SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 33-46795
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OLD DOMINION ELECTRIC COOPERATIVE
(Exact name of Registrant as specified in its charter)
VIRGINIA 23-7048405
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4201 Dominion Boulevard, Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip code)
(804) 747-0592
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the Registrant. NONE
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practicable date. The Registrant is a membership
corporation and has no authorized or outstanding equity securities.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
1998 ANNUAL REPORT ON FORM 10-K
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Item Page
Number Number
PART I
<S> <C>
1. Business ................................................................................... 1
2. Properties ................................................................................. 13
3. Legal Proceedings .......................................................................... 13
4. Submission of Matters to a Vote of Security Holders ........................................ 13
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters ...................... 13
6. Selected Financial Data .................................................................... 14
7. Management's Discussion and Analysis of Financial Condition and Results of Operations....... 15
8. Financial Statements and Supplementary Data ................................................ 27
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........ 48
PART III
10. Directors and Executive Officers of the Registrant ........................................ 48
11. Executive Compensation .................................................................... 52
12. Security Ownership of Certain Beneficial Owners and Management ............................ 54
13. Certain Relationships and Related Transactions ............................................ 54
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .......................... 55
Signatures ................................................................................ 64
Exhibit Index ............................................................................. 67
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
OLD DOMINION ELECTRIC COOPERATIVE
Old Dominion Electric Cooperative ("Old Dominion"), incorporated under the laws
of the Commonwealth of Virginia in 1948, is a not-for-profit wholesale power
supply cooperative engaged in the business of providing wholesale electric
service to its 12 member distribution cooperatives ("Members"). The Members, in
turn, are engaged in the retail sale of power to their consumers located in 70
counties throughout Virginia, Delaware, Maryland, and parts of West Virginia. As
of December 31, 1998, Old Dominion and its Members served more than 410,000
retail electric consumers (meters) within Old Dominion's and the Members'
service territory, representing a total population of approximately 1.0 million
people. Old Dominion's principal executive offices are located in the Innsbrook
Corporate Center, at 4201 Dominion Boulevard, Glen Allen, Virginia 23060
(telephone 804-747-0592).
Old Dominion is owned entirely by the Members, which are the purchasers of
the power sold by Old Dominion. The Members, in turn, are local consumer-owned
distribution cooperatives providing electric service on a retail basis. The
membership of each distribution cooperative consists of residential, commercial,
and industrial consumers within an exclusive certificated service territory
granted by the respective state's public utility commission. See "The
Members--Territorial Integrity." The Members purchase substantially all of their
power from Old Dominion pursuant to long-term wholesale power contracts with Old
Dominion ("Wholesale Power Contracts"). See "Wholesale Power Contracts." Old
Dominion has no legal interest in, or obligation with respect to, any of the
assets, liabilities, equity, revenues or margins of such Members, other than its
rights under such contracts to receive payment for power supplied.
The service territory of Old Dominion and its Members includes primarily
suburban, rural, and recreational areas. The service territory does not have any
significant concentration of power purchases by any single employer or industry,
and predominantly reflects a residential load both in terms of power sales and
number of consumers.
Old Dominion was organized for the purpose of securing adequate sources of
power for the Members at the lowest possible cost. Prior to December 1983, Old
Dominion acted solely as a central negotiating agent for power purchased by the
Members. In December 1983, Old Dominion purchased from Virginia Electric and
Power Company ("Virginia Power") an 11.6% undivided ownership interest in the
North Anna Power Station ("North Anna"), a two-unit 1,790 megawatt ("MW") (net
capacity rating) nuclear power facility located in Louisa County, Virginia,
approximately 60 miles northwest of Richmond, Virginia. With the North Anna
purchase, Old Dominion became an operating utility. See "System Assets--Power
Supply--North Anna."
Old Dominion also holds a 50% undivided ownership interest in the Clover
Power Station ("Clover"), a two-unit 882 MW (net capacity rating) coal-fired
electric generating facility near Clover, Virginia, approximately 100 miles
southwest of Richmond, Virginia. Clover Units 1 and 2 began commercial operation
on October 7, 1995, and March 28, 1996, respectively. See "System Assets--Power
Supply--Clover."
Old Dominion also purchases power under agreements with Virginia Power,
Delmarva Power & Light Company ("Delmarva Power"), Public Service Electric & Gas
Company ("PSE&G"), American Electric Power-Virginia ("American Electric Power"),
and Allegheny Power System ("Allegheny Power"). See "System Assets--Purchased
Power."
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As a not-for-profit electric cooperative, Old Dominion is currently exempt
from federal income taxation under Section 501(c)(12) of the Internal Revenue
Code of 1986, as amended. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--General" for further discussion of Old
Dominion's tax status.
Old Dominion is not a party to any collective bargaining agreement. Old
Dominion had 60 employees as of March 1, 1999, and believes that its relations
with its employees are good.
WHOLESALE POWER CONTRACTS
Old Dominion has entered into a long-term Wholesale Power Contract with each
of its Members. Each such contract provides that Old Dominion shall sell and
deliver to the Member, and the Member shall purchase and receive from Old
Dominion, all power that the Member requires for the operation of the Member's
system to the extent that Old Dominion has the power and facilities available.
The obligations of certain Members are subject to their right to purchase power
allocated to them from the Southeastern Power Administration ("SEPA"). See "The
Members--Contracts with SEPA." Each Wholesale Power Contract provides that if a
Member is required by law to purchase electric power from cogeneration
facilities or other qualifying facilities ("QFs"), Old Dominion may, at its
option, purchase such power from the Member at a rate not to exceed Old
Dominion's avoided cost. See "The Members--Power Purchases under PURPA."
Revenues from the following Members equaled or exceeded 10% of Old
Dominion's total revenues in 1998:
Percentage of
Old Dominion's
Members Revenues Total Revenues
- ------- -------- --------------
(in millions)
Northern Virginia Electric Cooperative.............. $95.4 26.3%
Rappahannock Electric Cooperative................... 77.0 21.2
Delaware Electric Cooperative....................... 39.0 10.7
For a discussion of concerns raised by Northern Virginia Electric
Cooperative regarding the all-requirements nature of the Wholesale Power
Contracts, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Other Matters."
REGULATION
GENERAL
Old Dominion is subject to regulation by the Federal Energy Regulatory
Commission ("FERC"). Certain of Old Dominion's operations are also subject to
regulation by the Virginia Department of Environmental Quality ("DEQ"), the
Department of Energy ("DOE"), the Nuclear Regulatory Commission ("NRC"), and
other federal, state, and local authorities. Compliance with future laws or
regulations may increase Old Dominion's operating and capital costs by
requiring, among other things, changes in the design and operation of its
generation facilities.
The rates and charges made, demanded, or received by Old Dominion for the
transmission and wholesale sale of power in interstate commerce, are regulated
by FERC. Old Dominion's rates and charges for power furnished to its Members are
established by Old Dominion pursuant to a comprehensive rate formula filed with
FERC. The formula is intended to permit collection of revenues which, together
with revenues from all other sources, are equal to all costs and expenses
recorded on Old Dominion's books, plus an additional 20% of total interest
charges, plus additional equity contributions as approved by the board of
directors. The formula provides for periodic adjustments of rates to recover
actual prudently incurred costs, whether they increase or decrease, without
further application to and acceptance by FERC. FERC may also review Old
Dominion's rates upon its own initiative or upon complaints and may order a
<PAGE>
reduction of any rates determined to be unjust, unreasonable, or otherwise
unlawful and may order a refund for amounts collected during such proceedings in
excess of the just, reasonable, and lawful rates.
In addition to its jurisdiction over rates, FERC regulates the issuance of
securities and assumption of liabilities by Old Dominion, as well as the
acquisition of securities of other utilities and the disposition of property
other than generating facilities. Under FERC regulations, Old Dominion is also
prohibited from selling, leasing, or otherwise disposing of the whole of its
facilities (other than generating facilities), or any part of such facilities
having a value in excess of $50,000, without FERC approval. Mergers,
consolidations, and the acquisition of the securities of any other public
utility by Old Dominion are also subject to FERC approval.
Since Old Dominion is regulated by FERC, the Virginia State Corporation
Commission ("VSCC") does not have jurisdiction over Old Dominion's rates and
services. The VSCC does, however, have oversight over the siting of Old
Dominion's utility facilities.
On behalf of its Members, Old Dominion has developed and published a
competitive bidding program for use in purchasing electric capacity and energy
from other power suppliers. This program represents a system-wide election to
use a centrally administered competitive bidding process for all Members to
satisfy the requirements of the Public Utility Regulatory Policies Act ("PURPA")
and the rules of the respective state commissions having regulatory authority
over the Members.
ENVIRONMENTAL
Old Dominion is currently subject to regulation by the Environmental
Protection Agency ("EPA") and other federal, state, and local authorities with
respect to the emission, discharge, or release of certain materials into the
environment. As with all electric utilities, the operation of Old Dominion's
generating units could be affected by any environmental regulations promulgated
in the future. Capital expenditures and increased operating costs required to
comply with any such future regulations could be significant. Expenditures
necessary to ensure compliance with environmental standards or deadlines will
continue to be reflected in Old Dominion's capital and operating costs.
Old Dominion is subject to certain requirements of the Clean Air Act
("CAA"). The CAA requires utilities owning fossil fuel fired power stations to,
among other things, limit emissions of sulfur dioxide or obtain allowances for
such emissions, or both, and limit emissions of nitrogen oxides. Clover is
designed and licensed to operate at full capacity below the permitted sulfur
dioxide emissions levels and utilizes equipment which operates at a level which
is at or below the limitations for nitrogen oxide emissions.
On September 24, 1998, the EPA issued a Final Rule addressing regional
transport of ground-level ozone through reductions in nitrogen oxides or NOx
(commonly known as the NOx State Implementation Plan ("SIP") call). The NOx SIP
call affects 22 states, including Virginia, and the District of Columbia and
requires these states to develop a plan by September 24, 1999, that will reduce
NOx emissions in the respective states. The EPA does not mandate which NOx
sources are required to reduce their emissions of NOx but leaves it up to the
individual states to determine the best approach. It is almost certain that
fossil fuel electric generation facilities greater than 250 mmBtu/hr. will be
required to reduce their NOx emissions. The NOx SIP call requires emissions
reduction to be implemented by May 1, 2003.
Virginia, along with other states, is suing the EPA over the NOx SIP call.
However, this lawsuit is not expected to be resolved prior to the September 24,
1999 deadline. Virginia will likely use its current permit program to enforce
reductions in NOx emissions which could affect Clover, either by lowering the
permitted levels of NOx emissions or by establishing a cap and trade program to
meet the statewide levels of emissions.
Old Dominion is also subject to permit limitations for surface water
discharges and for the operation of a combustion waste landfill. Permits
required by the Clean Water Act, the Resource Conservation and Recovery Act, and
state laws have been issued. These permits are subject to reissuance and
continued review.
<PAGE>
Old Dominion's direct capital expenditures for environmental control
facilities at Clover and North Anna, excluding capitalized interest, were
approximately $0.1 million and $0.8 million, respectively, in 1998. Based on
information provided by Virginia Power, Old Dominion's portion of direct capital
expenditures for environmental control facilities planned for Clover and North
Anna in the next three years is estimated to be approximately $24.9 million and
$0.4 million, respectively. These expenditures are included in Old Dominion's
estimated capital expenditures for the years 1999 through 2001. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." No amount has been included in the
above figures for NOx related expenditures, which could be significant.
The scientific community, regulatory agencies, and the electric utility
industry are examining the issues of global warming and acidic deposition, and
the possible health effects of electric and magnetic fields. While no definitive
scientific conclusions have been reached regarding these issues, it is possible
that new regulations pertaining to these matters could further increase the
capital and operating costs of electric utilities.
Old Dominion and its Members have entered into an agreement with the DOE to
participate in the voluntary Climate Challenge Program under the United States
Climate Challenge Action Plan. This voluntary program tracks reductions in
carbon dioxide emissions from efficiency programs. A report was submitted to the
DOE on June 17, 1998, summarizing various carbon dioxide reductions as a result
of efficiency programs and distribution system upgrades.
NUCLEAR
North Anna is subject to regulation by the NRC. Operating licenses issued by
the NRC are subject to revocation, suspension, or modification, and the
operation of a nuclear unit may be suspended if the NRC determines that the
public interest, health, or safety so requires. From time to time, new NRC
regulations require changes in the design, operation, and maintenance of
existing nuclear reactors. Virginia Power has advised Old Dominion that it
intends to work with industry groups on license renewal programs, and apply for
renewal of the current 40-year licenses for Units 1 and 2, which expire in 2018
and 2020, respectively. See Notes 1 and 11 to the Consolidated Financial
Statements for a discussion of other laws and regulations affecting Old Dominion
as a result of its ownership interest in North Anna.
Under the Nuclear Waste Policy Act ("NWPA"), the DOE is required to provide
for the permanent disposal of spent nuclear fuel produced by North Anna. In
accordance with the provisions of the NWPA, contracts executed with the DOE
required the DOE to provide for the permanent disposal of spent nuclear fuel
produced by North Anna; however, since the DOE did not begin accepting spent
fuel in 1998 as specified in its contracts, Virginia Power is providing on-site
spent nuclear fuel storage at the North Anna facility. These facilities are
expected to be adequate until the DOE begins accepting the spent fuel.
In connection with an investigation of certain spent fuel storage and
disposal issues begun in July 1995, the VSCC directed its staff to file a report
setting forth its findings, recommendations, and proposed policy statements
regarding spent nuclear fuel disposal. In February 1996, the VSCC staff issued
its report suggesting a definitive policy be delayed until: (1) a ruling is
forthcoming on pending litigation which seeks to impose on the federal
government the obligation to begin acceptance of spent nuclear fuel no later
than January 31, 1998, (2) the outcome of proposed legislation, which would
amend the NWPA to require the development of a centralized interim storage
facility, has been determined, and (3) a vision of the electric utility industry
restructuring efforts has been more fully conceptualized.
In January 1997, Virginia Power joined other electric utilities in filing a
petition in the United States Court of Appeals for the District of Columbia,
seeking to enforce the obligations of the DOE to begin accepting the utilities'
spent nuclear fuel for disposal by January 31, 1998, the date imposed by the
NWPA. In November 1997, the Court issued an Order finding that the DOE's
obligation to begin accepting spent nuclear fuel by the deadline is
unconditional, and that the DOE may not excuse its delay on the grounds that it
has not prepared a permanent repository or interim storage facility. In February
1998, the utilities requested the court to require the DOE to begin accepting
the spent nuclear fuel, prohibit the DOE from using the Nuclear Waste Fund to
pay damages, and relieve utilities of their obligations to pay Nuclear Waste
Fund fees until the DOE complies with its obligations. However, in May 1998, the
<PAGE>
court refused to require the DOE to accept the spent nuclear fuel and found that
the utilities should pursue remedies under their contracts with the DOE. In
November 1998, the United States Supreme Court denied the DOE's request for
review of the decisions of the District of Columbia Court of Appeals.
COMPETITION
The electric utility industry is becoming increasingly competitive as a
result of deregulation, competing energy suppliers, new technology, and other
factors. The Energy Policy Act of 1992 amended the Federal Power Act and the
Public Utilities Holding Company Act to allow for increased competition among
wholesale electricity suppliers and increased access to transmission services by
such suppliers. A number of other significant factors have affected the
operations of electric utilities, including the availability and cost of fuel
for the generation of electric energy; the use of alternative fuel sources for
space and water heating and household appliances; fluctuating rates of load
growth; compliance with environmental and other governmental regulations;
licensing and other delays affecting the construction, operation, and cost of
new and existing facilities; and the effects of conservation, energy management,
and other governmental regulations on the use of electric energy. All these
factors present an increasing challenge to companies in the electric utility
industry, including Old Dominion and its Members, to reduce costs, increase
efficiency and innovation, and improve management of resources.
In an effort to achieve an orderly transition of the industry to a
competitive wholesale power market, FERC issued its final rules (Orders 888 and
889) in April 1996 that provided for comparable transmission service for all
users of the transmission system. Such rules are intended to promote wholesale
competition through open access, non-discriminatory transmission service and
will become the catalyst for moving the industry into a competitive marketplace.
On March 4, 1997, FERC issued Orders 888-A and 889-A reaffirming its basic
determinations and clarifying certain terms in Orders 888 and 889. On November
25, 1997, FERC issued Orders 888-B and 889-B which basically denied all requests
for a rehearing regarding Orders 888-A and 889-A.
The 1999 Session of the Virginia General Assembly passed legislation, which
provides for retail choice to begin January 1, 2002, and be completed by January
1, 2004. The legislation allows the VSCC to accelerate competition, upon finding
that effective competition exists, or delay it by one year. Previously regulated
electric utilities unbundle into the component parts of generation,
transmission, and distribution. Power transmission and distribution will remain
under government regulation; however, power generation will be deregulated and
utilities will compete for customers in the open market. Cooperatives will
continue to be the default supplier for their members.
The deregulation plan calls for capping rates, excluding the recovery of
fuel costs, from January 1, 2002 to July 1, 2007, during which time competition
for power generation will be introduced into the state's electric utility
industry. The rates will be capped at the levels in effect on July 1, 1999;
however, a utility can petition the VSCC for an increase in rates prior to
January 1, 2001. Utilities may use revenues collected during the transition
period to recover the costs of nuclear power plants and other assets that could
lose their value in a competitive market. The member cooperatives in Virginia
will be required to comply with these regulations.
On December 3, 1997, the Maryland Public Service Commission ("Maryland
Commission") issued Order No. 73834 to commence a three-year phase-in of retail
competition beginning April 1999. The order identified many issues that must be
resolved in order to accomplish a comprehensive and orderly restructuring of the
retail electric industry in Maryland. However, after public comment, the
Maryland Commission delayed the implementation date until July 1, 2000.
In addition to the Maryland Commission Order, a package of legislation has
been introduced in the Maryland General Assembly. One approach leaves major
decisions to the Maryland Commission. A second approach provides for expanded
environmental and consumer protection programs. A majority of stakeholders are
supporting the first approach. In addition, a third measure to address the tax
consequences of restructuring has been introduced. It is uncertain at this point
whether any action will be taken before the Maryland General Assembly adjourns.
These bills call for retail choice to be phased in beginning July 2000 with all
investor owned utility customers having retail choice by July 2002. The bills
provide that a separate schedule be developed that would offer choice to all
cooperative
<PAGE>
customers by July 2003. Similar to legislation proposed in Virginia and by the
Maryland Commission, power generation will be deregulated and utilities will
compete for customers in the open market. The implementation of retail choice is
predicated on comprehensive tax restructuring legislation that has not yet been
introduced to the legislature.
Under the proposed Maryland legislation, the local distribution cooperatives
will retain the billing and metering functions and will continue to be the
default supplier in their assigned territories. Any proposed collection of
stranded costs by member cooperatives will be included in a filing before the
Maryland Commission along with an unbundled rate study for their approval.
The 1999 Session of the Delaware General Assembly is likely to pass
restructuring legislation, which sets the timeframe for bringing retail choice
to all customers within 24 months after the legislation is signed by the
governor. Key features of the legislation include a rate freeze for cooperative
customers and mandatory rate reductions for customers of the state's
investor-owned utility. Also, metering and billing functions will be retained by
the cooperative but will be competitive for others. The cooperative will
continue to be the default supplier for its members and any stranded costs of
the cooperative will be recovered based on an evaluation by the Delaware Public
Service Commission. As in Virginia and Maryland, this legislation proposes that
power generation be deregulated and utilities compete for customers in the open
market.
With the electric utility industry moving toward a competitive environment,
it has become necessary for Old Dominion and its Members to develop innovative
approaches to serving traditional markets. In a competitive environment,
generating utilities are no longer guaranteed the recovery of prudently incurred
costs. Generating utilities with costs that exceed market prices could suffer
significant losses. Additionally, the loss of customers could also have a
significant impact on a utility's results of operations. In the case of Old
Dominion and its Members, the loss of a significant portion of load could cause
a reduction in revenues and cash flows. The resulting decrease in Member
revenues could also cause Old Dominion to lose its tax-exempt status. Management
is currently working with the Members through the Strategic Plan Initiative to
improve Old Dominion's and the Members' competitive position. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Strategic Plan Initiative." Old Dominion cannot predict the ultimate
effect competition will have on results of operations and future cash flows.
<PAGE>
CONSERVATION AND LOAD MANAGEMENT
ENERGY SERVICES
Old Dominion seeks to encourage and promote, through its Members and their
consumers, effective energy services, energy efficiency, and load reduction
programs. Energy services programs offer commercial and industrial customers
solutions to their challenging energy needs. Energy efficiency programs
encourage the construction of efficient and affordable housing, encourage the
purchase of energy efficient water heaters and heating, ventilation, and air
conditioning equipment, and provide affordable financing for energy efficiency
improvements. Member cooperatives also support energy conservation efforts by
providing home and business energy audits and educational materials. Load
reduction efforts provide Old Dominion the capability of reducing peak load by
over 200 MW.
SEASONAL VARIATIONS
Old Dominion's system is geographically divided into two separate and
distinctive power supply area systems --the mainland Virginia area system and
the Delmarva Peninsula system. The two systems have similar customer usage
characteristics and distribution of sales by consumer classification.
Historically, the mainland Virginia area system's peak electric demand is in the
winter months, while the Delmarva Peninsula system's peak electric demand is in
the summer months. While there is little variance between its summer and winter
peak electric demands, Old Dominion, representing both areas, typically has
experienced a slightly higher peak demand for power in the winter months. This
peak is due to the winter heating load, which reflects the large residential
component of Old Dominion's total load. The mainland Virginia area represented
76.6% of Old Dominion's 1998 peak demand.
THE MEMBERS
TERRITORIAL INTEGRITY
The service territory of Old Dominion's Members ranges from the suburban
Washington D.C. area in northern Virginia to the Atlantic shore of Delaware, the
Appalachian Mountains, and the North Carolina border. Pursuant to statutes in
Virginia and Delaware and an order of the Maryland Commission, each of the
Members operating in those states has been granted an exclusive service
territory, certificated by its respective state commission. Generally, a
Member's certificated service territory cannot be changed, nor can customers in
such territories change electric suppliers, unless the applicable state
commission determines that the service provided by the certificated Member is
inadequate. For a discussion of recent legislative and regulatory actions, which
may eliminate these certificated service territories, see "Competition."
Subject to statutory limitations, a municipality operating an electric
system can expand into a Member's service territory by annexing a portion
thereof. The small number of municipally-owned electric systems in close
proximity to the Members' service territories and the statutory limitations on
annexation limit the threat to Old Dominion's Members. Moreover, Old Dominion's
Members would be entitled to compensation in the event any of their territory
was annexed. Virginia currently has a statutory moratorium on non-consensual
annexation by a city, which is scheduled to expire on July 1, 2000.
<PAGE>
CONTRACTS WITH SEPA
In addition to power purchased from Old Dominion under their Wholesale Power
Contracts, certain Members receive a power allocation from SEPA. The total SEPA
allocation to such Members is 84 MW plus associated energy, representing
approximately 5.1% of total Member peak demand and approximately 3.5% of total
Member energy requirements in 1998. Such Members' contracts with SEPA were
renewed in 1996. Each Member that purchases power from SEPA receives its
allotment directly from SEPA and pays SEPA directly for such power.
An additional 8 MW of SEPA power is currently allocated to preference
customers in the Virginia Power service area. Because of a recent FERC approved
purchase power agreement, the Blue Ridge Power Agency ("BRPA") returned its SEPA
allocation to be redistributed to other customers. All of the BRPA allocation is
currently distributed to the Virginia Power area preference customers.
Additionally, upon resolution of outstanding transmission related issues between
SEPA and Carolina Power and Light, a reduction in the allocation to certain
members will occur.
POWER PURCHASES UNDER PURPA
In addition to purchases from Old Dominion and SEPA, the Members are also
required to purchase power from QFs under PURPA. Purchases of power generated by
QFs constituted less than 1.0% of Old Dominion's energy requirements in 1998. In
accordance with FERC regulations, purchases from QFs must be made at avoided
costs. Although the Members are required to purchase power from QFs, such power
is currently being resold to Old Dominion at a rate not to exceed Old Dominion's
avoided costs. The costs are blended into Old Dominion's overall rates charged
to all Members. Under the Wholesale Power Contracts, Old Dominion may, at its
option, but is not obligated to, purchase this power. No determination has been
made as to whether the current arrangement will apply to power that Members may
be required to purchase from QFs in the future.
COOPERATIVE STRUCTURE
Old Dominion is a membership corporation, and the Members are not
subsidiaries of Old Dominion. The Members operate their independent systems on a
not-for-profit basis. Accumulated margins remaining after payment of expenses
and provision for depreciation constitute patronage capital of the Members'
consumers. Refunds of accumulated patronage capital to the individual consumers
are made from time to time on a patronage basis subject to Member policies and
in conformity with limitations contained in the Members' Rural Utilities
Services mortgages.
SYSTEM ASSETS
POWER SUPPLY
NORTH ANNA. Old Dominion has an 11.6% undivided ownership interest in North
Anna, including nuclear fuel and common facilities at the power station, and a
portion of spare parts inventory and other support facilities. This undivided
ownership interest was acquired in 1983, more than five years after the
commencement of commercial operation of Unit 1 (June 1978) and more than three
years after the commencement of commercial operation of Unit 2 (December 1980).
Old Dominion is responsible for 11.6% of all post-acquisition date additions and
operating costs associated with North Anna, as well as a pro-rata portion of
Virginia Power's administrative and general expenses directly attributable to
North Anna, and must provide its own financing for these items. In addition, Old
Dominion separately provides for its portion of the decommissioning costs of
North Anna; see Note 1 to the Consolidated Financial Statements.
Like other nuclear plants, North Anna is subject to unanticipated or
extended outages for repairs, replacements, or modifications of equipment or to
comply with regulatory requirements. Such outages may involve significant
expenditures not previously budgeted, including replacement energy costs. Stress
corrosion cracking has occurred in steam generators of a certain design,
including those on North Anna Units 1 and 2. Accordingly, the steam generators
on Unit 1 were replaced in 1993 and the steam generators on Unit 2 were replaced
in 1995.
<PAGE>
During 1998, North Anna provided approximately 20.3% of the energy
requirements of Old Dominion. For statistics regarding North Anna's performance
for the three year period ended December 31, 1998, see "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Operating
Expenses."
CLOVER. Units 1 and 2 of Clover, a joint project between Old Dominion and
Virginia Power in which each owns a 50% undivided ownership interest, began
commercial operations on October 7, 1995, and March 28, 1996, respectively. Old
Dominion has entered into a sale and lease-back of its undivided ownership
interest in certain pollution control assets at Clover and separate leases and
lease-backs of its undivided ownership interest in each unit and related common
facilities, including the pollution control assets. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." Old Dominion is responsible for 50% of all post-construction
additions and operating costs associated with Clover, as well as a pro-rata
portion of Virginia Power's administrative and general expenses for Clover, and
must provide its own financing for these items.
During 1998, Clover provided approximately 37.0% of the energy requirements
of Old Dominion. In accordance with the Clover Operating Agreement, Old Dominion
is required to sell any excess of its share of the energy from Clover to
Virginia Power. For statistics regarding Clover's performance for the year ended
December 31, 1998, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Operating Expenses."
PURCHASED POWER
In 1998, Old Dominion purchased approximately 42.7% of its total energy
requirements pursuant to agreements with five suppliers: Virginia Power, PSE&G,
Delmarva Power, American Electric Power, and Allegheny Power. These purchases
are system purchases that do not depend on the performance of any single unit in
a seller's system. Generally, under these arrangements, Old Dominion's purchases
expand and contract to fill the incremental requirements of the Members over
that provided by Old Dominion's owned generation, thereby minimizing any risk of
excess generating resources.
VIRGINIA POWER. Under the terms of the Interconnection and Operating
Agreement with Virginia Power ("I&O Agreement"), Old Dominion agreed to purchase
from Virginia Power reserve power for North Anna and its entire monthly
requirements for supplemental power to meet the needs of its Virginia Members
(except A&N Electric Cooperative) not met from Old Dominion's portion of North
Anna and Clover generation. Old Dominion's obligations to purchase supplemental
power may be reduced by any amount with nine years notice or through the
construction of jointly owned facilities or by 4% each year if notice is given
three months prior to year-end. Amendment No. 1 to the I&O Agreement
("Amendment") allows Old Dominion to accumulate its 4% per year reduction for
the life of the I&O Agreement. Under the terms of the Amendment, for the first
four years Old Dominion will purchase the 4% per year reduction from Virginia
Power. The Amendment has an effective date coincident with commercial operation
of Clover Unit 2 and expires in eight years.
On March 11, 1998, FERC approved an amended and restated I&O Agreement
retroactively effective to January 1, 1998. Under the terms of the amended and
restated I&O Agreement with Virginia Power, Old Dominion will continue, through
2001, to purchase from Virginia Power, at declining rates, all its monthly
requirements for supplemental demand to meet the needs of its Virginia Members
(except A&N Electric Cooperative) not met from Old Dominion's portion of North
Anna and Clover generation. Old Dominion will purchase its reserve capacity
requirements for North Anna and Clover from Virginia Power for the term of the
amended and restated I&O Agreement, which expires on the earlier of the date on
which all facilities at North Anna have been retired or decommissioned and the
date upon which Old Dominion's interest in North Anna is reduced to zero. Old
Dominion also has the right to displace up to two-thirds of its supplemental
energy requirements in 1998 and all of its energy requirements in 1999. By 2002,
purchases from Virginia Power are to be at market prices. The amended and
restated I&O Agreement extends through 2005 unless either party exercises
specific notice provisions in the agreement prior to that time. If such notice
provisions are exercised, purchases may be reduced as early as 2002.
<PAGE>
Additionally, under the terms of the amended and restated I&O Agreement,
services to Old Dominion have been unbundled and terms for the provision of
transmission and ancillary services have been removed. These services will be
provided pursuant to Virginia Power's open access transmission tariff. Specific
terms are provided in a Service Agreement for Network Integration Transmission
Service and a Network Operating Agreement between Virginia Power and Old
Dominion, both of which also were approved by FERC on March 11, 1998,
retroactively effective to January 1, 1998.
Virginia Power supplied approximately 19.5% of Old Dominion's total energy
requirements in 1998.
PSE&G. Old Dominion has an agreement with PSE&G ("PSE&G Agreement") to
purchase 150 MW of capacity, consisting of 75 MW intermediate and/or peaking
capacity and 75 MW base load capacity, and associated energy, through 2005. The
PSE&G Agreement contains fixed capacity charges for the base, intermediate, and
peaking capacity to be provided under the agreement. However, either party can
(within certain limits) apply to FERC to recover changes in certain costs of
providing services. In the event of a change in rate, the party adversely
affected may terminate the PSE&G Agreement, with one-year notice. Old Dominion
may purchase the energy associated with the PSE&G capacity from PSE&G or other
power suppliers. If purchased from PSE&G, the energy cost is based on PSE&G's
incremental cost above its native load, taking into account the Pennsylvania-New
Jersey-Maryland Interconnection LLC ("PJM") economy energy transactions. If
purchased from other power suppliers, Old Dominion would pay the negotiated
energy rate. Old Dominion is presently purchasing the energy requirements from
the short-term markets.
In October 1997, Old Dominion filed with FERC a section 206 complaint
against PSE&G. Old Dominion believes its contract with PSE&G should be modified
to conform with PJM restructuring. On May 19, 1998, FERC ruled in Old Dominion's
favor, ordering PSE&G to remove any transmission costs from its rates to Old
Dominion. Under the PJM structure, Old Dominion pays for the transmission of
PSE&G power through the zonal rate it currently pays Delmarva Power. PSE&G has
complied with FERC through its compliance order, but has requested a rehearing
and is awaiting a final FERC order.
Approximately 13.9% of Old Dominion's total energy requirements in 1998 was
supplied under the PSE&G Agreement.
DELMARVA POWER. Old Dominion has a partial requirements agreement with
Delmarva Power which obligates Delmarva Power to provide the balance of Old
Dominion's power requirements for A&N Electric Cooperative, Choptank Electric
Cooperative, and Delaware Electric Cooperative in excess of 150 MW purchased
from PSE&G or, within certain limits, any other capacity secured by Old Dominion
with proper notice to Delmarva Power. For the first five years of the agreement,
charges for service are based on a rate formula. The agreement continues through
2004 with automatic extensions for one-year periods unless either party gives
five years notice, or Old Dominion exercises it option to reduce its load by up
to 30% with two years notice or more than 30% with five years notice.
In August 1996, Old Dominion exercised its option under the partial
requirements agreement with Delmarva Power to reduce its power purchases by 30%
beginning in 1998. The notice was given based on a review of the wholesale power
bids that Old Dominion received in response to its request for proposals for
power purchase contracts. A joint venture contract with Conectiv and
Pennsylvania Power & Light ("PPL") to cover power purchases beginning September
1998 and extending through December 2001 was approved by FERC. In addition to
its notice to reduce power purchases by 30%, Old Dominion has given Delmarva
Power the required five years notice to terminate all purchases under the
partial requirements agreement by 2001.
Delmarva Power supplied approximately 6.9% of Old Dominion's total energy
requirements in 1998.
AMERICAN ELECTRIC POWER. Old Dominion purchases power from American Electric
Power pursuant to two agreements, each of which expires in 2001. Combined, the
agreements allow for purchases of up to 100 MW a year. A third agreement, which
became effective April 1, 1996, provides for purchases of an additional eight
MW. Charges for power are assessed according to American Electric Power's
wholesale rate tariff filed with FERC.
<PAGE>
American Electric Power supplied approximately 1.5% of Old Dominion's total
energy requirements in 1998.
ALLEGHENY POWER. Old Dominion entered into a five-year fixed price contract
with Allegheny Power beginning January 1997. Transmission service is supplied
under Allegheny Power's open access transmission tariff.
Allegheny Power supplied approximately 0.9% of Old Dominion's total energy
requirements in 1998.
TRANSMISSION
VIRGINIA POWER SYSTEM. Under the operating agreements for both North Anna
and Clover, Virginia Power has agreed to make available to Old Dominion its
transmission and distribution systems, as needed, to transmit Old Dominion's
power from North Anna and Clover, as well as power purchased from other
suppliers, to the Members' delivery points. Under the amended and restated I&O
Agreement, all transmission services will be supplied under Virginia Power's
open access transmission tariff. Terms for transmission and related services are
described in the Service Agreement for Network Integration Transmission Service
and the Network Operating Agreement between Old Dominion and Virginia Power.
In December 1996, FERC approved Virginia Power's rate schedule, entitled
Clover Transmission Interconnection Facilities Charges. The rate schedule sets
forth the terms and conditions under which Old Dominion will compensate Virginia
Power for 50% of the cost of the transmission facilities required to
interconnect Clover to the Virginia Power electric system. Those facilities
include two new 230 kV transmission lines, a new 500 kV transmission line
between Clover and the Carson substation, and related facilities.
DELMARVA POWER SYSTEM. The power purchase contract with Delmarva Power
provides that Delmarva Power will transmit power to delivery points in the
service territories of A&N Electric Cooperative, Choptank Electric Cooperative,
and Delaware Electric Cooperative. Delmarva Power and Old Dominion currently
have a tariff and a settlement agreement filed with FERC concerning power
transmission. The power delivered under the contract with PSE&G is transmitted
by Delmarva Power under the terms of a transmission service agreement dated
October 31, 1994.
PJM. In January 1998, Old Dominion submitted an application to become a
member of PJM. In September 1998, Old Dominion applied to PJM for network
transmission service to serve its PSE&G and Conective/PPL contracts.
On December 4, 1998, Old Dominion filed a complaint with FERC against PJM
believing that modification to the PJM open access tariff and Market Structure
Agreement was warranted. Old Dominion also requested an investigation into the
cause for the increase in energy market prices within PJM since locational
marginal pricing was implemented. FERC has not yet acted on the complaint.
OTHER TRANSMISSION SYSTEMS. Allegheny Power, in its power sales contract
with Old Dominion, has agreed to transmit power pursuant to Allegheny Power's
open access transmission tariff. In addition, the power purchase contracts
between American Electric Power and Old Dominion require American Electric Power
to transmit power to three delivery points in the service territory of Southside
Electric Cooperative.
FUEL SUPPLY
NUCLEAR FUEL. Under the Purchase, Construction and Ownership Agreement, the
amended and restated I&O Agreement, and the Nuclear Fuel Agreement between Old
Dominion and Virginia Power, each dated as of December 28, 1982, amended and
restated October 17, 1983, Virginia Power has the authority and responsibility
to procure nuclear fuel for North Anna. Virginia Power employs both spot
purchases and long-term contracts to satisfy nuclear fuel requirements. The
nuclear fuel supply and related services are expected to be adequate to satisfy
current and future nuclear generation requirements and Virginia Power
continually evaluates worldwide market conditions in order to ensure a range of
supply options at reasonable prices. Virginia Power reports that current
agreements, inventories, and
<PAGE>
market conditions will support current and planned fuel cycles throughout the
remainder of the 1990s and into the early 2000s. Beyond that period, additional
fuel will be purchased as required to ensure optimum cost and inventory levels.
COAL SUPPLY. Under the Clover Operating Agreement between Old Dominion and
Virginia Power, dated as of May 31, 1990, Virginia Power has the authority and
responsibility to procure coal for Clover. As with nuclear fuel, Virginia Power
employs both spot purchases and long-term contracts to support its needs for
coal. Virginia Power anticipates that sufficient coal supplies at reasonable
prices will be available for the remainder of the 1990s.
<PAGE>
ITEM 2. PROPERTIES
Information with respect to Old Dominion's properties is set forth under the
caption "System Assets" included in Item 1 and is incorporated herein by
reference.
ITEM 3. LEGAL PROCEEDINGS
Other than certain legal proceedings arising out of the ordinary course of
business, which management believes will not have a material adverse impact on
the results of operations or financial condition of Old Dominion, there is no
other litigation pending or threatened against Old Dominion. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Other
Matters" for a discussion of certain disputes relating to Old Dominion's
interest in Seacoast, Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Not Applicable
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected historical information relating to the
financial condition and results of operations of Old Dominion over the past five
years:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
------- --------- -------- --------- ------------
(in thousands, except ratios)
Statement of Operations Data:
Operating Revenues.......................... $364,221 $358,505 $366,909 $357,322 $336,541
Operating Margin............................ 66,195 72,336 67,780 56,010 56,817
Net Margin.................................. 12,094 12,799 12,240 34,028 37,694
Margins for Interest Ratio (1).............. 1.20 1.20 1.20 1.53 1.59
</TABLE>
- -------------------
(1) Under the Indenture (as hereinafter defined), Old Dominion is required,
subject to regulatory approval, to establish and collect rates which are
reasonably expected to yield Margins for Interest ("MFI") for the 12-month
period commencing with the effective date of such rates equal to at least
1.20 times total interest charges during such 12-month period on all
indebtedness secured under the Indenture or by a lien equal or prior to the
lien of the Indenture (the "MFI Ratio"). The MFI Ratio is determined by
dividing Old Dominion's MFI by its Interest Charges (as hereinafter
defined) where: MFI is defined as the sum of (i) net margins for the
period, plus (ii) Interest Charges and accruals for Federal and other taxes
imposed on income, minus (iii) the amount, if any, by which certain
non-operating margins otherwise includable in net margins exceed 60% of
such net margins. Interest Charges are defined as the total interest
charges (whether capitalized or expensed) of Old Dominion on all
indebtedness secured under the Indenture or by a lien equal or prior to the
lien of the Indenture, including amortization of debt discount and expense
or premium. The MFI ratio decreased from 1995 to 1996 primarily due to the
discontinuance of an Equity Development Plan which was designed to
significantly increase Old Dominion's patronage capital.
