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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
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 SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
or
____ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________ to _________________
Commission file number 33-46795
-------------------
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)
___________
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
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OLD DOMINION ELECTRIC COOPERATIVE
1999 ANNUAL REPORT ON FORM 10-K
Item Page
Number Number
- ------ ------
PART I
1. Business........................................................... 1
2. Properties......................................................... 11
3. Legal Proceedings.................................................. 11
4. Submission of Matters to a Vote of Security Holders................ 11
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters........................................................... 11
6. Selected Financial Data............................................ 11
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 12
8. Financial Statements and Supplementary Data........................ 25
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.............................................. 45
PART III
10. Directors and Executive Officers of the Registrant................. 45
11. Executive Compensation............................................. 49
12. Security Ownership of Certain Beneficial Owners and Management..... 51
13. Certain Relationships and Related Transactions..................... 51
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K... 51
Signatures......................................................... 61
Exhibit Index...................................................... 64
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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, 1999, Old Dominion and its Members served more than 423,000
retail electric consumers (meters) within Old Dominion's and the Members'
service territory, representing a total population of approximately 1.1 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. 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 Nuclear 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,
Conectiv Energy ("Conectiv"), formerly Delmarva Power & Light Company, Public
Service Electric & Gas Company ("PSE&G"), American Electric Power-Virginia
("American Electric Power"), Allegheny Power System ("Allegheny Power"), and the
Pennsylvania-New Jersey-Maryland Interconnection LLC ("PJM"). Additionally, Old
Dominion makes short-term energy purchases from a variety of suppliers. These
purchases have increased over the last year due to restructured contracts and
reliance on the market. 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 64 employees as of March 1, 2000, 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 1999:
Percentage of
Old Dominion's
Members Revenues Total Revenues
- ------- ------------- ---------------
(in millions)
Northern Virginia Electric Cooperative.. $102.6 26.3%
Rappahannock Electric Cooperative....... 82.2 21.1
Delaware Electric Cooperative........... 41.7 10.7
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 complaint and may order a
reduction of any rates determined to be unjust, unreasonable, or otherwise
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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"), the Delaware Public Service Commission ("DPSC"), and the
Maryland Public Service Commission ("MPSC") do not have jurisdiction over Old
Dominion's rates and services. The state commissions, however, do have
oversight over the siting of Old Dominion's utility facilities in their
respective jurisdictions. They also regulate the rates and services offered by
Old Dominion's Member cooperatives.
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 and nitrogen oxides or
obtain allowances for such emissions. 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 below the current
limitations for nitrogen oxide emissions.
In 1998, the EPA issued a Final Rule addressing regional transport of
ground-level ozone through reductions in nitrogen oxides (NOx) commonly known as
the NOx State Implementation Plan ("SIP") call. The NOx SIP call, which affects
22 states, including Virginia, and the District of Columbia, required those
states to develop a plan by September 24, 1999 that would reduce NOx emissions
in the respective states. The NOx SIP call also required emissions reduction to
be implemented by May 1, 2003. In 1999, a Federal Appeals Court stayed the EPA's
NOx SIP call. Additionally, the court agreed to put off the SIP filings until
April 2000 but did not address the 2003 deadline for compliance with the SIP
call. In March 2000, the Federal Appeals Court ruled in favor of the EPA. This
decision, if it stands, will require states to submit their SIP plans to the EPA
and implement their NOx reduction program. 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., such as
Clover, will be required to reduce their NOx emissions.
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In a related action, several Northeast utilities filed petitions under
Section 126 of the CAA requesting that the EPA take action against those states
affected by the NOx SIP call. The states submitting the petitions claim that
their efforts to meet CAA standards are impeded by transport pollution from
upwind states. In response to the Section 126 filings, in December 1999 the EPA
ordered 392 power plants, including Clover Units 1 and 2, and industrial
facilities to reduce their emissions and set up a trading program to help those
companies meet the reduction by May 2003.
Virginia, along with other states, is suing the EPA over the NOx SIP call.
Virginia will likely use a new permit program to enforce reductions in NOx
emissions which will 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.
Old Dominion's direct capital expenditures for environmental control
facilities at Clover and North Anna, excluding capitalized interest, were
approximately $0.2 million and $0.3 million, respectively, in 1999. 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 $42.2 million and
$0.5 million, respectively. These expenditures, which include amounts related to
the above referenced NOx emissions reduction plans, are included in Old
Dominion's estimated capital expenditures for the years 2000 through 2002. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
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 in 1999 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. See Notes 1 and 10 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
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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.
COMPETITION AND CHANGING REGULATION
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," for a discussion of the effects of competition and
changing regulation on Old Dominion and its Members.
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. As competition becomes available to Old Dominion's Members' retail
consumers, the impact of each of these programs must be evaluated to ensure that
value is added to the consumer and the cooperative.
Seasonal Variations
Old Dominion's system is geographically divided into two separate and
distinctive power supply systems--the mainland Virginia 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 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 system represented 76% of Old
Dominion's 1999 peak demand, which occurred in July and resulted from a
relatively mild winter and a warmer than expected summer peak season.
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 MPSC, 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 and Changing Regulations."
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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.
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 4.6% of total Member peak demand and approximately 1.4% of total
Member energy requirements in 1999. The 1999 energy component was lower than
normal because of the drought conditions that existed during much of 1999 in
Virginia and other southeastern states. Each Member that purchases power from
SEPA receives its allotment directly from SEPA and pays SEPA directly for such
power.
The allocation includes 8 MW of SEPA power 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 1999.
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. Members' retained net margins 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.
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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.
During 1999, North Anna provided approximately 20.4% of the energy
requirements of Old Dominion. For statistics regarding North Anna's performance
for the three year period ended December 31, 1999, 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 in 1995 and 1996, respectively. Old Dominion has entered
into a sale and leaseback of its undivided ownership interest in certain
pollution control assets at Clover and separate lease and leaseback agreements
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 1999, Clover provided approximately 36.6% 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. However, in light of recent deregulation initiatives in
Virginia, Old Dominion and Virginia Power have agreed that the Clover Operating
Agreement will have to be restructured prior to January 1, 2002, to permit Old
Dominion to sell its excess energy from Clover to others or to Virginia Power on
changed terms. For statistics regarding Clover's performance for the year ended
December 31, 1999, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Operating Expenses."
Purchased Power
Market forces influence the structure of new power supply contracts. Within
PJM, Old Dominion's contracts reflect the need to have capacity (either owned
generation or purchase contracts) to meet load. For supplying energy, Old
Dominion purchases energy from the market or utilizes the PJM power pool when
economical. In Virginia, demand and energy requirements contracts are provided
principally by Virginia Power, American Electric Power, and Allegheny Power,
although energy may be displaced under the Virginia Power Amended and Restated
Interconnection and Operating Agreement ("I&O Agreement"), as accepted by FERC
on March 11, 1998.
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Old Dominion's current power supply portfolio consists of its owned
generation resources supplemented by purchase power contracts. Old Dominion's
purchase power contracts are structured to expire during the same timeframes
that competition commences in Virginia, Maryland, and Delaware. As retail choice
occurs, it will be more difficult to project future sales requirements.
Uncertainties in projecting load growth in the Member service territories,
current customers opting to choose other suppliers and the obligation of
providing default supplier service in which customers may choose to return
during the transition periods developed by each state creates the need for power
supply flexibility. The result of Old Dominion's Request for Proposals ("RFP")
for power supply resources has indicated that the most cost effective means of
meeting its requirements is to build peaking capacity to meet its capacity
requirements and energy needs when economical and rely on the market to supply
the remaining energy. This strategy will allow Old Dominion to supply its Member
requirements and load growth, while allowing any excess capacity and energy to
be sold into the market. This flexibility does expose Old Dominion to some
degree of market price risk for required energy purchases, but only to the
extent that energy cannot be supplied by the peaking units. A description of Old
Dominion's current power purchase contracts and future power supply options
follows.
In 1999, Old Dominion purchased approximately 43.0% of its total energy
requirements. These energy requirements are in excess of Old Dominion's owned
generation and are principally provided by Virginia Power, American Electric
Power, Allegheny Power, and Conectiv through purchase power contracts; Reliant
Energy through short-term market energy contracts; and spot purchases from the
PJM power pool. Generally, under the Virginia Power and Conectiv contracts, Old
Dominion's energy purchases expand and contract to fill the incremental
requirements of the Members over that provided by Old Dominion's owned
generation. Old Dominion's capacity needs are met through its ownership
interests in Clover and North Anna, and through purchases from Virginia Power,
PSE&G, Conectiv, American Electric Power, Allegheny Power, and Pennsylvania
Power and Light ("PPL"). Details of the individual contracts are supplied below.
Virginia Power. Under the terms of I&O Agreement, Virginia Power agreed to
sell to Old Dominion reserve capacity and energy for North Anna and Clover. Old
Dominion will purchase its reserve capacity requirements for North Anna and
Clover from Virginia Power for the term of the 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. Additionally, Old Dominion will continue, through 2001, to
purchase from Virginia Power, at declining rates, its entire monthly
requirements for supplemental demand and energy 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 from
Virginia Power half of its supplemental requirements in 2002 and none of its
supplemental requirements in 2003.
Additionally, under the terms of the 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.
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 2004. 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 PJM economy energy
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transactions. If purchased from other power suppliers, Old Dominion would pay
the negotiated energy rate. Old Dominion is presently purchasing most of 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 Conectiv. PSE&G has
complied with FERC through its compliance order, but has requested a rehearing
and is awaiting a final FERC order.
Conectiv. Until December 1, 1999, Old Dominion had a partial requirements
agreement with Conectiv which obligated Conectiv 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 the 150 MW purchased
from PSE&G and the 60 MW purchase contract with Conectiv/Pennsylvania Power &
Light ("PPL").
In 1999, Old Dominion renegotiated the partial requirements contract with
Conectiv for the period December 1, 1999 through August 31, 2001, with an option
to extend through May 2002. Under this agreement, Conectiv will provide fixed
capacity and reserves to supply 60 MW of load to Old Dominion for the term of
the contract, and Old Dominion will be able to purchase an additional 20 MW of
capacity, if needed, to supply its PJM capacity commitment. There is no
commitment to provide energy under this contract.
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.
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.
Other. Old Dominion also purchased a portion of its energy requirements from
the short-term markets. These purchases represent the purchasing strategies
associated with the changing contracts and the ability to displace energy under
existing contracts. These strategies, however, are not without risk. To mitigate
the risks, Old Dominion is attempting to match its energy purchases with its
energy needs and is purchasing energy two to three months in advance to obtain
the lowest possible cost. Additionally, Old Dominion is developing policies and
procedures to manage the risks in the changing business environment.
