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 12, 1997
-----------------------------
SAVANNAH ELECTRIC AND POWER COMPANY
(Exact name of registrant as specified in its charter)
Georgia 1-5072 58-0418070
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 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, 1996.
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
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
Date: March 3, 1997
ARTHUR ANDERSEN LLP
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 12, 1997 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 27, 1997
<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 entirity by
reference to such financial statements.
</LEGEND>
<CIK> 0000086940
<NAME> SAVANNAH ELECTRIC AND POWER COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 448,164
<OTHER-PROPERTY-AND-INVEST> 1,785
<TOTAL-CURRENT-ASSETS> 53,746
<TOTAL-DEFERRED-CHARGES> 38,600
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 542,295
<COMMON> 54,223
<CAPITAL-SURPLUS-PAID-IN> 8,688
<RETAINED-EARNINGS> 109,373
<TOTAL-COMMON-STOCKHOLDERS-EQ> 172,284
0
35,000
<LONG-TERM-DEBT-NET> 125,350
<SHORT-TERM-NOTES> 5,000
<LONG-TERM-NOTES-PAYABLE> 30,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 7,088
<LEASES-CURRENT> (637)
<OTHER-ITEMS-CAPITAL-AND-LIAB> 168,210
<TOT-CAPITALIZATION-AND-LIAB> 542,295
<GROSS-OPERATING-REVENUE> 234,074
<INCOME-TAX-EXPENSE> 16,175
<OTHER-OPERATING-EXPENSES> 179,015
<TOTAL-OPERATING-EXPENSES> 195,190
<OPERATING-INCOME-LOSS> 38,884
<OTHER-INCOME-NET> (204)
<INCOME-BEFORE-INTEREST-EXPEN> 38,680
<TOTAL-INTEREST-EXPENSE> 12,416
<NET-INCOME> 26,264
2,324
<EARNINGS-AVAILABLE-FOR-COMM> 23,940
<COMMON-STOCK-DIVIDENDS> 19,600
<TOTAL-INTEREST-ON-BONDS> 11,526
<CASH-FLOW-OPERATIONS> 52,438
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
Exhibit 99
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1996 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 three 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 12, 1997
1
<PAGE>
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 Southern Company) as of December 31, 1996 and 1995, and the
related statements of income, retained earnings, and cash flows for each of the
three years in the period ended December 31, 1996. 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 8-20) referred to above
present fairly, in all material respects, the financial position of Savannah
Electric and Power Company as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
February 12, 1997
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Savannah Electric and Power Company 1996 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred
stock for 1996 totaled $23.9 million, representing a $0.5 million increase over
the prior year. This 2.3 percent improvement in earnings over 1995 is
principally the result of increased retail energy sales primarily attributable
to an increase in the number of customers served.
In 1995, earnings were $23.4 million, representing a $1.3 million (5.8
percent) increase from the prior year. This was primarily due to higher retail
energy sales as a result of exceptionally hot summer weather.
Revenues
Total revenues for 1996 were $234.1 million, reflecting a 3.7 percent increase
compared to 1995. The following table summarizes revenue increases and decreases
compared to prior years:
Increase (Decrease)
From Prior Year
--------------------------------------
1996 1995 1994
--------------------------------------
Retail -- (in thousands)
Sales growth $ 3,679 $ 1,068 $ 7,884
Weather (2,813) 6,232 (6,589)
Fuel cost recovery
and other 12,365 6,177 (9,214)
-------------------------------------------------------------------
Total retail 13,231 13,477 (7,919)
-------------------------------------------------------------------
Sales for resale--
Non-affiliates 147 (2,935) (1,235)
Affiliates (4,070) 754 4,013
-------------------------------------------------------------------
Total sales for resale (3,923) (2,181) 2,778
-------------------------------------------------------------------
Other operating revenues (963) 2,648 (1,516)
-------------------------------------------------------------------
Total operating revenues $ 8,345 $13,944 $(6,657)
===================================================================
Percent change 3.7% 6.6% (3.0)%
-------------------------------------------------------------------
Retail revenues increased 6.2 percent in 1996, compared to an increase of
6.7 percent in 1995. The increase in 1996 retail revenues is attributable to an
increase in the number of customers served and an increase in fuel cost recovery
revenues. Industrial energy sales were lower primarily due to a decrease in the
demand of a major customer. Under the Company's fuel cost recovery provisions,
fuel revenues--including purchased energy--generally equal fuel expense and have
no effect on earnings. The $1.0 million decrease in other operating revenues
reflects the elimination of the demand-side management rider in 1995. Revenues
from demand-side management riders (included in retail revenues) recovered
demand-side management program costs and had little impact on earnings. See Note
3 to the financial statements for further information on the Company's
demand-side management programs.
The increase in 1995 retail revenues was 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.
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 revenues continued to
decrease in 1996 primarily as a result of the scheduled decline in megawatts of
capacity under contract. The capacity and energy components were as follows:
1996 1995 1994
---------------------------------
(in thousands)
Capacity $ 2 $ 3 $ 448
Energy 1,329 1,250 3,052
- ------------------------------------------------------
Total $1,331 $1,253 $3,500
======================================================
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.
