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 11, 1998
-----------------------------
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, 1997.
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 4, 1998
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated February 11, 1998 on the financial statements of Savannah
Electric and Power Company, included in this Form 8-K, into Savannah Electric
and Power Company's previously filed Registration Statement File Nos. 33-52509
and 333-46171.
/s/Arthur Andersen LLP
Atlanta, Georgia
February 26, 1998
<TABLE> <S> <C>
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<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
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 446,894
<OTHER-PROPERTY-AND-INVEST> 1,783
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<TOTAL-DEFERRED-CHARGES> 43,994
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<TOTAL-ASSETS> 547,352
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</TABLE>
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1997 Annual Report
The management of Savannah Electric and Power Company has prepared--and is
responsible for--the financial statements and related information included in
this report. These statements were prepared in accordance with generally
accepted accounting principles appropriate in the circumstances and necessarily
include amounts that are based on the best estimates and judgments of
management. Financial information throughout this annual report is consistent
with the financial statements.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that books and records
reflect only authorized transactions of the Company. Limitations exist in any
system of internal controls, however, based on a recognition that the cost of
the system should not exceed its benefits. The Company believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an
ongoing basis by the Company's internal audit staff. The Company's independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.
The audit committee of the board of directors, composed of four directors
who are not employees, provides a broad overview of management's financial
reporting and control functions. Periodically, this committee meets with
management, the internal auditors and the independent public accountants to
ensure that these groups are fulfilling their obligations and to discuss
auditing, internal controls and financial reporting matters. The internal
auditors and the independent public accountants have access to the members of
the audit committee at any time.
Management believes that its policies and procedures provide reasonable
assurance that the Company's operations are conducted according to a high
standard of business ethics.
In management's opinion, the financial statements present fairly, in all
material respects, the financial position, results of operations, and cash flows
of Savannah Electric and Power Company in conformity with generally accepted
accounting principles.
/s/G. Edison Holland, Jr.
G. Edison Holland, Jr.
President and Chief Executive Officer
/s/K. R. Willis
K. R. Willis
Vice-President
Treasurer, Secretary and Chief Financial Officer
February 11, 1998
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, 1997 and 1996, and the
related statements of income, retained earnings, and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages 9-20) referred to above
present fairly, in all material respects, the financial position of Savannah
Electric and Power Company as of December 31, 1997 and 1996, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/Arthur Andersen LLP
Atlanta, Georgia
February 11, 1998
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Savannah Electric and Power Company 1997 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred
stock for 1997 totaled $23.8 million, representing a $0.1 million decrease from
the prior year. This (0.4) percent change in earnings from 1996 is principally
the result of an increase in other operation expense, partially offset by an
increase in other income, net.
In 1996, earnings were $23.9 million, representing a $0.5 million (2.3
percent) increase from the prior year. This was principally the result of
increased retail energy sales primarily attributable to an increase in the
number of customers served.
Revenues
Total revenues for 1997 were $226.3 million, reflecting a (3.3) percent decrease
compared to 1996. The following table summarizes revenue increases and decreases
compared to prior years:
Increase (Decrease)
From Prior Year
--------------------------------------
1997 1996 1995
--------------------------------------
Retail -- (in thousands)
Sales growth $ 7,664 $ 3,679 $ 1,068
Weather (6,186) (2,813) 6,232
Fuel cost recovery
and other (10,002) 12,365 6,177
-------------------------------------------------------------------
Total retail (8,524) 13,231 13,477
-------------------------------------------------------------------
Sales for resale--
Non-affiliates 1,469 147 (2,935)
Affiliates (1,078) (4,070) 754
-------------------------------------------------------------------
Total sales for resale 391 (3,923) (2,181)
-------------------------------------------------------------------
Other operating revenues 336 (963) 2,648
-------------------------------------------------------------------
Total operating revenues $(7,797) $ 8,345 $13,944
===================================================================
Percent change (3.3)% 3.7% 6.6%
-------------------------------------------------------------------
Retail revenues declined 3.7 percent in 1997, compared to an increase of
6.2 percent in 1996. The decline in 1997 retail revenues is attributable to the
mild summer weather and a decrease in fuel cost recovery revenues, somewhat
offset by customer growth and higher demand from a large industrial 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 increase in 1996 retail revenues was 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.
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 remained unchanged
in 1997. The capacity and energy components were as follows:
1997 1996 1995
----------------------------------------
(in thousands)
Capacity $ 2 $ 2 $ 3
Energy 746 1,329 1,250
- ---------------------------------------------------------
Total $748 $1,331 $1,253
=========================================================
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.
Changes in revenues are influenced heavily by the amount of energy sold
each year. Kilowatt-hour sales for 1997 and the percent change by year were as
follows:
KWH Percent Change
------------ ---------------------------
1997 1997 1996 1995
------------ ---------------------------
(millions)
Residential 1,428 (1.9)% 3.9% 8.0%
Commercial 1,156 1.3 3.8 5.1
Industrial 881 5.1 (5.5) 11.0
Other 125 (1.4) 0.1 5.4
------------
Total retail 3,590 0.8 1.4 7.7
Sales for resale
Non-affiliates 94 2.9 4.4 (56.5)
Affiliates 55 30.4 (34.4) (31.5)
------------
Total 3,739 1.2 % 0.8% 3.1%
===================================================================
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
Expenses
Total operating expenses for 1997 were $189.1 million, reflecting a $6.1 million
decrease from 1996. Major components of this decrease include a $16.5 million
reduction in purchased power from affiliates, partially offset by increases of
$6.4 million in fuel and $3.7 million in other operation expenses. The decline
in purchased power from affiliates was due primarily to an increase in internal
generation and to an adjustment in affiliated billings. The increase in fuel
expense was primarily attributable to higher generation and to fuel mix. The
increase in other operation expense primarily resulted from a one-time charge
for work force reductions of $1.9 million, and expenses associated with the
implementation of a new computer software system.
