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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-3526 The Southern Company 58-0690070
(A Delaware Corporation)
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
(770) 393-0650
1-3164 Alabama Power Company 63-0004250
(An Alabama Corporation)
600 North 18th Street
Birmingham, Alabama 35291
(205) 257-1000
1-6468 Georgia Power Company 58-0257110
(A Georgia Corporation)
241 Ralph McGill Boulevard, N.E.
Atlanta, Georgia 30308-3374
(404) 526-6526
0-2429 Gulf Power Company 59-0276810
(A Maine Corporation)
500 Bayfront Parkway
Pensacola, Florida 32501
(850) 444-6111
0-6849 Mississippi Power Company 64-0205820
(A Mississippi Corporation)
2992 West Beach
Gulfport, Mississippi 39501
(601) 864-1211
1-5072 Savannah Electric and Power Company 58-0418070
(A Georgia Corporation)
600 East Bay Street
Savannah, Georgia 31401
(912) 644-7171
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Securities registered pursuant to Section 12(b) of the Act:1
Each of the following classes or series of securities registered pursuant to
Section 12(b) of the Act is registered on the New York Stock Exchange.
Title of each class Registrant
Common Stock, $5 par value The Southern Company
Company obligated mandatorily redeemable
preferred securities, $25 liquidation amount
7.75% Cumulative Quarterly Income Preferred Securities 2
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Class A preferred, cumulative, $25 stated capital Alabama Power Company
6.80% Series Adjustable Rate (1993 Series)
6.40% Series
Senior Notes
7 1/8% Series A
Company obligated mandatorily redeemable
preferred securities, $25 liquidation amount
7.375% Trust Preferred Securities3
7.60% Trust Originated Preferred Securities4
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Class A preferred stock, cumulative, $25 stated value Georgia Power Company
Adjustable Rate (First 1993 Series)
Adjustable Rate (Second 1993 Series)
Company obligated mandatorily redeemable
preferred securities, $25 liquidation amount
9% Monthly Income Preferred Securities, Series A5 7.75% Trust Preferred Securities6
7.60% Trust Preferred Securities7 7.75% Quarterly Income Preferred Securities8
First mortgage bonds
6 1/8% Series due 1999 6 7/8% Series due 2002
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1 As of December 31, 1997.
2 Issued by Southern Company Capital Trust III and guaranteed by The Southern Company.
3 Issued by Alabama Power Capital Trust I and guaranteed by Alabama Power Company.
4 Issued by Alabama Power Capital Trust II and guaranteed by Alabama Power Company.
5 Issued by Georgia Power Capital, L.P. and guaranteed by Georgia Power Company.
6 Issued by Georgia Power Capital Trust I and guaranteed by Georgia Power Company.
7 Issued by Georgia Power Capital Trust II and guaranteed by Georgia Power Company.
8 Issued by Georgia Power Capital Trust III and guaranteed by Georgia Power Company.
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Company obligated mandatorily redeemable Gulf Power Company
preferred securities, $25 liquidation amount
7.625% Quarterly Income Preferred Securities9
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Depositary preferred shares, each representing one-fourth Mississippi Power Company
of a share of preferred stock, cumulative, $100 par value
6.32% Series 6.65% Series
Company obligated mandatorily redeemable
preferred securities, $25 liquidation amount
7.75% Trust Originated Preferred Securities10
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Preferred stock, cumulative, $25 par value Savannah Electric and Power Company
6.64% Series
Securities registered pursuant to Section 12(g) of the Act:11
Title of each class Registrant
Preferred stock, cumulative, $100 par value Alabama Power Company
4.20% Series 4.60% Series 4.72% Series
4.52% Series 4.64% Series 4.92% Series
Class A preferred, cumulative, $100,000 stated capital
Auction (1993 Series)
Class A preferred, cumulative, $100 stated capital
Auction (1988 Series)
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Preferred stock, cumulative, $100 stated value Georgia Power Company
$4.60 Series $4.72 Series $5.64 Series
$4.60 Series (1962) $4.92 Series $6.48 Series
$4.60 Series (1963) $4.96 Series $6.60 Series
$4.60 Series (1964) $5.00 Series
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9 Issued by Gulf Power Capital Trust I and guaranteed by Gulf Power Company.
10 Issued by Mississippi Power Capital Trust I and guaranteed by Misissippi Power Company.
11 As of December 31, 1997.
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Preferred stock, cumulative, $100 par value Gulf Power Company
4.64% Series 5.44% Series
5.16% Series
Class A preferred, cumulative, $10 par value, $25 stated capital
6.72% Series Adjustable Rate (1993 Series)
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Preferred stock, cumulative, $100 par value Mississippi Power Company
4.40% Series 4.60% Series
4.72% Series 7.00% Series
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Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No___
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 registrants' 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. ( )
Aggregate market value of voting stock held by non-affiliates of The Southern Company at February 28, 1998: $17.1 billion. Each of such other registrants is a wholly-owned subsidiary of The Southern Company and has no voting stock other than its common stock. A description of registrants' common stock follows:
Description of Shares Outstanding
Registrant Common Stock at February 28, 1998
The Southern Company Par Value $5 Per Share 694,327,636
Alabama Power Company Par Value $40 Per Share 5,608,955
Georgia Power Company No Par Value 7,761,500
Gulf Power Company No Par Value 992,717
Mississippi Power Company Without Par Value 1,121,000
Savannah Electric and Power Company Par Value $5 Per Share 10,844,635
Documents incorporated by reference: specified portionsof The Southern Company's Proxy Statement relating to the
1998 Annual Meeting of Stockholders are incorporated by reference into PART III.
This combined Form 10-K is separately filed by The Southern Company, Alabama
Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power
Company and Savannah Electric and Power Company. Information contained herein
relating to any individual company is filed by such company on its own behalf.
Each company makes no representation as to information relating to the other
companies.
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Table of Contents
Page
PART I
Item 1 Business
The SOUTHERN System.................................................................................. I-1
Traditional Business................................................................................. I-1
Non-Traditional Business............................................................................. I-2
Certain Factors Affecting the Industry............................................................... I-3
Construction Programs................................................................................ I-4
Financing Programs................................................................................... I-6
Fuel Supply.......................................................................................... I-7
Territory Served By Operating Affiliates............................................................. I-8
Competition.......................................................................................... I-11
Regulation........................................................................................... I-13
Rate Matters......................................................................................... I-15
Employee Relations................................................................................... I-16
Item 2 Properties............................................................................................. I-18
Item 3 Legal Proceedings...................................................................................... I-23
Item 4 Submission of Matters to a Vote of Security Holders.................................................... I-23
Executive Officers of SOUTHERN......................................................................... I-24
PART II
Item 5 Market for Registrants' Common Equity and Related Stockholder Matters.................................. II-1
Item 6 Selected Financial Data................................................................................ II-2
Item 7 Management's Discussion and Analysis of Results of Operations
and Financial Condition.............................................................................. II-2
Item 7A Quantitative and Qualitative Disclosures about Market Risk............................................. II-2
Item 8 Financial Statements and Supplementary Data............................................................ II-3
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................................................................. II-4
PART III
Item 10 Directors and Executive Officers of the Registrants................................................... III-1
Item 11 Executive Compensation................................................................................ III-13
Item 12 Security Ownership of Certain Beneficial Owners and
Management.......................................................................................... III-30
Item 13 Certain Relationships and Related Transactions........................................................ III-36
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K......................................................................................... IV-1
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DEFINITIONS
When used in Items 1 through 5 and Items 10 through 14, the
following terms will have the meanings indicated. Other defined
terms specific only to Item 11 are found on page III-13.
Term Meaning
AEC........................................... Alabama Electric Cooperative, Inc.
AFUDC......................................... Allowance for Funds Used During Construction
ALABAMA....................................... Alabama Power Company
Alicura....................................... Hidroelectrica Alicura, S.A. (Argentina)
AMEA.......................................... Alabama Municipal Electric Authority
CEPA.......................................... Consolidated Electric Power Asia
Clean Air Act................................. Clean Air Act Amendments of 1990
Dalton........................................ City of Dalton, Georgia
DOE........................................... United States Department of Energy
Edelnor....................................... Empresa Electrica del Norte Grande, S.A. (Chile)
EMF........................................... Electromagnetic field
Energy Act.................................... Energy Policy Act of 1992
Energy Solutions.............................. Southern Company Energy Solutions, Inc. (formerly The Southern
Development and Investment Group, Inc.)
Entergy Gulf States........................... Entergy Gulf States Utilities Company
EPA........................................... United States Environmental Protection Agency
EWG........................................... Exempt wholesale generator
FERC.......................................... Federal Energy Regulatory Commission
FPC........................................... Florida Power Corporation
FP&L.......................................... Florida Power & Light Company
Freeport...................................... Freeport Power Company (Bahamas)
FUCO.......................................... Foreign utility company
GEORGIA....................................... Georgia Power Company
GULF.......................................... Gulf Power Company
Holding Company Act........................... Public Utility Holding Company Act of 1935, as amended
IBEW.......................................... International Brotherhood of Electrical Workers
IRS........................................... Internal Revenue Service
JEA........................................... Jacksonville Electric Authority
MEAG.......................................... Municipal Electric Authority of Georgia
MISSISSIPPI................................... Mississippi Power Company
Mobile Energy................................. Mobile Energy Services Company, L.L.C.
NRC........................................... Nuclear Regulatory Commission
OPC........................................... Oglethorpe Power Corporation
operating affiliates.......................... ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH
PSC........................................... Public Service Commission
RUS........................................... Rural Utility Service (formerly Rural Electrification
Administration)
SAVANNAH...................................... Savannah Electric and Power Company
SCS........................................... Southern Company Services, Inc.
SEC........................................... Securities and Exchange Commission
SEGCO......................................... Southern Electric Generating Company
SEPA.......................................... Southeastern Power Administration
SERC.......................................... Southeastern Electric Reliability Council
SMEPA......................................... South Mississippi Electric Power Association
SOUTHERN...................................... The Southern Company
Southern Communications....................... Southern Communications Services, Inc.
Southern Energy............................... Southern Energy, Inc. (formerly Southern Electric
International, Inc.)
Southern Nuclear.............................. Southern Nuclear Operating Company, Inc.
SOUTHERN system............................... SOUTHERN, the operating affiliates, SEGCO, Southern Energy,
Southern Nuclear, SCS, Southern Communications,
Energy Solutions and other subsidiaries
SWEB.......................................... South Western Electricity plc (United Kingdom)
TVA........................................... Tennessee Valley Authority
ii
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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K includes forward-looking statements in addition to historical information. The registrants caution that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the markets of SOUTHERN's subsidiaries; potential business strategies, including acquisitions or dispositions of assets or internal restructuring, that may be pursued by the registrants; state and federal rate regulation in the United States; changes in or application of environmental and other laws and regulations to which SOUTHERN and its subsidiaries are subject; political, legal and economic conditions and developments in the United States and in foreign countries in which the subsidiaries operate; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; the performance of projects undertaken by the non-traditional business and the success of efforts to invest in and develop new opportunities; and other factors discussed elsewhere herein and in other reports filed from time to time by the registrants with the SEC.
PART I
Item 1. BUSINESS
SOUTHERN was incorporated under the laws of Delaware on November 9, 1945. SOUTHERN is domesticated under the laws of Georgia and is qualified to do business as a foreign corporation under the laws of Alabama. SOUTHERN owns all the outstanding common stock of ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH, each of which is an operating public utility company. ALABAMA and GEORGIA each own 50% of the outstanding common stock of SEGCO. The operating affiliates supply electric service in the states of Alabama, Georgia, Florida, Mississippi and Georgia, respectively, and SEGCO owns generating units at a large electric generating station which supplies power to ALABAMA and GEORGIA. More particular information relating to each of the operating affiliates is as follows:
ALABAMA is a corporation organized under the laws of the State of Alabama on November 10, 1927, by the consolidation of a predecessor Alabama Power Company, Gulf Electric Company and Houston Power Company. The predecessor Alabama Power Company had had a continuous existence since its incorporation in 1906.
GEORGIA was incorporated under the laws of the State of Georgia on June 26, 1930, and admitted to do business in Alabama on September 15, 1948.
GULF is a corporation which was organized under the laws of the State of Maine on November 2, 1925, and admitted to do business in Florida on January 15, 1926, in Mississippi on October 25, 1976 and in Georgia on November 20, 1984.
MISSISSIPPI was incorporated under the laws of the State of Mississippi on July 12, 1972, was admitted to do business in Alabama on November 28, 1972, and effective December 21, 1972, by the merger into it of the predecessor Mississippi Power Company, succeeded to the business and properties of the latter company. The predecessor Mississippi Power Company was incorporated under the laws of the State of Maine on November 24, 1924, and was admitted to do business in Mississippi on December 23, 1924, and in Alabama on December 7, 1962.
SAVANNAH is a corporation existing under the laws of the State of Georgia; its charter was granted by the Secretary of State on August 5, 1921.
SOUTHERN also owns all the outstanding common stock of Southern Energy, Southern Communications, Southern Nuclear, SCS (the system service company), Energy Solutions and other direct and indirect subsidiaries. Southern Energy is focused on several key international and domestic business lines, including energy distribution, integrated utilities, stand-alone generation, and other energy-related products and services. A further description of Southern Energy's business and organization follows later in this section under "Non-Traditional Business." Southern Communications provides digital wireless communications services to SOUTHERN's operating affiliates and also markets these services to the public within the Southeast. Southern Nuclear provides services to the Southern electric system's nuclear plants. Energy Solutions develops new business opportunities related to energy products and services.
SEGCO owns electric generating units with an aggregate capacity of 1,019,680 kilowatts at Plant Gaston on the Coosa River near Wilsonville, Alabama, and ALABAMA and GEORGIA are each entitled to one-half of SEGCO's capacity and energy. ALABAMA acts as SEGCO's agent in the operation of SEGCO's units and furnishes coal to SEGCO as fuel for its units. SEGCO also owns three 230,000 volt transmission lines extending from Plant Gaston to the Georgia state line at which point connection is made with the GEORGIA transmission line system.
The SOUTHERN System
Traditional Business
The transmission facilities of each of the operating affiliates and SEGCO are connected to the respective company's own generating plants and other sources of power and are interconnected with the transmission facilities of the other operating affiliates and SEGCO by means of heavy-duty high voltage lines. (In the case of GEORGIA's integrated transmission system, see Item 1 - BUSINESS - "Territory Served By Operating Affiliates" herein.)
Operating contracts covering arrangements in effect with principal neighboring utility systems provide for capacity exchanges, capacity purchases and sales, transfers of economy energy and other similar transactions. Additionally, the operating affiliates have entered into voluntary reliability agreements with the subsidiaries of Entergy Corporation, Florida Electric Power Coordinating Group and TVA and with Carolina Power & Light Company, Duke Energy Corporation, South Carolina Electric & Gas Company and Virginia Electric and Power Company, each of which provides for the establishment and periodic review of principles and procedures for planning and operation of generation and transmission facilities, maintenance schedules, load retention programs, emergency operations, and other matters affecting the reliability of bulk power supply. The operating affiliates have joined with other utilities in the Southeast (including those referred to above) to form the SERC to augment further the reliability and adequacy of bulk power supply. Through the SERC, the operating affiliates are represented on the National Electric Reliability Council.
An intra-system interchange agreement provides for coordinating operations of the power producing facilities of the operating affiliates and SEGCO and the capacities available to such companies from non-affiliated sources and for the pooling of surplus energy available for interchange. Coordinated operation of the entire interconnected system is conducted through a central power supply coordination office maintained by SCS. The available sources of energy are allocated to the operating affiliates to provide the most economical sources of power consistent with good operation. The resulting benefits and savings are apportioned among the operating affiliates.
SCS has contracted with SOUTHERN, each operating affiliate, Southern Energy, various of the other subsidiaries, Southern Nuclear and SEGCO to furnish, at cost and upon request, the following services: general executive and advisory services, power pool operations, general engineering, design engineering, purchasing, accounting, finance and treasury, taxes, insurance and pensions, corporate, rates, budgeting, public relations, employee relations, systems and procedures and other services with respect to business and operations. Southern Energy, Energy Solutions and Southern Communications have also secured from the operating affiliates certain services which are furnished at cost.
Southern Nuclear has contracted with ALABAMA to operate its Farley Nuclear Plant, as authorized by amendments to the plant operating licenses. Effective March 22, 1997, Southern Nuclear, pursuant to a contract with GEORGIA, assumed responsibility for the operation of plants Hatch and Vogtle, as authorized by amendments to the operating licenses for both plants. See Item 1 BUSINESS - "Regulation - Atomic Energy Act of 1954" herein.
Non-Traditional Business
SOUTHERN continues to consider new business opportunities, particularly those which allow use of the expertise and resources developed through its regulated utility experience. These endeavors began in 1981 and are conducted through Southern Energy and other subsidiaries. SOUTHERN presently has authorization from the SEC (the "SEC Order") which in effect will allow it to use the proceeds from financings for investment in EWGs and FUCOs up to an amount not exceeding 100% of SOUTHERN's consolidated retained earnings. A consumer group that had sought to intervene in the SEC proceeding has filed an appeal, which remains pending, with U.S. Court of Appeals for the 11th Circuit seeking judicial review of the SEC Order. At December 31, 1997, SOUTHERN's consolidated retained earnings amounted to $3,842 million and its aggregate investment in EWGs and FUCOs amounted to $2,795 million.
Worldwide, Southern Energy develops and manages electricity and other energy related projects, including domestic energy trading and marketing.
Reference is made to Note 15 to the financial statements of SOUTHERN in Item 8 herein for additional information regarding SOUTHERN's segment and related information.
In 1995, SOUTHERN acquired SWEB, one of the United Kingdom's 12 regional electric distribution companies, for approximately $1.8 billion. In July 1996, a 25 percent interest in SWEB was sold. SWEB is, to some extent, involved in power generation and certain non-regulated activities which include gas marketing and telecommunications. In mid-1997, the acquisition of all interest in CEPA was completed for a total net investment of $2.1 billion. CEPA is engaged in the business of developing, constructing, owning and operating electric power
generation facilities. Its current operations include installed operating capacity of approximately 3,306 megawatts, with projects either completed or under development in the Philippines, the People's Republic of China, and Pakistan. In September 1997, Southern Energy acquired a 26% interest in a German utility for approximately $820 million. For additional information regarding the acquisitions of SWEB and CEPA, reference is made to Note 14 to SOUTHERN's financial statements in Item 8 herein.
See Item 2 - PROPERTIES - "Other Electric Generation Facilities" herein for additional information regarding Southern Energy projects.
As the energy marketplace evolves, Southern Energy is positioning SOUTHERN to become a major competitor in energy trading and marketing activities. As part of this strategy, Southern Energy entered into a joint venture with Vastar Resources effective in January 1998. The two companies combined their energy trading and marketing operations to form a new full-service energy provider, Southern Company Energy Marketing. Southern Company Energy Marketing holds a top 10 position in the United States in both natural gas and power marketing.
Southern Energy and Energy Solutions render consulting services and market SOUTHERN system expertise in the United States and throughout the world. They contract with other public utilities, commercial concerns and government agencies for the rendition of services and the licensing of intellectual property. More specifically, Energy Solutions is focusing on new and existing programs to enhance customer satisfaction and efficiency and stockholder value, such as: Good Cents, an energy efficiency program for electric utility customers; EnerLink, a group of energy management products and services for large commercial and industrial electricity users; Energy Services, providing total energy solutions to industrial and commercial customers; other energy management programs under development; and telecommunications operations related to energy management programs.
In 1995, Southern Communications began serving SOUTHERN's operating affiliates and marketing its services to non-affiliates within the Southeast. The system covers 122,000 square miles and combines the functions of two-way radio dispatch, cellular phone, short text and numeric messaging and wireless data transfer.
These continuing efforts to invest in and develop new business opportunities offer the potential of earning returns which may exceed those of rate-regulated operations. However, these activities also involve a higher degree of risk. SOUTHERN expects to make substantial investments over the period 1998-2000 in these and other new businesses.
Certain Factors Affecting the Industry
Various factors are currently affecting the electric utility industry in general, including increasing competition and the regulatory changes related thereto, costs required to comply with environmental regulations, and the potential for new business opportunities (with their associated risks) outside of traditional rate-regulated operations. The effects of these and other factors on the SOUTHERN system are described herein. Particular reference is made to Item 1 - BUSINESS - "Non-Traditional Business," "Competition" and "Environmental Regulation."
Construction Programs
The subsidiary companies of SOUTHERN are engaged in continuous construction programs to accommodate existing and estimated future loads on their respective systems. Construction additions or acquisitions of property during 1998 through 2000 by the operating affiliates, SEGCO, SCS, Southern Communications and Southern Energy are estimated as follows: (in millions)
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1998 1999 2000
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ALABAMA $ 615 $ 723 $ 524
GEORGIA 506 561 549
GULF 68 62 62
MISSISSIPPI 67 92 291
SAVANNAH 22 23 21
SEGCO 3 8 1
SCS 7 15 6
Southern
Communications 67 20 18
Southern Energy* 629 493 78
Other 19 13 18
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SOUTHERN system $2,003 $2,010 $1,568
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*These construction estimates do not include amounts which may be expended by Southern Energy on future power production projects or by any subsidiaries created to effect such future projects. (See Item 1 - BUSINESS - "Non-Traditional Business" herein.)
Estimated construction costs in 1998 are expected to be apportioned approximately as follows: (in millions)
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SOUTHERN
system* ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
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Combustion turbines $109 $ 99 $ 1 $ 1 $ 8 $ -
Other generating
facilities including
associated plant 850 169 78 23 20 2
substations
New business 326 129 151 21 14 11
Transmission 147 64 69 3 9 2
Joint line and substation 31 - 28 3 - -
Distribution 225 70 54 11 12 5
Nuclear fuel 97 40 57 - - -
General plant 218 44 68 6 4 2
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$2,003 $615 $506 $68 $67 $22
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*Southern Communications, SCS and Southern Nuclear plan capital additions to general plant in 1998 of $67 million, $7 million and $400 thousand, respectively, while SEGCO plans capital additions of $3 million to generating facilities. Southern Energy plans capital additions of $555 million to generating facilities, $73 million to distribution facilities, and $1 million to general plant. These estimates do not reflect the possibility of Southern Energy's securing a contract(s) to buy or build additional generating facilities. Other non-traditional capital additions planned for 1998 are approximately $19 million. (See Item 1 - BUSINESS - "Non-Traditional Business" herein.)
The construction programs are subject to periodic review and revision, and actual construction costs may vary from the above estimates because of numerous factors. These factors include changes in business conditions; revised load growth estimates; changes in environmental regulations; changes in existing nuclear plants to meet new regulatory requirements; increasing costs of labor, equipment and materials; and cost of capital.
The operating affiliates have approximately 1,600 megawatts of combined cycle generation scheduled to be placed in service by 2001. In addition, significant construction will continue related to transmission and distribution facilities and the upgrading of generating plants . (See Item 2 - PROPERTIES - "Other Electric Generation Facilities" herein for additional information relating to facilities under development.)
In 1991, the Georgia legislature passed legislation which requires GEORGIA and SAVANNAH each to file an Integrated Resource Plan for approval by the Georgia PSC. Under the plan rules, the Georgia PSC must pre-certify the construction of new power plants and new purchase power contracts. (See Item 1 - BUSINESS - "Rate Matters - Integrated Resource Planning" herein.)
See Item 1 - BUSINESS - "Regulation - Environmental Regulation" herein for
information with respect to certain existing and proposed environmental
requirements and Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein for
additional information concerning ALABAMA's and GEORGIA's joint ownership of
certain generating units and related facilities with certain non-affiliated
utilities.
Financing Programs
In 1997, SOUTHERN raised $360 million from the issuance of new common stock under SOUTHERN's various stock plans. Also in 1997, SOUTHERN issued a total of $600 million in trust and capital preferred securities for the direct benefit of SOUTHERN. SOUTHERN plans to issue additional equity capital in 1998. The amount and timing of additional equity capital to be raised in 1998, as well as subsequent years, will be contingent on SOUTHERN's investment opportunities. Equity capital can be provided from any combination of public offerings, private placements, or SOUTHERN's stock plans. Any portion of the common stock required during 1998 for SOUTHERN's stock plans that is not provided from the issuance of new stock will be acquired on the open market in accordance with the terms of such plans.
The operating affiliates plan to obtain the funds required for construction and other purposes from sources similar to those used in the past, which was primarily from internal sources. However, the type and timing of any financings -- if needed -- will depend on market conditions and regulatory approval. Historically the operating affiliates have relied on issuances of first mortgage bonds and preferred stock, in addition to pollution control revenue bonds issued for their benefit by public authorities, to meet their long-term external financing requirements. Recently, financings have consisted of unsecured debt and trust preferred securities. In this regard, the operating affiliates -- except SAVANNAH -- sought and obtained stockholder approval in 1997 to amend their respective corporate charters eliminating restrictions on the amount of unsecured indebtedness they may incur.
Short-term debt is often utilized as appropriate at SOUTHERN and the operating affiliates. The amount of securities representing short-term unsecured indebtedness allowable under SAVANNAH's charter at December 31, 1997 was $71 million (20% of secured indebtedness and other capital). Under the provisions of SAVANNAH's charter, this percentage will be reduced to 10% on July 1, 1999. In the case of ALABAMA, GEORGIA, GULF and MISSISSIPPI, preferred shareholders approved the removal of restrictions on unsecured indebtedness under the respective charters. SOUTHERN does not have a charter limitation on short-term unsecured indebtedness.
The maximum amounts of short-term or term-loan indebtedness authorized by the appropriate regulatory authorities are shown on the following table:
Outstanding at
Amount December 31, 1997
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(in millions)
ALABAMA $ 750 (1) $306.9
GEORGIA 1,700 (2) 366.2
GULF 300(1) 82.3
MISSISSIPPI 350(1) 80.0
SAVANNAH 90(2) 30.0
SOUTHERN 2,000(1) 768.7
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Notes:
(1) ALABAMA's authority is based on authorization received from the Alabama PSC, which expires December 31, 1998. No SEC authorization is required for ALABAMA. GULF, MISSISSIPPI and SOUTHERN have received SEC authorization to issue from time to time short-term and/or term-loan notes to banks and commercial paper to dealers in the amounts shown through December 31, 2003, December 31, 2002 and March 31, 2001, respectively.
(2) GEORGIA and SAVANNAH have received SEC authorization to issue from time to time short-term and term-loan notes to banks and commercial paper to dealers in the amounts shown through December 31, 2002. Authorization for term-loan indebtedness is also required by and has been received from the Georgia PSC. Currently, GEORGIA and SAVANNAH have remaining authority from the Georgia PSC of $1.4 billion and $96.1 million, respectively, expiring December 31, 1998.
Reference is made to Note 5 to the financial statements for SOUTHERN, ALABAMA, GULF, MISSISSIPPI and SAVANNAH and Note 9 to the financial statements for GEORGIA in Item 8 herein for information regarding the registrants' credit arrangements.
New projects undertaken by subsidiaries of Southern Energy are generally financed through a combination of equity funds provided by SOUTHERN and non-recourse debt incurred on a project-specific basis.
Fuel Supply
The operating affiliates' and SEGCO's supply of electricity is derived predominantly from coal. The sources of generation for the years 1995 through 1997 and the estimates for 1998 are shown below:
Oil and
ALABAMA Coal Nuclear Hydro Gas
--------- ---------- --------- ---------
1995 73% 19% 8% *
1996 72 20 8 *
1997 72 19 8 1
1998 74 18 7 1
GEORGIA
1995 74 22 3 1
1996 74 22 3 1
1997 75 22 2 1
1998 75 21 3 1
GULF
1995 99 ** ** 1
1996 99 ** ** 1
1997 100 ** ** *
1998 99 ** ** 1
MISSISSIPPI
1995 79 ** ** 21
1996 85 ** ** 15
1997 85 ** ** 15
1998 85 ** ** 15
SAVANNAH
1995 80 ** ** 20
1996 90 ** ** 10
1997 87 ** ** 13
1998 88 ** ** 12
SEGCO
1995 100 ** ** *
1996 100 ** ** *
1997 100 ** ** *
1998 100 ** ** *
SOUTHERN system***
1995 77 17 4 2
1996 77 17 4 2
1997 77 17 4 2
1998 79 16 4 1
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*Less than 0.5%.
**Not applicable.
***Amounts shown for the SOUTHERN system are weighted
averages of the operating affiliates and SEGCO.
The average costs of fuel in cents per net kilowatt-hour generated for 1995 through 1997 are shown below:
Oil and Weighted
ALABAMA Coal Nuclear Gas Average
--------- ---------- ----------- -----------
1995 1.71 0.50 * 1.48
1996 1.71 0.50 * 1.46
1997 1.73 0.54 * 1.49
GEORGIA
1995 1.67 0.60 4.68 1.44
1996 1.55 0.55 5.50 1.35
1997 1.53 0.52 5.19 1.32
GULF
1995 2.08 ** 3.56 2.09
1996 1.99 ** 6.41 2.02
1997 1.97 ** 5.59 1.99
MISSISSIPPI
1995 1.58 ** 2.33 1.64
1996 1.43 ** 4.32 1.57
1997 1.44 ** 3.54 1.57
SAVANNAH
1995 1.77 ** 3.80 2.18
1996 1.76 ** 8.41 2.42
1997 1.91 ** 4.63 2.27
SEGCO
1995 1.87 ** * 1.87
1996 1.72 ** * 1.72
1997 1.51 ** * 1.51
SOUTHERN system***
1995 1.73 0.56 3.37 1.53
1996 1.65 0.52 5.20 1.48
1997 1.63 0.53 4.38 1.46
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|
* Not meaningful because of minimal generation from fuel source. ** Not applicable. *** Amounts shown for the SOUTHERN system are weighted averages of the operating affiliates and SEGCO. See SELECTED FINANCIAL DATA in Item 6 herein for each registrant's source of energy supply.
As of February 13, 1998, the operating affiliates and SEGCO had stockpiles of coal on hand at their respective coal-fired plants which represented an estimated 23 days of recoverable supply for bituminous coal and 27 days for sub-bituminous coal. It is estimated that approximately 66.6 million tons of coal will be consumed in 1998 by the operating affiliates and SEGCO (including those units GEORGIA owns jointly with OPC, MEAG and Dalton and operates for FP&L and JEA and the units ALABAMA owns jointly with AEC). The operating affiliates and SEGCO currently have 31 coal contracts. These contracts cover remaining terms of up to 14 years. Approximately 16% of 1998 estimated coal requirements will be purchased in the spot market. Management has set a goal whereby the spot market should be utilized, absent the transition from coal contract expirations, for 20 to 30% of the SOUTHERN system's coal supply. Additionally, it has been determined that approximately 30 days of recoverable supply is the appropriate level for coal stockpiles. During 1997, the operating affiliates' and SEGCO's average price of coal delivered was approximately $36.8 per ton.
The typical sulfur content of coal purchased under contracts ranges from
approximately 0.49% to 2.76% sulfur by weight. Fuel sulfur restrictions and
other environmental limitations have increased significantly and may increase
further the difficulty and cost of obtaining an adequate coal supply. See Item 1
- BUSINESS - "Regulation - Environmental Regulation" herein.
Changes in fuel prices are generally reflected in fuel adjustment clauses contained in rate schedules. See Item 1 - BUSINESS -"Rate Matters - Rate Structure" herein.
ALABAMA owns coal lands and mineral rights in the Warrior Coal Field, located northwest of Birmingham in the vicinity of its Gorgas Steam Plant. SEGCO also owns coal reserves in the Warrior Coal Field and in the Cahaba Coal Field, which is located southwest of Birmingham. ALABAMA has agreements with non-affiliated industrial and mining firms to mine coal from ALABAMA's reserves, as well as their own reserves, for supply to ALABAMA's generating units.
The operating affiliates have renegotiated, bought out or otherwise terminated various coal supply contracts. For more information on certain of these transactions, see Note 5 to the financial statements of GULF in Item 8 herein.
ALABAMA and GEORGIA have numerous contracts covering a portion of their nuclear fuel needs for uranium, conversion services, enrichment services and fuel fabrication. These contracts have varying expiration dates and most are short to medium term (less than 10 years). Management believes that sufficient capacity for nuclear fuel supplies and processing exists to preclude the impairment of normal operations of the SOUTHERN system's nuclear generating units.
ALABAMA and GEORGIA have contracts with the DOE that provide for the permanent disposal of spent nuclear fuel. Although disposal was scheduled to begin in 1998, the actual year this service will begin is uncertain. Sufficient storage capacity currently is available to permit operation into 2003 at Plant Hatch, into 2008 at Plant Vogtle, and into 2010 and 2013 at Plant Farley units 1 and 2, respectively. Activities for adding dry cask storage capacity at Plant Hatch by as early as 1999 are in progress.
The Energy Act imposed upon utilities with nuclear plants, including ALABAMA and GEORGIA, obligations for the decontamination and decommissioning of federal nuclear fuel enrichment facilities. See Note 1 to SOUTHERN's, ALABAMA's and GEORGIA's financial statements in Item 8 herein.
Territory Served By Operating Affiliates
The territory in which the operating affiliates provide electric service comprises most of the states of Alabama and Georgia together with the northwestern portion of Florida and southeastern Mississippi. In this territory there are non-affiliated electric distribution systems which obtain some or all of their power requirements either directly or indirectly from the operating affiliates. The territory has an area of approximately 120,000 square miles and an estimated population of approximately 11 million.
ALABAMA is engaged, within the State of Alabama, in the generation and purchase of electricity and the distribution and sale of such electricity at retail in over 1,000 communities (including Anniston, Birmingham, Gadsden,
Mobile, Montgomery and Tuscaloosa) and at wholesale to 15 municipally-owned electric distribution systems, 11 of which are served indirectly through sales to AMEA, and two rural distributing cooperative associations. ALABAMA also supplies steam service in downtown Birmingham. ALABAMA owns coal reserves near its steam-electric generating plant at Gorgas and uses the output of coal from these reserves in some of its generating plants. ALABAMA also sells, and cooperates with dealers in promoting the sale of, electric appliances.
GEORGIA is engaged in the generation and purchase of electricity and the distribution and sale of such electricity within the State of Georgia at retail in over 600 communities (including Athens, Atlanta, Augusta, Columbus, Macon, Rome and Valdosta), as well as in rural areas, and at wholesale currently to 39 electric cooperative associations through a power supply arrangement with OPC, a corporate cooperative of electric membership cooperatives in Georgia, and to 50 municipalities, 48 of which are served through a power supply arrangement with MEAG, a public corporation and an instrumentality of the State of Georgia.
GULF is engaged, within the northwestern portion of Florida, in the generation and purchase of electricity and the distribution and sale of such electricity at retail in 71 communities (including Pensacola, Panama City and Fort Walton Beach), as well as in rural areas, and at wholesale to a non-affiliated utility and a municipality. GULF also sells electric appliances.
MISSISSIPPI is engaged in the generation and purchase of electricity and the distribution and sale of such energy within the 23 counties of southeastern Mississippi, at retail in 123 communities (including Biloxi, Gulfport, Hattiesburg, Laurel, Meridian and Pascagoula), as well as in rural areas, and at wholesale to one municipality, six rural electric distribution cooperative associations and one generating and transmitting cooperative.
SAVANNAH is engaged, within a five-county area in eastern Georgia, in the generation and purchase of electricity and the distribution and sale of such electricity at retail and, as a member of the SOUTHERN system power pool, the transmission and sale of wholesale energy.
For information relating to kilowatt-hour sales by classification for each registrant, reference is made to "Management's Discussion and Analysis-Revenues" in Item 7 herein. Also, for information relating to the sources of revenues for the Southern system and each of the operating affiliates, reference is made to Item 6 herein.
A portion of the area served by SOUTHERN's operating affiliates adjoins the area served by TVA and its municipal and cooperative distributors. An Act of Congress limits the distribution of TVA power, unless otherwise authorized by Congress, to specified areas or customers which generally were those served on July 1, 1957.
The RUS has authority to make loans to cooperative associations or corporations to enable them to provide electric service to customers in rural sections of the country. There are 71 electric cooperative organizations operating in the territory in which the operating affiliates provide electric service at retail or wholesale.
One of these, AEC, is a generating and transmitting cooperative selling power to several distributing cooperatives, municipal systems and other customers in south Alabama and northwest Florida. AEC owns generating units with approximately 840 megawatts of nameplate capacity, including an undivided ownership interest in ALABAMA's Plant Miller Units 1 and 2. AEC's facilities were financed with RUS loans secured by long-term contracts requiring distributing cooperatives to take their requirements from AEC to the extent such energy is available. Two of the 14 distributing cooperatives operating in ALABAMA's service territory obtain a portion of their power requirements directly from ALABAMA.
Four electric cooperative associations, financed by the RUS, operate within GULF's service area. These cooperatives purchase their full requirements from AEC and SEPA. A non-affiliated utility also operates within GULF's service area and purchases a portion of its requirements from GULF.
ALABAMA and GULF have entered into separate agreements with AEC involving interconnection between the respective systems and, in the case of ALABAMA, the delivery of capacity and energy from AEC to certain distributing cooperatives.
The rates for the various services provided by ALABAMA and GULF to AEC are based on formulary approaches which result in the charges by each company being updated annually, subject to FERC approval. See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein for details of ALABAMA's joint-ownership with AEC of a portion of Plant Miller.
Another of the 71 electric cooperatives is SMEPA, also a generating and transmitting cooperative. SMEPA has a generating capacity of 739,000 kilowatts and a transmission system estimated to be 1,357 miles in length. MISSISSIPPI has an interchange agreement with SMEPA pursuant to which various services are provided, including the furnishing of protective capacity by MISSISSIPPI to SMEPA.
There are 43 electric cooperative organizations operating in, or in areas adjoining, territory in the State of Georgia in which GEORGIA provides electric service at retail or wholesale. Three of these organizations obtain their power from TVA and one from other sources. Since July 1, 1975, OPC has supplied the requirements of the remaining 39 of these cooperative organizations from self-owned generation acquired from GEORGIA and, until September 1991, through partial requirements purchases from GEORGIA. GEORGIA entered into an agreement with OPC pursuant to which, effective in September 1991, OPC ceased to be a partial requirements wholesale customer of GEORGIA. Instead, OPC began the purchase of 1,250 megawatts of capacity from GEORGIA through 1999, subject to reduction or extension by OPC, and may satisfy the balance of its needs through purchases from others. OPC decreased its purchases of capacity by 250 megawatts each in September 1996 and 1997 and has notified GEORGIA of its intent to decrease purchases of capacity by an additional 250 megawatts in September 1998 and 1999. Under the amended 1995 Integrated Resource Plan approved by the Georgia PSC in March 1997, the resources associated with the decreased purchases in 1996, 1997 and 1998 will be used to meet the needs of GEORGIA's retail customers through 2004.
There are 65 municipally-owned electric distribution systems operating in the territory in which SOUTHERN's operating affiliates provide electric service at retail or wholesale.
AMEA was organized under an act of the Alabama legislature and is comprised of 11 municipalities. In 1986, ALABAMA entered into a firm power purchase contract with AMEA entitling AMEA to scheduled amounts of capacity (to a maximum of 100 megawatts) for a period of 15 years commencing September 1, 1986. In October 1991, ALABAMA entered into a second firm power purchase contract with AMEA entitling AMEA to scheduled amounts of additional capacity (to a maximum 80 megawatts) for a period of 15 years commencing October 1, 1991. In both contracts the power will be sold to AMEA for its member municipalities that previously were served directly by ALABAMA as wholesale customers. Under the terms of the contracts, ALABAMA received payments from AMEA representing the net present value of the revenues associated with the respective capacity entitlements. See Note 7 to ALABAMA's financial statements in Item 8 herein for further information on these contracts.
Forty-seven municipally-owned electric distribution systems and one
county-owned system receive their requirements through MEAG, which was
established by a state statute in 1975. MEAG serves these requirements from
self-owned generation facilities acquired from GEORGIA and purchases from
others. In August 1997, a new power supply contract was implemented between
GEORGIA and MEAG that replaced the partial requirements tariff pursuant to which
GEORGIA previously sold wholesale energy to MEAG. Since 1977 Dalton has filled
its requirements from generation facilities acquired from GEORGIA and through
partial requirements purchases. One municipally-owned electric distribution
system's full requirements are served under a market-based contract by GEORGIA.
(See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein.)
GULF and MISSISSIPPI provide wholesale requirements for one municipal system each.
GEORGIA has entered into substantially similar agreements with Georgia Transmission Corporation (formerly OPC's transmission division), MEAG and Dalton providing for the establishment of an integrated transmission system to carry the power and energy of each. The agreements require an investment by each party in the integrated transmission system in proportion to its respective share of the aggregate system load. (See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein.)
SCS, acting on behalf of ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH, also has a contract with SEPA (a federal power marketing agency) providing for the use of those companies' facilities at government expense to deliver to certain cooperatives and municipalities, entitled by federal statute to preference in the purchase of power from SEPA, quantities of power equivalent to the amounts of power allocated to them by SEPA from certain United States Government hydroelectric projects.
The retail service rights of all electric suppliers in the State of Georgia are regulated by the 1973 State Territorial Electric Service Act. Pursuant to the provisions of this Act, all areas within existing municipal limits were assigned to the primary electric supplier therein on March 29, 1973 (451 municipalities, including Atlanta, Columbus, Macon, Augusta, Athens, Rome and Valdosta, to GEORGIA; 115 to electric cooperatives; and 50 to publicly-owned systems). Areas outside of such municipal limits were either to be assigned or to be declared open for customer choice of supplier by action of the Georgia PSC pursuant to standards set forth in the Act. Consistent with such standards, the Georgia PSC has assigned substantially all of the land area in the state to a supplier. Notwithstanding such assignments, the Act provides that any new customer locating outside of 1973 municipal limits and having a connected load of at least 900 kilowatts may receive electric service from the supplier of its choice. (See also Item 1 - BUSINESS - "Competition" herein.)
Under and subject to the provisions of its franchises and concessions and the 1973 State Territorial Electric Service Act, SAVANNAH has the full but nonexclusive right to serve the City of Savannah, the Towns of Bloomingdale, Pooler, Garden City, Guyton, Newington, Oliver, Port Wentworth, Rincon, Tybee Island, Springfield, Thunderbolt, Vernonburg, and in conjunction with a secondary supplier, the Town of Richmond Hill. In addition, SAVANNAH has been assigned certain unincorporated areas in Chatham, Effingham, Bryan, Bulloch and Screven Counties by the Georgia PSC. (See also Item 1 - BUSINESS - "Competition" herein.)
Pursuant to the 1956 Utility Act, the Mississippi PSC issued "Grandfather Certificates" of public convenience and necessity to MISSISSIPPI and to six distribution rural cooperatives operating in southeastern Mississippi, then served in whole or in part by MISSISSIPPI, authorizing them to distribute electricity in certain specified geographically described areas of the state. The six cooperatives serve approximately 300,000 retail customers in a certificated area of approximately 10,300 square miles. In areas included in a "Grandfather Certificate," the utility holding such certificate may, without further certification, extend its lines up to five miles; other extensions within that area by such utility, or by other utilities, may not be made except upon a showing of, and a grant of a certificate of, public convenience and necessity. Areas included in such a certificate which are subsequently annexed to municipalities may continue to be served by the holder of the certificate, irrespective of whether it has a franchise in the annexing municipality. On the other hand, the holder of the municipal franchise may not extend service into such newly annexed area without authorization by the Mississippi PSC.
Long-Term Power Sales Agreements
Reference is made to Note 7 to the financial statements for SOUTHERN, ALABAMA, GEORGIA, GULF and MISSISSIPPI in Item 8 herein for information regarding contracts for the sales of capacity and energy to non-territorial customers.
Competition
The electric utility industry in the United States is currently undergoing a period of dramatic change as a result of regulatory and competitive factors. Among the primary agents of change has been the Energy Policy Act of 1992 (Energy Act). The Energy Act allows independent power producers (IPPs) to access a utility's transmission network in order to sell electricity to other utilities. This enhances the incentive for IPPs to build cogeneration plants for a utility's large industrial and commercial customers, and sell energy generation to other utilities. Also, electricity sales for resale rates are being driven down by wholesale transmission access and numerous potential new energy suppliers, including power marketers and brokers. SOUTHERN is
aggressively working to maintain and expand its share of wholesale sales in the Southeastern power markets.
Although the Energy Act does not permit retail customer access, it was a major catalyst for the current restructuring and consolidation taking place within the utility industry. Numerous federal and state initiatives are in varying stages to promote wholesale and retail competition. Among other things, these initiatives allow customers to choose their electricity provider. As these initiatives materialize, the structure of the utility industry could radically change. Some states have approved initiatives that result in a separation of the ownership and/or operation of generating facilities from the ownership and/or operation of transmission and distribution facilities. While various restructuring and competition initiatives have been or are being discussed in Alabama, Florida, Georgia, and Mississippi, none have been enacted to date. Enactment would require numerous issues to be resolved, including significant ones relating to transmission pricing and recovery of any stranded investments. The inability of an operating company to recover its investments, including the regulatory assets described in Note 1 to each registrant's respective financial statements, could have a material adverse effect on the financial condition of that operating company. The operating companies are attempting to minimize or reduce their cost exposure. Reference is made to Note 3 to the financial statements for SOUTHERN for information regarding these efforts.
Continuing to be a low-cost producer could provide opportunities to increase market share and profitability in markets that evolve with changing regulation. Conversely, unless SOUTHERN remains a low-cost producer and provides quality service, the company's retail energy sales growth could be limited, and this could significantly erode earnings. Reference is made to each registrant's "Management's Discussion and Analysis - Future Earnings Potential" in Item 7 herein for further discussion of competition.
In order to adapt to a less regulated, more competitive environment,
SOUTHERN continues to evaluate and consider a wide array of potential business
strategies. These strategies may include business combinations, acquisitions
involving other utility or non-utility businesses or properties, internal
restructuring, disposition of certain assets, or some combination thereof.
Furthermore, SOUTHERN may engage in other new business ventures that arise from
competitive and regulatory changes in the utility industry. Pursuit of any of
the above strategies, or any combination thereof, may significantly affect the
business operations and financial condition of SOUTHERN. (See Item 1 - BUSINESS
- "Non-Traditional Business" herein.)
As a result of the foregoing factors, SOUTHERN has experienced increasing competition for available off-system sales of capacity and energy from neighboring utilities and alternative sources of energy. Additionally, the future effect of cogeneration and small-power production facilities on the SOUTHERN system cannot currently be determined but may be adverse.
ALABAMA currently has cogeneration contracts in effect with nine industrial customers. Under the terms of these contracts, ALABAMA purchases excess generation of such companies. During 1997, ALABAMA purchased approximately 57 million kilowatt-hours from such companies at a cost of $1.0 million.
GEORGIA currently has cogeneration contracts in effect with six industrial customers. Under the terms of these contracts, GEORGIA purchases excess generation of such companies. During 1997, GEORGIA purchased 5.3 million kilowatt-hours from such companies at a cost of $117,304. GEORGIA has entered into a 30-year purchase power agreement, scheduled to begin in June 1998, for electricity from a 300-megawatt cogeneration facility. Payments are subject to reductions for failure to meet minimum capacity output. Reference is made to Note 4 to the financial statements for GEORGIA in Item 8 herein for information regarding purchase power commitments.
GULF currently has cogeneration agreements for "as available" energy in effect with two industrial customers. During 1997, GULF purchased 98 million kilowatt-hours from such companies for $2 million.
MISSISSIPPI entered into agreements to purchase options for summer peaking power for the years 1997 through 2000. Also, the Company has purchased options from power marketers. Reference is made to Note 5 to the financial statements for MISSISSIPPI in Item 8 herein for information regarding fuel and purchased power commitments.
SAVANNAH currently has cogeneration contracts in effect with five industrial customers. Under the terms of these contracts, SAVANNAH purchases excess generation of such companies. During 1997, SAVANNAH purchased 1 million kilowatt-hours from such companies at a cost of $19,000.
The competition for retail energy sales among competing suppliers of energy is influenced by various factors, including price, availability, technological advancements and reliability. These factors are, in turn, affected by, among other influences, regulatory, political and environmental considerations, taxation and supply.
The operating affiliates have experienced, and expect to continue to experience, competition in their respective retail service territories in varying degrees as the result of self-generation (as described above) and fuel switching by customers and other factors. (See also Item 1 - BUSINESS - "Territory Served By Operating Affiliates" herein for information concerning suppliers of electricity operating within or near the areas served at retail by the operating affiliates.)
Regulation
State Commissions
The operating affiliates and SEGCO are subject to the jurisdiction of their respective state regulatory commissions, which have broad powers of supervision and regulation over public utilities operating in the respective states, including their rates, service regulations, sales of securities (except for the Mississippi PSC) and, in the cases of the Georgia PSC and Mississippi PSC, in part, retail service territories. (See Item 1 - BUSINESS - "Rate Matters" and "Territory Served By Operating Affiliates" herein.)
Holding Company Act
SOUTHERN is registered as a holding company under the Holding Company Act, and it and its subsidiary companies are subject to the regulatory provisions of said Act, including provisions relating to the issuance of securities, sales and acquisitions of securities and utility assets, services performed by SCS and Southern Nuclear, and the activities of certain of SOUTHERN's special purpose subsidiaries.
While various proposals have been introduced in Congress regarding the Holding Company Act, the prospects for legislative reform or repeal are uncertain at this time.
Federal Power Act
The Federal Power Act subjects the operating affiliates and SEGCO to regulation by the FERC as companies engaged in the transmission or sale at wholesale of electric energy in interstate commerce, including regulation of accounting policies and practices.
Reference is made to Note 3 to each registrant's financial statements (except SAVANNAH) in Item 8 herein for further information regarding FERC reviews of equity returns.
ALABAMA and GEORGIA are also subject to the provisions of the Federal Power Act or the earlier Federal Water Power Act applicable to licensees with respect to their hydroelectric developments. Among the hydroelectric projects subject to licensing by the FERC are 14 existing ALABAMA generating stations having an aggregate installed capacity of 1,582,725 kilowatts and 18 existing GEORGIA generating stations having an aggregate installed capacity of 1,074,696 kilowatts.
GEORGIA filed, in September, 1996, with the FERC, a notice of its intent to seek a new license for the Flint River Project. GEORGIA must file a new license by September 1999.
GEORGIA and OPC also have a license, expiring in 2027, for the Rocky Mountain Plant, a pure pumped storage facility of 847,800 kilowatt capacity which began commercial operation in 1995. (See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein and Note 3 to SOUTHERN's and GEORGIA's financial statements in Item 8 herein for additional information.)
Licenses for all projects, excluding those discussed above, expire in the period 2007-2023 in the case of ALABAMA's projects and in the period 2005-2036 in the case of GEORGIA's projects.
Upon or after the expiration of each license, the United States Government, by act of Congress, may take over the project, or the FERC may relicense the project either to the original licensee or to a new licensee. In the event of takeover or relicensing to another, the original licensee is to be compensated in accordance with the provisions of the Federal Power Act, such compensation to reflect the net investment of the licensee in the project, not in excess of the fair value of the property taken, plus reasonable damages to other property of the licensee resulting from the severance therefrom of the property taken.
Atomic Energy Act of 1954
ALABAMA, GEORGIA and Southern Nuclear are subject to the provisions of the Atomic Energy Act of 1954, as amended, which vests jurisdiction in the NRC over the construction and operation of nuclear reactors, particularly with regard to certain public health and safety and antitrust matters. The National Environmental Policy Act has been construed to expand the jurisdiction of the NRC to consider the environmental impact of a facility licensed under the Atomic Energy Act of 1954, as amended.
Reference is made to Notes 1 and 13 to SOUTHERN's, Notes 1 and 12 to ALABAMA's and Notes 1 and 5 to GEORGIA's financial statements in Item 8 herein for information on nuclear decommissioning costs and nuclear insurance. Additionally, Note 3 to GEORGIA's financial statements contains information regarding nuclear performance standards imposed by the Georgia PSC that may impact retail rates.
Environmental Regulation
The operating affiliates and SEGCO are subject to federal, state and local environmental requirements which, among other things, control emissions of particulates, sulfur dioxide and nitrogen oxides into the air; the use, transportation, storage and disposal of hazardous and toxic waste; and discharges of pollutants, including thermal discharges, into waters of the United States. The operating affiliates and SEGCO expect to comply with such requirements, which generally are becoming increasingly stringent, through technical improvements, the use of appropriate combinations of low-sulfur fuel and chemicals, addition of environmental control facilities, changes in control techniques and reduction of the operating levels of generating facilities. Failure to comply with such requirements could result in the complete shutdown of individual facilities not in compliance as well as the imposition of civil and criminal penalties.
Reference is made to each registrant's "Management's Discussion and Analysis" in Item 7 herein for a discussion of the Clean Air Act and other environmental legislation and proceedings.
Possible adverse health effects of EMFs from various sources, including transmission and distribution lines, have been the subject of a number of studies and increasing public discussion. The scientific research currently is inconclusive as to whether EMFs may cause adverse health effects. However, there is the possibility of passage of legislation and promulgation of rulemaking that would require measures to mitigate EMFs, with resulting increases in capital and operating costs. In addition, the potential exists for public liability with respect to lawsuits brought by plaintiffs alleging damages caused by EMFs.
The operating affiliates' and SEGCO's estimated capital expenditures for environmental quality control facilities for the years 1998, 1999 and 2000 are as follows: (in millions)
---------------- -- ------------ ------------ -----------
1998 1999 2000
------------ ------------ -----------
ALABAMA $18.3 $63.8 $19.6
GEORGIA 13.0 14.0 1.0
GULF 9.3 1.9 0.1
MISSISSIPPI 15.0 6.0 -
SAVANNAH - - -
SEGCO 0.7 7.6 0.5
------------ ------------ -----------
SOUTHERN
system $56.3 $93.3 $21.2
================ == ============ ============ ===========
|
*The foregoing estimates are included in the current construction programs.
(See Item 1 - BUSINESS - "Construction Programs" herein.)
Additionally, each operating affiliate and SEGCO have incurred costs for environmental remediation of various sites. Reference is made to each registrant's "Management's Discussion and Analysis" in Item 7 herein for information regarding the registrants' environmental remediation efforts. Also, see Note 3 to SOUTHERN's and GEORGIA's financial statements in Item 8 herein for
information regarding the identification of sites that may require environmental remediation by GEORGIA and Note 3 to MISSISSIPPI's financial statements in Item 8 herein for information regarding a site that may require environmental remediation by MISSISSIPPI.
The operating affiliates and SEGCO are unable to predict at this time what additional steps they may be required to take as a result of the implementation of existing or future quality control requirements for air, water and hazardous or toxic materials, but such steps could adversely affect system operations and result in substantial additional costs.
The outcome of the matters mentioned above under "Regulation" cannot now be determined, except that these developments may result in delays in obtaining appropriate licenses for generating facilities, increased construction and operating costs, or reduced generation, the nature and extent of which, while not determinable at this time, could be substantial.
Rate Matters
Rate Structure
The rates and service regulations of the operating affiliates are uniform for each class of service throughout their respective service areas. Rates for residential electric service are generally of the block type based upon kilowatt-hours used and include minimum charges.
Residential and other rates contain separate customer charges. Rates for commercial service are presently of the block type and, for large customers, the billing demand is generally used to determine capacity and minimum bill charges. These large customers' rates are generally based upon usage by the customer including those with special features to encourage off-peak usage. Additionally, the operating affiliates are allowed by their respective PSCs to negotiate the terms and compensation of service to large customers. Such terms and compensation of service, however, are subject to final PSC approval. ALABAMA and GEORGIA are allowed by state law to recover fuel and net purchased energy costs through fuel cost recovery provisions which are adjusted to reflect increases or decreases in such costs. GULF and SAVANNAH recover from retail customers fuel and net purchased power costs through provisions which are adjusted to reflect increases or decreases in such costs. GULF's recovery of fuel costs is based upon a projection for six-months - any over/under recovery during such period is reflected in a subsequent six-month period with interest. GULF's recovery of purchased power capacity costs is based upon an annual projection - any over/under recovery during such period is reflected in a subsequent annual period with interest. With respect to MISSISSIPPI's retail rates, fuel and purchased power costs above base levels included in the various rate schedules are billed to such customers under the fuel and energy adjustment clause. The adjustment factors for MISSISSIPPI's retail and wholesale rates are generally levelized based on the estimated energy cost for the year, adjusted for any actual over/under collection from the previous year. However, in January 1998, MISSISSIPPI received approval from the MPSC to change its Fuel Adjustment Clause and to levelize and fix its Fuel Adjustment Factors for January 1998 through December 2000. Revenues are adjusted for differences between recoverable fuel costs and amounts actually recovered in current rates.
Rate Proceedings
Reference is made to Note 3 to each registrant's financial statements in Item 8 herein for a discussion of rate matters. For each registrant (except SAVANNAH), such Note 3 includes a discussion of proceedings initiated by the FERC concerning the reasonableness of the Southern electric system's wholesale rate schedules and contracts that have a return on equity of 13.75% or greater.
For information regarding GEORGIA's Rocky Mountain Plant, including a joint ownership agreement with OPC and a January 14, 1998, GPSC order relating to the recovery of GEORGIA's costs in this plant, reference is made to Note 3 to SOUTHERN's and to GEORGIA's financial statements in Item 8 herein.
Integrated Resource Planning
In 1991, the Georgia legislature passed certain legislation under which both GEORGIA and SAVANNAH must file Integrated Resource Plans for approval by the Georgia PSC. The plans must specify how GEORGIA and SAVANNAH each intends to
meet the future electrical needs of their customers through a combination of demand-side and supply-side resources. The Georgia PSC must pre-certify these new resources. Once certified, all prudently incurred construction costs and purchased power costs will be recoverable through rates.
By orders issued in 1992 and by amended orders issued in 1995, the Georgia PSC approved Integrated Resource Plans for both GEORGIA and SAVANNAH.
In March 1997, the Georgia PSC approved amendments to GEORGIA's 1995 Integrated Resource Plan. Pursuant to the amended plan, the Georgia PSC certified a five-year purchase power agreement scheduled to begin in June 2000 for approximately 215 megawatts. Capacity and fixed operation and maintenance payments over the five-year period are estimated to be approximately $39 million.
The Florida PSC set conservation goals and approved programs to accomplish the goals beginning in 1995. The goals require conservation programs which reduce 154 megawatts of summer peak demand and 65 million kilowatt-hours of sales by the year 2004. For additional information, reference is made to GULF's "Management's Discussion and Analysis - Future Earnings Potential" in Item 7 herein.
Environmental Cost Recovery Plans
GULF and MISSISSIPPI both have retail rate mechanisms that provide for recovery of environmental compliance costs. For a description of these plans, see Note 3 to GULF's and MISSISSIPPI's financial statements in Item 8 herein.
Employee Relations
The companies of the SOUTHERN system had a total of 30,756 employees on their payrolls at December 31, 1997.
------------------------------ --- -------------------------
Employees
at
December 31, 1997
-------------------------
ALABAMA 6,531
GEORGIA 8,354
GULF 1,328
MISSISSIPPI 1,245
SAVANNAH 535
SCS 3,222
Southern Energy* 6,089
Southern Nuclear 3,070
Other 382
------------------------------ --- -------------------------
Total 30,756
============================== === =========================
|
*Includes 5,709 employees on international payrolls.
The operating affiliates have separate agreements with local unions of the IBEW generally covering wages, working conditions and procedures for handling grievances and arbitration. These agreements apply with certain exceptions to operating, maintenance and construction employees.
ALABAMA has agreements with the IBEW on a three-year contract extending to August 15, 1998. Upon notice given at least 60 days prior to that date, negotiations may be initiated with respect to agreement terms to be effective after such date.
GEORGIA has an agreement with the IBEW covering wages and working conditions, which is in effect through June 30, 1999.
GULF has an agreement with the IBEW on a three-year contract extending to August 15, 1998. Upon notice given at least 60 days prior to that date, negotiations may be initiated with respect to agreement terms to be effective after such date.
MISSISSIPPI has an agreement with the IBEW on a three-year contract extending to August 16, 1998. Upon notice given at least 60 days prior to that date, negotiations may be initiated with respect to agreement terms to be effective after such date.
SAVANNAH has three-year labor agreements with the IBEW and the Office and Professional Employees International Union that expire April 16, 1999 and December 1, 1999, respectively.
Southern Energy has a 5-year labor agreement with the IBEW extending to October 31, 2002, and the United Paperworkers International Union extending to June 1, 2002, covering employees of Mobile Energy. At its State Line facility in Hammond, Indiana, Southern Energy has a labor contract with the United Steel Workers that extends to January 1, 2004.
Southern Nuclear has agreements with the IBEW on separate three-year contracts extending to August 15, 1998 for Plant Farley and to July 1, 1999 for Plants Hatch and Vogtle. Upon notice given at least 60 days prior to these dates, negotiations may be initiated with respect to agreement terms to be effective after such dates.
Southern Nuclear also has an agreement with the United Plant Guard Workers of America for security officers at Plant Hatch extending to September 3, 1998. Upon notice given at least 60 days prior to that date, negotiations may be initiated with respect to agreement terms to be effective after such date.
The agreements also subject the terms of the pension plans for the companies discussed above to collective bargaining with the unions at five-year intervals.
Item 2. PROPERTIES
Electric Properties
The operating affiliates and SEGCO, at December 31, 1997, operated 33 hydroelectric generating stations, 32 fossil fuel generating stations and three nuclear generating stations. The amounts of capacity owned by each company are shown in the table below.
----------------------- -------------------------------------
Nameplate
Generating Station Location Capacity (1)
----------------------- ------------------- -----------------
(Kilowatts)
Fossil Steam
Gadsden Gadsden, AL 120,000
Gorgas Jasper, AL 1,221,250
Barry Mobile, AL 1,525,000
Chickasaw Chickasaw, AL 40,000
Greene County Demopolis, AL 300,000 (2)
Gaston Unit 5 Wilsonville, AL 880,000
Miller Birmingham, AL 2,532,288 (3)
---------
ALABAMA Total 6,618,538
---------
Arkwright Macon, GA 160,000
Atkinson Atlanta, GA 180,000
Bowen Cartersville, GA 3,160,000
Branch Milledgeville, GA 1,539,700
Hammond Rome, GA 800,000
McDonough Atlanta, GA 490,000
McManus Brunswick, GA 115,000
Mitchell Albany, GA 170,000
Scherer Macon, GA 750,924 (4)
Wansley Carrollton, GA 925,550 (5)
Yates Newnan, GA 1,250,000
---------
GEORGIA Total 9,541,174
---------
Crist Pensacola, FL 1,045,000
Lansing Smith Panama City, FL 305,000
Scholz Chattahoochee, FL 80,000
Daniel Pascagoula, MS 500,000 (6)
Scherer Unit 3 Macon, GA 204,500 (4)
-----------
GULF Total 2,134,500
---------
Eaton Hattiesburg, MS 67,500
Sweatt Meridian, MS 80,000
Watson Gulfport, MS 1,012,000
Daniel Pascagoula, MS 500,000 (6)
Greene County Demopolis, AL 200,000 (2)
-----------
MISSISSIPPI Total 1,859,500
-----------
|
----------------------- -----------------------------------------
Nameplate
Generating Station Location Capacity
-------------------- ------------------------- ------------------
(Kilowatts)
McIntosh Effingham County, GA 163,117
Kraft Port Wentworth, GA 281,136
Riverside Savannah, GA 102,278
-----------
SAVANNAH Total 546,531
-----------
Gaston Units 1-4 Wilsonville, AL
SEGCO Total 1,000,000 (7)
-----------
Total Fossil Steam 21,700,243
-----------
Nuclear Steam
Farley Dothan, AL
ALABAMA Total 1,720,000
-----------
Hatch Baxley, GA 862,669 (8)
Vogtle Augusta, GA 1,060,240 (9)
-----------
GEORGIA Total 1,922,909
----------
Total Nuclear Steam 3,642,909
-----------
Combustion Turbines
Greene County Demopolis, AL
ALABAMA Total 720,000
-----------
Arkwright Macon, GA 30,580
Atkinson Atlanta, GA 78,720
Bowen Cartersville, GA 39,400
Intercession City Intercession City, FL 47,333 (10)
McDonough Atlanta, GA 78,800
McIntosh
Units 1,2,3,4,7,8 Effingham County, GA 480,000
McManus Brunswick, GA 481,700
Mitchell Albany, GA 118,200
Robins Warner Robins, GA 160,000
Wilson Augusta, GA 354,100
Wansley Carrollton, GA 26,322 (5)
-----------
GEORGIA Total 1,895,155
---------
Lansing Smith
Unit A (GULF) Panama City, FL 39,400
Chevron Cogenerating
Station Pascagoula, MS 147,292 (11)
Sweatt Meridian, MS 39,400
Watson Gulfport, MS 39,360
---------
MISSISSIPPI Total 226,052
---------
Boulevard Savannah, GA 59,100
Kraft Port Wentworth, GA 22,000
McIntosh
Units 5&6 Effingham County, GA 160,000
SAVANNAH Total 241,100
----------------------------------------------- -----------------
I-18
|
------------------------- -------------------- -----------------
Nameplate
Generating Station Location Capacity
------------------------- -------------------- -----------------
(Kilowatts)
Gaston (SEGCO) Wilsonville, AL 19,680 (7)
Total Combustion Turbines 3,141,387
Hydroelectric Facilities
Weiss Leesburg, AL 87,750
Henry Ohatchee, AL 72,900
Logan Martin Vincent, AL 128,250
Lay Clanton, AL 177,000
Mitchell Verbena, AL 170,000
Jordan Wetumpka, AL 100,000
Bouldin Wetumpka, AL 225,000
Harris Wedowee, AL 135,000
Martin Dadeville, AL 154,200
Yates Tallassee, AL 32,000
Thurlow Tallassee, AL 58,000
Lewis Smith Jasper, AL 157,500
Bankhead Holt, AL 45,125
Holt Holt, AL 40,000
-----------
ALABAMA Total 1,582,725
----------
Barnett Shoals
(Leased) Athens, GA 2,800
Bartletts Ferry Columbus, GA 173,000
Goat Rock Columbus, GA 26,000
Lloyd Shoals Jackson, GA 14,400
Morgan Falls Atlanta, GA 16,800
North Highlands Columbus, GA 29,600
Oliver Dam Columbus, GA 60,000
Rocky Mountain Rome, GA 215,256 (12)
Sinclair Dam Milledgeville, GA 45,000
Tallulah Falls Clayton, GA 72,000
Terrora Clayton, GA 16,000
Tugalo Clayton, GA 45,000
Wallace Dam Eatonton, GA 321,300
Yonah Toccoa, GA 22,500
6 Other Plants 18,080
-----------
GEORGIA Total 1,077,736
----------
Total Hydroelectric Facilities 2,660,461
-----------
Total Generating Capacity 31,145,000
---------------------------------------------- -----------------
|
Notes:
(1) For additional information regarding facilities jointly-owned with
non-affiliated parties, see Item 2 - PROPERTIES -
"Jointly-Owned Facilities" herein.
(2) Owned by ALABAMA and MISSISSIPPI as
tenants in common in the proportions of 60% and 40%, respectively.
(3) Excludes the capacity owned by AEC.
(4) Capacity shown for GEORGIA is 8.4% of Units 1 and 2 and 75% of Unit 3.
Capacity shown for GULF is 25% of Unit 3.
(5) Capacity shown is GEORGIA's portion (53.5%) of total plant capacity.
(6) Represents 50% of the plant which is owned as tenants in common by
GULF and MISSISSIPPI.
(7) SEGCO is jointly-owned by ALABAMA and GEORGIA. (See Item 1 - BUSINESS
herein.)
(8) Capacity shown is GEORGIA's portion (50.1%) of total plant capacity.
(9) Capacity shown is GEORGIA's portion (45.7%) of total plant capacity.
(10) Capacity shown represents 33-1/3% of total plant capacity. GEORGIA
owns a 1/3 interest in the unit with 100% use of the
unit from June through September. FPC operates the unit.
(11) Generation is dedicated to a single industrial customer.
(12) Capacity shown is GEORGIA's portion (25.4%) of total plant capacity.
OPC operates the plant.
Except as discussed below under "Titles to Property," the principal plants and other important units of the operating affiliates and SEGCO are owned in fee by the respective companies. It is the opinion of management of each such company that its operating properties are adequately maintained and are substantially in good operating condition.
MISSISSIPPI owns a 79-mile length of 500-kilovolt transmission line which is leased to Entergy Gulf States. The line, completed in 1984, extends from Plant Daniel to the Louisiana state line. Entergy Gulf States is paying a use fee over a forty-year period covering all expenses and the amortization of the original $57 million cost of the line. At December 31, 1997, the unamortized portion of this cost was $38 million.
The all-time maximum demand on the operating affiliates and SEGCO was 27,419,700 kilowatts and occurred in August 1995. This amount excludes demand served by capacity retained by MEAG and Dalton and excludes demand associated with power purchased from OPC and SEPA by its preference customers. At that time, 29,596,100 kilowatts were supplied by SOUTHERN system generation and 2,176,400 kilowatts (net) were sold to other parties through net purchased and interchanged power. The reserve margin for the operating affiliates and SEGCO at
that time was 9.4%. For additional information on peak demands, reference is made to Item 6 - SELECTED FINANCIAL DATA herein.
ALABAMA and GEORGIA will incur significant costs in decommissioning their nuclear units at the end of their useful lives. (See Item 1 - BUSINESS "Regulation - Atomic Energy Act of 1954" and Note 1 to SOUTHERN's, ALABAMA's and GEORGIA's financial statements in Item 8 herein.)
Other Electric Generation Facilities
Through special purpose subsidiaries, SOUTHERN owns interests in or operates independent power production facilities and foreign utility companies. The generating capacity of these utilities (or facilities) at December 31, 1997, was as follows:
Facilities in Operation
-------------------------------------------------------------------------------------------------------------------------------
Megawatts of Capacity Percent
Facility Location Units Owned Operated Ownership Type
------------------- --------------------------- --------- ------------ ------------------------------------------------------
Alicura Argentina 4 551 (1) 1,000 55.14 (1) Hydro
BEWAG Germany 18 443 1,702 26.00 Coal
BEWAG Germany 17 375 1,444 26.00 Oil & Gas
Birchwood Virginia 1 111 222 50.00 Coal (2)
CEPA China 3 634 - (3) 32.00 Coal
CEPA Philippines 2 641 735 87.22 Coal
CEPA Philippines 3 126 210 60.10 Oil
CEPA Philippines 13 381 381 100.00 Oil
Edelnor Chile 1 111 166 67.00 Coal
Edelnor Chile 37 77 115 67.00 Oil
Edelnor Chile 2 7 10 67.00 Hydro
Freeport Grand Bahamas 8 80 127 62.50 Oil & Gas
UDG-Niagara New York 1 - 50 - Coal (2)
Mobile Energy Alabama 3 111 111 100.00 Waste/Biomass (2)
Penal Trinidad and Tobago 5 92 236 39.00 Gas
Port of Spain Trinidad and Tobago 6 120 308 39.00 Gas
Pt. Lisas Trinidad and Tobago 10 247 634 39.00 Gas
State Line Indiana 2 490 490 100.00 Coal
SWEB United Kingdom 8 144 - (3) 7.69 Gas
SWEB United Kingdom 12 15 15 100.00 Oil & Gas
SWEB United Kingdom 3 7 - (3) 38.00 Wind
SWEB United Kingdom 3 1 - 25.00 Landfill Gas
==========================================================================================================================
Total Capacity 4,764 7,942 (3)
===========================================================================================================================
Notes: (1) Represents megawatts of capacity under a concession agreement expiring in the year 2023.
(2) Cogeneration facility.
(3) Does not include Shajiao C (1,980 MW) or UK power plants (150 MW) that are partially owned but not operated by
CEPA and SWEB, respectively.
|
Facilities Under Development
-------------------------------------------------------------------------------------------------------------------------------
Megawatts of Capacity Percent
Facility Location Own Operate Ownership Type
------------------- --------------------------- ------------ ------------------------------ -----------------------
CEPA Philippines 1,200* 1,200 92.00 Coal
Edelnor Chile 104 160 67.00 Coal
-------------------------------------------------------------------------------------------------------------------------------
Total Capacity 1,304 1,360
===============================================================================================================================
* Percentage owned will ultimately be 91.91% upon completion, with the owned capacity reduced to 1,103 MW.
|
Jointly-Owned Facilities
ALABAMA and GEORGIA have sold and GEORGIA has purchased undivided interests in certain generating plants and other related facilities to or from non-affiliated parties. The percentages of ownership resulting from these transactions are as follows:
Percentage Ownership
Total ---------------- -------- ------------ -------- --------- ------------ --------
Capacity ALABAMA AEC GEORGIA OPC MEAG DALTON FPC
-------------- ---------------- -------- ------------ -------- --------- ------------ --------
(Megawatts)
Plant Miller
Units 1 and 2 1,320 91.8% 8.2% -% -% -% -% -%
Plant Hatch 1,722 - - 50.1 30.0 17.7 2.2 -
Plant Vogtle 2,320 - - 45.7 30.0 22.7 1.6 -
Plant Scherer
Units 1 and 2 1,636 - - 8.4 60.0 30.2 1.4 -
Plant Wansley 1,779 - - 53.5 30.0 15.1 1.4 -
Rocky Mountain 848 - - 25.4 74.6 - - -
Intercession City, FL 142 - - 33.3 - - - 66.7
--------------------------- -------------- -- ---------------- -------- ------------ -------- --------- ------------ --------
|
ALABAMA and GEORGIA have contracted to operate and maintain the respective units in which each has an interest (other than Rocky Mountain and Intercession City, as described below) as agent for the joint owners.
In connection with the joint ownership arrangements for Plant Vogtle, GEORGIA made commitments to purchase portions of OPC's and MEAG's capacity and energy from this plant. Declining commitments were in effect during periods of up to seven years following commercial operation and ended in 1996. In addition, the Company has commitments regarding a portion of a 5 percent interest in Plant Vogtle owned by MEAG that are in effect until the later of retirement of the plant or the latest stated maturity date of MEAG's bonds issued to finance such ownership interest. The payments for capacity are required whether any capacity is available. The energy cost is a function of each unit's variable operating costs. Except for the portion of the capacity payments related to the 1987 and 1990 write-offs of Plant Vogtle costs, the cost of such capacity and energy is included in purchased power from non-affiliates in GEORGIA's Statements of Income in Item 8 herein.
In December 1988, GEORGIA and OPC entered into a joint ownership agreement for the Rocky Mountain plant under which GEORGIA agreed to retain its present investment in the project and OPC agreed to finance, complete and operate the facility. In 1995, the plant went into commercial operation. GEORGIA's ownership is 25.4 percent. On January 14, 1998, the GPSC ordered that the Company be allowed approximately $108 million of its $143 million investment in the plant in rate base as of December 31, 1998. GEORGIA has appealed the GPSC's order. If
such order is ultimately upheld, GEORGIA will be required to record a charge to earnings currently estimated at approximately $29 million, after taxes. Reference is made to Note 3 to SOUTHERN's and GEORGIA's financial statements in Item 8 herein for additional information regarding the Rocky Mountain plant.
In 1994, GEORGIA and FPC entered into a joint ownership agreement regarding the Intercession City combustion turbine unit. The unit began commercial operation in January 1997, and is operated by FPC. GEORGIA owns a one-third interest in the unit, with use of 100% of the capacity from June through September. FPC has the capacity the remainder of the year.
Sale of Property
Reference is made to Note 6 to GEORGIA's financial statements in Item 8 herein for information regarding the sale completed in 1995 of GEORGIA's remaining ownership interest in Plant Scherer Unit 4.
Titles to Property
The operating affiliates' and SEGCO's interests in the principal plants (other than certain pollution control facilities, one small hydroelectric generating station leased by GEORGIA and the land on which five combustion turbine generators of MISSISSIPPI are located, which is held by easement) and other important units of the respective companies are owned in fee by such companies, subject only to the liens of applicable mortgage indentures (except for SEGCO) and to excepted encumbrances as defined therein. The operating affiliates own the fee interests in certain of their principal plants as tenants in common. (See Item 2 - PROPERTIES - "Jointly-Owned Facilities" herein.) Properties such as electric transmission and distribution lines and steam heating mains are constructed principally on rights-of-way which are maintained under franchise or are held by easement only. A substantial portion of lands submerged by reservoirs is held under flood right easements. In substantially all of its coal reserve lands, SEGCO owns or will own the coal only, with adequate rights for the mining and removal thereof.
Property Additions and Retirements
During the period from January 1, 1993 to December 31, 1997, the operating affiliates, SEGCO, SCS, Southern Nuclear, Southern Communications and Southern Energy recorded gross property additions and retirements as follows:
----------------------- ------------------- --- ----------
Gross Property
Additions Retirements
--------------- -------------
(in millions)
ALABAMA $2,402 $ 415
GEORGIA (1) 2,697 1,534
GULF 336 138
MISSISSIPPI 428 91
SAVANNAH 178 17
SEGCO 29 8
SCS 99 131
Southern Nuclear 6 7
Southern
Communications 246 -
Southern Energy 1,039 38
Other 6 -
==========================================================
SOUTHERN system $7,466 $2,379
==========================================================
|
Notes:
(1) Includes approximately $446 million attributable to 1993 through 1997
sales of Plant Scherer Unit 4 to FP&L and JEA.
Item 3. LEGAL PROCEEDINGS
(1) SOUTHERN and Subsidiaries v. Commissioner of the IRS
(U.S. Tax Court)
Reference is made to Note 3 to SOUTHERN's, ALABAMA's, and GEORGIA's financial statements in Item 8 herein under the captions "Southern Company Tax Litigation", "Tax Litigation", and "Tax Litigation", respectively.
(2) Frost v. ALABAMA
(Circuit Court of Jefferson County, Alabama)
Reference is made to Note 3 to SOUTHERN's and ALABAMA's financial statements in Item 8 herein under the captions "Alabama Power Appliance Warranty Litigation" and "Appliance Warranty Litigation", respectively.
(3) GEORGIA has been designated as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act with respect to a site in Brunswick, Georgia.
Reference is made to Note 3 to SOUTHERN's and GEORGIA's financial statements in Item 8 herein under the captions "Georgia Power Potentially Responsible Party Status" and "Certain Environmental Contingencies," respectively.
See Item 1 - BUSINESS - "Construction Programs," "Fuel Supply," "Regulation
- Federal Power Act" and "Rate Matters" as well as Note 3 to each registrant's
financial statements in Item 8 herein for a description of certain other
administrative and legal proceedings discussed therein.
Additionally, each of the operating affiliates, Southern Energy, SCS, Southern Nuclear, Energy Solutions and Southern Communications are, in the normal course of business, engaged in litigation or administrative proceedings that include, but are not limited to, acquisition of property, injuries and damages claims, and complaints by present and former employees.
Item 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
ALABAMA, GEORGIA, GULF AND MISSISSIPPI each held special meetings of their shareholders on December 10, 1997, for the purpose of amending their respective charters. The amendments eliminate restrictions on each of these registrant's ability to (1) issue unsecured indebtedness, (2) sell assets, merge or consolidate without preferred shareholder approval under certain circumstances, and (3) pay dividends on common stock.
The vote in connection with such matters was as follows:
FOR ABSTAINED from or AGAINST
ALABAMA 2,373,283 85,507
GEORGIA 2,601,807 52,487
GULF 437,296 5,394
MISSISSIPPI 328,961 16,340
|
EXECUTIVE OFFICERS OF SOUTHERN
(Identification of executive officers of SOUTHERN is inserted in Part I in accordance with Regulation S-K, Item 401(b), Instruction 3.) The ages of the officers set forth below are as of December 31, 1997.
A. W. Dahlberg
Chairman, President and Chief Executive Officer
Age 57
Elected in 1985; President and Chief Executive
Officer of GEORGIA from 1988 through 1993. He was elected President of SOUTHERN
effective January 1994. He was elected Chairman and Chief Executive Officer
effective March 1995.
Paul J. DeNicola
Executive Vice President and Director
Age 49
Elected in 1989; Executive Vice President of SOUTHERN since 1991. Elected
President and Chief Executive Officer of SCS effective January 1994. He
previously served as Executive Vice President of SCS from 1991 to 1993.
H. Allen Franklin
Executive Vice President and Director
Age 53
Elected in 1988; President and Chief Executive Officer
of SCS from 1988 through 1993 and, beginning 1991, Executive Vice President of
SOUTHERN. He was elected President and Chief Executive Officer of GEORGIA
effective January 1994.
Elmer B. Harris
Executive Vice President and Director
Age 58
Elected in 1989; President and Chief Executive Officer
of ALABAMA since 1989 and, beginning 1991, Executive Vice President of SOUTHERN.
David M. Ratcliffe
Senior Vice President
Age 49
Elected in 1995; President and Chief Executive Officer of MISSISSIPPI from 1991
to 1995. He also serves as Executive Vice President of SCS beginning in 1995.
Effective March 1, 1998, elected Executive Vice President and Treasurer of
GEORGIA.
W. L. Westbrook
Financial Vice President, Chief Financial Officer and Treasurer
Age 58
Elected in 1986; responsible primarily for all aspects of financing for
SOUTHERN. He has served as Executive Vice President of SCS since 1986.
Thomas G. Boren
Vice President
Age 48
Elected in 1995; President and Chief Executive Officer of Southern Energy since
1992.
Bill M. Guthrie
Vice President
Age 64
Elected in 1991; serves as Chief Production Officer for the SOUTHERN system.
Senior Executive Vice President of SCS effective January 1994 and Executive Vice
President of ALABAMA since 1988. He also serves as Executive Vice President of
GEORGIA and Vice President of GULF, MISSISSIPPI and SAVANNAH.
W. G. Hairston, III
Age 53
President and Chief Executive Officer of Southern Nuclear since 1993. He
previously served as Executive Vice President of GEORGIA from 1989 to March
1997.
Stephen A. Wakefield
Senior Vice President and General Counsel
Age 57
Elected in 1997. Previously, he was a partner at the firm of Akin, Gump,
Strauss, Hauer & Feld, LLP from July 1991 through August 10, 1997.
Each of the above is currently an officer of SOUTHERN, serving a term running from the last annual meeting of the directors (May 28, 1997) for one year until the next annual meeting or until his successor is elected and qualified, except for Mr.Wakefield who was elected on August 11, 1997.
PART II
Item 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The common stock of SOUTHERN is listed and traded on the New York Stock Exchange. The stock is also traded on regional exchanges across the United States. High and low stock prices, per the New York Stock Exchange Composite Tape during each quarter for the past two years were as follows:
---------------------- ----------- --------- --------
High Low
----------- --------
1997
First Quarter $23-3/8 $20-3/4
Second Quarter 22-1/4 19-7/8
Third Quarter 23 20-13/16
Fourth Quarter 26-1/4 22
1996
First Quarter $25-7/8 $22-3/8
Second Quarter 24-5/8 21-1/4
Third Quarter 24-5/8 21-3/4
Fourth Quarter 23-1/8 21-1/8
------------------ --------------- --- --------------
|
There is no market for the other registrants' common stock, all of which is owned by SOUTHERN. On February 28, 1998, the closing price of SOUTHERN's common stock was $24.6875.
(b) Number of SOUTHERN's common stockholders at December 31, 1997:
200,508
Each of the other registrants have one common stockholder, SOUTHERN.
(c) Dividends on each registrant's common stock are payable at the discretion of their respective board of directors. The dividends on common stock paid and/or declared by SOUTHERN and the operating affiliates to their stockholder(s) for the past two years were as follows: (in thousands)
----------------- --------- ------------- ----------
Registrant Quarter 1997 1996
----------------- --------- ------------- ----------
SOUTHERN First $220,194 $211,081
Second 221,544 211,272
Third 222,980 212,200
Fourth 224,287 212,201
ALABAMA First 80,100 76,000
Second 85,600 76,400
Third 86,100 76,400
Fourth 87,800 118,700
GEORGIA First 122,700 121,500
Second 131,000 122,100
Third 131,800 122,100
Fourth 134,500 109,800
GULF First 12,900 12,300
Second 13,800 12,400
Third 13,800 12,400
Fourth 24,100 21,200
MISSISSIPPI First 11,300 10,600
Second 12,100 10,700
Third 12,200 10,600
Fourth 13,800 12,000
SAVANNAH First 5,100 4,800
Second 5,400 4,800
Third 5,500 4,800
Fourth 4,500 5,200
----------------- --------- ------------- ----------
|
The dividend paid per share by SOUTHERN was 31.5(cent) for each quarter of 1996 and 32.5(cent) for each quarter of 1997. The dividend paid on SOUTHERN's common stock for the first quarter of 1998 was raised to 33.5(cent) per share.
II-1
The amount of dividends on their common stock that may be paid by the subsidiary registrants is restricted in accordance with their first mortgage bond indenture and, in the case of SAVANNAH, its charter. The amounts of earnings retained in the business and the amounts restricted against the payment of cash dividends on common stock at December 31, 1997, were as follows:
------------------ ------------------ --- --------------
Retained Restricted
Earnings Amount
------------------ --------------
(in millions)
ALABAMA $1,221 $ 796
GEORGIA 1,745 897
GULF 172 127
MISSISSIPPI 170 118
SAVANNAH 113 68
Consolidated 3,842 2,024
------------------ ------------------ --- --------------
|
Item 6. SELECTED FINANCIAL DATA
SOUTHERN. Reference is made to information under the heading "Selected Consolidated Financial and Operating Data," contained herein at pages II-41 through II-54.
ALABAMA. Reference is made to information under the heading "Selected Financial and Operating Data," contained herein at pages II-83 through II-96.
GEORGIA. Reference is made to information under the heading "Selected Financial and Operating Data," contained herein at pages II-129 through II-143.
GULF. Reference is made to information under the heading "Selected Financial and Operating Data," contained herein at pages II-172 through II-185.
MISSISSIPPI. Reference is made to information under the heading "Selected Financial and Operating Data," contained herein at pages II-212 through II-225.
SAVANNAH. Reference is made to information under the heading "Selected Financial and Operating Data," contained herein at pages II-247 through II-259.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SOUTHERN. Reference is made to information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition," contained herein at pages II-8 through II-16.
ALABAMA. Reference is made to information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition," contained herein at pages II-58 through II-64.
GEORGIA. Reference is made to information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition," contained herein at pages II-100 through II-107.
GULF. Reference is made to information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition," contained herein at pages II-147 through II-154.
MISSISSIPPI. Reference is made to information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition," contained herein at pages II-189 through II-195.
SAVANNAH. Reference is made to information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition," contained herein at pages II-229 through II-234.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to information in SOUTHERN's "Management's Discussion and Analysis - Derivative Financial Instruments" and to Note 1 to SOUTHERN's financial statements under the headings "Financial Instruments for Non-Trading" and "Financial Instruments for Trading" contained herein on pages II-13 through II-14; and pages II-26 through II-28, respectively.
II-2
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO 1997 FINANCIAL STATEMENTS
Page
The Southern Company and Subsidiary Companies:
Report of Independent Public Accountants................................................................................ II-7
Consolidated Statements of Income for the Years Ended December 31, 1997, 1996 and 1995.................................. II-17
Consolidated Statements of Retained Earnings for the Years Ended
December 31, 1997, 1996 and 1995.................................................................................... II-17
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995.............................. II-18
Consolidated Balance Sheets at December 31, 1997 and 1996............................................................... II-19
Consolidated Statements of Capitalization at December 31, 1997 and 1996................................................. II-21
Consolidated Statements of Paid-In Capital for the Years Ended December 31, 1997, 1996 and 1995......................... II-22
Notes to Financial Statements........................................................................................... II-23
ALABAMA:
Report of Independent Public Accountants .............................................................................. II-57
Statements of Income for the Years Ended December 31, 1997, 1996 and 1995............................................... II-65
Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995........................................... II-66
Balance Sheets at December 31, 1997 and 1996 ........................................................................... II-67
Statements of Capitalization at December 31, 1997 and 1996 ............................................................. II-69
Statements of Retained Earnings for the Years Ended December 31, 1997, 1996 and 1995.................................... II-70
Notes to Financial Statements........................................................................................... II-71
GEORGIA:
Report of Independent Public Accountants................................................................................ II-99
Statements of Income for the Years Ended December 31, 1997, 1996 and 1995............................................... II-108
Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995........................................... II-109
Balance Sheets at December 31, 1997 and 1996 ........................................................................... II-110
Statements of Capitalization at December 31, 1997 and 1996 ............................................................. II-112
Statements of Retained Earnings for the Years Ended December 31, 1997, 1996 and 1995.................................... II-113
Statements of Paid-In Capital for the Years Ended December 31, 1997, 1996 and 1995...................................... II-113
Notes to Financial Statements........................................................................................... II-114
GULF:
Report of Independent Public Accountants................................................................................ II-146
Statements of Income for the Years Ended December 31, 1997, 1996 and 1995............................................... II-155
Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995........................................... II-156
Balance Sheets at December 31, 1997 and 1996 ........................................................................... II-157
Statements of Capitalization at December 31, 1997 and 1996 ............................................................. II-159
Statements of Retained Earnings for the Years Ended December 31, 1997, 1996 and 1995.................................... II-161
Statements of Paid-In Capital for the Years Ended December 31, 1997, 1996 and 1995...................................... II-161
Notes to Financial Statements........................................................................................... II-162
II-3
|
Page
MISSISSIPPI:
Report of Independent Public Accountants................................................................................ II-188
Statements of Income for the Years Ended December 31, 1997, 1996 and 1995............................................... II-196
Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995........................................... II-197
Balance Sheets at December 31, 1997 and 1996 ........................................................................... II-198
Statements of Capitalization at December 31, 1997 and 1996 ............................................................. II-200
Statements of Retained Earnings for the Years Ended December 31, 1997, 1996 and 1995.................................... II-201
Statements of Paid-In Capital for the Years Ended December 31, 1997, 1996 and 1995...................................... II-201
Notes to Financial Statements........................................................................................... II-202
SAVANNAH:
Report of Independent Public Accountants................................................................................ II-228
Statements of Income for the Years Ended December 31, 1997, 1996 and 1995............................................... II-235
Statements of Retained Earnings for the Years Ended December 31, 1997, 1996 and 1995.................................... II-235
Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995........................................... II-236
Balance Sheets at December 31, 1997 and 1996 ........................................................................... II-237
Statements of Capitalization at December 31, 1997 and 1996 ............................................................. II-239
Notes to Financial Statements........................................................................................... II-240
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
|
II-4
THE SOUTHERN COMPANY
AND SUBSIDIARY COMPANIES
FINANCIAL SECTION
II-5
MANAGEMENT'S REPORT
Southern Company and Subsidiary Companies 1997 Annual Report
The management of Southern Company has prepared -- and is responsible for -- the consolidated financial statements and related information included in this report. These statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances and necessarily include amounts that are based on the best estimates and judgments of management. Financial information throughout this annual report is consistent with the financial statements.
The company maintains a system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that books and records reflect only authorized transactions of the company. Limitations exist in any system of internal controls, however, based on a recognition that the cost of the system should not exceed its benefits. The company believes its system of internal accounting controls maintains an appropriate cost/benefit relationship.
The company's system of internal accounting controls is evaluated on an ongoing basis by the company's internal audit staff. The company's independent public accountants also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of five directors who are not employees, provides a broad overview of management's financial reporting and control functions. Periodically, this committee meets with management, the internal auditors, and the independent public accountants to ensure that these groups are fulfilling their obligations and to discuss auditing, internal controls, and financial reporting matters. The internal auditors and independent public accountants have access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable assurance that the company's operations are conducted according to a high standard of business ethics.
In management's opinion, the consolidated financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of Southern Company and its subsidiary companies in conformity with generally accepted accounting principles.
/s/A. W. Dahlberg A. W. Dahlberg Chairman, President, and Chief Executive Officer /s/W. L. Westbrook W. L. Westbrook Financial Vice President, Chief Financial Officer, and Treasurer February 11, 1998 |
II-6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and to the Stockholders of Southern Company:
We have audited the accompanying consolidated balance sheets and consolidated statements of capitalization of Southern Company (a Delaware corporation) and subsidiary companies as of December 31, 1997 and 1996, and the related consolidated statements of income, retained earnings, paid-in capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements (pages 11-17 through 11-40) referred to above present fairly, in all material respects, the financial position of Southern Company and subsidiary companies as of December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
II-7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Southern Company and Subsidiary Companies 1997 Annual Report
RESULTS OF OPERATIONS
Earnings and Dividends
Southern Company reported 1997 earnings of $972 million or $1.42 for both basic and diluted earnings per share. The traditional core business of selling electricity in the southeastern United States remained strong, while non-traditional business results were adversely affected by a $111 million, after taxes, windfall profits tax assessed against South Western Electricity (SWEB) in the United Kingdom. SWEB is a subsidiary of Southern Energy, Inc. (Southern Energy). Excluding the windfall profits tax, Southern Energy's earnings account for 10 percent of consolidated net income in 1997. Consolidated net income decreased by $155 million compared with the amount reported for 1996. Continued cost controls and steady demand for electricity were offset by increased financing costs for the non-traditional business and the windfall profits tax.
Costs related to work force reduction programs decreased earnings by $31 million or 5 cents per share and $53 million or 8 cents per share in 1997 and 1996, respectively. These costs are expected to be recovered through future savings in approximately two years following each program's implementation.
In 1996, earnings were $1.1 billion or $1.68 for both basic and diluted earnings per share -- up 2 cents from the per share amount reported in 1995. Earnings in 1996, when compared with 1995 results, were affected by increased energy sales and growth in the non-traditional business.
Dividends paid on common stock during 1997 were $1.30 per share or 321/2 cents per quarter. During 1996 and 1995, dividends paid per share were $1.26 and $1.22, respectively. In January 1998, the Southern Company raised the quarterly dividend to 331/2 cents per share or an annual rate of $1.34 per share.
Acquisitions
Southern Energy owns and manages international and domestic non-traditional electric power production and delivery facilities for Southern Company. Southern Energy's acquisitions of 100 percent of Consolidated Electric Power Asia (CEPA) and a 26 percent interest in a German utility were completed in 1997. Also, Southern Energy acquired SWEB in late 1995. These businesses have been included in the consolidated financial statements since the dates of acquisition and are not reflected in prior periods. As a result, changes in revenues and expenses for Southern Energy in 1997 and 1996 reflect significant amounts related to acquisitions, which were not fully reflected in each year being compared. Therefore, to facilitate discussing the results of operations for business segments, Southern Energy's variances are primarily driven by the above reason unless otherwise noted.
Revenues
Operating revenues increased in 1997 and 1996 as a result of the following factors:
Increase (Decrease)
From Prior Year
---------------------------------
1997 1996 1995
---------------------------------
Retail -- (in millions)
Growth and price
change $ 105 $ 124 $ 177
Weather (110) (64) 143
Fuel cost recovery and
other (13) 2 134
---------------------------------------------------------------
Total retail (18) 62 454
---------------------------------------------------------------
Sales for resale --
Within service area (28) 10 39
Outside service area 76 14 (90)
---------------------------------------------------------------
Total sales for resale 48 24 (51)
Southern Energy 2,154 1,040 458
Other operating revenues 69 52 22
---------------------------------------------------------------
Total operating revenues $2,253 $1,178 $ 883
===============================================================
Percent change 21.8% 12.8% 10.6%
---------------------------------------------------------------
|
Retail revenues of $7.6 billion declined slightly compared with last year. Continued growth in the traditional service area was offset by the negative impact of weather on energy sales and by industrial and commercial customers taking advantage of lower load management rates. This trend will probably continue as the utility industry becomes much more competitive. In 1996, retail revenues barely increased by 0.8 percent compared with the year 1995. Under fuel cost recovery provisions, fuel revenues generally equal fuel expense -- including the fuel component of purchased energy -- and do not affect net income.
Sales for resale revenues within the service area were $381 million in 1997, down 7.1 percent from the prior year. This decrease resulted primarily from supplying less electricity under contractual agreements with certain wholesale customers in 1997. Revenues from sales for resale within the service area were
II-8
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
$409 million in 1996, up 2.5 percent from the prior year.
Revenues from sales to utilities outside the service area under long-term contracts consist of capacity and energy components. Capacity revenues reflect the recovery of fixed costs and a return on investment under the contracts. Energy is generally sold at variable cost. The capacity and energy components were as follows:
1997 1996 1995
------------------------------------
(in millions)
Capacity $203 $217 $237
Energy 183 176 151
---------------------------------------------------------
Total $386 $393 $388
=========================================================
|
Capacity revenues decreased in 1997 and 1996 because the amount of capacity under contract declined slightly during 1996. Additional declines in capacity are not scheduled until after 1999.
Southern Energy's revenues have escalated to $3.8 billion and $1.7 billion in 1997 and 1996, respectively. These rapid increases are primarily attributable to the development and growth of energy trading and marketing activities, primarily in 1997. Also, revenues have increased as a result of international acquisitions. In 1997, energy trading and marketing revenues increased $1.9 billion compared with amounts recorded in 1996. However, these revenues were substantially offset by purchased power expenses incurred in completing these trading and marketing transactions. Energy trading and marketing -- similar to other low margin sales activities -- is dependent on huge volumes for profitability.
Changes in traditional core business revenues are influenced heavily by the amount of energy sold each year. Kilowatt-hour sales for 1997 and the percent change by year were as follows:
(billions of
kilowatt-hours) Amount Percent Change
---------- ----------------------------
1997 1997 1996 1995
---------- ----------------------------
Residential 39.2 (2.2)% 2.5% 9.2%
Commercial 38.9 2.5 5.7 5.5
Industrial 54.2 2.6 2.2 2.7
Other 0.9 (1.1) 5.7 2.1
----------
Total retail 133.2 1.1 3.3 5.4
Sales for resale --
Within service area 9.9 (9.6) 15.4 16.2
Outside service area 13.3 23.6 17.9 (15.1)
----------
Total 156.4 1.9 5.0 4.4
===================================================================
|
The rate of increase in 1997 retail energy sales was significantly lower than the past two years. Although the total number of residential customers served increased by 63,000 during the year, residential energy sales experienced a decline as a result of milder weather in 1997, compared with closer to normal weather in 1996. Commercial and industrial sales both in 1997 and 1996 continued to show slight gains in excess of the national averages. This reflects the strength of business and economic conditions in Southern Company's traditional service area. Energy sales to retail customers are projected to increase at an average annual rate of 2.1 percent during the period 1998 through 2008.
Energy sales for resale outside the service area are predominantly unit power sales under long-term contracts to Florida utilities. Economy sales and amounts sold under short-term contracts are also sold for resale outside the service area. Sales to customers outside the service area increased in both 1997 and 1996 and declined in 1995 when compared with the respective prior year. However, these fluctuations in energy sales under long-term contracts have minimal effect on earnings because Southern Company is paid for dedicating specific amounts of its generating capacity to these utilities outside the service area.
Expenses
Total operating expenses of $10.7 billion for 1997 increased $2.2 billion compared with the prior year. Traditional core business expenses increased $69 million. Southern Energy's expenses increased almost $2.1 billion. The sharp increase for Southern Energy resulted primarily from two factors. First, the acquisition of CEPA is reflected only in 1997 expenses. Second, nearly $1.9 billion relates to energy trading and marketing activities, which is included in purchased power expenses. The costs to produce and deliver electricity for the traditional core business in 1997 increased by $37 million to meet higher energy demands. Also, costs related to work force reduction programs decreased in 1997 by $35 million. Traditional core business depreciation expenses and taxes other than income taxes increased by $158 million as a result of additional utility plant being placed into service and increased accelerated depreciation of certain assets.
In 1996, operating expenses of $8.5 billion increased 16.6 percent compared with 1995. Traditional core business expenses increased $173 million. Southern Energy's expenses increased $976 million. The large increase for Southern Energy resulted primarily from SWEB, which was acquired in late 1995. The costs to
II-9
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
produce and deliver electricity for the traditional core business in 1996 increased by $79 million to meet higher energy demands. Also, costs related to work force reduction programs increased expenses by $58 million compared with such expenses in 1995. Depreciation expense and taxes other than income taxes increased $39 million.
Fuel costs constitute the single largest expense for Southern Company's traditional core business. The mix of fuel sources for generation of electricity is determined primarily by system load, the unit cost of fuel consumed, and the availability of hydro and nuclear generating units. The amount and sources of generation and the average cost of fuel per net kilowatt-hour generated -- within the core business service area -- were as follows:
1997 1996 1995
--------------------------
Total generation
(billions of kilowatt-hours) 160 156 147
Sources of generation
(percent) --
Coal 77 77 77
Nuclear 17 17 17
Hydro 4 4 4
Oil and gas 2 2 2
Average cost of fuel per net
kilowatt-hour generated
(cents) --
Coal 1.63 1.65 1.73
Nuclear 0.53 0.52 0.56
Total 1.46 1.48 1.53
--------------------------------------------------------------
|
Total fuel and purchased power expenses of $5.3 billion in 1997 increased $2.0 billion compared with the prior year. These expenses for traditional core business increased $32 million and, Southern Energy's portion increased $1.9 billion. The traditional core business's customer demand for electricity rose by 1.6 billion kilowatt-hours more than in 1996. The additional cost to meet the demand was offset slightly by a lower average cost of fuel per net kilowatt-hour generated. Southern Energy's increase in expenses escalated as a result of energy trading and marketing activities discussed earlier. Fuel and purchased power costs of $3.3 billion in 1996 increased $731 million compared with 1995. Traditional core business increased $49 million and Southern Energy increased $682 million because of the acquisition of SWEB in late 1995.
Excluding the windfall profits tax in the United Kingdom, total income taxes in 1997 declined by $66 million compared with the amount in 1996. Southern Energy's portion was a reduction of $37 million. For 1996, traditional core business income taxes decreased $40 million, and Southern Energy increased $41 million.
Total net interest charges and capital and preferred stock expenses increased $248 million from amounts reported in the previous year. These costs for traditional core business overall netted out to be nearly flat compared with the reported amounts in 1996. Southern Energy's costs increased $221 million related primarily to financing acquisitions. In 1996, these same costs for traditional core business declined by $69 million, but Southern Energy's interest charges increased $85 million. The decline in costs for core business was attributable to lower interest rates and continued refinancing activities in 1996. As a result of favorable market conditions, $1.7 billion in 1997, $574 million in 1996, and $1.1 billion in 1995 of traditional senior securities were issued for the primary purpose of retiring higher-cost securities.
Effects of Inflation
Southern Company's traditional core business is subject to rate regulation and income tax laws that are based on the recovery of historical costs. Therefore, inflation creates an economic loss because the company is recovering its costs of investments in dollars that have less purchasing power. While the inflation rate has been relatively low in recent years, it continues to have an adverse effect on Southern Company because of the large investment in long-lived utility plant. Conventional accounting for historical cost does not recognize this economic loss nor the partially offsetting gain that arises through financing facilities with fixed-money obligations such as long-term debt and preferred stock. Any recognition of inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years are not necessarily indicative of future earnings potential. The level of Southern Company's future earnings depends on numerous factors. Two major factors are: achieving energy sales growth in a less regulated, more competitive environment; and operating non-traditional business activities successfully.
II-10
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Southern Company continues to position its business to meet the challenges of a new competitive environment. Work force reduction programs have reduced earnings by $31 million, $53 million, and $17 million for the years 1997, 1996, and 1995, respectively. These actions -- in conjunction with other cost containment programs -- will assist efforts to continue being a low-cost provider of electricity.
The operating companies currently operate as vertically integrated companies providing electricity to customers within the traditional service area of the southeastern United States. Prices for electricity provided by the operating companies to retail customers are set by state public service commissions under cost-based regulatory principles.
Rates for Alabama Power and Mississippi Power are adjusted periodically within certain limitations based on earned retail rate of return compared with an allowed return. Georgia Power is required to file a general rate case by July 1, 1998. See Note 3 to the financial statements for information about other retail and wholesale regulatory matters.
Future earnings for the operating companies in the near term will depend upon growth in energy sales, which is subject to a number of factors. These factors include weather, competition, changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, and the rate of economic growth in the company's service area.
The electric utility industry in the United States is currently undergoing a period of dramatic change as a result of regulatory and competitive factors. Among the primary agents of change has been the Energy Policy Act of 1992 (Energy Act). The Energy Act allows independent power producers (IPPs) to access a utility's transmission network in order to sell electricity to other utilities. This enhances the incentive for IPPs to build cogeneration plants for a utility's large industrial and commercial customers and sell energy generation to other utilities. Also, electricity sales for resale rates are being driven down by wholesale transmission access and numerous potential new energy suppliers, including power marketers and brokers. Southern Company is aggressively working to maintain and expand its share of wholesale sales in the Southeastern power markets.
Although the Energy Act does not permit retail customer access, it was a major catalyst for the current restructuring and consolidation taking place within the utility industry. Numerous federal and state initiatives are in varying stages to promote wholesale and retail competition. Among other things, these initiatives allow customers to choose their electricity provider. As these initiatives materialize, the structure of the utility industry could radically change. Some states have approved initiatives that result in a separation of the ownership and/or operation of generating facilities from the ownership and/or operation of transmission and distribution facilities. While various restructuring and competition initiatives have been or are being discussed in Alabama, Florida, Georgia, and Mississippi, none have been enacted to date. Enactment would require numerous issues to be resolved, including significant ones relating to transmission pricing and recovery of any stranded investments. The inability of an operating company to recover its investments, including the regulatory assets described in Note 1 to the financial statements, could have a material adverse effect on the financial condition of that operating company. The operating companies are attempting to minimize or reduce their cost exposure. See Note 3 to the financial statements for information regarding these efforts.
Continuing to be a low-cost producer could provide opportunities to increase market share and profitability in markets that evolve with changing regulation. Conversely, unless Southern Company remains a low-cost producer and provides quality service, the company's retail energy sales growth could be limited, and this could significantly erode earnings.
To adapt to a less regulated, more competitive environment, Southern Company continues to evaluate and consider a wide array of potential business strategies. These strategies may include business combinations, acquisitions involving other utility or non-utility businesses or properties, internal restructuring, disposition of certain assets, or some combination thereof. Furthermore, Southern Company may engage in other new business ventures that arise from competitive and regulatory changes in the utility industry. Pursuit of any of the above strategies, or any combination thereof, may significantly affect the business operations and financial condition of Southern Company.
The Energy Act amended the Public Utility Holding Company Act of 1935 (PUHCA). The amendment allows holding companies to form exempt wholesale generators and foreign utility companies to sell power largely free of regulation under PUHCA. These entities are able to sell power to affiliates -- under certain restrictions -- and to own and operate power generating facilities in other domestic and international markets. To take advantage of existing and
II-11
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
evolving opportunities, Southern Energy -- founded in 1981 -- is focused on several key international and domestic business lines, including energy distribution, integrated utilities, stand-alone generation, and other energy-related products and services. As the energy marketplace evolves, Southern Energy is positioning the company to become a major competitor in energy trading and marketing activities. As part of this strategy, Southern Energy entered into a joint venture with Vastar Resources effective in January 1998. The two companies combined their energy trading and marketing operations to form a new full-service energy provider, Southern Company Energy Marketing. Also, Southern Energy is expanding its international business through acquisitions. In September 1997, Southern Energy acquired a 26 percent interest in a German utility for approximately $820 million. Also, the acquisition of CEPA for a total net investment of some $2.1 billion was completed in mid-1997. In late 1995, SWEB was acquired for approximately $1.8 billion. In July 1996, a 25 percent interest in SWEB was sold. For additional information on acquisitions, see Note 14 to the financial statements.
The CEPA acquisition has a slightly dilutive impact on earnings in the near term. However, Southern Energy's investments should strengthen the opportunities for Southern Company's long-term future earnings growth. At December 31, 1997, Southern Energy's total assets amounted to $11 billion.
The depreciation of southeast Asian currencies is likely to increase the cost of electricity that nationally owned utilities purchase from independent power projects relative to the prices received by those utilities from their customers. This could cause a deterioration in the financial condition of nationally owned utilities, which could potentially impact these utilities' ability to meet their obligations under existing contracts and could reduce the near-term opportunities for greenfield independent power projects in the region. However, fewer greenfield opportunities may, to some extent, be offset by increased opportunities for CEPA to acquire projects from regional developers who have been adversely affected by the financial crisis, and also by a possible increase in the pace of privatizations by regional governments needing to raise capital.
Also during 1997, there was a substantial depreciation of the Philippine peso relative to the U.S. dollar. However, the long-term power sales contracts that govern CEPA's revenues from existing projects in the Philippines provide for U.S. dollar payments, or indexing to the U.S. dollar. This should sufficiently cover foreign currency costs of operation, including debt service and return on and of capital. The National Power Corporation, whose obligations are guaranteed by the Republic of the Philippines, is the counterparty to these contracts.
The staff of the Securities and Exchange Commission (SEC) has questioned certain of the current accounting practices of the electric utility industry -- including Southern Company's -- regarding the recognition, measurement, and classification of decommissioning costs for nuclear generating facilities in the financial statements. In response to these questions, the Financial Accounting Standards Board (FASB) has decided to review the accounting for liabilities related to closure and removal of long-lived assets, including nuclear decommissioning. If the FASB issues new accounting rules, the estimated costs of closing and removing Southern Company's nuclear and other facilities may be required to be recorded as liabilities in the Consolidated Balance Sheets. Also, the annual provisions for such costs could change. Because of the company's current ability to recover closure and removal costs through rates, these changes would not have a significant adverse effect on results of operations. See Note 1 to the financial statements under "Depreciation and Nuclear Decommissioning" for additional information.
Southern Company is heavily dependent upon complex computer systems for all phases of its operations. The year 2000 issue --common to most corporations -- concerns the inability of certain software and databases to properly recognize date-sensitive information related to the year 2000 and thereafter. This problem could result in a material disruption to the company's operations, if not corrected. Southern Company has assessed and developed a detailed strategy to prevent or at least minimize problems related to the year 2000 issue. In 1997, resources were committed and implementation began to modify the affected information systems. Total costs related to the project are estimated to be approximately $85 million, of which $8 million was spent in 1997. Most all remaining costs will be expensed in 1998. Implementation is currently on schedule. Although the degree of success of this project cannot be determined at this time, management believes there will be no significant effect on the company's operations.
II-12
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Southern Company is involved in various matters being litigated. See Note 3 to the financial statements for information regarding material issues that could possibly affect future earnings.
Compliance costs related to current and future environmental laws and regulations could affect earnings if such costs are not fully recovered. The Clean Air Act and other important environmental items are discussed later under "Environmental Matters."
The operating companies are subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of a company's operations is no longer subject to these provisions, the company would be required to write off related regulatory assets and liabilities that are not specifically recoverable, and determine if any other assets have been impaired. See Note 1 to the financial statements under "Regulatory Assets and Liabilities" for additional information.
New Accounting Standard
The FASB has issued Statement No. 130, Reporting Comprehensive Income, which will be effective in 1998. This statement establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. The objective of the statement is to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (comprehensive income). Comprehensive income is the total of net income and all other non-owner changes in equity. Southern Company will adopt this statement in 1998.
FINANCIAL CONDITION
Overview
Southern Company's financial condition continues to remain strong. The company's common stock closed 1997 with the highest year-end closing price in history. Earnings, excluding the windfall profits tax, were some $1.1 billion. Based on this performance, in January 1998, the Southern Company board of directors increased the common stock dividend for the seventh consecutive year.
Gross property additions to utility plant were $1.9 billion in 1997. The majority of funds needed for gross property additions since 1994 has been provided from operating activities, principally from earnings and non-cash charges to income. Southern Energy's business acquisitions in 1997 amounted to approximately $2.9 billion. The Consolidated Statements of Cash Flows provide additional details.
Derivative Financial Instruments
Southern Company is exposed to market risks in both its trading and non-trading operations. The non-trading operations are exposed to market risks, including changes in interest rates, currency exchange rates, and certain commodity prices. To mitigate changes in cash flows attributable to these exposures, the company has entered into various derivative financial instruments. Company policy for non-trading activities stipulates that derivatives are to be used only for hedging purposes. Derivative positions are monitored using techniques that include market value and sensitivity analysis.
Interest rate swaps are used to hedge underlying debt obligations. These swaps hedge specific debt issuances and therefore qualify for hedge accounting. The company has interest rate swaps in various currencies. These match debt issued in the same currency. In cases where debt is issued in currencies other than the functional currency, currency swaps convert the exposure to that of the functional currency. For qualifying hedges, the interest rate differential is reflected as an adjustment to interest expense over the life of the instruments.
If the company sustained a 100 basis point change in interest rates for all variable rate debt in all currencies, the change would affect annualized interest expense by approximately $35 million at December 31, 1997. Based on the company's overall interest rate exposure at December 31, 1997, including derivative and other interest rate sensitive instruments, a near-term 100 basis point change in interest rates would not materially affect the consolidated financial statements.
The company has investments in various emerging market countries where the net investments are not hedged, including Argentina, Chile, Trinidad, Bahamas, Philippines, and China. The company relies on either currency pegs or contractual or regulatory links to the U.S. dollar to mitigate currency risk attributable to these investments. The company does not believe it has a material exposure to changes in exchange rates between the U.S. dollar and the currencies of these countries. The company also has investments in the United Kingdom and Germany, and for these investments the company uses long-term cross-currency agreements to reduce a substantial portion of its exposure to fluctuations in the British pound sterling and German Deutschemark. These instruments are used to hedge its net investments in these countries. As a
II-13
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
result of these swaps, a 10 percent sustained decline of the British pound sterling and German Deutschemark versus the U.S. dollar would not materially affect the consolidated financial statements.
The company also uses currency swaps and forward agreements to hedge dollar denominated debt issued by subsidiaries with different functional currency. These swaps offset the dollar flows, thereby effectively converting debt to the appropriate currency. Gains and losses related to qualified hedges of foreign currency firm commitments are deferred and included in the basis of the underlying transactions.
In addition to the non-trading activities, the company is exposed to market risks through its electricity and natural gas commodity trading business. To estimate and manage the market risk of its trading and marketing portfolio, Southern Energy employs a daily Value at Risk (VAR) methodology. VAR is used to describe a probabilistic approach to measuring the exposure to market risk. VAR models are relatively sophisticated. However, the quantitative risk information is limited by the parameters established in creating the model. The instruments being evaluated may have features that may trigger a potential loss in excess of calculated amounts if the changes in commodity prices exceed the confidence level of the model used. The calculation utilizes the standard deviation of seasonally adjusted historical changes in the value of the market risk sensitive commodity-based financial instruments to estimate the amount of change (i.e., volatility) in the current value of these instruments that could occur at a specified confidence level over a specified holding interval. The parameters used in the calculation include holding intervals ranging from five to 20 days, depending upon the type of instrument, the term of the instrument, the liquidity of the underlying market, and other factors. The models employed a 95 percent confidence level based on historical price movement. Based on the company's VAR analysis of its overall commodity price risk exposure at December 31, 1997, management does not anticipate a materially adverse effect on the company's consolidated financial statements as a result of market fluctuations.
In the United Kingdom, the company utilizes contracts to mitigate its exposure to volatility in the prices of electricity purchased through the wholesale electricity market. These contracts are in place to hedge electricity purchases on approximately 20 billion kilowatt-hours through the year 2008. The gains or losses realized on such contracts are deferred and recognized as electricity is purchased. Because of the absence of a trading market, it is not practicable to estimate the fair value of these contracts.
Due to cost-based rate regulations, the operating companies have limited exposure to market volatility in interest rates and prices of electricity. To mitigate residual risks relative to movements in electricity prices, the operating companies enter into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market. Realized gains and losses are recognized in the income statement as incurred. At December 31, 1997, exposure from these activities was not material to the consolidated financial statements.
For additional information, see Note 1 to the financial statements under "Financial Instruments for Non-Trading and Trading."
Capital Structure
Southern Company achieved a ratio of common equity to total capitalization -- including short-term debt -- of 38.6 percent in 1997, compared with 45.1 percent in 1996, and 42.4 percent in 1995.
During 1997, the subsidiary companies sold, through public authorities, $404 million of pollution control revenue bonds. Preferred securities of $1.3 billion were issued in 1997. The companies continued to reduce financing costs by retiring higher-cost bonds and preferred stock. Retirements, including maturities, of bonds totaled $507 million during 1997, $600 million during 1996, and $1.3 billion during 1995. As a result, the composite interest rate on long-term debt decreased from 7.2 percent at December 31, 1994 to 6.6 percent at December 31, 1997. Retirements of preferred stock totaled $660 million during 1997, $179 million during 1996, and $1 million during 1995.
In 1997, Southern Company raised $360 million from the issuance of new common stock under the company's various stock plans. At the close of 1997, the company's common stock had a market value of 257/8 per share, compared with a book value of $13.91 per share. The market-to-book value ratio was 186 percent at the end of 1997, compared with 166 percent at year-end 1996, and 188 percent at year-end 1995.
II-14
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Capital Requirements for Construction
The construction program of Southern Company is budgeted at $2.0 billion for
1998, $2.0 billion for 1999, and $1.6 billion for 2000. Actual construction
costs may vary from this estimate because of changes in such factors as:
business conditions; environmental regulations; nuclear plant regulations; load
projections; the cost and efficiency of construction labor, equipment, and
materials; and the cost of capital. In addition, there can be no assurance that
costs related to capital expenditures will be fully recovered.
The operating companies have approximately 1,600 megawatts of combined cycle generation scheduled to be placed in service by 2001. Southern Energy has under construction some 1,400 megawatts of owned capacity. Significant construction of transmission and distribution facilities and upgrading of generating plants will be continuing for the core business in the Southeast.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately $2.5 billion will be required by the end of 2000 for present sinking fund requirements and maturities of long-term debt. Also, the subsidiaries will continue to retire higher-cost debt and preferred stock and replace these obligations with lower-cost capital if market conditions permit.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean Air Act -- the acid rain compliance provision of the law -- significantly affected Southern Company. Specific reductions in sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants are required in two phases. Phase I compliance began in 1995 and initially affected 28 generating units of Southern Company. As a result of the company's compliance strategy, an additional 22 generating units were brought into compliance with Phase I requirements. Phase II compliance is required in 2000, and all fossil-fired generating plants will be affected.
Southern Company achieved Phase I sulfur dioxide compliance at the affected plants by switching to low-sulfur coal, which required some equipment upgrades. Construction expenditures for Phase I compliance totaled approximately $300 million.
For Phase II sulfur dioxide compliance, Southern Company could use emission allowances, increase fuel switching, and/or install flue gas desulfurization equipment at selected plants. Also, equipment to control nitrogen oxide emissions will be installed on additional system fossil-fired units as necessary to meet Phase II limits and ozone non-attainment requirements for metropolitan Atlanta through 2000. Current compliance strategy for Phase II and ozone non-attainment could require total estimated construction expenditures of approximately $70 million, of which $55 million remains to be spent.
A significant portion of costs related to the acid rain provision of the Clean Air Act is expected to be recovered through existing ratemaking provisions. However, there can be no assurance that all Clean Air Act costs will be recovered.
In July 1997, the Environmental Protection Agency (EPA) revised the national ambient air quality standards for ozone and particulate matter. This revision makes the standards significantly more stringent. Also, in October 1997, the EPA issued a proposed regional ozone rule -- if implemented -- that could make substantial further reductions in NOx emissions from fossil-fueled generating facilities. Implementation of the standards and the proposed rule could result in significant additional compliance costs and capital expenditures that cannot be determined at this time.
The EPA and state environmental regulatory agencies are reviewing and evaluating various other matters including: emission control strategies for ozone non-attainment areas; additional controls for hazardous air pollutant emissions; and hazardous waste disposal requirements. The impact of new standards will depend on the development and implementation of applicable regulations.
Southern Company must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations, the subsidiaries could incur substantial costs to clean up properties. The subsidiaries conduct studies to determine the extent of any required cleanup costs and have recognized in their respective financial statements costs to clean up known sites. These costs for Southern Company amounted to $4 million in 1997 and $8 million in 1995. In 1996, the company was reimbursed $6 million for amounts previously expensed. Additional sites may
II-15
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
require environmental remediation for which the subsidiaries may be liable for a portion or all required cleanup costs. See Note 3 to the financial statements for information regarding Georgia Power's potentially responsible party status at a site in Brunswick, Georgia.
Several major pieces of environmental legislation are being considered for reauthorization or amendment by Congress. These include: the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation, and Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances Control Act; and the Endangered Species Act. Changes to these laws could affect many areas of Southern Company's operations. The full impact of any such changes cannot be determined at this time.
Compliance with possible additional legislation related to global climate change, electromagnetic fields, and other environmental and health concerns could significantly affect Southern Company. The impact of new legislation -- if any -- will depend on the subsequent development and implementation of applicable regulations. In addition, the potential exists for liability as the result of lawsuits alleging damages caused by electromagnetic fields.
Sources of Capital
The amount and timing of additional equity capital to be raised in 1998 -- as well as in subsequent years -- will be contingent on Southern Company's investment opportunities. Equity capital can be provided from any combination of public offerings, private placements, or the company's stock plans. Any portion of the common stock required during 1998 for the company's stock plans that is not provided from the issuance of new stock will be acquired on the open market in accordance with the terms of such plans.
The operating companies plan to obtain the funds required for construction and other purposes from sources similar to those used in the past, which were primarily from internal sources. However, the type and timing of any financings -- if needed -- will depend on market conditions and regulatory approval.
The operating companies historically have relied on issuances of first mortgage bonds and preferred stock, in addition to pollution control revenue bonds issued for their benefit by public authorities, to meet their long-term external financing requirements. Recently, the operating companies' financings have consisted of unsecured debt and trust preferred securities. In this regard, the operating companies -- except Savannah Electric -- sought and obtained stockholder approval in 1997 to amend their respective corporate charters eliminating restrictions on the amounts of unsecured indebtedness they may incur.
To meet short-term cash needs and contingencies, Southern Company had approximately $601 million of cash and cash equivalents and $4.9 billion of unused credit arrangements with banks at the beginning of 1998.
Cautionary Statement Regarding Forward-Looking Information
Southern Company's 1997 Annual Report contains forward-looking statements in addition to historical information. The company cautions that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the markets of the subsidiary companies; potential business strategies -- including acquisitions or dispositions of assets or internal restructuring -- that may be pursued by the company; state and federal rate regulation in the United States; changes in or application of environmental and other laws and regulations to which the company and its subsidiaries are subject; political, legal and economic conditions and developments in the United States and in foreign countries in which the subsidiaries operate; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; the performance of projects undertaken by the non-traditional business and the success of efforts to invest in and develop new opportunities; and other factors discussed in the reports -- including Form 10-K -- filed from time to time by the company with the SEC.
II-16
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1997, 1996, and 1995
Southern Company and Subsidiary Companies 1997 Annual Report
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in millions)
Operating Revenues $ 12,611 $ 10,358 $9,180
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,281 2,245 2,126
Purchased power 3,033 1,103 491
Other 1,930 1,860 1,626
Maintenance 763 782 683
Depreciation and amortization 1,246 996 904
Amortization of deferred Plant Vogtle costs, net 121 137 124
Taxes other than income taxes 572 634 535
Income taxes 725 747 805
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 10,671 8,504 7,294
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 1,940 1,854 1,886
Other Income:
Allowance for equity funds used during construction 6 4 5
Interest income 152 54 38
Other, net 53 42 (65)
Income taxes applicable to other income 34 (10) 36
Windfall profits tax assessed in United Kingdom (Note 8) (148) - -
-------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 2,037 1,944 1,900
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 678 530 557
Allowance for debt funds used during construction (14) (19) (20)
Interest on notes payable 112 107 63
Amortization of debt discount, premium, and expense, net 34 33 44
Other interest charges 63 46 43
Minority interest in subsidiaries 29 13 13
Distributions on capital and preferred securities of subsidiary companies 120 22 9
Preferred dividends of subsidiary companies 43 85 88
--------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 1,065 817 797
--------------------------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 972 $ 1,127 $1,103
================================================================================================================================
Common Stock Data: (Note 9)
Average number of shares of common stock outstanding (in millions) 685 673 665
Basic and diluted earnings per share of common stock $1.42 $1.68 $1.66
Cash dividends paid per share of common stock $1.30 $1.26 $1.22
--------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1997, 1996, and 1995
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in millions)
Balance at Beginning of Year $ 3,764 $ 3,483 $3,191
Consolidated net income 972 1,127 1,103
--------------------------------------------------------------------------------------------------------------------------------
4,736 4,610 4,294
Cash dividends on common stock 889 846 811
Capital and preferred stock transactions, net 5 - -
--------------------------------------------------------------------------------------------------------------------------------
Balance at End of Year (Note 9) $ 3,842 $ 3,764 $3,483
================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-17
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
Southern Company and Subsidiary Companies 1997 Annual Report
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in millions)
Operating Activities:
Consolidated net income $ 972 $ 1,127 $ 1,103
Adjustments to reconcile consolidated net income
to net cash provided by operating activities --
Depreciation and amortization 1,471 1,201 1,134
Deferred income taxes and investment tax credits (5) 57 117
Allowance for equity funds used during construction (6) (4) (5)
Amortization of deferred Plant Vogtle costs, net 121 137 124
Gain on asset sales (25) (59) (33)
Other, net (61) 54 (121)
Changes in certain current assets and liabilities
excluding effects from acquisitions --
Receivables, net (238) (92) (109)
Fossil fuel stock 56 57 28
Materials and supplies 21 47 11
Accounts payable 138 19 (138)
Other 181 (143) 204
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 2,625 2,401 2,315
--------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,859) (1,229) (1,401)
Southern Energy business acquisitions, net of cash acquired (2,925) - (1,416)
Sales of property 32 211 287
Other (13) (275) 153
--------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (4,765) (1,293) (2,377)
--------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds --
Common stock 360 171 277
Capital and preferred securities 1,321 322 -
First mortgage bonds - 85 375
Other long-term debt 2,499 1,570 1,805
Retirements --
Preferred stock (660) (179) (1)
First mortgage bonds (168) (426) (538)
Other long-term debt (802) (1,754) (902)
Increase (decrease) in notes payable, net 509 (268) 727
Payment of common stock dividends (889) (846) (811)
Miscellaneous 126 (110) (237)
---------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 2,296 (1,435) 695
--------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 156 (327) 633
Cash and Cash Equivalents at Beginning of Year 445 772 139
--------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 601 $ 445 $ 772
================================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $876 $677 $622
Income taxes $823 $706 $645
Southern Energy business acquisitions --
Fair value of assets acquired $4,768 $- $2,745
Less cash paid for common stock 2,925 - 1,416
-------------------------------------------------------------------------------------------------------------------------------
Liabilities assumed $1,843 $- $1,329
================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-18
CONSOLIDATED BALANCE SHEETS
At December 31, 1997 and 1996
Southern Company and Subsidiary Companies 1997 Annual Report
=======================================================================================================================
Assets 1997 1996
-----------------------------------------------------------------------------------------------------------------------
(in millions)
Utility Plant:
Plant in service (Note 1) $34,044 $33,260
Less accumulated provision for depreciation 11,934 10,921
-----------------------------------------------------------------------------------------------------------------------
22,110 22,339
Nuclear fuel, at amortized cost 230 246
Construction work in progress (Note 4) 1,312 684
-----------------------------------------------------------------------------------------------------------------------
Total 23,652 23,269
-----------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Goodwill, being amortized (Note 14) 1,888 318
Leasehold interests, being amortized 1,389 416
Equity investments in subsidiaries 1,168 227
Nuclear decommissioning trusts 387 279
Miscellaneous 742 261
-----------------------------------------------------------------------------------------------------------------------
Total 5,574 1,501
-----------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 601 445
Special deposits 17 62
Receivables, less accumulated provisions for uncollectible accounts
of $77 million in 1997 and $32 million in 1996 2,100 1,440
Fossil fuel stock, at average cost 214 270
Materials and supplies, at average cost 493 510
Prepayments 99 87
Vacation pay deferred 79 77
-----------------------------------------------------------------------------------------------------------------------
Total 3,603 2,891
-----------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes (Note 8) 1,142 1,238
Prepaid pension costs 399 341
Deferred Plant Vogtle costs 50 171
Debt expense, being amortized 101 81
Premium on reacquired debt, being amortized 285 289
Miscellaneous 465 449
-----------------------------------------------------------------------------------------------------------------------
Total 2,442 2,569
-----------------------------------------------------------------------------------------------------------------------
Total Assets $35,271 $30,230
=======================================================================================================================
The accompanying notes are an integral part of these balance sheets.
|
II-19
CONSOLIDATED BALANCE SHEETS
At December 31, 1997 and 1996
Southern Company and Subsidiary Companies 1997 Annual Report
===============================================================================================================================
Capitalization and Liabilities 1997 1996
-------------------------------------------------------------------------------------------------------------------------------
(in millions)
Capitalization (See(Seeoaccompanyingtstatements):
Common stock equity $ 9,647 $ 9,216
Preferred stock of subsidiaries 493 980
Company or subsidiary obligated mandatorily redeemable capital and preferred securities 1,744 422
Long-term debt 10,274 7,938
-------------------------------------------------------------------------------------------------------------------------------
Total 22,158 18,556
-------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year 784 364
Notes payable 2,064 1,483
Accounts payable 1,049 788
Customer deposits 133 132
Taxes accrued-
Federal and state income 120 12
Other 259 193
Interest accrued 262 187
Vacation pay accrued 108 104
Miscellaneous 608 535
-------------------------------------------------------------------------------------------------------------------------------
Total 5,387 3,798
-------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 4,650 4,738
Deferred credits related to income taxes (Note 8) 746 814
Accumulated deferred investment tax credits 754 788
Employee benefits provisions 447 439
Minority interests in subsidiaries 435 375
Prepaid capacity revenues 110 122
Department of Energy assessments 72 81
Disallowed Plant Vogtle capacity buyback costs 56 57
Storm damage reserves 38 35
Miscellaneous 418 427
-------------------------------------------------------------------------------------------------------------------------------
Total 7,726 7,876
-------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 3, 4, 5, 7, 13, and 14)
Total Capitalization and Liabilities $ 35,271 $ 30,230
===============================================================================================================================
The accompanying notes are an integral part of these balance sheets.
|
II-20
CONSOLIDATED STATEMENTS OF CAPITALIZATION
At December 31, 1997 and 1996
Southern Company and Subsidiary Companies 1997 Annual Report
==============================================================================================================================
1997 1996 1997 1996
-------------------------------------------------------------------------------------------------------------------------------
(in millions) (percent of total)
Common Stock Equity:
Common stock, par value $5 per share --
Authorized -- 1 billion shares
Outstanding -- 1997: 693 million shares
1996: 677 million shares $ 3,467 $ 3,385
Paid-in capital 2,338 2,067
Retained earnings (Note 9) 3,842 3,764
-------------------------------------------------------------------------------------------------------------------------------
Total common stock equity 9,647 9,216 43.5% 49.7%
-------------------------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock of Subsidiaries:
$100 par or stated value --
4.20% to 5.96% 89 199
6.32% to 7.88% 47 130
$25 par or stated value --
$1.90 to $1.9875 - 191
6.40% to 7.60% 131 323
Auction rates -- at January 1, 1998:
4.20% to 4.235% 70 70
Adjustable rates -- at January 1, 1998:
4.67% to 5.27% 156 240
-------------------------------------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $27 million) 493 1,153
Less amount due within one year - 173
-------------------------------------------------------------------------------------------------------------------------------
Total excluding amount due within one year 493 980 2.2 5.3
-------------------------------------------------------------------------------------------------------------------------------
Company or Subsidiary Obligated Mandatorily
Redeemable Capital and Preferred Securities (Note 10):
$25 liquidation value --
7.375% 97 97
7.60% to 7.625 % 415 -
7.75% 649 225
8.14% to 9% 583 100
-------------------------------------------------------------------------------------------------------------------------------
Total (annual distribution requirement -- $138 million) 1,744 422 7.9 2.3
-------------------------------------------------------------------------------------------------------------------------------
|
II-21
CONSOLIDATED STATEMENTS OF CAPITALIZATION (continued)
At December 31, 1997 and 1996
Southern Company and Subsidiary Companies 1997 Annual Report
===================================================================================================================================
1997 1996 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
(in millions) (percent of total)
Long-Term Debt of Subsidiaries:
First mortgage bonds --
Maturity Interest Rates
1997 5 7/8 % - 25
1997 8.665% - 7
1998 5% to 8.665% 238 238
1999 6 1/8% to 8.665% 373 373
2000 6% to 8.665% 349 349
2001 8.665% 9 9
2002 6.85% to 8.665% 260 260
2003 through 2007 6.07% to 8.665% 944 944
2008 through 2012 6 7/8% to 8.665% 121 121
2013 through 2017 8.665% 73 73
2018 through 2022 8.30% to 9 1/4% 476 612
2023 through 2026 6 7/8% to 9% 1,109 1,109
-----------------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 3,952 4,120
Other long-term debt (Note 11) 7,191 4,084
Unamortized debt premium (discount), net (85) (75)
-----------------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $738 million) 11,058 8,129
Less amount due within one year (Note 12) 784 191
-----------------------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 10,274 7,938 46.4 42.7
-----------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 22,158 $ 18,556 100.0% 100.0%
===================================================================================================================================
CONSOLIDATED STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1997, 1996, and 1995
===================================================================================================================================
1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
(in millions)
Balance at Beginning of Year $2,067 $1,941 $1,712
Proceeds from sales of common stock over the par value -- 16.4 million,
7.5 million, and 13.0 million shares in 1997, 1996, and 1995, respectively 278 133 212
Miscellaneous (7) (7) 17
-----------------------------------------------------------------------------------------------------------------------------------
Balance at End of Year $2,338 $2,067 $1,941
===================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-22
NOTES TO FINANCIAL STATEMENTS
Southern Company and Subsidiary Companies 1997 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Southern Company is the parent company of five operating companies, a system service company, Southern Communications Services (Southern Communications), Southern Company Energy Solutions, Southern Energy, Inc. (Southern Energy), Southern Nuclear Operating Company (Southern Nuclear), and other direct and indirect subsidiaries. The operating companies -- Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric -- provide electric service in four southeastern states. Contracts among the operating companies -- dealing with jointly owned generating facilities, interconnecting transmission lines, and the exchange of electric power -- are regulated by the Federal Energy Regulatory Commission (FERC) and/or the Securities and Exchange Commission (SEC). The system service company provides, at cost, specialized services to Southern Company and subsidiary companies. Southern Communications provides digital wireless communications services to the operating companies and also markets these services to the public within the Southeast. Southern Company Energy Solutions develops new business opportunities related to energy products and services. Worldwide, Southern Energy develops and manages electricity and other energy related projects, including domestic energy trading and marketing. Southern Nuclear provides services to Southern Company's nuclear power plants.
Southern Company is registered as a holding company under the Public Utility Holding Company Act of 1935 (PUHCA). Both the company and its subsidiaries are subject to the regulatory provisions of the PUHCA. The operating companies also are subject to regulation by the FERC and their respective state regulatory commissions. The companies follow generally accepted accounting principles and comply with the accounting policies and practices prescribed by their respective commissions. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates, and the actual results may differ from those estimates. All material intercompany items have been eliminated in consolidation.
The consolidated financial statements reflect investments in controlled subsidiaries on a consolidated basis and other investments on an equity basis. Effective in January 1998, Southern Energy and Vastar Resources combined their energy trading and marketing activities to form a joint venture. Southern Energy's investment in the joint venture will be accounted for under the equity method of accounting. Certain prior years' data presented in the consolidated financial statements have been reclassified to conform with the current year presentation.
Regulatory Assets and Liabilities
The operating companies are subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. Regulatory assets represent probable future revenues to the operating companies associated with certain costs that are expected to be recovered from customers through the ratemaking process. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are expected to be credited to customers through the ratemaking process. Regulatory assets and (liabilities) reflected in the Consolidated Balance Sheets at December 31 relate to the following:
1997 1996
------------------------
(in millions)
Deferred income taxes $1,142 $1,238
Deferred Plant Vogtle costs 50 171
Premium on reacquired debt 285 289
Demand-side programs 11 44
Department of Energy assessments 63 69
Vacation pay 79 77
Deferred fuel charges 4 29
Postretirement benefits 38 38
Work force reduction costs 37 48
Deferred income tax credits (746) (814)
Storm damage reserves (36) (32)
Other, net 152 114
-----------------------------------------------------------------
Total $1,079 $1,271
=================================================================
|
In the event that a portion of an operating company's operations is no longer subject to the provisions of FASB Statement No. 71, the company would be required to write off related net regulatory assets and liabilities that are not specifically recoverable through regulated rates. In addition, the company would be required to determine if any impairment to other assets exists, including plant, and write down the assets, if impaired, to their fair value.
II-23
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Revenues and Fuel Costs
The operating companies accrue revenues for service rendered but unbilled at the end of each fiscal period. Fuel costs are expensed as the fuel is used. The operating companies' electric rates include provisions to adjust billings for fluctuations in fuel, the energy component of purchased power costs, and certain other costs. Revenues are adjusted for differences between recoverable fuel costs and amounts actually recovered in current rates.
Southern Energy's revenues for product sales and marketing services are recognized when title passes to the customer or when service is performed.
The operating companies have a diversified base of customers. No single customer or industry comprises 10 percent or more of revenues. In 1997, uncollectible accounts continued to average less than 1 percent of revenues.
Fuel expense includes the amortization of the cost of nuclear fuel and a charge, based on nuclear generation, for the permanent disposal of spent nuclear fuel. Total charges for nuclear fuel included in fuel expense amounted to $144 million in 1997, $142 million in 1996, and $140 million in 1995. Alabama Power and Georgia Power have contracts with the U.S. Department of Energy (DOE) that provide for the permanent disposal of spent nuclear fuel. Although disposal was scheduled to begin in 1998, the actual year this service will begin is uncertain. Sufficient storage capacity currently is available to permit operation into 2003 at Plant Hatch, into 2008 at Plant Vogtle, and into 2010 and 2013 at Plant Farley units 1 and 2, respectively. Activities for adding dry cask storage capacity at Plant Hatch by as early as 1999 are in progress.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a Uranium Enrichment Decontamination and Decommissioning Fund, which is funded in part by a special assessment on utilities with nuclear plants. This assessment is being paid over a 15-year period, which began in 1993. This fund will be used by the DOE for the decontamination and decommissioning of its nuclear fuel enrichment facilities. The law provides that utilities will recover these payments in the same manner as any other fuel expense. Alabama Power and Georgia Power -- based on its ownership interests -- estimate their respective remaining liability at December 31, 1997, under this law to be approximately $34 million and $27 million, respectively. These obligations are recorded in the Consolidated Balance Sheets.
Depreciation and Nuclear Decommissioning
Depreciation of the original cost of depreciable utility plant in service is provided primarily by using composite straight-line rates, which approximated 3.4 percent in 1997 and 3.3 percent in 1996 and 1995. When property subject to depreciation is retired or otherwise disposed of in the normal course of business, its cost -- together with the cost of removal, less salvage -- is charged to the accumulated provision for depreciation. Minor items of property included in the original cost of the plant are retired when the related property unit is retired. Depreciation expense includes an amount for the expected costs of decommissioning nuclear facilities and removal of other facilities.
Georgia Power recorded additional depreciation of electric plant amounting to $159 million in 1997, $24 million in 1996, and $6 million in 1995. See Note 3 under "Georgia Power Retail Accounting Order" for additional information.
The Nuclear Regulatory Commission (NRC) requires all licensees operating commercial power reactors to establish a plan for providing, with reasonable assurance, funds for decommissioning. Alabama Power and Georgia Power have external trust funds to comply with the NRC's regulations. Amounts previously recorded in internal reserves are being transferred into the external trust funds over periods approved by the respective state public service commissions. The NRC's minimum external funding requirements are based on a generic estimate of the cost to decommission the radioactive portions of a nuclear unit based on the size and type of reactor. Alabama Power and Georgia Power have filed plans with the NRC to ensure that -- over time -- the deposits and earnings of the external trust funds will provide the minimum funding amounts prescribed by the NRC.
Site study cost is the estimate to decommission a specific facility as of the site study year, and ultimate cost is the estimate to decommission a
II-24
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
specific facility as of retirement date. The estimated costs of decommissioning -- both site study costs and ultimate costs -- at December 31, 1997, for Alabama Power's Plant Farley and Georgia Power's ownership interests in plants Hatch and Vogtle were as follows:
Plant Plant Plant
Farley Hatch Vogtle
--------------------------------
Site study basis (year) 1993 1997 1997
Decommissioning periods:
Beginning year 2017 2014 2027
Completion year 2029 2027 2038
-----------------------------------------------------------------
(in millions)
Site study costs:
Radiated structures $489 $372 $317
Non-radiated structures 89 33 44
-----------------------------------------------------------------
Total $578 $405 $361
=================================================================
Ultimate costs:
Radiated structures $1,504 $722 $922
Non-radiated structures 274 65 129
-----------------------------------------------------------------
Total $1,778 $787 $1,051
=================================================================
Plant Plant Plant
Farley Hatch Vogtle
-----------------------------
(in millions)
Amount expensed in 1997 $ 18 $ 11 $ 9
Accumulated provisions:
Balance in external trust
funds $193 $118 $76
Balance in internal reserves 44 23 13
------------------------------------------------------------------
Total $237 $141 $89
==================================================================
Significant assumptions:
Inflation rate 4.5% 3.6% 3.6%
Trust earning rate 7.0 6.5 6.5
------------------------------------------------------------------
|
Annual provisions for nuclear decommissioning are based on an annuity method as approved by the respective state public service commissions. All of Alabama Power's decommissioning costs are approved for ratemaking. For Georgia Power, only the costs to decommission the radioactive portion of the plants are currently included in cost of service. Georgia Power's decommissioning costs currently included in cost of service are $320 million and $267 million for plants Hatch and Vogtle, respectively. The estimated ultimate costs associated with the amounts currently included in cost of service are $781 million and $1.1 billion for plants Hatch and Vogtle, respectively. Alabama Power and Georgia Power expect their respective state public service commissions to periodically review and adjust, if necessary, the amounts collected in rates for the anticipated cost of decommissioning.
The decommissioning cost estimates are based on prompt dismantlement and removal of the plant from service. The actual decommissioning costs may vary from the above estimates because of changes in the assumed date of decommissioning, changes in NRC requirements, or changes in the assumptions used in making these estimates.
Income Taxes
Southern Company uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences. Investment tax credits utilized are deferred and amortized to income over the average lives of the related property.
Plant Vogtle Phase-In Plans
In 1987, 1989, and 1991, the Georgia Public Service Commission (GPSC) ordered that the allowed costs of Plant Vogtle, a two-unit nuclear facility of which Georgia Power owns 45.7 percent, be phased into rates. Each GPSC order called for recovery of deferred costs within 10 years. Under these plans, all allowed costs will be recovered by 1999.
Allowance for Funds Used During Construction (AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance the construction of new facilities. While cash is not realized currently from such allowance, it increases the revenue requirement over the service life of the plant through a higher rate base and higher depreciation expense. The composite rates used by the operating companies to calculate AFUDC during the years 1995 through 1997 ranged from a before-income-tax rate of 5.8 percent to 9.8 percent. AFUDC, net of income tax, as a percent of consolidated net income was 1.6 percent in 1997, 1.4 percent in 1996, and 1.6 percent in 1995.
Utility Plant
Utility plant is stated at original cost less regulatory disallowances. Original cost includes: materials; labor; minor items of property; appropriate administrative and general costs; payroll-related costs such as taxes, pensions, and other benefits; and the estimated cost of funds used during construction. The cost of maintenance, repairs, and replacement of minor items of property is charged to maintenance expense. The cost of replacements of property -- exclusive of minor items of property -- is charged to utility plant.
II-25
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Leasehold Interests
Leasehold interests include Southern Energy's power generation facilities that are developed under build, operate, and transfer agreements with foreign governments. Southern Energy's construction costs are initially recorded as construction work in progress, and -- after completion -- these costs are recorded as leasehold interests. These costs are amortized over the length of time the facility is operated before transferring ownership to the local government.
Cash and Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, temporary cash investments are considered cash equivalents. Temporary cash investments are securities with original maturities of 90 days or less.
Foreign Currency Translation
Assets and liabilities of Southern Company's international operations, where the local currency is the functional currency, have been translated at year-end exchange rates, and revenues and expenses have been translated using average exchange rates prevailing during the year. Adjustments resulting from translation have been recorded in stockholders' equity. The financial statements of international operations, where the U.S. dollar is the functional currency and when certain transactions are denominated in a local currency, are remeasured in U.S. dollars. The remeasurement of local currencies into U.S. dollars creates adjustments. These adjustments and all gains and losses from foreign currency transactions are included in consolidated net income. Foreign exchange gains and losses are not material for all periods presented.
Financial Instruments for Non-Trading
Non-trading derivative financial instruments are used to hedge exposures to fluctuations in interest rates, foreign currency exchange rates, and certain commodity prices. Gains and losses on qualifying hedges are deferred and recognized either in income or as an adjustment to the carrying amount when the hedged transaction occurs.
The company utilizes interest rate swaps and cross currency interest rate swaps to minimize borrowing costs by changing the interest rate and currency of the original borrowing. For qualifying hedges, the interest rate differential is reflected as an adjustment to interest expense over the life of the swaps.
Southern Company's international operations are exposed to the effects of foreign exchange rate fluctuations. To protect against this exposure, the company utilizes currency swaps to hedge its net investment in certain foreign subsidiaries, which has the effect of converting foreign currency cash inflows into U.S. dollars at fixed exchange rates. Gains or losses on these currency swaps, designated as hedges of net investment, are offset against the translation effects reflected in stockholders' equity, net of tax.