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1996 Annual Report
Changes in revenues are influenced heavily by the amount of energy sold
each year. Kilowatt-hour sales for 1996 and the percent change by year were as
follows:
KWH Percent Change
------------ ---------------------------
1996 1996 1995 1994
------------ ---------------------------
(millions)
Residential 1,457 3.9% 8.0% (2.3)%
Commercial 1,141 3.8 5.1 2.9
Industrial 839 (5.5) 11.0 (6.4)
Other 126 0.1 5.4 3.1
------------
Total retail 3,563 1.4 7.7 (1.6)
Sales for resale
Non-affiliates 91 4.4 (56.5) (18.4)
Affiliates 42 (34.4) (31.5) 23.4
------------
Total 3,696 0.8% 3.1% (2.2)%
==================================================================
Expenses
Total operating expenses for 1996 were $195.2 million, reflecting an $7.7
million increase over 1995. Major components of this increase include $5.3
million in purchased power from affiliates and $3.8 million in fuel, partially
offset by a $1.2 million reduction in other operation expenses. The increase in
purchased power from affiliates was due to an increase in the unit cost of
purchased power. The increase in fuel expense was primarily attributable to
higher generation and an increase in the unit cost of gas. The reduction in
other operation expense primarily resulted from the demand-side management
program being discontinued in December 1995.
In 1995, total operating expenses were $187.5 million, reflecting an $11.8
million increase from 1994. This increase includes $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 was 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 was 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.
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:
1996 1995 1994
--------------------------
Total energy supply
(millions of kilowatt-hours) 3,917 3,908 3,768
Sources of energy supply
(percent) --
Coal 28 24 18
Oil - - 1
Gas 3 6 1
Purchased Power 69 70 80
Average cost of fuel per net
kilowatt-hour generated
(cents) --
Coal 1.76 1.77 2.19
Oil 5.79 5.14 3.89
Gas 8.89 3.76 5.19
Average cost of purchased
power per net kilowatt-
hour (cents) 2.25 2.02 1.92
Total average cost of
energy supply 2.30 2.07 2.02
---------------------------------------------------------------
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on
the recovery of historical costs. Therefore, inflation creates an economic loss
because the Company is recovering its costs of investments in dollars that have
less purchasing power. While the inflation rate has been relatively low in
recent years, it continues to have an adverse effect on the Company because of
the large investment in long-lived utility plant. Conventional accounting for
historical cost does not recognize this economic loss nor the partially
offsetting gain that arises through financing facilities with fixed-money
obligations such as long-term debt and preferred stock. Any recognition of
inflation by regulatory authorities is reflected in the rate of return allowed.
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1996 Annual Report
Future Earnings Potential
The results of operations for the past three years are not necessarily
indicative of future earnings potential. The level of future earnings depends on
numerous factors ranging from 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 having 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 energy generation to other utilities.
Various federal and state initiatives designed to promote wholesale and
retail competition, among other things, include proposals that would allow
customers to choose their electricity provider. As the initiatives
materialize, the structure of the utility industry could radically change.
Certain initiatives could result in a change in the ownership and/or
operation of generation and transmission facilities. Numerous issues must be
resolved, including significant ones relating to transmission pricing and
recovery of stranded investments. Being a low-cost producer could provide
significant opportunities to increase market share and profitability in
markets that evolve with changing regulation. 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.
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. In June 1996, the
Company refunded to customers approximately $0.3 million which had been
overcollected from the rate riders.
FINANCIAL CONDITION
Overview
The principal change in the Company's financial condition in 1996 was the
addition of $29 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 and from financing activities. See Statements of Cash Flows for additional
information.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1996 Annual Report
Capital Structure
As of December 31, 1996, the Company's capital structure consisted of 46.7
percent common equity, 9.5 percent preferred stock and 43.8 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 1996, the Company issued $20 million of 6.90% first mortgage bonds
maturing in 2006 and $10 million of 6.88% term notes maturing in 2001.
Maturities and retirements of long-term debt were $29 million in 1996, $29
million in 1995 and $5 million in 1994.
In March 1996, the Company entered into a fifteen year variable rate
capital lease agreement with the Savannah Economic Development Authority for a
coal ship docking and unloading facility at Plant Kraft.
The composite interest rates and dividend rate for the years 1994 through
1996 as of year-end were as follows:
1996 1995 1994
-------------------------------
Composite interest rates
on long-term debt 7.0% 7.5% 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
$72 million ($26 million in 1997, $22 million in 1998, and $24 million in 1999).
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. The Company does not have any
traditional baseload generating plants under construction, and current energy
demand forecasts do not require any additional traditional baseload facilities
until well into the future. Construction of transmission and distribution
facilities and upgrading of generating plants will be continuing.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately
$21.6 million will be needed by the end of 1999 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--impacts the Company and
other subsidiaries of 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 Southern Company. As a result of 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
emission allowance is the authority to emit one ton of sulfur dioxide during a
calendar year. The sulfur dioxide emission allowance program is expected to
minimize the cost of compliance. Southern Company's sulfur dioxide compliance
strategy is designed to use allowances as a compliance option.
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. Construction expenditures for Phase I compliance totaled
approximately $2 million for Savannah Electric.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1996 Annual Report
For Phase II sulfur dioxide compliance, Southern Company could use emission
allowances, increase fuel switching, and/or install flue gas desulfurization
equipment at selected plants. Also, equipment to control nitrogen oxide
emissions will be installed on additional system fossil-fired plants as required
to meet Phase II limits. Therefore, current compliance strategy could require
total Phase II estimated construction expenditures of approximately $4 million
for the Company. 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 1 percent in annual revenue requirements from
customers could be necessary to fully recover the Company's cost 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.
