
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $225,729 $211,785 $218,442
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $23,395 $22,110 $21,459
Cash Dividends on Common Stock (in thousands) $17,600 $16,300 $21,000
Return on Average Common Equity (percent) 14.20 14.00 13.73
Total Assets (in thousands) $524,662 $518,305 $527,187
Gross Property Additions (in thousands) $26,503 $30,078 $72,858
- -----------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $167,812 $161,581 $154,269
Preferred stock 35,000 35,000 35,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 153,679 155,922 151,338
- -----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $356,491 $352,503 $340,607
=================================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.1 45.8 45.3
Preferred and preference stock 9.8 9.9 10.3
Long-term debt 43.1 44.3 44.4
- -----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=================================================================================================================
First Mortgage Bonds (in thousands):
Issued 15,000 - 45,000
Retired 29,250 5,065 -
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 104,624 103,199 101,032
Commercial 13,339 13,015 12,702
Industrial 65 65 69
Other 1,048 1,007 957
- -----------------------------------------------------------------------------------------------------------------
Total 119,076 117,286 114,760
=================================================================================================================
Employees (year-end) 584 616 665
Note:
NR = Not Rated
</TABLE>
<PAGE>
23A
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
=================================================================================================================
1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $197,761 $189,646 $205,635
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $20,512 $24,030 $26,254
Cash Dividends on Common Stock (in thousands) $22,000 $22,000 $22,000
Return on Average Common Equity (percent) 12.89 15.13 16.85
Total Assets (in thousands) $352,175 $352,505 $340,050
Gross Property Additions (in thousands) $30,132 $19,478 $20,086
- -----------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $158,376 $159,841 $157,811
Preferred stock 20,000 20,000 20,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 110,767 119,280 112,377
- -----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $289,143 $299,121 $290,188
=================================================================================================================
Capitalization Ratios (percent):
Common stock equity 54.8 53.4 54.4
Preferred and preference stock 6.9 6.7 6.9
Long-term debt 38.3 39.9 38.7
- -----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=================================================================================================================
First Mortgage Bonds (in thousands):
Issued 30,000 30,000 -
Retired 38,750 22,500 9,135
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - - 5,374
- -----------------------------------------------------------------------------------------------------------------
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 99,164 97,446 96,452
Commercial 12,416 12,153 12,045
Industrial 73 73 76
Other 940 897 867
- -----------------------------------------------------------------------------------------------------------------
Total 112,593 110,569 109,440
=================================================================================================================
Employees (year-end) 688 672 648
Note:
NR = Not Rated
</TABLE>
<PAGE>
23B
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
================================================================================================================
1989 1988 1987
- ----------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $201,799 $182,440 $174,707
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $25,535 $24,272 $22,086
Cash Dividends on Common Stock (in thousands) $20,000 $11,700 $10,741
Return on Average Common Equity (percent) 16.88 17.03 17.03
Total Assets (in thousands) $349,887 $347,051 $340,109
Gross Property Additions (in thousands) $18,831 $23,254 $32,276
- ----------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $153,737 $148,883 $136,207
Preferred stock 22,300 22,300 2,300
Preferred and preference stock subject
to mandatory redemption 2,884 3,075 9,665
Long-term debt 117,522 98,285 129,329
- ----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $296,443 $272,543 $277,501
================================================================================================================
Capitalization Ratios (percent):
Common stock equity 51.9 54.6 49.1
Preferred and preference stock 8.5 9.3 4.3
Long-term debt 39.6 36.1 46.6
- ----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
================================================================================================================
First Mortgage Bonds (in thousands):
Issued 30,000 - -
Retired 18,275 12,231 10,239
Preferred and Preference Stock (in thousands):
Issued - 20,000 -
Retired 6,591 553 588
- ----------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A3
Standard and Poor's A A- A-
Preferred Stock -
Moody's "a2" "a2" NR
Standard and Poor's A- BBB+ BBB+
- ----------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 94,766 93,486 92,094
Commercial 12,298 12,135 11,812
Industrial 69 69 67
Other 856 828 762
- ----------------------------------------------------------------------------------------------------------------
Total 107,989 106,518 104,735
================================================================================================================
Employees (year-end) 643 655 655
Note:
NR = Not Rated
</TABLE>
<PAGE>
23C
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C>
================================================================================================
1986 1985