Non-trading financial derivative instruments held at December 31, 1997, were as follows:
Year of Unrecognized
Maturity or Notional Gain
Type Termination Amount (Loss)
------------------------------------ ---------------------------
(in millions)
Interest rate
swaps:
2002-2012 $710 $(33)
2001-2012 (pound)500 $(52)
2002-2007 DM691 $(3)
Cross currency
swaps 2001-2007 (pound)439 $6
Cross currency
swaption 2003 DM570 $1
---------------------------------------------------------------
|
(pound) - Denotes British pound sterling. DM - Denotes Deutschemark.
The company is exposed to losses related to financial instruments in the event of counterparties' nonperformance. The company has established controls to determine and monitor the creditworthiness of counterparties in order to mitigate the company's exposure to counterparty credit risk. The company does not expect any of the counterparties to fail to meet their obligations.
In the United Kingdom, the company utilizes contracts to mitigate its exposure to volatility in the prices of electricity purchased through the wholesale electricity market. These contracts are in place to hedge electricity purchases of approximately 20 billion kilowatt-hours through the year 2008. The gains or losses realized on such contracts are deferred and recognized as electricity is purchased. Because of the absence of a trading market, it is not practicable to estimate the fair value of these contracts .
II-26
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Other Southern Company financial instruments for which the carrying amount did not equal fair value at December 31 were as follows:
Carrying Fair
Amount Value
--------------------------
(in millions)
Long-term debt:
At December 31, 1997 $10,916 $11,160
At December 31, 1996 7,975 8,122
Capital and preferred securities:
At December 31, 1997 1,744 1,826
At December 31, 1996 422 427
-----------------------------------------------------------------
|
The fair values for long-term debt and capital and preferred securities were based on either closing market price or closing price of comparable instruments.
Financial Instruments for Trading
Derivative financial instruments used for trading purposes primarily relate to commodities associated with the energy sector, such as electricity, natural gas, and crude oil. These instruments are recorded at fair value for balance sheet purposes. The determination of fair value considers various factors, such as closing exchange prices, broker price quotations, and model pricing. Model pricing considers time value and volatility factors underlying any options and contractual commitments. These transactions are accounted for using the mark-to-market method of accounting in which the unrealized gains or losses resulting from the impact of price movements are recognized as net gains or losses in the consolidated statements of income. If the company has a master netting agreement with counterparties, net positions are recognized for consolidated balance sheet and income statement purposes.
The company provides price risk management services by entering into a variety of contractual commitments such as price cap and floor agreements, futures contracts, forward purchase and sale agreements, and option contracts. These contracts generally require future settlement, and are either executed on an exchange or traded as over-the-counter (OTC) instruments. Contractual commitments have widely varying terms and durations that range from a few hours to a number of years depending on the instrument. The majority of the company's transactions are short-term in duration, with a weighted average maturity of approximately 1.3 years and 0.6 years at December 31, 1997 and 1996, respectively.
All contractual commitments used for trading purposes are recorded at fair value. Contracts in a net receivable position, as well as options held, are reported as assets. Similarly, contractual commitments in a net payable position, as well as options written, are reported as liabilities. The net unrealized gain from risk management services amounted to $8 million at December 31, 1997. Southern Company has made guarantees to certain counterparties regarding performance of contractual commitments by its affiliates related to trading and marketing activities. Contractual commitments reflected in the Consolidated Balance Sheets at December 31 were as follows:
Net Fair Value Notional ------------------------- Amounts |
Exchange-issued
products:
Futures
contracts 904 $14 $15
Other 958 1 1
-------------------------------------------------------------------
Total 1,862 15 16
-------------------------------------------------------------------
OTC products:
Forward
contracts 2,643 69 62
Swaps (473) 1 -
Other 639 9 8
-------------------------------------------------------------------
Total 2,809 79 70
-------------------------------------------------------------------
Total 4,671 $94 $86
===================================================================
Net Fair Value
|
Exchange-issued
products:
Futures
contracts 42 $ 3 $ 3
Other 105 - -
-------------------------------------------------------------------
Total 147 3 3
-------------------------------------------------------------------
OTC products:
Forward
contracts 56 15 15
Swaps - - -
Other 51 - -
-------------------------------------------------------------------
Total 107 15 15
-------------------------------------------------------------------
Total 254 $18 $18
===================================================================
|
II-27
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Notional amounts -- stated in equivalent millions of kilowatt-hours -- are indicative only of the volume of activity and are not a measure of market risk. Notional amounts of natural gas and crude oil positions are reflected in equivalent kilowatt-hours based on standard conversion rates. The company has established controls to determine and monitor the creditworthiness of counterparties in order to mitigate the company's exposure to counterparty credit risk. A concentration of counterparties may impact the company's overall exposure to credit risk, either positively or negatively, in that the counterparties may be similarly affected by changes in economic, regulatory, or other conditions.
The annual average gross balances of the company's options and contractual commitments used for trading purposes, based on month-end balances were as follows:
Average Fair Value
-------------------------
1997 Assets Liabilities
----------- -------------------------
(in millions)
Commodity instruments:
Electricity $97 $94
Gas 6 6
Other 7 6
Average Fair Value
-------------------------
1996 Assets Liabilities
----------- -------------------------
(in millions)
Commodity instruments:
Electricity $19 $18
Gas 1 1
Other - -
----------------------------------------------------------------
|
Materials and Supplies
Generally, materials and supplies include the costs of transmission, distribution, and generating plant materials. Materials are charged to inventory when purchased and then expensed or capitalized to plant, as appropriate, when installed.
2. RETIREMENT BENEFITS
Pension Plans
The system companies have defined benefit, trusteed, pension plans that cover substantially all regular employees. Benefits are based on one of the following formulas: years of service and final average pay or years of service and a flat-dollar benefit. Primarily, the companies use the "entry age normal method with a frozen initial liability" actuarial method for funding purposes, subject to limitations under federal income tax regulations. Amounts funded to the pension trusts are primarily invested in equity and fixed-income securities. FASB Statement No. 87, Employers' Accounting for Pensions, requires use of the "projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
In the United States, Southern Company provides certain medical care and life insurance benefits for retired employees. Substantially all these employees may become eligible for such benefits when they retire. The operating companies fund trusts to the extent deductible under federal income tax regulations or to the extent required by their respective regulatory commissions. Amounts funded are primarily invested in debt and equity securities.
FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, requires that medical care and life insurance benefits for retired employees be accounted for on an accrual basis using a specified actuarial method, "benefit/years-of-service." In October 1993, the GPSC ordered Georgia Power to phase in the adoption of Statement No. 106 to cost of service over a five-year period, whereby one-fifth of the additional costs was expensed in 1993 and the remaining costs were deferred. An additional one-fifth of the costs was expensed each succeeding year until the costs were fully reflected in cost of service in 1997. The costs deferred during the five-year period will be amortized to expense over a 15-year period beginning in 1998. For the other operating companies, the cost of postretirement benefits is reflected in rates on a current basis.
II-28
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Funded Status and Cost of Benefits
The funded status of the plans and reconciliation to amounts reflected in the Consolidated Balance Sheets at December 31 were as follows:
Pension
-----------------------
1997 1996
-----------------------
(in millions)
Actuarial present value of
benefit obligation:
Vested benefits $ 2,891 $ 2,730
Non-vested benefits 83 119
------------------------------------------------------------------
Accumulated benefit obligation 2,974 2,849
Additional amounts related to
projected salary increases 728 775
------------------------------------------------------------------
Projected benefit obligation 3,702 3,624
Less:
Fair value of plan assets 5,953 5,258
Unrecognized net gain (1,877) (1,314)
Unrecognized prior service cost 126 135
Unrecognized transition asset (101) (114)
------------------------------------------------------------------
Prepaid asset recognized in the
Consolidated Balance Sheets $ 399 $ 341
==================================================================
Postretirement Benefits
----------------------------
1997 1996
--------------- ------------
(in millions)
Actuarial present value of
benefit obligation:
Retirees and dependents $477 $409
Employees eligible to retire 85 78
Other employees 373 383
-------------------------------------------------------------------
Accumulated benefit obligation 935 870
Less:
Fair value of plan assets 335 260
Unrecognized net loss (gain) 68 79
Unrecognized prior service cost (4) (5)
Unrecognized transition
obligation 233 249
-------------------------------------------------------------------
Accrued liability recognized in the
Consolidated Balance Sheets $303 $287
===================================================================
|
The weighted average rates assumed in the actuarial calculations were:
1997 1996 1995
---------------------------------
Discount 7.5% 7.8% 7.3%
Annual salary increase 5.0 5.3 4.8
Long-term return on
plan assets 8.5 8.5 8.5
-----------------------------------------------------------------
|
An additional assumption used in measuring the accumulated postretirement benefit obligation was a weighted average medical care cost trend rate of 8.8 percent for 1997, decreasing gradually to 5.5 percent through the year 2005, and remaining at that level thereafter. An annual increase in the assumed medical care cost trend rate of 1 percent would increase the accumulated benefit obligation at December 31, 1997, by $80 million and the aggregate of the service and interest cost components of the net retiree cost by $7 million.
Components of the plans' net costs are shown below:
Pension
---------------------------
1997 1996 1995
---------------------------
(in millions)
Benefits earned during the year $ 94 $ 99 $ 79
Interest cost on projected
benefit obligation 271 267 193
Actual return on plan assets (856) (564) (730)
Net amortization and deferral 417 152 412
-------------------------------------------------------------------
Net pension cost (income) $ (74) $ (46) $ (46)
===================================================================
|
Of the above net pension income, $52 million in 1997, $37 million in 1996, and $30 million in 1995 were recorded in operating expenses, and the remainder was recorded in construction and other accounts.
Postretirement Benefits
---------------------------
1997 1996 1995
---------------------------
(in millions)
Benefits earned during the year $ 18 $ 20 $ 28
Interest cost on accumulated
benefit obligation 67 60 67
Amortization of transition
obligation 15 15 27
Actual return on plan assets (28) (17) (23)
Net amortization and deferral 12 6 12
------------------------------------------------------------------
Net postretirement costs $ 84 $ 84 $111
==================================================================
|
Of the above net postretirement costs, $70 million in 1997, $64 million in 1996, and $78 million in 1995 were charged to operating expenses, and $3 million in 1996 and $11 million in 1995 were deferred. The remainder for each year was charged to construction and other accounts.
Work Force Reduction Programs
The system companies have incurred additional costs for work force reduction programs. The costs related to these programs were $50 million, $85 million, and $42 million for the years 1997, 1996, and 1995, respectively. In addition, certain costs of these programs were deferred and are being amortized in
II-29
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
accordance with regulatory treatment. The unamortized balance of these costs was $37 million at December 31, 1997.
3. LITIGATION AND REGULATORY MATTERS
Alabama Power Appliance Warranty Litigation
In 1996, legal actions against Alabama Power were filed in several counties in Alabama charging Alabama Power with fraud and non-compliance with regulatory statutes relating to the offer, sale, and financing of "extended service contracts" in connection with the sale of electric appliances. Some of these suits were filed as class actions, while others were filed on behalf of multiple individual plaintiffs. The plaintiffs seek damages for an unspecified amount. Alabama Power has offered extended service agreements to its customers since January 1984, and approximately 175,000 extended service agreements could be involved in these proceedings. The final outcome of these cases cannot now be determined.
Georgia Power Potentially Responsible Party Status
In January 1995, Georgia Power and four other unrelated entities were notified by the Environmental Protection Agency (EPA) that they have been designated as potentially responsible parties under the Comprehensive Environmental Response, Compensation, and Liability Act with respect to a site in Brunswick, Georgia. As of December 31, 1997, Georgia Power had recorded approximately $5 million in expenses associated with the site. This represents Georgia Power's agreed upon share of removal and remedial investigation and feasibility study costs.
The final outcome of this matter cannot now be determined. However, based on the nature and extent of Georgia Power's activities relating to the site, management believes that the company's portion of any remaining remediation costs should not be material to the financial statements.
Georgia Power Investment in Rocky Mountain
In its 1985 financing order, the GPSC concluded that completion of the Rocky Mountain pumped storage hydroelectric plant in 1991 as then planned was not economically justifiable and reasonable and withheld authorization for Georgia Power to spend funds from approved securities issuances on that plant. In 1988, Georgia Power and Oglethorpe Power Corporation (OPC) entered into a joint ownership agreement for OPC to assume responsibility for the construction and operation of the plant. The plant went into commercial operation in 1995.
In June 1996, the GPSC initiated a review of this plant. On January 14, 1998, the GPSC ordered that Georgia Power be allowed to include approximately $108 million of its $143 million investment in rate base as of December 31, 1998. Georgia Power has appealed the GPSC's order to the Superior Court of Fulton County, Georgia. If the order is upheld, Georgia Power will be required to record a write-off currently estimated to be approximately $29 million, after taxes.
The final outcome of this matter cannot now be determined. Accordingly, no provision related to the GPSC's disallowance has been recorded.
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the reasonableness of the operating companies' wholesale rate schedules and contracts that have a return on common equity of 13.75 percent or greater. The contracts that could be affected by the hearings include substantially all of the transmission, unit power, long-term power, and other similar contracts.
In August 1992, a FERC administrative law judge issued an opinion that changes in rate schedules and contracts were not necessary and that the FERC staff failed to show how any changes were in the public interest. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on substantially the same issues as in the 1991 proceeding. In November 1995, a FERC administrative law judge issued an opinion that the FERC staff failed to meet its burden of proof, and therefore, no change in the equity return was necessary. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter is pending before the FERC.
If the rates of return on common equity recommended by the FERC staff were applied to all of the schedules and contracts involved in both proceedings -- as well as to certain other contracts that reference these proceedings in determining return on common equity -- and if refunds were ordered, the amount
II-30
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
of refunds could range up to approximately $194 million at December 31, 1997. Although management believes that rates are not excessive and that refunds are not justified, the final outcome of this matter cannot now be determined.
Southern Company Tax Litigation
In August 1997, Southern Company and the Internal Revenue Service (IRS) entered into a settlement agreement related to tax issues for the years 1984 through 1987. The agreement is subject to the review and approval by the Joint Congressional Committee on Taxation. If approved by the Joint Committee, the agreement would resolve all issues in the case for the years before the U.S. Tax Court, resulting in a refund to Southern Company of approximately $162 million. This amount includes interest of $76 million. The tax litigation was related to a timing issue as to when taxes should have been paid; therefore, only the interest portion will affect future income. There can be no assurance that such Joint Committee approval will be received.
Alabama Power Rate Adjustment Procedures
In November 1982, the Alabama Public Service Commission (APSC) adopted rates that provide for periodic adjustments based upon Alabama Power's earned return on end-of-period retail common equity. The rates also provide for adjustments to recognize the placing of new generating facilities in retail service. Both increases and decreases have been placed into effect since the adoption of these rates. The rate adjustment procedures allow a return on common equity range of 13.0 percent to 14.5 percent and limit increases or decreases in rates to 4 percent in any calendar year.
In June 1995, the APSC issued a rate order granting Alabama Power's request for gradual adjustments to move toward parity among customer classes. This order also calls for a moratorium on any periodic retail rate increases (but not decreases) until July 2001.
In December 1995, the APSC issued an order authorizing Alabama Power to reduce balance sheet items -- such as plant and deferred charges -- at any time the company's actual base rate revenues exceed the budgeted revenues. In April 1997, the APSC issued an additional order authorizing Alabama Power to reduce balance sheet asset items. This order authorizes the reduction of such items up to an amount equal to five times the total estimated annual revenue reduction resulting from future rate reductions initiated by Alabama Power.
The ratemaking procedures will remain in effect until the APSC votes to modify or discontinue them.
Georgia Power Retail Accounting Order
In February 1996, the GPSC approved a three-year accounting order, effective January 1, 1996. Under the accounting order, Georgia Power's earnings are evaluated against a retail return on common equity range of 10 percent to 12.5 percent. Earnings in excess of 12.5 percent will be used to accelerate the amortization of regulatory assets or to accelerate the depreciation of electric plant. At its option, Georgia Power may also accelerate amortization or depreciation of assets while within the range allowed on common equity. Georgia Power is required to absorb cost increases of approximately $29 million annually during the three-year period, including $14 million annually of accelerated depreciation of electric plant. Under the accounting order, Georgia Power will not file for a general base rate increase unless its projected retail return on common equity falls below 10 percent. On July 1, 1998, Georgia Power is required to file a general rate case. In response, the GPSC would be expected to either continue the provisions of the accounting order or adopt new ones.
A consumer group appealed the GPSC's decision to the Superior Court of Fulton County, Georgia. In 1996, the superior court ruled that statutory requirements applicable to rate cases were not followed and remanded the matter to the GPSC. In October 1997, the Georgia Court of Appeals upheld the accounting order and reversed the superior court's decision. This matter is now concluded.
4. CONSTRUCTION PROGRAM
The system companies are engaged in continuous construction programs, currently estimated to total some $2.0 billion in 1998, $2.0 billion in 1999, and $1.6 billion in 2000. The construction programs are subject to periodic review and revision, and actual construction costs may vary from the above estimates because of numerous factors. These factors include: changes in business conditions; revised load growth estimates; changes in environmental regulations; changes in existing nuclear plants to meet new regulatory requirements; increasing costs of labor, equipment, and materials; and cost of capital. At December 31, 1997, significant purchase commitments were outstanding in connection with the construction program. The operating companies have approximately 1,600 megawatts of combined cycle generation scheduled to be placed in service by 2001. Southern Energy has under construction some 1,400
II-31
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
megawatts of owned capacity. In addition, significant construction will continue related to transmission and distribution facilities and the upgrading of generating plants.
See Management's Discussion and Analysis under "Environmental Matters" for information on the impact of the Clean Air Act Amendments of 1990 and other environmental matters.
5. FINANCING, INVESTMENTS, AND COMMITMENTS
General
The amount and timing of additional equity capital to be raised in 1998 -- as well as in subsequent years -- will be contingent on Southern Company's investment opportunities. Equity capital can be provided from any combination of public offerings, private placements, or the company's stock plans.
The operating companies' construction programs are expected to be financed primarily from internal sources. Short-term debt is often utilized and the amounts available are discussed below. The companies may issue additional long-term debt and preferred securities primarily for debt maturities and for redeeming higher-cost securities if market conditions permit.
Bank Credit Arrangements
At the beginning of 1998, unused credit arrangements with banks totaled $4.9 billion, of which $3.0 billion expires during 1998, $800 million during 1999 to 2001, and $1.0 billion during 2002. The following table outlines the credit arrangements by company:
Amount of Credit
-----------------------------------------
Expires
--------------------
1999 &
Company Total Unused 1998 beyond
------------- -----------------------------------------
(in millions)
Alabama Power $ 814 $ 814 $ 679 $ 135
Georgia Power 1,144 1,144 919 225
Gulf Power 103 94 94 -
Mississippi Power 96 76 56 20
Savannah Electric 41 41 21 20
Southern Company 2,000 2,000 1,000 1,000
Southern Energy 1,038 635 193 442
Other 70 66 66 -
------------------------------------------
Total $5,306 $4,870 $3,028 $1,842
==========================================
|
Approximately $2.1 billion of the credit facilities allows for term loans ranging from one to three years. Most of the agreements include stated borrowing rates but also allow for competitive bid loans.
All of the credit arrangements require payment of commitment fees based on the unused portion of the commitments or the maintenance of compensating balances with the banks. These balances are not legally restricted from withdrawal. Of Southern Company's credit facilities, $1.7 billion is a syndicated credit arrangement which also requires the payment of agent fees.
A portion of the $4.9 billion unused credit with banks is allocated to provide liquidity support to the companies' variable rate pollution control bonds. At December 31, 1997, the amount of the credit lines allocated for this purpose was $1.2 billion.
In addition, the companies from time to time borrow under uncommitted lines of credit with banks, and in the case of Southern Company, Alabama Power, Georgia Power, and Southern Energy, through commercial paper programs that have the liquidity support of committed bank credit arrangements.
Assets Subject to Lien
Each of Southern Company's subsidiaries is organized as a legal entity, separate, and apart from Southern Company and its other subsidiaries. The subsidiary companies' mortgages, which secure the first mortgage bonds issued by the companies, constitute a direct first lien on substantially all of the companies' respective fixed property and franchises. There are no agreements or other arrangements among the subsidiary companies under which the assets of one company have been pledged or otherwise made available to satisfy obligations of Southern Company or any of its subsidiaries.
Fuel and Purchased Power Commitments
To supply a portion of the fuel requirements of the generating plants, Southern Company has entered into various long-term commitments for the procurement of fossil and nuclear fuel. In most cases, these contracts contain provisions for price escalations, minimum purchase levels, and other financial commitments.
II-32
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Also, Southern Company has entered into various long-term commitments for the purchase of electricity. Total estimated long-term obligations at December 31, 1997, were as follows:
Purchased
Year Fuel Power
----------- ------------------------------
(in millions)
1998 $ 2,081 $ 338
1999 1,596 164
2000 1,235 175
2001 1,122 178
2002 1,005 182
2003 and thereafter 4,580 1,720
-------------------------------------------------------------
Total commitments $11,619 $2,757
=============================================================
|
Operating Leases
Southern Company has operating lease agreements with various terms and expiration dates. These expenses totaled $33 million, $23 million, and $17 million for 1997, 1996, and 1995, respectively. At December 31, 1997, estimated minimum rental commitments for noncancelable operating leases were as follows:
Year Amounts
-------- -----------------
(in millions)
1998 $ 39
1999 37
2000 32
2001 28
2002 28
2003 and thereafter 291
-------------------------------------------------------------
Total minimum payments $455
=============================================================
6. FACILITY SALES AND JOINT OWNERSHIP
AGREEMENTS
|
In 1992, Alabama Power sold an undivided interest in units 1 and 2 of Plant Miller and related facilities to Alabama Electric Cooperative, Inc.
Since 1975, Georgia Power has sold undivided interests in plants Vogtle, Hatch, Scherer, and Wansley in varying amounts, together with transmission facilities, to OPC, the Municipal Electric Authority of Georgia, and the city of Dalton, Georgia. In addition, Georgia Power has joint ownership agreements with OPC for the Rocky Mountain project and with Florida Power Corporation (FPC) for a combustion turbine unit at Intercession City, Florida.
At December 31, 1997, Alabama Power's and Georgia Power's ownership and investment (exclusive of nuclear fuel) in jointly owned facilities with the above entities were as follows:
Jointly Owned Facilities
-------------------------------------------------
Percent Amount of Accumulated
Ownership Investment Depreciation
------------------- ------------------------------
Plant Vogtle (in millions)
(nuclear) 45.7% $3,299 $1,100
Plant Hatch
(nuclear) 50.1 840 477
Plant Miller
(coal)
Units 1 and 2 91.8 717 311
Plant Scherer
(coal)
Units 1 and 2 8.4 112 44
Plant Wansley
(coal) 53.5 298 136
Rocky Mountain
(pumped storage) 25.4 202 44
Intercession City
(combustion turbine) 33.3 13 *
------------------------------------------------------------------
|
*Less than $1 million.
Alabama Power and Georgia Power have contracted to operate and maintain the jointly owned facilities -- except for the Rocky Mountain project and Intercession City -- as agents for their respective co-owners. The companies' proportionate share of their plant operating expenses is included in the corresponding operating expenses in the Consolidated Statements of Income.
7. LONG-TERM POWER SALES AGREEMENTS
The operating companies have long-term contractual agreements for the sale of capacity and energy to certain non-affiliated utilities located outside the system's service area. These agreements -- expiring at various dates discussed below -- are firm and pertain to capacity related to specific generating units. Because the energy is generally sold at cost under these agreements, profitability is primarily affected by revenues from capacity sales. The capacity revenues amounted to $203 million in 1997, $217 million in 1996, and $237 million in 1995.
Unit power from specific generating plants is currently being sold to Florida Power & Light Company (FP&L), FPC, Jacksonville Electric Authority (JEA), and the city of Tallahassee, Florida. Under these agreements, approximately 1,600 megawatts of capacity is scheduled to be sold annually through 1999. Thereafter, these sales will decline to some 1,500 megawatts and
II-33
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
remain at that approximate level -- unless reduced by FP&L, FPC, and JEA for the periods after 1999 with a minimum of three years notice -- until the expiration of the contracts in 2010.
8. INCOME TAXES
At December 31, 1997, the tax-related regulatory assets and liabilities were $1.1 billion and $746 million, respectively. These assets are attributable to tax benefits flowed through to customers in prior years and to taxes applicable to capitalized AFUDC. These liabilities are attributable to deferred taxes previously recognized at rates higher than current enacted tax law and to unamortized investment tax credits.
Details of income tax provisions are as follows:
1997 1996 1995
-----------------------------
(in millions)
Total provision for income taxes:
Federal --
Currently payable $ 547 $569 $ 567
Deferred -- current year 188 116 185
-- reversal of
prior years (160) (74) (111)
--------------------------------------------------------------------
575 611 641
--------------------------------------------------------------------
State --
Currently payable 104 82 90
Deferred -- current year 15 23 26
-- reversal of
prior years (19) (9) (12)
--------------------------------------------------------------------
100 96 104
--------------------------------------------------------------------
International -
Windfall profits tax
assessed in United Kingdom 148 - -
Other 16 50 24
--------------------------------------------------------------------
Total 839 757 769
Less income taxes charged
(credited) to other income 114 10 (36)
--------------------------------------------------------------------
Total income taxes charged
to operations $ 725 $747 $ 805
====================================================================
|
The first half of the windfall profits tax assessed in the United Kingdom was paid in December 1997, and the remainder is due December 1998.
The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:
1997 1996
---------------------
(in millions)
Deferred tax liabilities:
Accelerated depreciation $3,345 $2,981
Property basis differences 1,756 2,154
Other 269 362
-----------------------------------------------------------------
Total 5,370 5,497
-----------------------------------------------------------------
Deferred tax assets:
Federal effect of state deferred taxes 108 110
Other property basis differences 245 253
Deferred costs 116 139
Pension and other benefits 72 68
Other 197 214
-----------------------------------------------------------------
Total 738 784
-----------------------------------------------------------------
Net deferred tax liabilities 4,632 4,713
Portion included in current assets, net 18 25
-----------------------------------------------------------------
Accumulated deferred income taxes
in the Consolidated Balance Sheets $4,650 $4,738
=================================================================
|
Deferred investment tax credits are amortized over the life of the related property with such amortization normally applied as a credit to reduce depreciation in the Consolidated Statements of Income. Credits amortized in this manner amounted to $30 million in 1997, $33 million in 1996, and $38 million in 1995. At December 31, 1997, all investment tax credits available to reduce federal income taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
1997 1996 1995
-------------------------------
Federal statutory rate 35.0% 35.0% 35.0%
State income tax,
net of federal deduction 3.4 3.2 3.4
Non-deductible book
depreciation 2.3 1.8 1.6
Windfall profits tax 8.0 - -
Difference in prior years'
deferred and current tax rate (1.5) (1.0) (1.1)
Other (1.9) (0.5) 0.3
----------------------------------------------------------------------
Effective income tax rate 45.3% 38.5% 39.2%
======================================================================
|
Southern Company files a consolidated federal income tax return. Under a joint consolidated income tax agreement, each subsidiary's current and deferred tax expense is computed on a stand-alone basis. Tax benefits from losses of the parent company are allocated to each subsidiary based on the ratio of taxable income to total consolidated taxable income.
II-34
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
9. COMMON STOCK
Shares Reserved
At December 31, 1997, a total of 49 million shares was reserved for issuance pursuant to the Southern Investment Plan, the Employee Savings Plan, the Outside Directors Stock Plan, and the Performance Stock Plan.
Performance Stock Plan
Southern Company's Executive Stock Option Plan was replaced by the Performance Stock Plan effective February 17, 1997. As of December 31, 1997, 283 current and former employees participated in the plan. The maximum number of shares of common stock that may be issued under the new plan may not exceed 40 million. The prices of options granted to date have been at the fair market value of the shares on the dates of grant. The first grant under the new plan was in July 1997. Options granted to date become exercisable pro rata over a maximum period of four years from the date of grant. Options outstanding will expire no later than 10 years after the date of grant, unless terminated earlier by the Southern Company Board of Directors in accordance with the plan. Stock option activity in 1996 and 1997 for both plans are summarized below:
Shares Average
Subject Option Price
To Option Per Share
----------------------------------
Balance at December 31, 1995 2,476,299 $19.87
Options granted 1,460,731 23.00
Options canceled (13,878) 22.35
Options exercised (97,988) 17.94
--------------------------------------------------------------------
Balance at December 31, 1996 3,825,164 21.11
Options granted 1,776,094 21.25
Options canceled (51,913) 21.83
Options exercised (137,426) 19.72
--------------------------------------------------------------------
Balance at December 31, 1997 5,411,919 $21.18
====================================================================
Shares reserved for future grants:
At December 31, 1995 2,114,915
At December 31, 1996 668,062
At December 31, 1997 38,234,044
--------------------------------------------------------------------
Options exercisable:
At December 31, 1996 1,279,830
At December 31, 1997 1,996,724
--------------------------------------------------------------------
|
Southern Company accounts for its stock-based compensation plans in accordance with Accounting Principles Board Opinion No. 25. Accordingly, no compensation expense has been recognized.
The pro forma impact on earnings of fair-value accounting for options granted -- as required by FASB Statement No. 123, Accounting for Stock-Based Compensation -- is less than 1 cent per share and is not significant to the consolidated financial statements.
Earnings Per Share
In 1997, Southern Company adopted FASB Statement No. 128, Earnings per Share. This statement simplifies the methodology for computing both basic and diluted earnings per share. The only difference in the two methods for computing Southern Company's per share amounts is attributable to outstanding options, under the Performance Stock Plan. The effect of the stock options was determined using the treasury stock method. Consolidated net income as reported was not affected. Shares used to compute diluted earnings per share are as follows:
Average Common Stock Shares
--------------------------------------
1997 1996 1995
--------------------------------------
(in thousands)
As reported shares 685,033 672,590 665,064
Effect of options 191 200 170
--------------------------------------
Diluted shares 685,224 672,790 665,234
======================================
|
Common Stock Dividend Restrictions
The income of Southern Company is derived primarily from equity in earnings of its subsidiaries. At December 31, 1997, consolidated retained earnings included $3.8 billion of undistributed retained earnings of the subsidiaries. Of this amount, $2.0 billion was restricted against the payment by the subsidiary companies of cash dividends on common stock under terms of bond indentures.
10. CAPITAL AND PREFERRED SECURITIES
Company or subsidiary obligated mandatorily redeemable capital and preferred securities have been issued by special purpose financing entities of Southern Company and its subsidiaries. Substantially all the assets of these special financing entities are junior subordinated notes issued by the related company seeking financing. Each of these companies considers that the mechanisms and obligations relating to the capital or preferred securities issued for its
II-35
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
benefit, taken together, constitute a full and unconditional guarantee by it of the respective special financing entities' payment obligations with respect to the capital or preferred securities. At December 31, 1997, preferred securities of $1.1 billion and capital securities of $600 million were outstanding. Southern Company guarantees the notes related to $600 million of capital securities issued on its behalf.
11. OTHER LONG-TERM DEBT
Details of other long-term debt at December 31 are as follows:
1997 1996
--------------------
(in millions)
Obligations incurred in connection
with the sale by public authorities
of pollution control
revenue bonds:
Collateralized --
4.375% to 9.375% due
2000-2026 $1,154 $1,403
Variable rates (3.85% to 5.20%
at 1/1/98) due 2011-2025 639 639
Non-collateralized --
7.25% due 2003 1 1
6.75% to 8.375% due 2015-2020 109 200
5.8% due 2022 10 10
Variable rates (4.50% to 5.90%
at 1/1/98) due 2021-2037 670 265
----------------------------------------------------------------
2,583 2,518
----------------------------------------------------------------
Capitalized lease obligations 142 151
----------------------------------------------------------------
Long-term notes payable:
4% to 11% due 1997-2000 295 301
5.502% to 10.56% due 2001-2037 1,741 793
7.125% due 2047 194 -
Adjustable rates (5.70% to 13% at
1/1/98) due 1997-2000 703 240
Adjustable rates (3.77% to
8.0781% at 1/1/98) due
2001-2007 1,533 81
----------------------------------------------------------------
4,466 1,415
----------------------------------------------------------------
Total $7,191 $4,084
================================================================
|
With respect to the collateralized pollution control revenue bonds, the operating companies have authenticated and delivered to trustees a like principal amount of first mortgage bonds as security for obligations under installment sale or loan agreements. The principal and interest on the first mortgage bonds will be payable only in the event of default under the agreements.
Sinking fund requirements and/or serial maturities through 2002 applicable to other long-term debt are as follows: $400 million in 1998; $610 million in 1999; $364 million in 2000; $323 million in 2001; and $939 million in 2002.
12. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund requirements and scheduled maturities and redemptions of long-term debt due within one year at December 31 is as follows:
1997 1996
----------------
(in millions)
Bond improvement fund requirements $ 38 $ 40
Less:
Portion to be satisfied by certifying
property additions 3 4
-----------------------------------------------------------------
Cash sinking fund requirements 35 36
First mortgage bond maturities
and redemptions 349 76
Other long-term debt maturities
(Note 11) 400 79
-----------------------------------------------------------------
Total $784 $191
=================================================================
|
The first mortgage bond improvement (sinking) fund requirements amount to 1 percent of each outstanding series of bonds authenticated under the indentures prior to January 1 of each year, other than those issued to collateralize pollution control and other obligations. The requirements may be satisfied by depositing cash or reacquiring bonds, or by pledging additional property equal to 166 2/3 percent of such requirements.
13. NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988, Alabama Power and Georgia Power maintain agreements of indemnity with the NRC that, together with private insurance, cover third-party liability arising from any nuclear incident occurring at the companies' nuclear power plants. The act provides funds up to $8.9 billion for public liability claims that could arise from a single nuclear incident. Each nuclear plant is insured against this liability to a maximum of $200 million by private insurance, with the remaining coverage provided by a mandatory program of deferred premiums that could be assessed, after a nuclear incident, against all owners of nuclear reactors. A company could be assessed up to $79 million per incident for each licensed reactor it operates, but not more
II-36
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
than an aggregate of $10 million per incident to be paid in a calendar year for each reactor. Such maximum assessment, excluding any applicable state premium taxes, for Alabama Power and Georgia Power -- based on its ownership and buyback interests -- is $159 million and $160 million, respectively, per incident, but not more than an aggregate of $20 million per company to be paid for each incident in any one year.
Alabama Power and Georgia Power are members of Nuclear Electric Insurance Limited (NEIL), a mutual insurer established to provide property damage insurance in an amount up to $500 million for members' nuclear generating facilities. The members are subject to a retrospective premium assessment in the event that losses exceed accumulated reserve funds. Alabama Power's and Georgia Power's maximum annual assessments are limited to $8 million and $10 million, respectively, under current primary policies.
Additionally, both companies have policies that currently provide decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. This excess insurance is also provided by NEIL.
NEIL also covers the additional costs that would be incurred in obtaining replacement power during a prolonged accidental outage at a member's nuclear plant. Members can be insured against increased costs of replacement power in an amount up to $3.5 million per week -- starting 17 weeks after the outage -- for one year and up to $2.8 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if losses each year exceed the accumulated funds available to the insurer under that policy. The maximum annual assessments under current policies for Alabama Power and Georgia Power for excess property damage would be $10 million and $11 million, respectively. The maximum replacement power assessments are $8 million for Alabama Power and $11 million for Georgia Power.
For all on-site property damage insurance policies for commercial nuclear power plants, the NRC requires that the proceeds of such policies issued or renewed on or after April 2, 1991, shall be dedicated first for the sole purpose of placing the reactor in a safe and stable condition after an accident. Any remaining proceeds are to be applied next toward the costs of decontamination and debris removal operations ordered by the NRC, and any further remaining proceeds are to be paid either to the company or to its bond trustees as may be appropriate under the policies and applicable trust indentures.
All retrospective assessments -- whether generated for liability, property, or replacement power -- may be subject to applicable state premium taxes.
14. ACQUISITIONS
In 1997, Southern Energy acquired a 26 percent interest in an integrated utility in Berlin, Germany for approximately $820 million. Southern Energy also completed in 1997 the acquisition of a 100 percent interest in Consolidated Electric Power Asia (CEPA) for a total net investment of some $2.1 billion. CEPA is the largest independent power producer in Asia. The acquisition has been accounted for under the purchase method of accounting. The acquisition cost exceeded the fair market value of net assets by approximately $1.6 billion. This amount is considered goodwill and is being amortized on a straight-line basis over 40 years.
CEPA has been included in the consolidated financial statements since January 29, 1997. The following unaudited pro forma results of operations for the years 1997 and 1996 have been prepared assuming the acquisition of CEPA, effective January 1, 1996. The pro forma results assume acquisition financing of $716 million of short-term borrowings, $792 million of long-term notes, and $600 million of capital securities. Southern Company's assumed effective composite interest rate on these obligations for each period was 6.82 percent.
In 1995, Southern Energy acquired SWEB for approximately $1.8 billion. The British utility distributes electricity to some 1.3 million customers. The acquisition has been accounted for under the purchase method of accounting. Goodwill of $287 million is being amortized over 40 years. SWEB has been included in the consolidated financial statements since September 1995. The following pro forma results of operations for the year 1995 has been prepared assuming the acquisition of SWEB, effective January 1, 1994, and assuming 100 percent short-term debt financing.
These unaudited pro forma results are not necessarily indicative of the actual results that would have been realized had the acquisitions occurred on the assumed dates, nor are they necessarily indicative of future results. Pro forma operating results are for information purposes only and are as follows:
II-37
1997 1996 1995
-----------------------------------------------------------------------------------
As Pro As Pro As Pro
Reported Forma Reported Forma Reported Forma
-----------------------------------------------------------------------------------
Operating revenues (in millions) $12,611 $12,632 $10,358 $10,506 $9,180 $10,013
Consolidated net income (in millions) $972 $977 $1,127 $1,109 $1,103 $1,144
Earnings per share $1.42 $1.43 $1.68 $1.65 $1.66 $1.72
15. SEGMENT AND RELATED INFORMATION
Effective December 31, 1997, Southern Company adopted FASB Statement No. 131, Disclosure About Segments of an Enterprise and
Related Information. Southern Company's principal business segment -- or its traditional core business -- is the five regulated
electric utility operating companies that provide electric service in four southeastern states. The other reportable business
segment is non-traditional energy services provided by Southern Energy, which develops and manages electricity and other
energy-related projects both in the United States and abroad including domestic energy trading and marketing. Intersegment revenues
are not material. Financial data for business segments, products and services, and geographic areas are as follows:
|
Business Segments
Regulated
Domestic Non-Traditional Services All
Electric ------------------------------------ Other Reconciling
Year Utilities International Domestic Total (Note) Eliminations Consolidated
-------------------------------- ----------------------------------------------------------------------------------------------
1997
---- (in millions)
Operating revenues $ 8,688 $1,748 $2,089 $ 3,837 $ 98 $ (12) $12,611
Depreciation and amortization 1,038 179 15 194 14 - 1,246
Interest income 51 96 42 138 21 (58) 152
Net interest charges 588 289 73 362 84 (41) 993
Income taxes from operations 735 24 (11) 13 (17) (6) 725
Windfall profits tax - 148 - 148 - - 148
Net income from equity
method subsidiaries - 41 7 48 - - 48
Segment net income (loss) 1,105 (4) 5 1 (123) (11) 972
Total assets 24,555 9,225 1,832 11,057 1,224 (1,565) 35,271
Investments in equity
method subsidiaries - 1,023 135 1,158 - 10 1,168
Gross property additions 1,080 720 1 721 58 - 1,859
Increase in goodwill - 1,649 - 1,649 - - 1,649
-------------------------------------------------------------------------------------------------- ------------- --------------
1996
-----
Operating revenues $ 8,639 $1,506 $177 $1,683 $ 50 $(14) $10,358
Depreciation and amortization 879 95 13 108 9 - 996
Interest income 36 15 2 17 20 (19) 54
Net interest charges 546 126 31 157 18 (2) 719
Income taxes from operations 755 16 (4) 12 (14) (6) 747
Net income from equity
method subsidiaries - 11 - 11 - - 11
Segment net income (loss) 1,086 88 4 92 (40) (11) 1,127
Total assets 24,899 4,320 604 4,924 450 (43) 30,230
Investments in equity
method subsidiaries - 227 - 227 - - 227
Gross property additions 1,033 157 8 165 31 - 1,229
Increase in goodwill - - - - - - -
-------------------------------------------------------------------------------------------------- ------------- ---------------
|
II-38
NOTES (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
Business Segments
Regulated
Domestic Non-Traditional Services All
Electric -------------------------------------- Other Reconciling
Year Utilities International Domestic Total (Note) Eliminations Consolidated
-------------------------------- --------------------------------------------------------------------------------------------
1995 (in millions)
Operating revenues $ 8,537 $ 561 $ 82 $ 643 $ - $ - $ 9,180
Depreciation and amortization 847 46 11 57 - - 904
Interest income 23 12 2 14 9 (8) 38
Net interest charges 611 54 19 73 20 (8) 696
Income taxes from operations 771 25 9 34 - - 805
Net income from equity
method subsidiaries - 11 - 11 - - 11
Segment net income (loss) 1,103 31 7 38 (38) - 1,103
Total assets 25,414 4,495 495 4,990 638 (520) 30,522
Investments in equity
method subsidiaries - 122 - 122 - 6 128
Gross property additions 1,213 123 13 136 52 - 1,401
Increase in goodwill - 287 - 287 - - 287
--------------------------------------------------------------------------------------------------------------------------------
(Note) The all other category includes parent Southern Company, which does not allocate operating expenses to business segments.
Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include a wireless
communication company and a developmental company for energy products and services. Non-traditional services exclude interest
expense to parent Southern Company.
|
Products and Services
Revenues
------------------------------------------------------------------------------------------
Non-Traditional Energy Services
Regulated ------------------------------------------------------------------------
Domestic Energy
Electric Trading
Year Utilities Generation Distribution Marketing Other Total
--------------- ------------------------------------------------------------------------------------------
(in millions)
1997 $8,688 $513 $1,282 $1,982 $60 $3,837
1996 8,639 242 1,309 77 55 1,683
1995 8,537 234 372 - 37 643
Geographic Areas
Revenues
--------------------------------------------------------------------------------------------------------------------------------
International
---------------------------------------------------------------
United Southeast All
Year Domestic Kingdom Asia Other Total Consolidated
--------- ----------------------------------------------------------------------------------------------------------
(in millions)
1997 $10,863 $1,282 $247 $219 $1,748 $12,611
1996 8,852 1,309 - 197 1,506 10,358
1995 8,619 372 - 189 561 9,180
|
II-39
Long-Lived Assets
----------------------------------------------------------------------------------------------------------
International
---------------------------------------------------------------
United Southeast All
Year Domestic Kingdom Asia Other Total Consolidated
--------- ----------------------------------------------------------------------------------------------------------
(in millions)
1997 $21,282 $2,428 $3,628 $1,888 $7,944 $29,226
1996 21,190 2,473 108 999 3,580 24,770
1995 21,114 2,232 - 973 3,205 24,319
16. QUARTERLY FINANCIAL INFORMATION (Unaudited)
Summarized quarterly financial data for 1997 and 1996 are as follows:
Per Common Share
----------------------------------------------------
Price Range
-----------------
Operating Operating Consolidated
Quarter Ended Revenues Income Net Income Earnings Dividends High Low
---------------------- --------------------------------------------- ----------------------------------------------------
(in millions)
March 1997 $2,585 $397 $187 $0.28 $0.325 233/8 203/4
June 1997 2,717 429 215 0.31 0.325 221/4 197/8
September 1997 4,071 720 375 0.55 0.325 23 2013/16
December 1997 3,238 394 195 0.28 0.325 261/4 22
March 1996 $2,429 $408 $233 $0.35 $0.315 257/8 223/8
June 1996 2,564 450 287 0.43 0.315 245/8 211/4
September 1996 2,932 665 468 0.69 0.315 245/8 213/4
December 1996 2,433 331 139 0.21 0.315 231/8 211/8
----------------------------------------------------------------------------------------------------------------------------------
Southern Company's business is influenced by seasonal weather conditions.
Earnings for the third quarter 1997 declined by $111 million or 16 cents per share as a result of a windfall profits tax being
assessed in the United Kingdom.
|
II-40
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997
Southern Company and Subsidiary Companies 1997 Annual Report
===================================================================================================================================
1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions) $12,611 $10,358 $9,180
Consolidated Net Income (in millions) $972 $1,127 $1,103
Basic and Diluted Earnings Per Share of Common Stock $1.42 $1.68 $1.66
Cash Dividends Paid Per Share of Common Stock $1.30 $1.26 $1.22
Return on Average Common Equity (percent) 10.30 12.53 13.01
Total Assets (in millions) $35,271 $30,230 $30,522
Gross Property Additions (in millions) $1,859 $1,229 $1,401
----------------------------------------------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $9,647 $9,216 $8,772
Preferred stock and securities 2,237 1,402 1,432
Long-term debt 10,274 7,938 8,274
----------------------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year $22,158 $18,556 $18,478
==================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 43.5 49.7 47.5
Preferred stock and securities 10.1 7.6 7.7
Long-term debt 46.4 42.7 44.8
----------------------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0 100.0
==================================================================================================================================
Other Common Stock Data:
Book value per share (year-end) $13.91 $13.61 $13.10
Market price per share:
High 26 1/4 25 7/8 25
Low 19 7/8 21 1/8 19 3/8
Close 25 7/8 22 5/8 24 5/8
Market-to-book ratio (year-end) (percent) 186.0 166.2 188.0
Price-earnings ratio (year-end) (times) 18.2 13.5 14.8
Dividends paid (in millions) $889 $846 $811
Dividend yield (year-end) (percent) 5.0 5.6 5.0
Dividend payout ratio (percent) 91.5 75.1 73.5
Cash coverage of dividends (year-end) (times) 2.8 2.9 2.9
Proceeds from sales of stock (in millions) $360 $171 $277
Shares outstanding (in thousands):
Average 685,033 672,590 665,064
Year-end 693,423 677,036 669,543
Stockholders of record (year-end) 200,508 215,246 225,739
----------------------------------------------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $- $85 $375
Retired 168 426 538
Preferred Stock and Capital and Preferred Securities (in millions):
Issued $1,321 $322 $--
Retired 660 179 1
----------------------------------------------------------------------------------------------------------------------------------
Traditional Core Business Customers (year-end) (in thousands):
Residential 3,220 3,157 3,100
Commercial 479 464 450
Industrial 16 17 17
Other 5 5 5
----------------------------------------------------------------------------------------------------------------------------------
Total 3,720 3,643 3,572
==================================================================================================================================
Employees (year-end):
Traditional core business 24,667 25,034 26,452
Southern Energy 6,089 4,212 5,430
----------------------------------------------------------------------------------------------------------------------------------
Total 30,756 29,246 31,882
==================================================================================================================================
II-41
|
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997
Southern Company and Subsidiary Companies 1997 Annual Report
==========================================================================================================================
1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions) $8,297 $8,489 $8,073
Consolidated Net Income (in millions) $989 $1,002 $953
Basic and Diluted Earnings Per Share of Common Stock $1.52 $1.57 $1.51
Cash Dividends Paid Per Share of Common Stock $1.18 $1.14 $1.10
Return on Average Common Equity (percent) 12.47 13.43 13.42
Total Assets (in millions) $27,042 $25,911 $20,038
Gross Property Additions (in millions) $1,536 $1,441 $1,105
-------------------------------------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $8,186 $7,684 $7,234
Preferred stock and securities 1,432 1,333 1,359
Long-term debt 7,593 7,412 7,241
-------------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year $17,211 $16,429 $15,834
=========================================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.6 46.8 45.7
Preferred stock and securities 8.3 8.1 8.6
Long-term debt 44.1 45.1 45.7
-------------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0 100.0
=========================================================================================================================
Other Common Stock Data:
Book value per share (year-end) $12.47 $11.96 $11.43
Market price per share:
High 22 23 5/8 19 1/2
Low 17 18 3/8 15 1/8
Close 20 22 19 1/4
Market-to-book ratio (year-end) (percent) 160.4 183.9 168.4
Price-earnings ratio (year-end) (times) 13.2 14.0 12.7
Dividends paid (in millions) $766 $726 $695
Dividend yield (year-end) (percent) 5.9 5.2 5.7
Dividend payout ratio (percent) 77.5 72.4 72.9
Cash coverage of dividends (year-end) (times) 2.7 2.9 2.8
Proceeds from sales of stock (in millions) $279 $204 $30
Shares outstanding (in thousands):
Average 649,927 637,319 631,844
Year-end 656,528 642,662 632,917
Stockholders of record (year-end) 234,927 237,105 247,378
-------------------------------------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $185 $2,185 $1,815
Retired 241 2,178 2,575
Preferred Stock and Capital and Preferred Securities (in millions):
Issued $100 $426 $410
Retired 1 516 326
-------------------------------------------------------------------------------------------------------------------------
Traditional Core Business Customers (year-end) (in thousands):
Residential 3,046 2,996 2,950
Commercial 439 427 414
Industrial 17 18 18
Other 5 4 4
-------------------------------------------------------------------------------------------------------------------------
Total 3,507 3,445 3,386
=========================================================================================================================
Employees (year-end):
Traditional core business 27,480 28,516 28,872
Southern Energy 1,400 745 213
-------------------------------------------------------------------------------------------------------------------------
Total 28,880 29,261 29,085
=========================================================================================================================
II-42A
|
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997
Southern Company and Subsidiary Companies 1997 Annual Report
===================================================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions) $8,050 $8,053 $7,620
Consolidated Net Income (in millions) $876 $604 $846
Basic and Diluted Earnings Per Share of Common Stock $1.39 $0.96 $1.34
Cash Dividends Paid Per Share of Common Stock $1.07 $1.07 $1.07
Return on Average Common Equity (percent) 12.74 8.85 12.49
Total Assets (in millions) $19,863 $19,955 $20,092
Gross Property Additions (in millions) $1,123 $1,185 $1,346
-----------------------------------------------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $6,976 $6,783 $6,861
Preferred stock and securities 1,333 1,358 1,400
Long-term debt 7,992 8,458 8,575
-----------------------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year $16,301 $16,599 $16,836
===================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 42.8 40.9 40.8
Preferred stock and securities 8.2 8.2 8.3
Long-term debt 49.0 50.9 50.9
-----------------------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0 100.0
===================================================================================================================================
Other Common Stock Data:
Book value per share (year-end) $11.05 $10.74 $10.87
Market price per share:
High 17 3/8 14 5/8 14 7/8
Low 12 7/8 11 1/2 11
Close 17 1/8 13 7/8 14 1/2
Market-to-book ratio (year-end) (percent) 155.5 129.7 134.0
Price-earnings ratio (year-end) (times) 12.4 14.6 10.9
Dividends paid (in millions) $676 $676 $675
Dividend yield (year-end) (percent) 6.2 7.7 7.3
Dividend payout ratio (percent) 77.1 111.8 79.8
Cash coverage of dividends (year-end)(times) 2.5 2.8 2.6
Proceeds from sales of stock (in millions) $-- $-- $4
Shares outstanding (in thousands):
Average 631,307 631,307 631,303
Year-end 631,307 631,307 631,307
Stockholders of record (year-end) 254,568 263,046 273,751
-----------------------------------------------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $380 $300 $280
Retired 881 146 201
Preferred Stock and Capital and Preferred Securities (in millions):
Issued $100 $-- $--
Retired 125 96 21
-----------------------------------------------------------------------------------------------------------------------------------
Traditional Core Business Customers (year-end) (in thousands):
Residential 2,903 2,865 2,824
Commercial 403 396 392
Industrial 18 18 18
Other 4 4 4
-----------------------------------------------------------------------------------------------------------------------------------
Total 3,328 3,283 3,238
===================================================================================================================================
Employees (year-end):
Traditional core business 30,144 30,087 30,368
Southern Energy 258 176 162
-----------------------------------------------------------------------------------------------------------------------------------
Total 30,402 30,263 30,530
===================================================================================================================================
|
II-42B
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997
Southern Company and Subsidiary Companies 1997 Annual Report
===================================================================================================================
1988 1987
-------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions) $7,287 $7,204
Consolidated Net Income (in millions) $846 $577
Basic and Diluted Earnings Per Share of Common Stock $1.36 $0.96
Cash Dividends Paid Per Share of Common Stock $1.07 $1.07
Return on Average Common Equity (percent) 13.03 9.27
Total Assets (in millions) $19,731 $19,518
Gross Property Additions (in millions) $1,754 $1,853
-------------------------------------------------------------------------------------------------------------------
Capitalization (in millions):
Common stock equity $6,686 $6,307
Preferred stock and securities 1,465 1,363
Long-term debt 8,433 8,333
-------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year $16,584 $16,003
===================================================================================================================
Capitalization Ratios (percent):
Common stock equity 40.3 39.4
Preferred stock and securities 8.8 8.5
Long-term debt 50.9 52.1
-------------------------------------------------------------------------------------------------------------------
Total excluding amounts due within one year 100.0 100.0
===================================================================================================================
Other Common Stock Data:
Book value per share (year-end) $10.60 $10.28
Market price per share:
High 12 1/8 14 1/2
Low 10 1/8 8 7/8
Close 11 1/8 11 1/8
Market-to-book ratio (year-end) (percent) 105.5 108.8
Price-earnings ratio (year-end) (times) 8.2 11.7
Dividends paid (in millions) $661 $628
Dividend yield (year-end) (percent) 9.6 9.6
Dividend payout ratio (percent) 78.1 108.9
Cash coverage of dividends (year-end) (times) 2.3 2.0
Proceeds from sales of stock (in millions) $194 $247
Shares outstanding (in thousands):
Average 622,292 601,390
Year-end 630,898 613,565
Stockholders of record (year-end) 290,725 296,079
-------------------------------------------------------------------------------------------------------------------
First Mortgage Bonds (in millions):
Issued $335 $700
Retired 273 369
Preferred Stock and Capital and Preferred Securities (in millions):
Issued $120 $125
Retired 10 160
-------------------------------------------------------------------------------------------------------------------
Traditional Core Business Customers (year-end) (in thousands):
Residential 2,781 2,733
Commercial 384 374
Industrial 18 18
Other 4 4
-------------------------------------------------------------------------------------------------------------------
Total 3,187 3,129
===================================================================================================================
Employees (year-end):
Traditional core business 32,366 32,557
Southern Energy 157 55
-------------------------------------------------------------------------------------------------------------------
Total 32,523 32,612
===================================================================================================================
|
II-42C
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997 (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
==============================================================================================================================
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions):
Residential $2,837 $2,894 $2,840
Commercial 2,595 2,559 2,485
Industrial 2,139 2,136 2,206
Other 76 76 72
------------------------------------------------------------------------------------------------------------------------------
Total retail 7,647 7,665 7,603
Sales for resale within service area 381 409 399
Sales for resale outside service area 505 429 415
------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 8,533 8,503 8,417
Southern Energy 3,837 1,683 643
Other revenues 241 172 120
------------------------------------------------------------------------------------------------------------------------------
Total $12,611 $10,358 $9,180
==============================================================================================================================
Kilowatt-Hour Sales (in millions):
Residential 39,217 40,117 39,147
Commercial 38,926 37,993 35,938
Industrial 54,196 52,798 51,644
Other 903 911 863
------------------------------------------------------------------------------------------------------------------------------
Total retail 133,242 131,819 127,592
Sales for resale within service area 9,884 10,935 9,472
Sales for resale outside service area 13,325 10,777 9,143
------------------------------------------------------------------------------------------------------------------------------
Total 156,451 153,531 146,207
==============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.23 7.21 7.25
Commercial 6.67 6.74 6.91
Industrial 3.95 4.04 4.27
Total retail 5.74 5.81 5.96
Sales for resale 3.82 3.86 4.38
Total sales 5.45 5.54 5.76
Average Annual Kilowatt-Hour Use Per Residential Customer 12,296 12,824 12,722
Average Annual Revenue Per Residential Customer $889.50 $925.12 $922.83
Plant Nameplate Capacity Owned (year-end) (megawatts 31,146 31,076 30,733
Maximum Peak-Hour Demand (megawatts):
Winter 22,969 22,631 21,422
Summer 27,334 27,190 27,420
System Reserve Margin (at peak)(percent) 15.0 14.0 9.4
Annual Load Factor (percent) 59.4 62.3 59.5
Plant Availability (percent):
Fossil-steam 88.2 86.4 86.7
Nuclear 88.8 89.7 88.3
------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 74.8 73.3 72.5
Nuclear 16.6 16.7 16.4
Hydro 4.4 4.1 4.1
Oil and gas 1.7 1.5 1.7
Purchased power 2.5 4.4 5.3
------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,035 10,257 10,099
Cost of fuel per million BTU (cents) 145.81 144.02 151.70
Average cost of fuel per net kilowatt-hour generated (cents) 1.46 1.48 1.53
------------------------------------------------------------------------------------------------------------------------------
|
II-43
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997 (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
===============================================================================================================================
1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions):
Residential $2,560 $2,696 $2,402
Commercial 2,357 2,313 2,181
Industrial 2,162 2,200 2,126
Other 70 68 64
--------------------------------------------------------------------------------------------------------------------------------
Total retail 7,149 7,277 6,773
Sales for resale within service area 360 447 409
Sales for resale outside service area 505 613 797
--------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 8,014 8,337 7,979
Southern Energy 185 54 -
Other revenues 98 98 94
--------------------------------------------------------------------------------------------------------------------------------
Total $8,297 $8,489 $8,073
================================================================================================================================
Kilowatt-Hour Sales (in millions):
Residential 35,836 36,807 33,627
Commercial 34,080 32,847 31,025
Industrial 50,311 48,738 47,816
Other 844 814 777
--------------------------------------------------------------------------------------------------------------------------------
Total retail 121,071 119,206 113,245
Sales for resale within service area 8,151 13,258 12,107
Sales for resale outside service area 10,769 12,445 16,632
--------------------------------------------------------------------------------------------------------------------------------
Total 139,991 144,909 141,984
================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.14 7.32 7.14
Commercial 6.92 7.04 7.03
Industrial 4.30 4.51 4.45
Total retail 5.90 6.10 5.98
Sales for resale 4.57 4.12 4.20
Total sales 5.72 5.75 5.62
Average Annual Kilowatt-Hour Use Per Residential Customer 11,851 12,378 11,490
Average Annual Revenue Per Residential Customer $846.48 $906.60 $820.67
Plant Nameplate Capacity Owned (year-end) (megawatts) 29,932 29,513 29,830
Maximum Peak-Hour Demand (megawatts):
Winter 22,254 19,432 19,121
Summer 24,546 25,937 24,146
System Reserve Margin (at peak)(percent) 19.3 13.2 14.3
Annual Load Factor (percent) 63.5 59.4 60.3
Plant Availability (percent):
Fossil-steam 85.2 87.9 88.6
Nuclear 89.8 85.9 85.2
--------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 70.8 73.0 71.7
Nuclear 17.9 16.3 16.2
Hydro 4.7 3.9 4.6
Oil and gas 0.9 0.9 0.5
Purchased power 5.7 5.9 7.0
--------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
================================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,010 9,994 9,976
Cost of fuel per million BTU (cents) 155.81 166.85 162.58
Average cost of fuel per net kilowatt-hour generated (cents) 1.56 1.67 1.62
--------------------------------------------------------------------------------------------------------------------------------
|
II-44A
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997 (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
=============================================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions):
Residential $2,391 $2,342 $2,194
Commercial 2,122 2,062 1,965
Industrial 2,088 2,085 2,011
Other 65 64 60
-----------------------------------------------------------------------------------------------------------------------------
Total retail 6,666 6,553 6,230
Sales for resale within service area 417 412 401
Sales for resale outside service area 884 977 928
-----------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 7,967 7,942 7,559
Southern Energy - - -
Other revenues 83 111 61
-----------------------------------------------------------------------------------------------------------------------------
Total $8,050 $8,053 $7,620
=============================================================================================================================
Kilowatt-Hour Sales (in millions):
Residential 33,622 33,118 31,627
Commercial 30,379 29,658 28,454
Industrial 46,050 45,974 45,022
Other 817 806 787
-----------------------------------------------------------------------------------------------------------------------------
Total retail 110,868 109,556 105,890
Sales for resale within service area 12,320 11,134 11,419
Sales for resale outside service area 19,839 24,402 24,228
-----------------------------------------------------------------------------------------------------------------------------
Total 143,027 145,092 141,537
=============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.11 7.07 6.94
Commercial 6.99 6.96 6.91
Industrial 4.53 4.53 4.47
Total retail 6.01 5.98 5.88
Sales for resale 4.05 3.91 3.73
Total sales 5.57 5.47 5.34
Average Annual Kilowatt-Hour Use Per Residential Customer 11,659 11,637 11,287
Average Annual Revenue Per Residential Customer $829.18 $822.93 $782.90
Plant Nameplate Capacity Owned (year-end)(megawatts) 29,915 29,532 29,532
Maximum Peak-Hour Demand (megawatts):
Winter 19,166 17,629 20,772
Summer 25,261 25,981 24,399
System Reserve Margin (at peak) (percent) 16.5 14.0 21.0
Annual Load Factor (percent) 58.3 56.6 58.6
Plant Availability (percent):
Fossil-steam 91.3 91.9 92.2
Nuclear 83.4 83.0 87.0
-----------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 72.6 72.1 71.5
Nuclear 16.2 15.6 15.7
Hydro 4.4 4.4 5.2
Oil and gas 0.6 1.3 1.1
Purchased power 6.2 6.6 6.5
-----------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,022 10,065 10,086
Cost of fuel per million BTU (cents) 168.28 172.81 171.00
Average cost of fuel per net kilowatt-hour generated (cents) 1.69 1.74 1.72
-----------------------------------------------------------------------------------------------------------------------------
|
II-44B
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA 1987 - 1997 (continued)
Southern Company and Subsidiary Companies 1997 Annual Report
======================================================================================================================
1988 1987
-----------------------------------------------------------------------------------------------------------------------
Operating Revenues (in millions):
Residential $2,103 $2,042
Commercial 1,835 1,692
Industrial 1,945 1,870
Other 56 54
-----------------------------------------------------------------------------------------------------------------------
Total retail 5,939 5,658
Sales for resale within service area 480 461
Sales for resale outside service area 777 1,028
-----------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 7,196 7,147
Southern Energy - -
Other revenues 91 57
-----------------------------------------------------------------------------------------------------------------------
Total $7,287 $7,204
=======================================================================================================================
Kilowatt-Hour Sales (in millions):
Residential 31,041 30,583
Commercial 27,005 25,593
Industrial 43,675 42,113
Other 763 737
-----------------------------------------------------------------------------------------------------------------------
Total retail 102,484 99,026
Sales for resale within service area 14,806 13,282
Sales for resale outside service area 15,860 22,905
-----------------------------------------------------------------------------------------------------------------------
Total 133,150 135,213
=======================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.77 6.68
Commercial 6.79 6.61
Industrial 4.45 4.44
Total retail 5.80 5.71
Sales for resale 4.10 4.11
Total sales 5.40 5.29
Average Annual Kilowatt-Hour Use Per Residential Customer 11,255 11,307
Average Annual Revenue Per Residential Customer $762.42 $754.96
Plant Nameplate Capacity Owned (year-end)(megawatts) 27,552 27,610
Maximum Peak-Hour Demand (megawatts):
Winter 18,685 18,185
Summer 23,641 23,194
System Reserve Margin (at peak) (percent) 15.0 16.2
Annual Load Factor (percent) 59.8 58.7
Plant Availability (percent):
Fossil-steam 91.3 91.2
Nuclear 78.4 84.5
-----------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 77.7 77.8
Nuclear 14.5 13.1
Hydro 2.3 3.3
Oil and gas 0.7 0.6
Purchased power 4.8 5.2
------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0
=======================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,094 10,122
Cost of fuel per million BTU (cents) 170.36 176.64
Average cost of fuel per net kilowatt-hour generated (cents) 1.72 1.78
-----------------------------------------------------------------------------------------------------------------------
|
II-44C
CONSOLIDATED OPERATING AREA CAPABILITY, POWER SUPPLY AND
FUEL ECONOMY DATA
Southern Company and Subsidiary Companies
=========================================================================================================================
At Time of Peak 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------
Operating Area Capability (Megawatts)
Plants:
Fossil - Coal 22,504 22,512 22,514
- Gas & Oil 4,220 4,074 3,744
-------------------------------------------------------------------------------------------------------------------------
Total 26,724 26,586 26,258
Nuclear 4,414 4,404 4,328
Hydro 2,652 2,744 2,780
-------------------------------------------------------------------------------------------------------------------------
Plant Capability 33,790 33,734 33,366
Firm Capacity Purchases 1,201 791 196
-------------------------------------------------------------------------------------------------------------------------
Total Operating Area Capability 34,991 34,525 33,562
=========================================================================================================================
=========================================================================================================================
Years Ended December 31, 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------
Power Supply Data (Millions of Kilowatt-hour)
Generated:
Fossil - Coal 123,030 119,382 112,157
- Gas 2,593 1,991 2,315
- Oil 180 364 385
-------------------------------------------------------------------------------------------------------------------------
Total 125,803 121,737 114,857
Nuclear 27,225 27,119 25,351
Hydro 7,156 6,665 6,377
-------------------------------------------------------------------------------------------------------------------------
Total Energy Generated 160,184 155,521 146,585
Purchased Power 4,183 7,227 8,259
-------------------------------------------------------------------------------------------------------------------------
Total Energy Generated and Received 164,367 162,748 154,844
=========================================================================================================================
=========================================================================================================================
Years Ended December 31, 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------
Fossil Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 9,881 10,139 9,915
Cost of Fuel per Million BTU (Cents) 168.73 166.84 176.46
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.67 1.69 1.75
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Nuclear Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 10,738 10,782 10,924
Cost of Fuel per Million BTU (Cents) 49.23 48.51 50.82
Fuel Cost per Net Kilowatt-hour Generated (Cents) 0.53 0.52 0.56
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Total Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 10,035 10,257 10,099
Cost of Fuel per Million BTU (Cents) 145.81 144.02 151.70
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.46 1.48 1.53
-------------------------------------------------------------------------------------------------------------------------
|
II-45
CONSOLIDATED OPERATING AREA CAPABILITY, POWER SUPPLY AND
FUEL ECONOMY DATA
Southern Company and Subsidiary Companies
==================================================================================================================
At Time of Peak 1994 1993 1992
------------------------------------------------------------------------------------------------------------------
Operating Area Capability (Megawatts)
Plants:
Fossil - Coal 22,668 22,770 22,708
- Gas & Oil 3,004 2,519 2,483
------------------------------------------------------------------------------------------------------------------
Total 25,672 25,289 25,191
Nuclear 4,338 4,317 4,260
Hydro 2,567 2,567 2,592
------------------------------------------------------------------------------------------------------------------
Plant Capability 32,577 32,173 32,043
Firm Capacity Purchases 391 (1) (1,366)
------------------------------------------------------------------------------------------------------------------
Total Operating Area Capability 32,968 32,172 30,677
==================================================================================================================
==================================================================================================================
Years Ended December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------------
Power Supply Data (Millions of Kilowatt-hour)
Generated:
Fossil - Coal 106,263 111,912 107,537
- Gas 1,224 1,106 727
- Oil 106 204 74
------------------------------------------------------------------------------------------------------------------
Total 107,593 113,222 108,338
Nuclear 26,902 24,993 24,328
Hydro 7,043 5,971 6,919
------------------------------------------------------------------------------------------------------------------
Total Energy Generated 141,538 144,186 139,585
Purchased Power 8,612 9,076 10,453
------------------------------------------------------------------------------------------------------------------
Total Energy Generated and Received 150,150 153,262 150,038
==================================================================================================================
==================================================================================================================
Years Ended December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------------
Fossil Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 9,807 9,790 9,755
Cost of Fuel per Million BTU (Cents) 184.60 195.75 191.22
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.81 1.92 1.87
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Nuclear Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 10,814 10,912 10,958
Cost of Fuel per Million BTU (Cents) 52.22 49.94 49.66
Fuel Cost per Net Kilowatt-hour Generated (Cents) 0.56 0.54 0.54
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Total Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 10,010 9,994 9,976
Cost of Fuel per Million BTU (Cents) 155.81 166.85 162.58
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.56 1.67 1.62
------------------------------------------------------------------------------------------------------------------
|
II-46A
CONSOLIDATED OPERATING AREA CAPABILITY, POWER SUPPLY AND
FUEL ECONOMY DATA
Southern Company and Subsidiary Companies
==================================================================================================================
At Time of Peak 1991 1990 1989
------------------------------------------------------------------------------------------------------------------
Operating Area Capability (Megawatts)
Plants:
Fossil - Coal 24,191 23,807 23,824
- Gas & Oil 2,338 2,327 2,324
------------------------------------------------------------------------------------------------------------------
Total 26,529 26,134 26,148
Nuclear 5,356 5,385 5,361
Hydro 2,592 2,592 2,592
------------------------------------------------------------------------------------------------------------------
Plant Capability 34,477 34,111 34,101
Firm Capacity Purchases (1,041) (949) (947)
------------------------------------------------------------------------------------------------------------------
Total Operating Area Capability 33,436 33,162 33,154
==================================================================================================================
==================================================================================================================
Years Ended December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------
Power Supply Data (Millions of Kilowatt-hour)
Generated:
Fossil - Coal 109,674 110,442 106,878
- Gas 962 1,776 1,501
- Oil 30 96 91
------------------------------------------------------------------------------------------------------------------
Total 110,666 112,314 108,470
Nuclear 24,464 23,958 23,471
Hydro 6,666 6,773 7,851
------------------------------------------------------------------------------------------------------------------
Total Energy Generated 141,796 143,045 139,792
Purchased Power 9,347 10,168 9,670
------------------------------------------------------------------------------------------------------------------
Total Energy Generated and Received 151,143 153,213 149,462
==================================================================================================================
==================================================================================================================
Years Ended December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------
Fossil Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 9,811 9,869 9,898
Cost of Fuel per Million BTU (Cents) 195.09 197.53 193.16
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.91 1.95 1.91
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Nuclear Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 10,972 10,980 10,951
Cost of Fuel per Million BTU (Cents) 60.37 69.10 78.61
Fuel Cost per Net Kilowatt-hour Generated (Cents) 0.66 0.76 0.86
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Total Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 10,022 10,065 10,086
Cost of Fuel per Million BTU (Cents) 168.28 172.81 171.00
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.69 1.74 1.72
------------------------------------------------------------------------------------------------------------------
|
II-46B
CONSOLIDATED OPERATING AREA CAPABILITY, POWER SUPPLY AND
FUEL ECONOMY DATA
Southern Company and Subsidiary Companies
================================================================================================
At Time of Peak 1988 1987
------------------------------------------------------------------------------------------------
Operating Area Capability (Megawatts)
Plants:
Fossil - Coal 22,255 22,274
- Gas & Oil 2,295 2,338
------------------------------------------------------------------------------------------------
Total 24,550 24,612
Nuclear 4,258 4,277
Hydro 2,592 2,591
------------------------------------------------------------------------------------------------
Plant Capability 31,400 31,480
Firm Capacity Purchases (923) (1,626)
------------------------------------------------------------------------------------------------
Total Operating Area Capability 30,477 29,854
================================================================================================
================================================================================================
Years Ended December 31, 1988 1987
------------------------------------------------------------------------------------------------
Power Supply Data (Millions of Kilowatt-hour)
Generated:
Fossil - Coal 108,936 110,591
- Gas 644 673
- Oil 200 134
------------------------------------------------------------------------------------------------
Total 109,780 111,398
Nuclear 20,368 18,572
Hydro 3,285 4,697
------------------------------------------------------------------------------------------------
Total Energy Generated 133,433 134,667
Purchased Power 6,694 7,436
------------------------------------------------------------------------------------------------
Total Energy Generated and Received 140,127 142,103
================================================================================================
================================================================================================
Years Ended December 31, 1988 1987
------------------------------------------------------------------------------------------------
Fossil Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 9,921 9,961
Cost of Fuel per Million BTU (Cents) 189.88 195.27
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.88 1.95
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Nuclear Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 11,027 11,086
Cost of Fuel per Million BTU (Cents) 75.67 76.28
Fuel Cost per Net Kilowatt-hour Generated (Cents) 0.83 0.85
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Total Fuel Economy Data:
BTU per Net Kilowatt-hour Generated 10,094 10,122
Cost of Fuel per Million BTU (Cents) 170.36 176.64
Fuel Cost per Net Kilowatt-hour Generated (Cents) 1.72 1.78
------------------------------------------------------------------------------------------------
|
II-46C
CONSOLIDATED STATEMENTS OF INCOME
Southern Company and Subsidiary Companies
==============================================================================================================================
For the Years Ended December 31, 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues $ 12,611 $ 10,358 $ 9,180
------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,281 2,245 2,126
Purchased power 3,033 1,103 491
Proceeds from settlement of disputed contracts - - -
Other 1,930 1,860 1,626
Maintenance 763 782 683
Depreciation and amortization 1,246 996 904
Amortization of deferred Plant Vogtle costs, net 121 137 124
Taxes other than income taxes 572 634 535
Income taxes 725 747 805
------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 10,671 8,504 7,294
------------------------------------------------------------------------------------------------------------------------------
Operating Income 1,940 1,854 1,886
Other Income:
Allowance for equity funds used during construction 6 4 5
Deferred return on Plant Vogtle - - -
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 152 54 38
Other, net 53 42 (65)
Income taxes applicable to other income (114) (10) 36
------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 2,037 1,944 1,900
------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 678 530 557
Allowance for debt funds used during construction (14) (19) (20)
Interest on notes payable 112 107 63
Amortization of debt discount, premium, and expense, net 34 33 44
Other interest charges 63 46 43
Minority interest in subsidiaries 29 13 13
Distributions on preferred securities of subsidiary companies 120 22 9
Preferred dividends of subsidiary companies 43 85 88
------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 1,065 817 797
------------------------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 972 $ 1,127 $ 1,103
==============================================================================================================================
Earnings Per Share of Common Stock $1.42 $1.68 $1.66
Average Number of Shares of Common Stock Outstanding (Thousands) 685,033 672,590 665,064
==============================================================================================================================
|
II-47
CONSOLIDATED STATEMENTS OF INCOME
Southern Company and Subsidiary Companies
==================================================================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues $ 8,297 $ 8,489 $ 8,073
----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,058 2,265 2,114
Purchased power 277 336 454
Proceeds from settlement of disputed contracts - (3) (7)
Other 1,505 1,448 1,317
Maintenance 660 653 613
Depreciation and amortization 821 793 768
Amortization of deferred Plant Vogtle costs, net 75 36 (31)
Taxes other than income taxes 475 462 436
Income taxes 711 734 647
----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 6,582 6,724 6,311
---------------------------------------------------------------------------------------------------------------------------------
Operating Income 1,715 1,765 1,762
Other Income:
Allowance for equity funds used during construction 11 9 10
Deferred return on Plant Vogtle - - -
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 32 30 32
Other, net (28) (34) (50)
Income taxes applicable to other income 26 57 39
----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,756 1,827 1,793
----------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 568 595 684
Allowance for debt funds used during construction (18) (13) (12)
Interest on notes payable 33 30 16
Amortization of debt discount, premium, and expense, net 30 26 14
Other interest charges 47 87 34
Minority interest in subsidiaries 20 7 -
Distributions on preferred securities of subsidiary companies - - -
Preferred dividends of subsidiary companies 87 93 104
---------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 767 825 840
----------------------------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 989 $ 1,002 $ 953
==================================================================================================================================
Earnings Per Share of Common Stock $1.52 $1.57 $1.51
Average Number of Shares of Common Stock Outstanding (Thousands) 649,927 637,319 631,844
==================================================================================================================================
|
II-48A
CONSOLIDATED STATEMENTS OF INCOME
Southern Company and Subsidiary Companies
==================================================================================================================================
For the Years Ended December 31, 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues $ 8,050 $ 8,053 $ 7,620
----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,237 2,327 2,241
Purchased power 468 642 575
Proceeds from settlement of disputed contracts (181) - -
Other 1,321 1,161 1,103
Maintenance 637 602 542
Depreciation and amortization 763 749 698
Amortization of deferred Plant Vogtle costs, net 16 31 (39)
Taxes other than income taxes 432 397 356
Income taxes 618 520 525
----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 6,311 6,429 6,001
----------------------------------------------------------------------------------------------------------------------------------
Operating Income 1,739 1,624 1,619
Other Income:
Allowance for equity funds used during construction 13 33 71
Deferred return on Plant Vogtle 35 83 48
Write-off of Plant Vogtle costs - (281) -
Income tax reduction for write-off of Plant Vogtle costs - 63 -
Interest income 30 28 28
Other, net (57) (55) (50)
Income taxes applicable to other income 21 36 30
----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,781 1,531 1,746
----------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 757 788 791
Allowance for debt funds used during construction (18) (34) (63)
Interest on notes payable 20 22 12
Amortization of debt discount, premium, and expense, net 9 10 11
Other interest charges 29 26 26
Minority interest in subsidiaries - - -
Distributions on preferred securities of subsidiary companies - - -
Preferred dividends of subsidiary companies 108 115 123
----------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 905 927 900
----------------------------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 876 $ 604 $ 846
==================================================================================================================================
Earnings Per Share of Common Stock $1.39 $0.96 $1.34
Average Number of Shares of Common Stock Outstanding (Thousands) 631,307 631,307 631,303
==================================================================================================================================
|
II-48B
CONSOLIDATED STATEMENTS OF INCOME
Southern Company and Subsidiary Companies
====================================================================================================================
For the Years Ended December 31, 1988 1987
--------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
--------------------------------------------------------------------------------------------------------------------
Operating Revenues $ 7,287 $ 7,204
--------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 2,213 2,303
Purchased power 562 552
Proceeds from settlement of disputed contracts - -
Other 1,167 1,219
Maintenance 547 574
Depreciation and amortization 632 563
Amortization of deferred Plant Vogtle costs, net (8) (142)
Taxes other than income taxes 362 349
Income taxes 412 517
--------------------------------------------------------------------------------------------------------------------
Total operating expenses 5,887 5,935
--------------------------------------------------------------------------------------------------------------------
Operating Income 1,400 1,269
Other Income:
Allowance for equity funds used during construction 138 190
Deferred return on Plant Vogtle 107 115
Write-off of Plant Vogtle costs - (358)
Income tax reduction for write-off of Plant Vogtle costs - 129
Interest income 46 77
Other, net (30) (59)
Income taxes applicable to other income 23 19
--------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,684 1,382
--------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 784 776
Allowance for debt funds used during construction (130) (157)
Interest on notes payable 22 24
Amortization of debt discount, premium, and expense, net 10 8
Other interest charges 32 29
Minority interest in subsidiaries - -
Distributions on preferred securities of subsidiary companies - -
Preferred dividends of subsidiary companies 120 125
--------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 838 805
--------------------------------------------------------------------------------------------------------------------
Consolidated Net Income $ 846 $ 577
====================================================================================================================
Earnings Per Share of Common Stock $1.36 $0.96
Average Number of Shares of Common Stock Outstanding (Thousands) 622,292 601,390
====================================================================================================================
|
II-48C
CONSOLIDATED STATEMENTS OF CASH FLOWS
Southern Company and Subsidiary Companies
===================================================================================================================================
For the Years Ended December 31, 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
Operating Activities:
Consolidated net income $ 972 $ 1,127 $ 1,103
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 1,471 1,201 1,134
Deferred income taxes (5) 57 116
Deferred investment tax credits - - 1
Allowance for equity funds used during construction (6) (4) (5)
Amortization of deferred Plant Vogtle costs, net 121 137 124
Write-off of Plant Vogtle costs - - -
Non-cash proceeds from settlement of disputed contracts - - -
Other, net (86) (5) (154)
Changes in certain current assets and liabilities --
Receivables (238) (92) (109)
Inventories 77 104 39
Payables 138 19 (138)
Taxes accrued 125 (69) -
Other 56 (74) 204
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 2,625 2,401 2,315
-----------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,859) (1,229) (1,401)
Southern Energy business acquisitions (2,925) - (1,416)
Sales of property 32 211 287
Other (13) (275) 153
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (4,765) (1,293) (2,377)
-----------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Common stock 360 171 277
Preferred securities 1,321 322 -
Preferred stock - - -
First mortgage bonds - 85 375
Pollution control bonds 405 167 731
Other long-term debt 2,094 1,403 1,074
Prepaid capacity revenues - - -
Retirements:
Preferred stock (660) (179) (1)
First mortgage bonds (168) (426) (538)
Pollution control bonds (340) (174) (721)
Other long-term debt (462) (1,580) (181)
Increase (decrease) in notes payable, net 509 (268) 727
Payment of common stock dividends (889) (846) (811)
Miscellaneous 126 (110) (237)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 2,296 (1,435) 695
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 156 (327) 633
Cash and Cash Equivalents at Beginning of Year 445 772 139
-----------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 601 $ 445 $ 772
===================================================================================================================================
( ) Denotes use of cash.
|
II-49
CONSOLIDATED STATEMENTS OF CASH FLOWS
Southern Company and Subsidiary Companies
============================================================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
Operating Activities:
Consolidated net income $ 989 $ 1,002 $ 953
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 1,050 1,011 969
Deferred income taxes (3) 209 221
Deferred investment tax credits (1) (20) (6)
Allowance for equity funds used during construction (11) (9) (10)
Amortization of deferred Plant Vogtle costs, net 75 36 (31)
Write-off of Plant Vogtle costs - - -
Non-cash proceeds from settlement of disputed contracts - - (7)
Other, net (7) (45) (25)
Changes in certain current assets and liabilities --
Receivables 114 (55) (10)
Inventories (128) 136 (23)
Payables 81 43 35
Taxes accrued - 3 (62)
Other (48) (64) (9)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 2,111 2,247 1,995
----------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,536) (1,441) (1,105)
Southern Energy business acquisitions (405) (465) -
Sales of property 171 262 44
Other (87) (37) 61
----------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (1,857) (1,681) (1,000)
----------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Common stock 279 205 30
Preferred securities 100 - -
Preferred stock - 426 410
First mortgage bonds 185 2,185 1,815
Pollution control bonds 749 386 208
Other long-term debt 439 206 48
Prepaid capacity revenues - - -
Retirements:
Preferred stock (1) (516) (326)
First mortgage bonds (241) (2,178) (2,575)
Pollution control bonds (732) (351) (208)
Other long-term debt (307) (99) (88)
Increase (decrease) in notes payable, net 37 114 525
Payment of common stock dividends (766) (726) (695)
Miscellaneous (35) (137) (148)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (293) (485) (1,004)
----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (39) 81 (9)
Cash and Cash Equivalents at Beginning of Year 178 97 106
----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 139 $ 178 $ 97
============================================================================================================================
( ) Denotes use of cash.
|
II-50A
CONSOLIDATED STATEMENTS OF CASH FLOWS
Southern Company and Subsidiary Companies
=========================================================================================================================
For the Years Ended December 31, 1991 1990 1989
-------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
Operating Activities:
Consolidated net income $ 876 $ 604 $ 846
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 968 982 951
Deferred income taxes 26 158 225
Deferred investment tax credits (11) - (1)
Allowance for equity funds used during construction (13) (33) (71)
Amortization of deferred Plant Vogtle costs, net (19) (52) (87)
Write-off of Plant Vogtle costs - 281 -
Non-cash proceeds from settlement of disputed contracts (141) - -
Other, net 45 (10) (28)
Changes in certain current assets and liabilities --
Receivables 68 8 (123)
Inventories 20 (82) 6
Payables (13) (41) (23)
Taxes accrued 107 (5) (15)
Other (46) (34) 156
-------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,867 1,776 1,836
-------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,123) (1,185) (1,346)
Southern Energy business acquisitions - - -
Sales of property 291 35 -
Other (45) 14 54
-------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (877) (1,136) (1,292)
-------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Common stock - - 4
Preferred securities - - -
Preferred stock 100 - -
First mortgage bonds 380 300 280
Pollution control bonds 126 - 104
Other long-term debt 14 74 74
Prepaid capacity revenues 53 - -
Retirements:
Preferred stock (125) (96) (21)
First mortgage bonds (881) (146) (201)
Pollution control bonds (130) (3) (55)
Other long-term debt (70) (207) (83)
Increase (decrease) in notes payable, net 180 78 27
Payment of common stock dividends (676) (676) (675)
Miscellaneous (41) (8) (10)
-------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (1,070) (684) (556)
-------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (80) (44) (12)
Cash and Cash Equivalents at Beginning of Year 186 230 242
-------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 106 $ 186 $ 230
=========================================================================================================================
( ) Denotes use of cash.
|
II-50B
CONSOLIDATED STATEMENTS OF CASH FLOWS
Southern Company and Subsidiary Companies
===========================================================================================================
For the Years Ended December 31, 1988 1987
-----------------------------------------------------------------------------------------------------------
(Millions of Dollars)
Operating Activities:
Consolidated net income $ 846 $ 577
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 837 742
Deferred income taxes 206 198
Deferred investment tax credits 27 20
Allowance for equity funds used during construction (138) (190)
Amortization of deferred Plant Vogtle costs, net (115) (257)
Write-off of Plant Vogtle costs - 358
Non-cash proceeds from settlement of disputed contracts - -
Other, net 46 87
Changes in certain current assets and liabilities --
Receivables (21) (113)
Inventories (47) (62)
Payables (6) 125
Taxes accrued 29 (34)
Other (40) 42
-----------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,624 1,493
-----------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (1,754) (1,853)
Southern Energy business acquisitions - -
Sales of property - 12
Other (2) 64
-----------------------------------------------------------------------------------------------------------
Net cash used for investing activities (1,756) (1,777)
-----------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Common stock 194 247
Preferred securities - -
Preferred stock 120 125
First mortgage bonds 335 700
Pollution control bonds 73 228
Other long-term debt 68 81
Prepaid capacity revenues - -
Retirements:
Preferred stock (10) (160)
First mortgage bonds (273) (369)
Pollution control bonds (1) (122)
Other long-term debt (108) (56)
Increase (decrease) in notes payable, net (300) 313
Payment of common stock dividends (661) (628)
Miscellaneous (20) (58)
-----------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (583) 301
-----------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (715) 17
Cash and Cash Equivalents at Beginning of Year 957 940
-----------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 242 $ 957
===========================================================================================================
( ) Denotes use of cash.
|
II-50C
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
============================================================================================================================
At December 31, 1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 8,780 $ 8,706 $ 8,533
Nuclear 5,924 5,982 5,956
Hydro 1,512 1,489 1,477
----------------------------------------------------------------------------------------------------------------------------
Total production 16,216 16,177 15,966
Transmission 3,705 3,596 3,452
Distribution 8,278 7,910 7,583
General 2,720 2,548 2,436
SEI utility plant 3,104 3,008 2,420
Construction work in progress 1,312 684 990
Nuclear fuel, at amortized cost 230 246 225
----------------------------------------------------------------------------------------------------------------------------
Total electric plant 35,565 34,169 33,072
----------------------------------------------------------------------------------------------------------------------------
Steam Heat Plant 21 21 21
----------------------------------------------------------------------------------------------------------------------------
Total utility plant 35,586 34,190 33,093
----------------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 11,922 10,909 10,056
Steam heat 12 12 11
----------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 11,934 10,921 10,067
----------------------------------------------------------------------------------------------------------------------------
Total 23,652 23,269 23,026
----------------------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes - - -
----------------------------------------------------------------------------------------------------------------------------
Total 23,652 23,269 23,026
----------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Equity investments in subsidiaries 1,168 227 128
Leasehold interest, being amortized 1,389 416 431
Goodwill, being amortized 1,888 318 344
Nuclear decommissioning trusts 387 279 201
Miscellaneous 742 261 189
----------------------------------------------------------------------------------------------------------------------------
Total 5,574 1,501 1,293
----------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 601 445 772
Investment securities - - -
Receivables, net 1,792 1,157 1,175
Accrued utility revenues 325 345 347
Fossil fuel stock, at average cost 214 270 327
Materials and supplies, at average cost 493 510 552
Prepayments 99 87 126
Vacation pay deferred 79 77 74
----------------------------------------------------------------------------------------------------------------------------
Total 3,603 2,891 3,373
----------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 1,142 1,238 1,386
Deferred Plant Vogtle costs 50 171 308
Deferred fuel charges 3 13 34
Debt expense, being amortized 101 81 68
Premium on reacquired debt, being amortized 285 289 295
Miscellaneous 861 777 739
----------------------------------------------------------------------------------------------------------------------------
Total 2,442 2,569 2,830
----------------------------------------------------------------------------------------------------------------------------
Total Assets $ 35,271 $ 30,230 $ 30,522
============================================================================================================================
|
II-51
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
===========================================================================================================================
At December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 8,778 $ 8,006 $ 8,033
Nuclear 5,942 5,930 5,912
Hydro 1,341 1,263 1,253
---------------------------------------------------------------------------------------------------------------------------
Total production 16,061 15,199 15,198
Transmission 3,504 3,224 3,093
Distribution 7,243 6,848 6,430
General 2,380 2,395 2,291
SEI utility plant - - -
Construction work in progress 1,247 1,031 665
Nuclear fuel, at amortized cost 238 229 257
---------------------------------------------------------------------------------------------------------------------------
Total electric plant 30,673 28,926 27,934
---------------------------------------------------------------------------------------------------------------------------
Steam Heat Plant 21 21 21
---------------------------------------------------------------------------------------------------------------------------
Total utility plant 30,694 28,947 27,955
---------------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 9,567 8,924 8,271
Steam heat 10 10 9
---------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 9,577 8,934 8,280
---------------------------------------------------------------------------------------------------------------------------
Total 21,117 20,013 19,675
---------------------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes - - 3,186
---------------------------------------------------------------------------------------------------------------------------
Total 21,117 20,013 16,489
---------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Equity investments in subsidiaries 93 - -
Leasehold interest, being amortized 446 469 -
Goodwill, being amortized 12 7 -
Nuclear decommissioning trusts 125 88 52
Miscellaneous 131 172 75
---------------------------------------------------------------------------------------------------------------------------
Total 807 736 127
---------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 139 178 97
Investment securities - - 199
Receivables, net 840 962 742
Accrued utility revenues 218 185 177
Fossil fuel stock, at average cost 354 254 392
Materials and supplies, at average cost 553 535 533
Prepayments 122 148 220
Vacation pay deferred 70 73 70
---------------------------------------------------------------------------------------------------------------------------
Total 2,296 2,335 2,430
---------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 1,454 1,546 -
Deferred Plant Vogtle costs 432 507 383
Deferred fuel charges 47 70 89
Debt expense, being amortized 48 33 28
Premium on reacquired debt, being amortized 298 288 222
Miscellaneous 543 383 270
---------------------------------------------------------------------------------------------------------------------------
Total 2,822 2,827 992
---------------------------------------------------------------------------------------------------------------------------
Total Assets $ 27,042 $ 25,911 $ 20,038
===========================================================================================================================
|
II-52A
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
==================================================================================================================
At December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 7,997 $ 7,661 $ 7,565
Nuclear 5,902 5,820 5,976
Hydro 1,247 1,222 1,215
------------------------------------------------------------------------------------------------------------------
Total production 15,146 14,703 14,756
Transmission 2,955 2,824 2,683
Distribution 6,092 5,738 5,365
General 2,196 2,078 2,026
SEI utility plant - - -
Construction work in progress 603 1,092 1,006
Nuclear fuel, at amortized cost 301 354 402
------------------------------------------------------------------------------------------------------------------
Total electric plant 27,293 26,789 26,238
------------------------------------------------------------------------------------------------------------------
Steam Heat Plant 20 20 20
------------------------------------------------------------------------------------------------------------------
Total utility plant 27,313 26,809 26,258
------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 7,676 7,079 6,492
Steam heat 8 8 7
------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 7,684 7,087 6,499
------------------------------------------------------------------------------------------------------------------
Total 19,629 19,722 19,759
------------------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 3,020 2,911 2,759
------------------------------------------------------------------------------------------------------------------
Total 16,609 16,811 17,000
------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 202 - -
Equity investments in subsidiaries - - -
Leasehold interest, being amortized - - -
Goodwill, being amortized - - -
Nuclear decommissioning trusts 26 2 -
Miscellaneous 83 83 85
------------------------------------------------------------------------------------------------------------------
Total 311 85 85
------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 106 186 230
Investment securities - - -
Receivables, net 723 793 765
Accrued utility revenues 160 151 189
Fossil fuel stock, at average cost 445 467 427
Materials and supplies, at average cost 457 456 413
Prepayments 222 193 192
Vacation pay deferred 70 64 65
------------------------------------------------------------------------------------------------------------------
Total 2,183 2,310 2,281
------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - -
Deferred Plant Vogtle costs 375 364 322
Deferred fuel charges 106 126 143
Debt expense, being amortized 23 23 24
Premium on reacquired debt, being amortized 126 99 103
Miscellaneous 130 137 134
------------------------------------------------------------------------------------------------------------------
Total 760 749 726
------------------------------------------------------------------------------------------------------------------
Total Assets $ 19,863 $ 19,955 $ 20,092
==================================================================================================================
|
II-52B
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
=========================================================================================================
At December 31, 1988 1987
---------------------------------------------------------------------------------------------------------
(Millions of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 6,226 $ 6,157
Nuclear 4,995 4,987
Hydro 1,197 1,192
---------------------------------------------------------------------------------------------------------
Total production 12,418 12,336
Transmission 2,500 2,388
Distribution 4,944 4,510
General 1,865 1,674
SEI utility plant - -
Construction work in progress 3,071 2,519
Nuclear fuel, at amortized cost 481 479
---------------------------------------------------------------------------------------------------------
Total electric plant 25,279 23,906
---------------------------------------------------------------------------------------------------------
Steam Heat Plant 20 20
---------------------------------------------------------------------------------------------------------
Total utility plant 25,299 23,926
---------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 5,885 5,355
Steam heat 6 6
---------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 5,891 5,361
---------------------------------------------------------------------------------------------------------
Total 19,408 18,565
---------------------------------------------------------------------------------------------------------
Less property-related accumulated deferred income taxes 2,559 2,371
---------------------------------------------------------------------------------------------------------
Total 16,849 16,194
---------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - -
Equity investments in subsidiaries - -
Leasehold interest, being amortized - -
Goodwill, being amortized - -
Nuclear decommissioning trusts - -
Miscellaneous 88 70
---------------------------------------------------------------------------------------------------------
Total 88 70
---------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 242 957
Investment securities - -
Receivables, net 687 687
Accrued utility revenues 148 139
Fossil fuel stock, at average cost 490 513
Materials and supplies, at average cost 348 278
Prepayments 174 136
Vacation pay deferred 63 59
---------------------------------------------------------------------------------------------------------
Total 2,152 2,769
---------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - -
Deferred Plant Vogtle costs 270 173
Deferred fuel charges 157 112
Debt expense, being amortized 24 25
Premium on reacquired debt, being amortized 102 95
Miscellaneous 89 80
---------------------------------------------------------------------------------------------------------
Total 642 485
---------------------------------------------------------------------------------------------------------
Total Assets $19,731 $19,518
=========================================================================================================
|
II-52C
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
============================================================================================================================
At December 31, 1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 3,467 $ 3,385 $ 3,348
Paid-in capital 2,338 2,067 1,941
Retained Earnings 3,842 3,764 3,483
----------------------------------------------------------------------------------------------------------------------------
Total common stock equity 9,647 9,216 8,772
Preferred stock 493 980 1,332
Preferred stock subject to mandatory redemption - - -
Subsidiary obligated mandatorily redeemable preferred securities 1,744 422 100
Long-term debt 10,274 7,938 8,274
----------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 22,158 18,556 18,478
----------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable 690 828 445
Commercial paper 1,374 655 1,225
Preferred stock due within one year - 173 -
Long-term debt due within one year 784 191 509
Accounts payable 1,049 788 785
Customer deposits 133 132 216
Taxes accrued 379 205 272
Interest accrued 262 187 199
Vacation pay accrued 108 104 100
Miscellaneous 608 535 530
----------------------------------------------------------------------------------------------------------------------------
Total 5,387 3,798 4,281
----------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,650 4,738 4,611
Deferred credits related to income taxes 746 814 936
Accumulated deferred investment tax credits 754 788 820
Minority interest 435 375 231
Prepaid capacity revenues 110 122 131
Disallowed Plant Vogtle capacity buyback costs 56 57 59
Miscellaneous 975 982 975
----------------------------------------------------------------------------------------------------------------------------
Total 7,726 7,876 7,763
----------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 35,271 $ 30,230 $ 30,522
============================================================================================================================
|
II-53
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
===========================================================================================================================
At December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 3,283 $ 3,213 $ 1,582
Paid-in capital 1,712 1,503 2,931
Retained Earnings 3,191 2,968 2,721
---------------------------------------------------------------------------------------------------------------------------
Total common stock equity 8,186 7,684 7,234
Preferred stock 1,332 1,332 1,351
Preferred stock subject to mandatory redemption - 1 8
Subsidiary obligated mandatorily redeemable preferred securities 100 - -
Long-term debt 7,593 7,412 7,241
---------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 17,211 16,429 15,834
---------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable 575 865 567
Commercial paper 403 76 260
Preferred stock due within one year 1 1 65
Long-term debt due within one year 228 156 188
Accounts payable 806 698 646
Customer deposits 102 103 99
Taxes accrued 153 206 172
Interest accrued 190 186 191
Vacation pay accrued 87 90 86
Miscellaneous 233 190 242
---------------------------------------------------------------------------------------------------------------------------
Total 2,778 2,571 2,516
---------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,007 3,979 -
Deferred credits related to income taxes 987 1,051 -
Accumulated deferred investment tax credits 858 900 957
Minority interest 267 - -
Prepaid capacity revenues 138 144 148
Disallowed Plant Vogtle capacity buyback costs 60 63 72
Miscellaneous 736 774 511
---------------------------------------------------------------------------------------------------------------------------
Total 7,053 6,911 1,688
---------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 27,042 $ 25,911 $ 20,038
===========================================================================================================================
|
II-54A
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
==================================================================================================================
At December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------
(Millions of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 1,578 $ 1,578 $ 1,578
Paid-in capital 2,908 2,909 2,909
Retained Earnings 2,490 2,296 2,374
------------------------------------------------------------------------------------------------------------------
Total common stock equity 6,976 6,783 6,861
Preferred stock 1,207 1,207 1,209
Preferred stock subject to mandatory redemption 126 151 191
Subsidiary obligated mandatorily redeemable preferred securities - - -
Long-term debt 7,992 8,458 8,575
------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 16,301 16,599 16,836
------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable 302 122 44
Commercial paper - - -
Preferred stock due within one year 7 7 61
Long-term debt due within one year 217 308 169
Accounts payable 585 616 676
Customer deposits 95 91 89
Taxes accrued 215 144 181
Interest accrued 221 246 233
Vacation pay accrued 84 75 75
Miscellaneous 229 233 252
------------------------------------------------------------------------------------------------------------------
Total 1,955 1,842 1,780
------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - -
Deferred credits related to income taxes - - -
Accumulated deferred investment tax credits 1,004 1,063 1,111
Minority interest - - -
Prepaid capacity revenues 149 100 102
Disallowed Plant Vogtle capacity buyback costs 110 136 73
Miscellaneous 344 215 190
------------------------------------------------------------------------------------------------------------------
Total 1,607 1,514 1,476
------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 19,863 $ 19,955 $ 20,092
==================================================================================================================
|
II-54B
CONSOLIDATED BALANCE SHEETS
Southern Company and Subsidiary Companies
=========================================================================================================
At December 31, 1988 1987
---------------------------------------------------------------------------------------------------------
(Millions of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 1,577 $ 1,534
Paid-in capital 2,906 2,755
Retained Earnings 2,203 2,018
---------------------------------------------------------------------------------------------------------
Total common stock equity 6,686 6,307
Preferred stock 1,259 1,139
Preferred stock subject to mandatory redemption 206 224
Subsidiary obligated mandatorily redeemable preferred securities - -
Long-term debt 8,433 8,333
---------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 16,584 16,003
---------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable 17 317
Commercial paper - -
Preferred stock due within one year 17 9
Long-term debt due within one year 190 192
Accounts payable 728 747
Customer deposits 83 86
Taxes accrued 203 221
Interest accrued 240 233
Vacation pay accrued 74 68
Miscellaneous 104 110
---------------------------------------------------------------------------------------------------------
Total 1,656 1,983
---------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - -
Deferred credits related to income taxes - -
Accumulated deferred investment tax credits 1,161 1,180
Minority interest - -
Prepaid capacity revenues 81 104
Disallowed Plant Vogtle capacity buyback costs 104 79
Miscellaneous 145 169
---------------------------------------------------------------------------------------------------------
Total 1,491 1,532
---------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 19,731 $ 19,518
=========================================================================================================
II-54C
|
ALABAMA POWER COMPANY
FINANCIAL SECTION
II-55
MANAGEMENT'S REPORT
Alabama Power Company 1997 Annual Report
The management of Alabama Power Company has prepared -- and is responsible for -- the financial statements and related information included in this report. These statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances and necessarily include amounts that are based on the best estimates and judgments of management. Financial information throughout this annual report is consistent with the financial statements.
The company maintains a system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that the books and records reflect only authorized transactions of the company. Limitations exist in any system of internal controls, however, based on a recognition that the cost of the system should not exceed its benefits. The company believes its system of internal accounting controls maintains an appropriate cost/benefit relationship.
The company's system of internal accounting controls is evaluated on an ongoing basis by the company's internal audit staff. The company's independent public accountants also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of directors who are not employees, provides a broad overview of management's financial reporting and control functions. Periodically, this committee meets with management, the internal auditors and the independent public accountants to ensure that these groups are fulfilling their obligations and to discuss auditing, internal controls, and financial reporting matters. The internal auditors and independent public accountants have access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable assurance that the company's operations are conducted according to a high standard of business ethics.
In management's opinion, the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of Alabama Power Company in conformity with generally accepted accounting principles.
/s/Elmer B. Harris Elmer B. Harris President and Chief Executive Officer /s/William B. Hutchins, III William B. Hutchins, III Executive Vice President, Chief Financial Officer, and Treasurer February 11, 1998 |
II-56
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Alabama Power Company:
We have audited the accompanying balance sheets and statements of capitalization of Alabama Power Company (an Alabama corporation and a wholly owned subsidiary of Southern Company) as of December 31, 1997 and 1996, and the related statements of income, retained earnings, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages 11-65 through II-82) referred to above present fairly, in all material respects, the financial position of Alabama Power Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP Birmingham, Alabama February 11, 1998 |
II-57
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Alabama Power Company 1997 Annual Report
RESULTS OF OPERATIONS
Earnings
Alabama Power Company's 1997 net income after dividends on preferred stock was $376 million, representing a $4.4 million (1.2 percent) increase from the prior year. This improvement can be attributed primarily to lower non-fuel related operating expenses. Despite the mild weather experienced during 1997, retail sales increased approximately 2 percent. However, the expected net income effect was offset by reductions in certain industrial and commercial prices.
In 1996, earnings were $371 million, representing a 2.9 percent increase from the prior year. This increase was due to an increase in retail energy sales of 2.7 percent from 1995 levels and lower net interest charges compared to the prior year. This improvement was partially offset by a 4.4 percent increase in operating costs.
The return on average common equity for 1997 was 13.76 percent compared to 13.75 percent in 1996, and 13.61 percent in 1995.
Revenues
Operating revenues for 1997 were $3.1 billion, reflecting a 0.9 percent increase from 1996. The following table summarizes the principal factors that affected operating revenues for the past three years:
Increase (Decrease)
From Prior Year
--------------------------------------
1997 1996 1995
--------------------------------------
(in thousands)
Retail --
Growth and price
change $ 33,813 $ 42,385 $ 19,164
Weather (22,973) (29,660) 54,888
Fuel cost recovery
and other 31,353 (30,846) 35,235
-------------------------------------------------------------
Total retail 42,193 (18,121) 109,287
-------------------------------------------------------------
Sales for resale --
Non-affiliates 39,354 21,529 15,380
Affiliates (54,825) 88,890 (37,032)
-------------------------------------------------------------
Total sales for resale (15,471) 110,419 (21,652)
Other operating
revenues 1,614 3,703 1,997
-------------------------------------------------------------
Total operating
revenues $ 28,336 $ 96,001 $ 89,632
-------------------------------------------------------------
Percent change 0.9% 3.2% 3.1%
=============================================================
|
Retail revenues of $2.5 billion in 1997 increased $42 million (1.7 percent) from the prior year, compared with a decrease of $18 million (0.7 percent) in 1996. Fuel revenues increased in 1997 due to slightly higher generation and higher fuel costs. This was the primary reason for the increase in 1997 retail revenues over 1996. Lower fuel cost recovery was the primary reason for the decrease in 1996 retail revenues as compared to 1995. Fuel revenues generally represent the direct recovery of fuel expense, including the fuel component of purchased energy, and therefore have no effect on net income.
Revenues from sales to utilities outside the service area under long-term contracts consist of capacity and energy components. Capacity revenues reflect the recovery of fixed costs and a return on investment under the contracts. Energy is generally sold at variable cost. These capacity
II-58
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1997 Annual Report
and energy components were:
1997 1996 1995
-------------------------------------------
(in thousands)
Capacity $136,248 $150,797 $157,119
Energy 134,498 107,996 83,352
----------------------------------------------------------
Total $270,746 $258,793 $240,471
==========================================================
|
Capacity revenues from non-affiliates in 1997 decreased 9.6% compared to 1996 primarily due to a one-time unit power sales adjustment in 1997. Capacity revenues from non-affiliates were relatively constant in 1996 and 1995.
Kilowatt-hour (KWH) sales for 1997 and the percent change by year were as follows:
KWH Percent Change
----------- -------------------------------
1997 1997 1996 1995
-------------------------------- ----------
(millions)
Residential 14,336 (1.8)% 1.5% 9.1%
Commercial* 11,330 3.9 8.6 4.1
Industrial* 20,728 3.6 0.7 2.0
Other 181 (6.3) 3.1 0.5
----------
Total retail 46,575 1.9 2.7 4.7
Sales for resale -
Non-affiliates 11,894 25.3 18.0 18.8
Affiliates 8,993 (12.6) 53.5 (20.5)
----------
Total 67,462 3.0% 10.5% 2.6%
-----------------------------------------------------------------
|
*The KWH sales for 1996 reflect a reclassification of approximately 200 customers from industrial to commercial, which resulted in a shift of 473 million KWH. Absent the reclassification, the percentage change in KWH sales for commercial and industrial would have been 3.9% and 3.1%, respectively.
The increases in 1997 and 1996 retail energy sales were primarily due to the strength of business and economic conditions in the company's service area. Residential energy sales experienced a decline as a result of milder than normal weather in 1997, compared to relatively normal weather in 1996. Assuming normal weather, sales to retail customers are projected to grow approximately 2.3 percent annually on average during 1998 through 2003.
Expenses
Total operating expenses of $2.5 billion for 1997 were up $18 million or 0.7 percent compared with the prior year. This increase was primarily due to a $19 million increase in fuel costs and a $10 million increase in depreciation and amortization expense. These increases were somewhat offset by a $16 million decrease in maintenance expenses.
Total operating expenses of $2.5 billion for 1996 were up $105 million or 4.4 percent compared with 1995. The major components of this increase include $85 million in fuel costs, $15 million in maintenance expense, and $17 million in depreciation and amortization offset by a decrease in purchased power of $15 million.
Fuel costs constitute the single largest expense for the company. The mix of fuel sources for generation of electricity is determined primarily by system load, the unit cost of fuel consumed, and the availability of hydro and nuclear generating units. The amount and sources of generation and the average cost of fuel per net KWH generated were as follows:
--------------------------
1997 1996 1995
--------------------------
Total generation
(billions of KWHs) 65 65 58
Sources of generation
(percent) --
Coal 72 72 73
Nuclear 20 20 19
Hydro 8 8 8
Average cost of fuel per net
KWH generated
(cents) --
Coal 1.73 1.71 1.71
Nuclear 0.54 0.50 0.50
Total 1.49 1.46 1.48
--------------------------------------------------------------
|
Note: Oil & Gas comprise less than 1% of generation.
Fuel expense increased in 1997 by $19 million or 2.2 percent. This increase can be attributed to slightly higher generation and fuel costs. Fuel expense increased in 1996 by $85 million or 10.8 percent. This increase can be attributed to higher generation.
Purchased power consists primarily of purchases from the affiliates of the Southern electric system. Purchased power transactions among the company and its
II-59
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1997 Annual Report
affiliates will vary from period to period depending on demand, the availability, and the variable production cost of generating resources at each company. Total KWH purchases increased 12.4 percent from the prior year.
The 6.1 percent decrease in maintenance expenses in 1997 is attributable primarily to a decrease in distribution expenses. The increase in maintenance expenses for 1996 is due to increased nuclear expenses, primarily outage related accruals.
Depreciation and amortization expense increased 3.2 percent in 1997 and 5.6 percent in 1996. These increases reflect additions to utility plant.
Total net interest and other charges increased $25.4 million (11.2 percent) in 1997 primarily due to an increase in company obligated mandatorily redeemable preferred securities outstanding. This increase was offset by a $12 million (45.2 percent) decrease in dividends on preferred stock. The decline in net interest and other charges in 1996 by $11 million (4.5 percent) was due primarily to a charge of $10 million in 1995 to the amortization of debt discount, premium, and expense net, pursuant to an Alabama Public Service Commission (APSC) order. See Note 3 to the financial statements under "Retail Rate Adjustment Procedures" for additional details.
Effects of Inflation
The company is subject to rate regulation and income tax laws that are based on the recovery of historical costs. Therefore, inflation creates an economic loss because the company is recovering its costs of investments in dollars that have less purchasing power. While the inflation rate has been relatively low in recent years, it continues to have an adverse effect on the company because of the large investment in long-lived utility plant. Conventional accounting for historical cost does not recognize this economic loss nor the partially offsetting gain that arises through financing facilities with fixed-money obligations, such as long-term debt and preferred stock. Any recognition of inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from energy sales growth to a less regulated more competitive environment.
The company currently operates as a vertically integrated utility providing electricity to customers within its traditional service area located in the state of Alabama. Prices for electricity provided by the company to retail customers are set by the APSC under cost-based regulatory principles.
Future earnings in the near term will depend upon growth in electric sales, which are subject to a number of factors. Traditionally, these factors have included weather, competition, changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, and the rate of economic growth in the company's service area. However, the Energy Policy Act of 1992 (Energy Act) is having a dramatic effect on the future of the electric utility industry. The Energy Act promotes energy efficiency, alternative fuel use, and increased competition for electric utilities. The company is positioning the business to meet the challenge of this major change in the traditional practice of selling electricity. The Energy Act allows independent power producers (IPPs) to access a utility's transmission network in order to sell electricity to other utilities. This enhances the incentive for IPPs to build cogeneration plants for a utility's large industrial and commercial customers and sell excess energy generation to other utilities. Also, electricity sales for resale rates are being driven down by wholesale transmission access and numerous potential new energy suppliers, including power marketers and brokers. The company is aggressively working to maintain and expand its share of wholesale business in the Southeastern power markets.
Although the Energy Act does not permit retail customer access, it was a major catalyst for the current restructuring and consolidation taking place within the utility industry. Numerous federal and state initiatives are in varying stages to promote wholesale and retail competition. Among other things, these initiatives allow customers to choose their electricity provider. As these initiatives materialize, the structure of the utility industry could radically
II-60
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1997 Annual Report
change. Some states have approved initiatives that result in a separation of the ownership and/or operation of generating facilities from the ownership and/or operation of transmission and distribution facilities. While various restructuring and competition initiatives have been or are being discussed in Alabama, Florida, Georgia, and Mississippi, none have been enacted to date. Enactment would require numerous issues to be resolved, including significant ones relating to transmission pricing and recovery of any stranded investments. The inability of the company to recover its investments, including the regulatory assets described in Note 1 to the financial statements, could have a material adverse effect on the financial condition of the company. The company is attempting to minimize or reduce stranded cost exposure.
Continuing to be a low-cost producer could provide opportunities to increase market share and profitability in markets that evolve with changing regulation. Conversely, unless the company remains a low-cost producer and provides quality service, the company's retail energy sales growth could be limited, and this could significantly erode earnings.
Rates to retail customers served by the company are regulated by the APSC. Rates for the company can be adjusted periodically within certain limitations based on earned retail rate of return compared with an allowed return. In June 1995, the APSC issued an order granting the company's request for gradual adjustments to move toward parity among customer classes. This order also calls for a moratorium on any periodic retail rate increases (but not decreases) until 2001.
In December 1995, the APSC issued an order authorizing the company to reduce balance sheet items -- such as plant and deferred charges -- at any time the company's actual base rate revenues exceed the budgeted revenues. In April 1997, the APSC issued an additional order authorizing the company to reduce balance sheet asset items. This order authorizes the reduction of such items up to an amount equal to five times the total estimated annual revenue reduction resulting from future rate reductions initiated by the company. See Note 3 to the financial statements for information about this and other matters.
The staff of the Securities and Exchange Commission has questioned certain of the current accounting practices of the electric utility industry --including the company -- regarding the recognition, measurement, and classification of decommissioning costs for nuclear generating facilities in the financial statements. In response to these questions, the Financial Accounting Standards Board (FASB) has decided to review the accounting for liabilities related to closure and removal of long-lived assets, including nuclear decommissioning. If the FASB issues new accounting rules, the estimated costs of closing and removing the company's nuclear and other facilities may be required to be recorded as liabilities in the Balance Sheets. Also, the annual provisions for such costs could change. Because of the company's current ability to recover closure and removal costs through rates, these changes would not have a significant adverse effect on results of operations. See Note 1 to the financial statements under "Depreciation and Nuclear Decommissioning" for additional information.
The company is heavily dependent upon complex computer systems for all phases of its operations. The year 2000 issue -- common to most corporations --concerns the inability of certain software and databases to properly recognize date sensitive information related to the year 2000 and thereafter. This problem could result in a material disruption to the company's operations, if not corrected. The company has assessed and developed a detailed strategy to prevent or at least minimize problems related to the year 2000 issue. In 1997 resources were committed and implementation began to modify the affected information systems. Total costs related to the project are estimated to be approximately $26 million, of which $2.1 million was spent in 1997. The remaining costs will be expensed primarily in 1998. Implementation is currently on schedule. Although, the degree of success of this project cannot be determined at this time, management believes there will be no significant effect on the company's operations.
The company is involved in various matters being litigated. See Note 3 to the financial statements for information regarding material issues that could possibly affect future earnings.
Compliance costs related to current and future environmental laws and regulations could affect earnings if such costs are not fully recovered. The Clean Air Act and other important environmental items are discussed later under "Environmental Matters."
II-61
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1997 Annual Report
The company is subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the company's operations is no longer subject to these provisions, the company would be required to write off related regulatory assets and liabilities that are not specifically recoverable, and determine if any other assets have been impaired. See Note 1 to the financial statements under "Regulatory Assets and Liabilities" for additional information.
Exposure to Market Risk
Due to cost-based rate regulation, the company has limited exposure to market volatility in interest rates and prices of electricity. To mitigate residual risks relative to movements in electricity prices, the company enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market. Realized gains and losses are recognized in the income statement as incurred. At December 31, 1997, exposure from these activities was not material to the company's financial position, results of operations, or cash flows.
New Accounting Standards
The FASB has issued Statement No. 130, Reporting Comprehensive Income, which will be effective in 1998. This statement establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. The objective of the statement is to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (comprehensive income). Comprehensive income is the total of net income and all other nonowner changes in equity. The company will adopt this statement in 1998.
The FASB has issued Statement No. 131, Disclosure about Segments of an Enterprise and Related Information. This statement requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Generally, financial information is required to be reported on the basis that it is used by the chief operating decision maker in deciding how to allocate resources and in assessing performance. This statement also establishes standards for related disclosures about products and services, geographic areas, and major customers. The company adopted the new rules in 1997, and they did not have a significant impact on the company's financial reporting. However, this conclusion may change as industry restructuring and competitive factors influence the company's operations.
FINANCIAL CONDITION
Overview
The company's financial condition remained stable in 1997. This stability is the continuation over recent years of growth in energy sales and cost control measures combined with a significant lowering of the cost of capital, achieved through the refinancing and/or redemption of higher-cost long-term debt and preferred stock.
The company had gross property additions of $451 million in 1997. The majority of funds needed for gross property additions for the last several years have been provided from operating activities, principally from earnings and non-cash charges to income such as depreciation and deferred income taxes. The Statements of Cash Flows provide additional details.
Capital Structure
The company's ratio of common equity to total capitalization -- including short-term debt -- was 44.7 percent in 1997, compared with 45.3 percent in 1996, and 45.0 percent in 1995.
In January 1997, Alabama Power Capital Trust II (Trust II), of which the company owns all of the common securities, issued $200 million of 7.60 percent mandatorily redeemable preferred securities. Substantially all of the assets of Trust II are $206 million aggregate principal amount of the company's 7.60 percent junior subordinated notes due December 31, 2036.
During 1997, the company redeemed $162.0 million of preferred stock and reacquired an additional $22.9 million through tender offer.
II-62
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1997 Annual Report
The company's current securities ratings are as follows:
Duff & Standard
Phelps Moody's & Poor's
----------------------------------
First Mortgage Bonds AA- A1 A+
Company Obligated
Mandatorily
Redeemable
Preferred Securities A+ a2 A
Preferred Stock A+ a2 A
------------------------------------------------------------
|
Capital Requirements
Capital expenditures are estimated to be $615 million for 1998, $723 million for 1999, and $524 million for 2000. The total is $1.9 billion for the three years. Actual capital costs may vary from this estimate because of factors such as changes in business conditions; revised load growth projections; changes in environmental regulations; changes in the existing nuclear plant to meet new regulatory requirements; increasing cost of labor, equipment, and materials; and cost of capital. In addition, there can be no assurance that costs related to capital expenditures will be fully recovered.
The company will replace all six steam generators at Plant Farley at a total cost of approximately $234 million. Additionally, the company plans to construct and install 800 megawatts of new generating capacity and associated substation facilities at Plant Barry. The projected capital expenditures for this project amount to approximately $289 million.
Other Capital Requirements
In addition to the funds needed for the capital budget, approximately $320 million will be required by the end of 2000 for maturities of first mortgage bonds. Also, the company will continue to retire higher-cost debt and preferred stock and replace these obligations with lower-cost capital if market conditions permit.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean Air Act -- the acid rain compliance provision of the law - significantly impacted the operating companies of Southern Company, including Alabama Power. Specific reductions in sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants are required in two phases. Phase I compliance began in 1995 and initially affected 28 generating units of Southern Company. As a result of Southern Company's compliance strategy, an additional 22 generating units were brought into compliance with Phase I requirements. Phase II compliance is required in 2000, and all fossil-fired generating plants will be affected.
Southern Company achieved Phase I sulfur dioxide compliance at the affected plants by switching to low-sulfur coal, which required some equipment upgrades. Construction expenditures for Phase I compliance totaled approximately $25 million for the company.
For Phase II sulfur dioxide compliance, the company could use emission allowances, increase fuel switching, and/or install flue gas desulfurization equipment at selected plants. Also equipment to control nitrogen oxide emissions will be installed on additional system fossil-fired units as necessary to meet Phase II limits. Current compliance strategy for Phase II could require total estimated construction expenditures of approximately $33 million, of which $27 million remains to be spent.
A significant portion of costs related to the acid rain provision of the Clean Air Act is expected to be recovered through existing ratemaking provisions. However, there can be no assurance that all Clean Air Act costs will be recovered.
In July 1997, the Environmental Protection Agency (EPA) revised the national ambient air quality standards for ozone and particulate matter. This revision makes the standards significantly more stringent. Also, in October 1997, the EPA issued a proposed regional ozone rule that --if implemented--could require substantial further reductions in NOx emissions from fossil-fueled generating facilities. Implementation of the standards and the proposed rule could result in significant additional compliance costs and capital expenditures that cannot be determined at this time.
The EPA and state environmental regulatory agencies are reviewing and evaluating various other matters including: emission control strategies for ozone nonattainment areas; additional controls for hazardous air pollutant emissions; and hazardous waste disposal requirements. The impact of new standards will depend on the development and implementation of applicable regulations.
II-63
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Alabama Power Company 1997 Annual Report
The company must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations, the company could incur costs to clean up properties. The company conducts studies to determine the extent of any required cleanup costs and has recognized in the financial statements costs to clean up known sites.
Several major pieces of environmental legislation are being considered for reauthorization or amendment by Congress. These include: the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation, and Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances Control Act; and the Endangered Species Act. Changes to these laws could affect many areas of Southern Company's operations. The full impact of any such changes cannot be determined at this time.
Compliance with possible additional legislation related to global climate change, electromagnetic fields, and other environmental and health concerns could significantly affect Southern Company. The impact of new legislation -- if any -- will depend on the subsequent development and implementation of applicable regulations. In addition, the potential exists for liability as the result of lawsuits alleging damages caused by electromagnetic fields.
Sources of Capital
The company historically has relied on issuances of first mortgage bonds and preferred stock, in addition to pollution control revenue bonds issued for its benefit by public authorities, to meet its long-term external financing requirements. Recently, the company's financings have consisted of unsecured debt and trust preferred securities. In this regard, the company sought and obtained stockholder approval in 1997 to amend its corporate charter eliminating restrictions on the amounts of unsecured indebtedness it may incur. To issue additional debt and equity securities, the company must comply with certain earnings coverage requirements designated in its mortgage indenture and corporate charter. The company's coverages are at a level that would permit any necessary amount of security sales at current interest and dividend rates.
As required by the Nuclear Regulatory Commission and as ordered by the APSC, the company has established external trust funds for nuclear decommissioning costs. In 1994, the company also established an external trust fund for postretirement benefits as ordered by the APSC. The cumulative effect of funding these items over a long period will diminish internally funded capital and may require capital from other sources. For additional information concerning nuclear decommissioning costs, see Note 1 to the financial statements under "Depreciation and Nuclear Decommissioning."
Cautionary Statement Regarding Forward-Looking Information
The company's 1997 Annual Report contains forward-looking statements in addition to historical information. The company cautions that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the company's markets; potential business strategies -- including acquisitions or dispositions of assets or internal restructuring --that may be pursued by Southern Company; state and federal rate regulation; changes in or application of environmental and other laws and regulations to which the company is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; and other factors discussed in the reports--including Form 10-K--filed from time to time by the company with the Securities and Exchange Commission.
II-64
STATEMENTS OF INCOME
For the Years Ended December 31, 1997, 1996, and 1995
Alabama Power Company 1997 Annual Report
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues:
Revenues (Notes 1, 3, and 7): $ 2,987,316 $ 2,904,155 $ 2,897,044
Revenues from affiliates 161,795 216,620 127,730
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,149,111 3,120,775 3,024,774
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 896,014 877,076 791,819
Purchased power from non-affiliates 41,795 36,813 30,065
Purchased power from affiliates 95,538 91,500 112,826
Other 510,203 505,884 501,876
Maintenance 242,691 258,482 243,218
Depreciation and amortization 330,377 320,102 303,050
Taxes other than income taxes 185,062 186,172 185,620
Federal and state income taxes (Note 8) 220,228 228,108 230,982
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,521,908 2,504,137 2,399,456
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 627,203 616,638 625,318
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) - - 1,649
Income from subsidiary (Note 6) 4,266 3,851 4,051
Charitable foundation - (6,800) (11,542)
Interest income 37,844 28,318 13,768
Other, net (38,522) (39,053) (21,536)
Income taxes applicable to other income 12,351 22,400 14,142
--------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges and Other 643,142 625,354 625,850
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 167,172 169,390 180,714
Allowance for debt funds used during construction (Note 1) (4,787) (6,480) (7,067)
Interest on interim obligations 22,787 20,617 16,917
Amortization of debt discount, premium, and expense, net 9,645 9,508 20,259
Other interest charges 36,037 27,510 27,064
Distributions on preferred securities of
Alabama Power Capital Trust I & II (Note 9) 21,763 6,717 -
--------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 252,617 227,262 237,887
--------------------------------------------------------------------------------------------------------------------------------
Net Income 390,525 398,092 387,963
Dividends on Preferred Stock 14,586 26,602 27,069
--------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 375,939 $ 371,490 $ 360,894
================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-65
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
Alabama Power Company 1997 Annual Report
==============================================================================================================================
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Activities:
Net income $ 390,525 $ 398,092 $ 387,963
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 394,572 383,438 371,382
Deferred income taxes and investment tax credits, net (12,429) 16,585 32,627
Allowance for equity funds used during construction - - (1,649)
Other, net (11,353) 6,247 459
Changes in certain current assets and liabilities --
Receivables, net (30,268) 3,958 (54,209)
Inventories 13,709 36,234 18,425
Payables (9,745) 1,006 (63,656)
Taxes accrued 6,191 (5,756) 551
Energy cost recovery, retail 7,108 25,771 1,177
Other 7,127 8,205 16,890
------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 755,437 873,780 709,960
------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (451,167) (425,024) (551,781)
Other (51,791) (61,119) (53,321)
------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (502,958) (486,143) (605,102)
------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Company obligated mandatorily redeemable preferred securities 200,000 97,000 -
Other long-term debt 258,800 21,000 131,500
Retirements:
Preferred stock (184,888) - -
First mortgage bonds (74,951) (83,797) -
Other long-term debt (951) (21,907) (132,291)
Interim obligations, net (57,971) (25,163) 210,134
Payment of preferred stock dividends (22,524) (26,665) (27,118)
Payment of common stock dividends (339,600) (347,500) (285,000)
Miscellaneous (16,024) (3,634) (4,143)
------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (238,109) (390,666) (106,918)
------------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 14,370 (3,029) (2,060)
Cash and Cash Equivalents at Beginning of Year 9,587 12,616 14,676
------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year 23,957 $ 9,587 $ 12,616
==============================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $ 209,919 $ 193,871 $ 189,268
Income taxes 207,653 195,214 172,777
------------------------------------------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
|
II-66
BALANCE SHEETS
At December 31, 1997 and 1996
Alabama Power Company 1997 Annual Report
================================================================================================================
ASSETS 1997 1996
------------------------------------------------------------------------------------------------------------------
(in thousands)
Utility Plant:
Plant in service, at original cost (Note 1) $11,070,323 $10,806,921
Less accumulated provision for depreciation 4,384,180 4,113,622
------------------------------------------------------------------------------------------------------------------
6,686,143 6,693,299
Nuclear fuel, at amortized cost 103,272 123,862
Construction work in progress 311,223 256,802
------------------------------------------------------------------------------------------------------------------
Total 7,100,638 7,073,963
-------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Southern Electric Generating Company, at equity (Note 6) 24,972 26,032
Nuclear decommissioning trusts (Note 1) 193,008 148,760
Miscellaneous 22,233 20,243
------------------------------------------------------------------------------------------------------------------
Total 240,213 195,035
------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 23,957 9,587
Receivables-
Customer accounts receivable 368,255 334,150
Other accounts and notes receivable 28,921 28,524
Affiliated companies 50,353 47,630
Accumulated provision for uncollectible accounts (2,272) (1,171)
Refundable income taxes - 5,856
Fossil fuel stock, at average cost 74,186 81,704
Materials and supplies, at average cost 161,601 167,792
Prepayments 20,453 17,841
Vacation pay deferred 28,783 28,369
------------------------------------------------------------------------------------------------------------------
Total 754,237 720,282
------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes (Note 8) 384,549 410,010
Debt expense, being amortized 7,276 7,398
Premium on reacquired debt, being amortized 81,417 84,149
Prepaid pension costs 130,733 114,029
Department of Energy assessments (Note 1) 34,416 37,490
Miscellaneous 79,388 91,490
------------------------------------------------------------------------------------------------------------------
Total 717,779 744,566
------------------------------------------------------------------------------------------------------------------
Total Assets $8,812,867 $8,733,846
==================================================================================================================
The accompanying notes are an integral part of these balance sheets.
|
II-67
BALANCE SHEETS
At December 31, 1997 and 1996
Alabama Power Company 1997 Annual Report
==================================================================================================================
CAPITALIZATION AND LIABILITIES 1997 1996
------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See accompanying statements):
Common stock equity $2,750,569 $2,714,277
Preferred stock 255,512 340,400
Company obligated mandatorily redeemable preferred securities of
subsidiary trusts holding Company Junior Subordinated Notes (Note 9) 297,000 97,000
Long-term debt 2,473,202 2,354,006
------------------------------------------------------------------------------------------------------------------
Total 5,776,283 5,505,683
------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Preferred stock due within one year (Note 11) - 100,000
Long-term debt due within one year (Note 11) 75,336 20,753
Commercial paper 306,882 364,853
Accounts payable-
Affiliated companies 79,822 64,307
Other 159,146 182,563
Customer deposits 34,968 32,003
Taxes accrued-
Federal and state income 21,177 35,638
Other 15,309 15,271
Interest accrued 50,722 51,941
Vacation pay accrued 28,783 28,369
Miscellaneous 103,602 96,485
------------------------------------------------------------------------------------------------------------------
Total 875,747 992,183
------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 1,192,265 1,177,687
Accumulated deferred investment tax credits 282,873 294,071
Prepaid capacity revenues, net (Note 7) 109,982 122,496
Department of Energy assessments (Note 1) 30,592 33,741
Deferred credits related to income taxes (Note 8) 327,328 364,792
Natural disaster reserve (Note 1) 22,416 20,757
Miscellaneous 195,381 222,436
------------------------------------------------------------------------------------------------------------------
Total 2,160,837 2,235,980
------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 3, 4, 5, 6, 7, and 12)
Total Capitalization and Liabilities $8,812,867 $8,733,846
==================================================================================================================
The accompanying notes are an integral part of these balance sheets.
|
II-68
STATEMENTS OF CAPITALIZATION
At December 31, 1997 and 1996
Alabama Power Company 1997 Annual Report
===================================================================================================================================
1997 1996 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Common Stock Equity:
Common stock, par value $40 per share --
Authorized -- 6,000,000 shares
Outstanding -- 5,608,955 shares in 1997 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645
Premium on preferred stock 99 146
Retained earnings (Note 13) 1,221,467 1,185,128
-----------------------------------------------------------------------------------------------------------------------------------
Total common stock equity 2,750,569 2,714,277 47.6% 49.3%
-----------------------------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock:
$1 par value --
Authorized -- 27,500,000 shares
Outstanding -- 6,020,200 shares
$25 stated capital --
6.40% 50,000 50,000
6.80% 38,000 38,000
7.60% - 150,000
Adjustable rate
4.82% - at January 1, 1998 50,000 50,000
$100 stated capital --
Auction rate - 4.235% at January 1, 1998 50,000 50,000
$100,000 stated capital --
Auction rate - 4.20% at January 1, 1998 20,000 20,000
$100 par value --
Authorized -- 3,850,000 shares
Outstanding -- 475,117 shares
4.20% to 4.52% 18,512 41,400
4.60% to 4.92% 29,000 29,000
5.96% to 6.88% - 12,000
-----------------------------------------------------------------------------------------------------------------------------------
Total cumulative preferred stock (annual dividend
requirement -- $13,313,000) 255,512 440,400
Less amount due within one year (Note 11) - 100,000
-----------------------------------------------------------------------------------------------------------------------------------
Cumulative preferred stock excluding amount due within one year 255,512 340,400 4.4 6.2
-----------------------------------------------------------------------------------------------------------------------------------
Company Obligated Mandatorily
Redeemable Preferred Securities (Note 9):
$25 liquidation value -- 7.375% 97,000 97,000
$25 liquidation value -- 7.60% 200,000 -
-----------------------------------------------------------------------------------------------------------------------------------
Total (annual distribution requirement -- $22,354,000) 297,000 97,000 5.2 1.7
------------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt:
First mortgage bonds --
Maturity Interest Rates
February 1, 1998 5 1/2% 50,000 50,000
August 1, 1999 6 3/8% 170,000 170,000
March 1, 2000 6% 100,000 100,000
August 1, 2002 6.85% 100,000 100,000
2003 through 2007 6 3/4% to 7 1/4% 475,000 475,000
2021 through 2024 7.30% to 9% 946,108 1,021,059
-----------------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 1,841,108 1,916,059
Pollution control obligations 541,140 476,140
Long-term senior notes 193,800 -
Other long-term debt 7,105 8,056
Unamortized debt premium (discount), net (34,615) (25,496)
-----------------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $181,726,000) 2,548,538 2,374,759
Less amount due within one year (Note 11) 75,336 20,753
-----------------------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 2,473,202 2,354,006 42.8 42.8
-----------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 5,776,283 $ 5,505,683 100.0% 100.0%
===================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-69
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1997, 1996, and 1995
Alabama Power Company 1997 Annual Report
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Year $1,185,128 $1,161,225 $1,085,256
Net income after dividends on preferred stock 375,939 371,490 360,894
Cash dividends on common stock (339,600) (347,500) (285,000)
Preferred stock transactions, net (45) (7) -
Other adjustments to retained earnings 45 (80) 75
--------------------------------------------------------------------------------------------------------------------------------
Balance at End of Year (Note 13) $1,221,467 $1,185,128 $1,161,225
================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-70
NOTES TO FINANCIAL STATEMENTS
Alabama Power Company 1997 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Alabama Power Company (the company) is a wholly owned subsidiary of Southern Company, which is the parent company of five operating companies, a system service company, Southern Communications Services (Southern Communications), Southern Energy, Inc. (Southern Energy), Southern Nuclear Operating Company (Southern Nuclear), Southern Company Energy Solutions, and other direct and indirect subsidiaries. The operating companies (Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power Company) provide electric service in four southeastern states. Contracts among the companies -- dealing with jointly-owned generating facilities, interconnecting transmission lines, and the exchange of electric power -- are regulated by the Federal Energy Regulatory Commission (FERC) or the Securities and Exchange Commission (SEC). The system service company provides, at cost, specialized services to Southern Company and subsidiary companies. Southern Communications provides digital wireless communications services to the operating companies and also markets these services to the public within the Southeast. Southern Energy designs, builds, owns and operates power production and delivery facilities and provides a broad range of energy related services in the United States and international markets. Southern Nuclear provides services to Southern Company's nuclear power plants. Southern Company Energy Solutions develops new business opportunities related to energy products and services.
Southern Company is registered as a holding company under the Public Utility Holding Company Act of 1935 (PUHCA). Both Southern Company and its subsidiaries are subject to the regulatory provisions of the PUHCA. The company is also subject to regulation by the FERC and the Alabama Public Service Commission (APSC). The company follows generally accepted accounting principles and complies with the accounting policies and practices prescribed by the respective regulatory commissions. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates, and the actual results may differ from those estimates.
Regulatory Assets and Liabilities
The company is subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. Regulatory assets represent probable future revenues to the company associated with certain costs that are expected to be recovered from customers through the ratemaking process. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are expected to be credited to customers through the ratemaking process. Regulatory assets and (liabilities) reflected in the Balance Sheets at December 31 relate to the following:
1997 1996
-----------------------
(in thousands)
Deferred income taxes $ 384,549 $ 410,010
Deferred income tax credits (327,328) (364,792)
Premium on reacquired debt 81,417 84,149
Department of Energy assessments 34,416 37,490
Vacation pay 28,783 28,369
Natural disaster reserve (22,416) (20,757)
Work force reduction costs 19,316 45,969
Other, net 59,726 45,521
----------------------------------------------------------------
Total $ 258,463 $265,959
================================================================
|
In the event that a portion of the company's operations is no longer subject to the provisions of Statement No. 71, the company would be required to write off related net regulatory assets and liabilities that are not specifically recoverable through regulated rates. In addition, the company would be required to determine if any impairment to other assets exists, including plant, and write down the assets, if impaired, to their fair value.
Revenues and Fuel Costs
The company accrues revenues for services rendered but unbilled at the end of each fiscal period. Fuel costs are expensed as the fuel is used. The company's electric rates include provisions to adjust billings for fluctuations in fuel and the energy component of purchased power costs. Revenues are adjusted for differences between recoverable fuel costs and amounts actually recovered in current rates.
The company has a diversified base of customers. No single customer or industry comprises 10 percent or more of revenues. In 1997, uncollectible
II-71
NOTES (continued)
Alabama Power Company 1997 Annual Report
accounts continued to average less than 1 percent of revenues.
Fuel expense includes the amortization of the cost of nuclear fuel and a charge, based on nuclear generation, for the permanent disposal of spent nuclear fuel. Total charges for nuclear fuel included in fuel expense amounted to $68 million in 1997, $64 million in 1996, and $54 million in 1995. The company has a contract with the U.S. Department of Energy (DOE) that provides for the permanent disposal of spent nuclear fuel, which was scheduled to begin in 1998. However, the actual year this service will begin is uncertain. Sufficient storage capacity currently is available to permit operation into 2010 and 2013 at Plant Farley units 1 and 2, respectively.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a Uranium Enrichment Decontamination and Decommissioning Fund, which is to be funded in part by a special assessment on utilities with nuclear plants. This assessment will be paid over a 15- year period, which began in 1993. This fund will be used by the DOE for the decontamination and decommissioning of its nuclear fuel enrichment facilities. The law provides that utilities will recover these payments in the same manner as any other fuel expense. The company estimates its remaining liability at December 31, 1997, under this law to be approximately $34 million. This obligation is recognized in the accompanying Balance Sheets.
Depreciation and Nuclear Decommissioning
Depreciation of the original cost of depreciable utility plant in service is provided primarily by using composite straight-line rates, which approximated 3.3 percent in 1997 and 1996, and 3.2 percent in 1995. When property subject to depreciation is retired or otherwise disposed of in the normal course of business, its cost -- together with the cost of removal, less salvage -- is charged to the accumulated provision for depreciation. Minor items of property included in the original cost of the plant are retired when the related property unit is retired. Depreciation expense includes an amount for the expected cost of decommissioning nuclear facilities and removal of other facilities.
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations requiring all licensees operating commercial power reactors to establish a plan for providing, with reasonable assurance, funds for decommissioning. The company has established external trust funds to comply with the NRC's regulations. Amounts previously recorded in internal reserves are being transferred into the external trust funds over periods approved by the APSC. The NRC's minimum external funding requirements are based on a generic estimate of the cost to decommission the radioactive portions of a nuclear unit based on the size and type of reactor. The company has filed plans with the NRC to ensure that -- over time -- the deposits and earnings of the external trust funds will provide the minimum funding amounts prescribed by the NRC.
Site study cost is the estimate to decommission the facility as of the site study year, and ultimate cost is the estimate to decommission the facility as of retirement date. The estimated costs of decommissioning -- both site study costs and ultimate costs -- at December 31, 1997, for Plant Farley were as follows:
Site study basis (year) 1993
Decommissioning periods:
Beginning year 2017
Completion year 2029
-----------------------------------------------------------
(in millions)
Site study costs:
Radiated structures $ 489
Non-radiated structures 89
-----------------------------------------------------------
Total $ 578
===========================================================
(in millions)
Ultimate costs:
Radiated structures $1,504
Non-radiated structures 274
-----------------------------------------------------------
Total $1,778
===========================================================
(in millions)
Amount expensed in 1997 $ 18
-----------------------------------------------------------
Accumulated provisions:
Balance in external trust funds $ 193
Balance in internal reserves 44
-----------------------------------------------------------
Total $ 237
===========================================================
Significant assumptions:
Inflation rate 4.5%
Trust earning rate 7.0
-----------------------------------------------------------
|
Annual provisions for nuclear decommissioning are based on an annuity method as approved by the APSC. All of the company's decommissioning costs are approved for ratemaking.
II-72
NOTES (continued)
Alabama Power Company 1997 Annual Report
The decommissioning cost estimates are based on prompt dismantlement and removal of the plant from service. The actual decommissioning costs may vary from the above estimates because of changes in the assumed date of decommissioning, changes in NRC requirements, or changes in the assumptions used in making estimates.
Income Taxes
The company uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences. Investment tax credits utilized are deferred and amortized to income over the average lives of the related property.
Allowance For Funds Used During Construction (AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance the construction of new facilities. While cash is not realized currently from such allowance, it increases the revenue requirement over the service life of the plant through a higher rate base and higher depreciation expense. The composite rate used to determine the amount of allowance was 5.8 percent in 1997 and 1996, and 7.1 percent in 1995. AFUDC, net of income tax, as a percent of net income after dividends on preferred stock was 0.8 percent in 1997, 1.1 percent in 1996 and 1.7 percent in 1995.
Utility Plant
Utility plant is stated at original cost. Original cost includes: materials; labor; minor items of property; appropriate administrative and general costs; payroll-related costs such as taxes, pensions, and other benefits; and the estimated cost of funds used during construction. The cost of maintenance, repairs and replacement of minor items of property is charged to maintenance expense. The cost of replacements of property (exclusive of minor items of property) is charged to utility plant.
Financial Instruments
The company's only financial instruments for which the carrying amount did not approximate fair value at December 31 are as follows:
Carrying Fair
Amount Value
-------------------------
(in millions)
Long-term debt:
At December 31, 1997 $2,541 $2,638
At December 31, 1996 $2,367 $2,420
Preferred Securities:
At December 31, 1997 297 300
At December 31, 1996 97 94
------------------------------------------------------------
|
The fair value for long-term debt and preferred securities was based on either closing market prices or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission, distribution, and generating plant materials. Materials are charged to inventory when purchased and then expensed or capitalized to plant, as appropriate, when installed.
Natural Disaster Reserve
In September 1994, in response to a request by the company, the APSC issued an order allowing the company to establish a Natural Disaster Reserve. Regulatory treatment allows the company to accrue $250 thousand per month, until the maximum accumulated provision of $32 million is attained. However, in December 1995, the APSC approved higher accruals to restore the reserve to its authorized level whenever the balance in the reserve declines below $22.4 million.
2. RETIREMENT BENEFITS
Pension Plan
The company has a defined benefit, trusteed, non-contributory pension plan that covers substantially all regular employees. Benefits are based on one of the following formulas: years of service and final average pay or years of service and a flat-dollar benefit. The company uses the "entry age normal method with a frozen initial liability" actuarial method for funding purposes, subject to limitations under federal income tax regulations. Amounts funded to the pension trusts are primarily invested in equity and fixed-income securities. FASB Statement No. 87, Employers' Accounting for Pensions, requires use of the
II-73
NOTES (continued)
Alabama Power Company 1997 Annual Report
"projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
The company also provides certain medical care and life insurance benefits for retired employees. Substantially all these employees may become eligible for these benefits when they retire. Amounts funded are primarily invested in debt and equity securities. In December 1993, the APSC issued an accounting policy statement which requires the company to externally fund net annual postretirement benefits.
FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, requires that medical care and life insurance benefits for retired employees be accounted for on an accrual basis using a specified actuarial method, "benefit/years-of-service."
Funded Status and Cost of Benefits
The funded status of the plans and reconciliation to amounts reflected in the Balance Sheets at December 31 are as follows:
Pension
-------------------
1997 1996
-------------------
(in millions)
Actuarial present value of
benefit obligations:
Vested benefits $ 626 $ 603
Non-vested benefits 22 30
---------------------------------------------------------
Accumulated benefit obligation 648 633
Additional amounts related to
projected salary increases 165 180
----------------------------------------------------------
Projected benefit obligation 813 813
Less:
Fair value of plan assets 1,521 1,334
Unrecognized net gain (585) (413)
Unrecognized prior service cost 43 46
Unrecognized transition asset (35) (40)
----------------------------------------------------------
Prepaid asset recognized in the
Balance Sheets $ 131 $ 114
==========================================================
Postretirement
Benefits
----------------------
1997 1996
----------------------
(in millions)
Actuarial present value of
benefit obligation:
Retirees and dependents $135 $116
Employees eligible to retire 24 28
Other employees 93 98
-----------------------------------------------------------
Accumulated benefit obligation 252 242
Less:
Fair value of plan assets 135 108
Unrecognized net loss 3 15
Unrecognized transition
obligation 61 65
-----------------------------------------------------------
Accrued liability recognized
in the Balance Sheets $ 53 $ 54
===========================================================
|
The weighted average rates assumed in the actuarial calculations were:
1997 1996 1995
-------------------------------
Discount 7.5% 7.8% 7.3%
Annual salary increase 5.0 5.3 4.8
Long-term return on
plan assets 8.5 8.5 8.5
----------------------------------------------------------
|
An additional assumption used in measuring the accumulated postretirement benefit obligation was a weighted average medical care cost trend rate of 8.8 percent for 1997, decreasing gradually to 5.5 percent through the year 2005 and remaining at that level thereafter. An annual increase in the assumed medical care cost trend rate of 1 percent would increase the accumulated benefit obligation as of December 31, 1997, by $21 million and the aggregate of the service and interest cost components of the net retiree cost by $2 million.
Components of the plans' net cost are shown below:
Pension
-------------------------------------------------------------------
1997 1996 1995
-----------------------------
(in millions)
Benefits earned during
the year $ 20.3 $ 21.5 $ 21.2
Interest cost on projected
benefit obligation 58.4 59.5 54.3
Actual (return) loss on plan
assets (227.8) (148.9) (236.3)
Net amortization and deferral 116.8 43.8 136.9
-------------------------------------------------------------------
Net pension cost (income) $ (32.3) $ (24.1) $ (23.9)
=====================================================================
|
II-74
NOTES (continued)
Alabama Power Company 1997 Annual Report
Of the above net pension income, $24.8 million in 1997, $20.3 million in 1996, and $17.1 million in 1995 were recorded as credits to operating expenses, and the remainder was recorded as credits to construction and other accounts.