The EPA and state environmental regulatory agencies are reviewing and
evaluating various matters including: revisions to the ambient air quality
standards for ozone and particulate matter; emission control strategies for
ozone nonattainment areas; additional controls for hazardous air pollutant
emissions; and hazardous waste disposal requirements. The impact of new
standards will depend on the development and implementation of applicable
regulations.
The Company must comply with other environmental laws and regulations that
cover the handling and disposal of hazardous waste. Under these various laws and
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 Southern Company's operations. The full impact of any such changes
cannot be determined at this time.
Compliance with possible additional legislation related to global climate
change, electromagnetic fields, and other environmental and health concerns
could significantly affect 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, 1996, the Company had $5.2 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, $15 million remained unused at December 31, 1996.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulations, will be derived
from operations and the sale of additional first mortgage bonds and preferred
stock and capital contributions from 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 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.
7
<PAGE>
<TABLE>
STATEMENTS OF INCOME
For the Years Ended December 31, 1996, 1995, and 1994
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Revenues (Notes 1 and 3):
Revenues $230,944 $218,529 $205,339
Revenues from affiliates 3,130 7,200 6,446
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 234,074 225,729 211,785
- --------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 29,139 25,386 18,555
Purchased power from non-affiliates 2,350 2,139 1,839
Purchased power from affiliates 58,591 53,252 55,822
Other 44,007 45,214 41,623
Maintenance 14,140 13,668 12,560
Depreciation and amortization (Note 1) 19,113 18,949 17,854
Taxes other than income taxes 11,675 11,465 11,074
Federal and state income taxes (Notes 1 and 6) 16,175 17,378 16,289
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 195,190 187,451 175,616
- --------------------------------------------------------------------------------------------------------------------------------
Operating Income 38,884 38,278 36,169
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) 317 163 831
Interest income 201 164 54
Other, net (1,756) (618) (1,032)
Income taxes applicable to other income (Notes 1 and 6) 1,034 651 864
- --------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 38,680 38,638 36,886
- --------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 11,563 12,380 12,585
Allowance for debt funds used during construction (Note 1) (333) (450) (1,225)
Interest on notes payable 229 135 205
Amortization of debt discount, premium, and expense, net 579 448 550
Other interest charges 378 406 337
- --------------------------------------------------------------------------------------------------------------------------------
Net interest charges 12,416 12,919 12,452
- --------------------------------------------------------------------------------------------------------------------------------
Net Income 26,264 25,719 24,434
Dividends on Preferred Stock 2,324 2,324 2,324
================================================================================================================================
Net Income After Dividends on Preferred Stock $ 23,940 $ 23,395 $ 22,110
================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1996, 1995, and 1994
- --------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Balance at Beginning of Period $105,033 $ 99,216 $ 93,479
Net income after dividends on preferred stock 23,940 23,395 22,110
Cash dividends on common stock (19,600) (17,600) (16,300)
Preferred stock transactions, net - 22 (73)
- --------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (Note 10) $109,373 $105,033 $ 99,216
================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
8
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996, 1995, and 1994
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Operating Activities:
Net income $ 26,264 $ 25,719 $ 24,434
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 20,246 20,535 19,353
Deferred income taxes and investment tax credits 7,482 4,359 1,625
Allowance for equity funds used during construction (317) (163) (831)
Other, net 705 35 826
Changes in certain current assets and liabilities --
Receivables, net (641) (6,241) 18,481
Inventories 410 2,318 1,144
Payables 4,242 2,213 (19,957)
Other (5,953) (1,848) (117)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 52,438 46,927 44,958
- -----------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (28,950) (26,503) (30,078)
Other (3,173) 3,198 (841)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (32,123) (23,305) (30,919)
- -----------------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
First mortgage bonds 20,000 15,000 -
Other long-term debt 17,000 33,500 8,500
Retirements:
First mortgage bonds (29,400) (29,250) (5,065)
Other long-term debt (397) (23,003) (823)
Notes payable, net 1,000 1,500 (500)
Payment of preferred stock dividends (2,324) (2,324) (2,129)
Payment of common stock dividends (19,600) (17,600) (16,300)
Miscellaneous (2,257) (2,131) (74)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (15,978) (24,308) (16,391)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 4,337 (686) (2,352)
Cash and Cash Equivalents at Beginning of Year 877 1,563 3,915
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 5,214 $ 877 $ 1,563
===================================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for-
Interest (net of amount capitalized) $ 12,960 $ 12,775 $ 11,579
Income taxes 10,926 11,316 14,441
- -----------------------------------------------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
9
<PAGE>
<TABLE>
BALANCE SHEETS
At December 31, 1996 and 1995
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Assets 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Utility Plant:
Plant in service, at original cost (Notes 1, 4, 5, and 8) $739,461 $715,146
Less accumulated provision for depreciation 304,760 287,004
- --------------------------------------------------------------------------------------------------------------------------------
434,701 428,142
Construction work in progress 13,463 6,707
- --------------------------------------------------------------------------------------------------------------------------------
Total 448,164 434,849
- --------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments 1,785 1,788
- --------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 5,214 877
Special deposits 1,395 -
Receivables-
Customer accounts receivable 18,827 19,574
Other accounts and notes receivable 769 7,251
Affiliated companies 844 614
Accumulated provision for uncollectible accounts (632) (983)