- ------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $174,847 $158,643
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $20,452 $15,279
Cash Dividends on Common Stock (in thousands) $9,353 $8,387
Return on Average Common Equity (percent) 17.52 14.41
Total Assets (in thousands) $341,826 $323,686
Gross Property Additions (in thousands) $26,800 $30,700
- ------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $123,133 $110,385
Preferred stock 2,300 2,300
Preferred and preference stock subject
to mandatory redemption 10,256 10,848
Long-term debt 137,821 128,850
- ------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $273,510 $252,383
================================================================================================
Capitalization Ratios (percent):
Common stock equity 45.0 43.7
Preferred and preference stock 4.6 5.2
Long-term debt 50.4 51.1
- ------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
================================================================================================
First Mortgage Bonds (in thousands):
Issued 25,000 20,000
Retired 10,160 5,592
Preferred and Preference Stock (in thousands):
Issued - -
Retired 610 588
- ------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A3 A3
Standard and Poor's A- A-
Preferred Stock -
Moody's NR NR
Standard and Poor's BBB+ BBB+
- ------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 89,951 88,101
Commercial 11,405 10,985
Industrial 67 66
Other 731 699
- ------------------------------------------------------------------------------------------------
Total 102,154 99,851
================================================================================================
Employees (year-end) 658 653
Note:
NR = Not Rated
</TABLE>
<PAGE>
24
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
===============================================================================================================
1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $95,208 $89,195 $93,883
Commercial 75,117 71,227 71,320
Industrial 36,040 32,906 36,180
Other 8,386 7,946 7,810
- ---------------------------------------------------------------------------------------------------------------
Total retail 214,751 201,274 209,193
Sales for resale - non-affiliates 1,851 4,786 6,021
Sales for resale - affiliates 7,200 6,446 2,433
- ---------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 223,802 212,506 217,647
Other revenues 1,927 (721) 795
- ---------------------------------------------------------------------------------------------------------------
Total $225,729 $211,785 $218,442
===============================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,402,148 1,298,122 1,329,362
Commercial 1,099,570 1,045,831 1,015,935
Industrial 887,141 799,543 854,324
Other 126,057 119,593 115,969
- ---------------------------------------------------------------------------------------------------------------
Total retail 3,514,916 3,263,089 3,315,590
Sales for resale - non-affiliates 87,747 201,716 247,203
Sales for resale - affiliates 63,731 93,001 75,384
- ---------------------------------------------------------------------------------------------------------------
Total 3,666,394 3,557,806 3,638,177
===============================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.79 6.87 7.06
Commercial 6.83 6.81 7.02
Industrial 4.06 4.12 4.23
Total retail 6.11 6.17 6.31
Sale for resale 5.98 3.81 2.62
Total sales 6.10 5.97 5.98
Residential Average Annual Kilowatt-Hour Use Per Customer 13,478 12,686 13,269
Residential Average Annual Revenue Per Customer $915.15 $871.68 $937.07
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 788 628
Maximum Peak-Hour Demand (megawatts):
Winter 630 617 524
Summer 811 729 747
Annual Load Factor (percent) 52.9 54.3 54.1
Plant Availability - Fossil-Steam (percent) 83.3 81.0 90.2
- ---------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 23.9 18.6 21.5
Oil and gas 5.9 1.8 4.5
Purchased power -
From non-affiliates 2.3 1.5 0.9
From affiliates 67.9 78.1 73.1
- ---------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
===============================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 12,146 11,786 11,515
Cost of fuel per million BTU (cents) 179.25 205.03 215.97
Average cost of fuel per net kilowatt-hour generated (cents) 2.18 2.42 2.49
===============================================================================================================
</TABLE>
<PAGE>
25A
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
=================================================================================================================
1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $82,670 $80,541 $87,063
Commercial 64,756 61,827 65,462
Industrial 33,171 30,492 30,237
Other 7,095 6,561 6,782
- -----------------------------------------------------------------------------------------------------------------
Total retail 187,692 179,421 189,544
Sales for resale - non-affiliates 7,821 7,813 9,482
Sales for resale - affiliates 1,505 1,430 5,566
- -----------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 197,018 188,664 204,592
Other revenues 743 982 1,043
- -----------------------------------------------------------------------------------------------------------------
Total $197,761 $189,646 $205,635
=================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,216,993 1,195,005 1,183,486
Commercial 953,840 925,757 892,931
Industrial 861,121 825,862 644,704
Other 110,270 106,683 103,539
- -----------------------------------------------------------------------------------------------------------------
Total retail 3,142,224 3,053,307 2,824,660
Sales for resale - non-affiliates 367,066 372,085 441,090
Sales for resale - affiliates 37,632 32,581 294,042
- -----------------------------------------------------------------------------------------------------------------
Total 3,546,922 3,457,973 3,559,792
=================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.79 6.74 7.36
Commercial 6.79 6.68 7.33