Postretirement
Benefits
--------------------
1997 1996 1995
------------- ------
(in millions)
Benefits earned during the year $ 4 $ 5 $ 7
Interest cost on accumulated
benefit obligation 18 17 18
Amortization of transition
obligation 4 4 7
Actual (return) loss on plan
assets (14) (7) (10)
Net amortization and deferral 7 2 5
-------------------------------------------------------------
Net postretirement costs $ 19 $ 21 $ 27
=============================================================
|
Of the above net postretirement costs recorded, $16.3 million in 1997, $17.8 million in 1996, and $22.7 million in 1995 were charged to operating expenses and the remainder was charged to construction and other accounts.
Work Force Reduction Programs
The company has incurred additional costs for work force reduction programs. The costs related to these programs were $33 million, $26.7 million and $14.3 million for the years 1997, 1996 and 1995, respectively. In addition, certain costs of these programs were deferred and are being amortized in accordance with regulatory treatment. The unamortized balance of these costs was $19.3 million at December 31, 1997.
3. LITIGATION AND REGULATORY MATTERS
Retail Rate Adjustment Procedures
In November 1982, the APSC adopted rates that provide for periodic adjustments based upon the company's earned return on end-of-period retail common equity. The rates also provide for adjustments to recognize the placing of new generating facilities in retail service. Both increases and decreases have been placed into effect since the adoption of these rates. The rate adjustment procedures allow a return on common equity range of 13.0 percent to 14.5 percent and limit increases or decreases in rates to 4 percent in any calendar year.
In June 1995, the APSC issued a rate order granting the company's request for gradual adjustments to move toward parity among customer classes. This order also calls for a moratorium on any periodic retail rate increases (but not decreases) until July 2001.
In December 1995, the APSC issued an order authorizing the company to reduce balance sheet items -- such as plant and deferred charges -- at any time the company's actual base rate revenues exceed the budgeted revenues. In April 1997, the APSC issued an additional order authorizing the company to reduce balance sheet asset items. This order authorizes the reduction of such items up to an amount equal to five times the total estimated annual revenue reduction resulting from future rate reductions initiated by the company.
The ratemaking procedures will remain in effect until the APSC votes to modify or discontinue them.
Appliance Warranty Litigation
In 1996, legal actions against the company were filed in several counties in Alabama charging the company with fraud and non-compliance with regulatory statutes relating to the offer, sale, and financing of "extended service contracts" in connection with the sale of electric appliances. Some of these suits were filed as class actions, while others were filed on behalf of multiple individual plaintiffs. The plaintiffs seek damages for an unspecified amount. The company has offered extended service agreements to its customers since January 1984, and approximately 175,000 extended service agreements could be involved in these proceedings. The final outcome of these cases cannot now be determined.
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the reasonableness of the operating companies' wholesale rate schedules and contracts that have a return on common equity of 13.75 percent or greater. The contracts that could be affected by the hearings include substantially all of the transmission, unit power, long-term power and other similar contracts.
In August 1992, a FERC administrative law judge issued an opinion that changes in rate schedules and contracts were not necessary and that the FERC
II-75
NOTES (continued)
Alabama Power Company 1997 Annual Report
staff failed to show how any changes were in the public interest. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on substantially the same issues as in the 1991 proceeding. In November 1995, a FERC administrative law judge issued an opinion that the FERC staff failed to meet its burden of proof, and therefore, no change in the equity return was necessary. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter is pending before the FERC.
If the rates of return on common equity recommended by the FERC staff were applied to all of the schedules and contracts involved in both proceedings, as well as certain other contracts that reference these proceedings in determining return on common equity, and if refunds were ordered, the amount of refunds could range up to approximately $194 million at December 31, 1997 for Southern Company, of which the company's portion would be approximately $95 million. Although management believes that rates are not excessive and that refunds are not justified, the final outcome of this matter cannot now be determined.
Tax Litigation
In August 1997, Southern Company and the Internal Revenue Service entered into a settlement agreement related to tax issues for the years 1984 through 1987. The agreement is subject to the review and approval by the Joint Congressional Committee on Taxation. If approved by the Joint Committee, the agreement would resolve all issues in the case for the years before the U. S. Tax Court, resulting in a refund to the company of approximately $22 million. This amount includes interest of $14 million. The tax litigation was related to a timing issue as to when taxes should have been paid; therefore, only the interest portion will affect future income.
4. CAPITAL BUDGET
The company's capital expenditures are currently estimated to total $615 million in 1998, $723 million in 1999, and $524 million in 2000. The capital budget is subject to periodic review and revision, and actual capital cost incurred may vary from the above estimates because of numerous factors. These factors include: changes in business conditions; revised load growth projections; changes in environmental regulations; changes in the existing nuclear plant to meet new regulatory requirements; increasing costs of labor, equipment, and materials; and cost of capital.
The company will replace all six steam generators at Plant Farley at a total cost of approximately $234 million. Additionally, the company plans to construct and install 800 megawatts of new generating capacity and associated substation facilities at Plant Barry. The projected capital expenditures for this project amount to approximately $289 million.
In addition, significant construction will continue related to transmission and distribution facilities and the upgrading of generating plants.
5. FINANCING, INVESTMENT, AND COMMITMENTS
General
To the extent possible, the company's construction program is expected to be financed primarily from internal sources. Short-term debt is often utilized and the amounts available are discussed below. The company may issue additional long-term debt and preferred securities for debt maturities, redeeming higher-cost securities, and meeting additional capital requirements.
Financing
The ability of the company to finance its capital budget depends on the amount of funds generated internally and the funds it can raise by external financing. The company historically has relied on issuances of first mortgage bonds and preferred stock, in addition to pollution control revenue bonds issued for its benefit by public authorities, to meet its long-term external financing requirements. Recently, the company's financings have consisted of unsecured debt and trust preferred securities. In this regard, the company sought and obtained stockholder approval in 1997 to amend its corporate charter eliminating restrictions on the amounts of unsecured indebtedness it may incur. In order to issue additional debt and equity securities, the company must comply with
II-76
NOTES (continued)
Alabama Power Company 1997 Annual Report
certain earnings coverage requirements designated in its mortgage indenture and corporate charter. The most restrictive of these provisions requires, for the issuance of additional first mortgage bonds, that before-income-tax earnings, as defined, cover pro forma annual interest charges on outstanding first mortgage bonds at least twice; and for the issuance of additional preferred stock, that gross income available for interest cover pro forma annual interest charges and preferred stock dividends at least one and one-half times. The company's coverages are at a level that would permit any necessary amount of security sales at current interest and dividend rates.
Bank Credit Arrangements
The company, along with Georgia Power Company, has entered into agreements with several banks outside the service area to provide $300 million of revolving credit to the companies through June 30, 1999. To provide liquidity support for commercial paper programs, the company and Georgia Power Company have exclusive right to $135 million and $165 million, respectively, of the available credit. However, the allocations can be changed among the borrowers by notifying the respective banks. The companies have the option of converting the short-term borrowings into term loans, payable in 12 equal quarterly installments, with the first installment due at the end of the first calendar quarter after the applicable termination date or at an earlier date at the companies' option. In addition, these agreements require payment of commitment fees based on the unused portions of the commitments or the maintenance of compensating balances with the banks.
Additionally, the company maintains committed lines of credit in the amount of $679 million (including $208 million of such lines under which borrowings may be made only to fund purchase obligations relating to variable rate pollution control bonds) which expire at various times during 1998 and, in certain cases, provide for average annual compensating balances. Because the arrangements are based on an average balance, the company does not consider any of its cash balances to be restricted as of any specific date. Moreover, the company borrows from time to time pursuant to arrangements with banks for uncommitted lines of credit.
At December 31, 1997, the company had regulatory approval to have outstanding up to $750 million of short-term borrowings.
Assets Subject to Lien
The company's mortgage, as amended and supplemented, securing the first mortgage bonds issued by the company, constitutes a direct lien on substantially all of the company's fixed property and franchises.
Fuel Commitments
To supply a portion of the fuel requirements of its generating plants, the company has entered into various long-term commitments for the procurement of fossil and nuclear fuel. In most cases, these contracts contain provisions for price escalations, minimum purchase levels and other financial commitments. Total estimated long-term obligations at December 31, 1997, were as follows:
Year Amounts
---- -----------------
(in millions)
1998 $869
1999 632
2000 388
2001 377
2002 317
2003-2013 2,538
-------------------------------------------------------------
Total commitments $5,121
=============================================================
|
Operating Leases
The company has entered into coal rail car rental agreements with various terms and expiration dates. At December 31, 1997, estimated minimum rental commitments for noncancellable operating leases were as follows:
Year Amounts
---- -----------------
(in millions)
1998 $5.6
1999 5.6
2000 5.6
2001 5.6
2002 5.6
2003-2017 55.5
------------------------------------------------------------------
Total minimum payments $83.5
==================================================================
|
6. JOINT OWNERSHIP AGREEMENTS
The company and Georgia Power Company own equally all of the outstanding capital stock of Southern Electric Generating Company (SEGCO), which owns electric
II-77
NOTES (continued)
Alabama Power Company 1997 Annual Report
generating units with a total rated capacity of 1,020 megawatts, together with associated transmission facilities. The capacity of these units is sold equally to the company and Georgia Power Company under a contract which, in substance, requires payments sufficient to provide for the operating expenses, taxes, interest expense and a return on equity, whether or not SEGCO has any capacity and energy available. The company's share of expenses totaled $73 million in 1997, $75 million in 1996 and $71 million in 1995, and is included in "Purchased power from affiliates" in the Statements of Income.
In addition, the company has guaranteed unconditionally the obligation of SEGCO under an installment sale agreement for the purchase of certain pollution control facilities at SEGCO's generating units, pursuant to which $24.5 million principal amount of pollution control revenue bonds are outstanding. Georgia Power Company has agreed to reimburse the company for the pro rata portion of such obligation corresponding to its then proportionate ownership of stock of SEGCO if the company is called upon to make such payment under its guaranty.
At December 31, 1997, the capitalization of SEGCO consisted of $50 million of equity and $72 million of long-term debt on which the annual interest requirement is $4.5 million. SEGCO paid dividends totaling $10.6 million in 1997, $10.1 million in 1996, and $7.6 million in 1995, of which one-half of each was paid to the company. SEGCO's net income was $8.5 million, $7.7 million, and $8.1 million for 1997, 1996 and 1995, respectively.
The company's percentage ownership and investment in jointly-owned generating plants at December 31, 1997, follows:
Total
Megawatt Company
Facility (Type) Capacity Ownership
------------------- ------------ -------------
Greene County 500 60.00% (1)
(coal)
Plant Miller
Units 1 and 2 1,320 91.84% (2)
(coal)
=========================================================
|
(1) Jointly owned with an affiliate, Mississippi Power Company.
(2) Jointly owned with Alabama Electric Cooperative, Inc.
Company Accumulated
Facility Investment Depreciation
------------------- -------------- ---------------
(in millions)
Greene County $ 93 $ 40
Plant Miller
Units 1 and 2 717 311
------------------------------------------------------------
7. LONG-TERM POWER SALES AGREEMENTS
|
General
The company and the operating affiliates of Southern Company have entered into long-term contractual agreements for the sale of capacity and energy to certain non-affiliated utilities located outside the system's service area. These agreements -- expiring at various dates discussed below -- are firm and pertain to capacity related to specific generating units. Because the energy is generally sold at cost under these agreements, profitability is primarily affected by revenues from capacity sales. The company's capacity revenues amounted to $136 million in 1997, $151 million in 1996, and $157 million in 1995.
Unit power from Plant Miller is being sold to Florida Power Corporation (FPC), Florida Power & Light Company (FP&L), Jacksonville Electric Authority (JEA) and the City of Tallahassee, Florida. Under these agreements, approximately 1,200 megawatts of capacity is scheduled to be sold through 1999. Thereafter, these sales will remain at that approximate level -- unless reduced by FP&L, FPC, and JEA for the periods after 1999 with a minimum of three years notice -- until the expiration of the contracts in 2010.
Alabama Municipal Electric Authority (AMEA) Capacity Contracts
In August 1986, the company entered into a firm power purchase contract with AMEA entitling AMEA to scheduled amounts of capacity (to a maximum 100 megawatts) for a period of 15 years commencing September 1, 1986 (1986 Contract). In October 1991, the company entered into a second firm power purchase contract with AMEA entitling AMEA to scheduled amounts of additional capacity (to a maximum 80 megawatts) for a period of 15 years commencing October 1, 1991 (1991 Contract). In both contracts the power will be sold to AMEA for its member municipalities that previously were served directly by the company as wholesale customers. Under the terms of the contracts, the company received
II-78
NOTES (continued)
Alabama Power Company 1997 Annual Report
payments from AMEA representing the net present value of the revenues associated with the respective capacity entitlements, discounted at effective annual rates of 9.96 percent and 11.19 percent for the 1986 and 1991 contracts, respectively. These payments are being recognized as operating revenues and the discounts are being amortized to other interest expense as scheduled capacity is made available over the terms of the contracts.
In order to secure AMEA's advance payments and the company's performance obligation under the contracts, the company issued and delivered to an escrow agent first mortgage bonds representing the maximum amount of liquidated damages payable by the company in the event of a default under the contracts. No principal or interest is payable on such bonds unless and until a default by the company occurs. As the liquidated damages decline under the contracts, a portion of the bonds equal to the decreases are returned to the company. At December 31, 1997, $113.8 million of such bonds was held by the escrow agent under the contracts.
8. INCOME TAXES
At December 31, 1997, the tax-related regulatory assets and liabilities were $385 million and $327 million, respectively. These assets are attributable to tax benefits flowed through to customers in prior years and to taxes applicable to capitalized AFUDC. These liabilities are attributable to deferred taxes previously recognized at rates higher than current enacted tax law and to unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
1997 1996 1995
------------------------------------
(in thousands)
Total provision for income
taxes:
Federal--
Currently payable $197,159 $172,911 $166,105
Deferred--
current year 32,884 (6,309) 43,493
reversal of prior years (44,300) 18,948 (15,817)
Deferred investment tax
credits - - (75)
------------------------------------------------------------------------
185,743 185,550 193,706
-----------------------------------------------------------------------
State--
Currently payable 23,147 16,212 18,108
Deferred--
current year 1,409 697 5,117
reversal of prior years (2,422) 3,249 (91)
------------------------------------------------------------------------
22,134 20,158 23,134
Total 207,877 205,708 216,840
Less income taxes credited
to other income (12,351) (22,400) (14,142)
-------------------------------------------------------------------------
Total income taxes
charged operations $220,228 $228,108 $230,982
=========================================================================
|
The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:
1997 1996
-------------------
(in millions)
Deferred tax liabilities:
Accelerated depreciation $ 847 $ 816
Property basis differences 463 466
Premium on reacquired debt 30 31
Other 31 51
------------------------------------------------------------------
Total 1,371 1,364
------------------------------------------------------------------
Deferred tax assets:
Capacity prepayments 31 34
Other deferred costs 33 27
Postretirement benefits 18 21
Unbilled revenue 16 15
Other 66 54
------------------------------------------------------------------
Total 164 151
------------------------------------------------------------------
Net deferred tax liabilities 1,207 1,213
Portion included in current assets
(liabilities), net (15) (35)
------------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $1,192 $1,178
===================================================================
|
II-79
NOTES (continued)
Alabama Power Company 1997 Annual Report
Deferred investment tax credits are amortized over the life of the related property with such amortization normally applied as a credit to reduce depreciation in the Statements of Income. Credits amortized in this manner amounted to $11 million in 1997 and 1996, and $12 million in 1995. At December 31, 1997, all investment tax credits available to reduce federal income taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
1997 1996 1995
--------------------------
Federal statutory rate 35.0% 35.0% 35.0%
State income tax,
net of federal deduction 2.4 2.2 2.5
Non-deductible book
depreciation 1.5 1.5 1.6
Differences in prior years'
deferred and current tax rates (2.3) (1.6) (1.8)
Other (1.9) (3.0) (1.4)
--------------------------------------------------------------
Effective income tax rate 34.7% 34.1% 35.9%
==============================================================
|
Southern Company files a consolidated federal income tax return. Under a joint consolidated income tax agreement, each subsidiary's current and deferred tax expense is computed on a stand-alone basis. Tax benefits from losses of the parent company are allocated to each subsidiary based on the ratio of taxable income to total consolidated taxable income.
9. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES
In January 1996, Alabama Power Capital Trust I (Trust I), of which the company owns all of the common securities, issued $97 million of 7.375 percent mandatorily redeemable preferred securities. Substantially all of the assets of Trust I are $100 million aggregate principal amount of the company's 7.375 percent junior subordinated notes due March 31, 2026.
In January 1997, Alabama Power Capital Trust II (Trust II), of which the company also owns all of the common securities, issued $200 million of 7.60 percent mandatorily redeemable preferred securities. Substantially all of the assets of Trust II are $206 million aggregate principal amount of the company's 7.60 percent junior subordinated notes due December 31, 2036.
10. OTHER LONG-TERM DEBT
Details of other long-term debt at December 31 are as follows:
1997 1996
--------------------------
(in thousands)
Obligations incurred in
connection with the
sale of pollution control
revenue bonds by public
authorities-
Collateralized -
5.5% to 6.5 % due
2023-2024 $223,040 $223,040
Variable rates (4.1%
to 4.8% at 1/1/98)
due 2015-2017 89,800 89,800
Non-collateralized -
7.25% due 2003 1,000 1,000
5.8% due 2022 9,800 9,800
Variable rates (4.50%
to 5.9% at 1/1/98)
due 2021 - 2022 217,500 152,500
-------------------------------------------------------------
541,140 476,140
Capitalized lease obligations 7,105 8,056
Long-term senior notes -
7.125% due 2047 193,800 -
-------------------------------------------------------------
Total $742,045 $484,196
=============================================================
|
Pollution control obligations represent installment purchases of pollution control facilities financed by funds derived from sales by public authorities of revenue bonds. The company is required to make payments sufficient for the authorities to meet principal and interest requirements of such bonds. With respect to $312.8 million of such pollution control obligations, the company has authenticated and delivered to the trustees a like principal amount of first mortgage bonds as security for its obligations under the installment purchase agreements. No principal or interest on these first mortgage bonds is payable unless and until a default occurs on the installment purchase agreements.
The estimated aggregate annual maturities of other long-term debt through 2001 are as follows: $1.0 million in 1998, $1.2 million in 1999, $1.1 million in 2000, $1.0 million in 2001 and $1.1 million in 2002.
II-80
NOTES (continued)
Alabama Power Company 1997 Annual Report
11. SECURITIES DUE WITHIN ONE YEAR
A summary of the improvement fund requirements and scheduled maturities and redemptions of long-term debt and preferred stock due within one year at December 31 is as follows:
1997 1996
------------------------
(in thousands)
Bond improvement fund
requirements $18,450 $ 19,410
First mortgage bond maturities
and redemptions 55,895 391
Other long-term debt maturities
(Note 10) 991 952
------------------------------------------------------------
Total long-term debt due within
one year 75,336 20,753
------------------------------------------------------------
Preferred stock to be reacquired - 100,000
------------------------------------------------------------
Total $75,336 $120,753
============================================================
|
The annual first mortgage bond improvement fund requirement is 1 percent of the aggregate principal amount of bonds of each series authenticated, so long as a portion of that series is outstanding, and may be satisfied by the deposit of cash and/or reacquired bonds, the certification of unfunded property additions or a combination thereof. The 1998 requirement of $18.5 million was satisfied by the deposit of cash in 1998, all of which was used for the redemption of outstanding first mortgage bonds. Also in early 1998, the company redeemed $5.9 million first mortgage bonds and retired $50 million first mortgage bonds. Scheduled maturities amount to $991 thousand in connection with capitalized office building leases and a street light lease.
12. NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988 (Act), the company maintains agreements of indemnity with the NRC that, together with private insurance, cover third-party liability arising from any nuclear incident occurring at Plant Farley. The Act provides funds up to $8.9 billion for public liability claims that could arise from a single nuclear incident. Plant Farley is insured against this liability to a maximum of $200 million by private insurance, with the remaining coverage provided by a mandatory program of deferred premiums which could be assessed, after a nuclear incident, against all owners of nuclear reactors. The company could be assessed up to $79 million per incident for each licensed reactor it operates but not more than an aggregate of $10 million per incident to be paid in a calendar year for each reactor. Such maximum assessment, excluding any applicable state premium taxes, for the company is $159 million per incident but not more than an aggregate of $20 million to be paid for each incident in any one year.
The company is a member of Nuclear Electric Insurance Limited (NEIL), a mutual insurer established to provide property damage insurance in an amount up to $500 million for members' nuclear generating facilities. The members are subject to a retrospective premium assessment in the event that losses exceed accumulated reserve funds. The company's maximum annual assessment per incident is limited to $8 million under the current policy.
Additionally, the company has policies that currently provide decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. This excess insurance is also provided by NEIL.
NEIL also covers the additional cost that would be incurred in obtaining replacement power during a prolonged accidental outage at a member's nuclear plant. Members can be insured against increased cost of replacement power in an amount up to $3.5 million per week (starting 17 weeks after the outage) for one year and up to $2.8 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if losses each year exceed the accumulated funds available to the insurer under that policy. The maximum annual assessments per incident under current policies for the company would be $10 million for excess property damage and $8 million for replacement power.
For all on-site property damage insurance policies for commercial nuclear power plants, the NRC requires that the proceeds of such policies issued or renewed on or after April 2, 1991, shall be dedicated first for the sole purpose of placing the reactor in a safe and stable condition after an accident. Any remaining proceeds are to be applied next toward the costs of decontamination and debris removal operations ordered by the NRC, and any further remaining proceeds are to be paid either to the company or to its bond trustees as may be appropriate under the policies and applicable trust indentures.
II-81
NOTES (continued)
Alabama Power Company 1997 Annual Report
All retrospective assessments, whether generated for liability, property or replacement power may be subject to applicable state premium taxes.
13. COMMON STOCK DIVIDEND RESTRICTIONS
The company's first mortgage bond indenture contains various common stock dividend restrictions that remain in effect as long as the bonds are outstanding. At December 31, 1997, retained earnings of $796 million were restricted against the payment of cash dividends on common stock under terms of the mortgage indenture.
14. QUARTERLY FINANCIAL INFORMATION
(Unaudited)
Summarized quarterly financial data for 1997 and 1996 are as follows:
Net Income
After
Dividends
Quarter Operating Operating on Preferred
Ended Revenues Income Stock
------------------- -----------------------------------------
(in thousands)
March 1997 $704,768 $123,455 $ 57,807
June 1997 728,089 125,750 63,137
September 1997 962,446 249,487 191,800
December 1997 753,808 128,511 63,195
March 1996 $732,809 $142,052 $ 73,159
June 1996 779,587 151,673 95,778
September 1996 913,308 222,523 152,589
December 1996 695,071 100,390 49,964
----------------------------------------------------------------
|
The company's business is influenced by seasonal weather conditions.
II-82
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1997 Annual Report
===================================================================================================================================
1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $3,149,111 $3,120,775 $3,024,774
Net Income after Dividends
on Preferred Stock (in thousands) $375,939 $371,490 $360,894
Cash Dividends on Common Stock (in thousands) $339,600 $347,500 $285,000
Return on Average Common Equity (percent) 13.76 13.75 13.61
Total Assets (in thousands) $8,812,867 $8,733,846 $8,744,360
Gross Property Additions (in thousands) $451,167 $425,024 $551,781
-----------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $2,750,569 $2,714,277 $2,690,374
Preferred stock 255,512 340,400 440,400
Preferred stock subject to mandatory redemption - - -
Subsidiary obligated mandatorily redeemable preferred securities 297,000 97,000 -
Long-term debt 2,473,202 2,354,006 2,374,948
-----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $5,776,283 $5,505,683 $5,505,722
===================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.6 49.3 48.9
Preferred stock 4.4 6.2 8.0
Company obligated mandatorily redeemable preferred securities 5.2 1.7 -
Long-term debt 42.8 42.8 43.1
-----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
===================================================================================================================================
First Mortgage Bonds (in thousands):
Issued - - -
Retired 74,951 83,797 -
Company Obligated Mandatorily Redeemable Preferred
Securities (in thousands):
Issued 200,000 97,000 -
Preferred Stock (in thousands):
Issued - - -
Retired 184,888 - -
-----------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A+ A+ A+
Duff & Phelps AA- AA- A+
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A A A
Duff & Phelps A+ A+ A
-----------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,092,161 1,073,559 1,058,197
Commercial 177,362 171,827 166,480
Industrial 5,076 5,100 5,338
Other 728 732 725
-----------------------------------------------------------------------------------------------------------------------------------
Total 1,275,327 1,251,218 1,230,740
===================================================================================================================================
Employees (year-end) 6,531 6,865 7,261
|
II-83
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1997 Annual Report
===================================================================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $2,935,142 $3,007,609 $2,846,840
Net Income after Dividends
on Preferred Stock (in thousands) $356,338 $346,494 $338,555
Cash Dividends on Common Stock (in thousands) $268,000 $252,900 $273,300
Return on Average Common Equity (percent) 13.86 13.94 14.02
Total Assets (in thousands) $8,459,217 $8,248,683 $6,593,618
Gross Property Additions (in thousands) $536,785 $435,843 $367,463
-----------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $2,614,405 $2,526,348 $2,443,493
Preferred stock 440,400 440,400 489,400
Preferred stock subject to mandatory redemption - - -
Subsidiary obligated mandatorily redeemable preferred securities - - -
Long-term debt 2,455,013 2,362,852 2,202,473
-----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $5,509,818 $5,329,600 $5,135,366
===================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.4 47.4 47.6
Preferred stock 8.0 8.3 9.5
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 44.6 44.3 42.9
-----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
===================================================================================================================================
First Mortgage Bonds (in thousands):
Issued 150,000 860,000 745,000
Retired 20,387 699,788 931,797
Company Obligated Mandatorily Redeemable Preferred
Securities (in thousands):
Issued - - -
Preferred Stock (in thousands):
Issued - 158,000 150,000
Retired - 207,000 145,000
-----------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Duff & Phelps A+ A+ A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A- A- A-
-----------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,042,974 1,027,130 1,012,294
Commercial 162,239 157,337 152,530
Industrial 5,341 5,391 5,434
Other 716 713 704
-----------------------------------------------------------------------------------------------------------------------------------
Total 1,211,270 1,190,571 1,170,962
===================================================================================================================================
Employees (year-end) 7,996 8,009 8,116
|
II-84A
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1997 Annual Report
===================================================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $2,846,794 $2,722,424 $2,629,354
Net Income after Dividends
on Preferred Stock (in thousands) $339,666 $312,803 $311,146
Cash Dividends on Common Stock (in thousands) $232,900 $220,800 $217,300
Return on Average Common Equity (percent) 14.55 14.00 14.53
Total Assets (in thousands) $6,549,462 $6,362,293 $6,279,431
Gross Property Additions (in thousands) $397,011 $444,680 $459,199
-----------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $2,387,198 $2,280,590 $2,188,811
Preferred stock 484,400 484,400 484,400
Preferred stock subject to mandatory redemption - 12,500 17,500
Subsidiary obligated mandatorily redeemable preferred securities - - -
Long-term debt 2,382,635 2,397,931 2,435,129
-----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $5,254,233 $5,175,421 $5,125,840
===================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 45.4 44.1 42.7
Preferred stock 9.2 9.6 9.8
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 45.4 46.3 47.5
-----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
===================================================================================================================================
First Mortgage Bonds (in thousands):
Issued 250,000 - -
Retired 227,695 33,122 75,650
Company Obligated Mandatorily Redeemable Preferred
Securities (in thousands):
Issued - - -
Preferred Stock (in thousands):
Issued - - -
Retired 17,500 5,000 5,000
-----------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Duff & Phelps A A A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A- A- A-
-----------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 997,585 985,566 974,622
Commercial 148,228 144,340 141,265
Industrial 5,496 5,322 5,200
Other 697 690 684
-----------------------------------------------------------------------------------------------------------------------------------
Total 1,152,006 1,135,918 1,121,771
===================================================================================================================================
Employees (year-end) 8,513 9,473 9,698
|
II-84B
SELECTED FINANCIAL AND OPERATING DATA
Alabama Power Company 1997 Annual Report
=====================================================================================================================
1988 1987
---------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $2,476,626 $2,574,634
Net Income after Dividends
on Preferred Stock (in thousands) $283,475 $257,239
Cash Dividends on Common Stock (in thousands) $212,700 $201,100
Return on Average Common Equity (percent) 14.03 13.56
Total Assets (in thousands) $6,180,945 $5,912,000
Gross Property Additions (in thousands) $643,892 $600,589
---------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $2,094,815 $1,946,747
Preferred stock 484,400 384,400
Preferred stock subject to mandatory redemption 22,500 27,500
Subsidiary obligated mandatorily redeemable preferred securities - -
Long-term debt 2,496,492 2,386,258
---------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $5,098,207 $4,744,905
=====================================================================================================================
Capitalization Ratios (percent):
Common stock equity 41.1 41.0
Preferred stock 9.9 8.7
Company obligated mandatorily redeemable preferred securities - -
Long-term debt 49.0 50.3
---------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
=====================================================================================================================
First Mortgage Bonds (in thousands):
Issued 150,000 200,000
Retired 42,445 108,082
Company Obligated Mandatorily Redeemable Preferred
Securities (in thousands):
Issued - -
Preferred Stock (in thousands):
Issued 100,000 -
Retired 2,500 5,000
---------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1
Standard and Poor's A A
Duff & Phelps 6 6
Preferred Stock -
Moody's a2 a2
Standard and Poor's A- A-
Duff & Phelps 7 7
---------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 964,581 950,101
Commercial 137,955 134,533
Industrial 5,120 4,955
Other 678 713
---------------------------------------------------------------------------------------------------------------------
Total 1,108,334 1,090,302
=====================================================================================================================
Employees (year-end) 10,302 10,457
|
II-84C
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1997 Annual Report
===================================================================================================================================
1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $997,507 $998,806 $997,069
Commercial 724,148 696,453 670,453
Industrial 775,591 759,628 805,596
Other 13,563 13,729 13,619
-----------------------------------------------------------------------------------------------------------------------------------
Total retail 2,510,809 2,468,616 2,486,737
Sales for resale - non-affiliates 431,023 391,669 370,140
Sales for resale - affiliates 161,795 216,620 127,730
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 3,103,627 3,076,905 2,984,607
Other revenues 45,484 43,870 40,167
-----------------------------------------------------------------------------------------------------------------------------------
Total $3,149,111 $3,120,775 $3,024,774
===================================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 14,336,408 14,593,761 14,383,231
Commercial 11,330,312 10,904,476 10,043,220
Industrial 20,727,912 19,999,258 19,862,577
Other 180,389 192,573 186,848
-----------------------------------------------------------------------------------------------------------------------------------
Total retail 46,575,021 45,690,068 44,475,876
Sales for resale - non-affiliates 11,893,905 9,491,237 8,046,189
Sales for resale - affiliates 8,993,326 10,292,066 6,705,174
-----------------------------------------------------------------------------------------------------------------------------------
Total 67,462,252 65,473,371 59,227,239
===================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.96 6.84 6.93
Commercial 6.39 6.39 6.68
Industrial 3.74 3.80 4.06
Total retail 5.39 5.40 5.59
Sales for resale 2.84 3.07 3.38
Total sales 4.60 4.70 5.04
Residential Average Annual Kilowatt-Hour
Use Per Customer 13,254 13,705 13,686
Residential Average Annual Revenue
Per Customer $922.21 $937.95 $948.71
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 11,151 11,151 10,831
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 8,478 8,413 7,958
Summer 9,778 9,912 10,090
Annual Load Factor (percent) (Note 2) 62.7 61.3 59.2
Plant Availability (percent):
Fossil-steam 86.3 86.6 88.3
Nuclear 88.8 90.5 81.1
-----------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 66.0 67.0 67.1
Nuclear 18.0 18.5 17.1
Hydro 7.6 7.1 7.0
Oil and gas 0.7 0.4 0.4
Purchased power -
From non-affiliates 2.3 2.4 2.7
From affiliates 5.4 4.6 5.7
-----------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
===================================================================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 9,984 10,035 10,025
Cost of fuel per million BTU (cents) 148.61 147.09 148.68
Average cost of fuel per net kilowatt-hour generated (cents) 1.48 1.48 1.49
===================================================================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
|
II-85
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1997 Annual Report
===================================================================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $913,146 $947,277 $845,660
Commercial 647,202 634,895 589,816
Industrial 803,587 832,938 800,311
Other 13,515 13,344 12,734
-----------------------------------------------------------------------------------------------------------------------------------
Total retail 2,377,450 2,428,454 2,248,521
Sales for resale - non-affiliates 354,760 364,105 407,791
Sales for resale - affiliates 164,762 181,975 158,088
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 2,896,972 2,974,534 2,814,400
Other revenues 38,170 33,075 32,440
-----------------------------------------------------------------------------------------------------------------------------------
Total $2,935,142 $3,007,609 $2,846,840
===================================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 13,183,147 13,185,062 12,069,268
Commercial 9,645,798 9,185,462 8,629,869
Industrial 19,479,364 18,595,237 18,260,274
Other 185,876 181,673 176,798
-----------------------------------------------------------------------------------------------------------------------------------
Total retail 42,494,185 41,147,434 39,136,209
Sales for resale - non-affiliates 6,775,176 7,143,672 8,382,571
Sales for resale - affiliates 8,432,533 8,081,324 7,210,697
-----------------------------------------------------------------------------------------------------------------------------------
Total 57,701,894 56,372,430 54,729,477
===================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.93 7.18 7.01
Commercial 6.71 6.91 6.83
Industrial 4.13 4.48 4.38
Total retail 5.59 5.90 5.75
Sales for resale 3.42 3.59 3.63
Total sales 5.02 5.28 5.14
Residential Average Annual Kilowatt-Hour
Use Per Customer 12,746 12,936 12,017
Residential Average Annual Revenue
Per Customer $882.88 $929.36 $842.00
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 10,431 10,431 10,431
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 8,217 7,152 7,077
Summer 9,028 9,457 8,801
Annual Load Factor (percent) (Note 2) 62.2 58.6 59.6
Plant Availability (percent):
Fossil-steam 86.9 89.7 88.9
Nuclear 92.5 86.6 80.2
-----------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 62.9 63.9 64.3
Nuclear 21.7 20.1 19.0
Hydro 8.4 6.9 8.5
Oil and gas * * *
Purchased power -
From non-affiliates 1.3 1.1 1.2
From affiliates 5.7 8.0 7.0
-----------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
===================================================================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 9,961 10,003 10,000
Cost of fuel per million BTU (cents) 157.62 173.66 164.57
Average cost of fuel per net kilowatt-hour generated (cents) 1.57 1.74 1.65
===================================================================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
|
II-86A
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1997 Annual Report
===================================================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $864,347 $825,645 $781,982
Commercial 582,730 551,634 533,487
Industrial 790,224 777,580 762,274
Other 12,662 12,103 11,743
-----------------------------------------------------------------------------------------------------------------------------------
Total retail 2,249,963 2,166,962 2,089,486
Sales for resale - non-affiliates 407,912 434,996 409,202
Sales for resale - affiliates 159,375 93,473 104,488
-----------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 2,817,250 2,695,431 2,603,176
Other revenues 29,544 26,993 26,178
-----------------------------------------------------------------------------------------------------------------------------------
Total $2,846,794 $2,722,424 $2,629,354
===================================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 12,324,898 11,996,794 11,346,736
Commercial 8,526,131 8,201,534 7,915,685
Industrial 17,511,579 17,713,153 17,360,791
Other 174,760 170,420 166,485
-----------------------------------------------------------------------------------------------------------------------------------
Total retail 38,537,368 38,081,901 36,789,697
Sales for resale - non-affiliates 8,810,442 10,277,060 10,292,329
Sales for resale - affiliates 7,784,285 4,519,275 5,048,743
-----------------------------------------------------------------------------------------------------------------------------------
Total 55,132,095 52,878,236 52,130,769
===================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.01 6.88 6.89
Commercial 6.83 6.73 6.74
Industrial 4.51 4.39 4.39
Total retail 5.84 5.69 5.68
Sales for resale 3.42 3.57 3.35
Total sales 5.11 5.10 4.99
Residential Average Annual Kilowatt-Hour
Use Per Customer 12,435 12,256 11,717
Residential Average Annual Revenue
Per Customer $872.04 $843.50 $807.50
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 10,539 9,879 9,879
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 6,586 6,293 7,264
Summer 8,627 8,878 8,256
Annual Load Factor (percent) (Note 2) 59.9 57.4 59.5
Plant Availability (percent):
Fossil-steam 93.1 92.2 90.7
Nuclear 87.0 86.5 83.1
-----------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 61.5 57.0 54.1
Nuclear 20.8 21.6 21.0
Hydro 8.2 8.7 11.0
Oil and gas * 0.1 0.1
Purchased power -
From non-affiliates 1.6 0.9 1.8
From affiliates 7.9 11.7 12.0
-----------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
===================================================================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 9,985 10,072 10,061
Cost of fuel per million BTU (cents) 170.49 171.55 172.20
Average cost of fuel per net kilowatt-hour generated (cents) 1.70 1.73 1.73
===================================================================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
|
II-86B
SELECTED FINANCIAL AND OPERATING DATA (continued)
Alabama Power Company 1997 Annual Report
====================================================================================================================
1988 1987
--------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $761,805 $759,957
Commercial 510,910 501,088
Industrial 738,755 721,298
Other 11,255 10,968
--------------------------------------------------------------------------------------------------------------------
Total retail 2,022,725 1,993,311
Sales for resale - non-affiliates 355,362 443,880
Sales for resale - affiliates 76,691 118,746
--------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 2,454,778 2,555,937
Other revenues 21,848 18,697
--------------------------------------------------------------------------------------------------------------------
Total $2,476,626 $2,574,634
====================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 11,332,285 11,149,225
Commercial 7,711,092 7,476,924
Industrial 16,881,342 15,969,075
Other 165,122 159,422
--------------------------------------------------------------------------------------------------------------------
Total retail 36,089,841 34,754,646
Sales for resale - non-affiliates 7,905,750 10,523,554
Sales for resale - affiliates 3,551,142 4,963,997
--------------------------------------------------------------------------------------------------------------------
Total 47,546,733 50,242,197
====================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.72 6.82
Commercial 6.63 6.70
Industrial 4.38 4.52
Total retail 5.60 5.74
Sales for resale 3.77 3.63
Total sales 5.16 5.09
Residential Average Annual Kilowatt-Hour
Use Per Customer 11,839 11,848
Residential Average Annual Revenue
Per Customer $795.84 $807.61
Plant Nameplate Capacity Ratings (Note 1)
(year-end) (megawatts) 9,279 9,337
Territorial Peak-Hour Demand (megawatts) (Note 2):
Winter 6,377 6,138
Summer 7,991 7,886
Annual Load Factor (percent) (Note 2) 59.6 58.3
Plant Availability (percent):
Fossil-steam 91.3 90.2
Nuclear 91.9 83.3
--------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 53.9 52.5
Nuclear 26.1 21.7
Hydro 4.8 6.3
Oil and gas 0.1 0.2
Purchased power -
From non-affiliates 0.5 0.2
From affiliates 14.6 19.1
--------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0
====================================================================================================================
Total Fuel Economy Data (Note 1):
BTU per net kilowatt-hour generated 10,137 10,214
Cost of fuel per million BTU (cents) 168.21 176.72
Average cost of fuel per net kilowatt-hour generated (cents) 1.71 1.80
====================================================================================================================
Notes:
(1) Generating capacity and fuel data includes Alabama Power Company's 50% portion of SEGCO.
(2) Includes Southeastern Power Administration allotment.
* Less than one-tenth of one percent.
|
II-86C
STATEMENTS OF INCOME
Alabama Power Company
================================================================================================================================
For the Years Ended December 31, 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $2,987,316 $2,904,155 $2,897,044
Revenues from affiliates 161,795 216,620 127,730
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 3,149,111 3,120,775 3,024,774
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 896,014 877,076 791,819
Purchased power from non-affiliates 41,795 36,813 30,065
Purchased power from affiliates 95,538 91,500 112,826
Proceeds from settlement of disputed contracts - - -
Other 510,203 505,884 501,876
Maintenance 242,691 258,482 243,218
Depreciation and amortization 330,377 320,102 303,050
Taxes other than income taxes 185,062 186,172 185,620
Federal and state income taxes 220,228 228,108 230,982
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,521,908 2,504,137 2,399,456
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 627,203 616,638 625,318
Other Income (Expense):
Allowance for equity funds used during construction - - 1,649
Income from subsidiary 4,266 3,851 4,051
Charitable foundation - (6,800) (11,542)
Interest income 37,844 28,318 13,768
Other, net (38,522) (39,053) (21,536)
Income taxes applicable to other income 12,351 22,400 14,142
--------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 643,142 625,354 625,850
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 167,172 169,390 180,714
Allowance for debt funds used during construction (4,787) (6,480) (7,067)
Interest on interim obligations 22,787 20,617 16,917
Amortization of debt discount, premium, and expense, net 9,645 9,508 20,259
Other interest charges 36,037 27,510 27,064
Distributions on preferred securities of
Alabama Power Capital Trust I 21,763 6,717 -
--------------------------------------------------------------------------------------------------------------------------------
Net interest charges 252,617 227,262 237,887
--------------------------------------------------------------------------------------------------------------------------------
Net Income 390,525 398,092 387,963
Dividends on Preferred Stock 14,586 26,602 27,069
--------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 375,939 $ 371,490 $ 360,894
================================================================================================================================
|
II-87
STATEMENTS OF INCOME
Alabama Power Company
============================================================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $2,770,380 $2,825,634 $2,688,752
Revenues from affiliates 164,762 181,975 158,088
----------------------------------------------------------------------------------------------------------------------------
Total operating revenues 2,935,142 3,007,609 2,846,840
----------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 801,948 877,099 794,438
Purchased power from non-affiliates 15,158 15,230 14,242
Purchased power from affiliates 100,888 120,330 107,230
Proceeds from settlement of disputed contracts - (2,568) (641)
Other 458,917 473,383 446,477
Maintenance 262,102 252,506 237,071
Depreciation and amortization 292,420 290,310 280,881
Taxes other than income taxes 183,425 178,997 172,095
Federal and state income taxes 224,280 207,210 201,925
---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,339,138 2,412,497 2,253,718
----------------------------------------------------------------------------------------------------------------------------
Operating Income 596,004 595,112 593,122
Other Income (Expense):
Allowance for equity funds used during construction 3,239 3,260 2,071
Income from subsidiary 3,588 4,127 4,635
Charitable foundation (13,500) (3,000) (6,887)
Interest income 16,944 20,775 14,804
Other, net (30,569) (24,420) (11,019)
Income taxes applicable to other income 16,834 10,239 8,947
----------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 592,540 606,093 605,673
----------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 178,045 184,861 206,871
Allowance for debt funds used during construction (3,548) (2,992) (2,416)
Interest on interim obligations 5,939 3,760 3,704
Amortization of debt discount, premium, and expense, net 9,623 8,937 4,392
Other interest charges 19,908 35,474 19,381
Distributions on preferred securities of
Alabama Power Capital Trust I - - -
----------------------------------------------------------------------------------------------------------------------------
Net interest charges 209,967 230,040 231,932
----------------------------------------------------------------------------------------------------------------------------
Net Income 382,573 376,053 373,741
Dividends on Preferred Stock 26,235 29,559 35,186
----------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 356,338 $ 346,494 $ 338,555
============================================================================================================================
|
II-88A
STATEMENTS OF INCOME
Alabama Power Company
============================================================================================================================
For the Years Ended December 31, 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $2,687,419 $2,628,951 $2,524,866
Revenues from affiliates 159,375 93,473 104,488
----------------------------------------------------------------------------------------------------------------------------
Total operating revenues 2,846,794 2,722,424 2,629,354
----------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 812,667 756,501 712,453
Purchased power from non-affiliates 21,080 11,185 28,272
Purchased power from affiliates 119,602 165,982 163,267
Proceeds from settlement of disputed contracts (14,819) - -
Other 435,908 411,559 380,536
Maintenance 229,114 215,304 202,633
Depreciation and amortization 271,433 262,817 247,973
Taxes other than income taxes 169,639 163,567 154,398
Federal and state income taxes 200,612 185,954 188,507
--------------------------------------------------------------------------------------------- -------------- --------------
Total operating expenses 2,245,236 2,172,869 2,078,039
----------------------------------------------------------------------------------------------------------------------------
Operating Income 601,558 549,555 551,315
Other Income (Expense):
Allowance for equity funds used during construction 2,368 25,487 29,515
Income from subsidiary 4,576 4,182 3,750
Charitable foundation (6,500) (17,500) (25,000)
Interest income 14,356 12,006 10,871
Other, net (9,926) (8,235) (4,313)
Income taxes applicable to other income 7,523 11,081 13,629
---------------------------------------------------------------------------------------------- -------------- --------------
Income Before Interest Charges 613,955 576,576 579,767
----------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 214,107 221,527 230,046
Allowance for debt funds used during construction (6,903) (23,339) (27,627)
Interest on interim obligations 13,385 10,252 9,098
Amortization of debt discount, premium, and expense, net 2,634 3,706 4,469
Other interest charges 14,927 13,115 13,112
Distributions on preferred securities of
Alabama Power Capital Trust I - - -
-----------------------------------------------------------------------------------------------------------------------------
Net interest charges 238,150 225,261 229,098
-----------------------------------------------------------------------------------------------------------------------------
Net Income 375,805 351,315 350,669
Dividends on Preferred Stock 36,139 38,512 39,523
-----------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 339,666 $ 312,803 $ 311,146
=============================================================================================================================
|
II-88B
STATEMENTS OF INCOME
Alabama Power Company
=============================================================================================================
For the Years Ended December 31, 1988 1987
-------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $2,399,935 $2,455,888
Revenues from affiliates 76,691 118,746
------------------------------------------------------------------------------------------------------------
Total operating revenues 2,476,626 2,574,634
-------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 676,423 696,763
Purchased power from non-affiliates 8,407 6,703
Purchased power from affiliates 185,390 257,052
Proceeds from settlement of disputed contracts - -
Other 400,879 410,575
Maintenance 197,225 199,617
Depreciation and amortization 225,123 212,072
Taxes other than income taxes 148,681 141,422
Federal and state income taxes 143,614 190,575
-------------------------------------------------------------------------------------------------------------
Total operating expenses 1,985,742 2,114,779
-------------------------------------------------------------------------------------------------------------
Operating Income 490,884 459,855
Other Income (Expense):
Allowance for equity funds used during construction 39,047 27,663
Income from subsidiary 3,302 3,440
Charitable foundation - -
Interest income 9,914 7,044
Other, net (13,694) (816)
Income taxes applicable to other income 8,034 849
-------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 537,487 498,035
-------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 225,522 205,824
Allowance for debt funds used during construction (31,830) (24,235)
Interest on interim obligations 5,714 7,221
Amortization of debt discount, premium, and expense, net 4,411 4,405
Other interest charges 13,715 14,662
Distributions on preferred securities of
Alabama Power Capital Trust I - -
-------------------------------------------------------------------------------------------------------------
Net interest charges 217,532 207,877
-------------------------------------------------------------------------------------------------------------
Net Income 319,955 290,158
Dividends on Preferred Stock 36,480 32,919
-------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 283,475 $ 257,239
=============================================================================================================
II-88C
|
STATEMENTS OF CASH FLOWS
Alabama Power Company
------------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 390,525 $ 398,092 $ 387,963
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 394,572 383,438 371,382
Deferred income taxes, net (12,429) 16,585 32,702
Deferred investment tax credits, net - - (75)
Allowance for equity funds used during construction - - (1,649)
Non-cash proceeds from settlement of disputed contracts - - -
Other, net (11,353) 6,247 459
Changes in certain current assets and liabilities --
Receivables, net (30,268) 3,958 (54,209)
Inventories 13,709 36,234 18,425
Payables (9,745) 1,006 (63,656)
Taxes accrued 6,191 (5,756) 551
Energy cost recovery, retail 7,108 25,771 1,177
Other 7,127 8,205 16,890
------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 755,437 873,780 709,960
------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (451,167) (425,024) (551,781)
Sales of property - - -
Other (51,791) (61,119) (53,321)
------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (502,958) (486,143) (605,102)
------------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Company obligated mandatorily redeemable preferred securities 200,000 97,000 -
Preferred stock - - -
First mortgage bonds - - -
Pollution control bonds 258,800 21,000 131,500
Other long-term debt - - -
Capital contributions from parent company - - -
Prepaid capacity revenues - - -
Retirements:
Preferred stock (184,888) - -
First mortgage bonds (74,951) (83,797) -
Pollution control bonds - (21,000) (131,500)
Other long-term debt (951) (907) (791)
Interim obligations, net (57,971) (25,163) 210,134
Payment of preferred stock dividends (22,524) (26,665) (27,118)
Payment of common stock dividends (339,600) (347,500) (285,000)
Miscellaneous (16,024) (3,634) (4,143)
-------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (238,109) (390,666) (106,918)
------------------------------------------------------------------------------------------------------------------------------
Net Change in Cash 14,370 (3,029) (2,060)
Cash at Beginning of Year 9,587 12,616 14,676
------------------------------------------------------------------------------------------------------------------------------
Cash at End of Year $ 23,957 $ 9,587 $ 12,616
==============================================================================================================================
( ) Denotes use of cash.
|
II-89
STATEMENTS OF CASH FLOWS
Alabama Power Company
================================================================================================================================
For the Years Ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 382,573 $ 376,053 $ 373,741
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 359,791 356,499 338,421
Deferred income taxes, net (32,612) 35,100 23,514
Deferred investment tax credits, net (1) (2,106) -
Allowance for equity funds used during construction (3,239) (3,260) (2,071)
Non-cash proceeds from settlement of disputed contracts - - (641)
Other, net 28,656 36,493 (2,657)
Changes in certain current assets and liabilities --
Receivables, net 19,390 19,215 (11,010)
Inventories (38,946) 51,630 12,704
Payables (21,240) 31,544 2,158
Taxes accrued 6,856 (9,959) (21,120)
Energy cost recovery, retail 16,907 (56,128) 45,509
Other (14,235) (21,110) 10,629
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 703,900 813,971 769,177
--------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (536,785) (435,843) (367,463)
Sales of property - - 43,556
Other (26,632) (741) (13,379)
--------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (563,417) (436,584) (337,286)
--------------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Company obligated mandatorily redeemable preferred securities - - -
Preferred stock - 158,000 150,000
First mortgage bonds 150,000 860,000 745,000
Pollution control bonds 179,750 144,436 -
Other long-term debt 28,970 35,878 48,382
Capital contributions from parent company - - -
Prepaid capacity revenues - - -
Retirements:
Preferred stock - (207,000) (145,000)
First mortgage bonds (20,387) (699,788) (931,797)
Pollution control bonds (179,750) (135,315) (335)
Other long-term debt (125,630) (46,014) (53,888)
Interim obligations, net 139,882 (156,917) 120,917
Payment of preferred stock dividends (25,431) (32,099) (35,704)
Payment of common stock dividends (268,000) (252,900) (273,300)
Miscellaneous (8,444) (56,064) (53,697)
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (129,040) (387,783) (429,422)
--------------------------------------------------------------------------------------------------------------------------------
Net Change in Cash 11,443 (10,396) 2,469
Cash at Beginning of Year 3,233 13,629 11,160
--------------------------------------------------------------------------------------------------------------------------------
Cash at End of Year $ 14,676 $ 3,233 $ 13,629
================================================================================================================================
( ) Denotes use of cash.
|
II-90A
STATEMENTS OF CASH FLOWS
Alabama Power Company
==============================================================================================================================
For the Years Ended December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 375,805 $ 351,315 $ 350,669
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 337,978 331,858 322,042
Deferred income taxes, net (5,779) 64,480 31,715
Deferred investment tax credits, net (1,089) 132 6,917
Allowance for equity funds used during construction (2,368) (25,487) (29,515)
Non-cash proceeds from settlement of disputed contracts (13,750) - -
Other, net 26,614 19,899 (5,297)
Changes in certain current assets and liabilities --
Receivables, net 9,178 12,005 (10,436)
Inventories (17,374) (40,901) 20,408
Payables 28,889 6,597 16,259
Taxes accrued 24,828 (6,167) 1,547
Energy cost recovery, retail (12,304) (42,535) 39,164
Other (37,906) 14,144 28,701
-------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 712,722 685,340 772,174
------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (397,011) (444,680) (459,199)
Sales of property - - -
Other (36,083) 6,935 3,768
------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (433,094) (437,745) (455,431)
------------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Company obligated mandatorily redeemable preferred securities - - -
Preferred stock - - -
First mortgage bonds 250,000 - -
Pollution control bonds - - 53,700
Other long-term debt 12,906 54,831 55,176
Capital contributions from parent company - - -
Prepaid capacity revenues 52,900 - -
Retirements:
Preferred stock (17,500) (5,000) (5,000)
First mortgage bonds (227,695) (33,122) (75,650)
Pollution control bonds (250) (250) (53,950)
Other long-term debt (48,428) (56,895) (57,316)
Interim obligations, net (13,500) 59,500 30,000
Payment of preferred stock dividends (36,829) (38,245) (40,105)
Payment of common stock dividends (232,900) (220,800) (217,300)
Miscellaneous (17,732) (293) (4,576)
-------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (279,028) (240,274) (315,021)
------------------------------------------------------------------------------------------------------------------------------
Net Change in Cash 600 7,321 1,722
Cash at Beginning of Year 10,560 3,239 1,517
------------------------------------------------------------------------------------------------------------------------------
Cash at End of Year $ 11,160 $ 10,560 $ 3,239
==============================================================================================================================
( ) Denotes use of cash.
II-90B
|
STATEMENTS OF CASH FLOWS
Alabama Power Company
=================================================================================================================
For the Years Ended December 31, 1988 1987
--------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 319,955 $ 290,158
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 296,234 270,492
Deferred income taxes, net 37,952 107,824
Deferred investment tax credits, net 15,019 23,477
Allowance for equity funds used during construction (39,047) (27,663)
Non-cash proceeds from settlement of disputed contracts - -
Other, net 16,106 67,445
Changes in certain current assets and liabilities --
Receivables, net 8,822 (133,468)
Inventories (23,182) (26,255)
Payables (12,957) 39,645
Taxes accrued (7,754) 516
Energy cost recovery, retail - -
Other (18,658) 4,464
---------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 592,490 616,635
--------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (643,892) (600,589)
Sales of property - -
Other 23,161 17,010
--------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (620,731) (583,579)
--------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Company obligated mandatorily redeemable preferred securities - -
Preferred stock 100,000 -
First mortgage bonds 150,000 200,000
Pollution control bonds - 432
Other long-term debt 62,515 69,786
Capital contributions from parent company 79,500 43,000
Prepaid capacity revenues - -
Retirements:
Preferred stock (2,500) (5,000)
First mortgage bonds (42,445) (108,082)
Pollution control bonds - -
Other long-term debt (56,748) (32,500)
Interim obligations, net (15,000) 15,000
Payment of preferred stock dividends (35,362) (32,837)
Payment of common stock dividends (212,700) (201,100)
Miscellaneous (5,581) (2,581)
---------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 21,679 (53,882)
--------------------------------------------------------------------------------------------------------------
Net Change in Cash (6,562) (20,826)
Cash at Beginning of Year 8,079 28,905
--------------------------------------------------------------------------------------------------------------
Cash at End of Year $ 1,517 $ 8,079
==============================================================================================================
( ) Denotes use of cash.
|
II-90C
BALANCE SHEETS
Alabama Power Company
-----------------------------------------------------------------------------------------------------------------------------------
At December 31, 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 3,330,389 $ 3,326,628 $ 3,221,250
Nuclear 1,893,359 1,884,567 1,874,111
Hydro 863,511 844,609 834,790
-----------------------------------------------------------------------------------------------------------------------------------
Total production 6,087,259 6,055,804 5,930,151
Transmission 1,275,091 1,208,636 1,132,336
Distribution 2,803,423 2,657,327 2,522,051
General 883,568 864,321 825,417
Construction work in progress 311,179 256,758 362,722
Nuclear fuel, at amortized cost 103,272 123,862 100,537
-----------------------------------------------------------------------------------------------------------------------------------
Total electric plant 11,463,792 11,166,708 10,873,214
-----------------------------------------------------------------------------------------------------------------------------------
Steam Heat Plant:
Plant in service 20,982 20,833 20,837
Construction work in progress 44 44 46
-----------------------------------------------------------------------------------------------------------------------------------
Total steam heat plant 21,026 20,877 20,883
-----------------------------------------------------------------------------------------------------------------------------------
Total utility plant 11,484,818 11,187,585 10,894,097
-----------------------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 4,371,895 4,102,070 3,827,123
Steam heat 12,285 11,552 10,970
-----------------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 4,384,180 4,113,622 3,838,093
-----------------------------------------------------------------------------------------------------------------------------------
Total 7,100,638 7,073,963 7,056,004
Less property-related accumulated deferred income taxes - - -
-----------------------------------------------------------------------------------------------------------------------------------
Total 7,100,638 7,073,963 7,056,004
-----------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Nuclear decommissioning trusts 193,008 148,760 108,368
Miscellaneous 47,205 46,275 46,388
-----------------------------------------------------------------------------------------------------------------------------------
Total 240,213 195,035 154,756
-----------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 23,957 9,587 12,616
Investment securities - - -
Receivables, net 445,257 414,989 427,157
Fossil fuel stock, at average cost 74,186 81,704 106,627
Materials and supplies, at average cost 161,601 167,792 179,103
Prepayments 20,453 17,841 17,618
Vacation pay deferred 28,783 28,369 29,458
-----------------------------------------------------------------------------------------------------------------------------------
Total 754,237 720,282 772,579
-----------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 384,549 410,010 436,837
Debt expense, being amortized 7,276 7,398 7,648
Premium on reacquired debt, being amortized 81,417 84,149 89,967
Uranium enrichment decontamination and decommissioning fund 34,416 37,490 40,282
Miscellaneous 210,121 205,519 186,287
-----------------------------------------------------------------------------------------------------------------------------------
Total 717,779 744,566 761,021
-----------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 8,812,867 $ 8,733,846 $ 8,744,360
===================================================================================================================================
|
II-91
BALANCE SHEETS
Alabama Power Company
==============================================================================================================================
At December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 3,027,956 $ 2,987,010 $ 2,953,683
Nuclear 1,866,750 1,860,842 1,860,832
Hydro 836,256 819,848 818,363
------------------------------------------------------------------------------------------------------------------------------
Total production 5,730,962 5,667,700 5,632,878
Transmission 1,087,452 1,051,130 1,013,464
Distribution 2,366,477 2,206,834 2,072,165
General 847,111 810,551 751,652
Construction work in progress 317,745 225,743 164,555
Nuclear fuel, at amortized cost 101,630 93,551 101,128
------------------------------------------------------------------------------------------------------------------------------
Total electric plant 10,451,377 10,055,509 9,735,842
------------------------------------------------------------------------------------------------------------------------------
Steam Heat Plant:
Plant in service 20,770 20,926 20,924
Construction work in progress 34 43 33
------------------------------------------------------------------------------------------------------------------------------
Total steam heat plant 20,804 20,969 20,957
------------------------------------------------------------------------------------------------------------------------------
Total utility plant 10,472,181 10,076,478 9,756,799
------------------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 3,588,363 3,374,310 3,122,332
Steam heat 10,241 9,846 9,211
------------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 3,598,604 3,384,156 3,131,543
------------------------------------------------------------------------------------------------------------------------------
Total 6,873,577 6,692,322 6,625,256
Less property-related accumulated deferred income taxes - - 1,170,982
------------------------------------------------------------------------------------------------------------------------------
Total 6,873,577 6,692,322 5,454,274
------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Nuclear decommissioning trusts 71,014 49,550 32,390
Miscellaneous 43,955 49,635 49,892
------------------------------------------------------------------------------------------------------------------------------
Total 114,969 99,185 82,282
------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 14,676 3,233 13,629
Investment securities - - 64,832
Receivables, net 374,125 410,422 344,934
Fossil fuel stock, at average cost 119,555 88,481 134,328
Materials and supplies, at average cost 184,600 176,728 182,511
Prepayments 103,550 79,207 108,254
Vacation pay deferred 20,442 22,680 21,879
------------------------------------------------------------------------------------------------------------------------------
Total 816,948 780,751 870,367
------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 451,886 469,010 -
Debt expense, being amortized 7,370 7,064 6,118
Premium on reacquired debt, being amortized 101,851 102,634 74,835
Uranium enrichment decontamination and decommissioning fund 42,996 45,554 47,730
Miscellaneous 49,620 52,163 58,012
------------------------------------------------------------------------------------------------------------------------------
Total 653,723 676,425 186,695
------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 8,459,217 $ 8,248,683 $ 6,593,618
==============================================================================================================================
|
II-92A
BALANCE SHEETS
Alabama Power Company
============================================================================================================================
At December 31, 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 2,991,876 $ 2,462,100 $ 2,428,146
Nuclear 1,851,317 1,794,540 1,786,877
Hydro 814,301 809,578 803,901
----------------------------------------------------------------------------------------------------------------------------
Total production 5,657,494 5,066,218 5,018,924
Transmission 977,239 925,368 882,933
Distribution 1,947,972 1,815,265 1,692,426
General 713,948 660,217 646,523
Construction work in progress 148,564 654,055 557,150
Nuclear fuel, at amortized cost 109,259 143,711 147,997
----------------------------------------------------------------------------------------------------------------------------
Total electric plant 9,554,476 9,264,834 8,945,953
----------------------------------------------------------------------------------------------------------------------------
Steam Heat Plant:
Plant in service 20,214 20,091 20,083
Construction work in progress 181 74 71
----------------------------------------------------------------------------------------------------------------------------
Total steam heat plant 20,395 20,165 20,154
----------------------------------------------------------------------------------------------------------------------------
Total utility plant 9,574,871 9,284,999 8,966,107
----------------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 2,913,385 2,676,957 2,458,747
Steam heat 8,492 7,861 7,154
----------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 2,921,877 2,684,818 2,465,901
----------------------------------------------------------------------------------------------------------------------------
Total 6,652,994 6,600,181 6,500,206
Less property-related accumulated deferred income taxes 1,140,303 1,106,664 1,051,877
----------------------------------------------------------------------------------------------------------------------------
Total 5,512,691 5,493,517 5,448,329
----------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 69,550 - -
Nuclear decommissioning trusts 15,864 - -
Miscellaneous 48,254 40,604 34,710
----------------------------------------------------------------------------------------------------------------------------
Total 133,668 40,604 34,710
----------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 11,160 10,560 3,239
Investment securities - - -
Receivables, net 349,599 346,473 355,107
Fossil fuel stock, at average cost 154,798 144,960 131,942
Materials and supplies, at average cost 174,745 167,209 139,326
Prepayments 95,832 50,364 54,613
Vacation pay deferred 21,691 22,845 22,021
----------------------------------------------------------------------------------------------------------------------------
Total 807,825 742,411 706,248
----------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - -
Debt expense, being amortized 5,957 6,083 6,491
Premium on reacquired debt, being amortized 40,174 26,504 28,778
Uranium enrichment decontamination and decommissioning fund - - -
Miscellaneous 49,147 53,174 54,875
----------------------------------------------------------------------------------------------------------------------------
Total 95,278 85,761 90,144
----------------------------------------------------------------------------------------------------------------------------
Total Assets $ 6,549,462 $ 6,362,293 $ 6,279,431
============================================================================================================================
|
II-92B
BALANCE SHEETS
Alabama Power Company
=============================================================================================================
At December 31, 1988 1987
-------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 1,820,966 $ 1,787,979
Nuclear 1,769,093 1,765,854
Hydro 789,617 788,046
-------------------------------------------------------------------------------------------------------------
Total production 4,379,676 4,341,879
Transmission 844,003 817,065
Distribution 1,587,690 1,481,845
General 613,498 535,148
Construction work in progress 1,023,019 750,907
Nuclear fuel, at amortized cost 174,130 191,493
-------------------------------------------------------------------------------------------------------------
Total electric plant 8,622,016 8,118,337
-------------------------------------------------------------------------------------------------------------
Steam Heat Plant:
Plant in service 20,076 20,217
Construction work in progress 58 89
-------------------------------------------------------------------------------------------------------------
Total steam heat plant 20,134 20,306
-------------------------------------------------------------------------------------------------------------
Total utility plant 8,642,150 8,138,643
-------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 2,257,696 2,068,176
Steam heat 6,456 5,938
-------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 2,264,152 2,074,114
-------------------------------------------------------------------------------------------------------------
Total 6,377,998 6,064,529
Less property-related accumulated deferred income taxes 1,001,173 933,932
-------------------------------------------------------------------------------------------------------------
Total 5,376,825 5,130,597
-------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - -
Nuclear decommissioning trusts - -
Miscellaneous 29,677 31,402
-------------------------------------------------------------------------------------------------------------
Total 29,677 31,402
-------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,517 8,079
Investment securities - -
Receivables, net 344,671 353,493
Fossil fuel stock, at average cost 173,858 164,671
Materials and supplies, at average cost 117,818 103,823
Prepayments 28,412 10,595
Vacation pay deferred 21,871 21,317
-------------------------------------------------------------------------------------------------------------
Total 688,147 661,978
-------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - -
Debt expense, being amortized 6,831 6,695
Premium on reacquired debt, being amortized 27,329 30,767
Uranium enrichment decontamination and decommissioning fund - -
Miscellaneous 52,136 50,561
-------------------------------------------------------------------------------------------------------------
Total 86,296 88,023
-------------------------------------------------------------------------------------------------------------
Total Assets $ 6,180,945 $ 5,912,000
=============================================================================================================
|
II-92C
BALANCE SHEETS
Alabama Power Company
==============================================================================================================================
At December 31, 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 224,358 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645 1,304,645
Premium on preferred stock 99 146 146
Earnings retained in the business 1,221,467 1,185,128 1,161,225
--------------------------------------------------------------------------------------------------------------------------------
Total common equity 2,750,569 2,714,277 2,690,374
Preferred stock 255,512 340,400 440,400
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities of
Alabama Power Capital Trust I holding Company Junior
Subordinated Notes 297,000 97,000 -
Long-term debt 2,473,202 2,354,006 2,374,948
--------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 5,776,283 5,505,683 5,505,722
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - - -
Commercial paper 306,882 364,853 390,016
Preferred stock due within one year - 100,000 -
Long-term debt due within one year 75,336 20,753 84,682
Accounts payable 238,968 246,870 258,727
Customer deposits 34,968 32,003 30,353
Taxes accrued 36,486 50,909 31,757
Interest accrued 50,722 51,941 53,527
Vacation pay accrued 28,783 28,369 29,458
Miscellaneous 103,602 96,485 70,543
--------------------------------------------------------------------------------------------------------------------------------
Total 875,747 992,183 949,063
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,192,265 1,177,687 1,191,591
Accumulated deferred investment tax credits 282,873 294,071 305,372
Prepaid capacity revenues, net 109,982 122,496 131,186
Deferred revenues from settlement of disputed contracts - - -
Uranium enrichment decontamination and decommissioning fund 30,592 33,741 36,620
Deferred credits related to income taxes 327,328 364,792 386,038
Natural disaster reserve 22,416 20,757 17,959
Miscellaneous 195,381 222,436 220,809
--------------------------------------------------------------------------------------------------------------------------------
Total 2,160,837 2,235,980 2,289,575
--------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 8,812,867 $ 8,733,846 $ 8,744,360
================================================================================================================================
|
II-93
BALANCE SHEETS
Alabama Power Company
================================================================================================================================
At December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 224,358 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645 1,304,645
Premium on preferred stock 146 146 342
Earnings retained in the business 1,085,256 997,199 914,148
--------------------------------------------------------------------------------------------------------------------------------
Total common equity 2,614,405 2,526,348 2,443,493
Preferred stock 440,400 440,400 489,400
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities of
Alabama Power Capital Trust I holding Company Junior
Subordinated Notes - - -
Long-term debt 2,455,013 2,362,852 2,202,473
--------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 5,509,818 5,329,600 5,135,366
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 40,000 71,000
Commercial paper 179,882 - 125,917
Preferred stock due within one year - - -
Long-term debt due within one year 796 58,998 67,379
Accounts payable 318,991 334,998 296,731
Customer deposits 30,245 31,198 31,286
Taxes accrued 22,437 40,144 24,373
Interest accrued 52,516 52,809 41,675
Vacation pay accrued 20,442 22,680 21,879
Miscellaneous 57,047 50,426 93,836
--------------------------------------------------------------------------------------------------------------------------------
Total 682,356 631,253 774,076
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,181,342 1,165,127 -
Accumulated deferred investment tax credits 317,018 329,909 344,707
Prepaid capacity revenues, net 138,421 143,762 147,658
Deferred revenues from settlement of disputed contracts - 19,871 46,721
Uranium enrichment decontamination and decommissioning fund 39,413 39,644 44,548
Deferred credits related to income taxes 405,256 440,945 -
Natural disaster reserve 28,750 - -
Miscellaneous 156,843 148,572 100,542
--------------------------------------------------------------------------------------------------------------------------------
Total 2,267,043 2,287,830 684,176
--------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 8,459,217 $ 8,248,683 $ 6,593,618
================================================================================================================================
|
II-94A
BALANCE SHEETS
Alabama Power Company
============================================================================================================================
At December 31, 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 224,358 $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,304,645 1,304,645
Premium on preferred stock 461 461 461
Earnings retained in the business 857,734 751,126 659,347
----------------------------------------------------------------------------------------------------------------------------
Total common equity 2,387,198 2,280,590 2,188,811
Preferred stock 484,400 484,400 484,400
Preferred stock subject to mandatory redemption - 12,500 17,500
Company obligated mandatorily redeemable preferred securities of
Alabama Power Capital Trust I holding Company Junior
Subordinated Notes - - -
Long-term debt 2,382,635 2,397,931 2,435,129
----------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 5,254,233 5,175,421 5,125,840
----------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 76,000 89,500 30,000
Commercial paper - - -
Preferred stock due within one year - 5,000 5,000
Long-term debt due within one year 85,077 83,989 81,031
Accounts payable 295,333 271,776 267,645
Customer deposits 30,165 29,571 28,450
Taxes accrued 45,493 20,665 26,832
Interest accrued 49,288 49,820 49,926
Vacation pay accrued 21,691 22,845 22,021
Miscellaneous 37,699 64,547 91,022
----------------------------------------------------------------------------------------------------------------------------
Total 640,746 637,713 601,927
----------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - -
Accumulated deferred investment tax credits 362,672 379,990 399,097
Prepaid capacity revenues, net 149,534 99,835 102,346
Deferred revenues from settlement of disputed contracts 59,937 - -
Uranium enrichment decontamination and decommissioning fund - - -
Deferred credits related to income taxes - - -
Natural disaster reserve - - -
Miscellaneous 82,340 69,334 50,221
----------------------------------------------------------------------------------------------------------------------------
Total 654,483 549,159 551,664
----------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 6,549,462 $ 6,362,293 $ 6,279,431
============================================================================================================================
|
II-94B
BALANCE SHEETS
Alabama Power Company
=============================================================================================================
At December 31, 1988 1987
-------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 224,358 $ 224,358
Paid-in capital 1,304,645 1,225,145
Premium on preferred stock 461 461
Earnings retained in the business 565,351 496,783
-------------------------------------------------------------------------------------------------------------
Total common equity 2,094,815 1,946,747
Preferred stock 484,400 384,400
Preferred stock subject to mandatory redemption 22,500 27,500
Company obligated mandatorily redeemable preferred securities of
Alabama Power Capital Trust I holding Company Junior
Subordinated Notes - -
Long-term debt 2,496,492 2,386,258
-------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 5,098,207 4,744,905
-------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 15,000
Commercial paper - -
Preferred stock due within one year 5,000 2,500
Long-term debt due within one year 96,242 95,140
Accounts payable 259,443 273,613
Customer deposits 25,964 32,220
Taxes accrued 25,285 72,118
Interest accrued 50,174 49,489
Vacation pay accrued 21,871 21,317
Miscellaneous 28,944 24,660
-------------------------------------------------------------------------------------------------------------
Total 512,923 586,057
-------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - -
Accumulated deferred investment tax credits 412,771 418,370
Prepaid capacity revenues, net 104,211 103,947
Deferred revenues from settlement of disputed contracts - -
Uranium enrichment decontamination and decommissioning fund - -
Deferred credits related to income taxes - -
Natural disaster reserve - -
Miscellaneous 52,833 58,721
-------------------------------------------------------------------------------------------------------------
Total 569,815 581,038
-------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 6,180,945 $ 5,912,000
=============================================================================================================
|
II-94C
ALABAMA POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1997
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 50,000 5-1/2% $ 50,000 2/1/98
1992 170,000 6-3/8% 170,000 8/1/99
1993 100,000 6% 100,000 3/1/00
1992 100,000 6.85% 100,000 8/1/02
1993 125,000 7% 125,000 1/1/03
1993 175,000 6-3/4% 175,000 2/1/03
1992 175,000 7-1/4% 175,000 8/1/07
1991 150,000 8-3/4% 148,500 12/1/21
1992 200,000 8-1/2% 198,000 5/1/22
1992 100,000 8.30% 99,608 7/1/22
1993 100,000 7-3/4% 100,000 2/1/23
1993 150,000 7.45% 150,000 7/1/23
1993 100,000 7.30% 100,000 11/1/23
1994 150,000 9% 150,000 12/1/24
---------- ----------
$1,845,000 $1,841,108
========== ==========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1978 $ 5,600 7-1/4% $ 1,000 5/1/03
1994 53,700 Variable 53,700 6/1/15
1993 12,000 Variable 12,000 8/1/17
1993 12,000 Variable 12,000 8/1/17
1993 12,100 Variable 12,100 8/1/17
1996 21,000 Variable 21,000 11/1/21
1997 65,000 Variable 65,000 11/1/21
1995 50,000 Variable 50,000 5/1/22
1993 9,800 5.80% 9,800 6/1/22
1995 81,500 Variable 81,500 10/1/22
1993 96,990 6.05% 96,990 5/1/23
1994 101,650 6-1/2% 101,650 9/1/23
1994 24,400 5-1/2% 24,400 1/1/24
---------- ----------
$ 545,740 $ 541,140
========== ==========
Company Obligated Mandatorily Redeemable Preferred Securities
of Subsidiary Trusts Holding Company Junior Subordinated Notes
Preferred Securities Interest Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------------------------------------
(Thousands)
1996 3,880,000(1) 7.375% $ 97,000(1)
1997 8,000,000(2) 7.60% 200,000(2)
---------- ----------
11,880,000 $ 297,000
========== ==========
(1) Issued by Alabama Power Capital Trust I and guaranteed to the extent Alabama Power
Capital Trust I has funds by ALABAMA.
(2) Issued by Alabama Power Capital Trust II and guaranteed to the extent Alabama Power
Capital Trust II has funds by ALABAMA.
|
II-95
ALABAMA POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1997 (Continued)
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------------------------
(Thousands)
1946-1952 135,117 4.20% $ 13,512
1950 100,000 4.60% 10,000
1961 80,000 4.92% 8,000
1963 50,000 4.52% 5,000
1964 60,000 4.64% 6,000
1965 50,000 4.72% 5,000
1988 500,000 Auction 50,000
1993 1,520,000 6.80% 38,000
1993 2,000,000 6.40% 50,000
1993 200 Auction 20,000
1993 2,000,000 Adjustable 50,000
--------- --------
6,495,317 $255,512
========= ========
=========================================================================================
SECURITIES RETIRED DURING 1997
First Mortgage Bonds
Principal Interest
Series Amount Rate
----------------------------------------------------------------------------------
(Thousands)
1991 $ 74,951 9-1/4%
Preferred Stock
Principal Dividend
Series Amount Rate
----------------------------------------------------------------------------------
(Thousands)
1946-1952 $ 22,888 4.20%
1966 7,000 5.96%
1968 5,000 6.88%
1992 100,000 7.60%
1992 50,000 7.60%
----------
$ 184,888
==========
|
II-96
GEORGIA POWER COMPANY
FINANCIAL SECTION
II-97
MANAGEMENT'S REPORT
Georgia Power Company 1997 Annual Report
The management of Georgia Power Company has prepared this annual report and is responsible for the financial statements and related information. These statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances, and necessarily include amounts that are based on the best estimates and judgments of management. Financial information throughout this annual report is consistent with the financial statements.
The Company maintains a system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that the books and records reflect only authorized transactions of the Company. Limitations exist in any system of internal controls based upon the recognition that the cost of the system should not exceed its benefits. The Company believes that its system of internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an ongoing basis by the Company's internal audit staff. The Company's independent public accountants also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements.
The audit committee of the board of directors, which is composed of four directors who are not employees, provides a broad overview of management's financial reporting and control functions. At least three times a year this committee meets with management, the internal auditors, and the independent public accountants to ensure that these groups are fulfilling their obligations and to discuss auditing, internal control and financial reporting matters. The internal auditors and the independent public accountants have access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable assurance that the Company's operations are conducted with a high standard of business ethics.
In management's opinion, the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of Georgia Power Company in conformity with generally accepted accounting principles.
/s/H. Allen Franklin H. Allen Franklin President and Chief Executive Officer /s/Warren Y. Jobe Warren Y. Jobe Executive Vice President, Treasurer and Chief Financial Officer February 11, 1998 |
II-98
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Georgia Power Company:
We have audited the accompanying balance sheets and statements of capitalization of Georgia Power Company (a Georgia corporation and a wholly owned subsidiary of Southern Company) as of December 31, 1997 and 1996, and the related statements of income, retained earnings, paid-in capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages 11-108 through II-128) referred to above present fairly, in all material respects, the financial position of Georgia Power Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
II-99
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Georgia Power Company 1997 Annual Report
RESULTS OF OPERATIONS
Earnings
Georgia Power Company's 1997 earnings totaled $594 million, representing a $14 million (2.4 percent) increase over 1996. This earnings increase resulted primarily from lower operating expenses, lower financing costs, and increased non-operating income, partially offset by lower retail revenues and additional depreciation charges pursuant to a Georgia Public Service Commission (GPSC) retail accounting order discussed below. Earnings for 1996 totaled $580 million, representing a $29 million (4.7 percent) decrease from 1995. Earnings for 1995 included an after-tax gain of approximately $12 million from the completion of the sale of Plant Scherer Unit 4. The remaining decrease in 1996 earnings was primarily due to increased operating and maintenance expenses, partially offset by lower interest charges compared to the prior year.
Revenues
The following table summarizes the factors impacting operating revenues for the 1995-1997 period:
Increase (Decrease)
From Prior Year
-----------------------------------
1997 1996 1995
-----------------------------------
Retail - (in millions)
Sales growth $ 62 $ 58 $110
Weather (74) (25) 69
Fuel cost recovery (30) 28 66
Demand-side programs (3) (10) 36
------------------------------------------------------------------
Total retail (45) 51 281
------------------------------------------------------------------
Sales for resale -
Non-affiliates 1 (9) (61)
Affiliates 3 (41) 16
------------------------------------------------------------------
Total sales for resale 4 (50) (45)
------------------------------------------------------------------
Other operating revenues 10 10 7
------------------------------------------------------------------
Total operating revenues $ (31) $ 11 $243
==================================================================
Percent change (0.7)% 0.3% 5.8%
------------------------------------------------------------------
|
Retail revenues of $4 billion in 1997 decreased $45 million (1.1 percent) from 1996 primarily due to milder-than-normal weather, as well as commercial and industrial customers taking advantage of load management rates. Retail revenues in 1996 increased $51 million (1.3 percent) over the prior year primarily due to strong economic growth and an increase in sales to existing customers.
Fuel revenues generally represent the direct recovery of fuel expense, including the fuel component of purchased energy, and do not affect net income. Revenues from demand-side option programs generally represent the direct recovery of program costs. See Note 3 to the financial statements under "Demand-Side Conservation Programs" for further information on these programs.
Wholesale revenues from sales to non-affiliated utilities increased slightly in 1997 and were as follows:
1997 1996 1995
-------------------------------
(in millions)
Outside service area -
Long-term contracts $ 71 $ 84 $ 98
Other sales 80 37 25
Inside service area 132 161 168
--------------------------------------------------------------
Total $283 $282 $291
==============================================================
|
Contractual long-term sales to Florida utilities for 1997 and 1996 are down primarily due to scheduled reductions in the amount of capacity under those contracts. See Note 7 to the financial statements for further information regarding these sales. Revenues from other sales outside the service area increased in 1997 and 1996 primarily due to power marketing activities. Wholesale revenues from customers within the service area decreased in 1997 and 1996 primarily due to a decrease in revenues under a power supply agreement with Oglethorpe Power Corporation (OPC) and, in 1996, recognition of a refund to these customers. OPC decreased its purchases of capacity by 250 megawatts each in September 1996 and 1997 and has notified the Company of its intent to decrease purchases of capacity by an additional 250 megawatts in September 1998 and 1999.
Revenues from sales to affiliated companies within the Southern electric system, as well as purchases of energy, will vary from year to year depending on demand and the availability and cost of generating resources at each company. These transactions do not have a significant impact on earnings.
II-100
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1997 Annual Report
Kilowatt-hour (KWH) sales for 1997 and the percent change by year were as follows:
Percent Change
---------------------------
1997
KWH 1997 1996 1995
------- -----------------------------
(in billions)
Residential 17.3 (3.0)% 3.0% 10.4%
Commercial 21.1 1.5 4.9 5.9
Industrial 26.7 1.9 3.6 3.9
Other 0.6 0.4 8.6 2.0
-------
Total retail 65.7 0.4 3.9 6.2
-------
Sales for resale -
Non-affiliates 6.8 (13.6) 19.4 (17.3)
Affiliates 1.7 44.6 (56.9) (10.4)
-------
Total sales for resale 8.5 (6.0) (3.0) (15.4)
-------
Total sales 74.2 (0.3) 3.0 2.8
=======
|
Residential sales declined 3.0 percent while sales to commercial and industrial customers increased slightly by 1.5 percent and 1.9 percent, respectively. Milder-than-normal temperatures experienced in 1997 contributed to the moderate sales. Residential, commercial and industrial energy sales growth in 1996 reflected strong economic growth and an increase in sales to existing customers.
Expenses
Fuel costs constitute the single largest expense for the Company. The mix of fuel sources for generation of electricity is determined primarily by system load, the unit cost of fuel consumed, and the availability of hydro and nuclear generating units. The amount and sources of generation and the average cost of fuel per net kilowatt-hour generated were as follows:
1997 1996 1995
--------------------------
Total generation
(billions of kilowatt-hours) 66.5 63.7 64.3
Sources of generation
(percent) --
Coal 74.8 74.3 73.7
Nuclear 21.8 22.4 22.6
Hydro 2.7 2.7 3.0
Oil and gas 0.7 0.6 0.7
Average cost of fuel per net
kilowatt-hour generated
(cents) --
Coal 1.53 1.55 1.67
Nuclear 0.52 0.55 0.60
Oil and gas * * *
Total 1.32 1.35 1.44
--------------------------------------------------------------
|
* Not meaningful because of minimal generation from fuel source.
Fuel expense increased 2.6 percent in 1997 primarily due to an increase in generation, partially offset by a lower average cost of fuel. Fuel expense decreased 7.3 percent in 1996 because of a decrease in generation resulting from the timing of maintenance at nuclear plants and a lower average cost of fuel.
Purchased power expense decreased $66 million (17.1 percent) in 1997 primarily due to decreased purchases from affiliated companies and declines in contractual capacity buyback purchases from the co-owners of Plant Vogtle. Purchased power expense increased $72 million (22.8 percent) in 1996 primarily due to increased purchases from affiliated companies as a result of the timing of maintenance at nuclear plants discussed above. The increase in 1996 was partially offset by a decrease in energy purchases from wholesale customers within the service area and declines in the Plant Vogtle contractual capacity buyback purchases. Under the terms of the 1991 GPSC retail rate order, the
II-101
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1997 Annual Report
declines in the Plant Vogtle contractual capacity buyback purchases were levelized over a six-year period ending September 1997. The levelization is reflected in the amortization of deferred Plant Vogtle costs in the Statements of Income. See Note 1 to the financial statements under "Plant Vogtle Phase-In Plans" for additional information.
Other operation and maintenance (O&M) expenses, excluding the provision for separation benefits, decreased 4.1 percent in 1997 primarily due to initiatives in 1996 to reduce fossil generation materials inventory levels and an adjustment in 1996 to deferred postretirement benefits to reflect changes in the retiree benefits plan. Other O&M expenses increased 2.9 percent in 1996 primarily as a result of the inventory initiatives and the adjustment to deferred postretirement benefits discussed above, and increased costs under a three-year retail accounting order effective January 1, 1996. See Note 3 to the financial statements under "Retail Accounting Order" for additional information.
Depreciation and amortization increased $140 million in 1997 and $11 million in 1996 primarily due to accelerated depreciation of generating plant pursuant to the retail accounting order and an increase in plant-in-service.
The Company has deferred certain expenses and recorded a deferred return related to Plant Vogtle under phase-in plans. The amortization of deferred Plant Vogtle costs reflects the completion in September 1997 of the amortization of the levelized buybacks and the Plant Vogtle Unit 1 cost deferrals under a 1987 GPSC order. See Note 1 to the financial statements under "Plant Vogtle Phase-In Plans" for information regarding the deferral and subsequent amortization of costs related to Plant Vogtle.
Other income increased in 1997 and decreased in 1996. The increase in 1997 is primarily due to increased tax benefits from losses of the parent company allocated to the Company under the joint consolidated income tax agreement between Southern Company and its subsidiaries. See Note 8 to the financial statements for additional information. The decrease in 1996 is primarily due to expenses in connection with the 1996 Summer Olympic games and the completion of the sale in 1995 of Plant Scherer Unit 4, which resulted in an after-tax gain of approximately $12 million.
Total financing costs decreased in 1997 and 1996. These changes were primarily due to the refinancing or retirement of securities. The Company refinanced or retired $701 million and $510 million of securities in 1997 and 1996, respectively. Interest and other charges increased $17 million (6.8 percent) and decreased $52 million (17.4 percent) in 1997 and 1996, respectively. While the issuance of additional mandatorily redeemable preferred securities in August 1996, January 1997 and June 1997 increased interest and other charges by $32 million and $6 million in 1997 and 1996, respectively, dividends on preferred stock decreased $26 million and $3 million in 1997 and 1996, respectively.
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on the recovery of historical costs. Therefore, inflation creates an economic loss because the Company is recovering its costs of investments in dollars that have less purchasing power. While the inflation rate has been relatively low in recent years, it continues to have an adverse effect on the Company because of the large investment in long-lived utility plant. Conventional accounting for historical cost does not recognize this economic loss nor the partially offsetting gain that arises through financing facilities with fixed-money obligations such as long-term debt and preferred stock. Any recognition of inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years are not necessarily indicative of future earnings. The level of future earnings depends on numerous factors including regulatory matters and energy sales.
The Company currently operates as a vertically integrated utility providing electricity to customers within its traditional service area located in the state of Georgia. Prices for electricity provided by the Company to retail customers are set by the GPSC under cost-based regulatory principles.
On January 1, 1996, the Company began operating under a three-year retail accounting order. Under the order, the Company's earnings are evaluated against a retail return on common equity range of 10 percent to 12.5 percent. Earnings
II-102
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1997 Annual Report
in excess of 12.5 percent will be used to accelerate the amortization of regulatory assets or depreciation of electric plant. At its option, the Company may also recognize accelerated amortization or depreciation of assets within the allowed return on common equity range. The Company is required to absorb cost increases of approximately $29 million annually during the order's three-year operation, including $14 million annually of accelerated depreciation of electric plant. During the order's operation, the Company will not file for a general base rate increase unless its projected retail return on common equity falls below 10 percent. Under the approved order, on July 1, 1998 the Company will make a general rate case filing in response to which the GPSC would be expected either to continue provisions of the accounting order or adopt different ones. See Note 3 to the financial statements under "Retail Accounting Order" for additional information.
Growth in energy sales is subject to a number of factors which traditionally have included changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, weather, competition, initiatives to increase sales to existing customers, and the rate of economic growth in the Company's service area. Assuming normal weather, retail sales growth is projected to be approximately 2 percent annually on average during 1998 through 2000.
Beginning in September 1997, OPC decreased its purchases of capacity under a power supply agreement by 250 megawatts and has notified the Company of its intent to decrease purchases of capacity by an additional 250 megawatts each in September 1998 and 1999. As a result, the Company's capacity revenues from OPC will decline by approximately $26 million in 1998, an additional $25 million in 1999, and an additional $18 million in 2000. Under the amended 1995 Integrated Resource Plan approved by the GPSC in March 1997, the resources associated with the decreased purchases in 1997 and 1998 will be used to meet the needs of the Company's retail customers through 2004.
The Company has entered into a 30-year purchase power agreement whereby the Company will buy electricity from a 300 megawatt cogeneration facility, starting in June 1998. Capacity and fixed O&M payments are projected to be $13 million in 1998, $14 million in 1999 and $14 million in 2000. The Company has also entered into a five-year purchase power agreement scheduled to begin in June 2000 for approximately 215 megawatts. Capacity and fixed O&M payments are estimated to be approximately $7 million in 2000.
The amortization of Plant Vogtle costs deferred under phase-in plans will decline by $89 million in 1998, $12 million in 1999, and $19 million in 2000. These costs will be fully amortized by September 1999. See Note 1 to the financial statements under "Plant Vogtle Phase-In Plans" for additional information.
The Federal Energy Regulatory Commission (FERC) regulates wholesale rate schedules and power sales contracts that the Company has with its sales for resale customers. The FERC currently is reviewing the rate of return on common equity included in these schedules and contracts and may require such returns to be lowered, possibly retroactively. See Note 3 to the financial statements under "FERC Review of Equity Returns" for additional information.
As discussed in Note 3 to the financial statements, regulatory uncertainties exist related to the Rocky Mountain pumped storage hydroelectric plant. On January 14, 1998, the GPSC ordered that the Company be allowed approximately $108 million of its $143 million investment in the plant in rate base as of December 31, 1998. The Company has appealed the GPSC's order. If such order is ultimately upheld, the Company will be required to record a charge to earnings currently estimated at approximately $29 million, after taxes.
Southern Company and the Internal Revenue Service (IRS) have entered into a settlement agreement that is subject to review and approval by the Joint Congressional Committee on Taxation. If approved, the agreement would result in a refund, including interest, to the Company. See Note 3 to the financial statements under "Tax Litigation" for additional information.
Compliance costs related to current and future environmental laws and regulations could affect earnings if such costs are not fully recovered. The Clean Air Act and other important environmental items are discussed later under "Environmental Issues."
The electric utility industry in the United States is currently undergoing a period of dramatic change as a result of regulatory and competitive factors.
II-103
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1997 Annual Report
Among the primary agents of change has been the Energy Policy Act of 1992 (Energy Act). The Energy Act allows independent power producers (IPPs) to access a utility's transmission network in order to sell electricity to other utilities. This enhances the incentive for IPPs to build cogeneration plants for a utility's large industrial and commercial customers and sell electric energy to other utilities. Also, electricity sales for resale rates are being driven down by wholesale transmission access and numerous potential new energy suppliers, including power marketers and brokers. The Company is aggressively working to maintain and expand its share of wholesale sales in the Southeastern power markets. Although the Energy Act does not permit retail customer access, it was a major catalyst for the current restructuring and consolidation taking place within the utility industry.
The Company continues to compete with other electric suppliers within the state. In Georgia, most new retail customers with at least 900 kilowatts of connected load may choose their electricity supplier. Numerous federal and state initiatives are in varying stages to promote wholesale and retail competition across the nation. Among other things, these initiatives allow customers to choose their electricity provider. As these initiatives materialize, the structure of the utility industry could radically change. Some states have approved initiatives that result in a separation of the ownership and/or operation of generating facilities from the ownership and/or operation of transmission and distribution facilities. While the GPSC has held workshops to discuss retail competition and industry restructuring, there has been no proposed or enacted legislation to date in Georgia. Enactment would require numerous issues to be resolved, including significant ones relating to transmission pricing and recovery of costs. The ability of the Company to recover all its costs, including the regulatory assets described in Note 1 to the financial statements, could have a material effect on the financial condition of the Company. The Company is attempting to reduce regulatory assets and other costs through a three-year retail accounting order. See Note 3 to the financial statements under "Retail Accounting Order" for additional information.
Unless the Company remains a low-cost producer and provides quality service, the Company's retail energy sales growth could be limited as competition increases. Conversely, continuing to be a low-cost producer could provide opportunities to increase market share and profitability in markets that evolve with changing regulation.
The Company is subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the Company's operations is no longer subject to these provisions, the Company would be required to write off related regulatory assets and liabilities that are not specifically recoverable, and determine if any other assets have been impaired. See Note 1 to the financial statements under "Regulatory Assets and Liabilities" for additional information.
The staff of the Securities and Exchange Commission has questioned certain of the current accounting practices of the electric utility industry - including the Company's - regarding the recognition, measurement, and classification of decommissioning costs for nuclear generating facilities in the financial statements. In response to these questions, the FASB has decided to review the accounting for liabilities related to closure and removal of long-lived assets, including nuclear decommissioning. If the FASB issues new accounting rules, the estimated costs of closing and removing the Company's nuclear and other facilities may be required to be recorded as liabilities in the Balance Sheets. Also, the annual provisions for such costs could change. Because of the Company's current ability to recover closure and removal costs through rates, these changes would not have a significant adverse effect on results of operations. See Note 1 to the financial statements under "Depreciation and Nuclear Decommissioning" for additional information.
The Company is heavily dependent upon complex computer systems for all phases of its operations. The year 2000 issue -- common to most corporations -- concerns the inability of certain software and databases to properly recognize date sensitive information related to the year 2000 and thereafter. This problem could result in a material disruption to the Company's operations, if not corrected. The Company has assessed and developed a detailed strategy to prevent or at least minimize problems related to the year 2000 issue. In 1997 resources were committed and implementation began to modify the affected information systems. Total costs related to the project are estimated to be approximately $33 million, of which $3 million was spent in 1997. The remaining costs will be
II-104
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1997 Annual Report
expensed primarily in 1998. Implementation is currently on schedule. Although the degree of success of this project cannot be determined at this time, management believes there will be no significant effect on the Company's operations.
Exposure to Market Risks
Due to cost-based rate regulation, the Company has limited exposure to market volatility in interest rates and prices of electricity. To mitigate residual risks relative to movements in electricity prices, the Company enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market. Realized gains and losses are recognized in the income statement as incurred. At December 31, 1997, exposure from these activities was not material to the Company's financial position, results of operations, or cash flows.
New Accounting Standards
The FASB has issued Statement No. 130, Reporting Comprehensive Income, which will be effective in 1998. This statement establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. The objective of the statement is to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (comprehensive income). Comprehensive income is the total of net income and all other nonowner changes in equity. The Company will adopt this statement in 1998.
The FASB has issued Statement No. 131, Disclosure about Segments of an Enterprise and Related Information. This statement requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Generally, financial information is required to be reported on the basis that it is used by the chief operating decision maker in deciding how to allocate resources and in assessing performance. This statement also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company adopted the new rules in 1997, and they did not have a significant impact on the Company's financial reporting. However, this conclusion may change as industry restructuring and competitive factors influence the company's operations.
FINANCIAL CONDITION
Plant Additions
In 1997 gross utility plant additions were $476 million. These additions were primarily related to transmission and distribution facilities and to the purchase of nuclear fuel. The funds needed for gross property additions are currently provided from operations. The Statements of Cash Flows provide additional details.
Financing Activities
In 1997, the Company continued to lower its financing costs by refinancing higher-cost issues. New issues during 1995 through 1997 totaled $1.6 billion and retirement or repayment of securities totaled $2.2 billion. The retirements included the redemption of $131 million in 1995 of first mortgage bonds with the proceeds from the Plant Scherer Unit 4 sales. Composite financing rates for long-term debt and preferred stock for the years 1995 through 1997, as of year-end, were as follows:
1997 1996 1995
---------------------------------
Composite interest rate
on long-term debt 6.11% 6.39% 6.57%
Composite preferred
stock dividend rate 5.18 6.34 6.73
----------------------------------------------------------------
|
The Company's current securities ratings are as follows:
Duff & Standard &
Phelps Moody's Poor's
------------------------------------
First Mortgage Bonds AA- A1 A+
Preferred Stock A+ a2 A
Unsecured Bonds A+ A2 A
Commercial Paper D1+ P1 A1
-----------------------------------------------------------------
|
Subsidiaries of the Company have issued mandatorily redeemable preferred securities. See Note 9 to the financial statements under "Preferred Securities" for additional information.
In January 1998, the Company issued $145 million of 6 7/8% unsecured senior notes due December 31, 2047. The senior notes are subordinated to all secured
II-105
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1997 Annual Report
debt of the Company, including its first mortgage bonds.
Liquidity and Capital Requirements
Cash provided from operations decreased by $15 million in 1997, primarily due to lower retail revenues.
The Company estimates that construction expenditures for the years 1998 through 2000 will total $506 million, $561 million and $549 million, respectively. Investments in transmission and distribution facilities, enhancements to existing generating plants, and equipment to comply with the provisions of the Clean Air Act are planned.
Cash requirements for improvement fund requirements, redemptions announced, and maturities of long-term debt and preferred stock are expected to total $693 million during 1998 through 2000.
As a result of requirements by the Nuclear Regulatory Commission, the Company has established external trust funds for the purpose of funding nuclear decommissioning costs. For 1998 through 2000, the amount to be funded totals $24 million annually. For additional information concerning nuclear decommissioning costs, see Note 1 to the financial statements under "Depreciation and Nuclear Decommissioning."
Sources of Capital
The Company expects to meet future capital requirements primarily using funds generated from operations and, if needed, by the issuance of new debt and equity securities, term loans, and short-term borrowings. To meet short-term cash needs and contingencies, the Company had approximately $1.3 billion of unused credit arrangements with banks at the beginning of 1998. See Note 9 to the financial statements under "Bank Credit Arrangements" for additional information.
The Company historically has relied on issuances of first mortgage bonds and preferred stock, in addition to pollution control revenue bonds issued for its benefit by public authorities, to meet its long-term external financing requirements. Recently, the Company's financings have consisted of unsecured debt and trust preferred securities. In this regard, the Company sought and obtained stockholder approval in 1997 to amend its corporate charter eliminating restrictions on the amounts of unsecured indebtedness it may incur.
If the Company chooses to issue first mortgage bonds or preferred stock, it is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter. The Company's ability to satisfy all coverage requirements is such that it could issue new first mortgage bonds and preferred stock to provide sufficient funds for all anticipated requirements.
Environmental Issues
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean Air Act -- the acid rain compliance provision of the law -- significantly impacted the operating companies of Southern Company, including Georgia Power. Specific reductions in sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants are required in two phases. Phase I compliance began in 1995 and initially affected 28 generating units in the Southern electric system. As a result of Southern Company's compliance strategy, an additional 22 generating units were brought into compliance with Phase I requirements. Phase II compliance is required in 2000, and all fossil-fired generating plants in the Southern electric system will be affected.
Southern Company achieved Phase I sulfur dioxide compliance at the affected units by switching to low-sulfur coal, which required some equipment upgrades. Construction expenditures for Georgia Power's Phase I compliance totaled approximately $167 million.
For Phase II sulfur dioxide compliance, Southern Company could use emission allowances, increase fuel switching, and/or install flue gas desulfurization equipment at selected plants. Also, equipment to control nitrogen oxide emissions will be installed on additional system fossil-fired units as required to meet Phase II limits and ozone nonattainment requirements for metropolitan Atlanta through 2000. Current compliance strategy for Phase II and ozone nonattainment could require total estimated construction expenditures of approximately $39 million, of which $28 million remains to be spent as of December 31, 1997.
A significant portion of costs related to the acid rain provision of the Clean Air Act is expected to be recovered through existing ratemaking
II-106
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Georgia Power Company 1997 Annual Report
provisions. However, there can be no assurance that all Clean Air Act costs will be recovered.
In July 1997, the Environmental Protection Agency (EPA) revised the national ambient air quality standards for ozone and particulate matter. This revision makes the standards significantly more stringent. Also, in October 1997, the EPA issued a proposed regional ozone rule that --if implemented--could require substantial further reductions in NOx emissions from fossil-fueled generating facilities. Implementation of the standards and the proposed rule could result in significant additional compliance costs and capital expenditures that cannot be determined at this time.
The EPA and state environmental regulatory agencies are reviewing and evaluating various matters including: emission control strategies for ozone nonattainment areas; additional controls for hazardous air pollutant emissions; and hazardous waste disposal requirements. The impact of new standards will depend on the development and implementation of applicable regulations.
The Company must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations, the Company could incur costs to clean up properties currently or previously owned. The Company conducts studies to determine the extent of any required clean-up costs and has recognized in the financial statements costs to clean up known sites. These costs for the Company amounted to $4 million, $2 million and $8 million, in 1997, 1996, and 1995, respectively. Additional sites may require environmental remediation for which the Company may be liable for a portion of or all required clean-up costs. See Note 3 to the financial statements under "Certain Environmental Contingencies" for information regarding the Company's potentially responsible party status at a site in Brunswick, Georgia, and the status of sites listed on the State of Georgia's hazardous site inventory.
Several major pieces of environmental legislation are being considered for reauthorization or amendment by Congress. These include: the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation, and Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances Control Act; and the Endangered Species Act. Changes to these laws could affect many areas of the Company's operations. The full impact of any such changes cannot be determined at this time.
Compliance with possible additional legislation related to global climate change, electromagnetic fields and other environmental and health concerns could significantly affect the Company. The impact of new legislation -- if any -- will depend on the subsequent development and implementation of applicable regulations. In addition, the potential exists for liability as the result of lawsuits alleging damages caused by electromagnetic fields.
Cautionary Statement Regarding Forward-Looking Information
The Company's 1997 Annual Report contains forward-looking statements in addition to historical information. The Company cautions that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the Company's markets; potential business strategies -- including acquisitions or dispositions of assets or internal restructuring -- that may be pursued by Southern Company; state and federal rate regulation; changes in or application of environmental and other laws and regulations to which the Company is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; and other factors discussed in the reports--including Form 10-K--filed from time to time by the Company with the Securities and Exchange Commission.
II-107
STATEMENTS OF INCOME
For the Years Ended December 31, 1997, 1996, and 1995
Georgia Power Company 1997 Annual Report
==============================================================================================================================
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues:
Revenues $4,347,009 $4,380,893 $4,328,432
Revenues from affiliates 38,708 35,886 76,906
------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 4,385,717 4,416,779 4,405,338
------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation--
Fuel 857,269 835,194 900,973
Purchased power from non-affiliates 143,409 157,308 183,009
Purchased power from affiliates 177,240 229,324 131,740
Provision for separation benefits 5,459 39,099 10,607
Other 696,700 741,383 735,918
Maintenance 317,199 315,934 292,029
Depreciation and amortization 572,640 432,940 421,850
Amortization of deferred Plant Vogtle costs (Note 1) 120,577 136,650 124,454
Taxes other than income taxes 207,192 207,098 204,675
Federal and state income taxes 426,918 435,904 449,204
------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 3,524,603 3,530,834 3,454,459
------------------------------------------------------------------------------------------------------------------------------
Operating Income 861,114 885,945 950,879
Other Income (Expense):
Allowance for equity funds used during construction 6,012 3,144 2,734
Equity in earnings of unconsolidated subsidiary (Note 4) 4,266 3,851 4,051
Interest income 10,581 5,333 5,524
Other, net (35,834) (43,502) (8,973)
Income taxes applicable to other income 31,763 18,581 3,022
------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 877,902 873,352 957,237
------------------------------------------------------------------------------------------------------------------------------
Interest and Other Charges:
Interest on long-term debt 194,344 207,851 254,607
Allowance for debt funds used during construction (8,962) (11,416) (12,081)
Interest on interim obligations 7,795 15,478 21,463
Amortization of debt discount, premium and expense, net 14,179 14,790 15,835
Other interest charges 10,254 6,338 11,399
Distributions on preferred securities of subsidiary companies 47,369 14,958 9,000
------------------------------------------------------------------------------------------------------------------------------
Interest and other charges, net 264,979 247,999 300,223
------------------------------------------------------------------------------------------------------------------------------
Net Income 612,923 625,353 657,014
Dividends on Preferred Stock 18,927 45,026 48,152
------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 593,996 $ 580,327 $ 608,862
==============================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-108
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
Georgia Power Company 1997 Annual Report
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Activities:
Net income $ 612,923 $ 625,353 $ 657,014
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 674,286 521,086 527,310
Deferred income taxes and investment tax credits, net (21,425) 35,700 37,150
Allowance for equity funds used during construction (6,012) (3,144) (2,734)
Amortization of deferred Plant Vogtle costs, net 120,577 136,650 124,454
Loss (gain) on asset sales (974) 3,766 (23,588)
Other, net 3,050 41,489 (7,980)
Changes in certain current assets and liabilities --
Receivables, net 13,387 9,421 (59,370)
Inventories 39,748 55,753 30,761
Payables (10,007) (35,651) 45,882
Taxes accrued (3,596) 11,766 11,373
Energy cost recovery, retail (20,103) 679 42,576
Other (30,026) (15,880) 35,175
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,371,828 1,386,988 1,418,023
--------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (475,921) (428,220) (480,449)
Sales of property - 3,319 131,099
Other 16,223 (16,468) (42,579)
--------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (459,698) (441,369) (391,929)
--------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds --
Preferred securities 364,250 225,000 -
First mortgage bonds - 10,000 75,000
Pollution control bonds 284,700 112,825 504,700
Retirements --
Preferred stock (356,392) (179,148) -
First mortgage bonds (60,258) (210,860) (505,789)
Pollution control bonds (284,700) (119,665) (504,810)
Other long-term debt - - (37,000)
Interim obligations, net (64,266) 30,166 (24,472)
Special deposits -- redemption funds 44,454 (44,454) -
Capital distribution to parent company (205,000) (250,000) -
Payment of preferred stock dividends (26,917) (46,911) (48,419)
Payment of common stock dividends (520,000) (475,500) (451,500)
Miscellaneous (20,024) (10,646) (17,413)
---------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (844,153) (959,193) (1,009,703)
---------------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 67,977 (13,574) 16,391
Cash and Cash Equivalents at Beginning of Year 15,356 28,930 12,539
---------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 83,333 $ 15,356 $ 28,930
================================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $ 258,298 $ 249,434 $ 298,482
Income taxes (net of refunds) 427,596 373,886 404,129
--------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
|
II-109
BALANCE SHEETS
At December 31, 1997 and 1996
Georgia Power Company 1997 Annual Report
===================================================================================================================
ASSETS 1997 1996
---------------------------------------------------------------------------------------------------------------------
(in thousands)
Utility Plant:
Plant in service $ 15,082,570 $ 14,769,573
Less accumulated provision for depreciation 5,319,680 4,793,638
---------------------------------------------------------------------------------------------------------------------
9,762,890 9,975,935
Nuclear fuel, at amortized cost 126,882 121,840
Construction work in progress (Note 4) 214,128 256,141
---------------------------------------------------------------------------------------------------------------------
Total 10,103,900 10,353,916
---------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Southern Electric Generating Company, at equity (Note 4) 24,973 26,032
Nuclear decommissioning trusts, at market 194,417 130,178
Miscellaneous 87,907 103,787
---------------------------------------------------------------------------------------------------------------------
Total 307,297 259,997
---------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 83,333 15,356
Receivables--
Customer accounts receivable 385,844 392,328
Other accounts and notes receivable 110,278 159,499
Affiliated companies 20,333 20,095
Accumulated provision for uncollectible accounts (3,000) (4,000)
Fossil fuel stock, at average cost 96,067 117,382
Materials and supplies, at average cost 240,387 258,820
Prepayments 27,503 67,118
Vacation pay deferred 40,996 39,965
---------------------------------------------------------------------------------------------------------------------
Total 1,001,741 1,066,563
---------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes (Note 8) 688,472 754,002
Deferred Plant Vogtle costs (Note 1) 50,412 170,988
Premium on reacquired debt, being amortized 166,609 166,670
Prepaid pension costs 67,777 42,653
Debt expense, being amortized 40,927 32,693
Miscellaneous 146,593 159,153
---------------------------------------------------------------------------------------------------------------------
Total 1,160,790 1,326,159
---------------------------------------------------------------------------------------------------------------------
Total Assets $ 12,573,728 $ 13,006,635
=====================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-110
BALANCE SHEETS (continued)
At December 31, 1997 and 1996
Georgia Power Company 1997 Annual Report
===============================================================================================================================
CAPITALIZATION AND LIABILITIES 1997 1996
-------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See accompanying statements):
Common stock equity $ 4,019,728 $ 4,154,281
Preferred stock 157,247 464,611
Company obligated mandatorily redeemable preferred securities
of subsidiaries substantially all of whose assets are junior
subordinated debentures or notes (Note 9) 689,250 325,000
Long-term debt 2,982,835 3,200,419
--------------------------------------------------------------------------------------------------------------------------------
Total 7,849,060 8,144,311
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Preferred stock due within one year (Note 9) - 49,028
Long-term debt due within one year (Note 9) 220,855 60,622
Notes payable to banks (Note 9) 142,300 207,300
Commercial paper (Note 9) 223,930 223,196
Accounts payable--
Affiliated companies 71,373 66,821
Other 261,293 263,093
Customer deposits 68,618 64,901
Taxes accrued--
Federal and state income 4,480 15,497
Other 111,541 100,661
Interest accrued 72,437 79,936
Miscellaneous 105,683 153,127
--------------------------------------------------------------------------------------------------------------------------------
Total 1,282,510 1,284,182
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 2,417,547 2,522,945
Accumulated deferred investment tax credits 397,202 415,477
Deferred credits related to income taxes (Note 8) 297,560 317,965
Employee benefits provisions 169,887 186,319
Miscellaneous 159,962 135,436
--------------------------------------------------------------------------------------------------------------------------------
Total 3,442,158 3,578,142
--------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1 through 7)
Total Capitalization and Liabilities $ 12,573,728 $ 13,006,635
================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-111
STATEMENTS OF CAPITALIZATION
At December 31, 1997 and 1996
Georgia Power Company 1997 Annual Report
==================================================================================================================================
1997 1996 1997 1996
----------------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Common Stock Equity:
Common stock, without par value --
Authorized -- 15,000,000 shares
Outstanding -- 7,761,500 shares $ 344,250 $ 344,250
Paid-in capital 1,929,971 2,134,886
Premium on preferred stock 160 371
Retained earnings (Note 9) 1,745,347 1,674,774
----------------------------------------------------------------------------------------------------------------------------------
Total common stock equity 4,019,728 4,154,281 51.2% 51.0%
----------------------------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock, without par value:
Authorized -- 55,000,000 shares
Outstanding -- 4,719,226 shares at December 31, 1997
Outstanding -- 16,111,964 shares at December 31, 1996
$100 stated value --
4.60% to 6.60% 52,355 117,787
7.72% to 7.80% - 30,000
$25 stated value --
$1.90 to $2.125 - 190,852
Adjustable rate -- at January 1, 1998:
4.85% 64,213 100,000
5.27% 40,679 75,000
----------------------------------------------------------------------------------------------------------------------------------
Total cumulative preferred stock (annual dividend
requirement -- $8,141,000) 157,247 513,639
Less amount due within one year (Note 9) - 49,028
----------------------------------------------------------------------------------------------------------------------------------
Cumulative preferred stock excluding amount due within one year 157,247 464,611 2.0 5.7
----------------------------------------------------------------------------------------------------------------------------------
Company Obligated Mandatorily
Redeemable Preferred Securities (Note 9):
$25 liquidation value -- 9% 100,000 100,000
$25 liquidation value -- 7.75% 225,000 225,000
$25 liquidation value -- 7.60% 175,000 -
$25 liquidation value -- 7.75% 189,250 -
----------------------------------------------------------------------------------------------------------------------------------
Total (annual distribution requirement -- $54,404,000) 689,250 325,000 8.8 4.0
----------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt:
First mortgage bonds --
Maturity Interest Rates
April 1, 1998 5 1/2% 100,000 100,000
September 1, 1999 6 1/8% 195,000 195,000
March 1, 2000 6% 100,000 100,000
October 1, 2000 7% 100,000 100,000
September 1, 2002 6 7/8% 150,000 150,000
2003 through 2005 6.07% to 6 5/8% 285,000 285,000
2008 6 7/8% 50,000 50,000
2023 through 2025 7.55% to 7.95% 474,250 534,508
----------------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 1,454,250 1,514,508
Pollution control obligations (Note 9) 1,671,190 1,671,190
Other long-term debt (Note 9) 86,675 87,114
Unamortized debt discount, net (8,425) (11,771)
----------------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $196,378,000) 3,203,690 3,261,041
Less amount due within one year (Note 9) 220,855 60,622
----------------------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 2,982,835 3,200,419 38.0 39.3
----------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 7,849,060 $ 8,144,311 100.0% 100.0%
==================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-112
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1997, 1996, and 1995
Georgia Power Company 1997 Annual Report
==================================================================================================================================
1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $1,674,774 $1,569,905 $1,412,543
Net income after dividends on preferred stock 593,996 580,327 608,862
Cash dividends on common stock (520,000) (475,500) (451,500)
Preferred stock transactions, net (3,423) 42 -
----------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (Note 9) $1,745,347 $1,674,774 $1,569,905
==================================================================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1997, 1996, and 1995
Georgia Power Company 1997 Annual Report
==================================================================================================================================
1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $2,134,886 $2,384,444 $2,384,348
Capital distribution to parent company (205,000) (250,000) -
Contributions to capital by parent company 85 442 96
----------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period $1,929,971 $2,134,886 $2,384,444
==================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-113
NOTES TO FINANCIAL STATEMENTS
Georgia Power Company 1997 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The Company is a wholly owned subsidiary of Southern Company, which is the parent company of five operating companies, Southern Company Services (SCS), a system service company, Southern Communications Services (Southern Communications), Southern Energy, Inc. (Southern Energy), Southern Nuclear Operating Company (Southern Nuclear), Southern Company Energy Solutions, and other direct and indirect subsidiaries. The operating companies (Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power Company) provide electric service in four Southeastern states. Contracts among the operating companies -- dealing with jointly owned generating facilities, interconnecting transmission lines, and the exchange of electric power -- are regulated by the Federal Energy Regulatory Commission (FERC) or the Securities and Exchange Commission (SEC). SCS provides, at cost, specialized services to Southern Company and subsidiary companies. Southern Communications provides digital wireless communications services to the operating companies and also markets these services to the public within the Southeast. Southern Energy designs, builds, owns, and operates power production and delivery facilities and provides a broad range of energy related services in the United States and international markets. Southern Nuclear provides services to Southern Company's nuclear power plants. Southern Company Energy Solutions develops new business opportunities related to energy products and services.
Southern Company is registered as a holding company under the Public Utility Holding Company Act of 1935 (PUHCA). Both Southern Company and its subsidiaries are subject to the regulatory provisions of this act. The Company is also subject to regulation by the FERC and the Georgia Public Service Commission (GPSC). The Company follows generally accepted accounting principles (GAAP) and complies with the accounting policies and practices prescribed by the respective regulatory commissions. The preparation of financial statements in conformity with GAAP requires the use of estimates, and the actual results may differ from these estimates.
Certain prior years' data presented in the financial statements have been reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The Company is subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. Regulatory assets represent probable future revenues to the Company associated with certain costs that are expected to be recovered from customers through the ratemaking process. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are expected to be credited to customers through the ratemaking process. Regulatory assets and (liabilities) reflected in the Company's Balance Sheets at December 31 relate to the following:
1997 1996
---------- ---------
(in millions)
--------------------
Deferred income taxes $ 688 $ 754
Deferred income tax credits (298) (318)
Premium on reacquired debt 167 167
Corporate building lease 52 51
Deferred Plant Vogtle costs 50 171
Vacation pay 41 40
Postretirement benefits 38 38
Department of Energy assessments 29 32
Deferred nuclear outage costs 28 18
Demand-side program costs 11 44
Other, net 10 (9)
--------------------------------------------------------------
Total $ 816 $ 988
==============================================================
|
In the event that a portion of the Company's operations is no longer subject to the provisions of Statement No. 71, the Company would be required to write off related net regulatory assets and liabilities that are not specifically recoverable through regulated rates. In addition, the Company would be required to determine if any impairment to other assets exists, including plant, and write down the assets, if impaired, to their fair value.
II-114
NOTES (continued)
Georgia Power Company 1997 Annual Report
Revenues and Fuel Costs
The Company accrues revenues for service rendered but unbilled at the end of each fiscal period. Fuel costs are expensed as the fuel is used. The Company's electric rates include provisions to adjust billings for fluctuations in fuel and the energy component of purchased power costs, and certain other costs. Revenues are adjusted for differences between recoverable fuel costs and amounts actually recovered in current rates.
The Company has a diversified base of customers. No single customer or industry comprises 10 percent or more of revenues. In 1997, uncollectible accounts continued to average less than 1 percent of revenues.
Fuel expense includes the amortization of the cost of nuclear fuel and a charge, based on nuclear generation, for the permanent disposal of spent nuclear fuel. Total charges for nuclear fuel included in fuel expense amounted to $76 million in 1997, $78 million in 1996, and $86 million in 1995. The Company has a contract with the U.S. Department of Energy (DOE) that provides for the permanent disposal of spent nuclear fuel, which was scheduled to begin in 1998. However, the actual year this service will begin is uncertain. Sufficient storage capacity currently is available to permit operation into 2003 at Plant Hatch and into 2008 at Plant Vogtle. Activities for adding dry cask storage capacity at Plant Hatch by as early as 1999 are in progress.
Also, the Energy Policy Act of 1992 required the establishment in 1993 of a Uranium Enrichment Decontamination and Decommissioning Fund, which is to be funded in part by a special assessment on utilities with nuclear plants. This fund will be used by the DOE for the decontamination and decommissioning of its nuclear fuel enrichment facilities. The assessment will be paid over a 15-year period, which began in 1993. The law provides that utilities will recover these payments in the same manner as any other fuel expense. The Company -- based on its ownership interests -- estimates its remaining liability under this law at December 31, 1997, to be approximately $27 million. This obligation is recorded in the accompanying Balance Sheets.
Depreciation and Nuclear Decommissioning
Depreciation of the original cost of depreciable utility plant in service is provided primarily by using composite straight-line rates, which approximated 3.1 percent in 1997 and 1996 and 3.2 percent in 1995. In addition, the Company recorded accelerated depreciation of electric plant of $159 million in 1997, $24 million in 1996, and $6 million in 1995. The amount of such charges in the accumulated provision for depreciation is $189 million at December 31, 1997. See Note 3 under "Retail Accounting Order" for additional information. When property subject to depreciation is retired or otherwise disposed of in the normal course of business, its cost -- together with the cost of removal, less salvage -- is charged to the accumulated provision for depreciation. Minor items of property included in the original cost of the plant are retired when the related property unit is retired. Depreciation expense includes an amount for the expected costs of decommissioning nuclear facilities and removal of other facilities.
In 1988, the Nuclear Regulatory Commission (NRC) adopted regulations requiring all licensees operating commercial nuclear power reactors to establish a plan for providing, with reasonable assurance, funds for decommissioning. The Company has established external trust funds to comply with the NRC's regulations. Amounts previously recorded in internal reserves are being transferred into the external trust funds over a set period of time as ordered by the GPSC. Earnings on the trust funds are considered in determining decommissioning expense. The NRC's minimum external funding requirements are based on a generic estimate of the cost to decommission the radioactive portions of a nuclear unit based on the size and type of reactor. The Company has filed plans with the NRC to ensure that -- over time -- the deposits and earnings of the external trust funds will provide the minimum funding amounts prescribed by the NRC.
Site study cost is the estimate to decommission the facility as of the site study year, and ultimate cost is the estimate to decommission the facility as of
II-115
NOTES (continued)
Georgia Power Company 1997 Annual Report
the retirement date. The estimated costs of decommissioning -- both site study costs and ultimate costs at December 31, 1997 -- based on the Company's ownership interests -- were as follows:
Plant Plant
Hatch Vogtle
--------------------
Site study basis (year) 1997 1997
Decommissioning periods:
Beginning year 2014 2027
Completion year 2027 2038
------------------------------------------------------------
(in millions)
Site study costs:
Radiated structures $372 $317
Non-radiated structures 33 44
------------------------------------------------------------
Total $405 $361
============================================================
(in millions)
Ultimate costs:
Radiated structures $722 $922
Non-radiated structures 65 129
------------------------------------------------------------
Total $787 $1,051
============================================================
(in millions)
Amount expensed in 1997 $ 11 $ 9
Accumulated provisions:
Balance in external trust funds $118 $ 76
Balance in internal reserves 23 13
------------------------------------------------------------
Total $141 $ 89
============================================================
Significant assumptions:
Inflation rate 3.6% 3.6%
Trust earnings rate 6.5 6.5
------------------------------------------------------------
|
Annual provisions for nuclear decommissioning are based on an annuity method as approved by the GPSC. The decommissioning costs currently included in cost of service are $320 million and $267 million for plants Hatch and Vogtle, respectively. These amounts are based on the higher of the costs to decommission the radioactive portions of the plants based on 1994 site studies or the 1993 NRC minimum funding requirements. The estimated ultimate costs associated with the amounts currently included in cost of service are $781 million and $1.1 billion for plants Hatch and Vogtle, respectively. The Company expects the GPSC to periodically review and adjust, if necessary, the amounts collected in rates for the anticipated cost of decommissioning.
The decommissioning cost estimates are based on prompt dismantlement and removal of the plant from service. The actual decommissioning costs may vary from the above estimates because of changes in the assumed date of decommissioning, changes in NRC requirements, changes in the assumptions used in making estimates, changes in regulatory requirements, changes in technology, and changes in costs of labor, materials, and equipment.
Income Taxes
The Company uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences. Investment tax credits utilized are deferred and amortized to income over the average lives of the related property.
Plant Vogtle Phase-In Plans
In 1987 and 1989, the GPSC ordered that the allowed costs of Plant Vogtle, a two-unit nuclear facility of which Georgia Power owns 45.7 percent, be phased into rates. Pursuant to the orders, the Company recorded a deferred return under phase-in plans until October 1991 when the allowed investment was fully reflected in rates. In 1991, the GPSC levelized the remaining Plant Vogtle declining capacity buyback expenses over a six-year period. In addition, the Company deferred certain Plant Vogtle operating expenses and financing costs under accounting orders issued by the GPSC. These GPSC orders provide for the recovery of deferred costs within 10 years. Costs deferred under the 1987 order and the levelized buybacks were fully recovered as of September 1997.
Allowance for Funds Used During Construction (AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance the construction of new facilities. While cash is not realized currently from such allowance, it increases the revenue requirement over the service life of the plant through a higher rate base and higher depreciation expense. For the years 1997, 1996 and 1995, the average AFUDC rates were 7.60 percent, 6.59 percent and 6.53 percent, respectively. AFUDC, net of taxes, as a percentage of net income after dividends on preferred stock, was less than 2.0 percent for 1997, 1996, and 1995.
II-116
NOTES (continued)
Georgia Power Company 1997 Annual Report
Utility Plant
Utility plant is stated at original cost with the exception of Plant Vogtle,
which is stated at cost less regulatory disallowances. Original cost includes:
materials; labor; payroll-related costs such as taxes, pensions, and other
benefits; and the cost of funds used during construction. The cost of
maintenance, repairs, and replacement of minor items of property is charged to
maintenance expense. The cost of replacements of property (exclusive of minor
items of property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are considered cash equivalents. Temporary cash investments are securities with original maturities of 90 days or less.
Financial Instruments
The Company's financial instruments for which the carrying amounts did not approximate fair value at December 31 were as follows:
Carrying Fair
Amount Value
------------------------
Long-term debt: (in millions)
At December 31, 1997 $3,125 $3,170
At December 31, 1996 3,174 3,206
Preferred securities:
At December 31, 1997 689 720
At December 31, 1996 325 333
--------------------------------------------------------------
|
The fair values for securities were based on either closing market prices or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission, distribution and generating plant materials. Materials are charged to inventory when purchased and then expensed or capitalized to plant, as appropriate, when installed.
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed, non-contributory pension plan covering substantially all regular employees. Benefits are based on one of the following formulas: years of service and final average pay or years of service and a flat-dollar benefit. The Company uses the "entry age normal method with a frozen initial liability" actuarial method for funding purposes, subject to limitations under federal income tax regulations. Amounts funded to the pension trusts are primarily invested in equity and fixed-income securities. FASB Statement No. 87, Employers' Accounting for Pensions, requires use of the "projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
The Company also provides certain medical care and life insurance benefits for retired employees. Substantially all employees may become eligible for these benefits when they retire. Qualified trusts are funded to the extent deductible under federal income tax regulations and to the extent required by the GPSC and the FERC. During 1997 and 1996, the Company funded $24 million and $25 million, respectively, to the qualified trusts. Amounts funded are primarily invested in debt and equity securities.
FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, requires that medical care and life insurance benefits for retired employees be accounted for on an accrual basis using a specified actuarial method, "benefit/years-of-service." In October 1993, the GPSC ordered the Company to phase in the adoption of Statement No. 106 to cost of service over a five-year period, whereby one-fifth of the additional cost was expensed in 1993, and the remaining additional costs were deferred. An additional one-fifth of the costs were expensed each succeeding year until the costs were fully reflected in cost of service in 1997. The cost deferred during the five-year period will be amortized to expense over a 15-year period beginning in 1998.
II-117
NOTES (continued)
Georgia Power Company 1997 Annual Report
Funded Status and Cost of Benefits
The funded status of the plans and reconciliation to amounts reflected in the Balance Sheets at December 31 are as follows:
Pension
---------------------
1997 1996
---------------------
(in millions)
---------------------
Actuarial present value of
benefit obligations:
Vested benefits $ 841 $ 806
Non-vested benefits 29 52
----------------------------------------------------------------
Accumulated benefit obligation 870 858
Additional amounts related
to projected salary increases 249 314
---------------------------------------------------------------
Projected benefit obligation 1,119 1,172
Less:
Fair value of plan assets 1,931 1,797
Unrecognized net gain (753) (591)
Unrecognized prior service cost 48 56
Unrecognized transition asset (39) (47)
---------------------------------------------------------------
Prepaid asset recognized in
the Balance Sheets $ 68 $ 43
===============================================================
Postretirement
Benefits
---------------------
1997 1996
---------------------
(in millions)
Actuarial present value of
benefit obligation:
Retirees and dependents $246 $217
Employees eligible to retire 33 29
Other employees 156 184
---------------------------------------------------------------
Accumulated benefit obligation 435 430
Less:
Fair value of plan assets 151 112
Unrecognized net loss 47 50
Unrecognized transition
obligation 139 157
---------------------------------------------------------------
Accrued liability recognized in the
Balance Sheets $ 98 $111
===============================================================
|
The weighted average rates used in actuarial calculations were:
1997 1996 1995
----------------------------
Discount 7.5% 7.8% 7.3%
Annual salary increase 5.0 5.3 4.8
Long-term return on
Plan assets 8.5 8.5 8.5
----------------------------------------------------------------
|
An additional assumption used in measuring the accumulated postretirement medical benefit obligation was a weighted average medical care cost trend rate of 8.8 percent for 1997, decreasing gradually to 5.5 percent through the year 2005 and remaining at that level thereafter. An annual increase in the assumed medical care cost trend rate of 1 percent would increase the accumulated benefit obligation as of December 31, 1997, by $43 million and the aggregate of the service and interest cost components of the net postretirement cost by $4 million.
The components of the plans' net costs are shown below:
Pension
----------------------------
1997 1996 1995
----------------------------
(in millions)
Benefits earned during the year $ 30 $ 35 $ 33
Interest cost on projected
benefit obligation 82 86 78
Actual return on plan assets (301) (202) (317)
Net amortization 161 62 185
-----------------------------------------------------------------
Net pension benefit $ (28) $ (19) $ (21)
=================================================================
|
Of net pension amounts recorded, $20 million in 1997, $14 million in 1996, and $15 million in 1995 were recorded as a reduction to operating expense, and the remainder was recorded as a reduction to construction and other accounts.
II-118
NOTES (continued)
Georgia Power Company 1997 Annual Report
Postretirement Benefits
-------------------------
1997 1996 1995
-------------------------
(in millions)
Benefits earned during the year $ 7 $ 9 $13
Interest cost on accumulated
benefit obligation 32 30 34
Amortization of transition
obligation 9 9 16
Actual return on plan assets (8) (6) (8)
Net amortization 2 3 4
---------------------------------------------------------------
Net postretirement cost $42 $45 $59
===============================================================
|
Of the above net postretirement benefit costs recorded, $32 million in 1997, $29 million in 1996, and $33 million in 1995 were charged to operating expenses. In addition, $3 million in 1996 and $11 million in 1995 were deferred, and the remainder was charged to construction and other accounts. During 1996, the Company expensed an additional $19 million due to an adjustment to amounts previously deferred under the GPSC order as a result of changes in the postretirement benefit plan.
Work Force Reduction Programs
The Company has incurred costs for work force reduction programs. The costs related to these programs were $5 million in 1997, $39 million in 1996 and $11 million in 1995. Additionally, the Company recognized $4 million in 1997, $9 million in 1996, and $3 million in 1995 for its share of costs associated with SCS's work force reduction programs.
3. REGULATORY AND LITIGATION MATTERS
Retail Accounting Order
On February 16, 1996, the GPSC approved a three-year accounting order for the Company. Under the order, effective January 1, 1996, the Company's earnings are evaluated against a retail return on common equity range of 10 percent to 12.5 percent. Earnings in excess of 12.5 percent will be used to accelerate the amortization of regulatory assets or depreciation of electric plant. At its option, the Company may also recognize accelerated amortization or depreciation of assets within the allowed return on common equity range. The Company is required to absorb cost increases of approximately $29 million annually during the order's three-year operation, including $14 million annually of accelerated depreciation of electric plant. During the order's operation, the Company will not file for a general base rate increase unless its projected retail return on common equity falls below 10 percent. Under the approved order, on July 1, 1998, the Company will make a general rate case filing in response to which the GPSC would be expected either to continue the provisions of the accounting order or adopt different ones.
The Company's 1996 retail return on common equity was within the 10 percent to 12.5 percent range. During 1997, for earnings in excess of the 12.5% retail return, the Company recorded charges of $135 million that are presented in the financial statements as depreciation expense of electric plant and as an addition to the reserve for depreciation.
In November 1996, on appeal by a consumer group, the Superior Court of Fulton County, Georgia, reversed the GPSC's accounting order and remanded the matter to the GPSC. The Court found that statutory requirements applicable to rate cases should have been, but were not, followed. The GPSC and the Company subsequently appealed the Superior Court's decision. In October 1997, the Court of Appeals upheld the accounting order. No appeal of that decision was filed within the allowable time frame. The order stands as written, and this matter is now concluded.
FERC Review of Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the reasonableness of the Southern electric system's wholesale rate schedules and contracts that have a return on common equity of 13.75 percent or greater. The contracts that could be affected by the hearings include substantially all of the transmission, unit power, long-term power, and other similar contracts.
In August 1992, a FERC administrative law judge issued an opinion that changes in rate schedules and contracts were not necessary and that the FERC staff failed to show how any changes were in the public interest. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on substantially the same issues as in the 1991 proceeding. In November 1995, a
II-119
NOTES (continued)
Georgia Power Company 1997 Annual Report
FERC administrative law judge issued an opinion that the FERC staff failed to meet its burden of proof, and therefore no change in the equity return was necessary. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter remains pending before the FERC.
If the rates of return on common equity recommended by the FERC staff were applied to all the schedules and contracts involved in both proceedings, as well as certain other contracts that reference these proceedings in determining return on common equity and if refunds were ordered, the amount of refunds could range up to approximately $71 million at December 31, 1997. Although management believes that rates are not excessive and that refunds are not justified, the final outcome of this matter cannot now be determined.
Rocky Mountain Plant Status
In its 1985 financing order, the GPSC concluded that completion of the Rocky Mountain pumped storage hydroelectric plant in 1991, as then planned, was not economically justifiable and reasonable and withheld authorization for the Company to spend funds from approved securities issuances on that plant. In 1988, the Company and Oglethorpe Power Corporation (OPC) entered into a joint ownership agreement for OPC to assume responsibility for the construction and operation of the plant, as discussed in Note 6. In 1995, the plant went into commercial operation.
In June 1996, the GPSC initiated a review of the plant. On January 14, 1998, the GPSC ordered that the Company be allowed approximately $108 million of its $143 million investment in the plant in rate base as of December 31, 1998. The Company has appealed the GPSC's order to the Superior Court of Fulton County, Georgia. If such order is ultimately upheld, the Company will be required to record a charge to earnings currently estimated at approximately $29 million, after taxes. The final outcome of this matter cannot now be determined. Accordingly, no provision related to the GPSC's disallowance has been recorded.
Tax Litigation
In August 1997, Southern Company and the Internal Revenue Service (IRS) entered into a settlement agreement related to tax issues for the years 1984 through 1987. The agreement is subject to the review and approval by the Joint Congressional Committee on Taxation. If approved by the Joint Committee, the agreement would resolve all issues in the case for the years before the U. S. Tax Court, resulting in a refund to the Company of approximately $140 million. This amount includes interest of $61 million. The tax litigation was related to a timing issue as to when taxes should have been paid; therefore, only the interest portion will affect future income. There can be no assurance that such Joint Committee approval will be received.
Demand-Side Conservation Programs
In August 1995, the GPSC ordered the Company to discontinue its current demand-side conservation programs by the end of 1995. Rate riders previously approved by the GPSC for recovery of the Company's costs incurred in connection with these programs remained in effect until January 1998 when costs deferred were fully collected.
Under the Retail Accounting Order approved February 16, 1996, the Company will recognize approximately $29 million of deferred program costs over a three-year period which will not be recovered through the riders.
Certain Environmental Contingencies
In January 1995, the Company and four other unrelated entities were notified by the EPA that they have been designated as potentially responsible parties under the Comprehensive Environmental Response, Compensation and Liability Act with respect to a site in Brunswick, Georgia. As of December 31, 1997, the Company has recognized approximately $5 million in expenses associated with this site. This represents the Company's agreed upon share of removal and remedial investigation and feasibility study costs. The final outcome of this matter cannot now be determined. However, based on the nature and extent of the Company's activities relating to the site, management believes that the Company's portion of any remaining remediation costs should not be material.
In compliance with the Georgia Hazardous Site Response Act of 1993, the State of Georgia was required to compile an inventory of all known or suspected sites where hazardous wastes, constituents or substances have been disposed of or released in quantities deemed reportable by the State. In developing this
II-120
NOTES (continued)
Georgia Power Company 1997 Annual Report
list, the State identified several hundred properties throughout the State, including 25 sites which may require environmental remediation that were either previously or are currently owned by the Company. The majority of these sites are electrical power substations and power generation facilities. The Company has remediated nine electrical substations on the list at a cost of approximately $3 million. In addition, the Company has recognized approximately $17 million in expenses through December 31, 1997 for the assessment of the remaining sites on the list and the anticipated clean-up cost for 11 sites that the Company plans to remediate. Any cost of remediating the remaining sites cannot presently be determined until such studies are completed for each site and the State of Georgia determines whether remediation is required. If all listed sites were required to be remediated, the Company could incur expenses of up to approximately $15 million in additional clean-up costs and construction expenditures of up to approximately $65 million to develop new waste management facilities or install additional pollution control devices.
The accrued costs for environmental remediation obligations are not discounted to their present value.
New Wholesale Agreement
On January 10, 1997, the Company and the Municipal Electric Authority of Georgia (MEAG) reached an agreement to enter into a new power supply relationship which would replace the partial requirements tariff pursuant to which the Company sells wholesale energy to MEAG and the scheduling services agreement between the Company and MEAG. The new power supply contract was approved by FERC and was implemented in August 1997.
Nuclear Performance Standards
In October 1989, the GPSC adopted a nuclear performance standard for the Company's nuclear generating units under which the performance of plants Hatch and Vogtle will be evaluated every three years. The performance standard is based on each unit's capacity factor as compared to the average of all comparable U.S. nuclear units operating at a capacity factor of 50 percent or higher during the three-year period of evaluation. Depending on the performance of the units, the Company could receive a monetary reward or penalty under the performance standards criteria.
The first evaluation was conducted in 1993 for performance during the 1990-92 period. The GPSC approved a performance reward of approximately $8.5 million for the Company. This reward was collected through the retail fuel cost recovery provision and recognized in income over a 36-month period which ended in October 1996. In January 1997, the GPSC approved a performance award of approximately $11.7 million for performance during the 1993-95 period. This reward is being collected through the retail fuel cost recovery provision and recognized in income over a 36-month period that began in January 1997.
4. COMMITMENTS
Construction Program
While the Company has no traditional baseload generating plants under construction, the construction of one jointly owned combustion turbine peaking unit was completed in January 1997. In addition, significant construction of transmission and distribution facilities, and projects to upgrade and extend the useful life of generating plants will continue. The Company currently estimates property additions to be approximately $506 million in 1998, $561 million in 1999, and $549 million in 2000. The estimates for property additions for the three-year period include $28 million committed to meeting the requirements of the Clean Air Act.
The construction program is subject to periodic review and revision, and actual construction costs may vary from estimates because of numerous factors, including, but not limited to, changes in business conditions, load growth estimates, environmental regulations, and regulatory requirements.
Fuel Commitments
To supply a portion of the fuel requirements of its generating plants, the Company has entered into various long-term commitments for the procurement of fossil and nuclear fuel. In most cases, these contracts contain provisions for price escalations, minimum purchase levels and other financial commitments.
II-121
NOTES (continued)
Georgia Power Company 1997 Annual Report
Total estimated long-term fossil and nuclear fuel commitments at December 31,
1997 were as follows:
Minimum
Year Obligations
----------------------
(in millions)
1998 $ 985
1999 799
2000 777
2001 673
2002 614
2003 and beyond 1,635
---------------------------------------------------------------
Total minimum obligations $5,483
===============================================================
|
Additional commitments for coal and for nuclear fuel will be required in the future to supply the Company's fuel needs.
Purchase Power Commitments
In connection with the joint ownership arrangement for Plant Vogtle, discussed in Note 6, the Company has made commitments to purchase portions of OPC's and MEAG's capacity and energy from this plant. Declining commitments were in effect during periods of up to seven years following commercial operation and ended in 1996. As discussed in Note 1, the Plant Vogtle declining capacity buyback expense was levelized over a six-year period which ended in September 1997. In addition, the Company has commitments regarding a portion of a 5 percent interest in Plant Vogtle owned by MEAG that are in effect until the latter of the retirement of the plant or the latest stated maturity date of MEAG's bonds issued to finance such ownership interest. The payments for capacity are required whether or not any capacity is available. The energy cost is a function of each unit's variable operating costs. Except as noted below, the cost of such capacity and energy is included in purchased power from non-affiliates in the Company's Statements of Income. Capacity payments totaled $54 million, $68 million, and $76 million in 1997, 1996, and 1995, respectively. The current projected Plant Vogtle capacity payments are:
Year Amounts
----------------------
(in millions)
1998 $ 57
1999 59
2000 62
2001 61
2002 60
2003 and beyond 771
----------------------------------------------------------------
Total $ 1,070
================================================================
|
Portions of the payments noted above relate to costs in excess of Plant Vogtle's allowed investment for ratemaking purposes. The present value of these portions was written off in 1987 and 1990.
The Company and an affiliate, Alabama Power Company, own equally all of the outstanding capital stock of Southern Electric Generating Company (SEGCO), which owns electric generating units with a total rated capacity of 1,020 megawatts, as well as associated transmission facilities. The capacity of the units has been sold equally to the Company and Alabama Power under a contract which, in substance, requires payments sufficient to provide for the operating expenses, taxes, debt service and return on investment, whether or not SEGCO has any capacity and energy available. The term of the contract extends automatically for two-year periods, subject to either party's right to cancel upon two year's notice. The Company's share of expenses included in purchased power from affiliates in the Statements of Income, is as follows:
1997 1996 1995
---------------------------------
(in millions)
Energy $45 $47 $44
Capacity 30 30 29
--------------------------------------------------------------
Total $75 $77 $73
==============================================================
Kilowatt-hours 3,038 2,780 2,391
--------------------------------------------------------------
|
At December 31, 1997, the capitalization of SEGCO consisted of $50 million of equity and $72 million of long-term debt on which the annual interest requirement is $4 million.
II-122
NOTES (continued)
Georgia Power Company 1997 Annual Report
The Company has entered into other various long-term commitments for the purchase of electricity. Total long-term obligations at December 31, 1997 were as follows:
Year Amounts
----------------------
(in millions)
1998 $ 16
1999 17
2000 21
2001 22
2002 23
2003 and beyond 360
---------------------------------------------------------------
Total $ 459
===============================================================
|
Operating Leases
The Company has entered into coal rail car rental agreements with various terms and expiration dates. These expenses totaled $11 million for 1997 and 1996 and $12 million for 1995. At December 31, 1997, estimated minimum rental commitments for these noncancelable operating leases were as follows:
Year Amounts
----------------------
(in millions)
1998 $ 11
1999 11
2000 11
2001 12
2002 12
2003 and beyond 132
---------------------------------------------------------------
Total $ 189
===============================================================
|
5. NUCLEAR INSURANCE
Under the Price-Anderson Amendments Act of 1988, the Company maintains agreements of indemnity with the NRC that, together with private insurance, cover third-party liability arising from any nuclear incident occurring at the Company's nuclear power plants. The act provides funds up to $8.9 billion for public liability claims that could arise from a single nuclear incident. Each nuclear plant is insured against this liability to a maximum of $200 million by private insurance, with the remaining coverage provided by a mandatory program of deferred premiums that could be assessed, after a nuclear incident, against all owners of nuclear reactors. The Company could be assessed up to $79 million per incident for each licensed reactor it operates but not more than an aggregate of $10 million per incident to be paid in a calendar year for each reactor. Such maximum assessment for the Company, excluding any applicable state premium taxes, -- based on its ownership and buyback interests -- is $160 million per incident but not more than an aggregate of $20 million to be paid for each incident in any one year.
The Company is a member of Nuclear Electric Insurance Limited (NEIL), a mutual insurer established to provide property damage insurance in an amount up to $500 million for members' nuclear generating facilities. The members are subject to a retrospective premium assessment in the event that losses exceed accumulated reserve funds. The Company's maximum annual assessment is limited to $10 million under current policies.
Additionally, the Company has policies that currently provide decontamination, excess property insurance, and premature decommissioning coverage up to $2.25 billion for losses in excess of the $500 million primary coverage. This excess insurance is also provided by NEIL.
Additionally, NEIL covers the costs that would be incurred in obtaining replacement power during a prolonged accidental outage at a member's nuclear plant. Members can be insured against increased costs of replacement power in an amount up to $3.5 million per week -- starting 17 weeks after the outage -- for one year and up to $2.8 million per week for the second and third years.
Under each of the NEIL policies, members are subject to assessments if losses each year exceed the accumulated funds available to the insurer under that policy. The maximum annual assessments under the current policies for the Company would be $11 million for excess property damage and $11 million for replacement power.
For all on-site property damage insurance policies for commercial nuclear power plants, the NRC requires that the proceeds of such policies issued or renewed on or after April 2, 1991, shall be dedicated first for the sole purpose of placing the reactor in a safe and stable condition after an accident. Any remaining proceeds are to be applied next toward the costs of decontamination and debris removal operations ordered by the NRC, and any further remaining
II-123
NOTES (continued)
Georgia Power Company 1997 Annual Report
proceeds are to be paid either to the Company or to its bond trustees as may be appropriate under the policies and applicable trust indentures.
All retrospective assessments, whether generated for liability, property or replacement power, may be subject to applicable state premium taxes.
6. FACILITY SALES AND JOINT OWNERSHIP AGREEMENTS
The Company has sold undivided interests in plants Hatch, Wansley, Vogtle, and Scherer Units 1 and 2 to OPC, an electric membership generation and transmission corporation; MEAG, a public corporation and an instrumentality of the state of Georgia; and the City of Dalton, Georgia. The Company has sold an interest in Plant Scherer Unit 3 to Gulf Power Company, an affiliate. Additionally, the Company has sold 76.4 percent of Plant Scherer Unit 4 to Florida Power & Light Company (FP&L) and the remaining 23.6 percent to Jacksonville Electric Authority (JEA). The Company has also sold transmission facilities to Georgia Transmission Corporation (formerly OPC's transmission division), MEAG, and the City of Dalton.
Except as otherwise noted, the Company has contracted to operate and maintain all jointly owned facilities. The Company includes its proportionate share of plant operating expenses in the corresponding operating expenses in the Statements of Income.
As discussed in Note 3, the Company owns 25.4 percent of the Rocky Mountain pumped storage hydroelectric plant, which began commercial operation in 1995. OPC owns the remainder, and is the operator of the plant.
The Company owns six of eight 80 megawatt combustion turbine generating units and 75 percent of the related common facilities at Plant McIntosh. Savannah Electric and Power Company, an affiliate, owns the remainder and operates the plant. Four of the Company's six units began commercial operation during 1994, and the remaining two units began commercial operation in 1995.
The Company and Florida Power Corporation (FPC) jointly own a combustion turbine unit at Intercession City, Florida, near Orlando. The unit began commercial operation in January 1997, and is operated by FPC. The Company owns a one-third interest in the unit, with use of 100 percent of the unit's capacity from June through September. FPC has the capacity the remainder of the year.