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
----------- ---------- ----------- ----------- -------
(in thousands, except ratios)
Balance Sheet Data:
Electric Plant:
In service, net........................... $ 753,375 $ 798,383 $ 824,455 $ 552,784 $ 206,202
Construction work in progress............. 13,591 12,701 11,106 269,554 551,042
----------- ---------- ---------- ---------- ----------
Net Electric Plant........................ 766,966 811,084 835,561 822,338 757,244
Other Assets................................ 359,578 319,172 320,785 256,608 316,657
----------- ---------- ---------- ---------- ----------
Total Assets................................ $ 1,126,544 $1,130,256 $1,156,346 $1,078,946 $1,073,901
=========== ========== ========== ========== ==========
Capitalization:
Patronage capital (1)..................... $ 206,530 $ 197,552 $ 184,753 $172,513 $ 138,485
Accumulated other comprehensive income.... 697 344 - - -
Long-term debt............................ 584,630 605,878 664,490 738,974 793,070
----------- ---------- ---------- ---------- ----------
Total capitalization...................... $ 791,857 $ 803,774 $ 849,243 $911,487 $931,555
=========== ========== ========== ========== ==========
Equity Ratio (2)............................ 26.1% 24.6% 21.8% 18.9% 14.9%
==== ==== ==== ==== ====
</TABLE>
- -------------------
(1) In December 1997, Old Dominion's Board of Directors approved the retirement
of $3.1 million of patronage capital, which was distributed in February
1998.
(2) Equity ratio equals patronage capital divided by total capitalization. The
equity ratio increased from 1997 to 1998 because of $29.0 million of debt
principal payments and the addition of $12.1 million of equity. The equity
ratio increased from 1996 to 1997 due to the purchase of $32.0 million of
debt, $16.9 million of debt principal payments, and the addition of $12.8
million of equity.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements, as defined by the Private
Securities Litigation Act of 1995, with respect to matters that could have an
impact on future operations of Old Dominion. These statements, based on
expectations and estimates of management, are not guarantees of future
performance and are subject to risks, uncertainties, and other factors that
could cause actual results to differ materially from those expressed in the
forward-looking statements. These risks, uncertainties, and other factors
include, but are not limited to: general business conditions, competition,
federal and state regulations, environmental issues, tax status, industry
restructuring, year 2000 readiness and weather. Given these uncertainties, undue
reliance should not be placed on such forward-looking statements.
GENERAL
Old Dominion operates on a not-for-profit basis and, accordingly, seeks to
generate revenues sufficient to recover its cost of service and to generate
margins sufficient to establish reasonable reserves and meet financial coverage
requirements. Revenues in excess of expenses in any year are designated as net
margins in Old Dominion's Consolidated Statements of Revenues, Expenses and
Patronage Capital. Retained net margins are designated in Old Dominion's
Consolidated Statements of Revenues, Expenses and Patronage Capital and
Consolidated Balance Sheets as patronage capital, which is assigned to each
Member on the basis of patronage. Patronage capital currently constitutes all of
Old Dominion's equity. Any distributions are subject to the discretion of the
Board of Directors of Old Dominion and to certain restrictions contained in the
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992, between Old
Dominion and Crestar Bank, as trustee, (as supplemented by eight supplemental
indentures thereto, hereinafter collectively referred to as the "Indenture"). In
December 1997, Old Dominion's Board of Directors approved the retirement of
approximately $3.1 million of patronage capital, which was disbursed in February
1998.
Under a rate formula accepted for filing by the Federal Energy Regulatory
Commission ("FERC") in 1992, the rates charged by Old Dominion are developed
using a rate methodology under which all categories of costs are specifically
separated as components of the formula to determine Old Dominion's revenue
requirements. The rate methodology uses traditional techniques to allocate costs
to capacity and energy in establishing rates to the Members. The formula is
intended to permit collection of revenues which, together with revenues from all
other sources, are equal to all costs and expenses recorded on Old Dominion's
books, plus an additional 20% of total interest charges, plus additional equity
contributions as approved by Old Dominion's Board of Directors. It also provides
for the periodic adjustment of rates to recover actual prudently incurred costs,
whether they increase or decrease, without further application to and acceptance
by FERC. In accordance with the Strategic Plan Initiative (as discussed
hereinafter), 1999 rates approved by the board of directors include an
additional equity contribution of approximately $45.0 million.
In order to minimize power costs to Members and provide for uncertainties
connected with the establishment of prospective rates, the Board of Directors
established a plan ("Margin Stabilization Plan") in 1984 which allows Old
Dominion to review its actual cost of service and power sales as of year end and
adjust revenues from the Members to take into account actual results and
financial coverage. Old Dominion's FERC rate formula allows Old Dominion to
recover and refund amounts under the Margin Stabilization Plan. All adjustments,
whether increases or decreases, are recorded in the year affected and allocated
to Members based on power sales during that year. Such increases or decreases
are collected from Members, or offset against amounts owed by the Members, in
the succeeding year. Under the Margin Stabilization Plan, Old Dominion reduced
revenues from power sales and increased accounts payable to Members for 1998,
1997, and 1996 in the amount of $4.4 million, $8.0 million, and $3.5 million,
respectively.
Under the Indenture, Old Dominion is required, subject to regulatory
approval, to establish and collect rates which are reasonably expected to yield
Margins for Interest ("MFI") for the 12-month period commencing with the
effective date of such rates equal to at least 1.20 times total interest charges
during such 12-month period on all indebtedness secured under the Indenture or
by a lien equal or prior to the lien of the Indenture (the "MFI Ratio"). The
Indenture limits the amount of certain non-operating margins that may be taken
into account in calculating MFI to 60% of net margins. Since 1984, Old
Dominion's first full year as an operating utility, Old Dominion's non-operating
margins have
<PAGE>
not equaled or exceeded 60% of net margins. Management does not anticipate that
such non-operating margins will equal or exceed 60% of net margins in the
foreseeable future and also believes that the rate formula described above and
the rates and charges established under the Wholesale Power Contracts will
enable Old Dominion to achieve such MFI. Old Dominion achieved an MFI Ratio of
1.20 in 1998, 1997, and 1996.
In accordance with the requirements of Section 501(c)(12) of the Internal
Revenue Code of 1986, as amended, Old Dominion must receive at least 85% of its
income from its Members in order to maintain its tax-exempt status. The major
components of Old Dominion's non-member income include investment interest,
income on the decommissioning fund, and interest from deposits associated with
two long-term lease transactions. If, in any given year, Member income is less
than 85% of total income, Old Dominion would become a taxable entity in that
year, which could have a significant impact on results of operations and cash
flows. Maintenance of a tax-exempt status is dependent upon many things, several
of which are outside of management's control, such as weather-related sales and
interest rates. Additionally, a decrease in Member revenues resulting from the
effect of deregulation could also cause Old Dominion to lose its tax-exempt
status. Management regularly monitors the level of non-member income to
determine whether the tax-exempt status continues. For purposes of determining
its tax status, Old Dominion's Member receipts in 1998, 1997 and 1996 were
approximately 87%, 87% and 86%, respectively, of total gross receipts.
STRATEGIC PLAN INITIATIVE
On October 14, 1997, Old Dominion's Board of Directors approved a resolution
adopting certain strategic objectives designed to mitigate the effects of the
transition to a competitive electric market ("Strategic Plan Initiative").
Subsequently, an independent assessment of the impact on Old Dominion of
transition to a competitive market was performed and the resulting
recommendations to mitigate the transition effects were approved by the board of
directors on July 28, 1998, and incorporated into the Strategic Plan Initiative.
The Strategic Plan Initiative calls for the accumulation of approximately $330.0
million in cash and cash equivalents from 1998 to 2003 with the funds to be used
for the prepayment of a portion of outstanding debt. To date, Old Dominion has
accelerated the recovery of certain assets ($28.0 million in 1998 and $11.5
million in 1997) and has rates in place to provide for an additional equity
contribution of approximately $45.0 million by the end of 1999. The Strategic
Plan Initiative could result in an alternate treatment of Old Dominion's excess
margins, which are currently returned to Members through the Margin
Stabilization Plan or retained as additional equity contributions. Management is
exploring alternative uses for these margins, including the potential
accelerated recovery through rates of plant assets. Funds received from the
Strategic Plan Initiative will be invested in high-grade available-for-sale
securities.
Northern Virginia Electric Cooperative ("NOVEC") and Southside Electric
Cooperative ("SEC") have voiced concerns about the level and timing of cost
recovery as contemplated by the Strategic Plan Initiative. Further, NOVEC has
expressed concerns about the Strategic Plan Initiative regarding whether Old
Dominion has the right under the Wholesale Power Contracts to "over-collect"
monies from its members for future debt retirement or for payment of future
costs. Management believes that in time these issues will be resolved.
RESULTS OF OPERATIONS
OPERATING REVENUES
Old Dominion's operating revenues are derived from power sales to its
Members and to a non-member. Revenues from sales to Members are a function of
the requirement for power by the Members' consumers and Old Dominion's cost of
service in meeting that requirement. The major factors affecting the Members'
consumers' demand for power are the growth in the number of consumers and
seasonal weather fluctuations.
Old Dominion is required to sell its excess power from Clover to Virginia
Power, a non-member. In 1998, 1997, and 1996, non-member sales were $0.8
million, $0.4 million, and $0.4 million, respectively.
<PAGE>
Old Dominion's energy sales to its Members, Member revenues, and average
power cost for the past three years were as follows:
Average
Member Power
Year Ended December 31, Sales Revenues Cost
----------------------- ----- -------- ----
(MWh) (In millions) ($/MWh)
1998.......................... 7,933,881 $363.4 $45.81
1997.......................... 7,665,042 358.1 46.72
1996.......................... 7,482,482 366.5 48.98
The average power cost to Members is based on the blended cost of power
from all Old Dominion resources. Old Dominion's average cost per MWh fluctuates
inversely with the level of generation from the North Anna Power Station ("North
Anna") and the Clover Power Station ("Clover"), as measured by their respective
capacity factors. Accordingly, in years in which North Anna and Clover perform
at a high capacity factor, Old Dominion's average cost per MWh decreases because
the cost of energy generated from North Anna and Clover is less than replacement
supplemental energy purchased under the Interconnection and Operating Agreement
with Virginia Power ("I&O Agreement").
Changes (increase/(decrease)) in operating revenues by component for the
past three years were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1998 1997 1996
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Sales to Members:
Power sales volume............................ $ 8,294 $ 4,957 $21,378
Blended rates................................. (8,546) (1,694) (1,982)
Fuel adjustment revenues...................... 1,924 (7,156) (10,175)
Margin Stabilization Plan adjustment.......... 3,638 (4,500) (15)
------- ------- -------
5,310 (8,393) 9,206
Sales to non-members............................ 406 (11) 381
------- -------- -------
$ 5,716 $(8,404) $ 9,587
======= ======== =======
</TABLE>
Warm weather in the first and fourth quarters of 1998, combined with a 4.0%
reduction in Old Dominion's demand rate, resulted in a decrease in demand
revenues. However, the decrease was partially offset by an increase in demand
revenues due to the hot weather during the second and third quarters. The net
result was a 2.0% decrease in demand revenues. Energy revenues increased 3.4% in
1998. An increase in fuel adjustment revenues combined with a decrease in the
Margin Stabilization Plan adjustment increased revenues by $5.6 million in 1998.
Lower energy costs in 1997 reduced fuel adjustment revenues by $7.2
million. Operating revenues were further reduced by a $4.5 million increase in
the Margin Stabilization Plan adjustment and a 1.0% reduction in the demand
rate, effective April 1, 1997. The decreases in operating revenues were offset
by a 2.4% increase in energy sales, which increased revenue approximately $5.0
million. There was no significant change in demand sales.
Weather affects customer demand for electricity. Hot summers and cold
winters increase demand while mild weather reduces demand. The weather's effect
is measured using degree days. A degree day is the difference between the
average daily temperature and a baseline temperature of 65 degrees. Cooling
degree days result when the average daily temperature is above 65 degrees;
heating degree days result when the average daily temperature is below 65
degrees. Heating and cooling degree days for 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997 Normal
---- ---- ------
<S> <C> <C> <C>
Cooling degree days................. 1,593 1,323 1,597
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percentage change compared to
prior year........................ 20.41 % (9.86)%
Heating degree days................. 3,195 3,816 3,737
Percentage change compared to
prior year........................ (16.27)% (2.98)%
</TABLE>
Consistent with the Strategic Plan Initiative, the Board of Directors
approved a 4.0% reduction in the demand rate to the Members effective in 1999.
Based on projected purchased power costs and other operating expenses for 1999,
Old Dominion plans no change in the base energy rate for the 1999 rate year.
OPERATING EXPENSES
OPERATION EXPENSES
Old Dominion has an 11.6% undivided ownership interest in North Anna and a
50% undivided ownership interest in Clover. Power plants, particularly nuclear
power plants such as North Anna, generally have relatively high fixed costs;
however, such facilities operate with relatively low variable costs due to lower
fuel costs and technological efficiencies. Owners of nuclear and other power
plants, including Old Dominion, incur the embedded fixed costs of these
facilities whether or not the units operate.
When either North Anna or Clover is off-line, Old Dominion must purchase
replacement power under the amended and restated I&O Agreement that is more
costly. Any change in the amount of Old Dominion's energy output from North Anna
or Clover displaces or is replaced by higher cost supplemental energy purchases
from Virginia Power. As a result, Old Dominion's operating expenses, and
therefore its rates to the Members, are significantly affected by the operation
of North Anna and Clover.
North Anna and Clover capacity factors for the past three years were as
follows:
<TABLE>
<CAPTION>
North Anna Clover
---------- ------
Year Ended December 31, Year Ended December 31,
----------------------- -----------------------
1998 1997 1996 1998 1997 1996
------ ------ ------ -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Unit 1................ 92.3% 91.5% 88.5% 85.7% 61.6 57.1
Unit 2................ 90.2 99.7 77.7 72.5 63.7 70.9
Combined.............. 91.3 95.6 83.1 79.1 62.7 64.0
</TABLE>
North Anna Unit 1 is scheduled for a 35-day refueling outage in 1999.
Refueling outages have no impact on Old Dominion's results of operations;
however, outages are a factor in the determination of the rates charged to
Members. Clover Units 1 and 2 are scheduled for 15- and 11-day outages,
respectively, in 1999.
In February 1997, it was determined that the chimney liners on both Clover
Units 1 and 2 would be replaced at no cost to the joint owners except in lost
generation and minimal overhead costs. The chimney liner replacement on Units 1
and 2 were completed in November 1997 and April 1998, respectively. The chimney
liner replacement on Unit 1 was completed in 61 days, 35 days ahead of schedule.
The chimney liner replacement on Unit 2 was completed in 60 days, 18 days ahead
of schedule.
Old Dominion's energy supply for the past three years was as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1998 1997 1996
---- ---- ----
(MWh)
<S> <C> <C> <C>
Clover ...................................... 3,028,740 2,394,471 2,246,920
--------- --------- ---------
North Anna................................... 1,659,167 1,739,108 1,515,777
--------- --------- ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Purchased power:
Virginia Power........................... 1,599,010 2,006,955 2,137,318
PSE&G.................................... 1,121,750 1,095,120 1,066,678
Delmarva Power........................... 565,562 500,573 528,368
Conectiv/PPL............................. 18,383 - -
Other.................................... 199,165 181,612 173,806
---------- ---------- ----------
Subtotal.............................. 3,503,870 3,784,260 3,906,170
--------- --------- ---------
Total Available Energy.............. 8,191,777 7,917,839 7,668,867
========= ========== =========
</TABLE>
Purchased power costs decreased in 1998 as compared to 1997 because: (1)
demand charges were reduced under the amended and restated I&O Agreement with
Virginia Power; (2) the Conectiv/Pennsylvania Power and Light ("PPL") contract,
which replaced more expensive purchased power contracts, commenced September 1,
1998; and (3) PSE&G costs were reduced as a result of the FERC order on PJM
restructuring. Purchased power costs also decreased in 1998 as compared to 1997
because of the operations of North Anna and Clover and because of the warm
weather during the first and fourth quarters of 1998. Purchased power costs
decreased in 1997 as compared to 1996 due to the operations of North Anna and
Clover and the milder weather in 1997.
Fuel costs increased in 1997 and 1998 because of greater production at
Clover. In 1997, fuel costs also increased because of increased production at
North Anna.
OTHER OPERATING EXPENSES
Depreciation and amortization was $48.5 million, $31.5 million, and $26.7
million in 1998, 1997, and 1996, respectively. In 1998 and 1997, Old Dominion
accelerated the amortization and recovery in rates of certain assets, which
increased amortization expense $20.7 million and $2.9 million, respectively.
Additionally, in 1997, Clover depreciation increased because of a change in the
estimated life of the Clover ash site landfill, and the operation of both Clover
units during the entire year of 1997. Clover Unit 2 was in operation for only
nine months in 1996.
NON-OPERATING INCOME AND EXPENSES
Investment balances were greater in 1998 than in 1997 resulting in an
increase in investment income. Investment income decreased in 1997 as compared
to 1996 because of lower investment balances.
Interest on long-term debt was $60.1 million, $63.7 million, and $60.9
million in 1998, 1997, and 1996, respectively. Interest on long-term debt
decreased in 1998 as compared to 1997 due to a continued reduction in the amount
of debt outstanding through scheduled principal payments of $28.5 million. The
decrease was partially offset by the accelerated amortization and recovery in
rates of debt refinancing premiums of $8.1 million. In 1997, Old Dominion
accelerated the amortization and recovery in rates of certain assets, which
increased interest expense $8.6 million. The increase was offset by a decrease
in interest expense resulting from the purchase, in April 1997, of $32.0 million
of outstanding debt combined with $16.9 million of debt principal payments.
LIQUIDITY AND CAPITAL RESOURCES
Old Dominion's Strategic Plan Initiative is designed to increase liquidity
with the objective of prepaying approximately $330.0 million in outstanding
debt.
OPERATING ACTIVITIES are a significant source of cash for Old Dominion,
providing $79.9 million, $80.2 million, and $92.8 million in 1998, 1997, and
1996, respectively. Old Dominion's cash flows from operating activities are
affected principally by the level of Old Dominion's net margins, depreciation
and, in 1998 and 1997, accelerated amortization and recovery in rates of certain
assets as approved by the Board of Directors. Cash flows from operating
activities also were affected by the increase in amortization expense resulting
from the accelerated amortization of the $20.7 million
<PAGE>
North Anna plant acquisition adjustment and an $8.1 million premium on debt
refinancing in 1998 and certain regulatory assets in 1997 of $11.5 million.
In March 1996, after all its contingent obligations connected therewith
were satisfied, Old Dominion recognized a gain of $5.8 million from a 1994
cross-border tax benefit lease transaction.
FINANCING ACTIVITIES resulted in a net cash outflow in 1998 and 1997 as Old
Dominion used available cash for debt service and to purchase long-term debt.
Old Dominion also purchased long-term debt in 1996; however, the completion of
two long-term lease transactions resulted in a $107.6 million addition to cash.
During 1997 and 1996, Old Dominion purchased approximately $32.0 million
and $83.1 million, respectively, of its First Mortgage Bonds, 1992 Series A and
1993 Series A. The transactions resulted in net losses of approximately $2.5
million in 1997 and $2.2 million in 1996, including the write-off of original
issuance costs. The net losses have been deferred and are being amortized over
the life of the remaining bonds.
In February 1997, Old Dominion refinanced its First Mortgage Bonds, 1996
Series A. The refinanced bonds, 1996 Series B, have an effective interest rate
of 7.06% and are due in 2018, except for approximately $0.6 million, which was
due in January 1998.
In November 1997, Old Dominion refinanced $1.0 million of its First
Mortgage Bonds, 1992 Series C due 1997. The refinanced bonds, 1997 Series A, are
due in 2002 at an interest rate of 4.9%.
In November 1998, Old Dominion refinanced $1.1 million of its First
Mortgage Bonds, 1992 Series C due 1998. The refinanced bonds, 1998 Series A, are
due in 2002 at an interest rate of 4.25%.
Also in November 1998, Old Dominion issued $5.0 million of First Mortgage
Bonds, 1998 Series B. The bonds have an interest rate of 4.25% and mature in
2002.
Old Dominion has established unsecured short-term lines of credit to provide
additional sources of financing. Old Dominion has a $30.0 million committed line
of credit with NationsBank N.A., which expires on September 30, 1999, and is
expected to be renewed. Additionally, Old Dominion has a $20.0 million committed
line of credit with National Rural Utilities Cooperative Finance Corporation, a
$20.0 million committed line of credit with CoBank, ACB, both of which expire on
December 31, 1999, and are expected to be renewed and a $150.0 million committed
line of credit with Branch Banking and Trust Company of Virginia ("BB&T"), which
expires on February 29, 2000, and is expected to be renewed. Old Dominion also
has arranged uncommitted short-term borrowing arrangements aggregating $30.0
million. Due to limitations contained in certain of these uncommitted
facilities, no more than $85.0 million in total can be outstanding at any time
under Old Dominion's committed and uncommitted short-term borrowing
arrangements. At December 31, 1998 and 1997, Old Dominion had no short-term
borrowings outstanding under any of these arrangements.
INVESTING ACTIVITIES resulted in a net cash outflow of $21.5 million in 1998
because of additions to electric plant and investments and funds, both
restricted and other. Investing activities resulted in a net cash outflow of
$22.5 million in 1997 mostly due to additions to electric plant and restricted
investments and funds. These cash outflows were offset by an increase in cash
resulting from a reduction in other investments and funds.
Old Dominion's capital improvement requirements are projected based on
long-range plans and supporting studies. The following projections are a product
of Old Dominion's most recently updated plans, and are subject to continuing
review and periodic revision. No amount has been included for NOx related
expenditures which could be material. The table below summarizes Old Dominion's
historical and projected capital improvements, including nuclear fuel, for 1996
through 2001 (in millions):
Historical Projected
-------------------- -------------------
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Clover....................... $20.7 $ 2.5 $ 0.2 $ 0.8 $ 12.4 $12.6
North Anna................... 12.8 7.2 8.5 9.0 8.2 11.2
Other........................ 1.2 0.3 0.2 5.8 - -
------ ------- ------- ----- ----- -----
Total..................... $34.7 $10.0 $ 8.9 $15.6 $20.6 $23.8
===== ===== ====== ===== ===== =====
<PAGE>
Old Dominion expects to satisfy the approximately $60.0 million of capital
expenditure requirements through 2001 with internally generated funds.
OTHER MATTERS
On July 29, 1997, Old Dominion and Virginia Power signed an amended and
restated I&O Agreement. The amended and restated I&O Agreement was filed with
FERC and was approved on March 11, 1998, effective retroactive to January 1,
1998. The terms of the amended and restated I&O Agreement extend through 2005,
unless either party exercises specific notice provisions in the agreement prior
to that time. If such notice provisions are exercised, purchases may be reduced
as early as 2002. The amended and restated I&O Agreement covers the supply of
supplemental, peaking and reserve power plus a new power transmission
relationship that takes into account a national policy of opening power lines to
competing wholesale power suppliers. It also allows the two companies to make
the transition to a competitive electric power market over a five-year period.
Old Dominion estimates that this new wholesale power contract with Virginia
Power could generate significant savings for its Members over current rates.
Old Dominion holds an approximate 30% equity interest in CSC Services, Inc.
("CSC"), formed in 1995 by Old Dominion and 10 of its 12 member distribution
systems to explore alternative business opportunities on behalf of the
cooperatives. During 1996, CSC invested in an approximate one-half interest in
Seacoast Power LLC, whose wholly owned subsidiary, Seacoast, Inc. ("Seacoast"),
executed a six-month power sales contract with INECEL, the state-owned electric
utility in Ecuador. Because of contract disputes, INECEL did not pay invoices
rendered by Seacoast for energy made available under the terms of the power
sales contract. Accordingly, in July 1996, Seacoast filed a $26.0 million
lawsuit in Ecuador against INECEL seeking to recover amounts owed under the
power sales contract, plus damages and fees. A trial date has not been set. In
August 1998, CSC signed an agreement in principle to sell its interest in
Seacoast Power LLC to the other participants in Seacoast Power LLC for $100,000.
On May 24, 1996, a default judgment of approximately $27.0 million was
rendered against Seacoast pursuant to a claim filed in the District Court of
Travis County, Texas, by an entity seeking damages for breach of an oral
contract by the former owners of Seacoast. On January 29, 1998, the Texas Court
of Appeals issued an order affirming the default judgment against Seacoast but
reversing and remanding the award of any damages as factually unsupported. On
March 18, 1998, Seacoast filed an appeal challenging the refusal by the Texas
Court of Appeals to set aside the judgment. That appeal was denied. CSC has
agreed to fund approximately one-half of any further costs, which may be
necessary to defend Seacoast against this action if the damage claim is pursued.
Management of CSC believes there is no basis for the lawsuit and no additional
amount has been recorded as a liability by Old Dominion in 1998.
FUTURE ISSUES
COMPETITION
The electric utility industry is becoming increasingly competitive as a
result of deregulation, competing energy suppliers, new technology, and other
factors. The Energy Policy Act of 1992 amended the Federal Power Act and the
Public Utilities Holding Company Act to allow for increased competition among
wholesale electricity suppliers and increased access to transmission services by
such suppliers. A number of other significant factors have affected the
operations of electric utilities, including the availability and cost of fuel
for the generation of electric energy; the use of alternative fuel sources for
space and water heating and household appliances; fluctuating rates of load
growth; compliance with environmental and other governmental regulations;
licensing and other delays affecting the construction, operation, and cost of
new and existing facilities; and the effects of conservation, energy management,
<PAGE>
and other governmental regulations on the use of electric energy. All these
factors present an increasing challenge to companies in the electric utility
industry, including Old Dominion and its Members, to reduce costs, increase
efficiency and innovation, and improve management of resources.
In an effort to achieve an orderly transition of the industry to a
competitive wholesale power market, FERC issued its final rules (Orders 888 and
889) in April 1996 that provided for comparable transmission service for all
users of the transmission system. Such rules are intended to promote wholesale
competition through open access, non-discriminatory transmission service and
will become the catalyst for moving the industry into a competitive marketplace.
On March 4, 1997, FERC issued Orders 888-A and 889-A reaffirming its basic
determinations and clarifying certain terms in Orders 888 and 889. On November
25, 1997, FERC issued Orders 888-B and 889-B which basically deny all requests
for a rehearing regarding Orders 888-A and 889-A.
The 1999 Session of the Virginia General Assembly passed legislation, which
provides for retail choice to begin on January 1, 2002, and be completed by
January 1, 2004. The legislation allows the VSCC to accelerate competition, upon
finding that effective competition exists, or may delay it by one year.
Previously regulated electric utilities will unbundle the component parts of
generation, transmission, and distribution. Power transmission and distribution
will remain under government regulation; however, power generation will be
deregulated and utilities will compete for customers in the open market.
Cooperatives will continue to be the default supplier for their members.
The deregulation plan calls for capping rates, excluding the recovery of
fuel costs, from January 1, 2002 to July 1, 2007, during which time competition
for power generation will be introduced into the state's electric utility
industry. The rates will be capped at the levels in effect on July 1, 1999;
however, a utility can petition the VSCC for an increase in rates prior to
January 1, 2001. Utilities may use revenues collected during the transition
period to recover the costs of nuclear power plants and other assets that could
lose their values in a competitive market. The member cooperatives in Virginia
will be required to comply with these regulations.
On December 3, 1997, the Maryland Public Service Commission ("Maryland
Commission") issued Order No. 73834 to commence a three-year phase-in of retail
competition beginning April 1999. The order identified many issues that must be
resolved in order to accomplish a comprehensive and orderly restructuring of the
retail electric industry in Maryland. However, after public comment, the
Maryland Commission delayed the implementation date until July 1, 2000.
In addition to the Maryland Commission Order, a package of legislation has
been introduced in the Maryland General Assembly. One approach leaves major
decisions to the Maryland Commission. A second approach provides for expanded
environmental and consumer protection programs. A majority of stakeholders are
supporting the first approach. In addition, a third measure to address the tax
consequences of restructuring has been introduced. It is uncertain at this point
whether any action will be taken before the Maryland General Assembly adjourns.
These bills call for retail choice to be phased in beginning July 2000 with all
investor owned utility customers having retail choice by July 2002. The bills
provide that a separate schedule be developed that would offer choice to all
cooperative customers by July 2003. Similar to legislation proposed in Virginia
and by the Maryland Commission, power generation will be deregulated and
utilities will compete for customers in the open market. The implementation of
retail choice is predicated on comprehensive tax restructuring legislation that
has not yet been introduced to the legislature.
Under the proposed legislation, the local distribution cooperatives will
retain the billing and metering functions and will continue to be the default
supplier in their assigned territories. Any proposed collection of stranded
costs by member cooperatives will be included in a filing before the Maryland
Commission along with an unbundled rate study for their approval.
The 1999 Session of the Delaware General Assembly is likely to pass
restructuring legislation, which sets the timeframe for bringing retail choice
to all customers within 24 months after the legislation is signed by the
governor. Key features of the legislation include a rate freeze for cooperative
customers and mandatory rate reductions for customers of the state's
investor-owned utility. Also, metering and billing functions will be retained by
the cooperatives in their assigned territories, but will be competitive for
others. The cooperative will continue to be the default supplier
<PAGE>
for its members and any stranded costs of the cooperative will be recovered
based on an evaluation by the Delaware Public Service Commission. As in Virginia
and Maryland, this legislation proposes that power generation be deregulated and
utilities compete for customers in the open market.
With the electric utility industry moving toward a competitive environment,
it has become necessary for Old Dominion and its members to develop innovative
approaches to serving traditional markets. In a competitive environment,
generating utilities are no longer guaranteed the recovery of prudently incurred
costs. Generating utilities with costs that exceed market prices could suffer
significant losses. Additionally, the loss of customers could also have a
significant impact on a utility's results of operations. In the case of Old
Dominion and its Members, the loss of a significant portion of load could cause
a reduction in revenues and cash flows. The resulting decrease in Member
revenues could also cause Old Dominion to lose its tax-exempt status. Management
is currently working with the Members through the Strategic Plan Initiative to
improve Old Dominion's and the Members' competitive position. Old Dominion
cannot predict the ultimate effect competition will have on results of
operations and future cash flows.
YEAR 2000
Certain computer hardware, computer software, and embedded technology used
by Old Dominion was not designed to recognize calendar years after 1999. Since
Old Dominion's operations rely upon computer technology and upon the systems of
others with whom it does business, the failure of Old Dominion, or those with
whom it does business, to become year 2000 compliant on a timely basis could
have a material adverse effect on Old Dominion's operations and its financial
condition.
Old Dominion's goal is to ensure that key systems, applications and
third-party relationships have been evaluated and will continue operating into
the year 2000 and thereafter ("year 2000 ready"). Given the magnitude and
complexity of the year 2000 issue, Old Dominion cannot guarantee that every
problem will be found and corrected prior to January 1, 2000. Therefore, Old
Dominion is focusing on critical operating and business systems and anticipates
having a contingency plan in place by June 1999 to deal with any problems should
they occur.
Old Dominion's primary concerns are its ability to obtain power for its
Members through purchase or generation; the ability of its Members to deliver
power to their customers; the ability of Old Dominion to bill its Members for
power received, and the ability of Old Dominion to monitor loads. To address
these and other concerns, Old Dominion formalized an initiative, which included
the appointment of a project manager having overall responsibility for
coordinating efforts in addressing its year 2000 issues and implementing
solutions. In addition, Old Dominion contracted with a technology services
company to perform an assessment and analysis of its information technology and
non-information technology systems. Their analysis involved inventorying all
systems and addressed computer hardware, computer software, and embedded
technology issues. In October 1998, the technology services company issued its
report, which contained detailed findings and recommendations. From this report,
Old Dominion formalized a year 2000 action plan which was approved by Old
Dominion's Board of Directors on February 8, 1999.
Currently, Old Dominion anticipates upgrading or replacing older systems and
equipment with new, year 2000 compliant systems and equipment and implementing a
four-phase approach for each system.
Planning and assessment: This phase consists of identifying affected
systems and software and developing a remediation or replacement plan.
Implementation and remediation: This phase consists of system upgrade,
replacement or other corrective action.
Testing and documentation: This phase includes validation of corrective
actions taken.
Contingency planning: This phase consists of departmental planning for
internal and external risks.
<PAGE>
Old Dominion has completed the assessment of its systems and identified
appropriate resources and courses of action to ensure that the key operating and
business systems are year 2000 ready. In addition, Old Dominion is meeting with
key suppliers and assessing their year 2000 readiness.
Old Dominion has determined that its financial and engineering systems are
year 2000 ready. The billing system has been modified and documentation of the
testing results is currently underway. Also user/information systems
documentation is being updated.
As operator of both the North Anna and Clover power stations, Virginia Power
is responsible for ensuring that the plants are year 2000 ready. North Anna is
expected to be year 2000 ready by October 31, 1999. Unit 2 is scheduled for a
regular maintenance and refueling outage in September 1999 and final remediation
work will be done during that outage. Virginia Power has represented that it
will have extensive experience performing remediation at three nuclear units,
including North Anna Unit 1, prior to that time and, thus, is confident that the
work on Unit 2 will be achieved quickly. Clover is expected to be year 2000
ready by July 1999. Virginia Power's contingency planning efforts to ensure
continuity of operations into and beyond the year 2000 are on schedule to be
completed by June 30, 1999. Virginia Power has existing contingency plans in
place in case of an extraordinary event, which may cause interruptions in
service. Year 2000 contingency planning is an extension of these existing plans.
As part of the year 2000 compliance process, Old Dominion must determine and
evaluate most reasonably likely worst case scenarios. Based on preliminary
evaluations, Old Dominion has identified the following as the most reasonably
likely worst case scenarios: temporary loss of a portion of generation capacity
and third party power suppliers' failure to be year 2000 compliant. Based on
information supplied by Virginia Power, Old Dominion does not believe that a
temporary loss of generation capacity will have a material adverse impact on Old
Dominion's results of operations.
Old Dominion has made inquiries of and sent questionnaires to its Members in
order to determine their year 2000 readiness. However, Old Dominion does not
control their year 2000 activities and non-compliance by a Member could have an
adverse impact on Old Dominion's results of operations.
Regarding third party power suppliers, Old Dominion receives a significant
portion of its power from other parties and is interconnected with other
utilities at more than 200 transmission and distribution points. Although Old
Dominion has a program to keep up with their efforts for year 2000 compliance,
Old Dominion does not control their activities and outcome. Non-year 2000
compliance by these third parties could have a detrimental impact on Old
Dominion and its Members.
Old Dominion's estimate of its year 2000 costs is approximately $0.6
million, of which approximately $0.3 million has been expended to date.
The above description of Old Dominion's year 2000 efforts and completion
dates are based on assumptions and management's best estimates regarding future
events. However, estimates and assumptions could change as Old Dominion moves
through this process and as more information becomes available. Additionally,
there are no assurances that estimates of completion will be achieved and actual
results could differ materially from those stated above.
UTILITY OPERATIONS
Effective November 23, 1998, the NRC amended its nuclear decommissioning
financial assurance requirements to limit the use of the sinking fund method to
only that portion of a licensee's collections for decommissioning that is
recovered through either traditional cost of service rate regulation or through
non-bypassable charges. Old Dominion's decommissioning collections are recovered
through cost of service rate regulation.
RECENTLY ISSUED ACCOUNTING STANDARDS
<PAGE>
During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities," effective for fiscal years beginning after
June 15, 1999 and the FASB Emerging Issues Task Force ("EITF") issued EITF
98-10, "Accounting for Energy Trading and Risk Management Activities." Old
Dominion believes the impact of these recently issued pronouncements will not be
material to its consolidated results of operations and financial position.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Old Dominion is exposed to market risk including changes in interest rates
and equity prices. Interest rate risk is generally associated with Old
Dominion's outstanding debt and trust-issued securities. Old Dominion is also
subject to interest rate risk as well as equity price risk as a result of its
nuclear decommissioning trust investments in debt and equity securities.