In September 1999, Old Dominion issued an RFP to replace the current power
supply contracts that expire during the period September 1, 2001 through
December 31, 2004. The RFP, issued in accordance with the VSCC competitive
bidding rules, requested various blocks of supply to coincide with the timing
and capacity and energy needs of each contract. Old Dominion also developed
detailed cost estimates for peaking units that it identified as a utility build
option. The estimates were submitted to the VSCC but not made available to
potential bidders.
Bids were received and evaluated and results presented to Old Dominion's Board
of Directors. Old Dominion's build option is the most economical evaluated
solution for supplying the needs identified in the RFP. However, at this time,
Old Dominion has not entered into any contractual arrangements related to the
build option. The RFP recognized that Old Dominion will not be able to construct
its build option in time to meet the contracts' expirations, and Old Dominion is
currently negotiating with the bidders for that portion of the power supply
needs.
9
<PAGE>
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 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 230 kV transmission lines, a 500 kV transmission line between Clover
and the Carson substation, and related facilities.
Conectiv System. The power purchase contract with Conectiv provides that
Conectiv will transmit power to delivery points in the service territories of
A&N Electric Cooperative, Choptank Electric Cooperative, and Delaware Electric
Cooperative. Conectiv 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 Conectiv 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. Subsequently, in September 1998, Old Dominion applied to PJM for
network transmission service to serve its PSE&G and Conectiv/PPL contracts. In
December 1999, Old Dominion revised its request to PJM to include transmission
service applicable to all retail load in PJM served by Old Dominion's Members.
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.
In December 1999, FERC issued Order 2000 concerning regional transmission
organizations. This order has no effect on Old Dominion.
Fuel Supply
Nuclear Fuel. Under the Purchase, Construction and Ownership Agreement, the
I&O Agreement, and the Nuclear Fuel Agreement between Old Dominion and Virginia
Power, 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 spot market availability will support current and planned fuel cycles 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, 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 next 5 to 10 years.
10
<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.
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
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,
------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(in thousands, except ratios)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
- -----------------------------
Operating Revenues............. $390,060 $364,221 $358,505 $366,909 $357,322
Operating Margin............... 53,325 66,195 72,336 67,780 56,010
Net Margin..................... 9,839 12,094 12,799 12,240 34,028
Margins for Interest Ratio(1).. 1.20 1.20 1.20 1.20 1.53
- -------------------
</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
11
<PAGE>
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 that was designed to
significantly increase Old Dominion's patronage capital.
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(in thousands, except ratios)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
- -----------------------------------------
Electric Plant:
In service, net......................... $ 686,508 $ 753,375 $ 798,383 $ 824,455 $ 552,784
Construction work in progress........... 13,023 13,591 12,701 11,106 269,554
---------- ---------- ---------- ---------- ----------
Net Electric Plant...................... 699,531 766,966 811,084 835,561 822,338
Investments.............................. 262,024 211,044 191,611 183,429 94,927
Other Assets............................. 88,957 148,534 127,561 137,356 161,681
---------- ---------- ---------- ---------- ----------
Total Assets............................. $1,050,512 $1,126,544 $1,130,256 $1,156,346 $1,078,946
========== ========== ========== ========== ==========
Capitalization:
Patronage capital(1).................... $ 216,369 $ 206,530 $ 197,552 $ 184,753 $ 172,513
Accumulated other comprehensive income.. (2,316) 697 344 - -
Long-term debt.......................... 509,606 584,630 605,878 664,490 738,974
---------- ---------- ---------- ---------- ----------
Total capitalization.................... $ 723,659 $ 791,857 $ 803,774 $ 849,243 $ 911,487
========== ========== ========== ========== ==========
Equity Ratio(2).......................... 29.9% 26.1% 24.6% 21.8% 18.9%
========== ========== ========== ========== ==========
- -------------------
</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 1998 to 1999 because of the purchase of $49.3
million of outstanding debt, $28.5 million of debt principal payments and
the addition of $9.8 million to patronage capital. 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.
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, 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 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. 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
nine supplemental indentures thereto, hereinafter collectively referred to as
the
12
<PAGE>
"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 Old Dominion's Strategic Plan
Initiative (as discussed hereinafter), 2000 rates approved by the Board of
Directors include the recovery of additional depreciation of approximately $53.1
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 1999,
1998, and 1997 in the amount of $3.9 million, $4.4 million, and $8.0 million,
respectively. Additionally, in September 1999 Old Dominion returned $3.3
million of margin stabilization to it Members.
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 not exceeded 60% of net margins. Management does not anticipate
that such non-operating margins will 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 1999, 1998, and 1997.
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 nonmember income include investment interest,
income on the decommissioning fund, interest from deposits associated with two
long-term lease transactions, and, in the future, sales to nonmembers as a
result of deregulation and/or sales of excess energy from Clover. 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 nonmember income to determine whether the tax-exempt status
continues. For purposes of determining its tax status, Old Dominion's Member
receipts in 1999, 1998 and 1997 were approximately 88%, 87% and 87%,
respectively, of total gross receipts.
13
<PAGE>
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" or
"SPI"). 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 SPI. The SPI, as then
approved, called 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. A provision of the SPI requires
that it be updated periodically based on revised projections, projected targets,
legislation, and the status of the SPI in terms of achieving its objective. The
Board of Directors will approve all revisions or modifications.
In conjunction with the SPI, on May 10, 1999, Old Dominion's Board of
Directors unanimously approved a resolution to record accelerated depreciation
on generation assets during the period January 1, 1999 through December 31,
2003, and to recover the additional expense through rates pursuant to the
comprehensive rate formula filed with and accepted by FERC. In 1999, Old
Dominion recorded additional depreciation of $43.7 million and accelerated the
recovery in rates of a debt prepayment premium of $1.7 million. Rates approved
by the Board of Directors for 2000 include the recovery of additional
depreciation of approximately $53.1 million.
A study was undertaken in late 1999 to assess the status of the SPI and the
numerous factors that impact its results. This update considered changes in
market rate forecast, components of Old Dominion's cost of service and
deregulation timelines. Additionally, it incorporated the effects of recording
accelerated depreciation. As a result of this study the targeted collection
amount of $330.0 million was reduced to $241.0 million. Old Dominion will
continue to evaluate the various factors that impact the results of the SPI,
monitor its progress, and, upon approval from its Board of Directors, adjust the
SPI as necessary to achieve its objective.
To date Old Dominion has collected cash totaling of $76.8 million ($45.4
million and $31.4 million in 1999 and 1998, respectively) toward the revised SPI
target of $241.0 million. Old Dominion anticipates collecting approximately
$165.0 million over the next four years to fulfill its SPI goal.
In conjunction with the SPI Old Dominion purchased $49.3 million of its
higher cost outstanding debt in 1999. During the first quarter of 2000 Old
Dominion purchased an additional $13.2 million of its outstanding debt.
Results of Operations
Operating Revenues
Old Dominion's operating revenues are derived from power sales to its
Members and to a nonmember. Revenues from sales to Members are a function of the
requirement for power by the Members' consumers and Old Dominion's cost of
service in meeting that requirement. The major factors affecting the Members'
consumers' demand for power are growth in the number of consumers, seasonal
weather fluctuations, and, in the future, retail competition.
Sales to a nonmember represent sales of excess energy from the Clover Power
Station ("Clover") to Virginia Electric and Power Company ("Virginia Power")
pursuant to the requirements of the Clover Operating Agreement. In light of
deregulation initiatives in Virginia, Old Dominion and Virginia Power have
agreed that the Clover Operating Agreement will have to be restructured prior to
January 1, 2002 to permit Old Dominion to sell its excess energy from Clover to
others or to Virginia Power on changed terms.
14
<PAGE>
Old Dominion's energy sales to its Members, Member revenues, and average
power cost for the past three years were as follows:
Average
Member Power
Year Ended December 31, Sales Revenues Cost
----------------------- ---------- ------------- --------
(MWh) (In millions) ($/MWh)
1999.................. 8,424,048 $389.0 $46.17
1998.................. 7,933,881 363.4 45.81
1997.................. 7,665,042 358.1 46.72
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 Nuclear Power Station
("North Anna") and Clover. Such fluctuations result because the cost of energy
generated from North Anna and Clover is less than replacement supplemental
energy purchased under the Amended and Restated 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:
Year Ended December 31,
-----------------------------
1999 1998 1997
--------- -------- --------
(In thousands)
Sales to Members:
Power sales volume........................ $25,536 $ 8,294 $ 4,957
Blended rates............................. (7,453) (8,546) (1,694)
Fuel adjustment revenues.................. 10,291 1,924 (7,156)
Margin Stabilization Plan adjustment...... 498 3,638 (4,500)
Margin Stabilization returned to Members.. (3,336) - -
------- ------- -------
25,536 5,310 (8,393)
Sales to nonmembers........................ 303 406 (11)
------- ------- -------
$25,839 $ 5,716 $(8,404)
======= ======= =======
The increase in 1999 operating revenues as compared to 1998 is primarily due
to the cold weather in the first quarter and the hot weather in the third
quarter of 1999. Demand and energy revenues increased 3.8% and 6.2%,
respectively. The smaller increase in demand revenues was caused by a 4.0%
reduction in the demand rate effective August 1, 1999.
Warm weather in the first and fourth quarters of 1998, combined with a 4.0%
reduction in Old Dominion's demand rate effective April 1, 1998, resulted in a
decrease in demand revenues in 1998. 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.
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 sales, which increased revenue by 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
15
<PAGE>
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 1999 and 1998 were as follows:
1999 1998 Normal
------- -------- ------
Cooling degree days............ 1,441 1,593 1,611
Percentage change compared to
prior year.................... (9.57)% 20.41%
Heating degree days............ 3,475 3,195 3,551
Percentage change compared to
prior year.................... 8.76% (16.27)%
While cooling degree days are lower in 1999 versus 1998, Old Dominion
experienced more severe hot weather which had the effect of increasing
comparative sales and purchase volumes.
Consistent with Old Dominion's Strategic Plan Initiative, the Board of
Directors approved a 4.0% reduction in the demand rate to the Members effective
April 1, 2000. Based on projected purchased power costs and other operating
expenses for 2000, Old Dominion plans no change in the base energy rate for the
2000 rate year.
Operating 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 may purchase
replacement energy from Virginia Power that is more costly or from the market.