At December 31, 1997, the Company's percentage ownership and investment (exclusive of nuclear fuel) in jointly owned facilities in commercial operation, were as follows:
Total
Nameplate Company
Facility (Type) Capacity Ownership
------------------------------------------------------------------
(megawatts)
Plant Vogtle (nuclear) 2,320 45.7%
Plant Hatch (nuclear) 1,722 50.1
Plant Wansley (coal) 1,730 53.5
Plant Scherer (coal)
Units 1 and 2 1,636 8.4
Unit 3 818 75.0
Plant McIntosh
Common Facilities N/A 75.0
(combustion-turbine)
Rocky Mountain 848 25.4
(pumped storage)
Intercession City 142 33.3
(combustion-turbine)
------------------------------------------------------------------
Accumulated
Facility (Type) Investment Depreciation
----------------------------------------------------------------
(in millions)
Plant Vogtle (nuclear) $3,299* $1,100
Plant Hatch (nuclear) 840 477
Plant Wansley (coal) 298 136
Plant Scherer (coal)
Units 1 and 2 112 44
Unit 3 542 164
Plant McIntosh
Common Facilities
(combustion-turbine) 19 1
Rocky Mountain
(pumped storage) 202 44
Intercession City
(combustion-turbine) 13 **
----------------------------------------------------------------
|
* Investment net of write-offs. ** Less than $1 million.
II-124
NOTES (continued)
Georgia Power Company 1997 Annual Report
7. LONG-TERM POWER SALES AGREEMENTS
The Company and the operating subsidiaries of Southern Company have long-term contractual agreements for the sale of capacity and energy to non-affiliated utilities located outside the system's service area. These agreements consist of firm unit power sales pertaining to capacity from specific generating units. Because energy is generally sold at cost under these agreements, it is primarily the capacity revenues that affect the Company's profitability.
The Company's capacity revenues were as follows:
Year
-------------------------------------
(in millions) (megawatts)
1997 $ 42 159
1996 41 173
1995 53 248
-------------------------------------
|
Unit power from specific generating plants is being sold to FP&L, FPC, JEA, and the City of Tallahassee, Florida. Under these agreements, the Company sold approximately 159 megawatts of capacity in 1997 and is scheduled to sell approximately 162 megawatts of capacity in 1998 and 1999. In 2000, 129 megawatts will be sold. After 2000, capacity sales will decline to approximately 105 megawatts -- unless reduced by FP&L, FPC, and JEA -- until the expiration of the contracts in 2010.
8. INCOME TAXES
At December 31, 1997, tax-related regulatory assets were $688 million and tax-related regulatory liabilities were $298 million. The assets are attributable to tax benefits flowed through to customers in prior years and to taxes applicable to capitalized AFUDC. The liabilities are attributable to deferred taxes previously recognized at rates higher than current enacted tax law and to unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
1997 1996 1995
-------------------------------
Total provision for income taxes: (in millions)
Federal:
Currently payable $ 352 $325 $349
Deferred -
Current year 49 70 84
Reversal of prior years (68) (41) (55)
Deferred investment tax
credits - - 1
-----------------------------------------------------------------
333 354 379
-----------------------------------------------------------------
State:
Currently payable 65 56 60
Deferred -
Current year 8 12 15
Reversal of prior years (11) (5) (8)
-----------------------------------------------------------------
62 63 67
-----------------------------------------------------------------
Total 395 417 446
-----------------------------------------------------------------
Less:
Income taxes credited
to other income (32) (19) (3)
-----------------------------------------------------------------
Total income taxes
charged to operations $ 427 $436 $449
=================================================================
|
The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:
1997 1996
-------------------
(in millions)
Deferred tax liabilities:
Accelerated depreciation $1,732 $1,736
Property basis differences 968 1,038
Other 142 174
-----------------------------------------------------------------
Total 2,842 2,948
-----------------------------------------------------------------
Deferred tax assets:
Other property basis differences 216 225
Federal effect of state deferred taxes 99 100
Other deferred costs 83 93
Disallowed Plant Vogtle buybacks 23 24
Other 14 36
-----------------------------------------------------------------
Total 435 478
-----------------------------------------------------------------
Net deferred tax liabilities 2,407 2,470
Portion included in current assets 11 53
-----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $2,418 $2,523
=================================================================
|
Deferred investment tax credits are amortized over the life of the related property with such amortization normally applied as a credit to reduce
II-125
NOTES (continued)
Georgia Power Company 1997 Annual Report
depreciation in the Statements of Income. Credits amortized in this manner amounted to $15 million in 1997, $17 million in 1996, and $22 million in 1995. At December 31, 1997, all investment tax credits available to reduce federal income taxes payable had been utilized.
A reconciliation of the federal statutory tax rate to the effective income tax rate is as follows:
1997 1996 1995
-------- -------- --------
Federal statutory rate 35% 35% 35%
State income tax, net of
federal deduction 4 4 4
Non-deductible book
depreciation 4 3 2
Other (4) (2) (1)
---------------------------------------------------------------
Effective income tax rate 39% 40% 40%
===============================================================
|
Southern Company and its subsidiaries file a consolidated federal income tax return. Under a joint consolidated income tax agreement, each subsidiary's current and deferred tax expense is computed on a stand-alone basis. Tax benefits from losses of the parent company are allocated to each subsidiary based on the ratio of taxable income to total consolidated taxable income.
9. CAPITALIZATION
First Mortgage Bond Indenture & Charter
Restrictions
The Company historically has relied on issuances of first mortgage bonds and preferred stock, in addition to pollution control revenue bonds issued for its benefit by public authorities, to meet its long-term external financing requirements. Recently, the Company's financings have consisted of unsecured debt and trust preferred securities. In this regard, the Company sought and obtained stockholder approval in 1997 to amend its corporate charter eliminating restrictions on the amounts of unsecured indebtedness it may incur.
The Company's first mortgage bond indenture contains various restrictions that remain in effect as long as the bonds are outstanding. At December 31, 1997, $852 million of retained earnings and paid-in capital was unrestricted for the payment of cash dividends or any other distributions under terms of the mortgage indenture. If additional first mortgage bonds are issued, supplemental indentures in connection with those issues may contain more stringent restrictions than those currently in effect.
The Company's charter previously limited cash dividends on common stock to the lesser of the retained earnings balance or 75 percent of net income available for such stock during a prior period of 12 months if the ratio of common stock equity to total capitalization, including retained earnings, adjusted to reflect the payment of the proposed dividend, was below 25 percent, and to 50 percent of such net income if such ratio was less than 20 percent. These restrictions were removed by a vote of preferred shareholders on December 10, 1997.
Preferred Securities
In December 1994, Georgia Power Capital, L.P., of which the Company is the sole general partner, issued $100 million of 9 percent mandatorily redeemable preferred securities. Substantially all of the assets of Georgia Power Capital are $103 million aggregate principal amount of Georgia Power's 9 percent Junior Subordinated Deferrable Interest Debentures due December 19, 2024.
Statutory business trusts formed by the Company, of which the Company owns all the common securities, have issued mandatorily redeemable preferred securities as follows:
Date of Maturity
Issue Amount Rate Notes Date
-------------------------------------------------------
(millions) (millions)
Trust I 8/1996 $225.00 7.75% $232 6/2036
Trust II 1/1997 175.00 7.60% 180 12/2036
Trust III 6/1997 189.25 7.75% 195 3/2037
|
Substantially all of the assets of each trust are junior subordinated notes issued by the Company in the respective approximate principal amounts set forth above.
The Company considers that the mechanisms and obligations relating to the preferred securities, taken together, constitute a full and unconditional guarantee by the Company of Georgia Power Capital's and the Trusts' payment obligations with respect to the preferred securities.
II-126
NOTES (continued)
Georgia Power Company 1997 Annual Report
Georgia Power Capital, L.P., and the Trusts are subsidiaries of the Company, and accordingly are consolidated in the Company's financial statements.
Pollution Control Bonds
The Company has incurred obligations in connection with the sale by public authorities of tax-exempt pollution control revenue bonds. The Company has authenticated and delivered to trustees an aggregate of $1.3 billion of its first mortgage bonds, which are pledged as security for its obligations under pollution control revenue contracts. No interest on these first mortgage bonds is payable unless and until a default occurs on the installment purchase or loan agreements.
Details of pollution control bonds are as follows:
Maturity Interest Rates 1997 1996
--------------------------------------------------------------
(in millions)
2000 4.375% $ 50 $ 50
2004-2005 5% to 5.70% 104 143
2011 Variable 10 10
2017 8.375% to 9.375% - 140
2018-2022 6% to 6.35%
& Variable 112 218
2023-2026 5.40% to 6.75%
& Variable 1,110 1,110
2029-2032 Variable 235 -
2034 Variable 50 -
--------------------------------------------------------------
|
Senior Notes
In January 1998, the Company issued $145 million of 6 7/8% unsecured senior notes due December 31, 2047. The senior notes are subordinated to all secured debt of the Company, including its first mortgage bonds.
Bank Credit Arrangements
At the beginning of 1998, the Company had unused credit arrangements with banks totaling $1.3 billion, of which $919 million expires at various times during 1998, $300 million expires at June 30, 1999, and $60.3 million expires at May 1, 2000.
The $300 million expiring June 30, 1999, is under revolving credit arrangements with several banks providing the Company and Alabama Power Company up to a total credit amount of $300 million. To provide liquidity support for commercial paper programs, $165 million and $135 million are currently dedicated to the Company and Alabama Power Company, respectively. However, the allocations can be changed among the borrowers by notifying the respective banks.
Approximately $1.1 billion of the credit facilities allow for term loans of between one and three years. Most of the agreements include stated borrowing rates but also allow for negotiated rates. In addition, these agreements require payment of commitment fees based on the unused portions of the commitments or the maintenance of compensating balances with the banks.
Of the Company's total $1.3 billion in unused credit arrangements, a portion of the lines is dedicated to provide liquidity support to variable rate pollution control bonds. The credit lines dedicated as of December 31, 1997, totaled $879 million. In connection with all other lines of credit, the Company has the option of paying fees or maintaining compensating balances. These balances are not legally restricted from withdrawal.
In addition, the Company borrows under uncommitted lines of credit with banks and through a $225 million commercial paper program that has the liquidity support of committed bank credit arrangements. Average compensating balances held under these committed facilities were not material in 1997.
Other Long-Term Debt
Assets acquired under capital leases are recorded in the Balance Sheets as utility plant in service, and the related obligations are classified as long-term debt. At December 31, 1997 and 1996, the Company had a capitalized lease obligation for its corporate headquarters building of $87 million with an interest rate of 8.1 percent. The lease agreement provides for payments that are minimal in early years and escalate through the first 21 years of the lease. For ratemaking purposes, the GPSC has treated the lease as an operating lease and has allowed only the lease payments in cost of service. The difference between the accrued expense and the lease payments allowed for ratemaking purposes is being deferred as a cost to be recovered in the future as ordered by the GPSC.
11-127
NOTES (continued)
Georgia Power Company 1997 Annual Report
At December 31, 1997, and 1996, the interest and lease amortization deferred on the Balance Sheets are $52 million and $51 million, respectively.
Assets Subject to Lien
The Company's mortgage dated as of March 1, 1941, as amended and supplemented, securing the first mortgage bonds issued by the Company, constitutes a direct lien on substantially all of the Company's fixed property and franchises.
Securities Due Within One Year
The current portion of the Company's long-term debt and preferred stock is as follows:
1997 1996
-------------------
(in millions)
First mortgage bonds $ 220 $ 61
Preferred stock - 49
----------------------------------------------------------------
Total $ 220 $ 110
================================================================
|
The Company's first mortgage bond indenture includes an improvement fund requirement that amounts to 1 percent of each outstanding series of bonds authenticated under the indenture prior to January 1 of each year, other than those issued to collateralize pollution control obligations. The requirement may be satisfied by June 1 of each year by depositing cash, reacquiring bonds, or by pledging additional property equal to 1 2/3 times the requirement. The 1998 requirement was met in the first quarter of the year by depositing cash with the trustee. These funds were used to redeem first mortgage bonds.
Redemption of Securities
The Company plans to continue a program of redeeming or replacing debt and preferred stock in cases where opportunities exist to reduce financing costs. Issues may be repurchased in the open market or called at premiums as specified under terms of the issue. They may also be redeemed at face value to meet improvement fund requirements, to meet replacement provisions of the mortgage, or through use of proceeds from the sale of property pledged under the mortgage. In general, for the first five years a series of first mortgage bonds is outstanding, the Company is prohibited from redeeming for improvement fund purposes more than 1 percent annually of the original issue amount.
10. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial information for 1997 and 1996 is as follows:
Net Income
After
Dividends on
Operating Operating Preferred
Quarter Ended Revenues Income Stock
-------------------------------------------------------------------
(in millions)
--------------------------------------------
March 1997 $ 959 $180 $106
June 1997 1,015 205 131
September 1997 1,407 317 257
December 1997 1,005 159 100
March 1996 $1,029 $192 $114
June 1996 1,134 233 154
September 1996 1,311 339 256
December 1996 943 122 56
-------------------------------------------------------------------
|
Earnings in the fourth quarter of 1997, compared to the fourth quarter of 1996, increased primarily as a result of higher retail sales and the recognition in 1996 of an agreement to refund $14 million to municipalities and cooperatives in Georgia.
The Company's business is influenced by seasonal weather conditions.
II-128
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1997 Annual Report
==========================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $4,385,717 $4,416,779 $4,405,338
Net Income after Dividends
on Preferred Stock (in thousands) $593,996 $580,327 $608,862
Cash Dividends on Common Stock (in thousands) $520,000 $475,500 $451,500
Return on Average Common Equity (percent) 14.53 13.73 14.43
Total Assets (in thousands) $12,573,728 $13,006,635 $13,470,275
Gross Property Additions (in thousands) $475,921 $428,220 $480,449
--------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $4,019,728 $4,154,281 $4,299,012
Preferred stock 157,247 464,611 692,787
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities 689,250 325,000 100,000
Long-term debt 2,982,835 3,200,419 3,315,460
--------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $7,849,060 $8,144,311 $8,407,259
==========================================================================================================================
Capitalization Ratios (percent):
Common stock equity 51.2 51.0 51.1
Preferred stock 2.0 5.7 8.2
Company obligated mandatorily redeemable preferred securities 8.8 4.0 1.2
Long-term debt 38.0 39.3 39.5
--------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==========================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 10,000 75,000
Retired 60,258 210,860 505,789
Preferred Stock (in thousands):
Issued - - -
Retired 356,392 179,148 -
Company Obligated Mandatorily Redeemable
Preferred Securities (in thousands):
Issued 364,250 225,000 -
--------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A+ A+ A+
Duff & Phelps AA- AA- AA-
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A A A
Duff & Phelps A+ A+ A
--------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,561,675 1,531,453 1,500,024
Commercial 211,672 205,087 198,624
Industrial 9,988 10,424 10,796
Other 2,748 2,645 2,568
--------------------------------------------------------------------------------------------------------------------------
Total 1,786,083 1,749,609 1,712,012
==========================================================================================================================
Employees (year-end) 8,354 * 10,346 11,061
*In 1997 Georgia Power Company transferred 1,855 employees to Southern Nuclear Operating Company.
|
II-129
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1997 Annual Report
=============================================================================================================================
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $4,162,403 $4,451,181 $4,297,436
Net Income after Dividends
on Preferred Stock (in thousands) $525,544 $569,853 $520,538
Cash Dividends on Common Stock (in thousands) $429,300 $402,400 $384,000
Return on Average Common Equity (percent) 12.84 14.37 13.60
Total Assets (in thousands) $13,712,658 $13,736,110 $10,964,442
Gross Property Additions (in thousands) $638,426 $674,432 $508,444
-----------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $4,141,554 $4,045,458 $3,888,237
Preferred stock 692,787 692,787 692,792
Preferred stock subject to mandatory redemption - - 6,250
Company obligated mandatorily redeemable preferred securities 100,000 - -
Long-term debt 3,757,823 4,031,387 4,131,016
-----------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $8,692,164 $8,769,632 $8,718,295
=============================================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.6 46.1 44.6
Preferred stock 8.0 7.9 8.0
Company obligated mandatorily redeemable preferred securities 1.2 - -
Long-term debt 43.2 46.0 47.4
-----------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=============================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 1,135,000 975,000
Retired 133,559 1,337,822 1,381,300
Preferred Stock (in thousands):
Issued - 175,000 195,000
Retired - 245,005 165,004
Company Obligated Mandatorily Redeemable
Preferred Securities (in thousands):
Issued 100,000 - -
-----------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A2 A3 A3
Standard and Poor's A A- A-
Duff & Phelps A+ A+ A-
Preferred Stock -
Moody's a3 baa1 baa1
Standard and Poor's A- BBB+ BBB+
Duff & Phelps A- A- BBB
-----------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,466,382 1,441,972 1,421,175
Commercial 193,648 188,820 183,784
Industrial 10,976 11,217 11,479
Other 2,426 2,322 2,269
-----------------------------------------------------------------------------------------------------------------------------
Total 1,673,432 1,644,331 1,618,707
=============================================================================================================================
Employees (year-end) 11,765 12,528 12,600
*In 1997 Georgia Power Company transferred 1,855 employees to Southern Nuclear Operating Company.
|
II-130A
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1997 Annual Report
=======================================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $4,301,428 $4,445,809 $4,145,240
Net Income after Dividends
on Preferred Stock (in thousands) $474,855 $208,066 $449,099
Cash Dividends on Common Stock (in thousands) $375,200 $389,600 $394,500
Return on Average Common Equity (percent) 12.76 5.52 11.72
Total Assets (in thousands) $10,842,538 $11,176,619 $11,372,346
Gross Property Additions (in thousands) $548,051 $558,727 $727,631
-----------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $3,766,551 $3,673,913 $3,860,657
Preferred stock 607,796 607,796 607,844
Preferred stock subject to mandatory redemption 118,750 125,000 155,000
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 4,553,189 5,000,225 5,054,001
-----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $9,046,286 $9,406,934 $9,677,502
=======================================================================================================================
Capitalization Ratios (percent):
Common stock equity 41.7 39.1 39.9
Preferred stock 8.0 7.8 7.9
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 50.3 53.1 52.2
-----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=======================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 300,000 250,000
Retired 598,384 91,117 91,516
Preferred Stock (in thousands):
Issued 100,000 - -
Retired 100,000 83,750 7,500
Company Obligated Mandatorily Redeemable
Preferred Securities (in thousands):
Issued - - -
-----------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Baa1 Baa1 Baa2
Standard and Poor's BBB+ BBB+ BBB+
Duff & Phelps BBB+ BBB BBB
Preferred Stock -
Moody's baa1 baa1 baa2
Standard and Poor's BBB BBB BBB
Duff & Phelps BBB- BBB- BBB-
-----------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,397,682 1,378,888 1,355,211
Commercial 179,933 178,391 177,814
Industrial 11,946 12,115 12,311
Other 2,190 2,114 2,050
-----------------------------------------------------------------------------------------------------------------------
Total 1,591,751 1,571,508 1,547,386
=======================================================================================================================
Employees (year-end) 13,700 13,746 13,900
*In 1997 Georgia Power Company transferred 1,855 employees to Southern Nuclear Operating Company.
|
130B
SELECTED FINANCIAL AND OPERATING DATA
Georgia Power Company 1997 Annual Report
============================================================================================================
1988 1987
------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $3,897,479 $3,786,485
Net Income after Dividends
on Preferred Stock (in thousands) $479,532 $240,057
Cash Dividends on Common Stock (in thousands) $386,600 $377,800
Return on Average Common Equity (percent) 13.06 6.85
Total Assets (in thousands) $11,130,539 $11,197,494
Gross Property Additions (in thousands) $929,019 $1,034,059
------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $3,806,070 $3,538,182
Preferred stock 657,844 657,844
Preferred stock subject to mandatory redemption 162,500 166,250
Company obligated mandatorily redeemable preferred securities - -
Long-term debt 4,861,378 4,825,760
------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $9,487,792 $9,188,036
============================================================================================================
Capitalization Ratios (percent):
Common stock equity 40.1 38.5
Preferred stock 8.6 9.0
Company obligated mandatorily redeemable preferred securities - -
Long-term debt 51.3 52.5
------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
============================================================================================================
First Mortgage Bonds (in thousands):
Issued 150,000 500,000
Retired 206,677 217,949
Preferred Stock (in thousands):
Issued - 125,000
Retired 3,750 150,000
Company Obligated Mandatorily Redeemable
Preferred Securities (in thousands):
Issued - -
------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Baa2 Baa2
Standard and Poor's BBB BBB
Duff & Phelps 9 9
Preferred Stock -
Moody's baa2 baa2
Standard and Poor's BBB- BBB-
Duff & Phelps 10 10
------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 1,329,173 1,303,721
Commercial 174,147 169,014
Industrial 12,353 12,307
Other 1,993 1,858
------------------------------------------------------------------------------------------------------------
Total 1,517,666 1,486,900
============================================================================================================
Employees (year-end) 15,110 14,924
*In 1997 Georgia Power Company transferred 1,855 employees to Southern Nuclear Operating Company.
|
130C
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1997 Annual Report
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $1,326,787 $1,371,033 $1,337,060
Commercial 1,493,353 1,486,586 1,449,108
Industrial 1,110,311 1,118,633 1,141,766
Other 47,848 47,060 44,255
--------------------------------------------------------------------------------------------------------------------------------
Total retail 3,978,299 4,023,312 3,972,189
Sales for resale - non-affiliates 282,365 281,580 290,302
Sales for resale - affiliates 38,708 35,886 76,906
--------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 4,299,372 4,340,778 4,339,397
Other revenues 86,345 76,001 65,941
--------------------------------------------------------------------------------------------------------------------------------
Total $4,385,717 $4,416,779 $4,405,338
================================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 17,295,022 17,826,451 17,307,399
Commercial 21,134,346 20,823,073 19,844,999
Industrial 26,701,685 26,191,831 25,286,340
Other 538,163 536,057 493,720
--------------------------------------------------------------------------------------------------------------------------------
Total retail 65,669,216 65,377,412 62,932,458
Sales for resale - non-affiliates 6,795,300 7,868,342 6,591,841
Sales for resale - affiliates 1,706,699 1,180,207 2,738,947
--------------------------------------------------------------------------------------------------------------------------------
Total 74,171,215 74,425,961 72,263,246
================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.67 7.69 7.73
Commercial 7.07 7.14 7.30
Industrial 4.16 4.27 4.52
Total retail 6.06 6.15 6.31
Sales for resale 3.78 3.51 3.94
Total sales 5.80 5.83 6.00
Residential Average Annual Kilowatt-Hour Use Per Customer 11,171 11,763 11,654
Residential Average Annual Revenue Per Customer $857.01 $904.70 $900.28
Plant Nameplate Capacity Ratings (year-end) (megawatts) 14,437 14,367 14,344
Maximum Peak-Hour Demand (megawatts):
Winter 10,407 10,410 9,819
Summer 13,153 12,914 12,828
Annual Load Factor (percent) 57.4 62.2 59.6
Plant Availability (percent):
Fossil-steam 85.8 85.2 85.8
Nuclear 88.8 89.3 91.8
--------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 64.3 60.4 63.0
Nuclear 18.8 18.2 19.3
Hydro 2.2 2.2 2.5
Oil and gas 0.6 0.5 0.6
Purchased power -
From non-affiliates 2.7 5.6 7.7
From affiliates 11.4 13.1 6.9
--------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
================================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 9,990 10,468 10,039
Cost of fuel per million BTU (cents) 132.61 128.72 143.85
Average cost of fuel per net kilowatt-hour generated (cents) 1.32 1.35 1.44
================================================================================================================================
* Less than one-tenth of one percent.
|
II-131
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1997 Annual Report
============================================================================================================================
1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $1,180,358 $1,291,035 $1,128,396
Commercial 1,367,315 1,354,130 1,285,681
Industrial 1,100,995 1,113,067 1,083,856
Other 42,983 41,399 39,504
----------------------------------------------------------------------------------------------------------------------------
Total retail 3,691,651 3,799,631 3,537,437
Sales for resale - non-affiliates 351,591 534,370 640,308
Sales for resale - affiliates 60,899 61,668 67,835
----------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 4,104,141 4,395,669 4,245,580
Other revenues 58,262 55,512 51,856
----------------------------------------------------------------------------------------------------------------------------
Total $4,162,403 $4,451,181 $4,297,436
============================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 15,680,709 16,649,859 14,939,172
Commercial 18,738,461 18,278,508 17,260,614
Industrial 24,337,632 23,635,363 22,978,312
Other 484,009 460,801 436,144
----------------------------------------------------------------------------------------------------------------------------
Total retail 59,240,811 59,024,531 55,614,242
Sales for resale - non-affiliates 7,968,475 14,307,030 15,870,222
Sales for resale - affiliates 3,056,050 3,027,733 3,320,060
----------------------------------------------------------------------------------------------------------------------------
Total 70,265,336 76,359,294 74,804,524
============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.53 7.75 7.55
Commercial 7.30 7.41 7.45
Industrial 4.52 4.71 4.72
Total retail 6.23 6.44 6.36
Sales for resale 3.74 3.44 3.69
Total sales 5.84 5.76 5.68
Residential Average Annual Kilowatt-Hour Use Per Customer 10,766 11,630 10,603
Residential Average Annual Revenue Per Customer $810.39 $901.79 $800.88
Plant Nameplate Capacity Ratings (year-end) (megawatts) 13,943 13,759 14,076
Maximum Peak-Hour Demand (megawatts):
Winter 10,509 9,067 8,938
Summer 11,758 12,573 11,448
Annual Load Factor (percent) 63.0 58.5 60.5
Plant Availability (percent):
Fossil-steam 83.1 85.9 86.6
Nuclear 88.4 85.5 87.7
----------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 61.3 62.1 61.4
Nuclear 18.0 16.2 17.0
Hydro 2.6 2.3 2.5
Oil and gas 0.1 0.2 *
Purchased power -
From non-affiliates 9.7 10.2 12.2
From affiliates 8.3 9.0 6.9
----------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 9,915 9,912 9,900
Cost of fuel per million BTU (cents) 145.33 153.62 153.08
Average cost of fuel per net kilowatt-hour generated (cents) 1.44 1.52 1.52
============================================================================================================================
* Less than one-tenth of one percent.
|
II-132A
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1997 Annual Report
================================================================================================================
1991 1990 1989
----------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $1,111,358 $1,109,165 $1,022,781
Commercial 1,243,067 1,218,441 1,143,727
Industrial 1,057,702 1,061,830 1,006,416
Other 37,861 36,773 34,775
----------------------------------------------------------------------------------------------------------------
Total retail 3,449,988 3,426,209 3,207,699
Sales for resale - non-affiliates 736,643 784,086 760,809
Sales for resale - affiliates 65,586 168,251 150,394
----------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 4,252,217 4,378,546 4,118,902
Other revenues 49,211 67,263 26,338
----------------------------------------------------------------------------------------------------------------
Total $4,301,428 $4,445,809 $4,145,240
================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 14,815,089 14,771,648 14,134,195
Commercial 16,885,833 16,627,128 15,843,181
Industrial 22,298,062 22,126,604 21,801,404
Other 429,016 428,459 414,107
----------------------------------------------------------------------------------------------------------------
Total retail 54,428,000 53,953,839 52,192,887
Sales for resale - non-affiliates 18,719,924 20,158,681 20,479,412
Sales for resale - affiliates 3,885,892 8,272,528 7,489,948
----------------------------------------------------------------------------------------------------------------
Total 77,033,816 82,385,048 80,162,247
================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.50 7.51 7.24
Commercial 7.36 7.33 7.22
Industrial 4.74 4.80 4.62
Total retail 6.34 6.35 6.15
Sales for resale 3.55 3.35 3.26
Total sales 5.52 5.31 5.14
Residential Average Annual Kilowatt-Hour Use Per Customer 10,675 10,795 10,530
Residential Average Annual Revenue Per Customer $800.78 $810.56 $761.96
Plant Nameplate Capacity Ratings (year-end) (megawatts) 14,076 14,366 14,366
Maximum Peak-Hour Demand (megawatts):
Winter 10,001 8,977 10,101
Summer 13,090 13,196 12,735
Annual Load Factor (percent) 55.2 55.5 56.3
Plant Availability (percent):
Fossil-steam 93.3 92.5 93.0
Nuclear 81.6 81.3 89.2
----------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 63.6 65.1 64.0
Nuclear 15.3 13.7 14.1
Hydro 2.3 2.2 2.1
Oil and gas * 0.1 0.1
Purchased power -
From non-affiliates 10.3 11.0 10.2
From affiliates 8.5 7.9 9.5
----------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 9,960 9,939 10,020
Cost of fuel per million BTU (cents) 157.97 166.22 164.27
Average cost of fuel per net kilowatt-hour generated (cents) 1.57 1.65 1.65
================================================================================================================
* Less than one-tenth of one percent.
|
II-132B
SELECTED FINANCIAL AND OPERATING DATA (continued)
Georgia Power Company 1997 Annual Report
===========================================================================================================
1988 1987
-----------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $979,047 $904,218
Commercial 1,054,995 915,540
Industrial 983,822 911,933
Other 31,743 29,350
-----------------------------------------------------------------------------------------------------------
Total retail 3,049,607 2,761,041
Sales for resale - non-affiliates 707,076 822,696
Sales for resale - affiliates 86,751 159,998
-----------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 3,843,434 3,743,735
Other revenues 54,045 42,750
-----------------------------------------------------------------------------------------------------------
Total $3,897,479 $3,786,485
===========================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 13,800,038 13,675,730
Commercial 14,790,561 13,799,379
Industrial 21,412,845 20,884,454
Other 397,669 385,514
-----------------------------------------------------------------------------------------------------------
Total retail 50,401,113 48,745,077
Sales for resale - non-affiliates 18,544,705 20,910,185
Sales for resale - affiliates 3,327,814 6,032,889
-----------------------------------------------------------------------------------------------------------
Total 72,273,632 75,688,151
===========================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.09 6.61
Commercial 7.13 6.63
Industrial 4.59 4.37
Total retail 6.05 5.66
Sales for resale 3.63 3.65
Total sales 5.32 4.95
Residential Average Annual Kilowatt-Hour Use Per Customer 10,484 10,623
Residential Average Annual Revenue Per Customer $743.82 $702.36
Plant Nameplate Capacity Ratings (year-end) (megawatts) 13,018 13,018
Maximum Peak-Hour Demand (megawatts):
Winter 9,866 9,446
Summer 12,295 12,390
Annual Load Factor (percent) 59.1 56.1
Plant Availability (percent):
Fossil-steam 94.5 92.7
Nuclear 69.4 85.4
-----------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 72.0 70.9
Nuclear 9.6 9.1
Hydro 1.2 1.7
Oil and gas 0.1 0.1
Purchased power -
From non-affiliates 8.2 8.5
From affiliates 8.9 9.7
-----------------------------------------------------------------------------------------------------------
Total 100.0 100.0
===========================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 9,969 9,932
Cost of fuel per million BTU (cents) 166.28 168.81
Average cost of fuel per net kilowatt-hour generated (cents) 1.66 1.68
===========================================================================================================
* Less than one-tenth of one percent.
|
II-132C
STATEMENTS OF INCOME
Georgia Power Company
================================================================================================================================
For the Years Ended December 31, 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $4,347,009 $4,380,893 $4,328,432
Revenues from affiliates 38,708 35,886 76,906
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 4,385,717 4,416,779 4,405,338
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 857,269 835,194 900,973
Purchased power from non-affiliates 143,409 157,308 183,009
Purchased power from affiliates 177,240 229,324 131,740
Provision for separation benefits 5,459 39,099 10,607
Proceeds from settlement of disputed contracts - - -
Other 696,700 741,383 735,918
Maintenance 317,199 315,934 292,029
Depreciation and amortization 572,640 432,940 421,850
Deferred Plant Vogtle expenses, net 120,577 136,650 124,454
Taxes other than income taxes 207,192 207,098 204,675
Federal and state income taxes 426,918 435,904 449,204
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 3,524,603 3,530,834 3,454,459
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 861,114 885,945 950,879
Other Income (Expense):
Allowance for equity funds used during construction 6,012 3,144 2,734
Equity in earnings of unconsolidated subsidiary 4,266 3,851 4,051
Deferred return on Plant Vogtle - - -
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 10,581 5,333 5,524
Other, net (See note) (35,834) (43,502) (8,973)
Income taxes applicable to other income 31,763 18,581 3,022
--------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 877,902 873,352 957,237
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 194,344 207,851 254,607
Allowance for debt funds used during construction (8,962) (11,416) (12,081)
Interest on interim obligations 7,795 15,478 21,463
Amortization of debt discount, premium, and expense, net 14,179 14,790 15,835
Other interest charges 10,254 6,338 11,399
Distributions on preferred securities of subsidiary companies 47,369 14,958 9,000
--------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 264,979 247,999 300,223
--------------------------------------------------------------------------------------------------------------------------------
Net Income 612,923 625,353 657,014
Dividends on Preferred Stock 18,927 45,026 48,152
--------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 593,996 $ 580,327 $ 608,862
================================================================================================================================
Note: Reflects major sales of facilities to JEA, FP& L, OPC, MEAG, and Dalton. Increases in net income, after total taxes, from
these sales were $12,312,000 in 1995, $11,275,000 in 1994, $23,191,000 in 1993, $14,542,000 in 1991, $6,336,000 in 1990, and
$3,851,000 in 1987.
|
II-133
STATEMENTS OF INCOME
Georgia Power Company
================================================================================================================================
For the Years Ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $4,101,504 $4,389,513 $4,229,601
Revenues from affiliates 60,899 61,668 67,835
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 4,162,403 4,451,181 4,297,436
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 870,653 951,507 929,780
Purchased power from non-affiliates 193,130 313,170 436,761
Purchased power from affiliates 158,063 194,024 158,306
Provision for separation benefits 82,238 - 9,778
Proceeds from settlement of disputed contracts - - (4,982)
Other 643,375 675,284 616,116
Maintenance 272,818 284,521 264,757
Depreciation and amortization 379,158 379,425 375,460
Deferred Plant Vogtle expenses, net 74,888 36,284 (30,804)
Taxes other than income taxes 194,566 192,671 179,460
Federal and state income taxes 399,413 452,122 377,542
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 3,268,302 3,479,008 3,312,174
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 894,101 972,173 985,262
Other Income (Expense):
Allowance for equity funds used during construction 5,663 3,168 5,855
Equity in earnings of unconsolidated subsidiary 3,588 4,127 4,635
Deferred return on Plant Vogtle - - -
Write-off of Plant Vogtle costs - - -
Income tax reduction for write-off of Plant Vogtle costs - - -
Interest income 3,254 3,806 12,475
Other, net (See note) 10,626 11,902 (30,527)
Income taxes applicable to other income 7,975 37,661 25,163
--------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 925,207 1,032,837 1,002,863
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 306,473 343,634 402,541
Allowance for debt funds used during construction (11,571) (8,271) (8,310)
Interest on interim obligations 17,529 15,530 9,694
Amortization of debt discount, premium, and expense, net 15,743 14,024 8,033
Other interest charges 23,183 47,393 12,425
Distributions on preferred securities of subsidiary companies 300 - -
--------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 351,657 412,310 424,383
--------------------------------------------------------------------------------------------------------------------------------
Net Income 573,550 620,527 578,480
Dividends on Preferred Stock 48,006 50,674 57,942
--------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 525,544 $ 569,853 $ 520,538
================================================================================================================================
Note: Reflects major sales of facilities to JEA, FP& L, OPC, MEAG, and Dalton. Increases in net income, after total taxes, from
these sales were $12,312,000 in 1995, $11,275,000 in 1994, $23,191,000 in 1993, $14,542,000 in 1991, $6,336,000 in 1990,
and $3,851,000 in 1987.
|
II-134A
STATEMENTS OF INCOME
Georgia Power Company
================================================================================================================================
For the Years Ended December 31, 1991 1990 1989
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $4,235,842 $4,277,558 $3,994,846
Revenues from affiliates 65,586 168,251 150,394
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 4,301,428 4,445,809 4,145,240
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 998,701 1,120,933 1,078,586
Purchased power from non-affiliates 444,920 626,989 543,448
Purchased power from affiliates 193,114 173,716 195,355
Provision for separation benefits 52,952 - -
Proceeds from settlement of disputed contracts (142,183) - -
Other 596,565 524,665 504,743
Maintenance 295,012 280,304 233,680
Depreciation and amortization 382,549 380,394 346,091
Deferred Plant Vogtle expenses, net 16,008 31,146 (39,211)
Taxes other than income taxes 172,893 151,124 128,518
Federal and state income taxes 349,284 270,561 273,287
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 3,359,815 3,559,832 3,264,497
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 941,613 885,977 880,743
Other Income (Expense):
Allowance for equity funds used during construction 9,083 6,985 40,525
Equity in earnings of unconsolidated subsidiary 4,576 4,182 3,750
Deferred return on Plant Vogtle 34,549 82,721 48,096
Write-off of Plant Vogtle costs - (281,254) -
Income tax reduction for write-off of Plant Vogtle costs - 63,231 -
Interest income 10,563 7,552 10,333
Other, net (See note) 13,551 (21,199) (20,603)
Income taxes applicable to other income (7,522) 20,859 15,573
--------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 1,006,413 769,054 978,417
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 459,184 480,174 475,991
Allowance for debt funds used during construction (10,385) (9,325) (34,244)
Interest on interim obligations 4,906 8,512 1,059
Amortization of debt discount, premium, and expense, net 6,214 6,100 5,865
Other interest charges 9,938 9,404 8,868
Distributions on preferred securities of subsidiary companies - - -
--------------------------------------------------------------------------------------------------------------------------------
Interest charges and other, net 469,857 494,865 457,539
--------------------------------------------------------------------------------------------------------------------------------
Net Income 536,556 274,189 520,878
Dividends on Preferred Stock 61,701 66,123 71,779
--------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 474,855 $ 208,066 $ 449,099
================================================================================================================================
Note: Reflects major sales of facilities to JEA, FP& L, OPC, MEAG, and Dalton. Increases in net income, after total taxes, from
these sales were $12,312,000 in 1995, $11,275,000 in 1994, $23,191,000 in 1993, $14,542,000 in 1991, $6,336,000 in 1990, and
$3,851,000 in 1987.
II-134B
|
STATEMENTS OF INCOME
Georgia Power Company
================================================================================================================
For the Years Ended December 31, 1988 1987
----------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $3,810,728 $3,626,487
Revenues from affiliates 86,751 159,998
----------------------------------------------------------------------------------------------------------------
Total operating revenues 3,897,479 3,786,485
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 1,023,173 1,064,552
Purchased power from non-affiliates 546,511 530,051
Purchased power from affiliates 164,873 199,831
Provision for separation benefits - -
Proceeds from settlement of disputed contracts - -
Other 541,975 575,182
Maintenance 246,877 274,672
Depreciation and amortization 306,492 254,929
Deferred Plant Vogtle expenses, net (8,333) (141,977)
Taxes other than income taxes 146,759 143,289
Federal and state income taxes 204,222 250,093
----------------------------------------------------------------------------------------------------------------
Total operating expenses 3,172,549 3,150,622
----------------------------------------------------------------------------------------------------------------
Operating Income 724,930 635,863
Other Income (Expense):
Allowance for equity funds used during construction 96,530 159,414
Equity in earnings of unconsolidated subsidiary 3,302 3,440
Deferred return on Plant Vogtle 107,310 115,028
Write-off of Plant Vogtle costs - (357,821)
Income tax reduction for write-off of Plant Vogtle costs - 128,923
Interest income 28,445 55,388
Other, net (See note) (3,746) (55,081)
Income taxes applicable to other income 6,583 17,344
----------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 963,354 702,498
----------------------------------------------------------------------------------------------------------------
Interest Charges and Other:
Interest on long-term debt 471,897 480,519
Allowance for debt funds used during construction (95,818) (130,756)
Interest on interim obligations 15,084 16,362
Amortization of debt discount, premium, and expense, net 5,466 3,573
Other interest charges 14,556 12,239
Distributions on preferred securities of subsidiary companies - -
----------------------------------------------------------------------------------------------------------------
Interest charges and other, net 411,185 381,937
----------------------------------------------------------------------------------------------------------------
Net Income 552,169 320,561
Dividends on Preferred Stock 72,637 80,504
----------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 479,532 $ 240,057
================================================================================================================
Note: Reflects major sales of facilities to JEA, FP& L, OPC, MEAG, and Dalton. Increases in net income, after
total taxes, from these sales were $12,312,000 in 1995, $11,275,000 in 1994, $23,191,000 in 1993, $14,542,000
in 1991, $6,336,000 in 1990, and $3,851,000 in 1987.
|
II-134C
STATEMENTS OF CASH FLOWS
Georgia Power Company
==============================================================================================================================
For the Years Ended December 31, 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 612,923 $ 625,353 $ 657,014
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 674,286 521,086 527,310
Deferred income taxes, net (21,425) 35,700 36,023
Deferred investment tax credits, net - - 1,127
Allowance for equity funds used during construction (6,012) (3,144) (2,734)
Amortization of deferred Plant Vogtle costs, net 120,577 136,650 124,454
Write-off of Plant Vogtle costs - - -
Non-cash portion of separation benefits - - -
Non-cash proceeds from settlement of disputed contracts - - -
Other, net 2,076 45,255 (31,568)
Changes in certain current assets and liabilities:
Receivables, net 13,387 9,421 (59,370)
Inventories 39,748 55,753 30,761
Payables (10,007) (35,651) 45,882
Other (53,725) (3,435) 89,124
------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,371,828 1,386,988 1,418,023
------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (475,921) (428,220) (480,449)
Sales of property - 3,319 131,099
Other 16,223 (16,468) (42,579)
------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (459,698) (441,369) (391,929)
------------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities 364,250 225,000 -
Preferred stock - - -
First mortgage bonds - 10,000 75,000
Pollution control bonds 284,700 112,825 504,700
Other long-term debt - - -
Capital contributions from parent company - - -
Retirements:
Preferred stock (356,392) (179,148) -
First mortgage bonds (60,258) (210,860) (505,789)
Pollution control bonds (284,700) (119,665) (504,810)
Other long-term debt - - (37,000)
Interim obligations, net (64,266) 30,166 (24,472)
Special deposits -- redemption funds 44,454 (44,454) -
Capital distribution to parent company (205,000) (250,000) -
Payment of preferred stock dividends (26,917) (46,911) (48,419)
Payment of common stock dividends (520,000) (475,500) (451,500)
Miscellaneous (20,024) (10,646) (17,413)
------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (844,153) (959,193) (1,009,703)
------------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 67,977 (13,574) 16,391
Cash and Cash Equivalents at Beginning of Year 15,356 28,930 12,539
------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 83,333 $ 15,356 $ 28,930
==============================================================================================================================
( ) Denotes use of cash.
|
II-135
STATEMENTS OF CASH FLOWS
Georgia Power Company
===========================================================================================================================
For the Years Ended December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 573,550 $ 620,527 $ 578,480
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 484,032 475,152 471,014
Deferred income taxes, net 34,053 169,009 194,955
Deferred investment tax credits, net (486) (18,274) (5,704)
Allowance for equity funds used during construction (5,663) (3,168) (5,855)
Amortization of deferred Plant Vogtle costs, net 74,888 36,284 (30,804)
Write-off of Plant Vogtle costs - - -
Non-cash portion of separation benefits 68,599 - -
Non-cash proceeds from settlement of disputed contracts - - (4,982)
Other, net (95,314) (46,227) (9,768)
Changes in certain current assets and liabilities:
Receivables, net 67,218 27,088 (31,348)
Inventories (63,545) 82,433 (65,621)
Payables 5,409 17,364 25,303
Other (5,675) (94,574) (85,961)
---------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 1,137,066 1,265,614 1,029,709
---------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (638,426) (674,432) (508,444)
Sales of property 132,644 261,687 46
Other (41,273) (43,154) 42,892
---------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (547,055) (455,899) (465,506)
---------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities 100,000 - -
Preferred stock - 175,000 195,000
First mortgage bonds - 1,135,000 975,000
Pollution control bonds 527,210 145,425 161,955
Other long-term debt - 37,000 -
Capital contributions from parent company - - -
Retirements:
Preferred stock - (245,005) (165,004)
First mortgage bonds (133,559) (1,337,822) (1,381,300)
Pollution control bonds (510,320) (145,465) (160,205)
Other long-term debt (10,187) (19,451) (567)
Interim obligations, net (57,425) (51,444) 334,671
Special deposits -- redemption funds - - -
Capital distribution to parent company - - -
Payment of preferred stock dividends (47,147) (53,123) (60,475)
Payment of common stock dividends (429,300) (402,400) (384,000)
Miscellaneous (22,640) (63,648) (70,986)
---------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (583,368) (825,933) (555,911)
---------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 6,643 (16,218) 8,292
Cash and Cash Equivalents at Beginning of Year 5,896 22,114 13,822
---------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 12,539 $ 5,896 $ 22,114
===========================================================================================================================
( ) Denotes use of cash.
|
II-136A
STATEMENTS OF CASH FLOWS
Georgia Power Company
=======================================================================================================================
For the Years Ended December 31, 1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 536,556 $ 274,189 $ 520,878
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 480,318 502,098 484,870
Deferred income taxes, net 53,219 88,667 184,490
Deferred investment tax credits, net (9,524) (52) (8,017)
Allowance for equity funds used during construction (9,083) (6,985) (40,525)
Amortization of deferred Plant Vogtle costs, net (18,541) (51,575) (87,307)
Write-off of Plant Vogtle costs - 281,254 -
Non-cash portion of separation benefits - - -
Non-cash proceeds from settlement of disputed contracts (103,846) - -
Other, net (26,024) (50,804) (38,046)
Changes in certain current assets and liabilities:
Receivables, net 23,920 1,444 (59,035)
Inventories 24,130 (23,498) (33,123)
Payables (23,075) (43,470) (38,976)
Other 54,777 (9,991) 36,015
-----------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 982,827 961,277 921,224
-----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (548,051) (558,727) (727,631)
Sales of property 291,075 34,573 -
Other 931 1,937 47,260
-----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (256,045) (522,217) (680,371)
-----------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities - - -
Preferred stock 100,000 - -
First mortgage bonds - 300,000 250,000
Pollution control bonds 80,420 - 50,000
Other long-term debt - - -
Capital contributions from parent company - - -
Retirements:
Preferred stock (100,000) (83,750) (7,500)
First mortgage bonds (598,384) (91,117) (91,516)
Pollution control bonds (83,265) (535) (505)
Other long-term debt (1,130) (114,452) (3,806)
Interim obligations, net 199,000 - -
Special deposits -- redemption funds - - -
Capital distribution to parent company - - -
Payment of preferred stock dividends (60,766) (67,757) (72,259)
Payment of common stock dividends (375,200) (389,600) (394,500)
Miscellaneous (17,613) (7,663) (4,742)
-----------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (856,938) (454,874) (274,828)
-----------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (130,156) (15,814) (33,975)
Cash and Cash Equivalents at Beginning of Year 143,978 159,792 193,767
-----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 13,822 $ 143,978 $ 159,792
=======================================================================================================================
( ) Denotes use of cash.
|
II-136B
STATEMENTS OF CASH FLOWS
Georgia Power Company
=========================================================================================================
For the Years Ended December 31, 1988 1987
---------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 552,169 $ 320,561
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 400,665 336,647
Deferred income taxes, net 160,774 76,445
Deferred investment tax credits, net 11,605 (5,075)
Allowance for equity funds used during construction (96,530) (159,414)
Amortization of deferred Plant Vogtle costs, net (115,643) (257,005)
Write-off of Plant Vogtle costs - 357,821
Non-cash portion of separation benefits - -
Non-cash proceeds from settlement of disputed contracts - -
Other, net 6,983 (759)
Changes in certain current assets and liabilities:
Receivables, net 11,225 (6,880)
Inventories (10,044) (72,540)
Payables (2,065) 74,341
Other 1,161 2,751
---------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 920,300 666,893
---------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (929,019) (1,034,059)
Sales of property - 12,276
Other 35,328 45,801
---------------------------------------------------------------------------------------------------------
Net cash used for investing activities (893,691) (975,982)
---------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities - -
Preferred stock - 125,000
First mortgage bonds 150,000 500,000
Pollution control bonds 69,526 191,736
Other long-term debt - -
Capital contributions from parent company 175,000 228,000
Retirements:
Preferred stock (3,750) (150,000)
First mortgage bonds (206,677) (217,949)
Pollution control bonds (475) (90,000)
Other long-term debt (2,878) (2,824)
Interim obligations, net (302,261) 302,261
Special deposits -- redemption funds - -
Capital distribution to parent company - -
Payment of preferred stock dividends (72,931) (80,420)
Payment of common stock dividends (386,600) (377,800)
Miscellaneous (13,440) (51,745)
---------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (594,486) 376,259
---------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (567,877) 67,170
Cash and Cash Equivalents at Beginning of Year 761,644 694,474
---------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 193,767 $ 761,644
=========================================================================================================
( ) Denotes use of cash.
|
II-136C
BALANCE SHEETS
Georgia Power Company
===============================================================================================================================
At December 31, 1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 3,191,446 $ 3,140,069 $ 3,105,165
Nuclear 4,030,532 4,097,192 4,082,098
Hydro 648,785 644,826 642,237
-------------------------------------------------------------------------------------------------------------------------------
Total production 7,870,763 7,882,087 7,829,500
Transmission 1,897,697 1,862,384 1,822,778
Distribution 4,268,909 4,090,262 3,949,238
General 1,045,201 934,840 937,079
Construction work in progress 214,128 256,141 236,715
Nuclear fuel, at amortized cost 126,882 121,840 124,849
-------------------------------------------------------------------------------------------------------------------------------
Total electric plant 15,423,580 15,147,554 14,900,159
Steam Heat Plant - - -
-------------------------------------------------------------------------------------------------------------------------------
Total utility plant 15,423,580 15,147,554 14,900,159
-------------------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 5,319,680 4,793,638 4,417,120
Steam heat - - -
-------------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 5,319,680 4,793,638 4,417,120
-------------------------------------------------------------------------------------------------------------------------------
Total 10,103,900 10,353,916 10,483,039
Less property-related accumulated deferred income taxes - - -
-------------------------------------------------------------------------------------------------------------------------------
Total 10,103,900 10,353,916 10,483,039
-------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Nuclear decommissioning trusts 194,417 130,178 92,273
Miscellaneous 112,880 129,819 147,615
-------------------------------------------------------------------------------------------------------------------------------
Total 307,297 259,997 239,888
-------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 83,333 15,356 28,930
Investment securities - - -
Receivables, net 395,122 463,502 411,038
Accrued utility revenues 118,333 104,420 121,146
Fossil fuel stock, at average cost 96,067 117,382 145,151
Materials and supplies, at average cost 240,387 258,820 286,804
Prepayments 27,503 67,118 73,271
Vacation pay deferred 40,996 39,965 35,543
-------------------------------------------------------------------------------------------------------------------------------
Total 1,001,741 1,066,563 1,101,883
-------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 688,472 754,002 871,783
Deferred Plant Vogtle costs 50,412 170,988 307,638
Debt expense, being amortized 40,927 32,693 27,227
Premium on reacquired debt, being amortized 166,609 166,670 174,018
Miscellaneous 214,370 201,806 264,799
-------------------------------------------------------------------------------------------------------------------------------
Total 1,160,790 1,326,159 1,645,465
-------------------------------------------------------------------------------------------------------------------------------
Total Assets $12,573,728 $13,006,635 $13,470,275
===============================================================================================================================
|
II-137
BALANCE SHEETS
Georgia Power Company
=======================================================================================================================
At December 31, 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 3,077,470 $ 2,976,806 $ 3,144,405
Nuclear 4,075,339 4,069,299 4,051,020
Hydro 443,466 442,888 434,341
-----------------------------------------------------------------------------------------------------------------------
Total production 7,596,275 7,488,993 7,629,766
Transmission 1,754,945 1,713,122 1,646,904
Distribution 3,777,279 3,600,115 3,413,681
General 926,418 941,291 923,010
Construction work in progress 541,889 584,013 405,606
Nuclear fuel, at amortized cost 136,425 135,742 155,194
-----------------------------------------------------------------------------------------------------------------------
Total electric plant 14,733,231 14,463,276 14,174,161
Steam Heat Plant - - -
-----------------------------------------------------------------------------------------------------------------------
Total utility plant 14,733,231 14,463,276 14,174,161
-----------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 4,054,986 3,822,344 3,569,717
Steam heat - - -
-----------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 4,054,986 3,822,344 3,569,717
-----------------------------------------------------------------------------------------------------------------------
Total 10,678,245 10,640,932 10,604,444
Less property-related accumulated deferred income taxes - - 1,589,743
-----------------------------------------------------------------------------------------------------------------------
Total 10,678,245 10,640,932 9,014,701
-----------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Nuclear decommissioning trusts 54,297 37,937 20,311
Miscellaneous 116,527 61,142 55,463
-----------------------------------------------------------------------------------------------------------------------
Total 170,824 99,079 75,774
-----------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 12,539 5,896 22,114
Investment securities - - 108,206
Receivables, net 389,279 515,178 385,227
Accrued utility revenues 103,223 99,550 88,164
Fossil fuel stock, at average cost 169,252 111,620 197,332
Materials and supplies, at average cost 293,464 287,551 284,272
Prepayments 55,383 65,269 91,447
Vacation pay deferred 40,823 41,575 40,169
-----------------------------------------------------------------------------------------------------------------------
Total 1,063,963 1,126,639 1,216,931
-----------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 919,750 992,510 -
Deferred Plant Vogtle costs 432,092 506,980 383,025
Debt expense, being amortized 26,223 20,730 17,719
Premium on reacquired debt, being amortized 164,676 153,146 116,940
Miscellaneous 256,885 196,094 139,352
-----------------------------------------------------------------------------------------------------------------------
Total 1,799,626 1,869,460 657,036
-----------------------------------------------------------------------------------------------------------------------
Total Assets $13,712,658 $13,736,110 $10,964,442
=======================================================================================================================
|
II-138A
BALANCE SHEETS
Georgia Power Company
===========================================================================================================================
At December 31, 1991 1990 1989
---------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 3,128,594 $ 3,350,018 $ 3,319,876
Nuclear 4,051,043 4,025,862 4,189,723
Hydro 432,674 412,157 411,235
---------------------------------------------------------------------------------------------------------------------------
Total production 7,612,311 7,788,037 7,920,834
Transmission 1,566,173 1,522,157 1,431,485
Distribution 3,252,111 3,056,825 2,863,011
General 896,477 876,989 859,013
Construction work in progress 390,437 370,243 403,365
Nuclear fuel, at amortized cost 191,726 210,320 254,101
---------------------------------------------------------------------------------------------------------------------------
Total electric plant 13,909,235 13,824,571 13,731,809
Steam Heat Plant - - -
---------------------------------------------------------------------------------------------------------------------------
Total utility plant 13,909,235 13,824,571 13,731,809
---------------------------------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 3,315,247 3,040,298 2,762,937
Steam heat - - -
---------------------------------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 3,315,247 3,040,298 2,762,937
---------------------------------------------------------------------------------------------------------------------------
Total 10,593,988 10,784,273 10,968,872
Less property-related accumulated deferred income taxes 1,465,408 1,397,647 1,313,626
---------------------------------------------------------------------------------------------------------------------------
Total 9,128,580 9,386,626 9,655,246
---------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 107,993 - -
Nuclear decommissioning trusts 10,007 - -
Miscellaneous 71,880 78,895 69,839
---------------------------------------------------------------------------------------------------------------------------
Total 189,880 78,895 69,839
---------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 13,822 143,978 159,792
Investment securities - - -
Receivables, net 330,411 356,236 347,899
Accrued utility revenues 79,099 78,067 93,786
Fossil fuel stock, at average cost 200,248 225,966 214,487
Materials and supplies, at average cost 215,735 220,103 208,084
Prepayments 96,750 121,646 116,342
Vacation pay deferred 39,769 33,677 35,238
---------------------------------------------------------------------------------------------------------------------------
Total 975,834 1,179,673 1,175,628
---------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - -
Deferred Plant Vogtle costs 375,028 364,446 322,116
Debt expense, being amortized 12,368 12,708 13,032
Premium on reacquired debt, being amortized 70,855 60,653 61,889
Miscellaneous 89,993 93,618 74,596
---------------------------------------------------------------------------------------------------------------------------
Total 548,244 531,425 471,633
---------------------------------------------------------------------------------------------------------------------------
Total Assets $10,842,538 $11,176,619 $11,372,346
===========================================================================================================================
|
II-138B
BALANCE SHEETS
Georgia Power Company
=====================================================================================================
At December 31, 1988 1987
----------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Electric Plant:
Production-
Fossil $ 2,638,725 $ 2,616,741
Nuclear 3,225,945 3,220,632
Hydro 407,771 404,291
----------------------------------------------------------------------------------------------------
Total production 6,272,441 6,241,664
Transmission 1,322,034 1,248,976
Distribution 2,598,714 2,318,185
General 737,621 657,258
Construction work in progress 1,963,283 1,710,769
Nuclear fuel, at amortized cost 307,109 287,492
----------------------------------------------------------------------------------------------------
Total electric plant 13,201,202 12,464,344
Steam Heat Plant - 7
----------------------------------------------------------------------------------------------------
Total utility plant 13,201,202 12,464,351
----------------------------------------------------------------------------------------------------
Accumulated Provision for Depreciation:
Electric 2,445,404 2,193,395
Steam heat - (5)
----------------------------------------------------------------------------------------------------
Total accumulated provision for depreciation 2,445,404 2,193,390
----------------------------------------------------------------------------------------------------
Total 10,755,798 10,270,961
Less property-related accumulated deferred income taxes 1,178,291 1,077,747
----------------------------------------------------------------------------------------------------
Total 9,577,507 9,193,214
----------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - -
Nuclear decommissioning trusts - -
Miscellaneous 66,677 54,148
----------------------------------------------------------------------------------------------------
Total 66,677 54,148
----------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 193,767 761,644
Investment securities - -
Receivables, net 320,018 342,315
Accrued utility revenues 66,265 68,370
Fossil fuel stock, at average cost 225,274 262,752
Materials and supplies, at average cost 164,174 116,652
Prepayments 121,840 113,381
Vacation pay deferred 34,418 30,100
----------------------------------------------------------------------------------------------------
Total 1,125,756 1,695,214
----------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - -
Deferred Plant Vogtle costs 269,958 172,990
Debt expense, being amortized 12,476 12,985
Premium on reacquired debt, being amortized 62,352 51,509
Miscellaneous 15,813 17,434
----------------------------------------------------------------------------------------------------
Total 360,599 254,918
----------------------------------------------------------------------------------------------------
Total Assets $11,130,539 $11,197,494
====================================================================================================
|
II-138C
BALANCE SHEETS
Georgia Power Company
================================================================================================================================
At December 31, 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 344,250 $ 344,250 $ 344,250
Paid-in capital 1,929,971 2,134,886 2,384,444
Premium on preferred stock 160 371 413
Earnings retained in the business 1,745,347 1,674,774 1,569,905
--------------------------------------------------------------------------------------------------------------------------------
Total common equity 4,019,728 4,154,281 4,299,012
Preferred stock 157,247 464,611 692,787
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities
of subsidiaries substantially all of whose assets are junior
subordinated debentures or notes 689,250 325,000 100,000
Long-term debt 2,982,835 3,200,419 3,315,460
-------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 7,849,060 8,144,311 8,407,259
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 142,300 207,300 178,000
Commercial paper 223,930 223,196 222,330
Preferred stock due within one year - 49,028 -
Long-term debt due within one year 220,855 60,622 150,446
Accounts payable 332,666 329,914 389,156
Customer deposits 68,618 64,901 53,145
Taxes accrued 116,021 116,158 104,392
Interest accrued 72,437 79,936 96,162
Vacation pay accrued 32,285 38,597 34,233
Miscellaneous 73,398 114,530 137,184
--------------------------------------------------------------------------------------------------------------------------------
Total 1,282,510 1,284,182 1,365,048
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 2,417,547 2,522,945 2,510,458
Accumulated deferred investment tax credits 397,202 415,477 432,184
Disallowed Plant Vogtle capacity buyback costs 55,856 57,250 58,514
Deferred credits related to income taxes 297,560 317,965 410,016
Miscellaneous 273,993 264,505 286,796
--------------------------------------------------------------------------------------------------------------------------------
Total 3,442,158 3,578,142 3,697,968
--------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $12,573,728 $13,006,635 $13,470,275
================================================================================================================================
|
II-139
BALANCE SHEETS
Georgia Power Company
===========================================================================================================================
At December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 344,250 $ 344,250 $ 344,250
Paid-in capital 2,384,348 2,384,348 2,384,140
Premium on preferred stock 413 413 467
Earnings retained in the business 1,412,543 1,316,447 1,159,380
---------------------------------------------------------------------------------------------------------------------------
Total common equity 4,141,554 4,045,458 3,888,237
Preferred stock 692,787 692,787 692,792
Preferred stock subject to mandatory redemption - - 6,250
Company obligated mandatorily redeemable preferred securities
of subsidiaries substantially all of whose assets are junior
subordinated debentures or notes 100,000 - -
Long-term debt 3,757,823 4,031,387 4,131,016
---------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 8,692,164 8,769,632 8,718,295
---------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 202,200 406,700 400,200
Commercial paper 222,602 75,527 133,471
Preferred stock due within one year - - 63,750
Long-term debt due within one year 167,420 10,543 95,823
Accounts payable 355,067 324,044 317,351
Customer deposits 47,017 45,922 45,145
Taxes accrued 93,019 153,493 138,289
Interest accrued 110,256 110,497 132,319
Vacation pay accrued 39,720 40,060 38,694
Miscellaneous 70,006 64,527 89,355
---------------------------------------------------------------------------------------------------------------------------
Total 1,307,307 1,231,313 1,454,397
---------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 2,477,661 2,479,720 -
Accumulated deferred investment tax credits 453,121 478,334 515,539
Disallowed Plant Vogtle capacity buyback costs 60,490 63,067 72,201
Deferred credits related to income taxes 433,334 452,819 -
Miscellaneous 288,581 261,225 204,010
---------------------------------------------------------------------------------------------------------------------------
Total 3,713,187 3,735,165 791,750
---------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $13,712,658 $13,736,110 $10,964,442
===========================================================================================================================
|
II-140A
BALANCE SHEETS
Georgia Power Company
===========================================================================================================================
At December 31, 1991 1990 1989
---------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 344,250 $ 344,250 $ 344,250
Paid-in capital 2,383,800 2,383,800 2,383,800
Premium on preferred stock 489 1,089 1,089
Earnings retained in the business 1,038,012 944,774 1,131,518
---------------------------------------------------------------------------------------------------------------------------
Total common equity 3,766,551 3,673,913 3,860,657
Preferred stock 607,796 607,796 607,844
Preferred stock subject to mandatory redemption 118,750 125,000 155,000
Company obligated mandatorily redeemable preferred securities
of subsidiaries substantially all of whose assets are junior
subordinated debentures or notes - - -
Long-term debt 4,553,189 5,000,225 5,054,001
---------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 9,046,286 9,406,934 9,677,502
---------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 199,000 - -
Commercial paper - - -
Preferred stock due within one year 6,250 - 53,750
Long-term debt due within one year 54,976 204,906 54,712
Accounts payable 275,932 310,676 372,968
Customer deposits 41,623 38,144 36,255
Taxes accrued 161,117 84,185 91,424
Interest accrued 151,171 175,959 162,513
Vacation pay accrued 38,531 33,677 35,238
Miscellaneous 106,810 135,392 130,546
---------------------------------------------------------------------------------------------------------------------------
Total 1,035,410 982,939 937,406
---------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - -
Accumulated deferred investment tax credits 540,134 576,837 601,248
Disallowed Plant Vogtle capacity buyback costs 109,537 135,926 73,111
Deferred credits related to income taxes - - -
Miscellaneous 111,171 73,983 83,079
---------------------------------------------------------------------------------------------------------------------------
Total 760,842 786,746 757,438
---------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $10,842,538 $11,176,619 $11,372,346
===========================================================================================================================
|
II-140B
BALANCE SHEETS
Georgia Power Company
===========================================================================================================
At December 31, 1988 1987
-----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 344,250 $ 344,250
Paid-in capital 2,383,800 2,208,800
Premium on preferred stock 1,089 1,089
Earnings retained in the business 1,076,931 984,043
-----------------------------------------------------------------------------------------------------------
Total common equity 3,806,070 3,538,182
Preferred stock 657,844 657,844
Preferred stock subject to mandatory redemption 162,500 166,250
Company obligated mandatorily redeemable preferred securities
of subsidiaries substantially all of whose assets are junior
subordinated debentures or notes - -
Long-term debt 4,861,378 4,825,760
-----------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 9,487,792 9,188,036
-----------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 302,261
Commercial paper - -
Preferred stock due within one year 3,750 3,750
Long-term debt due within one year 42,001 65,774
Accounts payable 429,807 446,004
Customer deposits 34,221 31,106
Taxes accrued 130,686 114,947
Interest accrued 170,090 162,439
Vacation pay accrued 34,418 30,100
Miscellaneous 51,289 62,364
-----------------------------------------------------------------------------------------------------------
Total 896,262 1,218,745
-----------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - -
Accumulated deferred investment tax credits 632,111 640,694
Disallowed Plant Vogtle capacity buyback costs 80,585 79,376
Deferred credits related to income taxes - -
Miscellaneous 33,789 70,643
-----------------------------------------------------------------------------------------------------------
Total 746,485 790,713
-----------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $11,130,539 $11,197,494
===========================================================================================================
|
II-140C
GEORGIA POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1997
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
-----------------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 100,000 5-1/2% $ 100,000 4/1/98
1992 195,000 6-1/8% 195,000 9/1/99
1993 100,000 6% 100,000 3/1/00
1992 100,000 7% 100,000 10/1/00
1992 150,000 6-7/8% 150,000 9/1/02
1993 200,000 6-5/8% 200,000 4/1/03
1993 75,000 6.35% 75,000 8/1/03
1996 10,000 6.07% 10,000 12/1/05
1993 50,000 6-7/8% 50,000 4/1/08
1993 160,000 7.95% 138,250 2/1/23
1993 100,000 7-5/8% 84,000 3/1/23
1993 75,000 7-3/4% 70,000 4/1/23
1993 125,000 7.55% 120,000 8/1/23
1995 75,000 7.70% 62,000 5/1/25
---------- ----------
$1,515,000 $1,454,250
=========== ==========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1995 $ 50,000 4-3/8% $ 50,000 11/1/00
1993 46,790 5-3/8% 46,790 3/1/05
1995 57,000 5% 57,000 9/1/05
1991 10,450 Variable 10,450 7/1/11
1993 26,700 6% 26,700 3/1/18
1989 50,000 6.35% 50,000 5/1/19
1991 8,500 6.25% 8,500 7/1/19
1991 10,125 6.25% 10,125 7/1/21
1992 13,155 Variable 13,155 5/1/22
1992 35,000 6.20% 4,100 9/1/22
1993 11,935 5-3/4% 11,935 9/1/23
1993 60,000 5-3/4% 60,000 9/1/23
1994 28,065 5.40% 28,065 1/1/24
1994 175,000 Variable 175,000 7/1/24
1994 125,000 6.60% 125,000 7/1/24
1994 60,000 6-3/8% 60,000 8/1/24
1994 43,420 6-3/4% 43,420 10/1/24
1994 20,000 Variable 20,000 10/1/24
1994 20,000 Variable 20,000 10/1/24
1994 38,725 6-5/8% 38,725 10/1/24
1994 10,000 5.90% 10,000 12/1/24
1994 7,000 5.90% 7,000 12/1/24
1995 73,535 6.10% 73,535 4/1/25
1995 75,000 Variable 75,000 4/1/25
1995 45,000 Variable 45,000 7/1/25
1995 40,000 Variable 40,000 7/1/25
1995 71,580 6% 71,580 7/1/25
1995 35,585 Variable 35,585 9/1/25
1995 30,000 Variable 30,000 9/1/25
1995 27,000 Variable 27,000 9/1/25
1996 51,345 Variable 51,345 6/1/23
1996 15,480 Variable 15,480 9/1/26
1996 46,000 Variable 46,000 9/1/26
1997 37,000 Variable 37,000 9/1/29
1997 69,700 Variable 69,700 9/1/29
1997 38,000 Variable 38,000 9/1/29
1997 49,600 Variable 49,600 4/1/32
1997 19,600 Variable 19,600 4/1/32
1997 20,800 Variable 20,800 4/1/32
1997 50,000 Variable 50,000 9/1/34
---------- ----------
$1,702,090 $1,671,190
========== ==========
|
II-141
GEORGIA POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1997 (Continued)
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiaries Substantially All of Whose
Assets Are Junior Subordinated Debentures or Notes
Preferred Securities Interest Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------------------------
(Thousands)
1994 4,000,000 1 9% $100,000 1
1996 9,000,000 2 7.75% 225,000 2
1997 7,000,000 3 7.60% 175,000 3
1997 7,570,000 4 7.75% 189,250 4
------------ -----------
27,570,000 $689,250
============ ===========
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------------------------
(Thousands)
(5) 4,454 $5.00 $ 445
1953 23,277 $4.92 2,328
1954 159,476 $4.60 15,948
1961 11,896 $4.96 1,190
1962 18,080 $4.60 1,808
1963 25,512 $4.60 2,551
1964 11,005 $4.60 1,100
1965 17,531 $4.72 1,753
1966 32,318 $5.64 3,232
1967 120,000 $6.48 12,000
1968 100,000 $6.60 10,000
1993 1,627,160 Adjustable 40,679
1993 2,568,517 Adjustable 64,213
--------- --------
4,719,226 $157,247
========= ========
II-142
(1) Issued by Georgia Power Capital, L.P., and guaranteed to the extent Georgia Power Capital
has funds by GEORGIA.
(2) Issued by Georgia Power Capital Trust I and guaranteed to the extent Georgia Power
Capital Trust I has funds by GEORGIA.
(3) Issued by Georgia Power Capital Trust II and guaranteed to the extent Georgia Power
Capital Trust II has funds by GEORGIA.
(4) Issued by Georgia Power Capital Trust III and guaranteed to the extent Georgia Power
Capital Trust III has funds by GEORGIA.
(5) Issued in exchange for $5.00 preferred outstanding at the time of company formation.
|
II-142
GEORGIA POWER COMPANY
SECURITIES RETIRED DURING 1997
First Mortgage Bonds
Principal Interest
Series Amount Rate
-------------------------------------------------------------------------------------------
(Thousands)
1992 $ 60,258 8-5/8%
Pollution Control Bonds
Principal Interest
Series Amount Rate
-------------------------------------------------------------------------------------------
(Thousands)
1987 $ 90,000 8-3/8%
1987 50,000 9-3/8%
1992 75,000 6.20%
1992 30,900 6.20%
1992 38,800 5.70%
--------
$284,700
========
Preferred Stock
Principal Dividend
Series Amount Rate
-------------------------------------------------------------------------------------------
(Thousands)
(1) $ 964 $5.00
1953 7,672 $4.92
1954 27,430 $4.60
1961 5,810 $4.96
1962 5,192 $4.60
1963 4,449 $4.60
1964 3,900 $4.60
1965 4,247 $4.72
1966 5,768 $5.64
1971 30,000 $7.72
1992 49,028 $1.90
1992 54,155 $1.9875
1992 58,757 $1.9375
1992 28,912 $1.925
1993 34,321 Adjustable
1993 35,787 Adjustable
--------
$356,392
========
(1) Issued in exchange for $5.00 preferred outstanding at the time of company formation.
|
II-143
GULF POWER COMPANY
FINANCIAL SECTION
II-144
MANAGEMENT'S REPORT
Gulf Power Company 1997 Annual Report
The management of Gulf Power Company has prepared -- and is responsible for -- the financial statements and related information included in this report. These statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances and necessarily include amounts that are based on the best estimates and judgments of management. Financial information throughout this annual report is consistent with the financial statements.
The Company maintains a system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that books and records reflect only authorized transactions of the Company. Limitations exist in any system of internal controls, however, based on a recognition that the cost of the system should not exceed its benefits. The Company believes its system of internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an ongoing basis by the Company's internal audit staff. The Company's independent public accountants also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of directors who are not employees, provides a broad overview of management's financial reporting and control functions. Periodically, this committee meets with management, the internal auditors, and the independent public accountants to ensure that these groups are fulfilling their obligations and to discuss auditing, internal controls, and financial reporting matters. The internal auditors and independent public accountants have access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable assurance that the Company's operations are conducted according to a high standard of business ethics.
In management's opinion, the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of Gulf Power Company in conformity with generally accepted accounting principles.
/s/Travis J. Bowden Travis J. Bowden President and Chief Executive Officer /s/Arlan E. Scarbrough Arlan E. Scarbrough Chief Financial Officer February 11, 1998 |
II-145
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Gulf Power Company:
We have audited the accompanying balance sheets and statements of capitalization of Gulf Power Company (a Maine corporation and a wholly owned subsidiary of Southern Company) as of December 31, 1997 and 1996, and the related statements of income, retained earnings, paid-in capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-155 through II-171) referred to above present fairly, in all material respects, the financial position of Gulf Power Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
II-146
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Gulf Power Company 1997 Annual Report
RESULTS OF OPERATIONS
Earnings
Gulf Power Company's 1997 net income after dividends on preferred stock was $57.6 million, a decrease of $0.2 million over the prior year. This change is primarily attributable to lower residential revenues as a result of milder than normal weather.
In 1996, earnings were $57.8 million, representing an increase of $0.6 million compared to the prior year. Earnings in 1996 were affected primarily by higher retail revenues.
The return on average common equity was 13.33 percent for 1997 and 13.27 percent for 1996.
Revenues
Operating revenues decreased in 1997 and increased in 1996 as a result of the following factors:
Increase (Decrease)
From Prior Year
-------------------------------------
1997 1996 1995
-------------------------------------
(in thousands)
Retail --
Sales growth $ 4,004 $ 7,123 $ 3,647
Weather (5,277) (1,057) 9,749
Regulatory cost
recovery and other (7,837) 5,649 22,502
----------------------------------------------------------------
Total retail (9,110) 11,715 35,898
----------------------------------------------------------------
Sales for resale--
Non-affiliates 496 2,788 (5,698)
Affiliates (1,002) (857) 1,266
----------------------------------------------------------------
Total sales for resale (506) 1,931 (4,432)
Other operating
revenues 1,107 1,642 8,798
----------------------------------------------------------------
Total operating
revenues $(8,509) $15,288 $40,264
================================================================
Percent change (1.3)% 2.5% 7.0%
----------------------------------------------------------------
|
Retail revenues of $521 million in 1997 decreased $9.1 million or 1.7 percent from last year, compared with an increase of 2.3 percent in 1996 and 7.4 percent in 1995. The 1997 reduction was due primarily to a decrease in residential revenues as a result of mild weather and recovery of lower purchased power capacity costs.
The decrease in regulatory cost recovery and other retail revenues is primarily attributable to the recovery of decreased purchased power capacity costs from affiliated companies. Regulatory cost recovery and other includes recovery provisions for fuel expense and the energy component of purchased power costs; energy conservation costs; purchased power capacity costs; and environmental compliance costs. The recovery provisions equal the related expenses and have no material effect on net income. See Notes 1 and 3 to the financial statements under "Revenues and Regulatory Cost Recovery Clauses" and "Environmental Cost Recovery," respectively, for further information.
Sales for resale were $80.5 million in 1997, decreasing $0.5 million or 0.6 percent from 1996. Revenues from sales to utilities outside the service area under long-term contracts consist of capacity and energy components. Capacity revenues reflect the recovery of fixed costs and a return on investment under the contracts. Energy is generally sold at variable cost. The capacity and energy components under these long-term contracts were as follows:
1997 1996 1995
----------------------------------------
(in thousands)
Capacity $24,899 $25,400 $25,870
Energy 18,160 19,804 18,598
------------------------------------------------------------
Total $43,059 $45,204 $44,468
============================================================
|
Capacity revenues decreased slightly in 1997 and 1996, primarily reflecting the decline in net plant investment related to these sales.
Sales to affiliated companies vary from year to year depending on demand and the availability and cost of generating resources at each company. These sales have little impact on earnings.
The increase in other operating revenues in 1997 is primarily attributable to adjustments to reflect differences between recoverable costs and the amounts actually reflected in current rates. The increase in other operating revenues for 1996 was primarily due to increased amounts collected to recover newly-imposed county franchise fees. These fees are included in taxes other than income taxes and have no impact on earnings. See Notes 1 and 3 to the financial statements under "Revenues and Regulatory Cost Recovery Clauses" and
II-147
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1997 Annual Report
"Environmental Cost Recovery," respectively, for further discussion.
Kilowatt-hour sales for 1997 and percent changes in sales since 1995 are reported below.
KWH Percent Change
------------ ---------------------------
1997 1997 1996 1995
------------ ---------------------------
(millions)
Residential 4,119 (1.0)% 3.6% 7.0%
Commercial 2,898 3.2 3.7 6.3
Industrial 1,903 5.3 0.7 (2.8)
Other 18 1.6 2.7 (0.1)
------------
Total retail 8,939 1.6 3.0 4.5
Sales for resale
Non-affiliates 1,531 (0.2) 9.9 (1.6)
Affiliates 848 19.5 (6.5) (13.1)
------------
Total 11,318 2.5 3.3 2.2
==================================================================
|
Retail sales growth was lower in 1997 than in the past two years. Although the total number of residential customers served increased by more than 9,000 or 3.1% during the year, residential energy sales declined as a result of milder weather in 1997, compared with more normal weather in 1996. The increase in energy sales to the industrial class is primarily the result of the Real-Time-Pricing program. The price structure of this program has encouraged participating industrial customers to lower their peak demand requirements and increase their purchases of energy during off-peak periods. See "Future Earnings Potential" for information on the Company's initiatives to remain competitive and to meet conservation goals set by the Florida Public Service Commission (FPSC).
In 1997, energy sales for resale to non-affiliates were essentially unchanged, decreasing 0.2 percent, and are predominantly related to unit power sales under long-term contracts to other Florida utilities and bulk power sales under short-term contracts to other non-affiliated utilities. Energy sales to affiliated companies vary from year to year as mentioned previously.
Expenses
In 1997, total operating expenses decreased $3.9 million or 0.7 percent from 1996 primarily due to lower fuel and purchased power expenses and maintenance expenses, offset by higher other operation expenses and depreciation and amortization expenses. Total operating expenses for 1996 increased $12.7 million or 2.4 percent from 1995. The increase is due to higher purchased power expenses, other operation expenses, depreciation expenses, and taxes.
In 1997, fuel and purchased power expenses decreased $10.1 million or 4.4 percent from 1996 reflecting the decrease in fuel and purchased power costs due to slightly lower fuel costs and increased generation. Fuel and purchased power expenses for 1996 increased $4 million or 1.8 percent from 1995. The change reflected the increase in purchased power from affiliated companies due to scheduled maintenance outages at Plant Crist and Plant Daniel during the first half of 1996. This increase was partially offset by a slight decrease in fuel expense reflecting a lower cost of fuel.
The amount and sources of generation and the average cost of fuel per net kilowatt-hour generated were as follows:
1997 1996 1995
----------------------------
Total generation
(millions of kilowatt-hours) 10,435 10,214 9,828
Sources of generation
(percent)
Coal 99.6 99.4 99.5
Oil and gas 0.4 0.6 0.5
Average cost of fuel per net
kilowatt-hour generated
(cents)
Coal 1.97 1.99 2.08
Oil and gas 5.59 6.41 3.56
Total 1.99 2.02 2.09
-----------------------------------------------------------------
|
Other operation expenses increased $11.1 million or 9.6% in 1997. The increase was primarily attributable to higher costs related to the amortization of prior year buyout and renegotiation of coal supply contracts. Other contributing factors were implementation costs related to a new customer accounting system and increased production and distribution costs related to 1997 work force reduction programs. In 1996, other operation expenses increased $1.8 million or 1.5 percent from the 1995 level. The increase was primarily attributable to an increase in administrative and general expenses including costs associated with the approved increase in the Company's annual accrual to
II-148
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1997 Annual Report
the accumulated provision for property damage to amortize deferred storm charges and restore the account balance to a reasonable level. See Note 2 to the financial statements under "Workforce Reduction Programs" for further discussion.
Maintenance expenses decreased $3.1 million or 6.0 percent in 1997 and decreased $0.9 million or 1.7 percent in 1996. The decreases were primarily due to a decrease in scheduled maintenance of production facilities.
Depreciation and amortization expenses increased $1.2 million or 2.2 percent in 1997 and increased $1.5 million or 2.8 percent in 1996. Both years increases were primarily due to an increase in depreciation expenses as a result of an increase in the average investment in distribution property required to serve the additional customers in the Company's service area.
Federal and state income taxes decreased $2.8 million or 7.4 percent in 1997 primarily due to a decrease in taxable income.
Interest expense in 1997 decreased $0.9 million or 3.0 percent from the prior year. The decrease is attributable to retirements and refinancings of long-term debt and reduced interest on notes payable, partially offset by the increase related to distributions on preferred securities of a subsidiary trust. In 1996, interest expense increased $0.9 million or 3.2 percent over the prior year. The increase was attributable to the issuance of $30 million of new first mortgage bonds in January 1996. The increase in interest on long-term debt was partially offset by a decrease in interest on notes payable as a result of a lower average amount of short-term notes outstanding.
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on the recovery of historical costs. Therefore, inflation creates an economic loss because the Company is recovering its cost of investments in dollars that have less purchasing power. While the inflation rate has been relatively low in recent years, it continues to have an adverse effect on the Company because of the large investment in long-lived utility plant. Conventional accounting for historical cost does not recognize this economic loss nor the partially offsetting gain that arises through financing facilities with fixed-money obligations, such as long-term debt and preferred stock. Any recognition of inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from energy sales growth to a potentially less regulated more competitive environment.
Gulf Power currently operates as a vertically integrated utility providing electricity to customers within its traditional service area located in northwest Florida. Prices for electricity provided by the Company to retail customers are set by the FPSC.
Future earnings in the near term will depend upon growth in energy sales, which is subject to a number of factors. Traditionally, these factors have included weather, competition, changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, and the rate of economic growth in the Company's service area.
The electric utility industry in the United States is currently undergoing a period of change as a result of regulatory and competitive factors. Among the primary agents of change has been the Energy Policy Act of 1992 (Energy Act). The Company is positioning the business to meet the challenge of this major change in the traditional practice of selling electricity. The Energy Act allows independent power producers (IPPs) to access the Company's transmission network in order to sell electricity to other utilities. This enhances the incentive for IPPs to build cogeneration plants for industrial and commercial customers and sell energy generation to other utilities. The Company has and will continue to evaluate opportunities to partner and participate in profitable cogeneration projects. In 1997, partnering with one of the Company's largest industrial customers, 15 megawatts of Company-owned cogeneration is being constructed on the customer's plant site. Also, electricity sales for resale rates are being driven down by wholesale transmission access and numerous potential new energy suppliers, including power marketers and brokers. The Company is aggressively working to maintain and expand its share of wholesale sales in the southeastern power markets.
II-149
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1997 Annual Report
Although the Energy Act does not permit retail customer access, it was a major catalyst for the current restructuring and consolidation taking place within the utility industry. Numerous federal and state initiatives to promote wholesale and retail competition are at varying stages. Among other things, these initiatives allow customers to choose their electricity provider. As the initiatives materialize, the structure of the utility industry could radically change. Some states have approved initiatives that result in a separation of the ownership and/or operation of generating facilities from the ownership and/or operation of transmission and distribution facilities. While various restructuring and competition initiatives have been or are being discussed in Florida, none have been enacted to date. Enactment would require numerous issues to be resolved, including significant ones relating to transmission pricing and recovery of any stranded investments. The inability of the Company to recover its investments, including the regulatory assets described in Note 1 to the financial statements, could have a material adverse effect on the financial condition of the Company. The Company is attempting to minimize or reduce its cost exposure.
Continuing to be a low-cost producer could provide significant opportunities to increase market share and profitability in markets that evolve with changing regulation. Conversely, unless the Company remains a low-cost producer and provides quality service, the Company's retail energy sales growth could be limited, and this could significantly erode earnings.
The FPSC set conservation goals and approved programs to accomplish the goals beginning in 1995. The goals require conservation programs which reduce 154 megawatts of summer peak demand and 65 million KWH of sales by the year 2004. The Company can experience net growth as long as the filed programs achieve the intended reductions in peak demand and KWH sales. In response to these goals and seeking to remain competitive with other electric utilities, the Company has developed initiatives which emphasize price flexibility and competitive offering of energy efficiency products and services. These initiatives will enable customers to lower or alter their peak energy requirements. Besides promoting energy efficiency, another benefit of these initiatives could be the ability to defer the need to construct additional generating capacity.
On September 3, 1996, the FPSC approved a new optional Commercial/Industrial Service Rider (CISR), which is applicable to the rate schedules for the Company's largest existing and potential customers who are able to show they have viable alternatives to purchasing the Company's energy services. The CISR, approved as a pilot program, provides the flexibility needed to enable the Company to offer its services in a more competitive manner to these customers. During 1997, the publicity of the CISR ruling, increased competitive pressures, and general awareness of customer choice pilots and proposals across the country has stimulated interest on the part of customers in custom tailored offerings. The Company has participated in one-on-one discussions with many of these customers, and has negotiated and executed two Contract Service Agreements within the CISR pilot program in 1997.
The Company is heavily dependent upon complex computer systems for all phases of its operations. The year 2000 issue--common to most corporations--concerns the inability of certain software and databases to properly recognize date sensitive information beginning related to the year 2000 and thereafter. This problem could result in a material disruption to the Company's operation, if not corrected. The Company has assessed and developed a detailed strategy to prevent or at least minimize problems related to the year 2000 issue. In 1997, resources were committed and implementation began to modify the affected information systems. Total costs related to the project for Southern Company are estimated to be approximately $85 million, of which $8 million was spent in 1997. The Company's total costs related to the project are estimated to be approximately $5 million, of which $0.5 million was spent in 1997. Most all remaining costs will be expensed in 1998. Implementation is currently on schedule and all costs are being expensed as incurred. The degree of success of this project cannot be determined at this time. However, management believes that the final outcome will not have a material adverse effect on the operations of the Company.
II-150
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1997 Annual Report
Compliance costs related to current and future environmental laws and regulations could affect earnings if such costs are not fully recovered. The Clean Air Act and other important environmental items are discussed later under "Environmental Matters." Also, Florida legislation adopted in 1993 that provides for recovery of prudent environmental compliance costs is discussed in Note 3 to the financial statements under "Environmental Cost Recovery."
The Company is subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the Company's operations is no longer subject to these provisions, the Company would be required to write off related regulatory assets and liabilities that are not specifically recoverable, and determine if any other assets have been impaired. See Note 1 to the financial statements under "Regulatory Assets and Liabilities" for additional information.
Exposure to Market Risks
Due to cost-based rate regulation, the Company has limited exposure to market volatility in interest rates and prices of electricity. To mitigate residual risks relative to movements in electricity prices, the Company enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market. Realized gains and losses are recognized in the income statements as incurred. At December 31, 1997, exposure from these activities was not material to the Company's financial position, results of operations, or cash flows.
New Accounting Standards
The FASB has issued Statement No. 130, Reporting Comprehensive Income, which will be effective in 1998. This statement establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. The objective of the statement is to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (comprehensive income). Comprehensive income is the total of net income and all other non-owner changes in equity. These rules will be adopted by the Company in 1998.
The FASB has issued Statement No. 131, Disclosure about Segments of an Enterprise and Related Information. This statement requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Generally, financial information is required to be reported on the basis that it is used by the chief operating decision maker in deciding how to allocate resources and in assessing performance. This statement also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company adopted the new rules in 1997, which do not have a significant impact on the Company's financial reporting. However, this conclusion may change as industry restructuring and competitive factors influence the Company's operations.
FINANCIAL CONDITION
Overview
The Company's financial condition continues to be very solid. During 1997, gross property additions were $54.3 million. Funds for the property additions were provided by internal sources. See the Statements of Cash Flows for further details.
Financing Activities
The Company continued to lower its financing costs by issuing new long term-notes and trust preferred securities and retiring higher-cost issues in 1997. The Company sold $40 million of trust preferred securities, $40.9 million of pollution control bonds, and $20 million of junior subordinated notes. Retirements, including maturities during 1997, totaled $25 million of first mortgage bonds, $40.9 million of pollution control bonds, $75.9 million of preferred stock, and $16 million of long-term bank notes. The refinancing of $40.9 million in pollution control bonds and $39.5 million in preferred stock will result in savings of over $2.6 million annually. See the Statements of Cash Flows for further details.
Composite financing rates for the years 1995 through 1997 as of year end were as follows:
1997 1996 1995
------------------------------
Composite interest rate on
long-term debt 5.9% 6.1% 6.5%
Composite preferred stock
dividend rate 6.1% 6.4% 6.4%
----------------------------------------------------------------
|
II-151
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1997 Annual Report
The decrease in the composite interest rate on long-term debt from 1995 to 1997 reflects the Company's efforts to refinance higher-cost debt. The decrease in the composite preferred stock dividend rate in 1997 was primarily due to a decrease in dividends on the Company's adjustable rate preferred stock, reflecting lower interest rates, and the retirement of higher coupon rate preferred stock.
Capital Requirements for Construction
The Company's gross property additions, including those amounts related to environmental compliance, are budgeted at $192 million for the three years beginning in 1998 ($68 million in 1998, $62 million in 1999, and $62 million in 2000). Actual construction costs may vary from this estimate because of changes in such factors as: business conditions; environmental regulations; load projections; the cost and efficiency of construction labor, equipment, and materials; and the cost of capital. In addition, there can be no assurance that costs related to capital expenditures will be fully recovered. The Company does not have any major generating plants under construction, however, significant construction related to maintaining and upgrading transmission and distribution facilities and generating plants will continue.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately $80 million will be required by the end of 2000 in connection with maturities of long-term debt. Also, the Company will continue to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital as market conditions and terms of the instruments permit.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean Air Act -- the acid rain compliance provision of the law -- significantly affected the Company. Specific reductions in sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants are required in two phases. Phase I compliance began in 1995 and initially affected 28 generating units of Southern Company. As a result of Southern Company's compliance strategy, an additional 22 generating units were brought into compliance with Phase I requirements. Phase II compliance is required in 2000, and all fossil-fired generating plants will be affected.
Southern Company achieved Phase I sulfur dioxide compliance at the affected plants by switching to low-sulfur coal, which required some equipment upgrades. Construction expenditures for Phase I compliance totaled approximately $300 million for Southern Company, including approximately $42 million for Gulf Power.
For Phase II sulfur dioxide compliance, Southern Company could use emission allowances, increase fuel switching, and/or install flue gas desulfurization equipment at selected plants. Also, equipment to control nitrogen oxide emissions will be installed on additional system fossil-fired units as required to meet Phase II limits. Current compliance strategy for Phase II and ozone non-attainment could require total estimated construction expenditures for Southern Company of approximately $70 million, of which $55 million remains to be spent. Phase II compliance is not expected to have a material impact on Gulf Power.
Following adoption of legislation in April of 1992 allowing electric utilities in Florida to seek FPSC approval of their Clean Air Act Compliance Plans, Gulf Power filed its petition for approval. The FPSC approved the Company's plan for Phase I compliance, deferring until a later date approval of its Phase II Plan.
In 1993, the Florida Legislature adopted legislation that allows a utility to petition the FPSC for recovery of prudent environmental compliance costs that are not being recovered through base rates or any other recovery mechanism. The legislation is discussed in Note 3 to the financial statements under "Environmental Cost Recovery." Substantially all of the costs for the Clean Air Act and other new environmental legislation discussed below are expected to be recovered through the Environmental Cost Recovery Clause.
In July 1997, the Environmental Protection Agency (EPA) revised the national ambient air quality standards for ozone and particulate matter. This revision makes the standards significantly more stringent. Also, in October 1997, the EPA issued a proposed regional ozone rule--if implemented--that could require substantial further reductions in NOx emissions from fossil-fueled generating facilities. Implementation of the standards and the proposed rule could result in significant additional compliance costs and capital expenditures that cannot be determined at this time.
II-152
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1997 Annual Report
The EPA and state environmental regulatory agencies are reviewing and evaluating various other matters including: emission control strategies for ozone non-attainment areas; additional controls for hazardous air pollutant emissions; and hazardous waste disposal requirements. The impact of new standards will depend on the development and implementation of applicable regulations.
Gulf Power must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations the Company could incur substantial costs to clean up properties. The Company conducts studies to determine the extent of any required cleanup costs and has recognized in the financial statements costs to clean up known sites. For additional information, see Note 3 to the financial statements under "Environmental Cost Recovery."
Several major pieces of environmental legislation are being considered for reauthorization or amendment by Congress. These include: the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances Control Act; and the Endangered Species Act. Changes to these laws could affect many areas of the Company's operations. The full impact of any such changes cannot be determined at this time.
Compliance with possible additional legislation related to global climate change, electric and magnetic fields, and other environmental health concerns could significantly affect the Company. The impact of new legislation -- if any -- will depend on the subsequent development and implementation of applicable regulations. In addition, the potential exists for liability as the result of lawsuits alleging damages caused by electric and magnetic fields.
Sources of Capital
At December 31, 1997, the Company had $4.7 million of cash and cash equivalents and $32.5 million of unused committed lines of credit with banks to meet its short-term cash needs. Refer to Statements of Cash Flows for details related to the Company's financing activities. See Note 5 to the financial statements under "Bank Credit Arrangements" for additional information.
In January 1998, Gulf Power Capital Trust II (Trust II), of which the Company owns all the common securities, issued $45 million of 7.0 percent mandatorily redeemable preferred securities. See Note 9 to the financial statements under "Company Obligated Mandatorily Redeemable Preferred Securities" for additional information.
It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from operations; the sale of additional first mortgage bonds, long-term unsecured debt, pollution control bonds, and preferred securities; bank notes; and capital contributions from Southern Company. If the attractiveness of current short-term interest rates continues, the Company may maintain a higher level of short-term indebtedness than has historically been true. The Company is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. The Company's coverage ratios are sufficient to permit, at present interest and preferred dividend levels, any foreseeable security sales. In December 1997, the Company obtained stockholder approval to amend the corporate charter including the elimination of the restrictions on the amount of unsecured indebtedness allowed. The amount of securities which the Company will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time.
Cautionary Statement Regarding Forward-Looking Information
Gulf Power Company's 1997 Annual Report contains forward-looking statements in addition to historical information. The Company cautions that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the Company's markets; potential business strategies--including acquisitions or dispositions of assets or internal restructuring--that may be pursued by the company; state and federal rate
II-153
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Gulf Power Company 1997 Annual Report
regulation; changes in or application of environmental and other laws and regulations to which the Company is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; and other factors discussed in the reports--including Form 10-K--filed from time to time by the Company with the Securities and Exchange Commission.
II-154
STATEMENTS OF INCOME
For the Years Ended December 31, 1997, 1996, and 1995
Gulf Power Company 1997 Annual Report
========================================================================================================================
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues:
Revenues $ 609,096 $ 616,603 $ 600,458
Revenues from affiliates 16,760 17,762 18,619
------------------------------------------------------------------------------------------------------------------------
Total operating revenues 625,856 634,365 619,077
------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation-
Fuel 180,843 184,500 185,274
Purchased power from non-affiliates 11,938 8,300 8,594
Purchased power from affiliates 24,955 35,076 29,966
Other 126,266 115,154 113,397
Maintenance 47,988 51,050 51,917
Depreciation and amortization 57,874 56,645 55,104
Taxes other than income taxes 51,775 52,027 49,598
Federal and state income taxes (Note 8) 35,034 37,821 34,065
------------------------------------------------------------------------------------------------------------------------
Total operating expenses 536,673 540,573 527,915
------------------------------------------------------------------------------------------------------------------------
Operating Income 89,183 93,792 91,162
Other Income (Expense):
Interest income 1,203 1,921 2,877
Other, net (992) (1,678) (1,225)
Income taxes applicable to other income 1,584 248 (121)
------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 90,978 94,283 92,693
------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 21,699 24,691 23,294
Other interest charges 2,076 1,824 1,487
Interest on notes payable 891 2,071 2,931
Amortization of debt discount, premium, and expense, net 2,281 2,087 2,014
Distributions on preferred securities of subsidiary trust 2,804 - -
------------------------------------------------------------------------------------------------------------------------
Net interest charges 29,751 30,673 29,726
------------------------------------------------------------------------------------------------------------------------
Net Income 61,227 63,610 62,967
Dividends on Preferred Stock 3,617 5,765 5,813
------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 57,610 $ 57,845 $ 57,154
========================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-155
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
Gulf Power Company 1997 Annual Report
=================================================================================================================================
1997 1996 1995
---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Activities:
Net income $ 61,227 $ 63,610 $ 62,967
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 72,860 71,825 75,293
Deferred income taxes (7,047) 2,157 390
Accumulated provision for property damage 2,572 4,227 (19,024)
Deferred costs of 1995 coal contract renegotiation 1,246 10,931 (12,177)
Other, net (1,413) 1,123 1,191
Changes in certain current assets and liabilities --
Receivables, net (1,111) 736 (12,210)
Inventories 10,674 12,957 (618)
Payables 1,398 (7,078) 18,258
Taxes accrued 6,123 (441) (2,803)
Current costs of 1995 coal contract renegotiation 14,778 (5,099) (9,859)
Other 4,240 5,937 (1,457)
---------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 165,547 160,885 99,951
---------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (54,289) (61,386) (63,113)
Other 509 (2,786) 4,401
---------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (53,780) (64,172) (58,712)
---------------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities 40,000 - -
First mortgage bonds - 55,000 -
Pollution control bonds 40,930 33,275 -
Other long-term debt 20,000 49,148 -
Retirements:
Preferred stock (75,911) - (1,000)
First mortgage bonds (25,000) (50,930) (1,750)
Pollution control bonds (40,930) (33,275) (125)
Other long-term debt (15,972) (34,923) (13,314)
Notes payable, net 22,000 (55,500) 27,000
Payment of preferred stock dividends (5,370) (5,749) (5,813)
Payment of common stock dividends (64,600) (48,300) (46,400)
Miscellaneous (3,014) (5,332) (59)
---------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (107,867) (96,586) (41,461)
---------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 3,900 127 (222)
Cash and Cash Equivalents at Beginning of Year 807 680 902
---------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 4,707 $ 807 $ 680
=================================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for --
Interest (net of amount capitalized) $26,558 $26,050 $26,161
Income taxes $36,010 $25,858 $38,537
---------------------------------------------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
|
II-156
BALANCE SHEETS
At December 31, 1997 and 1996
Gulf Power Company Annual Report
=====================================================================================================================
ASSETS 1997 1996
---------------------------------------------------------------------------------------------------------------------
(in thousands)
Utility Plant:
Plant in service (Notes 1 and 6) $1,762,244 $1,734,510
Less accumulated provision for depreciation 737,767 694,245
---------------------------------------------------------------------------------------------------------------------
1,024,477 1,040,265
Construction work in progress 31,030 23,465
---------------------------------------------------------------------------------------------------------------------
Total 1,055,507 1,063,730
---------------------------------------------------------------------------------------------------------------------
Other Property and Investments 622 652
---------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 4,707 807
Receivables-
Customer accounts receivable 63,691 67,727
Other accounts and notes receivable 2,744 3,098
Affiliated companies 7,329 1,821
Accumulated provision for uncollectible accounts (796) (789)
Fossil fuel stock, at average cost 19,296 28,352
Materials and supplies, at average cost (Note 1) 28,634 30,252
Current portion of deferred coal contract costs (Note 5) 4,456 16,389
Regulatory clauses under recovery (Note 1) 1,675 4,144
Prepayments 2,171 1,268
Vacation pay deferred 4,057 4,055
---------------------------------------------------------------------------------------------------------------------
Total 137,964 157,124
---------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes (Note 8) 26,586 28,313
Debt expense and loss, being amortized 22,941 23,308
Deferred coal contract costs (Note 5) - 13,126
Prepaid pension costs (Note 2) 10,385 7,918
Deferred storm charges (Note 1) 703 3,275
Miscellaneous 10,904 10,920
---------------------------------------------------------------------------------------------------------------------
Total 71,519 86,860
---------------------------------------------------------------------------------------------------------------------
Total Assets $1,265,612 $1,308,366
=====================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-157
BALANCE SHEETS
At December 31, 1997 and 1996
Gulf Power Company 1997 Annual Report
=======================================================================================================================
CAPITALIZATION AND LIABILITIES 1997 1996
-----------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See accompanying statements):
Common stock equity (Note 12) $ 428,718 $ 435,758
Preferred stock 13,691 65,102
Company obligated mandatorily redeemable preferred securities of
subsidiary trust holding Company Junior Subordinated Notes (Note 9) 40,000 -
Long-term debt 296,993 331,880
-----------------------------------------------------------------------------------------------------------------------
Total 779,402 832,740
-----------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Preferred stock due within one year (Note 11) - 24,500
Long-term debt due within one year (Note 11) 53,327 40,972
Notes payable 47,000 25,000
Accounts payable-
Affiliated companies 14,334 10,274
Other 20,205 22,496
Customer deposits 13,778 13,464
Taxes accrued 8,258 8,342
Interest accrued 7,227 7,629
Regulatory clauses over recovery (Note 1) 5,062 5,884
Vacation pay accrued 4,057 4,055
Dividends declared 10,210 11,453
Miscellaneous 8,739 5,668
-----------------------------------------------------------------------------------------------------------------------
Total 192,197 179,737
-----------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 166,302 163,857
Deferred credits related to income taxes (Note 8) 56,935 64,354
Accumulated deferred investment tax credits 31,552 33,760
Accumulated provision for postretirement benefits (Note 2) 20,491 18,339
Miscellaneous 18,733 15,579
-----------------------------------------------------------------------------------------------------------------------
Total 294,013 295,889
-----------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 3, 4, 5, and 7)
Total Capitalization and Liabilities $1,265,612 $1,308,366
=======================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-158
STATEMENTS OF CAPITALIZATION
At December 31, 1997 and 1996
Gulf Power Company 1997 Annual Report
=================================================================================================================================
1997 1996 1997 1996
---------------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Common Stock Equity:
Common stock, without par value --
Authorized and outstanding --
992,717 shares in 1997 and 1996 $ 38,060 $ 38,060
Paid-in capital 218,438 218,438
Premium on preferred stock 12 81
Retained earnings (Note 12) 172,208 179,179
---------------------------------------------------------------------------------------------------------------------------------
Total common stock equity 428,718 435,758 55.0% 52.3%
---------------------------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock:
$10 par value --
Authorized -- 10,000,000 shares,
Outstanding -- 377,989 shares at December 31, 1997
$25 stated capital --
6.72% 8,661 20,000
7.00% - 14,500
7.30% - 15,000
Adjustable Rate -- at January 1, 1998: 4.67% 789 15,000
$100 par value --
Authorized -- 801,626 shares
Outstanding -- 42,411 shares at December 31, 1997
4.64% 1,255 5,102
5.16% 1,357 5,000
5.44% 1,629 5,000
7.52% - 5,000
7.88% - 5,000
---------------------------------------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $836,000) 13,691 89,602
---------------------------------------------------------------------------------------------------------------------------------
Less amount due within one year (Note 11) - 24,500
---------------------------------------------------------------------------------------------------------------------------------
Total excluding amount due within one year 13,691 65,102 1.8 7.8
---------------------------------------------------------------------------------------------------------------------------------
|
II-159
STATEMENTS OF CAPITALIZATION (continued)
At December 31, 1997 and 1996
Gulf Power Company 1997 Annual Report
================================================================================================================================
1997 1996 1997 1996
--------------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Company Obligated Mandatorily
Redeemable Preferred Securities (Note 9):
$25 Liquidation Value--7.625% 40,000 -
--------------------------------------------------------------------------------------------------------------------------------
Total (annual distribution requirement--$3,050,000) 40,000 - 5.1 -
--------------------------------------------------------------------------------------------------------------------------------
Long-term Debt:
First mortgage bonds --
Maturity Interest Rates
August 1, 1997 5.875% - 25,000
April 1, 1998 5.55% 15,000 15,000
July 1, 1998 5.00% 30,000 30,000
July 1, 2003 6.125% 30,000 30,000
November 1, 2006 6.50% 25,000 25,000
January 1, 2026 6.875% 30,000 30,000
--------------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 130,000 155,000
Pollution control obligations (Note 10) 169,630 169,630
Other long-term debt (Note 10) 55,327 51,299
Unamortized debt premium (discount), net (4,637) (3,077)
--------------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $20,771,000) 350,320 372,852
Less amount due within one year (Note 11) 53,327 40,972
--------------------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 296,993 331,880 38.1 39.9
--------------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 779,402 $ 832,740 100.0% 100.0%
================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-160
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1997, 1996, and 1995
Gulf Power Company 1997 Annual Report
==================================================================================================================================
1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Year $ 179,179 $ 179,663 $ 168,951
Net income after dividends on preferred stock 57,610 57,845 57,154
Dividends on common stock (64,600) (58,300) (46,400)
Preferred stock transactions, net 19 (29) (42)
----------------------------------------------------------------------------------------------------------------------------------
Balance at End of Year (Note 11) $ 172,208 $ 179,179 $ 179,663
==================================================================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1997, 1996, and 1995
Gulf Power Company 1997 Annual Report
==================================================================================================================================
1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Year $ 218,438 $ 218,438 $ 218,380
Contributions to capital by parent company - - 58
----------------------------------------------------------------------------------------------------------------------------------
Balance at End of Year $ 218,438 $ 218,438 $ 218,438
==================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-161
NOTES TO FINANCIAL STATEMENTS
Gulf Power Company 1997 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Gulf Power Company is a wholly owned subsidiary of Southern Company, which is the parent company of five operating companies, a system service company, Southern Communications Services (Southern Communications), Southern Energy, Inc. (Southern Energy), Southern Nuclear Operating Company (Southern Nuclear), Southern Company Energy Solutions, and other direct and indirect subsidiaries. The operating companies (Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric) provide electric service in four southeastern states. Gulf Power Company provides electric service to the northwest panhandle of Florida. Contracts among the operating companies -- dealing with jointly owned generating facilities, interconnecting transmission lines, and the exchange of electric power -- are regulated by the Federal Energy Regulatory Commission (FERC) or the Securities and Exchange Commission. The system service company provides, at cost, specialized services to Southern Company and subsidiary companies. Southern Communications provides digital wireless communications services to the operating companies and also markets these services to the public within the Southeast. Worldwide, Southern Energy develops and manages electricity and other energy related projects, including domestic energy trading and marketing. Southern Nuclear provides services to Southern Company's nuclear power plants. Southern Company Energy Solutions develops new business opportunities related to energy products and services.
Southern Company is registered as a holding company under the Public Utility Holding Company Act of 1935 (PUHCA). Both Southern Company and its subsidiaries are subject to the regulatory provisions of the PUHCA. The Company is also subject to regulation by the FERC and the Florida Public Service Commission (FPSC). The Company follows generally accepted accounting principles and complies with the accounting policies and practices prescribed by the FPSC. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates, and the actual results may differ from those estimates.
Certain prior years' data presented in the financial statements have been reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
The Company is subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. Regulatory assets represent probable future revenues to the Company associated with certain costs that are expected to be recovered from customers through the ratemaking process. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are expected to be credited to customers through the ratemaking process. Regulatory assets and (liabilities) reflected in the Balance Sheets at December 31 relate to the following:
1997 1996
-------------------------
(in thousands)
Deferred income tax debits $ 26,586 $ 28,313
Deferred loss on reacquired debt 20,494 20,386
Environmental remediation 7,338 7,577
Current & deferred
coal contract costs 4,456 29,515
Vacation pay 4,057 4,055
Deferred storm charges 703 3,275
Regulatory clauses over
recovery, net (3,387) (1,740)
Deferred income tax credits (56,935) (64,354)
Other, net (629) (1,202)
-----------------------------------------------------------------
Total $ 2,683 $ 25,825
=================================================================
|
In the event that a portion of the Company's operations is no longer subject to the provisions of Statement No. 71, the Company would be required to write off related net regulatory assets and liabilities that are not specifically recoverable through regulated rates. In addition, the Company would be required to determine any impairment to other assets, including plant, and write down the assets, if impaired, to their fair value.
II-162
NOTES (continued)
Gulf Power Company 1997 Annual Report
Revenues and Regulatory Cost Recovery Clauses
The Company accrues revenues for service rendered but unbilled at the end of each fiscal period. The Company has a diversified base of customers and no single customer or industry comprises 10 percent or more of revenues. In 1997, uncollectible accounts continued to average significantly less than 1 percent of revenues.
Fuel costs are expensed as the fuel is used. The Company's electric rates include provisions to periodically adjust billings for fluctuations in fuel, the energy component of purchased power costs, and certain other costs. The Company also has similar cost recovery clauses for energy conservation costs, purchased power capacity costs, and environmental compliance costs. Revenues are adjusted monthly for differences between recoverable costs and amounts actually reflected in current rates.
Depreciation and Amortization
Depreciation of the original cost of depreciable utility plant in service is provided primarily by using composite straight-line rates, which approximated 3.6 percent in 1997, 1996, and 1995. When property subject to depreciation is retired or otherwise disposed of in the normal course of business, its cost -- together with the cost of removal, less salvage -- is charged to the accumulated provision for depreciation. Minor items of property included in the original cost of the plant are retired when the related property unit is retired. Also, the provision for depreciation expense includes an amount for the expected cost of removal of facilities.
Income Taxes
The Company uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences. Investment tax credits utilized are deferred and amortized to income over the average lives of the related property. The Company is included in the consolidated federal income tax return of Southern Company. See Note 8 for further information related to income taxes.
Allowance for Funds Used During Construction
(AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance the construction of new facilities. While cash is not realized currently from such allowance, it increases the revenue requirement over the service life of the plant through a higher rate base and higher depreciation expense. AFUDC amounts for 1997, 1996, and 1995 were immaterial and are included in other, net and other interest charges in the Statements of Income.
Utility Plant
Utility plant is stated at original cost. Original cost includes: materials; labor; minor items of property; appropriate administrative and general costs; payroll-related costs such as taxes, pensions, and other benefits; and the estimated cost of funds used during construction. The cost of maintenance, repairs, and replacement of minor items of property is charged to maintenance expense. The cost of replacements of property (exclusive of minor items of property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are considered cash equivalents. Temporary cash investments are securities with original maturities of 90 days or less.
Financial Instruments
The Company's financial instruments for which the carrying amount did not equal fair value at December 31 were as follows:
Carrying Fair
Amount Value
----------------------------
(in thousands)
Long-term debt
At December 31, 1997 $350,320 $356,766
At December 31, 1996 $372,852 $373,394
Capital trust preferred
securities:
At December 31, 1997 $40,000 $40,800
At December 31, 1996 - -
-------------------------------------------------------------
|
II-163
NOTES (continued)
Gulf Power Company 1997 Annual Report
The fair values for long-term debt and preferred securities were based on either closing market prices or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission, distribution, and generating plant materials. Materials are charged to inventory when purchased and then expensed or capitalized to plant, as appropriate, when installed.
Provision for Injuries and Damages
The Company is subject to claims and suits arising in the ordinary course of business. As permitted by regulatory authorities, the Company provides for the uninsured costs of injuries and damages by charges to income amounting to $1.2 million annually. The expense of settling claims is charged to the provision to the extent available. The accumulated provision of $1.4 million and $1.8 million at December 31, 1997 and 1996, respectively, is included in miscellaneous current liabilities in the accompanying Balance Sheets.
Provision for Property Damage
The Company is self-insured for the full cost of storm and other damages to its transmission and distribution property. At December 31, 1997, the accumulated provision for property damage had a negative balance of $0.7 million. The negative balance was reclassified to deferred storm charges in the accompanying Balance Sheets. In December 1995, the FPSC approved the Company's request to increase the amount of its annual accrual to the accumulated provision for property damage account from $1.2 million to $3.5 million and approved a target level for the accumulated provision account between $25.1 and $36 million. The FPSC has also given the Company the flexibility to increase its annual accrual amount above $3.5 million, when the Company believes it is in a position to do so, until the account balance reaches $12 million. The Company accrued $3.9 million in 1997 and $4.5 million in 1996 to the accumulated provision for property damage. The expense of repairing damages from major storms and other uninsured property damages is charged to the provision account.
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed, non-contributory pension plan that covers substantially all regular employees. Benefits are based on one of the following formulas: years of service and final average pay or years of service and a flat-dollar benefit. The Company uses the "entry age normal method with a frozen initial liability" actuarial method for funding purposes, subject to limitations under federal income tax regulations. Amounts funded to the pension trust fund are primarily invested in equity and fixed-income securities. FASB Statement No. 87, Employers' Accounting for Pension, requires use of the "projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
The Company provides certain medical care and life insurance benefits for retired employees. Substantially all employees may become eligible for these benefits when they retire. Trusts are funded to the extent deductible under federal income tax regulations or to the extent required by the Company's regulatory commissions. Amounts funded are primarily invested in equity and fixed-income securities. FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, requires that medical care and life insurance benefits for retired employees be accounted for on an accrual basis using a specified actuarial method, "benefit/years-of-service."
II-164
NOTES (continued)
Gulf Power Company 1997 Annual Report
Funded Status and Cost of Benefits
The funded status of the plans and reconciliation to amounts reflected in the Balance Sheets at December 31 are as follows:
Pension
-------------------------
1997 1996
-------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $ 97,180 $ 87,245
Non-vested benefits 3,886 5,101
-------------------------------------------------------------
Accumulated benefit obligation 101,066 92,346
Additional amounts related to
projected salary increases 29,728 31,121
-------------------------------------------------------------
Projected benefit obligation 130,794 123,467
Less:
Fair value of plan assets 222,196 191,152
Unrecognized net gain (80,497) (58,900)
Unrecognized prior service cost 5,244 5,618
Unrecognized transition asset (5,764) (6,485)
-------------------------------------------------------------
Prepaid asset recognized in
the Balance Sheets $ 10,385 $ 7,918
=============================================================
Postretirement Benefits
---------------------------
1997 1996
---------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $17,363 $10,478
Employees eligible to retire 4,537 5,484
Other employees 17,769 17,694
----------------------------------------------------------------
Accumulated benefit obligation 39,669 33,656
Less:
Fair value of plan assets 9,813 7,996
Unrecognized net loss 3,930 1,531
Unrecognized transition
obligation 5,435 5,790
----------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $20,491 $18,339
================================================================
|
The weighted average rates assumed in the actuarial calculations were:
1997 1996 1995
------------------------------
Discount 7.5% 7.8% 7.3%
Annual salary increase 5.0% 5.3% 4.8%
Long-term return on plan
assets 8.5% 8.5% 8.5%
-----------------------------------------------------------------
|
An additional assumption used in measuring the accumulated postretirement benefit obligation was a weighted average medical care cost trend rate of 8.8 percent for 1997, decreasing gradually to 5.5 percent through the year 2005 and remaining at that level thereafter. An annual increase in the assumed medical care cost trend rate of 1 percent would increase the accumulated benefit obligation at December 31, 1997, by $3.2 million and the aggregate of the service and interest cost components of the net retiree cost by $278 thousand.
Components of the plans' net costs are shown below:
Pension
------------------------------------
1997 1996 1995
------------------------------------
(in thousands)
Benefits earned during
the year $ 3,897 $ 3,880 $ 3,867
Interest cost on projected
benefit obligation 9,301 9,129 8,042
Actual (return) loss on
plan assets (32,924) (21,021) (33,853)
Net amortization
and deferral 17,246 5,920 19,619
------------------------------------------------------------------
Net pension income $ (2,480) $ (2,092) $(2,325)
==================================================================
|
Of the above net pension amounts, pension income of $1.8 million in 1997, $1.5 million in 1996, and $1.8 million in 1995 were recorded in operating expenses, and the remainder was recorded in construction and other accounts.
II-165
NOTES (continued)
Gulf Power Company 1997 Annual Report
Postretirement Benefits
--------------------------------
1997 1996 1995
--------------------------------
(in thousands)
Benefits earned during the year $ 896 $ 939 $1,259
Interest cost on accumulated
benefit obligation 2,845 2,330 2,520
Amortization of transition
obligation 356 356 853
Actual (return) loss on plan assets (1,166) (797) (1,268)
Net amortization and deferral 709 318 742
-------------------------------------------------------------------
Net postretirement cost $3,640 $3,146 $4,106
===================================================================
|
Of the above net postretirement costs recorded, $2.7 million in 1997, $2.3 million in 1996, and $3.1 million in 1995 were charged to operating expenses, and the remainder was recorded in construction and other accounts.
Work Force Reduction Programs
The Company recorded costs related to work force reductions programs of $1.4 million in 1997, $1.2 million in 1996, and $7 million in 1995. The Company has also incurred its pro rata share for the costs of affiliated companies' programs. The costs related to these programs were $1.3 million for 1997, $2.1 million for 1996, and $1 million for 1995. The costs related to work force reductions have been expensed to operation expenses.
3. LITIGATION AND REGULATORY MATTERS
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the reasonableness of the operating companies' wholesale rate schedules and contracts that have a return on common equity of 13.75 percent or greater. The contracts that could be affected by the hearings include substantially all of the transmission, unit power, long-term power and other similar contracts.
In August 1992, a FERC administrative law judge issued an opinion that changes in rate schedules and contracts were not necessary and that the FERC staff failed to show how any changes were in the public interest. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on substantially the same issues as in the 1991 proceeding. In November 1995, a FERC administrative law judge issued an opinion that the FERC staff failed to meet its burden of proof, and therefore, no change in the equity return was necessary. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter remains pending before the FERC.
If the rates of return on common equity recommended by the FERC staff were applied to all of the schedules and contracts involved in both proceedings, as well as certain other contracts that reference these proceedings in determining return on common equity, and if refunds were ordered, the amount of refunds could range up to approximately $194 million for Southern Company, including approximately $13 million for the Company at December 31, 1997. Although management believes that rates are not excessive and that refunds are not justified, the final outcome of this matter cannot now be determined.
Environmental Cost Recovery
In April 1993, the Florida Legislature adopted legislation for an Environmental Cost Recovery Clause (ECRC), which allows a utility to petition the FPSC for recovery of all prudent environmental compliance costs that are not being recovered through base rates or any other recovery mechanism. Such environmental costs include operation and maintenance expense, emission allowance expense, depreciation, and a return on invested capital.
In January 1994, the FPSC approved the Company's initial petition under the ECRC for recovery of environmental costs. Beginning with this initial period through September 1996, recovery under the ECRC was determined semi-annually. In August 1996, the FPSC approved annual recovery periods beginning with the October 1996 through September 1997 period. Recovery includes a true-up of the prior period and a projection of the ensuing period. During 1997 and 1996, the Company recorded ECRC revenues of $10.2 million and $11.0 million, respectively.
At December 31, 1997, the Company's liability for the estimated costs of environmental remediation projects for known sites was $7.3 million. These estimated costs are expected to be expended during the period 1998 to 2002.
II-166
NOTES (continued)
Gulf Power Company 1997 Annual Report
These projects have been approved by the FPSC for recovery through the ECRC discussed above. Therefore, the Company recorded $1.7 million in current assets and current liabilities, and $5.6 million in deferred assets and liabilities representing the future recoverability of these costs.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, the cost of which is currently estimated to total $68 million in 1998, $62 million in 1999, and $62 million in 2000. The construction program is subject to periodic review and revision, and actual construction costs may vary from the above estimates because of numerous factors. These factors include changes in business conditions; revised load growth estimates; changes in environmental regulations; increasing costs of labor, equipment and materials; and cost of capital. At December 31, 1997, significant purchase commitments were outstanding in connection with the construction program. The Company does not have any major generating plants under construction, however, significant construction will continue related to transmission and distribution facilities and the upgrading and extension of the useful lives of generating plants.
See Management's Discussion and Analysis under "Environmental Matters" for information on the impact of the Clean Air Act Amendments of 1990 and other environmental matters.
5. FINANCING AND COMMITMENTS
General
Current projections indicate that funds required for construction and other purposes, including compliance with environmental regulations, will be derived primarily from internal sources. Requirements not met from internal sources will be derived from the sale of additional first mortgage bonds, long-term unsecured debt, pollution control bonds, and preferred securities; bank notes; and capital contributions from Southern Company. In addition, the Company may issue additional long-term debt and preferred securities primarily for debt maturities and redemptions of higher-cost securities.
Bank Credit Arrangements
At December 31, 1997, the Company had $41.5 million of lines of credit with banks subject to renewal June 1 of each year, of which $32.5 million remained unused. In addition, the Company has two unused committed lines of credit totaling $61.9 million that were established for liquidity support of its variable rate pollution control bonds. In connection with these credit lines, the Company has agreed to pay commitment fees and/or to maintain compensating balances with the banks. The compensating balances, which represent substantially all of the cash of the Company except for daily working funds and like items, are not legally restricted from withdrawal. In addition, the Company has bid-loan facilities with ten major money center banks that total $180 million, of which $38 million was committed at December 31, 1997.
Assets Subject to Lien
The Company's mortgage, which secures the first mortgage bonds issued by the Company, constitutes a direct first lien on substantially all of the Company's fixed property and franchises.
Fuel Commitments
To supply a portion of the fuel requirements of its generating plants, the Company has entered into long-term commitments for the procurement of fuel. In most cases, these contracts contain provisions for price escalations, minimum purchase levels, and other financial commitments. Total estimated long-term obligations at December 31, 1997, were as follows:
Year Fuel
------- ----------------
(in millions)
1998 $82
1999 77
2000 70
2001 72
2002 74
2003 - 2007 408
--------------------------------------------------------
Total commitments $783
=========================================================
|
In 1988, the Company made an advance payment of $60 million to a coal supplier under an arrangement to lower the cost of future coal purchased under an existing contract. This amount is being amortized to expense on a per ton
II-167
NOTES (continued)
Gulf Power Company 1997 Annual Report
basis over a ten-year period. The remaining unamortized amount was $2.7 million at December 31, 1997.
In December 1995, the Company made another payment of $22 million to the same coal supplier under an arrangement to lower the cost of future coal and/or to suspend the purchase of coal under an existing contract for 25 months. This amount is being amortized to expense on a per ton basis through the first quarter of 1998. The remaining unamortized amount was $1.8 million at December 31, 1997.
The amortization expense of these contract buyouts and renegotiations is being recovered through the fuel cost recovery clause discussed under "Revenues and Regulatory Cost Recovery Clauses" in Note 1.
Lease Agreements
In 1989, the Company and Mississippi Power jointly entered into a twenty-two year operating lease agreement for the use of 495 aluminum railcars. In 1994, a second lease agreement for the use of 250 additional aluminum railcars was entered into for twenty-two years. Both of these leases are for the transportation of coal to Plant Daniel. The Company has the option after three years from the date of the original contract on the second lease agreement to purchase the railcars at the greater of the termination value or the fair market value. Additionally, at the end of each lease term, the Company has the option to renew the lease. In 1997, three additional lease agreements for 120 cars each were entered into for three years, with a monthly renewal option for up to an additional nine months.
The Company, as a joint owner of Plant Daniel, is responsible for one half of the lease costs. The lease costs are charged to fuel inventory and are allocated to fuel expense as the fuel is used. The Company's share of the lease costs charged to fuel inventories was $2.3 million in 1997 and $1.7 million in 1996. The annual amounts for 1998 through 2002 will be $2.8 million, $2.8 million, $2.1 million, $1.7 million, and $1.7 million respectively, and after 2002 will total $17.8 million.
6. JOINT OWNERSHIP AGREEMENTS
The Company and Mississippi Power jointly own Plant Daniel, a steam-electric generating plant located in Jackson County, Mississippi. In accordance with an operating agreement, Mississippi Power acts as the Company's agent with respect to the construction, operation, and maintenance of the plant.
The Company and Georgia Power jointly own Plant Scherer Unit No. 3. Plant Scherer is a steam-electric generating plant located near Forsyth, Georgia. In accordance with an operating agreement, Georgia Power acts as the Company's agent with respect to the construction, operation, and maintenance of the unit.
The Company's pro rata share of expenses related to both plants is included in the corresponding operating expense accounts in the Statements of Income.
At December 31, 1997, the Company's percentage ownership and its investment in these jointly owned facilities were as follows:
Plant Scherer Plant
Unit No. 3 Daniel
(coal-fired) (coal-fired)
------------------------------
(in thousands)
Plant In Service $185,723(1) $222,230
Accumulated Depreciation $58,219 $108,176
Construction Work in Progress $282 $231
Nameplate Capacity (2)
(megawatts) 205 500
Ownership 25% 50%
-----------------------------------------------------------------
|
(1) Includes net plant acquisition adjustment.
(2) Total megawatt nameplate capacity:
Plant Scherer Unit No. 3: 818
Plant Daniel: 1,000
7. LONG-TERM POWER SALES AGREEMENTS
The Company and the other operating affiliates have long-term contractual agreements for the sale of capacity and energy to certain non-affiliated utilities located outside the system's service area. The unit power sales agreements are firm and pertain to capacity related to specific generating units. Because the energy is generally sold at cost under these agreements, revenues from capacity sales primarily affect profitability. The capacity
II-168
NOTES (continued)
Gulf Power Company 1997 Annual Report
revenues from these sales were $24.9 million in 1997, $25.4 million in 1996, and $25.9 million in 1995.
Unit power from specific generating plants of Southern Company is currently being sold to Florida Power Corporation (FPC), Florida Power & Light Company (FP&L), Jacksonville Electric Authority (JEA), and the City of Tallahassee, Florida. Under these agreements, 211 megawatts of net dependable capacity were sold by the Company during 1997, and sales will remain at that level until the expiration of the contracts in 2010, unless reduced by FPC, FP&L and JEA after 2000.
Capacity and energy sales to FP&L, the Company's largest single customer, provided revenues of $25.4 million in 1997, $27.2 million in 1996, and $25.4 million in 1995, or 4.1 percent, 4.3 percent, and 4.1 percent of operating revenues, respectively.
8. INCOME TAXES
At December 31, 1997, the tax-related regulatory assets to be recovered from customers were $26.6 million. These assets are attributable to tax benefits flowed through to customers in prior years and to taxes applicable to capitalized AFUDC. At December 31, 1997, the tax-related regulatory liabilities to be credited to customers were $56.9 million. These liabilities are attributable to deferred taxes previously recognized at rates higher than current enacted tax law and to unamortized investment tax credits.
Details of the federal and state income tax provisions are as follows:
1997 1996 1995
----------------------------------
(in thousands)
Total provision for income taxes:
Federal--
Currently payable $34,522 $31,022 $29,018
Deferred --current year 19,297 26,072 23,172
--reversal of
prior years (25,778) (24,780) (23,116)
------------------------------------------------------------------
28,041 32,314 29,074
------------------------------------------------------------------
State--
Currently payable 5,975 4,394 4,778
Deferred --current year 2,868 3,904 3,313
--reversal of
prior years (3,434) (3,039) (2,979)
------------------------------------------------------------------
5,409 5,259 5,112
------------------------------------------------------------------
Total 33,450 37,573 34,186
Less income taxes charged
(credited) to other income (1,584) (248) 121
------------------------------------------------------------------
Total income taxes charged
to operations $35,034 $37,821 $34,065
==================================================================
|
The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:
1997 1996
----------- -----------
(in thousands)
Deferred tax liabilities:
Accelerated depreciation $156,328 $151,664
Property basis differences 19,220 21,028
Other 14,242 17,622
-------------------------------------------------------------------
Total 189,790 190,314
-------------------------------------------------------------------
Deferred tax assets:
Federal effect of state deferred taxes 9,268 9,773
Postretirement benefits 6,976 5,767
Other 10,861 7,814
-------------------------------------------------------------------
Total 27,105 23,354
-------------------------------------------------------------------
Net deferred tax liabilities 162,685 166,960
Less current portion, net (3,617) 3,103
-------------------------------------------------------------------
Accumulated deferred income
taxes in the Balance Sheets $166,302 $163,857
===================================================================
|
Deferred investment tax credits are amortized over the life of the related property with such amortization normally applied as a credit to reduce depreciation and amortization in the Statements of Income. Credits amortized in
II-169
NOTES (continued)
Gulf Power Company 1997 Annual Report
this manner amounted to $2.2 million in 1997 and $2.3 million in 1996 and 1995. At December 31, 1997, all investment tax credits available to reduce federal income taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
1997 1996 1995
--------- --------- ---------
Federal statutory rate 35% 35% 35%
State income tax,
net of federal deduction 4 4 4
Non-deductible book
depreciation 1 1 1
Difference in prior years'
deferred and current tax rate (1) (1) (3)
Other, net (4) (2) (2)
---------------------------------------------------------------
Effective income tax rate 35% 37% 35%
===============================================================
|
The Company and the other subsidiaries of Southern Company file a consolidated federal tax return. Under a joint consolidated income tax agreement, each subsidiary's current and deferred tax expense is computed on a stand-alone basis. Tax benefits from losses of the parent company are allocated to each subsidiary based on the ratio of taxable income to total consolidated taxable income.
9. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES
In January 1997, Gulf Power Capital Trust I (Trust I), of which the Company owns all of the common securities, issued $40 million of 7.625 percent mandatorily redeemable preferred securities. Substantially all of the assets of Trust I are $41 million aggregate principal amount of the Company's 7.625 percent junior subordinated notes due December 31, 2036.
In January 1998, Gulf Power Capital Trust II (Trust II), of which the Company also owns all of the common securities, issued $45 million of 7.0 percent mandatorily redeemable preferred securities. Substantially all of the assets of Trust II are $46 million aggregate principal amount of the Company's 7.0 percent junior subordinated notes due December 31, 2037.
The Company considers that the mechanisms and obligations relating to the preferred securities, taken together, constitute a full and unconditional guarantee by the Company of payment obligations with respect to the preferred securities of Gulf Power Capital Trust I and Trust II.
Gulf Power Capital Trust I and Trust II are subsidiaries of the Company, and accordingly are consolidated in the Company's financial statements.
10. POLLUTION CONTROL OBLIGATIONS AND OTHER LONG-TERM DEBT
Details of pollution control obligations and other long-term debt at December 31 are as follows:
1997 1996
--------------------------
(in thousands)
Obligations incurred in
connection with the sale by
public authorities of
tax-exempt pollution control
revenue bonds:
Collateralized
5.25% due 2006 $12,075 $12,075
8.25% due 2017 - 32,000
6.75% due 2022 - 8,930
Variable Rate due 2022
Remarketable daily 40,930 -
5.70% due 2023 7,875 7,875
5.80% due 2023 32,550 32,550
6.20% due 2023 13,000 13,000
6.30% due 2024 22,000 22,000
Variable Rate due 2024
Remarketable daily 20,000 20,000
5.50% due 2026 21,200 21,200
---------------------------------------------------------------
$169,630 $169,630
---------------------------------------------------------------
Other long-term debt:
5.2125% due 1996-1998 5,754 16,823
6.44% due 1994-1998 2,573 7,476
Variable Rate due 1999 13,500 13,500
Variable Rate due 1999 13,500 13,500
7.5% Junior Subordinated
Note due 2037 20,000 -
---------------------------------------------------------------
55,327 51,299
---------------------------------------------------------------
Total $224,957 $220,929
===============================================================
|
Pollution control obligations represent installment purchases of pollution control facilities financed by funds derived from sales by public authorities of revenue bonds. With respect to the collateralized pollution control revenue
II-170
NOTES (continued)
Gulf Power Company 1997 Annual Report
bonds, the Company has executed and delivered to trustees a like principal amount of first mortgage bonds, or in the case of the $40.9 million issue a deed of trust, as security for obligations under collateralized installment agreements. The principal and interest on the first mortgage bonds will be payable only in the event of default under the agreements.
The estimated annual maturities of other long-term debt are as follows:
$8.3 million in 1998 and $27 million in 1999.
11. SECURITIES DUE WITHIN ONE YEAR
A summary of the improvement fund requirement and scheduled maturities and redemptions of long-term debt and preferred stock due within one year at December 31 is as follows:
1997 1996
----------------------
(in thousands)
Bond improvement fund requirement $ 1,300 $ 1,550
Less: Portion to be satisfied by
certifying property additions 1,300 1,550
---------------------------------------------------------------
Cash sinking fund requirement - -
Maturities of first mortgage bonds 45,000 25,000
Current portion of other long-term
debt (Note 10) 8,327 15,972
Redemption of preferred stock - 24,500
---------------------------------------------------------------
Total $53,327 $65,472
===============================================================
|
The first mortgage bond improvement (sinking) fund requirement amounts to 1 percent of each outstanding series of bonds authenticated under the indenture prior to January 1 of each year, other than those issued to collateralize pollution control obligations. The requirement may be satisfied by depositing cash, reacquiring bonds, or by pledging additional property equal to 1 and 2/3 times the requirement.
12. COMMON STOCK DIVIDEND RESTRICTIONS
The Company's first mortgage bond indenture contains various common stock dividend restrictions which remain in effect as long as the bonds are outstanding. At December 31, 1997, retained earnings of $127 million were restricted against the payment of cash dividends on common stock under the terms of the mortgage indenture.
The Company's charter previously limited cash dividends on common stock to 50 percent of net income available for such stock during a prior period of 12 months if the capitalization ratio is below 20 percent and to 75 percent of such net income if such ratio is 20 percent or more but less than 25 percent. The capitalization ratio is defined as the ratio of common stock equity to total capitalization, including retained earnings, adjusted to reflect the payment of the proposed dividend. At December 31, 1997, the ratio was 50.4 percent. These restrictions were removed by a vote of preferred shareholders on December 10, 1997.
13. QUARTERLY FINANCIAL DATA (Unaudited)
Summarized quarterly financial data for 1997 and 1996 are as follows:
Net Income
After Dividends
Operating Operating on Preferred
Quarter Ended Revenues Income Stock
------------------------------------------------------------------
(in thousands)
March 31, 1997 $141,374 $20,212 $10,740
June 30, 1997 145,292 19,153 10,386
Sept. 30, 1997 193,710 34,750 27,484
Dec. 31, 1997 145,480 15,068 9,000
March 31, 1996 $154,921 $20,201 $11,258
June 30, 1996 153,821 21,565 12,581
Sept. 30, 1996 179,619 32,568 23,721
Dec. 31, 1996 146,004 19,458 10,285
------------------------------------------------------------------
|
The Company's business is influenced by seasonal weather conditions and the timing of rate changes, among other factors.