INTEREST RATE RISK
Old Dominion uses both fixed and variable rate debt as sources of
financing. The following table illustrates financial instruments that are held
or issued by Old Dominion at December 31, 1998, and are sensitive to interest
rate changes:
<TABLE>
<CAPTION>
At December 31,
---------------
Expected Maturity Value 1998 1997
----------------------- ---- ----
Fair
1999 2000 2001 2002 Thereafter Total Value Total Value
---- ---- ---- ---- ---------- ----- ----- ----- -----
(in millions, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES - Fixed rate Mortgage bonds:
Taxable bonds $28.2 $28.2 $28.2 $28.2 $446.3 $559.1 $681.5 $587.3 $701.7
Average interest rate 8.2% 8.2% 8.2% 8.2% 8.0%
Tax-exempt bonds 1.1 1.2 1.3 8.4 53.2 65.2 68.8 66.3 62.9
Average interest rate 6.1% 6.1% 6.1% 6.2% 6.6%
LIABILITIES - Variable rate
Tax-exempt bonds .3 .3 1.1 - 6.8 8.5 8.5 8.8 8.8
Average interest rate 3.2% 3.0% 2.7% 2.7% 2.9%
</TABLE>
EQUITY PRICE RISK
Old Dominion is exposed to price fluctuations in equity markets through its
nuclear decommissioning trust fund. At December 31, 1998, Old Dominion's equity
price risk was not material.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Page
Number
------
Report of Independent Accountants...................................... 28
Consolidated Balance Sheets............................................ 29
Consolidated Statements of Revenues, Expenses and Patronage Capital.... 30
Consolidated Statements of Comprehensive Income........................ 30
Consolidated Statements of Cash Flows.................................. 31
Notes to Consolidated Financial Statements............................. 32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Board of Directors
Old Dominion Electric Cooperative
In our opinion, the accompanying consolidated balance sheets and the related
statements of revenues, expenses and patronage capital, and comprehensive income
present fairly, in all material respects, the financial position of Old Dominion
Electric Cooperative ("the Cooperative") at December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Cooperative's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards, which
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, assessing the accompanying principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
March 5, 1999
Richmond, Virginia
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ----------------------------------------------------------------
Electric Plant:
In service $ 885,551 $ 885,670
Less accumulated depreciation (140,574) (116,409)
---------------- --------------
744,977 769,261
Nuclear fuel, at amortized cost 8,398 6,401
Plant acquisition adjustment, at amortized cost - 22,721
Construction work in progress 13,591 12,701
---------------- --------------
Net Electric Plant 766,966 811,084
---------------- --------------
Investments & Funds:
Nuclear Decommissioning Trust Fund 51,964 44,162
Restricted Investments 120,391 116,080
Other Investments 38,689 31,369
---------------- --------------
Total Investments & Funds 211,044 191,611
---------------- --------------
Current Assets:
Cash and cash equivalents 82,382 55,254
Receivables 37,367 34,582
Fuel stock 3,460 4,254
Materials and supplies, at average cost 5,831 5,362
Prepayments 2,533 1,439
---------------- --------------
Total Current Assets 131,573 100,891
---------------- --------------
Deferred Charges
Regulatory assets 4,643 14,058
Other 12,318 12,612
---------------- --------------
Total Deferred Charges 16,961 26,670
---------------- --------------
Total Assets $ 1,126,544 $ 1,130,256
================ ==============
CAPITALIZATION AND LIABILITIES
- ----------------------------------------------------------------
Capitalization:
Patronage capital $ 206,530 $ 197,552
Accumulated other comprehensive income 697 344
Long-term debt 584,630 605,878
---------------- --------------
Total Capitalization 791,857 803,774
---------------- --------------
Current Liabilities:
Long-term debt due within one year 29,590 30,116
Accounts payable 19,007 31,732
Accounts payable - Member deposits 42,204 26,118
Deferred energy 2,366 3,960
Accrued interest 3,839 4,111
Accrued taxes 212 263
Other 2,463 4,151
---------------- --------------
Total Current Liabilities 99,681 100,451
---------------- --------------
Deferred Credits & Other Liabilities:
Decommissioning reserve 51,964 44,162
Deferred credits 58,684 61,782
Obligations under long-term leases 123,614 119,343
Other 744 744
---------------- --------------
Total Deferred Credits & Other Liabilities 235,006 226,031
---------------- --------------
Commitments and Contingencies (Notes 1, 2, 3, 10, 11 and 14)
---------------- --------------
Total Capitalization and Liabilities $ 1,126,544 $ 1,130,256
================ ==============
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED STATEMENTS OF REVENUES,
EXPENSES AND PATRONAGE CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues:
Sales to members $ 363,432 $ 358,122 $ 366,515
Sales to non-member 789 383 394
---------------- -------------- ---------------
364,221 358,505 366,909
---------------- -------------- ---------------
Operating Expenses:
Operation:
Fuel 46,747 39,982 39,085
Purchased power 149,409 163,726 182,854
Other 25,345 21,997 20,673
---------------- -------------- ---------------
221,501 225,705 242,612
Maintenance 7,675 7,981 9,045
Administrative and general 15,071 16,355 15,325
Depreciation and amortization 48,496 31,488 26,724
Amortization of lease gains (2,756) (2,756) (1,596)
Decommissioning cost 681 681 681
Taxes other than income taxes 7,358 6,715 6,338
---------------- -------------- ---------------
Total Operating Expenses 298,026 286,169 299,129
---------------- -------------- ---------------
Operating Margin 66,195 72,336 67,780
---------------- -------------- ---------------
Other Income (Expense), net 1,301 528 (4,848)
---------------- -------------- ---------------
Investment Income:
Interest 4,408 3,449 5,082
Other 232 83 1,393
---------------- -------------- ---------------
Total Investment Income 4,640 3,532 6,475
---------------- -------------- ---------------
Interest Charges:
Interest on long-term debt, net 60,102 63,742 60,865
Other 360 247 328
Allowance for borrowed funds used during construction (420) (392) (4,026)
---------------- -------------- ---------------
Net Interest Charges 60,042 63,597 57,167
---------------- -------------- ---------------
Net Margin 12,094 12,799 12,240
Patronage Capital-Beginning of Year 197,552 184,753 172,513
Capital Credits Payment (3,116) - -
---------------- -------------- ---------------
Patronage Capital-End of Year $ 206,530 $ 197,552 $ 184,753
================ ============== ===============
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED 'STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Margin $ 12,094 $ 12,799 $ 12,240
Other Comprehensive Income:
Unrealized gains on investments 697 344 -
---------------- -------------- ---------------
Comprehensive Income $ 12,791 $ 13,143 $ 12,240
================ ============== ===============
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
(In thousands) 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash From Operating Activities:
Net margin $ 12,094 $ 12,799 $ 12,240
Adjustments to reconcile net margin to net cash provided
by operating activities:
Depreciation and amortization 48,496 26,415 24,534
Other non-cash charges 17,442 14,305 5,402
Decommissioning cost 681 681 681
Amortization of lease obligations 8,361 8,197 4,636
Write-off interest in Seacoast - - 11,512
Provision for contingent liability - - 630
Gain from lease transactions (2,756) (2,756) (7,361)
Changes in Current Assets and Current Liabilities:
Change in current assets (3,554) (128) (6,113)
Change in current liabilities (589) 13,233 (15,970)
Deferred charges (371) 9,034 807
Other assets 105 (1,574) (1,756)
Deferred credits 3 - 61,064
Other liabilities - (8) 2,464
------------ -------------- ---------------
Net Cash Provided by Operating Activities 79,912 80,198 92,770
------------ -------------- ---------------
Cash From Financing Activities:
Additions to long-term debt 5,000 - 23,884
Obligations under long-term lease (4,090) - 107,566
Payment of capital credits (3,116) - -
Borrowings under lines of credit - - (8,700)
Reductions of long-term debt (29,041) (48,616) (100,642)
------------ ---------------------------------
Net Cash (Used in) Provided by Financing Activities (31,247) (48,616) 22,108
------------ -------------- ---------------
Cash From Investing Activities:
Electric plant additions (9,441) (24,786) (47,049)
Decommissioning fund deposits (681) (681) (681)
Restricted investments and funds (4,311) (8,117) (109,019)
Other investments and funds, net (6,967) 4,087 23,697
Note Receivable - 6,992 698
Retirement work in progress (137) (40) 23
------------ -------------- ---------------
Net Cash Used in Investing Activities (21,537) (22,545) (132,331)
------------ -------------- ---------------
Net Change in Cash and Cash Equivalents 27,128 9,037 (17,453)
Cash and Cash Equivalents-Beginning of Year 55,254 46,217 63,670
------------ -------------- ---------------
Cash and Cash Equivalents-End of Year $ 82,382 $ 55,254 $ 46,217
============ ============== ===============
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL:
Old Dominion Electric Cooperative ("Old Dominion"), a not-for-profit wholesale
power supply cooperative, was incorporated under the laws of the Commonwealth of
Virginia in 1948. It provides wholesale electric service to 12 member
distribution cooperatives ("Members") engaged in the retail sale of power to
member consumers located in Virginia, Delaware, Maryland, and parts of West
Virginia. Old Dominion's Board of Directors is composed of two representatives
from each of the Members. Old Dominion's rates are not regulated by the
respective states' public service commissions, but are set periodically by a
formula that was accepted for filing by the Federal Energy Regulatory Commission
("FERC") on May 18, 1992.
Old Dominion complies with the Uniform System of Accounts prescribed by FERC. In
conformity with generally accepted accounting principles ("GAAP"), the
accounting policies and practices applied by Old Dominion in the determination
of rates are also employed for financial reporting purposes.
The preparation of the consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the amounts
reported therein. Actual results could differ from those estimates.
The accompanying financial statements reflect the consolidated accounts of Old
Dominion and Dominion Power Control, Ltd. ("DPC"), a wholly owned subsidiary of
Old Dominion which provides financing for a load management system used by Old
Dominion and its Members. All intercompany balances and transactions have been
eliminated in consolidation. Old Dominion's 50% ownership interest in Regional
Headquarters, Inc. ("RHI") (Note 12) is recorded under the equity method of
accounting.
ELECTRIC PLANT:
Electric plant is stated at original cost when first placed in service. Such
cost includes contract work, direct labor and materials, allocable overhead, and
an allowance for borrowed funds used during construction. Upon the partial sale
or retirement of plant assets, the original asset cost and current disposal
costs less sale proceeds, if any, are charged or credited to accumulated
depreciation. In accordance with industry practice, no profit or loss is
recognized in connection with normal sales and retirements of property units.
The plant acquisition adjustment represents the excess of the cost of the plant
to Old Dominion over the original cost less accumulated depreciation at the time
of acquisition.
Maintenance and repair costs are expensed as incurred. Replacements and renewals
of items considered to be units of property are capitalized to the property
accounts.
DEPRECIATION, AMORTIZATION, AND DECOMMISSIONING:
Depreciation is based on the straight line method at rates, which are designed
to amortize the original cost of properties over their service lives.
Depreciation rates for jointly-owned depreciable plant balances at the North
Anna Nuclear Power Station ("North Anna") were approximately 3.1% in 1998, 3.2%
in 1997, and 2.9% in 1996. The depreciation rate for jointly owned depreciable
plant balances at the Clover Power Station ("Clover") was approximately 2.7% in
1998, and 2.5% in 1997 and 1996. The North Anna plant acquisition adjustment was
being amortized for ratemaking and accounting purposes over a 40-year period
using the straight line method. However, in 1997, Old Dominion's Board of
Directors approved the accelerated amortization and recovery in rates of the
remaining plant acquisition adjustment to be completed in 1998. In 1998, $20.7
million of accelerated amortization was recorded on the plant acquisition
adjustment to fully amortize the asset. Additionally, in 1997, $2.9 million of
accelerated amortization and
<PAGE>
recovery in rates was recorded on certain regulatory assets and in 1996, $2.5
million of accelerated depreciation and recovery in rates was recorded on the
assets of DPC to adjust the balances to the net realizable value.
Old Dominion accrues decommissioning costs over the expected service life of
North Anna and makes periodic deposits in a trust fund, such that the fund
balance will equal Old Dominion's estimated cost at the time of decommissioning.
The present value of the future decommissioning cost is credited to the
decommissioning reserve; increases are charged to Members through their rates.
The estimated cost to decommission North Anna is based on a site-specific study
performed by Virginia Power in 1998 and assumes that the method of completing
decommissioning activities is dismantlement. Old Dominion's portion of the
estimated cost of decommissioning North Anna is expected to be approximately
$91.3 million in 1998 dollars. The decommissioning of North Anna is expected to
begin at the expiration date of each unit's operating license, which is 2018 and
2020 for North Anna Units 1 and 2, respectively. In the event the assumed return
on the trust fund is not earned, the management of Old Dominion believes that
any additional cost incurred will be recoverable through rates.
Amounts held in the decommissioning trust fund, which equals the decommissioning
reserve, at December 31, 1998 and 1997, were $52.0 million and $44.2 million,
respectively. Annual decommissioning expense, net of earnings on funds was $0.7
million in 1998, 1997, and 1996.
NUCLEAR FUEL:
Owned nuclear fuel is amortized on a unit-of-production basis sufficient to
fully amortize, over the estimated service life, the cost of fuel plus future
storage and disposal costs.
Under the Nuclear Waste Policy Act of 1982 ("NWPA"), the Federal government has
the responsibility for the permanent disposal of spent nuclear fuel. In
accordance with the provisions of the NWPA, contracts executed with the
Department of Energy ("DOE") required the DOE to provide for the permanent
disposal of spent nuclear fuel produced by North Anna; however, since the DOE
did not begin accepting spent fuel in 1998 as specified in its contracts,
Virginia Power is providing on-site spent nuclear fuel storage at the North Anna
facility. These facilities are expected to be adequate until the DOE begins
accepting the spent fuel.
Under the Energy Policy Act of 1992, all domestic utilities which purchased
enriched uranium from the DOE during the years 1969 through 1991 are required to
make payments to the DOE which, in the aggregate, total a maximum of $150.0
million (adjusted annually for inflation) each year for a new uranium enrichment
decontamination and decommissioning fund. Such payments, which commenced in
1993, are required to continue for a period of 15 years. At December 31, 1998
and 1997, the total accrued liability was $3.2 million and $3.5 million,
respectively, which represents Old Dominion's pro rata share. This amount has
been recorded as a deferred charge and will be amortized and recovered by Old
Dominion through rates over the 15-year funding period.
ALLOWANCE FOR BORROWED FUNDS USED DURING CONSTRUCTION:
Old Dominion capitalizes interest on borrowings for significant construction
projects. From 1992 through 1996, income earned on trusteed construction funds
was netted against the amount of interest charges capitalized. Interest
capitalized in 1998, 1997, and 1996 was $0.4 million, $0.4 million, and $4.0
million, respectively.
<PAGE>
INCOME TAXES:
As a not-for-profit electric cooperative, Old Dominion is currently exempt from
federal income taxation under Section 501(c)(12) of the Internal Revenue Code of
1986, as amended. Accordingly, provisions for income taxes have not been
reflected in the accompanying consolidated financial statements.
OPERATING REVENUES:
Sales to Members consist of power sales pursuant to long-term wholesale power
contracts ("Wholesale Power Contracts") which Old Dominion maintains with each
of its Members. These Wholesale Power Contracts obligate each Member to pay Old
Dominion for power furnished in accordance with rates established by Old
Dominion. Power furnished is determined based on month-end meter readings.
Sales to non-members consist of excess energy from Clover sold to Virginia
Power, a related party, under the terms of the contracts between Old Dominion
and Virginia Power relating to the construction and operation of Clover ("Clover
Agreements").
DEFERRED CHARGES:
Certain costs have been deferred based on rate action by Old Dominion's Board of
Directors and approval by FERC. These costs will be recognized as expense
concurrent with their recovery through rates. In 1998, Old Dominion accelerated
amortization and recovery in rates of an $8.1 million premium on refinancing.
Other Assets include costs associated with the issuance of debt. These costs are
being amortized using the effective interest method over the life of the
respective debt issues.
DEFERRED ENERGY:
A deferral method of accounting is used to recognize differences between Old
Dominion's actual energy and fuel expenses and the energy and fuel revenues
collected from its Members. The deferred credit at December 31, 1998 and 1997,
was $2.4 million and $4.0 million, respectively. The deferred credit at December
31, 1998, will be returned to the Members during 1999 in accordance with the
tariffs then in effect. The deferred credit at December 31, 1997, was returned
to the Members during 1998 in accordance with the tariffs then in effect.
INVESTMENTS:
Financial instruments included in the decommissioning fund and other investments
and funds are classified as available-for-sale, and accordingly, are carried at
fair value. Unrealized gains and losses on investments held in the
decommissioning fund are deferred as an adjustment to the decommissioning
reserve until realized.
Old Dominion's investments in marketable securities, which are actively managed,
are classified as available-for-sale and are recorded at fair value in other
investments and funds. Unrealized gains or losses on other investments, if
material, are reflected as a component of capitalization. Investments that Old
Dominion has the positive intent and ability to hold to maturity are classified
as held-to-maturity and are recorded at amortized cost in restricted investments
and other investments.
RESTRICTED INVESTMENTS:
Restricted investments include amounts received from two long-term lease
transactions, which are restricted for payment of lease obligations.
PATRONAGE CAPITAL:
<PAGE>
Old Dominion is organized and operates as a cooperative. Patronage capital is
the retained net margins of Old Dominion which have been allocated to its
Members based upon their respective power purchases in accordance with Old
Dominion's bylaws. Any distributions are subject to the discretion of the Board
of Directors of Old Dominion and the restrictions contained in the Indenture of
Mortgage and Deed of Trust, dated as of May 1, 1992, between Old Dominion and
Crestar Bank, as trustee (as supplemented by eight supplemental indentures
thereto, is hereinafter referred to as the "Indenture"). In December 1997, Old
Dominion's Board of Directors approved the retirement of approximately $3.1
million of patronage capital, which was disbursed in February 1998.
OUTAGE PROVISION:
The normal maintenance and refueling cycle for each of the North Anna nuclear
units is 18 months. During outage periods, approximately 35 days per unit, Old
Dominion incurs higher operation and maintenance costs and supplemental energy
purchases. Although the supplemental energy purchases are deferred and collected
in accordance with the deferred energy policy, the other outage costs are
charged to expense as incurred and have a direct impact on net margins. Old
Dominion has a policy of accruing a portion of incremental outage expenses that
are scheduled for the succeeding year. Operating expenses in 1998, 1997, and
1996 include $1.1 million, $1.3 million, and $1.2 million, respectively, accrued
under this policy.
CONCENTRATIONS OF CREDIT RISK:
Financial instruments which potentially subject Old Dominion to concentrations
of credit risk consist of cash equivalents, investments, and receivables arising
from energy sales to Members and from Virginia Power related to Clover and other
transactions. Old Dominion places its temporary cash investments with high
credit quality financial institutions and invests in debt securities with high
credit standards as required by the Indenture and the Board of Directors. Cash
and cash investment balances may exceed FDIC insurance limits. Concentrations of
credit risk with respect to receivables arising from energy sales to Members are
limited due to the large member consumer base that represents Old Dominion's
cooperative Members' accounts receivable.
IMPAIRMENT OF LONG-LIVED ASSETS:
In accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," long-lived assets and certain identifiable intangibles held and
used by Old Dominion are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Old Dominion reviews all appropriate assets for potential
impairment on an ongoing basis.
CASH EQUIVALENTS:
For purposes of the Consolidated Statements of Cash Flows, Old Dominion
considers all unrestricted highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
RECLASSIFICATIONS:
Certain reclassifications have been made to the accompanying prior years'
consolidated financial statements to conform to the current year's presentation.
<PAGE>
NOTE 2 - JOINTLY OWNED PLANTS
On December 21, 1983, Old Dominion purchased from Virginia Power an 11.6%
undivided ownership interest in North Anna, a two-unit, 1,790 MW (net capacity
rating) nuclear generating facility, as well as nuclear fuel and common
facilities at the power station, and a portion of spare parts, inventory and
other support facilities. Old Dominion is responsible for 11.6% of all post
acquisition date additions and operating costs associated with the plant, as
well as a pro rata portion of Virginia Power's administrative and general
expenses for North Anna, and must provide its own financing for these items. Old
Dominion's portion of assets, liabilities, and operating expenses associated
with North Anna are included in the consolidated financial statements. At
December 31, 1998 and 1997, Old Dominion had an outstanding accounts payable
balance of $0.7 million and $0.6 million, respectively, due to Virginia Power
for operation, maintenance, and capital investment at the facility.
In 1992, construction began on Clover, a two-unit, 882 MW (net capacity rating)
coal-fired generating facility in which Old Dominion and Virginia Power each
hold a 50% undivided ownership interest. Unit 1 began commercial operation on
October 7, 1995, and Unit 2 began commercial operation on March 28, 1996. Old
Dominion is responsible for 50% of all post-construction additions and operating
costs associated with Clover, as well as a pro rata portion of Virginia Power's
administrative and general expenses for Clover, and must provide its own
financing for these items. Old Dominion's portion of assets, liabilities, and
operating expense associated with Clover are included in the consolidated
financial statements. Old Dominion's share of the costs to construct Clover was
approximately $633.6 million, including capitalized interest. In connection with
its duties as construction agent for Clover, Old Dominion had an outstanding
accounts receivable balance of $0.1 million at December 31, 1997. At December
31, 1998, Old Dominion had an outstanding accounts receivable balance of $3.4
million due from Virginia Power for operation, maintenance, and capital
investment at the facility. At December 31, 1997, Old Dominion had an
outstanding accounts payable balance of $3.3 million due to Virginia Power for
operation, maintenance, and capital investment at the facility.
Old Dominion's investment in jointly owned plants at December 31, 1998, was as
follows:
North Anna Clover
------------ -----------
(in millions,except percentages)
Ownership interest 11.6% 50.0%
Electric plant $344.8 $635.3
Accumulated depreciation
and amortization 176.6 51.5
Construction work in progress 13.1 0.5
Projected capital expenditures for North Anna for 1999 through 2001 are $9.0
million, $8.2 million, and $11.2 million, respectively. Projected capital
expenditures for Clover for 1999 through 2001 are $0.8 million, $12.4 million,
and $12.6 million, respectively.
NOTE 3 - POWER PURCHASE AGREEMENTS
In 1998, 1997, and 1996, North Anna and Clover together furnished approximately
57.2%, 52.2%, and 49.1%, respectively, of Old Dominion's energy requirements.
The remaining needs were satisfied through purchases of supplemental power from
Virginia Power and other power companies. Under the terms of the Interconnection
and Operating Agreement with Virginia Power ("I&O Agreement"), executed in
connection with Old Dominion's purchase of its 11.6% interest in North Anna, Old
Dominion agreed to purchase from Virginia Power reserve power for North Anna and
its entire monthly requirements for supplemental power to meet the needs of its
Virginia Members (except A&N Electric Cooperative) not met from Old Dominion's
portion of North Anna and Clover generation. The I&O Agreement provides that Old
Dominion may reduce its obligations to purchase supplemental power by any amount
with nine years advance notice or through the construction of jointly-owned
facilities, or by up to 4% each year, if notice is given at least three months
prior to calendar year end. Amendment No. 1 to the I&O Agreement
<PAGE>
("Amendment") allows Old Dominion to accumulate its 4% per year reduction for
the life of the I&O Agreement. Under the terms of the Amendment, for the first
four years Old Dominion will purchase the 4% per year reduction from Virginia
Power. The Amendment has an effective date coincident with commercial operation
of Clover Unit 2 and expires in eight years.
On March 11, 1998, FERC approved an amended and restated I&O Agreement,
retroactively effective to January 1, 1998. Under the terms of the amended and
restated I&O Agreement with Virginia Power, Old Dominion will continue, through
2001, to purchase from Virginia Power, at declining rates, all its monthly
requirements for supplemental demand to meet the needs of its Virginia Members
(except A&N Electric Cooperative) not met from Old Dominion's portion of North
Anna and Clover generation. Old Dominion will purchase its reserve capacity
requirements for North Anna and Clover from Virginia Power for the term of the
amended and restated I&O Agreement, which expires on the earlier of the date on
which all facilities at North Anna have been retired or decommissioned and the
date upon which Old Dominion's interest in North Anna is reduced to zero. Old
Dominion also has the right to displace up to two-thirds of its supplemental
energy requirements in 1998 and all of its energy requirements in 1999. By 2002,
purchases from Virginia Power are to be at market prices. The amended and
restated I&O Agreement extends through 2005 unless either party exercises
specific notice provisions in the agreement prior to that time. If such notice
provisions are exercised, purchases may be reduced as early as 2002.
Additionally, under the terms of the amended and restated I&O Agreement,
services to Old Dominion have been unbundled and terms for the provision of
transmission and ancillary services have been removed. These services will be
provided pursuant to Virginia Power's open access transmission tariff. Specific
terms are provided in a Service Agreement for Network Integration Transmission
Service and a Network Operating Agreement between Virginia Power and Old
Dominion, both of which also were approved by FERC on March 11, 1998,
retroactively effective to January 1, 1998.
Old Dominion has an agreement with Public Service Electric & Gas ("PSE&G
Agreement") to purchase 150 MW of capacity, consisting of 75 MW intermediate
and/or peaking capacity and 75 MW base load capacity, and associated energy,
through 2005. The PSE&G Agreement contains fixed capacity charges for the base,
intermediate, and peaking capacity to be provided under the agreement. However,
either party can (within certain limits) apply to FERC to recover changes in
certain costs of providing services. In the event of a change in rate, the party
adversely affected may terminate the PSE&G Agreement, with one-year notice. Old
Dominion may purchase the energy associated with the PSE&G capacity from PSE&G
or other power suppliers. If purchased from PSE&G, the energy cost is based on
PSE&G's incremental cost above its native load, taking into account the
Pennsylvania-New Jersey-Maryland Interconnection LLC ("PJM") economy energy
transactions. If purchased from other power suppliers, Old Dominion would pay
the negotiated energy rate. Old Dominion is presently purchasing the energy
requirements from the short-term markets.
In October 1997, Old Dominion filed with FERC a section 206 complaint against
PSE&G. Old Dominion believes its contract with PSE&G should be modified to
conform with PJM restructuring. On May 19, 1998, FERC ruled in Old Dominion's
favor, ordering PSE&G to remove any transmission costs from its rates to Old
Dominion. Under the PJM structure, Old Dominion pays for the transmission of
PSE&G power through the zonal rate it currently pays Delmarva Power. PSE&G has
complied with FERC through its compliance order, but has requested a rehearing
and is awaiting a final FERC order.
Beginning January 1, 1995, Old Dominion's partial requirements agreement with
Delmarva Power & Light Company ("Delmarva Power") became effective, obligating
Delmarva Power to provide Old Dominion's power requirements for its three
Members east of the Chesapeake Bay in excess of 150 MW purchased from PSE&G or,
within certain limits, any other capacity secured by Old Dominion with proper
notice to Delmarva Power. For the first five years, charges for service are
based on a rate formula. The agreement continues through 2004 with automatic
extensions for one-year periods unless either party gives five years notice, or
Old Dominion exercises its option to reduce its load by up to 30% with two years
notice or more than 30% with five years notice.
In August 1996, Old Dominion exercised its option under the partial requirements
agreement with Delmarva Power to reduce its power purchases by 30% beginning in
1998. The notice was given based on a review of the wholesale power
<PAGE>
bids that Old Dominion received in response to its request for proposals for
power purchase contracts. A joint venture contract with Conectiv and
Pennsylvania Power & Light to cover power purchases beginning in September 1998
and extending through December 2001 was approved by FERC. In addition to its
notice to reduce power purchases by 30%, Old Dominion has given Delmarva Power
the required five years notice to terminate all purchases under the partial
requirements agreement by 2001.
Old Dominion's purchased power costs for the past three years were as follows :
Year Ended December 31,
-------------------------
1998 1997 1996
---- ---- ----
(in millions)
Virginia Power $ 70.4 $ 79.9 $100.7
Delmarva Power 37.2 34.8 34.1
PSE&G 33.2 39.0 37.6
Other 8.6 10.0 10.5
--------- --------- --------
$149.4 $163.7 $182.9
====== ====== ======
Old Dominion's power purchase agreements contain certain firm capacity and
minimum energy requirements. As of December 31, 1998, Old Dominion's minimum
purchase commitments under the various agreements, without regard to capacity
reductions or cost adjustments, were as follows:
<TABLE>
<CAPTION>
Firm Minimum
Capacity Energy
Year Ending December 31, Requirements Requirements Total
------------------------ ------------ ------------ -----
(in millions)
-------------
<S> <C> <C> <C> <C>
1999 $ 18.1 $ - $ 18.1
2000 17.2 - 17.2
2001 17.0 - 17.0
2002 13.4 - 13.4
2003 13.4 - 13.4
Thereafter 23.4 - 23.4
------- -------- -------
$102.5 $ - $102.5
====== ====== ======
</TABLE>
<PAGE>
NOTE 4 - WHOLESALE POWER CONTRACTS
Old Dominion has Wholesale Power Contracts with all of its Members whereby each
Member is obligated to purchase substantially all of its power requirements from
Old Dominion through the year 2028. Each such contract provides that Old
Dominion shall sell and deliver to the Member, and the Member shall purchase and
receive from Old Dominion, all power that the Member requires for the operation
of the Member's system to the extent that Old Dominion has the power and
facilities available. Each Member is required to pay Old Dominion monthly for
power furnished under its Wholesale Power Contract in accordance with rates and
charges established by Old Dominion pursuant to a rate formula filed with FERC.
Under the accepted rate formula, the rates charged by Old Dominion are developed
using a rate methodology under which all categories of costs are specifically
separated as components of the formula to determine Old Dominion's revenue
requirements. The rate formula method uses traditional techniques to allocate
costs to capacity and energy in establishing rates to the Members. The formula
is intended to permit collection of revenues, which, together with revenues from
all other sources, are equal to all costs and expenses recorded on Old
Dominion's books, plus an additional 20% of total interest charges, plus
additional equity contributions as approved by Old Dominion's Board of
Directors. It also provides for the periodic adjustment of rates to recover
actual, prudently incurred costs, whether they increase or decrease, without
further application to and acceptance by FERC. In accordance with the formula,
the Board of Directors can authorize accelerating the recovery of costs in the
establishment of rates. Old Dominion's rate formula allows Old Dominion to
recover and refund amounts under the Margin Stabilization Plan (as hereinafter
defined).
In order to ensure that only actual cost of power service plus necessary margins
are billed to the Members each year, and to provide for uncertainties connected
with the establishment of prospective rates, in 1984 Old Dominion's Board of
Directors established a plan (the "Margin Stabilization Plan") which allows Old
Dominion to review its actual cost of service and power sales as of year end and
adjust revenues from the Members to take into account actual results and
financial coverages. All adjustments, whether increases or decreases, are
recorded in the year affected and allocated to Members based on power sales
during that year. Such increases or decreases are either collected from Members,
or offset against amounts owed by the Members, in the succeeding year. Under the
Margin Stabilization Plan, Old Dominion reduced revenues from power sales and
increased accounts payable to Members for 1998, 1997, and 1996 in the amount of
$4.4 million, $8.0 million, and $3.5 million, respectively.
Revenues from the following Members equaled or exceeded 10% of Old Dominion's
total revenues for the past three years:
Year Ended December 31,
-----------------------
1998 1997 1996
---- ---- ----
(in millions)
Northern Virginia Electric Cooperative $95.4 $94.5 $98.4
Rappahannock Electric Cooperative 77.0 77.1 78.4
Delaware Electric Cooperative 39.0 37.2 38.2
NOTE 5 - LONG-TERM LEASE TRANSACTIONS
On March 1, 1996, Old Dominion finalized a long-term lease transaction with an
owner trust for the benefit of an equity investor. Under the terms of the
transaction, Old Dominion entered into a 48.8-year lease of its interest in
Clover Unit 1 (valued at $315.0 million) to such owner trustee, and
simultaneously entered into a 22-year lease of the interest back from such owner
trustee. As a result of the transaction, Old Dominion recorded a deferred gain
of $23.6 million, which is being amortized into income ratably over the
21.8-year operating lease term. A portion of the proceeds from the transaction,
$23.9 million, was used to retire a portion of Old Dominion's 8.76% First
Mortgage Bonds, 1992 Series A. Concurrent with the retirement of its 1992 Series
A bonds, Old Dominion issued a like amount of zero coupon First Mortgage Bonds,
1996 Series A with an effective interest rate of 7.06%. The lease transaction
increased other non-current liabilities and restricted investments and funds by
$51.5 million and $50.5 million, respectively.
<PAGE>
On July 31, 1996, Old Dominion finalized a long-term lease transaction with a
business trust created for the benefit of another equity investor. Under the
terms of the transaction, Old Dominion entered into a 63.4-year lease of its
interest in Clover Unit 2 (valued at $320.0 million) to such business trust and
simultaneously entered into a 23-year lease of the interest back from such
business trust. As a result of the transaction, Old Dominion recorded a deferred
gain of $39.3 million, which is being amortized into income ratably over the
23.4-year operating lease term. The lease transaction increased other
non-current liabilities and restricted investments and funds by $56.1 million
and $53.9 million, respectively.
NOTE 6 - INVESTMENTS AND FUNDS-RESTRICTED AND UNRESTRICTED
Investments and funds consist of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1998 1997
(in thousands)
<S> <C> <C>
Decommissioning Fund (trusteed) $51,964 $ 44,162
------- --------
Other Investments and Funds:
Patronage Capital and Capital Term Certificates of CFC 910 910
Regional Headquarters, Inc. (Note 12)
Common stock 455 455
Managed Bond Fund 24,280 20,040
Mutual Fund 4,567 6,564
Other 8,477 3,400
---------- ----------
Subtotal 38,689 31,369
--------- ---------
Restricted cash and investments:
Lease deposits 120,391 116,080
--------- ---------
Total Investments and Funds $211,044 $191,611
======== ========
</TABLE>
The preceding amounts were invested as follows:
<TABLE>
<S> <C> <C>
U.S. Government securities $ 47,291 $ 38,640
Corporate obligations 61,527 58,797
Mortgage-backed securities 6,192 9,849
Corporate common stock 32,766 26,782
Short term investment funds 62,358 56,632
Other 910 911
------------ ------------
Total Investments and Funds $211,044 $191,611
======== ========
</TABLE>
There was no patronage capital allocation from National Rural Utilities
Cooperative Finance Corporation ("CFC") in 1998 or 1997.
Realized gains and losses on the sale of securities are determined on the basis
of specific identification. During 1998 and 1997, sales proceeds were $18.6
million and $38.4 million, respectively. Gross realized gains and losses on the
sale of securities in 1998 were approximately $83,000 and $35,000, respectively.
Gross realized gains on the sale of securities in 1997 were approximately $0.3
million. There were no realized losses on the sale of securities in 1997.
At December 31, 1998 and 1997, the aggregate market value of the above
investments, based on quoted market prices obtained from independent sources,
was $225.2 million and $194.2 million, respectively.
<PAGE>
NOTE 7 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
------------
1998 1997
---- ----
(in thousands)
<S> <C> <C>
$1,075,000 principal amount of First Mortgage Bonds,
1998 Series A, due 2002 at an interest rate of 4.25% $ 1,075 -
$5,000,000 principal amount of First Mortgage Bonds,
1998 Series B, due 2002 at an interest rate of 4.25% 5,000 -
$1,025,000 principal amount of First Mortgage Bonds,
1997 Series A, due 2002 at an interest rate of 4.9% 1,025 $ 1,025
$109,182,937 principal amount of First Mortgage Bonds,
1996 Series B, due 2018 at an effective rate of 7.06% 108,601 109,183
$130,000,000 principal amount of First Mortgage Bonds,
1993 Series A, due 2013 at an interest rate of 7.48% 128,300 128,300
$120,000,000 principal amount of First Mortgage Bonds,
1993 Series A, due 2023 at an interest rate of 7.78% 66,500 66,500
$350,000,000 principal amount of First Mortgage Bonds,
1992 Series A, due 2022 at an interest rate of 8.76% 211,655 211,655
$150,000,000 principal amount of First Mortgage Bonds,
1992 Series A, due 2002 at an interest rate of 7.97% 112,640 140,800
$60,210,000 principal amount of First Mortgage Bonds,
1992 Series C, due 1997 through 2022 at interest rates
ranging from 4.9% to 6.5% 58,110 59,185
Louisa County Pollution Control Revenue Bonds (North Anna),
due December 1, 2008, with variable interest rates
(averaging 4.12% in 1998 and 3.67% in 1997) 6,750 6,750
Non-recourse debt of DPC due in monthly installments
through 2001, with variable interest rates (averaging
3.49% in 1998 and 5.14% in 1997) 1,722 2,022
---------- -----------
701,378 725,420
Less unamortized discounts (87,158) (89,426)
Less current maturities (29,590) (30,116)
---------- ----------
Total Long-Term Debt $584,630 $605,878
=========== ==========
</TABLE>
Substantially all assets of Old Dominion are pledged as collateral under the
Indenture.
The non-recourse debt of DPC is collateralized by a $2.3 million letter of
credit.
During 1997 and 1996, Old Dominion purchased approximately $32.0 million and
$83.1 million, respectively, of its First Mortgage Bonds, 1992 Series A and 1993
Series A. The transactions resulted in net losses of approximately $2.5 million
in 1997 and $2.2 million in 1996, including the write-off of original issuance
costs. The net losses have been deferred and are being amortized over the life
of the remaining bonds.
<PAGE>
In February 1997, Old Dominion refinanced its First Mortgage Bonds, 1996 Series
A. The refinanced bonds, 1996 Series B, have an effective interest rate of 7.06%
and are due in 2018, except for approximately $0.6 million which was due January
1998.
In November 1997, Old Dominion refinanced $1.0 million of its First Mortgage
Bonds, 1992 Series C due 1997. The refinanced bonds, 1997 Series A, are due in
2002 at an interest rate of 4.9%.
In November 1998, Old Dominion refinanced $1.1 million of its First Mortgage
Bonds, 1992 Series C due 1998. The refinanced bonds, 1998 Series A, are due in
2002 at an interest rate of 4.25%.
In December 1998, Old Dominion issued $5.0 million of First Mortgage Bonds, 1998
Series B. The bonds have an interest rate of 4.25% and are due in 2002.
Estimated maturities of long-term debt for the next five years are as follows:
Years Ending December 31, (in thousands)
------------------------- --------------
1999 $29,590
2000 29,700
2001 30,487
2002 36,590
2003 24,186
The aggregate fair value of long-term debt was $758.8 million and $773.4 million
at December 31, 1998 and 1997, respectively, based on current market prices. For
debt issues that are not quoted on an exchange, interest rates currently
available to Old Dominion for issuance of debt with similar terms and remaining
maturities are used to estimate fair value. Old Dominion believes that the
carrying amount of debt issues with variable rates that are refinanced at
current market rates is a reasonable estimate of their fair value.
NOTE 8 - SHORT-TERM BORROWING ARRANGEMENTS
Old Dominion has unsecured short-term lines of credit to provide additional
sources of financing. Old Dominion has a $30.0 million committed line of credit
with NationsBank N.A., which expires on September 30, 1999, and is expected to
be renewed. Additionally, Old Dominion has a $20.0 million committed line of
credit with CFC, a $20.0 million committed line of credit with CoBank, ACB, both
of which expire on December 31, 1999, and are expected to be renewed and a
$150.0 million committed line of credit with Branch Banking and Trust Company of
Virginia, which expires on February 29, 2000, and is expected to be renewed. Old
Dominion also has uncommitted short-term borrowing arrangements aggregating
$30.0 million. Due to limitations contained in certain of these uncommitted
facilities, no more than $85.0 million in total can be outstanding at any time
under Old Dominion's committed and uncommitted short-term borrowing
arrangements. At December 31, 1998 and 1997, Old Dominion had no short-term
borrowings outstanding under any of these arrangements.
Old Dominion maintains a policy which allows Members to pay monthly power bills
before their final due date. Under this policy, Old Dominion will pay interest
on early payment balances at a blended investment and outside short-term
borrowing rate. Amounts advanced by Members are classified as accounts
payable-Member deposits and totaled $42.2 million and $26.1 million at December
31, 1998 and 1997, respectively.
NOTE 9 - CROSS-BORDER TAX BENEFIT LEASE
In December 1994, Old Dominion entered into a cross-border tax benefit lease
with Esbelto BV ("Esbelto"), a Netherlands limited liability company and an
affiliate of Internationale Nederlanden Group ("ING"). Under the terms of the
transaction, Old Dominion transferred nominal title to certain qualifying
pollution control equipment
<PAGE>
("Qualifying Equipment") located at Clover to Esbelto for a cash payment of
$104.8 million, and concurrently entered into an agreement to lease the
Qualifying Equipment back from Esbelto. The lease agreement has an 18-year term,
requires Old Dominion to provide for all repair and maintenance costs (including
insurance and taxes), and provides Old Dominion with a repurchase option
exercisable at the end of the 10th year of the term and other purchase options
in specified circumstances. The Qualifying Equipment was transferred subject to
the lien of the Indenture, and title will revert to Old Dominion upon exercise
of any repurchase option. To fully defease its basic obligations under the
lease, including the 10th year repurchase option, Old Dominion irrevocably
deposited $99.0 million of the proceeds with another ING affiliate. In return,
Esbelto released Old Dominion from its direct obligations under the lease
agreement. The lease agreement required Old Dominion to ensure that Clover Units
1 and 2 were placed into service; accordingly, Old Dominion included the gain in
other liabilities at December 31, 1995. Old Dominion recognized the gain of $5.8
million in March 1996, after Clover Unit 2 was placed into commercial operation
and Old Dominion's obligations in connection with the lease were fulfilled.