As a result, Old Dominion's operating expenses, and therefore its rates to its
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:
North Anna Clover
----------------------- -----------------------
Year Ended December 31, Year Ended December 31,
----------------------- -----------------------
1999 1998 1997 1999 1998 1997
------ ------ ------- ------ ------ -------
Unit 1.... 103.8% 92.3% 91.5% 82.3% 85.7 61.6
Unit 2.... 91.4 90.2 99.7 84.7 72.5 63.7
Combined.. 97.6 91.3 95.6 83.5 79.1 62.7
North Anna Unit 2 is scheduled for a 35-day refueling outage in 2000.
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 Unit 1 is scheduled for a 12-day outage in 2000.
During the summer of 1999, Clover experienced very low water flow due to
continued drought conditions in the state. As a result, the units operated to
meet peak loads during the day; however, beginning on August 7, 1999, the load
at night was reduced on each unit to 150 MW in order to conserve water. On
August 27, 1999, the units were released for full operations.
16
<PAGE>
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 replacements on Units
1 and 2 were completed in November 1997 and April 1998, respectively.
Old Dominion's energy supply for the past three years was as follows:
Year Ended December 31,
--------------------------------
1999 1998 1997
--------- ---------- ---------
(MWh)
Clover................................... 3,198,062 3,028,740 2,394,471
North Anna............................... 1,775,915 1,659,167 1,739,108
--------- --------- ---------
Total Produced....................... 4,973,977 4,687,907 4,133,579
--------- --------- ---------
Purchased power:
Virginia Power......................... 1,699,480 1,599,010 2,006,955
Delmarva Area (PSE&G, Delmarva Power,
Conectiv/PPL)....................... 1,846,071 1,705,695 1,595,693
Other.................................. 208,228 199,165 181,612
--------- --------- ---------
Total Purchased...................... 3,753,779 3,503,870 3,784,260
--------- --------- ---------
Total Available Energy............. 8,727,756 8,191,777 7,917,839
========= ========= =========
Market forces influence the structure of new power supply contracts. Within
PJM, Old Dominion's contracts reflect the need to have capacity (either owned
generation or purchase contracts) to meet load. For supplying energy, Old
Dominion purchases energy from the market or utilizes the PJM power pool when
economical. In Virginia, demand and energy requirements contracts are provided
principally by Virginia Power, American Electric Power, and Allegheny Power,
although energy may be displaced under I&O Agreement.
Old Dominion's current power supply portfolio consists of its owned
generation resources supplemented by purchase power contracts. Old Dominion's
purchase power contracts are structured to expire during the same timeframes
that competition commences in Virginia, Maryland, and Delaware. As retail choice
occurs, it will be more difficult to project future sales requirements.
Uncertainties in projecting load growth in the member service territories,
current customers opting to choose other supplier's, and the obligation of
providing default supplier service in which customers may choose to return
during the transition periods developed by each state creates the need for power
supply flexibility. The result of Old Dominion's Request for Proposals ("RFP")
for power supply resources has indicated that the most cost effective means of
meeting its requirements is to build peaking capacity to meet its capacity
requirements and energy needs when economical and rely on the market to supply
the remaining energy. This strategy will allow Old Dominion to supply its member
requirements and load growth, while allowing any excess capacity and energy to
be sold into the market. This flexibility does expose Old Dominion to some
degree of market price risk for required energy purchases, but only to the
extent that energy cannot be supplied by the peaking units. A description of Old
Dominion's current power purchase contracts and future power supply options is
contained in Note 3 to the Consolidated Financial Statements.
Extreme temperatures in the first and third quarters of 1999 coupled with
increased production at North Anna and Clover in 1999 as compared to 1998 were
the primary factors affecting operating expenses in 1999. The result was an
increase in purchased power expenses.
Purchased power costs decreased in 1998 as compared to 1997 because: (1)
demand charges were reduced under the 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) Public
Service Electric & Gas Company, Company ("PSE&G") costs were reduced as a result
of the FERC order on PJM
17
<PAGE>
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.
Administrative and general expenses increased in 1999 primarily because of
legal and engineering consulting fees related to the siting and permitting
generating plants, which Old Dominion is considering constructing in the future,
combined with expenses incurred in forming Old Dominion's alliance with Reliant
Energy, Inc. ("Reliant"). See "Other Matters."
Depreciation and amortization increased in 1999 because of accelerated
depreciation recorded on generation assets in accordance with Old Dominion's
Strategic Plan Initiative. At December 31, 1999, Old Dominion had recorded
$43.7 million of additional depreciation. In 1998 and 1997, Old Dominion
accelerated the amortization and recovery in rates of certain other assets,
which increased amortization expense by $20.7 million and $2.9 million,
respectively.
Non-Operating Income and Expenses
Implementation of the Strategic Plan Initiative was the primary reason for
the increase in investment balances over the last two years. Such increases
resulted in an increase investment income.
Interest on long-term debt decreased in 1999 as compared to 1998 because of
scheduled debt principal payments of $28.5 million and the accelerated
amortization and recovery in rates of $8.1 million of debt prepayment premiums,
both of which occurred in late 1998 and the purchase of $49.3 million of
outstanding debt in 1999. The decrease was partially offset by an additional
$1.7 million of accelerated amortization and recovery in rates of a debt
prepayment premium in 1999. 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 $16.9 million in late 1997 and debt
purchases in 1997. The decrease was partially offset by the above referenced
accelerated amortization and recovery in rates of debt refinancing premiums of
$8.1 million.
Liquidity and Capital Resources
Old Dominion's Strategic Plan Initiative is designed to increase liquidity
with the objective of prepaying approximately $241.0 million in outstanding
debt. In conjunction with the SPI Old Dominion purchased $49.3 million of its
higher cost outstanding debt in 1999. During the first quarter of 2000, Old
Dominion purchased an additional $13.2 million of its outstanding debt.
Operating activities provided $84.0 million, $79.9 million, and $80.2
million in 1999, 1998, and 1997, respectively. In 1999, Old Dominion's cash
flows from operating activities were principally affected by accelerated
depreciation recorded on generation assets in accordance with Old Dominion's
Strategic Plan Initiative. See "Strategic Plan Initiative." In 1998 and 1997,
operating activities were principally affected by accelerated amortization and
inclusion in rates of the North Anna plant acquisition adjustment of $20.7
million, debt refinancing premiums of $8.1 million, and certain regulatory
assets totaling 11.5 million, all of which were consistent with Old Dominion's
Strategic Plan Initiative.
Financing activities resulted in a net cash outflow in 1999, 1998 and 1997
as Old Dominion used available cash for debt service and to purchase outstanding
debt.
During 1999 and 1997, Old Dominion purchased approximately $49.3 million and
$32.0 million, respectively, of its First Mortgage Bonds, 1992 Series A and 1993
Series A. The transactions resulted in net losses of approximately $4.2 million
in 1999 and $2.5 million in 1997, 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.
18
<PAGE>
In December 1999, Old Dominion refinanced $1.1 million of its First Mortgage
Bonds, 1992 Series C due 1999. The refinanced bonds, 1999 Series A, are due in
2002 at an interest rate of 5.25%.
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 mature in 2002.
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 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 4.90%.
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 and paid in January 1998.
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 Bank of America, which expires on September 30, 2000, 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, 2000, and are expected to be renewed and a $15.0
million committed line of credit with Branch Banking and Trust Company of
Virginia, which expires on February 28, 2001, 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, 1999 and 1998, Old Dominion had no short-term
borrowings outstanding under any of these arrangements.
Investing activities in 1999, mainly additions to other investments to
establish Old Dominion Strategic Plan Initiative fund, resulted in a net cash
outflow of $63.7 million. Other investments consisting primarily of highly
liquid managed bond and mutual funds are classified as available-for-sale, and
accordingly, are carried at fair value. Unrealized gains and losses on other
investments are reflected as a component of capitalization. Investing activities
resulted in a net cash outflow of $25.4 million in 1998 because of additions to
electric plant and investments
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. Amounts have been included for NOx related expenditures.
The table below summarizes Old Dominion's historical and projected capital
expenditures, including nuclear fuel, for 1997 through 2002 (in millions):
Historical Projected
------------------- ---------------------
1997 1998 1999 2000 2001 2002
----- ----- ----- ----- ----- -----
Clover...... $ 2.5 $ 0.2 $ 0.6 $ 9.3 $12.7 $22.4
North Anna.. 7.2 8.5 6.6 10.8 14.6 9.4
Other....... 0.3 0.2 0.5 2.0 - -
----- ----- ----- ----- ----- -----
Total...... $10.0 $ 8.9 $ 7.7 $22.1 $27.3 $31.8
===== ===== ===== ===== ===== =====
In September 1999, Old Dominion issued a Request for Power Supply Proposals
("RFP") to replace the current power supply contracts that expire during the
period September 1, 2001 through December 31, 2004. The RFP, issued in
accordance with the VSCC competitive bidding rules, requested various blocks of
supply to coincide
19
<PAGE>
with the timing and capacity and energy requirements contained in each expiring
contract. Old Dominion also developed detailed cost estimates for peaking units
that it identified as a utility build option. The estimates were submitted to
the VSCC but not made available to potential bidders.
Bids were received and evaluated and results presented to Old Dominion's
Board of Directors. Old Dominion's build option is the most economical evaluated
solution for supplying the needs identified in the RFP. At this time, Old
Dominion has not entered into any contractual arrangements related to the build
option but is currently working with Reliant on the development of a joint
project of 1,000 MW. The RFP recognized that Old Dominion will not be able to
fully construct its build option in time to coincide with supply contracts'
expirations, and Old Dominion is currently negotiating with the bidders for that
portion of the power supply needs.
Old Dominion has not yet determined how it will finance the approximately
$375.0 million of projected capital expenditure requirements associated with the
construction of these new generating facilities. It is expected that these
capital expenditures will aggregate approximately $75.0 million, $125.0 million,
and $175.0 million in 2000, 2001, and 2002, respectively.
Other Matters
In May 1999, Old Dominion signed an alliance agreement with Reliant to
better position Old Dominion for the deregulation of the electric utility
industry. The two companies are currently working together on the siting of a
generating facility to be located in Cecil County, Maryland. Old Dominion and
Reliant will continue to work together to evaluate future business relationships
in order to improve and expand service options and lower energy costs to Old
Dominion's Members.
Competition and Changing Regulations
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 factors 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 of 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.
The four states in which Old Dominion's Members operate (Virginia, Maryland,
Delaware and West Virginia) have enacted legislation that addresses deregulation
of the electric industry, and that outlines a process by which electric
utilities within their jurisdiction, including cooperatives, will transition to
competition. The individual deregulation plans adopted by the Virginia,
Maryland and Delaware legislators are similar. In all three states, previously
regulated electric utilities must 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. The plans of Virginia,
Maryland, and Delaware each indicate that cooperatives will remain the default
provider of power in their assigned territories, and that they will retain the
metering and billing functions. Each of these plans also provides for recovery
of stranded costs over a specified transition period, however the timing of each
state's plan implementation is different. Additionally, each Member is
legislatively required to submit a restructuring plan to
20
<PAGE>
its respective commission, including its assessment of stranded costs and
proposed unbundled rate structure. Specific and unique aspects of each state's
legislation are detailed below.