Fuel cost under recovery 7,289 -
Fossil fuel stock, at average cost 5,892 6,076
Materials and supplies, at average cost (Note 1) 8,013 8,239
Prepayments 6,135 6,467
- --------------------------------------------------------------------------------------------------------------------------------
Total 53,746 48,115
- --------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes (Note 6) 19,167 21,557
Premium on reacquired debt, being amortized 7,142 5,316
Cash surrender value of life insurance for deferred compensation plans 10,288 8,560
Miscellaneous 2,003 4,477
- --------------------------------------------------------------------------------------------------------------------------------
Total 38,600 39,910
- --------------------------------------------------------------------------------------------------------------------------------
Total Assets $542,295 $524,662
================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
10
<PAGE>
<TABLE>
BALANCE SHEETS
At December 31, 1996 and 1995
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Capitalization and Liabilities 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Capitalization (See accompanying statements):
Common stock equity $172,284 $167,812
Preferred stock 35,000 35,000
Long-term debt 161,801 153,679
- --------------------------------------------------------------------------------------------------------------------------------
Total 369,085 356,491
- --------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year (Note 9) 637 1,407
Notes payable (Note 5) 5,000 4,000
Accounts payable-
Affiliated companies 6,374 5,742
Other 10,201 5,620
Fuel cost over recovery - 865
Customer deposits 5,232 5,054
Taxes accrued-
Federal and state income - 570
Other 1,015 1,014
Interest accrued 5,275 6,331
Vacation pay accrued 2,038 1,916
Miscellaneous 7,470 5,870
- --------------------------------------------------------------------------------------------------------------------------------
Total 43,242 38,389
- --------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 6) 76,654 74,152
Accumulated deferred investment tax credits (Note 6) 13,271 13,934
Deferred credits related to income taxes (Note 6) 22,792 24,419
Deferred compensation plans 8,602 7,690
Deferred under-funded accrued benefit obligation (Note 2) - 2,123
Postretirement benefits 5,472 4,728
Miscellaneous 3,177 2,736
- --------------------------------------------------------------------------------------------------------------------------------
Total 129,968 129,782
- --------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 4, 5, and 8)
Total Capitalization and Liabilities $542,295 $524,662
================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
11
<PAGE>
<TABLE>
STATEMENTS OF CAPITALIZATION
At December 31, 1996 and 1995
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
<S> <C> <C> <C> <C>
Common Stock Equity (Notes 2 and 10):
Common stock, par value $5 per share --
Authorized -- 16,000,000 shares
Outstanding -- 10,844,635 shares in
1996 and 1995 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688
Additional minimum liability
for under-funded pension obligations - (132)
Retained earnings 109,373 105,033
- --------------------------------------------------------------------------------------------------------------------------------
Total common stock equity 172,284 167,812 46.7% 47.1%
- --------------------------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock (Note 7):
$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 9.5 9.8
- --------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt (Note 8):
First mortgage bonds --
Maturity Interest Rates
July 1, 2003 6 3/8% 20,000 20,000
May 1, 2006 6.90% 20,000 -
July 1, 2021 9 3/8% - 29,400
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 15,000
- --------------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 110,000 119,400
Pollution control obligations (Note 8) 17,955 17,955
Other long-term debt (Note 8) 37,088 20,485
Unamortized debt premium (discount), net (2,605) (2,754)
- --------------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $11,526,000) 162,438 155,086
Less amount due within one year (Note 9) 637 1,407
- --------------------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 161,801 153,679 43.8 43.1
- --------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $369,085 $356,491 100.0% 100.0%
================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
12
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
General
Savannah Electric and Power Company (the Company), is a wholly owned subsidiary
of Southern Company, which is the parent company of five operating companies, a
system service company, Southern Communications Services (Southern
Communications), Southern Energy, Inc. (Southern Energy), 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. The system service company provides, at cost,
specialized services to 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 Energy 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 Southern Company's
nuclear power plants. Southern Development develops new business opportunities
related to energy products and services.
Southern Company is registered as a holding company under the Public
Utility Holding Company Act of 1935 (PUHCA). Both 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:
1996 1995
---------------------------
(in thousands)
Deferred income taxes $ 19,167 $ 21,557
Premium on reacquired debt 7,142 5,316
Deferred income tax credits (22,792) (24,419)
- ---------------------------------------------------------------
Total $ 3,517 $ 2,454
===============================================================
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 and purchased power capacity
costs. Revenues are adjusted for differences between recoverable fuel 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 1996, uncollectible
accounts continued to average less than 1 percent of revenues.
13
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 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
2.8 percent in 1996 and 2.9 percent in 1995 and 1994. 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 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 8.69 percent in 1996, 7.42 percent in 1995 and 8.04 percent in 1994.
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
The Company's financial instruments for which the carrying amounts did not equal
fair value at December 31 were as follows:
Long-Term Debt
--------------------------
Carrying Fair
Year Amount Value
--------------------------
(in millions)
1996 $155 $161
1995 154 165
- --------------------------------------------------------------
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, 1996, the accumulated provision amounted to $0.9 million. Regulatory
treatment by the GPSC allows the Company to accrue up to an additional $0.6
million per year.
14
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 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 and
money market funds.