Accordingly, Old Dominion has recorded the equipment as an asset on its
consolidated financial statements. However, since Old Dominion's basic
obligations under the lease agreement are fully defeased, the lease obligations
are not reflected on the consolidated financial statements.
NOTE 10 - EMPLOYEE BENEFITS
Substantially all Old Dominion employees participate in the National Rural
Electric Cooperative Association ("NRECA") Retirement and Security Program, a
noncontributory, defined benefit multi-employer master pension plan. The cost of
the plan is funded annually by payments to NRECA to ensure that annuities in
amounts established by the plan will be available to individual participants
upon their retirement. Accumulated benefits and plan assets are not determined
or allocated separately by individual employer. Pension expense for 1998, 1997,
and 1996 was $265,000, $186,000, and $104,000, respectively.
Old Dominion has also elected to participate in the SelectRe Pension Plan, a
defined contribution multi-employer retirement plan administered by the NRECA.
Under the plan, employees may elect to have up to 23% or $10,000, whichever is
less, of their salary withheld on a pre-tax basis, subject to Internal Revenue
Service limitations, and invested on their behalf. As an additional incentive,
Old Dominion matches up to the first 2% of each employee's contribution to the
plan. Old Dominion's matching contributions were $61,000, $64,000, and $62,000
in 1998, 1997, and 1996, respectively.
Certain executive officers of Old Dominion also participate in an unfunded
salary continuation plan, which provides for post employment compensation for
these officers. Old Dominion is accruing the expected present values of the
future benefits over the estimated remaining working lives of these individuals.
Old Dominion's expense under this plan was $14,000 in 1998, $11,000 in 1997, and
$11,000 in 1996.
Old Dominion and the Virginia, Maryland and Delaware Association of Electric
Cooperatives ("VMDA") entered into an agreement with the former President and
Chief Executive Officer of the organizations to jointly fund a supplemental
retirement package on his behalf with an annual fixed contribution of $60,000.
Old Dominion's expense under this agreement was $18,000 in 1998 and $60,000 in
1997 and 1996.
Old Dominion provides no other significant postretirement benefits to its
employees. However, in conjunction with the I&O Agreement, Old Dominion is
required to pay 11.6% of the operating costs associated with North Anna and 50%
of the operating costs associated with Clover, including postretirement benefits
of Virginia Power employees whose costs are allocated to those stations. These
postretirement benefits other than pensions resulted in an increase in expense
to Old Dominion of approximately $0.7 million in 1998, $0.9 million in 1997, and
$0.8 million in 1996. Old Dominion is recovering the expense as it is billed by
Virginia Power.
NOTE 11 - INSURANCE
As a joint owner of North Anna, Old Dominion is a party to the insurance
policies which Virginia Power procures to limit the risk of loss associated with
a possible nuclear incident at the station, as well as policies regarding
general liability and property coverage. All policies are administered by
Virginia Power, which charges Old Dominion for its proportionate share of the
costs.
<PAGE>
The Price-Anderson Act limits the public liability of an owner of a nuclear
power plant to $9.7 billion for a single nuclear incident. The Price-Anderson
Act Amendment of 1988 allows for an inflationary provision adjustment every five
years. Virginia Power has purchased $200 million of coverage from the commercial
insurance pools with the remainder provided through a mandatory industry
risk-sharing program. In the event of a nuclear incident at any licensed nuclear
reactor in the United States, Virginia Power and Old Dominion, jointly, could be
assessed up to $90.7 million (including a 3% insurance premium tax for Virginia)
for each licensed reactor not to exceed $10.3 million (including a 3% insurance
premium tax for Virginia) per year per reactor. There is no limit to the number
of incidents for which this retrospective premium can be assessed.
Virginia Power's current level of property insurance coverage, $2.55 billion for
North Anna, exceeds the NRC's minimum requirement for nuclear power plant
licensees of $1.06 billion for each reactor site and includes coverage for
premature decommissioning and functional total loss. The NRC requires that the
proceeds from this insurance be used first to return the reactor to and maintain
it in a safe and stable condition, and second to decontaminate the reactor and
station site in accordance with a plan approved by the NRC. The property
insurance coverage provided to Virginia Power and Old Dominion, jointly, is
provided by Nuclear Electric Insurance Limited ("NEIL"), a mutual insurance
company, and is subject to retrospective premium assessments in any policy year
in which losses exceed the funds available to the insurance company. The maximum
assessment for the current policy period is $15.3 million. Based on the severity
of the incident, the Board of Directors of the nuclear insurer has the
discretion to lower or eliminate the maximum retrospective premium assessment.
Virginia Power and Old Dominion, jointly, have the financial responsibility for
any losses that exceed the limits or for which insurance proceeds are not
available, because they must first be used for stabilization and
decontamination.
Virginia Power purchases insurance from NEIL to cover the cost of replacement
power during a prolonged outage of a nuclear unit due to direct physical damage
of the unit. Under this program, Virginia Power and Old Dominion, jointly, are
subject to a retrospective premium assessment for any policy year in which
losses exceed funds available to NEIL. The current policy period's maximum
assessment is $3.3 million.
Old Dominion's share of the contingent liability for the coverage assessments
described above is a maximum of $23.2 million at December 31, 1998.
<PAGE>
NOTE 12 - REGIONAL HEADQUARTERS, INC.
Old Dominion and the VMDA are equal joint owners of RHI. Old Dominion's Members
are represented on both the VMDA's and Old Dominion's Boards of Directors. RHI
holds title to the office building that is being leased to Old Dominion, the
VMDA and third party lessees. As a 50% owner, Old Dominion is obligated to make
lease payments equal to one-half of RHI's annual operating expenses, net of
rental income from third party lessees, through the year 2016. Old Dominion is
presently paying approximately 74.2% of RHI's net costs based on its relative
occupancy. During 1998, 1997, and 1996, Old Dominion paid $184,000, $219,000,
and $248,000, respectively, to RHI for rent. At December 31, 1998 and 1997, Old
Dominion had outstanding accounts receivable of $171,000 and $63,000,
respectively, due from RHI.
Estimated future lease payments, without regard to changes in square footage,
third party occupancy rates, operating costs and inflation are as follows:
Year Ending December 31, (in thousands)
------------------------ --------------
1999 $293
2000 293
2001 293
2002 293
2003 293
2004 and thereafter 3,809
-----
$5,274
=====
The assets and liabilities of RHI at December 31, 1998, were $5.6 million
(primarily the book value of the office building) and $4.6 million (primarily an
industrial development bond payable), respectively. Old Dominion records its
investment in RHI under the equity method.
NOTE 13 - SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest, net of allowance for funds used during construction, in
1998, 1997, and 1996 was $60.3 million, $63.9 million, and $57.7 million,
respectively.
Unrealized deferred gains/(losses) on the decommissioning fund of approximately
$0.4 million and $26,000 in 1998 and 1997, respectively, have been included in
the decommissioning reserve.
NOTE 14 - COMMITMENTS AND CONTINGENCIES
STRATEGIC PLAN INITIATIVE - On October 14, 1997, Old Dominion's Board of
Directors approved a resolution adopting certain strategic objectives designed
to mitigate the effects of the transition to a competitive electric market (the
"Strategic Plan Initiative"). Subsequently, an independent assessment of the
impact on Old Dominion of transition to a competitive market was performed and
the resulting recommendations to mitigate the transition effects were approved
by the Board of Directors on July 28, 1998, and incorporated into the Strategic
Plan Initiative. The Strategic Plan Initiative calls for the accumulation of
approximately $330.0 million in cash and cash equivalents from 1998 to 2003 with
the funds to be used for the prepayment of a portion of outstanding debt. To
date, Old Dominion has accelerated the recovery of certain assets ($28.0 million
in 1998 and $11.5 million in 1997) and has rates in place to provide an
additional equity contribution of approximately $45.0 million by the end of
1999. The Strategic Plan Initiative could result in an alternate treatment of
Old Dominion's excess margins, which are currently returned to Members through
the Margin Stabilization Plan or retained as additional equity contributions.
Management is exploring alternative uses for these margins, including the
potential accelerated recovery through
<PAGE>
rates of plant assets. Funds received from the Strategic Plan Initiative will be
invested in high-grade available-for-sale securities.
Northern Virginia Electric Cooperative ("NOVEC") and Southside Electric
Cooperative ("SEC") have voiced concerns about the level and timing of cost
recovery as contemplated by the Strategic Plan Initiative. Further, NOVEC has
expressed concerns about the Strategic Plan Initiative regarding whether Old
Dominion has the right under the Wholesale Power Contracts to "over-collect"
monies from its members for future debt retirement or for payment of future
costs. Management believes that in time these issues will be resolved.
LEGAL - Old Dominion is subject to legal proceedings and claims which arise from
the ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to the actions will not materially affect the
consolidated financial position of Old Dominion.
Old Dominion holds an approximate 30% equity interest in CSC Services, Inc.
("CSC"), formed in 1995 by Old Dominion and 10 of its 12 member distribution
systems to explore alternative business opportunities on behalf of the
cooperatives. During 1996, CSC invested in an approximate one-half interest in
Seacoast Power LLC, whose wholly owned subsidiary, Seacoast, Inc. ("Seacoast"),
executed a six-month power sales contract with INECEL, the state-owned electric
utility in Ecuador. Because of contract disputes, INECEL did not pay invoices
rendered by Seacoast for energy made available under the terms of the power
sales contract. Accordingly, in July 1996, Seacoast filed a $26.0 million
lawsuit in Ecuador against INECEL seeking to recover amounts owed under the
power sales contract, plus damages and fees. A trial date has not been set. In
August 1998, CSC signed an agreement in principal to sell its interest in
Seacoast Power LLC to the other participants in Seacoast Power LLC for $100,000.
On May 24, 1996, a default judgment of approximately $27.0 million was rendered
against Seacoast pursuant to a claim filed in the District Court of Travis
County, Texas, by an entity seeking damages for breach of an oral contract by
the former owners of Seacoast. On January 29, 1998, the Texas Court of Appeals
issued an order affirming the default judgment against Seacoast but reversing
and remanding the award of any damages as factually unsupported. On March 18,
1998, Seacoast filed an appeal challenging the refusal by the Texas Court of
Appeals to set aside the default judgment. That appeal was denied. CSC has
agreed to fund approximately one-half of any further costs, which may be
necessary to defend Seacoast against this action if the damage claim is pursued.
Management of CSC believes there is no basis for the lawsuit and no additional
amount has been recorded as a liability by Old Dominion in 1998.
ENVIRONMENTAL - Old Dominion is currently subject to regulation by the
Environmental Protection Agency ("EPA") and other federal, state, and local
authorities with respect to the emission, discharge, or release of certain
materials into the environment. As with all electric utilities, the operation of
Old Dominion's generating units could be affected by any environmental
regulations promulgated in the future. Capital expenditures and increased
operating costs required to comply with any such future regulations could be
significant. Expenditures necessary to ensure compliance with environmental
standards or deadlines will continue to be reflected in Old Dominion's capital
and operating costs.
Old Dominion is subject to certain requirements of the Clean Air Act ("CAA").
The CAA requires utilities owning fossil fuel fired power stations to, among
other things, limit emissions of sulfur dioxide or obtain allowances for such
emissions, or both, and limit emissions of nitrogen oxides. Clover is designed
and licensed to operate at full capacity within its allocated allowances for
sulfur dioxide and utilizes equipment, which operates at a level significantly
below the limitations for nitrogen oxide emissions.
On September 24, 1998 the EPA issued a Final Rule addressing regional transport
of ground-level ozone through reductions in nitrogen oxides or "NOx" (commonly
known as the NOx State Implementation Plan ("SIP") call). The NOx SIP call
affects 22 states, including Virginia, and the District of Columbia and requires
these states to develop a plan by September 24, 1999 that will reduce NOx
emissions in the respective states. The EPA does not mandate which NOx sources
are required to reduce their emissions of NOx but leaves it up to the individual
state to determine the best approach. It is almost certain that fossil fuel
electric generation facilities greater than 250 mmBtu/hr. will be required to
reduce their NOx emissions. The NOx SIP call requires emission reduction to be
implemented by May 1, 2003.
<PAGE>
Virginia, along with other states, is suing the EPA over the NOx SIP call.
However, this lawsuit is not expected to be resolved prior to the September 24,
1999 deadline. Virginia will likely use its current permit program to enforce
reductions in NOx emissions, which could affect Clover, either by lowering the
permitted levels of NOx emissions or by establishing a cap and trade program to
meet the statewide levels of emissions. No estimate of the cost to Old Dominion
can be made at this time.
Old Dominion is also subject to permit limitations for surface water discharge
and for the operation of a combustion waste landfill. Permits required by the
Clean Water Act, the Resource Conservation and Recovery Act, and state laws have
been issued. These permits are subject to reissuance and continued review.
INSURANCE - Under several of the nuclear insurance policies procured by Virginia
Power and to which Old Dominion is a party, Old Dominion is subject to
retrospective premium assessments in any policy year in which losses exceed the
funds available to the insurance companies. See Note 11 to the Consolidated
Financial Statements.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Old Dominion is governed by a Board of 24 Directors, consisting of two
representatives from each Member. Each of the 12 Members nominates two Directors
who must be either a Director or an employee of the Member in good standing. The
candidates for Director are then elected to Old Dominion's Board of Directors by
voting delegates from each Member elected by each Member's local Board of
Directors and authorized to represent such Member at the annual meeting. Old
Dominion's Board of Directors sets policy and provides direction to Old
Dominion's President. The Board of Directors generally meets monthly. The
Members do not have a right to vote on any matters other than the election of
Directors.
Old Dominion's President administers the day-to-day business and affairs of
Old Dominion. The following table sets forth certain information with respect to
the executive officers of Old Dominion.
Executive Officers of Old Dominion
The executive officers of Old Dominion, as of March 1, 1999, their
respective ages and their respective positions with Old Dominion are listed
below. Each executive officer of Old Dominion serves at the discretion of the
Board of Directors.
<TABLE>
<CAPTION>
Name Age Positions Held
---- --- --------------
<S> <C> <C>
Jackson E. Reasor, Jr. 46 President and Chief Executive Officer
Daniel M. Walker 53 Vice President of Accounting and Finance
Konstantinos N. Kappatos 56 Vice President of Engineering and Operations
</TABLE>
JACKSON E. REASOR, JR. has served as President and Chief Executive Officer
of Old Dominion since November 1998; President of the Virginia, Maryland and
Delaware Association of Electric Cooperatives ("VMDA") (an electric cooperative
association which provides services to the Members and certain other electric
cooperatives) since November 1998; Vice President of First Virginia Bank from
May 1997 until November 1998; President and Chief Executive Officer of Premier
Trust Company from July 1995 until May 1997; a Virginia State Senator from
January 1992 until November 1998; and an attorney with Galumbeck, Simmons &
Reasor from January 1992 until July 1995.
DANIEL M. WALKER has been Vice President of Accounting and Finance of Old
Dominion since January 1984; Assistant Treasurer of Dominion Power Control, Ltd.
("DPC") since December 1986; Assistant Treasurer of Regional Headquarters, Inc.
("RHI") since December 1986; Director and President of CSC Services, Inc.
("CSC") since May 1998; and a Director of Energy Co-Opportunity since August
1998.
KONSTANTINOS N. KAPPATOS has been Vice President of Engineering and
Operations of Old Dominion since January 1984.
DIRECTORS OF OLD DOMINION
<PAGE>
The directors of Old Dominion, as of March 1, 1999, their respective ages,
their respective positions with Old Dominion, if any, their respective principal
occupations and employment during the past five years and other directorships
held by each director are listed below.
WILLIAM M. ALPHIN (Age 68) has been a Director of Old Dominion since
September 1980; a Director of CSC since June 1996; Secretary of RHI since July
1998; Treasurer of RHI from May 1987 until July 1998; a Director of DPC since
July 1988; a Director of Rappahannock Electric Cooperative since January 1980; a
Director of the VMDA since July 1987; an insurance advisor with Virginia Farm
Bureau Insurance Company since October 1975; and a self-employed farmer since
June 1995.
E. PAUL BIENVENUE (Age 59) was Chairman of Old Dominion's Board of
Directors from July 1995 until September 1998; President of DPC since July 1995;
Vice Chairman of Old Dominion's Board of Directors from January 1984 until July
1995; a Director of Old Dominion since September 1981; Vice President of DPC
from December 1990 until July 1995; President of Delaware Electric Cooperative
since September 1998; General Manager of Delaware Electric Cooperative from
September 1981 until September 1998; a Director of Seaford Golf and Country Club
from January 1996 until December 1997: a Director of United Utility Supply
Cooperative Corporation since June 1985; Executive Vice President and General
Manager of Rural Electric TV, Inc. since May 1989; and a Director of Nanticoke
Health Services, Inc. since November 1995.
FRANK W. BLAKE (Age 80) has been a Director of Old Dominion since July
1977; a Director of A&N Electric Cooperative since September 1963; a Director of
the VMDA since July 1987; a self-employed buyer and seller of real estate from
1943 until 1998; a Methodist Minister; and was co-owner of Maxine's Jewelry &
Gifts from August 1962 until December 1993.
JOHN E. BONFADINI (Age 60) has been a Director of Old Dominion since July
1977; a Director of DPC since July 1994; a Director of Northern Virginia
Electric Cooperative since September 1975; and a professor at George Mason
University since July 1980.
DICK D. BOWMAN (Age 70) has been a Director of Old Dominion since July
1993; a Director of DPC since October 1996; a Director of Shenandoah Valley
Electric Cooperative since November 1970; President of Bowman Brothers, Inc., a
farm equipment retailer, since November 1976; a Director of Rockingham Mutual
Insurance Co. since December 1977; a Director of Shenandoah Telecommunication
Co. since December 1980; and Vice President of Shenandoah Valley Electric
Cooperative from June 1989 until June 1991 and from June 1993 until June 1994.
M. JOHNSON BOWMAN (Age 53) has been a Director of Old Dominion since July
1974; a Director of CSC since June 1996; Executive Vice President and General
Manager of Mecklenburg Electric Cooperative since January 1980; a Director of
NRECA since February 1993; and Executive Vice President and General Manager of
Mecklenburg Communications Services, Inc. since January 1999.
M DALE BRADSHAW (Age 45) has been a Director of Old Dominion since January
1995; Chief Executive Officer of Prince George Electric Cooperative since
January 1995; and District Manager of Davidson Electric Membership Corporation
from September 1988 until December 1994.
VERNON N. BRINKLEY (Age 52) has been Secretary/Treasurer of Old Dominion's
Board of Directors since July 1998 and from July 1992 until July 1997; a
Director of Old Dominion since October 1982; a Director of CSC since June 1996;
Secretary/Treasurer of DPC since July 1998 and from July 1992 until July 1997;
President and General Manager of A&N Electric Cooperative since October 1995;
Executive Vice President and General Manager of A&N Electric Cooperative from
September 1982 until October 1995; and a Director of Central Area Data
Processing since May 1991.
CALVIN P. CARTER (Age 74) has been a Director of Old Dominion since May
1991; a Director of Southside Electric Cooperative since June 1972; self
employed as the owner of Carter's Store since April 1960; the owner of Carter
Stone Co., a stone quarry, since June 1965; and a member of the Campbell County
Board of Supervisors since November 1979.
<PAGE>
GLENN F. CHAPPELL (Age 55) has been a Director of Old Dominion since
December 1995; a Director of Prince George Electric Cooperative since February
1985; a Director of the VMDA since December 1995; and a self-employed farmer
since 1962.
STANLEY C. FEUERBERG (Age 47) has been a Director of Old Dominion since
July 1992; a Director of CSC since June 1996; and President and Chief Executive
Officer of Northern Virginia Electric Cooperative since January 1992.
HUNTER R. GREENLAW, JR. (Age 53) has been a Director of Old Dominion since
November 1991; a Director of CSC since June 1996; a Director of Northern Neck
Electric Cooperative since May 1979; and the President of Greenlaw Properties,
Ltd., a real estate development and general contracting company, since August
1974.
BRUCE A. HENRY (Age 53) has been a Director of Old Dominion since November
1993; a Director of Delaware Electric Cooperative since August 1978; and the
owner and Secretary/Treasurer of Delmarva Builders, Inc. since January 1981.
FREDERICK L. HUBBARD (Age 58) has been a Director of Old Dominion since
November 1991; Senior Vice President and Chief Executive Officer of Choptank
Electric Cooperative since May 1991; a Director of Peoples Bank of Maryland
since June 1996; and a Director of Energy Co-Opportunity since August 1998.
DAVID J. JONES (Age 50) has been a Director of Old Dominion since July
1986; a Director of Mecklenburg Electric Cooperative since June 1982; a Director
of DPC since August 1990; Vice President of Exchange Warehouse, Inc. since April
1996; and the owner and operator of Big Fork Farms since April 1970.
WILLIAM M. LEECH, JR. (Age 71) has been a Director of Old Dominion since
August 1977; a Director of DPC since July 1995; a Director of BARC Electric
Cooperative since October 1970; and a Director of CSC since June 1996.
M. LARRY LONGSHORE (57) has been a Director of Old Dominion since October
1998; President and Chief Executive Officer of Southside Electric Cooperative
since October 1998; and President and Chief Executive Officer of Newberry
Electric Cooperative from April 1973 until September 1998.
JAMES M. REYNOLDS (Age 51) was Chairman of Old Dominion's Board of
Directors from July 1992 until July 1995; a Director of Old Dominion since May
1977; President of DPC from July 1992 until July 1995; General Manager of
Community Electric Cooperative since April 1977; was Secretary of DPC from
December 1986 until July 1988; and was Secretary/Treasurer of DPC from July 1988
until July 1992.
CHARLES R. RICE, JR. (Age 56) has been Vice Chairman of Old Dominion's
Board of Directors since July 1995; President and Chief Executive Officer of Old
Dominion from April 1998 through November 1998; a Director of Old Dominion since
August 1986; General Manager of Northern Neck Electric Cooperative since August
1986; and a Director of Northern Neck Electric Cooperative, Ltd since July 1997.
CECIL E. VIVERETTE, JR. (Age 57) has been Chairman of Old Dominion's Board
of Directors since September 1998; Secretary/Treasurer of Old Dominion's Board
of Directors from July 1997 until September 1998; a Director of Old Dominion
since March 1988; President of RHI from July 1990 until July 1998; and President
of Rappahannock Electric Cooperative since March 1988.
RICHARD L. WEAVER (52) has been a Director of Old Dominion since 1998;
Manager of BARC Electric Cooperative since 1998; Vice President of Virginia
Operations for Stackhouse from November 1995 until November 1997; and a Manager
with Virginia Power from May 1969 until October 1995.
GWALTNEY W. WHITE, JR. (Age 71) has been a Director of Old Dominion since
June 1989; President of RHI since July 1998; Vice President of RHI from July
1990 until July 1998; a Director of Community Electric Cooperative since March
1983; Chairman of the Board of Directors of CSC since June 1996; a Director of
Prescription Fertilizer and
<PAGE>
Chemical Company, Inc. since January 1968; was a farmer and peanut buyer from
January 1948 until January 1990; and was the Vice President of Prescription
Fertilizer and Chemical Company, Inc. from January 1968 until January 1994.
CARL R. WIDDOWSON (Age 60) has been a Director of Old Dominion since
February 1987; a Director of Choptank Electric Cooperative since February 1980;
a Director of DPC since July 1988; a Director of the NRECA since 1993; and a
farmer since December 1956.
C. DOUGLAS WINE (Age 56) has been a Director of Old Dominion since April
1991; Vice President of RHI since July 1998; President and Chief Executive
Officer of Shenandoah Valley Electric Cooperative since July 1995; Secretary of
RHI from April 1991 until July 1998; Executive Vice President of Shenandoah
Valley Electric Cooperative from April 1991 until July 1995; a Director of an
advisory board to the Board of Directors of First Virginia Bank - Blue Ridge
since April 1991; and Manager of North River Telephone Cooperative since January
1994.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation awarded
to, earned by or paid to any person serving as Old Dominion's President and
Chief Executive Officer or acting in a similar capacity during the last
completed fiscal year and Old Dominion's two executive officers (collectively
the "Named Executives") for services rendered to Old Dominion in all capacities
during each of the last three fiscal years. The table also identifies the
principal capacity in which each of the Named Executives served Old Dominion at
the end of fiscal year 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Other
Annual All Other
Compen- Compen-
Name and Salary sation sation
Principal Position Year (2)(3) Bonus (4) (5)(6)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jackson E. Reasor. Jr. 1998 $ 20,513 - $ 497 -
President and Chief
Executive Officer
Ronald W. Watkins(1) 1998 75,831 - 282 $189,460
President and Chief 1997 321,593 - 1,149 21,440
Executive Officer 1996 360,900 - 1,181 12,559
Daniel M. Walker 1998 148,984 $7,500 - 25,578
Vice President of Accounting 1997 143,530 6,500 - 20,939
and Finance 1996 139,323 - - 15,693
Konstantinos N. Kappatos 1998 148,984 7,500 - 32,066
Vice President of Engineering 1997 143,530 7,500 - 22,676
and Operations 1996 139,323 - - 17,297
</TABLE>
- -------------------
(1) In 1991, Old Dominion and the VMDA entered into an agreement pursuant to
which the VMDA agreed to contribute to the President and Chief Executive
Officer's annual compensation. In 1998, 1997, and 1996, VMDA contributed
$24,000, $24,000, and $50,000, respectively, toward the President and Chief
Executive Officer's annual compensation.
(2) Includes amounts deferred by the Named Executives, except Mr. Reasor, under
the provisions of the SelectRe Pension Plan (the "401(k) Plan") a
multi-employer tax qualified retirement plan administered by the National
Rural Electric Cooperative Association. All employees of Old Dominion are
eligible to become participants on the first day of the month following
completion of one year of eligible service.
(3) In March 1995, Old Dominion and the VMDA entered into an agreement with Mr.
Watkins pursuant to which Old Dominion and the VMDA agreed to fund a
supplemental retirement package for Mr. Watkins with an annual fixed
contribution of $60,000. The amount paid by Old Dominion in 1998 was
$17,500. The amount paid by Old Dominion in 1996 was $60,000 for 1997 and
$108,300 for 1996 and 1995 combined.
(4) Perquisites and other personal benefits paid to Mr. Reasor in 1998 and to
Mr. Watkins in 1998 and 1997 included expenses for a company automobile.
Neither Mr. Walker nor Mr. Kappatos received any perquisites or other
personal benefits in any of the fiscal years covered by the table.
(5) The amount reflected in this column for 1998 is composed of contributions
made by Old Dominion under the Retirement and Security Plan, the 401(k)
Plan, payments made by Old Dominion for life insurance coverage and amounts
accrued by Old Dominion under the Salary Continuation Plan . Specifically
these amounts for 1998 were $12,012, $933, $560, and $0 for Mr. Watkins;
$12,057, $2,980, $968, and $9,573 for Mr. Walker; and $12,057, $4,980,
$968, and $14,061 for Mr. Kappatos, respectively. No contributions were
made for Mr. Reasor in 1998.
(6) The amount for Mr. Watkins in 1998 includes amounts paid under the
Separation Agreement and General Release for base pay ($130,000),
supplemental retirement ($30,000), health insurance ($2,576), and auto
($13,379).
Effective October 1, 1998, Old Dominion pays the 12 Directors who are not
employees of its Members a $1,000 per month retainer plus $300 per day for any
specially called meetings, $150 per travel day for other than a regular
<PAGE>
scheduled monthly board meeting and reimburses all Directors for out-of-pocket
expenses incurred in attending meetings.
CONTRACT WITH EXECUTIVE OFFICER
On October 28, 1998, Old Dominion and the VMDA entered into an agreement
with Jackson E. Reasor, Jr. in which the companies agreed to pay Mr. Reasor
$200,000 per year, with the potential for a bonus of up to $35,000, when
carrying out the responsibilities as President and Chief Executive Officer. The
agreement also provides for an automobile and all benefits available to other
employees.
DEFINED BENEFIT PLAN
Old Dominion has elected to participate in the NRECA Retirement and Security
Program (the "Plan"), a noncontributory, defined benefit multi-employer master
pension plan maintained and administered by the NRECA for the benefit of its
member systems and their employees. The Plan is a qualified pension plan under
Section 401(a) of the Internal Revenue Code of 1986. The following table lists
the estimated current annual pension benefit payable at "normal retirement age,"
age 65, for participants in the specified final average salary and years of
benefit service categories for the given current multiplier of 1.7%. Benefits,
which accrue under the Plan, are based upon the base annual salary as of
November of the previous year. As a result of changes in Internal Revenue
Service regulations, the base annual salary used in determining benefits is
limited to $150,000 effective January 1, 1994.
Years of Benefit Service
------------------------
Final Average Salary 15 20 25 30 35
-------------------- -------- -------- -------- --------- ---------
$ 75,000 $19,125 $25,500 $31,875 $ 38,250 $ 44,625
100,000 25,500 34,000 42,500 51,000 59,500
125,000 31,875 42,500 53,125 63,750 74,375
150,000 38,250 51,000 63,750 76,500 89,250
The pension benefits indicated above are the estimated annual straight life
as well as the joint and surviving spouse life annuity amounts payable by the
Plan, and they are not subject to any deduction for Social Security or other
offset amounts. The participant's annual pension at his normal retirement date
is equal to the product of his years of benefit service times final average
salary times the multiplier in effect during years of benefit service. The
multiplier was 1.7% commencing January 1, 1992.
As of December 31, 1998, years of credited service under the Plan at
"normal retirement age" for each of the Named Executives was: Mr. Reasor, 0
years; Mr. Watkins, 3.0 years; Mr. Walker, 13.92 years; and Mr. Kappatos, 13.92
years.
SALARY CONTINUATION PLAN
Certain executive officers of Old Dominion also participate in a salary
continuation plan. Pursuant to this plan, Old Dominion has entered into
agreements with each of the Named Executives, providing in part, that if the
Named Executive has attained the age of 50 or older on the date his employment
is terminated for any reason whatsoever, absent malfeasance in office, Old
Dominion will pay certain compensation for a period of 15 years, beginning at
age 65. The amount of such compensation increases under a formula which
considers the Named Executive's age and years of service on the date of
termination of employment, with a maximum compensation of $35,000 per year
payable if the Named Executive's employment is terminated at age 65 or older.
Each agreement provides for payment of similar benefits to the Named Executive's
beneficiaries in the event of his death or permanent disability. Old Dominion
<PAGE>
maintains life insurance coverage on each of the Named Executives to recover
from the insurance proceeds a sum approximately sufficient to offset the
aggregate benefits payable under each agreement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Not Applicable
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not Applicable
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Form 10-K.
1. Financial Statements
See Index on page 27.
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts
3. Exhibits
*3(i) Articles of Incorporation of Old Dominion Electric Cooperative
(filed as exhibit 3.1 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*3(ii) Bylaws of Old Dominion Electric Cooperative, as amended and
restated, October 6, 1992 (filed as exhibit 3.2 to the Registrant's
Form 10-K for the year ended December 31, 1992, File No. 33-46795,
filed on March 30, 1993).
*4.1 Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.1 to the Registrant's Form 10-K for the
year ended December 31, 1992, File No. 33-46795, filed on March 30,
1993).
*4.2 First Supplemental Indenture, dated as of August 1, 1992, to the
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.22 to the Registrant's Form 10-K for the
year ended December 31, 1992, File No. 33-46795, filed on March 30,
1993).
*4.3 Second Supplemental Indenture, dated as of December 1, 1992, to the
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.24 to the Registrant's Form 10-K for the
year ended December 31, 1992, File No. 33-46795, filed on March 30,
1993).
*4.4 Third Supplemental Indenture, dated as of May 1, 1993, to the
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.1 to the Registrant's Form 10-Q for the
quarter ended June 30, 1993, File No. 33-46795, filed on August 10,
1993).
*4.5 Fourth Supplemental Indenture, dated as of December 15, 1994, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.5 to Registrant's Form 10-K for the year
ended December 31, 1996, File No. 33-46795, on March 20, 1997).
*4.6 Fifth Supplemental Indenture, dated as of February 29, 1996, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.6 to Registrant's Form 10-K for the year
ended December 31, 1996, File No. 33-46795, on March 20, 1997).
<PAGE>
4.7 Sixth Supplemental Indenture, dated as of November 28, 1997, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee.
4.8 Seventh Supplemental Indenture, dated as of November 1, 1998, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee.
4.9 Eighth Supplemental Indenture, dated as of November 30, 1998, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee.
*4.10 Form of Bonds, 1992 Series A (filed as exhibit 4.2 to Amendment No.
1 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on May 6, 1992).
*4.11 Form of Bonds, 1992 Series C (filed as exhibit 4.23 to the
Registrant's Form 10-K for the year ended December 31, 1992, File
No. 33-46795, filed on March 30, 1993).
*4.12 Form of Bonds, 1993 Series A (filed as exhibit 4.2 to the
Registrant's Form S-1 Registration Statement, File No. 33-61326,
filed on April 19, 1993).
*10.1 Nuclear Fuel Agreement between Virginia Electric and Power Company
and Old Dominion Electric Cooperative, dated as of December 28,
1982, amended and restated October 17, 1983 (filed as exhibit 10.1
to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.2 Purchase, Construction and Ownership Agreement between Virginia
Electric and Power Company and Old Dominion Electric Cooperative,
dated as of December 28, 1982, amended and restated October 17, 1983
(filed as exhibit 10.2 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.3 Interconnection and Operating Agreement between Virginia Electric
and Power Company and Old Dominion Electric Cooperative, dated as of
December 28, 1982, amended and restated October 17, 1983 (filed as
exhibit 10.3 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on March 27, 1992).
*10.4 Amendment No. 1 to the Interconnection and Operating Agreement
between Virginia Electric and Power Company and Old Dominion
Electric Cooperative, effective on the date of commercial operation
for Clover Unit 2 or December 31, 1996, whichever occurs first
(filed as exhibit 10.4 to the Registrant's Form 10-K for the year
ended December 31, 1994, File No. 33-46795, filed on March 15,
1995).
***10.5 Amended and Restated Interconnection and Operating Agreement between
Virginia Electric and Power Company and Old Dominion Electric
Cooperative, dated as of July 29, 1997.
***10.6 Service Agreement for Network Integration Transmission Service to
Old Dominion Electric Cooperative between Virginia Electric and
Power Company and Old Dominion Electric Cooperative, dated as of
July 29, 1997.
***10.7 Network Operating Agreement between Virginia Electric and Power
Company and Old Dominion Electric Cooperative, dated as of July 29,
1997.
<PAGE>
*10.8 Clover Purchase, Construction and Ownership Agreement between Old
Dominion Electric Cooperative and Virginia Electric and Power
Company, dated as of May 31, 1990 (filed as exhibit 10.4 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on March 27, 1992).
*10.9 Amendment No. 1 to the Clover Purchase, Construction and Ownership
Agreement between Old Dominion Electric Cooperative and Virginia
Electric and Power Company, effective March 12, 1993 (filed as
exhibit 10.34 to the Registrant's Form S-1 Registration Statement,
File No. 33-61326, filed on April 19, 1993).
*10.10 Clover Operating Agreement between Virginia Electric and Power
Company and Old Dominion Electric Cooperative, dated as of May 31,
1990 (filed as exhibit 10.6 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March 27, 1992).
*10.11 Amendment to the Clover Operating Agreement between Virginia
Electric and Power Company and Old Dominion Electric Cooperative,
effective January 17, 1995 (filed as exhibit 10.8 to the
Registrant's Form 10-K for the year ended December 31, 1994, File
No. 33-46795, on March 15, 1995).
*10.12 Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6, 1989,
and the Unit 2 Amendment (Volume 1), dated May 31, 1990, between
Virginia Electric and Power Company and Old Dominion Electric
Cooperative, Westinghouse Electric Corporation, Black & Veatch
Engineers-Architects, Combustion Engineering, Inc. and H.B. Zachry
Company (Volumes 2 - 11 contain technical specifications only)
(filed as exhibit 10.7 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.13 Electric Service Agreement between Old Dominion Electric Cooperative
and Appalachian Power Company, dated July 2, 1990 (filed as exhibit
10.8 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.14 Electric Service Agreement between Old Dominion Electric Cooperative
and Appalachian Power Company, dated March 6, 1991 (filed as exhibit
10.9 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.15 Electric Service Agreement between The Potomac Edison Company and
Old Dominion Electric Cooperative, dated October 4, 1991 (filed as
exhibit 10.11 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on March 27, 1992).
*10.16 Amendment to Electric Service Agreement between The Potomac Edison
Company and Old Dominion Electric Cooperative, dated October 4, 1991
(filed as exhibit 10.36 to Amendment No. 2 to the Registrant's Form
S-1 Registration Statement, File No. 33-61326, filed on May 26,
1993).
*10.17 Lease Agreement between Old Dominion Electric Cooperative and
Regional Headquarters, Inc., dated July 29, 1986 (filed as exhibit
10.27 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.18 Credit Agreement between Virginia Electric and Power Company and Old
Dominion Electric Cooperative, dated as of December 1, 1985 (filed
as exhibit 10.28 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.19 Nuclear Decommissioning Trust Agreement between Old Dominion
Electric Cooperative and Bankers Trust Company, dated March 1, 1991
(filed as exhibit 10.29 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
<PAGE>
*10.20 Form of Salary Continuation Plan (filed as exhibit 10.31 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on March 27, 1992).
*10.21 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and A&N Electric Cooperative, dated April 24,
1992 (filed as exhibit 10.34 to Amendment No. 2 to the Registrant's
Form S-1 Registration Statement, File No. 33-46795, filed on May 27,
1992).
*10.22 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and BARC Electric Cooperative, dated April 22,
1992 (filed as exhibit 10.35 to Amendment No. 1 to the Registrant's
Form S-1 Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.23 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Choptank Electric Cooperative, dated April
20, 1992 (filed as exhibit 10.36 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.24 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Community Electric Cooperative, dated April
28, 1992 (filed as exhibit 10.37 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.25 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Delaware Electric Cooperative, dated April
22, 1992 (filed as exhibit 10.38 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.26 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Mecklenburg Electric Cooperative, dated
April 15, 1992 (filed as exhibit 10.39 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.27 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Northern Neck Electric Cooperative, dated
April 21, 1992 (filed as exhibit 10.40 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.28 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Northern Virginia Electric Cooperative,
dated April 17, 1992 (filed as exhibit 10.41 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.29 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Prince George Electric Cooperative, dated
May 6, 1992 (filed as exhibit 10.42 to Amendment No. 2 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 27, 1992).