In 1996, total operating expenses were $195.2 million, reflecting an $7.7
million increase over 1995. This increase includes $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.
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:
1997 1996 1995
--------------------------
Total energy supply
(millions of kilowatt-hours) 3,964 3,917 3,908
Sources of energy supply
(percent) --
Coal 34 28 24
Oil - - -
Gas 5 3 6
Purchased Power 61 69 70
Average cost of fuel per net
Kilowatt-hour generated
(cents) --
Coal 1.91 1.76 1.77
Oil 4.73 5.79 5.14
Gas 4.62 8.89 3.76
Average cost of purchased
power per net kilowatt-
hour (cents) 1.86 2.25 2.02
Total average cost of
energy supply (cents) 2.02 2.30 2.07
---------------------------------------------------------------
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 1997 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.
Savannah Electric currently operates as a vertically integrated utility
providing electricity to customers within the traditional service area of
southeastern Georgia. Prices for electricity provided by the Company to retail
customers are set by the Georgia Public Service Commission(GPSC).
Future earnings in the near term will depend upon growth in energy sales,
which is subject to a number of factors. These factors include 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.
The electric utility industry in the United States is currently undergoing
a period of dramatic change as a result of regulatory and competitive factors.
Among the primary agents of change has been the Energy Policy Act of 1992
(Energy Act). 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 the Company's
transmission network in order to sell electricity to other utilities. This
enhances the incentive for IPPs to build cogeneration plants for industrial and
commercial customers and sell energy generation to other utilities. Also,
electricity sales for resale rates are being driven down by wholesale
transmission access and numerous potential new energy suppliers, including power
marketers and brokers.
Although the Energy Act does not permit retail customer access, it was a
major catalyst for the current restructuring and consolidation taking place
within the utility industry. Numerous federal and state initiatives are in
varying stages to promote wholesale and retail competition. Among other things,
these initiatives allow customers to choose their electricity provider. As these
initiatives materialize, the structure of the utility industry could radically
change. Some states have approved initiatives that result in a separation of the
ownership and/or operation of generating facilities from the ownership and/or
operation of transmission and distribution facilities. While various
restructuring and competition initiatives have been or are being discussed in
Georgia, none have been enacted to date. Enactment would require numerous issues
to be resolved, including significant ones relating to transmission pricing and
recovery of any stranded investments. The inability of the Company to recover
its investments, including the regulatory assets described in Note 1 to the
financial statements, could have a material adverse effect on the financial
condition of the Company. The Company is attempting to minimize or reduce its
cost exposure.
Continuing to be a low-cost producer could provide significant
opportunities to increase market share and profitability in markets that evolve
with changing regulation. Conversely, 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 heavily dependent upon complex computer systems for all
phases of its operations. The year 2000 issue--common to most
corporations--concerns the inability of certain software and databases to
properly recognize date sensitive information related to the year 2000 and
thereafter. This problem could result in a material disruption to the Company's
operation, if not corrected. The Company has assessed and developed a detailed
strategy to prevent or at least minimize problems related to the year 2000
issue. In 1997, resources were committed and implementation began to modify the
affected information systems. Total costs related to the project for Southern
Company are estimated to be approximately $85 million, of which $8 million was
spent in 1997. The Company's total costs related to the project are estimated to
be approximately $1 million, of which $0.2 million was spent in 1997. Most all
remaining costs will be expensed in 1998. Implementation is currently on
schedule. The degree of success of this project cannot be determined at this
time. However, management believes that the final outcome will not have a
material adverse affect on the operations of the Company.
Compliance costs related to current and future environmental laws and
regulations could affect earnings if such costs are not fully recovered. The
Clean Air Act and other important environmental items are discussed later under
"Environmental Matters."
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
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.
The Company is subject to the provisions of Financial Accounting Standards
Board 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 that are not specifically recoverable, and
determine if any other assets have been impaired. See Note 1 to the financial
statements under "Regulatory Assets and Liabilities" for additional information.
Exposure to Market Risks
Due to cost-based rate regulation, the Company has limited exposure to market
volatility in interest rates and prices of electricity. To mitigate residual
risks relative to movements in electricity prices, the Company enters into fixed
price contracts for the purchase and sale of electricity through the wholesale
electricity market. Realized gains and losses are recognized in the income
statement as incurred. At December 31, 1997, exposure from these activities was
not material to the Company's financial statements.
New Accounting Standards
The FASB has issued Statement No. 130, Reporting Comprehensive Income, which
will be effective in 1998. This statement establishes standards for reporting
and display of comprehensive income and its components in a full set of general
purpose financial statements. The objective of the statement is to report a
measure of all changes in equity of an enterprise that result from transactions
and other economic events of the period other than transactions with owners
(comprehensive income). Comprehensive income is the total of net income and all
other non-owner changes in equity. The Company will adopt this statement in
1998.
The FASB has issued Statement No. 131, Disclosure about Segments of an
Enterprise and Related Information. This statement requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. Generally, financial information is required to
be reported on the basis that it is used by the chief operating decision maker
in deciding how to allocate resources and in assessing performance. This
statement also establishes standards for related disclosures about products and
services, geographic areas, and major customers. The Company adopted the new
rules in 1997, which do not have a significant impact on the Company's financial
reporting. However, this conclusion may change as industry restructuring and
competitive factors influence the Company's operations.
FINANCIAL CONDITION
Overview
The principal change in the Company's financial condition in 1997 was the
addition of $19 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.
Capital Structure
As of December 31, 1997, the Company's capital structure consisted of 49.7
percent common equity, 9.9 percent preferred stock and 40.4 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 April 1997, the Company issued $14 million of variable interest rate
pollution control obligations maturing in 2037. Maturities and retirements of
long-term debt were $14 million in 1997, $29 million in 1996 and $29 million in
1995.