II-171
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1997 Annual Report
================================================================================================================
1997 1996 1995
----------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $625,856 $634,365 $619,077
Net Income after Dividends
on Preferred Stock (in thousands) $57,610 $57,845 $57,154
Dividends on Common Stock (in thousands) $64,600 $58,300 $46,400
Return on Average Common Equity (percent) 13.33 13.27 13.27
Total Assets (in thousands) 1,265,612 $1,308,366 $1,341,859
Gross Property Additions (in thousands) $54,289 $61,386 $63,113
----------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $428,718 $435,758 $436,242
Preferred stock 13,691 65,102 89,602
Preferred stock subject to mandatory redemption - - -
Trust preferred securities 40,000 - -
Long-term debt 296,993 331,880 323,376
----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $779,402 $832,740 $849,220
----------------------------------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 55.0 52.3 51.4
Preferred stock 1.8 7.8 10.5
Trust preferred securities 5.1
Long-term debt 38.1 39.9 38.1
----------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 55,000 -
Retired 25,000 50,930 1,750
Preferred Stock (in thousands):
Issued - - -
Retired 75,911 - 1,000
----------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A+ A+ A+
Duff & Phelps AA- AA- A+
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A A A
Duff & Phelps A+ A+ A
----------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 300,257 291,196 283,421
Commercial 44,589 43,196 41,281
Industrial 267 278 278
Other 264 162 134
----------------------------------------------------------------------------------------------------------------
Total 345,377 334,832 325,114
================================================================================================================
Employees (year-end) 1,328 1,384 1,501
|
II-172
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1997 Annual Report
==================================================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $578,813 $583,142 $570,902
Net Income after Dividends
on Preferred Stock (in thousands) $55,229 $54,311 $54,090
Dividends on Common Stock (in thousands) $44,000 $41,800 $39,900
Return on Average Common Equity (percent) 13.15 13.29 13.62
Total Assets (in thousands) $1,315,542 $1,307,809 $1,062,699
Gross Property Additions (in thousands) $78,869 $78,562 $64,671
------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $425,472 $414,196 $403,190
Preferred stock 89,602 89,602 74,662
Preferred stock subject to mandatory redemption - 1,000 2,000
Trust preferred securities - - -
Long-term debt 356,393 369,259 382,047
------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $871,467 $874,057 $861,899
------------------------------------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 48.8 47.4 46.8
Preferred stock 10.3 10.4 8.9
Trust preferred securities
Long-term debt 40.9 42.2 44.3
------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 75,000 25,000
Retired 48,856 88,809 117,693
Preferred Stock (in thousands):
Issued - 35,000 29,500
Retired 1,000 21,060 15,500
------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A2 A2 A2
Standard and Poor's A A A
Duff & Phelps A+ A+ A
Preferred Stock -
Moody's a2 a2 a2
Standard and Poor's A- A- A-
Duff & Phelps A A A-
------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 280,859 274,194 267,591
Commercial 40,398 39,253 37,105
Industrial 283 274 270
Other 106 86 74
------------------------------------------------------------------------------------------------------------------
Total 321,646 313,807 305,040
==================================================================================================================
Employees (year-end) 1,540 1,565 1,613
|
II-173A
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1997 Annual Report
==============================================================================================================================
1991 1990 1989
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $565,207 $567,825 $527,821
Net Income after Dividends
on Preferred Stock (in thousands) $57,796 $38,714 $37,361
Dividends on Common Stock (in thousands) $38,000 $37,000 $37,200
Return on Average Common Equity (percent) 15.17 10.51 10.32
Total Assets (in thousands) $1,095,736 $1,084,579 $1,093,430
Gross Property Additions (in thousands) $64,323 $62,462 $70,726
------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $390,981 $371,185 $365,471
Preferred stock 55,162 55,162 55,162
Preferred stock subject to mandatory redemption 7,500 9,250 11,000
Trust preferred securities - - -
Long-term debt 434,648 475,284 484,608
------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $888,291 $910,881 $916,241
------------------------------------------------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 44.0 40.8 39.9
Preferred stock 7.1 7.1 7.2
Trust preferred securities
Long-term debt 48.9 52.1 52.9
------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==============================================================================================================================
First Mortgage Bonds (in thousands):
Issued 50,000 - -
Retired 32,807 6,455 9,344
Preferred Stock (in thousands):
Issued - - -
Retired 2,500 1,750 1,250
------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A2 A2 A1
Standard and Poor's A A A
Duff & Phelps A A AA-
Preferred Stock -
Moody's a2 a2 a1
Standard and Poor's A- A- A-
Duff & Phelps A- A- A+
------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 261,210 256,111 251,341
Commercial 34,685 34,019 33,678
Industrial 264 252 240
Other 72 67 67
------------------------------------------------------------------------------------------------------------------------------
Total 296,231 290,449 285,326
==============================================================================================================================
Employees (year-end) 1,598 1,615 1,614
|
II-173B
SELECTED FINANCIAL AND OPERATING DATA
Gulf Power Company 1997 Annual Report
==============================================================================================================
1988 1987
--------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $550,827 $587,860
Net Income after Dividends
on Preferred Stock (in thousands) $45,698 $42,217
Dividends on Common Stock (in thousands) $35,400 $34,200
Return on Average Common Equity (percent) 13.41 13.23
Total Assets (in thousands) $1,097,225 $1,051,182
Gross Property Additions (in thousands) $67,042 $97,511
--------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $358,310 $323,012
Preferred stock 55,162 55,162
Preferred stock subject to mandatory redemption 12,750 14,000
Trust preferred securities - -
Long-term debt 497,069 474,640
--------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $923,291 $866,814
--------------------------------------------------------------------------------------------------------------
Capitalization Ratios (percent):
Common stock equity 38.8 37.2
Preferred stock 7.4 8.0
Trust preferred securities
Long-term debt 53.8 54.8
--------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
==============================================================================================================
First Mortgage Bonds (in thousands):
Issued 35,000 -
Retired 9,369 -
Preferred Stock (in thousands):
Issued - -
Retired 1,750 2,500
--------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1
Standard and Poor's A A
Duff & Phelps 4 4
Preferred Stock -
Moody's a1 a1
Standard and Poor's A- A-
Duff & Phelps 5 5
--------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 246,450 241,138
Commercial 33,030 32,139
Industrial 206 206
Other 61 61
--------------------------------------------------------------------------------------------------------------
Total 279,747 273,544
==============================================================================================================
Employees (year-end) 1,601 1,603
|
II-173C
SELECTED FINANCIAL AND OPERATING DATE (continued)
Gulf Power Company 1997 Annual Report
==============================================================================================================================
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $277,609 $285,498 $276,155
Commercial 164,435 164,181 159,260
Industrial 77,492 78,994 81,606
Other 2,084 2,056 1,993
------------------------------------------------------------------------------------------------------------------------------
Total retail 521,620 530,729 519,014
Sales for resale - non-affiliates 63,697 63,201 60,413
Sales for resale - affiliates 16,760 17,762 18,619
------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 602,077 611,692 598,046
Other revenues 23,779 22,673 21,031
------------------------------------------------------------------------------------------------------------------------------
Total $625,856 $634,365 $619,077
==============================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 4,119,492 4,159,924 4,014,142
Commercial 2,897,887 2,808,634 2,708,243
Industrial 1,903,050 1,808,086 1,794,754
Other 18,101 17,815 17,345
------------------------------------------------------------------------------------------------------------------------------
Total retail 8,938,530 8,794,459 8,534,484
Sales for resale - non-affiliates 1,531,179 1,534,097 1,396,474
Sales for resale - affiliates 848,135 709,647 759,341
------------------------------------------------------------------------------------------------------------------------------
Total 11,317,844 11,038,203 10,690,299
==============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.74 6.86 6.88
Commercial 5.67 5.85 5.88
Industrial 4.07 4.37 4.55
Total retail 5.84 6.03 6.08
Sales for resale 3.38 3.61 3.67
Total sales 5.32 5.54 5.59
Average Annual Kilowatt-Hour Use Per Residential Customer 13,894 14,457 14,148
Average Annual Revenue Per Residential Customer $936.30 $992.17 $973.35
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,174 2,174 2,174
Maximum Peak-Hour Demand - Net of SEPA (megawatts):
Winter 1,844 2,136 1,732
Summer 2,032 1,961 2,040
Annual Load Factor (percent) 55.5 51.4 53.0
Plant Availability - Fossil-Steam (percent) 91.0 91.8 84.0
------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 87.1 87.8 86.8
Oil and gas 0.4 0.5 0.4
Purchased power -
From non-affiliates 3.5 2.7 4.0
From affiliates 9.0 9.0 8.8
------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,436 10,484 10,609
Cost of fuel per million BTU (cents) 190.75 192.22 196.62
Average cost of fuel per net kilowatt-hour generated (cents) 1.99 2.02 2.09
==============================================================================================================================
II-174
|
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1997 Annual Report
========================================================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $252,598 $244,967 $235,296
Commercial 146,394 137,308 133,071
Industrial 82,169 87,526 91,320
Other 1,955 1,882 1,784
------------------------------------------------------------------------------------------------------------------------
Total retail 483,116 471,683 461,471
Sales for resale - non-affiliates 66,111 72,209 70,078
Sales for resale - affiliates 17,353 23,166 24,075
------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 566,580 567,058 555,624
Other revenues 12,233 16,084 15,278
------------------------------------------------------------------------------------------------------------------------
Total $578,813 $583,142 $570,902
========================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 3,751,932 3,712,980 3,596,515
Commercial 2,548,846 2,433,382 2,369,236
Industrial 1,847,114 2,029,936 2,179,435
Other 17,354 16,944 16,649
------------------------------------------------------------------------------------------------------------------------
Total retail 8,165,246 8,193,242 8,161,835
Sales for resale - non-affiliates 1,418,977 1,460,105 1,430,908
Sales for resale - affiliates 874,050 1,029,787 1,208,771
------------------------------------------------------------------------------------------------------------------------
Total 10,458,273 10,683,134 10,801,514
========================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.73 6.60 6.54
Commercial 5.74 5.64 5.62
Industrial 4.45 4.31 4.19
Total retail 5.92 5.76 5.65
Sales for resale 3.64 3.83 3.57
Total sales 5.42 5.31 5.14
Average Annual Kilowatt-Hour Use Per Residential Customer 13,486 13,671 13,553
Average Annual Revenue Per Residential Customer $907.92 $901.96 $886.66
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,174 2,174 2,174
Maximum Peak-Hour Demand - Net of SEPA (megawatts):
Winter 1,801 1,571 1,533
Summer 1,795 1,898 1,828
Annual Load Factor (percent) 56.7 54.5 55.0
Plant Availability - Fossil-Steam (percent) 92.2 88.9 91.2
------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 87.2 84.5 87.7
Oil and gas 0.2 0.5 0.1
Purchased power -
From non-affiliates 2.8 1.5 0.8
From affiliates 9.8 13.5 11.4
------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
========================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,614 10,390 10,347
Cost of fuel per million BTU (cents) 189.55 197.37 200.30
Average cost of fuel per net kilowatt-hour generated (cents) 2.01 2.05 2.07
========================================================================================================================
|
II-175A
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1997 Annual Report
================================================================================================================================
1991 1990 1989
--------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $231,220 $217,843 $203,781
Commercial 130,691 124,066 118,897
Industrial 92,300 91,041 84,671
Other 1,860 1,805 1,586
--------------------------------------------------------------------------------------------------------------------------------
Total retail 456,071 434,755 408,935
Sales for resale - non-affiliates 69,636 73,855 67,554
Sales for resale - affiliates 29,343 38,563 39,244
--------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 555,050 547,173 515,733
Other revenues 10,157 20,652 12,088
--------------------------------------------------------------------------------------------------------------------------------
Total $565,207 $567,825 $527,821
================================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 3,455,100 3,360,838 3,293,750
Commercial 2,272,690 2,217,568 2,169,497
Industrial 2,117,408 2,177,872 2,094,670
Other 17,118 18,866 17,209
--------------------------------------------------------------------------------------------------------------------------------
Total retail 7,862,316 7,775,144 7,575,126
Sales for resale - non-affiliates 1,550,018 1,775,703 1,640,355
Sales for resale - affiliates 1,236,223 1,435,558 1,461,036
--------------------------------------------------------------------------------------------------------------------------------
Total 10,648,557 10,986,405 10,676,517
================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.69 6.48 6.19
Commercial 5.75 5.59 5.48
Industrial 4.36 4.18 4.04
Total retail 5.80 5.59 5.40
Sales for resale 3.55 3.50 3.44
Total sales 5.21 4.98 4.83
Average Annual Kilowatt-Hour Use Per Residential Customer 13,320 13,173 13,173
Average Annual Revenue Per Residential Customer $891.38 $853.86 $815.00
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,174 2,174 2,174
Maximum Peak-Hour Demand - Net of SEPA (megawatts):
Winter 1,418 1,310 1,814
Summer 1,740 1,778 1,691
Annual Load Factor (percent) 57.0 55.2 52.6
Plant Availability - Fossil-Steam (percent) 92.2 89.2 89.1
--------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 82.0 69.8 78.3
Oil and gas 0.1 0.5 0.2
Purchased power -
From non-affiliates 0.5 0.6 0.4
From affiliates 17.4 29.1 21.1
--------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
================================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,636 10,765 10,621
Cost of fuel per million BTU (cents) 203.60 206.06 193.70
Average cost of fuel per net kilowatt-hour generated (cents) 2.17 2.22 2.06
================================================================================================================================
|
II-175B
SELECTED FINANCIAL AND OPERATING DATA (continued)
Gulf Power Company 1997 Annual Report
===============================================================================================================
1988 1987
--------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $184,036 $199,701
Commercial 107,615 116,057
Industrial 72,634 80,295
Other 1,402 1,357
--------------------------------------------------------------------------------------------------------------
Total retail 365,687 397,410
Sales for resale - non-affiliates 117,466 134,456
Sales for resale - affiliates 48,277 55,955
--------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 531,430 587,821
Other revenues 19,397 39
--------------------------------------------------------------------------------------------------------------
Total $550,827 $587,860
==============================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 3,154,541 3,055,041
Commercial 2,088,598 1,986,332
Industrial 1,968,091 1,839,931
Other 16,257 15,241
--------------------------------------------------------------------------------------------------------------
Total retail 7,227,487 6,896,545
Sales for resale - non-affiliates 1,911,759 2,138,390
Sales for resale - affiliates 2,326,238 2,689,487
--------------------------------------------------------------------------------------------------------------
Total 11,465,484 11,724,422
==============================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 5.83 6.54
Commercial 5.15 5.84
Industrial 3.69 4.36
Total retail 5.06 5.76
Sales for resale 3.91 3.94
Total sales 4.64 5.01
Average Annual Kilowatt-Hour Use Per Residential Customer 12,883 12,763
Average Annual Revenue Per Residential Customer $751.60 $834.31
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,174 2,174
Maximum Peak-Hour Demand - Net of SEPA (megawatts):
Winter 1,395 1,354
Summer 1,613 1,617
Annual Load Factor (percent) 56.5 54.4
Plant Availability - Fossil-Steam (percent) 88.2 92.8
--------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 93.2 93.5
Oil and gas 0.4 0.4
Purchased power -
From non-affiliates 0.4 0.4
From affiliates 6.0 5.7
--------------------------------------------------------------------------------------------------------------
Total 100.0 100.0
==============================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,461 10,512
Cost of fuel per million BTU (cents) 178.00 197.53
Average cost of fuel per net kilowatt-hour generated (cents) 1.86 2.08
==============================================================================================================
|
II-175C
STATEMENTS OF INCOME
Gulf Power Company
==============================================================================================================================
For the Years Ended December 31, 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $609,096 $616,603 $600,458
Revenues from affiliates 16,760 17,762 18,619
------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 625,856 634,365 619,077
------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 180,843 184,500 185,274
Purchased power from non-affiliates 11,938 8,300 8,594
Purchased power from affiliates 24,955 35,076 29,966
Proceeds from settlement of disputed contracts - - -
Other 126,266 115,154 113,397
Maintenance 47,988 51,050 51,917
Depreciation and amortization 57,874 56,645 55,104
Taxes other than income taxes 51,775 52,027 49,598
Federal and state income taxes 35,034 37,821 34,065
------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 536,673 540,573 527,915
------------------------------------------------------------------------------------------------------------------------------
Operating Income 89,183 93,792 91,162
Other Income (Expense):
Allowance for equity funds used during construction 3 17 36
Interest income 1,203 1,921 2,877
Other, net (995) (1,695) (1,261)
Gain on sale of investment securities - - -
Income taxes applicable to other income 1,584 248 (121)
------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 90,978 94,283 92,693
------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 21,699 24,691 23,294
Allowance for debt funds used during construction (5) (58) (187)
Interest on notes payable 891 2,071 2,931
Amortization of debt discount, premium, and expense, net 2,281 2,087 2,014
Other interest charges 2,081 1,882 1,674
Distributions on preferred securities of subsidiary trust 2,804 - -
------------------------------------------------------------------------------------------------------------------------------
Net interest charges 29,751 30,673 29,726
------------------------------------------------------------------------------------------------------------------------------
Net Income 61,227 63,610 62,967
Dividends on Preferred Stock 3,617 5,765 5,813
------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 57,610 $ 57,845 $ 57,154
==============================================================================================================================
II-176
|
STATEMENTS OF INCOME
Gulf Power Company
==============================================================================================================================
For the Years Ended December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $561,460 $559,976 $546,827
Revenues from affiliates 17,353 23,166 24,075
------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 578,813 583,142 570,902
------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 161,168 170,485 182,754
Purchased power from non-affiliates 6,761 4,386 1,394
Purchased power from affiliates 25,819 32,273 26,788
Proceeds from settlement of disputed contracts - - (920)
Other 113,879 109,164 98,230
Maintenance 46,700 46,004 41,947
Depreciation and amortization 56,615 55,309 53,758
Taxes other than income taxes 41,701 40,204 37,898
Federal and state income taxes 33,957 32,730 32,078
------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 486,600 490,555 473,927
------------------------------------------------------------------------------------------------------------------------------
Operating Income 92,213 92,587 96,975
Other Income (Expense):
Allowance for equity funds used during construction 450 512 14
Interest income 1,429 1,328 2,733
Other, net (780) (1,238) (1,487)
Gain on sale of investment securities - 3,820 -
Income taxes applicable to other income 95 (921) 187
------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 93,407 96,088 98,422
------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 27,124 31,344 35,792
Allowance for debt funds used during construction (656) (454) (46)
Interest on notes payable 1,509 870 1,041
Amortization of debt discount, premium, and expense, net 1,834 1,412 1,032
Other interest charges 2,442 2,877 1,410
Distributions on preferred securities of subsidiary trust - - -
------------------------------------------------------------------------------------------------------------------------------
Net interest charges 32,253 36,049 39,229
------------------------------------------------------------------------------------------------------------------------------
Net Income 61,154 60,039 59,193
Dividends on Preferred Stock 5,925 5,728 5,103
------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 55,229 $ 54,311 $ 54,090
==============================================================================================================================
|
II-177A
STATEMENTS OF INCOME
Gulf Power Company
==============================================================================================================================
For the Years Ended December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $535,864 $529,262 $488,577
Revenues from affiliates 29,343 38,563 39,244
------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 565,207 567,825 527,821
------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 176,038 156,712 158,858
Purchased power from non-affiliates 896 1,427 1,251
Purchased power from affiliates 32,579 67,729 48,972
Proceeds from settlement of disputed contracts (20,385) - -
Other 94,411 90,045 82,231
Maintenance 45,468 45,491 44,295
Depreciation and amortization 52,195 50,899 48,760
Taxes other than income taxes 42,359 39,110 30,718
Federal and state income taxes 33,893 24,780 23,621
------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 457,454 476,193 438,706
------------------------------------------------------------------------------------------------------------------------------
Operating Income 107,753 91,632 89,115
Other Income (Expense):
Allowance for equity funds used during construction 54 - (446)
Interest income 2,427 4,508 3,271
Other, net (3,484) (6,360) (3,800)
Gain on sale of investment securities - - -
Income taxes applicable to other income 1,104 1,303 779
------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 107,854 91,083 88,919
------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 41,665 43,215 43,265
Allowance for debt funds used during construction (95) 1 242
Interest on notes payable 280 693 180
Amortization of debt discount, premium, and expense, net 699 603 613
Other interest charges 2,272 2,422 1,636
Distributions on preferred securities of subsidiary trust - - -
------------------------------------------------------------------------------------------------------------------------------
Net interest charges 44,821 46,934 45,936
------------------------------------------------------------------------------------------------------------------------------
Net Income 63,033 44,149 42,983
Dividends on Preferred Stock 5,237 5,435 5,622
------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 57,796 $ 38,714 $ 37,361
==============================================================================================================================
|
II-177B
STATEMENTS OF INCOME
Gulf Power Company
=============================================================================================================
For the Years Ended December 31, 1988 1987
-------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $502,550 $531,905
Revenues from affiliates 48,277 55,955
-------------------------------------------------------------------------------------------------------------
Total operating revenues 550,827 587,860
-------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 191,687 227,233
Purchased power from non-affiliates 1,468 1,792
Purchased power from affiliates 27,267 28,326
Proceeds from settlement of disputed contracts - -
Other 93,028 100,032
Maintenance 41,919 38,748
Depreciation and amortization 47,530 44,619
Taxes other than income taxes 27,087 26,246
Federal and state income taxes 26,239 31,703
-------------------------------------------------------------------------------------------------------------
Total operating expenses 456,225 498,699
-------------------------------------------------------------------------------------------------------------
Operating Income 94,602 89,161
Other Income (Expense):
Allowance for equity funds used during construction 457 1,013
Interest income 2,858 4,507
Other, net (3,491) (1,207)
Gain on sale of investment securities - -
Income taxes applicable to other income 1,001 (642)
-------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 95,427 92,832
-------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 42,538 43,689
Allowance for debt funds used during construction (808) (1,004)
Interest on notes payable 182 -
Amortization of debt discount, premium, and expense, net 600 555
Other interest charges 1,456 1,350
Distributions on preferred securities of subsidiary trust - -
-------------------------------------------------------------------------------------------------------------
Net interest charges 43,968 44,590
-------------------------------------------------------------------------------------------------------------
Net Income 51,459 48,242
Dividends on Preferred Stock 5,761 6,025
-------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 45,698 $ 42,217
=============================================================================================================
|
II-177C
STATEMENTS OF CASH FLOWS
Gulf Power Company
============================================================================================================================
For the Years Ended December 31, 1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 61,227 $ 63,610 $ 62,967
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 72,860 71,825 75,293
Deferred income taxes, net (7,047) 2,157 390
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction 3 (17) (36)
Non-cash proceeds from settlement of disputed contracts - - -
Other, net 2,402 16,298 (29,974)
Changes in certain current assets and liabilities --
Receivables, net (1,111) 736 (12,210)
Inventories 10,674 12,957 (618)
Payables 1,398 (7,078) 18,258
Other 25,141 397 (14,119)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 165,547 160,885 99,951
----------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (54,289) (61,386) (63,113)
Other 509 (2,786) 4,401
----------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (53,780) (64,172) (58,712)
----------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities 40,000 - -
Preferred stock - - -
First mortgage bonds - 55,000 -
Pollution control bonds 40,930 33,275 -
Capital contributions from parent company - - 58
Other long-term debt 20,000 49,148 -
Retirements:
Preferred stock (75,911) - (1,000)
First mortgage bonds (25,000) (50,930) (1,750)
Pollution control bonds (40,930) (33,275) (125)
Other long-term debt (15,972) (34,923) (13,314)
Notes payable, net 22,000 (55,500) 27,000
Payment of preferred stock dividends (5,370) (5,749) (5,813)
Payment of common stock dividends (64,600) (48,300) (46,400)
Miscellaneous (3,014) (5,332) (117)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (107,867) (96,586) (41,461)
----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 3,900 127 (222)
Cash and Cash Equivalents at Beginning of Year 807 680 902
----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 4,707 $ 807 $ 680
============================================================================================================================
( ) Denotes use of cash.
|
II-178
STATEMENTS OF CASH FLOWS
Gulf Power Company
============================================================================================================================
For the Years Ended December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 61,154 $ 60,039 $ 59,193
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 86,098 72,111 68,021
Deferred income taxes, net (6,986) 5,347 3,322
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (450) (512) (14)
Non-cash proceeds from settlement of disputed contracts - - (920)
Other, net 4,898 (864) 185
Changes in certain current assets and liabilities --
Receivables, net 3,540 12,867 (11,041)
Inventories (13,901) 5,574 23,560
Payables (10,159) 5,386 1,580
Other 610 (9,504) (13,637)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 124,804 150,444 130,249
----------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (78,869) (78,562) (64,671)
Other (3,493) (5,328) 3,970
----------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (82,362) (83,890) (60,701)
----------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities - - -
Preferred stock - 35,000 29,500
First mortgage bonds - 75,000 25,000
Pollution control bonds 42,000 53,425 8,930
Capital contributions from parent company 98 11 121
Other long-term debt 32,108 25,000 -
Retirements:
Preferred stock (1,000) (21,060) (15,500)
First mortgage bonds (48,856) (88,809) (117,693)
Pollution control bonds (42,100) (40,650) (9,205)
Other long-term debt (24,240) (7,736) (5,783)
Notes payable, net 47,447 (37,947) 44,000
Payment of preferred stock dividends (5,925) (5,728) (5,103)
Payment of common stock dividends (44,000) (41,800) (39,900)
Miscellaneous (2,648) (6,888) (8,760)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (47,116) (62,182) (94,393)
----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (4,674) 4,372 (24,845)
Cash and Cash Equivalents at Beginning of Year 5,576 1,204 26,049
----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 902 $ 5,576 $ 1,204
============================================================================================================================
( ) Denotes use of cash.
|
II-179A
STATEMENTS OF CASH FLOWS
Gulf Power Company
============================================================================================================================
For the Years Ended December 31, 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 63,033 $ 44,149 $ 42,983
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 65,584 63,650 59,955
Deferred income taxes, net (3,392) 1,837 5,319
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (54) - 446
Non-cash proceeds from settlement of disputed contracts (19,734) - -
Other, net 3,079 1,544 3,827
Changes in certain current assets and liabilities --
Receivables, net 12,421 (2,468) 492
Inventories (2,397) (11,807) 16,306
Payables (2,003) (3,440) 6,142
Other 8,012 5,781 4,466
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 124,549 99,246 139,936
----------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (64,323) (62,462) (70,726)
Other (8,097) (1,597) 419
----------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (72,420) (64,059) (70,307)
----------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities - - -
Preferred stock - - -
First mortgage bonds 50,000 - -
Pollution control bonds 21,200 - -
Capital contributions from parent company - 4,000 7,000
Other long-term debt - - -
Retirements:
Preferred stock (2,500) (1,750) (1,250)
First mortgage bonds (32,807) (6,455) (9,344)
Pollution control bonds (21,250) (50) (50)
Other long-term debt (7,981) (6,083) (5,611)
Notes payable, net - - -
Payment of preferred stock dividends (5,237) (5,435) (5,622)
Payment of common stock dividends (38,000) (37,000) (37,200)
Miscellaneous (3,715) 5 (3)
----------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (40,290) (52,768) (52,080)
----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 11,839 (17,581) 17,549
Cash and Cash Equivalents at Beginning of Year 14,210 31,791 14,242
----------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 26,049 $ 14,210 $ 31,791
============================================================================================================================
( ) Denotes use of cash.
|
II-179B
STATEMENTS OF CASH FLOWS
Gulf Power Company
=========================================================================================================
For the Years Ended December 31, 1988 1987
---------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 51,459 $ 48,242
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 56,260 51,672
Deferred income taxes, net 10,138 2,377
Deferred investment tax credits, net - 868
Allowance for equity funds used during construction (457) (1,013)
Non-cash proceeds from settlement of disputed contracts - -
Other, net 11,449 12,913
Changes in certain current assets and liabilities --
Receivables, net 8,984 (8,849)
Inventories (16,160) 23,691
Payables (5,340) 10,173
Other (18,432) 6,208
---------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 97,901 146,282
---------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (67,042) (97,511)
Other (62,782) (692)
---------------------------------------------------------------------------------------------------------
Net cash used for investing activities (129,824) (98,203)
---------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred securities - -
Preferred stock - -
First mortgage bonds 35,000 -
Pollution control bonds 3,677 35,996
Capital contributions from parent company 25,000 -
Other long-term debt - -
Retirements:
Preferred stock (1,750) (2,500)
First mortgage bonds (9,369) -
Pollution control bonds (50) (32,050)
Other long-term debt (5,175) (4,774)
Notes payable, net - -
Payment of preferred stock dividends (5,761) (6,025)
Payment of common stock dividends (35,400) (34,200)
Miscellaneous (233) (1,632)
---------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 5,939 (45,185)
---------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (25,984) 2,894
Cash and Cash Equivalents at Beginning of Year 40,226 37,332
---------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 14,242 $ 40,226
=========================================================================================================
( ) Denotes use of cash.
|
II-179C
BALANCE SHEET
Gulf Power Company
============================================================================================================================
At December 31, 1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 921,761 $ 921,295 $ 905,784
Transmission 163,018 161,634 156,786
Distribution 547,403 530,467 512,184
General 130,062 121,114 121,060
Construction work in progress 31,030 23,465 26,301
----------------------------------------------------------------------------------------------------------------------------
Total utility plant 1,793,274 1,757,975 1,722,115
Accumulated provision for depreciation 737,767 694,245 658,806
----------------------------------------------------------------------------------------------------------------------------
Total 1,055,507 1,063,730 1,063,309
Less property-related accumulated deferred income taxes - - -
----------------------------------------------------------------------------------------------------------------------------
Total 1,055,507 1,063,730 1,063,309
----------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Miscellaneous 622 652 740
----------------------------------------------------------------------------------------------------------------------------
Total 622 652 740
----------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 4,707 807 680
Investment securities - - -
Receivables, net 72,968 71,857 72,593
Fossil fuel stock, at average cost 19,296 28,352 37,875
Materials and supplies, at average cost 28,634 30,252 33,686
Current portion of deferred coal contract costs 4,456 16,389 12,767
Regulatory clauses under recovery 1,675 4,144 3,432
Prepayments 2,171 1,268 12,232
Vacation pay deferred 4,057 4,055 4,419
----------------------------------------------------------------------------------------------------------------------------
Total 137,964 157,124 177,684
----------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 26,586 28,313 29,093
Debt expense, being amortized 2,447 2,922 3,444
Premium on reacquired debt, being amortized 20,494 20,386 17,015
Deferred coal contract costs - 13,126 33,768
Miscellaneous 21,992 22,113 16,806
----------------------------------------------------------------------------------------------------------------------------
Total 71,519 86,860 100,126
----------------------------------------------------------------------------------------------------------------------------
Total Assets $1,265,612 $1,308,366 $1,341,859
============================================================================================================================
|
II-180
BALANCE SHEETS
Gulf Power Company
============================================================================================================================
At December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 896,236 $ 863,223 $ 841,489
Transmission 155,967 154,304 148,824
Distribution 487,986 464,182 443,352
General 116,178 129,995 127,826
Construction work in progress 24,288 34,591 29,564
----------------------------------------------------------------------------------------------------------------------------
Total utility plant 1,680,655 1,646,295 1,591,055
Accumulated provision for depreciation 622,911 610,542 578,851
----------------------------------------------------------------------------------------------------------------------------
Total 1,057,744 1,035,753 1,012,204
Less property-related accumulated deferred income taxes - - 200,904
----------------------------------------------------------------------------------------------------------------------------
Total 1,057,744 1,035,753 811,300
----------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Miscellaneous 7,997 13,242 7,074
----------------------------------------------------------------------------------------------------------------------------
Total 7,997 13,242 7,074
----------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 902 5,576 1,204
Investment securities - - 22,322
Receivables, net 60,384 63,924 60,047
Fossil fuel stock, at average cost 35,686 20,652 29,492
Materials and supplies, at average cost 35,257 36,390 33,124
Current portion of deferred coal contract costs 2,521 12,535 3,071
Regulatory clauses under recovery 5,002 3,244 1,680
Prepayments 4,354 2,160 1,395
Vacation pay deferred 4,172 4,022 3,779
----------------------------------------------------------------------------------------------------------------------------
Total 148,278 148,503 156,114
----------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 30,433 31,334 -
Debt expense, being amortized 3,625 3,693 3,253
Premium on reacquired debt, being amortized 18,494 17,554 15,319
Deferred coal contract costs 38,169 52,884 63,723
Miscellaneous 10,802 4,846 5,916
----------------------------------------------------------------------------------------------------------------------------
Total 101,523 110,311 88,211
----------------------------------------------------------------------------------------------------------------------------
Total Assets $1,315,542 $1,307,809 $1,062,699
============================================================================================================================
|
II-181A
BALANCE SHEETS
Gulf Power Company
============================================================================================================================
At December 31, 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 837,712 $ 817,490 $ 807,546
Transmission 143,275 136,813 133,926
Distribution 419,228 400,016 375,521
General 125,330 123,059 119,779
Construction work in progress 13,684 16,868 10,166
----------------------------------------------------------------------------------------------------------------------------
Total utility plant 1,539,229 1,494,246 1,446,938
Accumulated provision for depreciation 535,408 501,739 464,944
----------------------------------------------------------------------------------------------------------------------------
Total 1,003,821 992,507 981,994
Less property-related accumulated deferred income taxes 197,138 192,749 186,084
----------------------------------------------------------------------------------------------------------------------------
Total 806,683 799,758 795,910
----------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 19,938 - -
Miscellaneous 6,410 5,439 6,933
----------------------------------------------------------------------------------------------------------------------------
Total 26,348 5,439 6,933
----------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 26,049 14,210 31,791
Investment securities - - -
Receivables, net 49,006 61,427 58,959
Fossil fuel stock, at average cost 52,106 50,469 37,526
Materials and supplies, at average cost 34,070 33,310 34,446
Current portion of deferred coal contract costs 4,626 6,212 5,534
Regulatory clauses under recovery - 7,008 4,503
Prepayments 1,410 2,168 2,490
Vacation pay deferred 3,776 3,631 3,425
----------------------------------------------------------------------------------------------------------------------------
Total 171,043 178,435 178,674
----------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - -
Debt expense, being amortized 3,232 2,954 3,117
Premium on reacquired debt, being amortized 8,855 6,256 6,574
Deferred coal contract costs 74,502 87,102 97,833
Miscellaneous 5,073 4,635 4,389
----------------------------------------------------------------------------------------------------------------------------
Total 91,662 100,947 111,913
----------------------------------------------------------------------------------------------------------------------------
Total Assets $1,095,736 $1,084,579 $1,093,430
============================================================================================================================
|
II-181B
BALANCE SHEETS
Gulf Power Company
=========================================================================================================
At December 31, 1988 1987
---------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 796,052 $ 801,600
Transmission 113,177 106,352
Distribution 343,421 325,037
General 115,273 102,664
Construction work in progress 29,572 10,113
---------------------------------------------------------------------------------------------------------
Total utility plant 1,397,495 1,345,766
Accumulated provision for depreciation 425,520 388,248
---------------------------------------------------------------------------------------------------------
Total 971,975 957,518
Less property-related accumulated deferred income taxes 178,657 166,707
---------------------------------------------------------------------------------------------------------
Total 793,318 790,811
---------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - -
Miscellaneous 6,756 2,932
---------------------------------------------------------------------------------------------------------
Total 6,756 2,932
---------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 14,242 40,226
Investment securities - -
Receivables, net 59,451 68,435
Fossil fuel stock, at average cost 55,286 43,290
Materials and supplies, at average cost 32,992 28,828
Current portion of deferred coal contract costs 6,194 2,642
Regulatory clauses under recovery 1,218 -
Prepayments 3,577 677
Vacation pay deferred 3,340 3,200
---------------------------------------------------------------------------------------------------------
Total 176,300 187,298
---------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - -
Debt expense, being amortized 3,281 3,203
Premium on reacquired debt, being amortized 6,892 7,210
Deferred coal contract costs 106,263 55,889
Miscellaneous 4,415 3,839
---------------------------------------------------------------------------------------------------------
Total 120,851 70,141
---------------------------------------------------------------------------------------------------------
Total Assets $1,097,225 $1,051,182
=========================================================================================================
|
II-181C
BALANCE SHEETS
Gulf Power Company
============================================================================================================================
At December 31, 1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 38,060 $ 38,060 $ 38,060
Paid-in capital 218,438 218,438 218,438
Premium on preferred stock 12 81 81
Earnings retained in the business 172,208 179,179 179,663
----------------------------------------------------------------------------------------------------------------------------
Total common equity 428,718 435,758 436,242
Preferred stock 13,691 65,102 89,602
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities 40,000 - -
Long-term debt 296,993 331,880 323,376
----------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 779,402 832,740 849,220
----------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 47,000 25,000 80,500
Preferred stock due within one year - 24,500 -
Long-term debt due within one year 53,327 40,972 31,548
Accounts payable 34,539 32,770 41,643
Customer deposits 13,778 13,464 13,195
Taxes accrued 8,258 8,342 9,547
Interest accrued 7,227 7,629 5,719
Regulatory clauses over recovery 5,062 5,884 2,800
Vacation pay accrued 4,057 4,055 4,419
Miscellaneous 18,949 17,121 7,356
----------------------------------------------------------------------------------------------------------------------------
Total 192,197 179,737 196,727
----------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 166,302 163,857 162,345
Deferred credits related to income taxes 56,935 64,354 67,481
Accumulated deferred investment tax credits 31,552 33,760 36,052
Miscellaneous 39,224 33,918 30,034
----------------------------------------------------------------------------------------------------------------------------
Total 294,013 295,889 295,912
----------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $1,265,612 $1,308,366 $1,341,859
============================================================================================================================
|
II-182
BALANCE SHEETS
Gulf Power Company
============================================================================================================================
At December 31, 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 38,060 $ 38,060 $ 38,060
Paid-in capital 218,380 218,282 218,271
Premium on preferred stock 81 81 88
Earnings retained in the business 168,951 157,773 146,771
----------------------------------------------------------------------------------------------------------------------------
Total common equity 425,472 414,196 403,190
Preferred stock 89,602 89,602 74,662
Preferred stock subject to mandatory redemption - 1,000 2,000
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 356,393 369,259 382,047
----------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 871,467 874,057 861,899
----------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 53,500 6,053 44,000
Preferred stock due within one year 1,000 1,000 1,000
Long-term debt due within one year 13,439 41,552 13,820
Accounts payable 23,656 38,699 33,461
Customer deposits 13,609 15,082 15,532
Taxes accrued 13,465 13,015 11,419
Interest accrued 6,106 5,420 6,370
Regulatory clauses over recovery 3,960 840 -
Vacation pay accrued 4,172 4,022 3,779
Miscellaneous 7,828 8,527 3,950
----------------------------------------------------------------------------------------------------------------------------
Total 140,735 134,210 133,331
----------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 151,681 151,743 -
Deferred credits related to income taxes 71,964 76,876 -
Accumulated deferred investment tax credits 38,391 40,770 43,117
Miscellaneous 41,304 30,153 24,352
----------------------------------------------------------------------------------------------------------------------------
Total 303,340 299,542 67,469
----------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $1,315,542 $1,307,809 $1,062,699
============================================================================================================================
|
II-183A
BALANCE SHEETS
Gulf Power Company
============================================================================================================================
At December 31, 1991 1990 1989
----------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 38,060 $ 38,060 $ 38,060
Paid-in capital 218,150 218,150 214,150
Premium on preferred stock 399 399 399
Earnings retained in the business 134,372 114,576 112,862
----------------------------------------------------------------------------------------------------------------------------
Total common equity 390,981 371,185 365,471
Preferred stock 55,162 55,162 55,162
Preferred stock subject to mandatory redemption 7,500 9,250 11,000
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 434,648 475,284 484,608
----------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 888,291 910,881 916,241
----------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - - -
Preferred stock due within one year 1,000 1,750 1,750
Long-term debt due within one year 59,111 9,452 12,588
Accounts payable 25,315 27,447 34,764
Customer deposits 15,513 15,551 15,752
Taxes accrued 19,274 19,610 12,388
Interest accrued 9,720 10,820 10,105
Regulatory clauses over recovery 1,114 - -
Vacation pay accrued 3,776 3,631 3,425
Miscellaneous 3,545 12,177 7,759
----------------------------------------------------------------------------------------------------------------------------
Total 138,368 100,438 98,531
----------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 1,775 6,736 13,381
Deferred credits related to income taxes - - -
Accumulated deferred investment tax credits 45,446 47,776 50,109
Miscellaneous 21,856 18,748 15,168
----------------------------------------------------------------------------------------------------------------------------
Total 69,077 73,260 78,658
----------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $1,095,736 $1,084,579 $1,093,430
============================================================================================================================
|
II-183B
BALANCE SHEETS
Gulf Power Company
=========================================================================================================
At December 31, 1988 1987
---------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 38,060 $ 38,060
Paid-in capital 207,150 182,150
Premium on preferred stock 399 399
Earnings retained in the business 112,701 102,403
---------------------------------------------------------------------------------------------------------
Total common equity 358,310 323,012
Preferred stock 55,162 55,162
Preferred stock subject to mandatory redemption 12,750 14,000
Company obligated mandatorily redeemable preferred securities - -
Long-term debt 497,069 474,640
---------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 923,291 866,814
---------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - -
Preferred stock due within one year 1,250 1,750
Long-term debt due within one year 15,005 13,225
Accounts payable 29,595 34,500
Customer deposits 15,316 15,565
Taxes accrued 10,683 7,850
Interest accrued 10,247 9,584
Regulatory clauses over recovery - 9,330
Vacation pay accrued 3,340 3,200
Miscellaneous 2,748 2,144
---------------------------------------------------------------------------------------------------------
Total 88,184 97,148
---------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 17,678 22,992
Deferred credits related to income taxes - -
Accumulated deferred investment tax credits 52,451 54,597
Miscellaneous 15,621 9,631
---------------------------------------------------------------------------------------------------------
Total 85,750 87,220
---------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $1,097,225 $1,051,182
=========================================================================================================
|
II-183C
GULF POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1997
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
--------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 15,000 5.55% $ 15,000 4/1/98
1993 30,000 5% 30,000 7/1/98
1993 30,000 6-1/8% 30,000 7/1/03
1996 30,000 6-7/8% 30,000 1/1/26
1996 25,000 6-1/2% 25,000 11/1/06
-------- --------
$130,000 $130,000
======== ========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
--------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1996 $ 12,075 5.25% $ 12,075 4/1/06
1997 40,930 Variable 40,930 7/1/22
1993 13,000 6.20% 13,000 4/1/23
1993 32,550 5.80% 32,550 6/1/23
1993 7,875 5.70% 7,875 11/1/23
1994 22,000 6.30% 22,000 9/1/24
1994 20,000 Variable 20,000 9/1/24
1996 21,200 5-1/2% 21,200 2/1/26
-------- --------
$169,630 $169,630
======== ========
Company Obligated Mandatorily Redeemable Preferred Securities
of Subsidiary Trust Holding Company Junior Subordinated Notes
Preferred Securities Interest Amount
Series Outstanding Rate Outstanding
--------------------------------------------------------------------------------------------------
(Thousands)
1997 1,600,000 7.625% 40,000
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
--------------------------------------------------------------------------------------------------
(Thousands)
1950 12,553 4.64% $ 1,255
1960 13,574 5.16% 1,357
1966 16,284 5.44% 1,629
1993 346,429 6.72% 8,661
1993 31,560 Adjustable 789
------- --------
420,400 $ 13,691
======= ========
|
II-184
GULF POWER COMPANY
SECURITIES RETIRED DURING 1997
First Mortgage Bonds
Principal Interest
Series Amount Rate
---------------------------------------------------------------------------------------
(Thousands)
1992 $25,000 5-7/8%
Pollution Control Bonds
Principal Interest
Series Amount Rate
---------------------------------------------------------------------------------------
(Thousands)
1987 $32,000 8-1/4%
1992 8,930 6-3/4%
-------
$40,930
=======
Preferred Stock
Principal Dividend
Series Amount Rate
---------------------------------------------------------------------------------------
(Thousands)
1950 $ 3,847 4.64%
1960 3,643 5.16%
1966 3,371 5.44%
1969 5,000 7.52%
1972 5,000 7.88%
1992 14,500 7%
1992 15,000 7.30%
1993 11,339 6.72%
1993 14,211 Adjustable
-------
$75,911
=======
|
II-185
MISSISSIPPI POWER COMPANY
FINANCIAL SECTION
II-186
MANAGEMENT'S REPORT
Mississippi Power Company 1997 Annual Report
The management of Mississippi Power Company has prepared--and is responsible for--the financial statements and related information included in this report. These statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances and necessarily include amounts that are based on best estimates and judgments of management. Financial information throughout this annual report is consistent with the financial statements.
The Company maintains a system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that books and records reflect only authorized transactions of the Company. Limitations exist in any system of internal controls, however, based upon a recognition that the cost of the system should not exceed its benefits. The Company believes its system of internal accounting control maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an ongoing basis by the internal audit staff. The Company's independent public accountants also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of four directors who are not employees, provides a broad overview of management's financial reporting and control functions. Periodically, this committee meets with management, the internal auditors, and the independent public accountants to ensure that these groups are fulfilling their obligations and to discuss auditing, internal controls, and financial reporting matters. The internal auditors and independent public accountants have access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable assurance that the Company's operations are conducted according to a high standard of business ethics.
In management's opinion, the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of Mississippi Power Company in conformity with generally accepted accounting principles.
/s/ Dwight H. Evans Dwight H. Evans President and Chief Executive Officer /s/ Michael W. Southern Michael W. Southern Vice President, Secretary, Treasurer and Chief Financial Officer February 11, 1998 |
II-187
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Mississippi Power Company:
We have audited the accompanying balance sheets and statements of capitalization of Mississippi Power Company (a Mississippi corporation and a wholly owned subsidiary of Southern Company) as of December 31, 1997 and 1996, and the related statements of income, retained earnings, paid-in capital, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-196 through II-211) referred to above present fairly, in all material respects, the financial position of Mississippi Power Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
II-188
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Mississippi Power Company 1997 Annual Report
RESULTS OF OPERATIONS
Earnings
Mississippi Power Company's net income after dividends on preferred stock for 1997 was $54.0 million, reflecting a 2.4 percent or $1.3 million increase above 1996. The increased earnings is due to lower operating expenses.
In 1996, earnings were $52.7 million, up $0.2 million from the prior year. Earnings reflected a modest increase in energy sales, an annual retail rate decrease of $3.0 million under the Environmental Compliance Overview Plan (ECO Plan) and an annual retail increase of $4.5 million under the Performance Evaluation Plan (PEP) which became effective in October 1996.
Revenues
The following table summarizes the factors impacting operating revenues for the past three years:
Increase (Decrease)
from Prior Year
-------------------------------------
1997 1996 1995
-------------------------------------
(in thousands)
Retail --
Change in base
rates (PEP and
ECO Plan) $ 3,177 $ (402) $ 2,694
Sales growth 109 11,187 4,045
Weather (1,118) (5,585) 4,513
Fuel cost
recovery
and other 948 (1,255) 3,806
---------------------------------------------------------------
Total retail 3,116 3,945 15,058
---------------------------------------------------------------
Sales for resale --
Non-affiliates 5,464 7,776 3,698
Affiliates (11,606) 14,139 (1,847)
---------------------------------------------------------------
Total sales for
resale (6,142) 21,915 1,851
Other operating
revenues 2,585 1,616 482
---------------------------------------------------------------
Total operating
revenues $ (441) $27,476 $17,391
===============================================================
Percent change (0.1)% 5.3% 3.5%
---------------------------------------------------------------
|
Retail revenues in 1997 were $417 million, up 0.8 percent from the corresponding amount in 1996. The increase in retail revenues was primarily caused by the October 1996 PEP retail rate increase, as mentioned above, and the January 1997 ECO Plan retail rate increase of $0.9 million. Retail revenues for 1996 when compared to 1995 reflected a 1.0 percent increase due to modest growth in energy sales to industrial, commercial and residential customers, as well as changes in retail revenues due to the ECO Plan and PEP. Changes in base rates reflect any rate changes made under the PEP and ECO Plan.
Under the fuel cost recovery provision, recorded fuel revenues are equal to recorded fuel expenses, including the fuel component and the operation and maintenance component of purchased energy. Therefore, changes in recoverable fuel expenses are offset with corresponding changes in fuel revenues and have no effect on net income.
Energy sales to non-affiliates include economy sales and amounts sold under short-term contracts. Sales for resale to non-affiliates are influenced by those utilities' own customer demand, plant availability, and the cost of their predominant fuels -- oil and natural gas.
Included in sales for resale to non-affiliates are revenues from rural electric cooperative associations and municipalities located in southeastern Mississippi. Energy sales to these customers increased 3.6 percent in 1997 and 6.4 percent in 1996, with the related revenues rising 1.6 percent and 7.1 percent, respectively. The customer demand experienced by these utilities is determined by factors very similar to Mississippi Power's.
Sales for resale to non-territorial utilities are primarily under long-term contracts consisting of capacity and energy components. Capacity revenues reflect the recovery of fixed costs and a return on investment under the contracts. Energy is generally sold at variable cost. Under these long-term contracts, the capacity and energy components were:
1997 1996 1995
-------------------------------------
(in thousands)
Capacity $ 8 $ - $ 268
Energy 1,896 3,761 3,627
----------------------------------------------------------
Total $1,904 $3,761 $3,895
==========================================================
|
Capacity revenues for Mississippi Power varied due to changes in the contracts and in the allocation of transmission capacity revenues throughout the Southern electric system. Most of the Company's capacity revenues are derived from transmission charges.
II-189
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1997 Annual Report
Sales to affiliated companies within the Southern electric system will vary from year to year depending on demand and the availability and cost of generating resources at each company. These sales have no material impact on earnings.
Below is a breakdown of kilowatt-hour sales for 1997 and the percent change for the last three years:
Amount Percent Change
(millions of ----------- ------------------------------
kilowatt-hours) 1997 1997 1996 1995
---------- ------------------------------
Residential 2,039 (2.0)% 1.9% 6.2%
Commercial 2,408 4.0 3.3 6.7
Industrial 3,982 0.6 3.8 (0.9)
Other 40 2.6 1.9 1.1
----------
Total retail 8,469 0.9 3.2 2.9
Sales for
resale --
Non-affiliates 2,895 6.2 9.4 (2.4)
Affiliates 479 (31.0) 184.7 39.7
----------
Total 11,843 0.2 8.7 2.2
================================================================
|
Total retail energy sales for 1997 compared to 1996 and for 1996 compared to 1995 increased primarily due to growth in the number of customers served by the Company.
The Company anticipates continued growth in energy sales as the economy improves within its service area. The casino industry and ancillary services, such as lodging, food, transportation, etc., are some of the factors which may influence the economy of the Company's service area. Also, energy demand is expected to grow as a result of a larger and more fully employed population.
Expenses
Total operating expenses for 1997 were $466 million, reflecting a decrease of $1.3 million or 0.3 percent when compared to the corresponding amount in 1996. The decrease was due primarily to lower administrative and general expenses. In 1996, total operating expenses increased by 6.6 percent when compared to the prior year due to higher fuel expenses, higher maintenance and higher depreciation and amortization.
Fuel costs are the single largest expense for the Company. Fuel expenses for 1997 when compared to 1996 increased by 0.4 percent due to a 1.1 percent increase in generation. The increase in generation was due to the higher demand for energy in the retail sector. In 1997, expenses related to purchased power from non-affiliates decreased 19.1 percent and expenses related to purchased power from affiliates increased 13.7 percent due to the increased availability of energy within the Southern electric system.
A comparison of 1996 to 1995 fuel costs reflects an increase that was due to a 21.7 percent increase in generation. This increased generation was due to higher demand for energy across the Southern electric system. Further, the higher demand for energy resulted in higher purchased power costs from non-affiliates and lower purchased power from affiliates of the Southern electric system.
Purchased power consists mainly of energy purchases from affiliates in the Southern electric system. Purchased power transactions (both sales and purchases) among Mississippi Power and its affiliates will vary from period to period depending on demand and the availability and variable production cost at each generating unit in the Southern electric system.
II-190
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1997 Annual Report
The amount and sources of energy supply, the average cost of fuel per net kilowatt-hour generated, and the total average cost of energy supply (including purchased power) were as follows:
1997 1996 1995
------------------------------
Total generation
(millions of
kilowatt-hours) 10,289 10,180 8,368
Sources of energy
supply (percent) --
Coal 70 70 58
Gas 13 12 15
Oil * * *
Purchased Power 17 18 27
Average cost of fuel per
net kilowatt-hour
generated (cents) --
Coal 1.44 1.43 1.58
Gas 3.54 4.24 2.32
Oil - 5.71 6.21
Total average cost
of energy supply 1.57 1.56 1.53
--------------------------------------------------------------
|
* Not meaningful because of minimal generation from the fuel source.
Other operation expense in 1997 decreased 3.5 percent from the amount recorded in 1996. The decrease was due to lower administrative and general expenses.
Maintenance expenses in 1996 when compared to 1995 increased due to the timing of maintenance performed at Plants Daniel and Watson, as well as other projects.
In 1996, as compared to 1995, depreciation and amortization increased primarily due to additional plant investment, higher depreciation rates beginning in 1996, and increased amortization of regulatory assets.
Comparisons of taxes other than income taxes for 1997 to 1996 and for 1996 to 1995 show increases of 1.1 percent and 2.6 percent, respectively, due to higher municipal franchise taxes resulting from higher retail revenues.
Effects of Inflation
Mississippi Power is subject to rate regulation and income tax laws that are based on the recovery of historical costs. Therefore, inflation creates an economic loss because the Company is recovering its costs of investments in dollars that have less purchasing power. While the inflation rate has been relatively low in recent years, it continues to have an adverse effect on the Company because of the large investment in long-lived utility plant. Conventional accounting for historical costs does not recognize this economic loss nor the partially offsetting gain that arises through financing facilities with fixed-money obligations, such as long-term debt and preferred stock. Any recognition of inflation by regulatory authorities is reflected in the rate of return allowed.
Future Earnings Potential
The results of operations for the past three years are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from regulatory matters to energy sales growth to a less regulated more competitive environment. Expenses are subject to constant review and cost control programs. See Note 2 to the financial statements under "Workforce Reduction Programs" for information regarding the Company's workforce reduction plan of 1997.
The Company currently operates as a vertically integrated company providing electricity to customers within its traditional service area located in southeastern Mississippi. Prices for electricity provided by the Company to retail customers are set by the MPSC under cost-based regulatory principles.
Mississippi Power is also maximizing the utility of invested capital and minimizing the need for capital by refinancing, decreasing the average fuel stockpile, raising generating plant availability and efficiency, and aggressively controlling the construction budget.
Operating revenues will be affected by any changes in rates under the PEP, the Company's performance based ratemaking plan, and the ECO Plan. PEP has proven to be a stabilizing force on electric rates, with only moderate changes in rates taking place. The ECO Plan provides for recovery of costs (including costs of capital) associated with environmental projects approved by the Mississippi Public Service Commission (MPSC), most of which are required to comply with Clean Air Act Amendments of 1990 (Clean Air Act) regulations. The ECO Plan is operated independently of PEP. The Clean Air Act and other important environmental items are discussed later under "Environmental Matters."
II-191
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1997 Annual Report
The Federal Energy Regulatory Commission (FERC) regulates the Company's wholesale rate schedules, power sales contracts and transmission facilities. The FERC is currently reviewing the rate of return on common equity included in these schedules and contracts and may require such returns to be lowered, possibly retroactively.
Further discussion of PEP, the ECO Plan, and proceedings before the FERC is found in Note 3 to the financial statements herein.
Future earnings in the near term will depend upon growth in energy sales, which is subject to a number of factors. These factors include weather, competition, changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, and the rate of economic growth in Mississippi Power's service area.
The electric utility industry in the United States is currently undergoing a period of dramatic change as a result of regulatory and competitive factors. Among the primary agents of change has been the Energy Policy Act of 1992 (Energy Act). The Energy Act allows Independent Power Producers (IPPs) to access a utility's transmission network in order to sell electricity to other utilities. This enhances the incentive for IPPs to build cogeneration plants for a utility's large industrial and commercial customers and sell energy generation to other utilities. Also, electricity sales for resale rates are being driven down by wholesale transmission access and numerous potential new energy suppliers, including power marketers and brokers. The Company is aggressively working to maintain and expand its share of wholesale sales in the Southeastern power markets.
Although the Energy Act does not permit retail transmission access, it has been a catalyst for some emerging restructuring and consolidation within the utility industry. There are federal and various state initiatives in various stages which would promote wholesale and retail competition. Certain of these initiatives would result in some form of separation of generation, transmission and distribution facilities. As these changes take place the structure of the utility industry could change. Restructuring initiatives are being discussed in Mississippi; none have been enacted to date. Enactment would have to encompass the resolution of numerous complex legislative, jurisdictional, financial and operational issues.
Mississippi Power is subject to the provisions of Financial Accounting Standards Board Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the Company's operations is no longer subject to these provisions, the Company would be required to write off related regulatory assets and liabilities that are not specifically recoverable, and determine if any other assets have been impaired. See Note 1 to the financial statements under "Regulatory Assets and Liabilities" for additional information. The inability of Mississippi Power to recover its investment, including regulatory assets, could have a material adverse effect on the financial condition of the Company.
The Company is attempting to minimize or reduce its cost exposure. Continuing to be a low-cost producer could provide significant opportunities to increase market share and profitability in markets that evolve with changing regulation. Conversely, unless Mississippi Power remains a low-cost producer and provides quality service, the Company's retail energy sales growth could be limited, and this could significantly erode earnings.
The Company is heavily dependent upon complex computer systems for all phases of its operations. The year 2000 issue--common to most corporations--concerns the inability of certain software and databases to properly recognize date sensitive information related to the year 2000 and thereafter. This problem could result in a material disruption to the company's operations, if not corrected. Mississippi Power has assessed and developed a detailed strategy to prevent or at least minimize problems related to the year 2000 issue. In 1997, resources were committed and implementation began to modify the affected information systems. Total costs related to the project are estimated to be approximately $4.8 million, of which $0.5 million was spent in 1997. Most all remaining costs will be expensed in 1998. Implementation is currently on schedule. Although, the degree of success of this project cannot be determined at this time, management believes that there will be no significant effect on the Company's operations.
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1997 Annual Report
Exposure to Market Risk
Due to cost-based rate regulation, the Company has limited exposure to market volatility in interest rates and prices of electricity. To mitigate residual risks relative to movements in electricity prices, the Company enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market. Realized gains and losses are recognized in the income statement as incurred. At December 31, 1997, exposure from these activities was not material to the Company's financial position, results of operations, or cash flows.
New Accounting Standards
The FASB has issued Statement No. 130, Reporting Comprehensive Income, which will be effective in 1998. This statement establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. The objective of the statement is to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (comprehensive income). Comprehensive income is the total of net income and all other non-owner changes in equity. The Company will adopt the new rules in 1998.
The FASB has issued Statement No. 131, Disclosure about Segments of an Enterprise and Related Information. Southern Company adopted the new rules effective December 31, 1997. This statement requires that a public business enterprise report financial and descriptive information about its reportable operating segments. This statement also establishes standards for related disclosures about products and services, geographic areas, and major customers. Mississippi Power adopted the new rules in 1997, and they did not have any significant impact on the Company's financial reporting. However, this conclusion may change as industry restructuring and competitive factors influence the Company's operations.
FINANCIAL CONDITION
Overview
The principal change in Mississippi Power's financial condition during 1997 was gross property additions to utility plant of $55 million. Funding for gross property additions and other capital requirements has been provided from operating activities, principally earnings and the non-cash charges to income of depreciation and amortization, and the issuance of preferred securities. The Statements of Cash Flows provide additional details.
Financing Activity
Retirements, including maturities during 1997, primarily related to preferred stock, totaled some $42 million. In February 1997, Mississippi Power Capital Trust I (Trust I), of which the Company owns all the common securities, issued $35 million of 7.75 percent mandatorily redeemable preferred securities. Substantially all of the assets of Trust I are $36 million aggregate principal amount of the Company's 7.75 percent junior subordinated notes due February 15, 2037. (See the Statements of Cash Flows for further details.) Composite financing rates for the years 1995 through 1997 as of year-end were as follows:
1997 1996 1995
-----------------------------
Composite interest rate on
long-term debt 6.16% 6.03% 6.63%
Composite preferred stock
dividend rate 6.33% 6.58% 6.58%
Composite interest rate on
preferred securities 7.75% - -
-----------------------------------------------------------
|
The decrease in the composite dividend rate on preferred stock in 1997 is primarily the result of retirements.
Capital Structure
At year-end 1997, the Company's ratio of common equity to total capitalization, excluding long-term debt due within one year, was 52.0 percent, compared to 48.9 percent in 1996. The increase in equity ratio in 1997 is attributed to the reclassification of $35 million of long-term debt to a current liability.
Capital Requirements for Construction
The Company's projected construction expenditures for the next three years total $450 million ($67 million in 1998, $92 million in 1999, and $291 million in 2000). The major emphasis within the construction program will be on the upgrade of existing facilities and the addition of combined cycle generation. In 1998, Mississippi Power received approval from the MPSC to build up to 1,000 megawatts of natural gas-fired combined cycle generation at Plant Daniel. Construction is expected to begin in 1999.
Revisions may be necessary because of factors such as changes in business conditions, revised load projections, the availability and cost of capital, and changes in environmental regulations, and alternatives such as leasing.
II-193
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1997 Annual Report
Other Capital Requirements
In addition to the funds required for the Company's construction program, approximately $155.1 million will be required by the end of 2000 for present sinking fund requirements and maturities of long-term debt. Mississippi Power plans to continue, when economically feasible, to retire higher cost debt and preferred stock and replace these obligations with lower-cost capital if market conditions permit.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean Air Act -- the acid rain compliance provision of the law -- significantly affected Mississippi Power and the other operating companies of Southern Company. Specific reductions in sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants are required in two phases. Phase I compliance began in 1995 and initially affected 28 generating plants in the Southern electric system. As a result of Southern Company's compliance strategy, an additional 22 generating units were brought into compliance with Phase I requirements. Phase II compliance is required in 2000, and all fossil-fired generating plants will be affected.
Southern Company achieved Phase I sulfur dioxide compliance at the affected plants by switching to low-sulfur coal, which required some equipment upgrades. Construction expenditures for Phase I compliance totaled approximately $65 million for Mississippi Power.
For Phase II sulfur dioxide compliance, Southern Company could use emission allowances, increase fuel switching, and/or install flue gas desulfurization equipment at selected plants. The full impact of Phase II compliance cannot now be determined with certainty, pending the continuing development of a market for emission allowances, the completion of EPA regulations, and the possibility of new emission reduction technologies.
Mississippi Power's ECO Plan is designed to allow recovery of costs of compliance with the Clean Air Act, as well as other environmental statutes and regulations. The MPSC reviews environmental projects and the Company's environmental policy through the ECO Plan. Under the ECO Plan, any increase in the annual revenue requirement is limited to 2 percent of retail revenues. Mississippi Power's management believes that the ECO Plan provides for recovery of the Clean Air Act costs. See Note 3 to the financial statements under "Environmental Compliance Overview Plan" for additional information.
A significant portion of costs related to the acid rain provision of the Clean Air Act is expected to be recovered through existing ratemaking provisions. However, there can be no assurance that all Clean Air Act costs will be recovered.
In July 1997, the Environmental Protection Agency (EPA) revised the national ambient air quality standards for ozone and particulate matter. This revision makes the standards significantly more stringent. Also, in October 1997, the EPA issued a proposed regional ozone rule which-- if implemented-- could require substantial further reductions in NOx emissions from fossil-fueled generating facilities. Implementation of the standards and the proposed rule could result in significant additional compliance costs and capital expenditures that cannot be determined at this time.
The EPA and state environmental regulatory agencies are reviewing and evaluating various matters including: emission control strategies for ozone non-attainment areas; additional controls for hazardous air pollutant emissions; and hazardous waste disposal requirements. The impact of new standards will depend on the development and implementation of applicable regulations.
The Company must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations, the Company could incur costs to clean up properties currently or previously owned. Upon identifying potential sites, the Company conducts studies, when possible, to determine the extent of any required cleanup costs. Should remediation be determined to be probable, reasonable estimates of costs to clean up such sites are developed and recognized in the financial statements. A currently owned site where manufactured gas plant operations were located prior to the Company's ownership is being investigated for potential remediation. See Note 3 to the financial statements under "Environmental Compliance Overview Plan" for additional information.
Several major pieces of environmental legislation are being considered for reauthorization or amendment by Congress. These include: the Clean Air Act; the
II-194
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Mississippi Power Company 1997 Annual Report
Clean Water Act; the Comprehensive Environmental Response, Compensation, and Liability Act; the Resource Conservation and Recovery Act; and the Endangered Species Act. Changes to these laws could affect many areas of the Company's operations. The full impact of any such changes cannot be determined at this time.
Compliance with possible additional legislation related to global climate change, electromagnetic fields, and other environmental and health concerns could significantly affect the Company. The impact of new legislation -- if any -- will depend on the subsequent development and implementation of applicable regulations. In addition, the potential exists for lawsuits alleging damages caused by electromagnetic fields. The likelihood or outcome of such potential lawsuits cannot be determined at this time.
Sources of Capital
At December 31, 1997, the Company had $76.3 million of unused committed credit agreements. The Company had no short-term notes payable outstanding at year end 1997.
It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulations, will be derived from sources similar to those used in the past. These sources were primarily the issuances of first mortgage bonds and preferred stock, in addition to pollution control revenue bonds issued for the Company's benefit by public authorities. Recently, the Company issued trust preferred securities and plans to issue unsecured debt in 1998. In this regard, Mississippi Power sought and obtained stockholder approval in 1997 to amend its corporate charter eliminating restrictions on the amounts of unsecured indebtedness the Company may incur.
Mississippi Power is required to meet certain coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. The Company's coverage ratios are sufficiently high enough to permit, at present interest rate levels, any foreseeable security sales. The amount of securities which the Company will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time.
Cautionary Statement Regarding Forward-Looking Information
This annual report, including the foregoing Management's Discussion and Analysis, contains forward-looking statements in addition to historical information. The Company cautions that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the Company's markets; potential business strategies -- including acquisitions or dispositions of assets or internal restructuring -- that may be pursued by the Company; state and federal rate regulation; changes in or application of environmental and other laws and regulations to which the Company is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; and other factors discussed in the reports (including Form 10-K) filed from time to time by the Company with the SEC.
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STATEMENTS OF INCOME
For the Years Ended December 31, 1997, 1996, and 1995
Mississippi Power Company 1997 Annual Report
---------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues (Notes 1 and 3):
Revenues $ 533,445 $ 522,199 $ 508,862
Revenues from affiliates 10,143 21,830 7,691
---------------------------------------------------------------------------------------------------------------------------
Total operating revenues 543,588 544,029 516,553
---------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation--
Fuel 142,059 141,532 111,071
Purchased power from non-affiliates 14,536 17,960 6,019
Purchased power from affiliates 37,794 33,245 57,777
Other 102,365 106,061 107,296
Maintenance 47,302 47,091 39,627
Depreciation and amortization 45,574 44,906 39,224
Taxes other than income taxes 44,034 43,545 42,443
Federal and state income taxes (Note 8) 31,968 32,618 34,486
---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 465,632 466,958 437,943
---------------------------------------------------------------------------------------------------------------------------
Operating Income 77,956 77,071 78,610
Other Income (Expense):
Interest income 857 239 199
Other, net 2,368 4,145 4,962
Income taxes applicable to other income 588 (932) (1,006)
---------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 81,769 80,523 82,765
---------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 19,856 19,898 21,898
Interest on notes payable 96 1,416 1,141
Amortization of debt discount, premium, and expense, net 1,577 1,547 1,510
Other interest charges 574 40 786
Distributions on preferred securities of subsidiary trust 2,369 - -
---------------------------------------------------------------------------------------------------------------------------
Net interest charges 24,472 22,901 25,335
---------------------------------------------------------------------------------------------------------------------------
Net Income 57,297 57,622 57,430
Dividends on Preferred Stock 3,287 4,899 4,899
===========================================================================================================================
Net Income After Dividends on Preferred Stock $ 54,010 $ 52,723 $ 52,531
===========================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-196
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
Mississippi Power Company 1997 Annual Report
----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Activities:
Net income $ 57,297 $ 57,622 $ 57,430
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization 49,661 50,551 51,588
Deferred income taxes (1,809) 74 (480)
Other, net 3,206 9,443 5,338
Changes in certain current assets and liabilities--
Receivables, net (8,583) 5,118 (8,758)
Inventories 3,148 4,973 3,962
Payables 8,357 2,077 17,421
Taxes accrued 2,515 532 -
Other 1,465 (240) 681
----------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 115,257 130,150 127,182
----------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (55,375) (61,314) (67,570)
Other (489) (2,258) (1,697)
----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (55,864) (63,572) (69,267)
----------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds--
Capital contribution - 27 -
First mortgage bonds - - 30,000
Pollution control bonds - - 10,600
Preferred securities 35,000 - -
Other long-term debt - 80,000 -
Retirements--
Preferred stock (42,518) - -
First mortgage bonds - (45,447) (1,625)
Pollution control bonds (10) (10) (10)
Other long-term debt - (55,000) (40,689)
Payment of preferred stock dividends (3,287) (4,899) (4,899)
Payment of common stock dividends (49,400) (43,900) (39,400)
Miscellaneous (1,804) (2,932) (568)
----------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (62,019) (72,161) (46,591)
----------------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (2,626) (5,583) 11,324
Cash and Cash Equivalents at Beginning of Year 7,058 12,641 1,317
----------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 4,432 $ 7,058 $ 12,641
==================================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the period for--
Interest (net of amount capitalized) $ 22,297 $ 21,467 $ 23,308
Income taxes 33,450 34,072 36,908
----------------------------------------------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
|
II-197
BALANCE SHEETS
At December 31, 1997 and 1996
Mississippi Power Company 1997 Annual Report
--------------------------------------------------------------------------------------------------------------------------------
ASSETS 1997 1996
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Utility Plant:
Plant in service, at original cost (Notes 1 and 6) $ 1,518,402 $ 1,483,875
Less accumulated provision for depreciation 559,098 526,776
--------------------------------------------------------------------------------------------------------------------------------
959,304 957,099
Construction work in progress 41,083 35,100
--------------------------------------------------------------------------------------------------------------------------------
Total 1,000,387 992,199
--------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments 650 3,054
--------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 4,432 7,058
Receivables--
Customer accounts receivable 32,220 26,364
Regulatory clauses under recovery 7,619 7,300
Other accounts and notes receivable 8,666 7,468
Affiliated companies 7,398 6,329
Accumulated provision for uncollectible accounts (698) (839)
Fossil fuel stock, at average cost 10,651 12,168
Materials and supplies, at average cost 19,452 21,083
Current portion of accumulated deferred income taxes 8,379 7,227
Prepayments 1,791 4,744
Vacation pay deferred 5,030 4,806
--------------------------------------------------------------------------------------------------------------------------------
Total 104,940 103,708
--------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense and loss, being amortized 12,234 12,220
Deferred charges related to income taxes (Note 8) 21,906 22,274
Long-term notes receivable 2,837 3,737
Workforce Reduction Plan 18,236 -
Miscellaneous 5,639 5,135
--------------------------------------------------------------------------------------------------------------------------------
Total 60,852 43,366
--------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 1,166,829 $ 1,142,327
================================================================================================================================
The accompanying notes are an integral part of these statements.
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II-198
BALANCE SHEETS (continued)
At December 31, 1997 and 1996
Mississippi Power Company 1997 Annual Report
--------------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES 1997 1996
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See accompanying statements):
Common stock equity $ 387,824 $ 383,734
Preferred stock 31,896 74,414
Company obligated mandatorily redeemable preferred securities of
subsidiary trust holding Company Junior Subordinated Notes (Note 9) 35,000 -
Long-term debt 291,665 326,379
--------------------------------------------------------------------------------------------------------------------------------
Total 746,385 784,527
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Long-term debt due within one year (Note 11) 35,020 10
Accounts payable--
Affiliated companies 8,548 4,136
Regulatory clauses over recovery 15,476 8,788
Other 34,065 38,720
Customer deposits 3,225 3,154
Taxes accrued--
Federal and state income 1,101 -
Other 33,859 32,445
Interest accrued 4,098 4,384
Miscellaneous 12,797 13,942
--------------------------------------------------------------------------------------------------------------------------------
Total 148,189 105,579
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 8) 134,645 133,437
Accumulated deferred investment tax credits 27,121 28,333
Deferred credits related to income taxes (Note 8) 38,203 40,568
Postretirement benefits other than pension 25,145 21,850
Accumulated provision for property damage (Note 1) 13,991 12,955
Workforce Reduction Plan 15,700 -
Miscellaneous 17,450 15,078
--------------------------------------------------------------------------------------------------------------------------------
Total 272,255 252,221
--------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 2, 3, 4, and 5)
Total Capitalization and Liabilities $ 1,166,829 $ 1,142,327
================================================================================================================================
The accompanying notes are an integral part of these statements.
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II-199
STATEMENTS OF CAPITALIZATION
At December 31, 1997 and 1996
Mississippi Power Company 1997 Annual Report
---------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
---------------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Common Stock Equity:
Common stock, without par value --
Authorized -- 1,130,000 shares
Outstanding -- 1,121,000 shares in
1997 and 1996 $ 37,691 $ 37,691
Paid-in capital 179,389 179,389
Premium on preferred stock 327 372
Retained earnings (Note 12) 170,417 166,282
---------------------------------------------------------------------------------------------------------------------------
Total common stock equity 387,824 383,734 52.0% 48.9%
---------------------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock:
$100 par value --
Authorized -- 1,244,139 shares
Outstanding --318,955 shares in 1997 and
744,139 shares in 1996
4.40% 948 4,000
4.60% 874 2,010
4.72% 1,670 5,000
6.32% 15,000 15,000
6.65% 8,404 8,404
7.00% 5,000 5,000
7.25% - 35,000
---------------------------------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $2,018,000) 31,896 74,414 4.3 9.5
---------------------------------------------------------------------------------------------------------------------------
Company Obligated Mandatorily
Redeemable Preferred Securities (Note 9):
$25 liquidation value -- 7.75% 35,000 -
---------------------------------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $2,713,000) 35,000 - 4.7 -
---------------------------------------------------------------------------------------------------------------------------
Long-Term Debt:
First mortgage bonds --
Maturity Interest Rates
March 1, 1998 5 3/8% 35,000 35,000
August 1, 2000 6 5/8% 40,000 40,000
March 1, 2004 6.60% 35,000 35,000
June 1, 2023 7.45% 35,000 35,000
December 1, 2025 6 7/8% 30,000 30,000
---------------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 175,000 175,000
Pollution control obligations (Note 10) 73,725 73,735
Other long-term debt (Note 10) 80,000 80,000
Unamortized debt premium (discount), net (2,040) (2,346)
---------------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement--$20,246,000) 326,685 326,389
Less amount due within one year (Note 11) 35,020 10
---------------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 291,665 326,379 39.0 41.6
---------------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 746,385 $ 784,527 100.0% 100.0%
===========================================================================================================================
The accompanying notes are an integral part of these statements.
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II-200
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1997, 1996, and 1995
Mississippi Power Company 1997 Annual Report
---------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 166,282 $ 157,459 $ 144,328
Net income after dividends on preferred stock 54,010 52,723 52,531
Cash dividends on common stock (49,400) (43,900) (39,400)
Preferred stock transactions and other, net (475) - -
=====================================================================================================================
Balance at End of Period (Note 12) $ 170,417 $ 166,282 $ 157,459
=====================================================================================================================
STATEMENTS OF PAID-IN CAPITAL
For the Years Ended December 31, 1997, 1996, and 1995
---------------------------------------------------------------------------------------------------------------------
1997 1996 1995
---------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 179,389 $ 179,362 $ 179,362
Contributions to capital by parent company - 27 -
=====================================================================================================================
Balance at End of Period $ 179,389 $ 179,389 $ 179,362
=====================================================================================================================
The accompanying notes are an integral part of these statements.
II-201
|
NOTES TO FINANCIAL STATEMENTS
Mississippi Power Company 1997 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Mississippi Power Company is a wholly owned subsidiary of Southern Company, which is the parent company of five operating companies, Southern Company Services (SCS), Southern Communications Services (Southern Communications), Southern Energy, Inc. (Southern Energy), Southern Nuclear Operating Company (Southern Nuclear), and Southern Energy Solutions, and other direct and indirect subsidiaries. The operating companies (Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power Company) provide electric service in four southeastern states. Contracts among the companies--dealing with jointly owned generating facilities, interconnecting transmission lines, and the exchange of electric power--are regulated by the Federal Energy Regulatory Commission (FERC) and/or the Securities and Exchange Commission. SCS provides, at cost, specialized services to Southern Company and to the subsidiary companies. Southern Communications provides digital wireless communications services to the operating companies and also markets these services to the public within the Southeast. Worldwide, Southern Energy develops and manages electricity and other energy related projects, including domestic energy trading and marketing. Southern Nuclear provides services to Southern Company's nuclear power plants. Southern Energy Solutions develops new business opportunities related to energy products and services.
Southern Company is registered as a holding company under the Public Utility Holding Company Act of 1935 (PUHCA). Both Southern Company and its subsidiaries are subject to the regulatory provisions of the PUHCA. Mississippi Power is also subject to regulation by the FERC and the Mississippi Public Service Commission (MPSC). The Company follows generally accepted accounting principles and complies with the accounting policies and practices prescribed by the respective commissions. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and the actual results may differ from those estimates.
Certain prior years' data presented in the financial statements have been reclassified to conform with current year presentation.
Regulatory Assets and Liabilities
Mississippi Power is subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. Regulatory assets represent probable future revenues to the Company associated with certain costs that are expected to be recovered from customers through the ratemaking process. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are expected to be credited to customers through the ratemaking process. Regulatory assets and (liabilities) reflected in the Balance Sheets as of December 31 relate to:
1997 1996
-------------------------
(in thousands)
Deferred income taxes $21,906 $22,274
Vacation pay 5,030 4,806
Workforce reduction costs - 1,991
Workforce reduction plan of
1997 18,236 -
Premium on reacquired debt 9,508 10,672
Deferred environmental costs 1,583 1,679
Property damage reserve (13,991) (12,955)
Deferred income tax credits (38,203) (40,568)
Other, net (2,982) (2,882)
----------------------------------------------------------------
Total $ 1,087 $(14,983)
================================================================
|
In the event that a portion of the Company's operations is no longer subject to the provisions of FASB Statement No. 71, the Company would be required to write off the net regulatory assets and liabilities related to that portion of operations that are not specifically recoverable through regulated rates. In addition, the Company would be required to determine any impairment to other assets, including plant, and, write down the assets, if impaired, to their fair value.
Revenues
Mississippi Power accrues revenues for service rendered but unbilled at the end of each fiscal period. The Company's retail and wholesale rates include provisions to adjust billings for fluctuations in fuel, the energy component of purchased power costs and certain other costs. Retail rates also include
II-202
NOTES (continued)
Mississippi Power Company 1997 Annual Report
provisions to adjust billings for fluctuations in costs for ad valorem taxes and certain qualifying environmental costs. Revenues are adjusted for differences between actual allowable amounts and the amounts included in rates.
The Company has a diversified base of customers. No single customer or industry comprises 10 percent or more of revenues. In 1997, uncollectible accounts continued to average less than 1 percent of revenues.
Depreciation
Depreciation of the original cost of depreciable utility plant in service is provided by using composite straight-line rates which approximated 3.3 percent in 1997 and 1996, and 3.2 percent in 1995. When property subject to depreciation is retired or otherwise disposed of in the normal course of business, its cost -- together with the cost of removal, less salvage -- is charged to the accumulated provision for depreciation. Minor items of property included in the original cost of the plant are retired when the related property unit is retired. Depreciation expense includes an amount for the expected cost of removal of facilities.
Income Taxes
Mississippi Power uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences. Investment tax credits utilized are deferred and amortized to income over the average lives of the related property.
Utility Plant
Utility plant is stated at original cost. This cost includes: materials; labor; minor items of property; appropriate administrative and general costs; payroll-related costs such as taxes, pensions, and other benefits; and the estimated cost of funds used during construction. If applicable, the cost of maintenance, repairs, and replacement of minor items of property are charged to maintenance expense except for the maintenance of coal cars and a portion of the railway track maintenance, which are charged to fuel stock. The cost of replacements of property (exclusive of minor items of property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are considered cash equivalents. Temporary cash investments are securities with original maturities of 90 days or less.
Financial Instruments
In accordance with FASB Statement No. 107, Disclosure About Fair Value of Financial Instruments, all financial instruments of the Company for which the carrying amount does not approximate fair value, at December 31 are as follows:
Carrying Fair
Amount Value
--------------------
(in millions)
Long-term debt:
At December 31, 1997 $327 $330
At December 31, 1996 326 324
Preferred securities:
At December 31, 1997 35 36
At December 31, 1996 - -
--------------------------------------------------------
|
The fair value for long-term debt and preferred securities was based on either closing market price or closing price of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the cost of transmission, distribution and generating plant materials. Materials are charged to inventory when purchased and then expensed or capitalized to plant, as appropriate, when used or installed.
Provision for Property Damage
Mississippi Power is self-insured for the cost of storm, fire and other uninsured casualty damage to its property, including transmission and distribution facilities. As permitted by regulatory authorities, the Company provided for such costs by charges to income of $1.5 million in each of the years 1997, 1996 and 1995. The cost of repairing damage resulting from such events that individually exceed $50 thousand is charged to the accumulated provision to the extent it is available. Effective January 1995, regulatory treatment by the MPSC allowed a maximum accumulated provision of $18 million. As of December 31, 1997, the accumulated provision amounted to $14.0 million.
II-203
NOTES (continued)
Mississippi Power Company 1997 Annual Report
2. RETIREMENT BENEFITS
Pension Plan
Mississippi Power has a defined benefit, trusteed, non-contributory pension plan that covers substantially all regular employees. Benefits are based on one of the following formulas: years of service and final average pay or years of service and a flat-dollar benefit. The Company uses the "entry age normal method with a frozen initial liability" actuarial method for funding purposes, subject to limitations under federal income tax regulations. Amounts funded to the pension trust are primarily invested in equity and fixed-income securities. FASB Statement No. 87, Employers' Accounting for Pensions, requires use of the "projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
Mississippi Power also provides certain medical care and life insurance benefits for retired employees. Substantially all employees may become eligible for these benefits when they retire. The Company funds trusts to the extent deductible under federal income tax regulations or to the extent required by the Company's regulatory commissions. Amounts funded are primarily invested in debt and equity securities.
FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, requires that medical care and life insurance benefits for retired employees be accounted for on an accrual basis using a specified actuarial method, "benefit/years-of-service." The cost of postretirement benefits is reflected in rates on a current basis.
Funded Status and Cost of Benefits
The funded status of the plans and reconciliation to amounts reflected in the Balance Sheets at December 31 are as follows:
Pension
------------------------
1997 1996
------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $102,764 $92,091
Non-vested benefits 3,120 5,191
--------------------------------------------------------------
Accumulated benefit obligation 105,884 97,282
Additional amounts related to
projected salary increases 26,247 30,552
--------------------------------------------------------------
Projected benefit obligation 132,131 127,834
Less:
Fair value of plan assets 207,457 179,658
Unrecognized net gain (78,936) (56,674)
Unrecognized prior service cost 5,819 6,422
Unrecognized transition asset (4,904) (5,449)
--------------------------------------------------------------
Accrued liability recognized
in the Balance Sheets $ 2,695 $3,877
==============================================================
Postretirement Benefits
------------------------
1997 1996
------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $19,816 $20,841
Employees eligible to retire 3,691 2,703
Other employees 19,910 17,564
------------------------------------------------------------
Accumulated benefit obligation 43,417 41,108
Less:
Fair value of plan assets 12,916 10,210
Unrecognized net (gain)/ loss (1,980) 1,136
Unrecognized transition
obligation 5,314 5,911
------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $27,167 $23,851
============================================================
|
II-204
NOTES (continued)
Mississippi Power Company 1997 Annual Report
The weighted average rates assumed in the above actuarial calculations were:
1997 1996 1995
---------------------------------
Discount 7.5% 7.8% 7.3%
Annual salary increase 5.0 5.3 4.8
Long-term return on
plan assets 8.5 8.5 8.5
------------------------------------------------------------
|
An additional assumption used in measuring the accumulated postretirement benefit obligation was a weighted average medical care cost trend rate of 8.8 percent for 1997, decreasing gradually to 5.5 percent through the year 2005 and remaining at that level thereafter. An annual increase in the assumed medical care cost trend rate of 1 percent would increase the accumulated benefit obligation as of December 31, 1997, by $3.3 million and the aggregate of the service and interest cost components of the net retiree cost by $0.3 million.
Components of the plans' net cost are shown below:
Pension
--------------------------------
1997 1996 1995
--------------------------------
(in thousands)
Benefits earned during
the year $4,015 $ 3,842 $ 3,636
Interest cost on
projected benefit
obligation 9,408 9,310 8,434
Actual (return) loss on
plan assets (30,680) (20,438) (32,232)
Net amortization and
deferral 16,026 6,442 18,650
--------------------------------------------------------------
Net pension income $(1,231) $ (844) $ (1,512)
==============================================================
|
Of the above net pension income, $(0.9) million in 1997, $(0.6) million in 1996, and $(1.1) million in 1995 were recorded in operating expenses, and the remainder was recorded in construction and other accounts.
Postretirement Benefits
------------------------------
1997 1996 1995
------------------------------
(in thousands)
Benefits earned during the year $ 867 $ 958 $1,525
Interest cost on accumulated
benefit obligation 2,922 2,830 3,442
Amortization of transition
obligation over 20 years 362 362 1,027
Actual (return) loss on
plan assets (1,388) (990) (1,436)
Net amortization and deferral 566 312 851
================================================================
Net postretirement costs $3,329 $3,472 $5,409
================================================================
|
Of the above net postretirement costs recorded, $2.6 million in 1997, $2.8 million in 1996, and $3.9 million in 1995 were recorded in operating expenses, and the remainder was recorded in construction and other accounts.
Workforce Reduction Programs
During 1994, Mississippi Power and SCS instituted workforce reduction programs. The costs of the SCS workforce reduction program were apportioned among the various entities that form the Southern electric system, with the Company's portion amounting to $1.4 million. The Company instituted an early retirement incentive program in April 1994 and deferred the related costs of approximately $12.9 million. The Company received authority from the MPSC to defer these costs, as well as its portion of the costs of the SCS program, and to amortize over a period not to exceed 60 months, beginning no later than January 1995. The Company expensed $2.0 million, $5.3 million, and $4.0 million of the cost of these programs in 1997, 1996 and 1995, respectively. In 1997, Mississippi Power expensed its pro-rata share of the costs for affiliated companies' programs of $0.5 million.
In 1997, approximately one hundred employees of Mississippi Power, in certain areas, including finance, environmental quality and external affairs, accepted the terms under a workforce reduction plan. The total cost to be incurred in connection with this voluntary plan is expected to be $18.2 million. The MPSC approved the deferral and amortization of these program costs over a period not to exceed 60 months beginning no later than July 1998. The unamortized balance of this program was $18.2 million at December 31, 1997.
II-205
NOTES (continued)
Mississippi Power Company 1997 Annual Report
3. LITIGATION AND REGULATORY MATTERS
Retail Rate Adjustment Plans
Mississippi Power's retail base rates are set under a Performance Evaluation Plan (PEP) approved by the MPSC in 1994. PEP was designed with the objective that the plan would reduce the impact of rate changes on the customer and provide incentives for Mississippi Power to keep customer prices low. PEP includes a mechanism for sharing rate adjustments based on the Company's ability to maintain low rates for customers and on the Company's performance as measured by three indicators that emphasize price and service to the customer. PEP provides for semiannual evaluations of Mississippi's performance-based return on investment. Any change in rates is limited to 2 percent of retail revenues per evaluation period. PEP will remain in effect until the MPSC modifies or terminates the plan. In September 1996, the MPSC under PEP approved a retail revenue increase of $4.5 million (1.06 percent of annual retail revenue) which became effective in October 1996. There were no PEP retail revenue changes for 1997.
FERC Reviews Equity Returns
In May 1991, the FERC ordered that hearings be conducted concerning the reasonableness of the operating companies' wholesale rate schedules and contracts that have a return on equity of 13.75 percent or greater. The contracts that could be affected by the hearings include substantially all of the transmission, unit power, long-term power and other similar contracts, including the Company's transmission facilities agreement discussed in Note 5 under "Lease Agreements."
In August 1992, a FERC administrative law judge issued an opinion that changes in rate schedules and contracts were not necessary and that the FERC staff failed to show how any changes were in the public interest. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter remains pending before the FERC.
In August 1994, the FERC instituted another proceeding based on substantially the same issues as in the 1991 proceeding. In November 1995, a FERC administrative law judge issued an opinion that the FERC staff failed to meet its burden of proof, and therefore, no change in the equity return was necessary. The FERC staff has filed exceptions to the administrative law judge's opinion, and the matter is pending before the FERC.
If the rates of return on common equity recommended by the FERC staff were applied to all of the schedules and contracts involved in both proceedings -- as well as certain other contracts that reference these proceedings in determining return on common equity -- and if refunds were ordered, the amount of refunds could range up to approximately $4.1 million for Mississippi Power at December 31, 1997. Although management believes that rates are not excessive and that refunds are not justified, the final outcome of this matter cannot now be determined.
Environmental Compliance Overview Plan
The MPSC approved Mississippi Power's ECO Plan in 1992. The plan establishes procedures to facilitate the MPSC's overview of the Company's environmental strategy and provides for recovery of costs (including costs of capital) associated with environmental projects approved by the MPSC. Under the ECO Plan any increase in the annual revenue requirement is limited to 2 percent of retail revenues. However, the plan also provides for carryover of any amount over the 2 percent limit into the next year's revenue requirement. The ECO Plan had previously resulted in an annual retail rate increase of $3.7 million, effective in May 1995 which included $1.6 million of 1994 carryover and an annual retail rate increase of $7.6 million, effective in April 1994. The Company's 1996 annual filing under the ECO Plan resulted in a $3.0 million decrease in retail rates, effective in April 1996. In 1997, the Company's filing with the MPSC under the ECO Plan resulted in an annual retail rate increase of $0.9 million. The 1998 ECO filing, if approved by the MPSC, will result in a small decrease in customer prices.
Mississippi Power conducts studies, when possible, to determine the extent of any required environmental remediation. Should remediation be determined to be probable, reasonable estimates of costs to clean up such sites are developed and recognized in the financial statements. A currently owned site where manufactured gas plant operations were located prior to the Company's ownership is being investigated for potential remediation. The remedial investigation is near completion and is being conducted in conjunction with the Mississippi Department of Environmental Quality. In recognition of probable further study and remediation, the Company in 1995 recorded a liability and a deferred debit (regulatory asset) of $1.8 million, including feasibility study costs. The Company recognizes such costs as they are incurred and recovers them under the
II-206
NOTES (continued)
Mississippi Power Company 1997 Annual Report
ECO Plan as provided in the Company's 1995 ECO order. As of December 31, 1997, the balance in the liability and regulatory asset accounts was $1.6 million. If this site were required to be remediated, industry studies show the Company could incur cleanup costs ranging from $1.5 million to $10 million before giving consideration to possible recovery of clean-up costs from other parties.
4. CONSTRUCTION PROGRAM
Mississippi Power is engaged in continuous construction programs, the costs of which are currently estimated to total $67 million in 1998, $92 million in 1999, and $291 million in 2000.
The construction program is subject to periodic review and revision, and actual construction costs may vary from the above estimates because of numerous factors. These factors include changes in business conditions; revised load growth estimates; changes in environmental regulations; increasing costs of labor, equipment and materials; and cost of capital. Significant construction will continue related to transmission and distribution facilities, the upgrading of generating plants, and the addition of combined cycle generation.
5. FINANCING AND COMMITMENTS
Financing
Mississippi Power's construction program is expected to be financed from internal and other sources, such as the issuance of additional long-term debt and preferred stock and the receipt of capital contributions from Southern Company.
The amounts of first mortgage bonds and preferred stock which can be issued in the future will be contingent upon market conditions, adequate earnings levels, regulatory authorizations and other factors.
At December 31, 1997, Mississippi Power had total committed credit agreements with banks for $96.3 million. At year-end 1997, the unused portion of these committed credit agreements was $76.3 million. These credit agreements expire at various dates in 1998 and in 2000. Some of these agreements allow short-term borrowings to be converted into term loans, payable in 12 equal quarterly installments, with the first installment due at the end of the first calendar quarter after the applicable termination date or at an earlier date at the Company's option. In connection with these credit arrangements, the Company agrees to pay commitment fees based on the unused portions of the commitments or to maintain compensating balances with the banks. At December 31, 1997, the Company had no short-term borrowings outstanding.
Assets Subject to Lien
Mississippi Power's mortgage indenture dated as of September 1, 1941, as amended and supplemented, which secures the first mortgage bonds issued by the Company, constitutes a direct first lien on substantially all the Company's fixed property and franchises.
Lease Agreements
In 1984, Mississippi Power and Gulf States Utilities Company (Gulf States) entered into a forty-year transmission facilities agreement whereby Gulf States began paying a use fee to the Company covering all expenses relative to ownership and operation and maintenance of a 500 kV line, including amortization of its original $57 million cost. For the three years ended 1997 use fees collected under this agreement, net of related expenses, amounted to $3.5 million each year, and are included within Other Income in the Statements of Income.
In 1989, Mississippi Power entered into a twenty-two year lease agreement for the use of 495 aluminum railcars. In 1994, a second lease agreement for the use of 250 additional aluminum railcars was also entered into for twenty-two years. The Company has the option to purchase the 745 railcars at the greater of lease termination value or fair market value, or to renew the leases at the end of the lease term. In 1997, a third lease agreement for the use of 360 railcars was also entered into for three years, with a monthly renewal option for up to an additional nine months. All of these leases, totaling 1,105 railcars, were for the transport of coal at Plant Daniel.
Gulf Power, as joint owner of Plant Daniel, is responsible for one half of the lease cost. The Company's share (50%) of the leases, charged to fuel inventory, was $2.0 million in 1997, and $1.7 million in both 1996 and 1995. The Company's annual lease payments for 1998 through 2002 will average approximately $2.2 million and after 2002, lease payments total in aggregate approximately $18 million.
II-207
NOTES (continued)
Mississippi Power Company 1997 Annual Report
Fuel and Purchased Power Commitments
To supply a portion of the fuel requirements of its generating plants, Mississippi Power has entered into various long-term commitments for the procurement of fuel. In most cases, these contracts contain provisions for price escalations, minimum production levels, and other financial commitments.
Total estimated obligations at December 31, 1997 were as follows:
Year Fuel
(in millions)
1998 $137
1999 88
---------------------------------------------------
Total commitments $225
===================================================
|
Additional commitments for fuel will be required in the future to supply the Company's fuel needs.
In 1996, Mississippi Power entered into agreements to purchase options for summer peaking power for the years 1997 through 2000. The Company has purchased options from power marketers for up to 250 megawatts of peaking power in 1997; 300 megawatts in 1998; 350 megawatts in 1999; and 400 megawatts in 2000. In 1997, Mississippi Power exercised its option to purchase 250 megawatts of peaking capacity. In June 1997, the MPSC approved Mississippi Power's request that it be allowed to earn a return on the capacity portion of this agreement. Mississippi Power expects to exercise its options to purchase 300 megawatts of summer peaking capacity in 1998.
6. JOINT OWNERSHIP AGREEMENTS
Mississippi Power and Alabama Power own as tenants in common Units 1 and 2 at Greene County Electric Generating Plant (coal) located in Alabama; and Mississippi Power and Gulf Power own as tenants in common Daniel Electric Generating Plant (coal) located in Mississippi. At December 31, 1997, Mississippi Power's percentage ownership and investment in these jointly owned facilities were as follows:
Company's
Generating Total Percent Gross Accumulated
Plant Capacity Ownership Investment Depreciation
(Megawatts) (in thousands)
Greene
County
Units 1 and 2 500 40% $ 63,206 $30,168
Daniel 1,000 50% 220,984 92,484
----------------------------------------------------------------
|
Mississippi Power's share of plant operating expenses is included in the corresponding operating expenses in the Statements of Income.
7. LONG-TERM POWER SALES AGREEMENTS
Mississippi Power and the other operating affiliates of Southern Company have long-term contractual agreements for the sale of capacity and energy to certain non-affiliated utilities located outside the system's service area. Because the energy is generally sold at cost under these agreements, profitability is primarily affected by revenues from capacity sales. The capacity revenues have been $8,000 in 1997; $0 in 1996; and $268,000 in 1995.
8. INCOME TAXES
At December 31, 1997, the tax-related regulatory assets and liabilities were $22 million and $38 million, respectively. These assets are attributable to tax benefits flowed through to customers in prior years and to taxes applicable to capitalized AFUDC. These liabilities are attributable to deferred taxes previously recognized at rates higher than current enacted tax law and to unamortized investment tax credits.
II-208
NOTES (continued)
Mississippi Power Company 1997 Annual Report
Details of the federal and state income tax provisions are shown below:
1997 1996 1995
---------------------------------
(in thousands)
Total provision for
income taxes
Federal --
Currently payable $27,651 $29,888 $32,546
Deferred --current year 8,171 13,816 5,122
--reversal of
prior years (9,236) (14,913) (7,039)
---------------------------------------------------------------
26,586 28,791 30,629
---------------------------------------------------------------
State --
Currently payable 5,537 3,588 3,426
Deferred --current year 1,756 4,727 2,270
--reversal of
prior years (2,499) (3,556) (833)
---------------------------------------------------------------
4,794 4,759 4,863
---------------------------------------------------------------
Total 31,380 33,550 35,492
Less income taxes charged
to other income (588) 932 1,006
---------------------------------------------------------------
Federal and state
income taxes charged
to operations $31,968 $32,618 $34,486
===============================================================
|
The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities are as follows:
1997 1996
-----------------------------
(in thousands)
Deferred tax liabilities:
Accelerated depreciation $149,941 $148,667
Basis differences 10,037 10,507
Other 25,097 19,285
-------------------------------------------------------------
Total 185,075 178,459
-------------------------------------------------------------
Deferred tax assets:
Other property
basis differences 23,139 24,434
Pension and
other benefits 9,803 8,750
Property insurance 5,351 4,955
Unbilled fuel 802 2,808
Other 19,714 11,302
-------------------------------------------------------------
Total 58,809 52,249
-------------------------------------------------------------
Net deferred tax
liabilities 126,266 126,210
Portion included in
current assets, net 8,379 7,227
-------------------------------------------------------------
Accumulated deferred
income taxes in the
Balance Sheets $134,645 $133,437
=============================================================
|
Deferred investment tax credits are amortized over the life of the related property with such amortization normally applied as a credit to reduce depreciation in the Statements of Income. Credits amortized in this manner amounted to $1.2 million in 1997, $1.4 million in 1996, and $1.5 million in 1995. At December 31, 1997, all investment tax credits available to reduce federal income taxes payable had been utilized.
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
1997 1996 1995
-----------------------------
Total effective tax rate 37% 37% 38%
State income tax, net of
federal income tax benefit (3) (3) (3)
Tax rate differential 1 1 -
-------------------------------------------------------------
Statutory federal tax rate 35% 35% 35%
=============================================================
|
II-209
NOTES (continued)
Mississippi Power Company 1997 Annual Report
Mississippi Power and the subsidiaries of Southern Company file a consolidated federal income tax return. Under a joint consolidated income tax agreement, each subsidiary's current and deferred tax expense is computed on a stand-alone basis. Tax benefits from losses of the parent company are allocated to each subsidiary based on the ratio of taxable income to total consolidated taxable income.
9. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES
In February 1997, Mississippi Power Capital Trust I (Trust I), of which the Company owns all the common securities, issued $35 million of 7.75 percent mandatorily redeemable preferred securities. Substantially all of the assets of Trust I are $36 million aggregate principal amount of the Company's 7.75 percent junior subordinated notes due February 15, 2037.
10. OTHER LONG-TERM DEBT
Details of pollution control obligations and other long-term debt are as follows:
December 31,
1997 1996
---------------------
(in thousands)
Obligations incurred in
connection with the sale by
public authorities of
tax-exempt pollution control
revenue bonds:
5.8$% due 2007 $ 950 $ 960
Variable rate due 2020 6,550 6,550
Variable rate due 2022 16,750 16,750
6.20% due 2023 13,000 13,000
5.65% due 2023 25,875 25,875
Variable due 2025 10,600 10,600
------------------------------------------------------------
73,725 73,735
------------------------------------------------------------
Other long-term debt:
Variable rates (6.10875% to
6.18984% at 1/1/98) due 1999 50,000 50,000
Variable rate due 2000 30,000 30,000
------------------------------------------------------------
80,000 80,000
------------------------------------------------------------
Total $153,725 $153,735
============================================================
|
Pollution control obligations represent installment or lease purchases of pollution control facilities financed by application of funds derived from sales by public authorities of tax-exempt revenue bonds. Mississippi Power has authenticated and delivered to the Trustee a like principal amount of first mortgage bonds as security for obligations under collateralized installment agreements. The principal and interest on the first mortgage bonds will be payable only in the event of default under these agreements. The 5.80% series of pollution control obligations has a cash sinking fund requirement of $20 thousand annually in 1998, 1999, 2000 and 2001.
11. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the improvement fund requirements and scheduled maturities and redemptions of long-term debt due within one year is as follows:
1997 1996
-------------------
(in thousands)
Bond improvement
fund requirements $ 1,750 $1,750
Less:
Portion to be satisfied by
certifying property additions 1,750 1,750
-------------------------------------------------------------
Redemptions of first mortgage bonds 35,000 -
Pollution control bond cash
sinking fund requirements (Note 10) 20 10
-------------------------------------------------------------
Total $35,020 $ 10
=============================================================
|
The first mortgage bond improvement fund requirement is one percent of each outstanding series authenticated under the indenture of Mississippi Power prior to January 1 of each year, other than first mortgage bonds issued as collateral security for certain pollution control obligations. The requirement must be satisfied by June 1 of each year by depositing cash or reacquiring bonds, or by pledging additional property equal to 166-2/3 percent of such requirement.
12. COMMON STOCK DIVIDEND RESTRICTIONS
Mississippi Power's first mortgage bond indenture and the corporate charter contain various common stock dividend restrictions. At December 31, 1997, approximately $118 million of retained earnings was restricted against the payment of cash dividends on common stock under the most restrictive terms of the mortgage indenture or corporate charter.
II-210
NOTES (continued)
Mississippi Power Company 1997 Annual Report
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for 1997 and 1996 are as follows:
Net Income
After Dividends
Quarter Operating Operating On
Ended Revenues Income Preferred Stock
-------------------------------------------------------------------
March 1997 $116,903 $17,132 $ 10,645
June 1997 128,915 19,340 12,618
September 1997 171,874 30,441 25,163
December 1997 125,896 11,043 5,584
March 1996 $126,954 $18,074 $ 11,695
June 1996 136,749 17,691 11,400
September 1996 156,603 27,670 21,784
December 1996 123,723 13,636 7,844
|
Mississippi Power's business is influenced by seasonal weather conditions and the timing of rate changes.
II-211
SELECTED FINANCIAL AND OPERATING DATA
Mississippi Power Company 1997 Annual Report
-------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $543,588 $544,029 $516,553
Net Income after Dividends
on Preferred Stock (in thousands) $54,010 $52,723 $52,531
Cash Dividends on Common Stock (in thousands) $49,400 $43,900 $39,400
Return on Average Common Equity (percent) 14.0 13.9 14.26
Total Assets (in thousands) $1,166,829 $1,142,327 $1,148,953
Gross Property Additions (in thousands) $55,375 $61,314 $67,570
-------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $387,824 $383,734 $374,884
Preferred stock 31,896 74,414 74,414
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities 35,000 - -
Long-term debt 291,665 326,379 288,820
------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $746,385 $784,527 $738,118
=========================================================================================================================
Capitalization Ratios (percent):
Common stock equity 52.0 48.9 50.8
Preferred stock 4.3 9.5 10.1
Company obligated mandatorily redeemable preferred securities 4.7 - -
Long-term debt 39.0 41.6 39.1
-------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=========================================================================================================================
First Mortgage Bonds (in thousands):
Issued - - 30,000
Retired - 45,447 1,625
Preferred Stock (in thousands):
Issued - - -
Retired 42,518 - -
Company Obligated Mandatorily Redeemable
Preferred Securities (in thousands):
Issued 35,000 - -
-------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Aa3 Aa3 Aa3
Standard and Poor's AA- A+ A+
Duff & Phelps AA- AA- AA-
Preferred Stock -
Moody's a1 a1 a1
Standard and Poor's A A A
Duff & Phelps A+ A+ A+
-------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 156,650 154,630 154,014
Commercial 31,667 30,366 29,903
Industrial 642 639 642
Other 200 200 194
-------------------------------------------------------------------------------------------------------------------------
Total 189,159 185,835 184,753
=========================================================================================================================
Employees (year-end) 1,245 1,363 1,421
-------------------------------------------------------------------------------------------------------------------------
|
II-212
SELECTED FINANCIAL AND OPERATING DATA
Mississippi Power Company 1997 Annual Report
----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991
----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $499,162 $474,883 $434,447 $432,386
Net Income after Dividends
on Preferred Stock (in thousands) $49,157 $42,436 $36,790 $22,627
Cash Dividends on Common Stock (in thousands) $34,100 $29,000 $28,000 $28,500
Return on Average Common Equity (percent) 14.38 14.09 13.27 8.17
Total Assets (in thousands) $1,123,711 $1,050,334 $791,283 $790,641
Gross Property Additions (in thousands) $104,014 $139,976 $68,189 $53,675
----------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $361,753 $321,768 $280,640 $273,855
Preferred stock 74,414 74,414 74,414 39,414
Preferred stock subject to mandatory redemption - - - -
Company obligated mandatorily redeemable preferred securities - - - -
Long-term debt 306,522 250,391 238,650 304,150
----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $742,689 $646,573 $593,704 $617,419
==================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 48.7 49.8 47.3 44.4
Preferred stock 10.0 11.5 12.5 6.4
Company obligated mandatorily redeemable preferred securities - - - -
Long-term debt 41.3 38.7 40.2 49.2
----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0 100.0
==================================================================================================================================
First Mortgage Bonds (in thousands):
Issued 35,000 70,000 40,000 50,000
Retired 32,628 51,300 104,703 -
Preferred Stock (in thousands):
Issued - 23,404 35,000 -
Retired - 23,404 - 4,118
Company Obligated Mandatorily Redeemable
Preferred Securities (in thousands):
Issued - - - -
----------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's Aa3 A1 A1 A1
Standard and Poor's A+ A+ A+ A+
Duff & Phelps A+ A+ A+ A+
Preferred Stock -
Moody's a1 a1 a1 a1
Standard and Poor's A A A A
Duff & Phelps A A A A
----------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 152,891 151,692 150,248 148,978
Commercial 29,276 28,648 28,056 27,441
Industrial 650 570 573 562
Other 189 190 189 400
----------------------------------------------------------------------------------------------------------------------------------
Total 183,006 181,100 179,066 177,381
==================================================================================================================================
Employees (year-end) 1,535 1,586 1,619 1,630
----------------------------------------------------------------------------------------------------------------------------------
|
II-213A
SELECTED FINANCIAL AND OPERATING DATA
Mississippi Power Company 1997 Annual Report
----------------------------------------------------------------------------------------------------------------------------------
1990 1989 1988 1987
----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $446,871 $442,650 $437,939 $455,843
Net Income after Dividends
on Preferred Stock (in thousands) $34,176 $38,576 $36,081 $35,200
Cash Dividends on Common Stock (in thousands) $27,500 $27,000 $27,600 $24,700
Return on Average Common Equity (percent) 12.36 14.43 14.03 14.68
Total Assets (in thousands) $800,026 $786,570 $779,319 $764,068
Gross Property Additions (in thousands) $49,009 $43,916 $54,550 $53,288
----------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $279,833 $273,157 $261,473 $252,992
Preferred stock 39,414 39,414 39,414 39,414
Preferred stock subject to mandatory redemption 3,750 4,500 5,250 6,750
Company obligated mandatorily redeemable preferred securities - - - -
Long-term debt 270,724 277,693 287,525 294,811
----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $593,721 $594,764 $593,662 $593,967
==================================================================================================================================
Capitalization Ratios (percent):
Common stock equity 47.1 45.9 44.1 42.6
Preferred stock 7.3 7.4 7.5 7.8
Company obligated mandatorily redeemable preferred securities - - - -
Long-term debt 45.6 46.7 48.4 49.6
----------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0 100.0
==================================================================================================================================
First Mortgage Bonds (in thousands):
Issued - - - -
Retired 4,000 3,823 - 29,701
Preferred Stock (in thousands):
Issued - - - -
Retired 750 750 1,500 1,500
Company Obligated Mandatorily Redeemable
Preferred Securities (in thousands):
Issued - - - -
----------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1 A1
Standard and Poor's A+ A+ A+ A+
Duff & Phelps A+ A+ 5 5
Preferred Stock -
Moody's a1 a1 a1 a1
Standard and Poor's A A A A
Duff & Phelps A A 6 6
----------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 147,738 147,308 146,750 146,273
Commercial 27,134 26,867 26,751 26,342
Industrial 574 525 478 438
Other 411 404 399 389
----------------------------------------------------------------------------------------------------------------------------------
Total 175,857 175,104 174,378 173,442
==================================================================================================================================
Employees (year-end) 1,842 1,750 1,831 1,898
----------------------------------------------------------------------------------------------------------------------------------
|
II-213B
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1997 Annual Report
-------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
-------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $138,608 $137,055 $134,286
Commercial 134,208 131,734 131,034
Industrial 140,233 141,324 140,947
Other 4,193 4,013 3,914
-------------------------------------------------------------------------------------------------------------------------
Total retail 417,242 414,126 410,181
Sales for resale - non-affiliates 105,141 99,596 91,820
Sales for resale - affiliates 10,143 21,830 7,691
-------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 532,526 535,552 509,692
Other revenues 11,062 8,477 6,861
-------------------------------------------------------------------------------------------------------------------------
Total $543,588 $544,029 $516,553
=========================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 2,039,042 2,079,611 2,040,608
Commercial 2,407,520 2,315,860 2,242,163
Industrial 3,981,875 3,960,243 3,813,456
Other 40,508 39,297 38,559
-------------------------------------------------------------------------------------------------------------------------
Total retail 8,468,945 8,395,011 8,134,786
Sales for resale - non-affiliates 2,895,182 2,726,993 2,493,519
Sales for resale - affiliates 478,884 693,510 243,554
---------------------------------------------------------------------------------------------------------------------------
Total 11,843,011 11,815,514 10,871,859
=========================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.80 6.59 6.58
Commercial 5.57 5.69 5.84
Industrial 3.52 3.57 3.70
Total retail 4.93 4.93 5.04
Total sales 4.50 4.53 4.69
Residential Average Annual Kilowatt-Hour Use Per Customer 13,132 13,469 13,307
Residential Average Annual Revenue Per Customer $892.68 $887.66 $875.69
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,086 2,086 2,086
Maximum Peak-Hour Demand (megawatts):
Winter 1,922 2,030 1,637
Summer 2,209 2,117 2,095
Annual Load Factor (percent) 59.1 60.7 60.0
Plant Availability - Fossil-Steam (percent) 92.4 91.8 92.1
-------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 70.0 70.4 58.0
Oil and gas 13.0 12.0 15.2
Purchased power -
From non-affiliates 3.0 6.5 2.4
From affiliates 14.0 11.1 24.4
-------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
=========================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,078 10,038 10,249
Cost of fuel per million BTU (cents) 153.32 156.08 160.48
Average cost of fuel per net kilowatt-hour generated (cents) 1.54 1.57 1.64
-------------------------------------------------------------------------------------------------------------------------
|
II-214
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1997 Annual Report
----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991
----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $124,257 $118,793 $109,781 $103,820
Commercial 124,716 115,152 107,131 103,666
Industrial 142,268 130,198 117,010 116,972
Other 3,882 3,760 3,533 5,869
----------------------------------------------------------------------------------------------------------------------------------
Total retail 395,123 367,903 337,455 330,327
Sales for resale - non-affiliates 88,122 83,511 80,213 78,826
Sales for resale - affiliates 9,538 15,519 10,055 18,044
----------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 492,783 466,933 427,723 427,197
Other revenues 6,379 7,950 6,724 5,189
----------------------------------------------------------------------------------------------------------------------------------
Total $499,162 $474,883 $434,447 $432,386
==================================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,922,217 1,929,835 1,804,858 1,832,266
Commercial 2,100,625 1,933,685 1,811,042 1,768,441
Industrial 3,847,011 3,623,543 3,536,634 3,297,247
Other 38,147 38,357 38,261 89,375
----------------------------------------------------------------------------------------------------------------------------------
Total retail 7,908,000 7,525,420 7,190,795 6,987,329
Sales for resale - non-affiliates 2,555,914 2,544,982 2,687,917 2,706,320
Sales for resale - affiliates 174,342 426,919 280,443 617,696
----------------------------------------------------------------------------------------------------------------------------------
Total 10,638,256 10,497,321 10,159,155 10,311,345
==================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.46 6.16 6.08 5.67
Commercial 5.94 5.96 5.92 5.86
Industrial 3.70 3.59 3.31 3.55
Total retail 5.00 4.89 4.69 4.73
Total sales 4.63 4.45 4.21 4.14
Residential Average Annual Kilowatt-Hour Use Per Customer 12,611 12,780 12,066 12,338
Residential Average Annual Revenue Per Customer $815.21 $786.71 $733.90 $699.11
Plant Nameplate Capacity Ratings (year-end) (megawatts) 2,086 2,011 2,011 2,011
Maximum Peak-Hour Demand (megawatts):
Winter 1,636 1,401 1,386 1,267
Summer 1,874 1,872 1,755 1,682
Annual Load Factor (percent) 63.4 60.0 60.8 61.5
Plant Availability - Fossil-Steam (percent) 85.4 88.0 92.0 89.8
----------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 56.0 63.5 60.4 64.1
Oil and gas 10.2 7.6 5.8 8.1
Purchased power -
From non-affiliates 1.2 1.3 1.2 0.7
From affiliates 32.6 27.6 32.6 27.1
----------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0 100.0
==================================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,295 10,075 9,888 10,142
Cost of fuel per million BTU (cents) 165.96 170.13 162.27 177.52
Average cost of fuel per net kilowatt-hour generated (cents) 1.71 1.71 1.60 1.80
----------------------------------------------------------------------------------------------------------------------------------
|
II-215A
SELECTED FINANCIAL AND OPERATING DATA (continued)
Mississippi Power Company 1997 Annual Report
----------------------------------------------------------------------------------------------------------------------------------
1990 1989 1988 1987
----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $102,243 $100,068 $96,711 $98,338
Commercial 103,352 103,403 98,772 98,669
Industrial 123,754 128,983 123,038 129,004
Other 6,078 5,992 5,874 5,723
----------------------------------------------------------------------------------------------------------------------------------
Total retail 335,427 338,446 324,395 331,734
Sales for resale - non-affiliates 86,194 82,111 75,525 88,060
Sales for resale - affiliates 20,157 16,938 33,747 31,278
----------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 441,778 437,495 433,667 451,072
Other revenues 5,093 5,155 4,272 4,771
----------------------------------------------------------------------------------------------------------------------------------
Total $446,871 $442,650 $437,939 $455,843
==================================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,804,838 1,741,855 1,686,722 1,658,327
Commercial 1,718,074 1,686,302 1,607,988 1,555,044
Industrial 3,311,460 3,204,208 2,879,457 2,862,632
Other 85,938 87,611 86,049 81,153
----------------------------------------------------------------------------------------------------------------------------------
Total retail 6,920,310 6,719,976 6,260,216 6,157,156
Sales for resale - non-affiliates 2,883,581 2,798,086 2,280,341 2,615,058
Sales for resale - affiliates 714,365 527,970 1,100,808 955,303
----------------------------------------------------------------------------------------------------------------------------------
Total 10,518,256 10,046,032 9,641,365 9,727,517
==================================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 5.66 5.74 5.73 5.93
Commercial 6.02 6.13 6.14 6.35
Industrial 3.74 4.03 4.27 4.51
Total retail 4.85 5.04 5.18 5.39
Total sales 4.20 4.35 4.50 4.64
Residential Average Annual Kilowatt-Hour Use Per Customer 12,228 11,842 11,499 11,356
Residential Average Annual Revenue Per Customer $692.70 $680.32 $659.30 $673.41
Plant Nameplate Capacity Ratings (year-end) (megawatts) 1,998 1,998 1,966 1,966
Maximum Peak-Hour Demand (megawatts):
Winter 1,201 1,556 1,284 1,224
Summer 1,724 1,682 1,621 1,548
Annual Load Factor (percent) 59.0 58.8 57.6 59.0
Plant Availability - Fossil-Steam (percent) 93.3 94.0 93.0 93.5
----------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 62.6 63.4 86.3 79.4
Oil and gas 14.0 13.5 4.8 5.3
Purchased power -
From non-affiliates 0.8 0.5 0.4 0.3
From affiliates 22.6 22.6 8.5 15.0
----------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0 100.0
==================================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,319 10,159 10,220 10,525
Cost of fuel per million BTU (cents) 183.27 178.38 185.13 194.46
Average cost of fuel per net kilowatt-hour generated (cents) 1.89 1.81 1.89 2.05
----------------------------------------------------------------------------------------------------------------------------------
|
II-215B
STATEMENTS OF INCOME
Mississippi Power Company
===================================================================================================================================
For the Years Ended December 31, 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $533,445 $522,199 $508,862
Revenues from affiliates 10,143 21,830 7,691
-----------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 543,588 544,029 516,553
-----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 142,059 141,532 111,071
Purchased power from non-affiliates 14,536 17,960 6,019
Purchased power from affiliates 37,794 33,245 57,777
Proceeds from settlement of disputed contracts - - -
Other 102,365 106,061 107,296
Maintenance 47,302 47,091 39,627
Depreciation and amortization 45,574 44,906 39,224
Taxes other than income taxes 44,034 43,545 42,443
Federal and state income taxes 31,968 32,618 34,486
-----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 465,632 466,958 437,943
-----------------------------------------------------------------------------------------------------------------------------------
Operating Income 77,956 77,071 78,610
Other Income (Expense):
Allowance for equity funds used during construction - 344 366
Interest income 857 239 199
Other, net 2,368 3,801 4,596
Income taxes applicable to other income 588 (932) (1,006)
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 81,769 80,523 82,765
-----------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 19,856 19,898 21,898
Allowance for debt funds used during construction - (713) (399)
Interest on notes payable 96 1,416 1,141
Amortization of debt discount, premium, and expense, net 1,577 1,547 1,510
Other interest charges 574 753 1,185
Distributions on preferred securities of subsidiary trust 2,369 - -
-----------------------------------------------------------------------------------------------------------------------------------
Net interest charges 24,472 22,901 25,335
-----------------------------------------------------------------------------------------------------------------------------------
Net Income From Continuing Operations 57,297 57,622 57,430
-----------------------------------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations of discontinued subsidiary, net of taxes - - -
Loss on disposal of discontinued subsidiary, net of taxes - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net Loss From Discontinued Operations - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net Income 57,297 57,622 57,430
Dividends on Preferred Stock 3,287 4,899 4,899
-----------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 54,010 $ 52,723 $ 52,531
===================================================================================================================================
II-216
|
STATEMENTS OF INCOME
Mississippi Power Company
===================================================================================================================================
For the Years Ended December 31, 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $489,624 $459,364 $424,392
Revenues from affiliates 9,538 15,519 10,055
-----------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 499,162 474,883 434,447
-----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 102,216 113,986 96,743
Purchased power from non-affiliates 2,711 2,198 1,337
Purchased power from affiliates 68,543 58,019 60,689
Proceeds from settlement of disputed contracts - - (189)
Other 97,988 100,381 90,581
Maintenance 45,785 44,001 43,165
Depreciation and amortization 35,716 33,099 32,789
Taxes other than income taxes 41,742 37,145 34,664
Federal and state income taxes 31,386 22,668 16,378
-----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 426,087 411,497 376,157
-----------------------------------------------------------------------------------------------------------------------------------
Operating Income 73,075 63,386 58,290
Other Income (Expense):
Allowance for equity funds used during construction 1,099 1,010 642
Interest income 87 517 766
Other, net 2,033 3,971 5,501
Income taxes applicable to other income (227) (1,158) (1,427)
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 76,067 67,726 63,772
-----------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 19,725 17,688 22,357
Allowance for debt funds used during construction (1,039) (788) (563)
Interest on notes payable 1,442 1,000 362
Amortization of debt discount, premium, and expense, net 1,479 1,262 630
Other interest charges 404 728 339
Distributions on preferred securities of subsidiary trust - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net interest charges 22,011 19,890 23,125
-----------------------------------------------------------------------------------------------------------------------------------
Net Income From Continuing Operations 54,056 47,836 40,647
-----------------------------------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations of discontinued subsidiary, net of taxes - - -
Loss on disposal of discontinued subsidiary, net of taxes - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net Loss From Discontinued Operations - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net Income 54,056 47,836 40,647
Dividends on Preferred Stock 4,899 5,400 3,857
-----------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 49,157 $ 42,436 $ 36,790
===================================================================================================================================
|
II-217A
STATEMENTS OF INCOME
Mississippi Power Company
===================================================================================================================================
For the Years Ended December 31, 1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $414,342 $426,714 $425,712
Revenues from affiliates 18,044 20,157 16,938
-----------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 432,386 446,871 442,650
-----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 120,485 138,303 133,671
Purchased power from non-affiliates 851 1,406 1,266
Purchased power from affiliates 45,506 49,547 47,066
Proceeds from settlement of disputed contracts (4,205) - -
Other 86,932 83,730 84,820
Maintenance 44,166 33,368 35,658
Depreciation and amortization 32,147 30,770 28,001
Taxes other than income taxes 35,414 32,709 32,435
Federal and state income taxes 13,976 17,144 18,387
-----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 375,272 386,977 381,304
-----------------------------------------------------------------------------------------------------------------------------------
Operating Income 57,114 59,894 61,346
Other Income (Expense):
Allowance for equity funds used during construction 728 307 903
Interest income 1,093 829 1,096
Other, net 3,845 6,297 6,013
Income taxes applicable to other income (863) (1,666) (1,392)
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 61,917 65,661 67,966
-----------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 23,656 22,221 21,685
Allowance for debt funds used during construction (584) (600) (821)
Interest on notes payable 603 1,142 689
Amortization of debt discount, premium, and expense, net 377 359 362
Other interest charges 285 333 566
Distributions on preferred securities of subsidiary trust - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net interest charges 24,337 23,455 22,481
-----------------------------------------------------------------------------------------------------------------------------------
Net Income From Continuing Operations 37,580 42,206 45,485
-----------------------------------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations of discontinued subsidiary, net of taxes (6,404) (4,669) (3,459)
Loss on disposal of discontinued subsidiary, net of taxes (5,455) - -
-----------------------------------------------------------------------------------------------------------------------------------
Net Loss From Discontinued Operations (11,859) (4,669) (3,459)
-----------------------------------------------------------------------------------------------------------------------------------
Net Income 25,721 37,537 42,026
Dividends on Preferred Stock 3,094 3,361 3,450
-----------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 22,627 $ 34,176 $ 38,576
===================================================================================================================================
|
II-217B
STATEMENTS OF INCOME
Mississippi Power Company
=================================================================================================================
For the Years Ended December 31, 1988 1987
------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $404,192 $424,565
Revenues from affiliates 33,747 31,278
------------------------------------------------------------------------------------------------------------------
Total operating revenues 437,939 455,843
------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 165,912 167,165
Purchased power from non-affiliates 1,257 1,108
Purchased power from affiliates 19,270 36,114
Proceeds from settlement of disputed contracts - -
Other 83,542 81,331
Maintenance 33,412 33,974
Depreciation and amortization 26,610 26,210
Taxes other than income taxes 29,638 27,882
Federal and state income taxes 20,313 23,888
------------------------------------------------------------------------------------------------------------------
Total operating expenses 379,954 397,672
------------------------------------------------------------------------------------------------------------------
Operating Income 57,985 58,171
Other Income (Expense):
Allowance for equity funds used during construction 850 608
Interest income 1,030 1,121
Other, net 6,399 7,065
Income taxes applicable to other income (1,148) (2,507)
------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 65,116 64,458
------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 22,271 24,139
Allowance for debt funds used during construction (595) (652)
Interest on notes payable 341 558
Amortization of debt discount, premium, and expense, net 363 388
Other interest charges 522 601
Distributions on preferred securities of subsidiary trust - -
------------------------------------------------------------------------------------------------------------------
Net interest charges 22,902 25,034
------------------------------------------------------------------------------------------------------------------
Net Income From Continuing Operations 42,214 39,424
------------------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations of discontinued subsidiary, net of taxes (2,549) (487)
Loss on disposal of discontinued subsidiary, net of taxes - -
------------------------------------------------------------------------------------------------------------------
Net Loss From Discontinued Operations (2,549) (487)
------------------------------------------------------------------------------------------------------------------
Net Income 39,665 38,937
Dividends on Preferred Stock 3,584 3,737
------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 36,081 $ 35,200
==================================================================================================================
|
II-217C
STATEMENTS OF CASH FLOWS
Mississippi Power Company
=======================================================================================================================
For the Years Ended December 31, 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 57,297 $ 57,622 $ 57,430
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 49,661 50,551 51,588
Deferred income taxes, net (1,809) 74 (480)
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction - (344) (366)
Non-cash proceeds from settlement of disputed contracts - - -
Other, net 3,206 9,787 5,704
Changes in certain current assets and liabilities --
Receivables, net (8,583) 5,118 (8,758)
Inventories 3,148 4,973 3,962
Payables 8,357 2,077 17,421
Other 3,980 292 681
-----------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 115,257 130,150 127,182
-----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (55,375) (61,314) (67,570)
Other (489) (2,258) (1,697)
-----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (55,864) (63,572) (69,267)
-----------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - -
First mortgage bonds - - 30,000
Pollution control bonds - - 10,600
Preferred securities 35,000 - -
Other long-term debt - 80,000 -
Capital contributions - 27 -
Redemptions:
Preferred stock (42,518) - -
First mortgage bonds - (45,447) (1,625)
Pollution control bonds (10) (10) (10)
Other long-term debt - (55,000) (40,689)
Notes payable, net - - -
Payment of preferred stock dividends (3,287) (4,899) (4,899)
Payment of common stock dividends (49,400) (43,900) (39,400)
Miscellaneous (1,804) (2,932) (568)
-----------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (62,019) (72,161) (46,591)
-----------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (2,626) (5,583) 11,324
Cash and Cash Equivalents at Beginning of Year 7,058 12,641 1,317
-----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 4,432 $ 7,058 $ 12,641
=======================================================================================================================
( ) Denotes use of cash.
|
II-218
STATEMENTS OF CASH FLOWS
Mississippi Power Company
===========================================================================================================================
For the Years Ended December 31, 1994 1993 1992
---------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 54,056 $ 47,836 $ 40,647
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 47,827 45,660 41,472
Deferred income taxes, net 1,563 5,039 (5,473)
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (1,099) (1,010) (642)
Non-cash proceeds from settlement of disputed contracts - - (189)
Other, net 5,230 3,005 8,093
Changes in certain current assets and liabilities --
Receivables, net 3,066 (4,347) 1,002
Inventories (9,856) 11,119 975
Payables (8,754) 4,133 460
Other 3,334 (8,033) 6,095
---------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 95,367 103,402 92,440
---------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (104,014) (139,976) (68,189)
Other (14,087) 7,562 4,235
---------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (118,101) (132,414) (63,954)
---------------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - 23,404 35,000
First mortgage bonds 35,000 70,000 40,000
Pollution control bonds - 38,875 23,300
Preferred securities - - -
Other long-term debt 85,310 - -
Capital contributions 25,000 30,036 26
Redemptions:
Preferred stock - (23,404) -
First mortgage bonds (32,628) (51,300) (104,703)
Pollution control bonds (10) (25,885) (23,650)
Other long-term debt (9,299) (8,170) (6,212)
Notes payable, net (40,000) 9,000 26,500
Payment of preferred stock dividends (4,899) (5,400) (3,857)
Payment of common stock dividends (34,100) (29,000) (28,000)
Miscellaneous (1,201) (5,683) (7,821)
---------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities 23,173 22,473 (49,417)
---------------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 439 (6,539) (20,931)
Cash and Cash Equivalents at Beginning of Year 878 7,417 28,348
---------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,317 $ 878 $ 7,417
===========================================================================================================================
|
( ) Denotes use of cash.
II-219A
STATEMENTS OF CASH FLOWS
Mississippi Power Company
=======================================================================================================================
For the Years Ended December 31, 1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 25,721 $ 37,537 $ 42,026
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 41,773 41,079 35,878
Deferred income taxes, net (11,869) 2,756 (294)
Deferred investment tax credits, net (2) (26) (38)
Allowance for equity funds used during construction (728) (307) (903)
Non-cash proceeds from settlement of disputed contracts (4,071) - -
Other, net (4,982) 7,257 4,306
Changes in certain current assets and liabilities --
Receivables, net 35,343 (6,252) (18,506)
Inventories 10,518 (8,922) 3,687
Payables (4,949) (5,552) 1,307
Other 11,433 (1,461) 2,172
-----------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 98,187 66,109 69,635
-----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (53,675) (49,009) (43,916)
Other 2,148 4,481 1,860
-----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (51,527) (44,528) (42,056)
-----------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - - -
First mortgage bonds 50,000 - -
Pollution control bonds - - -
Preferred securities - - -
Other long-term debt 844 - 844
Capital contributions - - -
Redemptions:
Preferred stock (4,118) (750) (750)
First mortgage bonds - (4,000) (3,823)
Pollution control bonds (300) (288) (62)
Other long-term debt (8,958) (6,416) (5,919)
Notes payable, net (25,603) 17,146 6,457
Payment of preferred stock dividends (3,094) (3,361) (3,450)
Payment of common stock dividends (28,500) (27,500) (27,000)
Miscellaneous (839) 2 -
-----------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (20,568) (25,167) (33,703)
-----------------------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents 26,092 (3,586) (6,124)
Cash and Cash Equivalents at Beginning of Year 2,256 5,842 11,966
-----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 28,348 $ 2,256 $ 5,842
=======================================================================================================================
( ) Denotes use of cash.
|
II-219B
STATEMENTS OF CASH FLOWS
Mississippi Power Company
=======================================================================================================
For the Years Ended December 31, 1988 1987
-------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 39,665 $ 38,937
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 34,440 33,971
Deferred income taxes, net (3,053) 10,035
Deferred investment tax credits, net 571 896
Allowance for equity funds used during construction (850) (608)
Non-cash proceeds from settlement of disputed contracts - -
Other, net 3,503 1,965
Changes in certain current assets and liabilities --
Receivables, net 816 12,000
Inventories 283 13,708
Payables (5,241) 7,487
Other (2,294) (9,342)
-------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 67,840 109,049
-------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (54,550) (53,288)
Other 8,368 (1,461)
-------------------------------------------------------------------------------------------------------
Net cash used for investing activities (46,182) (54,749)
-------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
Preferred stock - -
First mortgage bonds - -
Pollution control bonds - -
Preferred securities - -
Other long-term debt - 130
Capital contributions - 16,000
Redemptions:
Preferred stock (1,500) (1,500)
First mortgage bonds - (29,701)
Pollution control bonds (50) (50)
Other long-term debt (5,401) (4,974)
Notes payable, net 6,500 -
Payment of preferred stock dividends (3,584) (3,737)
Payment of common stock dividends (27,600) (24,700)
Miscellaneous - (2,696)
-------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (31,635) (51,228)
-------------------------------------------------------------------------------------------------------
Net Change in Cash and Cash Equivalents (9,977) 3,072
Cash and Cash Equivalents at Beginning of Year 21,943 18,871
-------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 11,966 $ 21,943
=======================================================================================================
( ) Denotes use of cash.
|
II-219C
BALANCE SHEETS
Mississippi Power Company
==============================================================================================================================
At December 31, 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 732,102 $ 722,183 $ 717,055
Transmission 246,773 241,509 220,038
Distribution 374,453 356,305 335,163
General 165,074 163,878 162,071
Construction work in progress 41,083 35,100 41,210
------------------------------------------------------------------------------------------------------------------------------
Total utility plant 1,559,485 1,518,975 1,475,537
Accumulated provision for depreciation 559,098 526,776 499,308
------------------------------------------------------------------------------------------------------------------------------
Total 1,000,387 992,199 976,229
Less property-related accumulated deferred income taxes - - -
------------------------------------------------------------------------------------------------------------------------------
Total 1,000,387 992,199 976,229
------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Miscellaneous 650 3,054 4,160
------------------------------------------------------------------------------------------------------------------------------
Total 650 3,054 4,160
------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 4,432 7,058 12,641
Investment securities - - -
Receivables, net 51,369 34,288 39,358
Accrued utility revenues 3,836 12,334 12,382
Fossil fuel stock, at average cost 10,651 12,168 15,666
Materials and supplies, at average cost 19,452 21,083 22,558
Current portion of deferred fuel commitments - - 1,546
Prepayments 10,170 11,971 7,584
Vacation pay deferred 5,030 4,806 4,715
------------------------------------------------------------------------------------------------------------------------------
Total 104,940 103,708 116,450
------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 2,726 1,548 1,530
Premium on reacquired debt, being amortized 9,508 10,672 8,509
Deferred fuel commitments - - -
Deferred charges related to income taxes 21,906 22,274 23,384
Miscellaneous 26,712 8,872 18,691
------------------------------------------------------------------------------------------------------------------------------
Total 60,852 43,366 52,114
------------------------------------------------------------------------------------------------------------------------------
Total Assets $1,166,829 $1,142,327 $1,148,953
==============================================================================================================================
|
II-220
BALANCE SHEETS
Mississippi Power Company
==============================================================================================================================
At December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 705,043 $ 597,425 $ 576,848
Transmission 202,503 188,375 173,278
Distribution 313,345 295,799 279,335
General 164,141 157,248 151,044
Construction work in progress 44,838 108,063 41,692
------------------------------------------------------------------------------------------------------------------------------
Total utility plant 1,429,870 1,346,910 1,222,197
Accumulated provision for depreciation 477,098 462,725 440,777
------------------------------------------------------------------------------------------------------------------------------
Total 952,772 884,185 781,420
Less property-related accumulated deferred income taxes - - 142,338
------------------------------------------------------------------------------------------------------------------------------
Total 952,772 884,185 639,082
------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - - -
Miscellaneous 3,353 11,289 4,539
------------------------------------------------------------------------------------------------------------------------------
Total 3,353 11,289 4,539
------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,317 878 7,417
Investment securities - - 3,622
Receivables, net 25,424 28,021 20,219
Accrued utility revenues 14,428 14,897 14,898
Fossil fuel stock, at average cost 16,885 11,185 21,341
Materials and supplies, at average cost 25,301 21,145 22,108
Current portion of deferred fuel commitments 1,068 440 1,861
Prepayments 11,189 8,971 5,869
Vacation pay deferred 4,588 4,797 4,651
------------------------------------------------------------------------------------------------------------------------------
Total 100,200 90,334 101,986
------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 1,358 1,103 804
Premium on reacquired debt, being amortized 9,571 10,563 10,102
Deferred fuel commitments 9,000 17,520 25,255
Deferred charges related to income taxes 25,036 25,267 -
Miscellaneous 22,421 10,073 9,515
------------------------------------------------------------------------------------------------------------------------------
Total 67,386 64,526 45,676
------------------------------------------------------------------------------------------------------------------------------
Total Assets $1,123,711 $1,050,334 $ 791,283
==============================================================================================================================
|
II-221A
BALANCE SHEETS
Mississippi Power Company
==============================================================================================================================
At December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 567,588 $ 560,537 $ 547,946
Transmission 162,379 151,949 147,288
Distribution 259,929 247,705 229,238
General 141,564 136,815 133,361
Construction work in progress 33,078 26,816 27,057
------------------------------------------------------------------------------------------------------------------------------
Total utility plant 1,164,538 1,123,822 1,084,890
Accumulated provision for depreciation 415,135 392,440 366,193
------------------------------------------------------------------------------------------------------------------------------
Total 749,403 731,382 718,697
Less property-related accumulated deferred income taxes 138,616 139,970 138,071
------------------------------------------------------------------------------------------------------------------------------
Total 610,787 591,412 580,626
------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts 4,113 - -
Miscellaneous 3,954 8,631 7,792
------------------------------------------------------------------------------------------------------------------------------
Total 8,067 8,631 7,792
------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 28,348 2,256 5,842
Investment securities - - -
Receivables, net 27,152 67,734 58,425
Accrued utility revenues 12,420 10,797 13,854
Fossil fuel stock, at average cost 22,373 29,812 24,788
Materials and supplies, at average cost 22,051 25,130 21,232
Current portion of deferred fuel commitments 933 1,430 3,017
Prepayments 6,137 11,392 12,512
Vacation pay deferred 4,406 3,955 3,910
------------------------------------------------------------------------------------------------------------------------------
Total 123,820 152,506 143,580
------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 981 824 886
Premium on reacquired debt, being amortized 4,676 4,919 5,161
Deferred fuel commitments 31,039 39,020 45,103
Deferred charges related to income taxes - - -
Miscellaneous 11,271 2,714 3,422
------------------------------------------------------------------------------------------------------------------------------
Total 47,967 47,477 54,572
------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 790,641 $ 800,026 $ 786,570
==============================================================================================================================
|
II-221B
BALANCE SHEETS
Mississippi Power Company
===========================================================================================================
At December 31, 1988 1987
-----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $ 529,742 $ 524,198
Transmission 134,674 130,963
Distribution 221,327 207,810
General 137,333 127,690
Construction work in progress 35,204 27,755
-----------------------------------------------------------------------------------------------------------
Total utility plant 1,058,280 1,018,416
Accumulated provision for depreciation 348,085 328,761
-----------------------------------------------------------------------------------------------------------
Total 710,195 689,655
Less property-related accumulated deferred income taxes 134,220 127,912
-----------------------------------------------------------------------------------------------------------
Total 575,975 561,743
-----------------------------------------------------------------------------------------------------------
Other Property and Investments:
Securities received from settlement of disputed contracts - -
Miscellaneous 8,153 4,122
-----------------------------------------------------------------------------------------------------------
Total 8,153 4,122
-----------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 11,966 21,943
Investment securities - -
Receivables, net 43,246 42,218
Accrued utility revenues 10,527 12,371
Fossil fuel stock, at average cost 26,587 29,989
Materials and supplies, at average cost 23,120 20,001
Current portion of deferred fuel commitments - -
Prepayments 12,341 830
Vacation pay deferred 3,815 3,956
-----------------------------------------------------------------------------------------------------------
Total 131,602 131,308
-----------------------------------------------------------------------------------------------------------
Deferred Charges:
Debt expense, being amortized 949 1,012
Premium on reacquired debt, being amortized 5,404 5,647
Deferred fuel commitments 50,714 55,889
Deferred charges related to income taxes - -
Miscellaneous 6,522 4,347
-----------------------------------------------------------------------------------------------------------
Total 63,589 66,895
-----------------------------------------------------------------------------------------------------------
Total Assets $ 779,319 $ 764,068
===========================================================================================================
|
II-221C
BALANCE SHEETS
Mississippi Power Company
==============================================================================================================================
At December 31, 1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 37,691 $ 37,691 $ 37,691
Paid-in capital 179,389 179,389 179,362
Premium on preferred stock 327 372 372
Earnings retained in the business 170,417 166,282 157,459
------------------------------------------------------------------------------------------------------------------------------
Total common equity 387,824 383,734 374,884
Preferred stock 31,896 74,414 74,414
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities 35,000 - -
Long-term debt 291,665 326,379 288,820
------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 746,385 784,527 738,118
------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - - -
Preferred stock due within one year - - -
Long-term debt due within one year 35,020 10 57,229
Accounts payable 58,089 51,644 50,775
Customer deposits 3,225 3,154 2,716
Taxes accrued 34,960 32,445 31,913
Interest accrued 4,098 4,384 4,701
Vacation pay accrued 5,017 4,793 4,563
Miscellaneous 7,780 9,149 8,890
------------------------------------------------------------------------------------------------------------------------------
Total 148,189 105,579 160,787
------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 134,645 133,437 129,711
Accumulated deferred investment tax credits 27,121 28,333 29,773
Deferred credits related to income taxes 38,203 40,568 43,266
Miscellaneous 72,286 49,883 47,298
------------------------------------------------------------------------------------------------------------------------------
Total 272,255 252,221 250,048
------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $1,166,829 $1,142,327 $1,148,953
==============================================================================================================================
|
II-222
BALANCE SHEETS
Mississippi Power Company
==============================================================================================================================
At December 31, 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 37,691 $ 37,691 $ 37,691
Paid-in capital 179,362 154,362 124,326
Premium on preferred stock 372 372 194
Earnings retained in the business 144,328 129,343 118,429
------------------------------------------------------------------------------------------------------------------------------
Total common equity 361,753 321,768 280,640
Preferred stock 74,414 74,414 74,414
Preferred stock subject to mandatory redemption - - -
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 306,522 250,391 238,650
-------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 742,689 646,573 593,704
------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 40,000 31,000
Preferred stock due within one year - - -
Long-term debt due within one year 41,199 19,345 8,878
Accounts payable 34,481 60,928 43,550
Customer deposits 2,712 2,786 2,976
Taxes accrued 31,657 27,138 32,035
Interest accrued 4,427 4,237 3,961
Vacation pay accrued 4,588 4,797 4,651
Miscellaneous 10,025 9,323 10,963
------------------------------------------------------------------------------------------------------------------------------
Total 129,089 168,554 138,014
------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 129,505 124,334 169
Accumulated deferred investment tax credits 31,228 32,710 34,242
Deferred credits related to income taxes 45,832 48,228 -
Miscellaneous 45,368 29,935 25,154
------------------------------------------------------------------------------------------------------------------------------
Total 251,933 235,207 59,565
------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $1,123,711 $1,050,334 $791,283
==============================================================================================================================
|
II-223A
BALANCE SHEETS
Mississippi Power Company
===============================================================================================================================
At December 31, 1991 1990 1989
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 37,691 $ 37,691 $ 37,691
Paid-in capital 124,300 124,300 124,300
Premium on preferred stock 194 299 299
Earnings retained in the business 111,670 117,543 110,867
------------------------------------------------------------------------------------------------------------------------------
Total common equity 273,855 279,833 273,157
Preferred stock 39,414 39,414 39,414
Preferred stock subject to mandatory redemption - 3,750 4,500
Company obligated mandatorily redeemable preferred securities - - -
Long-term debt 304,150 270,724 277,693
------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 617,419 593,721 594,764
------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 4,500 30,103 12,957
Preferred stock due within one year - 368 368
Long-term debt due within one year 14,650 7,039 10,717
Accounts payable 38,213 45,763 47,019
Customer deposits 3,109 3,430 3,906
Taxes accrued 29,609 24,935 23,843
Interest accrued 4,602 4,315 4,280
Vacation pay accrued 4,406 3,955 3,910
Miscellaneous 10,236 6,833 7,746
------------------------------------------------------------------------------------------------------------------------------
Total 109,325 126,741 114,746
------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 4,117 18,992 22,085
Accumulated deferred investment tax credits 35,657 37,187 38,752
Deferred credits related to income taxes - - -
Miscellaneous 24,123 23,385 16,223
------------------------------------------------------------------------------------------------------------------------------
Total 63,897 79,564 77,060
------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $790,641 $800,026 $786,570
==============================================================================================================================
|
II-223B
BALANCE SHEETS
Mississippi Power Company
===========================================================================================================
At December 31, 1988 1987
-----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 37,691 $ 37,691
Paid-in capital 124,300 124,300
Premium on preferred stock 299 299
Earnings retained in the business 99,183 90,702
-----------------------------------------------------------------------------------------------------------
Total common equity 261,473 252,992
Preferred stock 39,414 39,414
Preferred stock subject to mandatory redemption 5,250 6,750
Company obligated mandatorily redeemable preferred securities - -
Long-term debt 287,525 294,811
-----------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 593,662 593,967
-----------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 6,500 -
Preferred stock due within one year 368 368
Long-term debt due within one year 9,789 5,451
Accounts payable 46,937 45,659
Customer deposits 3,904 3,857
Taxes accrued 21,130 21,351
Interest accrued 4,016 4,474
Vacation pay accrued 3,815 3,956
Miscellaneous 9,347 6,005
-----------------------------------------------------------------------------------------------------------
Total 105,806 91,121
-----------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 24,556 27,411
Accumulated deferred investment tax credits 40,435 41,427
Deferred credits related to income taxes - -
Miscellaneous 14,860 10,142
-----------------------------------------------------------------------------------------------------------
Total 79,851 78,980
-----------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 779,319 $ 764,068
===========================================================================================================
|
II-223C
MISSISSIPPI POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1997
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 35,000 5-3/8% $ 35,000 3/1/98
1992 40,000 6-5/8% 40,000 8/1/00
1994 35,000 6.60% 35,000 3/1/04
1993 35,000 7.45% 35,000 6/1/23
1995 30,000 6-7/8% 30,000 12/1/25
-------- --------
$175,000 $175,000
======== ========
Pollution Control Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
----------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1977 $ 1,000 5.80% $ 950 10/1/07
1992 6,550 Variable 6,550 12/1/20
1992 16,750 Variable 16,750 12/1/22
1993 13,000 6.20% 13,000 4/1/23
1993 25,875 5.65% 25,875 11/1/23
1995 10,600 Variable 10,600 7/1/25
-------- --------
$ 73,775 $ 73,725
======== ========
Company Obligated Mandatorily Redeemable Preferred Securities
of Subsidiary Trust Holding Company Junior Subordinated Notes
Preferred Securities Interest Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------------------------------------------
(Thousands)
1997 1,400,000 7.75% $ 35,000
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
----------------------------------------------------------------------------------------------------
(Thousands)
1947 8,739 4.60% $ 874
1956 9,476 4.40% 948
1965 16,700 4.72% 1,670
1968 50,000 7.00% 5,000
1993 150,000 6.32% 15,000
1993 84,040 6.65% 8,404
------- ---------
318,955 $ 31,896
======= =========
|
II-224
MISSISSIPPI POWER COMPANY
SECURITIES RETIRED DURING 1997
Pollution Control Bonds
Principal Interest
Series Amount Rate
-------------------------------------------------------------------------------
(Thousands)
1977 $ 10 5.80%
Preferred Stock
Principal Dividend
Series Amount Rate
-------------------------------------------------------------------------------
(Thousands)
1947 $ 1,136 4.60%
1956 3,052 4.40%
1965 3,330 4.72%
1992 35,000 7.25%
-------
$42,518
=======
II-225
SAVANNAH ELECTRIC AND POWER COMPANY
FINANCIAL SECTION
|
II-226
MANAGEMENT'S REPORT
Savannah Electric and Power Company 1997 Annual Report
The management of Savannah Electric and Power Company has prepared--and is responsible for--the financial statements and related information included in this report. These statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances and necessarily include amounts that are based on the best estimates and judgments of management. Financial information throughout this annual report is consistent with the financial statements.
The Company maintains a system of internal accounting controls to provide reasonable assurance that assets are safeguarded and that books and records reflect only authorized transactions of the Company. Limitations exist in any system of internal controls, however, based on a recognition that the cost of the system should not exceed its benefits. The Company believes its system of internal accounting controls maintains an appropriate cost/benefit relationship.
The Company's system of internal accounting controls is evaluated on an ongoing basis by the Company's internal audit staff. The Company's independent public accountants also consider certain elements of the internal control system in order to determine their auditing procedures for the purpose of expressing an opinion on the financial statements.
The audit committee of the board of directors, composed of four directors who are not employees, provides a broad overview of management's financial reporting and control functions. Periodically, this committee meets with management, the internal auditors and the independent public accountants to ensure that these groups are fulfilling their obligations and to discuss auditing, internal controls and financial reporting matters. The internal auditors and the independent public accountants have access to the members of the audit committee at any time.
Management believes that its policies and procedures provide reasonable assurance that the Company's operations are conducted according to a high standard of business ethics.
In management's opinion, the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of Savannah Electric and Power Company in conformity with generally accepted accounting principles.
/s/G. Edison Holland, Jr.
G. Edison Holland, Jr.
President and Chief Executive Officer
/s/K. R. Willis
K. R. Willis
Vice-President
Treasurer, Secretary and Chief Financial Officer
February 11, 1998
II-227
|
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of Savannah Electric and Power Company:
We have audited the accompanying balance sheets and statements of capitalization of Savannah Electric and Power Company (a Georgia corporation and a wholly owned subsidiary of Southern Company) as of December 31, 1997 and 1996, and the related statements of income, retained earnings, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements (pages II-235 through 11-246) referred to above present fairly, in all material respects, the financial position of Savannah Electric and Power Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
II-228
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Savannah Electric and Power Company 1997 Annual Report
RESULTS OF OPERATIONS
Earnings
Savannah Electric and Power Company's net income after dividends on preferred stock for 1997 totaled $23.8 million, representing a $0.1 million decrease from the prior year. This (0.4) percent change in earnings from 1996 is principally the result of an increase in other operation expense, partially offset by an increase in other income, net.
In 1996, earnings were $23.9 million, representing a $0.5 million (2.3 percent) increase from the prior year. This was principally the result of increased retail energy sales primarily attributable to an increase in the number of customers served.
Revenues
Total revenues for 1997 were $226.3 million, reflecting a (3.3) percent decrease compared to 1996. The following table summarizes revenue increases and decreases compared to prior years:
Increase (Decrease)
From Prior Year
--------------------------------------
1997 1996 1995
--------------------------------------
Retail -- (in thousands)
Sales growth $ 7,664 $ 3,679 $ 1,068
Weather (6,186) (2,813) 6,232
Fuel cost recovery
and other (10,002) 12,365 6,177
-------------------------------------------------------------------
Total retail (8,524) 13,231 13,477
-------------------------------------------------------------------
Sales for resale--
Non-affiliates 1,469 147 (2,935)
Affiliates (1,078) (4,070) 754
-------------------------------------------------------------------
Total sales for resale 391 (3,923) (2,181)
-------------------------------------------------------------------
Other operating revenues 336 (963) 2,648
-------------------------------------------------------------------
Total operating revenues $(7,797) $ 8,345 $13,944
===================================================================
Percent change (3.3)% 3.7% 6.6%
-------------------------------------------------------------------
|
Retail revenues declined 3.7 percent in 1997, compared to an increase of 6.2 percent in 1996. The decline in 1997 retail revenues is attributable to the mild summer weather and a decrease in fuel cost recovery revenues, somewhat offset by customer growth and higher demand from a large industrial customer. Under the Company's fuel cost recovery provisions, fuel revenues--including purchased energy--generally equal fuel expense and have no effect on earnings.
The increase in 1996 retail revenues was attributable to an increase in the number of customers served and an increase in fuel cost recovery revenues. Industrial energy sales were lower primarily due to a decrease in the demand of a major customer.
Revenues from sales to utilities outside the service area under long-term contracts consist of capacity and energy components. Capacity revenues reflect the recovery of fixed costs and a return on investment under the contracts. Energy is generally sold at variable cost. Capacity revenues remained unchanged in 1997. The capacity and energy components were as follows:
1997 1996 1995
----------------------------------------
(in thousands)
Capacity $ 2 $ 2 $ 3
Energy 746 1,329 1,250
---------------------------------------------------------
Total $748 $1,331 $1,253
=========================================================
|
Sales to affiliated companies within the Southern electric system vary from year to year depending on demand and the availability and cost of generating resources at each company. These sales have little impact on earnings.
Changes in revenues are influenced heavily by the amount of energy sold each year. Kilowatt-hour sales for 1997 and the percent change by year were as follows:
KWH Percent Change
------------ ---------------------------
1997 1997 1996 1995
------------ ---------------------------
(millions)
Residential 1,428 (1.9)% 3.9% 8.0%
Commercial 1,156 1.3 3.8 5.1
Industrial 881 5.1 (5.5) 11.0
Other 125 (1.4) 0.1 5.4
------------
Total retail 3,590 0.8 1.4 7.7
Sales for resale
Non-affiliates 94 2.9 4.4 (56.5)
Affiliates 55 30.4 (34.4) (31.5)
------------
Total 3,739 1.2 % 0.8% 3.1%
===================================================================
|
II-229
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
Expenses
Total operating expenses for 1997 were $189.1 million, reflecting a $6.1 million decrease from 1996. Major components of this decrease include a $16.5 million reduction in purchased power from affiliates, partially offset by increases of $6.4 million in fuel and $3.7 million in other operation expenses. The decline in purchased power from affiliates was due primarily to an increase in internal generation and to an adjustment in affiliated billings. The increase in fuel expense was primarily attributable to higher generation and to fuel mix. The increase in other operation expense primarily resulted from a one-time charge for work force reductions of $1.9 million, and expenses associated with the implementation of a new computer software system.
In 1996, total operating expenses were $195.2 million, reflecting an $7.7 million increase over 1995. This increase includes $5.3 million in purchased power from affiliates and $3.8 million in fuel, partially offset by a $1.2 million reduction in other operation expenses. The increase in purchased power from affiliates was due to an increase in the unit cost of purchased power. The increase in fuel expense was primarily attributable to higher generation and an increase in the unit cost of gas. The reduction in other operation expense primarily resulted from the demand-side management program being discontinued in December 1995.
Fuel and purchased power costs constitute the single largest expense for the Company. The mix of energy supply is determined primarily by system load, the unit cost of fuel consumed and the availability of units.
The amount and sources of energy supply, the average cost of fuel per net kilowatt-hour generated, the average cost of purchased power per net kilowatt-hour, and the total average cost of energy supply were as follows:
1997 1996 1995
--------------------------
Total energy supply
(millions of kilowatt-hours) 3,964 3,917 3,908
Sources of energy supply
(percent) --
Coal 34 28 24
Oil - - -
Gas 5 3 6
Purchased Power 61 69 70
Average cost of fuel per net
Kilowatt-hour generated
(cents) --
Coal 1.91 1.76 1.77
Oil 4.73 5.79 5.14
Gas 4.62 8.89 3.76
Average cost of purchased
power per net kilowatt-
hour (cents) 1.86 2.25 2.02
Total average cost of
energy supply (cents) 2.02 2.30 2.07
---------------------------------------------------------------
|
Effects of Inflation
The Company is subject to rate regulation and income tax laws that are based on the recovery of historical costs. Therefore, inflation creates an economic loss because the Company is recovering its costs of investments in dollars that have less purchasing power. While the inflation rate has been relatively low in recent years, it continues to have an adverse effect on the Company because of the large investment in long-lived utility plant. Conventional accounting for historical cost does not recognize this economic loss nor the partially offsetting gain that arises through financing facilities with fixed-money obligations such as long-term debt and preferred stock. Any recognition of inflation by regulatory authorities is reflected in the rate of return allowed.
II-230
MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
Future Earnings Potential
The results of operations for the past three years are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from energy sales growth to a less regulated, more competitive environment.
Savannah Electric currently operates as a vertically integrated utility providing electricity to customers within the traditional service area of southeastern Georgia. Prices for electricity provided by the Company to retail customers are set by the Georgia Public Service Commission(GPSC).
Future earnings in the near term will depend upon growth in energy sales, which is subject to a number of factors. These factors include weather, competition, changes in contracts with neighboring utilities, energy conservation practiced by customers, the elasticity of demand, and the rate of economic growth in the Company's service area.
The electric utility industry in the United States is currently undergoing a period of dramatic change as a result of regulatory and competitive factors. Among the primary agents of change has been the Energy Policy Act of 1992 (Energy Act). The Company is positioning the business to meet the challenge of this major change in the traditional practice of selling electricity. The Energy Act allows independent power producers (IPPs) to access the Company's transmission network in order to sell electricity to other utilities. This enhances the incentive for IPPs to build cogeneration plants for industrial and commercial customers and sell energy generation to other utilities. Also, electricity sales for resale rates are being driven down by wholesale transmission access and numerous potential new energy suppliers, including power marketers and brokers.
Although the Energy Act does not permit retail customer access, it was a major catalyst for the current restructuring and consolidation taking place within the utility industry. Numerous federal and state initiatives are in varying stages to promote wholesale and retail competition. Among other things, these initiatives allow customers to choose their electricity provider. As these initiatives materialize, the structure of the utility industry could radically change. Some states have approved initiatives that result in a separation of the ownership and/or operation of generating facilities from the ownership and/or operation of transmission and distribution facilities. While various restructuring and competition initiatives have been or are being discussed in Georgia, none have been enacted to date. Enactment would require numerous issues to be resolved, including significant ones relating to transmission pricing and recovery of any stranded investments. The inability of the Company to recover its investments, including the regulatory assets described in Note 1 to the financial statements, could have a material adverse effect on the financial condition of the Company. The Company is attempting to minimize or reduce its cost exposure.