*10.30 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Rappahannock Electric Cooperative, dated
April 17, 1992 (filed as exhibit 10.43 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.31 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Shenandoah Valley Electric Cooperative,
dated April 23, 1992 (filed as exhibit 10.44 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.32 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Southside Electric Cooperative, dated April
22, 1992 (filed as exhibit 10.45 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.33 Capacity and Energy Sales Agreement between Old Dominion Electric
Cooperative and Public Service Electric and Gas, dated December 17,
1992, effective January 1, 1995 (filed as exhibit 10.30 to the
<PAGE>
Registrant's Form 10-K for the year ended December 31, 1992, File
No. 33-46795, filed on March 30, 1993).
*10.34 First Supplement to Capacity and Energy Sales Agreement between Old
Dominion Electric Cooperative and Public Service Electric & Gas,
dated March 26, 1993 (filed as exhibit 10.32 to the Registrant's
Form S-1 Registration Statement, File No. 33-61326, filed on April
19, 1993).
*10.35 Letter Agreement between Old Dominion Electric Cooperative and
Delmarva Power & Light Company, dated March 2, 1993 (filed as
exhibit 10.35 to the Registrant's Form S-1 Registration Statement,
File No. 33-61326, filed on April 19, 1993).
*10.36 Wholesale Partial Requirements Service Agreement between Delmarva
Power & Light Company and Old Dominion Electric Cooperative,
effective January 1, 1995 (filed as exhibit 10.38 to Registrant's
Form 10-K for the year ended December 31, 1994, File No. 33-46795,
on March 15, 1995).
*10.37 Transmission Service Agreement between Delmarva Power & Light
Company and Old Dominion Electric Cooperative, effective January 1,
1995 (filed as exhibit 10.39 to Registrant's Form 10-K for the year
ended December 31, 1994, File No. 33-46795, on March 15, 1995).
*10.38 Participation Agreement, dated as of February 29, 1996, among Old
Dominion Electric Cooperative, State Street Bank and Trust Company,
the Owner Participant named therein and Utrecht-America Finance Co
(filed as exhibit 10.35 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.39 Clover Unit 1 Equipment Interest Lease Agreement, dated as of
February 29, 1996, between Old Dominion Electric Cooperative, as
Equipment Head Lessor, and State Street Bank and Trust Company, as
Equipment Head Lessee (filed as exhibit 10.36 to Registrant's Form
10-K for the year ended December 31, 1996, File No. 33-46795, on
March 20, 1996).
**10.40 Equipment Operating Lease Agreement, dated as of February 29, 1996,
between State Street Bank and Trust Company, as Lessor, and Old
Dominion Electric Cooperative, as Lessee (filed as exhibit 10.37 to
Registrant's Form 10-K for the year ended December 31, 1996, File
No. 33-46795, on March 20, 1996).
**10.41 Corrected Option Agreement to Lease, dated as of February 29, 1996,
among Old Dominion Electric Cooperative and State Street Bank and
Trust Company (filed as exhibit 10.38 to Registrant's Form 10-K for
the year ended December 31, 1996, File No. 33-46795, on March 20,
1996).
*10.42 Clover Agreements Assignment and Assumption Agreement, dated as of
February 29, 1996, between Old Dominion Electric Cooperative, as
Assignor, and State Street Bank and Trust Company, as Assignee
(filed as exhibit 10.39 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.43 Deposit Agreement, dated as of February 29, 1996, between Old
Dominion Electric Cooperative, as Depositor, and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New
York Branch, as Issuer (filed as exhibit 10.40 to Registrant's Form
10-K for the year ended December 31, 1996, File No. 33-46795, on
March 20, 1996).
*10.44 Deposit Pledge Agreement, dated as of February 29, 1996, between Old
Dominion Electric Cooperative, as Pledgor, and State Street Bank and
Trust Company, as Pledgee (filed as exhibit 10.41 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
*10.45 Payment Undertaking Agreement, dated as of February 29, 1996,
between Old Dominion Electric Cooperative and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New
<PAGE>
York Branch (filed as exhibit 10.42 to Registrant's Form 10-K for
the year ended December 31, 1996, File No. 33-46795, on March 20,
1996).
*10.46 Payment Undertaking Pledge Agreement, dated as of February 29, 1996,
between Old Dominion Electric Cooperative, as Payment Undertaking
Pledgor, and State Street Bank and Trust Company, as Payment
Undertaking Pledgee (filed as exhibit 10.43 to Registrant's Form
10-K for the year ended December 31, 1996, File No. 33-46795, on
March 20, 1996).
*10.47 Pledge Agreement, dated as of February 29, 1996, between Old
Dominion Electric Cooperative, as Pledgor, and State Street Bank and
Trust Company, as Pledgee (filed as exhibit 10.44 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
*10.48 Tax Indemnity Agreement, dated as of February 29, 1996, among Old
Dominion Electric Cooperative, State Street Bank and Trust Company,
the Owner Participant named therein and Utrecht-America Finance Co.
(filed as exhibit 10.45 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.49 Participation Agreement, dated as of July 1, 1996, among Old
Dominion Electric Cooperative, Clover Unit 2 Generating Trust,
Wilmington Trust Company, the Owner Participant named therein and
Utrecht-America Finance Co. (filed as exhibit 10.46 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
**10.50 Clover Unit 2 Equipment Interest Agreement, dated as of July 1,
1996, between Old Dominion Electric Cooperative and Clover Unit 2
Generating Trust (filed as exhibit 10.47 to Registrant's Form 10-K
for the year ended December 31, 1996, File No. 33-46795, on March
20, 1996).
**10.51 Operating Equipment Agreement, dated as of July 1, 1996, between
Clover Unit 2 Generating Trust and Old Dominion Electric Cooperative
(filed as exhibit 10.48 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.52 Clover Agreements Assignment and Assumption Agreement, dated as of
July 1, 1996, between Old Dominion Electric Cooperative, as
Assignor, and Clover Unit 2 Generating Trust, as Assignee (filed as
exhibit 10.49 to Registrant's Form 10-K for the year ended December
31, 1996, File No. 33-46795, on March 20, 1996).
*10.53 Deed of Ground Lease and Sublease Agreement, dated as of July 1,
1996, between Old Dominion Electric Cooperative, as Ground Lessor,
and Clover Unit 2 Generating Trust, as Ground Lessee (filed as
exhibit 10.50 to Registrant's Form 10-K for the year ended December
31, 1996, File No. 33-46795, on March 20, 1996).
*10.54 Guaranty Agreement, dated as of July 1, 1996, between Old Dominion
Electric Cooperative and AMBAC Indemnity Corporation (filed as
exhibit 10.51 to Registrant's Form 10-K for the year ended December
31, 1996, File No. 33-46795, on March 20, 1996).
*10.55 Investment Agreement, dated as of July 31, 1996, among AMBAC Capital
Funding, Inc., Old Dominion Electric Cooperative and AMBAC Indemnity
Corporation (filed as exhibit 10.52 to Registrant's Form 10-K for
the year ended December 31, 1996, File No. 33-46795, on March 20,
1996).
*10.56 Investment Agreement Pledge Agreement, dated as of July 1, 1996,
among Old Dominion Electric Cooperative, as Investment Agreement
Pledgor, AMBAC Indemnity Corporation, the Owner Participant named
therein and Clover Unit 2 Generating Trust (filed as exhibit 10.53
to Registrant's Form 10-K for the year ended December 31, 1996, File
No. 33-46795, on March 20, 1996).
<PAGE>
*10.57 Equity Security Pledge Agreement, dated as of July 1, 1996, between
Old Dominion Electric Cooperative, as Pledgor, and Wilmington Trust
Company, as Collateral Agent (filed as exhibit 10.54 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
*10.58 Payment Undertaking Agreement, dated as of July 1, 1996, between Old
Dominion Electric Cooperative and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York
Branch (filed as exhibit 10.55 to Registrant's Form 10-K for the
year ended December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.59 Payment Undertaking Pledge Agreement, dated as of July 1, 1996,
between Old Dominion Electric Cooperative, as Payment Undertaking
Pledgor, and Clover Unit 2 Generating Trust, as Payment Undertaking
Pledgee (filed as exhibit 10.56 to Registrant's Form 10-K for the
year ended December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.60 Subordinated Deed of Trust and Security Agreement, dated as of July
1, 1996, among Old Dominion Electric Cooperative, Richard W.
Gregory, Trustee, and Michael P. Drzal, Trustee (filed as exhibit
10.57 to Registrant's Form 10-K for the year ended December 31,
1996, File No. 33-46795, on March 20, 1996).
*10.61 Subordinated Security Agreement, dated as of July 1, 1996, among Old
Dominion Electric Cooperative, the Owner Participant named therein,
AMBAC Indemnity Corporation and Clover Unit 2 Generating Trust
(filed as exhibit 10.58 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.62 Tax Indemnity Agreement, dated as of July 1 1996, between Old
Dominion Electric Cooperative and the Owner Participant named
therein (filed as exhibit 10.59 to Registrant's Form 10-K for the
year ended December 31, 1996, File No. 33-46795, on March 20, 1996).
21 Subsidiaries of Old Dominion Electric Cooperative (not included
because Old Dominion Electric Cooperative's subsidiaries, considered
in the aggregate as a single subsidiary, would not constitute a
"significant subsidiary" under Rule 1-02(w) of Regulation S-X).
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1998.
- ----------------------
* Incorporated herein by reference.
** These leases relate to Old Dominion Electric Cooperative's interest in all
of Clover Unit 1 and Clover Unit 2, as applicable, other than the
foundations. At the time these leases were executed, Old Dominion had
entered into identical leases with respect to the foundations as part of
the same transactions. Old Dominion Electric Cooperative agrees to furnish
to the Commission, upon request, a copy of the leases of its interest in
the foundations for Clover Unit 1 and Clover Unit 2, as applicable.
*** This agreement consists of two separate signed documents, which have been
combined.
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance Charged Charged to
at to other Balance
beginning costs and accounts-- Deductions-- at end of
Description of period expenses describe describe period
- ----------- --------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance sheet reserves deducted from
the assets to which they apply:
Decommissioning Reserve
1998 $44.2 $ 8.8 $ - $ - $53.0
1997 39.3 4.9 - - 44.2
1996 36.1 3.2 - - 39.3
Accumulated provision for
uncollectibles
1998 6.0 - - 6.0(A) -
1997 6.6 - - .6(B) 6.0
1996 - 11.5 - 4.9(A) 6.6
</TABLE>
(A) Represents amounts charged off as uncollectible.
(B) Represents collection of amounts previously reserved.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
OLD DOMINION ELECTRIC COOPERATIVE
Registrant
Date: March 25, 1999 By:/s/JACKSON E.REASOR,JR.
-----------------------
Jackson E. Reasor, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the following capacities on March 25, 1999.
Signature Title
--------- -----
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ JACKSON E. REASOR, JR. President (principal executive officer)
--------------------------
Jackson E. Reasor, Jr.
/s/ DANIEL M. WALKER Vice President of Accounting & Finance
-------------------------- (principal financial officer)
Daniel M. Walker
/s/ ROBERT L. KEES Controller (principal accounting officer)
--------------------------
Robert L. Kees
/s/ WILLIAM M. ALPHIN Director
--------------------------
William M. Alphin
/s/ E. PAUL BIENVENUE Director
--------------------------
E. Paul Bienvenue
/s/ FRANK W. BLAKE Director
-------------------------
Frank W. Blake
/s/ JOHN E. BONFADINI Director
-------------------------
John E. Bonfadini
/s/ DICK D. BOWMAN Director
-------------------------
Dick D. Bowman
</TABLE>
<PAGE>
Signature Title
--------- -----
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ M. JOHNSON BOWMAN Director
-------------------------
M. John Bowman
/s/ M DALE BRADSHAW Director
-------------------------
M Dale Bradshaw
/s/ VERNON N. BRINKLEY Director
-------------------------
Vernon N. Brinkley
/s/ CALVIN P. CARTER Director
-------------------------
Calvin P. Carter
/s/ GLENN F. CHAPPELL Director
-------------------------
Glenn F. Chappell
/s/ STANLEY C. FEUERBERG Director
-------------------------
Stanley C. Feuerberg
/s/ HUNTER R. GREENLAW, JR. Director
-------------------------
Hunter R. Greenlaw, Jr.
/s/ BRUCE A. HENRY Director
-------------------------
Bruce A. Henry
/s/ FREDERICK L. HUBBARD Director
-------------------------
Frederick L. Hubbard
/s/ DAVID J. JONES Director
-------------------------
David J. Jones
/s/ WILLIAM M. LEECH, JR. Director
-------------------------
William M. Leech, Jr.
/s/ M. LARRY LONGSHORE Director
-------------------------
M. Larry Longshore
/s/ JAMES M. REYNOLDS Director
-------------------------
James M. Reynolds.
/s/ CHARLES R. RICE, JR. Director
-------------------------
Charles R. Rice, Jr.
/s/ CECIL E. VIVERETTE, JR. Director
-------------------------
Cecil E. Viverette, Jr.
</TABLE>
Signature Title
--------- -----
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ RICHARD L. WEAVER Director
-------------------------
Richard L. Weaver
/s/ GWALTNEY W. WHITE, JR. Director
-------------------------
Gwaltney W. White, Jr.
/s/ CARL R. WIDDOWSON Director
-------------------------
Carl R. Widdowson
/s/ C. DOUGLAS WINE Director
-------------------------
C. Douglas Wine
</TABLE>
- ----------------------
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
As of the date this annual report on Form 10-K was filed with the Securities
and Exchange Commission, Old Dominion had not yet furnished to its security
holders copies of its annual report for fiscal year 1998. Old Dominion
undertakes that it will file four copies of such annual report with the
Securities and Exchange Commission when such report is sent to security holders.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
EXHIBIT INDEX
Page
Exhibit Description of Exhibit Number
Number
*3(1) Articles of Incorporation of Old Dominion Electric Cooperative
(filed as exhibit 3.1 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*3(ii) Bylaws of Old Dominion Electric Cooperative, as amended and
restated, October 6, 1992 (filed as exhibit 3.2 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1992, File No.
33-46795, filed on March 30, 1993).
*4.1 Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1992, File No. 33-46795, filed on
March 30, 1993).
*4.2 First Supplemental Indenture, dated as of August 1, 1992, to the
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.22 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1992, File No. 33-46795, filed on
March 30, 1993).
*4.3 Second Supplemental Indenture, dated as of December 1, 1992, to the
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.24 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1992, File No. 33-46795, filed on
March 30, 1993).
*4.4 Third Supplemental Indenture, dated as of May 1, 1993, to the
Indenture of Mortgage and Deed of Trust, dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.1 to the Registrant's Form 10-Q for the
fiscal quarter ended June 30, 1993, File No. 33-46795, filed on
August 10, 1993).
*4.5 Fourth Supplemental Indenture, dated as of December 15, 1994, to
the Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.5 to Registrant's Form 10-K for the year
ended December 31, 1996, File No. 33-46795, on March 20, 1997).
*4.6 Fifth Supplemental Indenture, dated as of February 29, 1996, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee (filed as exhibit 4.6 to Registrant's Form 10-K for the year
ended December 31, 1996, File No. 33-46795, on March 20, 1997).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Page
Number Description of Exhibit Number
4.7 Sixth Supplemental Indenture, dated as of November 28, 1997, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee.
4.8 Seventh Supplemental Indenture, dated as of November 1, 1998, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee.
4.9 Eighth Supplemental Indenture, dated as of November 30, 1998, to the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1992,
between Old Dominion Electric Cooperative and Crestar Bank, as
Trustee.
*4.10 Form of Bonds, 1992 Series A (filed as exhibit 4.2 to Amendment
No. 1 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on May 6, 1992).
*4.11 Form of Bonds, 1992 Series C (filed as exhibit 4.23 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1992,
File No. 33-46795, filed on March 30, 1993).
*4.12 Form of Bonds, 1993 Series A (filed as exhibit 4.2 to the
Registrant's Form S-1 Registration Statement, File No. 33-61326,
filed on April 19, 1993).
*10.1 Nuclear Fuel Agreement between Virginia Electric and Power Company
and Old Dominion Electric Cooperative, dated as of December 28,
1982, amended and restated October 17, 1983 (filed as exhibit 10.1
to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.2 Purchase, Construction and Ownership Agreement between Virginia
Electric and Power Company and Old Dominion Electric Cooperative,
dated as of December 28, 1982, amended and restated October 17, 1983
(filed as exhibit 10.2 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.3 Interconnection and Operating Agreement between Virginia Electric
and Power Company and Old Dominion Electric Cooperative, dated as of
December 28, 1982, amended and restated October 17, 1983 (filed as
exhibit 10.3 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on March 27, 1992).
*1.4 Amendment No. 1 to the Interconnection and Operating Agreement
between Virginia Electric and Power Company and Old Dominion
Electric Cooperative, effective on the date of commercial operation
for Clover Unit 2 or December 31, 1996, whichever occurs first
(filed as exhibit 10.4 to the Registrant's Form 10-K for the year
ended December 31, 1994, File No. 33-46795, filed on March 15,
1995).
***10.5 Amended and Restated Interconnection and Operating Agreement between
Virginia Electric and Power Company and Old Dominion Electric
Cooperative, dated as of July 29, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Page
Number Description of Exhibit Number Number
***10.6 Service Agreement for Network Integration Transmission Service to
Old Dominion Electric Cooperative between Virginia Electric and
Power Company and Old Dominion Electric Cooperative, dated as of
July 29, 1997.
***10.7 Network Operating Agreement between Virginia Electric and Power
Company and Old Dominion Electric Cooperative, dated as of July 29,
1997.
*10.8 Clover Purchase, Construction and Ownership Agreement between Old
Dominion Electric Cooperative and Virginia Electric and Power
Company, dated as of May 31, 1990 (filed as exhibit 10.4 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on March 27, 1992).
*10.9 Amendment No. 1 to the Clover Purchase, Construction and Ownership
Agreement between Old Dominion Electric Cooperative and Virginia
Electric and Power Company, effective March 12, 1993 (filed as
exhibit 10.34 to the Registrant's Form S-1 Registration Statement,
File No. 33-61326, filed on April 19, 1993).
*10.10 Clover Operating Agreement between Virginia Electric and Power
Company and Old Dominion Electric Cooperative, dated as of May 31,
1990 (filed as exhibit 10.6 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March 27, 1992).
*10.11 Amendment to the Clover Operating Agreement between Virginia
Electric and Power Company and Old Dominion Electric Cooperative,
effective January 17, 1995 (filed as exhibit 10.8 to the
Registrant's Form 10-K for the year ended December 31, 1994, File
No. 33-46795, on March 15, 1995).
*10.12 Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6, 1989,
and the Unit 2 Amendment (Volume 1), dated May 31, 1990, between
Virginia Electric and Power Company and Old Dominion Electric
Cooperative, Westinghouse Electric Corporation, Black & Veatch
Engineers-Architects, Combustion Engineering, Inc. and H.B. Zachry
Company (Volumes 2 - 11 contain technical specifications only)
(filed as exhibit 10.7 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.13 Electric Service Agreement between Old Dominion Electric Cooperative
and Appalachian Power Company, dated July 2, 1990 (filed as exhibit
10.8 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.14 Electric Service Agreement between Old Dominion Electric Cooperative
and Appalachian Power Company, dated March 6, 1991 (filed as exhibit
10.9 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Page
Number Description of Exhibit Number
*10.15 Electric Service Agreement between The Potomac Edison Company and
Old Dominion Electric Cooperative, dated October 4, 1991 (filed as
exhibit 10.11 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on March 27, 1992).
*10.16 Amendment to Electric Service Agreement between The Potomac Edison
Company and Old Dominion Electric Cooperative, dated October 4, 1991
(filed as exhibit 10.36 to Amendment No. 2 to the Registrant's Form
S-1 Registration Statement, File No. 33-61326, filed on May 26,
1993).
*10.17 Lease Agreement between Old Dominion Electric Cooperative and
Regional Headquarters, Inc., dated July 29, 1986 (filed as exhibit
10.27 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.18 Credit Agreement between Virginia Electric and Power Company and Old
Dominion Electric Cooperative, dated as of December 1, 1985 (filed
as exhibit 10.28 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.19 Nuclear Decommissioning Trust Agreement between Old Dominion
Electric Cooperative and Bankers Trust Company, dated March 1, 1991
(filed as exhibit 10.29 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.20 Form of Salary Continuation Plan (filed as exhibit 10.31 to
the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.21 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and A&N Electric Cooperative,
dated April 24, 1992 (filed as exhibit 10.34 to Amendment No. 2
to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on May 27, 1992).
*10.22 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and BARC Electric Cooperative,
dated April 22, 1992 (filed as exhibit 10.35 to Amendment No. 1
to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on May 6, 1992).
*10.23 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Choptank Electric Cooperative, dated April
20, 1992 (filed as exhibit 10.36 to Amendment No. 1 to the
Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.24 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Community Electric Cooperative,
dated April 28, 1992 (filed as exhibit 10.37 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Page
Number Description of Exhibit Number
*10.25 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Delaware Electric Cooperative,
dated April 22, 1992 (filed as exhibit 10.38 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.26 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Mecklenburg Electric Cooperative,
dated April 15, 1992 (filed as exhibit 10.39 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.27 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Northern Neck Electric
Cooperative, dated April 21, 1992 (filed as exhibit 10.40 to
Amendment No. 1 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on May 6, 1992).
*10.28 Amended and Restated Wholesale Power Contract between Old Dominion
Electric Cooperative and Northern Virginia Electric Cooperative,
dated April 17, 1992 (filed as exhibit 10.41 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.29 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Prince George Electric
Cooperative, dated May 6, 1992 (filed as exhibit 10.42 to Amendment
No. 2 to the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on May 27, 1992).
*10.30 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Rappahannock Electric Cooperative,
dated April 17, 1992 (filed as exhibit 10.43 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.31 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Shenandoah Valley Electric
Cooperative, dated April 23, 1992 (filed as exhibit 10.44 to
Amendment No. 1 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on May 6, 1992).
*10.32 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Southside Electric Cooperative,
dated April 22, 1992 (filed as exhibit 10.45 to Amendment No. 1 to
the Registrant's Form S-1 Registration Statement, File No. 33-46795,
filed on May 6, 1992).
*10.33 Capacity and Energy Sales Agreement between Old Dominion Electric
Cooperative and Public Service Electric and Gas, dated December 17,
1992, effective January 1, 1995 (filed as exhibit 10.30 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1992,
File No. 33-46795, filed on March 30, 1993).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Page
Number Number
Description of Exhibit
*10.34 First Supplement to Capacity and Energy Sales Agreement between Old
Dominion Electric Cooperative and Public Service Electric & Gas,
dated March 26, 1993 (filed as exhibit 10.32 to the Registrant's
Form S-1 Registration Statement, File No. 33-61326, filed on April
19, 1993).
*10.35 Letter Agreement between Old Dominion Electric Cooperative and
Delmarva Power & Light Company, dated March 2, 1993 (filed as
exhibit 10.35 to the Registrant's Form S-1 Registration Statement,
File No. 33-61326, filed on April 19, 1993).
*10.36 Wholesale Partial Requirements Service Agreement between Delmarva
Power & Light Company and Old Dominion Electric Cooperative,
effective January 1, 1995 (filed as exhibit 10.38 to the
Registrant's Form 10-K for the year ended December 31, 1994, File
No. 33-46795, on March 15, 1995).
*10.37 Transmission Service Agreement between Delmarva Power & Light
Company and Old Dominion Electric Cooperative, effective January 1,
1995 (filed as exhibit 10.39 to the Registrant's Form 10-K for the
year ended December 31, 1994, File No. 33-46795, on March 15, 1995).
*10.38 Participation Agreement, dated as of February 29, 1996, among Old
Dominion Electric Cooperative, State Street Bank and Trust Company,
the Owner Participant named therein and Utrecht-America Finance
Co.(filed as exhibit 10.35 to Registrant's Form 10-K for the year
ended December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.39 Clover Unit 1 Equipment Interest Lease Agreement, dated as of
February 29, 1996, between Old Dominion Electric Cooperative, as
Equipment Head Lessor, and State Street Bank and Trust Company, as
Equipment Head Lessee (filed as exhibit 10.36 to Registrant's Form
10-K for the year ended December 31, 1996, File No. 33-46795, on
March 20, 1996).
**10.40 Equipment Operating Lease Agreement, dated as of February 29, 1996,
between State Street Bank and Trust Company, as Lessor, and Old
Dominion Electric Cooperative, as Lessee (filed as exhibit 10.37 to
Registrant's Form 10-K for the year ended December 31, 1996, File
No.33-46795, on March 20, 1996).
**10.41 Corrected Option Agreement to Lease, dated as of February 29, 1996,
among Old Dominion Electric Cooperative and State Street Bank and
Trust Company (filed as exhibit 10.38 to Registrant's Form 10-K for
the year ended December 31, 1996, File No. 33-46795, on March 20,
1996).
*10.42 Clover Agreements Assignment and Assumption Agreement, dated as of
February 29, 1996, between Old Dominion Electric Cooperative, as
Assignor, and State Street Bank and Trust Company, as Assignee
(filed as exhibit 10.39 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Page
Number Number
Description of Exhibit
*10.43 Deposit Agreement, dated as of February 29, 1996, between Old
Dominion Electric Cooperative, as Depositor, and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland," New
York Branch, as Issuer (filed as exhibit 10.40 to Registrant's Form
10-K for the year ended December 31, 1996, File No. 33-46795, on
March 20, 1996).
*10.44 Deposit Pledge Agreement, dated as of February 29, 1996, between Old
Dominion Electric Cooperative, as Pledgor, and State Street Bank and
Trust Company, as Pledgee (filed as exhibit 10.41 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
*10.45 Payment Undertaking Agreement, dated as of February 29, 1996,
between Old Dominion Electric Cooperative and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland," New York
Branch (filed as exhibit 10.42 to Registrant's Form 10-K for the
year ended December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.46 Payment Undertaking Pledge Agreement, dated as of February 29, 1996,
between Old Dominion Electric Cooperative, as Payment Undertaking
Pledgor, and State Street Bank and Trust Company, as Payment
Undertaking Pledgee (filed as exhibit 10.43 to Registrant's Form
10-K for the year ended December 31, 1996, File No. 33-46795, on
March 20, 1996).
*10.47 Pledge Agreement, dated as of February 29, 1996, between Old
Dominion Electric Cooperative, as Pledgor, and State Street Bank and
Trust Company, as Pledgee (filed as exhibit 10.44 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
*10.48 Tax Indemnity Agreement, dated as of February 29, 1996, among Old
Dominion Electric Cooperative, State Street Bank and Trust Company,
the Owner Participant named therein and Utrecht-America Finance Co
(filed as exhibit 10.45 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.49 Participation Agreement, dated as of July 1, 1996, among Old
Dominion Electric Cooperative, Clover Unit 2 Generating Trust,
Wilmington Trust Company, the Owner Participant named therein and
Utrecht-America Finance Co (filed as exhibit 10.46 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
**10.50 Clover Unit 2 Equipment Interest Agreement, dated as of July 1,
1996, between Old Dominion Electric Cooperative and Clover Unit 2
Generating Trust (filed as exhibit 10.47 to Registrant's Form 10-K
for the year ended December 31, 1996, File No. 33-46795, on March
20, 1996).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Description of Exhibit Page
Number Number
**10.51 Operating Equipment Agreement, dated as of July 1, 1996, between
Clover Unit 2 Generating Trust and Old Dominion Electric Cooperative
(filed as exhibit 10.48 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.52 Clover Agreements Assignment and Assumption Agreement, dated as of
July 1, 1996, between Old Dominion Electric Cooperative, as
Assignor, and Clover Unit 2 Generating Trust, as Assignee (filed as
exhibit 10.49 to Registrant's Form 10-K for the year ended December
31, 1996, File No.33-46795, on March 20, 1996).
*10.53 Deed of Ground Lease and Sublease Agreement, dated as of July 1,
1996, between Old Dominion Electric Cooperative, as Ground Lessor,
and Clover Unit 2 Generating Trust, as Ground Lessee (filed as
exhibit 10.50 to Registrant's Form 10-K for the year ended December
31, 1996, File No.33-46795, on March 20, 1996).
*10.54 Guaranty Agreement, dated as of July 1, 1996, between Old Dominion
Electric Cooperative and AMBAC Indemnity Corporation (filed as
exhibit 10.51 to Registrant's Form 10-K for the year ended December
31, 1996, File No. 33-46795, on March 20, 1996).
*10.55 Investment Agreement, dated as of July 1, 1996, among AMBAC Capital
Funding, Inc., Old Dominion Electric Cooperative and AMBAC Indemnity
Corporation (filed as exhibit 10.52 to Registrant's Form 10-K for
the year ended December 31, 1996, File No. 33-46795, on March 20,
1996).
*10.56 Investment Agreement Pledge Agreement, dated as of July 1, 1996,
among Old Dominion Electric Cooperative, as Investment Agreement
Pledgor, AMBAC Indemnity Corporation, the Owner Participant named
therein and Clover Unit 2 Generating Trust (filed as exhibit 10.53
to Registrant's Form 10-K for the year ended December 31, 1996, File
No. 33-46795, on March 20, 1996).
*10.57 Equity Security Pledge Agreement, dated as of July 1, 1996, between
Old Dominion Electric Cooperative, as Pledgor, and Wilmington Trust
Company, as Collateral Agent (filed as exhibit 10.54 to Registrant's
Form 10-K for the year ended December 31, 1996, File No. 33-46795,
on March 20, 1996).
*10.58 Payment Undertaking Agreement, dated as of July 1, 1996, between Old
Dominion Electric Cooperative and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland," New York
Branch (filed as exhibit 10.55 to Registrant's Form 10-K for the
year ended December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.59 Payment Undertaking Pledge Agreement, dated as of July 1, 1996,
between Old Dominion Electric Cooperative, as Payment Undertaking
Pledgor, and Clover Unit 2 Generating Trust, as Payment Undertaking
Pledgee (filed as exhibit 10.56 to Registrant's Form 10-K for the
year ended December 31, 1996, File No. 33-46795, on March 20, 1996).
Exhibit Page
Number Number
Description of Exhibit
*10.60 Subordinated Deed of Trust and Security Agreement, dated as of July
1, 1996, among Old Dominion Electric Cooperative, Richard W.
Gregory, Trustee, and Michael P. Drzal,
<PAGE>
Trustee (filed as exhibit 10.57 to Registrant's Form 10-K for the
year ended December 31, 1996, File No.33-46795, on March 20, 1996).
*10.61 Subordinated Security Agreement, dated as of July 1, 1996, among Old
Dominion Electric Cooperative, the Owner Participant named therein,
AMBAC Indemnity Corporation and Clover Unit 2 Generating Trust
(filed as exhibit 10.58 to Registrant's Form 10-K for the year ended
December 31, 1996, File No. 33-46795, on March 20, 1996).
*10.62 Tax Indemnity Agreement, dated as of July 1, 1996, between Old
Dominion Electric Cooperative and the Owner Participant named
therein (filed as exhibit 10.59 to Registrant's Form 10-K for the
year ended December 31, 1996, File No. 33-46795, on March 20, 1996).
21 Subsidiaries of Old Dominion Electric Cooperative (not included
because Old Dominion Electric Cooperative's subsidiaries, considered
in the aggregate as a single subsidiary, would not constitute a
"significant subsidiary" under Rule 1-02(W) of Regulation S-X).
27 Financial Data Schedule.
</TABLE>
- -----------------------------------
* Incorporated herein by reference.
** These leases relate to Old Dominion Electric Cooperative's interest in all
of Clover Unit 1 and Clover Unit 2, as applicable, other than the
foundations. At the time these leases were executed, Old Dominion had
entered into identical leases with respect to the foundations as part of the
same transactions. Old Dominion Electric Cooperative agrees to furnish the
Commission, upon request, a copy of the leases of its interest in the
foundations for Clover Unit 1 and Clover Unit 2, as applicable.
*** This agreement consists of two separate signed documents, which have been
combined.
<PAGE>
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A PUBLIC UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
--------------------------------------------------------------------------
OLD DOMINION ELECTRIC COOPERATIVE,
GRANTOR
TO
CRESTAR BANK,
TRUSTEE
------------------------
SIXTH SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 28, 1997
----------------------
SUPPLEMENTAL TO THE INDENTURE OF MORTGAGE AND DEED OF TRUST
DATED AS OF MAY 1, 1992
----------------------------------------------------------------------
A MORTGAGE OF BOTH REAL AND PERSONAL PROPERTY
THIS INSTRUMENT IS EXEMPT FROM RECORDATION TAX PURSUANT TO VIRGINIA CODE SECTION
58.1-803.D. RECORDATION TAX HAS BEEN PAID IN THE OFFICE OF THE CLERK OF THE
CIRCUIT COURT FOR HALIFAX COUNTY, VIRGINIA ON A SECOND SUPPLEMENTAL INDENTURE
RECORDED IN DEED BOOK ___, PAGE ___
<PAGE>
SIXTH SUPPLEMENTAL INDENTURE
-------------------------
THIS SIXTH SUPPLEMENTAL INDENTURE, dated as of November 28, 1997
(the "Sixth Supplemental Indenture"), between OLD DOMINION ELECTRIC COOPERATIVE,
a Virginia power supply cooperative (the "Company"), whose mailing address and
address of its chief executive office is Innsbrook Corporate Center, 4201
Dominion Boulevard, Glen Allen, Virginia 23060, and CRESTAR BANK, a Virginia
banking corporation, as trustee (the "Trustee"), having its principal corporate
trust office at 919 East Main Street, Corporate Trust Department, Richmond,
Virginia 23219.
WHEREAS , the Company has heretofore executed and delivered an Indenture
of Mortgage and Deed of Trust, dated as of May 1, 1992 (herein sometimes called
the "Original Indenture"), to secure, as provided therein, its bonds (in the
Original Indenture and herein called the "Bonds"), to be designated generally as
its "First Mortgage Bonds", and to be issued in one or more series as provided
in the Original Indenture; and
WHEREAS, the Original Indenture was recorded among the land records in
the counties of Halifax, Louisa, Spotsylvania and Orange, Virginia, and a UCC
Form 1 concerning the Original Indenture was recorded among the financing
statement records at the Virginia State Corporation Commission and the Counties
of Henrico, Halifax, Louisa, Spotsylvania and Orange; and
WHEREAS, the Company has heretofore executed and delivered a First
Supplemental Indenture, dated as of August 1, 1992 (hereinafter the "First
Supplemental Indenture"), its Second Supplemental Indenture dated as of December
1, 1992 (hereinafter called the "Second Supplemental Indenture"), its Third
Supplemental Indenture, dated as of May 1, 1993 (hereinafter called the "Third
Supplemental Indenture"), its Fourth Supplemental Indenture, dated as of
December 15, 1994 (hereinafter called the "Fourth Supplemental Indenture") and
its Fifth Supplemental Indenture, dated as of February 29, 1996 (hereinafter
called the "Fifth Supplemental Indenture"), supplementing the Original
Indenture, each of which, with the exception of the Fourth Supplemental
Indenture, provided for the creation of a new series of Bonds which subjected,
or intended to subject, to the lien of the Original Indenture certain property
described therein and was recorded among the land records for the counties of
Halifax, Louisa, Spotsylvania and Orange, Virginia and among the financing
statement records at the Virginia State Corporation Commission and the Counties
of Henrico, Halifax, Louisa, Spotsylvania and Orange, Virginia, which recording
offices will include the recording offices in which this Sixth Supplemental
Indenture will be recorded; and
<PAGE>
WHEREAS, pursuant to the Original Indenture, the First Supplemental
Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture,
and the Fifth Supplemental Indenture, there have been executed, authenticated,
delivered and issued and there are now outstanding First Mortgage Bonds of the
series and in the principal amount as follows:
Principal Principal
Amount Amount
Series Issued Outstanding
------ ------ -----------
7.27% First Mortgage $50,000,000 $16,668,000
Bonds, 1992 Series A,
Due December 1, 1997
7.97% First Mortgage l50,000,000 142,000,000
Bonds, 1992 Series A,
Due December 1, 2002
8.76% First Mortgage 350,000,000 271,200,000
Bonds, 1992 Series A,
Due December 1, 2022
First Mortgage Bonds, 1,203,638 0
1992 Series B, Due
September 15, 1992
First Mortgage Bonds, 1,203,637 0
1992 Series B, Due
December 15, 1992
First Mortgage Bonds, 1,203,637 0
1992 Series B, Due
March 15, 1993
First Mortgage Bonds, 1,203,638 0
1992 Series B, Due
June 15, 1993
First Mortgage Bonds, l,203,638 0
1992 Series B, Due
September 15, 1993
First Mortgage Bonds, 1,203,637 0
<PAGE>
1992 Series B, Due
December 15, 1993
First Mortgage Bonds, 392,375 0
1992 Series B, Due
March 15, 1994
First Mortgage Bonds 392,376 0
1992 Series B, Due
June 15, 1994
First Mortgage Bonds 392,376 0
1992 Series B, Due
September 15, 1994
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15, 1994
First Mortgage Bonds 392,375 0
1992 Series B, Due
March 15, 1995
First Mortgage Bonds, 392,376 0
1992 Series B, Due
June 15, 1995
First Mortgage Bonds 392,376 0
1992 Series B, Due
September 15, 1995
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15, 1995
First Mortgage Bonds, 392,375 0
1992 Series B, Due
March 15, 1996
First Mortgage Bonds, 392,376 0
1992 Series B, Due
June 15, 1996
<PAGE>
First Mortgage Bonds, 392,376 0
1992 Series B, Due
September 15, 1996
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15,1996
4.90% First Mortgage 1,025,000 1,025,000
Bonds, 1992 Series C,
Due December 1, 1997
5.20% First Mortgage 1,075,000 1,075,000
Bonds, 1992 Series C,
Due December 1, 1998
5.40% First Mortgage 1,130,000 1,130,000
Bonds, 1992 Series C,
Due December 1, 1999
5.50% First Mortgage 1,190,000 1,190,000
Bonds, 1992 Series C,
Due December 1, 2000
5.70% First Mortgage 1,255,000 1,255,000
Bonds, 1992 Series C,
Due December 1, 2001
5.90% First Mortgage 1,330,000 1,330,000
Bonds, 1992 Series C,
Due December 1, 2002
6.00% First Mortgage 1,405,000 1,405,000
Bonds, 1992 Series C,
Due December 1, 2003
6.10% First Mortgage 1,495,000 1,495,000
Bonds, 1992 Series C,
Due December 1, 2004
6.35% First Mortgage 5,060,000 5,060,000
Bonds, 1992 Series C,
Due December 1, 2007
<PAGE>
6.50% First Mortgage 10,845,000 10,845,000
Bonds, 1992 Series C,
Due December 1, 2012
6.00% First Mortgage 34,400,000 34,400,000
Bonds, 1992 Series C,
Due December 1, 2022
7.48% First Mortgage 130,000,000 129,000,000
Bonds, 1993 Series A,
Due December 1, 2013
7.78% First Mortgage 120,000,000 120,000,000
Bonds, 1993 Series A,
Due December 1, 2023
First Mortgage Bonds 25,565,962 0
1996 Series A, Due
February 28, 1997
First Mortgage Bonds 581,032 581,032
1996 Series B, Due
January 5, 1998
First Mortgage Bonds 10,649,541 10,649,541
1996 Series B, Due
April 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
June 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
September 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
December 15, 2018
WHEREAS, in connection with the construction of a two-unit, coal-fired
electric generating facility (the "Project") in Halifax County, Virginia (in
which the Company has an undivided 50% interest), the Company installed certain
solid waste disposal and sewerage facilities (the "Facilities"). Pursuant to a
loan agreement dated as of December
<PAGE>
1, 1992 (the "Loan Agreement"), between the Company and the Industrial
Development Authority of Halifax County, Virginia (the "Authority"), the
Authority assisted the Company with the financing of the Facilities by issuing
its Exempt Facility Revenue Bonds (Old Dominion Electric Cooperative Project),
Series 1992, in an aggregate principal amount of $60,210,000.00 (the "Series
1992 Tax-Exempt Bonds"). The Company's obligation to repay the loan from the
Authority is evidenced by a new series of Bonds designated First Mortgage Bonds,
1992 Series C (the "1992 Series C Bonds"); and
WHEREAS, pursuant to a First Supplemental Loan Agreement dated as of
November 28, 1997 (the "First Supplemental Loan Agreement"), between the
Authority and the Company, the Authority has agreed to issue a new series of
refunding revenue bonds in an aggregate principal amount of $1,025,000 (the
"Series 1997 Tax-Exempt Bonds") to refund the December 1, 1997, maturity of the
Series 1992 Tax-Exempt Bonds. The Company's obligation to repay the loan from
the Authority in connection with the Series 1997 Tax-Exempt Bonds shall be
evidenced by a new series of Bonds to be designated First Mortgage Bonds, 1997
Series A (the "1997 Series A Bonds"), which will replace and refund the December
1, 1997, maturity of the 1992 Series C Bonds.