The following table estimates the cumulative percentage of Old Dominion's
load sales, based on 1999 demand sales, that will be subject to deregulation and
at risk of loss in the competitive market each year in Virginia, Maryland,
Delaware and West Virginia. This data is based on the dates that the Members'
individual classes of customers are free to choose an alternative power
supplier, as mandated by the individual state's legislative action:
Percentage of Old Dominion's Load Sales
---------------------------------------------
2000 2001 2002-2004
--- ---- ---------------
Virginia -% -% 78.8% (1)
Maryland - - (2) 9.5 (2)
Delaware 0.6 11.5 11.5
West Virginia - 0.2 0.2
--- ---- -----
Old Dominion Total System 0.6% 11.7% 100.0%
==== ==== ======
- ------------------
(1) The opportunity for Virginia consumers to shop will be phased in between
January 1, 2002 and January 1, 2004 in accordance with a schedule that is to
be developed by the VSCC.
(2) Old Dominion's Maryland Member must offer customer choice by July 1, 2003.
It may, voluntarily, offer choice as early as 2001.
Virginia. On March 25, 1999, the governor of Virginia signed into law
comprehensive electric utility restructuring legislation. The legislation
provides for retail choice to be phased in between January 1, 2002 and January
1, 2004 in accordance with a schedule that is to be developed by the VSCC. By
January 1, 2001 each utility is to submit to the VSCC its plan for functional
separation.
The deregulation plan calls for capping rates, excluding the recovery of
fuel costs, from January 1, 2002 to July 1, 2007. The rates were 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. During this transition period
utilities may collect stranded costs through operation of the capped rates and a
wires charge that will be applied to all customers that choose an alternative
power supplier.
The 2000 session of the Virginia General Assembly passed legislation to
further enhance retail choice in Virginia. The legislation as passed
accomplishes the following: (1) more clearly defines which entities qualify as
aggregators and therefore, must be licensed, (2) directs the VSCC to continue
its examination of whether metering and billing should be competitive, and (3)
allows the VSCC to consider transmission charges when calculating market price.
Language in this legislation clarifies that cooperatives will be the default
supplier of all competitive services, and that they will continue to be
permitted to sell power directly to their customers.
Maryland. On April 8, 1999, the governor of Maryland signed into law
restructuring legislation requiring a three-year phase-in of retail competition
beginning with investor-owned utilities on July 1, 2001. Such phase-in is to be
completed by July 1, 2003 at which time all customers will be able to choose
their electric supplier. By the same law, the cooperatives must present to the
MPSC a plan where all cooperative customers will have choice by July 1, 2003.
The legislation also calls for a 3.0% to 7.5% rate reduction for non-
cooperative residential customers upon commencement of competition; no such rate
reduction is required for cooperative customers. Rates for all customers are to
be frozen for four years from the date of the commencement of competition. Any
proposed collection of stranded costs by cooperatives is to be included in a
filing before the MPSC along with an unbundled rate study for their approval.
Old Dominion's Maryland Member, Choptank Electric Cooperative, made such a
21
<PAGE>
filing in July 1999. Additionally, Choptank Electric Cooperative has indicated
that it may voluntarily offer customer choice as early as July 1, 2001. Choptank
Electric Cooperative and Old Dominion are currently involved in settlement
negotiations with the MPSC regarding this filing. Old Dominion management
believes that a component of this settlement will permit Choptank Electric
Cooperative to collect its stranded costs from its customers that choose an
alternative power supplier.
Delaware. On March 31, 1999, the governor of Delaware signed into law
legislation requiring a phase-in of retail competition beginning October 1, 1999
for customers of the state's investor-owned electric utility, Conectiv, and
beginning April 1, 2000 for the customers of Delaware Electric Cooperative, Old
Dominion's Delaware Member. Based on current estimates, the customers of
Delaware Electric Cooperative that will be permitted to shop for power during
2000 account for less than 1.0% of Old Dominion's total load sales. All
customers of Delaware Electric Cooperative, representing approximately 11.5% of
Old Dominion's total load sales, will have the option of choosing their power
supplier by April 1, 2001.
Rates for Conectiv's residential customers were reduced 7.5% effective
October 1, 1999 and will remain frozen at those levels through September 30,
2003. Rates for Conectiv's non-residential customers are to remain frozen at
their October 1, 1999 levels through September 30, 2002. Delaware Electric
Cooperative's customers' rates are to be frozen at current levels through March
31, 2005.
The Delaware legislation required that Delaware Electric Cooperative file a
restructuring and rate unbundling plan, including any proposed collection of the
Member cooperative's stranded costs. Delaware Electric Cooperative filed such a
plan in September of 1999. Old Dominion intervened in this proceeding to
represent the interest of all of its Members. On February 28, 2000 the DPSC
issued its order in response to the filing. The order indicates that it is the
determination of the DPSC that Delaware Electric Cooperative has no stranded
costs and therefore cannot collect such costs from those customers who choose an
alternative power supplier. Conversely, Delaware Electric Cooperative has
determined that it does have stranded costs by virtue of its wholesale power
contract with Old Dominion, which includes certain above-market generation costs
that its Members are obligated to pay. Delaware Electric Cooperative believes
that it should be allowed to collect those costs from all its customers,
including those that choose an alternative power supplier. Old Dominion
supports this position and is currently reviewing its options to ensure that all
its Members equitably share recovery of its above-market generation cost, and
that no shifting of stranded costs among jurisdictions occurs.
West Virginia. On March 11, 2000 the West Virginia legislature adopted a
restructuring plan in to law that implements customer choice on January 1, 2001,
or a later date established by the state commission. As in the other three
states, power generation will be deregulated and utilities will compete for
customers in the open market. Incumbent utilities will be the default suppliers;
metering and billing services will be fully competitive within four years of the
plan's implementation. The plan imposes restrictions on the residential and
large commercial/industrial rates to be charged during the first 7 and 13 years,
respectively.
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 "Strategic
Plan Initiative." Old Dominion cannot predict the ultimate effect competition
will have on results of operations and future cash flows.
22
<PAGE>
Year 2000 Compliance
Old Dominion experienced a successful transition from 1999 to 2000. During
the period immediately following the rollover and through the following few
days, Old Dominion encountered no problems related to the year 2000 date change.
Old Dominion continued to monitor its systems for any year 2000 problems through
the transition to February 29, 2000. However, as with the rollover from 1999 to
2000, no problems were experienced.
As operator of both the North Anna and Clover power stations, Virginia Power
was responsible for ensuring that the plants were year 2000 ready. Virginia
Power reported that it made a successful transition. Additionally, immediately
following the rollover and throughout the weekend, Virginia Power's transmission
and distribution systems, as well as North Anna and Clover, continued to operate
smoothly. Virginia Power also reported no problems as a result of the
transition to February 29, 2000.
Old Dominion estimates its total year 2000 costs to be approximately $1.1
million.
Future Issues
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
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities," which, as amended, is effective for periods beginning after June
15, 2000. Old Dominion believes the impact of this new standard will not be
material to its financial position or results of operations.
23
<PAGE>
Quantitative and Qualitative Disclosures About Market Risk
Old Dominion is exposed to market risk including changes in interest rates
and equity and market 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, 1999, and are sensitive to interest rate changes:
<TABLE>
<CAPTION>
At December 31,
-------------------------------
Expected Maturity Value 1999 1998
------------------------------------------ --------------- --------------
Fair Fair
2000 2001 2002 2003 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 $21.7 $444.0 $550.3 $557.9 $627.7 $681.5
Average interest rate 8.2% 8.2% 8.2% 8.2% 8.0%
Tax-exempt bonds 1.2 1.2 9.5 1.4 51.7 65.2 64.8 65.2 68.8
Average interest rate 6.1% 6.2% 6.2% 6.4% 6.7%
LIABILITIES - Variable rate
Tax-exempt bonds 0.3 1.1 - - 6.7 8.2 8.2 8.5 8.5
Average interest rate 3.0% 2.7% 2.7% 2.9%
</TABLE>
Equity Price Risk
Old Dominion is exposed to price fluctuations in equity markets with respect to
its investments. At December 31, 1999, Old Dominion's equity investments
totaled approximately $35.0 million.
Market Price Risk
Because the demand on Old Dominion's system is greater than its power resources
(owned generation and power purchase contracts), Old Dominion must secure
additional resources to meet its load requirements. Obtaining additional
resources subjects Old Dominion to market price risk for supplemental power
purchases. Management continually reviews various options to acquire low cost
power.