Continuing to be a low-cost producer could provide significant opportunities to increase market share and profitability in markets that evolve with changing regulation. Conversely, unless the Company remains a low-cost producer and provides quality service, the Company's retail energy sales growth could be limited, and this could significantly erode earnings.
The Company is heavily dependent upon complex computer systems for all phases of its operations. The year 2000 issue--common to most corporations--concerns the inability of certain software and databases to properly recognize date sensitive information related to the year 2000 and thereafter. This problem could result in a material disruption to the Company's operation, if not corrected. The Company has assessed and developed a detailed strategy to prevent or at least minimize problems related to the year 2000 issue. In 1997, resources were committed and implementation began to modify the affected information systems. Total costs related to the project for Southern Company are estimated to be approximately $85 million, of which $8 million was spent in 1997. The Company's total costs related to the project are estimated to be approximately $1 million, of which $0.2 million was spent in 1997. Most all remaining costs will be expensed in 1998. Implementation is currently on schedule. The degree of success of this project cannot be determined at this time. However, management believes that the final outcome will not have a material adverse affect on the operations of the Company.
Compliance costs related to current and future environmental laws and regulations could affect earnings if such costs are not fully recovered. The Clean Air Act and other important environmental items are discussed later under "Environmental Matters."
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
Rates to retail customers served by the Company are regulated by the GPSC. As part of the Company's most recent rate settlement in 1992, it was informally agreed that the Company's earned rate of return on common equity should be 12.95 percent. The Company is currently undergoing an earnings review by the GPSC, and to date, the GPSC has made no determination.
The Company is subject to the provisions of Financial Accounting Standards Board Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of the Company's operations is no longer subject to these provisions, the Company would be required to write off related regulatory assets and liabilities that are not specifically recoverable, and determine if any other assets have been impaired. See Note 1 to the financial statements under "Regulatory Assets and Liabilities" for additional information.
Exposure to Market Risks
Due to cost-based rate regulation, the Company has limited exposure to market volatility in interest rates and prices of electricity. To mitigate residual risks relative to movements in electricity prices, the Company enters into fixed price contracts for the purchase and sale of electricity through the wholesale electricity market. Realized gains and losses are recognized in the income statement as incurred. At December 31, 1997, exposure from these activities was not material to the Company's financial statements.
New Accounting Standards
The FASB has issued Statement No. 130, Reporting Comprehensive Income, which will be effective in 1998. This statement establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. The objective of the statement is to report a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period other than transactions with owners (comprehensive income). Comprehensive income is the total of net income and all other non-owner changes in equity. The Company will adopt this statement in 1998.
The FASB has issued Statement No. 131, Disclosure about Segments of an Enterprise and Related Information. This statement requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Generally, financial information is required to be reported on the basis that it is used by the chief operating decision maker in deciding how to allocate resources and in assessing performance. This statement also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company adopted the new rules in 1997, which do not have a significant impact on the Company's financial reporting. However, this conclusion may change as industry restructuring and competitive factors influence the Company's operations.
FINANCIAL CONDITION
Overview
The principal change in the Company's financial condition in 1997 was the addition of $19 million to utility plant. The funds needed for gross property additions are currently provided from operating activities, principally from earnings and non-cash charges to income such as depreciation and deferred income taxes and from financing activities. See Statements of Cash Flows for additional information.
Capital Structure
As of December 31, 1997, the Company's capital structure consisted of 49.7 percent common equity, 9.9 percent preferred stock and 40.4 percent long-term debt, excluding amounts due within one year. The Company's long-term financial objective for capitalization ratios is to maintain a capital structure of common equity at 48 percent, preferred stock at 10 percent and debt at 42 percent.
In April 1997, the Company issued $14 million of variable interest rate pollution control obligations maturing in 2037. Maturities and retirements of long-term debt were $14 million in 1997, $29 million in 1996 and $29 million in 1995.
In March 1996, the Company entered into a fifteen year variable rate capital lease agreement with the Savannah Economic Development Authority for a coal ship docking and unloading facility at Plant Kraft.
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
The composite interest rates and dividend rate for the years 1995 through 1997 as of year-end were as follows:
1997 1996 1995
-------------------------------
Composite interest rates
on long-term debt 6.9% 7.0% 7.5%
Preferred stock dividend rate 6.6% 6.6% 6.6%
---------------------------------------------------------------
The Company's current securities ratings are as follows:
Standard
Moody's & Poor's
--------------------------
First Mortgage Bonds A1 AA-
Preferred Stock "a2" A
-----------------------------------------------------------------
|
Capital Requirements for Construction
The Company's projected construction expenditures for the next three years total $66 million ($22 million in 1998, $23 million in 1999, and $21 million in 2000). Actual construction costs may vary from this estimate because of factors such as changes in: business conditions; environmental regulations; load projections; the cost and efficiency of construction labor, equipment and materials; and the cost of capital. In addition, there can be no assurance that costs related to capital expenditures will be fully recovered. The Company does not have any traditional baseload generating plants under construction, and current energy demand forecasts do not require any additional traditional baseload facilities until well into the future. Construction of transmission and distribution facilities and upgrading of generating plants will be continuing.
Other Capital Requirements
In addition to the funds needed for the construction program, approximately $23 million will be needed by the end of 2000 for maturities of long-term debt and present sinking fund requirements.
Environmental Matters
In November 1990, the Clean Air Act was signed into law. Title IV of the Clean Air Act--the acid rain compliance provision of the law--significantly affected the Company and other subsidiaries of Southern Company. Specific reductions in sulfur dioxide and nitrogen oxide emissions from fossil-fired generating plants are required in two phases. Phase I compliance began in 1995 and initially affected 28 generating units of Southern Company. As a result of Southern Company's compliance strategy, an additional 22 generating units, which included four of the Company's units, were brought into compliance with Phase I requirements. Phase II compliance is required in 2000, and all fossil-fired generating plants will be affected.
Southern Company achieved Phase I sulfur dioxide compliance at the affected plants by switching to low-sulfur coal, which required some equipment upgrades. This compliance strategy resulted in unused emission allowances being banked for later use. Construction expenditures for Phase I compliance totaled approximately $2 million for Savannah Electric.
For Phase II sulfur dioxide compliance, Southern Company could use emission allowances, increase fuel switching, and/or install flue gas desulfurization equipment at selected plants. Also, equipment to control nitrogen oxide emissions will be installed on additional system fossil-fired plants as necessary to meet Phase II limits. Current compliance strategy for Phase II and ozone non-attainment could require total estimated construction expenditures for Southern Company of approximately $70 million, of which $55 million remains to be spent. Phase II compliance is not expected to have a material impact on Savannah Electric.
A significant portion of costs related to the acid rain provision of the Clean Air Act is expected to be recovered through existing ratemaking provisions. However, there can be no assurance that all Clean Air Act costs will be recovered.
In July 1997, the Environmental Protection Agency (EPA) revised the national ambient air quality standards for ozone and particulate matter. This revision makes the standards significantly more stringent. Also, in October 1997, the EPA issued a proposed regional ozone rule that could require substantial further reductions in NOx emissions from fossil-fueled generating facilities. Implementation of the standards and the proposed rule could result in significant additional compliance costs and capital expenditures that cannot be determined at this time.
The EPA and state environmental regulatory agencies are reviewing and evaluating various other matters including: emission control strategies for ozone non-attainment areas; additional controls for hazardous air pollutant
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MANAGEMENT'S DISCUSSION AND ANALYSIS (continued)
Savannah Electric and Power Company 1997 Annual Report
emissions; and hazardous waste disposal requirements. The impact of new standards will depend on the development and implementation of applicable regulations.
The Company must comply with other environmental laws and regulations that cover the handling and disposal of hazardous waste. Under these various laws and regulations, the Company could incur substantial costs to clean up properties currently or previously owned. The Company conducts studies to determine the extent of any required cleanup costs and will recognize in the financial statements any costs to clean up known sites.
Several major pieces of environmental legislation are being considered for reauthorization or amendment by Congress. These include: the Clean Air Act; the Clean Water Act; the Comprehensive Environmental Response, Compensation, and Liability Act; the Resource Conservation and Recovery Act; the Toxic Substances Control Act; and the Endangered Species Act. Changes to these laws could affect many areas of Southern Company's operations. The full impact of any such changes cannot be determined at this time.
Compliance with possible additional legislation related to global climate change, electromagnetic fields, and other environmental and health concerns could significantly affect Southern Company. The impact of new legislation--if any--will depend on the subsequent development and implementation of applicable regulations. In addition, the potential exists for liability as the result of lawsuits alleging damages caused by electromagnetic fields.
Sources of Capital
At December 31, 1997, the Company had $6.1 million of cash and $20.5 million of unused short-term credit arrangements with banks to meet its short-term cash needs. Revolving credit arrangements of $20 million, which expire December 31, 2000, are also used to meet short-term cash needs and to provide additional interim funding for the Company's construction program. Of the revolving credit arrangements, $20 million remained unused at December 31, 1997.
It is anticipated that the funds required for construction and other purposes, including compliance with environmental regulation, will be derived from sources similar to those used in the past. These sources were primarily from the issuances of first mortgage bonds, other long-term debt and preferred stock, in addition to pollution control revenue bonds issued for the Company's benefit by public authorities, to meet long-term external financing requirements. The Company plans to issue unsecured debt in 1998. The Company is required to meet certain earnings coverage requirements specified in its mortgage indenture and corporate charter to issue new first mortgage bonds and preferred stock. The Company's coverage ratios are sufficiently high to permit, at present interest rate levels, any foreseeable security sales. The amount of securities which the Company will be permitted to issue in the future will depend upon market conditions and other factors prevailing at that time.
Cautionary Statement Regarding Forward-Looking Information
Savannah Electric and Power Company's 1997 Annual Report contains forward-looking statements in addition to historical information. The Company cautions that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the Company's markets; potential business strategies--including acquisitions or dispositions of assets or internal restructuring--that may be pursued by the company; state and federal rate regulation; changes in or application of environmental and other laws and regulations to which the Company is subject; political, legal and economic conditions and developments; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; and other factors discussed in the reports--including Form 10-K--filed from time to time by the Company with the Securities and Exchange Commission.
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STATEMENTS OF INCOME
For the Years Ended December 31, 1997, 1996, and 1995
Savannah Electric and Power Company 1997 Annual Report
================================================================================================================================
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues (Note 1):
Revenues $ 224,225 $ 230,944 $ 218,529
Revenues from affiliates 2,052 3,130 7,200
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 226,277 234,074 225,729
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 35,563 29,139 25,386
Purchased power from non-affiliates 2,347 2,350 2,139
Purchased power from affiliates 42,107 58,591 53,252
Other 47,735 44,007 45,214
Maintenance 13,236 14,140 13,668
Depreciation and amortization (Note 1) 20,152 19,113 18,949
Taxes other than income taxes 11,494 11,675 11,465
Federal and state income taxes (Notes 1 and 6) 16,419 16,175 17,378
-------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 189,053 195,190 187,451
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 37,224 38,884 38,278
Other Income (Expense):
Allowance for equity funds used during construction (Note 1) 239 317 163
Interest income 279 201 164
Other, net (781) (1,756) (618)
Income taxes applicable to other income (Notes 1 and 6) 1,233 1,034 651
--------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 38,194 38,680 38,638
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 10,907 11,563 12,380
Allowance for debt funds used during construction (Note 1) (164) (333) (450)
Interest on notes payable 172 229 135
Amortization of debt discount, premium, and expense, net 739 579 448
Other interest charges 369 378 406
--------------------------------------------------------------------------------------------------------------------------------
Net interest charges 12,023 12,416 12,919
--------------------------------------------------------------------------------------------------------------------------------
Net Income 26,171 26,264 25,719
Dividends on Preferred Stock 2,324 2,324 2,324
--------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred Stock $ 23,847 $ 23,940 $ 23,395
================================================================================================================================
STATEMENTS OF RETAINED EARNINGS
For the Years Ended December 31, 1997, 1996, and 1995
--------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Balance at Beginning of Period $ 109,373 $ 105,033 $ 99,216
Net income after dividends on preferred stock 23,847 23,940 23,395
Cash dividends on common stock (20,500) (19,600) (17,600)
Preferred stock transactions, net - - 22
--------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (Note 10) $ 112,720 $ 109,373 $ 105,033
================================================================================================================================
The accompanying notes are an integral part of these statements.
|
II-235
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997, 1996, and 1995
Savannah Electric and Power Company 1997 Annual Report
=======================================================================================================================
1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Activities:
Net income $ 26,171 $ 26,264 $ 25,719
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 21,083 20,246 20,535
Deferred income taxes and investment tax credits 3,841 7,482 4,359
Allowance for equity funds used during construction (239) (317) (163)
Other, net (2,577) (641) 35
Changes in certain current assets and liabilities --
Receivables, net (3,239) (641) (6,241)
Inventories 1,720 410 2,318
Payables (1,608) 4,242 2,213
Taxes accrued 2,310 (569) 451
Other 2,357 (4,038) (2,299)
-----------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 49,819 52,438 46,927
-----------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (18,846) (28,950) (26,503)
Other (1,418) (3,173) 3,198
-----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (20,264) (32,123) (23,305)
-----------------------------------------------------------------------------------------------------------------------
Financing Activities and Capital Contributions:
Proceeds:
First mortgage bonds - 20,000 15,000
Pollution control obligations 13,870 - -
Other long-term debt - 17,000 33,500
Retirements:
First mortgage bonds - (29,400) (29,250)
Pollution control bonds (13,870) - -
Other long-term debt (433) (397) (23,003)
Notes payable, net (5,000) 1,000 1,500
Payment of preferred stock dividends (2,324) (2,324) (2,324)
Payment of common stock dividends (20,500) (19,600) (17,600)
Miscellaneous (368) (2,257) (2,131)
-----------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (28,625) (15,978) (24,308)
-----------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 930 4,337 (686)
Cash and Cash Equivalents at Beginning of Year 5,214 877 1,563
-----------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 6,144 $ 5,214 $ 877
=======================================================================================================================
Supplemental Cash Flow Information:
Cash paid during the year for-
Interest (net of amount capitalized) $11,619 $12,960 $12,775
Income taxes 11,150 10,926 11,316
-----------------------------------------------------------------------------------------------------------------------
( ) Denotes use of cash.
The accompanying notes are an integral part of these statements.
|
II-236
BALANCE SHEETS
At December 31, 1997 and 1996
Savannah Electric and Power Company 1997 Annual Report
================================================================================================================================
Assets 1997 1996
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Utility Plant:
Plant in service, at original cost (Notes 1, 4, 5, and 8) $ 760,694 $ 739,461
Less accumulated provision for depreciation 321,509 304,760
--------------------------------------------------------------------------------------------------------------------------------
439,185 434,701
Construction work in progress 7,709 13,463
--------------------------------------------------------------------------------------------------------------------------------
Total 446,894 448,164
--------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments 1,783 1,785
--------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 6,144 5,214
Special deposits 94 1,395
Receivables-
Customer accounts receivable 21,148 18,827
Other accounts and notes receivable 720 769
Affiliated companies 1,128 844
Accumulated provision for uncollectible accounts (354) (632)
Fuel cost under recovery 7,694 7,289
Fossil fuel stock, at average cost 5,205 5,892
Materials and supplies, at average cost (Note 1) 6,980 8,013
Prepayments 5,922 4,789
--------------------------------------------------------------------------------------------------------------------------------
Total 54,681 52,400
--------------------------------------------------------------------------------------------------------------------------------
Deferred Charges and Other Assets:
Deferred charges related to income taxes (Note 6) 17,267 19,167
Debt issue expense, being amortized 2,255 2,605
Premium on reacquired debt, being amortized 7,121 7,142
Prepaid pension costs (Note 2) 3,424 1,347
Cash surrender value of life insurance for deferred compensation plans 12,130 10,288
Miscellaneous 1,797 2,002
--------------------------------------------------------------------------------------------------------------------------------
Total 43,994 42,551
--------------------------------------------------------------------------------------------------------------------------------
Total Assets $ 547,352 $ 544,900
================================================================================================================================
The accompanying notes are an integral part of these statements.
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II-237
BALANCE SHEETS
At December 31, 1997 and 1996
Savannah Electric and Power Company 1997 Annual Report
================================================================================================================================
CAPITALIZATION AND LIABILITIES 1997 1996
--------------------------------------------------------------------------------------------------------------------------------
(in thousands)
Capitalization (See accompanying statements):
Common stock equity $ 175,631 $ 172,284
Preferred stock 35,000 35,000
Long-term debt 142,846 164,406
--------------------------------------------------------------------------------------------------------------------------------
Total 353,477 371,690
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Amount of securities due within one year (Note 9) 21,764 637
Notes payable - 5,000
Accounts payable-
Affiliated companies 6,025 6,374
Other 7,862 10,201
Customer deposits 5,541 5,232
Taxes accrued-
Federal and state income 534 -
Other 2,791 1,015
Interest accrued 4,963 5,275
Vacation pay accrued 1,893 2,038
Miscellaneous 9,031 7,470
--------------------------------------------------------------------------------------------------------------------------------
Total 60,404 43,242
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes (Note 6) 80,697 76,654
Accumulated deferred investment tax credits (Note 6) 12,607 13,271
Deferred credits related to income taxes (Note 6) 21,469 22,792
Deferred compensation plans 9,272 8,602
Postretirement benefits (Note 2) 6,011 5,472
Miscellaneous 3,415 3,177
--------------------------------------------------------------------------------------------------------------------------------
Total 133,471 129,968
--------------------------------------------------------------------------------------------------------------------------------
Commitments and Contingent Matters (Notes 1, 2, 4, 5, and 8)
Total Capitalization and Liabilities $ 547,352 $ 544,900
================================================================================================================================
The accompanying notes are an integral part of these statements.
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II-238
STATEMENTS OF CAPITALIZATION
At December 31, 1997 and 1996
Savannah Electric and Power Company 1997 Annual Report
======================================================================================================================
1997 1996 1997 1996
----------------------------------------------------------------------------------------------------------------------
(in thousands) (percent of total)
Common Stock Equity (Note 10):
Common stock, par value $5 per share --
Authorized -- 16,000,000 shares
Outstanding -- 10,844,635 shares in
1997 and 1996 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688
Retained earnings 112,720 109,373
----------------------------------------------------------------------------------------------------------------------
Total common stock equity 175,631 172,284 49.7% 46.4%
----------------------------------------------------------------------------------------------------------------------
Cumulative Preferred Stock (Note 7):
$25 par value --
Authorized -- 2,200,000 shares
6.64% Series -- Outstanding -- 1,400,000 shares 35,000 35,000
----------------------------------------------------------------------------------------------------------------------
Total (annual dividend requirement -- $2,324,000) 35,000 35,000 9.9 9.4
----------------------------------------------------------------------------------------------------------------------
Long-Term Debt (Note 8):
First mortgage bonds --
Maturity Interest Rates
July 1, 2003 6 3/8% 20,000 20,000
May 1, 2006 6.90% 20,000 20,000
July 1, 2022 8.30% 30,000 30,000
July 1, 2023 7.40% 25,000 25,000
May 1, 2025 7 7/8% 15,000 15,000
----------------------------------------------------------------------------------------------------------------------
Total first mortgage bonds 110,000 110,000
Pollution control obligations (Note 8) 17,955 17,955
Other long-term debt (Note 8) 36,655 37,088
----------------------------------------------------------------------------------------------------------------------
Total long-term debt (annual interest
requirement -- $11,380,000) 164,610 165,043
Less amount due within one year (Note 9) 21,764 637
----------------------------------------------------------------------------------------------------------------------
Long-term debt excluding amount due within one year 142,846 164,406 40.4 44.2
----------------------------------------------------------------------------------------------------------------------
Total Capitalization $ 353,477 $ 371,690 100.0% 100.0%
======================================================================================================================
The accompanying notes are an integral part of these statements
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II-239
PAGE>
NOTES TO FINANCIAL STATEMENTS
Savannah Electric and Power Company 1997 Annual Report
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Savannah Electric and Power Company (the Company), is a wholly owned subsidiary of Southern Company, which is the parent company of five operating companies, a system service company, Southern Communications Services (Southern Communications), Southern Energy, Inc. (Southern Energy), Southern Nuclear Operating Company (Southern Nuclear), Southern Company Energy Solutions, and other direct and indirect subsidiaries. The operating companies provide electric service in four southeastern states. Contracts among the companies--dealing with jointly owned generating facilities, interconnecting transmission lines, and the exchange of electric power--are regulated by the Federal Energy Regulatory Commission (FERC) and/or the Securities and Exchange Commission. The system service company provides, at cost, specialized services to Southern Company and subsidiary companies. Southern Communications provides digital wireless communications services to the operating companies and also markets these services to the public within the Southeast. Worldwide, Southern Energy develops and manages electricity and other energy related projects, including domestic energy trading and marketing. Southern Nuclear provides services to Southern Company's nuclear power plants. Southern Company Energy Solutions develops new business opportunities related to energy products and services.
Southern Company is registered as a holding company under the Public Utility Holding Company Act of 1935 (PUHCA). Both Southern Company and its subsidiaries are subject to the regulatory provisions of the PUHCA. The Company also is subject to regulation by the FERC and the Georgia Public Service Commission (GPSC). The Company follows generally accepted accounting principles and complies with the accounting policies and practices prescribed by the GPSC. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates, and the actual results may differ from those estimates.
Certain prior years' data presented in the financial statements have been reclassified to conform with the current year presentation.
Regulatory Assets and Liabilities
The Company is subject to the provisions of Financial Accounting Standards Board (FASB) Statement No. 71, Accounting for the Effects of Certain Types of Regulation. Regulatory assets represent probable future revenues to the Company associated with certain costs that are expected to be recovered from customers through the ratemaking process. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are expected to be credited to customers through the ratemaking process. Regulatory assets and (liabilities) reflected in the Balance Sheets at December 31 relate to:
1997 1996
---------------------------
(in thousands)
Deferred income taxes $ 17,267 $ 19,167
Premium on reacquired debt 7,121 7,142
Deferred income tax credits (21,469) (22,792)
Storm damage reserves (1,500) (900)
---------------------------------------------------------------
Total $ 1,419 $ 2,617
===============================================================
|
In the event that a portion of the Company's operations is no longer subject to the provisions of Statement No. 71, the Company would be required to write off related net regulatory assets and liabilities that are not specifically recoverable through regulated rates. In addition, the Company would be required to determine if any impairment to other assets exists, including plant, and write down the assets, if impaired, to their fair value.
Revenues and Fuel Costs
The Company accrues revenues for service rendered but unbilled at the end of each fiscal period. Fuel costs are expensed as the fuel is used. The Company's electric rates include provisions to adjust billings for fluctuations in fuel, the energy component of purchased power costs, and certain other costs. Revenues are adjusted for differences between recoverable fuel costs and amounts actually recovered in current rates.
The Company has a diversified base of customers. No single customer or industry comprises 10 percent or more of revenues. In 1997, uncollectible accounts continued to average less than 1 percent of revenues.
II-240
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
Depreciation and Amortization
Depreciation of the original cost of depreciable utility plant in service is provided primarily by using composite straight-line rates, which approximated 2.9 percent in 1997, 2.8 percent in 1996 and 2.9 percent in 1995. When property subject to depreciation is retired or otherwise disposed of in the normal course of business, its cost--together with the cost of removal, less salvage--is charged to the accumulated provision for depreciation. Minor items of property included in the original cost of the plant are retired when the related property unit is retired. Depreciation expense includes an amount for the expected cost of removal of certain facilities.
Income Taxes
The Company, which is included in the consolidated federal income tax return filed by Southern Company, uses the liability method of accounting for deferred income taxes and provides deferred income taxes for all significant income tax temporary differences. Investment tax credits utilized are deferred and amortized to income over the average lives of the related property.
Allowance for Funds Used During Construction
(AFUDC)
AFUDC represents the estimated debt and equity costs of capital funds that are necessary to finance the construction of new facilities. While cash is not realized currently from such allowance, it increases the revenue requirement over the service life of the plant through a higher rate base and higher depreciation expense. The composite rates used by the Company to calculate AFUDC were 9.24 percent in 1997, 8.69 percent in 1996 and 7.42 percent in 1995.
Utility Plant
Utility plant is stated at original cost, which includes: materials; labor; minor items of property; appropriate administrative and general costs; payroll-related costs such as taxes, pensions, and other benefits; and AFUDC. The cost of maintenance, repairs, and replacement of minor items of property is charged to maintenance expense. The cost of replacements of property (exclusive of minor items of property) is charged to utility plant.
Cash and Cash Equivalents
For purposes of the Statements of Cash Flows, temporary cash investments are considered cash equivalents. Temporary cash investments are securities with original maturities of 90 days or less.
Financial Instruments
The Company's financial instruments for which the carrying amounts did not equal fair value at December 31 were as follows:
Long-Term Debt
--------------------------
Carrying Fair
Year Amount Value
--------------------------
(in millions)
1997 $158 $161
1996 155 161
--------------------------------------------------------------
|
The fair values for long-term debt were based on either closing market prices or closing prices of comparable instruments.
Materials and Supplies
Generally, materials and supplies include the costs of transmission, distribution, and generating plant materials. Materials are charged to inventory when purchased and then expensed or capitalized to plant, as appropriate, when installed.
Work Force Reduction Program
In 1997, the Company incurred a $1.9 million one-time charge to other operation expense for costs related to the implementation of a work force reduction program.
2. RETIREMENT BENEFITS
Pension Plan
The Company has a defined benefit, trusteed, non-contributory pension plan that covers substantially all regular employees. Effective January 1, 1998, Savannah Electric and Power Company's pension plan was merged with the Southern Company plan. Benefits are based on the greater of amounts resulting from two different formulas: years of service and final average pay or years of service and a flat-dollar benefit. The Company uses the "projected unit credit" actuarial
II-241
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
method for funding purposes, subject to limitations under federal income tax regulations. Amounts funded to the pension trust are primarily invested in equity and fixed-income securities. FASB Statement No. 87, Employers' Accounting for Pensions, requires use of the "projected unit credit" actuarial method for financial reporting purposes.
Postretirement Benefits
The Company also provides certain medical care and life insurance benefits for retired employees. Substantially all employees may become eligible for these benefits when they retire. The Company funds trusts to the extent deductible under federal income tax regulations and to the extent required by the GPSC and the FERC. Amounts funded are primarily invested in equity and fixed--income securities.
FASB Statement No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, requires that medical care and life insurance benefits for retired employees be accounted for on an accrual basis using a specified actuarial method, "benefit/years-of-service." The cost of postretirement benefits is reflected in rates on a current basis.
Funded Status and Cost of Benefits
The funded status of the plans and reconciliation to amounts reflected in the Balance Sheets at December 31 are as follows:
Pension
---------------------------
1997 1996
---------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Vested benefits $40,240 $39,270
Non-vested benefits 3,350 2,939
----------------------------------------------------------------
Accumulated benefit obligation 43,590 42,209
Additional amounts related to
projected salary increases 8,130 7,705
----------------------------------------------------------------
Projected benefit obligation 51,720 49,914
Less:
Fair value of plan assets 51,630 42,430
Unrecognized net loss 1,275 7,147
Unrecognized prior service cost 1,884 1,240
Unrecognized net transition
obligation 355 444
----------------------------------------------------------------
Prepaid asset
recognized in the Balance Sheets $ 3,424 $ 1,347
================================================================
Postretirement Benefits
-------------------------
1997 1996
--------------------------
(in thousands)
Actuarial present value of
benefit obligation:
Retirees and dependents $12,509 $12,442
Employees eligible to retire 1,923 1,614
Other employees 6,467 6,464
-------------------------------------------------------------
Accumulated benefit obligation 20,899 20,520
Less:
Fair value of plan assets 3,859 2,473
Unrecognized net loss 3,737 4,835
Unrecognized transition
Obligation 7,407 7,900
-------------------------------------------------------------
Accrued liability recognized in
the Balance Sheets $ 5,896 $ 5,312
=============================================================
|
The weighted average rates assumed in the actuarial calculations for the pension plan were:
1997 1996 1995
--------------------------
Discount 7.50% 7.25% 7.25%
Annual salary increase 5.00 4.75 4.75
Long-term return on plan assets 8.50 8.75 8.75
---------------------------------------------------------------
|
An additional assumption used in measuring the accumulated postretirement benefit obligation was a weighted average medical care cost trend rate of 8.8 percent for 1997, decreasing gradually to 5.5 percent through the year 2005 and remaining at that level thereafter. An annual increase in the assumed medical care cost trend rate of 1 percent would increase the accumulated benefit obligation at December 31, 1997, by $1.4 million and the aggregate of the service and interest cost components of the net postretirement cost by $0.1 million.
Components of the plans' net costs are shown below:
Pension
-----------------------------
1997 1996 1995
-----------------------------
(in thousands)
Benefits earned during the year $1,393 $1,352 $1,188
Interest cost on projected
benefit obligation 3,556 3,389 3,395
Actual (return) loss
on plan assets (7,762) (4,852) (5,791)
Net amortization and deferral 4,735 2,439 4,125
------------------------------------------------------------------
Net pension cost $1,922 $2,328 $2,917
==================================================================
|
II-242
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
Of the above net pension costs, $1.7 million in 1997, $2.0 million in 1996 and $2.4 million in 1995 were recorded in operating expenses, and the remainder was recorded in construction and other accounts.
Postretirement Benefits
-----------------------------
1997 1996 1995
-----------------------------
(in thousands)
Benefits earned during the year $ 319 $ 360 $ 504
Interest cost on accumulated
benefit obligation 1,499 1,422 1,638
Amortization of transition
Obligation 494 494 723
Actual (return) loss
on plan assets (346) (145) (34)
Net amortization and deferral 260 187 93
------------------------------------------------------------------
Net postretirement costs $2,226 $2,318 $2,924
==================================================================
|
Of the above net postretirement costs, $1.9 million in 1997, $2.0 million in 1996 and $2.4 million in 1995 were recorded in operating expenses. The remainder for each year was charged to construction and other accounts.
The Company has a supplemental retirement plan for certain executive employees. The plan is unfunded and payable from the general funds of the Company. The Company has purchased life insurance on participating executives, and plans to use these policies to satisfy this obligation. Benefit costs associated with this plan were $0.4 million for 1997, 1996 and 1995.
3. REGULATORY MATTERS
Rates to retail customers served by the Company are regulated by the GPSC. As part of the Company's most recent rate settlement in 1992, it was informally agreed that the Company's earned rate of return on common equity should be 12.95 percent. The Company is currently undergoing an earnings review by the GPSC, and to date, the GPSC has made no determination.
4. CONSTRUCTION PROGRAM
The Company is engaged in a continuous construction program, currently estimated to total $22 million in 1998, $23 million in 1999 and $21 million in 2000. The construction program is subject to periodic review and revision, and actual construction costs may vary from the above estimates because of numerous factors. These factors include: changes in business conditions; revised load growth estimates; changes in environmental regulations; increasing cost of labor, equipment and materials; and changes in cost of capital. The Company does not have any traditional baseload generating plants under construction. However, construction related to transmission and distribution facilities and the upgrading and extension of the useful lives of generating plants will continue.
5. FINANCING AND COMMITMENTS
General
To the extent possible, the Company's construction program is expected to be financed from internal sources and from the issuance of additional long-term debt, preferred stock and capital contributions from Southern Company.
The amounts of long-term debt and preferred stock that can be issued in the future will be contingent on market conditions, the maintenance of adequate earnings levels, regulatory authorizations and other factors.
Bank Credit Arrangements
At the end of 1997, unused credit arrangements with five banks totaled $20.5 million and expire at various times during 1998.
The Company's revolving credit arrangements of $20 million, of which $20 million remained unused as of December 31, 1997, expire December 31, 2000. These agreements allow short-term borrowings to be converted into term loans, payable in 12 equal quarterly installments, with the first installment due at the end of the first calendar quarter after the applicable termination date or at an earlier date at the Company's option.
In connection with these credit arrangements, the Company agrees to pay commitment fees based on the unused portions of the commitments.
Assets Subject to Lien
As amended and supplemented, the Company's Indenture of Mortgage, which secures the first mortgage bonds issued by the Company, constitutes a direct first lien on substantially all of the Company's fixed property and franchises. A second lien for $10 million of bank debt is secured by a portion of the Plant Kraft
II-243
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
property and a second lien for a $14 million bank note is secured by a portion of the Plant McIntosh property.
Operating Leases
The Company has rental agreements with various terms and expiration dates. Rental expenses totaled $1.2 million for 1997, $1.6 million for 1996, and $1.3 million for 1995. The Company entered into a 22.5 year lease agreement effective December 1, 1995 for 100 new aluminum rail cars at an annual cost of approximately $0.5 million. The rail cars are used to transport coal to one of the Company's generating plants.
At December 31, 1997, estimated future minimum lease payments for non-cancelable operating leases were as follows:
Amounts
--------------------
(in thousands)
1998 $1,077
1999 483
2000 483
2001 483
2002 and thereafter 7,935
-------------------------------------------------------------
|
6. INCOME TAXES
At December 31, 1997, tax-related regulatory assets and liabilities were $17 million and $21 million, respectively. The assets are attributable to tax benefits flowed through to customers in prior years and to taxes applicable to capitalized AFUDC. The liabilities are attributable to deferred taxes previously recognized at rates higher than current enacted tax law and to unamortized investment tax credits.
Details of income tax provisions are as follows:
1997 1996 1995
--------------------------------
(in thousands)
Total provision for income taxes
Federal --
Currently payable $9,743 $ 7,084 $10,427
Deferred -- current year 4,522 8,216 5,290
-- reversal of
prior years (1,381) (1,989) (1,661)
-----------------------------------------------------------------
12,884 13,311 14,056
-----------------------------------------------------------------
State --
Currently payable 1,603 575 1,941
Deferred -- current year 569 1,216 695
-- reversal of
prior years 130 39 35
-----------------------------------------------------------------
2,302 1,830 2,671
-----------------------------------------------------------------
Total 15,186 15,141 16,727
Less income taxes credited
to other income (1,233) (1,034) (651)
-----------------------------------------------------------------
Total income taxes
charged to operations $16,419 $16,175 $17,378
=================================================================
|
The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, are as follows:
1997 1996
--------------------
Deferred tax liabilities: (in thousands)
Accelerated depreciation $72,663 $67,104
Property basis differences 8,034 9,550
Other 5,850 5,703
----------------------------------------------------------------
Total 86,547 82,357
----------------------------------------------------------------
Deferred tax assets:
Pension and other benefits 5,338 5,183
Other 2,957 2,186
----------------------------------------------------------------
Total 8,295 7,369
----------------------------------------------------------------
Net deferred tax liabilities 78,252 74,988
Portions included in current assets, net 2,445 1,666
----------------------------------------------------------------
Accumulated deferred income taxes
in the Balance Sheets $80,697 $76,654
================================================================
|
Deferred investment tax credits are amortized over the life of the related property with such amortization normally applied as a credit to reduce depreciation in the Statements of Income. Credits amortized in this manner amounted to $0.7 million in 1997, 1996 and 1995. At December 31, 1997, all investment tax credits available to reduce federal income taxes payable had been utilized.
II-244
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
1997 1996 1995
-----------------------------
Federal statutory tax rate 35% 35% 35%
State income tax, net of
federal income tax benefit 4 3 4
Other (2) (1) -
--------------------------------------------------------------
Effective income tax rate 37% 37% 39%
==============================================================
|
Southern Company files a consolidated federal income tax return. Under a joint consolidated income tax agreement, each subsidiary's current and deferred tax expense is computed on a stand-alone basis. Tax benefits from losses of the parent company are allocated to each subsidiary based on the ratio of taxable income to total consolidated taxable income.
7. CUMULATIVE PREFERRED STOCK
The Company has outstanding 1,400,000 shares of 6.64% Series Preferred Stock which has redemption provisions of $26.66 per share plus accrued dividends if redeemed on or prior to November 1, 1998, and redemption provisions of $25 per share plus accrued dividends thereafter. Cumulative preferred stock dividends are preferential to the payment of dividends on common stock.
8. LONG-TERM DEBT
The Company's Indenture related to its First Mortgage Bonds is unlimited as to the authorized amount of bonds which may be issued, provided that required property additions, earnings and other provisions of such Indenture are met.
In April 1997, the Company issued $14 million in variable rate pollution control obligations (bank note) maturing in 2037. The Company redeemed all of its remaining outstanding 6 3/4% Pollution Control Bonds due 2022.
The sinking fund requirements of first mortgage bonds were satisfied by
certifying property additions in 1997 and by cash redemption in 1996. The 1998
requirement will be satisfied by cash redemption. Sinking fund requirements
and/or maturities through 2002 applicable to long-term debt are as follows:
$21.8 million in 1998; $0.6 million in 1999; $0.6 million in 2000; $10.5 million
in 2001; and $0.4 million in 2002.
Details of pollution control obligations and other long-term debt at December 31 are as follows:
1997 1996
------------------------
(in thousands)
Collateralized obligations incurred
in connection with the sale by public
authorities of tax-exempt pollution
control revenue bonds --
Variable rate (4.20% at 1/1/98)
due 2016 $ 4,085 $ 4,085
6 3/4% due 2022 - 13,870
Variable rate bank note
(5.05% at 1/1/98) due 2037 13,870 -
Capital lease obligations --
Coal unloading facility
Variable rate (6.25% at 1/1/98) 5,867 6,667
Transportation fleet 788 421
Notes Payable --
6.88% due 2001 10,000 10,000
Variable rate (6.06% at 1/1/98)
due 1998 15,000 15,000
Variable rate (6.06% at 1/1/98)
due 1998 5,000 5,000
----------------------------------------------------------------
Total $54,610 $55,043
================================================================
|
Assets acquired under capital leases are recorded as utility plant in service, and the related obligation is classified as other long-term debt. Leases are capitalized at the net present value of the future lease payments. However, for ratemaking purposes, these obligations are treated as operating leases, and as such, lease payments are charged to expense as incurred.
In March 1996, the Company entered into a fifteen year variable rate capital lease agreement with the Savannah Economic Development Authority for a coal ship docking and unloading facility at Plant Kraft.
II-245
NOTES (continued)
Savannah Electric and Power Company 1997 Annual Report
9. LONG-TERM DEBT DUE WITHIN ONE YEAR
A summary of the sinking fund requirements and scheduled maturities and redemptions of long-term debt due within one year at December 31 is as follows:
1997 1996
-------------------------
(in thousands)
Bond sinking fund requirement $ 1,100 $1,100
Less:
Portion to be satisfied by
certifying property additions - 1,100
--------------------------------------------------------------------
Cash sinking fund requirement 1,100 -
Other long-term debt maturities (Note 8) 20,664 637
--------------------------------------------------------------------
Total $21,764 $ 637
====================================================================
|
The first mortgage bond improvement (sinking) fund requirements amount to 1 percent of each outstanding series of bonds authenticated under the Indenture prior to January 1 of each year, other than those issued to collateralize pollution control and other obligations. The requirements may be satisfied by depositing cash or reacquiring bonds, or by pledging additional property equal to 1 2/3 times the requirements.
10. COMMON STOCK DIVIDEND RESTRICTIONS
The Company's Charter and Indenture contain certain limitations on the payment of cash dividends on preferred and common stocks. At December 31, 1997, approximately $68 million of retained earnings was restricted against the payment of cash dividends on common stock under the terms of the Indenture.
11. QUARTERLY FINANCIAL INFORMATIO
(Unaudited)
Summarized quarterly financial data for 1997 and 1996 are as follows (in thousands):
Net Income After
Operating Operating Dividends on
Quarter Ended Revenues Income Preferred Stock
-----------------------------------------------------------------
March 1997 $42,945 $ 6,117 $ 2,545
June 1997 52,516 8,626 5,136
September 1997 79,900 17,531 14,276
December 1997 50,916 4,950 1,890
March 1996 $50,575 $ 6,562 $ 2,740
June 1996 61,906 9,786 5,859
September 1996 73,359 16,542 12,815
December 1996 48,234 5,994 2,526
-----------------------------------------------------------------
|
The Company's business is influenced by seasonal weather conditions and a seasonal rate structure, among other factors.
II-246
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
==============================================================================================================================
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $226,277 $234,074 $225,729
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $23,847 $23,940 $23,395
Cash Dividends on Common Stock (in thousands) $20,500 $19,600 $17,600
Return on Average Common Equity (percent) 13.71 14.08 14.20
Total Assets (in thousands) $547,352 $544,900 $524,662
Gross Property Additions (in thousands) $18,846 $28,950 $26,503
------------------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $175,631 $172,284 $167,812
Preferred stock 35,000 35,000 35,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 142,846 164,406 153,679
------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $353,477 $371,690 $356,491
==============================================================================================================================
Capitalization Ratios (percent):
Common stock equity 49.7 46.4 47.1
Preferred and preference stock 9.9 9.4 9.8
Long-term debt 40.4 44.2 43.1
------------------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==============================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 20,000 15,000
Retired - 29,400 29,250
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - - -
------------------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's AA- A+ A+
Preferred Stock -
Moody's ""a2" ""a2" ""a2"
Standard and Poor's A A A
------------------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 109,092 106,657 104,624
Commercial 14,233 13,877 13,339
Industrial 64 65 65
Other 1,129 1,097 1,048
------------------------------------------------------------------------------------------------------------------------------
Total 124,518 121,696 119,076
==============================================================================================================================
Employees (year-end) 535 571 584
Note:
NR = Not Rated
|
II-247
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
==================================================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $211,785 $218,442 $197,761
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $22,110 $21,459 $20,512
Cash Dividends on Common Stock (in thousands) $16,300 $21,000 $22,000
Return on Average Common Equity (percent) 14.00 13.73 12.89
Total Assets (in thousands) $518,305 $527,187 $352,175
Gross Property Additions (in thousands) $30,078 $72,858 $30,132
------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $161,581 $154,269 $158,376
Preferred stock 35,000 35,000 20,000
Preferred and preference stock subject
to mandatory redemption - - -
Long-term debt 155,922 151,338 110,767
------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $352,503 $340,607 $289,143
==================================================================================================================
Capitalization Ratios (percent):
Common stock equity 45.8 45.3 54.8
Preferred and preference stock 9.9 10.3 6.9
Long-term debt 44.3 44.4 38.3
------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
==================================================================================================================
First Mortgage Bonds (in thousands):
Issued - 45,000 30,000
Retired 5,065 - 38,750
Preferred and Preference Stock (in thousands):
Issued - 35,000 -
Retired - 20,000 -
------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's ""a2" ""a2" ""a2"
Standard and Poor's A- A- A-
------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 103,199 101,032 99,164
Commercial 13,015 12,702 12,416
Industrial 65 69 73
Other 1,007 957 940
------------------------------------------------------------------------------------------------------------------
Total 117,286 114,760 112,593
==================================================================================================================
Employees (year-end) 616 665 688
Note:
NR = Not Rated
|
II-248A
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
=======================================================================================================================
1991 1990 1989
-----------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $189,646 $205,635 $201,799
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,030 $26,254 $25,535
Cash Dividends on Common Stock (in thousands) $22,000 $22,000 $20,000
Return on Average Common Equity (percent) 15.13 16.85 16.88
Total Assets (in thousands) $352,505 $340,050 $349,887
Gross Property Additions (in thousands) $19,478 $20,086 $18,831
-----------------------------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $159,841 $157,811 $153,737
Preferred stock 20,000 20,000 22,300
Preferred and preference stock subject
to mandatory redemption - - 2,884
Long-term debt 119,280 112,377 117,522
-----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $299,121 $290,188 $296,443
=======================================================================================================================
Capitalization Ratios (percent):
Common stock equity 53.4 54.4 51.9
Preferred and preference stock 6.7 6.9 8.5
Long-term debt 39.9 38.7 39.6
-----------------------------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0 100.0
=======================================================================================================================
First Mortgage Bonds (in thousands):
Issued 30,000 - 30,000
Retired 22,500 9,135 18,275
Preferred and Preference Stock (in thousands):
Issued - - -
Retired - 5,374 6,591
-----------------------------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A1 A1
Standard and Poor's A A A
Preferred Stock -
Moody's ""a2" ""a2" ""a2"
Standard and Poor's A- A- A-
-----------------------------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 97,446 96,452 94,766
Commercial 12,153 12,045 12,298
Industrial 73 76 69
Other 897 867 856
-----------------------------------------------------------------------------------------------------------------------
Total 110,569 109,440 107,989
=======================================================================================================================
Employees (year-end) 672 648 643
Note:
NR = Not Rated
|
II-248B
SELECTED FINANCIAL AND OPERATING DATA
Savannah Electric and Power Company 1997 Annual Report
====================================================================================================
1988 1987
----------------------------------------------------------------------------------------------------
Operating Revenues (in thousands) $182,440 $174,707
Net Income after Dividends
on Preferred and Preference Stocks (in thousands) $24,272 $22,086
Cash Dividends on Common Stock (in thousands) $11,700 $10,741
Return on Average Common Equity (percent) 17.03 17.03
Total Assets (in thousands) $347,051 $340,109
Gross Property Additions (in thousands) $23,254 $32,276
----------------------------------------------------------------------------------------------------
Capitalization (in thousands):
Common stock equity $148,883 $136,207
Preferred stock 22,300 2,300
Preferred and preference stock subject
to mandatory redemption 3,075 9,665
Long-term debt 98,285 129,329
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) $272,543 $277,501
====================================================================================================
Capitalization Ratios (percent):
Common stock equity 54.6 49.1
Preferred and preference stock 9.3 4.3
Long-term debt 36.1 46.6
----------------------------------------------------------------------------------------------------
Total (excluding amounts due within one year) 100.0 100.0
====================================================================================================
First Mortgage Bonds (in thousands):
Issued - -
Retired 12,231 10,239
Preferred and Preference Stock (in thousands):
Issued 20,000 -
Retired 553 588
----------------------------------------------------------------------------------------------------
Security Ratings:
First Mortgage Bonds -
Moody's A1 A3
Standard and Poor's A- A-
Preferred Stock -
Moody's ""a2" NR
Standard and Poor's BBB+ BBB+
----------------------------------------------------------------------------------------------------
Customers (year-end):
Residential 93,486 92,094
Commercial 12,135 11,812
Industrial 69 67
Other 828 762
----------------------------------------------------------------------------------------------------
Total 106,518 104,735
====================================================================================================
Employees (year-end) 655 655
Note:
NR = Not Rated
|
II-248C
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
==============================================================================================================================
1997 1996 1995
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $96,587 $101,607 $95,208
Commercial 78,949 80,494 75,117
Industrial 35,301 37,077 36,040
Other 8,621 8,804 8,386
------------------------------------------------------------------------------------------------------------------------------
Total retail 219,458 227,982 214,751
Sales for resale - non-affiliates 3,467 1,998 1,851
Sales for resale - affiliates 2,052 3,130 7,200
------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 224,977 233,110 223,802
Other revenues 1,300 964 1,927
------------------------------------------------------------------------------------------------------------------------------
Total $226,277 $234,074 $225,729
==============================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,428,337 1,456,651 1,402,148
Commercial 1,156,078 1,141,218 1,099,570
Industrial 881,261 838,753 887,141
Other 124,490 126,215 126,057
------------------------------------------------------------------------------------------------------------------------------
Total retail 3,590,166 3,562,837 3,514,916
Sales for resale - non-affiliates 94,280 91,610 87,747
Sales for resale - affiliates 54,509 41,808 63,731
------------------------------------------------------------------------------------------------------------------------------
Total 3,738,955 3,696,255 3,666,394
==============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.76 6.98 6.79
Commercial 6.83 7.05 6.83
Industrial 4.01 4.42 4.06
Total retail 6.11 6.40 6.11
Sale for resale 3.71 3.84 5.98
Total sales 6.02 6.31 6.10
Residential Average Annual Kilowatt-Hour Use Per Customer 13,231 13,771 13,478
Residential Average Annual Revenue Per Customer $894.73 $960.58 $915.15
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 788 788
Maximum Peak-Hour Demand (megawatts):
Winter 625 666 630
Summer 802 811 811
Annual Load Factor (percent) 54.3 53.1 52.9
Plant Availability - Fossil-Steam (percent) 93.7 77.6 83.3
------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 34.4 27.7 23.9
Oil and gas 5.2 3.1 5.9
Purchased power -
From non-affiliates 1.4 2.1 2.3
From affiliates 59.0 67.1 67.9
------------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,495 11,888 12,146
Cost of fuel per million BTU (cents) 197.19 203.36 179.25
Average cost of fuel per net kilowatt-hour generated (cents) 2.27 2.42 2.18
==============================================================================================================================
|
II-249
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
==============================================================================================================================
1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $89,195 $93,883 $82,670
Commercial 71,227 71,320 64,756
Industrial 32,906 36,180 33,171
Other 7,946 7,810 7,095
------------------------------------------------------------------------------------------------------------------------------
Total retail 201,274 209,193 187,692
Sales for resale - non-affiliates 4,786 6,021 7,821
Sales for resale - affiliates 6,446 2,433 1,505
------------------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 212,506 217,647 197,018
Other revenues (721) 795 743
------------------------------------------------------------------------------------------------------------------------------
Total $211,785 $218,442 $197,761
==============================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,298,122 1,329,362 1,216,993
Commercial 1,045,831 1,015,935 953,840
Industrial 799,543 854,324 861,121
Other 119,593 115,969 110,270
------------------------------------------------------------------------------------------------------------------------------
Total retail 3,263,089 3,315,590 3,142,224
Sales for resale - non-affiliates 201,716 247,203 367,066
Sales for resale - affiliates 93,001 75,384 37,632
------------------------------------------------------------------------------------------------------------------------------
Total 3,557,806 3,638,177 3,546,922
==============================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.87 7.06 6.79
Commercial 6.81 7.02 6.79
Industrial 4.12 4.23 3.85
Total retail 6.17 6.31 5.97
Sale for resale 3.81 2.62 2.30
Total sales 5.97 5.98 5.55
Residential Average Annual Kilowatt-Hour Use Per Customer 12,686 13,269 12,369
Residential Average Annual Revenue Per Customer $871.68 $937.07 $840.23
Plant Nameplate Capacity Ratings (year-end) (megawatts) 788 628 628
Maximum Peak-Hour Demand (megawatts):
Winter 617 524 533
Summer 729 747 695
Annual Load Factor (percent) 54.3 54.1 55.0
Plant Availability - Fossil-Steam (percent) 81.0 90.2 89.1
------------------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 18.6 21.5 12.0
Oil and gas 1.8 4.5 2.9
Purchased power -
From non-affiliates 1.5 0.9 1.0
From affiliates 78.1 73.1 84.1
-----------------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==============================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 11,786 11,515 12,547
Cost of fuel per million BTU (cents) 205.03 215.97 201.50
Average cost of fuel per net kilowatt-hour generated (cents) 2.42 2.49 2.53
==============================================================================================================================
|
II-250A
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
==================================================================================================================
1991 1990 1989
------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $80,541 $87,063 $85,113
Commercial 61,827 65,462 65,474
Industrial 30,492 30,237 28,304
Other 6,561 6,782 6,892
------------------------------------------------------------------------------------------------------------------
Total retail 179,421 189,544 185,783
Sales for resale - non-affiliates 7,813 9,482 8,814
Sales for resale - affiliates 1,430 5,566 6,025
------------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 188,664 204,592 200,622
Other revenues 982 1,043 1,177
------------------------------------------------------------------------------------------------------------------
Total $189,646 $205,635 $201,799
==================================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,195,005 1,183,486 1,109,976
Commercial 925,757 892,931 839,756
Industrial 825,862 644,704 561,063
Other 106,683 103,539 101,164
------------------------------------------------------------------------------------------------------------------
Total retail 3,053,307 2,824,660 2,611,959
Sales for resale - non-affiliates 372,085 441,090 437,943
Sales for resale - affiliates 32,581 294,042 303,142
------------------------------------------------------------------------------------------------------------------
Total 3,457,973 3,559,792 3,353,044
==================================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 6.74 7.36 7.67
Commercial 6.68 7.33 7.80
Industrial 3.69 4.69 5.04
Total retail 5.88 6.71 7.11
Sale for resale 2.28 2.05 2.00
Total sales 5.46 5.75 5.98
Residential Average Annual Kilowatt-Hour Use Per Customer 12,323 12,339 11,781
Residential Average Annual Revenue Per Customer $830.54 $907.68 $903.37
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 526 428 548
Summer 691 648 613
Annual Load Factor (percent) 54.1 53.2 52.4
Plant Availability - Fossil-Steam (percent) 76.9 89.6 94.7
------------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 16.3 52.8 63.5
Oil and gas 1.7 3.4 1.4
Purchased power -
From non-affiliates 0.4 0.8 1.5
From affiliates 81.6 43.0 33.6
------------------------------------------------------------------------------------------------------------------
Total 100.0 100.0 100.0
==================================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,917 10,741 10,611
Cost of fuel per million BTU (cents) 199.42 188.18 180.48
Average cost of fuel per net kilowatt-hour generated (cents) 2.18 2.02 1.92
==================================================================================================================
|
II-250B
SELECTED FINANCIAL AND OPERATING DATA (continued)
Savannah Electric and Power Company 1997 Annual Report
==============================================================================================================
1988 1987
--------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands):
Residential $81,098 $79,785
Commercial 62,640 60,285
Industrial 26,865 27,422
Other 6,557 6,315
--------------------------------------------------------------------------------------------------------------
Total retail 177,160 173,807
Sales for resale - non-affiliates 808 -
Sales for resale - affiliates 3,567 -
--------------------------------------------------------------------------------------------------------------
Total revenues from sales of electricity 181,535 173,807
Other revenues 905 900
--------------------------------------------------------------------------------------------------------------
Total $182,440 $174,707
==============================================================================================================
Kilowatt-Hour Sales (in thousands):
Residential 1,067,411 1,044,554
Commercial 806,687 775,643
Industrial 533,604 557,281
Other 97,072 94,949
--------------------------------------------------------------------------------------------------------------
Total retail 2,504,774 2,472,427
Sales for resale - non-affiliates 24,168 -
Sales for resale - affiliates 156,106 -
--------------------------------------------------------------------------------------------------------------
Total 2,685,048 2,472,427
==============================================================================================================
Average Revenue Per Kilowatt-Hour (cents):
Residential 7.60 7.64
Commercial 7.77 7.77
Industrial 5.03 4.92
Total retail 7.07 7.03
Sale for resale 2.43 -
Total sales 6.76 7.03
Residential Average Annual Kilowatt-Hour Use Per Customer 11,489 11,481
Residential Average Annual Revenue Per Customer $872.87 $876.95
Plant Nameplate Capacity Ratings (year-end) (megawatts) 605 605
Maximum Peak-Hour Demand (megawatts):
Winter 471 414
Summer 574 562
Annual Load Factor (percent) 53.4 53.6
Plant Availability - Fossil-Steam (percent) 77.1 81.2
--------------------------------------------------------------------------------------------------------------
Source of Energy Supply (percent):
Coal 79.8 74.3
Oil and gas 5.4 4.4
Purchased power -
From non-affiliates 5.9 19.9
From affiliates 8.9 1.4
--------------------------------------------------------------------------------------------------------------
Total 100.0 100.0
==============================================================================================================
Total Fuel Economy Data:
BTU per net kilowatt-hour generated 10,683 10,551
Cost of fuel per million BTU (cents) 178.31 176.10
Average cost of fuel per net kilowatt-hour generated (cents) 1.90 1.86
==============================================================================================================
|
II-250C
STATEMENTS OF INCOME
Savannah Electric and Power Company
===================================================================================================================================
For the Years Ended December 31, 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $224,225 $230,944 $218,529
Revenues from affiliates 2,052 3,130 7,200
-----------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 226,277 234,074 225,729
-----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 35,563 29,139 25,386
Purchased power from non-affiliates 2,347 2,350 2,139
Purchased power from affiliates 42,107 58,591 53,252
Other 47,735 44,007 45,214
Maintenance 13,236 14,140 13,668
Depreciation and amortization 20,152 19,113 18,949
Taxes other than income taxes 11,494 11,675 11,465
Federal and state income taxes 16,419 16,175 17,378
-----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 189,053 195,190 187,451
-----------------------------------------------------------------------------------------------------------------------------------
Operating Income 37,224 38,884 38,278
Other Income (Expense):
Allowance for equity funds used during construction 239 317 163
Interest income 279 201 164
Other, net (781) (1,756) (618)
Income taxes applicable to other income 1,233 1,034 651
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 38,194 38,680 38,638
-----------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 10,907 11,563 12,380
Allowance for debt funds used during construction (164) (333) (450)
Interest on notes payable 172 229 135
Amortization of debt discount, premium, and expense, net 739 579 448
Other interest charges 369 378 406
-----------------------------------------------------------------------------------------------------------------------------------
Net interest charges 12,023 12,416 12,919
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of a
Change in Method of Recording Revenues 26,171 26,264 25,719
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net Income 26,171 26,264 25,719
Dividends on Preferred and Preference Stock 2,324 2,324 2,324
-----------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred and Preference Stock $ 23,847 $ 23,940 $ 23,395
===================================================================================================================================
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 23,847 $ 23,940 $ 23,395
|
II-251
STATEMENTS OF INCOME
Savannah Electric and Power Company
===================================================================================================================================
For the Years Ended December 31, 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $205,339 $216,009 $196,256
Revenues from affiliates 6,446 2,433 1,505
-----------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 211,785 218,442 197,761
-----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 18,555 24,976 14,162
Purchased power from non-affiliates 1,839 793 494
Purchased power from affiliates 55,822 56,274 56,492
Other 41,623 45,610 36,884
Maintenance 12,560 13,516 14,232
Depreciation and amortization 17,854 16,467 16,829
Taxes other than income taxes 11,074 11,136 10,231
Federal and state income taxes 16,289 15,436 14,566
-----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 175,616 184,208 163,890
-----------------------------------------------------------------------------------------------------------------------------------
Operating Income 36,169 34,234 33,871
Other Income (Expense):
Allowance for equity funds used during construction 831 958 446
Interest income 54 209 276
Other, net (1,032) (1,841) (1,450)
Income taxes applicable to other income 864 1,117 758
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 36,886 34,677 33,901
-----------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 12,585 10,696 10,870
Allowance for debt funds used during construction (1,225) (699) (289)
Interest on notes payable 205 240 15
Amortization of debt discount, premium, and expense, net 550 535 427
Other interest charges 337 340 466
-----------------------------------------------------------------------------------------------------------------------------------
Net interest charges 12,452 11,112 11,489
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of a
Change in Method of Recording Revenues 24,434 23,565 22,412
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) - - -
-----------------------------------------------------------------------------------------------------------------------------------
Net Income 24,434 23,565 22,412
Dividends on Preferred and Preference Stock 2,324 2,106 1,900
-----------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred and Preference Stock $ 22,110 $ 21,459 $ 20,512
===================================================================================================================================
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 22,110 $ 21,459 $ 20,512
|
II-252A
STATEMENTS OF INCOME
Savannah Electric and Power Company
================================================================================================================================
For the Years Ended December 31, 1991 1990 1989
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $188,216 $200,069 $195,774
Revenues from affiliates 1,430 5,566 6,025
--------------------------------------------------------------------------------------------------------------------------------
Total operating revenues 189,646 205,635 201,799
--------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 14,415 42,630 44,224
Purchased power from non-affiliates 297 611 616
Purchased power from affiliates 49,007 34,648 26,361
Other 32,945 30,630 29,371
Maintenance 12,475 12,754 12,281
Depreciation and amortization 16,549 16,118 20,343
Taxes other than income taxes 10,122 9,798 9,152
Federal and state income taxes 16,195 17,611 17,571
--------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 152,005 164,800 159,919
--------------------------------------------------------------------------------------------------------------------------------
Operating Income 37,641 40,835 41,880
Other Income (Expense):
Allowance for equity funds used during construction 170 193 -
Interest income 589 741 719
Other, net (879) (803) (672)
Income taxes applicable to other income 722 187 192
--------------------------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 38,243 41,153 42,119
--------------------------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 11,486 12,052 12,287
Allowance for debt funds used during construction (103) (194) (112)
Interest on notes payable 25 116 402
Amortization of debt discount, premium, and expense, net 380 241 274
Other interest charges 525 665 1,313
--------------------------------------------------------------------------------------------------------------------------------
Net interest charges 12,313 12,880 14,164
--------------------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of a
Change in Method of Recording Revenues 25,930 28,273 27,955
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) - - -
--------------------------------------------------------------------------------------------------------------------------------
Net Income 25,930 28,273 27,955
Dividends on Preferred and Preference Stock 1,900 2,019 2,420
--------------------------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred and Preference Stock $ 24,030 $ 26,254 $ 25,535
================================================================================================================================
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 24,030 $ 26,254 $ 25,535
|
II-252B
STATEMENTS OF INCOME
Savannah Electric and Power Company
================================================================================================================
For the Years Ended December 31, 1988 1987
----------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues:
Revenues $178,873 $174,707
Revenues from affiliates 3,567 -
----------------------------------------------------------------------------------------------------------------
Total operating revenues 182,440 174,707
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Operation --
Fuel 46,578 38,597
Purchased power from non-affiliates 3,593 11,453
Purchased power from affiliates 6,586 1,186
Other 28,271 25,642
Maintenance 14,261 13,629
Depreciation and amortization 19,771 18,152
Taxes other than income taxes 9,209 9,088
Federal and state income taxes 14,017 16,969
----------------------------------------------------------------------------------------------------------------
Total operating expenses 142,286 134,716
----------------------------------------------------------------------------------------------------------------
Operating Income 40,154 39,991
Other Income (Expense):
Allowance for equity funds used during construction 273 512
Interest income 355 925
Other, net (1,423) (464)
Income taxes applicable to other income 459 (317)
----------------------------------------------------------------------------------------------------------------
Income Before Interest Charges 39,818 40,647
----------------------------------------------------------------------------------------------------------------
Interest Charges:
Interest on long-term debt 15,603 17,127
Allowance for debt funds used during construction (330) (459)
Interest on notes payable 230 70
Amortization of debt discount, premium, and expense, net 196 237
Other interest charges 336 251
----------------------------------------------------------------------------------------------------------------
Net interest charges 16,035 17,226
----------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of a
Change in Method of Recording Revenues 23,783 23,421
Cumulative effect as of January 1, 1988, of accruing unbilled
revenues--less income taxes of $1,164(000) 1,920 -
----------------------------------------------------------------------------------------------------------------
Net Income 25,703 23,421
Dividends on Preferred and Preference Stock 1,431 1,335
----------------------------------------------------------------------------------------------------------------
Net Income After Dividends on Preferred and Preference Stock $ 24,272 $ 22,086
================================================================================================================
Pro Forma Net Income After Dividends on Preferred Stock
Assuming Change in Method of Recording
Revenues Was Applied Retroactively $ 22,352 $ 21,865
|
II-252C
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
================================================================================================================================
For the Years Ended December 31, 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 26,171 $ 26,264 $ 25,719
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 21,083 20,246 20,535
Deferred income taxes, net 3,841 7,482 4,359
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (239) (317) (163)
Other, net (2,577) (641) 35
Changes in certain current assets and liabilities --
Receivables, net (3,239) (641) (6,241)
Inventories 1,720 410 2,318
Payables (1,608) 4,242 2,213
Other 4,667 (4,607) (1,848)
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 49,819 52,438 46,927
--------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (18,846) (28,950) (26,503)
Sales of property - - -
Other (1,418) (3,173) 3,198
--------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (20,264) (32,123) (23,305)
--------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock - - -
First mortgage bonds - 20,000 15,000
Pollution control bonds 13,870 - -
Other long-term debt - 17,000 33,500
Common stock - - -
Retirements:
Preferred and preference stock - - -
First mortgage bonds - (29,400) (29,250)
Pollution control bonds (13,870) - -
Other long-term debt (433) (397) (23,003)
Notes payable, net (5,000) 1,000 1,500
Payment of preferred and preference stock dividends (2,324) (2,324) (2,324)
Payment of common and class A stock dividends (20,500) (19,600) (17,600)
Miscellaneous (368) (2,257) (2,131)
---------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (28,625) (15,978) (24,308)
--------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 930 4,337 (686)
Cash and Cash Equivalents at Beginning of Year 5,214 877 1,563
--------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 6,144 $ 5,214 $ 877
================================================================================================================================
( ) Denotes use of cash.
|
II-253
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
===================================================================================================================================
For the Years Ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 24,434 $ 23,565 $ 22,412
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 19,353 17,482 17,757
Deferred income taxes, net 1,625 607 5,947
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (831) (958) (446)
Other, net 826 2,853 (1,312)
Changes in certain current assets and liabilities --
Receivables, net 18,481 (16,839) (3,757)
Inventories 1,144 (3,947) 4,435
Payables (19,957) 18,742 351
Other (117) 3,282 2,083
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 44,958 44,787 47,470
--------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (30,078) (72,858) (30,132)
Sales of property - - -
Other (841) 1,676 (1,073)
--------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (30,919) (71,182) (31,205)
--------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock - 35,000 -
First mortgage bonds - 45,000 30,000
Pollution control bonds - 4,085 13,870
Other long-term debt 8,500 10,000 -
Common stock - - -
Retirements:
Preferred and preference stock - (20,000) -
First mortgage bonds (5,065) - (38,750)
Pollution control bonds - (4,085) (14,550)
Other long-term debt (823) (10,356) (217)
Notes payable, net (500) (4,500) 7,500
Payment of preferred and preference stock dividends (2,129) (2,222) (1,900)
Payment of common and class A stock dividends (16,300) (21,000) (22,000)
Miscellaneous (74) (3,400) (3,985)
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (16,391) 28,522 (30,032)
--------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (2,352) 2,127 (13,767)
Cash and Cash Equivalents at Beginning of Year 3,915 1,788 15,555
--------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 1,563 $ 3,915 $ 1,788
================================================================================================================================
( ) Denotes use of cash.
|
II-254A
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
================================================================================================================================
For the Years Ended December 31, 1991 1990 1989
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 25,930 $ 28,273 $ 27,955
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 17,501 16,995 21,310
Deferred income taxes, net 1,601 2,782 3,476
Deferred investment tax credits, net - - -
Allowance for equity funds used during construction (170) (193) -
Other, net (1,876) 511 (775)
Changes in certain current assets and liabilities --
Receivables, net 6,639 1,726 (4,241)
Inventories (1,082) 1,246 (1,503)
Payables 568 (228) 1,086
Other 3,710 (319) 1,544
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 52,821 50,793 48,852
--------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (19,478) (20,086) (18,831)
Sales of property - - -
Other 407 (120) 381
--------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (19,071) (20,206) (18,450)
--------------------------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock - - -
First mortgage bonds 30,000 - 30,000
Pollution control bonds - - -
Other long-term debt - - -
Common stock - - -
Retirements:
Preferred and preference stock - (5,374) (6,591)
First mortgage bonds (22,500) (9,135) (18,275)
Pollution control bonds (515) (485) (455)
Other long-term debt (275) (364) (7,656)
Notes payable, net (1,500) 1,500 -
Payment of preferred and preference stock dividends (1,900) (2,113) (2,318)
Payment of common and class A stock dividends (22,000) (22,000) (20,000)
Miscellaneous (477) 47 (1,071)
--------------------------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (19,167) (37,924) (26,366)
--------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 14,583 (7,337) 4,036
Cash and Cash Equivalents at Beginning of Year 972 8,309 4,273
--------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 15,555 $ 972 $ 8,309
================================================================================================================================
( ) Denotes use of cash.
|
II-254B
STATEMENTS OF CASH FLOWS
Savannah Electric and Power Company
================================================================================================================
For the Years Ended December 31, 1988 1987
----------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income $ 25,703 $ 23,421
Adjustments to reconcile net income to net
cash provided by operating activities --
Depreciation and amortization 20,592 19,126
Deferred income taxes, net 3,568 925
Deferred investment tax credits, net - (5)
Allowance for equity funds used during construction (273) (512)
Other, net 718 (1,016)
Changes in certain current assets and liabilities --
Receivables, net (7,620) 773
Inventories 3,063 (503)
Payables (1,151) (78)
Other (1,684) (757)
----------------------------------------------------------------------------------------------------------------
Net cash provided from operating activities 42,916 41,374
----------------------------------------------------------------------------------------------------------------
Investing Activities:
Gross property additions (23,254) (32,276)
Sales of property - -
Other (4,042) 1,296
-----------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (27,296) (30,980)
----------------------------------------------------------------------------------------------------------------
Financing Activities:
Proceeds:
Preferred stock 20,000 -
First mortgage bonds - -
Pollution control bonds - -
Other long-term debt - -
Common stock 403 1,693
Retirements:
Preferred and preference stock (553) (588)
First mortgage bonds (12,231) (10,239)
Pollution control bonds (430) (405)
Other long-term debt (4,401) (3,954)
Notes payable, net - -
Payment of preferred and preference stock dividends (1,284) (1,351)
Payment of common and class A stock dividends (14,407) (10,383)
Miscellaneous (269) -
----------------------------------------------------------------------------------------------------------------
Net cash provided from (used for) financing activities (13,172) (25,227)
----------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 2,448 (14,833)
Cash and Cash Equivalents at Beginning of Year 1,825 16,658
----------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 4,273 $ 1,825
================================================================================================================
( ) Denotes use of cash.
|
II-254C
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================================
At December 31, 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $335,002 $327,549 $317,026
Transmission 103,776 103,160 102,129
Distribution 283,700 275,877 264,115
General 38,216 32,875 31,876
Construction work in progress 7,709 13,463 6,707
--------------------------------------------------------------------------------------------------------------------------------
Total utility plant 768,403 752,924 721,853
Accumulated provision for depreciation 321,509 304,760 287,004
--------------------------------------------------------------------------------------------------------------------------------
Total 446,894 448,164 434,849
Less property-related accumulated deferred income taxes - - -
--------------------------------------------------------------------------------------------------------------------------------
Total 446,894 448,164 434,849
--------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments 1,783 1,785 1,788
--------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 6,144 5,214 877
Receivables, net 17,498 16,606 21,346
Accrued unbilled revenues 5,238 4,597 5,110
Fuel cost under recovery 7,694 7,289 -
Fossil fuel stock, at average cost 5,205 5,892 6,076
Materials and supplies, at average cost 6,980 8,013 8,239
Prepayments 5,922 4,789 6,467
--------------------------------------------------------------------------------------------------------------------------------
Total 54,681 52,400 48,115
--------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 17,267 19,167 21,557
Miscellaneous 26,727 23,384 18,353
--------------------------------------------------------------------------------------------------------------------------------
Total 43,994 42,551 39,910
--------------------------------------------------------------------------------------------------------------------------------
Total Assets $547,352 $544,900 $524,662
================================================================================================================================
|
II-255
|
|
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================================
At December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $312,215 $257,708 $258,539
Transmission 100,956 99,791 93,182
Distribution 251,323 237,012 222,024
General 28,938 28,010 25,851
Construction work in progress 5,930 49,797 5,966
--------------------------------------------------------------------------------------------------------------------------------
Total utility plant 699,362 672,318 605,562
Accumulated provision for depreciation 267,590 251,565 240,094
--------------------------------------------------------------------------------------------------------------------------------
Total 431,772 420,753 365,468
Less property-related accumulated deferred income taxes - - 65,725
--------------------------------------------------------------------------------------------------------------------------------
Total 431,772 420,753 299,743
--------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments 1,790 1,793 1,795
--------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 1,563 3,915 1,788
Receivables, net 12,328 27,714 14,480
Accrued unbilled revenues 4,780 3,789 3,401
Fuel cost under recovery 3,113 7,112 3,895
Fossil fuel stock, at average cost 7,557 8,419 4,895
Materials and supplies, at average cost 9,076 9,358 8,935
Prepayments 7,446 4,849 1,599
--------------------------------------------------------------------------------------------------------------------------------
Total 45,863 65,156 38,993
--------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes 23,521 24,890 -
Miscellaneous 15,359 14,595 11,644
---------------------------------------------------------------------------------------------------------------------------------
Total 38,880 39,485 11,644
--------------------------------------------------------------------------------------------------------------------------------
Total Assets $518,305 $527,187 $352,175
================================================================================================================================
|
II-256A
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================================
At December 31, 1991 1990 1989
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $247,017 $246,278 $242,988
Transmission 90,198 73,358 72,299
Distribution 212,576 217,913 204,611
General 24,283 22,990 22,482
Construction work in progress 4,211 1,354 2,880
--------------------------------------------------------------------------------------------------------------------------------
Total utility plant 578,285 561,893 545,260
Accumulated provision for depreciation 225,605 211,725 198,228
--------------------------------------------------------------------------------------------------------------------------------
Total 352,680 350,168 347,032
Less property-related accumulated deferred income taxes 62,737 58,106 54,418
--------------------------------------------------------------------------------------------------------------------------------
Total 289,943 292,062 292,614
--------------------------------------------------------------------------------------------------------------------------------
Other Property and Investments 39 39 49
--------------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 15,555 972 8,309
Receivables, net 14,549 14,450 14,300
Accrued unbilled revenues 3,252 3,831 4,501
Fuel cost under recovery - 5,662 6,881
Fossil fuel stock, at average cost 9,196 8,071 9,706
Materials and supplies, at average cost 9,069 9,112 8,723
Prepayments 4,544 1,492 585
--------------------------------------------------------------------------------------------------------------------------------
Total 56,165 43,590 53,005
--------------------------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - - -
Miscellaneous 6,358 4,359 4,219
--------------------------------------------------------------------------------------------------------------------------------
Total 6,358 4,359 4,219
--------------------------------------------------------------------------------------------------------------------------------
Total Assets $352,505 $340,050 $349,887
================================================================================================================================
|
II-256B
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================
At December 31, 1988 1987
----------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
Utility Plant:
Production-fossil $241,833 $236,587
Transmission 71,601 69,822
Distribution 192,335 177,163
General 21,686 17,513
Construction work in progress 1,684 7,214
----------------------------------------------------------------------------------------------------------------
Total utility plant 529,139 508,299
Accumulated provision for depreciation 178,888 161,531
----------------------------------------------------------------------------------------------------------------
Total 350,251 346,768
Less property-related accumulated deferred income taxes 51,487 49,255
----------------------------------------------------------------------------------------------------------------
Total 298,764 297,513
----------------------------------------------------------------------------------------------------------------
Other Property and Investments 49 49
----------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents 4,273 1,825
Receivables, net 15,714 14,419
Accrued unbilled revenues 3,889 -
Fuel cost under recovery 1,838 -
Fossil fuel stock, at average cost 8,455 12,359
Materials and supplies, at average cost 8,471 7,630
Prepayments 1,240 2,786
----------------------------------------------------------------------------------------------------------------
Total 43,880 39,019
----------------------------------------------------------------------------------------------------------------
Deferred Charges:
Deferred charges related to income taxes - -
Miscellaneous 4,358 4,127
----------------------------------------------------------------------------------------------------------------
Total 4,358 4,127
----------------------------------------------------------------------------------------------------------------
Total Assets $347,051 $340,708
================================================================================================================
|
II-256C
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================================
At December 31, 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 54,223 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688 8,688
Additional minimum liability
for under-funded pension obligations - - (132)
Retained Earnings 112,720 109,373 105,033
--------------------------------------------------------------------------------------------------------------------------------
Total common equity 175,631 172,284 167,812
Preferred stock 35,000 35,000 35,000
Preferred and preference stock subject to mandatory redemption - - -
Long-term debt 142,846 164,406 153,679
--------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 353,477 371,690 356,491
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 5,000 4,000
Preferred and preference stock due within one year - - -
Long-term debt due within one year 21,764 637 1,407
Accounts payable 13,887 16,575 11,362
Customer deposits 5,541 5,232 5,054
Fuel cost over recovery - - 865
Taxes accrued 3,325 1,015 1,584
Interest accrued 4,963 5,275 6,331
Vacation pay accrued 1,893 2,038 1,916
Miscellaneous 9,031 7,470 5,870
--------------------------------------------------------------------------------------------------------------------------------
Total 60,404 43,242 38,389
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 80,697 76,654 74,152
Accumulated deferred investment tax credits 12,607 13,271 13,934
Deferred credits related to income taxes 21,469 22,792 24,419
Deferred under-funded accrued benefit obligation - - 2,123
Miscellaneous 18,698 17,251 15,154
--------------------------------------------------------------------------------------------------------------------------------
Total 133,471 129,968 129,782
--------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 547,352 $ 544,900 $ 524,662
================================================================================================================================
|
II-257
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================================
At December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 54,223 $ 54,223 $ 54,223
Paid-in capital 8,688 8,688 8,688
Additional minimum liability
for under-funded pension obligations (546) (2,121) -
Retained Earnings 99,216 93,479 95,465
--------------------------------------------------------------------------------------------------------------------------------
Total common equity 161,581 154,269 158,376
Preferred stock 35,000 35,000 20,000
Preferred and preference stock subject to mandatory redemption - - -
Long-term debt 155,922 151,338 110,767
--------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 352,503 340,607 289,143
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks 2,500 3,000 7,500
Preferred and preference stock due within one year - - -
Long-term debt due within one year 2,579 4,499 1,319
Accounts payable 8,991 30,442 11,179
Customer deposits 4,698 4,714 4,541
Fuel cost over recovery - - -
Taxes accrued 1,133 1,529 3,016
Interest accrued 6,830 6,730 5,733
Vacation pay accrued 1,823 1,638 1,790
Miscellaneous 8,282 8,703 5,025
--------------------------------------------------------------------------------------------------------------------------------
Total 36,836 61,255 40,103
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 70,786 66,947 -
Accumulated deferred investment tax credits 14,637 15,301 15,964
Deferred credits related to income taxes 25,487 26,173 -
Deferred under-funded accrued benefit obligation 3,022 5,855 -
Miscellaneous 15,034 11,049 6,965
--------------------------------------------------------------------------------------------------------------------------------
Total 128,966 125,325 22,929
--------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 518,305 $ 527,187 $ 352,175
================================================================================================================================
|
II-258A
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================================
At December 31, 1991 1990 1989
--------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 54,223 $ 54,223 $ 54,223
Paid-in capital 8,665 8,665 8,665
Additional minimum liability
for under-funded pension obligations - - -
Retained Earnings 96,953 94,923 90,849
--------------------------------------------------------------------------------------------------------------------------------
Total common equity 159,841 157,811 153,737
Preferred stock 20,000 20,000 22,300
Preferred and preference stock subject to mandatory redemption - - 2,884
Long-term debt 119,280 112,377 117,522
--------------------------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 299,121 290,188 296,443
--------------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - 1,500 -
Preferred and preference stock due within one year - - 190
Long-term debt due within one year 2,442 2,358 7,091
Accounts payable 10,176 8,786 9,078
Customer deposits 4,528 4,472 4,296
Fuel cost over recovery 1,603 - -
Taxes accrued 724 1,387 1,749
Interest accrued 4,657 3,415 4,287
Vacation pay accrued 1,672 1,604 1,477
Miscellaneous 4,823 3,398 2,880
--------------------------------------------------------------------------------------------------------------------------------
Total 30,625 26,920 31,048
--------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - - -
Accumulated deferred investment tax credits 16,628 17,292 17,971
Deferred credits related to income taxes - - -
Deferred under-funded accrued benefit obligation - - -
Miscellaneous 6,131 5,650 4,425
--------------------------------------------------------------------------------------------------------------------------------
Total 22,759 22,942 22,396
--------------------------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 352,505 $ 340,050 $ 349,887
================================================================================================================================
|
II-258B
BALANCE SHEETS
Savannah Electric and Power Company
================================================================================================================
At December 31, 1988 1987
----------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 54,223 $ 54,131
Paid-in capital 8,665 8,353
Additional minimum liability
for under-funded pension obligations - -
Retained Earnings 85,995 73,723
----------------------------------------------------------------------------------------------------------------
Total common equity 148,883 136,207
Preferred stock 22,300 2,300
Preferred and preference stock subject to mandatory redemption 3,075 9,665
Long-term debt 98,285 129,329
----------------------------------------------------------------------------------------------------------------
Total (excluding amount due within one year) 272,543 277,501
----------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable to banks - -
Preferred and preference stock due within one year 6,590 553
Long-term debt due within one year 23,217 8,956
Accounts payable 7,950 9,427
Customer deposits 3,983 3,729
Fuel cost over recovery - 599
Taxes accrued 1,899 3,713
Interest accrued 4,154 4,599
Vacation pay accrued 1,412 1,306
Miscellaneous 1,705 6,257
----------------------------------------------------------------------------------------------------------------
Total 50,910 39,139
----------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes - -
Accumulated deferred investment tax credits 19,106 20,264
Deferred credits related to income taxes - -
Deferred under-funded accrued benefit obligation - -
Miscellaneous 4,492 3,804
----------------------------------------------------------------------------------------------------------------
Total 23,598 24,068
----------------------------------------------------------------------------------------------------------------
Total Capitalization and Liabilities $ 347,051 $ 340,708
================================================================================================================
|
II-258C
SAVANNAH ELECTRIC AND POWER COMPANY
OUTSTANDING SECURITIES AT DECEMBER 31, 1997
First Mortgage Bonds
Amount Interest Amount
Series Issued Rate Outstanding Maturity
------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 20,000 6-3/8% $ 20,000 7/1/03
1996 20,000 6.90% 20,000 5/1/06
1992 30,000 8.30% 30,000 7/1/22
1993 25,000 7.40% 25,000 7/1/23
1995 15,000 7-7/8% 15,000 5/1/25
-------- --------
$110,000 $110,000
======== ========
Pollution Control Obligations
Amount Interest Amount
Series Issued Rate Outstanding Maturity
------------------------------------------------------------------------------------------------
(Thousands) (Thousands)
1993 $ 4,085 Variable $ 4,085 1/1/16
1997 13,870 Variable 13,870 4/1/37
-------- --------
$ 17,955 $ 17,955
======== ========
Preferred Stock
Shares Dividend Amount
Series Outstanding Rate Outstanding
------------------------------------------------------------------------------------------------
(Thousands)
1993 1,400,000 6.64% $ 35,000
================================================================================================
SECURITIES RETIRED DURING 1997
Pollution Control Bonds
Principal Interest
Series Amount Rate
------------------------------------------------------------------------------------------------
(Thousands)
1992 $13,870 6-3/4%
|
II-259
PART III
Items 10, 11, 12 and 13 for SOUTHERN are incorporated by reference to ELECTION OF DIRECTORS in SOUTHERN's definitive Proxy Statement relating to the 1998 annual meeting of stockholders. The ages of directors and executive officers in Item 10 set forth below are as of December 31, 1997.
Item 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANTS
ALABAMA
Identification of directors of ALABAMA.
Elmer B. Harris (1)
President and Chief Executive Officer
Age 58
Served as Director since 3-1-89
Bill M. Guthrie
Executive Vice President
Age 64
Served as Director since 12-16-88
Whit Armstrong (2)
Age 50
Served as Director since 9-24-82
A. W. Dahlberg (2)
Age 57
Served as Director since 4-22-94
Peter V. Gregerson, Sr. (2)
Age 69
Served as Director since 10-22-93
Carl E. Jones, Jr. (2)
Age 57
Served as Director since 4-22-88
Patricia M. King (2)
Age 52
Served as Director since 7-25-97
James K. Lowder (2)
Age 48
Served as Director since 7-25-97
Wallace D. Malone, Jr. (2)
Age 61
Served as Director since 6-22-90
William V. Muse (2)
Age 58
Served as Director since 2-26-93
John T. Porter (2)
Age 66
Served as Director since 10-22-93
Robert D. Powers (2)
Age 47
Served as Director since 1-24-92
Andreas Renschler (2)
Age 39
Served as Director since 1-23-98
C. Dowd Ritter (2)
Age 50
Served as Director since 7-25-97
John W. Rouse (2)
Age 60
Served as Director since 4-22-88
William J. Rushton, III (2)
Age 68
Served as Director since 9-18-70
James H. Sanford (2)
Age 53
Served as Director since 8-1-83
John C. Webb, IV (2)
Age 55
Served as Director since 4-22-77
(1) Previously served as Director of ALABAMA from 1980 to 1985.
(2) No position other than Director.
Each of the above is currently a director of ALABAMA, serving a term running from the last annual meeting of ALABAMA's stockholder (April 25, 1997) for one year until the next annual meeting or until a successor is elected and qualified, except for Ms. King, Mr. Lowder, Mr. Renschler and Mr. Ritter whose elections were effective on the date indicated.
III-1
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he was or is to be selected as a director or nominee, other than any arrangements or understandings with directors or officers of ALABAMA acting solely in their capacities as such.
Identification of executive officers of ALABAMA.
Elmer B. Harris (1)
President, Chief Executive Officer and Director
Age 58
Served as Executive Officer since 3-1-89
Banks H. Farris
Executive Vice President
Age 62
Served as Executive Officer since 12-3-91
Michael D. Garrett
Executive Vice President - External Affairs
Age 48
Served as Executive Officer since 3-1-98
William B. Hutchins, III
Executive Vice President, Chief Financial Officer
and Treasurer
Age 54
Served as Executive Officer since 12-3-91
Charles D. McCrary (2)
Executive Vice President
Age 46
Served as Executive Officer since 1-1-91
(1) Previously served as executive officer of ALABAMA from 1979 to 1985.
(2) Resigned effective March 1, 1998, upon being
elected Executive Vice President of SOUTHERN's
Fossil/Hydro Group.
Each of the above is currently an executive officer of ALABAMA, serving a term running from the last annual meeting of the directors (April 25, 1997) for one year until the next annual meeting or until his successor is elected and qualified, except for Mr. Garrett whose election was effective on the date indicated.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he was or is to be selected as an officer, other than any arrangements or understandings with officers of ALABAMA acting solely in their capacities as such.
Identification of certain significant employees.
None.
Family relationships.
None.
Business experience.
Elmer B. Harris - Elected in 1989; Chief Executive Officer. Director of SOUTHERN and AmSouth Bancorporation.
Bill M. Guthrie - Elected in 1988; also served since 1991 as Chief Production Officer of the SOUTHERN system and from 1991 to 1994 as Executive Vice President and Chief Production Officer of SCS. Elected Senior Executive Vice President and Chief Production Officer of SCS effective 1994. Also serves as Vice President of SOUTHERN, GULF, MISSISSIPPI and SAVANNAH and Executive Vice President of GEORGIA. Responsible primarily for providing overall management of materials management, fuel services, operating and planning services, fossil, hydro and bulk power operations of the Southern electric system.
Whit Armstrong - President, Chairman and Chief Executive Officer of The Citizens Bank, Enterprise, Alabama. Also, President and Chairman of the Board of Enterprise Capital Corporation, Inc. Director of Enstar Group, Inc.
A. W. Dahlberg - Chairman, President and Chief Executive Officer of SOUTHERN since 1995. He previously served as President of SOUTHERN from 1994 to 1995 and President and Chief Executive Officer of GEORGIA from 1988 through 1993. Director of SOUTHERN, GEORGIA, Equifax, Inc., Protective Life Corporation and SunTrust Banks, Inc.
Peter V. Gregerson, Sr. - Chairman Emeritus of Gregerson's Foods, Inc. (retail groceries), Gadsden, Alabama.
Carl E. Jones, Jr. - President and Chief Executive Officer of Regions Financial Corporation, Birmingham, Alabama. He previously served as President and Chief Operating Officer of Regions Financial Corporation.
III-2
Patricia M. King - President and Chief Executive Officer of King Motor Co., Inc., King's Highway, Inc. and King Imports, Inc., Anniston, Alabama.
James K. Lowder - President and Chief Executive Officer of The Colonial Company (real estate development and sales), Montgomery, Alabama.
Wallace D. Malone, Jr. - Chairman and Chief Executive Officer of SouthTrust Corporation, bank holding company, Birmingham, Alabama. Director of American Cast Iron Pipe Company.
William V. Muse - President of Auburn University. Director of SouthTrust Bank and American Cast Iron Pipe Company.
John T. Porter - Pastor of Sixth Avenue Baptist Church, Birmingham, Alabama. Director of Citizens Federal Savings Bank.
Robert D. Powers - President and Director, The Eufaula Agency, Inc. (real estate and insurance), Eufaula, Alabama.
Andreas Renschler - President and Chief Executive Officer of Mercedes-Benz U.S. International, Inc., Tuscaloosa County, Alabama.
C. Dowd Ritter - Chairman, President, Chief Executive Officer and Director, AmSouth Bancorporation and AmSouth Bank, Birmingham, Alabama.
John W. Rouse - President of The Rouse Group, LLC, (technology consulting), Birmingham, Alabama and President Emeritus of Southern Research Institute. Director of Protective Life Corporation.
William J. Rushton, III - Chairman Emeritus of the Board, Protective Life Corporation (insurance holding company), Birmingham, Alabama. Director of SOUTHERN.
James H. Sanford - Chairman, HOME Place Farms Inc. (diversified farmers and ginners), Prattville, Alabama. Chairman of the Board, Sylvest Farms of Georgia, Inc., College Park, Georgia. Chairman of the Board, Sylvest Poultry Inc., Montgomery, Alabama.
John C. Webb, IV - President, Webb Lumber Company, Inc. (wholesale lumber and wood products sales), Demopolis, Alabama. Director, J. F. Suttle, Co.
Banks H. Farris - Elected in 1991; responsible primarily for providing the overall management of human resources, information resources, power delivery and marketing departments, customer service centers and the six geographic divisions. He previously served as Senior Vice President from 1991 to 1994.
Michael D. Garrett - Elected in 1998; responsible for external relations department, public relations and corporate services. He previously served as Senior Vice President - External Affairs from February 1994 to March 1998.
William B. Hutchins, III - Elected in 1991; responsible for financial and accounting operations, corporate planning and treasury operations. He previously served as Senior Vice President and Chief Financial Officer from 1991 to 1994 and as Executive Vice President and Chief Financial Officer from 1994 to 1998.
Charles D. McCrary - Elected in 1991; responsible for the external relations department, public relations and corporate services. He previously served as Senior Vice President from 1991 to 1994.
Involvement in certain legal proceedings.
None.
III-3
GEORGIA
Identification of directors of GEORGIA.
H. Allen Franklin
President and Chief Executive Officer
Age 53
Served as Director since 1-1-94
Warren Y. Jobe
Executive Vice President and
Chief Financial Officer
Age 57
Served as Director since 8-1-82
Daniel P. Amos (1)
Age 46
Served as Director since 5-21-97
Juanita P. Baranco (1)
Age 48
Served as Director since 5-21-97
A. W. Dahlberg (1)
Age 57
Served as Director since 6-1-88
William A. Fickling, Jr. (1)
Age 65
Served as Director since 4-18-73
L. G. Hardman III (1)
Age 58
Served as Director since 6-25-79
James R. Lientz, Jr. (1)
Age 54
Served as Director since 7-21-93
G. Joseph Prendergast (1)
Age 52
Served as Director since 1-20-93
Herman J. Russell (1)
Age 67
Served as Director since 5-18-88
Gloria M. Shatto (1)
Age 66
Served as Director since 2-20-80
William Jerry Vereen (1)
Age 57
Served as Director since 5-18-88
Carl Ware (1) (2)
Age 54
Served as Director since 2-15-95
Thomas R. Williams (1)
Age 69
Served as Director since 3-17-82
(1) No position other than Director.
(2) Previously served as Director of GEORGIA
from 1980 to 1991.
Each of the above is currently a director of GEORGIA, serving a term running from the last annual meeting of GEORGIA's stockholder (May 21, 1997) for one year until the next annual meeting or until a successor is elected and qualified.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he/she was or is to be selected as a director or nominee, other than any arrangements or understandings with directors or officers of GEORGIA acting solely in their capacities as such.
Identification of executive officers of GEORGIA.
H. Allen Franklin
President, Chief Executive Officer and Director
Age 53
Served as Executive Officer since 1-1-94
Warren Y. Jobe (1)
Executive Vice President, Chief Financial Officer and
Director
Age 57
Served as Executive Officer since 5-19-82
III-4
William C. Archer, III
Executive Vice President - External Affairs
Age 49
Served as Executive Officer since 4-6-95
Gene R. Hodges
Executive Vice President - Customer Operations
Age 59
Served as Executive Officer since 11-19-86
David M. Ratcliffe
Executive Vice President and Treasurer
Age 49
Served as Executive Officer since 3-1-98
William P. Bowers
Senior Vice President - Marketing
Age 41
Served as Executive Officer since 9-22-95
Wayne T. Dahlke
Senior Vice President - Power Delivery
Age 56
Served as Executive Officer since 4-19-89
James K. Davis
Senior Vice President - Corporate Relations
Age 57
Served as Executive Officer since 10-1-93
Robert H. Haubein
Senior Vice President - Fossil/Hydro Power
Age 57
Served as Executive Officer since 2-19-92
Fred D. Williams
Senior Vice President - Resource Policy & Planning
Age 53
Served as Executive Officer since 11-18-92
(1) Elected Senior Vice President of SOUTHERN in February 1998; however, Mr. Jobe will maintain his present position as Executive Vice President, Chief Financial Officer and Director of GEORGIA.
Each of the above is currently an executive officer of GEORGIA, serving a term running from the last annual meeting of the directors (May 21, 1997) for one year until the next annual meeting or until his successor is elected and qualified, except for Mr. Ratcliffe whose election was effective on the date indicated.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he was or is to be selected as an officer, other than any arrangements or understandings with officers of GEORGIA acting solely in their capacities as such.
Identification of certain significant employees.
None.
Family relationships.
None.
Business experience.
H. Allen Franklin - President and Chief Executive Officer since 1994. He previously served as President and Chief Executive Officer of SCS from 1988 through 1993. Director of SOUTHERN and SouthTrust Corporation.
Warren Y. Jobe - Executive Vice President and Chief Financial Officer since 1982 and Treasurer from 1992 to 1998. Responsible for financial and accounting operations and planning, internal auditing, procurement, corporate secretary and treasury operations.
Daniel P. Amos - President and Chief Executive Officer, American Family Life Assurance Company (AFLAC), Columbus, Georgia. Director, AFLAC Incorporated (and subsidiaries), CIT Group and Greystone Capital Partners, I.L.P.
Juanita P. Baranco - Business owner of Baranco Automotive Group. Director of Federal Reserve Bank of Atlanta and John H. Harland Company, Decatur, Georgia.
A. W. Dahlberg - Chairman, President and Chief Executive Officer of SOUTHERN since 1995. He previously served as President of SOUTHERN from 1994 to 1995 and President and Chief Executive Officer of GEORGIA from 1988 through 1993. Director of SOUTHERN, ALABAMA, Equifax, Inc., Protective Life Corporation and SunTrust Banks, Inc.
William A. Fickling, Jr. - Chairman of the Board, Chief Executive Officer of Beech Street Corporation (provider of managed care services) and President from 1995 to 1996. He previously served as Chairman of the Board and Chief Executive Officer of Charter Medical Corporation (provider of psychiatric care).
III-5
L. G. Hardman III - Chairman of the Board of The First National Bank of Commerce, Georgia and Chairman of the Board and Chief Executive Officer of First Commerce Bancorp, Inc. Chairman of the Board, President and Treasurer of Harmony Grove Mills, Inc. (real estate investments). Director of SOUTHERN.
James R. Lientz, Jr. - President of NationsBank of Georgia since 1993. He previously served as President and Chief Executive Officer of former Citizens & Southern Bank of South Carolina (now NationsBank) from 1990 to 1993. Director of Cerulean Companies, Inc. and Blue Cross/Blue Shield of Georgia.
G. Joseph Prendergast - Senior Executive Vice President, Wachovia Corporation. Heads the banking division comprising the companies consumer and corporate banking activities and Wachovia Bank, N.A. Chairman, Wachovia Bank of Georgia, Wachovia Bank of South Carolina and Wachovia Bank of North Carolina since 1994. Director, Willamette Industries, Portland, Oregon.
Herman J. Russell - Chairman of the Board, H. J. Russell & Company (construction), Atlanta, Georgia. Chairman of the Board, Citizens Trust Bank, Atlanta, Georgia. Director of Wachovia Corporation and First Union Real Estate and Mortgage Investments.
Gloria M. Shatto - President, Berry College, Mount Berry, Georgia. Director of SOUTHERN, Becton Dickinson & Company and Texas Instruments, Inc.
William Jerry Vereen - President, Treasurer and Chief Executive Officer of Riverside Manufacturing Company (manufacture and sale of uniforms), Moultrie, Georgia. Director of Gerber Scientific, Inc., Textile Clothing Technology Corporation, Cerulean Companies, Inc. and Blue Cross/Blue Shield of Georgia.
Carl Ware - President, Africa Group, The Coca-Cola Company since 1991.
Thomas R. Williams - President of The Wales Group, Inc. (investments), Atlanta, Georgia. Director of ConAgra, Inc., National Life Insurance Company of Vermont, AppleSouth, Inc., American Software, Inc. and The Fidelity Group of Funds.
William C. Archer, III - Executive Vice President - External Affairs since September 1995. Senior Vice President - External Affairs from April 1995 to September 1995. Vice President - Human Resources for SCS from 1992 to 1995.
Gene R. Hodges - Executive Vice President - Customer Operations, Power Delivery and Safety.
David M. Ratcliffe - Executive Vice President - Finance and Treasurer since 3-1-98. Responsible for accounting, corporate secretary, finance and procurement. He previously served as Senior Vice President - External Affairs of SOUTHERN from 1995 to 1998. President and Chief Executive Officer of MISSISSIPPI from 1991 to 1995.
William P. Bowers - Senior Vice President - Marketing since 1995. Vice President
- Retail Sales and Service from 1992 to 1995. Director of Georgia MedCorp, Inc.,
Southern Regional Medical Center and Georgia MedCorp Development Corporation.
Wayne T. Dahlke - Senior Vice President - Power Delivery since 1992. Senior Vice President - Marketing from 1989 to 1992.
James K. Davis - Senior Vice President - Corporate Relations since 1993. Vice President of Corporate Relations from 1988 to 1993.
Robert H. Haubein - Senior Vice President - Fossil/ Hydro Power since 1994. Senior Vice President - Administrative Services from 1992 to 1994 and Vice President - Northern Region from 1990 to 1992.
Fred D. Williams - Senior Vice President - Resource Policy and Planning since 1997. Senior Vice President - Wholesale Power Marketing from 1995 to 1997. Senior Vice President - Bulk Power Markets from 1992 to August 1995. In addition, he was elected Senior Vice President - Wholesale Power Marketing of SCS in 1995 and Senior Vice President of ALABAMA in February 1996.
Involvement in certain legal proceedings.
None.
III-6
GULF
Identification of directors of GULF.
Travis J. Bowden
President and Chief Executive Officer
Age 59
Served as Director since 2-1-94
Paul J. DeNicola (1)
Age 49
Served as Director since 4-19-91
Fred C. Donovan (1)
Age 57
Served as Director since 1-18-91
W. Deck Hull, Jr. (1)
Age 65
Served as Director since 10-14-83
Joseph K. Tannehill (1)
Age 64
Served as Director since 7-19-85
Barbara H. Thames (1)
Age 57
Served as Director since 2-28-97
(1) No position other than Director.
Each of the above is currently a director of GULF, serving a term running from the last annual meeting of GULF's stockholder (June 24, 1997) for one year until the next annual meeting or until a successor is elected and qualified.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he was or is to be selected as a director or nominee, other than any arrangements or understandings with directors or officers of GULF acting solely in their capacities as such. Identification of executive officers of GULF.
Travis J. Bowden
President, Chief Executive Officer and Director
Age 59
Served as Executive Officer since 2-1-94
Francis M. Fisher, Jr.
Vice President - Power Delivery and Customer Operations
Age 49
Served as Executive Officer since 5-19-89
John E. Hodges, Jr.
Vice President - Marketing and Employee/External Affairs
Age 54
Served as Executive Officer since 5-19-89
Robert G. Moore
Vice President - Power Generation and Transmission
Age 48
Served as Executive Officer since 7-25-97
Arlan E. Scarbrough
Vice President - Finance
Age 61
Served as Executive Officer since 9-21-77
Each of the above is currently an executive officer of GULF, serving a term running from the last annual meeting of the directors (July 25, 1997) for one year until the next annual meeting or until his successor is elected and qualified.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he was or is to be selected as an officer, other than any arrangements or understandings with officers of GULF acting solely in their capacities as such.
III-7
Identification of certain significant employees.
None.
Family relationships.
None.
Business experience.
Travis J. Bowden - Elected President effective February 1994 and, effective May 1994, Chief Executive Officer. He previously served as Executive Vice President of ALABAMA from 1985 to 1994.
Paul J. DeNicola - President and Chief Executive Officer of SCS since 1994. He
previously served as Executive Vice President of SCS from 1991 through 1993.
Director of SOUTHERN, MISSISSIPPI and SAVANNAH.
Fred C. Donovan - President of Baskerville - Donovan, Inc., Pensacola, Florida, an architectural and engineering firm.
W. Deck Hull, Jr. - President and Director of Hull Oil Company - Panama City, Florida. He previously served as Vice Chairman of the SunTrust Bank, West Florida, Panama City, Florida.
Joseph K. Tannehill - President and Chief Executive Officer of Merrick International Industries, Lynn Haven, Florida. Director of Regions Bank of North Florida, Panama City, Florida.
Barbara H. Thames - Chief Executive Officer of Santa Rosa Medical Center, Milton, Florida.
Francis M. Fisher, Jr. - Elected Vice President - Employee and External Relations in 1989 and, effective August 1996, Vice President - Power Delivery and Customer Operations.
John E. Hodges, Jr. - Elected Vice President - Customer Operations in 1989 and,
effective August 1996, Vice President - Marketing and Employee/External Affairs. Robert G. Moore - Elected Vice President - Power Generation and Transmission of GULF and Vice President of Fossil Generation of SCS in 1997. He previously served as Plant Manager - Bowen at GEORGIA. |
Arlan E. Scarbrough - Elected Vice President - Finance in 1980; responsible for all accounting and financial services of GULF.
Involvement in certain legal proceedings.
None.
III-8
MISSISSIPPI
Identification of directors of MISSISSIPPI.
Dwight H. Evans
President and Chief Executive Officer
Age 49
Served as Director since 3-27-95
Paul J. DeNicola (1)
Age 49
Served as Director since 5-1-89
Edwin E. Downer (1)
Age 66
Served as Director since 4-24-84
Robert S. Gaddis (1)
Age 66
Served as Director since 1-21-86
Walter H. Hurt, III (1)
Age 62
Served as Director since 4-6-82
Aubrey K. Lucas (1)
Age 63
Served as Director since 4-24-84
George A. Schloegel (1)
Age 57
Served as Director since 7-26-95
Philip J. Terrell (1)
Age 44
Served as Director since 2-22-95
N. Eugene Warr (1)
Age 62
Served as Director since 1-21-86
(1) No position other than Director.
Each of the above is currently a director of MISSISSIPPI, serving a term running from the last annual meeting of MISSISSIPPI's stockholder (April 1, 1997) for one year until the next annual meeting or until his successor is elected and qualified.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he or she was or is to be selected as a director or nominee, other than any arrangements or understandings with directors or officers of MISSISSIPPI acting solely in their capacities as such.
Identification of executive officers of MISSISSIPPI.
Dwight H. Evans
President, Chief Executive Officer and Director
Age 49
Served as Executive Officer since 3-27-95
H. E. Blakeslee
Vice President - Customer Services and Marketing
Age 57
Served as Executive Officer since 1-25-84
Andrew J. Dearman, III
Vice President - Power Generation and Delivery
Age 44
Served as Executive Officer since 4-23-97
Don E. Mason
Vice President - External Affairs and Corporate Services
Age 56
Served as Executive Officer since 7-27-83
Michael W. Southern
Vice President, Secretary, Treasurer and
Chief Financial Officer
Age 45
Served as Executive Officer since 1-1-95
Each of the above is currently an executive officer of MISSISSIPPI, serving a term running from the last annual meeting of the directors (April 23, 1997) for one year until the next annual meeting or until his successor is elected and qualified.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he was or is to be selected as an officer, other than any arrangements or understandings with officers of MISSISSIPPI acting solely in their capacities as such.
Identification of certain significant employees.
None.
III-9
Family relationships.
None.
Business experience.
Dwight H. Evans - President and Chief Executive Officer since 1995. He previously served as Executive Vice President of GEORGIA from 1989 to 1995.
Paul J. DeNicola - President and Chief Executive Officer of SCS effective 1994. Executive Vice President of SCS from 1991 through 1993. Director of SOUTHERN, SAVANNAH and GULF.
Edwin E. Downer - Business consultant specializing in economic analysis, management controls and procedural studies.
Robert S. Gaddis - Chairman of the Advisory Board of Trustmark National Bank, Laurel, Mississippi.
Walter H. Hurt, III - President and Director of NPC Inc. (Investments). Vicar of All Saints' Episcopal Church, Inverness, Mississippi, and St. Thomas Church, Belzoni, Mississippi.
Aubrey K. Lucas - President Emeritus and Distinguished Professor of Higher Education at the University of Southern Mississippi, Hattiesburg, Mississippi.
George A. Schloegel - President of Hancock Bank and Hancock Bank Securities Corporation. Vice Chairman of Hancock Holding Company. Director of Hancock Bank - Mississippi and Hancock Bank - Louisiana.
Philip J. Terrell - Superintendent of Pass Christian Public School District and adjunct professor at William Carey College.
N. Eugene Warr - Retailer (Biloxi and Gulfport, Mississippi). Director of Coast Community Bank, formerly SouthTrust Bank of Mississippi, Biloxi, Mississippi.
H. E. Blakeslee - Elected Vice President in 1984. Primarily responsible for rate design, revenue forecasting, marketing, district operations, corporate compliance, distribution engineering, customer account and customer call center.
Andrew J. Dearman, III - Elected Vice President in 1997. Primarily responsible for generating plants, environmental quality, fuel services, power generation technical services, transmission, system planning, bulk power contracts, system operations and control, system protection and real estate. He served as Vice President - Southern Division of ALABAMA from 1995 to May 1997, and Division Manager - Customer Service of ALABAMA from 1989 to 1995.
Don E. Mason - Elected Vice President in 1983. Primarily responsible for external affairs, corporate communications, security, risk management, economic development and general services, as well as the human resources function.
Michael W. Southern - Elected Vice President, Secretary, Treasurer and Chief Financial Officer in 1995. Primarily responsible for accounting, secretary/treasury, corporate planning, procurement and information resources. He previously served as Director of Corporate Finance of SCS from 1994 to 1995 and Director of Financial Planning of SCS from 1990 to 1994.
Involvement in certain legal proceedings.
None.
III-10
SAVANNAH
Identification of directors of SAVANNAH.
G. Edison Holland, Jr.
President and Chief Executive Officer
Age 45
Served as Director since 5-20-97
Archie H. Davis (1)
Age 56
Served as Director since 2-18-97
Paul J. DeNicola (1)
Age 49
Served as Director since 3-14-91
Walter D. Gnann (1)
Age 62
Served as Director since 5-17-83
Robert B. Miller, III (1)
Age 52
Served as Director since 5-17-83
Arnold M. Tenenbaum (1)
Age 61
Served as Director since 5-17-77
(1) No Position other than Director.
Each of the above is currently a director of SAVANNAH, serving a term running from the last annual meeting of SAVANNAH's stockholder (May 20, 1997) for one year until the next annual meeting or until a successor is elected and qualified.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he/she was or is to be selected as a director or nominee, other than any arrangements or understandings with directors or officers of SAVANNAH acting solely in their capacities as such.
Identification of executive officers of SAVANNAH.
G. Edison Holland, Jr.
President, Chief Executive Officer and Director
Age 45
Served as Executive Officer since 10-1-97
W. Miles Greer
Vice President - Marketing and Customer Services
Age 54
Served as Executive Officer since 11-20-85
Larry M. Porter
Vice President - Operations
Age 52
Served as Executive Officer since 7-1-91
Kirby R. Willis
Vice President, Treasurer, Chief Financial Officer
and Assistant Corporate Secretary
Age 46
Served as Executive Officer since 1-1-94
Each of the above is currently an executive officer of SAVANNAH, serving a term running from the last annual meeting of the directors (July 15, 1997) for one year until the next annual meeting or until his successor is elected and qualified, except for Mr. Holland whose election was effective on the date indicated.
There are no arrangements or understandings between any of the individuals listed above and any other person pursuant to which he was or is to be selected as an officer, other than any arrangements or understandings with officers of SAVANNAH acting solely in their capacities as such.
Identification of certain significant employees.
None.
Family relationships.
None.
Business experience.
G. Edison Holland, Jr. - Elected President and Chief Executive Officer in 1997. Vice President - Power Generation/Transmission and Corporate Counsel of Gulf Power Company from 1995 to 1997. Served as a partner in the law firm of Beggs & Lane from 1979 to 1997.
Archie H. Davis - President and Chief Executive Officer of The Savannah Bancorp and The Savannah Bank, N.A., Savannah, Georgia. Member of the Board of Directors of Thomaston Mills, Thomaston, Georgia.
III-11
Paul J. DeNicola - President and Chief Executive Officer of SCS since 1994. Executive Vice President of SCS from 1991 through 1993. Director of SOUTHERN, GULF and MISSISSIPPI.
Walter D. Gnann - President of Walt's TV, Appliance and Furniture Co., Inc., Springfield, Georgia. Past Chairman of the Development Authority of Effingham County, Georgia.
Robert B. Miller, III - President of American Building Systems, Inc.
Arnold M. Tenenbaum - President and Director of Chatham Steel Corporation. Director of First Union Bank of Georgia, First Union Bank of Savannah, Cerulean Corporation and Blue Cross/Blue Shield of Georgia.
W. Miles Greer - Vice President - Marketing and Customer Services effective 1994. Formerly served as Vice President - Economic Development and Corporate Services from 1989 through 1993.
Larry M. Porter - Vice President - Operations since 1991. Responsible for managing the areas of fuel procurement, power production, transmission and distribution, engineering and system operation.
Kirby R. Willis - Vice President, Treasurer and Chief Financial Officer since 1994 and Assistant Corporate Secretary effective 1998. Responsible primarily for all accounting, financial, information resources, labor relations, corporate services, environmental and safety activities. He previously served as Treasurer, Controller and Assistant Secretary from 1991 to 1993.
Involvement in certain legal proceedings.
None.
Section 16(a) Beneficial Ownership Reporting Compliance.
GEORGIA's Messrs. Jobe and Vereen each failed to file on a timely basis a single report disclosing one transaction on Form 5 as required by Section 16 of the Securities Act of 1934.
GULF's Ms. Thames and Mr. Moore each failed to file on a timely basis a single report disclosing one transaction on Form 3 as required by Section 16 of the Securities Act of 1934. Ms. Thames executed a Form 3 on the day of the reporting event for mailing by GULF; however, GULF inadvertently submitted the report two days late.
III-12
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Tables. The following tables set forth information concerning any Chief Executive Officer and the four most highly compensated executive officers whose total annual salary and bonus exceeded $100,000 during 1997 for each of the operating affiliates (ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH).
Key terms used in this Item will have the following meanings:- AME.........................................Above-market earnings on deferred compensation ESP.........................................Employee Savings Plan ESOP........................................Employee Stock Ownership Plan SBP.........................................Supplemental Benefit Plan ERISA.......................................Employee Retirement Income Security Act |
ALABAMA
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
-----------------------------------------------------------------------------------------------------------------------
Elmer B. Harris
President,
Chief Executive 1997 500,700 101,002 20,453 35,648 247,224 30,172
Officer, 1996 480,310 72,697 7,112 31,608 439,508 25,068
Director 1995 458,940 74,204 5,956 32,170 494,447 26,058
Banks H. Farris 1997 247,170 37,500 7,218 13,513 155,313 14,379
Executive Vice 1996 235,255 32,390 7,829 9,730 155,313 12,161
President 1995 221,405 76,182 4,239 9,856 174,727 11,889
Charles D. McCrary 1997 224,359 34,000 8,639 10,112 126,075 12,864
Executive Vice 1996 215,762 29,906 3,198 8,984 126,075 11,530
President 1995 206,400 69,380 2,549 9,188 141,834 11,071
|
See next page for footnotes.
ALABAMA
SUMMARY COMPENSATION TABLE
(Continued)
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
--------------------------------------------------------------------------------------------------------------------------
William B.
Hutchins, III
Executive Vice
President, 1997 217,756 31,400 1,383 9,834 115,170 12,441
Chief Financial 1996 209,213 28,806 3,029 8,654 115,169 10,853
Officer 1995 199,164 69,841 1,180 8,850 129,565 11,088
1 Tax reimbursement by ALABAMA and certain personal benefits.
2 Payouts made in 1996, 1997 and 1998 for the four-year performance periods ending December 31, 1995, 1996 and 1997,
respectively.
3 ALABAMA contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan under
which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP) for the following:-
Name ESP ESOP SBP
Elmer B. Harris $7,125 $1,072 $21,975
Banks H. Farris 7,181 1,072 6,126
Charles D. McCrary 7,125 1,072 4,667
William B. Hutchins, III 7,125 1,072 4,244
|
III-14
GEORGIA
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
-------------------------------------------------------------------------------------------------------------------------
H. Allen Franklin
President, 1997 511,505 129,426 14,219 36,544 280,513 31,350
Chief Executive 1996 482,658 73,260 10,992 31,853 498,688 27,334
Officer, Director 1995 456,366 82,935 3,936 31,960 561,024 25,493
Warren Y. Jobe
Executive
Vice President,
Treasurer, 1997 238,948 39,862 98,870 10,483 126,075 13,408
Chief Financial 1996 227,496 26,749 4,308 9,404 126,075 12,476
Officer, Director 1995 220,152 31,000 1,994 9,710 141,834 12,248
Gene R. Hodges 1997 228,336 39,058 5,544 10,271 126,075 13,111
Executive 1996 221,708 26,209 1,783 9,214 126,075 12,193
Vice President 1995 214,502 32,000 1,978 9,514 141,834 11,160
Robert H.
Haubein, Jr. 1997 220,358 35,683 657 9,952 115,170 11,981
Senior Vice 1996 211,010 29,681 2,081 8,757 115,169 11,740
President 1995 199,759 34,000 1,623 8,871 129,565 10,825
William C.
Archer 1997 197,870 40,054 3,410 8,953 84,048 11,280
Executive 1996 189,178 26,450 4,205 7,804 84,047 9,812
Vice President 1995 113,771 36,000 63,024 6,252 6,252 8,347
1 Tax reimbursement by GEORGIA on certain personal benefits including membership fees of $94,429 in 1997 for Mr. Jobe
and $61,877 in 1995 for Mr. Archer.
2 Payouts made in 1996, 1997 and 1998 for the four-year performance periods ending December 31, 1995,
1996 and 1997, respectively.
3 GEORGIA contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan
under which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP) for
the following:-
Name ESP ESOP SBP
H. Allen Franklin $7,181 $1,072 $23,097
Warren Y. Jobe 7,181 1,072 5,155
Gene R. Hodges 7,125 1,072 4,914
Robert H. Haubein, Jr. 7,181 1,072 3,728
William C. Archer 7,200 1,072 3,008
|
III-15
GULF
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
-------------------------------------------------------------------------------------------------------------------------
Travis J. Bowden
President, 1997 306,584 33,933 2,842 16,694 207,322 17,888
Chief Executive 1996 297,685 29,950 1,560 14,975 207,322 14,950
Officer, Director 1995 289,749 29,077 4,663 15,464 233,237 16,679
Arlan E. Scarbrough 1997 180,642 18,212 1,440 8,142 84,048 10,235
Vice President 1996 173,719 17,512 1,514 7,234 84,047 9,420
1995 167,568 16,718 722 7,398 94,553 8,556
John E. Hodges, Jr. 1997 178,428 17,989 2,418 8,042 91,977 10,185
Vice President 1996 171,688 17,297 1,415 7,145 91,977 9,405
1995 164,738 16,718 2,272 7,307 103,474 9,040
Francis M. 1997 160,783 16,274 479 7,275 84,048 9,182
Fisher, Jr. 1996 151,236 15,352 459 5,674 84,047 8,177
Vice President 1995 141,389 16,718 510 5,603 94,553 7,694
Robert G. Moore4 1997 149,926 23,474 - 4,741 46,551 7,550
Vice President 1996 - - - - - -
1995 - - - - - -
1 Tax reimbursement by GULF on certain personal benefits.
2 Payouts made in 1996, 1997 and 1998 for the four-year performance periods ending December 31, 1995,
1996 and 1997, respectively.
3 GULF contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan under
which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP) for the following:-
Name ESP ESOP SBP
Travis J. Bowden $7,181 $1,072 $9,635
Arlan E. Scarbrough 7,200 1,072 1,963
John E. Hodges, Jr. 6,438 1,072 2,675
Francis M. Fisher, Jr. 7,125 1,072 985
Robert G. Moore 6,159 1,072 319
4 Mr. Moore was named an executive officer effective July 25, 1997.
|
III-16
MISSISSIPPI
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
-------------------------------------------------------------------------------------------------------------------------
Dwight H. Evans
President, Chief 1997 262,678 39,643 3,830 14,303 126,075 15,025
Executive 1996 253,006 35,923 3,519 12,830 126,075 13,824
Officer, Director 1995 233,069 42,965 2,746 10,486 141,834 34,139
H. E. Blakeslee 1997 192,029 38,863 697 8,687 91,977 10,991
Vice President 1996 190,429 25,664 224 7,572 91,977 9,885
1995 168,651 29,358 952 7,598 103,474 9,161
Don E. Mason 1997 188,126 41,889 839 8,512 84,048 10,675
Vice President 1996 186,670 25,148 125 7,420 84,047 9,587
1995 163,901 29,358 794 7,445 94,553 8,830
Michael W. Southern
Vice President
Chief Financial 1997 155,151 31,406 1,590 6,281 65,768 8,757
Officer, Secretary, 1996 155,027 20,740 2,841 5,475 65,768 7,865
Treasurer 1995 133,505 24,467 344 4,847 73,989 19,806
Andrew J.
Dearman, III4 1997 141,393 21,008 2,083 5,871 42,903 21,354
Vice President 1996 - - - - - -
1995 - - - - - -
1 Tax reimbursement by MISSISSIPPI on certain personal benefits.
2 Payouts made in 1996, 1997 and 1998 for the four-year performance periods ending December 31, 1995,
1996 and 1997, respectively.
3 MISSISSIPPI contributions to the ESP, ESOP, and non-pension related accruals under the SBP (ERISA excess plan
under which accruals are made to offset Internal Revenue Code imposed limitations under the ESP and ESOP) for the
following:-
Name ESP ESOP SBP
Dwight H. Evans $7,181 $1,072 $6,772
H. E. Blakeslee 7,181 1,072 2,738
Don E. Mason 7,125 1,072 2,478
Michael W. Southern 7,007 1,072 678
Andrew J. Dearman, III 6,387 1,072 304
In 1997, Mr. Dearman received a one-time lump-sum payment of $13,591, given in connection with his appointment to
his current position.
4 Mr. Dearman was named an executive officer effective April 23, 1997.
|
III-17
SAVANNAH
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Number of
Securities Long-
Name Underlying Term
and Other Annual Stock Incentive All Other
Principal Compensation Options Payouts Compensation
Position Year Salary($) Bonus($) ($)1 (Shares) ($)2 ($)3
--------------------------------------------------------------------------------------------------------------------------
Arthur M.
Gignilliat, Jr.4
President, 1997 203,888 20,866 3,555 10,365 151,383 28,095
Chief Executive 1996 218,208 26,371 1,104 9,077 151,382 25,705
Officer, Director 1995 211,385 31,847 492 9,327 170,305 21,323
G. Edison
Holland, Jr.5
President, 1997 202,413 26,231 3,046 8,640 91,977 49,892
Chief Executive 1996 184,359 18,584 2,969 7,677 91,977 9,940
Officer, Director 1995 177,682 16,718 2,463 7,851 103,474 9,491
Larry M. Porter 1997 143,135 18,472 177 5,761 65,768 11,624
Vice President 1996 138,931 16,740 421 4,560 65,768 9,814
1995 134,687 18,100 256 4,701 73,989 8,718
W. Miles Greer 1997 138,643 16,294 805 4,924 60,636 10,740
Vice President 1996 131,203 16,225 322 4,261 60,636 9,631
1995 125,891 18,225 355 4,393 68,215 8,376
Kirby R. Willis
Vice President, 1997 134,794 15,915 182 4,809 60,636 9,322
Chief Financial 1996 122,110 15,505 674 3,924 60,636 8,765
Officer, Treasurer 1995 115,632 18,225 256 4,038 68,215 7,444
1 Tax reimbursement by SAVANNAH on certain personal benefits.
2 Payouts made in 1996, 1997 and 1998 for the four-year performance periods ending December 31, 1995, 1996
and 1997, respectively.
3 SAVANNAH contributions to the ESP, under Section 401(k) of the Internal Revenue Code, ESOP, and AME for
the following:-
Name ESP ESOP AME
Arthur M. Gignilliat $5,700 $1,072 $21,323
G. Edison Holland, Jr. 7,181 1,072 2,985
Larry M. Porter 6,139 1,072 4,413
W. Miles Greer 4,992 1,072 4,676
Kirby R. Willis 5,630 1,072 2,620
In 1997, Mr. Holland received a one-time lump-sum payment of $38,654, given in connection with his appointment
to his current position.
4 Mr. Gignilliat retired effective October 1, 1997.
5 Mr. Holland became president on July 1, 1997. He was previously an executive officer at GULF.
|
III-18
STOCK OPTION GRANTS IN 1997
Stock Option Grants. The following table sets forth all stock option grants to
the named executive officers of each operating subsidiary during the year ending
December 31, 1997.
Individual Grants Grant Date Value
# of % of Total
Securities Options Exercise
Underlying Granted to or
Options Employees in Base Price Expiration Grant Date
Name Granted1 Fiscal Year2 ($/Sh)1 Date1 Present Value($)3
---------------------------------------------------------------------------------------------------------------------
ALABAMA
Elmer B. Harris 35,648 2.0 21.25 07/21/2007 203,907
Banks H. Farris 13,513 0.8 21.25 06/01/2003 63,106
Charles D. McCrary 10,112 0.6 21.25 07/21/2007 57,841
William B. Hutchins, III 9,834 0.6 21.25 07/21/2007 56,250
GEORGIA
H. Allen Franklin 36,544 2.1 21.25 07/21/2007 209,032
Warren Y. Jobe 10,483 0.6 21.25 07/21/2007 59,963
Gene R. Hodges 10,271 0.6 21.25 07/21/2007 58,750
Robert H. Haubein, Jr. 9,952 0.6 21.25 07/21/2007 56,925
William C. Archer 8,953 0.5 21.25 07/21/2007 51,211
GULF
Travis J. Bowden 16,694 0.9 21.25 07/21/2007 95,375
Arlan E. Scarbrough 8,142 0.5 21.25 11/01/2004 40,629
John E. Hodges, Jr. 8,042 0.5 21.25 07/21/2007 46,000
Francis M. Fisher, Jr. 7,275 0.4 21.25 07/21/2007 41,613
Robert G. Moore 4,741 0.3 21.25 07/21/2007 27,119
See next page for footnotes.
|
STOCK OPTION GRANTS IN 1997
Individual Grants Grant Date Value
# of % of Total
Securities Options Exercise
Underlying Granted to or
Options Employees in Base Price Expiration Grant Date
Name Granted1 Fiscal Year2 ($/Sh)1 Date1 Present Value($)3
------------------------------------------------------------------------------------------------------------------
MISSISSIPPI
Dwight H. Evans 14,303 0.8 21.25 07/21/2007 81,813
H. E. Blakeslee 8,687 0.5 21.25 07/21/2007 49,690
Don E. Mason 8,512 0.5 21.25 07/21/2007 48,689
Michael W. Southern 6,281 0.4 21.25 07/21/2007 35,927
Andrew J. Dearman, III 5,871 0.3 21.25 07/21/2007 33,582
SAVANNAH
Arthur M. Gignilliat, Jr. 10,365 0.6 21.25 09/03/2000 34,101
G. Edison Holland, Jr. 8,640 0.5 21.25 07/21/2007 49,421
Larry M. Porter 5,761 0.3 21.25 07/21/2007 32,953
W. Miles Greer 4,924 0.3 21.25 07/21/2007 28,165
Kirby R. Willis 4,809 0.3 21.25 07/21/2007 27,507
1 Performance Stock Plan grants were made on July 21, 1997, and vest 25% per
year on the anniversary date of the grant. Grants fully vest upon termination
incident to death, disability, or retirement. The exercise price is the average
of the high and low fair market value of SOUTHERN's common stock on the date
granted. In accordance with the terms of the Performance Stock Plan, Mr. Farris'
unexercised options expire on June 1, 2003, three years after his normal
retirement date; Mr. Scarbrough's unexercised options expire on November 1,
2004, three years after his normal retirement date; and Mr. Gignilliat's
unexercised options expire on September 3, 2000, three years after his
retirement date which was October 1, 1997.
2 A total of 1,776,094 stock options were granted in 1997 to key executives
participating in SOUTHERN's Performance Stock Plan.
3 Based on the Black-Scholes option valuation model. The actual
value, if any, an executive officer may realize ultimately depends on the market
value of SOUTHERN's common stock at a future date. This valuation is provided
pursuant to SEC disclosure rules. There is no assurance that the value realized
will be at or near the value estimated by the Black-Scholes model. Assumptions
used to calculate this value: price volatility - 17.471%; risk-free rate of
return - 6.49%; dividend yield - 3.06%; and time to exercise - 10 years. These
assumptions reflect the effects of cash dividend equivalents paid to
participants at the target rates under the Performance Dividend Plan.
|
III-20
AGGREGATED STOCK OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
Aggregated Stock Option Exercises. The following table sets forth information
concerning options exercised during the year ending December 31, 1997, by the
named executive officers and the value of unexercised options held by them as of
December 31, 1997.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Fiscal
Year-End (#) Year-End($)1
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($)2 Unexercisable Unexercisable
--------------------------------------------------------------------------------------------------------------
ALABAMA
Elmer B. Harris - - 150,793/83,300 1,191,285/356,415
Banks H. Farris - - 13,662/27,822 57,279/119,004
Charles D. McCrary - - 24,067/23,386 137,122/99,258
William B. Hutchins, III - - 23,799/22,638 136,098/96,166
GEORGIA
H. Allen Franklin - - 120,384/84,261 892,379/360,544
Warren Y. Jobe - - 30,094/24,544 188,226/104,466
Gene R. Hodges - - 25,873/23,988 156,204/101,933
Robert H. Haubein, Jr. - - 24,693/22,748 142,756/96,308
Willam C. Archer - - 5,077/17,932 18,895/71,521
GULF
Travis J. Bowden - - 65,767/39,442 500,077/168,851
Arlan E. Scarbrough - - 5,507/17,267 20,919/68,977
John E. Hodges, Jr. - - 19,172/18,419 110,017/77,679
Francis M. Fisher, Jr. - - 4,219/14,333 15,981/57,791
Robert G. Moore - - 3,116/9,893 11,846/39,628
See next page for footnotes.
|
III-21
AGGREGATED STOCK OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Fiscal
Year-End (#) Year-End($)1
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($)2 Unexercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------
MISSISSIPPI
Dwight H. Evans - - 31,172/31,322 190,266/131,171
H. E. Blakeslee - - 19,875/19,543 113,822/82,296
Don E. Mason - - 5,577/17,800 21,152/71,190
Michael W. Southern - - 3,791/12,812 14,231/51,159
Andrew J. Dearman, III - - 3,164/11,128 12,010/45,182
SAVANNAH
Arthur M. Gignilliat, Jr. - - 75,138/0 550,074/0
G. Edison Holland, Jr. - - 22,443/20,048 129,070/85,268
Larry M. Porter - - 3,490/11,532 13,265/46,469
W. Miles Greer - - 3,261/10,317 12,395/41,299
Kirby R. Willis - - 3,000/9,771 11,401/39,284
1 This represents the excess of the fair market value of SOUTHERN's common stock
of $25.875 per share, as of December 31, 1997, above the exercise price of the
options. One column reports the "value" of options that are vested and therefore
could be exercised; the other the "value" of options that are not vested and
therefore could not be exercised as of December 31, 1997.
2 The "Value Realized" is ordinary income, before taxes, and represents the
amount equal to the excess of the fair market value of the shares at the time
of exercise over the exercise price.
|
III-22
LONG-TERM INCENTIVE PLANS - AWARDS IN 1997
Long-Term Incentive Plans. The following table sets forth the long-term
incentive plan awards made to the named executive officers for the performance
period January 1, 1997 through December 31, 2000.
Estimated Future Payouts under
Non-Stock Price-Based Plans
Performance or
Other Period
Number of Until Maturation Threshold Target Maximum
Name Units (#)1 or Payout ($)2 ($)2 ($)2
------------------------------------------------------------------------------------------------------------------
ALABAMA
Elmer B. Harris 285,784 4 years 142,892 285,784 571,568
Banks H. Farris 110,500 4 years 55,250 110,500 221,000
Charles D. McCrary 81,854 4 years 40,927 81,854 163,708
William B. Hutchins, III 81,854 4 years 40,927 81,854 163,708
GEORGIA
H. Allen Franklin 324,269 4 years 162,135 324,269 648,538
Warren Y. Jobe 81,854 4 years 40,927 81,854 163,708
Gene R. Hodges 81,854 4 years 40,927 81,854 163,708
Robert H. Haubein, Jr. 74,889 4 years 37,445 74,889 149,778
William C. Archer 81,854 4 years 40,927 81,854 163,708
GULF
Travis J. Bowden 134,814 4 years 67,407 134,814 269,628
Arlan E. Scarbrough 59,686 4 years 29,843 59,686 119,372
John E. Hodges, Jr. 59,686 4 years 29,843 59,686 119,372
Francis M. Fisher, Jr. 59,686 4 years 29,843 59,686 119,372
Robert G. Moore 29,610 4 years 14,805 29,610 59,220
See next page for footnotes.
|
III-23
LONG-TERM INCENTIVE PLANS - AWARDS IN 1997
Estimated Future Payouts under
Non-Stock Price-Based Plans
Performance or
Other Period
Number of Until Maturation Threshold Target Maximum
Name Units (#)1 or Payout ($)2 ($)2 ($)2
-------------------------------------------------------------------------------------------------------------------
MISSISSIPPI
Dwight H. Evans 134,814 4 years 67,407 134,814 269,628
H. E. Blakeslee 59,686 4 years 29,843 59,686 119,372
Don E. Mason 59,686 4 years 29,843 59,686 119,372
Michael W. Southern 42,635 4 years 21,318 42,635 85,270
Andrew J. Dearman, III 42,635 4 years 21,318 42,635 85,270
SAVANNAH
Arthur M. Gignilliat, Jr.3 N/A N/A N/A N/A N/A
G. Edison Holland, Jr. 59,686 4 years 29,843 59,686 119,372
Larry M. Porter 42,635 4 years 21,318 42,635 85,270
W. Miles Greer 42,635 4 years 21,318 42,635 85,270
Kirby R. Willis 42,635 4 years 21,318 42,635 85,270
1 A performance unit is a method of assigning a dollar value to a performance
award opportunity. Under the Productivity Improvement Plan (the "Plan") of
SOUTHERN, the number of units granted to named executive officers is 50 to 65
percent of their base salary range mid-point at the beginning of the performance
period, with each unit valued at $1.00. No awards are paid unless the
participant remains employed by the company through the end of the performance
period.
2 The threshold, target and maximum value of a unit is $0.50, $1.00, and
$2.00, respectively, and can vary based on SOUTHERN's return on common equity
and total shareholder return relative to selected groups of electric and gas
utilities. If certain minimum performance relative to the selected groups is not
achieved, there will be no payout; nor is there a payout if the current earnings
of SOUTHERN are not sufficient to fund the dividend rate paid in the last
calendar year. The Plan provides that in the discretion of the committee
extraordinary income may be excluded for purposes of calculating the amount
available for the payment of awards. All awards are payable in cash at the end
of the performance period.
3 Not applicable due to Mr. Gignilliat's retirement on October 1, 1997.
|
III-24
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
Pension Plan Table. The following table sets forth the estimated combined annual pension benefits under the Pension, Supplemental Defined Benefit, and Supplemental Executive Retirement Plans in effect during 1997 for the named executives at ALABAMA, GEORGIA, GULF and MISSISSIPPI and Messrs. Gignilliat and Holland at SAVANNAH. Employee compensation covered by the Pension, Supplemental Benefit, and Supplemental Executive Retirement Plans for pension purposes is limited to the average of the highest three of the final 10 years' compensation -- base salary plus the excess of annual and long-term incentive compensation over 25 percent of base salary (reported under column titled "Salary", "Bonus", and "Long-Term Incentive Payouts" in the Summary Compensation Tables on pages III-13 through III-18).
The amounts shown in the table were calculated according to the final average pay formula and are based on a single life annuity without reduction for joint and survivor annuities (although married employees are required to have their pension benefits paid in one of various joint and survivor annuity forms, unless the employee elects otherwise with the spouse's consent) or computation of the Social Security offset which would apply in most cases. This offset amounts to one-half of the estimated Social Security benefit (primary insurance amount) in excess of $3,900 per year times the number of years of accredited service, divided by the total possible years of accredited service to normal retirement age.
Years of Accredited Service
Remuneration 15 20 25 30 35 40
------------ -----------------------------------------------------------------
$ 100,000 25,500 34,000 42,500 51,000 59,500 68,000
300,000 76,500 102,000 127,500 153,000 178,500 204,000
500,000 127,500 170,000 212,500 255,000 297,500 340,000
700,000 178,500 238,000 297,500 357,000 416,500 476,000
900,000 229,500 306,000 382,500 459,000 535,500 612,000
1,100,000 380,500 374,000 467,500 561,000 654,500 748,000
|
As of December 31, 1997, the applicable compensation levels and years of accredited service are presented in the following tables:
ALABAMA
Compensation Accredited
Name Level Years of Service
Elmer B. Harris $839,724 39
Banks H. Farris 372,912 38
Charles D. McCrary 324,528 23
William B. Hutchins, III 306,456 31
|
III-25
GEORGIA
Compensation Accredited
Name Level Years of Service
H. Allen Franklin $908,664 26
Warren Y. Jobe1 334,656 26
Gene R. Hodges 331,092 33
Robert H. Haubein, Jr. 312,216 30
William C. Archer 258,780 26
GULF
Compensation Accredited
Name Level Years of Service
Travis J. Bowden2 $471,636 31
Arlan E. Scarbrough 236,436 34
John E. Hodges, Jr. 242,940 31
Francis M. Fisher, Jr. 218,364 26
Robert G. Moore 166,296 24
MISSISSIPPI
Compensation Accredited
Name Level Years of Service
Dwight H. Evans $360,732 26
H. E. Blakeslee 264,744 32
Don E. Mason 254,556 31
Michael W. Southern 205,272 22
Andrew J. Dearman, III 162,552 22
SAVANNAH
Compensation Accredited
Name Level Years of Service
Arthur M. Gignilliat $354,456 37
G. Edison Holland, Jr.3 255,768 15
Larry M. Porter 139,788 20
W. Miles Greer 133,860 13
Kirby R. Willis 126,180 23
|
1 The number of accredited years of service includes 8 years credited to Mr.
Jobe pursuant to a supplemental pension agreement.
2 The number of accredited years of service includes 10 years credited to
Mr. Bowden pursuant to a supplemental pension agreement.
3 The number of accredited years of service includes 10 years credited to
Mr. Holland pursuant to a supplemental pension agreement.
III-26
SAVANNAH has in effect a qualified, trusteed, noncontributory, defined benefit pension plan which provides pension benefits to employees upon retirement at the normal retirement age after designated periods of accredited service and at a specified compensation level. The plan provides pension benefits under a formula which includes each participant's years of service with the Southern system and average annual earnings (excluding incentive compensation) of the highest three of the final 10 years of service with the Southern system preceding retirement. Plan benefits are reduced by a portion of the benefits participants are entitled to receive under Social Security. The plan provides for reduced early retirement benefits at age 55 and a pension for the surviving spouse equal to one-half of the deceased retiree's pension.
SAVANNAH also has in effect a supplemental executive retirement plan for certain of its executive employees. The plan is designed to provide participants with a supplemental retirement benefit, which, in conjunction with social security and benefits under SAVANNAH's qualified pension plan, will equal 70 percent of the highest three of the final 10 years' average annual earnings (excluding incentive compensation).
The following table sets forth the estimated combined annual pension benefits under SAVANNAH's pension and supplemental executive retirement plans in effect during 1997 which are payable to SAVANNAH's named executives, except Messrs. Gignilliat and Holland who participate in the plans described on page III-25, upon retirement at the normal retirement age after designated periods of accredited service and at a specified compensation level.
Years of Accredited Service
Remuneration 15 25 35
-------------------------- -- -- --
$ 90,000 $ 63,000 $ 63,000 $ 63,000
120,000 84,000 84,000 84,000
150,000 105,000 105,000 105,000
180,000 126,000 126,000 126,000
210,000 147,000 147,000 147,000
260,000 182,000 182,000 182,000
280,000 196,000 196,000 196,000
300,000 210,000 210,000 210,000
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III-27
Compensation of Directors.
Standard Arrangements. The following table presents compensation paid to the directors, during 1997 for service as a member of the board of directors and any board committee(s), except that employee directors received no fees or compensation for service as a member of the board of directors or any board committee. All or a portion of these fees payable in cash may be deferred under the Deferred Compensation Plan until membership on the board is terminated or may be payable in SOUTHERN common stock at the election of the director.
ALABAMA GEORGIA GULF MISSISSIPPI SAVANNAH
Cash Retainer Fee $17,000 $20,000 $10,000 $10,000 $10,000
Stock Retainer Fee $3,000 $3,000 $2,000 $2,000 $2,000
Meeting Fee 900 900 750 750 750
Committees:
Audit 900 900 750 750 750
Compensation 900 900 750 750 750
Executive 900 900 - - 750
Finance - 900 - 750 -
Nominating 900 - - - -
Nuclear Safety 900 - - - -
Nuclear Operations
Overview - 1,800 - - -
|
Effective January 1, 1997, the Outside Directors Pension Plan (the "Plan") was terminated and benefits payable under the Plan were frozen. Non-employee directors serving as of January 1, 1997, were given a one-time election to receive a Plan benefit buy-out equal to the actuarial present value of future Plan benefits or receive benefits under the terms of the Plan at the annual retainer rate in effect on December 31, 1996. Directors who elected to receive the benefit buy-out were required to defer receipt of that amount under the Deferred Compensation Plan until termination from board membership. Directors who elected to continue to participate under the terms of the Plan are entitled to benefits upon retirement from the board on the retirement date designated in the respective companies' by-laws. The annual benefit payable is based upon length of service and varies from 75 percent of the annual retainer in effect on December 31, 1996, if the participant has at least 60 months of service on the board of one or more system companies, to 100 percent if the participant has at least 120 months of such service. Payments will continue for the greater of the lifetime of the participant or 10 years.
Other Arrangements. No director received other compensation for services as a director during the year ending December 31, 1997 in addition to or in lieu of that specified by the standard arrangements specified above.
III-28
Employment Contracts and Termination of Employment and Change in Control Arrangements.
None.
Report on Repricing of Options.
None.
Compensation Committee Interlocks and Insider Participation.
None.
III-29
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security ownership of certain beneficial owners. SOUTHERN is the beneficial owner of 100% of the outstanding common stock of registrants: ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH.
Amount and
Name and Address Nature of Percent
of Beneficial Beneficial of
Title of Class Owner Ownership Class
Common Stock The Southern Company 100%
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Registrants:
ALABAMA 5,608,955
GEORGIA 7,761,500
GULF 992,717
MISSISSIPPI 1,121,000
SAVANNAH 10,844,635
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Security ownership of management. The following table shows the number of shares of SOUTHERN common stock and operating subsidiary preferred stock owned by the directors, nominees and executive officers as of December 31, 1997. It is based on information furnished by the directors, nominees and executive officers. The shares owned by all directors, nominees and executive officers as a group constitute less than one percent of the total number of shares of the respective classes outstanding on December 31, 1997.
Name of Directors,
Nominees and Number of Shares
Executive Officers Title of Class Beneficially Owned1,2
ALABAMA
Whit Armstrong SOUTHERN Common 16,028
A. William Dahlberg SOUTHERN Common 255,790
Peter V. Gregerson, Sr. SOUTHERN Common 439
Bill M. Guthrie SOUTHERN Common 139,031
Elmer B. Harris SOUTHERN Common 204,339
Carl E. Jones, Jr. SOUTHERN Common 10,641
Patricia M. King SOUTHERN Common 34
James K. Lowder SOUTHERN Common 4,721
III-30
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Name of Directors,
Nominees and Number of Shares
Executive Officers Title of Class Beneficially Owned1,2
Wallace D. Malone, Jr. SOUTHERN Common 400
William V. Muse SOUTHERN Common 439
John T. Porter SOUTHERN Common 850
Robert D. Powers SOUTHERN Common 439
C. Dowd Ritter SOUTHERN Common 34
John W. Rouse, Jr. SOUTHERN Common 4,694
William J. Rushton, III SOUTHERN Common 7,607
ALABAMA Preferred 20
James H. Sanford SOUTHERN Common 400
John C. Webb, IV SOUTHERN Common 19,237
Banks H. Farris SOUTHERN Common 16,802
William B. Hutchins, III SOUTHERN Common 46,463
Charles D. McCrary SOUTHERN Common 30,576
The directors, nominees,
and executive officers
as a group SOUTHERN Common 758,964
ALABAMA Preferred 20
GEORGIA
Daniel P. Amos SOUTHERN Common 2,601
Juanita P. Baranco SOUTHERN Common 51
A. William Dahlberg SOUTHERN Common 255,790
W. A. Fickling, Jr. SOUTHERN Common 908
|
III-31
Name of Directors,
Nominees and Number of Shares
Executive Officers Title of Class Beneficially Owned1,2
H. Allen Franklin SOUTHERN Common 146,255
L. G. Hardman III SOUTHERN Common 14,816
Warren Y. Jobe SOUTHERN Common 60,369
GEORGIA Preferred 200
James R. Lientz, Jr. SOUTHERN Common 617
G. Joseph Prendergast SOUTHERN Common 659
Herman J. Russell SOUTHERN Common 8,414
Gloria M. Shatto SOUTHERN Common 17,459
GEORGIA Preferred 1,200
W. J. Vereen SOUTHERN Common 5,376
Carl Ware SOUTHERN Common 108
Thomas R. Williams SOUTHERN Common 398
GEORGIA Preferred 1,000
William C. Archer, III SOUTHERN Common 18,918
GEORGIA Preferred 666
Robert H. Haubein, Jr. SOUTHERN Common 27,243
Gene R. Hodges SOUTHERN Common 40,856
The directors, nominees
and executive officers
as a group SOUTHERN Common 690,473
GEORGIA Preferred 3,066
III-32
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Name of Directors,
Nominees and Number of Shares
Executive Officers Title of Class Beneficially Owned1,2
GULF
Travis J. Bowden SOUTHERN Common 98,742
Paul J. DeNicola SOUTHERN Common 109,746
Fred C. Donovan SOUTHERN Common 1,059
W. Deck Hull, Jr. SOUTHERN Common 2,753
Joseph K. Tannehill SOUTHERN Common 4,344
Barbara H. Thames SOUTHERN Common 78
Francis M Fisher, Jr. SOUTHERN Common 10,212
John E. Hodges, Jr. SOUTHERN Common 43,001
Robert G. Moore SOUTHERN Common 17,857
Arlan E. Scarbrough SOUTHERN Common 28,457
The directors, nominees
and executive officers
as a group SOUTHERN Common 316,248
MISSISSIPPI
Paul J. DeNicola SOUTHERN Common 109,746
Edwin E. Downer SOUTHERN Common 2,671
Dwight H. Evans SOUTHERN Common 51,740
GEORGIA Preferred 400
MISSISSIPPI Preferred 200
SOUTHERN Preferred 200
Robert S. Gaddis SOUTHERN Common 3,019
|
III-33
Name of Directors,
Nominees and Number of Shares
Executive Officers Title of Class Beneficially Owned1,2
Walter H. Hurt, III SOUTHERN Common 1,291
MISSISSIPPI Preferred 33
Aubrey K. Lucas SOUTHERN Common 3,581
George A. Schloegel SOUTHERN Common 389
Philip J. Terrell SOUTHERN Common 632
N. Eugene Warr SOUTHERN Common 688
H. E. Blakeslee SOUTHERN Common 26,953
Andrew J. Dearman, III SOUTHERN Common 11,674
Don E. Mason SOUTHERN Common 27,313
Michael W. Southern SOUTHERN Common 7,430
The directors, nominees
and executive officers
as a group SOUTHERN Common 247,127
GEORGIA Preferred 400
MISSISSIPPI Preferred 233
SOUTHERN Preferred 200
SAVANNAH
Archie H. Davis SOUTHERN Common 108
Paul J. DeNicola SOUTHERN Common 109,746
Walter D. Gnann SOUTHERN Common 1,334
G. Edison Holland SOUTHERN Common 24,416
Robert B. Miller, III SOUTHERN Common 2,318
Arnold M. Tenenbaum SOUTHERN Common 699
III-34
|
Name of Directors, Nominees and Number of Shares Executive Officers Title of Class Beneficially Owned 1,2 W. Miles Greer SOUTHERN Common 5,817 Larry M. Porter SOUTHERN Common 19,297 Kirby R. Willis SOUTHERN Common 8,054 The directors, nominees and executive officers as a group SOUTHERN Common 171,788 Changes in control. SOUTHERN and the operating affiliates know of no arrangements which may at a subsequent date result in any change in control. -------- 1 As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security and/or investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). 2 The shares shown include shares of SOUTHERN common stock of which certain directors and executive officers have the right to acquire beneficial ownership within 60 days pursuant to the Executive Stock Plan, as follows: Mr. Blakeslee, 19,875 shares; Mr. Bowden, 65,767 shares; Mr. Dahlberg, 193,347 shares; Mr. DeNicola, 75,791 shares; Mr. Evans, 31,172 shares; Mr. Farris, 13,662 shares; Mr. Franklin, 120,384 shares; Mr. Greer, 3,261 shares; Mr. Guthrie, 91,055 shares; Mr. Harris, 150,793 shares; Mr. Haubein, 24,693 shares; Mr. G. R. Hodges, 25,873 shares; Mr. J. E. Hodges, 19,172 shares; Mr. Holland, 22,443 shares; Mr. Hutchins, 23,799 shares; Mr. Jobe, 30,094 shares; Mr. Mason, 5,577 shares; Mr. McCrary, 24,067 shares; Mr. Porter, 3,490 shares; Mr. Scarbrough, 5,507 shares; Mr. Southern, 3,791 shares; and Mr. Willis, 3,000 shares. Also included are shares of SOUTHERN common stock held by the spouses of the following directors: Mr. Bowden, 500 shares; Mr. Gaddis, 1,200 shares; Mr. Hardman, 100 shares; Mr. Harris, 310 shares; and Dr. Shatto, 13,438 shares. Also included are shares of common stock held in the Southern Company Deferred Stock Trust of which certain directors have the power to direct the voting, as follows: Mr. Hardman, 6,019 shares; Mr. Rushton, 400 shares and Dr. Shatto, 400 shares. Also included are 1,200 shares of GEORGIA preferred stock held by Dr. Shatto's spouse. |
III-35
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ALABAMA
Transactions with management and others.