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
------------------------
1996 1995
------------------------
(in thousands)
Actuarial present value of benefit
obligation:
Vested benefits $39,270 $38,169
Non-vested benefits 2,939 2,585
- ----------------------------------------------------------------
Accumulated benefit obligation 42,209 40,754
Additional amounts related to
projected salary increases 7,705 7,786
- ----------------------------------------------------------------
Projected benefit obligation 49,914 48,540
Less:
Fair value of plan assets 42,430 36,836
Unrecognized net loss 7,252 9,606
Unrecognized prior service cost 1,240 1,375
Unrecognized net transition
obligation 444 532
Adjustment required to
recognize additional
minimum liability - 3,727
- ----------------------------------------------------------------
(Prepaid asset) accrued liability
recognized in the Balance Sheets $(1,452) $ 3,918
================================================================
The weighted average rates assumed in the actuarial calculations for the
pension plan were:
1996 1995 1994
------------------------
Discount 7.25% 7.25% 8.00%
Annual salary increase 4.75 4.75 5.25
Long-term return on plan assets 8.75 8.75 9.00
---------------------------------------------------------------
15
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 Annual Report
In accordance with Statement No. 87, an additional liability related to an
under-funded accumulated benefit obligations was reflected at December 31, 1995.
A corresponding net-of-tax balance of $0.1 million was recognized as a separate
component of Common Stock Equity in the 1995 Statement of Capitalization.
Postretirement
Benefits
------------------------
1996 1995
------------------------
(in thousands)
Actuarial present value of benefit
obligation:
Retirees and dependents $12,442 $13,560
Employees eligible to retire 1,614 1,471
Other employees 6,464 5,966
- -------------------------------------------------------------
Accumulated benefit obligation 20,520 20,997
Less:
Fair value of plan assets 2,473 1,443
Unrecognized net loss 4,835 5,719
Unrecognized transition
obligation 7,900 9,135
- -------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $ 5,312 $ 4,700
=============================================================
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:
1996 1995
-------------------
Discount 7.75% 7.25%
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 9.3
percent for 1996, decreasing gradually to 5.8 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, 1996, by $1.2 million and the aggregate of the
service and interest cost components of the net postretirement cost by $0.1
million.
Components of the plans' net costs are shown below:
Pension
------------------------------
1996 1995 1994
------------------------------
(in thousands)
Benefits earned during the year $1,352 $1,188 $1,192
Interest cost on projected
benefit obligation 3,389 3,395 3,279
Actual (return) loss on plan assets (4,852) (5,791) 27
Net amortization and deferral 2,439 4,125 (1,474)
- --------------------------------------------------------------------
Net pension cost $2,328 $2,917 $3,024
====================================================================
Of the above net pension costs, $2.0 million in 1996, $2.4 million in 1995
and $2.6 million in 1994 were recorded in operating expenses, and the remainder
was recorded in construction and other accounts.
Postretirement
Benefits
------------------------------
1996 1995 1994
------------------------------
(in thousands)
Benefits earned during the year $ 360 $ 504 $ 632
Interest cost on accumulated
benefit obligation 1,422 1,638 1,492
Amortization of transition
obligation 494 723 723
Actual (return) loss on plan assets (145) (34) 6
Net amortization and deferral 187 93 111
- --------------------------------------------------------------------
Net postretirement costs $2,318 $2,924 $2,964
- --------------------------------------------------------------------
Of the above net postretirement costs, $2.0 million in 1996, $2.4 million
in 1995 and $2.4 million in 1994 were recorded in operating expenses, and the
remainder was recorded in construction and other accounts.
16
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 Annual Report
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 were $0.4 million for 1996, 1995 and 1994.
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. In June 1996, the
Company refunded to customers approximately $0.3 million which had been
overcollected from the rate rider.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently estimated
to total $26 million in 1997, $22 million in 1998 and $24 million in 1999. 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 Company does
not have any traditional 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 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 end of 1996, unused credit arrangements with five banks totaled $20.5
million and expire at various times during 1997.
The Company's revolving credit arrangements of $20 million, of which $15
million remained unused as of December 31, 1996, 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. A second
lien for $10 million of bank debt is secured by a portion of the Plant Kraft
property.
17
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 Annual Report
Operating Leases
The Company has rental agreements with various terms and expiration dates.
Rental expenses totaled $1.6 million for 1996, $1.3 million for 1995, and $1.5
million for 1994. 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 one of
the Company's generating plants.
At December 31, 1996, estimated future minimum lease payments for
non-cancelable operating leases were as follows:
Amounts
--------------------
(in thousands)
1997 $1,413
1998 1,135
1999 497
2000 485
2001 483
2002 and thereafter 7,935
- -------------------------------------------------------------
6. INCOME TAXES
At December 31, 1996, tax-related regulatory assets and liabilities were $19
million and $23 million, respectively. The assets are attributable to tax
benefits flowed through to customers in prior years and to taxes applicable to
capitalized AFUDC. The 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:
1996 1995 1994
--------------------------------
(in thousands)
Total provision for income taxes
Federal --
Currently payable $ 7,084 $10,427 $11,736
Deferred -- current year 8,216 5,290 2,106
-- reversal of
prior years (1,989) (1,661) (755)
- -----------------------------------------------------------------
13,311 14,056 13,087
- -----------------------------------------------------------------
State --
Currently payable 575 1,941 2,064
Deferred -- current year 1,216 695 188
-- reversal of
prior years 39 35 86
- -----------------------------------------------------------------
1,830 2,671 2,338
- -----------------------------------------------------------------
Total 15,141 16,727 15,425
Less income taxes credited
to other income (1,034) (651) (864)
- -----------------------------------------------------------------
Total income taxes
charged to operations $16,175 $17,378 $16,289
=================================================================
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:
1996 1995
--------------------
Deferred tax liabilities: (in thousands)
Accelerated depreciation $67,104 $62,822
Property basis differences 9,550 11,330
Other 5,703 1,511
- ----------------------------------------------------------------
Total 82,357 75,663
- ----------------------------------------------------------------
Deferred tax assets:
Pension and other benefits 5,183 3,660
Other 2,186 3,818
- ----------------------------------------------------------------
Total 7,369 7,478
- ----------------------------------------------------------------
Net deferred tax liabilities 74,988 68,185
Portions included in current assets, net 1,666 5,967
- ----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $76,654 $74,152
================================================================
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 1996, 1995 and 1994. At December 31, 1996, all
investment tax credits available to reduce federal income taxes payable had been
utilized.