24
<PAGE>
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Page
Number
--------
Report of Independent Accountants.................................... 26
Consolidated Balance Sheets.......................................... 27
Consolidated Statements of Revenues, Expenses and Patronage Capital.. 28
Consolidated Statements of Comprehensive Income...................... 28
Consolidated Statements of Cash Flows................................ 29
Notes to Consolidated Financial Statements........................... 30
25
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. 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 auditing standards generally
accepted in the United States, 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
Richmond, Virginia
March 10, 2000
26
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED BALANCE SHEETS
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
(In thousands) 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------------------
Electric Plant:
In service $ 889,392 $ 885,551
Less accumulated depreciation (209,865) (140,574)
-------------------- -----------------
679,527 744,977
Nuclear fuel, at amortized cost 6,981 8,398
Construction work in progress 13,023 13,591
-------------------- -----------------
Net Electric Plant 699,531 766,966
-------------------- -----------------
Investments:
Nuclear decommissioning trust fund 54,159 51,964
Lease deposits 125,845 120,391
Other 82,020 38,689
-------------------- -----------------
Total Investments 262,024 211,044
-------------------- -----------------
Current Assets:
Cash and cash equivalents 25,088 82,382
Receivables 34,044 37,367
Fuel, materials and supplies, at average cost 9,312 9,291
Prepayments 2,244 2,533
-------------------- -----------------
Total Current Assets 70,688 131,573
-------------------- -----------------
-------------------- -----------------
Deferred Charges 18,269 16,961
-------------------- -----------------
-------------------- -----------------
Total Assets $ 1,050,512 $ 1,126,544
==================== =================
CAPITALIZATION AND LIABILITIES
- ------------------------------------------------------------------------------
Capitalization:
Patronage capital $ 216,369 $ 206,530
Accumulated other comprehensive income (2,316) 697
Long-term debt 509,606 584,630
-------------------- -----------------
Total Capitalization 723,659 791,857
-------------------- -----------------
Current Liabilities:
Long-term debt due within one year 29,700 29,590
Accounts payable 18,886 19,007
Accounts payable - Member deposits 28,752 42,204
Deferred energy 3,263 2,366
Accrued expenses 6,770 6,514
-------------------- -----------------
Total Current Liabilities 87,371 99,681
-------------------- -----------------
Deferred Credits & Other Liabilities:
Decommissioning reserve 54,159 51,964
Obligations under long-term leases 129,010 123,614
Other 56,313 59,428
-------------------- -----------------
Total Deferred Credits & Other Liabilities 239,482 235,006
-------------------- -----------------
Commitments and Contingencies (Notes 1, 2, 3, 9, 10, and 13)
-------------------- -----------------
Total Capitalization and Liabilities $ 1,050,512 $ 1,126,544
==================== =================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
27
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED STATEMENTS OF REVENUES,
EXPENSES AND PATRONAGE CAPITAL
For The Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues: $ 390,060 $ 364,221 $ 358,505
-------------------- ----------------- -----------------
Operating Expenses:
Fuel 46,045 46,747 39,982
Purchased power 162,242 149,409 163,726
Operations and maintenance 34,096 33,020 29,978
Administrative and general 18,659 15,071 16,355
Depreciation, amortization, and decommissioning 68,015 46,421 29,413
Taxes other than income taxes 7,678 7,358 6,715
-------------------- ----------------- -----------------
Total Operating Expenses 336,735 298,026 286,169
-------------------- ----------------- -----------------
Operating Margin 53,325 66,195 72,336
Other Income (Expense), net (152) 1,301 528
Investment Income 5,552 4,640 3,532
Interest Charges, net (48,886) (60,042) (63,597)
-------------------- ----------------- -----------------
Net Margin 9,839 12,094 12,799
Patronage Capital-Beginning of Year 206,530 197,552 184,753
Capital Credit Payments - (3,116) -
-------------------- ----------------- -----------------
Patronage Capital-End of Year $ 216,369 $ 206,530 $ 197,552
==================== ================= =================
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Margin $ 9,839 $ 12,094 $ 12,799
Other Comprehensive Income:
Unrealized (losses)/gains on investments (3,013) 697 -
-------------------- ----------------- -----------------
Comprehensive Income $ 6,826 $ 12,791 $ 12,799
==================== ================= =================
- ----------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
28
<PAGE>
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net margin $ 9,839 $ 12,094 $ 12,799
Adjustments to reconcile net margin to net cash provided
by operating activities:
Depreciation, amortization and decommissioning 68,015 46,421 24,340
Other non-cash charges 10,238 17,442 14,305
Amortization of lease obligations 8,725 8,361 8,197
Changes in current assets 3,591 (3,554) (128)
Changes in current liabilities (12,797) (589) 13,233
Deferred charges and credits (3,615) (263) 7,452
-------------------- ----------------- -----------------
Net Cash Provided by Operating Activities 83,996 79,912 80,198
-------------------- ----------------- -----------------
Financing Activities:
Reductions of long-term debt (77,297) (29,041) (48,616)
Obligations under long-term lease (262) (248) (172)
Additions to long-term debt - 5,000 -
Payment of capital credits - (3,116) -
-------------------- ----------------- -----------------
Net Cash Used in Financing Activities (77,559) (27,405) (48,788)
-------------------- ----------------- -----------------
Investing Activities:
Lease deposits and other investments (54,865) (15,120) (3,858)
Electric plant additions (8,185) (9,578) (24,826)
Decommissioning fund deposits (681) (681) (681)
Note receivable - - 6,992
-------------------- ----------------- -----------------
Net Cash Used in Investing Activities (63,731) (25,379) (22,373)
-------------------- ----------------- -----------------
Net Change in Cash and Cash Equivalents (57,294) 27,128 9,037
Cash and Cash Equivalents-Beginning of Year 82,382 55,254 46,217
-------------------- ----------------- -----------------
Cash and Cash Equivalents-End of Year $ 25,088 $ 82,382 $ 55,254
==================== ================= =================
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
29
<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 11) is recorded using 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.
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 that are designed to
amortize the original cost of properties over their service lives. Depreciation
rates, excluding accelerated depreciation associated with Old Dominion's
Strategic Plan Initiative ("Strategic Plan Initiative" or "SPI"), for jointly
owned depreciable plant balances at the North Anna Nuclear Power Station ("North
Anna") were approximately 3.3% in 1999, 3.1% in 1998, and 3.2% in 1997. The
depreciation rates, excluding accelerated depreciation associated with the SPI,
for jointly owned depreciable plant balances at the Clover Power Station
("Clover") were approximately 2.8% in 1999, 2.7% in 1998, and 2.5% in 1997. In
accordance with the SPI, in 1999 Old Dominion recorded $43.7 million of
30
<PAGE>
accelerated depreciation on its generation assets. See Note 13 to the
Consolidated Financial Statements. In 1998, $20.7 million of accelerated
amortization was recorded on the plant acquisition adjustment to fully amortize
the asset, and in 1997, $2.9 million of accelerated amortization and recovery in
rates was recorded on certain regulatory assets.
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 to decommission 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, 1999 and 1998, were $54.2 million and $52.0 million,
respectively. Annual decommissioning expense, net of earnings on the fund, was
$0.7 million in 1999, 1998, and 1997.
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, 1999
and 1998, the total accrued liability was $2.8 million and $3.2 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. Interest capitalized in 1999,
1998, and 1997 was $0.3 million, $0.4 million, and $0.4 million, respectively.
31
<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:
Operating revenues consist of sales to Members and to a nonmember. Sales to
Members consist of power sales pursuant to long-term wholesale power contracts
("wholesale power contracts") that 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 a nonmember consist of sales of excess energy from Clover 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 1999 and 1998, Old Dominion
accelerated the amortization and recovery in rates of debt refinancing premiums
in the amounts of $1.7 million and $8.1 million, respectively.
Deferred charges also 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, 1999 and 1998,
was $3.3 million and $2.4 million, respectively. The deferred credit at
December 31, 1999, will be returned to the Members in 2000 in accordance with
the tariffs then in effect. The deferred credit at December 31, 1998, was
returned to the Members during 1999 in accordance with the tariffs then in
effect.
Investments:
Financial instruments included in the decommissioning fund and other investments
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. 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.
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<PAGE>
Patronage Capital:
Old Dominion is organized and operates as a cooperative. Patronage capital
represents 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 nine supplemental indentures
thereto and 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 1999, 1998, and
1997 include $1.5 million, $1.1 million, and $1.3 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.
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.
33
<PAGE>
NOTE 2 - Jointly Owned Plants
In 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, 1999, Old Dominion had an
outstanding accounts receivable balance of $0.4 million due from Virginia Power
for operation, maintenance, and capital investment at the facility. At December
31, 1998, Old Dominion had an outstanding accounts payable balance of $0.7
million, respectively, due to Virginia Power for operation, maintenance, and
capital investment at the facility.
Old Dominion and Virginia Power each hold a 50% undivided ownership interest in
Clover, a two-unit, 882 MW (net capacity rating) coal-fired generating facility.
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. At December 31,
1999, Old Dominion had an outstanding accounts payable balance of $0.3 million
due to Virginia Power for operation, maintenance, and capital investment at the
facility. 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.
Old Dominion's investment in jointly owned plants at December 31, 1999,
excluding accelerated depreciation of $43.7 million, was as follows:
North Anna Clover
---------- ------
(in millions, except percentages)
Ownership interest 11.6% 50.0%
Electric plant $347.3 $635.5
Accumulated depreciation
and amortization 185.2 69.5
Construction work in progress 12.1 0.9
Projected capital expenditures for North Anna for 2000 through 2002 are $10.8
million, $14.6 million, and $9.4 million, respectively. Projected capital
expenditures for Clover for 2000 through 2002 are $9.3 million, $12.7 million,
and $22.4 million, respectively.
NOTE 3 - Power Purchase Agreements
In 1999, 1998, and 1997, North Anna and Clover together furnished approximately
57.0%, 57.2%, and 52.2%, 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 Amended and Restated Interconnection and Operating
Agreement with Virginia Power ("I&O Agreement"), as accepted by FERC on March
11, 1998, Virginia Power agreed to sell to Old Dominion reserve capacity and
energy for North Anna and Clover until 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
34
<PAGE>
Anna is reduced to zero. Additionally, Old Dominion will continue, through 2001,
to purchase from Virginia Power, at declining rates, its entire monthly
requirements for supplemental demand and energy 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 from
Virginia Power half of its supplemental requirements in 2002 and none of its
supplemental requirements in 2003.
Additionally, under the terms of the 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 2004. 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 most of 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 to Conectiv Energy
("Conectiv"). PSE&G has complied with FERC's ruling through its compliance
order, but has requested a rehearing and is awaiting a final FERC order.
Until December 1, 1999, Old Dominion had a partial requirements agreement with
Conectiv, which obligated Conectiv to provide the balance of Old Dominion's
power requirements for its three Members east of the Chesapeake Bay in excess of
the 150 MW purchased from PSE&G and a 60 MW purchase contract with
Conectiv/Pennsylvania Power & Light ("PPL"). In 1999, Old Dominion renegotiated
the partial requirements contract with Conectiv for the period December 1, 1999
through August 31, 2001, with an option to extend through May 2002. Under this
agreement, Conectiv will provide a fixed capacity amount to Old Dominion for the
term of the contract and Old Dominion will be able to purchase an additional
limited amount of capacity, if needed, to supply its PJM capacity commitment.
There is no commitment to provide energy under this contract.
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<PAGE>
Old Dominion's purchased power costs for the past three years were as follows :
Year Ended December 31,
-------------------------
1999 1998 1997
------- ------- -------
(in millions)
Virginia Power $ 69.8 $ 70.4 $ 79.9
Conectiv 29.9 37.2 34.8
PSE&G 49.3 33.2 39.0
Other 13.2 8.6 10.0
------ ------ ------
$162.2 $149.4 $163.7
====== ====== ======
Old Dominion's power purchase agreements contain certain firm capacity and
minimum energy requirements. As of December 31, 1999, Old Dominion's minimum
purchase commitments under the various agreements, without regard to capacity
reductions or cost adjustments, were as follows:
Firm Minimum
Capacity Energy
Year Ending December 31, Requirements Requirements Total
- -------------------------- ------------ ------------ -----
(in millions)
-------------
2000 $18.0 $33.4 $51.4
2001 16.0 - 16.0
2002 8.0 - 8.0
2003 8.0 - 8.0
2004 6.4 - 6.4
----- ------------ -----
$56.4 $33.4 $89.4
===== ============ =====
As of December 31, 1999, Old Dominion had short-term commitments to buy energy
in the amount of $10.3 million over the next six months.