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.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
The composite interest rates and dividend rate for the years 1995 through
1997 as of year-end were as follows:
1997 1996 1995
-------------------------------
Composite interest rates
on long-term debt 6.9% 7.0% 7.5%
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 AA-
Preferred Stock "a2" A
- -----------------------------------------------------------------
Capital Requirements for Construction
The Company's projected construction expenditures for the next three years total
$66 million ($22 million in 1998, $23 million in 1999, and $21 million in 2000).
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 $23
million will be needed by the end of 2000 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--significantly affected
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.
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.
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
necessary to meet Phase II limits. Current compliance strategy for Phase II and
ozone non-attainment could require total estimated construction expenditures for
Southern Company of approximately $70 million, of which $55 million remains to
be spent. Phase II compliance is not expected to have a material impact on
Savannah Electric.
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.
In July 1997, the Environmental Protection Agency (EPA) revised the
national ambient air quality standards for ozone and particulate matter. This
revision makes the standards significantly more stringent. Also, in October
1997, the EPA issued a proposed regional ozone rule that could require
substantial further reductions in NOx emissions from fossil-fueled generating
facilities. Implementation of the standards and the proposed rule could result
in significant additional compliance costs and capital expenditures that cannot
be determined at this time.
The EPA and state environmental regulatory agencies are reviewing and
evaluating various other matters including: emission control strategies for
ozone non-attainment areas; additional controls for hazardous air pollutant
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
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, 1997, the Company had $6.1 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,
2000, 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, $20 million remained unused at December 31, 1997.
It is anticipated that the funds required for construction and other
purposes, including compliance with environmental regulation, will be derived
from sources similar to those used in the past. These sources were primarily
from the issuances of first mortgage bonds, other long-term debt and preferred
stock, in addition to pollution control revenue bonds issued for the Company's
benefit by public authorities, to meet long-term external financing
requirements. The Company plans to issue unsecured debt in 1998. 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.
Cautionary Statement Regarding Forward-Looking Information
Savannah Electric and Power Company's 1997 Annual Report contains
forward-looking statements in addition to historical information. The Company
cautions that there are various important factors that could cause actual
results to differ materially from those indicated in the forward-looking
statements; accordingly, there can be no assurance that such indicated results
will be realized. These factors include legislative and regulatory initiatives
regarding deregulation and restructuring of the electric utility industry; the
extent and timing of the entry of additional competition in the Company's
markets; potential business strategies--including acquisitions or dispositions
of assets or internal restructuring--that may be pursued by the company; state
and federal rate regulation; changes in or application of environmental and
other laws and regulations to which the Company is subject; political, legal and
economic conditions and developments; financial market conditions and the
results of financing efforts; changes in commodity prices and interest rates;
weather and other natural phenomena; and other factors discussed in the
reports--including Form 10-K--filed from time to time by the Company with the
Securities and Exchange Commission.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
For the Years Ended December 31, 1997, 1996, and 1995
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
================================================================================================================================
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues (Note 1):
Revenues $ 224,225 $ 230,944 $ 218,529
Revenues from affiliates 2,052 3,130 7,200
- --------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 226,277 234,074 225,729
- --------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 35,563 29,139 25,386
Purchased power from non-affiliates 2,347 2,350 2,139
Purchased power from affiliates 42,107 58,591 53,252
Other 47,735 44,007 45,214
Maintenance 13,236 14,140 13,668
Depreciation and amortization (Note 1) 20,152 19,113 18,949
Taxes other than income taxes 11,494 11,675 11,465
Federal and state income taxes (Notes 1 and 6) 16,419 16,175 17,378
- -------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 189,053 195,190 187,451
- --------------------------------------------------------------------------------------------------------------------------------
Operating Income 37,224 38,884 38,278
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) 239 317 163
Interest income 279 201 164
Other, net (781) (1,756) (618)
Income taxes applicable to other income (Notes 1 and 6) 1,233 1,034 651
- --------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 38,194 38,680 38,638
- --------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 10,907 11,563 12,380
Allowance for debt funds used during construction (Note 1) (164) (333) (450)
Interest on notes payable 172 229 135
Amortization of debt discount, premium, and expense, net 739 579 448
Other interest charges 369 378 406
- --------------------------------------------------------------------------------------------------------------------------------
Net interest charges 12,023 12,416 12,919
- --------------------------------------------------------------------------------------------------------------------------------
Net Income 26,171 26,264 25,719
Dividends on Preferred Stock 2,324 2,324 2,324
- --------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 23,847 $ 23,940 $ 23,395
================================================================================================================================
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1997, 1996, and 1995
- --------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 109,373 $ 105,033 $ 99,216
Net income after dividends on preferred stock 23,847 23,940 23,395
Cash dividends on common stock (20,500) (19,600) (17,600)
Preferred stock transactions, net - - 22
- --------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (Note 10) $ 112,720 $ 109,373 $ 105,033
================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1997 and 1996
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C>
================================================================================================================================
Assets 1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Utility Plant:
Plant in service, at original cost (Notes 1, 4, 5, and 8) $ 760,694 $ 739,461
Less accumulated provision for depreciation 321,509 304,760
- --------------------------------------------------------------------------------------------------------------------------------
439,185 434,701
Construction work in progress 7,709 13,463
- --------------------------------------------------------------------------------------------------------------------------------
Total 446,894 448,164
- --------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments 1,783 1,785
- --------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 6,144 5,214
Special deposits 94 1,395
Receivables-
Customer accounts receivable 21,148 18,827
Other accounts and notes receivable 720 769
Affiliated companies 1,128 844
Accumulated provision for uncollectible accounts (354) (632)
Fuel cost under recovery 7,694 7,289
Fossil fuel stock, at average cost 5,205 5,892
Materials and supplies, at average cost (Note 1) 6,980 8,013
Prepayments 5,922 4,789
- --------------------------------------------------------------------------------------------------------------------------------
Total 54,681 52,400
- --------------------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes (Note 6) 17,267 19,167