WHEREAS, the Board of Directors of the Company has established the 1997
Series A Bonds and the Board of Directors of the Company has authorized an issue
of One Million Twenty-Five Thousand and no/100 Dollars ($1,025,000) principal
amount thereof, and the Company has complied or will comply with all provisions
required to issue Additional Bonds provided for in the Original Indenture; and
WHEREAS, the Company desires to execute and deliver this Sixth
Supplemental Indenture, in accordance with the provisions of the Original
Indenture, for the purposes, among others, of (i) providing for the creation of
a new series of Bonds, designating the series to be created and specifying the
form and provisions of the Bonds of such series (the Original Indenture, as
heretofore and hereby supplemented and modified, being herein sometimes called
the "Indenture"), and (ii) modifying the terms, provisions, restrictions or
conditions of the Original Indenture; and
WHEREAS, Section 13.01 of the Original Indenture provides that, without
the consent of the Holders of any of the Bonds at the time Outstanding, the
Company, when authorized by a Board Resolution and the Trustee, may enter into
supplemental indentures for the purposes and subject to the conditions set forth
in said Section 13.01; and
WHEREAS, the Company proposes to modify the Original Indenture as
provided in Section 13.01; and
WHEREAS, all acts and proceedings required by law and by the Articles of
Incorporation and Bylaws of the Company necessary to secure the payment of the
principal of (and premium, if any) and interest on the 1997 Series A Bonds, to
make the 1997 Series A Bonds to be issued hereunder, when executed by the
Company, authenticated and delivered by the Trustee and duly issued, the valid,
binding and legal obligations of the
<PAGE>
Company, and to constitute the Indenture a valid and binding mortgage for the
security of all of the Bonds, in accordance with its and their terms, have been
done and taken; and the execution and delivery of this Sixth Supplemental
Indenture has been in all respects duly authorized;
NOW, THEREFORE, THIS SIXTH SUPPLEMENTAL INDENTURE WITNESSETH, that, to
secure the payment of the principal of (and premium, if any) and interest on
the Outstanding Secured Bonds, to confirm the lien of the Original Indenture
upon the Trust Estate mentioned therein including all property purchased,
constructed or otherwise acquired by the Company since the date of execution of
the Original Indenture, to secure performance of the covenants therein and
herein contained, to declare the terms and conditions on which the Outstanding
Secured Bonds are secured, and in consideration of the premises thereof and
hereof and to modify the Original Indenture, the Company by these presents does
grant, bargain, sell, alienate, remiss, release, convey, assign, transfer,
mortgage, hypothecate, pledge, set over and confirm to the Trustee, in trust,
all property, rights, privileges and franchises (other than Excepted Property)
of the Company of the character described in the Granting Clauses of the
Original Indenture, including all such property, rights, privileges and
franchises acquired since the date of execution of the Original Indenture,
including, without limitation, all of those fee and leasehold interests in real
property, if any, which may hereafter be constructed or acquired by it, but
subject to all exceptions, reservations and matters of the character therein
referred to, and expressly excepting and excluding from the lien and operation
of the Indenture all properties of the character specifically excepted by
Subdivisions A through K of "Excepted Property" in the Original Indenture to
the extent contemplated thereby, and all property heretofore released or
otherwise disposed of pursuant to the provisions of the Original Indenture.
PROVIDED, HOWEVER, that (i) if, upon the occurrence of an Event of
Default, the Trustee, or any separate trustee or co-trustee appointed under
Section 10.14 of the Original Indenture or any receiver appointed pursuant to
statutory provision or order of court, shall have entered into possession of all
or substantially all of the Trust Estate, all the Excepted Property described or
referred to in Subdivisions A through G, inclusive, of "Excepted Property" in
the Original Indenture then owned or thereafter acquired by the Company shall
immediately, and, in the case of any Excepted Property described or referred to
in Subdivisions H through J inclusive, of "Excepted Property" in the Original
Indenture, upon demand of the Trustee or such other trustee or receiver, become
subject to the lien of the Original Indenture to the extent permitted by law,
and the Trustee or such other trustee or receiver may, to the extent permitted
by law, at the same time likewise take possession thereof, and (ii) whenever all
Events of Default shall have been cured and the possession of all or
substantially all of the Trust Estate shall have been restored to the Company,
such Excepted Property shall again be excepted and excluded from the lien of the
Original Indenture to the extent and otherwise as hereinabove set forth and as
set forth in the Original Indenture.
<PAGE>
The Company may, however, pursuant to Granting Clause Third of the
Original Indenture, subject any Excepted Property to the lien of the Original
Indenture, whereupon the same shall cease to be Excepted Property.
TO HAVE AND TO HOLD all said property, rights, privileges and franchises
of every kind and description, real, personal or mixed, hereby and hereafter (by
Supplemental Indenture or otherwise) granted, bargained, sold, alienated,
remised, released, conveyed, assigned, transferred, mortgaged, hypothecated,
pledged, set over or confirmed as aforesaid, or intended, agreed or covenanted
so to be, together with all the appurtenances thereto appertaining unto the
Trustee and its successors and assigns forever.
SUBJECT, HOWEVER, to (i) Permitted Encumbrances (as defined in Section
1.01 of the Original Indenture), (ii) to the extent permitted by Section 14.06
of the Original Indenture, as to property acquired since the date of execution
of the Original Indenture, (a) any duly recorded or perfected prior mortgage or
other lien that may exist thereon at the date of the acquisition thereof by the
Company, and (b) purchase money mortgages created by the Company at the time of
acquisition thereof, and (iii) defects of title to and encumbrances on property
described in Article IV of the First Supplemental Indenture.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and
proportionate benefit and security of the Holders from time to time of all the
Outstanding Secured Bonds without any priority of any such Bond over any other
such Bond and for the enforcement of the payment of such Bonds in accordance
with their terms.
UPON CONDITION that, until the happening of an Event of Default (as
defined in Section 1.01 of the Original Indenture) and subject to the provisions
of Article Six of the Original Indenture, the Company shall be permitted to
possess and use the Trust Estate, except cash, securities and other personal
property deposited, or required to be deposited, with the Trustee and to explore
for, mine, extract and dispose of coal, ore, gas, oil and other minerals, to
harvest standing timber and to receive and use the rents, issues, profits,
revenues and other income, products and proceeds of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that all the Bonds are to be
authenticated and delivered and the Trust Estate is to be held and applied by
the Trustee, subject to the further covenants, conditions and trusts set forth
in the Original Indenture, and the Company does hereby covenant and agree to and
with the Trustee, for the equal and proportionate benefit of all Holders of the
Bonds as follows:
<PAGE>
ARTICLE 1
BONDS OF THE 1997 SERIES A AND CERTAIN PROVISIONS
RELATING THERETO
SECTION 1.01
(A) TERMS OF THE 1997 SERIES A BONDS. There be hereby established a
series of Bonds, known as and entitled "First Mortgage Bonds, 1997 Series A"
(hereinafter referred to as the "1997 Series A Bonds") and the form thereof
shall be substantially as set forth in Section 1.01 (D). The aggregate principal
amount of 1997 Series A Bonds which may be authenticated and delivered and
Outstanding at any one time is limited to One Million Twenty Five Thousand and
no/100 Dollars ($1,025,000). The Trustee is hereby appointed as Authenticating
Agent for the 1997 Series A Bonds.
The 1997 Series A Bonds shall be issuable in fully registered form
without coupons and in denominations of $5,000 and integral multiples thereof.
Each 1997 Series A Bond shall be dated the date of its issuance and delivery.
The 1997 Series A Bonds shall bear interest from their date payable on June 1,
1998, and on each of June 1 and December 1 of each year thereafter at the rate
of _____% per annum and shall mature, subject to prior redemption, on the later
of (a) March 15, 1998, and (b) December 1, 2002, if, prior to March 15, 1998.
the Company has received a final non-appealable order from the Federal Energy
Regulatory Commission authorizing the Company's issuance to the Authority of its
First Mortgage Bonds to mature on December 1, 2002, to secure payment of the
Series 1997 Tax-Exempt Bonds.
The 1997 Series A Bonds shall be issued to and registered in the name of
the Authority and subsequently will be assigned by the Authority to the Bank of
New York,. as trustee (the "Tax-Exempt Bond Trustee") pursuant to that certain
Indenture of Trust, dated as of December 1, 1992, between the Authority and the
Tax-Exempt Bond Trustee (as supplemental and amended by that certain First
Supplemental Tax-Exempt Indenture of Trust, dated as of November 28, 1997 the
"Tax-Exempt Indenture") and will secure the obligations of the Company under the
Loan Agreement, as supplemented and amended by the First Supplemental Loan
Agreement").
The 1997 Series A Bonds shall be lettered "A". The principal and
interest on the 1997 Series A Bonds shall be payable in lawful money of the
United States of America to the registered owner of the 1997 Series A Bonds or
its assignee in accordance with the provisions of the First Supplemental Loan
Agreement by wire transfer or other method acceptable to such registered owner
or its assignee in funds which will be immediately available on the applicable
principal and/or Interest Payment Date or Redemption Date. Interest on the 1997
Series A Bonds shall be payable without presentation of the 1997 Series A Bonds
for payment. Payment of the principal or Redemption Price of any 1997
<PAGE>
Series A Bond shall be made by the Company to the Tax-Exempt Bond Trustee upon
presentation and surrender of such Bond to the Trustee.
The Regular Record Date referred to in Section 3.09 of the Original
Indenture for the payment of interest on the 1997 Series A Bonds shall be the
fifteenth day (whether or not a business day) of the calendar month next
preceding such Interest Payment Date.
(B) EXTRAORDINARY OPTIONAL REDEMPTION OF 1997 SERIES A BONDS.
(i) The 1997 Series A Bonds are subject to extraordinary optional
redemption by the Company in whole at any time at a Redemption Price equal to
100% of the principal amount of such 1997 Series A Bonds, together with accrued
interest to the Redemption Date, upon the happening of any of the following
events:
(a) Damage or destruction of the Facilities by fire or
other casualty to such extent that, or loss of title to or use of substantially
all of the Facilities as a result of the exercise of the power of eminent domain
or failure of title which, in the opinion of both the Company (expressed in a
certificate of an Officer of the Company) and an Engineer, both filed with the
Trustee and the Tax-Exempt Bond Trustee and, that (1) the Facilities cannot be
reasonably repaired, rebuilt or restored within a period of 12 months to their
condition immediately preceding such damage or destruction, or (2) the Company
is prevented from carrying on its normal operations at the Facilities for a
period of 12 months; or
(b) A change in the Constitution of Virginia or of the
United States of America or a legislative or administrative action (whether
local, state or Federal) or a final decree, judgment or order of any court or
administrative body (whether local, state or Federal) contested by the Company
in good faith which causes (1) the First Supplemental Loan Agreement or the 1997
Series A Bonds to become void or unenforceable or their performance in
accordance with the intent and purpose of the parties as expressed therein to be
impossible or (2) unreasonable burdens or excessive liabilities to be imposed on
the Authority or the Company.
(ii) The 1997 Series A Bonds are subject to extraordinary
optional redemption by the Company in part on any Interest Payment Date at a
Redemption Price equal to 100% of the principal amount of the 1997 Series A
Bonds to be redeemed, together with accrued interest to the Redemption Date in
the event of (i) damage or destruction to any part of the Facilities by fire or
other casualty or (ii) loss of title to any part of the Facilities as a result
of the exercise of eminent domain or failure of title, but only upon receipt by
the Trustee and the Tax-Exempt Bond Trustee of the following:
(a) A certificate of an Officer of the Company stating
that there has been either (x) damage or destruction of the Facilities by fire
or other casualty or (y) loss of title to any part of the Facilities as a result
of the exercise of eminent domain or
<PAGE>
failure of title and that it is not in the best interest of the Company to
rebuild such portion of the Facilities; and
(b) An Opinion of Counsel stating that the use of the
condemnation award or insurance proceeds resulting from such casualty or loss of
title, for purposes other than (x) rebuilding, restoring or repairing the
Facilities, or (y) redeeming the Series 1997 Tax-Exempt Bonds would cause the
interest paid or payable on the Series 1997 Tax-Exempt Bonds (other than
interest paid to any "substantial user" of the Facilities or "related person" as
those terms are defined in Section 147(a) of the Internal Revenue Code of 1986,
as amended (the "Code")) to be includable in the gross income of a holder of
Series 1997 Tax-Exempt Bonds for Federal income tax purposes under the Code (or
for Virginia state income tax purposes).
(iii) To exercise its option to redeem the 1997 Series A Bonds,
in whole under subsection (B)(i), above, or in part under subsection (B)(ii),
above, the Company shall comply with the provisions of Article Seven of the
Original Indenture, if applicable, and shall within 120 days after the event
permitting its exercise, file the required documentation with the Trustee and
the Tax-Exempt Bond Trustee and specify a date not more than 60 days thereafter
for making such payments.
(C) MANDATORY REDEMPTION OF THE 1997 SERIES A BONDS. The 1997 Series A
Bonds are subject to mandatory redemption in whole as promptly as possible, but
no later than 180 days after the occurrence of any Determination of Taxability,
at a Redemption Price equal to 100% of the principal amount of the 1997 Series A
Bonds to be redeemed plus interest accrued to the Redemption Date. For purposes
of this paragraph, "Determination of Taxability" shall mean (i) any enactment or
amendment of any applicable statute or regulation, or (ii) a final decree or
judgment of any federal court, a final determination by the United States
Internal Revenue Service or a final judgment or determination by any court or
agency of the Commonwealth of Virginia, with the effect that interest paid or
payable on the Series 1997 Tax-Exempt Bonds (other than interest paid to any
"substantial user" of the Facilities or "related person" as those terms are
defined in Section 147(a) of the Code) is or was includable in the gross income
of a Series 1997 Tax-Exempt Bondholder for Federal income tax purposes under the
Code (or for Virginia state income tax purposes). A Determination of Taxability
does not include any tax upon interest payable on exempt facility bonds under
Section 142 of the Code and other statutes and regulations in effect on the date
of issuance of the Series 1997 Tax-Exempt Bonds and does not include any change
in tax rates. A Determination of Taxability will be deemed to have occurred on
the date on which the Tax-Exempt Bond Trustee is first notified in writing of
any such enactment, amendment, judgment, decree or determination.
(D) FORM OF 1997 SERIES A BONDS. The 1997 Series A Bonds and the
Trustee's authentication certificate to be executed on the Bonds of said series
shall be substantially in the following form, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Original Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed
<PAGE>
thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the Officers executing such
Bonds, as evidenced by their execution of such Bonds:
FORM OF 1997 SERIES A BONDS
THIS FIRST MORTGAGE BOND, 1997 SERIES A, HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER SUCH ACT OR
IN RELIANCE UPON AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
Old Dominion Electric Cooperative
First Mortgage Bond 1997 Series A,
Due March 15, 1998 or December 1, 2002 (as described herein)
No. $
-----------------
Old Dominion Electric Cooperative, a Virginia power supply
cooperative (herein called the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to _____________, or registered assigns, the principal
sum of ______________ Dollars on the later of (a) March 15, 1998 and (b)
December 1, 2002, if, prior to March 15, 1998, the Company has received a final,
non-appealable order from the Federal Energy Regulatory Commission authorizing
the Company's issuance to the Authority (as defined herein) of its First
Mortgage Bonds to mature on December 1, 2002, to secure payment of the Series
1997 Tax-Exempt Bonds (as defined herein), in which event the Noteholder and the
Company shall execute an allonge to the Bond evidencing the extension of its
maturity, and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) thereon from the date of this Bond or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on June 1 and December 1 in each year, commencing June 1, 1998, at
the rate of _______% per annum, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture
(as defined herein), be paid to the Person in whose name this Bond is registered
on the date of business on the Regular Record Date for such interest, which
shall be the fifteenth day (whether or not a business day), of the calendar
month next proceeding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Bond is registered at the close of business on a Special Record Date
for the payment of such defaulted interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Bonds of this series not less than 10 days
prior to such
<PAGE>
Special Record Date, or may be paid at any time in any other lawful manner not
inconsistent with the provisions of the Indenture and acceptable to the Holder
hereof.
If any principal of or premium, if any, or interest on this Bond is not
paid when due (whether at maturity, upon acceleration or call for redemption or
otherwise), then the overdue installments of principal and, to the extent
permitted by law, interest shall bear interest until paid at the interest rate
borne by this Bond.
The principal of and premium, if any, and interest on this Bond shall be
payable in lawful money of the United States of America to the registered owner
hereof in accordance with the provisions of the Loan Agreement (as defined
herein) by wire transfer or other method acceptable to such registered owner in
funds which will be immediately available on the applicable principal and/or
interest payment date or redemption date. Interest on this Bond shall be payable
without presentation hereof. Payment of the principal and premium, if any, on
this Bond shall be made by the Company to the holder hereof upon presentation
and surrender of such Bond to Crestar Bank, Richmond, Virginia, as trustee
("Trustee") under the Indenture.
This Bond is one of a duly authorized issue of Bonds of the Company
designated as its "First Mortgage Bonds" (herein called the "Bonds") issued and
to be issued in one or more series (which may have varying terms) under, and all
equally and ratably secured by, an Indenture of Mortgage and Deed of Trust,
dated as of May 1, 1992 (herein called the "Indenture"), between the Company and
the Trustee to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the description of the properties thereby
mortgaged, pledged and assigned, the nature and extent of the security and the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Bonds and of the terms upon
which the Bonds are, and are to be, authenticated and delivered. This Bond is
issued pursuant to the Sixth Supplemental Indenture, dated as of November 15,
1997 ("Sixth Supplemental Indenture"), between the Company and the Trustee. The
Bonds are being issued to refund the December 1, 1997, maturity of the Company's
First Mortgage Bonds, 1992 Series C ("1992 Series C Bonds). The 1992 Series C
Bonds were issued by the Company to repay a loan from the Industrial Development
Authority of Halifax County, Virginia ("Authority") made to the Company from the
proceeds of the Authority's $60,210,000 Exempt Facility Revenue Bonds (Old
Dominion Electric Cooperative Project) Series 1992 ("1992 Tax-Exempt Bonds") for
the purpose of acquiring, constructing and equipping certain solid waste and
sewage disposal facilities ("Facilities") for the Company pursuant to the Loan
Agreement, dated as of December 1, 1992 ("Loan Agreement"), between the Company
and the Authority. The 1992 Tax-Exempt Bonds were issued pursuant to an
Indenture of Trust, dated as of December 1, 1992 (as amended and supplemented
"Tax-Exempt Indenture"), between the Authority and the Bank of New York, as
trustee ("Tax-Exempt Bond Trustee"). Pursuant to a First Supplemental Loan
Agreement, dated as of November 28, 1997 ("First Supplemental Loan Agreement"),
between the Authority and the Company and the Tax-Exempt Indenture, the
Authority has issued its Exempt Facility Refunding Revenue Bonds (Old Dominion
Electric Cooperative Project), Series 1997 ("1997 Tax-
<PAGE>
Exempt Bonds") in the aggregate principal amount of $1,025,000, under that
certain First Supplemental Tax-Exempt Indenture, dated as of November 28, 1997
("First Supplemental Tax-Exempt Indenture"), between the Authority and the
Tax-Exempt Trustee.
If at any time the amount held by the Tax-Exempt Bond Trustee in the
Bond Fund, as defined in the Tax-Exempt Indenture, should be sufficient to pay
at the times required the principal of, and premium, if any, and interest on the
1997 Tax-Exempt Bonds then remaining unpaid and to pay all fees and expenses of
the Tax-Exempt Bond Trustee accrued and to accrue through final payment of the
1997 Tax-Exempt Bonds, the Company shall not be obligated to make any further
payments hereunder, except to the extent losses may be incurred in connection
with investment of moneys in the Bond Fund.
The Authority, by the execution of the First Supplemental Tax-Exempt
Indenture and the assignment form at the foot of this Bond ("Assignment"), is
assigning this Bond and the payments thereon to the Tax-Exempt Trustee, acting
pursuant to the First Supplemental Tax-Exempt Indenture, as security for the
1997 Tax-Exempt Bonds. Payments of principal of, and premium, if any, and
interest on this Bond shall be made directly to the Tax-Exempt Bond Trustee for
the account of the Authority pursuant to such assignment and applied only to the
principal of, and premium, if any, and interest on the 1997 Tax-Exempt Bonds.
All obligations of the Company hereunder shall terminate when all sums due and
to become due pursuant to the First Supplemental Tax-Exempt Indenture, this
Bond, the First Supplemental Loan Agreement and the 1997 Tax-Exempt Bonds have
been paid or provided for in full.
The Bond is subject to extraordinary optional redemption by the Company
in whole at any time at a Redemption Price equal to 100% of the principal amount
of such Bonds, together with accrued interest to the Redemption Date, upon the
happening of any of the following events:
(a) Damage or destruction of the Facilities by fire or
other casualty to such extent that, or loss of title to or use of substantially
all of the Facilities as a result of the exercise of the power of eminent domain
or failure of title which, in the opinion of both the Company (expressed in a
certificate of an Officer of the Company) and an Engineer, both filed with the
Trustee and the Tax-Exempt Bond Trustee, (1) the Facilities cannot be reasonably
repaired, rebuilt or restored within a period of 12 months to their condition
immediately preceding such damage or destruction, or (2) the Company is
prevented from carrying on its normal operations at the Facilities for a period
of 12 months; or
(b) A change in the Constitution of Virginia or of the
United States of America or a legislative or administrative action (whether
local, state or Federal) or a final decree, judgment or order of any court or
administrative body (whether local, state or Federal) contested by the Company
in good faith which causes (1) the First Supplemental Loan Agreement or the 1997
Tax-Exempt Bonds to become void or unenforceable or their performance in
accordance with the intent and purpose of the parties
<PAGE>
as expressed therein to be impossible or (2) unreasonable burdens or excessive
liabilities to be imposed on the Authority or the Company.
The Bond is subject to extraordinary optional redemption by the Company
in part on any Interest Payment Date at a Redemption Price equal to 100% of the
principal amount of the Bonds to be redeemed, together with accrued interest to
the Redemption Date in the event of (i) damage or destruction to any part of the
Facilities by fire or other casualty or (ii) loss of title to any part of the
Facilities as a result of the exercise of eminent domain or failure of title,
but only upon receipt by the Trustee and the Tax-Exempt Bond Trustee of the
following:
(A) A certificate of an Officer of the Company stating that there has
been either (x) damage or destruction of the Facilities by fire or other
casualty or (y) loss of title to any part of the Facilities as a result of the
exercise of eminent domain or failure of title and that it is not in the best
interests of the Company to rebuild such portion of the Facilities; and
(B) An opinion of counsel stating that the use of the condemnation award
or insurance proceeds resulting from such casualty or loss of title, for
purposes other than (x) rebuilding, restoring or repairing the Facilities, or
(y) redeeming the 1997 Tax-Exempt Bonds would cause the interest paid or payable
on the 1997 Tax-Exempt Bonds (other than interest paid to any "substantial user"
of the Facilities or "related person" as those terms are defined in Section
147(a) of the Internal Revenue Code of 1986, as amended, (the "Code")) to be
includable in the gross income of a holder of the 1997 Tax-Exempt Bonds for
federal income tax purposes under the Code (or for Virginia state income tax
purposes).
To exercise such right of extraordinary redemption in whole or in part,
the Company shall comply with the provisions of Article Seven of the Indenture,
if applicable, and shall within 120 days after the event permitting its
exercise, file the required documentation with the Trustee and the Tax-Exempt
Bond Trustee and specify a date not more than 60 days thereafter for making such
payments.
The Bonds are subject to mandatory redemption in whole as promptly as
possible, but not later than 180 days after the occurrence of any Determination
of Taxability (as defined in the Tax-Exempt Indenture) at a Redemption Price
equal to 100% of the principal amount of the Bonds to be redeemed plus interest
accrued to the Redemption Date.
If the Bond is called for redemption, the Company has covenanted to
cause notice of the call for redemption to be given to each Holder of the Bond
to be redeemed at such Holder's address as the same shall last appear upon the
Bond Register, by first class mail at least 35 and no more than 60 days prior to
the Redemption Date.
If an Event of Default with respect to the Bond shall occur and be
continuing, the principal of the Bond may be declared due and payable in the
manner and with the effect provided in the Indenture.
<PAGE>
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of Bonds under the Indenture at any time
by the Company with the consent of the Holders of a majority in aggregate
principal amount of Bonds of all series at the time outstanding affected by such
modification. The Indenture also contains provisions permitting the Holders of a
majority in principal amount of Bonds at the time outstanding, on behalf of the
Holders of all Bonds to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Bond.
No reference herein to the Indenture and no provision of this Bond or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and premium, if any, and
interest on this Bond at the times, places and rates, and in the coin or
currency herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond is registrable in the Bond Register, upon
surrender of this Bond for registration of transfer at the office or agency
maintained by the Bond Registrar in Richmond, Virginia, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Bond Registrar duly executed by the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Bonds of this
series or authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Bonds of this series are issuable only in registered form without
coupons in denominations of $5,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Bonds of this series are exchangeable for a like aggregate principal amount of
Bonds of this series of a different authorized denomination, but of the same
maturity, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Bond for registration of transfer and
subject to the Assignment, the Company, the Trustee and any agent of the Company
or the Trustee may treat the person in whose name this Bond is registered as the
owner hereof for all purposes, whether or not this Bond be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Unless the context suggest otherwise, all capitalized terms used
herein and not otherwise defined shall have the same meaning assigned to them in
the Indenture.
<PAGE>
IN witness thereof, the Company has caused this Bond to be duly
executed.
Dated: ______________________
OLD DOMINION ELECTRIC
COOPERATIVE
By: _________________________
Authorized Officer
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture.
CRESTAR BANK, a Virginia
corporation, as Trustee
By: ________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
The Industrial Development Authority of Halifax County, Virginia (the
"Authority"), hereby irrevocably assigns without recourse the foregoing Bond to
the Bank of New York, New York, New York (the "Tax-Exempt Bond Trustee"), as
trustee, acting pursuant to a First Supplemental Indenture of Trust dated as of
November 28, 1997 (the "First Supplemental Tax-Exempt Indenture"), between the
Authority and the Tax-Exempt Bond Trustee and hereby directs the Company, as the
issuer of this Bond, to make all payments of principal of, premium and interest
thereon directly to the Tax-Exempt Bond Trustee at its principal office in New
York, New York, or at such other place as the Tax-Exempt Bond Trustee may direct
in writing. Such assignment is made as security for the payment of the
Authority's $1,025,000 Exempt Facility Refunding Revenue Bonds (Old Dominion
Electric Cooperative Project), Series 1997, issued pursuant to the Tax-Exempt
Indenture.
INDUSTRIAL DEVELOPMENT AUTHORITY OF
HALIFAX COUNTY, VIRGINIA
By: ____________________________________
Chairman
<PAGE>
ARTICLE II
PRINCIPAL AMOUNT PRESENTLY OUTSTANDING TO BE OUTSTANDING
SECTION 2.01 PRINCIPAL AMOUNT PRESENTLY TO BE OUTSTANDING. The total
aggregate principal amount of Bonds of the Company issued and outstanding and
presently to be issued and outstanding under the provisions of and secured by
the Indenture will be Eight Hundred Forty-Nine Million, Two Hundred Eighty-Five
Thousand, Nine Hundred Thirty-Seven Dollars ($849,285,937), namely Four Hundred
Twenty-Nine Million, Eight Hundred Sixty-Eight Thousand Dollars ($429,868,000)
principal amount of First Mortgage Bonds, 1992 Series A, Sixty Million, Two
Hundred Ten Thousand Dollars ($60,210,000) principal amount of First Mortgage
Bonds, 1992 Series C, Two Hundred Forty-Nine Million Dollars ($249,000,000)
principal amount of First Mortgage Bonds, 1993 Series A, One Hundred Nine
Million, One Hundred Eighty-Two Thousand, Nine Hundred Thirty-Seven Dollars
($109,182,937) principal amount of First Mortgage Bonds, 1996 Series B, now
issued and outstanding and One Million Twenty-Five Thousand Dollars ($1,025,000)
principal amount of 1997 Series A Bonds to be issued pursuant to this Sixth
Supplemental Indenture upon compliance by the Company with the provisions of
Section 5.01 and 5.02 and/or 5.03 and/or 5.04 of the Original Indenture.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. This Sixth Supplemental Indenture is executed and shall be
construed as an indenture supplemental to the Original Indenture, and shall form
a part thereof, and the Original Indenture, as heretofore supplemented and as
hereby supplemented and modified, is hereby confirmed. Except to the extent
inconsistent with the express terms hereof, all of the provisions, terms,
covenants and conditions of the Original Indenture shall be applicable to the
1997 Series A Bonds to the same extent as if specifically set forth herein. All
capitalized terms used in this Second Supplemental Indenture shall be taken to
have the same meanings as in the Original Indenture, except in cases where the
context clearly indicates otherwise.
SECTION 3.02. All recitals in this Sixth Supplemental Indenture are made
by the Company only and not by the Trustee; and all of the provisions contained
in the Original Indenture, in respect of the rights, privileges, immunities,
powers and duties of the Trustee shall be applicable in respect hereof as fully
and with like effect as if set forth herein in full.
SECTION 3.03. Whenever in this Sixth Supplemental Indenture any of the
parties hereto is named or referred to, this shall, subject to the provisions of
Articles Ten and Twelve of the Original Indenture, be deemed to include the
successors and assigns of such party, and all the covenants and agreements in
this Sixth Supplemental Indenture contained by or an behalf of the Company, or
by or on behalf of the Trustee shall, subject as
<PAGE>
aforesaid, bind and inure to the respective benefits of the respective
successors and assigns of such parties, whether so expressed or not.
SECTION 3.04. Nothing in this Sixth Supplemental Indenture, expressed or
implied, is intended, or shall be construed, to confer upon, or to give to, any
person, firm or corporation, other than the parties hereto and the Holders of
the Outstanding Bonds, any right, remedy or claim under or by reason of this
Sixth Supplemental Indenture or any covenant, condition, stipulation, promise or
agreement hereof, and all the covenants, conditions, stipulations, promises and
agreements in this Second Supplemental Indenture contained by or on behalf of
the Company shall be for the sole and exclusive benefit of the parties hereto,
and of the Holders of Outstanding Bonds.
SECTION 3.05. This Sixth Supplemental Indenture may be executed in
several counterparts, each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts, or as many of them as the Company
and the Trustee shall preserve undestroyed, shall together constitute but one
and the same instrument.
SECTION 3.06. Although this Sixth Supplemental Indenture is dated for
convenience and for the purpose of reference as of November 28, 1997, the actual
date or dates of execution by the Company and by the Trustee are as indicated by
their respective acknowledgments hereto annexed.
SECTION 3.07. To the extent permitted by applicable law, this Sixth
Supplemental Indenture shall be deemed to be a Security Agreement and Financing
Statement whereby the Company grants to the Trustee a security interest in all
of the Trust Estate that is personal property or fixtures under the Uniform
Commercial Code, as adopted or hereafter adopted in one or more of the states in
which any part of the properties of the Company are situated. The mailing
address of the Company, as debtor, is Innsbrook Corporate Center, 4201 Dominion
Boulevard, Glen Allen, Virginia 23060, and the mailing address of the Trustee,
as secured party, is Crestar Bank, 919 East Main Street, Richmond, Virginia
23219.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Sixth
Supplemental Indenture to be duly executed as of the day and year first above
written.
Company: OLD DOMINION ELECTRIC COOPERATIVE
Innsbrook Corporate Center
4201 Dominion Boulevard
Glen Allen, Virginia 23060
By: ____________________________
Name: Daniel M. Walker
Title: Vice President of
Accounting and Finance
Trustee: CRESTAR BANK
919 East Main Street
Corporate Trust Department
Richmond, Virginia 23219
By: ____________________________
Name: Sarah A. McMahon
Title: Vice President
<PAGE>
ACKNOWLEDGMENT
COMMONWEALTH OF VIRGINIA )
)
CITY/COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this _____ day of
November, 1997, by Daniel M. Walker, the Vice President of Old Dominion Electric
Cooperative, a Virginia power supply cooperative.
------------------------------------
Notary Public
My Commission expires: _____________________
ACKNOWLEDGMENT
COMMONWEALTH OF VIRGINIA )
)
CITY/COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this _____ day of
November, 1997, by Sarah A. McMahon, the Vice President of Crestar Bank, a
Virginia banking corporation, on behalf of the Bank.
------------------------------------
Notary Public
My Commission expires: _____________________
<PAGE>
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A PUBLIC UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
--------------------------------------------------------------------------
OLD DOMINION ELECTRIC COOPERATIVE,
GRANTOR
TO
CRESTAR BANK,
TRUSTEE
------------------------
SEVENTH SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 1, 1998
----------------------
SUPPLEMENTAL TO THE INDENTURE OF MORTGAGE AND DEED OF TRUST
DATED AS OF MAY 1, 1992
----------------------------------------------------------------------
A MORTGAGE OF BOTH REAL AND PERSONAL PROPERTY
THIS INSTRUMENT IS EXEMPT FROM RECORDATION TAX PURSUANT TO VIRGINIA CODE
SECTION 58.1-803.D. RECORDATION TAX HAS BEEN PAID IN THE OFFICE OF THE CLERK OF
THE CIRCUIT COURT FOR HALIFAX COUNTY, VIRGINIA ON A SECOND SUPPLEMENTAL
INDENTURE RECORDED IN DEED BOOK ___, PAGE ___
<PAGE>
SEVENTH SUPPLEMENTAL INDENTURE
-------------------------
THIS SEVENTH SUPPLEMENTAL INDENTURE, dated as of November 1, 1998
(the "Seventh Supplemental Indenture"), between OLD DOMINION ELECTRIC
COOPERATIVE, a Virginia power supply cooperative (the "Company"), whose mailing
address and address of its chief executive office is Innsbrook Corporate Center,
4201 Dominion Boulevard, Glen Allen, Virginia 23060, and CRESTAR BANK, a
Virginia banking corporation, as trustee (the "Trustee"), having its principal
corporate trust office at 919 East Main Street, Corporate Trust Department,
Richmond, Virginia 23219.