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
36
<PAGE>
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 1999, 1998, and 1997 in the
amount of $3.9 million, $4.4 million, and $8.0 million, respectively.
Additionally, in September 1999 Old Dominion returned $3.3 million of margin
stabilization to its Members.
Revenues from the following Members equaled or exceeded 10% of Old Dominion's
total revenues for the past three years:
Year Ended December 31,
-----------------------
1999 1998 1997
------- ------ ------
(in millions)
Northern Virginia Electric Cooperative $102.6 $95.4 $94.5
Rappahannock Electric Cooperative 82.2 77.0 77.1
Delaware Electric Cooperative 41.7 39.0 37.2
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<PAGE>
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 21.8-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%.
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 23.4-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.
NOTE 6 - Investments
Investments consist of the following:
December 31,
-----------------------
1999 1998
-------- --------
(in thousands)
Restricted Investments:
Nuclear decommissioning trust fund $ 54,159 $ 51,964
Lease deposits 125,845 120,391
Unrestricted Investments 82,020 38,689
-------- --------
Total Investments $262,024 $211,044
======== ========
The preceding amounts were invested as follows:
U.S. Government securities $ 51,753 $ 47,261
Corporate obligations 73,288 61,527
Asset backed securities 31,308 -
Mortgage backed securities 4,543 6,192
Corporate common stock 34,995 32,766
Short term investment funds 65,228 62,358
Other 909 910
-------- --------
Total Investments $262,024 $211,044
======== ========
Realized gains and losses on the sale of securities are determined on the basis
of specific identification. During 1999 and 1998, sales proceeds were $81.6
million and $18.6 million, respectively. Gross realized gains and losses on the
sale of securities in 1999 were approximately $0.2 million and $0.5 million,
respectively. Gross realized gains and losses on the sale of securities in 1998
were approximately $83,000 and $35,000, respectively.
Gross unrealized gains and losses on investments in 1999 and 1998 were
approximately $7,000 and $2.3 million and $0.7 million and $22,000,
respectively.
At December 31, 1999 and 1998, the aggregate market value of the above
investments, based on quoted market prices obtained from independent sources,
was $264.7 million and $225.2 million, respectively.
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<TABLE>
<CAPTION>
NOTE 7 - Long-Term Debt
<S> <C> <C>
Long-term debt consists of the following:
December 31,
------------------------
1999 1998
-------- --------
(in thousands)
$1,130,000 principal amount of First Mortgage Bonds,
1999 Series A, due 2002 at an interest rate of 5.25% $ 1,130
$1,075,000 principal amount of First Mortgage Bonds,
1998 Series A, due 2002 at an interest rate of 4.25% 1,075 $ 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 5,000
$1,025,000 principal amount of First Mortgage Bonds,
1997 Series A, due 2002 at an interest rate of 4.90% 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% 108,601 108,601
$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% 38,500 66,500
$150,000,000 principal amount of First Mortgage Bonds,
1992 Series A, due 2002 at an interest rate of 7.97% 84,480 112,640
$350,000,000 principal amount of First Mortgage Bonds,
1992 Series A, due 2022 at an interest rate of 8.76% 190,405 211,655
$60,210,000 principal amount of First Mortgage Bonds,
1992 Series C, due 1997 through 2022 at interest rates
ranging from 4.90% to 6.50% 56,980 58,110
Louisa County Pollution Control Revenue Bonds (North Anna),
due December 1, 2008, with variable interest rates
(averaging 3.27% in 1999 and 4.12% in 1998) 6,750 6,750
Non-recourse debt of DPC due 2001, with variable interest
rates (averaging 4.11% in 1999 and 3.49% in 1998) 1,422 1,722
-------- --------
623,668 701,378
Less unamortized discounts (84,362) (87,158)
Less current maturities (29,700) (29,590)
-------- --------
Total Long-Term Debt $509,606 $584,630
======== ========
</TABLE>
Substantially all assets of Old Dominion are pledged as collateral under the
Indenture.
The non-recourse debt of DPC is collateralized by a $1.9 million letter of
credit.
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<PAGE>
During 1999 and 1997, Old Dominion purchased approximately $49.3 million and
$32.0 million, respectively, of its First Mortgage Bonds, 1992 Series A and 1993
Series A. The transactions resulted in net losses of approximately $4.2 million
in 1999 and $2.5 million in 1997, 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 December 1999, Old Dominion refinanced $1.1 million of its First Mortgage
Bonds, 1992 Series C due in 1999. The refinanced bonds, 1999 Series A, are due
in 2002 at an interest rate of 5.25%.
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.
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 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 4.90%.
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
and paid January 1998.
Estimated maturities of long-term debt for the next five years are as follows:
Years Ending December 31, (in thousands)
------------------------- --------------
2000 $29,700
2001 30,487
2002 37,720
2003 23,124
2004 23,125
The aggregate fair value of long-term debt was $630.9 million and $758.8 million
at December 31, 1999 and 1998, 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 Bank of America, which expires on September 30, 2000, 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, 2000, and are expected to be renewed and a $15.0
million committed line of credit with Branch Banking and Trust Company of
Virginia, which expires on February 28, 2001, 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, 1999 and 1998, Old Dominion had no short-term
borrowings outstanding under any of these arrangements.
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<PAGE>
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 $28.8 million and $42.2 million at December 31, 1999
and 1998, respectively.
NOTE 9 - 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 1999, 1998,
and 1997 was $272,000, $265,000, and $186,000, 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 $66,000, $61,000, and $64,000
in 1999, 1998, and 1997, 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 1999 and 1998 and $11,000
in 1997.
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.
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 $0.9 million in 1999, $0.7 million in 1998, and
$0.9 million in 1997. Old Dominion is recovering the expense as it is billed by
Virginia Power.
NOTE 10 - Insurance
As a joint owner of North Anna, Old Dominion is a party to the insurance
policies that 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.
The Price-Anderson Act limits the public liability of an owner of a nuclear
power plant to $9.5 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
41
<PAGE>
incident at any licensed nuclear reactor in the United States, Virginia Power
and Old Dominion, jointly, could be assessed up to $91.0 million for each
licensed reactor not to exceed $10.0 million 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 $29.0 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 $7.0 million.
Old Dominion's share of the contingent liability for the coverage assessments
described above is a maximum of $25.3 million at December 31, 1999.
NOTE 11 - 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 1999, 1998, and 1997, Old Dominion paid $236,000, $184,000,
and $219,000, respectively, to RHI for rent. At December 31, 1999 and 1998, Old
Dominion had outstanding accounts receivable of $15,000 and $171,000,
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)
------------------------ --------------
2000 $ 293
2001 293
2002 293
2002 293
2004 293
2005 and thereafter 3,516
------
$4,981
======
42
<PAGE>
The assets and liabilities of RHI at December 31, 1999, were $5.3 million
(primarily the book value of the office building) and $4.4 million (primarily an
industrial development bond payable), respectively. Old Dominion records its
investment in RHI under the equity method.
NOTE 12 - Supplemental Cash Flows Information
Cash paid for interest, net of allowance for funds used during construction, in
1999, 1998, and 1997 was $49.4 million, $60.3 million, and $63.9 million,
respectively.
Unrealized deferred gains on the decommissioning fund of approximately $4.0
million and $5.0 million in 1999 and 1998, respectively, have been included in
the decommissioning reserve.
NOTE 13 - 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" or "SPI"). 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 SPI. The SPI, as then approved, called 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. A
provision of the SPI requires that it be updated periodically based on revised
projections, projected targets, legislation, and the status of the SPI in terms
of achieving its objective. The Board of Directors will approve all revisions or
modifications.
In conjunction with the SPI, on May 10, 1999, Old Dominion's Board of Directors
unanimously approved a resolution to record accelerated depreciation on
generation assets during the period January 1, 1999 through December 31, 2003,
and to recover the additional expense through rates pursuant to the
comprehensive rate formula filed with and accepted by FERC. In 1999, Old
Dominion recorded additional depreciation of $43.7 million and accelerated the
recovery in rates of a debt prepayment premium of $1.7 million. Rates approved
by the Board of Directors for 2000 include the recovery of additional
depreciation of approximately $53.1 million.
A study was undertaken in late 1999 to assess the status of the SPI and the
numerous factors that impact its results. This update considered changes in
market rate forecast, components of Old Dominion's cost of service and
deregulation timelines. Additionally, it incorporated the effects of recording
accelerated depreciation. As a results of this study the targeted collection
amount of $330.0 million was reduced to $241.0 million. Old Dominion will
continue to evaluate the various factors that impact the results of the SPI,
monitor its progress, and, upon approval from its Board of Directors, adjust the
SPI as necessary to achieve its objective.
To date Old Dominion has collected cash totaling of $76.8 million ($45.4 million
and $31.4 million in 1999 and 1998, respectively) toward the revised SPI target
of $241.0 million. Old Dominion anticipates collecting approximately $165.0
million over the next four years to fulfill its SPI goal.
In conjunction with the SPI Old Dominion purchased $49.3 million of its higher
cost outstanding debt in 1999. During the first quarter of 2000 Old Dominion
purchased an additional $13.2 million of its outstanding debt.
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.
43
<PAGE>
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 and nitrogen oxides or obtain
allowances for such emissions. 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 which is below the current limitations for
nitrogen oxide emissions.
In 1998, the EPA issued a Final Rule addressing regional transport of ground-
level ozone through reductions in nitrogen oxides (NOx) commonly known as the
NOx State Implementation Plan ("SIP") call. The NOx SIP call, which affects 22
states, including Virginia, and the District of Columbia, required those states
to develop a plan by September 24, 1999 that would reduce NOx emissions in the
respective states. The NOx SIP call also required emissions reduction to be
implemented by May 1, 2003. In 1999, a Federal Appeals Court stayed the EPA's
NOx SIP call. Additionally, the court agreed to put off the SIP filings until
April 2000 but did not address the 2003 deadline for compliance with the SIP
call. In March 2000, the Federal Appeals Court ruled in favor of the EPA. This
decision, if it stands, will require states to submit their SIP plans to the EPA
and implement their NOx reduction program. 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., such as
Clover, will be required to reduce their NOx emissions.
In a related action, several Northeast utilities filed petitions under Section
126 of the CAA requesting that the EPA take action against those states affected
by the NOx SIP call. The states submitting the petitions claim that their
efforts to meet CAA standards are impeded by transport pollution from upwind
states. In response to the Section 126 filings, in December 1999 the EPA
ordered 392 power plants, including Clover Units 1 and 2, and industrial
facilities to reduce their emissions and set up a trading program to help those
companies meet the reduction by May 2003.