18
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 Annual Report
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
1996 1995 1994
-----------------------------
Federal statutory tax rate 35% 35% 35%
State income tax, net of
federal income tax benefit 3 4 4
Other (1) - -
--------------------------------------------------------------
Effective income tax rate 37% 39% 39%
==============================================================
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.
7. CUMULATIVE PREFERRED STOCK
The Company has outstanding 1,400,000 shares of 6.64% Series Preferred Stock
which has redemption provisions of $26.66 per share plus accrued dividends if
redeemed 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.
8. 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 1996, the Company issued $20 million in 6.90% Series First Mortgage
Bonds maturing in 2006 and $10 million of 6.88% term notes maturing in 2001.
Using the proceeds from such sales, the Company redeemed in July 1996 all of its
remaining outstanding 9 3/8% Series First Mortgage Bonds due July 2021.
The sinking fund requirements of first mortgage bonds were satisfied by
cash redemption in 1996 and 1995. The 1997 requirement will be satisfied by
certifying property additions. Sinking fund requirements and/or maturities
through 2001 applicable to long-term debt are as follows: $0.6 million in 1997;
$20.5 million in 1998; $0.5 million in 1999; $0.4 million in 2000; and $10.4
million in 2001.
Details of pollution control obligations and other long-term debt at
December 31 are as follows:
1996 1995
-----------------------
(in thousands)
Collateralized obligations incurred in
connection with the sale by public
authorities of tax-exempt pollution
control revenue bonds --
Variable rate (3.20% at 1/1/97)
due 2016 $ 4,085 $ 4,085
6 3/4% due 2022 13,870 13,870
Capital lease obligations --
Coal unloading facility
Variable rate (5.60% at 1/1/97) 6,667 -
Transportation fleet 421 485
Notes Payable --
6.88% due 2001 10,000 -
Variable rate (5.75% at 1/1/97)
due 1998 15,000 15,000
Variable rate (5.73% at 1/1/97)
due 1998 5,000 5,000
- ----------------------------------------------------------------
Total $55,043 $38,440
================================================================
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.
In March 1996, the Company entered into a fifteen year variable rate
capital lease agreement with the Savannah Economic Development Authority for a
coal ship docking and unloading facility at Plant Kraft.
19
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1996 Annual Report
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.
9. 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:
1996 1995
----------------------
(in thousands)
Bond sinking fund requirement $1,100 $1,200
Less:
Portion to be satisfied by
certifying property additions 1,100 -
- --------------------------------------------------------------------
Cash sinking fund requirement - 1,200
Other long-term debt maturities (Note 9) 637 207
- --------------------------------------------------------------------
Total $ 637 $1,407
====================================================================
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.
10. 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, 1996,
approximately $68 million of retained earnings was restricted against the
payment of cash dividends on common stock under the terms of the Indenture.
11. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized quarterly financial data for 1996 and 1995 are as follows (in
thousands):
Net Income After
Operating Operating Dividends on
Quarter Ended Revenue Income Preferred Stock
- -----------------------------------------------------------------
March 1996 $50,575 $ 6,562 $ 2,740
June 1996 61,906 9,786 5,859
September 1996 73,359 16,542 12,815
December 1996 48,234 5,994 2,526
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
- ------------------- ------------ ------------ -------------------
The Company's business is influenced by seasonal weather conditions and a
seasonal rate structure, among other factors.
20
<PAGE>
<TABLE>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands) $234,074 $225,729 $211,785
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $23,940 $23,395 $22,110
Cash Dividends on Common Stock (in thousands) $19,600 $17,600 $16,300
Return on Average Common Equity (percent) 14.08 14.20 14.00
Total Assets (in thousands) $542,295 $524,662 $518,305
Gross Property Additions (in thousands) $28,950 $26,503 $30,078
- ---------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $172,284 $167,812 $161,581
Preferred stock 35,000 35,000 35,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 161,801 153,679 155,922
- ---------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $369,085 $356,491 $352,503
=====================================================================================================================
Capitalization Ratios (percent):
Common stock equity 46.7 47.1 45.8
Preferred and preference stock 9.5 9.8 9.9
Long-term debt 43.8 43.1 44.3
- ---------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=====================================================================================================================
First Mortgage Bonds (in thousands):
Issued 20,000 15,000 -
Retired 29,400 29,250 5,065
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - - -
- ---------------------------------------------------------------------------------------------------------------------
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 106,657 104,624 103,199
Commercial 13,877 13,339 13,015
Industrial 65 65 65
Other 1,097 1,048 1,007
- ---------------------------------------------------------------------------------------------------------------------
Total 121,696 119,076 117,286
=====================================================================================================================
Employees (year-end) 571 584 616
</TABLE>
Note:
NR = Not Rated
21
<PAGE>
<TABLE>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues (in thousands) $218,442 $197,761 $189,646 $205,635