Debt issue expense, being amortized 2,255 2,605
Premium on reacquired debt, being amortized 7,121 7,142
Prepaid pension costs (Note 2) 3,424 1,347
Cash surrender value of life insurance for deferred compensation plans 12,130 10,288
Miscellaneous 1,797 2,002
- --------------------------------------------------------------------------------------------------------------------------------
Total 43,994 42,551
- --------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 547,352 $ 544,900
================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS
At December 31, 1997 and 1996
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C>
================================================================================================================================
CAPITALIZATION AND LIABILITIES 1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See accompanying statements):
Common stock equity $ 175,631 $ 172,284
Preferred stock 35,000 35,000
Long-term debt 142,846 164,406
- --------------------------------------------------------------------------------------------------------------------------------
Total 353,477 371,690
- --------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year (Note 9) 21,764 637
Notes payable - 5,000
Accounts payable-
Affiliated companies 6,025 6,374
Other 7,862 10,201
Customer deposits 5,541 5,232
Taxes accrued-
Federal and state income 534 -
Other 2,791 1,015
Interest accrued 4,963 5,275
Vacation pay accrued 1,893 2,038
Miscellaneous 9,031 7,470
- --------------------------------------------------------------------------------------------------------------------------------
Total 60,404 43,242
- --------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 6) 80,697 76,654
Accumulated deferred investment tax credits (Note 6) 12,607 13,271
Deferred credits related to income taxes (Note 6) 21,469 22,792
Deferred compensation plans 9,272 8,602
Postretirement benefits (Note 2) 6,011 5,472
Miscellaneous 3,415 3,177
- --------------------------------------------------------------------------------------------------------------------------------
Total 133,471 129,968
- --------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 4, 5, and 8)
Total Capitalization and Liabilities $ 547,352 $ 544,900
================================================================================================================================
The accompanying notes are an integral part of these statements.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CAPITALIZATION
At December 31, 1997 and 1996
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C> <C>
======================================================================================================================
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Common Stock Equity (Note 10):
Common stock, par value $5 per share --
Authorized -- 16,000,000 shares
Outstanding -- 10,844,635 shares in
1997 and 1996 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688
Retained earnings 112,720 109,373
- ----------------------------------------------------------------------------------------------------------------------
Total common stock equity 175,631 172,284 49.7% 46.4%
- ----------------------------------------------------------------------------------------------------------------------
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 9.9 9.4
- ----------------------------------------------------------------------------------------------------------------------
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 20,000
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 110,000 110,000
Pollution control obligations (Note 8) 17,955 17,955
Other long-term debt (Note 8) 36,655 37,088
- ----------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $11,380,000) 164,610 165,043
Less amount due within one year (Note 9) 21,764 637
- ----------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 142,846 164,406 40.4 44.2
- ----------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 353,477 $ 371,690 100.0% 100.0%
======================================================================================================================
The accompanying notes are an integral part of these statements
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
=======================================================================================================================
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Activities:
Net income $ 26,171 $ 26,264 $ 25,719
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 21,083 20,246 20,535
Deferred income taxes and investment tax credits 3,841 7,482 4,359
Allowance for equity funds used during construction (239) (317) (163)
Other, net (2,577) (641) 35
Changes in certain current assets and liabilities --
Receivables, net (3,239) (641) (6,241)
Inventories 1,720 410 2,318
Payables (1,608) 4,242 2,213
Taxes accrued 2,310 (569) 451
Other 2,357 (4,038) (2,299)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 49,819 52,438 46,927
- -----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (18,846) (28,950) (26,503)
Other (1,418) (3,173) 3,198
- -----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (20,264) (32,123) (23,305)
- -----------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
First mortgage bonds - 20,000 15,000
Pollution control obligations 13,870 - -
Other long-term debt - 17,000 33,500
Retirements:
First mortgage bonds - (29,400) (29,250)
Pollution control bonds (13,870) - -
Other long-term debt (433) (397) (23,003)
Notes payable, net (5,000) 1,000 1,500
Payment of preferred stock dividends (2,324) (2,324) (2,324)
Payment of common stock dividends (20,500) (19,600) (17,600)
Miscellaneous (368) (2,257) (2,131)
- -----------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (28,625) (15,978) (24,308)
- -----------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 930 4,337 (686)
Cash and Cash Equivalents at Beginning of Year 5,214 877 1,563
- -----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 6,144 $ 5,214 $ 877
=======================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for-
Interest (net of amount capitalized) $11,619 $12,960 $12,775
Income taxes 11,150 10,926 11,316
- -----------------------------------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
</TABLE>
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Savannah Electric and Power Company 1997 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), Southern Company Energy Solutions, 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) and/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. Worldwide, Southern Energy develops
and manages electricity and other energy related projects, including domestic
energy trading and marketing. Southern Nuclear provides services to Southern
Company's nuclear power plants. Southern Company Energy Solutions 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 the 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 expected to be credited
to customers through the ratemaking process. Regulatory assets and (liabilities)
reflected in the Balance Sheets at December 31 relate to:
1997 1996
---------------------------
(in thousands)
Deferred income taxes $ 17,267 $ 19,167
Premium on reacquired debt 7,121 7,142
Deferred income tax credits (21,469) (22,792)
Storm damage reserves (1,500) (900)
- ---------------------------------------------------------------
Total $ 1,419 $ 2,617
===============================================================
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 net regulatory assets and liabilities that are not
specifically recoverable through regulated rates. In addition, the Company would
be required to determine if any impairment to other assets exists, 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,
the energy component of purchased power costs, and certain other 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 1997, uncollectible
accounts continued to average less than 1 percent of revenues.
14
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
Depreciation and Amortization
Depreciation of the original cost of depreciable utility plant in service is
provided primarily by using composite straight-line rates, which approximated
2.9 percent in 1997, 2.8 percent in 1996 and 2.9 percent in 1995. 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 9.24 percent in 1997, 8.69 percent in 1996 and 7.42 percent in 1995.
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)
1997 $158 $161
1996 155 161
- --------------------------------------------------------------
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 costs 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.