Mr. Whit Armstrong is President, Chairman and Chief Executive Officer of The Citizens Bank, Enterprise, Alabama; Mr. Carl E. Jones, Jr. is President and Chief Executive Officer of Regions Financial Corporation, Birmingham, Alabama; Mr. Wallace D. Malone is Chairman and Chief Executive Officer of SouthTrust Corporation, Birmingham, Alabama. Mr. Ritter is Chairman, President, Chief Executive Officer and Director of AmSouth Bancorporation and AmSouth Bank, Birmingham, Alabama. During 1997, these banks furnished a number of regular banking services in the ordinary course of business to ALABAMA. ALABAMA intends to maintain normal banking relations with all the aforesaid banks in the future.
Certain business relationships.
None.
Indebtedness of management.
None.
Transactions with promoters.
None.
GEORGIA
Transactions with management and others.
Mr. L. G. Hardman III is Chairman of the Board of The First National Bank of Commerce, Georgia; Mr. James R. Lientz, Jr. is President of NationsBank of Georgia, Atlanta, Georgia; Mr. G. Joseph Prendergast is Chairman of Wachovia Bank of Georgia, N.A., Atlanta, Georgia; and Mr. Herman J. Russell is Chairman of the Board of Citizens Trust Bank, Atlanta, Georgia. During 1997, these banks furnished a number of regular banking services in the ordinary course of business to GEORGIA. GEORGIA intends to maintain normal banking relations with all the aforesaid banks in the future.
In 1997, GEORGIA leased a building from Riverside Manufacturing Co. for approximately $80,511. Also, Riverside Manufacturing sold to GEORGIA fire retardant uniforms for $104,687. Mr. William J. Vereen is Chief Executive Officer, President, Treasurer and Director of Riverside Manufacturing Co.
Certain business relationships.
None.
Indebtedness of management.
None.
Transactions with promoters.
None.
GULF
Transactions with management and others.
Mr. W. Deck Hull, Jr. was Vice Chairman of SunTrust Bank, West Florida, Panama City, Florida from 1993 to 1997. During 1997, this bank furnished a number of regular banking services in the ordinary course of business to GULF. GULF intends to maintain normal banking relations with the aforesaid bank in the future.
In 1997, GULF paid to Merrick Industries, Inc. $303,782 for replacement parts for existing equipment and for the purchase and installation of coal feeders for Plant Smith. Mr. Tannehill is President and Chief Executive Officer of Merrick Industries, Inc.
Certain business relationships.
None.
Indebtedness of management.
None.
Transactions with promoters.
None.
MISSISSIPPI
Transactions with management and others.
Mr. Robert S. Gaddis is Chairman of the Advisory Board of Trustmark National Bank, Laurel, Mississippi; Mr. George A. Schloegel is President of Hancock Bank, Gulfport, Mississippi. During 1997, these banks furnished a number of regular banking services in the ordinary course of business to MISSISSIPPI. MISSISSIPPI intends to maintain normal banking relations with the aforesaid banks in the future.
III-36
Certain business relationships.
None.
Indebtedness of management.
None.
Transactions with promoters.
None.
SAVANNAH
Transactions with management and others.
None
Certain business relationships.
None.
Indebtedness of management.
None.
Transactions with promoters.
None.
III-37
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report on this Form 10-K:
(1) Financial Statements:
Reports of Independent Public Accountants on the financial statements for SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH are listed under Item 8 herein.
The financial statements filed as a part of this report for SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH are listed under Item 8 herein.
(2) Financial Statement Schedules:
Reports of Independent Public Accountants as to Schedules for SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH are included herein on pages IV-12 through IV-17.
Financial Statement Schedules for SOUTHERN and Subsidiary Companies, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH are listed in the Index to the Financial Statement Schedules at page S-1.
(3) Exhibits:
Exhibits for SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH
are listed in the Exhibit Index at page E-1.
(b) Reports on Form 8-K during the fourth quarter of 1997 were as follows:
ALABAMA filed a Current Report on Form 8-K:
Date of event: December 4, 1997
Items reported: Items 5 and 7
IV-1
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
THE SOUTHERN COMPANY
By: A. W. Dahlberg, Chairman, President and Chief Executive Officer
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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 and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
A. W. Dahlberg
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
W. L. Westbrook
Financial Vice President, Chief Financial Officer and
Treasurer
(Principal Financial and Accounting Officer)
Directors:
John C. Adams Elmer B. Harris
A. D. Correll William J. Rushton, III
Paul J. DeNicola Gloria M. Shatto
Jack Edwards Gerald J. St. Pe'
H. Allen Franklin Herbert Stockham
Bruce S. Gordon
L. G. Hardman III
|
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
ALABAMA POWER COMPANY
By: Elmer B. Harris, President and Chief Executive Officer
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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 and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Elmer B. Harris
President, Chief Executive Officer and Director
(Principal Executive Officer)
William B. Hutchins, III
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Art P. Beattie
Vice President, Secretary and Comptroller
(Principal Accounting Officer)
Directors:
Whit Armstrong John T. Porter
Peter V. Gregerson, Sr. Robert D. Powers
Bill M. Guthrie Andreas Renschler
Carl E. Jones, Jr. C. Dowd Ritter
Patricia M. King John W. Rouse
James K. Lowder James H. Sanford
Wallace D. Malone, Jr. John Cox Webb, IV
|
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
IV-2
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
GEORGIA POWER COMPANY
By: H. Allen Franklin, President and Chief Executive Officer
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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 and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
H. Allen Franklin
President, Chief Executive Officer and Director
(Principal Executive Officer)
Warren Y. Jobe
Executive Vice President, Chief Financial Officer and Director
(Principal Financial Officer)
Cliff S. Thrasher
Vice President, Comptroller and Chief Accounting Officer
(Principal Accounting Officer)
Directors:
Daniel P. Amos G. Joseph Prendergast
Juanita P. Baranco Herman J. Russell
A. W. Dahlberg Gloria M. Shatto
William A. Fickling, Jr. William Jerry Vereen
L. G. Hardman III Carl Ware
James R. Lientz, Jr. Thomas R. Williams
|
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
GULF POWER COMPANY
By: Travis J. Bowden, President and Chief Executive Officer
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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 and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Travis J. Bowden
President, Chief Executive Officer and Director
(Principal Executive Officer)
Arlan E. Scarbrough
Vice President - Finance
(Principal Financial and Accounting Officer)
Directors:
Paul J. DeNicola Joseph K. Tannehill
Fred C. Donovan Barbara H. Thames
W. Deck Hull, Jr.
|
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
IV-3
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
MISSISSIPPI POWER COMPANY
By: Dwight H. Evans, President and Chief Executive Officer
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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 and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
Dwight H. Evans
President, Chief Executive Officer and Director
(Principal Executive Officer)
Michael W. Southern
Vice President, Secretary, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
Paul J. DeNicola Aubrey K. Lucas
Edwin E. Downer George A. Schloegel
Robert S. Gaddis Philip J. Terrell
Walter H. Hurt, III Gene Warr
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
|
Date: March 30, 1998
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. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
SAVANNAH ELECTRIC AND POWER COMPANY
By: G. Edison Holland, Jr., President and Chief Executive Officer
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
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 and in the capacities and on the dates indicated. The signature of each of the undersigned shall be deemed to relate only to matters having reference to the above-named company and any subsidiaries thereof.
G. Edison Holland, Jr.
President, Chief Executive Officer and Director
(Principal Executive Officer)
Kirby R. Willis
Vice President, Treasurer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Directors:
Archie H. Davis Robert B. Miller, III
Paul J. DeNicola Arnold M. Tenenbaum
Walter D. Gnann
|
By: Wayne Boston
(Wayne Boston, Attorney-in-fact)
Date: March 30, 1998
IV-4
Exhibit 21. Subsidiaries of the Registrants.*
Jurisdiction of
Name of Company Organization
-----------------------------------------------------------------------------------------------------------------------
The Southern Company Delaware
Southern Company Capital Trust I Delaware
Southern Company Capital Trust II Delaware
Southern Company Capital Trust III Delaware
Alabama Power Company Alabama
Alabama Power Capital Trust I Delaware
Alabama Power Capital Trust II Delaware
Alabama Power Capital Trust III Delaware
Alabama Power Capital Trust IV Delaware
Alabama Power Capital Trust V Delaware
Alabama Property Company Alabama
Southern Electric Generating Company Alabama
Georgia Power Company Georgia
Georgia Power Capital Trust I Delaware
Georgia Power Capital Trust II Delaware
Georgia Power Capital Trust III Delaware
Georgia Power Capital Trust IV Delaware
Georgia Power Capital Trust V Delaware
Georgia Power Capital Trust VI Delaware
Georgia Power L.P. Holdings Corp. Georgia
Georgia Power Capital, L.P. Delaware
Piedmont-Forrest Corporation Georgia
Southern Electric Generating Company Alabama
Gulf Power Company Maine
Gulf Power Capital Trust I Delaware
Gulf Power Capital Trust II Delaware
Gulf Power Capital Trust III Delaware
Mississippi Power Company Mississippi
Mississippi Power Capital Trust I Delaware
Mississippi Power Capital Trust II Delaware
Mississippi Power Capital Trust III Delaware
Savannah Electric and Power Company Georgia
Southern Energy, Inc. Delaware
--------------------------------------------------------------------------------------------- --- ---------------------
*This information is as of December 31, 1997. In addition, the list omits
certain subsidiaries pursuant to paragraph (b)(21)(ii) of Regulation S-K Item
601.
|
IV-5
Exhibit 23(a)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports dated February 11, 1998 on the financial statements of The Southern Company and its subsidiaries and the related financial statement schedule, included in this Form 10-K, into The Southern Company's previously filed Registration Statement File Nos. 2-78617, 33-3546, 33-30171, 33-51433, 33-54415, 33-57951, 33-58371, 33-60427, 333-09077, 333-44127 and 333-44261.
/s/ Arthur Andersen LLP Atlanta, Georgia March 27, 1998 |
IV-6
Exhibit 23(b)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports dated February 11, 1998 on the financial statements of Alabama Power Company and the related financial statement schedule, included in this Form 10-K, into Alabama Power Company's previously filed Registration Statement File Nos. 33-49653, 33-61845 and 333-40629.
/s/ Arthur Andersen LLP Birmingham, Alabama March 27, 1998 |
IV-7
Exhibit 23(c)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports dated February 11, 1998 on the financial statements of Georgia Power Company and the related financial statement schedule, included in this Form 10-K, into Georgia Power Company's previously filed Registration Statement File Nos. 33-60345 and 333-43895.
/s/ Arthur Andersen LLP Atlanta, Georgia March 27, 1998 |
IV-8
Exhibit 23(d)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports dated February 11, 1998 on the financial statements of Gulf Power Company and the related financial statement schedule, included in this Form 10-K, into Gulf Power Company's previously filed Registration Statement File Nos. 33-50165 and 333-42033.
/s/ Arthur Andersen LLP Atlanta, Georgia March 27, 1998 |
IV-9
Exhibit 23(e)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports dated February 11, 1998 on the financial statements of Mississippi Power Company and the related financial statement schedule, included in this Form 10-K, into Mississippi Power Company's previously filed Registration Statement File Nos. 33-49649, 333-20469 and 333-45069.
/s/ Arthur Andersen LLP Atlanta, Georgia March 27, 1998 |
IV-10
Exhibit 23(f)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports dated February 11, 1998 on the financial statements of Savannah Electric and Power Company and the related financial statement schedule, included in this Form 10-K, into Savannah Electric and Power Company's previously filed Registration Statement File Nos. 33-52509 and 333-46171.
/s/ Arthur Andersen LLP Atlanta, Georgia March 27, 1998 |
IV-11
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
To The Southern Company:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements of The Southern Company and its subsidiaries included in this Form 10-K, and have issued our report thereon dated February 11, 1998. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under Item 14(a)(2) herein as it relates to The Southern Company and its subsidiaries (page S-2) is the responsibility of The Southern Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
IV-12
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
To Alabama Power Company:
We have audited in accordance with generally accepted auditing standards, the financial statements of Alabama Power Company included in this Form 10-K, and have issued our report thereon dated February 11, 1998. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under Item 14(a)(2) herein as it relates to Alabama Power Company (page S-3) is the responsibility of Alabama Power Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP Birmingham, Alabama February 11, 1998 |
IV-13
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
To Georgia Power Company:
We have audited in accordance with generally accepted auditing standards, the financial statements of Georgia Power Company included in this Form 10-K, and have issued our report thereon dated February 11, 1998. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under Item 14(a)(2) herein as it relates to Georgia Power Company (page S-4) is the responsibility of Georgia Power Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
IV-14
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
To Gulf Power Company:
We have audited in accordance with generally accepted auditing standards, the financial statements of Gulf Power Company included in this Form 10-K, and have issued our report thereon dated February 11, 1998. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under Item 14(a)(2) herein as it relates to Gulf Power Company (page S-5) is the responsibility of Gulf Power Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
IV-15
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
To Mississippi Power Company:
We have audited in accordance with generally accepted auditing standards, the financial statements of Mississippi Power Company included in this Form 10-K, and have issued our report thereon dated February 11, 1998. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under Item 14(a)(2) herein as it relates to Mississippi Power Company (page S-6) is the responsibility of Mississippi Power Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
IV-16
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
To Savannah Electric and Power Company:
We have audited in accordance with generally accepted auditing standards, the financial statements of Savannah Electric and Power Company included in this Form 10-K, and have issued our report thereon dated February 11, 1998. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed under Item 14(a)(2) herein as it relates to Savannah Electric and Power Company (page S-7) is the responsibility of Savannah Electric and Power Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP Atlanta, Georgia February 11, 1998 |
IV-17
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule Page
II Valuation and Qualifying Accounts and Reserves
1997, 1996 and 1995
The Southern Company and Subsidiary Companies.......................................................... S-2
Alabama Power Company.................................................................................. S-3
Georgia Power Company.................................................................................. S-4
Gulf Power Company..................................................................................... S-5
Mississippi Power Company.............................................................................. S-6
Savannah Electric and Power Company.................................................................... S-7
Schedules I through V not listed above are omitted as not applicable or not
required. Columns omitted from schedules filed have been omitted because the
information is not applicable or not required.
|
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Stated in Thousands of Dollars)
Additions
----------------------------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
----------------------------------- ------------------------ -------------- ------------------- --------------- ----------------
Provision for uncollectible
accounts
1997.......................... $31,587 $35,930 $36,290 (2) $26,751 $77,056
1996.......................... 37,119 24,768 48 30,348 (1) 31,587
1995.......................... 9,129 30,445 23,053 (3) 25,508 (1) 37,119
-------------------
Notes:
(1) Represents write-off of accounts considered to be uncollectible, less
recoveries of amounts previously written off.
(2) Includes the addition of a Purchased Reserve in the amount of $37,000
related to the acquisition of CEPA.
(3) Includes the addition of a Purchased Reserve in the amount of
$23,027 related to the acquisition of SWEB.
|
ALABAMA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Stated in Thousands of Dollars)
Additions
---------------------------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------- -------------------------- --------------- ------------------ -------------------------------
Provision for uncollectible
accounts
1997.......................... $1,171 $8,580 $- $7,479 (Note) $2,272
1996.......................... 1,212 8,214 - 8,255 (Note) 1,171
1995.......................... 2,297 5,823 - 6,908 (Note) 1,212
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off.
|
GEORGIA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Stated in Thousands of Dollars)
Additions
---------------------------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
--------------------------------- ----------------------- -------------- ------------------ ----------------- ----------------
Provision for uncollectible
accounts
1997.......................... $4,000 $ 7,888 $- $ 8,888 (Note) $3,000
1996.......................... 5,000 11,815 - 12,815 (Note) 4,000
1995.......................... 4,500 15,875 - 15,375 (Note) 5,000
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off.
|
GULF POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Stated in Thousands of Dollars)
Additions
--------------------------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------- ------------------------ --------------- ------------------ ---------------- ---------------
Provision for uncollectible
accounts
1997.......................... $789 $1,350 $- $1,343 (Note) $796
1996.......................... 768 1,850 7 1,836 (Note) 789
1995.......................... 600 1,612 3 1,447 (Note) 768
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off.
|
MISSISSIPPI POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Stated in Thousands of Dollars)
Additions
--------------------------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
---------------------------------- ------------------------- -------------- ------------------ ---------------- ---------------
Provision for uncollectible
accounts
1997.......................... $839 $1,128 $56 $1,325 (Note) $698
1996.......................... 802 1,726 41 1,730 (Note) 839
1995.......................... 670 1,602 23 1,493 (Note) 802
-------------------
Note: Represents write-off of accounts considered to be uncollectible, less recoveries of amounts previously written off.
|
SAVANNAH ELECTRIC AND POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(Stated in Thousands of Dollars)
Additions
-------------------------------------
Balance at Beginning Charged to Charged to Other Balance at End
Description of Period Income Accounts Deductions of Period
------------------------------------ ---------------------- ------------ ------------------ --------------- -----------------
Provision for uncollectible
accounts
1997.......................... $632 $192 $- $470 (Note) $354
1996.......................... 983 126 - 477 (Note) 632
1995.......................... 866 439 - 322 (Note) 983
-------------------
Note: Represents write-off of accounts receivable considered to be uncollectible, less recoveries of amounts previously written
off.
|
EXHIBIT INDEX
The following exhibits indicated by an asterisk preceding the exhibit number are filed herewith. The balance of the exhibits have heretofore been filed with the SEC, respectively, as the exhibits and in the file numbers indicated and are incorporated herein by reference. Reference is made to a duplicate list of exhibits being filed as a part of this Form 10-K, which list, prepared in accordance with Item 601 of Regulation S-K of the SEC, immediately precedes the exhibits being physically filed with this Form 10-K.
(1) Underwriting Agreements
GEORGIA
(c) - Distribution Agreement dated November 29, 1995 between GEORGIA and Lehman Brothers Inc.; Donaldson, Lufkin & Jenrette Securities Corporation; J. P. Morgan Securities Inc.; Salomon Brothers Inc and Smith Barney Inc. relating to $300,000,000 First Mortgage Bonds Secured Medium-Term Notes. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1995, as Exhibit 1(c).)
(3) Articles of Incorporation and By-Laws
SOUTHERN
(a) 1 - Composite Certificate of Incorporation of SOUTHERN, reflecting all amendments thereto through January 5, 1994. (Designated in Registration No. 33-3546 as Exhibit 4(a), in Certificate of Notification, File No. 70-7341, as Exhibit A and in Certificate of Notification, File No. 70-8181, as Exhibit A.)
(a) 2 - By-laws of SOUTHERN as amended effective October 21, 1991, and as presently in effect. (Designated in Form U-1, File No.
70-8181, as Exhibit A-2.)
ALABAMA
(b) 1 - Charter of ALABAMA and amendments thereto through October
14, 1994. (Designated in Registration Nos. 2-59634 as Exhibit
2(b), 2-60209 as Exhibit 2(c), 2-60484 as Exhibit 2(b),
2-70838 as Exhibit 4(a)-2, 2-85987 as Exhibit 4(a)-2, 33-25539
as Exhibit 4(a)-2, 33-43917 as Exhibit 4(a)-2, in Form 8-K
dated February 5, 1992, File No. 1-3164, as Exhibit 4(b)-3, in
Form 8-K dated July 8, 1992, File No. 1-3164, as Exhibit
4(b)-3, in Form 8-K dated October 27, 1993, File No. 1-3164,
as Exhibits 4(a) and 4(b), in Form 8-K dated November 16,
1993, File No. 1-3164, as Exhibit 4(a) and in Certificate of
Notification, File No. 70-8191, as Exhibit A.)
* (b) 2 - Amendment to the Charter of ALABAMA dated December 15, 1997.
(b) 3 - By-laws of ALABAMA as amended effective July 23, 1993, and as presently in effect. (Designated in Form U-1, File No.
70-8191, as Exhibit A-2.)
GEORGIA
(c) 1 - Charter of GEORGIA and amendments thereto through October
25, 1993. (Designated in Registration Nos. 2-63392 as Exhibit
2(a)-2, 2-78913 as Exhibits 4(a)-(2) and 4(a)-(3), 2-93039 as
Exhibit 4(a)-(2), 2-96810 as Exhibit 4(a)-2, 33-141 as Exhibit
4(a)-(2), 33-1359 as Exhibit 4(a)(2), 33-5405 as Exhibit
4(b)(2), 33-14367 as Exhibits 4(b)-(2) and 4(b)-(3), 33-22504
as Exhibits 4(b)-(2), 4(b)-(3) and 4(b)-(4), in GEORGIA's Form
10-K for the year ended December 31, 1991, File No. 1-6468, as
Exhibits 4(a)(2) and 4(a)(3), in Registration No. 33-48895 as
Exhibits 4(b)-(2) and 4(b)-(3), in Form 8-K dated December 10,
1992, File No. 1-6468 as Exhibit 4(b), in Form 8-K dated June
17, 1993, File No. 1-6468, as Exhibit 4(b) and in Form 8-K
dated October 20, 1993, File No. 1-6468, as Exhibit 4(b).)
* (c) 2 - Amendment to the Charter of GEORGIA dated January 26, 1998.
(c) 3 - By-laws of GEORGIA as amended effective July 18, 1990, and as presently in effect. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 3.)
GULF
(d) 1 - Restated Articles of Incorporation of GULF and amendments thereto through November 8, 1993. (Designated in Registration No. 33-43739 as Exhibit 4(b)-1, in Form 8-K dated January 15, 1992, File No. 0-2429, as Exhibit 1(b), in Form 8-K dated August 18, 1992, File No. 0-2429, as Exhibit 4(b)-2, in Form 8-K dated September 22, 1993, File No. 0-2429, as Exhibit 4 and in Form 8-K dated November 3, 1993, File No. 0-2429, as Exhibit 4.)
* (d) 2 - Amendment to the Restated Articles of Incorporation of GULF dated January 28, 1998.
(d) 3 - By-laws of GULF as amended effective July 26, 1996, and as presently in effect. (Designated in Form U-1, File No.
70-8949, as Exhibit A-2(c).)
MISSISSIPPI
(e) 1 - Articles of incorporation of MISSISSIPPI, articles of
merger of Mississippi Power Company (a Maine corporation) into
MISSISSIPPI and articles of amendment to the articles of
incorporation of MISSISSIPPI through August 19, 1993.
(Designated in Registration No. 2-71540 as Exhibit 4(a)-1, in
Form U5S for 1987, File No. 30-222-2, as Exhibit B-10, in
Registration No. 33-49320 as Exhibit 4(b)-(1), in Form 8-K
dated August 5, 1992, File No. 0-6849, as Exhibits 4(b)-2 and
4(b)-3, in Form 8-K dated August 4, 1993, File No. 0-6849, as
Exhibit 4(b)-3 and in Form 8-K dated August 18, 1993, File No.
0-6849, as Exhibit 4(b)-3.)
* (e) 2 - Article of Amendment to the Articles of Incorporation of MISSISSIPPI dated December 31, 1997.
(e) 3 - By-laws of MISSISSIPPI as amended effective April 2, 1996, and as presently in effect. (Designated in Form U5S for 1995, File No. 30-222-2, as Exhibit B-10.)
SAVANNAH
(f) 1 - Charter of SAVANNAH and amendments thereto through November 10, 1993. (Designated in Registration Nos. 33-25183 as Exhibit 4(b)-(1), 33-45757 as Exhibit 4(b)-(2) and in Form 8-K dated November 9, 1993, File No. 1-5072, as Exhibit 4(b).)
(f) 2 - By-laws of SAVANNAH as amended effective February 16, 1994, and as presently in effect. (Designated in SAVANNAH's Form 10-K for the year ended December 31, 1993, as Exhibit 3(f)2.)
(4) Instruments Describing Rights of Security Holders, Including Indentures
SOUTHERN
(a) 1 - Subordinated Note Indenture dated as of February 1, 1997, between SOUTHERN, Southern Company Capital Funding, Inc. and Bankers Trust Company, as Trustee, and indentures supplemental thereto dated as of February 4, 1997. (Designated in Registration Nos. 333-28349 as Exhibits 4.1 and 4.2 and 333-28355 as Exhibit 4.2.)
* (a) 2 - Subordinated Note Indenture dated as of June 1, 1997, between SOUTHERN, Southern Company Capital Funding, Inc. and Bankers Trust Company, as Trustee, and indenture supplemental thereto dated as of June 6, 1997.
(a) 3 - Amended and Restated Trust Agreement of Southern Company Capital Trust I dated as of February 1, 1997. (Designated in Registration No. 333-28349 as Exhibit 4.6)
(a) 4 - Amended and Restated Trust Agreement of Southern Company Capital Trust II dated as of February 1, 1997. (Designated in Registration No. 333-28355 as Exhibit 4.6)
* (a) 5 - Amended and Restated Trust Agreement of Southern Company Capital Trust III dated as of June 1, 1997.
(a) 6 - Capital Securities Guarantee Agreement relating to
Southern Company Capital Trust I dated as of February 1, 1997.
(Designated in Registration No. 333-28349 as Exhibit 4.10)
(a) 7 - Capital Securities Guarantee Agreement relating to Southern Company Capital Trust II dated as of February 1, 1997. (Designated in Registration No. 333-28355 as Exhibit 4.10)
* (a) 8 - Preferred Securities Guarantee Agreement relating to Southern Company Capital Trust III dated as of June 1, 1997.
ALABAMA
(b) 1 - Indenture dated as of January 1, 1942, between ALABAMA and
The Chase Manhattan Bank (formerly Chemical Bank), as Trustee,
and indentures supplemental thereto through that dated as of
December 1, 1994. (Designated in Registration Nos. 2-59843 as
Exhibit 2(a)-2, 2-60484 as Exhibits 2(a)-3 and 2(a)-4, 2-60716
as Exhibit 2(c), 2-67574 as Exhibit 2(c), 2-68687 as Exhibit
2(c), 2-69599 as Exhibit 4(a)-2, 2-71364 as Exhibit 4(a)-2,
2-73727 as Exhibit 4(a)-2, 33-5079 as Exhibit 4(a)-2, 33-17083
as Exhibit 4(a)-2, 33-22090 as Exhibit 4(a)-2, in ALABAMA's
Form 10-K for the year ended December 31, 1990, File No.
1-3164, as Exhibit 4(c), in Registration Nos. 33-43917 as
Exhibit 4(a)-2, 33-45492 as Exhibit 4(a)-2, 33-48885 as
Exhibit 4(a)-2, 33-48917 as Exhibit 4(a)-2, in Form 8-K dated
January 20, 1993, File No. 1-3164, as Exhibit 4(a)-3, in Form
8-K dated February 17, 1993, File No. 1-3164, as Exhibit
4(a)-3, in Form 8-K dated March 10, 1993, File No. 1-3164, as
Exhibit 4(a)-3, in Certificate of Notification, File No.
70-8069, as Exhibits A and B, in Form 8-K dated June 24, 1993,
File No. 1-3164, as Exhibit 4, in Certificate of Notification,
File No. 70-8069, as Exhibit A, in Form 8-K dated November 16,
1993, File No. 1-3164, as Exhibit 4(b), in Certificate of
Notification, File No. 70-8069, as Exhibits A and B, in
Certificate of Notification, File No. 70-8069, as Exhibit A,
in Certificate of Notification, File No. 70-8069, as Exhibit A
and in Form 8-K dated November 30, 1994, File No. 1-3164, as
Exhibit 4.)
(b) 2 - Subordinated Note Indenture dated as of January 1, 1996, between ALABAMA and The Chase Manhattan Bank (formerly Chemical Bank), as Trustee, and indenture supplemental thereto dated as of January 1, 1996. (Designated in Certificate of Notification, File No. 70-8461, as Exhibits E and F.)
(b) 3 - Subordinated Note Indenture dated as of January 1, 1997, between ALABAMA and The Chase Manhattan Bank, as Trustee, and indenture supplemental thereto dated as of January 1, 1997. (Designated in Form 8-K dated January 9, 1997, File No.
1-3164, as Exhibits 4.1 and 4.2.)
(b) 4 - Senior Note Indenture dated as of December 1, 1997, between ALABAMA and The Chase Manhattan Bank, as Trustee, and indentures supplemental thereto through that dated February 26, 1998. (Designated in Form 8-K dated December 4, 1997, File No. 1-3164, as Exhibits 4.1 and 4.2 and in Form 8-K dated February 20, 1998, File No. 1-3164, as Exhibit 4.2.)
(b) 5 - Amended and Restated Trust Agreement of Alabama Power Capital Trust I dated as of January 1, 1996. (Designated in Certificate of Notification, File No. 70-8461, as Exhibit D.)
(b) 6 - Amended and Restated Trust Agreement of Alabama Power Capital Trust II dated as of January 1, 1997. (Designated in Form 8-K dated January 9, 1997, File No. 1-3164, as Exhibit 4.5.)
(b) 7 - Guarantee Agreement relating to Alabama Power Capital Trust I dated as of January 1, 1996. (Designated in Certificate of Notification, File No. 70-8461, as Exhibit G.)
(b) 8 - Guarantee Agreement relating to Alabama Power Capital Trust II dated as of January 1, 1997. (Designated in Form 8-K dated January 9, 1997, File No. 1-3164, as Exhibit 4.8.)
GEORGIA
(c) 1 - Indenture dated as of March 1, 1941, between GEORGIA and
The Chase Manhattan Bank (formerly Chemical Bank), as Trustee,
and indentures supplemental thereto dated as of March 1, 1941,
March 3, 1941 (3 indentures), March 6, 1941 (139 indentures),
March 1, 1946 (88 indentures) and December 1, 1947, through
October 15, 1995. (Designated in Registration Nos. 2-4663 as
Exhibits B-3 and B-3(a), 2-7299 as Exhibit 7(a)-2, 2-61116 as
Exhibit 2(a)-3 and 2(a)-4, 2-62488 as Exhibit 2(a)-3, 2-63393
as Exhibit 2(a)-4, 2-63705 as Exhibit 2(a)-3, 2-68973 as
Exhibit 2(a)-3, 2-70679 as Exhibit 4(a)-(2), 2-72324 as
Exhibit 4(a)-2, 2-73987 as Exhibit 4(a)-(2), 2-77941 as
Exhibits 4(a)-(2) and 4(a)-(3), 2-79336 as Exhibit 4(a)-(2),
2-81303 as Exhibit 4(a)-(2), 2-90105 as Exhibit 4(a)-(2),
33-5405 as Exhibit 4(a)-(2), 33-14367 as Exhibits 4(a)-(2) and
4(a)-(3), 33-22504 as Exhibits 4(a)-(2), 4(a)-(3) and
4(a)-(4), 33-32420 as Exhibit 4(a)-(2), 33-35683 as Exhibit
4(a)-(2), in GEORGIA's Form 10-K for the year ended December
31, 1990, File No. 1-6468, as Exhibit 4(a)(3), in Form 10-K
for the year ended December 31, 1991, File No. 1-6468, as
Exhibit 4(a)(5), in Registration No. 33-48895 as Exhibit
4(a)-(2), in Form 8-K dated August 26, 1992, File No. 1-6468,
as Exhibit 4(a)-(3), in Form 8-K dated September 9, 1992, File
No. 1-6468, as Exhibits 4(a)-(3) and 4(a)-(4), in Form 8-K
dated September 23, 1992, File No. 1-6468, as Exhibit
4(a)-(3), in Form 8-A dated October 12, 1992, as Exhibit 2(b),
in Form 8-K dated January 27, 1993, File No. 1-6468, as
Exhibit 4(a)-(3), in Registration No. 33-49661 as Exhibit
4(a)-(2), in Form 8-K dated July 26, 1993, File No. 1-6468, as
Exhibit 4, in Certificate of Notification, File No. 70-7832,
as Exhibit M, in Certificate of Notification, File No.
70-7832, as Exhibit C, in Certificate of Notification, File
No. 70-7832, as Exhibits K and L, in Certificate of
Notification, File No. 70-8443, as Exhibit C, in Certificate
of Notification, File No. 70-8443, as Exhibit C, in
Certificate of Notification, File No. 70-8443, as Exhibit E,
in Certificate of Notification, File No. 70-8443, as Exhibit
E, in Certificate of Notification, File No. 70-8443, as
Exhibit E, in GEORGIA's Form 10-K for the year ended December
31, 1994, File No. 1-6468, as Exhibits 4(c)2 and 4(c)3, in
Certificate of Notification, File No. 70-8443, as Exhibit C,
in Certificate of Notification, File No. 70-8443, as Exhibit
C, in Form 8-K dated May 17, 1995, File No. 1-6468, as Exhibit
4 and in GEORGIA's Form 10-K for the year ended December 31,
1995, File No. 1-6468, as Exhibits 4(c)2, 4(c)3, 4(c)4, 4(c)5
and 4(c)6.)
(c) 2 - Indenture dated as of December 1, 1994, between GEORGIA and Trust Company Bank, as Trustee and indentures supplemental thereto through that dated as of December 15, 1994. (Designated in Certificate of Notification, File No. 70-8461, as Exhibits E and F.)
(c) 3 - Subordinated Note Indenture dated as of August 1, 1996, between GEORGIA and The Chase Manhattan Bank, as Trustee, and indentures supplemental thereto through January 1, 1997. (Designated in Form 8-K dated August 21, 1996, File No. 1-6468, as Exhibits 4.1 and 4.2 and in Form 8-K dated January 9, 1997, File No. 1-6468, as Exhibit 4.2.)
(c) 4 - Subordinated Note Indenture dated as of June 1, 1997, between GEORGIA and The Chase Manhattan Bank, as Trustee, and indenture supplemental thereto dated as of June 11, 1997. (Designated in Certificate of Notification, File No. 70-8461, as Exhibits D and E.)
(c) 5 - Senior Note Indenture dated as of January 1, 1998, between GEORGIA and The Chase Manhattan Bank, as Trustee, and indenture supplemental thereto dated as of January 27, 1998. (Designated in Form 8-K dated January 21, 1998, File No.
1-6468, as Exhibits 4.1 and 4.2.)
(c) 6 - Amended and Restated Trust Agreement of Georgia Power Capital Trust I dated as of August 1, 1996. (Designated in Form 8-K dated August 21, 1996, File No. 1-6468, as Exhibit 4.5.)
(c) 7 - Amended and Restated Trust Agreement of Georgia Power Capital Trust II dated as of January 1, 1997. (Designated in Form 8-K dated January 9, 1997, File No. 1-6468, as Exhibit 4.5.)
(c) 8 - Amended and Restated Trust Agreement of Georgia Power Capital Trust III dated as of June 1, 1997. (Designated in Certificate of Notification, File No. 70-8461, as Exhibit C.)
(c) 9 - Guarantee Agreement relating to Georgia Power Capital Trust I dated as of August 1, 1996. (Designated in Form 8-K dated August 21, 1996, File No. 1-6468, as Exhibit 4.8.)
(c) 10 - Guarantee Agreement relating to Georgia Power Capital Trust II dated as of January 1, 1997. (Designated in Form 8-K dated January 9, 1997, File No. 1-6468, as Exhibit 4.8.)
(c) 11 - Guarantee Agreement relating to Georgia Power Capital Trust III dated as of June 1, 1997. (Designated in Certificate of Notification, File No. 70-8461, as Exhibit F.)
GULF
(d) 1 - Indenture dated as of September 1, 1941, between GULF and
The Chase Manhattan Bank (formerly The Chase Manhattan Bank
(National Association)), as Trustee, and indentures
supplemental thereto through November 1, 1996. (Designated in
Registration Nos. 2-4833 as Exhibit B-3, 2-62319 as Exhibit
2(a)-3, 2-63765 as Exhibit 2(a)-3, 2-66260 as Exhibit 2(a)-3,
33-2809 as Exhibit 4(a)-2, 33-43739 as Exhibit 4(a)-2, in
GULF's Form 10-K for the year ended December 31, 1991, File
No. 0-2429, as Exhibit 4(b), in Form 8-K dated August 18,
1992, File No. 0-2429, as Exhibit 4(a)-3, in Registration No.
33-50165 as Exhibit 4(a)-2, in Form 8-K dated July 12, 1993,
File No. 0-2429, as Exhibit 4, in Certificate of Notification,
File No. 70-8229, as Exhibit A, in Certificate of
Notification, File No. 70-8229, as Exhibits E and F, in Form
8-K dated January 17, 1996, File No. 0-2429, as Exhibit 4, in
Certificate of Notification, File No. 70-8229, as Exhibit A,
in Certificate of Notification, File No. 70-8229, as Exhibit A
and in Form 8-K dated November 6, 1996, File No. 0-2429, as
Exhibit 4.)
(d) 2 - Subordinated Note Indenture dated as of January 1, 1997, between GULF and The Chase Manhattan Bank, as Trustee, and indentures supplemental thereto through that dated as of January 1, 1998. (Designated in Form 8-K dated January 27, 1997, File No. 0-2429, as Exhibits 4.1 and 4.2, in Form 8-K dated July 28, 1997, File No. 0-2429, as Exhibit 4.2 and in Form 8-K dated January 13, 1998, File No. 0-2429, as Exhibit 4.2.)
(d) 3 - Amended and Restated Trust Agreement of Gulf Power Capital Trust I dated as of January 1, 1997. (Designated in Form 8-K dated January 27, 1997, File No. 0-2429, as Exhibit 4.5.)
(d) 4 - Amended and Restated Trust Agreement of Gulf Power Capital Trust II dated as of January 1, 1998. (Designated in Form 8-K dated January 13, 1998, File No. 0-2429, as Exhibit 4.5.)
(d) 5 - Guarantee Agreement relating to Gulf Power Capital Trust I dated as of January 1, 1997. (Designated in Form 8-K dated January 27, 1997, File No. 0-2429, as Exhibit 4.8.)
(d) 6 - Guarantee Agreement relating to Gulf Power Capital Trust II dated as of January 1, 1998. (Designated in Form 8-K dated January 13, 1998, File No. 0-2429, as Exhibit 4.8.)
MISSISSIPPI
(e) 1 - Indenture dated as of September 1, 1941, between MISSISSIPPI and Bankers Trust Company, as Successor Trustee, and indentures supplemental thereto through December 1, 1995. (Designated in Registration Nos. 2-4834 as Exhibit B-3, 2-62965 as Exhibit 2(b)-2, 2-66845 as Exhibit 2(b)-2, 2-71537 as Exhibit 4(a)-(2), 33-5414 as Exhibit 4(a)-(2), 33-39833 as Exhibit 4(a)-2, in MISSISSIPPI's Form 10-K for the year ended
December 31, 1991, File No. 0-6849, as Exhibit 4(b), in Form 8-K dated August 5, 1992, File No. 0-6849, as Exhibit 4(a)-2, in Second Certificate of Notification, File No. 70-7941, as Exhibit I, in MISSISSIPPI's Form 8-K dated February 26, 1993, File No. 0-6849, as Exhibit 4(a)-2, in Certificate of Notification, File No. 70-8127, as Exhibit A, in Form 8-K dated June 22, 1993, File No. 0-6849, as Exhibit 1, in Certificate of Notification, File No. 70-8127, as Exhibit A, in Form 8-K dated March 8, 1994, File No. 0-6849, as Exhibit 4, in Certificate of Notification, File No. 70-8127, as Exhibit C and in Form 8-K dated December 5, 1995, File No.
0-6849, as Exhibit 4.)
(e) 2 - Subordinated Note Indenture dated as of February 1, 1997, between MISSISSIPPI and Bankers Trust Company, as Trustee, and indenture supplemental thereto dated as of February 1, 1997. (Designated in Form 8-K dated February 20, 1997, File No.
0-6849, as Exhibits 4.1 and 4.2.)
(e) 3 - Amended and Restated Trust Agreement of Mississippi Power Capital Trust I dated as of February 1, 1997. (Designated in Form 8-K dated February 20, 1997, File No. 0-6849, as Exhibit 4.5.)
(e) 4 - Guarantee Agreement relating to Mississippi Power Capital Trust I dated as of February 1, 1997. (Designated in Form 8-K dated February 20, 1997, File No. 0-6849, as Exhibit 4.8.)
SAVANNAH
(f) 1 - Indenture dated as of March 1, 1945, between SAVANNAH and The Bank of New York, New York, as Trustee, and indentures supplemental thereto through May 1, 1996. (Designated in Registration Nos. 33-25183 as Exhibit 4(a)-(1), 33-41496 as Exhibit 4(a)-(2), 33-45757 as Exhibit 4(a)-(2), in SAVANNAH's Form 10-K for the year ended December 31, 1991, File No. 1-5072, as Exhibit 4(b), in Form 8-K dated July 8, 1992, File No. 1-5072, as Exhibit 4(a)-3, in Registration No. 33-50587 as Exhibit 4(a)-(2), in Form 8-K dated July 22, 1993, File No. 1-5072, as Exhibit 4, in Form 8-K dated May 18, 1995, File No. 1-5072, as Exhibit 4 and in Form 8-K dated May 23, 1996, File No. 1-5072, as Exhibit 4.)
(f) 2 - Senior Note Indenture dated as of March 1, 1998 between SAVANNAH and The Bank of New York, as Trustee and indenture supplemental thereto dated as of March 1, 1998. (Designated in Form 8-K dated March 9, 1998, File No. 1-5072, as Exhibits 4.1 and 4.2.)
(10) Material Contracts
SOUTHERN
(a) 1 - Service contracts dated as of January 1, 1984 and
Amendment No. 1 dated as of September 6, 1985, between SCS and
ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN.
(Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1984, File No. 1-3526, as Exhibit 10(a) and in
SOUTHERN's Form 10-K for the year ended December 31, 1985,
File No. 1-3526, as Exhibit 10(a)(3).)
(a) 2 - Service contract dated as of July 17, 1981, between SCS and SEI. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1985, File No. 1-3526, as Exhibit 10(a)(2).)
(a) 3 - Service contract dated as of March 3, 1988, between SCS and SAVANNAH. (Designated in SAVANNAH's Form 10-K for the year ended December 31, 1987, File No. 1-5072, as Exhibit 10-p.)
(a) 4 - Service contract dated as of January 15, 1991, between SCS and Southern Nuclear. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1991, File No. 1-3526, as Exhibit 10(a)(4).)
(a) 5 - Service Contract dated as of December 12, 1994, between SCS and Mobile Energy Services Company, Inc. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1994, File No. 1-3526, as Exhibit 10(a)58.)
(a) 6 - Interchange contract dated October 28, 1988, effective January 1, 1989, between ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for the year ended December 31, 1988, File No. 1-5072, as Exhibit 10(b).)
(a) 7 - Agreement dated as of January 27, 1959, Amendment No. 1 dated as of October 27, 1982 and Amendment No. 2 dated November 4, 1993 and effective June 1, 1994, among SEGCO, ALABAMA and GEORGIA. (Designated in Registration No. 2-59634 as Exhibit 5(c), in GEORGIA's Form 10-K for the year ended December 31, 1982, File No. 1-6468, as Exhibit 10(d)(2) and in ALABAMA's Form 10-K for the year ended December 31, 1994, File No. 1-3164, as Exhibit 10(b)18.)
(a) 8 - Joint Committee Agreement dated as of August 27, 1976, among GEORGIA, OPC, MEAG and Dalton. (Designated in Registration No. 2-61116 as Exhibit 5(d).)
(a) 9 - Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement dated as of January 6, 1975, between GEORGIA and OPC. (Designated in Form 8-K for January, 1975, File No. 1-6468, as Exhibit (b)(1).)
(a) 10 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as
of January 6, 1975, between GEORGIA and OPC. (Designated in
Form 8-K for January, 1975, File No. 1-6468, as Exhibit
(b)(3).)
(a) 11 - Revised and Restated Integrated Transmission System Agreement dated as of November 12, 1990, between GEORGIA and OPC. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(g).)
(a) 12 - Plant Hal Wansley Purchase and Ownership Participation Agreement dated as of March 26, 1976, between GEORGIA and OPC. (Designated in Certificate of Notification, File No. 70-5592, as Exhibit A.)
(a) 13 - Plant Hal Wansley Operating Agreement dated as of March 26, 1976, between GEORGIA and OPC. (Designated in Certificate of Notification, File No. 70-5592, as Exhibit B.)
(a) 14 - Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement dated as of August 27, 1976, between GEORGIA, MEAG and Dalton. (Designated in Form 8-K dated as of June 13, 1977, File No. 1-6468, as Exhibit (b)(1).)
(a) 15 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as of August 27, 1976, between GEORGIA, MEAG and Dalton. (Designated in Form 8-K for February 1977, File No. 1-6468, as Exhibit (b)(2).)
(a) 16 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase and Ownership Participation Agreement dated as of August 27, 1976 and Amendment No. 1 dated as of January 18, 1977, among GEORGIA, OPC, MEAG and Dalton. (Designated in Form U-1, File No. 70-5792, as Exhibit B-1 and in Form 8-K for January 1977, File No. 1-6468, as Exhibit (B)(3).)
(a) 17 - Alvin W. Vogtle Nuclear Units Number One and Two Operating Agreement dated as of August 27, 1976, among GEORGIA, OPC, MEAG and Dalton. (Designated in Form U-1, File No. 70-5792, as Exhibit B-2.)
(a) 18 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase, Amendment, Assignment and Assumption Agreement dated as of November 16, 1983, between GEORGIA and MEAG. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1983, File No. 1-6468, as Exhibit 10(k)(4).)
(a) 19 - Plant Hal Wansley Purchase and Ownership Participation Agreement dated as of August 27, 1976, between GEORGIA and MEAG. (Designated in Form 8-K dated as of July 5, 1977, File No. 1-6468, as Exhibit (b)(2).)
(a) 20 - Plant Hal Wansley Operating Agreement dated as of August 27, 1976, between GEORGIA and MEAG. (Designated in Form 8-K dated as of July 5, 1977, File No. 1-6468, as Exhibit (b)(4).)
* (a) 21 - Nuclear Operating Agreement between Southern Nuclear and GEORGIA dated as of July 1, 1993.
* (a) 22 - Pseudo Scheduling and Services Agreement between GEORGIA and MEAG dated as of April 8, 1997.
(a) 23 - Plant Hal Wansley Purchase and Ownership Participation Agreement dated as of April 19, 1977, between GEORGIA and Dalton. (Designated in Form 8-K dated as of June 13, 1977, File No. 1-6468, as Exhibit (b)(3).)
(a) 24 - Plant Hal Wansley Operating Agreement dated as of April
19, 1977, between GEORGIA and Dalton. (Designated in Form 8-K
dated as of June 13, 1977, File No. 1-6468, as Exhibit
(b)(7).)
(a) 25 - Plant Robert W. Scherer Units Number One and Two Purchase and Ownership Participation Agreement dated as of May 15, 1980, Amendment No. 1 dated as of December 30, 1985, Amendment No. 2 dated as of July 1, 1986, Amendment No. 3 dated as of August 1, 1988 and Amendment No. 4 dated as of December 31, 1990, among GEORGIA, OPC, MEAG and Dalton. (Designated in Form U-1, File No. 70-6481, as Exhibit B-3, in SOUTHERN's Form 10-K for the year ended December 31, 1987, File No. 1-3526, as Exhibit 10(o)(2), in SOUTHERN's Form 10-K for the year ended December 31, 1989, File No. 1-3526, as Exhibit 10(n)(2) and in SOUTHERN's Form 10-K for the year ended December 31, 1993, File No. 1-3526, as Exhibit 10(a)54.)
(a) 26 - Plant Robert W. Scherer Units Number One and Two Operating Agreement dated as of May 15, 1980, Amendment No. 1 dated as of December 3, 1985 and Amendment No. 2 dated as of December 31, 1990, among GEORGIA, OPC, MEAG and Dalton. (Designated in Form U-1, File No. 70-6481, as Exhibit B-4, in SOUTHERN's Form 10-K for the year ended December 31, 1987, File No. 1-3526, as Exhibit 10(o)(4) and in SOUTHERN's Form 10-K for the year ended December 31, 1993, File No. 1-3526, as Exhibit 10(a)55.)
(a) 27 - Plant Robert W. Scherer Purchase, Sale and Option
Agreement dated as of May 15, 1980, between GEORGIA and MEAG.
(Designated in Form U-1, File No. 70-6481, as Exhibit B-1.)
(a) 28 - Plant Robert W. Scherer Purchase and Sale Agreement dated as of May 16, 1980, between GEORGIA and Dalton. (Designated in Form U-1, File No. 70-6481, as Exhibit B-2.)
(a) 29 - Plant Robert W. Scherer Unit Number Three Purchase and Ownership Participation Agreement dated as of March 1, 1984, Amendment No. 1 dated as of July 1, 1986 and Amendment No. 2 dated as of August 1, 1988, between GEORGIA and GULF. (Designated in Form U-1, File No. 70-6573, as Exhibit B-4, in SOUTHERN's Form 10-K for the year ended December 31, 1987, as Exhibit 10(o)(2) and in SOUTHERN's Form 10-K for the year ended December 31, 1989, as Exhibit 10(n)(2).)
(a) 30 - Plant Robert W. Scherer Unit Number Three Operating
Agreement dated as of March 1, 1984, between GEORGIA and GULF.
(Designated in Form U-1, File No. 70-6573, as Exhibit B-5.)
(a) 31 - Plant Robert W. Scherer Unit No. Four Amended and Restated Purchase and Ownership Participation Agreement by and among GEORGIA, FP&L and JEA, dated as of December 31, 1990 and Amendment No. 1 dated as of June 15, 1994. (Designated in Form U-1, File No. 70-7843, as Exhibit B-1 and in SOUTHERN's Form 10-K for the year ended December 31, 1994, File No. 1-3526, as Exhibit 10(a)60.)
(a) 32 - Plant Robert W. Scherer Unit No. Four Operating Agreement by and among GEORGIA, FP&L and JEA, dated as of December 31, 1990 and Amendment No. 1 dated as of June 15, 1994. (Designated in Form U-1, File No. 70-7843, as Exhibit B-2 and in SOUTHERN's Form 10-K for the year ended December 31, 1994, File No. 1-3526, as Exhibit 10(a)61.)
(a) 33 - Amended and Restated Unit Power Sales Agreement dated
February 18, 1982 and Amendment No. 1 dated May 18, 1982,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS.
(Designated in MISSISSIPPI's Form 10-K for the year ended
December 31, 1981, File No. 0-6849, as Exhibit 10(c)(2) and in
GEORGIA's Form 10-K for the year ended December 31, 1982, File
No. 1-6468, as Exhibit 10(r)(3).)
(a) 34 - Amended and Restated Unit Power Sales Agreement dated May 19, 1982, Amendment No. 1 dated August 30, 1984 and Amendment No. 2 dated October 30, 1987, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1982, File No. 1-6468, as Exhibit 10(s)(2), in SOUTHERN's Form 10-K for the year ended December 31, 1984, File No. 1-3526, as Exhibit 10(r)(2) and in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(s)(2).)
(a) 35 - Unit Power Sales Agreement dated July 19, 1988, between
FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS.
(Designated in SAVANNAH's Form 10-K for the year ended
December 31, 1988, File No. 1-5072, as Exhibit 10(d).)
(a) 36 - Amended Unit Power Sales Agreement dated July 20, 1988, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for the year ended December 31, 1988, File No. 1-5072, as Exhibit 10(e).)
(a) 37 - Amended Unit Power Sales Agreement dated August 17, 1988, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. (Designated in SAVANNAH's Form 10-K for the year ended December 31, 1988, File No. 1-5072, as Exhibit 10(f).)
(a) 38 - Unit Power Sales Agreement dated December 8, 1990, between Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(x).)
(a) 39 - Transition Energy Agreement dated December 31, 1990,
between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH
and SCS. (Designated in GULF's Form 10-K for the year ended
December 31, 1991, File No. 0-2429, as Exhibit 10(1).)
(a) 40 - Transition Energy Agreement dated December 31, 1990,
between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH
and SCS. (Designated in GULF's Form 10-K for the year ended
December 31, 1991, File No. 0-2429, as Exhibit 10(m).)
(a) 41 - Rocky Mountain Pumped Storage Hydroelectric Project Ownership Participation Agreement dated November 18, 1988, between OPC and GEORGIA. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1988, File No. 1-6468, as Exhibit 10(x).)
(a) 42 - Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement dated November 18, 1988, between OPC and GEORGIA. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1988, File No. 1-6468, as Exhibit 10(y).)
(a) 43 - Purchase and Ownership Agreement for Joint Ownership Interest in the James H. Miller, Jr. Steam Electric Generating Plant Units One and Two dated November 18, 1988, between ALABAMA and AEC. (Designated in Form U-1, File No. 70-7609, as Exhibit B-1.)
(a) 44 - Operating Agreement for Joint Ownership Interest in the
James H. Miller, Jr. Steam Electric Generating Plant Units One
and Two dated November 18, 1988, between ALABAMA and AEC.
(Designated in Form U-1, File No. 70-7609, as Exhibit B-2.)
(a) 45 - Transmission Facilities Agreement dated February 25, 1982, Amendment No. 1 dated May 12, 1982 and Amendment No. 2 dated December 6, 1983, between Gulf States and MISSISSIPPI. (Designated in MISSISSIPPI's Form 10-K for the year ended December 31, 1981, File No. 0-6849, as Exhibit 10(f), in MISSISSIPPI's Form 10-K for the year ended December 31, 1982, File No. 0-6849, as Exhibit 10(f)(2) and in MISSISSIPPI's Form 10-K for the year ended December 31, 1983, File No. 0-6849, as Exhibit 10(f)(3).)
(a) 46 - Form of commitment agreement, Amendment No. 1 and Amendment No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and MISSISSIPPI revolving credits. (Designated in Form U-1, File No. 70-7738, as Exhibit A-5 and in Form U-1, File No. 70-7937, as A-5(b).)
(a) 47 - Block Power Sale Agreement between GEORGIA and OPC dated as of November 12, 1990. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(cc).)
* (a) 48 - Revised and Restated Coordination Services Agreement between and among GEORGIA, OPC and Georgia Systems Operations Corporation dated as of September 10, 1997.
(a) 49 - Amended and Restated Nuclear Managing Board Agreement for Plant Hatch and Plant Vogtle among GEORGIA, OPC, MEAG and Dalton dated as of July 1, 1993. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1993, File No.
1-3526, as Exhibit 10(a)49.)
(a) 50 - Integrated Transmission System Agreement, Power Sale and Coordination Umbrella Agreement between GEORGIA and OPC dated as of November 12, 1990. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(ff).)
(a) 51 - Revised and Restated Integrated Transmission System Agreement between GEORGIA and Dalton dated as of December 7, 1990. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(gg).)
(a) 52 - Revised and Restated Integrated Transmission System Agreement between GEORGIA and MEAG dated as of December 7, 1990. (Designated in GEORGIA's Form 10-K for the year ended December 31, 1990, File No. 1-6468, as Exhibit 10(hh).)
(a) 53 - Long Term Transmission Service Agreement between Entergy Power, Inc. and ALABAMA, MISSISSIPPI and SCS. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1992, File No. 1-3526, as Exhibit 10(a)53.)
(a) 54 - Plant Scherer Managing Board Agreement dated as of December 31, 1990 among GEORGIA, OPC, MEAG, Dalton, GULF, FP&L and JEA. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1993, File No. 1-3526, as Exhibit 10(a)56.)
(a) 55 - Plant McIntosh Combustion Turbine Purchase and Ownership Participation Agreement between GEORGIA and SAVANNAH dated as of December 15, 1992. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1993, File No. 1-3526, as Exhibit 10(a)57.)
(a) 56 - Plant McIntosh Combustion Turbine Operating Agreement between GEORGIA and SAVANNAH dated as of December 15, 1992. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1993, File No. 1-3526, as Exhibit 10(a)58.)
(a) 57 - Power Purchase Agreement dated as of December 3, 1993 between GEORGIA and FPC. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1993, File No. 1-3526, as Exhibit 10(a)59.)
(a) 58 - Operating Agreement for the Joseph M. Farley Nuclear Plant between ALABAMA and Southern Nuclear dated as of December 23, 1991. (Designated in Form U-1, File No. 70-7530, as Exhibit B-7.)
* (a) 59 - The Southern Company Productivity Improvement Plan, Amended and Restated effective January 1, 1997.
* (a) 60 - The Southern Company Executive Productivity Improvement Plan, effective January 1, 1997.
(a) 61 - The Southern Company Employee Savings Plan, Amended and Restated effective July 3, 1995 and all amendments thereto through Amendment Number Six. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)63, in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No. 1-3526, as Exhibit 10(a)64 and in Registration No. 333-44261 as Exhibit 4(e).)
(a) 62 - The Southern Company Employee Stock Ownership Plan, Amended and Restated effective April 1, 1995 and all amendments thereto through Amendment Number Two. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)64 and in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No. 1-3526, as Exhibit 10(a)66.)
* (a) 63 - Amendment Number Three to The Southern Company Employee Stock Ownership Plan.
(a) 64 - Pension Plan For Employees of ALABAMA, Amended and Restated effective as of January 1, 1989 and all amendments thereto through Amendment Number Three. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1994, File No. 1-3526, as Exhibit 10(a)69 and in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No. 1-3526, as Exhibit 10(a)68.)
(a) 65 - Pension Plan For Employees of GEORGIA, Amended and Restated effective as of January 1, 1989 and all amendments thereto through Amendment Number Three. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1994, File No. 1-3526, as Exhibit 10(a)70 and in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No. 1-3526, as Exhibit 10(a)70.)
(a) 66 - Pension Plan For Employees of SCS, Amended and Restated effective as of January 1, 1989 and all amendments thereto through Amendment Number Four. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1994, File No. 1-3526, as Exhibit 10(a)71, in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)68 and in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No. 1-3526, as Exhibit 10(a)72.)
(a) 67 - The Southern Company Performance Pay Plan, Amended and Restated effective January 1, 1996. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No.
1-3526, as Exhibit 10(a)73.)
* (a) 68 - Amendment Number One and Amendment Number Two to The Southern Company Performance Pay Plan.
(a) 69 - Supplemental Benefit Plan for ALABAMA. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)71.)
(a) 70 - Supplemental Benefit Plan for GEORGIA. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)72.)
(a) 71 - Supplemental Benefit Plan for SCS and SEI, Amended and Restated effective as of January 1, 1996. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No. 1-3526, as Exhibit 10(a)76.)
(a) 72 - The Deferred Compensation Plan for the Directors of The Southern Company and First Amendment and Second Amendment thereto. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1994, File No. 1-3526, as Exhibit 10(a)76 and in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)75.)
(a) 73 - The Southern Company Outside Directors Pension Plan.
(Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1994, File No. 1-3526, as Exhibit 10(a)77.)
(a) 74 - The Southern Company Deferred Compensation Plan.
(Designated in SOUTHERN's Form 10-K for the year ended
December 31, 1995, File No. 1-3526, as Exhibit 10(a)77.)
(a) 75 - The Southern Company Outside Directors Stock Plan and First Amendment thereto. (Designated in Registration No. 33-54415 as Exhibit 4(c) and in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)79.)
(a) 76 - Outside Directors Stock Plan for Subsidiaries of The Southern Company and First Amendment thereto. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1995, File No. 1-3526, as Exhibit 10(a)80.)
* (a) 77 - The Southern Company Performance Dividend Plan.
(a) 78 - The Southern Company Pension Plan, effective as of January 1, 1997. (Designated in SOUTHERN's Form 10-K for the year ended December 31, 1996, File No. 1-3526, as Exhibit 10(a)83.)
* (a) 79 - Amendment Number One to The Southern Company Pension Plan.
* (a) 80 - The Southern Company Performance Stock Plan.
* (a) 81 - The Southern Company Supplemental Executive Retirement Plan.
* (a) 82 - The Southern Company Performance Sharing Plan.
ALABAMA
(b) 1 - Service contracts dated as of January 1, 1984 and Amendment No. 1 dated as of September 6, 1985, between SCS and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN. See Exhibit 10(a)1 herein.
(b) 2 - Interchange contract dated October 28, 1988, effective January 1, 1989, between ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)6 herein.
(b) 3 - Agreement dated as of January 27, 1959, Amendment No. 1 dated as of October 27, 1982 and Amendment No. 2 dated November 4, 1993 and effective June 1, 1994, among SEGCO, ALABAMA and GEORGIA. See Exhibit 10(a)7 herein.
(b) 4 - Amended and Restated Unit Power Sales Agreement dated February 18, 1982 and Amendment No. 1 dated May 18, 1982, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)33 herein.
(b) 5 - Amended and Restated Unit Power Sales Agreement dated May 19, 1982, Amendment No. 1, dated August 30, 1984 and Amendment No. 2, dated October 30, 1987, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)34 herein.
(b) 6 - Unit Power Sales Agreement dated July 19, 1988, between FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(b) 7 - Amended Unit Power Sales Agreement dated July 20, 1988, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(b) 8 - Amended Unit Power Sales Agreement dated August 17, 1988, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(b) 9 - Unit Power Sales Agreement dated December 8, 1990, between Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)38 herein.
(b) 10 - Transition Energy Agreement dated December 31, 1990, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(b) 11 - Transition Energy Agreement dated December 31, 1990, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(b) 12 - Firm Power Purchase Contract between ALABAMA and AMEA. (Designated in Certificate of Notification, File No. 70-7212, as Exhibit B.)
(b) 13 - 1991 Firm Power Purchase Contract between ALABAMA and AMEA. (Designated in Form U-1, File No. 70-7873, as Exhibit B-1.)
(b) 14 - Purchase and Ownership Agreement for Joint Ownership Interest in the James H. Miller, Jr. Steam Electric Generating Plant Units One and Two dated November 18, 1988, between ALABAMA and AEC. See Exhibit 10(a)43 herein.
(b) 15 - Operating Agreement for Joint Ownership Interest in the James H. Miller, Jr. Steam Electric Generating Plant Units One and Two dated November 18, 1988, between ALABAMA and AEC. See Exhibit 10(a)44 herein.
(b) 16 - Form of commitment agreement, Amendment No. 1 and Amendment No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and MISSISSIPPI revolving credits. See Exhibit 10(a)46 herein.
(b) 17 - Long Term Transmission Service Agreement between Entergy Power, Inc. and ALABAMA, MISSISSIPPI and SCS. See Exhibit 10(a)53 herein.
(b) 18 - Operating Agreement for the Joseph M. Farley Nuclear Plant between ALABAMA and Southern Nuclear dated as of December 23, 1991. See Exhibit 10(a)58 herein.
* (b) 19 - The Southern Company Productivity Improvement Plan, Amended and Restated effective January 1, 1997. See Exhibit 10(a)59 herein.
* (b) 20 - The Southern Company Executive Productivity Improvement Plan, effective January 1, 1997. See Exhibit 10(a)60 herein.
(b) 21 - The Southern Company Employee Savings Plan, Amended and Restated effective July 3, 1995 and all amendments thereto through Amendment Number Six. See Exhibit 10(a)61 herein.
(b) 22 - The Southern Company Employee Stock Ownership Plan, Amended and Restated effective April 1, 1995 and all amendments thereto through Amendment Number Two. See Exhibit 10(a)62 herein.
* (b) 23 - Amendment Number Three to The Southern Company Employee Stock Ownership Plan. See Exhibit 10(a)63 herein.
(b) 24 - Pension Plan For Employees of ALABAMA, Amended and Restated effective as of January 1, 1989 and all amendments thereto through Amendment Number Three. See Exhibit 10(a)64 herein.
(b) 25 - The Southern Company Performance Pay Plan, Amended and Restated effective January 1, 1996. See Exhibit 10(a)67 herein.
* (b) 26 - Amendment Number One and Amendment Number Two to The Southern Company Performance Pay Plan. See Exhibit 10(a)68 herein.
(b) 27 - Supplemental Benefit Plan for ALABAMA. See Exhibit 10(a)69 herein.
(b) 28 - The Southern Company Deferred Compensation Plan. See Exhibit 10(a)74 herein.
(b) 29 - The Southern Company Outside Directors Pension Plan. See Exhibit 10(a)73 herein.
(b) 30 - Outside Directors Stock Plan for Subsidiaries of The Southern Company and First Amendment thereto. See Exhibit 10(a)76 herein.
(b) 31 - The Southern Company Pension Plan, effective as of January 1, 1997. See Exhibit 10(a)78 herein.
* (b) 32 - Amendment Number One to The Southern Company Pension Plan. See Exhibit 10(a)79 herein.
* (b) 33 - The Southern Company Performance Stock Plan. See Exhibit 10(a)80 herein.
* (b) 34 - The Southern Company Supplemental Executive Retirement Plan. See Exhibit 10(a)81 herein.
* (b) 35 - The Southern Company Performance Dividend Plan. See Exhibit 10(a)77 herein.
* (b) 36 - The Southern Company Performance Sharing Plan. See Exhibit 10(a)82 herein.
GEORGIA
(c) 1 - Service contracts dated as of January 1, 1984 and Amendment No. 1 dated as of September 6, 1985, between SCS and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN. See Exhibit 10(a)1 herein.
(c) 2 - Interchange contract dated October 28, 1988, effective January 1, 1989, between ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)6 herein.
(c) 3 - Agreement dated as of January 27, 1959, Amendment No. 1 dated as of October 27, 1982 and Amendment No. 2 dated November 4, 1993 and effective June 1, 1994, among SEGCO, ALABAMA and GEORGIA. See Exhibit 10(a)7 herein.
(c) 4 - Joint Committee Agreement dated as of August 27, 1976, among GEORGIA, OPC, MEAG and Dalton. See Exhibit 10(a)8 herein.
(c) 5 - Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement dated as of January 6, 1975, between GEORGIA and OPC. See Exhibit 10(a)9 herein.
(c) 6 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as of January 6, 1975, between GEORGIA and OPC. See Exhibit 10(a)10 herein.
(c) 7 - Revised and Restated Integrated Transmission System Agreement dated as of November 12, 1990, between GEORGIA and OPC. See Exhibit 10(a)11 herein.
(c) 8 - Plant Hal Wansley Purchase and Ownership Participation Agreement dated as of March 26, 1976, between GEORGIA and OPC. See Exhibit 10(a)12 herein.
(c) 9 - Plant Hal Wansley Operating Agreement dated as of March 26, 1976, between GEORGIA and OPC. See Exhibit 10(a)13 herein.
(c) 10 - Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement dated as of August 27, 1976, between GEORGIA, MEAG and Dalton. See Exhibit 10(a)14 herein.
(c) 11 - Edwin I. Hatch Nuclear Plant Operating Agreement dated as of August 27, 1976, between GEORGIA, MEAG and Dalton. See Exhibit 10(a)15 herein.
(c) 12 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase and Ownership Participation Agreement dated as of August 27, 1976 and Amendment No. 1 dated as of January 18, 1977, among GEORGIA, OPC, MEAG and Dalton. See Exhibit 10(a)16 herein.
(c) 13 - Alvin W. Vogtle Nuclear Units Number One and Two Operating Agreement dated as of August 27, 1976, among GEORGIA, OPC, MEAG and Dalton. See Exhibit 10(a)17 herein.
(c) 14 - Alvin W. Vogtle Nuclear Units Number One and Two Purchase, Amendment, Assignment and Assumption Agreement dated as of November 16, 1983, between GEORGIA and MEAG. See Exhibit 10(a)18 herein.
(c) 15 - Plant Hal Wansley Purchase and Ownership Participation Agreement dated as of August 27, 1976, between GEORGIA and MEAG. See Exhibit 10(a)19 herein.
(c) 16 - Plant Hal Wansley Operating Agreement dated as of August 27, 1976, between GEORGIA and MEAG. See Exhibit 10(a)20 herein.
* (c) 17 - Nuclear Operating Agreement between Southern Nuclear and GEORGIA dated as of July 1, 1993. See Exhibit 10(a)21 herein.
* (c) 18 - Pseudo Scheduling and Services Agreement between GEORGIA and MEAG dated as of April 8, 1997. See Exhibit 10(a)22 herein.
(c) 19 - Plant Hal Wansley Purchase and Ownership Participation Agreement dated as of April 19, 1977, between GEORGIA and Dalton. See Exhibit 10(a)23 herein.
(c) 20 - Plant Hal Wansley Operating Agreement dated as of April 19, 1977, between GEORGIA and Dalton. See Exhibit 10(a)24 herein.
(c) 21 - Plant Robert W. Scherer Units Number One and Two Purchase and Ownership Participation Agreement dated as of May 15, 1980, Amendment No. 1 dated as of December 30, 1985, Amendment No. 2 dated as of July 1, 1986, Amendment No. 3 dated as of August 1, 1988 and Amendment No. 4 dated as of December 31, 1990, among GEORGIA, OPC, MEAG and Dalton. See Exhibit 10(a)25 herein.
(c) 22 - Plant Robert W. Scherer Units Number One and Two Operating Agreement dated as of May 15, 1980, Amendment No. 1
dated as of December 3, 1985 and Amendment No. 2 dated as of December 31, 1990, among GEORGIA, OPC, MEAG and Dalton. See Exhibit 10(a)26 herein.
(c) 23 - Plant Robert W. Scherer Purchase, Sale and Option Agreement dated as of May 15, 1980, between GEORGIA and MEAG. See Exhibit 10(a)27 herein.
(c) 24 - Plant Robert W. Scherer Purchase and Sale Agreement dated as of May 16, 1980, between GEORGIA and Dalton. See Exhibit 10(a)28 herein.
(c) 25 - Plant Robert W. Scherer Unit Number Three Purchase and Ownership Participation Agreement dated as of March 1, 1984, Amendment No. 1 dated as of July 1, 1986 and Amendment No. 2 dated as of August 1, 1988, between GEORGIA and GULF. See Exhibit 10(a)29 herein.
(c) 26 - Plant Robert W. Scherer Unit Number Three Operating Agreement dated as of March 1, 1984, between GEORGIA and GULF. See Exhibit 10(a)30 herein.
(c) 27 - Plant Robert W. Scherer Unit No. Four Amended and Restated Purchase and Ownership Participation Agreement by and among GEORGIA, FP&L and JEA dated as of December 31, 1990 and Amendment No. 1 dated as of June 15, 1994. See Exhibit 10(a)31 herein.
(c) 28 - Plant Robert W. Scherer Unit No. Four Operating Agreement by and among GEORGIA, FP&L and JEA dated as of December 31, 1990 and Amendment No. 1 dated as of June 15, 1994. See Exhibit 10(a)32 herein.
(c) 29 - Amended and Restated Unit Power Sales Agreement dated February 18, 1982 and Amendment No. 1 dated May 18, 1982, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)33 herein.
(c) 30 - Amended and Restated Unit Power Sales Agreement dated May 19, 1982, Amendment No. 1, dated August 30, 1984 and Amendment No. 2 dated October 30, 1987, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)34 herein.
(c) 31 - Unit Power Sales Agreement dated July 19, 1988, between FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(c) 32 - Amended Unit Power Sales Agreement dated July 20, 1988, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(c) 33 - Amended Unit Power Sales Agreement dated August 17, 1988, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(c) 34 - Unit Power Sales Agreement dated December 8, 1990, between Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)38 herein.
(c) 35 - Power Purchase Agreement dated as of December 3, 1993 between GEORGIA and FPC. See Exhibit 10(a)57 herein.
(c) 36 - Transition Energy Agreement dated December 31, 1990, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(c) 37 - Transition Energy Agreement dated December 31, 1990, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(c) 38 - Rocky Mountain Pumped Storage Hydroelectric Project Ownership Participation Agreement dated November 18, 1988, between OPC and GEORGIA. See Exhibit 10(a)41 herein.
(c) 39 - Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement dated November 18, 1988, between OPC and GEORGIA. See Exhibit 10(a)42 herein.
(c) 40 - Form of commitment agreement, Amendment No. 1 and Amendment No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and MISSISSIPPI revolving credits. See Exhibit 10(a)46 herein.
(c) 41 - Block Power Sale Agreement between GEORGIA and OPC dated as of November 12, 1990. See Exhibit 10(a)47 herein.
* (c) 42 - Revised and Restated Coordination Services Agreement between and among GEORGIA, OPC and Georgia Systems Operations Corporation dated as of September 10, 1997. See Exhibit 10(a)48 herein.
(c) 43 - Amended and Restated Nuclear Managing Board Agreement for Plant Hatch and Plant Vogtle among GEORGIA, OPC, MEAG and Dalton dated as of July 1, 1993. See Exhibit 10(a)49 herein.
(c) 44 - Integrated Transmission System Agreement, Power Sale and Coordination Umbrella Agreement between GEORGIA and OPC dated as of November 12, 1990. See Exhibit 10(a)50 herein.
(c) 45 - Revised and Restated Integrated Transmission System Agreement between GEORGIA and Dalton dated as of December 7, 1990. See Exhibit 10(a)51 herein.
(c) 46 - Revised and Restated Integrated Transmission System Agreement between GEORGIA and MEAG dated as of December 7, 1990. See Exhibit 10(a)52 herein.
(c) 47 - Plant Scherer Managing Board Agreement dated as of December 31, 1990 among GEORGIA, OPC, MEAG, Dalton, GULF, FP&L and JEA. See Exhibit 10(a)54 herein.
(c) 48 - Plant McIntosh Combustion Turbine Purchase and Ownership Participation Agreement between GEORGIA and SAVANNAH dated as of December 15, 1992. See Exhibit 10(a)55 herein.
(c) 49 - Plant McIntosh Combustion Turbine Operating Agreement between GEORGIA and SAVANNAH dated as of December 15, 1992. See Exhibit 10(a)56 herein.
(c) 50 - Certificate of Limited Partnership of Georgia Power Capital. (Designated in Certificate of Notification, File No.
70-8461, as Exhibit B.)
(c) 51 - Amended and Restated Agreement of Limited Partnership of Georgia Power Capital, dated as of December 1, 1994. (Designated in Certificate of Notification, File No. 70-8461, as Exhibit C.)
(c) 52 - Action of General Partner of Georgia Power Capital creating the Series A Preferred Securities. (Designated in Certificate of Notification, File No. 70-8461, as Exhibit D.)
(c) 53 - Guarantee Agreement of GEORGIA dated as of December 1, 1994, for the benefit of the holders from time to time of the Series A Preferred Securities. (Designated in Certificate of Notification, File No. 70-8461, as Exhibit G.)
* (c) 54 - The Southern Company Productivity Improvement Plan, Amended and Restated effective January 1, 1997. See Exhibit 10(a)59 herein.
* (c) 55 - The Southern Company Executive Productivity Improvement Plan, effective January 1, 1997. See Exhibit 10(a)60 herein.
(c) 56 - The Southern Company Employee Savings Plan, Amended and Restated effective July 3, 1995 and all amendments thereto through Amendment Number Six. See Exhibit 10(a)61 herein.
(c) 57 - The Southern Company Employee Stock Ownership Plan, Amended and Restated effective April 1, 1995 and all amendments thereto through Amendment Number Two. See Exhibit 10(a)62 herein.
* (c) 58 - Amendment Number Three to The Southern Company Employee Stock Ownership Plan. See Exhibit 10(a)63 herein.
(c) 59 - Pension Plan For Employees of GEORGIA, Amended and Restated effective as of January 1, 1989 and all amendments thereto through Amendment Number Three. See Exhibit 10(a)65 herein.
(c) 60 - The Southern Company Performance Pay Plan, Amended and Restated effective January 1, 1996. See Exhibit 10(a)67 herein.
* (c) 61 - Amendment Number One and Amendment Number Two to The Southern Company Performance Pay Plan. See Exhibit 10(a)68 herein.
(c) 62 - Supplemental Benefit Plan for GEORGIA. See Exhibit 10(a)70 herein.
(c) 63 - The Southern Company Deferred Compensation Plan. See Exhibit 10(a)74 herein.
(c) 64 - The Southern Company Outside Directors Pension Plan. See Exhibit 10(a)73 herein.
(c) 65 - Outside Directors Stock Plan for Subsidiaries of The Southern Company and First Amendment thereto. See Exhibit 10(a)76 herein.
(c) 66 - The Southern Company Pension Plan, effective as of January 1, 1997. See Exhibit 10(a)78 herein.
* (c) 67 - Amendment Number One to The Southern Company Pension Plan. See Exhibit 10(a)79 herein.
* (c) 68 - The Southern Company Performance Stock Plan. See Exhibit 10(a)80 herein.
* (c) 69 - The Southern Company Supplemental Executive Retirement Plan. See Exhibit 10(a)81 herein.
* (c) 70 - The Southern Company Performance Dividend Plan. See Exhibit 10(a)77 herein.
* (c) 71 - The Southern Company Performance Sharing Plan. See Exhibit 10(a)82 herein.
GULF
(d) 1 - Service contracts dated as of January 1, 1984 and Amendment No. 1 dated as of September 6, 1985, between SCS and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN. See Exhibit 10(a)1 herein.
(d) 2 - Interchange contract dated October 28, 1988, effective January 1, 1989, between ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)6 herein.
(d) 3 - Plant Robert W. Scherer Unit Number Three Purchase and Ownership Participation Agreement dated as of March 1, 1984, Amendment No. 1 dated as of July 1, 1986 and Amendment No. 2 dated as of August 1, 1988, between GEORGIA and GULF. See Exhibit 10(a)29 herein.
(d) 4 - Plant Robert W. Scherer Unit Number Three Operating Agreement dated as of March 1, 1984, between GEORGIA and GULF. See Exhibit 10(a)30 herein.
(d) 5 - Plant Scherer Managing Board Agreement dated as of December 31, 1990 among GEORGIA, OPC, MEAG, Dalton, GULF, FP&L and JEA. See Exhibit 10(a)54 herein.
(d) 6 - Amended and Restated Unit Power Sales Agreement dated February 18, 1982 and Amendment No. 1 dated May 18, 1982, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)33 herein.
(d) 7 - Amended and Restated Unit Power Sales Agreement dated May 19, 1982, Amendment No. 1 dated August 30, 1984 and Amendment No. 2 dated October 30, 1987, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)34 herein.
(d) 8 - Unit Power Sales Agreement dated July 19, 1988, between FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(d) 9 - Amended Unit Power Sales Agreement dated July 20, 1988, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(d) 10 - Amended Unit Power Sales Agreement dated August 17, 1988, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(d) 11 - Agreement between GULF and AEC, effective August 1, 1985.
(Designated in GULF's Form 10-K for the year ended December
31, 1985, File No. 0-2429, as Exhibit 10(g).)
(d) 12 - Unit Power Sales Agreement dated December 8, 1990, between Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)38 herein.
(d) 13 - Transition Energy Agreement dated December 31, 1990, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(d) 14 - Transition Energy Agreement dated December 31, 1990, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)40 herein.
* (d) 15 - The Southern Company Productivity Improvement Plan, Amended and Restated effective January 1, 1997. See Exhibit 10(a)59 herein.
* (d) 16 - The Southern Company Executive Productivity Improvement Plan, effective January 1, 1997. See Exhibit 10(a)60 herein.
(d) 17 - The Southern Company Employee Savings Plan, Amended and Restated effective July 3, 1995 and all amendments thereto through Amendment Number Six. See Exhibit 10(a)61 herein.
(d) 18 - The Southern Company Employee Stock Ownership Plan, Amended and Restated effective April 1, 1995 and all amendments thereto through Amendment Number Two. See Exhibit 10(a)62 herein.
* (d) 19 - Amendment Number Three to The Southern Company Employee Stock Ownership Plan. See Exhibit 10(a)63 herein.
(d) 20 - Pension Plan For Employees of GULF, Amended and Restated effective as of January 1, 1989 and all amendments thereto through Amendment Number Three. (Designated in GULF's Form 10-K for the year ended December 31, 1994, File No. 0-2429, as Exhibit 10(d)18 and in GULF's Form 10-K for the year ended December 31, 1996, File No. 0-2429, as Exhibit 10(d)22.)
(d) 21 - The Southern Company Performance Pay Plan, Amended and Restated effective January 1, 1996. See Exhibit 10(a)67 herein.
* (d) 22 - Amendment Number One and Amendment Number Two to The Southern Company Performance Pay Plan. See Exhibit 10(a)68 herein.
(d) 23 - Supplemental Benefit Plan for GULF. (Designated in GULF's Form 10-K for the year ended December 31, 1995, File No.
0-2429, as Exhibit 10(d)22.)
(d) 24 - The Southern Company Deferred Compensation Plan. See Exhibit 10(a)74 herein.
(d) 25 - The Southern Company Outside Directors Pension Plan. See Exhibit 10(a)73 herein.
(d) 26 - Outside Directors Stock Plan for Subsidiaries of The Southern Company and First Amendment thereto. See Exhibit 10(a)76 herein.
(d) 27 - The Southern Company Pension Plan, effective as of January 1, 1997. See Exhibit 10(a)78 herein.
* (d) 28 - Amendment Number One to The Southern Company Pension Plan. See Exhibit 10(a)79 herein.
MISSISSIPPI
(e) 1 - Service contracts dated as of January 1, 1984 and Amendment No. 1 dated September 6, 1985, between SCS and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SEGCO and SOUTHERN. See Exhibit 10(a)1 herein.
(e) 2 - Interchange contract dated October 28, 1988, effective January 1, 1989, between ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)6 herein.
(e) 3 - Amended and Restated Unit Power Sales Agreement dated February 18, 1982 and Amendment No. 1 dated May 18, 1982, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)33 herein.
(e) 4 - Amended and Restated Unit Power Sales Agreement dated May 19, 1982, Amendment No. 1 dated August 30, 1984, and Amendment No. 2 dated October 30, 1987, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI and SCS. See Exhibit 10(a)34 herein.
(e) 5 - Unit Power Sales Agreement dated July 19, 1988, between FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(e) 6 - Amended Unit Power Sales Agreement dated July 20, 1988, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(e) 7 - Amended Unit Power Sales Agreement dated August 17, 1988, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(e) 8 - Unit Power Sales Agreement dated December 8, 1990, between Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)38 herein.
(e) 9 - Transition Energy Agreement dated December 31, 1990, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(e) 10 - Transition Energy Agreement dated December 31, 1990, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(e) 11 - Transmission Facilities Agreement dated February 25, 1982, Amendment No. 1 dated May 12, 1982 and Amendment No. 2 dated December 6, 1983, between Gulf States and MISSISSIPPI. See Exhibit 10(a)45 herein.
(e) 12 - Form of commitment agreement, Amendment No. 1 and Amendment No. 2 with respect to SOUTHERN, ALABAMA, GEORGIA and MISSISSIPPI revolving credits. See Exhibit 10(a)46 herein.
(e) 13 - Long Term Transmission Service Agreement between Entergy Power, Inc. and ALABAMA, MISSISSIPPI and SCS. See Exhibit 10(a)53 herein.
* (e) 14 - The Southern Company Productivity Improvement Plan, Amended and Restated effective January 1, 1997. See Exhibit 10(a)59 herein.
* (e) 15 - The Southern Company Executive Productivity Improvement Plan, effective January 1, 1997. See Exhibit 10(a)60 herein.
(e) 16 - The Southern Company Employee Savings Plan, Amended and Restated effective July 3, 1995 and all amendments thereto through Amendment Number Six. See Exhibit 10(a)61 herein.
(e) 17 - The Southern Company Employee Stock Ownership Plan, Amended and Restated effective April 1, 1995 and all amendments thereto through Amendment Number Two. See Exhibit 10(a)62 herein.
* (e) 18 - Amendment Number Three to The Southern Company Employee Stock Ownership Plan. See Exhibit 10(a)63 herein.
(e) 19 - Pension Plan For Employees of MISSISSIPPI, Amended and Restated effective as of January 1, 1989 and all amendments thereto through Amendment Number Three. (Designated in MISSISSIPPI's Form 10-K for the year ended December 31, 1994, File No. 0-6849, as Exhibit 10(e)18 and in MISSISSIPPI's Form 10-K for the year ended December 31, 1996, File No. 0-6849, as Exhibit 10(e)21.)
(e) 20 - The Southern Company Performance Pay Plan, Amended and Restated effective January 1, 1996. See Exhibit 10(a)67 herein.
* (e) 21 - Amendment Number One and Amendment Number Two to The Southern Company Performance Pay Plan. See Exhibit 10(a)68 herein.
(e) 22 - Supplemental Benefit Plan for MISSISSIPPI, Amended and Restated effective as of January 1, 1996. (Designated in MISSISSIPPI's Form 10-K for the year ended December 31, 1996, File No. 0-6849, as Exhibit 10(e)23.)
(e) 23 - The Southern Company Deferred Compensation Plan. See Exhibit 10(a)74 herein.
(e) 24 - The Southern Company Outside Directors Pension Plan. See Exhibit 10(a)73 herein.
(e) 25 - Outside Directors Stock Plan for Subsidiaries of The Southern Company and First Amendment thereto. See Exhibit 10(a)76 herein.
(e) 25 - The Southern Company Pension Plan, effective as of January 1, 1997. See Exhibit 10(a)78 herein.
* (e) 26 - Amendment Number One to The Southern Company Pension Plan. See Exhibit 10(a)79 herein.
SAVANNAH
(f) 1 - Service contract dated as of March 3, 1988, between SCS and SAVANNAH. See Exhibit 10(a)3 herein.
(f) 2 - Interchange contract dated October 28, 1988, effective January 1, 1989, between ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)6 herein.
(f) 3 - Unit Power Sales Agreement dated July 19, 1988, between FPC and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)35 herein.
(f) 4 - Amended Unit Power Sales Agreement dated July 20, 1988, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)36 herein.
(f) 5 - Amended Unit Power Sales Agreement dated August 17, 1988, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)37 herein.
(f) 6 - Unit Power Sales Agreement dated December 8, 1990, between Tallahassee and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)38 herein.
(f) 7 - Transition Energy Agreement dated December 31, 1990, between JEA and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)39 herein.
(f) 8 - Transition Energy Agreement dated December 31, 1990, between FP&L and ALABAMA, GEORGIA, GULF, MISSISSIPPI, SAVANNAH and SCS. See Exhibit 10(a)40 herein.
(f) 9 - Plant McIntosh Combustion Turbine Purchase and Ownership Participation Agreement between GEORGIA and SAVANNAH dated as of December 15, 1992. See Exhibit 10(a)55 herein.
(f) 10 - Plant McIntosh Combustion Turbine Operating Agreement between GEORGIA and SAVANNAH dated December 15, 1992. See Exhibit 10(a)56 herein.
* (f) 11 - The Southern Company Productivity Improvement Plan, Amended and Restated effective January 1, 1997. See Exhibit 10(a)59 herein.
* (f) 12 - The Southern Company Executive Productivity Improvement Plan, effective January 1, 1997. See Exhibit 10(a)60 herein.
(f) 13 - The Southern Company Employee Savings Plan, Amended and Restated effective July 3, 1995 and all amendments thereto through Amendment Number Six. See Exhibit 10(a)61 herein.
(f) 14 - The Southern Company Employee Stock Ownership Plan, Amended and Restated effective April 1, 1995 and all amendments thereto through Amendment Number Two. See Exhibit 10(a)62 herein.
* (f) 15 - Amendment Number Three to The Southern Company Employee Stock Ownership Plan. See Exhibit 10(a)63 herein.
* (f) 16 - Employees' Retirement Plan of SAVANNAH, Amended and Restated effective January 1, 1997.
(f) 17 - Supplemental Executive Retirement Plan of SAVANNAH, Amended and Restated effective January 1, 1996 and Amendment Number One thereto. (Designated in SAVANNAH's Form 10-K for the year ended December 31, 1995, File No. 1-5072, as Exhibit 10(f)17 and in SAVANNAH's Form 10-K for the year ended December 31, 1996, File No. 1-5072, as Exhibit 10(f)20.)
* (f) 18 - Amendment Number Two to The Supplemental Executive Retirement Plan of SAVANNAH.
(f) 19 - Deferred Compensation Plan for Key Employees of SAVANNAH and all amendments thereto through Amendment Number Two. (Designated in SAVANNAH's Form 10-K for the year ended December 31, 1994, File No. 1-5072, as Exhibit 10(f)17, in SAVANNAH's Form 10-K for the year ended December 31, 1995, File No. 1-5072, as Exhibit 10(f)19 and in SAVANNAH's Form 10-K for the year ended December 31, 1996, File No. 1-5072, as Exhibit 10(f)22.)
(f) 20 - The Southern Company Performance Pay Plan, Amended and Restated effective January 1, 1996. See Exhibit 10(a)67 herein.
* (f) 21 - Amendment Number One and Amendment Number Two to The Southern Company Performance Pay Plan. See Exhibit 10(a)68 herein.
(f) 22 - The Southern Company Outside Directors Pension Plan. See Exhibit 10(a)73 herein.
* (f) 23 - Deferred Compensation Plan for Directors of SAVANNAH.
(f) 24 - Outside Directors Stock Plan for Subsidiaries of The Southern Company and First Amendment thereto. See Exhibit 10(a)75 herein.
(f) 25 - The Southern Company Pension Plan, effective as of January 1, 1997. See Exhibit 10(a)78 herein.
* (f) 26 - Amendment Number One to The Southern Company Pension Plan. See Exhibit 10(a)79 herein.
(21) *Subsidiaries of Registrants - Contained herein at page IV-5.
(23) Consents of Experts and Counsel
SOUTHERN
* (a) - The consent of Arthur Andersen LLP is contained herein at page IV-6.
ALABAMA
* (b) - The consent of Arthur Andersen LLP is contained herein at page IV-7.
GEORGIA
* (c) - The consent of Arthur Andersen LLP is contained herein at page IV-8.
GULF
* (d) - The consent of Arthur Andersen LLP is contained herein at page IV-9.
MISSISSIPPI
* (e) - The consent of Arthur Andersen LLP is contained herein at page IV-10.
SAVANNAH
* (f) - The consent of Arthur Andersen LLP is contained herein at page IV-11.
(24) Powers of Attorney and Resolutions
SOUTHERN
* (a) - Power of Attorney and resolution.
ALABAMA
* (b) - Power of Attorney and resolution.
GEORGIA
* (c) - Power of Attorney and resolution.
GULF
* (d) - Power of Attorney and resolution.
MISSISSIPPI
* (e) - Power of Attorney and resolution.
SAVANNAH
* (f) - Power of Attorney and resolution.
(27) Financial Data Schedule
SOUTHERN
(a) - Financial Data Schedule. (Designated in Form 8-K dated February 11, 1998, File No. 1-3526, as Exhibit 27.)
ALABAMA
(b) - Financial Data Schedule. (Designated in Form 8-K dated February 11, 1998, File No. 1-3164, as Exhibit 27.)
GEORGIA
(c) - Financial Data Schedule. (Designated in Form 8-K dated February 11, 1998, File No. 1-6468, as Exhibit 27.)
GULF
(d) - Financial Data Schedule. (Designated in Form 8-K dated February 11, 1998, File No. 0-2429, as Exhibit 27.)
MISSISSIPPI
(e) - Financial Data Schedule. (Designated in Form 8-K dated February 11, 1998, File No. 0-6849, as Exhibit 27.)
SAVANNAH
(f) - Financial Data Schedule. (Designated in Form 8-K dated February 11, 1998, File No. 1-5072, as Exhibit 27.)
Exhibit 3(b)2 Articles of Amendment to Joint Agreement Between Alabama Power Company and Birmingham Electric Company Prescribing the Terms and Conditions of Merger Of Birmingham Electric Company Into and With Alabama Power Company
STATE OF ALABAMA )
)
JEFFERSON COUNTY )
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We, Elmer B. Harris and Art P. Beattie, respectively the President and Secretary of Alabama Power Company, a corporation, do hereby certify that, at a meeting of the Board of Directors of said corporation duly called and held at the office of said corporation in the City of Birmingham, Alabama, on the 25th day of July, 1997, at 10:15 o'clock A.M., Birmingham Time, a majority and quorum of Directors being present, the following resolutions were duly adopted by said Board of Directors:
RESOLVED, that in connection with an offer ("Offer") to be made by Southern Company ("Southern") to purchase all or a portion of one or more of the series of outstanding preferred stock of Alabama Power Company (the "Company"), there be and hereby is called a special meeting (the "Special Meeting") of the stockholders of the Company for the purpose of considering and acting upon any or all of the following proposals, the final slate of proposals to be determined by the officers of the Company in their discretion and submitted to the stockholders of the Company for approval at the Special Meeting:
(a) a proposal to approve an amendment of the Charter of the Company to delete in its entirety the restriction on the incurrence of unsecured debt by the Company;
(b) a proposal to approve an amendment to the Charter of the Company to delete in their entirety provisions requiring a vote of preferred stockholders for approval of a merger, consolidation or sale of all or substantially all of the assets of the Company; and
(c) Such other proposals, including other amendments to the Company's Charter, as the officers shall
determine in their discretion and cause to be specified in this notice of the Special Meeting; and
RESOLVED FURTHER, that the date, time and location of the Special Meeting, and any record date with respect thereto, shall be determined by the officers in their discretion and caused by them to be specified in the notice of the Special Meeting; and
RESOLVED FURTHER, that the officers of the Company be and hereby are authorized to solicit proxies or consents from the stockholders of the Company for use in connection with the Special Meeting, and to employ such broker-dealers, dealers- managers or other parties and to incur such costs and expenses in soliciting such proxies as the officers shall consider necessary or appropriate; and
RESOLVED FURTHER, that the officers of the Company are hereby authorized to cause the Company to remit a cash payment of $1.00 for each $100.00 of par value or stated capital of the Company's Preferred Stock and Class A Preferred Stock, respectively, or such other sum as the officers of the Company shall consider necessary and appropriate to the holders of such stock voting in favor of the proposal submitted to the stockholders at the Special Meeting; and
RESOLVED FURTHER, that the officers of the Company be and they hereby are authorized on behalf of the Company to purchase any and all shares of preferred stock of the Company tendered to, and accepted for payment and paid for by, Southern pursuant to the Offer, for the purchase price and associated expenses paid by Southern for such shares, and, upon the purchase of such shares from Southern, to cancel and retire all of such shares; and
RESOLVED FURTHER, that, in connection with and to carry out the purposes and intent of the foregoing resolutions, the officers of the Company be and they hereby are authorized to take any and all actions on behalf of the Company as they shall consider necessary or appropriate, including, without limitation, the execution and filing of any applications or other documents with the Securities and Exchange Commission and other regulatory authorities and the execution and delivery of agreements with brokers-dealers, dealers-managers or any other parties as the
officers shall in their discretion consider necessary and appropriate.
And we do further certify that pursuant to such resolutions so adopted at such meeting of the Board of Directors of Alabama Power Company, a special meeting of the stockholders of the corporation was duly held at the office of its affiliate, Georgia Power Company, 333 Piedmont Avenue, Atlanta, Georgia, on Wednesday, the 10th day of December, 1997, 3:30 o'clock P.M., Atlanta Time, for the purpose of considering taking action, in the manner provided by law, upon the aforesaid proposal and upon such other proposal or proposals as were set forth in the notice of such and for the transaction of any and all business in connection therewith, including the following amendment to the Joint Agreement Between Alabama Power Company and Birmingham Electric Company Prescribing the Terms and Conditions of Merger Of Birmingham Electric Company and Into and With Alabama Power Company, dated as of October 21, 1952 (as amended, the "Charter"):
(1) To remove in its entirety Paragraph A.2.f.(2) of Article IX of the Charter, a provision restricting the amount of securities representing unsecured indebtedness issuable by the Company;
(2) To remove in its entirety Paragraph A.2.f.(1) of Article IX of the Charter, a provision which requires the vote of the holders of at least a majority of the total voting power of the outstanding preferred stock of Alabama Power Company to approve the sale of all or substantially all of Alabama Power Company's property and mergers or consolidations that have not been approved under the Public Utility Holding Company Act of 1935, as amended;
(3) To remove in its entirety Paragraph A.2.b. (except the first paragraph therein) of Article IX of the Charter, a provision restricting the ability of Alabama Power Company to pay dividends on its common stock in the event that its common equity capitalization falls below certain levels; and
(4) To remove the words after "January 31, 1942" of the first paragraph of Paragraph A.2.b. of Article IX of the Charter, a provision restricting the ability of Alabama Power Company to pay dividends on its common stock in the event that its retained earnings are not at least equal to two times the annual dividends on its outstanding preferred stock.
We do further certify that notice in compliance with applicable laws and the Bylaws of Alabama Power Company of the time, place and purpose of said meeting of stockholders was given to each stockholder of Alabama Power Company as follows: to those stockholders of record at the close of business on November 7, 1997 with respect to the Class A Preferred Stock of Alabama Power Company (as defined herein) listed on the New York Stock Exchange, and
to those stockholders of record at the close of business on November 6, 1997 with respect to all other classes of preferred stock and common stock of Alabama Power Company, in each case addressed to each stockholder at his, her or its address as it appeared on the stock transfer books of the corporation, with postage thereon prepaid and deposited in the United States mail; and that at said meeting the holders of more than two-thirds of the total value of the outstanding shares of preferred stock and of the larger amount in total value of the outstanding shares of capital stock of the corporation having voting powers on such proposal were present in person or represented by proxy; and
We do further certify that at the close of business on each of November 6, 1997 and November 7, 1997, Alabama Power Company had 704,000 shares of $100 Preferred Stock, par value $100 per share (the "$100 Preferred Stock"), issued and outstanding, and 6,020,200 shares of Class A Preferred Stock, par value $1 per share (the "Class A Preferred Stock"), issued and outstanding (collectively, the "Preferred Stock"), and 5,608,955 shares of common stock issued and outstanding (the "Common Stock"). All of such outstanding shares of Preferred Stock were entitled to vote on the above proposal as a single class, each share of $100 Preferred Stock and each share of Class A Preferred Stock with a stated value of $100 per share being counted as one, each share of Class A Preferred Stock with a stated value of $25 per share being counted as one-quarter, and each share of Class A Preferred Stock with a stated value of $100,000 per share being counted as 1,000. The adoption of the above proposal required the affirmative vote in favor thereof of (i) the holders of record of a majority of the shares of the issued and outstanding Common Stock of Alabama Power Company and (ii) the holders of two-thirds of the total number of shares of Preferred Stock outstanding, voting as a single class; and
We do further certify that at said meeting all of the 5,608,955 shares of common stock outstanding voted affirmatively for the adoption of the proposal, and of the total votes of Preferred Stock (counting shares of Preferred Stock as described above) 2,159,146 shares voted affirmatively for the adoption of the proposal and 33,594 shares voted against the proposal or abstained from voting thereon; such affirmative votes being sufficient for the adoption of the proposal.
We, Elmer B. Harris and Art P. Beattie, as President and Secretary, respectively, of Alabama Power Company, do hereby make this report of such meeting and certify that such amendment, as set forth in the above resolutions, was duly adopted in accordance with the applicable provisions of the Alabama Business Corporation Act; and we do further certify that the proceedings of said meeting of the Board of Directors and said special meeting of stockholders were reduced to writing and that the same are hereby certified by Elmer B. Harris, the President, and Art P. Beattie, the Secretary, of Alabama Power Company, under its corporate seal.
IN WITNESS WHEREOF, we, Elmer B. Harris, and Art P. Beattie, as President and Secretary, respectively, of Alabama Power Company, do hereunto set our hands and seal of such corporation on the 10th day of December, 1997.
ELMER B. HARRIS
President, Alabama Power Company
ART P. BEATTIE
Secretary, Alabama Power Company
UNITED STATES OF AMERICA ) STATE OF ALABAMA ) MONTGOMERY COUNTY ) |
I, Jim Bennett, Secretary of State of the State of Alabama, do hereby certify that the foregoing pages numbered 1 to 5, both inclusive, to which this certificate is attached, contain a full, true and correct copy of the Certificate of Resolutions of Board of Directors and Stockholders of Alabama Power Company, as the same was certified by the President and Secretary of such Alabama Power Company under its corporation seal and filed in this, the office of Secretary of State of Alabama, on the ____ day of December, 1997.
In Testimony Whereof, I have hereunto set my hand and caused the Great Seal of the State of Alabama to be hereunto affixed at the Capitol in the City of Montgomery, on this the _____ day of December in the year of our Lord, Nineteen Hundred and Ninety-Seven.
(Seal) JIM BENNETT
Secretary of State of the
State of Alabama
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Exhibit 3(c)2
PETITION FOR FORTY-EIGHTH AMENDMENT TO CHARTER
TO THE SECRETARY OF STATE OF THE STATE OF GEORGIA:
The petition of Georgia Power Company, a corporation of Fulton County, in said State, respectfully shows:
I. It is a street and suburban railroad, electric light and power and
steam heat corporation, incorporated under the above name on June 26, 1930, and
its charter has been amended on the following dates: (1) May 1, 1933, (2) March
31, 1941, (3) November 20, 1947, (4) October 18, 1949, (5) July 25, 1950, (6)
February 6, 1953, (7) April 3, 1953, (8) October 7, 1954, (9) September 6, 1961,
(10) October 27, 1961, (11) November 16, 1962, (12) November 15, 1963, (13)
October 2, 1964, (14) September 10, 1965, (15) July 8, 1966, (16) September 8,
1967, (17) September 6, 1968, (18) September 5, 1969, (19) March 13, 1970, (20)
April 10, 1970, (21) September 9, 1970, (22) February 19, 1971, (23) October 27,
1972, (24) October 24, 1975, (25) October 29, 1975, (26) July 2, 1976, (27)
February 23, 1979, (28) June 26, 1981, (29) September 16, 1982, (30) November
21, 1984, (31) November 26, 1984, (32) November 30, 1984, (33) April 18, 1985,
(34) September 26, 1985, (35) December 6, 1985, (36) July 16, 1986, (37) August
21, 1986, (38) June 2, 1987, (39) July 20, 1987, (40) August 19, 1987, (41)
November 5, 1991, (42) January 28, 1992, (43) June 1, 1992, (44) July 27, 1992,
(45) December 15, 1992, (46) June 28, 1993 and (47) October 25, 1993.
II. All of the authorized shares of the capital stock of the Company are without nominal or par value, and the authorized and outstanding shares of capital stock of the Company outstanding at December 10, 1997, the date of the Special Meeting of Shareholders hereinafter referred to, are as follows:
Authorized Outstanding
Kind of Stock Number of Shares Number of Shares
$5.00 Preferred Stock 80,000 14,090
$4.92 Preferred Stock 130,000 100,000
$4.60 Preferred Stock 500,000 433,774
$4.96 Preferred Stock 80,000 70,000
$4.60 Preferred Stock (1962 Series) 70,000 70,000
$4.60 Preferred Stock (1963 Series) 70,000 70,000
$4.60 Preferred Stock (1964 Series) 50,000 50,000
$4.72 Preferred Stock 60,000 60,000
$5.64 Preferred Stock 90,000 90,000
$6.48 Preferred Stock 120,000 120,000
$6.60 Preferred Stock 100,000 100,000
Undesignated Preferred Stock 3,650,000 --------
Adjustable Rate Class A Preferred Stock (First 1993 Series) 3,000,000 3,000,000
Adjustable Rate Class A Preferred Stock (Second 1993 Series) 4,000,000 4,000,000
Undesignated Class A Preferred Stock 43,000,000 ----------
Common Stock 15,000,000 7,761,500
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III. The Company desires an amendment to its charter to eliminate therefrom in their entirety (i) Subparagraph 14.A.3.f.(2) of Paragraph III, a provision restricting the amount of securities representing unsecured indebtedness issuable by the Company, (ii) Subparagraph 14.A.3.f.(1) of Paragraph III, a provision which requires the vote of the holders of at least a majority of the total voting power of the Company's outstanding preferred stock to approve the sale of all or substantially all of the Company's property and mergers or consolidations that have not been approved under the Public Utility Holding Company Act of 1935, as amended, and (iii) Subparagraph 14.A.3.b. (except the first paragraph therein) of Paragraph III, a provision restricting the ability of the Company to pay dividends on its common stock in the event that its common equity capitalization falls below certain levels.
IV. This petition for the proposed amendment has been duly authorized by the action of more than two-thirds in amount of the entire capital stock of the Company outstanding and entitled by the terms of its charter or state law to vote thereon at a Special Meeting of Shareholders of the Company called for that purpose. The affirmative vote of (i) the holders of record of at least 66-2/3% of the shares of common stock of the Company outstanding and entitled to vote and (ii) the holders of at least 66-2/3% of the total number of shares of preferred stock outstanding (each share of Preferred Stock being counted as one and each share of Class A Preferred Stock being counted as one-quarter) was required to adopt the foregoing amendment. There were 7,761,500 shares of common stock of the Company outstanding and entitled to vote thereon of which all were voted in favor of the foregoing amendment. For the purpose of counting shares of preferred stock pursuant to the Company's charter, each share of Preferred Stock counts as one and each share of Class A Preferred Stock counts as one-quarter. Counting the shares of preferred stock in this manner, 951,156 shares of the Company's 1,177,864 shares of outstanding Preferred Stock and 6,600,763 shares of the Company's 7,000,000 shares of outstanding Class A Preferred Stock (aggregating 88.86%) were voted in favor of the foregoing amendment at the Special Meeting.
V. Petitioner respectfully presents this, its petition for an amendment to its charter, as heretofore amended, and asks that the same be granted as herein prayed for and that all other rights, powers and privileges contained in its original charter, as heretofore amended, and such as are incident to like corporations under the laws of Georgia, do continue and remain of force and be approved and confirmed.
GEORGIA POWER COMPANY
By: _____________________
President
Attest:
Date: January 26, 1998
CERTIFIED ABSTRACT FROM THE MINUTES OF THE
BOARD OF DIRECTORS OF GEORGIA POWER COMPANY
WITH RESPECT TO PETITION FOR
FORTY-EIGHTH AMENDMENT TO ITS CHARTER
On motion, duly made and seconded, the following resolution was unanimously adopted by the Board of Directors of the Company:
RESOLVED: That it is desirable and in the best interests of the Company to seek the approval of the Company's shareholders to amend the Company's charter, as heretofore amended (the "Charter"), in order to eliminate in their entirety (i) Subparagraph 14.A.3.f.(2) of Paragraph III, a provision restricting the amount of securities representing unsecured indebtedness issuable by the Company, (ii) Subparagraph 14.A.3.f.(1) of Paragraph III, a provision which requires the vote of the holders of at least a majority of the total voting power of the Company's outstanding preferred stock to approve the sale of all or substantially all of the Company's property and mergers or consolidations that have not been approved under the Public Utility Holding Company Act of 1935, as amended, and (iii) Subparagraph 14.A.3.b. (except the first paragraph therein) of Paragraph III, a provision restricting the ability of the Company to pay dividends on its common stock in the event that its common equity capitalization falls below certain levels, and this Board of Directors does hereby authorize and approve such amendment;
RESOLVED FURTHER: That, if at such meeting the holders of
record of two-thirds of the Company's outstanding common stock and the
holders of two-thirds of the total number of shares of outstanding
preferred stock (each share of Preferred Stock being counted as one and
each share of Class A Preferred Stock being counted as one-quarter)
vote affirmatively for the proposal to amend the Charter, the President
or any Vice President and the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company be and hereby are
authorized and directed to make application to the Secretary of State
of the State of Georgia that the Charter of Georgia Power Company, as
constituted by the Joint or Consolidation Agreement, dated May 12,
1930, and certified by the Honorable George H. Carswell, Secretary of
State of Georgia, under date of June 26, 1930, as heretofore amended by
certificates of the Honorable Secretary of State dated (1) May 1, 1933,
(2) March 31, 1941, (3) November 20, 1947, (4) October 18, 1949, (5)
July 25, 1950, (6) February 6, 1953, (7) April 3, 1953, (8) October 7,
1954, (9) September 6, 1961, (10) October 27, 1961, (11) November 16,
1962, (12) November 15, 1963, (13) October 2, 1964, (14) September 10,
1965, (15) July 8, 1966, (16) September 8, 1967, (17) September 6,
1968, (18) September 5, 1969, (19) March 13, 1970, (20) April 10, 1970,
(21) September 9, 1970, (22) February 19, 1971, (23) October 27, 1972,
(24) October 24, 1975, (25) October 29, 1975, (26) July 2, 1976, (27)
February 23, 1979, (28) June 26, 1981, (29) September 16, 1982, (30)
November 21, 1984, (31) November 26, 1984, (32) November 30, 1984, (33)
April 18, 1985, (34) September 26, 1985, (35) December 6, 1985, (36)
July 16, 1986, (37) August 21, 1986, (38) June 2, 1987, (39) July 20,
1987, (40) August 19, 1987, (41) November 5, 1991, (42) January 28,
1992, (43) June 1, 1992, (44) July 27, 1992, (45) December 15, 1992,
(46) June 28, 1993 and (47) October 25, 1993, be further amended to
eliminate Subparagraphs 14.A.3.f.(2), 14.A.3.f.(1) and 14.A.3.b.
(except the first paragraph therein) of Paragraph III (all other terms
and provisions of the Charter to remain unchanged); and that the
officers of the Company be and they are hereby authorized and empowered
to take all such other action as any one of them may deem necessary or
desirable to effect said amendment;
RESOLVED FURTHER: That the Secretary of the Company shall certify under the seal of the Company a copy of this resolution and attach it to the petition for forty-eighth amendment to the Charter to be filed with the Secretary of State of the State of Georgia.
I, Judy M. Anderson, Secretary of Georgia Power Company, do hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Georgia Power Company, duly held on November 19, 1997, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Given under my official signature and the seal of said Company this 26th day of January, 1998.
Secretary
(SEAL)
CERTIFIED ABSTRACT FROM THE MINUTES OF THE
SPECIAL MEETING OF SHAREHOLDERS OF GEORGIA POWER COMPANY
WITH RESPECT TO PETITION FOR
FORTY-EIGHTH AMENDMENT TO ITS CHARTER
On motion, duly made and seconded, the following resolution was adopted by at least two-thirds of the voting power of the outstanding shares of the Company's preferred stock:
RESOLVED: That there be and hereby is approved and adopted an amendment to the Company's Charter to remove therefrom (i) Subparagraph 14.A.3.f.(2), a provision restricting the amount of securities representing unsecured indebtedness issuable by the Company, (ii) Subparagraph 14.A.3.f.(1) of Paragraph III, a provision which requires the vote of the holders of at least a majority of the total voting power of the outstanding Company preferred stock to approve the sale of all or substantially all of the Company's property and mergers or consolidations that have not been approved under the Public Utility Holding Company Act of 1935, as amended, and (iii) Subparagraph 14.A.3.b. (except the first paragraph therein) of Paragraph III, a provision restricting the ability of the Company to pay dividends on its common stock in the event that its common equity capitalization falls below certain levels.
I, Judy M. Anderson, Secretary of Georgia Power Company, do hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a special meeting of shareholders of Georgia Power Company, duly held on December 10, 1997, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Given under my official signature and the seal of said Company this 26th day of January, 1998.
Secretary
(SEAL)
TO ALL TO WHOM THESE PRESENTS MAY COME -- GREETING:
WHEREAS, GEORGIA POWER COMPANY, a corporation created and existing
under the laws of Georgia, has filed in this office in terms of law a petition
asking that its charter be amended to eliminate therefrom in their entirety (i)
Subparagraph 14.A.3.f.(2) of Paragraph III, a provision restricting the amount
of securities representing unsecured indebtedness issuable by the Company, (ii)
Subparagraph 14.A.3.f.(1) of Paragraph III, a provision which requires the vote
of the holders of at least a majority of the total voting power of the Company's
outstanding preferred stock to approve the sale of all or substantially all of
the Company's property and mergers or consolidations that have not been approved
under the Public Utility Holding Company Act of 1935, as amended, and (iii)
Subparagraph 14.A.3.b. (except the first paragraph therein) of Paragraph III, a
provision restricting the ability of the Company to pay dividends on its common
stock in the event that its common equity capitalization falls below certain
levels; and
WHEREAS, Georgia Power Company has complied with all the requirements
of the law in such cases made and provided.
THEREFORE, the State of Georgia hereby amends the charter of said
Georgia Power Company so as to eliminate Subparagraphs 14.A.3.f.(1),
14.A.3.f.(2) and 14.A.3.b. (except the first paragraph therein) of Paragraph III
of its charter.
IN WITNESS WHEREOF, these presents have been signed by the Secretary of State and the great seal has been attached hereto at the State Capitol in Atlanta, Georgia, on this 26th day of January, 1998.
Secretary of State
Exhibit 3(d)2
DOMESTIC
BUSINESS CORPORATION
STATE OF MAINE
ARTICLES OF AMENDMENT
(Shareholders Voting as Separate Class)
OF
GULF POWER COMPANY
(Name of Corporation)
Pursuant to 13-A MRSA ss.ss.805 and 807, the undersigned corporation adopts these Articles of Amendment:
FIRST: As set out in detail in "THIRD", one or more classes of shares of the
corporation were entitled to vote as a separate class on the following
amendment of its articles of incorporation set forth in Exhibit A
attached hereto
SECOND: The amendment set out in Exhibit A attached was adopted by the
shareholders on (date) December 10, 1998. ("X" one box only)
|
|X| at a meeting legally called and held OR |_| by unanimous written consent
THIRD: On said date, the number of shares of each class outstanding and
entitled to vote on said amendment (whether or not entitled to vote as
a separate class), the manner in which each such class was entitled to
vote (whether or not as a separate class), and the number of shares
|
voted for and against said amendment, respectively, were as follows:
Designation of Manner No. of Shares
Each Class In Which Outstanding NUMBER NUMBER
However Entitled Entitled And Entitled Voted Voted
To Vote To Vote To Vote For Against
Common Stock As a Class 992,717 992,717 0
$25 Class A Preferred As a Class, together
Stock with $100 Preferred 1,400,000 1,211,081 16,852
Stock
$100 Preferred Stock As a Class, together 151,026 134,526 1,181
with $25 Class A
Preferred Stock ___________ __________ ___________
Totals of All Classes 2,543,743 2,338,324 18,033
|
FOURTH: If such amendment provides for exchange, reclassification or
cancellation of issued shares, the manner in which this shall be
effected is contained in Exhibit B attached if it is not set forth in
the amendment itself.
Not Applicable.
FIFTH: If the amendment changes the number or par values of authorized shares,
the number of shares which the corporation has authority to issue
|
thereafter, is as follows:
Class Series (If Any) Number of Shares Par Value (If Any)
Not Applicable.
The aggregate par value of all such shares (of all classes and series) having par value is $--------------.
The total number of all shares (of all classes and series) without par value is ___________________shares.
SIXTH: The address of the registered office of the corporation in the State of
Maine is
1 Weston Court,
P.O. Box F, Augusta, Maine 04332-0232.
(street, city, state and zip code)
DATED: January 28, 1998 *By /s/ Maurice Hebert
(signature)
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Maurice Hebert, Clerk
(type or print name and capacity)
*By
(signature)
(type or print name and capacity)
MUST BE COMPLETED FOR VOTE
OF SHAREHOLDERS
I certify that I have custody of the minutes showing the above action by the
shareholders.
/s/ Maurice Hebert
(signature of clerk, secretary or assist. secretary)
|
*This document MUST be signed by (1) the Clerk OR (2) the President or a
vice-president and the Secretary or an assistant secretary, or such other
officer as the bylaws may designate as a 2nd certifying officer OR (3) if
there are no such officers, then a majority of the Directors or such
directors as may be designated by a majority of directors then in office OR
(4) if there are no such directors, then the Holders, or such of them as may
be designated by the holders, of record of a majority of all outstanding
shares entitled to vote thereon OR (5) the Holders of all of the outstanding
shares of the corporation.
SUBMIT COMPLETED FORMS TO: CORPORATE EXAMINING SECTION, SECRETARY OF STATE,
101 STATE HOUSE STATION, AUGUSTA, ME 04333-0101
Exhibit A
Articles of Amendment to the
Articles of Incorporation of
Gulf Power Company
The Company's Restated Articles of Incorporation, as amended ("Charter"), are hereby amended to eliminate in their entirety, (i) Paragraph (F)(b) under "General Provisions" of the "Preferred Stock" section of the Charter, a provision restricting the amount of securities representing unsecured indebtedness issuable by the Company, (ii) Paragraph (F)(a) under "General Provisions" of the "Preferred Stock" section of the Charter, a provision which requires the vote of the holders of at least a majority of the total voting power of the Company's outstanding preferred stock to approve the sale of all or substantially all of the Company's property and mergers or consolidations that have not been approved under the Public Utility Holding Company Act of 1935, as amended, and (iii) Paragraph (B) (except the first paragraph therein) under "General Provisions" of the "Preferred Stock" section of the Charter, a provision restricting the ability of the Company to pay dividends on its common stock in the event that its common equity capitalization falls below certain levels.
EXHIBIT 3(e)2
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
MISSISSIPPI POWER COMPANY
The following provisions of the Articles of Incorporation ("Charter") are hereby deleted in their entirety:
1. The Debt Limitation Provision
Subparagraph (F)(b) of Paragraph FOURTH under "General Provisions" of the "Preferred Stock" section of the Charter which provides as follows is hereby deleted in its entirety:
"So long as any shares of the preferred stock are outstanding, the corporation shall not, without the affirmative vote in favor thereof of the holders of at least a majority of the shares of preferred stock at the time outstanding,
(b)(i) issue or assume any secured notes, debentures or other securities representing unsecured debt (other than for the purpose of refunding or renewing outstanding unsecured securities issued or assumed by the corporation resulting in equal or longer maturities or redeeming or otherwise retiring all outstanding shares of the preferred stock or of any kind of stock over which the preferred stock does not have preference as to the payment of dividends and as to assets) if immediately after such issue or assumption (1) the total outstanding principal amount of all unsecured notes, debentures or other securities representing unsecured debt of the corporation will thereby exceed 20% of the aggregate of all existing secured debt of the corporation and the capital stock, premiums thereon and surplus of the corporation as stated on its books; or (2) the total outstanding principal amount of all unsecured notes, debentures or other securities representing unsecured debt of the corporation of maturities of less than ten years would exceed 10% of such aggregate;
(ii) for the purpose of sub-paragraph (i) above, the payment due upon the maturity of unsecured debt having an original single maturity in excess of 10 years or the payment due upon the final maturity of any unsecured serial debt which had original maturities in excess of ten years shall not be regarded as unsecured debt of a maturity of less than 10 years until such payment shall be required to be made within 3 years."
2. The Merger Provision
Subparagraph (F)(a) of Paragraph FOURTH under "General Provisions" of the "Preferred Stock" section of the Charter which provides as follows is hereby deleted in its entirety:
"So long as any shares of the preferred stock are outstanding, the corporation shall not, without the affirmative vote in favor thereof of the holders of at least a majority of the shares of preferred stock at the time outstanding,
(a) sell, lease or exchange all or substantially all of its property or merge or consolidate with or into any other corporation or corporations, unless such sale, lease, exchange, merger or consolidation, or the issuance and assumption of all securities to be issued or assumed in connection therewith, shall have been ordered, approved or permitted by the Securities and Exchange Commission, or by any successor commission thereto, under the Public Utility
Holding Company Act of 1935; provided, however, that nothing in this paragraph contained shall authorize any such sale, lease, exchange, merger or consolidation by the vote of the holders of a less number of shares of the preferred stock, or of any other class of stock, or of all classes of stock, than is required for any such sale, lease, exchange, merger or consolidation by the laws of the State of Mississippi at the time applicable thereto."
3. The Common Stock Dividend Provision
The relevant provision of Subparagraph (B) of Paragraph FOURTH under "General Provisions" of the "Preferred Stock" section of the Charter which provides as follows is hereby deleted in its entirety:
"So long as any shares of the preferred stock are outstanding, the payment of dividends on the common stock (other than dividends payable in common stock) and the making of any distribution of assets to holders of common stock by purchase of shares or otherwise (each of such actions being herein embraced within the term "payment of common stock dividends") shall be subject to the following limitations:
(a) If and so long as the ratio of the aggregate of the par value of, or stated capital represented by, the outstanding shares of common stock (including premiums on the common stock but excluding premiums on the preferred stock) and of the surplus of the corporation to the total capitalization and surplus of the corporation at the end of a period of twelve consecutive calendar months within the fourteen calendar months immediately preceding the calendar month in which the proposed payment of common stock dividends is to be made (which period is hereinafter referred to as the "base period"), adjusted to reflect the proposed payment of common stock dividends (which ratio is hereinafter referred to as the "capitalization ratio"), is less than 20%, the payment of common stock dividends, including the proposed payment, during the twelve calendar months period ending with and including the calendar month in which the proposed payment is to be made shall not exceed 50% of the net income of the corporation available for the payment of dividends on the common stock during the base period;
(b) If and so long as the capitalization ratio is 20% or more but less than 25%, the payment of common stock dividends, including the proposed payment, during the twelve calendar months period ending with and including the calendar month in which the proposed payment is to be made shall not exceed 75% of the net income of the corporation available for the payment of dividends on the common stock during the base period;
(c) Except to the extent permitted under paragraph (a) and (b) above, the corporation shall not make any payment of common stock dividends which would reduce the capitalization ratio to less than 25%.
Exhibit 4(a)2
SOUTHERN COMPANY CAPITAL FUNDING, INC.
AND
THE SOUTHERN COMPANY
TO
BANKERS TRUST COMPANY,
TRUSTEE.
SUBORDINATED NOTE INDENTURE
DATED AS OF JUNE 1, 1997
SOUTHERN COMPANY CAPITAL FUNDING, INC.
THE SOUTHERN COMPANY
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
SUBORDINATED NOTE INDENTURE, DATED AS OF JUNE 1, 1997
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
(S) 310(a)(1)..............................609
(a)(2)............................609
(a)(3).................Not Applicable
(a)(4).................Not Applicable
(b)...............................608
..............................................610
(S) 311(a).................................613
311(b)(4)...........................613(a)
(b)(6)..........................613(b)
(S) 312(a).................................701
...........................................702(a)
(c).............................702(b)
(S) 313(a)..............................703(a)
313(b)..............................703(b)
313(c)..............................703(c)
..............................................704
(d)............................703(c)
(S) 314(a)...........................704, 1007
(b).....................Not Applicable
(c)(1).............................102
(c)(2).............................102
(c)(3)..................Not Applicable
(d).....................Not Applicable
(e)................................102
(S) 315(a)..............................601(a)
(b)................................602
(c).............................601(b)
(d).............................601(c)
(d)(1).......................601(a)(1)
(d)(2).......................601(c)(2)
(d)(3).......................601(c)(3)
(e)................................514
(S) 316(a).................................101
(a)(1)(A)..........................502
..............................................512
(a)(1)(B)..........................513
(a)(2)..................Not Applicable
(b)................................508
(S) 317(a)(1)..............................503
(a)(2).............................504
(b)...............................1003
(S) 318(a).................................107
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TABLE OF CONTENTS
PAGE
Parties......................................................................1
Recitals of the Company......................................................1
ARTICLE ONE..................................................................1
SECTION 101. DEFINITIONS............................................1
Act 2
Additional Interest........................................2
Affiliate..................................................2
Authenticating Agent.......................................3
Board Resolution...........................................3
Business Day...............................................3
Certificate of a Firm of Independent Public Accountants....3
Commission.................................................3
Company 3
Company Request or Company Order...........................3
Corporate Trust Office.....................................3
Corporation................................................3
Defaulted Interest.........................................4
Depositary.................................................4
Event of Default...........................................4
Global Security............................................4
Guarantee Agreement........................................4
Guarantor..................................................4
Holder 4
Indenture..................................................4
Interest Payment Date......................................4
Junior Subordinated Note...................................4
Maturity 4
Notes Guarantee............................................5
Officers' Certificate......................................5
Opinion of Counsel.........................................5
Outstanding................................................5
Paying Agent...............................................6
Paying Agent...............................................6
Person 6
Predecessor Security.......................................6
Property Trustee...........................................6
Redemption Date............................................6
Redemption Price...........................................6
Regular Record Date........................................6
Responsible Officer........................................6
Securities Trust...........................................6
Security Register and Security Registrar...................6
Special Record Date........................................7
Stated Maturity............................................7
Trust Agreement............................................7
Trust Indenture Act........................................7
Trust Securities...........................................7
Trustee 7
Vice President.............................................8
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS...................8
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.................8
SECTION 104. ACTS OF HOLDERS........................................9
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.................10
SECTION 106. NOTICE TO HOLDERS OF JUNIOR SUBORDINATED NOTES; WAIVER10
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.....................11
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS..............11
SECTION 109. SUCCESSORS AND ASSIGNS................................11
SECTION 110. SEPARABILITY CLAUSE...................................11
SECTION 111. BENEFITS OF INDENTURE.................................11
SECTION 112. GOVERNING LAW.........................................11
SECTION 113. LEGAL HOLIDAYS........................................12
ARTICLE TWO.................................................................12
SECTION 201. FORMS GENERALLY.......................................12
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.......13
SECTION 203. JUNIOR SUBORDINATED NOTES ISSUABLE IN THE FORM OF A
GLOBAL SECURITY...........................................13
ARTICLE THREE...............................................................15
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES..................15
SECTION 302. EXECUTION, AUTHENTICATION, DELIVERY AND DATING........17
SECTION 303. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE...19
SECTION 304. MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR
SUBORDINATED NOTES........................................20
SECTION 305. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED........21
SECTION 306. PERSONS DEEMED OWNERS.................................22
SECTION 307. CANCELLATION..........................................22
SECTION 308. COMPUTATION OF INTEREST...............................23
ARTICLE FOUR 23
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE...............23
SECTION 402. APPLICATION OF TRUST MONEY............................24
ARTICLE FIVE................................................................24
SECTION 501. EVENTS OF DEFAULT.....................................24
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT....26
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE................................................27
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM......................28
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
JUNIOR SUBORDINATED NOTES.................................29
SECTION 506. APPLICATION OF MONEY COLLECTED........................29
SECTION 507. LIMITATION ON SUITS...................................29
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST......................................30
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES....................31
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE........................31
SECTION 511. DELAY OR OMISSION NOT WAIVER..........................31
SECTION 512. CONTROL BY HOLDERS OF JUNIOR SUBORDINATED NOTES.......31
SECTION 513. WAIVER OF PAST DEFAULTS...............................32
SECTION 514. UNDERTAKING FOR COSTS.................................32
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS......................32
ARTICLE SIX.................................................................33
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES...................33
SECTION 602. NOTICE OF DEFAULTS....................................34
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.............................34
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF JUNIOR
SUBORDINATED NOTES........................................35
SECTION 605. MAY HOLD JUNIOR SUBORDINATED NOTES....................36
SECTION 606. MONEY HELD IN TRUST...................................36
SECTION 607. COMPENSATION AND REIMBURSEMENT........................36
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS...............37
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY...............37
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.....37
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR................39
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS..................................................40
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.....40
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT...................41
ARTICLE SEVEN...............................................................42
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS...................................................42
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS43
SECTION 703. REPORTS BY TRUSTEE....................................43
SECTION 704. REPORTS BY COMPANY....................................43
ARTICLE EIGHT...............................................................44
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS..44
SECTION 802. SUCCESSOR CORPORATION SUBSTITUTED.....................45
ARTICLE NINE................................................................45
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS....45
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.......46
SECTION 903. GENERAL PROVISIONS REGARDING SUPPLEMENTAL INDENTURE...47
SECTION 904. EXECUTION OF SUPPLEMENTAL INDENTURES..................48
SECTION 905. EFFECT OF SUPPLEMENTAL INDENTURES.....................48
SECTION 906. CONFORMITY WITH TRUST INDENTURE ACT...................48
SECTION 907. REFERENCE IN JUNIOR SUBORDINATED NOTES TO SUPPLEMENTAL
INDENTURES................................................48
ARTICLE TEN.................................................................49
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST....................49
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY......................49
SECTION 1003. MONEY FOR JUNIOR SUBORDINATED NOTES PAYMENTS TO BE
HELD IN TRUST.............................................49
SECTION 1004. ADDITIONAL INTEREST..................................51
SECTION 1005. CORPORATE EXISTENCE..................................51
SECTION 1006. LIMITATIONS ON DIVIDEND AND CERTAIN OTHER PAYMENTS...51
SECTION 1007. STATEMENT AS TO COMPLIANCE...........................52
SECTION 1008. WAIVER OF CERTAIN COVENANTS..........................52
SECTION 1009. COVENANTS REGARDING TRUST............................53
ARTICLE ELEVEN..............................................................53
SECTION 1101. APPLICABILITY OF ARTICLE.............................53
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE................53
SECTION 1103. SELECTION BY TRUSTEE OF JUNIOR SUBORDINATED NOTES TO
BE REDEEMED...............................................54
SECTION 1104. NOTICE OF REDEMPTION.................................54
SECTION 1105. DEPOSIT OF REDEMPTION PRICE..........................55
SECTION 1106. JUNIOR SUBORDINATED NOTES PAYABLE ON REDEMPTION DATE.55
SECTION 1107. JUNIOR SUBORDINATED NOTES REDEEMED IN PART...........55
ARTICLE TWELVE..............................................................56
SECTION 1201. APPLICABILITY OF ARTICLE.............................56
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH JUNIOR
SUBORDINATED NOTES........................................56
SECTION 1203. REDEMPTION OF JUNIOR SUBORDINATED NOTES FOR SINKING
FUND......................................................57
ARTICLE THIRTEEN............................................................57
SECTION 1301. JUNIOR SUBORDINATED NOTES SUBORDINATE TO SENIOR
INDEBTEDNESS..............................................57
SECTION 1302. PAYMENT OF PROCEEDS UPON DISSOLUTION, ETC............57
SECTION 1303. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.......58
SECTION 1304. PAYMENT PERMITTED IF NO DEFAULT......................59
SECTION 1305. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS..............................................59
SECTION 1306. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS..........59
SECTION 1307. TRUSTEE TO EFFECTUATE SUBORDINATION..................60
SECTION 1308. NO WAIVER OF SUBORDINATION PROVISIONS................60
SECTION 1309. TRUST MONEYS NOT SUBORDINATED........................61
SECTION 1310. NOTICE TO THE TRUSTEE................................61
SECTION 1311. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT.........................................62
SECTION 1312. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS..............................................62
SECTION 1313. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS..........................62
SECTION 1314. ARTICLE APPLICABLE TO PAYING AGENTS..................62
SECTION 1315. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
SUBORDINATION PROVISIONS..................................63
ARTICLE FOURTEEN............................................................63
SECTION 1401. GUARANTEE............................................63
SECTION 1402. WAIVER OF NOTICE AND DEMAND..........................63
SECTION 1403. GUARANTOR OBLIGATIONS NOT AFFECTED...................64
SECTION 1404. FORM OF GUARANTEE....................................64
SECTION 1405. EXECUTION OF GUARANTEE...............................66
SECTION 1406. SUBROGATION..........................................66
SECTION 1407. INDEPENDENT OBLIGATIONS..............................66
SECTION 1408. SUBORDINATION........................................66
ARTICLE FIFTEEN.............................................................67
SECTION 1501. NO RECOURSE AGAINST OTHERS...........................67
SECTION 1502. SET-OFF..............................................67
SECTION 1503. ASSIGNMENT; BINDING EFFECT...........................67
SECTION 1504. ADDITIONAL INTEREST..................................68
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SUBORDINATED NOTE INDENTURE
THIS SUBORDINATED NOTE INDENTURE is made as of June 1, 1997, among SOUTHERN COMPANY CAPITAL FUNDING, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal office at 270 Peachtree Street, N.W., Atlanta, Georgia 30303, THE SOUTHERN COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Guarantor"), having its principal office at 270 Peachtree Street, N.W., Atlanta, Georgia 30303, and BANKERS TRUST COMPANY, a banking corporation duly organized and existing under the laws of the State of New York, having its principal corporate trust office at Four Albany Street, New York, New York 10006, as Trustee (herein called the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company has duly authorized the execution and delivery of this Subordinated Note Indenture to provide for the issuance from time to time of its unsecured subordinated debentures, notes or other evidences of indebtedness (herein called the "Junior Subordinated Notes"), to be issued in one or more series as in this Subordinated Note Indenture provided; and
WHEREAS, the Guarantor has duly authorized the execution and delivery of this Subordinated Note Indenture to provide for the guarantee of the Junior Subordinated Notes as herein provided; and
WHEREAS, all things necessary to make this Subordinated Note Indenture a valid agreement of each of the Company and the Guarantor, in accordance with its terms, have been done.
NOW, THEREFORE, for and in consideration of the premises and the purchase of the Junior Subordinated Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Junior Subordinated Notes or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Subordinated Note Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States of America, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America at the date of such computation;
(4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Subordinated Note Indenture as a whole and not to any particular Article, Section or other subdivision; and
(5) Trust Securities related to a particular series of Junior Subordinated Notes means the series of Trust Securities the proceeds of the sale of which were loaned to the Company in exchange for such series of Junior Subordinated Notes, and the guarantee agreement related to such series of Trust Securities means the guarantee agreement pursuant to which the Guarantor has guaranteed, to the extent stated therein, the payment of distributions and certain other amounts with respect to such series of Trust Securities.
Certain terms, used principally in Article Six, are defined in that Article.
"Act" when used with respect to any Holder of a Junior Subordinated Note, has the meaning specified in Section 104.
"Additional Interest" means (i) such additional amounts as may be required so that the net amounts received and retained by the Holder (if the Holder is a Securities Trust) after paying taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority will not be less than the amounts the Holder would have received had no such taxes, duties, assessments, or other governmental charges been imposed; and (ii) any interest due and not paid on an Interest Payment Date, together with interest thereon from such Interest Payment Date to the date of payment, compounded quarterly, on each Interest Payment Date.
"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Notwithstanding the foregoing, any Securities Trust organized by the Company shall not be deemed to be an Affiliate of the Company or the Guarantor.
"Authenticating Agent" means any Person or Persons authorized by the Trustee to authenticate one or more series of Junior Subordinated Notes.
"Board of Directors" means either the board of directors of the Company or the Guarantor, as applicable, or any duly authorized committee of the officers and/or directors of the Company or the Guarantor appointed by that board.
"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as applicable, to have been duly adopted by its Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed, or (iii) a day on which the Trustee's Corporate Trust Office or Property Trustee's principal corporate trust office is closed for business.
"Certificate of a Firm of Independent Public Accountants" means a certificate signed by an independent public accountant or a firm of independent public accountants who may be the independent public accountants regularly retained by the Company or the Guarantor or who may be other independent public accountants. Such accountant or firm shall be entitled to rely upon an Opinion of Counsel as to the interpretation of any legal matters relating to such certificate.
"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Subordinated Note Indenture, and thereafter "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in the Borough of Manhattan, New York City, at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Subordinated Note Indenture is located at Four Albany Street, New York, New York 10006.
"Corporation" includes corporations, partnerships, limited liability companies, associations, companies and business trusts.
"Defaulted Interest" has the meaning specified in Section 305.
"Depositary" means, unless otherwise specified by the Company pursuant to either Section 203 or 301, with respect to Junior Subordinated Notes of any series issuable or issued as a Global Security, The Depository Trust Company, New York, New York, or any successor thereto registered as a clearing agency under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation.
"Event of Default" has the meaning specified in Section 501.
"Global Security" means, with respect to any series of Junior Subordinated Notes issued hereunder, a Junior Subordinated Note that is executed by the Company and authenticated and delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, all in accordance with Section 203 of this Indenture and any indenture supplemental hereto.
"Guarantee Agreement" means a Guarantee Agreement, if any, executed and delivered by the Guarantor for the benefit of the holders from time to time of all or a portion of the Trust Securities of a Securities Trust.
"Guarantor" means the Person named as the "Guarantor" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Subordinated Note Indenture, and thereafter "Guarantor" shall mean such successor corporation.
"Holder", when used with respect to any Junior Subordinated Note, means the Person in whose name the Junior Subordinated Note is registered in the Security Register.
"Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of the particular series of Junior Subordinated Notes established as contemplated by Section 301.
"Interest Payment Date", when used with respect to any series of Junior Subordinated Notes, means the dates established for the payment of interest thereon, as provided in the supplemental indenture for such series.
"Junior Subordinated Note" has the meaning stated in the first recital of this Indenture and more particularly means any Junior Subordinated Notes authenticated and delivered under this Indenture.
"Maturity", when used with respect to any Junior Subordinated Note, means the date on which the principal of such Junior Subordinated Note or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
"Notes Guarantee" means the agreement of the Guarantor set forth in
Section 1401.
"Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company or the Guarantor, and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Junior Subordinated Notes, means, as of the date of determination, all Junior Subordinated Notes theretofore authenticated and delivered under this Indenture, except:
(i) Junior Subordinated Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
(ii) Junior Subordinated Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Junior Subordinated Notes; provided that if such Junior Subordinated Notes are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) Junior Subordinated Notes that have been paid or in exchange for or in lieu of which other Junior Subordinated Notes have been authenticated and delivered pursuant to this Indenture, other than any such Junior Subordinated Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Junior Subordinated Notes are held by a bona fide purchaser in whose hands such Junior Subordinated Notes are valid obligations of the Company; and
(iv) Junior Subordinated Notes, or portions thereof, converted into or exchanged for another security if the terms of such Junior Subordinated Notes provide for such conversion or exchange;
provided, however, that in determining, during any period in which any Junior Subordinated Notes of a series are owned by any Person other than the Company, the Guarantor or any Affiliate thereof, whether the Holders of the requisite principal amount of Outstanding Junior Subordinated Notes of such series have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Junior Subordinated Notes of such series owned by the Company, the Guarantor or any Affiliate thereof shall be disregarded and deemed not to be Outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Junior Subordinated Notes that the Trustee knows to be so owned by the Company, the Guarantor or an Affiliate of the Company or the Guarantor in the above circumstances shall be so disregarded. Junior Subordinated Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Junior Subordinated Notes and that the pledgee is not the Company, the Guarantor or any Affiliate of the Company or the Guarantor.
"Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Junior Subordinated Notes on behalf of the Company.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
"Predecessor Security" of any particular Junior Subordinated Note means every previous Junior Subordinated Note evidencing all or a portion of the same debt as that evidenced by such particular Junior Subordinated Note; and, for the purposes of this definition, any Junior Subordinated Note authenticated and delivered under Section 304 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Junior Subordinated Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Junior Subordinated Note.
"Property Trustee", when used with respect to the Junior Subordinated Notes of any series, means the Person designated as such in the related Trust Agreement.
"Redemption Date", when used with respect to any Junior Subordinated Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Junior Subordinated Note to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date on the Junior Subordinated Notes of any series means the date specified for that purpose as contemplated by Section 301, whether or not a Business Day.
"Responsible Officer", when used with respect to the Trustee, means any managing director, any vice president, any assistant vice president, any assistant secretary, any assistant treasurer, or any other officer of the Corporate Trust and Agency Group of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
"Securities Trust" means any statutory business trust formed by the Company or an Affiliate to issue Trust Securities, the proceeds of which will be used to purchase Junior Subordinated Notes of one or more series.
"Security Register" and "Security Registrar" have the respective meanings specified in Section 303.
"Senior Indebtedness" means, with respect to any Person, (i) any payment due in respect of indebtedness of such Person, whether outstanding at the date of execution of this Subordinated Note Indenture or thereafter incurred, created, or assumed, (a) in respect of money borrowed (including any financial derivative, hedging or futures contract or similar instrument) and (b) evidenced by securities, debentures, bonds, notes or other similar instruments issued by such Person which, by their terms, are senior or senior subordinated debt securities including, without limitation, all obligations under its indentures with various trustees; (ii) all capital lease obligations; (iii) all obligations issued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business and long-term purchase obligations); (iv) all obligations for the reimbursement of any letter of credit, banker's acceptance, security purchase facility or similar credit transaction; (v) all obligations of the type referred to in clauses (i) through (iv) above of other Persons the payment of which such Person is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) above of other Persons secured by any lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), except for (1) any such indebtedness that is by its terms subordinated to or pari passu with the Junior Subordinated Notes and (2) any unsecured indebtedness between or among the such Person or its Affiliates. Such Senior Indebtedness shall continue to be entitled to the benefits of the subordination provisions contained in Article Thirteen irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness.
"Special Record Date" for the payment of any Defaulted Interest on the Junior Subordinated Notes of any series means a date fixed by the Trustee pursuant to Section 305.
"Stated Maturity", when used with respect to any Junior Subordinated Note or any installment of principal thereof or interest thereon, means the date specified in such Junior Subordinated Note as the fixed date on which the principal of such Junior Subordinated Note or such installment of principal or interest is due and payable.
"Trust Agreement", when used with respect to a Securities Trust, means the agreement or instrument that governs the affairs of such Securities Trust.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, and any reference herein to the Trust Indenture Act or a particular provision thereof shall mean such Trust Indenture Act or provision, as the case may be, as amended or replaced from time to time.
"Trust Securities" means the securities issued by a Securities Trust evidencing the entire beneficial interest therein.
"Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such with respect to one or more series of Junior Subordinated Notes pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Junior Subordinated Notes of any series shall mean the Trustee with respect to Junior Subordinated Notes of that series.
"Vice President", when used with respect to the Company, the Guarantor or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president."
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include
(i) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority.
(c) The principal amount and serial numbers of Junior Subordinated Notes held by any Person, and the date of holding the same, shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of the Holder of any Junior Subordinated Note shall bind every future Holder of the same Junior Subordinated Note and the Holder of every Junior Subordinated Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Junior Subordinated Note.
(e) The fact and date of execution of any such instrument or writing and the authority of the Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section.
(f) If the Company shall solicit from the Holders of Junior Subordinated Notes of any series any Act, the Company may, at its option, by Board Resolution, fix in advance a record date for the determination of Holders of Junior Subordinated Notes entitled to take such Act, but the Company shall have no obligation to do so. Any such record date shall be fixed at the Company's discretion. If such a record date is fixed, such Act may be sought or given before or after the record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders of Junior Subordinated Notes for the purpose of determining whether Holders of the requisite proportion of Junior Subordinated Notes of such series Outstanding have authorized or agreed or consented to such Act, and for that purpose the Junior Subordinated Notes of such series Outstanding shall be computed as of such record date.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, election, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder of a Junior Subordinated Note or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust and Agency Group, or
(2) the Company or the Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company or the Guarantor addressed to the attention of its Secretary, 270 Peachtree Street, N.W., Atlanta, Georgia 30303, with a copy to Southern Company Services, Inc., 270 Peachtree Street, N.W., Atlanta, Georgia 30303, Attention: Corporate Finance Department, or at any other address previously furnished in writing to the Trustee by the Company or the Guarantor.
SECTION 106. NOTICE TO HOLDERS OF JUNIOR SUBORDINATED NOTES; WAIVER.
Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of Junior Subordinated Notes of any event, such notice shall be sufficiently given if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such Notice.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Junior Subordinated Notes shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required to be a part of and govern this Indenture, such required provision shall control.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Junior Subordinated Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or the Junior Subordinated Notes, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder and the Holders of Junior Subordinated Notes and, to the extent provided in Section 1403, the holders of Senior Indebtedness or Trust Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
THIS INDENTURE, THE JUNIOR SUBORDINATED NOTES AND THE NOTES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE COMPANY AND THE GUARANTOR EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS INDENTURE OR THE TRANSACTIONS CONTEMPLATED THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AND THE GUARANTOR EACH HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS INDENTURE OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. THE COMPANY AND THE GUARANTOR EACH AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS INDENTURE OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Junior Subordinated Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Junior Subordinated Notes) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, provided that no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
FORMS OF JUNIOR SUBORDINATED NOTES
SECTION 201. FORMS GENERALLY.
The Junior Subordinated Notes of each series shall be in substantially the form appended to the supplemental indenture authorizing such series, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this 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 Junior Subordinated Notes, as evidenced by their execution of the Junior Subordinated Notes.
The Junior Subordinated Notes of each series shall be issuable in registered form without coupons.
The definitive Junior Subordinated Notes may be printed, typewritten, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Junior Subordinated Notes, as evidenced by their execution of such Junior Subordinated Notes.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The form of the Trustee's Certificate of Authentication for a series of Junior Subordinated Notes shall be in substantially the form appended to the Supplemental Indenture authorizing such series.
SECTION 203. JUNIOR SUBORDINATED NOTES ISSUABLE IN THE FORM OF A GLOBAL SECURITY.