WHEREAS, the Company has heretofore executed and delivered an Indenture
of Mortgage and Deed of Trust, dated as of May 1, 1992 (herein sometimes called
the "Original Indenture"), to secure, as provided therein, its bonds (in the
Original Indenture and herein called the "Bonds"), to be designated generally as
its "First Mortgage Bonds", and to be issued in one or more series as provided
in the Original Indenture; and
WHEREAS, the Original Indenture was recorded among the land records in
the counties of Halifax, Louisa, Spotsylvania and Orange, Virginia, and a UCC
Form 1 concerning the Original Indenture was recorded among the financing
statement records at the Virginia State Corporation Commission and the Counties
of Henrico, Halifax, Louisa, Spotsylvania and Orange; and
WHEREAS, the Company has heretofore executed and delivered a First
Supplemental Indenture, dated as of August 1, 1992 (hereinafter the "First
Supplemental Indenture"), its Second Supplemental Indenture dated as of December
1, 1992 (hereinafter called the "Second Supplemental Indenture"), its Third
Supplemental Indenture, dated as of May 1, 1993 (hereinafter called the "Third
Supplemental Indenture"), its Fourth Supplemental Indenture, dated as of
December 15, 1994 (hereinafter called the "Fourth Supplemental Indenture"), its
Fifth Supplemental Indenture, dated as of February 29, 1996 (hereinafter called
the "Fifth Supplemental Indenture") and its Sixth Supplemental Indenture, dated
as of November 28, 1997, (hereinafter called the "Sixth Supplemental
Indenture"), supplementing the Original Indenture, each of which, with the
exception of the Fourth Supplemental Indenture, provided for the creation of a
new series of Bonds which subjected, or intended to subject, to the lien of the
Original Indenture certain property described therein and was recorded among the
land records for the counties of Halifax, Louisa, Spotsylvania and Orange,
Virginia and among the financing statement records at the Virginia State
Corporation Commission and the Counties of Henrico, Halifax, Louisa,
Spotsylvania and Orange, Virginia, which recording offices will include the
recording offices in which this Sixth Supplemental Indenture will be recorded;
and
<PAGE>
WHEREAS, pursuant to the Original Indenture, the First Supplemental
Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture,
the Fifth Supplemental Indenture, and the Sixth Supplemental Indenture there
have been executed, authenticated, delivered and issued and there are now
outstanding First Mortgage Bonds of the series and in the principal amount as
follows:
Principal Principal
Amount Amount
Series Issued Outstanding
------ ------ -----------
7.27% First Mortgage $50,000,000 $16,668,000
Bonds, 1992 Series A,
Due December 1, 1997
7.97% First Mortgage l50,000,000 142,000,000
Bonds, 1992 Series A,
Due December 1, 2002
8.76% First Mortgage 350,000,000 271,200,000
Bonds, 1992 Series A,
Due December 1, 2022
First Mortgage Bonds, 1,203,638 0
1992 Series B, Due
September 15, 1992
First Mortgage Bonds, 1,203,637 0
1992 Series B, Due
December 15, 1992
First Mortgage Bonds, 1,203,637 0
1992 Series B, Due
March 15, 1993
First Mortgage Bonds, 1,203,638 0
1992 Series B, Due
June 15, 1993
First Mortgage Bonds, l,203,638 0
1992 Series B, Due
September 15, 1993
First Mortgage Bonds, 1,203,637 0
<PAGE>
1992 Series B, Due
December 15, 1993
First Mortgage Bonds, 392,375 0
1992 Series B, Due
March 15, 1994
First Mortgage Bonds 392,376 0
1992 Series B, Due
June 15, 1994
First Mortgage Bonds 392,376 0
1992 Series B, Due
September 15, 1994
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15, 1994
First Mortgage Bonds 392,375 0
1992 Series B, Due
March 15, 1995
First Mortgage Bonds, 392,376 0
1992 Series B, Due
June 15, 1995
First Mortgage Bonds 392,376 0
1992 Series B, Due
September 15, 1995
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15, 1995
First Mortgage Bonds, 392,375 0
1992 Series B, Due
March 15, 1996
First Mortgage Bonds, 392,376 0
1992 Series B, Due
June 15, 1996
<PAGE>
First Mortgage Bonds, 392,376 0
1992 Series B, Due
September 15, 1996
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15,1996
5.20% First Mortgage 1,075,000 1,075,000
Bonds, 1992 Series C,
Due December 1, 1998
5.40% First Mortgage 1,130,000 1,130,000
Bonds, 1992 Series C,
Due December 1, 1999
5.50% First Mortgage 1,190,000 1,190,000
Bonds, 1992 Series C,
Due December 1, 2000
4.90% First Mortgage 1,025,000 1,025,000
Bonds, 1997 Series A,
Due December 1, 2001
5.70% First Mortgage 1,255,000 1,255,000
Bonds, 1992 Series C,
Due December 1, 2001
5.90% First Mortgage 1,330,000 1,330,000
Bonds, 1992 Series C,
Due December 1, 2002
6.00% First Mortgage 1,405,000 1,405,000
Bonds, 1992 Series C,
Due December 1, 2003
6.10% First Mortgage 1,495,000 1,495,000
Bonds, 1992 Series C,
Due December 1, 2004
6.35% First Mortgage 5,060,000 5,060,000
Bonds, 1992 Series C,
Due December 1, 2007
<PAGE>
6.50% First Mortgage 10,845,000 10,845,000
Bonds, 1992 Series C,
Due December 1, 2012
6.00% First Mortgage 34,400,000 34,400,000
Bonds, 1992 Series C,
Due December 1, 2022
7.48% First Mortgage 130,000,000 129,000,000
Bonds, 1993 Series A,
Due December 1, 2013
7.78% First Mortgage 120,000,000 120,000,000
Bonds, 1993 Series A,
Due December 1, 2023
First Mortgage Bonds 25,565,962 0
1996 Series A, Due
February 28, 1997
First Mortgage Bonds 581,032 581,032
1996 Series B, Due
January 5, 1998
First Mortgage Bonds 10,649,541 10,649,541
1996 Series B, Due
April 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
June 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
September 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
December 15, 2018
WHEREAS, in connection with the construction of a two-unit, coal-fired
electric generating facility (the "Project") in Halifax County, Virginia (in
which the Company has an undivided 50% interest), the Company installed certain
solid waste disposal and sewerage facilities (the "Facilities"). Pursuant to a
loan agreement dated as of December
<PAGE>
1, 1992 (the "Loan Agreement"), between the Company and the Industrial
Development Authority of Halifax County, Virginia (the "Authority"), the
Authority assisted the Company with the financing of the Facilities by issuing
its Exempt Facility Revenue Bonds (Old Dominion Electric Cooperative Project),
Series 1992, in an aggregate principal amount of $60,210,000.00 (the "Series
1992 Tax-Exempt Bonds"). The Company's obligation to repay the loan from the
Authority is evidenced by a new series of Bonds designated First Mortgage Bonds,
1992 Series C (the "1992 Series C Bonds"); and
WHEREAS, pursuant to a Second Supplemental Loan Agreement dated as of
November 18, 1998 (the "Second Supplemental Loan Agreement"), between the
Authority and the Company, the Authority has agreed to issue a new series of
refunding revenue bonds in an aggregate principal amount of $1,075,000 (the
"Series 1998 Tax-Exempt Bonds") to refund the December 1, 1998, maturity of the
Series 1992 Tax-Exempt Bonds. The Company's obligation to repay the loan from
the Authority in connection with the Series 1998 Tax-Exempt Bonds shall be
evidenced by a new series of Bonds to be designated First Mortgage Bonds, 1998
Series A (the "1998 Series A Bonds"), which will replace and refund the December
1, 1998, maturity of the 1992 Series C Bonds.
WHEREAS, the Board of Directors of the Company has established the 1998
Series A Bonds and the Board of Directors of the Company has authorized an issue
of One Million Seventy-Five Thousand and no/100 Dollars ($1,075,000) principal
amount thereof, and the Company has complied or will comply with all provisions
required to issue Additional Bonds provided for in the Original Indenture; and
WHEREAS, the Company desires to execute and deliver this Seventh
Supplemental Indenture, in accordance with the provisions of the Original
Indenture, for the purposes, among others, of (i) providing for the creation of
a new series of Bonds, designating the series to be created and specifying the
form and provisions of the Bonds of such series (the Original Indenture, as
heretofore and hereby supplemented and modified, being herein sometimes called
the "Indenture"), and (ii) modifying the terms, provisions, restrictions or
conditions of the Original Indenture; and
WHEREAS, Section 13.01 of the Original Indenture provides that, without
the consent of the Holders of any of the Bonds at the time Outstanding, the
Company, when authorized by a Board Resolution and the Trustee, may enter into
supplemental indentures for the purposes and subject to the conditions set forth
in said Section 13.01; and
WHEREAS, the Company proposes to modify the Original Indenture as
provided in Section 13.01; and
WHEREAS, all acts and proceedings required by law and by the Articles of
Incorporation and Bylaws of the Company necessary to secure the payment of the
principal of (and premium, if any) and interest on the 1998 Series A Bonds, to
make the 1998 Series A Bonds to be issued hereunder, when executed by the
Company, authenticated and delivered by the Trustee and duly issued, the valid,
binding and legal obligations of the
<PAGE>
Company, and to constitute the Indenture a valid and binding mortgage for the
security of all of the Bonds, in accordance with its and their terms, have been
done and taken; and the execution and delivery of this Seventh Supplemental
Indenture has been in all respects duly authorized;
NOW, THEREFORE, THIS SEVENTH SUPPLEMENTAL INDENTURE WITNESSETH, that, to
secure the payment of the principal of (and premium, if any) and interest on
the Outstanding Secured Bonds, to confirm the lien of the Original Indenture
upon the Trust Estate mentioned therein including all property purchased,
constructed or otherwise acquired by the Company since the date of execution of
the Original Indenture, to secure performance of the covenants therein and
herein contained, to declare the terms and conditions on which the Outstanding
Secured Bonds are secured, and in consideration of the premises thereof and
hereof and to modify the Original Indenture, the Company by these presents does
grant, bargain, sell, alienate, remiss, release, convey, assign, transfer,
mortgage, hypothecate, pledge, set over and confirm to the Trustee, in trust,
all property, rights, privileges and franchises (other than Excepted Property)
of the Company of the character described in the Granting Clauses of the
Original Indenture, including all such property, rights, privileges and
franchises acquired since the date of execution of the Original Indenture,
including, without limitation, all of those fee and leasehold interests in real
property, if any, which may hereafter be constructed or acquired by it, but
subject to all exceptions, reservations and matters of the character therein
referred to, and expressly excepting and excluding from the lien and operation
of the Indenture all properties of the character specifically excepted by
Subdivisions A through K of "Excepted Property" in the Original Indenture to
the extent contemplated thereby, and all property heretofore released or
otherwise disposed of pursuant to the provisions of the Original Indenture.
PROVIDED, HOWEVER, that (i) if, upon the occurrence of an Event of
Default, the Trustee, or any separate trustee or co-trustee appointed under
Section 10.14 of the Original Indenture or any receiver appointed pursuant to
statutory provision or order of court, shall have entered into possession of all
or substantially all of the Trust Estate, all the Excepted Property described or
referred to in Subdivisions A through G, inclusive, of "Excepted Property" in
the Original Indenture then owned or thereafter acquired by the Company shall
immediately, and, in the case of any Excepted Property described or referred to
in Subdivisions H through J inclusive, of "Excepted Property" in the Original
Indenture, upon demand of the Trustee or such other trustee or receiver, become
subject to the lien of the Original Indenture to the extent permitted by law,
and the Trustee or such other trustee or receiver may, to the extent permitted
by law, at the same time likewise take possession thereof, and (ii) whenever all
Events of Default shall have been cured and the possession of all or
substantially all of the Trust Estate shall have been restored to the Company,
such Excepted Property shall again be excepted and excluded from the lien of the
Original Indenture to the extent and otherwise as hereinabove set forth and as
set forth in the Original Indenture.
<PAGE>
The Company may, however, pursuant to Granting Clause Third of the
Original Indenture, subject any Excepted Property to the lien of the Original
Indenture, whereupon the same shall cease to be Excepted Property.
TO HAVE AND TO HOLD all said property, rights, privileges and franchises
of every kind and description, real, personal or mixed, hereby and hereafter (by
Supplemental Indenture or otherwise) granted, bargained, sold, alienated,
remised, released, conveyed, assigned, transferred, mortgaged, hypothecated,
pledged, set over or confirmed as aforesaid, or intended, agreed or covenanted
so to be, together with all the appurtenances thereto appertaining unto the
Trustee and its successors and assigns forever.
SUBJECT, HOWEVER, to (i) Permitted Encumbrances (as defined in Section
1.01 of the Original Indenture), (ii) to the extent permitted by Section 14.06
of the Original Indenture, as to property acquired since the date of execution
of the Original Indenture, (a) any duly recorded or perfected prior mortgage or
other lien that may exist thereon at the date of the acquisition thereof by the
Company, and (b) purchase money mortgages created by the Company at the time of
acquisition thereof, and (iii) defects of title to and encumbrances on property
described in Article IV of the First Supplemental Indenture.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and
proportionate benefit and security of the Holders from time to time of all the
Outstanding Secured Bonds without any priority of any such Bond over any other
such Bond and for the enforcement of the payment of such Bonds in accordance
with their terms.
UPON CONDITION that, until the happening of an Event of Default (as
defined in Section 1.01 of the Original Indenture) and subject to the provisions
of Article Six of the Original Indenture, the Company shall be permitted to
possess and use the Trust Estate, except cash, securities and other personal
property deposited, or required to be deposited, with the Trustee and to explore
for, mine, extract and dispose of coal, ore, gas, oil and other minerals, to
harvest standing timber and to receive and use the rents, issues, profits,
revenues and other income, products and proceeds of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that all the Bonds are to be
authenticated and delivered and the Trust Estate is to be held and applied by
the Trustee, subject to the further covenants, conditions and trusts set forth
in the Original Indenture, and the Company does hereby covenant and agree to and
with the Trustee, for the equal and proportionate benefit of all Holders of the
Bonds as follows:
<PAGE>
ARTICLE 1
BONDS OF THE 1998 SERIES A AND CERTAIN PROVISIONS RELATING THERETO
SECTION 1.01
(A) TERMS OF THE 1998 SERIES A BONDS. There be hereby established a
series of Bonds, known as and entitled "First Mortgage Bonds, 1998 Series A"
(hereinafter referred to as the "1998 Series A Bonds") and the form thereof
shall be substantially as set forth in Section 1.01 (D). The aggregate principal
amount of 1998 Series A Bonds which may be authenticated and delivered and
Outstanding at any one time is limited to One Million Seventy Five Thousand and
no/100 Dollars ($1,075,000). The Trustee is hereby appointed as Authenticating
Agent for the 1998 Series A Bonds.
The 1998 Series A Bonds shall be issuable in fully registered form
without coupons and in denominations of $5,000 and integral multiples thereof.
Each 1998 Series A Bond shall be dated the date of its issuance and delivery.
The 1998 Series A Bonds shall bear interest from their date payable on June 1,
1999, and on each of June 1 and December 1 of each year thereafter at the rate
of 4.25% per annum and shall mature, subject to prior redemption, on December 1,
2002.
The 1998 Series A Bonds shall be issued to and registered in the name of
the Authority and subsequently will be assigned by the Authority to the Bank of
New York,. as trustee (the "Tax-Exempt Bond Trustee") pursuant to that certain
Indenture of Trust, dated as of December 1, 1992, between the Authority and the
Tax-Exempt Bond Trustee (as supplemental and amended by that certain Second
Supplemental Tax-Exempt Indenture of Trust, dated as of November 18, 1998 the
"Tax-Exempt Indenture") and will secure the obligations of the Company under the
Loan Agreement, as supplemented and amended by the Second Supplemental Loan
Agreement").
The 1998 Series A Bonds shall be lettered "A". The principal and
interest on the 1998 Series A Bonds shall be payable in lawful money of the
United States of America to the registered owner of the 1998 Series A Bonds or
its assignee in accordance with the provisions of the Second Supplemental Loan
Agreement by wire transfer or other method acceptable to such registered owner
or its assignee in funds which will be immediately available on the applicable
principal and/or Interest Payment Date or Redemption Date. Interest on the 1998
Series A Bonds shall be payable without presentation of the 1998 Series A Bonds
for payment. Payment of the principal or Redemption Price of any 1998 Series A
Bond shall be made by the Company to the Tax-Exempt Bond Trustee upon
presentation and surrender of such Bond to the Trustee.
<PAGE>
The Regular Record Date referred to in Section 3.09 of the Original
Indenture for the payment of interest on the 1998 Series A Bonds shall be the
fifteenth day (whether or not a business day) of the calendar month next
preceding such Interest Payment Date.
(B) EXTRAORDINARY OPTIONAL REDEMPTION OF 1998 SERIES A BONDS.
(i) The 1998 Series A Bonds are subject to extraordinary optional
redemption by the Company in whole at any time at a Redemption Price equal to
100% of the principal amount of such 1998 Series A Bonds, together with accrued
interest to the Redemption Date, upon the happening of any of the following
events:
(a) Damage or destruction of the Facilities by fire or
other casualty to such extent that, or loss of title to or use of substantially
all of the Facilities as a result of the exercise of the power of eminent domain
or failure of title which, in the opinion of both the Company (expressed in a
certificate of an Officer of the Company) and an Engineer, both filed with the
Trustee and the Tax-Exempt Bond Trustee and, that (1) the Facilities cannot be
reasonably repaired, rebuilt or restored within a period of 12 months to their
condition immediately preceding such damage or destruction, or (2) the Company
is prevented from carrying on its normal operations at the Facilities for a
period of 12 months; or
(b) A change in the Constitution of Virginia or of the
United States of America or a legislative or administrative action (whether
local, state or Federal) or a final decree, judgment or order of any court or
administrative body (whether local, state or Federal) contested by the Company
in good faith which causes (1) the Second Supplemental Loan Agreement or the
1998 Series A Bonds to become void or unenforceable or their performance in
accordance with the intent and purpose of the parties as expressed therein to be
impossible or (2) unreasonable burdens or excessive liabilities to be imposed on
the Authority or the Company.
(ii) The 1998 Series A Bonds are subject to extraordinary
optional redemption by the Company in part on any Interest Payment Date at a
Redemption Price equal to 100% of the principal amount of the 1998 Series A
Bonds to be redeemed, together with accrued interest to the Redemption Date in
the event of (i) damage or destruction to any part of the Facilities by fire or
other casualty or (ii) loss of title to any part of the Facilities as a result
of the exercise of eminent domain or failure of title, but only upon receipt by
the Trustee and the Tax-Exempt Bond Trustee of the following:
(a) A certificate of an Officer of the Company stating
that there has been either (x) damage or destruction of the Facilities by fire
or other casualty or (y) loss of title to any part of the Facilities as a result
of the exercise of eminent domain or failure of title and that it is not in the
best interest of the Company to rebuild such portion of the Facilities; and
<PAGE>
(b) An Opinion of Counsel stating that the use of the
condemnation award or insurance proceeds resulting from such casualty or loss of
title, for purposes other than (x) rebuilding, restoring or repairing the
Facilities, or (y) redeeming the Series 1998 Tax-Exempt Bonds would cause the
interest paid or payable on the Series 1998 Tax-Exempt Bonds (other than
interest paid to any "substantial user" of the Facilities or "related person" as
those terms are defined in Section 147(a) of the Internal Revenue Code of 1986,
as amended (the "Code")) to be includable in the gross income of a holder of
Series 1998 Tax-Exempt Bonds for Federal income tax purposes under the Code (or
for Virginia state income tax purposes).
(iii) To exercise its option to redeem the 1998 Series A Bonds,
in whole under subsection (B)(i), above, or in part under subsection (B)(ii),
above, the Company shall comply with the provisions of Article Seven of the
Original Indenture, if applicable, and shall within 120 days after the event
permitting its exercise, file the required documentation with the Trustee and
the Tax-Exempt Bond Trustee and specify a date not more than 60 days thereafter
for making such payments.
(C) MANDATORY REDEMPTION OF THE 1998 SERIES A BONDS. The 1998 Series A
Bonds are subject to mandatory redemption in whole as promptly as possible, but
no later than 180 days after the occurrence of any Determination of Taxability,
at a Redemption Price equal to 100% of the principal amount of the 1998 Series A
Bonds to be redeemed plus interest accrued to the Redemption Date. For purposes
of this paragraph, "Determination of Taxability" shall mean (i) any enactment or
amendment of any applicable statute or regulation, or (ii) a final decree or
judgment of any federal court, a final determination by the United States
Internal Revenue Service or a final judgment or determination by any court or
agency of the Commonwealth of Virginia, with the effect that interest paid or
payable on the Series 1998 Tax-Exempt Bonds (other than interest paid to any
"substantial user" of the Facilities or "related person" as those terms are
defined in Section 147(a) of the Code) is or was includable in the gross income
of a Series 1998 Tax-Exempt Bondholder for Federal income tax purposes under the
Code (or for Virginia state income tax purposes). A Determination of Taxability
does not include any tax upon interest payable on exempt facility bonds under
Section 142 of the Code and other statutes and regulations in effect on the date
of issuance of the Series 1998 Tax-Exempt Bonds and does not include any change
in tax rates. A Determination of Taxability will be deemed to have occurred on
the date on which the Tax-Exempt Bond Trustee is first notified in writing of
any such enactment, amendment, judgment, decree or determination.
(D) FORM OF 1998 SERIES A BONDS. The 1998 Series A Bonds and the
Trustee's authentication certificate to be executed on the Bonds of said series
shall be substantially in the following form, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Original Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the Officers executing such Bonds, as
evidenced by their execution of such Bonds:
<PAGE>
FORM OF 1998 SERIES A BONDS
THIS FIRST MORTGAGE BOND, 1998 SERIES A, HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER SUCH ACT OR
IN RELIANCE UPON AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
Old Dominion Electric Cooperative
First Mortgage Bond 1997 Series A,
Due December 1, 2002
No. $
-----------------
Old Dominion Electric Cooperative, a Virginia power supply
cooperative (herein called the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to _____________, or registered assigns, the principal
sum of ______________ Dollars on December 1, 2002, and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) thereon from the date of
this Bond or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semi-annually on June 1 and December 1 in each
year, commencing June 1, 1999, at the rate of _______% per annum, until the
principal hereof is paid or made available for payment. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture (as defined herein), be paid to the Person in whose
name this Bond is registered on the date of business on the Regular Record Date
for such interest, which shall be the fifteenth day (whether or not a business
day), of the calendar month next proceeding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Bond is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Bonds of this series
not less than 10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner not inconsistent with the provisions of the
Indenture and acceptable to the Holder hereof.
If any principal of or premium, if any, or interest on this Bond is not
paid when due (whether at maturity, upon acceleration or call for redemption or
otherwise), then the overdue installments of principal and, to the extent
permitted by law, interest shall bear interest until paid at the interest rate
borne by this Bond.
The principal of and premium, if any, and interest on this Bond shall be
payable in lawful money of the United States of America to the registered owner
hereof in accordance
<PAGE>
with the provisions of the Loan Agreement (as defined herein) by wire transfer
or other method acceptable to such registered owner in funds which will be
immediately available on the applicable principal and/or interest payment date
or redemption date. Interest on this Bond shall be payable without presentation
hereof. Payment of the principal and premium, if any, on this Bond shall be made
by the Company to the holder hereof upon presentation and surrender of such Bond
to Crestar Bank, Richmond, Virginia, as trustee ("Trustee") under the Indenture.
This Bond is one of a duly authorized issue of Bonds of the Company
designated as its "First Mortgage Bonds" (herein called the "Bonds") issued and
to be issued in one or more series (which may have varying terms) under, and all
equally and ratably secured by, an Indenture of Mortgage and Deed of Trust,
dated as of May 1, 1992 (herein called the "Indenture"), between the Company and
the Trustee to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the description of the properties thereby
mortgaged, pledged and assigned, the nature and extent of the security and the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Bonds and of the terms upon
which the Bonds are, and are to be, authenticated and delivered. This Bond is
issued pursuant to the Seventh Supplemental Indenture, dated as of November 1,
1998 ("Seventh Supplemental Indenture"), between the Company and the Trustee.
The Bonds are being issued to refund the December 1, 1998, maturity of the
Company's First Mortgage Bonds, 1992 Series C ("1992 Series C Bonds). The 1992
Series C Bonds were issued by the Company to repay a loan from the Industrial
Development Authority of Halifax County, Virginia ("Authority") made to the
Company from the proceeds of the Authority's $60,210,000 Exempt Facility Revenue
Bonds (Old Dominion Electric Cooperative Project) Series 1992 ("1992 Tax-Exempt
Bonds") for the purpose of acquiring, constructing and equipping certain solid
waste and sewage disposal facilities ("Facilities") for the Company pursuant to
the Loan Agreement, dated as of December 1, 1992 ("Loan Agreement"), between the
Company and the Authority. The 1992 Tax-Exempt Bonds were issued pursuant to an
Indenture of Trust, dated as of December 1, 1992 (as amended and supplemented
"Tax-Exempt Indenture"), between the Authority and the Bank of New York, as
trustee ("Tax-Exempt Bond Trustee"). Pursuant to a Second Supplemental Loan
Agreement, dated as of November 18, 1998 ("Second Supplemental Loan Agreement"),
between the Authority and the Company and the Tax-Exempt Indenture, the
Authority has issued its Exempt Facility Refunding Revenue Bonds (Old Dominion
Electric Cooperative Project), Series 1998 ("1998 Tax-Exempt Bonds") in the
aggregate principal amount of $1,075,000, under that certain Second Supplemental
Tax-Exempt Indenture, dated as of November 1, 1998 ("Second Supplemental
Tax-Exempt Indenture"), between the Authority and the Tax-Exempt Trustee.
If at any time the amount held by the Tax-Exempt Bond Trustee in the
Bond Fund, as defined in the Tax-Exempt Indenture, should be sufficient to pay
at the times required the principal of, and premium, if any, and interest on the
1998 Tax-Exempt Bonds then remaining unpaid and to pay all fees and expenses of
the Tax-Exempt Bond Trustee accrued and to accrue through final payment of the
1998 Tax-Exempt Bonds, the Company
<PAGE>
shall not be obligated to make any further payments hereunder, except to the
extent losses may be incurred in connection with investment of moneys in the
Bond Fund.
The Authority, by the execution of the Second Supplemental Tax-Exempt
Indenture and the assignment form at the foot of this Bond ("Assignment"), is
assigning this Bond and the payments thereon to the Tax-Exempt Trustee, acting
pursuant to the First Supplemental Tax-Exempt Indenture, as security for the
1998 Tax-Exempt Bonds. Payments of principal of, and premium, if any, and
interest on this Bond shall be made directly to the Tax-Exempt Bond Trustee for
the account of the Authority pursuant to such assignment and applied only to the
principal of, and premium, if any, and interest on the 1998 Tax-Exempt Bonds.
All obligations of the Company hereunder shall terminate when all sums due and
to become due pursuant to the Second Supplemental Tax-Exempt Indenture, this
Bond, the Second Supplemental Loan Agreement and the 1998 Tax-Exempt Bonds have
been paid or provided for in full.
The Bond is subject to extraordinary optional redemption by the Company
in whole at any time at a Redemption Price equal to 100% of the principal amount
of such Bonds, together with accrued interest to the Redemption Date, upon the
happening of any of the following events:
(a) Damage or destruction of the Facilities by fire or
other casualty to such extent that, or loss of title to or use of substantially
all of the Facilities as a result of the exercise of the power of eminent domain
or failure of title which, in the opinion of both the Company (expressed in a
certificate of an Officer of the Company) and an Engineer, both filed with the
Trustee and the Tax-Exempt Bond Trustee, (1) the Facilities cannot be reasonably
repaired, rebuilt or restored within a period of 12 months to their condition
immediately preceding such damage or destruction, or (2) the Company is
prevented from carrying on its normal operations at the Facilities for a period
of 12 months; or
(b) A change in the Constitution of Virginia or of the
United States of America or a legislative or administrative action (whether
local, state or Federal) or a final decree, judgment or order of any court or
administrative body (whether local, state or Federal) contested by the Company
in good faith which causes (1) the Second Supplemental Loan Agreement or the
1998 Tax-Exempt Bonds to become void or unenforceable or their performance in
accordance with the intent and purpose of the parties as expressed therein to be
impossible or (2) unreasonable burdens or excessive liabilities to be imposed on
the Authority or the Company.
The Bond is subject to extraordinary optional redemption by the Company
in part on any Interest Payment Date at a Redemption Price equal to 100% of the
principal amount of the Bonds to be redeemed, together with accrued interest to
the Redemption Date in the event of (i) damage or destruction to any part of the
Facilities by fire or other casualty or (ii) loss of title to any part of the
Facilities as a result of the exercise of eminent domain or
<PAGE>
failure of title, but only upon receipt by the Trustee and the Tax-Exempt Bond
Trustee of the following:
(A) A certificate of an Officer of the Company stating that there has
been either (x) damage or destruction of the Facilities by fire or other
casualty or (y) loss of title to any part of the Facilities as a result of the
exercise of eminent domain or failure of title and that it is not in the best
interests of the Company to rebuild such portion of the Facilities; and
(B) An opinion of counsel stating that the use of the condemnation award
or insurance proceeds resulting from such casualty or loss of title, for
purposes other than (x) rebuilding, restoring or repairing the Facilities, or
(y) redeeming the 1998 Tax-Exempt Bonds would cause the interest paid or payable
on the 1998 Tax-Exempt Bonds (other than interest paid to any "substantial user"
of the Facilities or "related person" as those terms are defined in Section
147(a) of the Internal Revenue Code of 1986, as amended, (the "Code")) to be
includable in the gross income of a holder of the 1998 Tax-Exempt Bonds for
federal income tax purposes under the Code (or for Virginia state income tax
purposes).
To exercise such right of extraordinary redemption in whole or in part,
the Company shall comply with the provisions of Article Seven of the Indenture,
if applicable, and shall within 120 days after the event permitting its
exercise, file the required documentation with the Trustee and the Tax-Exempt
Bond Trustee and specify a date not more than 60 days thereafter for making such
payments.
The Bonds are subject to mandatory redemption in whole as promptly as
possible, but not later than 180 days after the occurrence of any Determination
of Taxability (as defined in the Tax-Exempt Indenture) at a Redemption Price
equal to 100% of the principal amount of the Bonds to be redeemed plus interest
accrued to the Redemption Date.
If the Bond is called for redemption, the Company has covenanted to
cause notice of the call for redemption to be given to each Holder of the Bond
to be redeemed at such Holder's address as the same shall last appear upon the
Bond Register, by first class mail at least 35 and no more than 60 days prior to
the Redemption Date.
If an Event of Default with respect to the Bond shall occur and be
continuing, the principal of the Bond may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of Bonds under the Indenture at any time
by the Company with the consent of the Holders of a majority in aggregate
principal amount of Bonds of all series at the time outstanding affected by such
modification. The Indenture also contains provisions permitting the Holders of a
majority in principal amount of Bonds at the time outstanding, on behalf of the
Holders of all Bonds to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
<PAGE>
consequences. Any such consent or waiver by the Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Bond.
No reference herein to the Indenture and no provision of this Bond or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and premium, if any, and
interest on this Bond at the times, places and rates, and in the coin or
currency herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond is registrable in the Bond Register, upon
surrender of this Bond for registration of transfer at the office or agency
maintained by the Bond Registrar in Richmond, Virginia, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Bond Registrar duly executed by the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Bonds of this
series or authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Bonds of this series are issuable only in registered form without
coupons in denominations of $5,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Bonds of this series are exchangeable for a like aggregate principal amount of
Bonds of this series of a different authorized denomination, but of the same
maturity, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Bond for registration of transfer and
subject to the Assignment, the Company, the Trustee and any agent of the Company
or the Trustee may treat the person in whose name this Bond is registered as the
owner hereof for all purposes, whether or not this Bond be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Unless the context suggests otherwise, all capitalized terms used
herein and not otherwise defined shall have the same meaning assigned to them in
the Indenture.
<PAGE>
IN witness thereof, the Company has caused this Bond to be duly
executed.
Dated: ______________________
OLD DOMINION ELECTRIC
COOPERATIVE
By: _________________________
Authorized Officer
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture.
CRESTAR BANK, a Virginia
corporation, as Trustee
By: ________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
The Industrial Development Authority of Halifax County, Virginia (the
"Authority"), hereby irrevocably assigns without recourse the foregoing Bond to
the Bank of New York, New York, New York (the "Tax-Exempt Bond Trustee"), as
trustee, acting pursuant to a Second Supplemental Indenture of Trust dated as of
November 18, 1998 (the "Second Supplemental Tax-Exempt Indenture"), between the
Authority and the Tax-Exempt Bond Trustee and hereby directs the Company, as the
issuer of this Bond, to make all payments of principal of, premium and interest
thereon directly to the Tax-Exempt Bond Trustee at its principal office in New
York, New York, or at such other place as the Tax-Exempt Bond Trustee may direct
in writing. Such assignment is made as security for the payment of the
Authority's $1,075,000 Exempt Facility Refunding Revenue Bonds (Old Dominion
Electric Cooperative Project), Series 1998, issued pursuant to the Tax-Exempt
Indenture.
INDUSTRIAL DEVELOPMENT AUTHORITY OF
HALIFAX COUNTY, VIRGINIA
By: ____________________________________
Chairman
<PAGE>
ARTICLE II
PRINCIPAL AMOUNT PRESENTLY OUTSTANDING TO BE OUTSTANDING
SECTION 2.01 PRINCIPAL AMOUNT PRESENTLY TO BE OUTSTANDING. The total
aggregate principal amount of Bonds of the Company issued and outstanding and
presently to be issued and outstanding under the provisions of and secured by
the Indenture will be Eight Hundred Forty-Nine Million, Two Hundred Eighty-Five
Thousand, Nine Hundred Thirty-Seven Dollars ($849,285,937), namely Four Hundred
Twenty-Nine Million, Eight Hundred Sixty-Eight Thousand Dollars ($429,868,000)
principal amount of First Mortgage Bonds, 1992 Series A, Fifty-eight Million,
One Hundred Ten Thousand Dollars ($58,110,000) principal amount of First
Mortgage Bonds, 1992 Series C, Two Hundred Forty-Nine Million Dollars
($249,000,000) principal amount of First Mortgage Bonds, 1993 Series A, One
Hundred Nine Million, One Hundred Eighty-Two Thousand, Nine Hundred Thirty-Seven
Dollars ($109,182,937) principal amount of First Mortgage Bonds, 1996 Series B,
One Million Twenty-Five Thousand Dollars ($1,025,000) principal amount of 1997
Series A Bonds and now issued, outstanding and One Million Seventy-Five Thousand
Dollars ($1,075,000) principal amount of 1998 Series A Bonds to be issued
pursuant to this Seventh Supplemental Indenture upon compliance by the Company
with the provisions of Section 5.01 and 5.02 and/or 5.03 and/or 5.04 of the
Original Indenture.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. This Seventh Supplemental Indenture is executed and shall
be construed as an indenture supplemental to the Original Indenture, and shall
form a part thereof, and the Original Indenture, as heretofore supplemented and
as hereby supplemented and modified, is hereby confirmed. Except to the extent
inconsistent with the express terms hereof, all of the provisions, terms,
covenants and conditions of the Original Indenture shall be applicable to the
1998 Series A Bonds to the same extent as if specifically set forth herein. All
capitalized terms used in this Seventh Supplemental Indenture shall be taken to
have the same meanings as in the Original Indenture, except in cases where the
context clearly indicates otherwise.
SECTION 3.02. All recitals in this Sixth Supplemental Indenture are made
by the Company only and not by the Trustee; and all of the provisions contained
in the Original Indenture, in respect of the rights, privileges, immunities,
powers and duties of the Trustee shall be applicable in respect hereof as fully
and with like effect as if set forth herein in full.
SECTION 3.03. Whenever in this Seventh Supplemental Indenture any of the
parties hereto is named or referred to, this shall, subject to the provisions of
Articles Ten and Twelve of the Original Indenture, be deemed to include the
successors and assigns of such party, and all the covenants and agreements in
this Seventh Supplemental Indenture
<PAGE>
contained by or on behalf of the Company, or by or on behalf of the Trustee
shall, subject as aforesaid, bind and inure to the respective benefits of the
respective successors and assigns of such parties, whether so expressed or not.
SECTION 3.04. Nothing in this Seventh Supplemental Indenture, expressed
or implied, is intended, or shall be construed, to confer upon, or to give to,
any person, firm or corporation, other than the parties hereto and the Holders
of the Outstanding Bonds, any right, remedy or claim under or by reason of this
Seventh Supplemental Indenture or any covenant, condition, stipulation, promise
or agreement hereof, and all the covenants, conditions, stipulations, promises
and agreements in this Seventh Supplemental Indenture contained by or on behalf
of the Company shall be for the sole and exclusive benefit of the parties
hereto, and of the Holders of Outstanding Bonds.
SECTION 3.05. This Seventh Supplemental Indenture may be executed in
several counterparts, each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts, or as many of them as the Company
and the Trustee shall preserve undestroyed, shall together constitute but one
and the same instrument.
SECTION 3.06. Although this Seventh Supplemental Indenture is dated for
convenience and for the purpose of reference as of November 1, 1998, the actual
date or dates of execution by the Company and by the Trustee are as indicated by
their respective acknowledgments hereto annexed.
SECTION 3.07. To the extent permitted by applicable law, this Seventh
Supplemental Indenture shall be deemed to be a Security Agreement and Financing
Statement whereby the Company grants to the Trustee a security interest in all
of the Trust Estate that is personal property or fixtures under the Uniform
Commercial Code, as adopted or hereafter adopted in one or more of the states in
which any part of the properties of the Company are situated. The mailing
address of the Company, as debtor, is Innsbrook Corporate Center, 4201 Dominion
Boulevard, Glen Allen, Virginia 23060, and the mailing address of the Trustee,
as secured party, is Crestar Bank, Attention: Corporate Trust Administration,
919 East Main Street, Richmond, Virginia 23219.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Seventh
Supplemental Indenture to be duly executed as of the day and year first above
written.
Company: OLD DOMINION ELECTRIC COOPERATIVE
Innsbrook Corporate Center
4201 Dominion Boulevard
Glen Allen, Virginia 23060
By: ____________________________
Name: Daniel M. Walker
Title: Vice President of
Accounting and Finance
Trustee: CRESTAR BANK
919 East Main Street
Corporate Trust Department
Richmond, Virginia 23219
By: ____________________________
Name: J. Lee Judy
Title: Senior Vice President
<PAGE>
ACKNOWLEDGMENT
COMMONWEALTH OF VIRGINIA )
)
CITY/COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this _____ day of
November, 1998, by Daniel M. Walker, the Vice President of Old Dominion
Electric Cooperative, a Virginia power supply cooperative.
-------------------------------
Notary Public
My Commission expires: _____________________
ACKNOWLEDGMENT
COMMONWEALTH OF VIRGINIA )
)
CITY/COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this _____ day of
November, 1998, by J. Lee Judy, the Vice President of Crestar Bank, a Virginia
banking corporation, on behalf of the Bank.
-------------------------------
Notary Public
My Commission expires: _____________________
<PAGE>
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A PUBLIC UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
- --------------------------------------------------------------------------
OLD DOMINION ELECTRIC COOPERATIVE,
GRANTOR
TO
CRESTAR BANK,
TRUSTEE
------------------------
EIGHTH SUPPLEMENTAL INDENTURE
DATED AS OF NOVEMBER 30, 1998
----------------------
SUPPLEMENTAL TO THE INDENTURE OF MORTGAGE AND DEED OF TRUST
DATED AS OF MAY 1, 1992
----------------------------------------------------------------------
A MORTGAGE OF BOTH REAL AND PERSONAL PROPERTY
<PAGE>
EIGHTH SUPPLEMENTAL INDENTURE
-------------------------
THIS EIGHTH SUPPLEMENTAL INDENTURE, dated as of November 30, 1998
(the "Eighth Supplemental Indenture"), between OLD DOMINION ELECTRIC
COOPERATIVE, a Virginia power supply cooperative (the "Company"), whose mailing
address and address of its chief executive office is Innsbrook Corporate Center,
4201 Dominion Boulevard, Glen Allen, Virginia 23060, and CRESTAR BANK, a
Virginia banking corporation, as trustee (the "Trustee"), having its principal
corporate trust office at 919 East Main Street, Corporate Trust Department,
Richmond, Virginia 23219.