Work Force Reduction Program
In 1997, the Company incurred a $1.9 million one-time charge to other operation
expense for costs related to the implementation of a work force reduction
program.
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed, non-contributory pension plan that
covers substantially all regular employees. Effective January 1, 1998, Savannah
Electric and Power Company's pension plan was merged with the Southern Company
plan. 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
15
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
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. The Company funds trusts 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 equity and fixed--income
securities.
FASB Statement No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions, requires that medical care and life insurance benefits for
retired employees be accounted for on an accrual basis using a specified
actuarial method, "benefit/years-of-service." The cost of postretirement
benefits is reflected in rates on a current basis.
Funded Status and Cost of Benefits
The funded status of the plans and reconciliation to amounts reflected in the
Balance Sheets at December 31 are as follows:
Pension
---------------------------
1997 1996
---------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $40,240 $39,270
Non-vested benefits 3,350 2,939
- ----------------------------------------------------------------
Accumulated benefit obligation 43,590 42,209
Additional amounts related to
projected salary increases 8,130 7,705
- ----------------------------------------------------------------
Projected benefit obligation 51,720 49,914
Less:
Fair value of plan assets 51,630 42,430
Unrecognized net loss 1,275 7,147
Unrecognized prior service cost 1,884 1,240
Unrecognized net transition
obligation 355 444
- ----------------------------------------------------------------
Prepaid asset
recognized in the Balance Sheets $ 3,424 $ 1,347
================================================================
Postretirement Benefits
-------------------------
1997 1996
--------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $12,509 $12,442
Employees eligible to retire 1,923 1,614
Other employees 6,467 6,464
- -------------------------------------------------------------
Accumulated benefit obligation 20,899 20,520
Less:
Fair value of plan assets 3,859 2,473
Unrecognized net loss 3,737 4,835
Unrecognized transition
Obligation 7,407 7,900
- -------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $ 5,896 $ 5,312
=============================================================
The weighted average rates assumed in the actuarial calculations for the
pension plan were:
1997 1996 1995
--------------------------
Discount 7.50% 7.25% 7.25%
Annual salary increase 5.00 4.75 4.75
Long-term return on plan assets 8.50 8.75 8.75
---------------------------------------------------------------
An additional assumption used in measuring the accumulated postretirement
benefit obligation was a weighted average medical care cost trend rate of 8.8
percent for 1997, decreasing gradually to 5.5 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, 1997, by $1.4 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
-----------------------------
1997 1996 1995
-----------------------------
(in thousands)
Benefits earned during the year $1,393 $1,352 $1,188
Interest cost on projected
benefit obligation 3,556 3,389 3,395
Actual (return) loss
on plan assets (7,762) (4,852) (5,791)
Net amortization and deferral 4,735 2,439 4,125
- ------------------------------------------------------------------
Net pension cost $1,922 $2,328 $2,917
==================================================================
16
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
Of the above net pension costs, $1.7 million in 1997, $2.0 million in 1996
and $2.4 million in 1995 were recorded in operating expenses, and the remainder
was recorded in construction and other accounts.
Postretirement Benefits
-----------------------------
1997 1996 1995
-----------------------------
(in thousands)
Benefits earned during the year $ 319 $ 360 $ 504
Interest cost on accumulated
benefit obligation 1,499 1,422 1,638
Amortization of transition
Obligation 494 494 723
Actual (return) loss
on plan assets (346) (145) (34)
Net amortization and deferral 260 187 93
- ------------------------------------------------------------------
Net postretirement costs $2,226 $2,318 $2,924
==================================================================
Of the above net postretirement costs, $1.9 million in 1997, $2.0 million
in 1996 and $2.4 million in 1995 were recorded in operating expenses. The
remainder for each year was charged to construction and other accounts.
The Company has a supplemental retirement plan for certain executive
employees. The plan is unfunded and payable from the general funds of the
Company. The Company has purchased life insurance on participating executives,
and plans to use these policies to satisfy this obligation. Benefit costs
associated with this plan were $0.4 million for 1997, 1996 and 1995.
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.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently estimated
to total $22 million in 1998, $23 million in 1999 and $21 million in 2000. 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 1997, unused credit arrangements with five banks totaled $20.5
million and expire at various times during 1998.
The Company's revolving credit arrangements of $20 million, of which $20
million remained unused as of December 31, 1997, expire December 31, 2000. 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
17
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
property and a second lien for a $14 million bank note is secured by a portion
of the Plant McIntosh property.
Operating Leases
The Company has rental agreements with various terms and expiration dates.
Rental expenses totaled $1.2 million for 1997, $1.6 million for 1996, and $1.3
million for 1995. 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, 1997, estimated future minimum lease payments for
non-cancelable operating leases were as follows:
Amounts
--------------------
(in thousands)
1998 $1,077
1999 483
2000 483
2001 483
2002 and thereafter 7,935
- -------------------------------------------------------------
6. INCOME TAXES
At December 31, 1997, tax-related regulatory assets and liabilities were $17
million and $21 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 income tax provisions are as follows:
1997 1996 1995
--------------------------------
(in thousands)
Total provision for income taxes
Federal --
Currently payable $9,743 $ 7,084 $10,427
Deferred -- current year 4,522 8,216 5,290
-- reversal of
prior years (1,381) (1,989) (1,661)
- -----------------------------------------------------------------
12,884 13,311 14,056
- -----------------------------------------------------------------
State --
Currently payable 1,603 575 1,941
Deferred -- current year 569 1,216 695
-- reversal of
prior years 130 39 35
- -----------------------------------------------------------------
2,302 1,830 2,671
- -----------------------------------------------------------------
Total 15,186 15,141 16,727
Less income taxes credited
to other income (1,233) (1,034) (651)
- -----------------------------------------------------------------
Total income taxes
charged to operations $16,419 $16,175 $17,378
=================================================================
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:
1997 1996
--------------------
Deferred tax liabilities: (in thousands)
Accelerated depreciation $72,663 $67,104
Property basis differences 8,034 9,550
Other 5,850 5,703
- ----------------------------------------------------------------
Total 86,547 82,357
- ----------------------------------------------------------------
Deferred tax assets:
Pension and other benefits 5,338 5,183
Other 2,957 2,186
- ----------------------------------------------------------------
Total 8,295 7,369
- ----------------------------------------------------------------
Net deferred tax liabilities 78,252 74,988
Portions included in current assets, net 2,445 1,666
- ----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $80,697 $76,654
================================================================
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 1997, 1996 and 1995. At December 31, 1997, all
investment tax credits available to reduce federal income taxes payable had been
utilized.