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $21,459 $20,512 $24,030 $26,254
Cash Dividends on Common Stock (in thousands) $21,000 $22,000 $22,000 $22,000
Return on Average Common Equity (percent) 13.73 12.89 15.13 16.85
Total Assets (in thousands) $527,187 $352,175 $352,505 $340,050
Gross Property Additions (in thousands) $72,858 $30,132 $19,478 $20,086
- -------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $154,269 $158,376 $159,841 $157,811
Preferred stock 35,000 20,000 20,000 20,000
Preferred and preference stock subject
to mandatory redemption - - - -
Long-term debt 151,338 110,767 119,280 112,377
- -------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $340,607 $289,143 $299,121 $290,188
=========================================================================================================================
Capitalization Ratios (percent):
Common stock equity 45.3 54.8 53.4 54.4
Preferred and preference stock 10.3 6.9 6.7 6.9
Long-term debt 44.4 38.3 39.9 38.7
- -------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0 100.0
=========================================================================================================================
First Mortgage Bonds (in thousands):
Issued 45,000 30,000 30,000 -
Retired - 38,750 22,500 9,135
Preferred and Preference Stock (in thousands):
Issued 35,000 - - -
Retired 20,000 - - 5,374
- -------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1 A1
Standard and Poor's A A A A
Preferred Stock -
Moody's "a2" "a2" "a2" "a2"
Standard and Poor's A- A- A- A-
- -------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 101,032 99,164 97,446 96,452
Commercial 12,702 12,416 12,153 12,045
Industrial 69 73 73 76
Other 957 940 897 867
- -------------------------------------------------------------------------------------------------------------------------
Total 114,760 112,593 110,569 109,440
=========================================================================================================================
Employees (year-end) 665 688 672 648
</TABLE>
Note:
NR = Not Rated
22a
<PAGE>
<TABLE>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
1989 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues (in thousands) $201,799 $182,440 $174,707 $174,847
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $25,535 $24,272 $22,086 $20,452
Cash Dividends on Common Stock (in thousands) $20,000 $11,700 $10,741 $9,353
Return on Average Common Equity (percent) 16.88 17.03 17.03 17.52
Total Assets (in thousands) $349,887 $347,051 $340,109 $341,826
Gross Property Additions (in thousands) $18,831 $23,254 $32,276 $26,800
- ----------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $153,737 $148,883 $136,207 $123,133
Preferred stock 22,300 22,300 2,300 2,300
Preferred and preference stock subject
to mandatory redemption 2,884 3,075 9,665 10,256
Long-term debt 117,522 98,285 129,329 137,821
- ----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $296,443 $272,543 $277,501 $273,510
======================================================================================================================
Capitalization Ratios (percent):
Common stock equity 51.9 54.6 49.1 45.0
Preferred and preference stock 8.5 9.3 4.3 4.6
Long-term debt 39.6 36.1 46.6 50.4
- ----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0 100.0
======================================================================================================================
First Mortgage Bonds (in thousands):
Issued 30,000 - - 25,000
Retired 18,275 12,231 10,239 10,160
Preferred and Preference Stock (in thousands):
Issued - 20,000 - -
Retired 6,591 553 588 610
- ----------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A3 A3
Standard and Poor's A A- A- A-
Preferred Stock -
Moody's "a2" "a2" NR NR
Standard and Poor's A- BBB+ BBB+ BBB+
- ----------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 94,766 93,486 92,094 89,951
Commercial 12,298 12,135 11,812 11,405
Industrial 69 69 67 67
Other 856 828 762 731
- ----------------------------------------------------------------------------------------------------------------------
Total 107,989 106,518 104,735 102,154
======================================================================================================================
Employees (year-end) 643 655 655 658
</TABLE>
Note:
NR = Not Rated
22b
<PAGE>
<TABLE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues (in thousands):
Residential $101,607 $95,208 $89,195
Commercial 80,494 75,117 71,227
Industrial 37,077 36,040 32,906
Other 8,804 8,386 7,946
- ---------------------------------------------------------------------------------------------------------------------
Total retail 227,982 214,751 201,274
Sales for resale - non-affiliates 1,998 1,851 4,786
Sales for resale - affiliates 3,130 7,200 6,446
- ---------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 233,110 223,802 212,506
Other revenues 964 1,927 (721)
- ---------------------------------------------------------------------------------------------------------------------
Total $234,074 $225,729 $211,785
=====================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,456,651 1,402,148 1,298,122
Commercial 1,141,218 1,099,570 1,045,831
Industrial 838,753 887,141 799,543
Other 126,215 126,057 119,593
- ---------------------------------------------------------------------------------------------------------------------
Total retail 3,562,837 3,514,916 3,263,089
Sales for resale - non-affiliates 91,610 87,747 201,716
Sales for resale - affiliates 41,808 63,731 93,001
- ---------------------------------------------------------------------------------------------------------------------
Total 3,696,255 3,666,394 3,557,806
=====================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.98 6.79 6.87
Commercial 7.05 6.83 6.81
Industrial 4.42 4.06 4.12
Total retail 6.40 6.11 6.17
Sale for resale 3.84 5.98 3.81
Total sales 6.31 6.10 5.97
Residential Average Annual Kilowatt-Hour Use Per Customer 13,771 13,478 12,686
Residential Average Annual Revenue Per Customer $960.58 $915.15 $871.68
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 788 788
Maximum Peak-Hour Demand (megawatts):
Winter 666 630 617
Summer 811 811 729