WHEREAS , the Company has heretofore executed and delivered an Indenture
of Mortgage and Deed of Trust, dated as of May 1, 1992 (herein sometimes called
the "Original Indenture"), to secure, as provided therein, its bonds (in the
Original Indenture and herein called the "Bonds"), to be designated generally as
its "First Mortgage Bonds", and to be issued in one or more series as provided
in the Original Indenture; and
WHEREAS, the Original Indenture was recorded among the land records in
the counties of Halifax, Louisa, Spotsylvania and Orange, Virginia, and a UCC
Form 1 concerning the Original Indenture was recorded among the financing
statement records at the Virginia State Corporation Commission and the Counties
of Henrico, Halifax, Louisa, Spotsylvania and Orange; and
WHEREAS, the Company has heretofore executed and delivered a First
Supplemental Indenture, dated as of August 1, 1992 (hereinafter the "First
Supplemental Indenture"), its Second Supplemental Indenture dated as of December
1, 1992 (hereinafter called the "Second Supplemental Indenture"), its Third
Supplemental Indenture, dated as of May 1, 1993 (hereinafter called the "Third
Supplemental Indenture"), its Fourth Supplemental Indenture, dated as of
December 15, 1994 (hereinafter called the "Fourth Supplemental Indenture"), its
Fifth Supplemental Indenture, dated as of February 29, 1996 (hereinafter called
the "Fifth Supplemental Indenture"), its Sixth Supplemental Indenture, dated as
of November 28, 1997, (hereinafter called the "Sixth Supplemental Indenture"),
and its Seventh Supplemental Indenture, dated as of November 1, 1998,
(hereinafter called the "Seventh Supplemental Indenture"), supplementing the
Original Indenture, each of which, with the exception of the Fourth Supplemental
Indenture, provided for the creation of a new series of Bonds which subjected,
or intended to subject, to the lien of the Original Indenture certain property
described therein and was recorded among the land records for the counties of
Halifax, Louisa, Spotsylvania and Orange, Virginia and among the financing
statement records at the Virginia State Corporation Commission and the Counties
of Henrico, Halifax, Louisa, Spotsylvania and Orange, Virginia, which recording
offices will include the recording offices in which this Eighth Supplemental
Indenture will be recorded; and
<PAGE>
WHEREAS, pursuant to the Original Indenture, the First Supplemental
Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture,
the Fifth Supplemental Indenture, the Sixth Supplemental Indenture, and the
Seventh Supplemental Indenture there have been executed, authenticated,
delivered and issued and there are now outstanding First Mortgage Bonds of the
series and in the principal amount as follows:
Principal Principal
Amount Amount
Series Issued Outstanding
7.27% First Mortgage $50,000,000 0
Bonds, 1992 Series A,
Due December 1, 1997
7.97% First Mortgage l50,000,000 142,000,000
Bonds, 1992 Series A,
Due December 1, 2002
8.76% First Mortgage 350,000,000 271,200,000
Bonds, 1992 Series A,
Due December 1, 2022
First Mortgage Bonds, 1,203,638 0
1992 Series B, Due
September 15, 1992
First Mortgage Bonds, 1,203,637 0
1992 Series B, Due
December 15, 1992
First Mortgage Bonds, 1,203,637 0
1992 Series B, Due
March 15, 1993
First Mortgage Bonds, 1,203,638 0
1992 Series B, Due
June 15, 1993
<PAGE>
First Mortgage Bonds, l,203,638 0
1992 Series B, Due
September 15, 1993
First Mortgage Bonds, 1,203,637 0
1992 Series B, Due
December 15, 1993
First Mortgage Bonds, 392,375 0
1992 Series B, Due
March 15, 1994
First Mortgage Bonds 392,376 0
1992 Series B, Due
June 15, 1994
First Mortgage Bonds 392,376 0
1992 Series B, Due
September 15, 1994
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15, 1994
First Mortgage Bonds 392,375 0
1992 Series B, Due
March 15, 1995
First Mortgage Bonds, 392,376 0
1992 Series B, Due
June 15, 1995
First Mortgage Bonds 392,376 0
1992 Series B, Due
September 15, 1995
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15, 1995
First Mortgage Bonds, 392,375 0
1992 Series B, Due
March 15, 1996
<PAGE>
First Mortgage Bonds, 392,376 0
1992 Series B, Due
June 15, 1996
First Mortgage Bonds, 392,376 0
1992 Series B, Due
September 15, 1996
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15,1996
4.90% First Mortgage 1,025,000 1,025,000
Bonds, 1992 Series C,
Due December 1, 1997
5.20% First Mortgage 1,075,000 1,075,000
Bonds, 1992 Series C,
Due December 1, 1998
5.40% First Mortgage 1,130,000 1,130,000
Bonds, 1992 Series C,
Due December 1, 1999
5.50% First Mortgage 1,190,000 1,190,000
Bonds, 1992 Series C,
Due December 1, 2000
5.70% First Mortgage 1,255,000 1,255,000
Bonds, 1992 Series C,
Due December 1, 2002
5.90% First Mortgage 1,330,000 1,330,000
Bonds, 1992 Series C,
Due December 1, 2002
6.00% First Mortgage 1,405,000 1,405,000
Bonds, 1992 Series C,
Due December 1, 2003
6.10% First Mortgage 1,495,000 1,495,000
Bonds, 1992 Series C,
Due December 1, 2004
<PAGE>
6.35% First Mortgage 5,060,000 5,060,000
Bonds, 1992 Series C,
Due December 1, 2007
6.50% First Mortgage 10,845,000 10,845,000
Bonds, 1992 Series C,
Due December 1, 2012
6.00% First Mortgage 34,400,000 34,400,000
Bonds, 1992 Series C,
Due December 1, 2022
7.48% First Mortgage 130,000,000 129,000,000
Bonds, 1993 Series A,
Due December 1, 2013
7.78% First Mortgage 120,000,000 120,000,000
Bonds, 1993 Series A,
Due December 1, 2023
First Mortgage Bonds 25,565,962 0
1996 Series A, Due
February 28, 1997
First Mortgage Bonds 581,032 0
1996 Series B, Due
January 5, 1998
First Mortgage Bonds 10,649,541 10,649,541
1996 Series B, Due
April 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
June 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
September 15, 2018
First Mortgage Bonds 32,650,788 32,650,788
1996 Series B, Due
December 15, 2018
4.90% First Mortgage 1,025,000 1,025,000
<PAGE>
Bonds, 1997 Series A,
Due December 1, 2002
4.25% First Mortgage 1,025,000 1,025,000
Bonds, 1998 Series A,
Due December 1, 2002
WHEREAS, in connection with the operation of a two-unit, coal-fired
electric generating facility in Halifax County, Virginia (in which the Company
has an undivided 50% interest), the Company will install certain solid waste
disposal facilities (the "Facilities"). Pursuant to a loan agreement dated as of
November 30, 1998 (the "Loan Agreement"), between the Company and the Industrial
Development Authority of Goochland County, Virginia (the "Authority"), the
Authority assisted the Company with the financing of the Facilities by issuing
its Exempt Facility Revenue Bonds (Old Dominion Electric Cooperative Project),
Series 1998, in an aggregate principal amount of $5,000,000.00 (the "Series 1998
Tax-Exempt Bonds"). The Company's obligation to repay the loan from the
Authority is evidenced by a new series of Bonds designated First Mortgage Bonds,
1998 Series B (the "1998 Series B Bonds"); and
WHEREAS, the Board of Directors of the Company has established the 1998
Series B Bonds and the Board of Directors of the Company has authorized an issue
of Five Million and no/100 Dollars ($5,000,000) principal amount thereof, and
the Company has complied or will comply with all provisions required to issue
Additional Bonds provided for in the Original Indenture; and
WHEREAS, the Company desires to execute and deliver this Eighth
Supplemental Indenture, in accordance with the provisions of the Original
Indenture, for the purposes, among others, of (i) providing for the creation of
a new series of Bonds, designating the series to be created and specifying the
form and provisions of the Bonds of such series (the Original Indenture, as
heretofore and hereby supplemented and modified, being herein sometimes called
the "Indenture"), and (ii) modifying the terms, provisions, restrictions or
conditions of the Original Indenture; and
WHEREAS, Section 13.01 of the Original Indenture provides that, without
the consent of the Holders of any of the Bonds at the time Outstanding, the
Company, when authorized by a Board Resolution and the Trustee, may enter into
supplemental indentures for the purposes and subject to the conditions set forth
in said Section 13.01; and
WHEREAS, the Company proposes to modify the Original Indenture as
provided in Section 13.01; and
WHEREAS, all acts and proceedings required by law and by the Articles of
Incorporation and Bylaws of the Company necessary to secure the payment of the
principal of (and premium, if any) and interest on the 1998 Series B Bonds, to
make the 1998 Series
<PAGE>
B Bonds to be issued hereunder, when executed by the Company,
authenticated and delivered by the Trustee and duly issued, the valid, binding
and legal obligations of the Company, and to constitute the Indenture a valid
and binding mortgage for the security of all of the Bonds, in accordance with
its and their terms, have been done and taken; and the execution and delivery
of this Eighth Supplemental Indenture has been in all respects duly authorized;
NOW, THEREFORE, THIS EIGHTH SUPPLEMENTAL INDENTURE WITNESSETH, that, to
secure the payment of the principal of (and premium, if any) and interest on
the Outstanding Secured Bonds, to confirm the lien of the Original Indenture
upon the Trust Estate mentioned therein including all property purchased,
constructed or otherwise acquired by the Company since the date of execution of
the Original Indenture, to secure performance of the covenants therein and
herein contained, to declare the terms and conditions on which the Outstanding
Secured Bonds are secured, and in consideration of the premises thereof and
hereof and to modify the Original Indenture, the Company by these presents does
grant, bargain, sell, alienate, remiss, release, convey, assign, transfer,
mortgage, hypothecate, pledge, set over and confirm to the Trustee, in trust,
all property, rights, privileges and franchises (other than Excepted Property)
of the Company of the character described in the Granting Clauses of the
Original Indenture, including all such property, rights, privileges and
franchises acquired since the date of execution of the Original Indenture,
including, without limitation, all of those fee and leasehold interests in real
property, if any, which may hereafter be constructed or acquired by it, but
subject to all exceptions, reservations and matters of the character therein
referred to, and expressly excepting and excluding from the lien and operation
of the Indenture all properties of the character specifically excepted by
Subdivisions A through K of "Excepted Property" in the Original Indenture to
the extent contemplated thereby, and all property heretofore released or
otherwise disposed of pursuant to the provisions of the Original Indenture.
PROVIDED, HOWEVER, that (i) if, upon the occurrence of an Event of
Default, the Trustee, or any separate trustee or co-trustee appointed under
Section 10.14 of the Original Indenture or any receiver appointed pursuant to
statutory provision or order of court, shall have entered into possession of all
or substantially all of the Trust Estate, all the Excepted Property described or
referred to in Subdivisions A through G, inclusive, of "Excepted Property" in
the Original Indenture then owned or thereafter acquired by the Company shall
immediately, and, in the case of any Excepted Property described or referred to
in Subdivisions H through J inclusive, of "Excepted Property" in the Original
Indenture, upon demand of the Trustee or such other trustee or receiver, become
subject to the lien of the Original Indenture to the extent permitted by law,
and the Trustee or such other trustee or receiver may, to the extent permitted
by law, at the same time likewise take possession thereof, and (ii) whenever all
Events of Default shall have been cured and the possession of all or
substantially all of the Trust Estate shall have been restored to the Company,
such Excepted Property shall again be excepted and excluded from the lien of the
Original Indenture to the extent and otherwise as hereinabove set forth and as
set forth in the Original Indenture.
<PAGE>
The Company may, however, pursuant to Granting Clause Third of the
Original Indenture, subject any Excepted Property to the lien of the Original
Indenture, whereupon the same shall cease to be Excepted Property.
TO HAVE AND TO HOLD all said property, rights, privileges and franchises
of every kind and description, real, personal or mixed, hereby and hereafter (by
Supplemental Indenture or otherwise) granted, bargained, sold, alienated,
remised, released, conveyed, assigned, transferred, mortgaged, hypothecated,
pledged, set over or confirmed as aforesaid, or intended, agreed or covenanted
so to be, together with all the appurtenances thereto appertaining unto the
Trustee and its successors and assigns forever.
SUBJECT, HOWEVER, to (i) Permitted Encumbrances (as defined in Section
1.01 of the Original Indenture), (ii) to the extent permitted by Section 14.06
of the Original Indenture, as to property acquired since the date of execution
of the Original Indenture, (a) any duly recorded or perfected prior mortgage or
other lien that may exist thereon at the date of the acquisition thereof by the
Company, and (b) purchase money mortgages created by the Company at the time of
acquisition thereof, and (iii) defects of title to and encumbrances on property
described in Article IV of the First Supplemental Indenture.
BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and
proportionate benefit and security of the Holders from time to time of all the
Outstanding Secured Bonds without any priority of any such Bond over any other
such Bond and for the enforcement of the payment of such Bonds in accordance
with their terms.
UPON CONDITION that, until the happening of an Event of Default (as
defined in Section 1.01 of the Original Indenture) and subject to the provisions
of Article Six of the Original Indenture, the Company shall be permitted to
possess and use the Trust Estate, except cash, securities and other personal
property deposited, or required to be deposited, with the Trustee and to explore
for, mine, extract and dispose of coal, ore, gas, oil and other minerals, to
harvest standing timber and to receive and use the rents, issues, profits,
revenues and other income, products and proceeds of the Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that all the Bonds are to be
authenticated and delivered and the Trust Estate is to be held and applied by
the Trustee, subject to the further covenants, conditions and trusts set forth
in the Original Indenture, and the Company does hereby covenant and agree to and
with the Trustee, for the equal and proportionate benefit of all Holders of the
Bonds as follows:
<PAGE>
ARTICLE 1
BONDS OF THE 1998 SERIES B AND CERTAIN PROVISIONS
RELATING THERETO
SECTION 1.01
(A) TERMS OF THE 1998 SERIES B BONDS. There be hereby established a
series of Bonds, known as and entitled "First Mortgage Bonds, 1998 Series B"
(hereinafter referred to as the "1998 Series B Bonds") and the form thereof
shall be substantially as set forth in Section 1.01 (D). The aggregate principal
amount of 1998 Series B Bonds which may be authenticated and delivered and
Outstanding at any one time is limited to Five Million and no/100 Dollars
($5,000,000). The Trustee is hereby appointed as Authenticating Agent for the
1998 Series B Bonds.
The 1998 Series B Bonds shall be issuable in fully registered form
without coupons and in denominations of $100,000 and integral multiples thereof.
Each 1998 Series B Bond shall be dated the date of its issuance. The 1998 Series
B Bonds shall bear interest from the date they are authenticated and delivered
by the Trustee, payable on June 1, 1999, and on each of June 1 and December 1 of
each year thereafter at the rate of 4.25% per annum and shall mature, subject to
prior redemption, on December 1, 2002.
The 1998 Series B Bonds shall be issued to and registered in the name of
the Authority and subsequently will be assigned by the Authority to the Crestar
Bank, as trustee (the "Tax-Exempt Bond Trustee") pursuant to that certain
Indenture of Trust, dated as of November 30, 1998, between the Authority and the
Tax-Exempt Bond Trustee (the "Tax-Exempt Indenture") and will secure the
obligations of the Company under the Loan Agreement.
The 1998 Series B Bonds shall be lettered "A". The principal and
interest on the 1998 Series B Bonds shall be payable in lawful money of the
United States of America to the registered owner of the 1998 Series B Bonds or
its assignee in accordance with the provisions of the Loan Agreement by wire
transfer or other method acceptable to such registered owner or its assignee in
funds which will be immediately available on the applicable principal and/or
Interest Payment Date or Redemption Date. Interest on the 1998 Series B Bonds
shall be payable without presentation of the 1998 Series B Bonds for payment.
Payment of the principal or Redemption Price of any 1998 Series B Bond shall be
made by the Company to the Tax-Exempt Bond Trustee upon presentation and
surrender of such Bond to the Trustee.
The Regular Record Date referred to in Section 3.09 of the Original
Indenture for the payment of interest on the 1998 Series B Bonds shall be the
fifteenth day (whether or not a business day) of the calendar month next
preceding such Interest Payment Date.
<PAGE>
(B) EXTRAORDINARY OPTIONAL REDEMPTION OF 1998 SERIES B BONDS.
(i) The 1998 Series B Bonds are subject to extraordinary optional
redemption by the Company in whole at any time at a Redemption Price equal to
100% of the principal amount of such 1998 Series B Bonds, together with accrued
interest to the Redemption Date, upon the happening of any of the following
events:
(a) Damage or destruction of the Facilities by fire or other
casualty to such extent that, or loss of title to or use of substantially all of
the Facilities as a result of the exercise of the power of eminent domain or
failure of title which, in the opinion of both the Company (expressed in a
certificate of an Officer of the Company) and an Engineer, both filed with the
Trustee and the Tax-Exempt Bond Trustee and, that (1) the Facilities cannot be
reasonably repaired, rebuilt or restored within a period of 12 months to their
condition immediately preceding such damage or destruction, or (2) the Company
is prevented from carrying on its normal operations at the Facilities for a
period of 12 months; or
(b) A change in the Constitution of Virginia or of the United
States of America or a legislative or administrative action (whether local,
state or Federal) or a final decree, judgment or order of any court or
administrative body (whether local, state or Federal) contested by the Company
in good faith which causes (1) the Loan Agreement or the 1998 Series B Bonds to
become void or unenforceable or their performance in accordance with the intent
and purpose of the parties as expressed therein to be impossible or (2)
unreasonable burdens or excessive liabilities to be imposed on the Authority or
the Company.
(ii) The 1998 Series B Bonds are subject to extraordinary
optional redemption by the Company in part on any Interest Payment Date at a
Redemption Price equal to 100% of the principal amount of the 1998 Series B
Bonds to be redeemed, together with accrued interest to the Redemption Date in
the event of (i) damage or destruction to any part of the Facilities by fire or
other casualty or (ii) loss of title to any part of the Facilities as a result
of the exercise of eminent domain or failure of title, but only upon receipt by
the Trustee and the Tax-Exempt Bond Trustee of the following:
(a) A certificate of an Officer of the Company stating
that there has been either (x) damage or destruction of the Facilities by fire
or other casualty or (y) loss of title to any part of the Facilities as a result
of the exercise of eminent domain or failure of title and that it is not in the
best interest of the Company to rebuild such portion of the Facilities; and
(b) An Opinion of Counsel stating that the use of the
condemnation award or insurance proceeds resulting from such casualty or loss of
title, for purposes other than (x) rebuilding, restoring or repairing the
Facilities, or (y) redeeming the Series 1998 Tax-Exempt Bonds would cause the
interest paid or payable on the Series
<PAGE>
1998 Tax-Exempt Bonds (other than interest paid to any "substantial user" of the
Facilities or "related person" as those terms are defined in Section 147(a) of
the Internal Revenue Code of 1986, as amended (the "Code")) to be includable in
the gross income of a holder of Series 1998 Tax-Exempt Bonds for Federal income
tax purposes under the Code (or for Virginia state income tax purposes).
(iii) To exercise its option to redeem the 1998 Series B Bonds,
in whole under subsection (B)(i), above, or in part under subsection (B)(ii),
above, the Company shall comply with the provisions of Article Seven of the
Original Indenture, if applicable, and shall within 120 days after the event
permitting its exercise, file the required documentation with the Trustee and
the Tax-Exempt Bond Trustee and specify a date not more than 60 days thereafter
for making such payments.
(C) MANDATORY REDEMPTION OF THE 1998 SERIES B BONDS. The 1998 Series B
Bonds are subject to mandatory redemption in whole as promptly as possible, but
no later than 180 days after the occurrence of any Determination of Taxability,
at a Redemption Price equal to 100% of the principal amount of the 1998 Series B
Bonds to be redeemed plus interest accrued to the Redemption Date. For purposes
of this paragraph, "Determination of Taxability" shall mean (i) any enactment or
amendment of any applicable statute or regulation, or (ii) a final decree or
judgment of any federal court, a final determination by the United States
Internal Revenue Service or a final judgment or determination by any court or
agency of the Commonwealth of Virginia, with the effect that interest paid or
payable on the Series 1998 Tax-Exempt Bonds (other than interest paid to any
"substantial user" of the Facilities or "related person" as those terms are
defined in Section 147(a) of the Code) is or was includable in the gross income
of a Series 1998 Tax-Exempt Bondholder for Federal income tax purposes under the
Code (or for Virginia state income tax purposes). A Determination of Taxability
does not include any tax upon interest payable on exempt facility bonds under
Section 142 of the Code and other statutes and regulations in effect on the date
of issuance of the Series 1998 Tax-Exempt Bonds and does not include any change
in tax rates. A Determination of Taxability will be deemed to have occurred on
the date on which the Tax-Exempt Bond Trustee is first notified in writing of
any such enactment, amendment, judgment, decree or determination.
(D) FORM OF 1998 SERIES B BONDS. The 1998 Series B Bonds and the
Trustee's authentication certificate to be executed on the Bonds of said series
shall be substantially in the following form, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
the Original Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the Officers executing such Bonds, as
evidenced by their execution of such Bonds:
<PAGE>
FORM OF 1998 SERIES B BONDS
THIS FIRST MORTGAGE BOND, 1998 SERIES B, HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED WITHOUT
REGISTRATION UNDER SUCH ACT OR IN RELIANCE UPON AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
Old Dominion Electric Cooperative
First Mortgage Bond 1998 Series B,
Due March 30, 1999 or December 1, 2002
(as described herein)
No. A-1 $ 5,000,000.00
Old Dominion Electric Cooperative, a Virginia power supply
cooperative (herein called the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to the INDUSTRIAL DEVELOPMENT AUTHORITY OF GOOCHLAND
COUNTY, VIRGINIA, or registered assigns, the principal sum of Five Million and
xx/100 Dollars ($5,000,000.00) on the later of (a) March 30, 1999, and (b)
December 1, 2002, if, prior to March 30, 1999, the Company has received a final,
non-appealable order from the Federal Energy Regulatory Commission authorizing
the Company's issuance to the Authority (as defined herein) of its First
Mortgage Bonds to mature on December 1, 2002, to secure payment of the Series
1998 Tax-Exempt Bonds (as defined herein), thereon from the date this Bond is
authenticated and delivered by the Trustee (as defined herein) or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on June 1 and December 1 in each year, commencing June 1,
1999, at the rate 4.25% per annum, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture
(as defined herein), be paid to the Person in whose name this Bond is registered
on the date of business on the Regular Record Date for such interest, which
shall be the fifteenth day (whether or not a business day), of the calendar
month next proceeding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Bond is registered at the close of business on a Special Record Date
for the payment of such defaulted interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Bonds of this series not less than 10 days
prior
<PAGE>
to such Special Record Date, or may be paid at any time in any other lawful
manner not inconsistent with the provisions of the Indenture and acceptable to
the Holder hereof.
If any principal of or premium, if any, or interest on this Bond is not
paid when due (whether at maturity, upon acceleration or call for redemption or
otherwise), then the overdue installments of principal and, to the extent
permitted by law, interest shall bear interest until paid at the interest rate
borne by this Bond.
The principal of and premium, if any, and interest on this Bond shall be
payable in lawful money of the United States of America to the registered owner
hereof in accordance with the provisions of the Loan Agreement (as defined
herein) by wire transfer or other method acceptable to such registered owner in
funds which will be immediately available on the applicable principal and/or
interest payment date or redemption date. Interest on this Bond shall be payable
without presentation hereof. Payment of the principal and premium, if any, on
this Bond shall be made by the Company to the holder hereof upon presentation
and surrender of such Bond to Crestar Bank, Richmond, Virginia, as trustee
("Trustee") under the Indenture.
This Bond is one of a duly authorized issue of Bonds of the Company
designated as its "First Mortgage Bonds" (herein called the "Bonds") issued and
to be issued in one or more series (which may have varying terms) under, and all
equally and ratably secured by, an Indenture of Mortgage and Deed of Trust,
dated as of May 1, 1992 (herein called the "Indenture"), between the Company and
the Trustee to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the description of the properties thereby
mortgaged, pledged and assigned, the nature and extent of the security and the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Bonds and of the terms upon
which the Bonds are, and are to be, authenticated and delivered. This Bond is
issued pursuant to the Eighth Supplemental Indenture, dated as of November 30,
1998 ("Eighth Supplemental Indenture"), between the Company and the Trustee.
This Bond is being issued by the Company to repay a loan from the Industrial
Development Authority of Goochland County, Virginia ("Authority") made to the
Company from the proceeds of the Authority's $5,000,000 Exempt Facility Revenue
Bonds (Old Dominion Electric Cooperative Project) Series 1998 ("1998 Tax-Exempt
Bonds") for the purpose of acquiring, constructing and equipping certain solid
waste disposal facilities ("Facilities") for the Company pursuant to the Loan
Agreement, dated as of November 30, 1998 ("Loan Agreement"), between the Company
and the Authority. The 1998 Tax-Exempt Bonds were issued pursuant to an
Indenture of Trust, dated as of November 30, 1998 ("Tax-Exempt Indenture"),
between the Authority and Crestar Bank, as trustee ("Tax-Exempt Bond Trustee").
If at any time the amount held by the Tax-Exempt Bond Trustee in the
Bond Fund, as defined in the Tax-Exempt Indenture, should be sufficient to pay
at the times required the principal of, and premium, if any, and interest on the
1998 Tax-Exempt Bonds then remaining unpaid and to pay all fees and expenses of
the Tax-Exempt Bond Trustee accrued and to accrue through final payment of the
1998 Tax-Exempt Bonds, the Company
<PAGE>
shall not be obligated to make any further payments hereunder, except to the
extent losses may be incurred in connection with investment of moneys in the
Bond Fund.
The Authority, by the execution of the Tax-Exempt Indenture and the
assignment form at the foot of this Bond ("Assignment"), is assigning this Bond
and the payments thereon to the Tax-Exempt Trustee, acting pursuant to the
Tax-Exempt Indenture, as security for the 1998 Tax-Exempt Bonds. Payments of
principal of, and premium, if any, and interest on this Bond shall be made
directly to the Tax-Exempt Bond Trustee for the account of the Authority
pursuant to such assignment and applied only to the principal of, and premium,
if any, and interest on the 1998 Tax-Exempt Bonds. All obligations of the
Company hereunder shall terminate when all sums due and to become due pursuant
to the Tax-Exempt Indenture, this Bond, the Loan Agreement and the 1998
Tax-Exempt Bonds have been paid or provided for in full.
The Bond is subject to extraordinary optional redemption by the Company
in whole at any time at a Redemption Price equal to 100% of the principal amount
of such Bonds, together with accrued interest to the Redemption Date, upon the
happening of any of the following events:
(a) Damage or destruction of the Facilities by fire or other casualty to
such extent that, or loss of title to or use of substantially all of the
Facilities as a result of the exercise of the power of eminent domain or failure
of title which, in the opinion of both the Company (expressed in a certificate
of an Officer of the Company) and an Engineer, both filed with the Trustee and
the Tax-Exempt Bond Trustee, (1) the Facilities cannot be reasonably repaired,
rebuilt or restored within a period of 12 months to their condition immediately
preceding such damage or destruction, or (2) the Company is prevented from
carrying on its normal operations at the Facilities for a period of 12 months;
or
(b) A change in the Constitution of Virginia or of the United States of
America or a legislative or administrative action (whether local, state or
Federal) or a final decree, judgment or order of any court or administrative
body (whether local, state or Federal) contested by the Company in good faith
which causes (1) the Loan Agreement or the 1998 Tax-Exempt Bonds to become void
or unenforceable or their performance in accordance with the intent and purpose
of the parties as expressed therein to be impossible or (2) unreasonable burdens
or excessive liabilities to be imposed on the Authority or the Company.
The Bond is subject to extraordinary optional redemption by the Company
in part on any Interest Payment Date at a Redemption Price equal to 100% of the
principal amount of the Bonds to be redeemed, together with accrued interest to
the Redemption Date in the event of (i) damage or destruction to any part of the
Facilities by fire or other casualty or (ii) loss of title to any part of the
Facilities as a result of the exercise of eminent domain or failure of title,
but only upon receipt by the Trustee and the Tax-Exempt Bond Trustee of the
following:
<PAGE>
(A) A certificate of an Officer of the Company stating that there has
been either (x) damage or destruction of the Facilities by fire or other
casualty or (y) loss of title to any part of the Facilities as a result of the
exercise of eminent domain or failure of title and that it is not in the best
interests of the Company to rebuild such portion of the Facilities; and
(B) An opinion of counsel stating that the use of the condemnation award
or insurance proceeds resulting from such casualty or loss of title, for
purposes other than (x) rebuilding, restoring or repairing the Facilities, or
(y) redeeming the 1998 Tax-Exempt Bonds would cause the interest paid or payable
on the 1998 Tax-Exempt Bonds (other than interest paid to any "substantial user"
of the Facilities or "related person" as those terms are defined in Section
147(a) of the Internal Revenue Code of 1986, as amended, (the "Code")) to be
includable in the gross income of a holder of the 1998 Tax-Exempt Bonds for
federal income tax purposes under the Code (or for Virginia state income tax
purposes).
To exercise such right of extraordinary redemption in whole or in part,
the Company shall comply with the provisions of Article Seven of the Indenture,
if applicable, and shall within 120 days after the event permitting its
exercise, file the required documentation with the Trustee and the Tax-Exempt
Bond Trustee and specify a date not more than 60 days thereafter for making such
payments.
The Bonds are subject to mandatory redemption in whole as promptly as
possible, but not later than 180 days after the occurrence of any Determination
of Taxability (as defined in the Tax-Exempt Indenture) at a Redemption Price
equal to 100% of the principal amount of the Bonds to be redeemed plus interest
accrued to the Redemption Date.
If the Bond is called for redemption, the Company has covenanted to
cause notice of the call for redemption to be given to each Holder of the Bond
to be redeemed at such Holder's address as the same shall last appear upon the
Bond Register, by first class mail at least 35 and no more than 60 days prior to
the Redemption Date.
If an Event of Default with respect to the Bond shall occur and be
continuing, the principal of the Bond may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of Bonds under the Indenture at any time
by the Company with the consent of the Holders of a majority in aggregate
principal amount of Bonds of all series at the time outstanding affected by such
modification. The Indenture also contains provisions permitting the Holders of a
majority in principal amount of Bonds at the time outstanding, on behalf of the
Holders of all Bonds to waive compliance by the Company with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any Bond
<PAGE>
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Bond.
No reference herein to the Indenture and no provision of this Bond or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and premium, if any, and
interest on this Bond at the times, places and rates, and in the coin or
currency herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond is registrable in the Bond Register, upon
surrender of this Bond for registration of transfer at the office or agency
maintained by the Bond Registrar in Richmond, Virginia, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Bond Registrar duly executed by the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Bonds of this
series or authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Bonds of this series are issuable only in registered form without
coupons in denominations of $5,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Bonds of this series are exchangeable for a like aggregate principal amount of
Bonds of this series of a different authorized denomination, but of the same
maturity, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Bond for registration of transfer and
subject to the Assignment, the Company, the Trustee and any agent of the Company
or the Trustee may treat the person in whose name this Bond is registered as the
owner hereof for all purposes, whether or not this Bond be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
Unless the context suggest otherwise, all capitalized terms used
herein and not otherwise defined shall have the same meaning assigned to them in
the Indenture.
[SIGNATURE APPEARS ON FOLLOWING PAGE]
<PAGE>
IN witness thereof, the Company has caused this Bond to be duly
executed.
Dated: November 30, 1998
OLD DOMINION ELECTRIC
COOPERATIVE
By: _SAMPLE_______________
Daniel M. Walker
Authorized Officer
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds of the series designated therein referred to
in the within-mentioned Indenture.
Dated: __________________
CRESTAR BANK, a Virginia
corporation, as Trustee
By: _SAMPLE___________________
R. Lee Judy
Authorized Signatory
<PAGE>
ASSIGNMENT
The Industrial Development Authority of Goochland County, Virginia
(the "Authority"), hereby irrevocably assigns without recourse the foregoing
Bond to Crestar Bank, Richmond, Virginia (the "Tax-Exempt Bond Trustee"), as
trustee, acting pursuant to an Indenture of Trust dated as of December 1, 1998
(the "Tax-Exempt Indenture"), between the Authority and the Tax-Exempt Bond
Trustee and hereby directs the Company, as the issuer of this Bond, to make all
payments of principal of, premium and interest thereon directly to the
Tax-Exempt Bond Trustee at its principal office in Richmond, Virginia, or at
such other place as the Tax-Exempt Bond Trustee may direct in writing. Such
assignment is made as security for the payment of the Authority's $5,000,000
Exempt Facility Revenue Bonds (Old Dominion Electric Cooperative Project),
Series 1998, issued pursuant to the Tax-Exempt Indenture.
INDUSTRIAL DEVELOPMENT AUTHORITY OF
GOOCHLAND COUNTY, VIRGINIA
By: _SAMPLE_____________________
Chairman
<PAGE>
ARTICLE II
PRINCIPAL AMOUNT PRESENTLY OUTSTANDING TO BE OUTSTANDING
SECTION 2.01 PRINCIPAL AMOUNT PRESENTLY TO BE OUTSTANDING. The total
aggregate principal amount of Bonds of the Company issued and outstanding and
presently to be issued and outstanding under the provisions of and secured by
the Indenture will be Eight Hundred Thirty-Six Million, Eight Hundred Eighty-Six
Thousand, Nine Hundred Five Dollars ($836,886,905), namely Four Hundred Thirteen
Million, Dollars ($413,000,000) principal amount of First Mortgage Bonds, 1992
Series A, Fifty-Nine Million, One Hundred Eighty-Five Thousand Dollars
($59,185,000) principal amount of First Mortgage Bonds, 1992 Series C, Two
Hundred Forty-Nine Million Dollars ($249,000,000) principal amount of First
Mortgage Bonds, 1993 Series A, One Hundred Eight Million, Six Hundred One
Thousand, Nine Hundred Five Dollars ($108,601,905) principal amount of First
Mortgage Bonds, 1996 Series B, One Million Twenty-Five Thousand Dollars
($1,025,000) principal amount of 1997 Series A Bonds, and One Million
Seventy-Five Thousand Dollars ($1,075,000) principal amount of 1998 Series A
Bonds now issued and outstanding and Five Million Dollars ($5,000,000) principal
amount of 1998 Series B Bonds to be issued pursuant to this Eighth Supplemental
Indenture upon compliance by the Company with the provisions of Section 5.01 and
5.02 and/or 5.03 and/or 5.04 of the Original Indenture.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. This Eighth Supplemental Indenture is executed and shall
be construed as an indenture supplemental to the Original Indenture, and shall
form a part thereof, and the Original Indenture, as heretofore supplemented and
as hereby supplemented and modified, is hereby confirmed. Except to the extent
inconsistent with the express terms hereof, all of the provisions, terms,
covenants and conditions of the Original Indenture shall be applicable to the
1998 Series B Bonds to the same extent as if specifically set forth herein. All
capitalized terms used in this Eighth Supplemental Indenture shall be taken to
have the same meanings as in the Original Indenture, except in cases where the
context clearly indicates otherwise.
SECTION 3.02. All recitals in this Eighth Supplemental Indenture are
made by the Company only and not by the Trustee; and all of the provisions
contained in the Original Indenture, in respect of the rights, privileges,
immunities, powers and duties of the Trustee shall be applicable in respect
hereof as fully and with like effect as if set forth herein in full.
<PAGE>
SECTION 3.03. Whenever in this Eighth Supplemental Indenture any of the
parties hereto is named or referred to, this shall, subject to the provisions of
Articles Ten and Twelve of the Original Indenture, be deemed to include the
successors and assigns of such party, and all the covenants and agreements in
this Eighth Supplemental Indenture contained by or an behalf of the Company, or
by or on behalf of the Trustee shall, subject as aforesaid, bind and inure to
the respective benefits of the respective successors and assigns of such
parties, whether so expressed or not.
SECTION 3.04. Nothing in this Eighth Supplemental Indenture, expressed
or implied, is intended, or shall be construed, to confer upon, or to give to,
any person, firm or corporation, other than the parties hereto and the Holders
of the Outstanding Bonds, any right, remedy or claim under or by reason of this
Eighth Supplemental Indenture or any covenant, condition, stipulation, promise
or agreement hereof, and all the covenants, conditions, stipulations, promises
and agreements in this Eighth Supplemental Indenture contained by or on behalf
of the Company shall be for the sole and exclusive benefit of the parties
hereto, and of the Holders of Outstanding Bonds.
SECTION 3.05. This Eighth Supplemental Indenture may be executed in
several counterparts, each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts, or as many of them as the Company
and the Trustee shall preserve undestroyed, shall together constitute but one
and the same instrument.
SECTION 3.06. Although this Eighth Supplemental Indenture is dated for
convenience and for the purpose of reference as of November 30, 1998, the actual
date or dates of execution by the Company and by the Trustee are as indicated by
their respective acknowledgments hereto annexed.
SECTION 3.07. To the extent permitted by applicable law, this Eighth
Supplemental Indenture shall be deemed to be a Security Agreement and Financing
Statement whereby the Company grants to the Trustee a security interest in all
of the Trust Estate that is personal property or fixtures under the Uniform
Commercial Code, as adopted or hereafter adopted in one or more of the states in
which any part of the properties of the Company are situated. The mailing
address of the Company, as debtor, is Innsbrook Corporate Center, 4201 Dominion
Boulevard, Glen Allen, Virginia 23060, and the mailing address of the Trustee,
as secured party, is Crestar Bank, Attention: Corporate Trust Administration,
919 East Main Street, Richmond, Virginia 23219.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Supplemental Indenture to be duly executed as of the day and year first above
written.
Company: OLD DOMINION ELECTRIC COOPERATIVE
Innsbrook Corporate Center
4201 Dominion Boulevard
Glen Allen, Virginia 23060
By: ____________________________
Name: Daniel M. Walker
Title: Vice President of
Accounting and Finance
Trustee: CRESTAR BANK
919 East Main Street
Corporate Trust Department
Richmond, Virginia 23219
By: ____________________________
Name: J. Lee Judy
Title: Senior Vice President
<PAGE>
ACKNOWLEDGMENT
COMMONWEALTH OF VIRGINIA )
)
CITY/COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this _____ day of
December, 1998, by Daniel M. Walker, the Vice President of Old Dominion Electric
Cooperative, a Virginia power supply cooperative.
-------------------------------
Notary Public
My Commission expires: _____________________
ACKNOWLEDGMENT
COMMONWEALTH OF VIRGINIA )
)
CITY/COUNTY OF_____________________ )
The foregoing instrument was acknowledged before me this _____ day of
December, 1998, by J. Lee Judy, the Vice President of Crestar Bank, a Virginia
banking corporation, on behalf of the Bank.
-------------------------------
Notary Public
My Commission expires: _____________________
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF OLD DOMINION ELECTRIC COOPERATIVE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 766,966
<OTHER-PROPERTY-AND-INVEST> 211,044
<TOTAL-CURRENT-ASSETS> 131,573
<TOTAL-DEFERRED-CHARGES> 16,961
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,126,544
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 206,530<F1>
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 584,630
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 29,590
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 305,097
<TOT-CAPITALIZATION-AND-LIAB> 1,126,544
<GROSS-OPERATING-REVENUE> 364,221
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 298,026
<TOTAL-OPERATING-EXPENSES> 298,026
<OPERATING-INCOME-LOSS> 66,195
<OTHER-INCOME-NET> 5,941
<INCOME-BEFORE-INTEREST-EXPEN> 72,136
<TOTAL-INTEREST-EXPENSE> 60,042
<NET-INCOME> 12,094
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 79,912
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>* Old Dominion is organized and operated as a cooperative. Patronage capital is
the retained net margins of Old Dominion which have been allocated to its
members based on their respective power purchases in accordance with Old
Dominion bylaws.
</FN>
</TABLE>