18
<PAGE>
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
A reconciliation of the federal statutory income tax rate to the effective
income tax rate is as follows:
1997 1996 1995
-----------------------------
Federal statutory tax rate 35% 35% 35%
State income tax, net of
federal income tax benefit 4 3 4
Other (2) (1) -
--------------------------------------------------------------
Effective income tax rate 37% 37% 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 April 1997, the Company issued $14 million in variable rate pollution
control obligations (bank note) maturing in 2037. The Company redeemed all of
its remaining outstanding 6 3/4% Pollution Control Bonds due 2022.
The sinking fund requirements of first mortgage bonds were satisfied by
certifying property additions in 1997 and by cash redemption in 1996. The 1998
requirement will be satisfied by cash redemption. Sinking fund requirements
and/or maturities through 2002 applicable to long-term debt are as follows:
$21.8 million in 1998; $0.6 million in 1999; $0.6 million in 2000; $10.5 million
in 2001; and $0.4 million in 2002.
Details of pollution control obligations and other long-term debt at
December 31 are as follows:
1997 1996
------------------------
(in thousands)
Collateralized obligations incurred
in connection with the sale by public
authorities of tax-exempt pollution
control revenue bonds --
Variable rate (4.20% at 1/1/98)
due 2016 $ 4,085 $ 4,085
6 3/4% due 2022 - 13,870
Variable rate bank note
(5.05% at 1/1/98) due 2037 13,870 -
Capital lease obligations --
Coal unloading facility
Variable rate (6.25% at 1/1/98) 5,867 6,667
Transportation fleet 788 421
Notes Payable --
6.88% due 2001 10,000 10,000
Variable rate (6.06% at 1/1/98)
due 1998 15,000 15,000
Variable rate (6.06% at 1/1/98)
due 1998 5,000 5,000
- ----------------------------------------------------------------
Total $54,610 $55,043
================================================================
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 1997 Annual Report
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:
1997 1996
-------------------------
(in thousands)
Bond sinking fund requirement $ 1,100 $1,100
Less:
Portion to be satisfied by
certifying property additions - 1,100
- --------------------------------------------------------------------
Cash sinking fund requirement 1,100 -
Other long-term debt maturities (Note 8) 20,664 637
- --------------------------------------------------------------------
Total $21,764 $ 637
====================================================================
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, 1997,
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 INFORMATIO
(Unaudited)
Summarized quarterly financial data for 1997 and 1996 are as follows (in
thousands):
Net Income After
Operating Operating Dividends on
Quarter Ended Revenues Income Preferred Stock
- -----------------------------------------------------------------
March 1997 $42,945 $ 6,117 $ 2,545
June 1997 52,516 8,626 5,136
September 1997 79,900 17,531 14,276
December 1997 50,916 4,950 1,890
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
- -----------------------------------------------------------------
The Company's business is influenced by seasonal weather conditions and a
seasonal rate structure, among other factors.
20
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
==============================================================================================================================
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $226,277 $234,074 $225,729
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $23,847 $23,940 $23,395
Cash Dividends on Common Stock (in thousands) $20,500 $19,600 $17,600
Return on Average Common Equity (percent) 13.71 14.08 14.20
Total Assets (in thousands) $547,352 $544,900 $524,662
Gross Property Additions (in thousands) $18,846 $28,950 $26,503
- ------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $175,631 $172,284 $167,812
Preferred stock 35,000 35,000 35,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 142,846 164,406 153,679
- ------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $353,477 $371,690 $356,491
==============================================================================================================================
Capitalization Ratios (percent):
Common stock equity 49.7 46.4 47.1
Preferred and preference stock 9.9 9.4 9.8
Long-term debt 40.4 44.2 43.1
- ------------------------------------------------------------------------------------------------------------------------------
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
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - - -
- ------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's AA- A+ A+
Preferred Stock -
Moody's ""a2" ""a2" ""a2"
Standard and Poor's A A A
- ------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 109,092 106,657 104,624
Commercial 14,233 13,877 13,339
Industrial 64 65 65
Other 1,129 1,097 1,048
- ------------------------------------------------------------------------------------------------------------------------------
Total 124,518 121,696 119,076
==============================================================================================================================
Employees (year-end) 535 571 584
Note:
NR = Not Rated
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
==================================================================================================================
1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $211,785 $218,442 $197,761
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $22,110 $21,459 $20,512
Cash Dividends on Common Stock (in thousands) $16,300 $21,000 $22,000
Return on Average Common Equity (percent) 14.00 13.73 12.89
Total Assets (in thousands) $518,305 $527,187 $352,175
Gross Property Additions (in thousands) $30,078 $72,858 $30,132
- ------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $161,581 $154,269 $158,376
Preferred stock 35,000 35,000 20,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 155,922 151,338 110,767
- ------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $352,503 $340,607 $289,143
==================================================================================================================
Capitalization Ratios (percent):
Common stock equity 45.8 45.3 54.8
Preferred and preference stock 9.9 10.3 6.9
Long-term debt 44.3 44.4 38.3
- ------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 45,000 30,000
Retired 5,065 - 38,750
Preferred and Preference Stock (in thousands):
Issued - 35,000 -
Retired - 20,000 -
- ------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's ""a2" ""a2" ""a2"
Standard and Poor's A- A- A-
- ------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 103,199 101,032 99,164
Commercial 13,015 12,702 12,416
Industrial 65 69 73
Other 1,007 957 940
- ------------------------------------------------------------------------------------------------------------------
Total 117,286 114,760 112,593
==================================================================================================================
Employees (year-end) 616 665 688
Note:
NR = Not Rated
</TABLE>
22A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
=======================================================================================================================
1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $189,646 $205,635 $201,799
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,030 $26,254 $25,535
Cash Dividends on Common Stock (in thousands) $22,000 $22,000 $20,000
Return on Average Common Equity (percent) 15.13 16.85 16.88
Total Assets (in thousands) $352,505 $340,050 $349,887
Gross Property Additions (in thousands) $19,478 $20,086 $18,831
- -----------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $159,841 $157,811 $153,737
Preferred stock 20,000 20,000 22,300
Preferred and preference stock subject
to mandatory redemption - - 2,884
Long-term debt 119,280 112,377 117,522
- -----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $299,121 $290,188 $296,443
=======================================================================================================================
Capitalization Ratios (percent):
Common stock equity 53.4 54.4 51.9
Preferred and preference stock 6.7 6.9 8.5
Long-term debt 39.9 38.7 39.6
- -----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=======================================================================================================================
First Mortgage Bonds (in thousands):
Issued 30,000 - 30,000
Retired 22,500 9,135 18,275
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - 5,374 6,591
- -----------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's ""a2" ""a2" ""a2"
Standard and Poor's A- A- A-
- -----------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 97,446 96,452 94,766
Commercial 12,153 12,045 12,298
Industrial 73 76 69
Other 897 867 856
- -----------------------------------------------------------------------------------------------------------------------
Total 110,569 109,440 107,989
=======================================================================================================================
Employees (year-end) 672 648 643
Note:
NR = Not Rated
</TABLE>
22B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C>
====================================================================================================
1988 1987
- ----------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $182,440 $174,707
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,272 $22,086
Cash Dividends on Common Stock (in thousands) $11,700 $10,741
Return on Average Common Equity (percent) 17.03 17.03
Total Assets (in thousands) $347,051 $340,109
Gross Property Additions (in thousands) $23,254 $32,276
- ----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $148,883 $136,207
Preferred stock 22,300 2,300
Preferred and preference stock subject
to mandatory redemption 3,075 9,665
Long-term debt 98,285 129,329
- ----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $272,543 $277,501
====================================================================================================
Capitalization Ratios (percent):
Common stock equity 54.6 49.1
Preferred and preference stock 9.3 4.3
Long-term debt 36.1 46.6
- ----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
====================================================================================================
First Mortgage Bonds (in thousands):
Issued - -
Retired 12,231 10,239
Preferred and Preference Stock (in thousands):
Issued 20,000 -
Retired 553 588
- ----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A3
Standard and Poor's A- A-
Preferred Stock -
Moody's ""a2" NR
Standard and Poor's BBB+ BBB+
- ----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 93,486 92,094
Commercial 12,135 11,812
Industrial 69 67
Other 828 762
- ----------------------------------------------------------------------------------------------------
Total 106,518 104,735
====================================================================================================
Employees (year-end) 655 655
Note:
NR = Not Rated
</TABLE>
22C
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
==============================================================================================================================
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $96,587 $101,607 $95,208
Commercial 78,949 80,494 75,117
Industrial 35,301 37,077 36,040
Other 8,621 8,804 8,386
- ------------------------------------------------------------------------------------------------------------------------------
Total retail 219,458 227,982 214,751
Sales for resale - non-affiliates 3,467 1,998 1,851
Sales for resale - affiliates 2,052 3,130 7,200
- ------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 224,977 233,110 223,802
Other revenues 1,300 964 1,927
- ------------------------------------------------------------------------------------------------------------------------------
Total $226,277 $234,074 $225,729
==============================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,428,337 1,456,651 1,402,148
Commercial 1,156,078 1,141,218 1,099,570
Industrial 881,261 838,753 887,141
Other 124,490 126,215 126,057
- ------------------------------------------------------------------------------------------------------------------------------
Total retail 3,590,166 3,562,837 3,514,916
Sales for resale - non-affiliates 94,280 91,610 87,747
Sales for resale - affiliates 54,509 41,808 63,731
- ------------------------------------------------------------------------------------------------------------------------------
Total 3,738,955 3,696,255 3,666,394
==============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.76 6.98 6.79
Commercial 6.83 7.05 6.83
Industrial 4.01 4.42 4.06
Total retail 6.11 6.40 6.11
Sale for resale 3.71 3.84 5.98
Total sales 6.02 6.31 6.10
Residential Average Annual Kilowatt-Hour Use Per Customer 13,231 13,771 13,478
Residential Average Annual Revenue Per Customer $894.73 $960.58 $915.15
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 788 788
Maximum Peak-Hour Demand (megawatts):
Winter 625 666 630
Summer 802 811 811
Annual Load Factor (percent) 54.3 53.1 52.9
Plant Availability - Fossil-Steam (percent) 93.7 77.6 83.3
- ------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 34.4 27.7 23.9
Oil and gas 5.2 3.1 5.9
Purchased power -
From non-affiliates 1.4 2.1 2.3
From affiliates 59.0 67.1 67.9
- ------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,495 11,888 12,146
Cost of fuel per million BTU (cents) 197.19 203.36 179.25
Average cost of fuel per net kilowatt-hour generated (cents) 2.27 2.42 2.18
==============================================================================================================================
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
==============================================================================================================================
1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $89,195 $93,883 $82,670
Commercial 71,227 71,320 64,756
Industrial 32,906 36,180 33,171
Other 7,946 7,810 7,095
- ------------------------------------------------------------------------------------------------------------------------------
Total retail 201,274 209,193 187,692