Virginia, along with other states, is suing the EPA over the NOx SIP call.
Virginia will likely use a new permit program to enforce reductions in NOx
emissions, which will 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 estimates the cost to comply with the new
requirements to be approximately $40.0 million.
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 10 to the Consolidated
Financial Statements.
44
<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, 2000, 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 47 President and Chief Executive Officer
Daniel M. Walker 54 Sr. Vice President of Accounting and Finance
Konstantinos N. Kappatos 57 Sr. Vice President of Engineering and Operations
Gregory W. White 47 Sr. Vice President of Retail & Alliance Management
</TABLE>
Jackson E. Reasor 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 April 1998; and a Director of Energy Co-Opportunity from August
1998 until July 1999.
45
<PAGE>
Konstantinos N. Kappatos has been Vice President of Engineering and
Operations of Old Dominion since January 1984.
Gregory W. White has been Vice President of Alliance Management since June
1999; a Director of the Virginia Council of Farmer Cooperatives since March
1997; was Vice President of the VMDA from October 1996 until June 1999; and was
interim Vice President of VMDA from June 1995 until October 1996.
Directors of Old Dominion
The directors of Old Dominion, as of March 1, 2000, 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 69) 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; Director of DPC from July
1988 until July 1995; 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 60) was Chairman of Old Dominion's Board of Directors
from July 1995 until September 1998; President of DPC from July 1995 until
September 1998; 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 81) 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 61) 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 71) has been a Director of Old Dominion since July 1993;
a Director of DPC from October 1996 until July 1999; 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 54) 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.
46
<PAGE>
M Dale Bradshaw (Age 46) has been a Director of Old Dominion since January
1995; Secretary of Old Dominion's Board of Directors since July 1999; Chief
Executive Officer of Prince George Electric Cooperative since January 1995;
Secretary/Treasurer of DPC since July 1999; and District Manager of Davidson
Electric Membership Corporation from September 1988 until December 1994.
Vernon N. Brinkley (Age 53) has been Vice Chairman of Old Dominion's Board of
Directors since July 1999; a Director of Old Dominion since October 1982; a
Director of CSC since June 1996; Vice President of DPC since July 1999;
Secretary/Treasurer of DPC from July 1998 until July 1999 and from July 1992
until July 1997; President and General Manager of A&N Electric Cooperative since
October 1995; was Secretary/Treasurer of Old Dominion's Board of Directors from
July 1998 until July 1999 and from July 1992 until July 1997; and Executive Vice
President and General Manager of A&N Electric Cooperative from September 1982
until October 1995.
Calvin P. Carter (Age 75) has been a Director of Old Dominion since May 1991;
a Director of Southside Electric Cooperative since June 1972; a Director of DPC
since July 1997; 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.
Glenn F. Chappell (Age 56) 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 48) has been a Director of Old Dominion since July
1992; a Director of CSC since June 1996; a Director and Treasurer of Regional
Headquarters, Inc. since July 1998; and President and Chief Executive Officer of
Northern Virginia Electric Cooperative since January 1992.
Hunter R. Greenlaw, Jr. (Age 54) 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 54) has been a Director of Old Dominion since November
1993; a Director of Delaware Electric Cooperative since August 1978; a Director
of DPC since July 1998; and the owner and Secretary/Treasurer of Delmarva
Builders, Inc. since January 1981.
Frederick L. Hubbard (Age 59) 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 July 1999.
David J. Jones (Age 51) has been a Director of Old Dominion since July 1986;
a Director of Mecklenburg Electric Cooperative since June 1982; a Director of
DPC from August 1990 until July 1996; 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 72) has been a Director of Old Dominion since
August 1977; a Director of DPC from July 1995 until July 1998; a Director of
BARC Electric Cooperative since October 1970; and a Director of CSC since June
1996.
M. Larry Longshore (58) 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.
47
<PAGE>
James M. Reynolds (Age 52) 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 57) a has been a Director of Old Dominion since
August 1986; President and Chief Executive Officer of Northern Neck Electric
Cooperative since August 1986; a Director of Northern Neck Electric Cooperative,
Ltd since July 1997; was Vice Chairman of Old Dominion's Board of Directors
from July 1995 until July 1999; and President and Chief Executive Officer of Old
Dominion from April 1998 through November 1998;.
Cecil E. Viverette, Jr. (Age 58) has been Chairman of Old Dominion's Board of
Directors since September 1998; President of DPC 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 (53) 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 72) 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 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 61) has been a Director of Old Dominion since February
1987; a Director of Choptank Electric Cooperative since February 1980; a
Director of DPC from July 1988 until July 1995; a Director of the NRECA since
1993; and a farmer since December 1956.
C. Douglas Wine (Age 57) 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.
48
<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 three 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 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C>
Annual Compensation
------------------------
Other
Annual All Other
Compen- Compen-
Name and Salary Bonus sation sation
Principal Position Year (2)(3) (4) (5)
- -------------------------------------------------------------------------------------
Jackson E. Reasor(1) 1999 $204,102 $25,000 $1,458 $ 2,888
President and Chief 1998 20,513 - 497 -
Executive Officer
Ronald W. Watkins(1)
President and Chief 1998 75,831 - 282 189,460
Executive Officer 1997 321,593 - 1,149 21,440
Daniel M. Walker 1999 155,043 8,000 - 26,928
Sr. Vice President of Accounting 1998 148,984 7,500 - 25,578
and Finance 1997 143,530 6,500 - 20,939
Konstantinos N. Kappatos 1999 155,043 8,000 - 32,035
Sr. Vice President of Engineering 1998 148,984 7,500 - 32,066
and Operations 1997 143,530 7,500 - 22,676
Gregory W. White
Sr. Vice President of Retail and
Alliance Management 1999 66,714 - - 6,082
- -------------------
</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 1999, 1998 and 1997, VMDA contributed
$24,000 toward the President and Chief Executive Officer's annual
compensation.
(2) Includes amounts deferred by the Named Executives 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 was $17,500 for
1998 and $60,000 for 1997.
(4) Perquisites and other personal benefits paid to Mr. Reasor in 1999 and 1998
and to Mr. Watkins in 1998 and 1997 included expenses for a company
automobile. Mr. Walker, Mr. Kappatos, and Mr. White did not receive any
perquisites or other personal benefits in any of the fiscal years covered
by the table.
(5) The amount reflected in this column for 1999 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 1999 were $1,262, $266, $1,360, and $0 for Mr. Reasor;
$12,530, $3,100, $930, and
49
<PAGE>
$10,368 for Mr. Walker; $12,530, $3,100, $930, and $15,475 for Mr.
Kappatos; and $4,329, $1,334, $419, and $0 for Mr. White, respectively.
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
scheduled monthly board meeting and reimburses all Directors for out-of-pocket
expenses incurred in attending meetings.
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 $160,000 effective January 1, 1997.
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
160,000 40,800 54,400 68,000 81,600 95,000
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, 1999, years of credited service under the Plan at "normal
retirement age" for each of the Named Executives was: Mr. Reasor, 0.08 years;
Mr. Walker, 14.92 years; Mr. Kappatos, 14.92 years and Mr. White 21.22 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 Mr. Walker and Mr. Kappatos (individually "Executive"),
providing in part, that if the 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 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 Executive's employment is terminated at age 65 or older.
Each agreement provides for payment of similar benefits to the Executive's
beneficiaries in the event of his death or permanent disability.
50
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
Not Applicable
Item 13. Certain Relationships and Related Transactions
Not Applicable
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 25.
2. Financial Statement Schedules
-----------------------------
Report of Independent Accountants on 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).
51
<PAGE>
*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 the 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 the Registrant's Form 10-K for the year ended December
31, 1996, File No. 33-46795, on March 20, 1997).
*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 (filed as
exhibit 4.7 to the Registrant's Form 10-K for the year ended December
31, 1998, File No. 33-46795, on March 25, 1999).
*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 (filed as
exhibit 4.8 to the Registrant's Form 10-K for the year ended December
31, 1998, File No. 33-46795, on March 25, 1999).
*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 (filed as
exhibit 4.9 to the Registrant's Form 10-K for the year ended December
31, 1998, File No. 33-46795, on March 25, 1999).
4.10 Ninth Supplemental Indenture, dated as of November 1, 1999, 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.
*4.11 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).
*4.12 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).
*4.13 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).
52
<PAGE>
*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 (filed as exhibit 10.5 to the
Registrant's Form 10-K for the year ended December 31, 1998, File No.
33-46795, on March 25, 1999).
***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
(filed as exhibit 10.6 to the Registrant's Form 10-K for the year ended
December 31, 1998, File No. 33-46795, on March 25, 1999).
***10.7 Network Operating Agreement between Virginia Electric and Power Company
and Old Dominion Electric Cooperative, dated as of July 29, 1997 (filed
as exhibit 10.7 to the Registrant's Form 10-K for the year ended
December 31, 1998, File No. 33-46795, on March 25, 1999).
*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).
53
<PAGE>
*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).
*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).
54
<PAGE>
*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
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).
55
<PAGE>
*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 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).
56
<PAGE>
*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).
57
<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 1999.
______________________
* 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.
58
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To The Board of Directors of
Old Dominion Electric Cooperative
Our audits of the consolidated financial statements of Old Dominion Electric
Cooperative referred to in our report dated March 10, 2000 appearing in this
Form 10-K also included an audit of the Financial Statement Schedules listed in
Item 14(a)(2) of this Form 10-K. In our opinion, these Financial Statement
Schedules present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
/s/ PricewaterhouseCoopers LLP
Richmond, Virginia
March 10, 2000
59
<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
1999 $52.0 $2.2 $- $ - $54.2
1998 44.2 7.8 - - 52.0
1997 39.3 4.9 - - 44.2
Accumulated provision for uncollectibles
1999 - - - - -
1998 6.0 - - 6.0(A) -
1997 6.6 - - 0.6(B) 6.0
</TABLE>
(A) Represents amounts charged off as uncollectible.
(B) Represents collection of amounts previously reserved.
60
<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 14, 2000 By: /s/ JACKSON E. REASOR
---------------------------------
Jackson E. Reasor
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 14, 2000.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ JACKSON E. REASOR President (principal executive officer)
- -------------------------------------------------------
Jackson E. Reasor
/s/ DANIEL M. WALKER Sr.Vice President of Accounting & Finance
- ------------------------------------------------------- (principal financial officer)
Daniel M. Walker
/s/ ROBERT L. KEES Assistant Vice President & 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>
61
<PAGE>
<TABLE>
<CAPTION>
Signature Title
- ------------------------------------------------------- ------------------------------------------------------------
<S> <C>
/s/ M. JOHNSON BOWMAN Director
- -------------------------------------------------------
M. Johnson 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>
62
<PAGE>
<TABLE>
<CAPTION>
Signature Title
----------- -------
<S> <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 1999. 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.