Annual Load Factor (percent) 53.1 52.9 54.3
Plant Availability - Fossil-Steam (percent) 77.6 83.3 81.0
- ---------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 27.7 23.9 18.6
Oil and gas 3.1 5.9 1.8
Purchased power -
From non-affiliates 2.1 2.3 1.5
From affiliates 67.1 67.9 78.1
- ---------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=====================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,888 12,146 11,786
Cost of fuel per million BTU (cents) 203.36 179.25 205.03
Average cost of fuel per net kilowatt-hour generated (cents) 2.42 2.18 2.42
=====================================================================================================================
</TABLE>
23
<PAGE>
<TABLE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues (in thousands):
Residential $93,883 $82,670 $80,541 $87,063
Commercial 71,320 64,756 61,827 65,462
Industrial 36,180 33,171 30,492 30,237
Other 7,810 7,095 6,561 6,782
- -------------------------------------------------------------------------------------------------------------------------
Total retail 209,193 187,692 179,421 189,544
Sales for resale - non-affiliates 6,021 7,821 7,813 9,482
Sales for resale - affiliates 2,433 1,505 1,430 5,566
- -------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 217,647 197,018 188,664 204,592
Other revenues 795 743 982 1,043
- -------------------------------------------------------------------------------------------------------------------------
Total $218,442 $197,761 $189,646 $205,635
=========================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,329,362 1,216,993 1,195,005 1,183,486
Commercial 1,015,935 953,840 925,757 892,931
Industrial 854,324 861,121 825,862 644,704
Other 115,969 110,270 106,683 103,539
- -------------------------------------------------------------------------------------------------------------------------
Total retail 3,315,590 3,142,224 3,053,307 2,824,660
Sales for resale - non-affiliates 247,203 367,066 372,085 441,090
Sales for resale - affiliates 75,384 37,632 32,581 294,042
- -------------------------------------------------------------------------------------------------------------------------
Total 3,638,177 3,546,922 3,457,973 3,559,792
=========================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.06 6.79 6.74 7.36
Commercial 7.02 6.79 6.68 7.33
Industrial 4.23 3.85 3.69 4.69
Total retail 6.31 5.97 5.88 6.71
Sale for resale 2.62 2.30 2.28 2.05
Total sales 5.98 5.55 5.46 5.75
Residential Average Annual Kilowatt-Hour Use Per Customer 13,269 12,369 12,323 12,339
Residential Average Annual Revenue Per Customer $937.07 $840.23 $830.54 $907.68
Plant Nameplate Capacity Ratings (year-end) (megawatts) 628 628 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 524 533 526 428
Summer 747 695 691 648
Annual Load Factor (percent) 54.1 55.0 54.1 53.2
Plant Availability - Fossil-Steam (percent) 90.2 89.1 76.9 89.6
- -------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 21.5 12.0 16.3 52.8
Oil and gas 4.5 2.9 1.7 3.4
Purchased power -
From non-affiliates 0.9 1.0 0.4 0.8
From affiliates 73.1 84.1 81.6 43.0
- -------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0 100.0
=========================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,515 12,547 10,917 10,741
Cost of fuel per million BTU (cents) 215.97 201.50 199.42 188.18
Average cost of fuel per net kilowatt-hour generated (cents) 2.49 2.53 2.18 2.02
=========================================================================================================================
</TABLE>
24a
<PAGE>
<TABLE>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1996 Annual Report
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
1989 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues (in thousands):
Residential $85,113 $81,098 $79,785 $80,348
Commercial 65,474 62,640 60,285 59,547
Industrial 28,304 26,865 27,422 27,694
Other 6,892 6,557 6,315 6,300
- ----------------------------------------------------------------------------------------------------------------------
Total retail 185,783 177,160 173,807 173,889
Sales for resale - non-affiliates 8,814 808 - -
Sales for resale - affiliates 6,025 3,567 - -
- ----------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 200,622 181,535 173,807 173,889
Other revenues 1,177 905 900 958
- ----------------------------------------------------------------------------------------------------------------------
Total $201,799 $182,440 $174,707 $174,847
======================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,109,976 1,067,411 1,044,554 1,021,905
Commercial 839,756 806,687 775,643 746,133
Industrial 561,063 533,604 557,281 515,544
Other 101,164 97,072 94,949 92,471
- ----------------------------------------------------------------------------------------------------------------------
Total retail 2,611,959 2,504,774 2,472,427 2,376,053
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 2,376,053
======================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.67 7.60 7.64 7.86
Commercial 7.80 7.77 7.77 7.98
Industrial 5.04 5.03 4.92 5.37
Total retail 7.11 7.07 7.03 7.32
Sale for resale 2.00 2.43 - -
Total sales 5.98 6.76 7.03 7.32
Residential Average Annual Kilowatt-Hour Use Per Customer 11,781 11,489 11,481 11,514
Residential Average Annual Revenue Per Customer $903.37 $872.87 $876.95 $905.27
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 548 471 414 464
Summer 613 574 562 565
Annual Load Factor (percent) 52.4 53.4 53.6 51.1
Plant Availability - Fossil-Steam (percent) 94.7 77.1 81.2 86.9
- ----------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 63.5 79.8 74.3 81.9
Oil and gas 1.4 5.4 4.4 6.8
Purchased power -
From non-affiliates 1.5 5.9 19.9 11.3
From affiliates 33.6 8.9 1.4 -
- ----------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0 100.0
======================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,611 10,683 10,551 10,607
Cost of fuel per million BTU (cents) 180.48 178.31 176.10 186.30
Average cost of fuel per net kilowatt-hour generated (cents) 1.92 1.90 1.86 1.98
======================================================================================================================
</TABLE>
24b