Sales for resale - non-affiliates 4,786 6,021 7,821
Sales for resale - affiliates 6,446 2,433 1,505
- ------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 212,506 217,647 197,018
Other revenues (721) 795 743
- ------------------------------------------------------------------------------------------------------------------------------
Total $211,785 $218,442 $197,761
==============================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,298,122 1,329,362 1,216,993
Commercial 1,045,831 1,015,935 953,840
Industrial 799,543 854,324 861,121
Other 119,593 115,969 110,270
- ------------------------------------------------------------------------------------------------------------------------------
Total retail 3,263,089 3,315,590 3,142,224
Sales for resale - non-affiliates 201,716 247,203 367,066
Sales for resale - affiliates 93,001 75,384 37,632
- ------------------------------------------------------------------------------------------------------------------------------
Total 3,557,806 3,638,177 3,546,922
==============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.87 7.06 6.79
Commercial 6.81 7.02 6.79
Industrial 4.12 4.23 3.85
Total retail 6.17 6.31 5.97
Sale for resale 3.81 2.62 2.30
Total sales 5.97 5.98 5.55
Residential Average Annual Kilowatt-Hour Use Per Customer 12,686 13,269 12,369
Residential Average Annual Revenue Per Customer $871.68 $937.07 $840.23
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 628 628
Maximum Peak-Hour Demand (megawatts):
Winter 617 524 533
Summer 729 747 695
Annual Load Factor (percent) 54.3 54.1 55.0
Plant Availability - Fossil-Steam (percent) 81.0 90.2 89.1
- ------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 18.6 21.5 12.0
Oil and gas 1.8 4.5 2.9
Purchased power -
From non-affiliates 1.5 0.9 1.0
From affiliates 78.1 73.1 84.1
- -----------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,786 11,515 12,547
Cost of fuel per million BTU (cents) 205.03 215.97 201.50
Average cost of fuel per net kilowatt-hour generated (cents) 2.42 2.49 2.53
==============================================================================================================================
</TABLE>
24A
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C> <C>
==================================================================================================================
1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $80,541 $87,063 $85,113
Commercial 61,827 65,462 65,474
Industrial 30,492 30,237 28,304
Other 6,561 6,782 6,892
- ------------------------------------------------------------------------------------------------------------------
Total retail 179,421 189,544 185,783
Sales for resale - non-affiliates 7,813 9,482 8,814
Sales for resale - affiliates 1,430 5,566 6,025
- ------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 188,664 204,592 200,622
Other revenues 982 1,043 1,177
- ------------------------------------------------------------------------------------------------------------------
Total $189,646 $205,635 $201,799
==================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,195,005 1,183,486 1,109,976
Commercial 925,757 892,931 839,756
Industrial 825,862 644,704 561,063
Other 106,683 103,539 101,164
- ------------------------------------------------------------------------------------------------------------------
Total retail 3,053,307 2,824,660 2,611,959
Sales for resale - non-affiliates 372,085 441,090 437,943
Sales for resale - affiliates 32,581 294,042 303,142
- ------------------------------------------------------------------------------------------------------------------
Total 3,457,973 3,559,792 3,353,044
==================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.74 7.36 7.67
Commercial 6.68 7.33 7.80
Industrial 3.69 4.69 5.04
Total retail 5.88 6.71 7.11
Sale for resale 2.28 2.05 2.00
Total sales 5.46 5.75 5.98
Residential Average Annual Kilowatt-Hour Use Per Customer 12,323 12,339 11,781
Residential Average Annual Revenue Per Customer $830.54 $907.68 $903.37
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 526 428 548
Summer 691 648 613
Annual Load Factor (percent) 54.1 53.2 52.4
Plant Availability - Fossil-Steam (percent) 76.9 89.6 94.7
- ------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 16.3 52.8 63.5
Oil and gas 1.7 3.4 1.4
Purchased power -
From non-affiliates 0.4 0.8 1.5
From affiliates 81.6 43.0 33.6
- ------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,917 10,741 10,611
Cost of fuel per million BTU (cents) 199.42 188.18 180.48
Average cost of fuel per net kilowatt-hour generated (cents) 2.18 2.02 1.92
==================================================================================================================
</TABLE>
24B
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
<S> <C> <C>
==============================================================================================================
1988 1987
- --------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $81,098 $79,785
Commercial 62,640 60,285
Industrial 26,865 27,422
Other 6,557 6,315
- --------------------------------------------------------------------------------------------------------------
Total retail 177,160 173,807
Sales for resale - non-affiliates 808 -
Sales for resale - affiliates 3,567 -
- --------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 181,535 173,807
Other revenues 905 900
- --------------------------------------------------------------------------------------------------------------
Total $182,440 $174,707
==============================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,067,411 1,044,554
Commercial 806,687 775,643
Industrial 533,604 557,281
Other 97,072 94,949
- --------------------------------------------------------------------------------------------------------------
Total retail 2,504,774 2,472,427
Sales for resale - non-affiliates 24,168 -
Sales for resale - affiliates 156,106 -
- --------------------------------------------------------------------------------------------------------------
Total 2,685,048 2,472,427
==============================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.60 7.64
Commercial 7.77 7.77
Industrial 5.03 4.92
Total retail 7.07 7.03
Sale for resale 2.43 -
Total sales 6.76 7.03
Residential Average Annual Kilowatt-Hour Use Per Customer 11,489 11,481
Residential Average Annual Revenue Per Customer $872.87 $876.95
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 471 414
Summer 574 562
Annual Load Factor (percent) 53.4 53.6
Plant Availability - Fossil-Steam (percent) 77.1 81.2
- --------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 79.8 74.3
Oil and gas 5.4 4.4
Purchased power -
From non-affiliates 5.9 19.9
From affiliates 8.9 1.4
- --------------------------------------------------------------------------------------------------------------
Total 100.0 100.0
==============================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,683 10,551
Cost of fuel per million BTU (cents) 178.31 176.10
Average cost of fuel per net kilowatt-hour generated (cents) 1.90 1.86
==============================================================================================================
</TABLE>
24C
<PAGE>