63
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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).
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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 (filed as
exhibit 4.7 to the Registrant's Form 10-K for the year ended December
31, 1998, File No. 33-46795, on March 25, 1999).
*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 (filed as
exhibit 4.8 to Registrant's Form 10-K for the year ended December 31,
1998, File No. 33-46795, on March 25, 1999).
*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 (filed as
exhibit 4.9 to Registrant's Form 10-K for the year ended December 31,
1998, File No. 33-46795, on March 25, 1999).
4.10 Ninth Supplemental Indenture, dated as of November 1, 1999, 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.
*4.11 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).
*4.12 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).
*4.13 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).
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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 (filed as exhibit 10.5 to the
Registrant's Form 10-K for the year ended December 31, 1998, File No.
33-46795, filed on March 25, 1999).
***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).
</TABLE>
66
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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).
*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).
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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).
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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).
*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).
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
**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 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).
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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 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).
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
<C> <S> <C>
*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.
- -----------------------------------
</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.
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Exhibit 4.10
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
________________________
NINTH SUPPLEMENTAL INDENTURE
Dated as of November 1, 1999
______________________
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>
NINTH SUPPLEMENTAL INDENTURE
_________________________
THIS NINTH SUPPLEMENTAL INDENTURE, dated as of November 1, 1999 (the "Ninth
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"),
its Seventh Supplemental Indenture, dated as of November 1, 1998 (hereinafter
called the "Seventh Supplemental Indenture") and its Eighth Supplemental
Indenture, dated as of November 30, 1998 (hereinafter called the "Eighth
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,
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<PAGE>
Spotsylvania and Orange, Virginia, which recording offices will include the
recording offices in which this Ninth Supplemental Indenture will be recorded;
and
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, the Seventh
Supplemental Indenture and the Eighth 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 l50,000,000 113,600,000
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
3
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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
4
<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
4.90% First Mortgage 1,025,000 0
Bonds, 1992 Series C,
Due December 1, 1997
First Mortgage Bonds, 392,376 0
1992 Series B, Due
December 15,1996
5.20% First Mortgage 1,075,000 0
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
5
<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 34,400,00
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
6
<PAGE>
4.90% First Mortgage 1,025,000 1,025,000
Bonds, 1997 Series A,
Due December 1, 2001
4.25% First Mortgage Bonds 1,075,000 1,075,000
1998 Series A, Due
December 1, 2002
4.25%First Mortgage Bonds 5,000,000 5,000,000
1998 Series B, Due
December 1, 2002
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 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 Third Supplemental Loan Agreement dated as of November
17, 1999 (the "Third 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 $1,130,000 (the "Series 1999 Tax-
Exempt Bonds") to refund the December 1, 1999, maturity of the Series 1992 Tax-
Exempt Bonds. The Company's obligation to repay the loan from the Authority in
connection with the Series 1999 Tax-Exempt Bonds shall be evidenced by a new
series of Bonds to be designated First Mortgage Bonds, 1999 Series A (the "1999
Series A Bonds"), which will replace and refund the December 1, 1999, maturity
of the 1992 Series C Bonds.
WHEREAS, the Board of Directors of the Company has established the 1999
Series A Bonds and the Board of Directors of the Company has authorized an issue
of One Million One Hundred Thirty Thousand and no/100 Dollars ($1,130,000)
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 Ninth 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
7
<PAGE>
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 1999 Series A Bonds, to
make the 1999 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 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 Ninth Supplemental Indenture has been in all respects duly
authorized;
NOW, THEREFORE, THIS NINTH 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
8
<PAGE>
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.
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
9
<PAGE>
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:
ARTICLE 1
BONDS OF THE 1998 SERIES A AND CERTAIN PROVISIONS RELATING THERETO
Section 1.01
(A) Terms of the 1999 Series A Bonds. There be hereby established a series
of Bonds, known as and entitled "First Mortgage Bonds, 1999 Series A"
(hereinafter referred to as the "1999 Series A Bonds") and the form thereof
shall be substantially as set forth in Section 1.01 (D). The aggregate
principal amount of 1999 Series A Bonds which may be authenticated and delivered
and outstanding at any one time is limited to One Million One Hundred Thirty
Thousand and no/100 Dollars ($1,130,000). The Trustee is hereby appointed as
Authenticating Agent for the 1999 Series A Bonds.
The 1999 Series A Bonds shall be issuable in fully registered form without
coupons and in denominations of $5,000 and integral multiples thereof. Each
1999 Series A Bond shall be dated the date of its issuance and delivery. The
1999 Series A Bonds shall bear interest from their date payable on June 1, 2000,
and on each of June 1 and December 1 of each year thereafter at the rate of
5.25% per annum and shall mature, subject to prior redemption, on December 1,
2002.
The 1999 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 Third
Supplemental Tax-Exempt Indenture of Trust, dated as of November 17, 1999, the
"Tax-Exempt Indenture") and will secure the obligations of the Company under the
Loan Agreement, as supplemented and amended by the Third Supplemental Loan
Agreement").
The 1999 Series A Bonds shall be lettered "A". The principal and interest
on the 1999 Series A Bonds shall be payable in lawful money of the United States
of America to the registered owner of the 1999 Series A Bonds or its assignee in
accordance with the
10
<PAGE>
provisions of the Third 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 1999 Series A Bonds shall be payable
without presentation of the 1999 Series A Bonds for payment. Payment of the
principal or Redemption Price of any 1999 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 1999 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 1999 Series A Bonds.
(i) The 1999 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 1999 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
1999 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 1999 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 1999 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:
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<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 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 1999 Tax-Exempt Bonds would cause the
interest paid or payable on the Series 1999 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 1999 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 1999 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 1999 Series A Bonds. The 1999
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 1999 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 1999 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 1999 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.
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(D) Form of 1999 Series A Bonds. The 1999 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:
FORM OF 1999 SERIES A BONDS
THIS FIRST MORTGAGE BOND, 1999 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 1999 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, 2000, 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.
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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 Ninth Supplemental Indenture, dated as of November 1,
1999 ("Ninth Supplemental Indenture"), between the Company and the Trustee. The
Bonds are being issued to refund the December 1, 1999, 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 Third Supplemental Loan
Agreement, dated as of November 17, 1999 ("Third 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 1999 ("1999 Tax-Exempt Bonds") in the
aggregate principal amount of $1,130,000, under that certain Third Supplemental
Tax-Exempt Indenture, dated as of November 17, 1999
14
<PAGE>
("Third 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 1999
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 1999
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 Third 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 Third Supplemental Tax-Exempt Indenture, as security for the
1999 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 1999 Tax-Exempt Bonds.
All obligations of the Company hereunder shall terminate when all sums due and
to become due pursuant to the Third Supplemental Tax-Exempt Indenture, this
Bond, the Third Supplemental Loan Agreement and the 1999 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 1999 Tax-Exempt
Bonds to become void or unenforceable or their performance in accordance with
the intent and purpose of the parties
15
<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 1999 Tax-Exempt Bonds would cause the interest paid or payable
on the 1999 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 1999 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.
16
<PAGE>
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 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,
17
<PAGE>
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.
18
<PAGE>
IN WITNESS THEREOF, the Company has caused this Bond to be duly executed.
Dated: ______________________
OLD DOMINION ELECTRIC
COOPERATIVE
By: SPECIMAN
--------
Authorized Officer
19
<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: SPECIMAN
--------
Authorized Signatory
20
<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 Third Supplemental Indenture of Trust dated as of
November 17, 1999 (the "Third 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 $1,130,000 Exempt Facility Refunding Revenue Bonds (Old Dominion
Electric Cooperative Project), Series 1999, issued pursuant to the Tax-Exempt
Indenture.
INDUSTRIAL DEVELOPMENT AUTHORITY OF
HALIFAX COUNTY, VIRGINIA
By: SPECIMAN
--------
Chairman
21
<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 Eight Million, Seven Hundred Forty-One
Thousand, Nine Hundred-Five Dollars ($808,741,905), namely Three Hundred Eighty-
Four Million, Eight Hundred Thousand Dollars ($384,800,000) 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 ($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, One Million
Seventy-Five Thousand Dollars ($1,075,000) principal amount of 1998 Series A
Bonds, Five Million Dollars ($5,000,000) principal amount of 1998 Series B Bonds
and now issued, outstanding and One Million One Hundred Thirty Thousand Dollars
($1,130,000) principal amount of 1999 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 Ninth 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
1999 Series A Bonds to the same extent as if specifically set forth herein. All
capitalized terms used in this Ninth 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 Ninth 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 Ninth Supplemental Indenture any of the
parties hereto is named or referred to, this shall, subject to the provisions of
Articles Ten and
22
<PAGE>
Twelve of the Original Indenture, be deemed to include the successors and
assigns of such party, and all the covenants and agreements in this Ninth
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 Ninth 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
Ninth 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 Ninth 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 Ninth Supplemental Indenture is dated for
convenience and for the purpose of reference as of November 1, 1999, 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 Ninth
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.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Ninth
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
24
<PAGE>
ACKNOWLEDGMENT
COMMONWEALTH OF VIRGINIA )
)
CITY/COUNTY OF__________________ )
The foregoing instrument was acknowledged before me this _____ day of
November, 1999, 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, 1999, by J. Lee Judy, the Vice President of Crestar Bank, a Virginia
banking corporation, on behalf of the Bank.
____________________________________
Notary Public
My Commission expires: _____________________
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS 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-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 699,531
<OTHER-PROPERTY-AND-INVEST> 262,024
<TOTAL-CURRENT-ASSETS> 70,688
<TOTAL-DEFERRED-CHARGES> 18,269
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,050,512
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 216,369<F1>
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 509,606
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 29,700
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 294,837
<TOT-CAPITALIZATION-AND-LIAB> 1,050,512
<GROSS-OPERATING-REVENUE> 390,060
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 336,735
<TOTAL-OPERATING-EXPENSES> 336,735
<OPERATING-INCOME-LOSS> 53,325
<OTHER-INCOME-NET> 5,400
<INCOME-BEFORE-INTEREST-EXPEN> 58,725
<TOTAL-INTEREST-EXPENSE> 48,886
<NET-INCOME> 9,839
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 83,996
<EPS-BASIC> 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>