Industrial 3.85 3.69 4.69
Total retail 5.97 5.88 6.71
Sale for resale 2.30 2.28 2.05
Total sales 5.55 5.46 5.75
Residential Average Annual Kilowatt-Hour Use Per Customer 12,369 12,323 12,339
Residential Average Annual Revenue Per Customer $840.23 $830.54 $907.68
Plant Nameplate Capacity Ratings (year-end) (megawatts) 628 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 533 526 428
Summer 695 691 648
Annual Load Factor (percent) 55.0 54.1 53.2
Plant Availability - Fossil-Steam (percent) 89.1 76.9 89.6
- -----------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 12.0 16.3 52.8
Oil and gas 2.9 1.7 3.4
Purchased power -
From non-affiliates 1.0 0.4 0.8
From affiliates 84.1 81.6 43.0
- -----------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 12,547 10,917 10,741
Cost of fuel per million BTU (cents) 201.50 199.42 188.18
Average cost of fuel per net kilowatt-hour generated (cents) 2.53 2.18 2.02
=================================================================================================================
</TABLE>
<PAGE>
25B
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C> <C>
=============================================================================================================
1989 1988 1987
- -------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $85,113 $81,098 $79,785
Commercial 65,474 62,640 60,285
Industrial 28,304 26,865 27,422
Other 6,892 6,557 6,315
- -------------------------------------------------------------------------------------------------------------
Total retail 185,783 177,160 173,807
Sales for resale - non-affiliates 8,814 808 -
Sales for resale - affiliates 6,025 3,567 -
- -------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 200,622 181,535 173,807
Other revenues 1,177 905 900
- -------------------------------------------------------------------------------------------------------------
Total $201,799 $182,440 $174,707
=============================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,109,976 1,067,411 1,044,554
Commercial 839,756 806,687 775,643
Industrial 561,063 533,604 557,281
Other 101,164 97,072 94,949
- -------------------------------------------------------------------------------------------------------------
Total retail 2,611,959 2,504,774 2,472,427
Sales for resale - non-affiliates 437,943 24,168 -
Sales for resale - affiliates 303,142 156,106 -
- -------------------------------------------------------------------------------------------------------------
Total 3,353,044 2,685,048 2,472,427
=============================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.67 7.60 7.64
Commercial 7.80 7.77 7.77
Industrial 5.04 5.03 4.92
Total retail 7.11 7.07 7.03
Sale for resale 2.00 2.43 -
Total sales 5.98 6.76 7.03
Residential Average Annual Kilowatt-Hour Use Per Customer 11,781 11,489 11,481
Residential Average Annual Revenue Per Customer $903.37 $872.87 $876.95
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 548 471 414
Summer 613 574 562
Annual Load Factor (percent) 52.4 53.4 53.6
Plant Availability - Fossil-Steam (percent) 94.7 77.1 81.2
- -------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 63.5 79.8 74.3
Oil and gas 1.4 5.4 4.4
Purchased power -
From non-affiliates 1.5 5.9 19.9
From affiliates 33.6 8.9 1.4
- -------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,611 10,683 10,551
Cost of fuel per million BTU (cents) 180.48 178.31 176.10
Average cost of fuel per net kilowatt-hour generated (cents) 1.92 1.90 1.86
=============================================================================================================
</TABLE>
<PAGE>
25C
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1995 Annual Report
<S> <C> <C>
============================================================================================
1986 1985
- --------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $80,348 $70,377
Commercial 59,547 53,696
Industrial 27,694 28,335
Other 6,300 5,823
- --------------------------------------------------------------------------------------------
Total retail 173,889 158,231
Sales for resale - non-affiliates - -
Sales for resale - affiliates - -
- --------------------------------------------------------------------------------------------
Total revenues from sales of electricity 173,889 158,231
Other revenues 958 412
- --------------------------------------------------------------------------------------------
Total $174,847 $158,643
============================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,021,905 926,988
Commercial 746,133 694,168
Industrial 515,544 513,270
Other 92,471 87,238
- --------------------------------------------------------------------------------------------
Total retail 2,376,053 2,221,664
Sales for resale - non-affiliates - -
Sales for resale - affiliates - -
- --------------------------------------------------------------------------------------------
Total 2,376,053 2,221,664
============================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.86 7.59
Commercial 7.98 7.74
Industrial 5.37 5.52
Total retail 7.32 7.12
Sale for resale - -
Total sales 7.32 7.12
Residential Average Annual Kilowatt-Hour Use Per Customer 11,514 10,536
Residential Average Annual Revenue Per Customer $905.27 $799.90
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 464 440
Summer 565 498
Annual Load Factor (percent) 51.1 54.7
Plant Availability - Fossil-Steam (percent) 86.9 92.0
- --------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 81.9 87.5
Oil and gas 6.8 2.6
Purchased power -
From non-affiliates 11.3 9.9
From affiliates - -
- --------------------------------------------------------------------------------------------
Total 100.0 100.0
============================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,607 10,581
Cost of fuel per million BTU (cents) 186.30 198.80
Average cost of fuel per net kilowatt-hour generated (cents) 1.98 2.10
============================================================================================
</TABLE>