(a) If the Company shall establish pursuant to Section 301 that the Junior Subordinated Notes of a particular series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with Section 302 and the Company Order delivered to the Trustee thereunder, authenticate and deliver such Global Security or Securities, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of the Outstanding Junior Subordinated Notes of such series to be represented by such Global Security or Securities, (ii) may provide that the aggregate amount of Outstanding Junior Subordinated Notes represented thereby may from time to time be increased or reduced to reflect exchanges, (iii) shall be registered in the name of the Depositary for such Global Security or Securities or its nominee, (iv) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction and (v) shall bear a legend in accordance with the requirements of the Depositary.
(b) Notwithstanding any other provision of this Section 203 or of
Section 303, subject to the provisions of paragraph (c) below, unless the terms
of a Global Security expressly permit such Global Security to be exchanged in
whole or in part for individual Junior Subordinated Notes, a Global Security may
be transferred, in whole but not in part and in the manner provided in Section
303, only to a nominee of the Depositary for such Global Security, or to the
Depositary, or to a successor Depositary for such Global Security selected or
approved by the Company, or to a nominee of such successor Depositary.
(c) (1) If at any time the Depositary for a Global Security notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security or if at any time the Depositary for the Junior Subordinated Notes for such series shall no longer be eligible or in good standing under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to such Global Security. If a successor Depositary for such Global Security is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Junior Subordinated Notes of such series in exchange for such Global Security, will authenticate and deliver individual Junior Subordinated Notes of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of the Global Security in exchange for such Global Security.
(2) The Company may at any time and in its sole discretion determine that the Junior Subordinated Notes of any series issued or issuable in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Request for the authentication and delivery of individual Junior Subordinated Notes of such series in exchange in whole or in part for such Global Security, will authenticate and deliver individual Junior Subordinated Notes of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Security or Securities representing such series in exchange for such Global Security or Securities.
(3) If specified by the Company pursuant to Section 301 with respect to Junior Subordinated Notes issued or issuable in the form of a Global Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for individual Junior Subordinated Notes of such series of like tenor and terms in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (A) to each Person specified by such Depositary a new Junior Subordinated Note or Notes of the same series of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (B) to such Depositary a new Global Security of like tenor and terms and in an authorized denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Junior Subordinated Notes delivered to Holders thereof.
(4) In any exchange provided for in any of the preceding three paragraphs, the Company will execute and the Trustee will authenticate and deliver individual Junior Subordinated Notes in definitive form in authorized denominations. Upon the exchange of the entire principal amount of a Global Security for individual Junior Subordinated Notes, such Global Security shall be cancelled by the Trustee. Except as provided in the preceding paragraph, Junior Subordinated Notes issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. Provided that the Company and the Trustee have so agreed, the Trustee shall deliver such Junior Subordinated Notes to the Persons in whose names the Junior Subordinated Notes are registered.
(5) Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders, of Outstanding Junior Subordinated Notes represented thereby shall be made in such manner and by such Person or Persons as shall be specified therein or in the Company Order to be delivered pursuant to Section 302 with respect thereto. Subject to the provisions of Section 302, the Trustee shall deliver and redeliver any such Global Security in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Company Order. If a Company Order pursuant to Section 302 has been, or simultaneously is, delivered, any instructions by the Company with respect to such Global Security shall be in writing but need not be accompanied by or contained in an Officers' Certificate and need not be accompanied by an Opinion of Counsel.
ARTICLE THREE
THE JUNIOR SUBORDINATED NOTES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Junior Subordinated Notes which may be authenticated and delivered under this Indenture is unlimited.
The Junior Subordinated Notes may be issued in one or more series. There may be established, pursuant to one or more indentures supplemental hereto, prior to the issuance of Junior Subordinated Notes of any series,
(1) the title of the Junior Subordinated Notes of the series (which shall distinguish the Junior Subordinated Notes of the series from Junior Subordinated Notes of all other series);
(2) any limit upon the aggregate principal amount of the Junior Subordinated Notes of the series which may be authenticated and delivered under this Indenture (except for Junior Subordinated Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Junior Subordinated Notes of the series pursuant to Sections 203, 303, 304, 907 or 1107);
(3) the Person to whom interest on a Junior Subordinated Note of the series shall be payable if other than the Person in whose name that Junior Subordinated Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of the Junior Subordinated Notes of the series is payable, and the right, if any, to extend or advance the Stated Maturity of the Junior Subordinated Notes and the conditions to such extension or advancement;
(5) the rate or rates at which the Junior Subordinated Notes of the series shall bear interest, if any, or any method by which such rate or rates shall be determined, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable, the Regular Record Date for the interest payable on Junior Subordinated Notes on any Interest Payment Date and the basis upon which interest shall be calculated if other than that of a 360-day year consisting of twelve 30-day months;
(6) the place or places where the principal of (and premium, if any) and interest, if any, on Junior Subordinated Notes of the series shall be payable;
(7) the period or periods within which, the price or prices at which and the terms and conditions upon which Junior Subordinated Notes of the series may be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase Junior Subordinated Notes of the series pursuant to any sinking fund or analogous provision or at the option of a Holder thereof and the period or periods within which, the price or prices at which, and the terms and conditions upon which, Junior Subordinated Notes of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(9) the denominations in which Junior Subordinated Notes of the series shall be issuable;
(10) if the amount of payments of principal of (and premium, if any) or interest (including Additional Interest) on the Junior Subordinated Notes of the series may be determined with reference to an index or formula, the manner in which such amounts shall be determined;
(11) if other than the principal amount thereof, the portion of the principal amount of Junior Subordinated Notes of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502;
(12) any deletions from, modifications of or additions to the Events of Default or covenants of the Company as provided herein pertaining to the Junior Subordinated Notes of the series, and any change in the rights of the Trustee or Holders of such series pursuant to Section 901 or 902;
(13) any additions to the definitions currently set forth in this Indenture with respect to such series;
(14) whether the Junior Subordinated Notes of the series shall be issued in whole or in part in the form of a Global Security or Securities; the terms and conditions, if any, upon which such Global Security or Securities may be exchanged in whole or in part for certificated Junior Subordinated Notes of such series and of like tenor of any authorized denomination and the circumstances under which such exchange may occur, if other than in the manner provided for in Section 203; the Depositary for such Global Security or Securities; and the form of any legend or legends to be borne by any such Global Security in addition to or in lieu of the legend referred to in Section 203;
(15) the right, if any, of the Company to extend the interest payment periods of such series of Junior Subordinated Notes, including the maximum duration of any such extension or extensions, the Additional Interest, if any, payable on such Junior Subordinated Notes during any extension of the interest payment period and any notice (which shall include notice to the Trustee) that must be given upon the exercise of such right to extend interest payment periods;
(16) any restriction or condition on the transferability of such Junior Subordinated Notes;
(17) the terms of any right to convert or exchange such Junior Subordinated Notes into or for other securities or property of the Company; and
(18) any other terms of the series.
All Junior Subordinated Notes of any one series shall be substantially identical except as to the date or dates from which interest, if any, shall accrue and denomination and except as may otherwise be provided in the terms of such Junior Subordinated Notes determined or established as provided above. All Junior Subordinated Notes of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened for issuances of additional Junior Subordinated Notes of such series.
SECTION 302. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Junior Subordinated Notes shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Junior Subordinated Notes may be manual or facsimile.
Junior Subordinated Notes bearing the manual or facsimile signatures of individuals who were at the time relevant to the authorization thereof the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Junior Subordinated Notes or did not hold such offices at the date of such Junior Subordinated Notes.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Junior Subordinated Notes of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Junior Subordinated Notes, and the Trustee, in accordance with the Company Order, shall authenticate and deliver such Junior Subordinated Notes. If all of the Junior Subordinated Notes of any series are not to be issued at one time and if the supplemental indenture establishing such series shall so permit, such Company Order may set forth procedures acceptable to the Trustee for the issuance of such Junior Subordinated Notes and determining the terms of particular Junior Subordinated Notes of such series, such as interest rate, maturity date, date of issuance and date from which interest shall accrue. In authenticating Junior Subordinated Notes hereunder, and accepting the additional responsibilities under this Indenture in relation to such Junior Subordinated Notes, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon:
(1) an Opinion of Counsel, to the effect that:
(a) the form and terms of such Junior Subordinated Notes or the manner of determining such terms have been established in conformity with the provisions of this Indenture; and
(b) such Junior Subordinated Notes, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles; and
(2) an Officers' Certificate stating, to the best knowledge of each signer of such certificate, that no event which is, or after notice or lapse of time would become, an Event of Default with respect to any of the Junior Subordinated Notes shall have occurred and be continuing.
The Trustee shall not be required to authenticate such Junior Subordinated Notes if the issue of such Junior Subordinated Notes pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Junior Subordinated Notes and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
If all the Junior Subordinated Notes of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel and Officers' Certificate at the time of issuance of each such Junior Subordinated Note, but such opinion and certificate shall be delivered at or before the time of issuance of the first Junior Subordinated Note of such series to be issued.
Each Junior Subordinated Note shall be dated the date of its authentication.
No Junior Subordinated Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Junior Subordinated Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Junior Subordinated Note shall be conclusive evidence, and the only evidence, that such Junior Subordinated Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.
SECTION 303. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the office of the Security Registrar designated pursuant to this Section 303 or Section 1002 a register (referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Junior Subordinated Notes and of transfers of Junior Subordinated Notes. The Trustee is hereby initially appointed as Security Registrar for the purpose of registering Junior Subordinated Notes and transfers of Junior Subordinated Notes as herein provided.
Subject to Section 203, upon surrender for registration of transfer of any Junior Subordinated Note of any series at the office or agency maintained for such purpose for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Junior Subordinated Notes of the same series, Stated Maturity and original issue date, of any authorized denominations and of like tenor and aggregate principal amount.
Subject to Section 203, Junior Subordinated Notes of any series may be exchanged, at the option of the Holder, for Junior Subordinated Notes of the same series, Stated Maturity and original issue date, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Junior Subordinated Notes to be exchanged at any such office or agency.
Whenever any Junior Subordinated Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Junior Subordinated Notes that the Holder making the exchange is entitled to receive.
All Junior Subordinated Notes issued upon any registration of transfer or exchange of Junior Subordinated Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Junior Subordinated Notes surrendered upon such registration of transfer or exchange.
Every Junior Subordinated Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Junior Subordinated Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Junior Subordinated Notes, other than exchanges pursuant to Section 304, 907 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, to register the transfer of or to exchange Junior Subordinated Notes of any series during a period of 15 days immediately preceding the date notice is given identifying the serial numbers of the Junior Subordinated Notes of that series called for redemption, or (ii) to issue, to register the transfer of or to exchange any Junior Subordinated Notes so selected for redemption in whole or in part, except the unredeemed portion of any Junior Subordinated Note being redeemed in part.
None of the Company, the Guarantor, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
SECTION 304. MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR SUBORDINATED NOTES.
If any mutilated Junior Subordinated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Junior Subordinated Note of the same series, Stated Maturity and original issue date, and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Junior Subordinated Note and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Junior Subordinated Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Junior Subordinated Note, a new Junior Subordinated Note of the same series, Stated Maturity and original issue date, and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Junior Subordinated Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Junior Subordinated Note, pay such Junior Subordinated Note.
Upon the issuance of any new Junior Subordinated Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Junior Subordinated Note of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Junior Subordinated Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Junior Subordinated Note shall be at any time enforceable by anyone, and any such new Junior Subordinated Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Junior Subordinated Notes of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Junior Subordinated Notes.
SECTION 305. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Unless otherwise provided as contemplated by Section 301 with respect to any series of Junior Subordinated Notes, interest (including Additional Interest) on any Junior Subordinated Note that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Junior Subordinated Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.
Any interest (including Additional Interest) on any Junior Subordinated Note of any series that is payable, but is not punctually paid or duly provided for on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Junior Subordinated Notes of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Junior Subordinated Note of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Junior Subordinated Notes of such series at the address of such Holder as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Junior Subordinated Notes of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest (including Additional Interest, if any) on the Junior Subordinated Notes of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Junior Subordinated Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Junior Subordinated Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Junior Subordinated Note shall carry the rights to interest accrued (including Additional Interest, if any) and unpaid, and to accrue (including Additional Interest, if any), which were carried by such other Junior Subordinated Note.
SECTION 306. PERSONS DEEMED OWNERS.
Prior to due presentment of a Junior Subordinated Note for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name such Junior Subordinated Note is registered as the absolute owner of such Junior Subordinated Note for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 305) interest (including Additional Interest, if any) on such Junior Subordinated Note and for all other purposes whatsoever, whether or not such Junior Subordinated Note be overdue, and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary.
SECTION 307. CANCELLATION.
All Junior Subordinated Notes surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by the Trustee. The Company may at any time deliver to the Trustee for cancellation any Junior Subordinated Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Junior Subordinated Notes so delivered shall be canceled by the Trustee. No Junior Subordinated Notes shall be authenticated in lieu of or in exchange for any Junior Subordinated Notes canceled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Junior Subordinated Notes held by the Trustee shall be disposed of in accordance with a Company Order or, in the absence of such a Company Order, in accordance with the Trustee's usual procedures and the Trustee shall promptly deliver a certificate of disposition to the Company.
SECTION 308. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for Junior Subordinated Notes of any series, interest on the Junior Subordinated Notes of each series shall be computed on the basis of a 360-day year consisting of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE
This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Junior Subordinated Notes herein expressly provided for) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Junior Subordinated Notes theretofore
authenticated and delivered (other than (i) Junior
Subordinated Notes that have been destroyed, lost or stolen
and that have been replaced as provided for in Section 304 and
(ii) Junior Subordinated Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Junior Subordinated Notes not theretofore delivered to the Trustee for cancellation have become due and payable, or have been called for redemption,
and the Company, in the case of (B) above, has deposited or caused to be deposited with the Trustee as funds in trust for the purpose described above an amount sufficient to pay and discharge the entire indebtedness on such Junior Subordinated Notes not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of the Stated Maturity or Redemption Date, as the case may be, or if later, the date of payment;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
In the event there are Junior Subordinated Notes of two or more series hereunder, the Trustee shall be required to execute an instrument acknowledging satisfaction and discharge of this Indenture only if requested to do so with respect to Junior Subordinated Notes of all series as to which it is Trustee and if the other conditions thereto are met. In the event there are two or more Trustees hereunder, then the effectiveness of any such instrument shall be conditioned upon receipt of such instruments from all Trustees hereunder.
If, subsequent to the date a discharge is effected pursuant to this
Section 401, Additional Interest (in excess of that established as of the date
such discharge is effected) becomes payable in respect of the series of Junior
Subordinated Notes discharged, in order to preserve the benefits of the
discharge established hereunder, the Company shall irrevocably deposit or cause
to be irrevocably deposited in accordance with the provisions of this Section
401, within ten Business Days prior to the date the first payment in respect of
any portion of such excess Additional Interest becomes due, such additional
funds as are necessary to satisfy the provisions of this Section 401 as if a
discharge were being effected as of the date of such subsequent deposit. Failure
to comply with the requirements of this paragraph shall result in the
termination of the benefits of the discharge established by this Section 401.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607, the obligations of the Company to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Junior Subordinated Notes, and this Indenture, to the payment, either directly or through any Paying Agent (including the Company or an Affiliate acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Junior Subordinated Notes of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body or occasioned by the operation of Article Thirteen):
(1) default in the payment of any interest upon any Junior
Subordinated Note of that series when it becomes due and payable on an
Interest Payment Date other than at Maturity, including Additional
Interest (as defined in clause (ii) of the definition thereof) in
respect thereof, and continuance of such default for a period of ten
(10) days; provided, however, that (i) a valid extension of the
interest payment period by the Company pursuant to the terms of a
supplemental indenture authorizing the Junior Subordinated Notes of
that series shall not constitute a default in the payment of interest
for this purpose and (ii) no such default shall be deemed to exist if,
on or prior to the date on which such interest became due, the
Guarantor shall have made a payment sufficient to pay such interest
pursuant to the Guarantee Agreement related to the Trust Securities of
the Securities Trust owning such series of Junior Subordinated Notes,
and shall have delivered a notice to the Trustee to that effect; or
(2) default in payment of Additional Interest (as defined in clause (i) of the definition thereof) and the continuance of such default for a period of ten (10) days; or
(3) default in the payment of the principal of, (or premium,
if any) or interest (including Additional Interest as defined in clause
(ii) of the definition thereof) on any Junior Subordinated Note of that
series at its Maturity; provided, however, that no such default in the
payment of principal (or premium, if any) or interest (including
Additional Interest as defined in clause (ii) of the definition
thereof) shall be deemed to exist if, on or prior to the date such
principal (and premium, if any) or interest (including Additional
Interest as defined in clause (ii) of the definition thereof) became
due, the Guarantor shall have made a payment sufficient to pay such
principal (and premium, if any) or interest (including Additional
Interest as defined in clause (ii) of the definition thereof) pursuant
to the Guarantee Agreement related to the Trust Securities of the
Securities Trust owning such series of Junior Subordinated Notes, and
shall have delivered a notice to the Trustee to that effect; or
(4) default in the deposit of any sinking fund payment, when and as due by the terms of a Junior Subordinated Note of that series and continuance of such default for a period of 3 Business Days; or
(5) default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of one or more series of Junior Subordinated Notes other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Junior Subordinated Notes of that series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or the Guarantor in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as properly filed a petition by one or more Persons other than the Company or the Guarantor seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the Guarantor under any applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for the Company or the Guarantor or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or
(7) the commencement by the Company or the Guarantor of a case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or the Guarantor to the entry of a decree or order for relief in respect of it in a case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or the Guarantor or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or the Guarantor in furtherance of any such action; or
(8) any other Event of Default provided with respect to Junior Subordinated Notes of that series in the supplemental indenture authorizing such series.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Junior Subordinated Notes of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Junior Subordinated Notes of that series may declare the principal amount (or such portion of the principal amount as may be specified in the terms of that series) of all of the Junior Subordinated Notes of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Junior Subordinated Notes of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of not less than a majority in principal amount of the Outstanding Junior Subordinated Notes of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest (including any Additional Interest) on all Junior Subordinated Notes of that series,
(B) the principal of (and premium, if any) any Junior Subordinated Notes of that series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Junior Subordinated Notes,
(C) to the extent that payment of such interest is lawful, interest upon overdue interest (including any Additional Interest) at the rate or rates prescribed therefor in such Junior Subordinated Notes, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due to the Trustee under
Section 607; and
(2) all Events of Default with respect to Junior Subordinated Notes of that series, other than the non-payment of the principal of Junior Subordinated Notes of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if an Event of Default occurs under Section 501(1), (2), (3) or (4) with respect to any Junior Subordinated Notes the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Junior Subordinated Notes, the whole amount then due and payable on such Junior Subordinated Notes for principal (and premium, if any) and interest (including Additional Interest, if any) and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest (including Additional Interest, if any), at the rate or rates prescribed therefor in such Junior Subordinated Notes, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee under Section 607.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Junior Subordinated Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Junior Subordinated Notes, wherever situated.
If an Event of Default with respect to Junior Subordinated Notes of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Junior Subordinated Notes of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Junior Subordinated Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Junior Subordinated Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Junior Subordinated Notes and to file such other papers
or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due to the Trustee under
Section 607) and of the Holders of Junior Subordinated Notes allowed in
such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder of Junior Subordinated Notes to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Junior Subordinated Notes, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Junior Subordinated Note any plan of reorganization, arrangement, adjustment or composition affecting the Junior Subordinated Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Junior Subordinated Note in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF JUNIOR SUBORDINATED NOTES.
All rights of action and claims under this Indenture or the Junior Subordinated Notes may be prosecuted and enforced by the Trustee without the possession of any of the Junior Subordinated Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Junior Subordinated Notes in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Junior Subordinated Notes, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under
Section 607; and
Second: Subject to Article Thirteen, to the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest (including Additional Interest, if any) on the Junior Subordinated Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Junior Subordinated Notes for principal (and premium, if any) and interest (including Additional Interest, if any), respectively; and
Third: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Junior Subordinated Note of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Junior Subordinated Notes of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding Junior Subordinated Notes of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Junior Subordinated Notes of that series;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture but subject to
Article Thirteen, (1) the Holder of any Junior Subordinated Notes shall have the
right, which is absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 305) interest (including any
Additional Interest) on such Junior Subordinated Note on the due dates expressed
in such Junior Subordinated Note (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder; and
(2) so long as the Junior Subordinated Notes of any series are held by a
Securities Trust, a registered holder of preferred securities issued by such
Securities Trust may institute a legal proceeding directly against the Company
(or against the Guarantor pursuant to the Notes Guarantee), without first
instituting a legal proceeding directly against or requesting or directing that
action be taken by the Property Trustee of such Securities Trust or any other
Person, for enforcement of payment to such registered holder of principal of or
interest on Junior Subordinated Notes of such series having a principal amount
equal to the aggregate stated liquidation amount of such preferred securities of
such registered holder on or after the due dates therefor specified or provided
for in the Junior Subordinated Notes of such series.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Junior Subordinated Note has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Guarantor, the Trustee and the Holders of Junior Subordinated Notes shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Junior Subordinated Notes in the last paragraph of Section 304, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders of Junior Subordinated Notes is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Junior Subordinated Note to exercise any right or remedy upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders of Junior Subordinated Notes may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Junior Subordinated Notes.
SECTION 512. CONTROL BY HOLDERS OF JUNIOR SUBORDINATED NOTES.
The Holders of not less than a majority in principal amount of the Outstanding Junior Subordinated Notes of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Junior Subordinated Notes of such series, provided that
(1) such direction shall not be in conflict with any rule of law or with this Indenture, and could not involve the Trustee in personal liability in circumstances where reasonable indemnity would not be adequate, and
(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the Outstanding Junior Subordinated Notes of any series may, on behalf of the Holders of all the Junior Subordinated Notes of such series, waive any past default hereunder with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or interest (including Additional Interest) on any Junior Subordinated Note of such series, or
(2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Junior Subordinated Note of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Junior Subordinated Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company or the Guarantor, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Junior Subordinated Notes of any series, or to any suit instituted by any Holder of any Junior Subordinated Note for the enforcement of the payment of the principal of (or premium, if any) or interest (including Additional Interest) on any Junior Subordinated Note on or after the Stated Maturity or Maturities expressed in such Junior Subordinated Note (or, in the case of redemption, on or after the Redemption Date).
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default with respect to Junior Subordinated Notes of any series,
(1) the Trustee undertakes to perform, with respect to Junior Subordinated Notes of such series, such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may, with respect to Junior Subordinated Notes of such series, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Junior Subordinated Notes of any series has occurred and is continuing, the Trustee shall exercise, with respect to Junior Subordinated Notes of such series, such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Junior Subordinated Notes of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Junior Subordinated Notes of such series; and
(4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default hereunder with respect to the Junior Subordinated Notes of any series, the Trustee shall transmit by mail to all Holders of Junior Subordinated Notes of such series entitled to receive reports pursuant to Section 313(c) of the Trust Indenture Act, notice of all defaults hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest (including Additional Interest) on any Junior Subordinated Note of such series or in the payment of any sinking fund installment with respect to Junior Subordinated Notes of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of Junior Subordinated Notes of such series; and provided, further, that in the case of any default of the character specified in Section 501(5) with respect to Junior Subordinated Notes of such series, no such notice to Holders shall be given until at least 45 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Junior Subordinated Notes of such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and a resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of Junior Subordinated Notes of any series pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and
(h) the Trustee shall not be charged with knowledge of any Event of Default with respect to the Junior Subordinated Notes of any series for which it is acting as Trustee unless either (1) a Responsible Officer of the Trustee shall have actual knowledge of the Event of Default or (2) written notice of such Event of Default shall have been given to the Trustee by the Company, any other obligor on such Junior Subordinated Notes or by any Holder of such Junior Subordinated Notes.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF JUNIOR SUBORDINATED NOTES.
The recitals contained herein and in the Junior Subordinated Notes (except the Trustee's certificates of authentication) shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Junior Subordinated Notes. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Junior Subordinated Notes or the proceeds thereof.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of Trust Securities and shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of a Trust Security to establish that such Person is such a holder. The Trustee may conclusively rely on an Officers' Certificate as evidence that the holders of the necessary percentage of liquidation preference of Trust Securities have taken any action contemplated hereunder and shall have no duty to investigate the truth or accuracy of any statement contained therein.
SECTION 605. MAY HOLD JUNIOR SUBORDINATED NOTES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Junior Subordinated Notes and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, willful misconduct or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. This indemnification shall survive the termination of this Indenture or the resignation or removal of the Trustee.
As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Junior Subordinated Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of, premium, if any, or interest, if any, on particular Junior Subordinated Notes.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire any conflicting interest, within the meaning of the Trust Indenture Act, it shall, within 90 days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by federal or state authority and qualified and eligible under this Article and otherwise permitted by the Trust Indenture Act to act as Trustee under an Indenture qualified under the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Junior
Subordinated Notes of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Junior Subordinated Notes of such series.
(c) The Trustee may be removed at any time with respect to the Junior Subordinated Notes of any series by Act of the Holders of a majority in principal amount of the Outstanding Junior Subordinated Notes of such series delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder of a Junior Subordinated Note who has been a Holder of a Junior Subordinated Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Junior Subordinated Notes, or (ii) subject to
Section 514, any Holder of a Junior Subordinated Note who has been a bona fide
Holder of a Junior Subordinated Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Junior
Subordinated Notes and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Junior Subordinated Notes of one or more series, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Junior Subordinated Notes of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Junior Subordinated Notes of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the Junior Subordinated
Notes of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Junior Subordinated Notes of any series shall be appointed by Act
of the Holders of a majority in principal amount of the Outstanding Junior
Subordinated Notes of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Junior Subordinated Notes
of such series and to that extent supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the Junior Subordinated
Notes of any series shall have been so appointed by the Company or the Holders
of Junior Subordinated Notes and accepted appointment in the manner required by
Section 611, any Holder of a Junior Subordinated Note who has been a bona fide
Holder of a Junior Subordinated Note of such series for at least six months may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Junior Subordinated Notes of such series.
(f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Junior Subordinated Notes of any series and each appointment of a successor Trustee with respect to the Junior Subordinated Notes of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of such series of Junior Subordinated Notes as their names and addresses appear in the Security Register.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with respect to all Junior Subordinated Notes, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Junior Subordinated Notes of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Junior Subordinated Notes of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Junior Subordinated Notes of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Junior Subordinated Notes, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Junior Subordinated Notes of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Junior Subordinated Notes of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Junior Subordinated Notes of that or those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Junior Subordinated Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Junior Subordinated Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Junior Subordinated Notes.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Junior Subordinated Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). For purposes of Section 311(b)(4) and (6) of the Trust Indenture Act:
(a) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company (or any such obligor) for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company (or any such obligor) arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
At any time when any of the Junior Subordinated Notes remain Outstanding the Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Junior Subordinated Notes that shall be authorized to act on behalf of the Trustee to authenticate Junior Subordinated Notes of such series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 304, and Junior Subordinated Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Junior Subordinated Notes by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Junior Subordinated Notes, if any, of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.
The provisions of Sections 306, 604 and 605 shall be applicable to each Authenticating Agent.
If an appointment with respect to one or more series is made pursuant to this Section, the Junior Subordinated Notes of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form:
This is one of the Junior Subordinated Notes of the series designated therein referred to in the within-mentioned Indenture.
As Trustee
By
As Authenticating Agent
By
Authorized Signatory
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than June 1 and December 1, in each year, a list, in such form as the Trustee may reasonably require, containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Junior Subordinated Notes as of the preceding May 15 or November 15, as the case may be, and
(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of the most recent Regular Record Date;
excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall comply with the obligations imposed on it pursuant to Section 312 of the Trust Indenture Act.
(b) Every Holder of Junior Subordinated Notes, by receiving and holding
the same, agrees with the Company, the Guarantor and the Trustee that neither
the Company, the Guarantor nor the Trustee nor any agent of any of them shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders of Junior Subordinated Notes in accordance
with Section 312(b) of the Trust Indenture Act, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the first May 15 after the first issuance of Junior Subordinated Notes pursuant to this Indenture, if required by Section 313(a) of the Trust Indenture Act, the Trustee shall transmit a brief report dated as of such May 15 with respect to any of the events specified in such Section 313(a) that may have occurred since the later of the immediately preceding May 15 and the date of this Indenture.
(b) The Trustee shall transmit the reports required by Section 313(b) of the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 313(c) and (d) of the Trust Indenture Act.
SECTION 704. REPORTS BY COMPANY.
The Company, pursuant to Section 314(a) of the Trust Indenture Act, shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) that the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended; or,
if the Company is not required to file information, documents or
reports pursuant to either of said Sections, then it shall file with
the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Securities Exchange Act of
1934, as amended, in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in
such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations;
(3) transmit, within 30 days after the filing thereof with the Trustee, to the Holders of Junior Subordinated Notes, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section 704 as may be required by rules and regulations prescribed from time to time by the Commission; and
(4) notify the Trustee when and as the Junior Subordinated Notes of any series become admitted to trading on any national securities exchange.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY AND GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
Neither the Company nor the Guarantor shall consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless
(1) in case the Company or the Guarantor shall consolidate with or merge into another corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the corporation formed by such consolidation or into which the Company or the Guarantor is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company or the Guarantor substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including Additional Interest) on all the Junior Subordinated Notes and the performance of every covenant of this Indenture on the part of the Company or the Guarantor, as the case may be, to be performed or observed;
(2) immediately after giving effect to such transactions, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and
(3) the Company or the Guarantor, as the case may be, has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.
SECTION 802. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company or the Guarantor with or merger by the Company or the Guarantor into any corporation or any conveyance, transfer or lease of the properties and assets of the Company or the Guarantor substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company or the Guarantor is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor, as the case may be, under this Indenture with the same effect as if such successor corporation had been named as the Company or the Guarantor, as the case may be, herein, and thereafter, except in the case of a lease, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Junior Subordinated Notes.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Junior Subordinated Notes, the Company and the Guarantor, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor herein and in the Junior Subordinated Notes; or
(2) to add to the covenants of the Company or the Guarantor for the benefit of the Holders of all or any series of Junior Subordinated Notes (and if such covenants are to be for the benefit of less than all series of Junior Subordinated Notes, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company or the Guarantor; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture, to change or eliminate any restrictions on the payment of principal (or premium, if any) on Junior Subordinated Notes or to permit the issuance of Junior Subordinated Notes in uncertificated form, provided any such action shall not adversely affect the interests of the Holders of Junior Subordinated Notes of any series in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture with respect to any series of Junior Subordinated Notes theretofore unissued; or
(6) to secure the Junior Subordinated Notes; or
(7) to establish the form or terms of Junior Subordinated Notes of any series as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Junior Subordinated Notes of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611(b); or
(9) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make provisions with respect to matters or questions arising under this Indenture, provided such action shall not adversely affect the interests of the Holders of Junior Subordinated Notes of any series or holders of outstanding Trust Securities in any material respect; or
(10) subject to Section 903(a), to make any change in Articles Thirteen and Fourteen that would limit or terminate the benefits available to any holder of Senior Indebtedness under such Articles; or
(11) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly required by the Trust Indenture Act.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal amount of the Outstanding Junior Subordinated Notes of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company, the Guarantor and the Trustee, the Company and the Guarantor, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Junior Subordinated Notes of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Junior Subordinated Note affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Junior Subordinated Note, or reduce the principal amount thereof or the rate of interest (including Additional Interest) thereon or any premium payable upon the redemption thereof, or change the method of calculating the rate of interest thereon, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Junior Subordinated Notes of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section 902, Section
513 or Section 1008, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Junior Subordinated Note affected thereby, provided,
however, that this clause shall not be deemed to require the consent of
any Holder of a Junior Subordinated Note with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 1008, or the deletion of this proviso, in accordance with the
requirements of Sections 611(b) and 901(8), or
(4) reduce any amount payable under, delay or defer the required time of payment under, or impair the right to institute suit to enforce any payment under the Notes Guarantee, or
(5) modify the provisions of this Indenture with respect to the subordination of the Junior Subordinated Notes or the Notes Guarantee in a manner adverse to such Holder.
SECTION 903. GENERAL PROVISIONS REGARDING SUPPLEMENTAL INDENTURE.
(a) A supplemental indenture entered into pursuant to Section 901 or
Section 902 may not make any change that adversely affects the rights under
Article Thirteen or Article Fourteen of any holder of Senior Indebtedness of the
Company or the Guarantor then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
(b) A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Junior Subordinated Notes, or which modifies the rights of the Holders of Junior Subordinated Notes of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Junior Subordinated Notes of any other series.
(c) It shall not be necessary for any Act of Holders of Junior Subordinated Notes under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act or action shall approve the substance thereof.
SECTION 904. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, immunities or liabilities under this Indenture or otherwise.
SECTION 905. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Junior Subordinated Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
SECTION 906. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act.
SECTION 907. REFERENCE IN JUNIOR SUBORDINATED NOTES TO SUPPLEMENTAL INDENTURES.
Junior Subordinated Notes of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Junior Subordinated Notes of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Junior Subordinated Notes of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company covenants and agrees for the benefit of each series of Junior Subordinated Notes that it will duly and punctually pay the principal of (and premium, if any) and interest, including Additional Interest (subject to the right of the Company to extend an interest payment period pursuant to the terms of a supplemental indenture authorizing the Junior Subordinated Notes of that series), on the Junior Subordinated Notes of that series in accordance with the terms of the Junior Subordinated Notes and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company or its Affiliate will maintain an office or agency where Junior Subordinated Notes of each series may be presented or surrendered for payment, where Junior Subordinated Notes of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Junior Subordinated Notes of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency in respect of any series of Junior Subordinated Notes or shall fail to furnish the Trustee with the address thereof, such presentations and surrenders of Junior Subordinated Notes of that series may be made and notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive such respective presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices or agencies where the Junior Subordinated Notes of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
SECTION 1003. MONEY FOR JUNIOR SUBORDINATED NOTES PAYMENTS TO BE HELD IN TRUST.
If the Company or one of its Affiliates shall at any time act as its own Paying Agent with respect to any series of Junior Subordinated Notes, it will, on or before each due date of the principal of (and premium, if any) or interest (including Additional Interest, if any) on any of the Junior Subordinated Notes of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest (including Additional Interest, if any) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Junior Subordinated Notes, it will, prior to each due date of the principal of (and premium, if any) or interest (including Additional Interest, if any) on any Junior Subordinated Notes of that series, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest (including Additional Interest, if any) so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest (including Additional Interest, if any), and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Junior Subordinated Notes other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest (including Additional Interest, if any) on Junior Subordinated Notes of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other obligor upon the Junior Subordinated Notes of that series) in the making of any payment of principal of (and premium, if any) or interest (including Additional Interest, if any) on the Junior Subordinated Notes of that series; and
(3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest (including Additional Interest, if any) on any Junior Subordinated Note of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest (including Additional Interest, if any) has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Junior Subordinated Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper of general circulation in New York City notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 1004. ADDITIONAL INTEREST.
If the Junior Subordinated Notes of a series provide for the payment of Additional Interest (for purposes of this Section 1004, as defined in clause (i) of the definition thereof) to the Holders of such Junior Subordinated Notes, then the Company shall pay to each Holder of such Securities the Additional Interest as provided therein.
Except as otherwise provided in or pursuant to this Indenture, if the Junior Subordinated Notes of a series provide for the payment of Additional Interest, at least 10 days prior to the first Interest Payment Date with respect to that series of Junior Subordinated Notes upon which such Additional Interest shall be payable (or, if the Junior Subordinated Notes of that series shall not bear interest prior to Maturity, the first day on which a payment of principal and any premium is made), and at least 10 days prior to each date of payment of principal and any premium or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the Company's Paying Agents, if other than the Trustee or the Company, with an Officers' Certificate stating the amount of the Additional Interest payable per minimum authorized denomination of such Junior Subordinated Notes (and, if such Additional Interest is payable only with respect to particular Junior Subordinated Notes, then the names of the Holders of such Junior Subordinated Notes).
SECTION 1005. CORPORATE EXISTENCE.
Subject to Article Eight, each of the Company and the Guarantor will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights (charter and statutory) and franchises; provided, however, that neither the Company nor the Guarantor shall be required to preserve any such right or franchise if its Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of its business, and that the loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 1006. LIMITATIONS ON DIVIDEND AND CERTAIN OTHER PAYMENTS.
The Company and the Guarantor each covenants, for the benefit of the Holders of each series of Junior Subordinated Notes, that, subject to the next succeeding sentence, (a) neither the Company nor the Guarantor shall declare or pay any dividend or make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, and (b) neither the Company nor the Guarantor shall make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees) issued by it which rank pari passu with or junior to the Junior Subordinated Notes or the Notes Guarantee, (x) if at such time the Company shall have given notice of its election to extend an interest payment period for such series of Junior Subordinated Notes and such extension shall be continuing, (y) if at such time the Guarantor shall be in default with respect to its payment or other obligations under (A) the Guarantee Agreement with respect to the series of Trust Securities, if any, related to such series of Junior Subordinated Notes or (B) the Notes Guarantee related to such series of Junior Subordinated Notes, or (z) if at such time an Event of Default hereunder with respect to such series of Junior Subordinated Notes shall have occurred and be continuing. The preceding sentence, however, shall not restrict (i) any of the actions described in the preceding sentence resulting from any reclassification of the Company's or the Guarantor's capital stock or the exchange or conversion of one class or series of the Company's or the Guarantor's capital stock for another class or series of the Company's or the Guarantor's capital stock, (ii) the purchase of fractional interests in shares of the Company's or the Guarantor's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iii) dividends, payments or distributions payable in shares of capital stock, (iv) redemptions, purchases or other acquisitions of shares of capital stock in connection with any employment contract, incentive plan, benefit plan or other similar arrangement of the Guarantor or any of its subsidiaries or in connection with a dividend reinvestment or stock purchase plan, or (v) any declaration of a dividend in connection with implementation of any stockholders' rights plan, or the issuance of rights, stock or other property under any such plan, or the redemption, repurchase or other acquisition of any such rights pursuant thereto.
SECTION 1007. STATEMENT AS TO COMPLIANCE.
(a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, a written statement, which need not comply with Section 102, signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company, as to his or her knowledge of the Company's compliance with all conditions and covenants under this Indenture. For purposes of this Section 1007, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture.
(b) The Company shall deliver to the Trustee, no later than the Business Day on which the event occurs, written notice of the liquidation, dissolution or winding-up of a Securities Trust if such liquidation, dissolution or winding-up would occur earlier than the Stated Maturity of the Junior Subordinated Notes owned by such Securities Trust.
(c) The Company shall deliver to the Trustee, within five days after the occurrence thereof, written notice of any event which after notice or lapse of time or both would become an Event of Default pursuant to Section 501.
SECTION 1008. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term, provision or condition set forth in Sections 1005 and 1006 with respect to the Junior Subordinated Notes of any series if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Junior Subordinated Notes of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
SECTION 1009. COVENANTS REGARDING TRUST.
For so long as the Trust Securities remain outstanding, the Company
covenants (i) to directly or indirectly maintain 100% ownership of the Common
Securities (as defined in the Trust Agreement relating to such securities) of
the Trust; provided, however, that any permitted successor of the Company
hereunder may succeed to the Company's ownership of such Common Securities, and
(ii) to use its reasonable efforts to cause the Trust (a) to remain a statutory
business trust, except in connection with the distribution of Junior
Subordinated Notes to the holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities of the Trust, or certain
mergers, consolidations or amalgamations, each as permitted under the Trust
Agreement, and (b) to otherwise continue to be classified as a grantor trust for
United States federal income tax purposes.
ARTICLE ELEVEN
REDEMPTION OF JUNIOR SUBORDINATED NOTES
SECTION 1101. APPLICABILITY OF ARTICLE.
Junior Subordinated Notes of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Junior Subordinated Notes of any series) in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Junior Subordinated Notes shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of all of the Junior Subordinated Notes of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee and the related Property Trustee), notify the Trustee and the related Property Trustee in writing of such Redemption Date. In case of any redemption at the election of the Company of less than all the Junior Subordinated Notes of any series, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee and the related Property Trustee), notify the Trustee and the related Property Trustee in writing of such Redemption Date and of the principal amount of Junior Subordinated Notes of such series to be redeemed. In the case of any redemption of Junior Subordinated Notes (i) prior to the expiration of any restriction on such redemption provided in the terms of such Junior Subordinated Notes or elsewhere in this Indenture, or (ii) pursuant to an election of the Company which is subject to a condition specified in the terms of such Junior Subordinated Notes, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction or condition.
SECTION 1103. SELECTION BY TRUSTEE OF JUNIOR SUBORDINATED NOTES TO BE REDEEMED.
If the Junior Subordinated Notes are registered in the name of only one Holder, any partial redemptions shall be pro rata. If the Junior Subordinated Notes are held in definitive form by more than one Holder and if less than all the Junior Subordinated Notes of any series are to be redeemed, the particular Junior Subordinated Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Junior Subordinated Notes of such series not previously called for redemption, by lot or other such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Junior Subordinated Notes of that series or any integral multiple thereof) of the principal amount of Junior Subordinated Notes of such series of a denomination larger than the minimum authorized denomination for Junior Subordinated Notes of that series.
The Trustee shall promptly notify the Company in writing of the Junior Subordinated Notes selected for redemption and, in the case of any Junior Subordinated Notes selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Junior Subordinated Notes shall relate, in the case of any Junior Subordinated Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Junior Subordinated Notes which has been or is to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section 106 to the Holders of Junior Subordinated Notes to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Junior Subordinated Notes of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Junior Subordinated Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due and payable upon each such Junior Subordinated Note to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date,
(5) the place or places where such Junior Subordinated Notes are to be surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Junior Subordinated Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
Except as otherwise provided in a supplemental indenture pursuant to
Section 301, prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company or its Affiliate is acting as
its own Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money sufficient to pay the Redemption Price of and accrued
interest, if any, on all the Junior Subordinated Notes which are to be redeemed
on that date.
SECTION 1106. JUNIOR SUBORDINATED NOTES PAYABLE ON REDEMPTION DATE
Notice of redemption having been given as aforesaid, the Junior Subordinated Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified together with any accrued interest (including any Additional Interest) thereon, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Junior Subordinated Notes shall cease to bear interest. Upon surrender of any such Junior Subordinated Note for redemption in accordance with such notice, such Junior Subordinated Note shall be paid by the Company at the Redemption Price, together with accrued interest, if any, and any Additional Interest to the Redemption Date; provided, however, that, except as otherwise provided in a supplemental indenture pursuant to Section 301, installments of interest on Junior Subordinated Notes whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Junior Subordinated Notes, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 305.
If any Junior Subordinated Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Junior Subordinated Note.
SECTION 1107. JUNIOR SUBORDINATED NOTES REDEEMED IN PART.
Any Junior Subordinated Note that is to be redeemed only in part shall be surrendered at an office or agency of the Company therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Junior Subordinated Note without service charge, a new Junior Subordinated Note of the same series, Stated Maturity and original issue date of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Junior Subordinated Note so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund for the retirement of Junior Subordinated Notes of a series except as otherwise specified as contemplated by Section 301 for Junior Subordinated Notes of such series.
The minimum amount of any sinking fund payment provided for by the terms of Junior Subordinated Notes of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Junior Subordinated Notes of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Junior Subordinated Notes of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Junior Subordinated Notes of any series as provided for by the terms of Junior Subordinated Notes of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH JUNIOR SUBORDINATED NOTES.
The Company (1) may deliver Outstanding Junior Subordinated Notes of a series (other than any previously called for redemption), and (2) may apply as a credit Junior Subordinated Notes of a series which have been redeemed either at the election of the Company pursuant to the terms of such Junior Subordinated Notes or through the application of permitted optional sinking fund payments pursuant to the terms of such Junior Subordinated Notes, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Junior Subordinated Notes of such series required to be made pursuant to the terms of such Junior Subordinated Notes as provided for by the terms of such series; provided that such Junior Subordinated Notes have not been previously so credited. Such Junior Subordinated Notes shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Junior Subordinated Notes for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF JUNIOR SUBORDINATED NOTES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date for any series of Junior Subordinated Notes, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Junior Subordinated Notes of that series pursuant to Section 1202 and stating the basis for such credit and that such Junior Subordinated Notes have not previously been so credited and will also deliver to the Trustee any Junior Subordinated Notes to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Junior Subordinated Notes to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Junior Subordinated Notes shall be made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
SUBORDINATION
SECTION 1301. JUNIOR SUBORDINATED NOTES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Junior Subordinated Note, by his acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article (subject to Article Four), the payment of the principal of, premium, if any, and interest (including Additional Interest) on each and all of the Junior Subordinated Notes are hereby expressly made subordinate and subject in right of payment to the prior payment in full in cash of all Senior Indebtedness. The term "Senior Indebtedness" when used in this Article Thirteen shall be deemed to mean the Senior Indebtedness of the Company.
SECTION 1302. PAYMENT OF PROCEEDS UPON DISSOLUTION, ETC.
Upon any payment or distribution of assets of the Company to creditors upon any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors, marshalling of assets or liabilities or any bankruptcy, insolvency or similar proceedings of the Company (each such event, if any, referred to as a "Proceeding"), the holders of Senior Indebtedness shall be entitled to receive payment in full of all amounts due on or to become due on or in respect of all Senior Indebtedness (including any interest accruing thereon after the commencement of any such Proceeding, whether or not allowed as a claim against the Company in such Proceeding), before the Holders of the Junior Subordinated Notes are entitled to receive any payment or distribution (excluding any payment described in Section 1309) on account of the principal of, premium, if any, or interest (including Additional Interest, if any) on the Junior Subordinated Notes or on account of any purchase, redemption or other acquisition of Junior Subordinated Notes by the Company (all such payments, distributions, purchases, redemptions and acquisitions, whether or not in connection with a Proceeding, herein referred to, individually and collectively, as a "Payment").
In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing shall be received by the Trustee or the Holders of the Junior Subordinated Notes before all Senior Indebtedness is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Indebtedness or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness.
For purposes of this Article, "assets of the Company" shall not be
deemed to include shares of stock of the Company as reorganized or readjusted,
or securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least to
the extent provided in this Article with respect to the Junior Subordinated
Notes to the payment of all Senior Indebtedness that may at the time be
outstanding, provided, however, that (i) the Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article Eight hereof shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 1302 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
Eight hereof. Nothing in Section 1303 or in this Section 1302 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 607.
SECTION 1303. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT
No payment of any principal, including redemption payments, if any, premium, if any, or interest on (including Additional Interest) the Junior Subordinated Notes shall be made if
(i) any Senior Indebtedness is not paid when due whether at the stated maturity of any such payment or by call for redemption and any applicable grace period with respect to such default has ended, with such default remaining uncured and such default has not been waived or otherwise ceased to exist;
(ii) the maturity of any Senior Indebtedness has been accelerated because of a default; or
(iii) notice has been given of the exercise of an option to require repayment, mandatory payment or prepayment or otherwise.
In the event that, notwithstanding the foregoing, the Company shall make any Payment to the Trustee or any Holder prohibited by the foregoing provisions of this Section, then in such event such Payment shall be held in trust and paid over and delivered forthwith to the holders of the Senior Indebtedness.
The provisions of this Section shall not apply to any Payment with respect to which Section 1302 hereof would be applicable.
SECTION 1304. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or in any of the Junior Subordinated Notes shall prevent the Company, at any time except during the pendency of any Proceeding referred to in Section 1302 hereof or under the conditions described in Section 1303 hereof, from making Payments. Nothing in this Article shall have any effect on the right of the Holders or the Trustee to accelerate the maturity of the Junior Subordinated Notes upon the occurrence of an Event of Default, but, in that event, no payment may be made in violation of the provisions of this Article with respect to the Junior Subordinated Notes. If payment of the Junior Subordinated Notes is accelerated because of an Event of Default, the Company shall promptly notify the holders of the Senior Indebtedness (or their representatives) of such acceleration.
SECTION 1305. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
The rights of the Holders of the Junior Subordinated Notes shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of, premium, if any, and interest (including Additional Interest) on the Junior Subordinated Notes shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Junior Subordinated Notes or the Trustee would be entitled except for the provisions of this Article, and no payments pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Junior Subordinated Notes or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Junior Subordinated Notes, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness.
SECTION 1306. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Junior Subordinated Notes is intended to or shall (a) impair, as among the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Junior Subordinated Notes, the obligation of the Company, which is absolute and unconditional (and which, subject to the rights under this Article of the holders of Senior Indebtedness, is intended to rank equally with all other general obligations of the Company), to pay to the Holders of the Junior Subordinated Notes the principal of, premium, if any, and interest (including Additional Interest) on the Junior Subordinated Notes as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Junior Subordinated Notes and creditors of the Company other than the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Junior Subordinated Note from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder or, under the conditions specified in Section 1303, to prevent any payment prohibited by such Section or enforce their rights pursuant to the penultimate paragraph in Section 1303.
SECTION 1307. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Junior Subordinated Note by his acceptance thereof authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article and appoints the Trustee his attorney-in-fact for any and all such purposes, including, in the event of any dissolution, winding-up, liquidation or reorganization of the Company, whether in bankruptcy, insolvency, receivership proceedings, or otherwise, the timely filing of a claim for the unpaid balance of the indebtedness of the Company owing to such Holder in the form required in such proceedings and the causing of such claim to be approved.
SECTION 1308. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness to enforce the subordination provisions provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or any failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Junior Subordinated Notes, without incurring responsibility to the Holders of the Junior Subordinated Notes and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Holders of the Junior Subordinated Notes to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) permit the Company to borrow, repay and then reborrow any or all of the Senior Indebtedness; (iii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iv) release any Person liable in any manner for the collection of Senior Indebtedness; (v) exercise or refrain from exercising any rights against the Company and any other Person; or (vi) apply any sums received by them to Senior Indebtedness.
SECTION 1309. TRUST MONEYS NOT SUBORDINATED.
Notwithstanding anything contained herein to the contrary, payments from money held in trust by the Trustee under Article Four for the payment of the principal of, premium, if any, and interest (including Additional Interest) on any series of Junior Subordinated Notes shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article and no Holder of such Junior Subordinated Notes nor the Trustee shall be obligated to pay over such amount to the Company, any holder of Senior Indebtedness (or a designated representative of such holder) or any other creditor of the Company.
SECTION 1310. NOTICE TO THE TRUSTEE.
The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment of monies to or by the Trustee in respect of the Junior Subordinated Notes pursuant to the provisions of this Article. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of monies to or by the Trustee in respect of the Junior Subordinated Notes pursuant to the provisions of this Article unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Corporate Trust Office of the Trustee from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Section 601, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 1310 at least two Business Days prior to the date upon which, by the terms hereof, any money may become payable for any purpose (including, without limitation, the payment of the principal of (or premium, if any) or interest on any Junior Subordinated Note), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 601, shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
SECTION 1311. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 601 hereof, and the Holders of the Junior Subordinated Notes shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Junior Subordinated Notes, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article, provided that the foregoing shall apply only if such court has been apprised of the provisions of this Article.
SECTION 1312. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the provisions of Section 601, the Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Junior Subordinated Notes or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
SECTION 1313. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS; PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607 hereof.
SECTION 1314. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee (or the Company or an Affiliate of the Company) shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee.
SECTION 1315. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION PROVISIONS.
Each Holder by accepting a Junior Subordinated Note acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the issuance of the Junior Subordinated Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or to continue to hold, such Senior Indebtedness.
ARTICLE FOURTEEN
NOTES GUARANTEE
SECTION 1401. GUARANTEE.
The Guarantor hereby irrevocably and unconditionally guarantees to each Holder of a Junior Subordinated Note of each series the due and punctual payment of the principal of and any premium and interest (including Additional Interest) on such Junior Subordinated Note when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, in accordance with the terms of such Junior Subordinated Note and this Indenture, regardless of any defense, right of set-off or counterclaim that the Guarantor may have or assert, except the defense of payment. The Guarantor's obligation to make a payment under this Article XIV may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Company to pay such amounts to the Holders.
The Notes Guarantee set forth in this Section 1401 shall not be valid or become obligatory for any purpose with respect to a Junior Subordinated Note until the certificate of authentication on such Junior Subordinated Note shall have been authenticated by or on behalf of the Trustee by manual signature.
SECTION 1402. WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of the Notes Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Company or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.
SECTION 1403. GUARANTOR OBLIGATIONS NOT AFFECTED.
The obligations of the Guarantor under this Article XIV shall in no way be affected or impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Company of any express or implied agreement, covenant, term or condition relating to the Junior Subordinated Notes to be performed or observed by the Company;
(b) the extension of time for the payment by the Company of all or any portion of the interest on the Junior Subordinated Notes, the Redemption Price or any other sums payable under the terms of the Junior Subordinated Notes or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Junior Subordinated Notes (other than an extension of time for payment of interest or any other sums payable that results from the extension of any interest payment period on the Junior Subordinated Notes of any series permitted by this Indenture).
(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Junior Subordinated Notes, or any action on the part of the Company granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Company or any of the assets of the Company;
(e) any invalidity of, or defect or deficiency in, the Junior Subordinated Notes;
(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment of the underlying obligation), it being the intent of this Article XIV that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 1404. FORM OF GUARANTEE.
A notation of the Notes Guarantee shall be set forth on each Junior Subordinated Note in substantially the following form:
FOR VALUE RECEIVED, THE SOUTHERN COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (the "Guarantor", which term includes any successor Person under the Indenture referred to herein) hereby irrevocably and unconditionally guarantees to the Holder of this Junior Subordinated Note issued by Southern Company Capital Funding, Inc. (the "Company"), pursuant to the terms of the Notes Guarantee contained in Article XIV of the Indenture, the due and punctual payment of the principal of and premium, if any, and interest (including Additional Interest) on this Junior Subordinated Note, when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, in accordance with the terms of this Junior Subordinated Note and the Indenture.
The obligations of the Guarantor to the Holders of the Junior Subordinated Notes and to the Trustee pursuant to the Notes Guarantee and the Indenture are expressly set forth in Article XIV of the Indenture, and reference is hereby made to such Article and Indenture for the precise terms of the Notes Guarantee.
Notwithstanding anything to the contrary in this Notes Guarantee, all payments in respect of the Notes Guarantee are subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture) of the Guarantor.
THIS NOTES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
The Notes Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Junior Subordinated Note upon which this notation of the Notes Guarantee is endorsed shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.
(SEAL) THE SOUTHERN COMPANY
Attest:
By:
Name:
Title:
SECTION 1405. EXECUTION OF GUARANTEE.
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To evidence the Notes Guarantee to the Holders specified in Section 1401, the Guarantor hereby agrees to execute the notation of the Notes Guarantee, in substantially the form set forth in Section 1404, to be endorsed on each Junior Subordinated Note authenticated and delivered by the Trustee. The Guarantor hereby agrees that the Notes Guarantee set forth in Section 1401 shall remain in full force and effect notwithstanding any failure to endorse on each Junior Subordinated Note a notation of the Notes Guarantee. Each such notation of the Notes Guarantee shall be signed on behalf of the Guarantor, by a director or officer, prior to the authentication of the Junior Subordinated Note on which it is endorsed, and the delivery of such Junior Subordinated Note by the Trustee, after the due authentication thereof by the Trustee hereunder, shall constitute due delivery of the Notes Guarantee on behalf of the Guarantor. Such signature upon the notation of the Notes Guarantee may be a manual or facsimile signature of any such director or officer and may be imprinted or otherwise reproduced below the notation of the Notes Guarantee, and in case any such director or officer who shall have signed the notation of the Notes Guarantee shall cease to be such director or officer before the Junior Subordinated Note on which such notation is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Junior Subordinated Note nevertheless may be authenticated and delivered or disposed of as though the person who signed the notation of the Notes Guarantee had not ceased to be such director or officer of the Guarantor.
SECTION 1406. SUBROGATION.
The Guarantor shall be subrogated to all rights (if any) of the Holders against the Company in respect of any amounts paid to the Holders by the Guarantor under this Article XIV with respect to any series of Junior Subordinated Notes; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Article XIV with respect to a series of Junior Subordinated Notes if, at the time of any such payment, any amounts are due and unpaid under such series of Junior Subordinated Notes. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 1407. INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Company with respect to the Junior Subordinated Notes and that the Guarantor shall be liable as principal and as debtor hereunder to make payments pursuant to the terms of the Notes Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 1403 hereof.
SECTION 1408. SUBORDINATION.
The Guarantor covenants and agrees, and each Holder of a Junior Subordinated Note, by his acceptance thereof, likewise covenants and agrees, that, to the same extent and in the same manner set forth in Article XIII with respect to subordination and relative rights of the Junior Subordinated Notes, all payments in respect of the Notes Guarantee are hereby expressly made subordinate and subject in right of payment to the prior payment in full in cash of all Senior Indebtedness of the Guarantor.
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 1501. NO RECOURSE AGAINST OTHERS.
An incorporator or any past, present or future director, officer, employee or stockholder, as such, of the Company or the Guarantor shall not have any liability for any obligations of the Company or the Guarantor under the Junior Subordinated Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Junior Subordinated Note, each Holder shall waive and release all such liability. Such waiver and release shall be part of the consideration for the issue of the Junior Subordinated Notes.
SECTION 1502. SET-OFF.
Notwithstanding anything to the contrary in this Indenture or in any Junior Subordinated Note of any series, prior to the dissolution of any Securities Trust that has issued Trust Securities related to a series of Junior Subordinated Notes, the Company shall have the right to set-off and apply against any payment it is otherwise required to make hereunder or thereunder with respect to the principal of or interest (including any Additional Interest) on the Junior Subordinated Notes of such series with and to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment with respect to the Trust Securities of the series related to such series of Junior Subordinated Notes under the applicable Guarantee. Contemporaneously with, or as promptly as practicable after, any such payment under such Guarantee, the Company shall deliver to the Trustee an Officers' Certificate (upon which the Trustee shall be entitled to rely conclusively without any requirement to investigate the facts contained therein) to the effect that such payment has been made and that, as a result of such payment, the corresponding payment under the related series of Junior Subordinated Notes has been set-off in accordance with this Section 1502.
SECTION 1503. ASSIGNMENT; BINDING EFFECT.
The Company shall have the right at all times to assign any of its rights or obligations under this Indenture to a direct or indirect wholly-owned subsidiary of the Company, provided that, in the event of any such assignment, the Company shall remain primarily liable for the performance of all such obligations. This Indenture may also be assigned by the Company in connection with a transaction described in Article Eight. This Indenture shall be binding upon and inure to the benefit of the Company, the Trustee, the Holders, any Security Registrar, Paying Agent, and Authenticating Agent and, to the extent specifically set forth herein, the holders of Senior Indebtedness and their respective successors and assigns. The provisions of clause (2) of Section 508 and Section 1006 are for the benefit of the holders of the series of Trust Securities referred to therein and, prior to the dissolution of the related Securities Trust, may be enforced by such holders. A holder of a Trust Security shall not have the right, as such a holder, to enforce any other provision of this Indenture.
SECTION 1504. ADDITIONAL INTEREST.
Whenever there is mentioned in this Indenture, in any context, the payment of the principal of, premium, if any, or interest on, or in respect of, any Junior Subordinated Note of any series, such mention shall be deemed to include mention of the payment of Additional Interest provided for by the terms of such series of Junior Subordinated Notes to the extent that, in such context, Additional Interest is, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Interest in any provisions hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
By
Vice President
Attest:
Assistant Secretary
THE SOUTHERN COMPANY
By
Financial Vice President
Attest:
Assistant Secretary
BANKERS TRUST COMPANY
Trustee
By
Attest:
SOUTHERN COMPANY CAPITAL FUNDING, INC.
AND
THE SOUTHERN COMPANY
TO
BANKERS TRUST COMPANY,
TRUSTEE.
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 6, 1997
$206,186,000
SERIES C 7.75% JUNIOR SUBORDINATED NOTES
DUE MARCH 31, 2037
TABLE OF CONTENTS1
ARTICLE 1..............................................................1
SECTION 101. Establishment.............................................1 SECTION 102. Definitions...............................................2 SECTION 103. Payment of Principal and Interest.........................3 SECTION 104. Deferral of Interest Payments.............................4 SECTION 105. Denominations.............................................5 SECTION 106. Global Securities.........................................5 SECTION 107. Transfer..................................................5 SECTION 108. Redemption................................................6 ARTICLE 2..............................................................6 SECTION 201. Recitals by Company.......................................6 SECTION 202. Ratification and Incorporation of Original Indenture......6 SECTION 203. Executed in Counterparts..................................6 SECTION 204. Listing of Notes..........................................7 ______________________________ |
1 This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.
..................THIS FIRST SUPPLEMENTAL INDENTURE is made as of the 6th day of June, 1997, by and among SOUTHERN COMPANY CAPITAL FUNDING, INC., a Delaware corporation, 270 Peachtree Street, N.W., Atlanta, Georgia 30303 (the "Company"), THE SOUTHERN COMPANY, a Delaware corporation, 270 Peachtree Street, N.W., Atlanta, Georgia 30303 (the "Guarantor"), and BANKERS TRUST COMPANY, a New York banking corporation, Four Albany Street, New York, New York 10006 (the "Trustee").
W I T N E S S E T H:
.........WHEREAS, the Company and the Guarantor have heretofore entered into a Subordinated Note Indenture, dated as of June 1, 1997 (the "Original Indenture"), with Bankers Trust Company;
.........WHEREAS, the Original Indenture is incorporated herein by this reference and the Original Indenture, as supplemented by this First Supplemental Indenture, is herein called the "Indenture";
.........WHEREAS, under the Original Indenture, a new series of Junior Subordinated Notes may at any time be established by the Board of Directors of the Company in accordance with the provisions of the Original Indenture and the terms of such series may be described by a supplemental indenture executed by the Company, the Guarantor and the Trustee;
.........WHEREAS, the Company proposes to create under the Indenture a new series of Junior Subordinated Notes;
.........WHEREAS, additional Junior Subordinated Notes of other series hereafter established, except as may be limited in the Original Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and
.........WHEREAS, all conditions necessary to authorize the execution and delivery of this First Supplemental Indenture and to make it a valid and binding obligation of the Company have been done or performed.
.........NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
Series C Junior Subordinated Notes
SECTION 101. Establishment. There is hereby established a new series of Junior Subordinated Notes to be issued under the Indenture, to be designated as the Company's Series C 7.75% Junior Subordinated Notes due March 31, 2037 (the "Series C Notes").
There are to be authenticated and delivered $206,186,000 principal amount of Series C Notes, and no further Series C Notes shall be authenticated and delivered except as provided by Sections 203, 303, 304, 907 or 1107 of the Original Indenture. The Series C Notes shall be issued in definitive fully registered form.
The Series C Notes shall be in substantially the form set out in Exhibit A hereto. The entire principal amount of the Series C Notes shall initially be evidenced by one certificate issued to the Property Trustee of Southern Company Capital Trust III.
The form of the Trustee's Certificate of Authentication for the Series C Notes shall be in substantially the form set forth in Exhibit B hereto. A notation of the Notes Guarantee shall be set forth on each Series C Note in substantially the form set forth in Section 1404 of the Original Indenture.
Each Series C Note shall be dated the date of authentication thereof and shall bear interest from the date of original issuance thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for.
SECTION 102. Definitions. The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.
"Deferred Interest" means each installment of interest not paid during any Extension Period, and interest thereon. Deferred installments of interest shall bear interest at the rate of 7.75% per annum from the applicable Interest Payment Date to the date of payment, compounded quarterly, to the extent permitted by applicable law.
"Extension Period" means any period during which the Company has elected to defer payments of interest, which deferral may be for a period of up to twenty (20) consecutive quarters.
"Interest Payment Dates" means March 31, June 30, September 30 and December 31 of each year.
"Investment Company Act Event" means that the Company shall have received an Opinion of Counsel to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Securities Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which change becomes effective on or after the Original Issue Date.
"Original Issue Date" means June 6, 1997.
"Regular Record Date" means, with respect to each Interest Payment Date, the close of business on the 15th calendar day preceding such Interest Payment Date.
"Securities Trust" means Southern Company Capital Trust III, a statutory business trust formed by the Company under Delaware law to issue Trust Securities, the proceeds of which will be used to purchase Series C Notes.
"Special Event" means an Investment Company Act Event or Tax Event.
"Stated Maturity" means March 31, 2037.
"Tax Event" means that the Company shall have received an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations, there is more than an insubstantial risk that (i) the Securities Trust would be subject to United States federal income tax with respect to income accrued or received on the Series C Notes, (ii) interest payable to the Securities Trust on the Series C Notes would not be deductible by a member of the Guarantor's consolidated tax group for United States federal income tax purposes, or (iii) the Securities Trust would be subject to more than a de minimis amount of other taxes, duties or other governmental charges, which change or amendment becomes effective on or after the Original Issue Date.
SECTION 103. Payment of Principal and Interest. The unpaid principal amount of the Series C Notes shall bear interest at the rate of 7.75% per annum until paid or duly provided for. Interest shall be paid quarterly in arrears on each Interest Payment Date to the Person in whose name the Series C Notes are registered on the Regular Record Date for such Interest Payment Date, provided that interest payable at the Stated Maturity of principal or on a Redemption Date as provided herein will be paid to the Person to whom principal is payable. So long as an Extension Period is not occurring, any such interest that is not so punctually paid or duly provided for will forthwith cease to be payable to the Holders on such Regular Record Date and may either be paid to the Person or Persons in whose name the Series C Notes are registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee ("Special Record Date"), notice whereof shall be given to Holders of the Series C Notes not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Series C Notes shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Original Indenture.
Payments of interest on the Series C Notes will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for the Series C Notes shall be computed and paid on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Series C Notes is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day that is a Business Day, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable.
Payment of the principal, premium, if any, and interest (including Additional Interest, if any) due at the Stated Maturity or earlier redemption of the Series C Notes shall be made upon surrender of the Series C Notes at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of interest (including interest on any Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto.
The Company shall pay, as additional interest on the Series C Notes, when due to the United States or any other taxing authority, the amounts set forth in clause (i) of the definition of Additional Interest.
SECTION 104. Deferral of Interest Payments. The Company has the right at any time and from time to time to extend the interest payment period of the Series C Notes for up to twenty (20) consecutive quarters (each, an "Extension Period"), but not beyond the Stated Maturity. Notwithstanding the foregoing, the Company has no right to extend its obligation to pay such amounts as are defined in clause (i) of the definition of Additional Interest. Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, provided that such Extension Period, together with all such previous and further extensions of that Extension Period, shall not exceed twenty (20) consecutive quarters. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due, the Company may select a new Extension Period, subject to the above limitations and requirements.
Upon the termination of any Extension Period, which termination shall be on an Interest Payment Date, the Company shall pay all Deferred Interest on the next succeeding Interest Payment Date to the Person in whose name the Series C Notes are registered on the Regular Record Date for such Interest Payment Date, provided that Deferred Interest payable at Stated Maturity or on any Redemption Date will be paid to the Person to whom principal is payable.
The Company shall give the Holder or Holders of the Series C Notes and the Trustee notice, as provided in Sections 105 and 106, respectively, of the Original Indenture, of its selection or extension of an Extension Period at least one Business Day prior to the earlier of (i) the Regular Record Date relating to the Interest Payment Date on which the Extension Period is to commence or relating to the Interest Payment Date on which an Extension Period that is being extended would otherwise terminate, or (ii) the date the Company or Securities Trust is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization of the record date or the date such distributions are payable. The Company shall cause the Securities Trust to give notice of the Company's selection of such Extension Period to Holders of the Trust Securities. The month in which any notice is given pursuant to the immediately preceding sentence of this Section shall constitute the first month of the first quarter of the twenty (20) quarters, which comprise the Maximum Extension Period.
At any time any of the foregoing notices are given to the Trustee, the Company shall give to the Paying Agent for the Series C Notes such information as said Paying Agent shall reasonably require in order to fulfill its tax reporting obligations with respect to such Series C Notes.
SECTION 105. Denominations. The Series C Notes may be issued in the denominations of $25, or any integral multiple thereof.
SECTION 106. Global Securities. If the Series C Notes are distributed to Holders of the Trust Securities of the Securities Trust in liquidation of such Holders' interests therein, the Series C Notes will be issued in the form of one or more Global Securities registered in the name of the Depositary (which shall be The Depository Trust Company) or its nominee. Except under the limited circumstances described below, Series C Notes represented by the Global Security will not be exchangeable for, and will not otherwise be issuable as, Series C Notes in definitive form. The Global Securities described above may not be transferred except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or to a successor Depositary or its nominee.
Owners of beneficial interests in such a Global Security will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing a Series C Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of the Depositary or its nominee or to a successor Depositary or its nominee. The rights of Holders of such Global Security shall be exercised only through the Depositary.
A Global Security shall be exchangeable for Series C Notes registered
in the names of persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as a
Depositary for such Global Security and no successor Depositary shall have been
appointed, or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, at a time when
the Depositary is required to be so registered to act as such Depositary and no
successor Depositary shall have been appointed, (ii) the Company in its sole
discretion determines that such Global Security shall be so exchangeable, or
(iii) there shall have occurred an Event of Default with respect to the Series C
Notes. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Series C Notes registered in such names as
the Depositary shall direct.
SECTION 107. Transfer. No service charge will be made for any transfer or exchange of Series C Notes, but payment will be required of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.
The Company shall not be required (a) to issue, transfer or exchange
any Series C Notes during a period beginning at the opening of business fifteen
(15) days before the day of the mailing of a notice identifying the serial
numbers of the Series C Notes to be called for redemption, and ending at the
close of business on the day of the mailing, or (b) to transfer or exchange any
Series C Notes theretofore selected for redemption in whole or in part, except
the unredeemed portion of any Series C Note redeemed in part.
SECTION 108. Redemption. The Series C Notes shall be subject to redemption at the option of the Company, in whole or in part, without premium or penalty, at any time or from time to time on or after June 6, 2002, at a Redemption Price equal to 100% of the principal amount to be redeemed plus accrued but unpaid interest, including Additional Interest, if any, to the Redemption Date; provided, however, that if a redemption in part shall result in the delisting of the Preferred Securities issued by the Securities Trust, the Company may only redeem the Series C Notes in whole. In addition, upon the occurrence of a Special Event at any time, the Company may, within ninety (90) days following the occurrence thereof and subject to the terms and conditions of the Indenture, elect to redeem the Series C Notes, in whole, at a price equal to 100% of the principal amount to be redeemed plus any accrued but unpaid interest (including Additional Interest) to the Redemption Date.
In the event of redemption of the Series C Notes in part only, a new Series C Note or Notes for the unredeemed portion will be issued in the name or names of the Holders thereof upon the surrender thereof.
The Series C Notes will not have a sinking fund.
Notice of redemption shall be given as provided in Section 1104 of the Original Indenture.
Any redemption of less than all of the Series C Notes shall, with respect to the principal thereof, be divisible by $25.
ARTICLE 2
Miscellaneous Provisions
SECTION 201. Recitals by Company. The recitals in this First 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 of Series C Notes and of this First Supplemental Indenture as fully and with like effect as if set forth herein in full.
SECTION 202. Ratification and Incorporation of Original Indenture. As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture, as heretofore supplemented and modified, and this First Supplemental Indenture shall be read, taken and construed as one and the same instrument.
SECTION 203. Executed in Counterparts. This First Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.
SECTION 204. Listing of Notes. If the Series C Notes are to be issued as a Global Security in connection with the distribution of the Series C Notes to the Holders of the Preferred Securities issued by the Securities Trust, the Company will use its best efforts to list such Series C Notes on the New York Stock Exchange or any such other exchange on which such Preferred Securities are then listed and traded.
IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written.
SOUTHERN COMPANY
CAPITAL FUNDING, INC.
ATTEST:
By:____________________________ By:_____________________________
ATTEST: THE SOUTHERN COMPANY
By:____________________________ By:_____________________________
ATTEST: BANKERS TRUST COMPANY,
as Trustee
By:____________________________ By:_____________________________
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EXHIBIT A
FORM OF SERIES C NOTE
NO. 1 CUSIP NO.
THE INDEBTEDNESS EVIDENCED BY THIS SECURITY IS, TO THE EXTENT PROVIDED IN THE INDENTURE, SUBORDINATE AND SUBJECT IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS OF THE COMPANY AND THIS SECURITY IS ISSUED SUBJECT TO THE PROVISIONS OF THE INDENTURE WITH RESPECT THERETO.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
SERIES C 7.75% JUNIOR SUBORDINATED NOTE
DUE MARCH 31, 2037
Principal Amount: $____________ Regular Record Date: 15th calendar day prior to Interest Payment Date Original Issue Date: June 6, 1997 Stated Maturity: March 31, 2037 |
Interest Payment Dates: March 31, June 30, September 30 and December 31
Interest Rate: 7.75% per annum Authorized Denomination: $25 Initial Redemption Date: June 6, 2002 |
Southern Company Capital Funding, Inc., a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to _____________________________________, or registered assigns, the principal sum of _________ DOLLARS ($__________) on the Stated Maturity shown above (or upon earlier redemption), and to pay interest thereon from the Original Issue Date shown above, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on each Interest Payment Date as specified above, commencing on the Interest Payment Date next succeeding the Original Issue Date shown above and on the Stated Maturity (or upon earlier redemption) at the rate per annum shown above until the principal hereof is paid or made available for payment and on any overdue principal and on any overdue installment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date (other than an Interest Payment Date that is the Stated Maturity or on a Redemption Date) will, as provided in such Indenture, be paid to the Person in whose name this Note (the "Note") is registered at the close of business on the Regular Record Date as specified above next preceding such Interest Payment Date, provided that any interest payable at Stated Maturity or on any Redemption Date will be paid to the Person to whom principal is payable. Except as otherwise provided in the Indenture, 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 Note 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 Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes of this series shall be listed, and upon such notice as may be required by any such exchange, all as more fully provided in the Indenture.
Payments of interest on this Note will include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for this Note shall be computed and paid on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day, except that, if such Business Day is in the next succeeding calendar year, payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. A "Business Day" shall mean any day other than a Saturday or a Sunday or a day on which banking institutions in New York City are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Trustee or the principal corporate trust office of the Property Trustee of the Securities Trust are closed for business.
The Company shall have the right at any time and from time to time during the term of this Note to extend the interest payment period of such Note for up to 20 consecutive quarters but not beyond the Stated Maturity of this Note (each, an "Extension Period"), during which periods unpaid interest (together with interest thereon) will compound quarterly at the Interest Rate ("Deferred Interest"). Upon the termination of each Extension Period, which shall be an Interest Payment Date, the Company shall pay all Deferred Interest on the next succeeding Interest Payment Date to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such Interest Payment Date, provided that any Deferred Interest payable at Stated Maturity or on any Redemption Date will be paid to the Person to whom principal is payable. Prior to the termination of any such Extension Period, the Company may extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof shall not exceed 20 consecutive quarters. Upon the termination of any such Extension Period, and the payment of all accrued and unpaid interest and any Additional Interest then due, the Company may select a new Extension Period, subject to the above requirements. If the Company shall have given notice of its election to select any Extension Period, subject to certain exceptions provided in the Indenture, neither the Company nor the Guarantor referred to herein shall (i) declare or pay any dividend or distribution on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock, or make any guarantee payments with respect to the foregoing or (ii) make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by it that rank pari passu with or junior to this Note or the Notes Guarantee referred to herein. The Company shall give the Holder of this Note and the Trustee notice of its selection or extension of an Extension Period at least one Business Day prior to the earlier of (i) the Regular Record Date relating to the Interest Payment Date on which the Extension Period is to commence or relating to the Interest Payment Date on which an Extension Period that is being extended would otherwise terminate or (ii) the date the Company or Securities Trust is required to give notice to the New York Stock Exchange or other applicable self-regulatory organization of the record date or the date distributions are payable.
The Company also shall be obligated to pay when due and without extension all additional amounts as may be required so that the net amount received and retained by the Holder of this Note (if the Holder is a Securities Trust) after paying taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States or any other taxing authority will not be less than the amounts such Holder would have received had no such taxes, duties, assessments, or other governmental charges been imposed.
Payment of the principal of and interest (including Additional Interest, if any) due at the Stated Maturity or earlier redemption of the Series C Notes shall be made upon surrender of the Series C Notes at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payment of interest (including interest on an Interest Payment Date) will be made, subject to such surrender where applicable, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least 16 days prior to the date for payment by the Person entitled thereto.
The indebtedness evidenced by this Note is, to the extent provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture) of the Company, and this Note is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided, and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness of the Company, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.
Dated: ________ __, 19__.
SOUTHERN COMPANY CAPITAL
FUNDING, INC.
By:
Vice President
Attest:
Assistant Secretary
{Seal of SOUTHERN COMPANY CAPITAL FUNDING, INC. appears here}
NOTES GUARANTEE
FOR VALUE RECEIVED, THE SOUTHERN COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (the "Guarantor", which term includes any successor Person under the Indenture referred to herein) hereby irrevocably and unconditionally guarantees to the Holder of this Junior Subordinated Note issued by Southern Company Capital Funding, Inc. (the "Company"), pursuant to the terms of the Notes Guarantee contained in Article XIV of the Indenture, the due and punctual payment of the principal of and premium, if any, and interest (including Additional Interest) on this Junior Subordinated Note, when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, in accordance with the terms of this Junior Subordinated Note and the Indenture.
The obligations of the Guarantor to the Holders of the Junior Subordinated Notes and to the Trustee pursuant to the Notes Guarantee and the Indenture are expressly set forth in Article XIV of the Indenture, and reference is hereby made to such Article and Indenture for the precise terms of the Notes Guarantee.
Notwithstanding anything to the contrary in this Notes Guarantee, all payments in respect of the Notes Guarantee are subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness (as defined in the Indenture) of the Guarantor.
This Notes Guarantee shall be governed by and construed in accordance with the laws of the State of New York.
The Notes Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Junior Subordinated Note upon which this notation of the Notes Guarantee is endorsed shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.
(SEAL) THE SOUTHERN COMPANY
Attest:
By:
Name:
Title
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CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
Authorized Officer
(Reverse Side of Note)
This Note is one of a duly authorized issue of Junior Subordinated Notes of the Company (the "Notes"), issued and issuable in one or more series under a Subordinated Note Indenture, dated as of June 1, 1997, as supplemented (the "Indenture"), among the Company, the Guarantor and Bankers Trust Company, Trustee (the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures incidental thereto reference is hereby made for a statement of the respective rights, limitation of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Notes issued thereunder and of the terms upon which said Notes are, and are to be, authenticated and delivered. This Note is one of the series designated on the face hereof as Series C 7.75% Junior Subordinated Notes due March 31, 2037 (the "Series C Notes") in the aggregate principal amount of up to $206,186,000. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.
The Company shall have the right, subject to the terms and conditions of the Indenture, to redeem this Note at any time on or after June 6, 2002, at the option of the Company, without premium or penalty, in whole or in part, at a Redemption Price equal to 100% of the principal amount to be redeemed plus any accrued and unpaid interest, including Additional Interest, if any, to the Redemption Date . Upon the occurrence of a Special Event (as defined below) at any time, the Company may, within 90 days following the occurrence thereof and subject to the terms and conditions of the Indenture, redeem this Note without premium or penalty, in whole, at a Redemption Price equal to 100% of the principal amount thereof plus any accrued and unpaid interest, including Additional Interest, if any, to the Redemption Date. A Special Event may be a Tax Event or an Investment Company Act Event. "Tax Event" means that the Company shall have received an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an interpretation or application of such laws or regulations, there is more than an insubstantial risk that (i) the related Securities Trust would be subject to United States federal income tax with respect to income accrued or received on the Series C Notes, (ii) interest payable to the related Securities Trust would not be deductible by the Company for United States federal income tax purposes, or (iii) the related Securities Trust would be subject to more than a de minimis amount of other taxes, duties or other governmental charges, which change or amendment becomes effective on or after the Original Issue Date. "Investment Company Act Event" means that the Company shall have received an Opinion of Counsel to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the related Securities Trust is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940, as amended, which change becomes effective on or after the Original Issue Date.
In the event of redemption of this Note in part only, a new Note or Notes of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the surrender hereof. The Notes will not have a sinking fund.
If an Event of Default with respect to the Notes of this series shall occur and be continuing, the principal of the Notes of this series may be declared due and payable in the manner, with the effect and subject to the conditions 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 Guarantor and the rights of the Holders of the Notes of each series to be affected under the Indenture at any time by the Company, the Guarantor and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Notes of each series at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes of such series, 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 Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note 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 Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, 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 Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 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 Note for registration of transfer, the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to the contrary.
The Notes of this series are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Note or Notes to be exchanged at the office or agency of the Company.
This Note shall be governed by, and construed in accordance with, the internal laws of the State of New York.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM- as tenants in UNIF GIFT MIN ACT- _______ Custodian ________
common (Cust) (Minor)
TEN ENT- as tenants by the
entireties under Uniform Gifts to
JT TEN- as joint tenants Minors Act
with right of
survivorship and ________________________
not as tenants (State)
in common
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Additional abbreviations may also be used though not on the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
(please insert Social Security or other identifying number of assignee)
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE
the within Note and all rights thereunder, hereby irrevocably constituting and appointing
agent to transfer said Note on the books of the Company, with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement, or any change whatever.
EXHIBIT B
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
Authorized Officer
Exhbit 4(a)5
SOUTHERN COMPANY CAPITAL TRUST III
AMENDED AND RESTATED
TRUST AGREEMENT
among
SOUTHERN COMPANY CAPITAL FUNDING, INC., as Depositor,
BANKERS TRUST COMPANY, as Property Trustee,
BANKERS TRUST (DELAWARE), as Delaware Trustee,
and
WAYNE BOSTON AND RICHARD A. CHILDS,
as Administrative Trustees
Dated as of June 1, 1997
SOUTHERN COMPANY CAPITAL TRUST III
Certain Sections of this Trust Agreement relating to Sections 310 through 318 of the Trust Indenture Act of 1939:
Trust Indenture Act Section Trust Agreement Section
Section 310(a)(1)..........................8.07
(a)(2)............................8.07
(a)(3)............................8.09
(a)(4)..................Not Applicable
(b)...............................8.08
Section 311(a).............................8.13
(b)...............................8.13
Section 312(a).............................5.07
(b)...............................5.07
(c)...............................5.07
Section 313(a)..........................8.14(a)
(a)(4).........................8.14(b)
(b)............................8.14(b)
(c)............................8.14(a)
(d)...................8.14(a), 8.14(b)
Section 314(a).............................8.15
(b).....................Not Applicable
(c)(1)......................8.15, 8.16
(c)(2)............................8.16
(c)(3)............................8.16
(d).....................Not Applicable
(e)...............................8.16
Section 315(a).............................8.01
(b)......................8.02, 8.14(b)
(c)............................8.01(a)
(d).........................8.01, 8.03
(e).....................Not Applicable
Section 316(a)...................Not Applicable
(a)(1)(A).........................8.19
(a)(1)(B).........................8.19
(a)(2)..................Not Applicable
(b).....................Not Applicable
(c).....................Not Applicable
Section 317(a)(1)................Not Applicable
(a)(2)..................Not Applicable
(b)...............................5.09
Section 318(a)............................10.10
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Note: This Cross-Reference Table does not constitute part of the Trust Agreement and shall not affect the interpretation of any of its terms and provisions.
TABLE OF CONTENTS
ARTICLE I....................................................1
Section 1.01 Definitions.....................................1
ARTICLE II..................................................10
Section 2.01 Name...........................................10
Section 2.02 Offices of the Trustees; Principal Place
of Business........................................10
Section 2.03 Initial Contribution of Trust Property;
Organizational Expenses............................10
Section 2.04 Issuance of the Preferred Securities...........10
Section 2.05 Subscription and Purchase of Junior
Subordinated Notes; Issuance of the Common
Securities.........................................10
Section 2.06 Declaration of Trust...........................11
Section 2.07 Authorization to Enter into Certain
Transactions.......................................11
Section 2.08 Assets of Trust................................15
Section 2.09 Title to Trust Property........................15
Section 2.10 Mergers and Consolidations of the Trust........15
ARTICLE III.................................................16
Section 3.01 Payment Account................................16
ARTICLE IV..................................................17
Section 4.01 Distributions..................................17
Section 4.02 Redemption.....................................18
Section 4.03 Subordination of Common Securities.............20
Section 4.04 Payment Procedures.............................20
Section 4.05 Tax Returns and Reports........................20
ARTICLE V...................................................21
Section 5.01 Initial Ownership..............................21
Section 5.02 The Trust Securities Certificates..............21
Section 5.03 Authentication of Trust Securities
Certificates.......................................21
Section 5.04 Registration of Transfer and Exchange of
Preferred Securities Certificates..................21
Section 5.05 Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates......................22
Section 5.06 Persons Deemed Securityholders.................22
Section 5.07 Access to List of Securityholders' Names
and Addresses......................................23
Section 5.08 Maintenance of Office or Agency................23
Section 5.09 Appointment of Paying Agent....................23
Section 5.10 Ownership of Common Securities by
Depositor..........................................24
Section 5.11 Book-Entry Preferred Securities
Certificates; Common Securities Certificate........24
Section 5.12 Notices to Clearing Agency.....................25
Section 5.13 Definitive Preferred Securities
Certificates.......................................25
Section 5.14 Rights of Securityholders......................26
ARTICLE VI..................................................26
Section 6.01 Limitations on Voting Rights...................26
Section 6.02 Notice of Meetings.............................27
Section 6.03 Meetings of Preferred Securityholders..........27
Section 6.04 Voting Rights..................................28
Section 6.05 Proxies, etc...................................28
Section 6.06 Securityholder Action by Written Consent.......28
Section 6.07 Record Date for Voting and Other Purposes......28
Section 6.08 Acts of Securityholders........................28
Section 6.09 Inspection of Records..........................29
ARTICLE VII.................................................30
Section 7.01 Representations and Warranties of the
Trustees...........................................30
ARTICLE VIII................................................31
Section 8.01 Certain Duties and Responsibilities............31
Section 8.02 Notice of Defaults.............................32
Section 8.03 Certain Rights of Property Trustee.............32
Section 8.04 Not Responsible for Recitals or Issuance
of Securities......................................33
Section 8.05 May Hold Securities............................33
Section 8.06 Compensation; Fees; Indemnity..................33
Section 8.07 Trustees Required; Eligibility.................34
Section 8.08 Conflicting Interests..........................34
Section 8.09 Co-Trustees and Separate Trustee...............35
Section 8.10 Resignation and Removal; Appointment of
Successor..........................................36
Section 8.11 Acceptance of Appointment by Successor.........37
Section 8.12 Merger, Conversion, Consolidation or
Succession to Business.............................38
Section 8.13 Preferential Collection of Claims
Against Depositor or Trust.........................38
Section 8.14 Reports by Property Trustee....................38
Section 8.15 Reports to the Property Trustee................39
Section 8.16 Evidence of Compliance with Conditions
Precedent..........................................39
Section 8.17 Number of Trustees.............................39
Section 8.18 Delegation of Power............................39
Section 8.19 Enforcement of Rights of Property
Trustee by Securityholders.........................40
ARTICLE IX..................................................40
Section 9.01 Termination Upon Expiration Date...............40
Section 9.02 Early Termination..............................40
Section 9.03 Termination....................................41
Section 9.04 Liquidation....................................41
Section 9.05 Bankruptcy.....................................42
ARTICLE X...................................................43
Section 10.01 Expense Agreement.............................43
Section 10.02 Limitation of Rights of Securityholders.......43
Section 10.03 Amendment.....................................43
Section 10.04 Separability..................................44
Section 10.05 Governing Law.................................44
Section 10.06 Successors....................................44
Section 10.07 Headings......................................44
Section 10.08 Notice and Demand.............................44
Section 10.09 Agreement Not to Petition.....................45
Section 10.10 Conflict with Trust Indenture Act.............45
EXHIBIT A [INTENTIONALLY RESERVED]
EXHIBIT B [INTENTIONALLY RESERVED]
EXHIBIT C Form of Common Securities Certificate
EXHIBIT D Form of Expense Agreement
EXHIBIT E Form of Preferred Securities Certificate
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AMENDED AND RESTATED TRUST AGREEMENT
THIS AMENDED AND RESTATED TRUST AGREEMENT is made as of June 1, 1997,
by and among (i) Southern Company Capital Funding, Inc., a Delaware corporation
(the "Depositor" or the "Company"), (ii) Bankers Trust Company, a banking
corporation duly organized and existing under the laws of New York, as trustee
(the "Property Trustee" and, in its separate corporate capacity and not in its
capacity as Property Trustee, the "Bank"), (iii) Bankers Trust (Delaware), a
banking corporation duly organized under the laws of Delaware, as Delaware
trustee (the "Delaware Trustee" and, in its separate corporate capacity and not
in its capacity as Delaware Trustee, the "Delaware Bank"), (iv) Wayne Boston, an
individual, and Richard A. Childs, an individual, as administrative trustees
(each an "Administrative Trustee" and together the "Administrative Trustees")
(the Property Trustee, the Delaware Trustee and the Administrative Trustees
referred to collectively as the "Trustees") and (v) the several Holders, as
hereinafter defined.
WITNESSETH:
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly declared and established a business trust pursuant to the Delaware Business Trust Act by the entering into that certain Trust Agreement, dated as of May 23, 1997 (the "Original Trust Agreement"), and by the execution and filing by the Delaware Trustee with the Secretary of State of the State of Delaware of the Certificate of Trust, dated May 23, 1997; and
WHEREAS, the parties hereto desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the addition of the Bank, Wayne Boston and Richard A. Childs as trustees of the Trust, (ii) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Junior Subordinated Notes, (iii) the issuance of the Common Securities by the Trust to the Depositor, and (iv) the issuance and sale of the Preferred Securities by the Trust pursuant to the Underwriting Agreement.
NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Securityholders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I
Defined Terms
Section 1.01 Definitions. For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(c) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Trust Agreement; and
(d) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, an amount equal to the Additional Interest (as defined in clause (ii) of the definition of "Additional Interest" in the Subordinated Indenture) paid by the Depositor on a Like Amount of Junior Subordinated Notes for such period.
"Administrative Trustee" means each of the individuals identified as an "Administrative Trustee" in the preamble to this Trust Agreement solely in their capacities as Administrative Trustees of the Trust formed and continued hereunder and not in their individual capacities, or such trustee's successor(s) in interest in such capacity, or any successor "Administrative Trustee" appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(i) the entry of a decree or order by a court having jurisdiction in the premises judging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjudication or composition of or in respect of such Person under federal bankruptcy law or any other applicable federal or state law, or appointing a receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of such decree or order unstayed and in effect for a period of 60 consecutive days; or
(ii) the institution by such Person of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under federal bankruptcy law or any other applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or similar official of such Person or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Depositor to have been duly adopted by the Depositor's Board of Directors or a duly authorized committee thereof and to be in full force and effect on the date of such certification, and delivered to the Trustees.
"Book-Entry Preferred Securities Certificates" means certificates representing Preferred Securities issued in global, fully registered form to the Clearing Agency as described in Section 5.11.
"Business Day" means a day other than (i) a Saturday or a Sunday, (ii) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office or the Indenture Trustee's principal corporate trust office is closed for business.
"Certificate Depository Agreement" means the agreement among the Trust, the Property Trustee and The Depository Trust Company, as the initial Clearing Agency, dated June 5, 1997, relating to the Preferred Securities Certificates, as the same may be amended and supplemented from time to time.
"Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
"Common Security" means an undivided beneficial ownership interest in the assets of the Trust having a Liquidation Amount of $25 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing ownership of a Common Security or Securities, substantially in the form attached as Exhibit C.
"Company" means Southern Company Capital Funding, Inc., a Delaware corporation, its successors and assigns.
"Corporate Trust Office" means the office of the Property Trustee at which its corporate trust business shall be principally administered.
"Definitive Preferred Securities Certificates" means either or both (as the context requires) of (i) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.11(a) and (ii) Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.13.
"Delaware Bank" has the meaning specified in the preamble to this Trust Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time.
"Delaware Trustee" means the commercial bank or trust company or any other Person identified as the "Delaware Trustee" and has the meaning specified in the preamble to this Trust Agreement solely in its capacity as Delaware Trustee of the Trust formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as herein provided.
"Depositor" means Southern Company Capital Funding, Inc., a Delaware corporation, in its capacity as "Depositor" under this Trust Agreement, its successors and assigns.
"Distribution Date" has the meaning specified in Section 4.01(a).
"Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.01.
"Event of Default" means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of an Indenture Event of Default; or
(ii) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, of any covenant or warranty of the Trustees in this Trust Agreement (other than a covenant or warranty a default in whose performance or breach is dealt with in clause (ii) or (iii) above) and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Trustees by the Holders of at least 10% in Liquidation Amount of the Outstanding Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or
(v) the occurrence of a Bankruptcy Event with respect to the Trust.
"Expense Agreement" means the Agreement as to Expenses and Liabilities between the Guarantor and the Trust, substantially in the form attached as Exhibit D, as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Guarantee" means the Preferred Securities Guarantee Agreement executed and delivered by the Guarantor and Bankers Trust Company, as Guarantee Trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the Holders of the Preferred Securities, as amended from time to time.
"Guarantor" means The Southern Company, a Delaware corporation, its successors and assigns.
"Indenture Event of Default" means an "Event of Default" as defined in the Subordinated Indenture.
"Indenture Redemption Date" means "Redemption Date," as defined in the Subordinated Indenture.
"Indenture Trustee" means the trustee under the Subordinated Indenture.
"Issue Date" means the date of the delivery of the Trust Securities.
"Junior Subordinated Notes" means the $206,186,000 aggregate principal amount of the Depositor's Series C 7.75% Junior Subordinated Notes due March 31, 2037, issued pursuant to the Subordinated Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever.
"Like Amount" means (i) Trust Securities having a Liquidation Amount equal to the principal amount of Junior Subordinated Notes to be contemporaneously redeemed in accordance with the Subordinated Indenture and the proceeds of which will be used to pay the Redemption Price of such Trust Securities and (ii) Junior Subordinated Notes having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Junior Subordinated Notes are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated Notes are to be distributed to Holders of Trust Securities in connection with a dissolution and liquidation of the Trust pursuant to Section 9.04.
"Liquidation Distribution" has the meaning specified in Section 9.05.
"Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 8.16 shall be the principal executive, financial or accounting officer of the Depositor. An Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or investigation as is necessary, in such officer's opinion, to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Trust, the Trustees, the Guarantor or the Depositor, but not an employee of the Trust or the Trustees, and who shall be reasonably acceptable to the Property Trustee. Any Opinion of Counsel pertaining to federal income tax matters may rely on published rulings of the Internal Revenue Service.
"Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means, as of the date of determination, all Preferred Securities theretofore authenticated and delivered under this Trust Agreement, except:
(i) Preferred Securities theretofore canceled by the Administrative Trustees or delivered to the Administrative Trustees for cancellation;
(ii) Preferred Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Preferred Securities; provided that if such Preferred Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and
(iii) Preferred Securities in exchange for or in lieu of which other Preferred Securities have been authenticated and delivered pursuant to this Trust Agreement;
provided, however, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, the Holder of the Common Securities, the Guarantor, any Administrative Trustee or any Affiliate of the Depositor, the Guarantor or any Administrative Trustee shall be disregarded and deemed not to be Outstanding, except that (a) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities which such Trustee knows to be so owned shall be so disregarded and (b) the foregoing shall not apply at any time when all of the outstanding Preferred Securities are owned by the Depositor, the Holder of the Common Securities, the Guarantor, one or more Administrative Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee's right so to act with respect to such Preferred Securities and that the pledgee is not the Depositor, the Guarantor or any Affiliate of the Depositor or the Guarantor.
"Owner" means each Person who is the beneficial owner of a Book-Entry Preferred Securities Certificate as reflected in the records of the Clearing Agency or, if a Clearing Agency Participant is not the Owner, then as reflected in the records of a Person maintaining an account with such Clearing Agency (directly or indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 5.09 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee for the benefit of the Securityholders in which all amounts paid in respect of the Junior Subordinated Notes will be held and from which the Property Trustee shall make payments to the Securityholders in accordance with Section 4.01.
"Person" means an individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial ownership interest in the assets of the Trust having a Liquidation Amount of $25 and having rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing ownership of a Preferred Security or Securities, substantially in the form attached as Exhibit E.
"Property Trustee" means the commercial bank or trust company identified as the "Property Trustee" in the preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor "Property Trustee" as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that each Indenture Redemption Date shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any date fixed for redemption of any Trust Security, the Liquidation Amount of such Trust Security, plus accrued and unpaid Distributions to such date.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation.
"Securities Register" and "Securities Registrar" are described in
Section 5.04.
"Securityholder" or "Holder" means a Person in whose name a Trust Security or Securities is registered in the Securities Register; any such Person is a beneficial owner within the meaning of the Delaware Business Trust Act.
"Subordinated Indenture" means the Subordinated Note Indenture, dated as of June 1, 1997, among the Depositor, the Guarantor and the Indenture Trustee, as supplemented by the Supplemental Indenture.
"Supplemental Indenture" means the First Supplemental Indenture, dated as of June 6, 1997, by and among the Depositor, the Guarantor and the Indenture Trustee.
"Trust" means the Delaware business trust continued hereby and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including all exhibits hereto, including, for all purposes of this Amended and Restated Trust Agreement and any modification, amendment or supplement, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Amended and Restated Trust Agreement and any such modification, amendment or supplement, respectively.
"Trustees" means the Persons identified as "Trustees" in the preamble to this Trust Agreement solely in their capacities as Trustees of the Trust formed and continued hereunder and not in their individual capacities, or their successor in interest in such capacity, or any successor trustee appointed as herein provided.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (i) the Junior Subordinated Notes, (ii) any cash on deposit in, or owing to, the Payment Account, and (iii) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to this Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the Preferred Securities.
"Underwriting Agreement" means the Underwriting Agreement, dated June 5, 1997, among the Depositor, the Guarantor, the Trust and the Underwriters named therein.
ARTICLE II
Establishment of the Trust
Section 2.01 Name. The Trust continued hereby shall be known as "Southern Company Capital Trust III", in which name the Trustees may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. The Administrative Trustees may change the name of the Trust from time to time following written notice to the Holders.
Section 2.02 Offices of the Trustees; Principal Place of Business. The address of the Property Trustee is Bankers Trust Company, Four Albany Street, New York, New York 10006, or at such other address as the Property Trustee may designate by written notice to the Securityholders, the Depositor and the Guarantor. The principal place of business of the Delaware Trustee is 1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801-1457, or at such other address in Delaware as the Delaware Trustee may designate by notice to the Depositor and the Guarantor. The address of the Administrative Trustees is c/o The Southern Company, 270 Peachtree Street, N.W., Atlanta, Georgia 30303, Attention: Secretary. The principal place of business of the Trust is c/o The Southern Company, 270 Peachtree Street, N.W., Atlanta, Georgia 30308. The Depositor may change the principal place of business of the Trust at any time by giving notice thereof to the Trustees.
Section 2.03 Initial Contribution of Trust Property; Organizational Expenses. The Delaware Trustee acknowledges receipt in trust from the Depositor in connection with the Original Trust Agreement of the sum of $10, which constituted the initial Trust Property. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of the Trustees, promptly reimburse the Trustees for any such expenses paid by the Trustees. The Depositor shall make no claim upon the Trust Property for the payment of such expenses.
Section 2.04 Issuance of the Preferred Securities. Contemporaneously with the execution and delivery of this Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall execute and deliver to the underwriters named in the Underwriting Agreement Preferred Securities Certificates, registered in the name of the nominee of the initial Clearing Agency, in an aggregate amount of 8,000,000 Preferred Securities having an aggregate Liquidation Amount of $200,000,000, against receipt of the aggregate purchase price of such Preferred Securities of $200,00,000, which amount the Administrative Trustees shall promptly deliver to the Property Trustee.
Section 2.05 Subscription and Purchase of Junior Subordinated Notes; Issuance of the Common Securities. Contemporaneously with the execution and delivery of this Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall execute and deliver to the Depositor Common Securities Certificates, registered in the name of the Depositor, in an aggregate amount of 227,440 Common Securities having an aggregate Liquidation Amount of $6,186,000, against payment by the Depositor of such amount. Contemporaneously therewith, the Administrative Trustees, on behalf of the Trust, shall subscribe to and purchase from the Depositor Junior Subordinated Notes, registered in the name of the Property Trustee, on behalf of the Trust and the Holders, and having an aggregate principal amount equal to $206,186,000, and, in satisfaction of the purchase price for such Junior Subordinated Notes, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $206,186,000.
Section 2.06 Declaration of Trust. The exclusive purposes and functions of the Trust are (i) to issue and sell the Trust Securities and use the proceeds from such sale to acquire the Junior Subordinated Notes, and (ii) to engage in those activities necessary, incidental, appropriate or convenient thereto. The Depositor hereby appoints each of the Bank, the Delaware Bank, Wayne Boston and Richard A. Childs as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Trust and the Securityholders. The Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the Trustees for the sole and limited purpose of fulfilling the requirements of the Delaware Business Trust Act.
Section 2.07 Authorization to Enter into Certain Transactions. The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph C of this Section, and in accordance with the following paragraphs A and B, the Trustees shall have the authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express (in the case of the Property Trustee) or implied, otherwise granted to the Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the following:
A. As among the Trustees, the Administrative Trustees, acting singly or jointly, shall have the exclusive power, duty and authority to act on behalf of the Trust with respect to the following matters:
(i) to acquire the Junior Subordinated Notes with the proceeds of the sale of the Trust Securities; provided, however, the Administrative Trustees shall cause legal title to all of the Junior Subordinated Notes to be vested in, and the Junior Subordinated Notes to be held of record in the name of, the Property Trustee for the benefit of the Trust and Holders of the Trust Securities;
(ii) to give the Depositor and the Property Trustee prompt written notice of the occurrence of any Special Event (as defined in the Supplemental Indenture) and to take any ministerial actions in connection therewith; provided, that the Administrative Trustees shall consult with the Depositor and the Property Trustee before taking or refraining to take any ministerial action in relation to a Special Event;
(iii) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including for the purposes of ss. 316(c) of the Trust Indenture Act and with respect to Distributions, voting rights, redemptions, and exchanges, and to issue relevant notices to Holders of the Trust Securities as to such actions and applicable record dates;
(iv) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless pursuant to Section 2.07(B)(v), the Property Trustee has the power to bring such Legal Action;
(v) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services;
(vi) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act;
(vii) to give the certificate to the Property Trustee required by ss. 314(a)(4) of the Trust Indenture Act, which certificate may be executed by any Administrative Trustee;
(viii) to take all actions and perform such duties as may be required of the Administrative Trustees pursuant to the terms of this Trust Agreement;
(ix) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Trust Securities or to enable the Trust to effect the purposes for which the Trust has been created;
(x) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Administrative Trustees, on behalf of the Trust;
(xi) to issue and sell the Trust Securities;
(xii) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Expense Agreement and the Certificate Depository Agreement and such other agreements as may be necessary or desirable in connection with the consummation hereof;
(xiii) to assist in the registration of the Preferred Securities under the Securities Act of 1933, as amended, and under state securities or blue sky laws, and the qualification of this Trust Agreement as a trust indenture under the Trust Indenture Act;
(xiv) to assist in the listing of the Preferred Securities upon such securities exchange or exchanges, if any, as shall be determined by the Depositor and, if required, the registration of the Preferred Securities under the Exchange Act, and the preparation and filing of all periodic and other reports and other documents pursuant to the foregoing;
(xv) to send notices (other than notices of default) and other information regarding the Trust Securities and the Junior Subordinated Notes to the Securityholders in accordance with this Trust Agreement;
(xvi) to appoint a Paying Agent (subject to Section 5.09), authenticating agent and Securities Registrar in accordance with this Trust Agreement;
(xvii) to register transfers of the Trust Securities in accordance with this Trust Agreement;
(xviii) to assist in, to the extent provided in this Trust Agreement, the winding up of the affairs of and termination of the Trust and the preparation, execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware; and
(xix) to take any action incidental to the foregoing as the Administrative Trustees may from time to time determine is necessary, appropriate, convenient or advisable to protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder).
B. The Property Trustee shall:
(i) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Trust Securities to the extent the Junior Subordinated Notes are redeemed or mature;
(ii) upon notice of distribution issued by the Administrative Trustees in accordance with the terms of this Trust Agreement, engage in such ministerial activities as shall be necessary or appropriate to effect the distribution pursuant to terms of this Trust Agreement of Junior Subordinated Notes to Holders of Trust Securities;
(iii) subject to the terms hereof, take any Legal Action which arises out of or in connection with an Event of Default of which a Responsible Officer of the Property Trustee has actual knowledge or the Property Trustee's duties and obligations under this Trust Agreement or the Trust Indenture Act; and
(iv) take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of this Trust Agreement.
C. So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trustees shall not (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that would cause the Trust to fail or cease to qualify as a grantor trust for United States federal income tax purposes, (iv) incur any indebtedness for borrowed money, (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property, (vi) issue any securities other than the Trust Securities, or (vii) have any power to, or agree to any action by the Depositor that would, vary the investment (within the meaning of Treasury Regulation Section 301.7701-4(c)) of the Trust or of the Securityholders. The Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders.
D. In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) to prepare for filing by the Trust with the Commission a registration statement on Form S-3 under the Securities Act in relation to the Preferred Securities, including any amendments thereto;
(ii) to determine the states in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions they must take on behalf of the Trust, and prepare for execution and filing any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such States;
(iii) to prepare for filing by the Trust an application to the New York Stock Exchange or any other national stock exchange or the NASDAQ National Market for listing upon notice of issuance of any Preferred Securities;
(iv) to prepare for filing by the Trust with the Commission a registration statement on Form 8-A relating to the registration of the Preferred Securities under Section 12(b) of the Exchange Act, including any amendments thereto;
(v) to negotiate the terms of the Underwriting Agreement providing for the sale of the Preferred Securities and to execute, deliver and perform the Underwriting Agreement on behalf of the Trust; and
(vi) any other actions necessary, incidental, appropriate or convenient to carry out any of the foregoing activities.
E. Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act of 1940, as amended, or taxed as other than a grantor trust for United States federal income tax purposes and so that the Junior Subordinated Notes will be treated as indebtedness of the Depositor for United States federal income tax purposes. In this connection, the Depositor and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law, the Certificate of Trust or this Trust Agreement, that each of the Depositor and the Administrative Trustees determines in its discretion to be necessary or desirable for such purposes, as long as such action does not materially and adversely affect the interests of the Holders of the Preferred Securities.
Section 2.08 Assets of Trust. The assets of the Trust shall consist of the Trust Property.
Section 2.09 Title to Trust Property. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Securityholders and the Trust in accordance with this Trust Agreement. The right, title and interest of the Property Trustee to the Junior Subordinated Notes shall vest automatically in each Person who may thereafter be appointed as Property Trustee in accordance with the terms hereof. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered.
Section 2.10 Mergers and Consolidations of the Trust. The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other body, except as described below or otherwise provided in this Trust Agreement. The Trust may at the request of the Company, with the consent of the Administrative Trustees and without the consent of the Holders of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state; provided, that (i) such successor entity either (x) expressly assumes all of the obligations of the Trust with respect to the Trust Securities or (y) substitutes for the Preferred Securities other securities having substantially the same terms as the Trust Securities (herein referred to as the "Successor Securities") so long as the Successor Securities rank the same as the Trust Securities rank in priority with respect to Distributions and payments upon liquidation, redemption and otherwise, (ii) the Company expressly appoints a trustee of such successor entity possessing the same powers and duties as the Property Trustee as the holder of legal title to the Junior Subordinated Notes, (iii) the Preferred Securities or any Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the Preferred Securities are then listed, (iv) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Trust Securities (including any Successor Securities) in any material respect, (vi) such successor entity has a purpose substantially identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation, or replacement, the Company and the Property Trustee have received an Opinion of Counsel to the effect that (A) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Trust Securities (including any Successor Securities) in any material respect, and (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor such successor entity will be required to register as an investment company under the Investment Company Act of 1940, and (viii) the Company guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of 100% in Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified as other than a grantor trust for federal income tax purposes.
ARTICLE III
Payment Account
Section 3.01 Payment Account.
(a) On or prior to the Issue Date, the Property Trustee shall establish the Payment Account. The Property Trustee and an agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits in and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Securityholders and for distribution as herein provided, including (and subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal or interest on, and any other payments or proceeds with respect to, the Junior Subordinated Notes. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof.
ARTICLE IV
Distributions; Redemption
Section 4.01 Distributions.
(a) Distributions on the Trust Securities shall be cumulative and accrue from the Issue Date and, except in the event that the Depositor exercises its right to extend the interest payment period for the Junior Subordinated Notes pursuant to Section 104 of the Supplemental Indenture, shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on June 30, 1997. If any date on which Distributions are otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Distribution shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date (each such date, a "Distribution Date").
(b) Distributions payable on the Trust Securities shall be fixed at a rate of 7.75% per annum of the Liquidation Amount of the Trust Securities. The amount of Distributions payable for any full quarterly period shall be computed on the basis of twelve 30-day months and a 360-day year. If the interest payment period for the Junior Subordinated Notes is extended pursuant to Section 104 of the Supplemental Indenture (an "Extension Period"), then the rate per annum at which Distributions on the Trust Securities accumulate shall be increased by an amount such that the aggregate amount of Distributions that accumulate on all Trust Securities during any such Extension Period is equal to the aggregate amount of interest (including interest payable on unpaid interest at the percentage rate per annum set forth above, compounded quarterly, to the extent permitted by applicable law) that accrues during any such Extension Period on the Junior Subordinated Notes. The payment of such deferred interest, together with interest thereon, will be distributed to the Holders of the Trust Securities as received at the end of any Extension Period. The amount of Distributions payable for any period shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made and shall be deemed payable on each Distribution Date only to the extent that the Trust has legally and immediately available funds in the Payment Account for the payment of such Distributions.
(d) Distributions, including Additional Amounts, if any, on the Trust Securities on each Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be the close of business on the fifteenth calendar day prior to the relevant Distribution Date.
Each Trust Security upon registration of transfer of or in exchange for or in lieu of any other Trust Security shall carry the rights of Distributions accrued (including Additional Amounts, if any) and unpaid, and to accrue (including Additional Amounts, if any), which were carried by such other Trust Security.
Section 4.02 Redemption.
(a) On each Redemption Date with respect to the Junior Subordinated Notes, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Securities Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be redeemed, the total Liquidation Amount of the Trust Securities to be redeemed; and
(v) that on the Redemption Date the Redemption Price will become due and payable upon each such Trust Security to be redeemed and that Distributions thereon will cease to accrue on and after such date.
(c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption of Junior Subordinated Notes. Redemptions of the Trust Securities shall be made and the Redemption Price shall be deemed payable on each Redemption Date only to the extent that the Trust has funds legally and immediately available in the Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 2:00 p.m. New York time, on the Redemption Date, subject to Section 4.02(c), the Property Trustee will, so long as the Preferred Securities are in book-entry only form, irrevocably deposit with the Clearing Agency for the Preferred Securities funds sufficient to pay the applicable Redemption Price. If the Preferred Securities are not in book-entry only form, the Property Trustee, subject to Section 4.02(c), shall irrevocably deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions to pay the Redemption Price to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Securityholders holding Trust Securities so called for redemption will cease, except the right of such Securityholders to receive the Redemption Price, but without interest, and such Securities will cease to be outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date shall be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Redemption Price shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of Trust Securities is improperly withheld or refused and not paid either by the Trust or by the Guarantor pursuant to the Guarantee, Distributions on such Trust Securities will continue to accrue at the then applicable rate, from such Redemption Date originally established by the Trust for such Preferred Securities to the date such Redemption Price is actually paid.
(e) If less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated 3% to the Common Securities and 97% to the Preferred Securities, with such adjustments that each amount so allocated shall be divisible by $25. The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption, by such method as the Property Trustee shall deem fair and appropriate and which may provide for the selection for a redemption of portions (equal to $25 or integral multiple thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $25; provided, however, that before undertaking redemption of the Preferred Securities on other than a pro rata basis, the Property Trustee shall have received an Opinion of Counsel that the status of the Trust as a grantor trust for federal income tax purposes would not be adversely affected. The Property Trustee shall promptly notify the Securities Registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Preferred Securities which has been or is to be redeemed.
(f) Subject to the foregoing provisions of Section 4.02 and to applicable law (including, without limitation, United States federal securities laws), the Company, the Guarantor or their Affiliates may, at any time and from time to time, purchase outstanding Preferred Securities by tender, in the open market or by private agreement.
Section 4.03 Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price of, the Trust Securities, as applicable, shall be made pro rata based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date an Indenture Event of Default shall have occurred and be continuing, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Preferred Securities for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Indenture Event of Default, the Holder of Common Securities will be deemed to have waived any such Event of Default under this Trust Agreement until the effect of all such Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until any such Events of Default under this Trust Agreement with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not the Holder of the Common Securities, and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf.
Section 4.04 Payment Procedures. Payments in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register or, if the Preferred Securities are held by a Clearing Agency, such Distributions shall be made to the Clearing Agency, which shall credit the relevant Persons' accounts at such Clearing Agency on the applicable distribution dates. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of the Common Securities.
Section 4.05 Tax Returns and Reports. The Administrative Trustee(s) shall prepare (or cause to be prepared), at the Depositor's expense, and file all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. The Administrative Trustee(s) shall provide or cause to be provided on a timely basis to each Holder any Internal Revenue Service form required to be so provided in respect of the Trust Securities.
ARTICLE V
Trust Securities Certificates
Section 5.01 Initial Ownership. Upon the creation of the Trust by the contribution by the Depositor pursuant to Section 2.03 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are outstanding, the Depositor shall be the sole beneficial owner of the Trust.
Section 5.02 The Trust Securities Certificates. Each of the Preferred and Common Securities Certificates shall be issued in minimum denominations of $25 and integral multiples in excess thereof. The Trust Securities Certificates shall be executed on behalf of the Trust by manual or facsimile signature of at least one Administrative Trustee. Trust Securities Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Trust Securities Certificates or did not hold such offices at the date of authentication and delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Section 5.04.
Section 5.03 Authentication of Trust Securities Certificates. On the Issue Date, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04 and 2.05, to be executed on behalf of the Trust, authenticated and delivered to or upon the written order of the Depositor signed by its Chairman of the Board, its President or any Vice President, without further corporate action by the Depositor, in authorized denominations. No Trust Securities Certificate shall entitle its holder to any benefit under this Trust Agreement, or shall be valid for any purpose, unless there shall appear on such Trust Securities Certificate a certificate of authentication substantially in the form set forth in Exhibit E or Exhibit C, as applicable, executed by at least one Administrative Trustee by manual signature; such authentication shall constitute conclusive evidence that such Trust Securities Certificate shall have been duly authenticated and delivered hereunder. All Trust Securities Certificates shall be dated the date of their authentication.
Section 5.04 Registration of Transfer and Exchange of Preferred
Securities Certificates. The Securities Registrar shall keep or cause to be
kept, at the office or agency maintained pursuant to Section 5.08, a Securities
Register in which, subject to such reasonable regulations as it may prescribe,
the Securities Registrar shall provide for the registration of Preferred
Securities Certificates and the Common Securities Certificates (subject to
Section 5.10 in the case of the Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
provided. The Property Trustee shall be the initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.08, the
Administrative Trustees shall execute, authenticate and deliver in the name of
the designated transferee or transferees one or more new Preferred Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of authentication by the Administrative Trustee or Trustees. The
Securities Registrar shall not be required to register the transfer of any
Preferred Securities that have been called for redemption. At the option of a
Holder, Preferred Securities Certificates may be exchanged for other Preferred
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Preferred Securities
Certificates to be exchanged at the office or agency maintained pursuant to
Section 5.08.
Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Administrative Trustees and the Securities Registrar duly executed by the Holder or his attorney duly authorized in writing. Each Preferred Securities Certificate surrendered for registration of transfer or exchange shall be canceled and subsequently disposed of by the Securities Registrar in accordance with its customary practice.
No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Securities Registrar or the Administrative Trustees may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. If (a) any mutilated Trust Securities Certificate shall be surrendered to the Securities Registrar, or if the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Securities Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a bona fide purchaser, the Administrative Trustees or any one of them on behalf of the Trust shall execute and authenticate and make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of any new Trust Securities Certificate under this Section, the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time.
Section 5.06 Persons Deemed Securityholders. Prior to due presentation of a Trust Securities Certificate for registration of transfer, the Trustees or the Securities Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions (subject to Section 4.01(d)) and for all other purposes whatsoever, and neither the Trustees nor the Securities Registrar shall be bound by any notice to the contrary.
Section 5.07 Access to List of Securityholders' Names and Addresses. The Administrative Trustees shall furnish or cause to be furnished to (i) the Depositor and the Property Trustee semi-annually, not later than June 1 and December 1 in each year, and (ii) the Depositor or the Property Trustee, as the case may be, within 30 days after receipt by any Administrative Trustee of a request therefor from the Depositor or the Property Trustee, as the case may be, in writing, a list, in such form as the Depositor or the Property Trustee, as the case may be, may reasonably require, of the names and addresses of the Securityholders as of a date not more than 15 days prior to the time such list is furnished; provided, that the Administrative Trustees shall not be obligated to provide such list at any time such list does not differ from the most recent list given to the Depositor and the Property Trustee by the Administrative Trustees or at any time the Property Trustee is the Securities Registrar. If three or more Securityholders or one or more Holders of Trust Securities Certificates evidencing not less than 25% of the outstanding Liquidation Amount apply in writing to the Administrative Trustees, and such application states that the applicants desire to communicate with other Securityholders with respect to their rights under this Trust Agreement or under the Trust Securities Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Administrative Trustees shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Securityholders. Each Holder, by receiving and holding a Trust Securities Certificate, shall be deemed to have agreed not to hold either the Depositor or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived.
Section 5.08 Maintenance of Office or Agency. The Administrative Trustees shall maintain in the Borough of Manhattan, New York, an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Administrative Trustees initially designate Bankers Trust Company, Four Albany Street, New York, New York 10006, as its principal agency for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor and to the Securityholders of any change in the location of the Securities Register or any such office or agency.
Section 5.09 Appointment of Paying Agent. The Paying Agent shall make Distributions and other payments provided hereby to Securityholders from the Payment Account and shall report the amounts of such Distributions and payments to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account for the purpose of making the Distributions and payments provided hereby. The Administrative Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Agreement in any material respect. The Paying Agent shall initially be the Property Trustee, and it may choose any co-paying agent that is acceptable to the Administrative Trustees and the Depositor. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Administrative Trustees and the Depositor. In the event that a Paying Agent shall resign or be removed, the Administrative Trustees shall appoint a successor that is acceptable to the Depositor to act as Paying Agent (which shall be a bank or trust company). The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Sections 8.01, 8.03 and 8.06 shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other paying agent appointed hereunder. Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise.
Section 5.10 Ownership of Common Securities by Depositor. On the Issue Date, the Depositor shall acquire, and thereafter retain, beneficial and record ownership of the Common Securities. Any attempted transfer of the Common Securities, except for transfers by operation of law or to an Affiliate of the Guarantor or the Depositor or a permitted successor under Section 801 of the Subordinated Indenture, shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE TRUST AGREEMENT REFERRED TO HEREIN".
Section 5.11 Book-Entry Preferred Securities Certificates; Common Securities Certificate.
(a) The Preferred Securities Certificates, upon original issuance, will be issued in the form of a typewritten Preferred Securities Certificate or Certificates representing Book-Entry Preferred Securities Certificates, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust. Such Preferred Securities Certificate or Certificates shall initially be registered on the Securities Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Owner will receive a definitive Preferred Securities Certificate representing such beneficial owner's interest in such Preferred Securities, except as provided in Section 5.13. Unless and until Definitive Preferred Securities Certificates have been issued to Owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full force and effect;
(ii) the Securities Registrar and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Trust Agreement relating to the Book-Entry Preferred Securities Certificates (including the payment of principal of and interest on the Book-Entry Preferred Securities and the giving of instructions or directions to Owners of Book-Entry Preferred Securities) as the sole Holder of Book-Entry Preferred Securities and shall have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section conflict with any other provisions of this Trust Agreement, the provisions of this Section shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred Securities Certificates shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Certificate Depository Agreement, unless and until Definitive Preferred Securities Certificates are issued pursuant to Section 5.13, the Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments on the Preferred Securities to such Clearing Agency Participants.
(b) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate.
Section 5.12 Notices to Clearing Agency. To the extent a notice or other communication to the Owners is required under this Trust Agreement, unless and until Definitive Preferred Securities Certificates shall have been issued to Owners pursuant to Section 5.13, the Trustees shall give all such notices and communications specified herein to be given to Owners to the Clearing Agency, and shall have no obligations to the Owners.
Section 5.13 Definitive Preferred Securities Certificates. If (i) the Depositor advises the Trustees in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities with respect to the Preferred Securities Certificates, and the Depositor is unable to locate a qualified successor, or (ii) the Depositor at its option advises the Trustees in writing that it elects to terminate the book-entry system through the Clearing Agency, then the Administrative Trustees shall notify the Clearing Agency and Holders of the Preferred Securities. Upon surrender to the Administrative Trustees of the typewritten Preferred Securities Certificate or Certificates representing the Book-Entry Preferred Securities Certificates by the Clearing Agency, accompanied by registration instructions, the Administrative Trustees or any one of them shall execute and authenticate the Definitive Preferred Securities Certificates in accordance with the instructions of the Clearing Agency. Neither the Securities Registrar nor the Trustees shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Preferred Securities Certificates, the Trustees shall recognize the Holders of the Definitive Preferred Securities Certificates as Securityholders. The Definitive Preferred Securities Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidenced by the execution thereof by the Administrative Trustees or any one of them.
Section 5.14 Rights of Securityholders. The legal title to the Trust
Property is vested exclusively in the Property Trustee (in its capacity as such)
in accordance with Section 2.09, and the Securityholders shall not have any
right or title therein other than the beneficial ownership interest in the
assets of the Trust conferred by their Trust Securities, and they shall have no
right to call for any partition or division of property, profits or rights of
the Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or other similar rights
and when issued and delivered to Securityholders against payment of the purchase
price therefor, except as otherwise provided in the Expense Agreement and
Section 10.01 hereof, will be fully paid and nonassessable by the Trust. Except
as otherwise provided in the Expense Agreement and Section 10.01 hereof, the
Holders of the Trust Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
ARTICLE VI
Acts of Securityholders; Meetings; Voting
Section 6.01 Limitations on Voting Rights.
(a) Except as provided in this Section, in Section 8.10 or Section 10.03 of this Trust Agreement, in the Subordinated Indenture, and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association.
(b) So long as any Junior Subordinated Notes are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or executing any trust or power conferred on the Indenture Trustee with respect to such Junior Subordinated Notes, (ii) waive any past default which is waivable under Section 513 of the Subordinated Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Junior Subordinated Notes shall be due and payable or (iv) consent to any amendment, modification or termination of the Subordinated Indenture or the Junior Subordinated Notes, where such consent shall be required, or to any other action, as holder of the Junior Subordinated Notes, under the Subordinated Indenture, without, in each case, obtaining the prior approval of the Holders of at least 66-2/3% in Liquidation Amount of the Preferred Securities; provided, however, that where a consent under the Subordinated Indenture would require the consent of each holder of Junior Subordinated Notes affected thereby, no such consent shall be given by the Trustees without the prior written consent of each Holder of Preferred Securities. The Trustees shall not revoke any action previously authorized or approved by a vote of the Holders of Preferred Securities, except pursuant to a subsequent vote of the Holders of Preferred Securities. The Property Trustee shall notify all Holders of the Preferred Securities of any notice of default received from the Indenture Trustee with respect to the Junior Subordinated Notes. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will not be classified as other than a grantor trust for United States federal income tax purposes on account of such action.
(c) If any proposed amendment to this Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to this Trust Agreement or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least 66-2/3% in Liquidation Amount of the Outstanding Preferred Securities. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will not be classified as other than a grantor trust for United States federal income tax purposes on account of such action.
Section 6.02 Notice of Meetings. Notice of all meetings of the Preferred Securityholders, stating the time, place and purpose of the meeting, shall be given by the Administrative Trustees pursuant to Section 10.08 to each Preferred Securityholder of record, at his registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice.
Section 6.03 Meetings of Preferred Securityholders. No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter upon the written request of the Preferred Securityholders of record of 25% of the Preferred Securities (based upon their Liquidation Amount) and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of Preferred Securityholders to vote on any matters as to which Preferred Securityholders are entitled to vote.
Preferred Securityholders of record of 50% of the Preferred Securities (based upon their Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the Preferred Securityholders of record present, in person or by proxy, holding more than 66-2/3% of the Preferred Securities (based upon their Liquidation Amount) held by the Preferred Securityholders of record present, either in person or by proxy, at such meeting shall constitute the action of the Securityholders, unless this Trust Agreement requires a greater number of affirmative votes.
Section 6.04 Voting Rights. Securityholders shall be entitled to one vote for each $25 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote.
Section 6.05 Proxies, etc. At any meeting of Securityholders, any Securityholder entitled to vote may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resolution of the Property Trustee, proxies may be solicited in the name of the Property Trustee or one or more officers of the Property Trustee. Only Securityholders of record shall be entitled to vote. When Trust Securities are held jointly by several Persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution.
Section 6.06 Securityholder Action by Written Consent. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding at least 66-2/3% of all outstanding Trust Securities entitled to vote in respect of such action (or such other proportion thereof as shall be required by any express provision of this Trust Agreement) shall consent to the action in writing (based upon their Liquidation Amount).
Section 6.07 Record Date for Voting and Other Purposes. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any Distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of Distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes.
Section 6.08 Acts of Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by an agent appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Administrative Trustees. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and (subject to Section 8.01) conclusive in favor of the Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustees deem sufficient.
The ownership of Preferred Securities shall be proved by the Securities Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Securityholders of Trust Securities and the Administrative Trustees or among such Securityholders or Trustees with respect to the authenticity, validity or binding nature of any request, demand, authorization, direction, consent, waiver or other Act of such Securityholder or Trustee under this Article VI, then the determination of such matter by the Property Trustee shall be conclusive with respect to such matter.
Section 6.09 Inspection of Records. Upon reasonable notice to the Trustees, the records of the Trust shall be open to inspection by Securityholders during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder.
ARTICLE VII
Representations and Warranties of the
Property Trustee and Delaware Trustee
Section 7.01 Representations and Warranties of Property Trustee. The Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Depositor at the date of this Trust Agreement, and each Successor Property Trustee represents and warrants to the Trust and the Depositor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that:
(a) the Property Trustee is a New York banking corporation with trust powers and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Trust Agreement;
(b) The execution, delivery and performance by the Property Trustee of this Trust Agreement has been duly authorized by all necessary corporate action on the part of the Property Trustee. This Trust Agreement has been duly executed and delivered by the Property Trustee and constitutes a legal, valid and binding obligation of the Property Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of this Trust Agreement by the Property Trustee does not conflict with or constitute a breach of the charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with or notice to, any New York State or federal banking authority is required for the execution, delivery or performance by the Property Trustee of this Trust Agreement.
Section 7.02 Representations and Warranties of Delaware Trustee
The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Depositor at the date of this Trust Agreement, and each Successor Delaware Trustee represents and warrants to the Trust and the Depositor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and in good standing under the laws of the State of Delaware, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Trust Agreement;
(b) The execution, delivery and performance by the Delaware Trustee of this Trust Agreement has been duly authorized by all necessary corporate action on the part of the Delaware Trustee. This Trust Agreement has been duly executed and delivered by the Delaware Trustee and constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with or notice to, any federal banking authority is required for the execution, delivery or performance by the Delaware Trustee of this Trust Agreement; and
(d) The Delaware Trustee is a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware.
ARTICLE VIII
The Trustees
Section 8.01 Certain Duties and Responsibilities.
(a) The rights, duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and, in the case of the Property Trustee, the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Trust Agreement shall require the Trustees to expend or risk their own funds or otherwise incur any financial liability in the performance of any of their duties hereunder, or in the exercise of any of their rights or powers, if they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to them. Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section.
(b) All payments made by the Property Trustee in respect of the Trust Securities shall be made only from the income and proceeds from the Trust Property and only to the extent that there shall be sufficient income or proceeds from the Trust Property to enable the Property Trustee to make payments in accordance with the terms hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.01(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act.
Section 8.02 Notice of Defaults. Within 90 days after the occurrence of any Event of Default, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.08, notice of any Event of Default known to the Property Trustee to the Securityholders, the Administrative Trustees, the Guarantor and the Depositor, unless such Event of Default shall have been cured or waived.
Section 8.03 Certain Rights of Property Trustee. Subject to the provisions of Section 8.01 and except as provided by law:
(i) the Property Trustee may conclusively rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(ii) if (A) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action, or (B) in construing any of the provisions in this Trust Agreement the Property Trustee finds the same ambiguous or inconsistent with any other provisions contained herein, or (C) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Preferred Securityholders are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken. The Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within ten Business Days after it has delivered such notice, or such reasonably shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct;
(iii) the Property Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(iv) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(v) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond or other document, unless requested in writing to do so by one or more Securityholders; and
(vi) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder.
Section 8.04 Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust, and the Trustees do not assume any responsibility for their correctness. The Trustees shall not be accountable for the use or application by the Trust of the proceeds of the Trust Securities in accordance with Section 2.05.
The Property Trustee may conclusively assume that any funds held by it hereunder are legally available unless a Responsible Officer shall have received written notice from the Company, any Holder or any other Trustee that such funds are not legally available.
Section 8.05 May Hold Securities. Except as provided in the definition of the term "Outstanding" in Article I, any Trustee or any other agent of the Trustees or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent.
Section 8.06 Compensation; Fees; Indemnity.
The Depositor agrees:
(1) to pay to the Trustees from time to time reasonable compensation for all services rendered by the Trustees hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of their agents and counsel), except any such expense, disbursement or advance as may be attributable to their willful misconduct, negligence or bad faith; and
(3) to indemnify the Trustees for, and to hold the Trustees harmless against, any and all loss, damage, claims, liability or expense incurred without willful misconduct, negligence or bad faith on their part, arising out of or in connection with the acceptance or administration of this Trust Agreement, including the costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their powers or duties hereunder.
The provisions of this Section 8.06 shall survive the termination of this Trust Agreement.
Section 8.07 Trustees Required; Eligibility.
(a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind such entity.
(c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity authorized to conduct a trust business and with its principal place of business in the State of Delaware that shall act through one or more persons authorized to bind such entity.
Section 8.08 Conflicting Interests.
If the Property Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Property Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Trust Agreement. To the extent permitted by the Trust Indenture Act, the Property Trustee shall not be deemed to have a conflicting interest by virtue of being trustee under the Guarantee.
Section 8.09 Co-Trustees and Separate Trustee.
At any time or times, for the purpose of meeting the legal requirements
of the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Holder of the Common Securities and the
Property Trustee shall have power to appoint, and upon the written request of
the Property Trustee, the Depositor shall for such purpose join with the
Property Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such Trust Property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or Persons
in the capacity aforesaid, any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Section. If the Depositor
does not join in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Indenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section shall satisfy the requirements of Section 8.07.
Should any written instrument from the Depositor be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged, and delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely:
(i) The Trust Securities shall be executed, authenticated and delivered and all rights, powers, duties, and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees hereunder, shall be exercised, solely by the Trustees.
(ii) The rights, powers, duties, and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or by the Property Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties, and obligations shall be exercised and performed by such co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case an Indenture Event of Default has occurred and is continuing, the Property Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery, and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section.
(iv) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Property Trustee, or any other such trustee hereunder.
(v) The Trustees shall not be liable by reason of any act of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee.
Section 8.10 Resignation and Removal; Appointment of Successor. No resignation or removal of any Trustee (the "Relevant Trustee") and no appointment of a successor Relevant Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Relevant Trustee in accordance with the applicable requirements of Section 8.11.
The Relevant Trustee may resign at any time by giving written notice thereof to the Securityholders. If the instrument of acceptance by a successor Relevant Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the resigning Relevant Trustee may petition any court of competent jurisdiction for the appointment of a successor Relevant Trustee.
Unless an Indenture Event of Default shall have occurred and be continuing, the Relevant Trustee may be removed at any time by Act of the Holder of the Common Securities. If an Indenture Event of Default shall have occurred and be continuing, the Relevant Trustee may be removed at such time by Act of the Securityholders of a majority in Liquidation Amount of the Preferred Securities Certificates, delivered to the Relevant Trustee (in its individual capacity and on behalf of the Trust).
If the Relevant Trustee shall resign, be removed or become incapable of
continuing to act as Trustee at a time when no Indenture Event of Default shall
have occurred and be continuing, the Holder of the Common Securities, by Act of
the Holder of the Common Securities delivered to the retiring Relevant Trustee,
shall promptly appoint a successor Relevant Trustee or Trustees, and the
retiring Relevant Trustee shall comply with the applicable requirements of
Section 8.11. If the Relevant Trustee shall resign, be removed or become
incapable of continuing to act as the Relevant Trustee at a time when an
Indenture Event of Default shall have occurred and be continuing, the Holders of
Preferred Securities, by Act of the Securityholders of a majority in Liquidation
Amount of the Preferred Securities then outstanding delivered to the retiring
Relevant Trustee, shall promptly appoint a successor Relevant Trustee or
Trustees, and the Relevant Trustee shall comply with the applicable requirements
of Section 8.11. If no successor Relevant Trustee shall have been so appointed
in accordance with this Section 8.10 and accepted appointment in the manner
required by Section 8.11, any Securityholder who has been a Securityholder of
Trust Securities for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
The retiring Relevant Trustee shall give notice of each resignation and each removal of the Relevant Trustee, and each appointment of a successor Trustee to all Securityholders in the manner provided in Section 10.08 and shall give notice to the Depositor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust Office if it is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes incompetent or incapacitated or resigns, the
vacancy created by such death, incompetence or incapacity or resignation may be
filled by (i) the act of the remaining Administrative Trustee or (ii) otherwise
by the Depositor (with the successor in each case being an individual who
satisfies the eligibility requirement for Administrative Trustees set forth in
Section 8.07). Additionally, notwithstanding the foregoing or any other
provision of this Trust Agreement, in the event the Depositor believes that any
Administrative Trustee has become incompetent or incapacitated, the Depositor,
by notice to the remaining Trustees, may terminate the status of such Person as
an Administrative Trustee (in which case the vacancy so created will be filled
in accordance with the preceding sentence).
Section 8.11 Acceptance of Appointment by Successor. In case of the appointment hereunder of a successor Relevant Trustee, every such successor Relevant Trustee so appointed shall execute, acknowledge and deliver to the Trust and to the retiring Relevant Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Relevant Trustee shall become effective and such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on the request of the Depositor or the successor Relevant Trustee, such retiring Relevant Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Relevant Trustee all the rights, powers and trusts of the retiring Relevant Trustee and shall duly assign, transfer and deliver to such successor Relevant Trustee all property and money held by such retiring Relevant Trustee hereunder.
Upon request of any such successor Relevant Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Relevant Trustee all such rights, powers and trusts referred to in the preceding paragraph.
No successor Relevant Trustee shall accept its appointment unless at the time of such acceptance such successor Relevant Trustee shall be qualified and eligible under this Article.
Section 8.12 Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Property Trustee, Delaware Trustee or any Administrative Trustee which is not a natural person may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto.
Section 8.13 Preferential Collection of Claims Against Depositor or Trust. If and when the Property Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Junior Subordinated Notes or the Trust Securities), the Property Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Depositor or Trust (or any such other obligor). For purposes of Section 311(b)(4) and (6) of the Trust Indenture Act:
(a) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Depositor or the Trust (or any such obligor) for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Property Trustee simultaneously with the creation of the creditor relationship with the Depositor or the Trust (or any such obligor) arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
Section 8.14 Reports by Property Trustee.
(a) Within 60 days after May 15 of each year commencing with May 15, 1998, if required by Section 313(a) of the Trust Indenture Act, the Property Trustee shall transmit a brief report dated as of such May 15 with respect to any of the events specified in such Section 313(a) that may have occurred since the later of the date of this Trust Agreement or the preceding May 15.
(b) The Property Trustee shall transmit to Securityholders the reports required by Section 313(b) of the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 313(c) and (d) of the Trust Indenture Act.
Section 8.15 Reports to the Property Trustee. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and, within 120 days after the end of each
fiscal year of the Depositor, the compliance certificate required by Section
314(a)(4) of the Trust Indenture Act in the form and in the manner required by
Section 314 of the Trust Indenture Act.
Section 8.16 Evidence of Compliance with Conditions Precedent. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Trust Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given pursuant to Section 314(c)(1) of the Trust Indenture Act shall comply with Section 314(e) of the Trust Indenture Act.
Section 8.17 Number of Trustees.
(a) The number of Trustees shall initially be four, provided that the Depositor by written instrument may increase or decrease the number of Administrative Trustees.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.10, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Trust Agreement), shall have all powers granted to the Administrative Trustees and shall discharge the duties imposed upon the Administrative Trustees by this Trust Agreement.
Section 8.18 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.07(A), including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time to time to such of their number the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein.
Section 8.19 Enforcement of Rights of Property Trustee by Securityholders. If (i) the Trust fails to pay Distributions in full on the Preferred Securities for more than 20 consecutive quarterly distribution periods, or (ii) an Event of Default occurs and is continuing, then the Holders of Preferred Securities will rely on the enforcement by the Property Trustee of its rights against the Company and the Guarantor as the holder of the Junior Subordinated Notes. In addition, the Holders of a majority in aggregate Liquidation Amount of the Preferred Securities will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Property Trustee or to direct the exercise of any trust or power conferred upon the Property Trustee under this Trust Agreement, including the right to direct the Property Trustee to exercise the remedies available to it as a holder of the Junior Subordinated Notes, provided that such direction shall not be in conflict with any rule of law or with this Trust Agreement, and could not involve the Property Trustee in personal liability in circumstances where reasonable indemnity would not be adequate. If the Property Trustee fails to enforce its rights under the Junior Subordinated Notes, a Holder of Preferred Securities may, to the fullest extent permitted by applicable law, institute a legal proceeding against the Company or the Guarantor or both to enforce its rights under this Trust Agreement without first instituting any legal proceeding against the Property Trustee or any other Person, including the Trust; it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Notwithstanding the foregoing, a Holder of Preferred Securities may institute a legal proceeding directly against the Company or the Guarantor or both, without first instituting a legal proceeding against or requesting or directing that action be taken by the Property Trustee or any other Person, for enforcement of payment to such Holder of principal of or interest on the Junior Subordinated Notes having a principal amount equal to the aggregate stated liquidation amount of the Preferred Securities of such Holder on or after the due dates therefor specified or provided for in the Junior Subordinated Notes. The Company or the Guarantor shall be subrogated to all rights of the Holders of Preferred Securities in respect of any amounts paid to such Holders by the Company or the Guarantor pursuant to this Section.
ARTICLE IX
Termination and Liquidation
Section 9.01 Termination Upon Expiration Date. The Trust shall automatically terminate on December 31, 2042 (the "Expiration Date") or earlier pursuant to Section 9.02.
Section 9.02 Early Termination. Upon the first to occur of any of the following events (such first occurrence, an "Early Termination Event"), the Trust shall be dissolved and terminated in accordance with the terms hereof:
(i) the occurrence of a Bankruptcy Event in respect of the Depositor, dissolution or liquidation of the Depositor, or the dissolution of the Trust pursuant to judicial decree;
(ii) the delivery of written direction to the Property Trustee by the Depositor at any time (which direction is optional and wholly within the discretion of the Depositor) to terminate the Trust and distribute the Junior Subordinated Notes to Securityholders as provided in Section 9.04; and
(iii) the payment at maturity or redemption of all of the Junior Subordinated Notes, and the consequent payment of the Preferred Securities.
Section 9.03 Termination. The respective obligations and responsibilities of the Trust and the Trustees created hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.04, or upon the redemption of all of the Trust Securities pursuant to Section 4.02, of all amounts or instruments required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of any expenses owed by the Trust; and (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders.
Section 9.04 Liquidation.
(a) If any Early Termination Event specified in clause (ii) of Section 9.02 occurs, the Trust shall be liquidated and the Property Trustee shall distribute the Junior Subordinated Notes to the Securityholders as provided in this Section 9.04.
(b) In connection with a distribution of the Junior Subordinated Notes, each Holder of Trust Securities shall be entitled to receive, after the satisfaction of liabilities to creditors of the Trust (as evidenced by a certificate of the Administrative Trustees), a Like Amount of Junior Subordinated Notes. Notice of liquidation shall be given by the Trustees by first-class mail, postage prepaid, mailed not later than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address appearing in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Junior Subordinated Notes; and
(iii) provide such information with respect to the mechanics by which Holders may exchange Trust Securities Certificates for Junior Subordinated Notes as the Administrative Trustees or the Property Trustee shall deem appropriate.
(c) In order to effect the liquidation of the Trust and distribution of the Junior Subordinated Notes to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Junior Subordinated Notes in exchange for the Outstanding Trust Securities Certificates.
(d) After the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) certificates representing a Like Amount of Junior Subordinated Notes will be issued to Holders of Trust Securities Certificates, upon surrender of such certificates to the Administrative Trustees or their agent for exchange, (iii) any Trust Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Junior Subordinated Notes, accruing interest at the rate provided for in the Junior Subordinated Notes from the last Distribution Date on which a Distribution was made on such Trust Certificates until such certificates are so surrendered (and until such certificates are so surrendered, no payments of interest or principal will be made to Holders of Trust Securities Certificates with respect to such Junior Subordinated Notes) and (iv) all rights of Securityholders holding Trust Securities will cease, except the right of such Securityholders to receive Junior Subordinated Notes upon surrender of Trust Securities Certificates.
(e) The Depositor will use its best efforts to have the Junior Subordinated Notes that are distributed in exchange for the Preferred Securities to be listed on such securities exchange as the Preferred Securities are then listed. The Depositor may elect to have the Junior Subordinated Notes issued in book-entry form to the Clearing Agency or its nominee.
Section 9.05 Bankruptcy. If an Early Termination Event specified in clause (i) of Section 9.02 has occurred, the Trust shall be liquidated. The Property Trustee shall distribute the Junior Subordinated Notes to the Securityholders as provided in Section 9.04, unless such distribution is determined by the Administrative Trustees not to be practical, in which event the Holders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors, an amount equal to the Liquidation Amount per Trust Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If such Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution, winding-up or termination pro rata (determined as aforesaid) with Holders of Preferred Securities, except that, if an Indenture Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities.
ARTICLE X
Miscellaneous Provisions
Section 10.01 Expense Agreement. The Depositor shall cause the Guarantor, contemporaneously with the execution and delivery of this Trust Agreement, to execute and deliver the Expense Agreement.
Section 10.02 Limitation of Rights of Securityholders. The death or incapacity of any Person having an interest, beneficial or otherwise, in a Trust Security shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such Person or any Securityholder for such Person, to claim an accounting, take any action or bring any proceeding in and for a partition or winding up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them.
Section 10.03 Amendment.
(a) This Trust Agreement may be amended from time to time by the Trustees and the Depositor, without the consent of any Securityholders, (i) to cure any ambiguity, correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, which shall not be inconsistent with the other provisions of this Trust Agreement, provided, however, that any such amendment shall not adversely affect in any material respect the interests of any Securityholder or (ii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will not be classified as other than a grantor trust for United States federal income tax purposes at any time that any Trust Securities are outstanding; provided, however, that, except in the case of clause (ii), such action shall not adversely affect in any material respect the interests of any Securityholder and, in the case of clause (i), any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders.
(b) Except as provided in Section 10.03(c) hereof, any provision in this Trust Agreement may be amended by the Trust or the Trustees with (i) the consent of Trust Securityholders representing not less than 66-2/3% (based upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status of an "investment company" under the Investment Company Act of 1940, as amended.
(c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.03 or 6.06 hereof), this Trust Agreement may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date, (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date, or (iii) change the consent required pursuant to Section 10.03.
(d) Notwithstanding any other provisions of this Trust Agreement, the Trustees shall not enter into or consent to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an "investment company" under the Investment Company Act of 1940, as amended, afforded by Rule 3a-5 thereunder.
(e) Without the consent of the Depositor, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor. In executing any amendment permitted by this Trust Agreement, the Trustees shall be entitled to receive, and (subject to Section 8.01) shall be fully protected in relying upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Trust Agreement. Any Trustee may, but shall not be obligated to, enter into any such amendment which affects such Trustee's own rights, duties, immunities or liabilities under this Trust Agreement or otherwise.
(f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment.
Section 10.04 Separability. In case any provision in this Trust Agreement or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.05 Governing Law. THIS TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH
RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE;
PROVIDED THAT THE IMMUNITIES AND STANDARD OF CARE OF THE PROPERTY TRUSTEE SHALL
BE GOVERNED BY NEW YORK LAW.
Section 10.06 Successors. This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to both the Trust and the Trustees, including any successor by operation of law.
Section 10.07 Headings. The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement.
Section 10.08 Notice and Demand. Any notice, demand or other
communication which by any provision of this Trust Agreement is required or
permitted to be given or served to or upon any Securityholder or the Depositor
may be given or served in writing by deposit thereof, first-class postage
prepaid, in the United States mail, hand delivery or facsimile transmission, in
each case, addressed, (i) in the case of a Preferred Securityholder, to such
Preferred Securityholder as such Securityholder's name and address appear on the
Securities Register and (ii) in the case of the Common Securityholder or the
Depositor, to Southern Company Capital Funding, Inc., c/o The Southern Company,
270 Peachtree Street, N.W., Atlanta, Georgia 30303, Attention: Secretary,
Facsimile No. (404) 506-0808, with a copy to Southern Company Services, Inc.,
270 Peachtree Street, N.W., Suite 2000, Atlanta, Georgia 30303, Attention:
Corporate Finance Department, Facsimile No. (404) 506-0674. Such notice, demand
or other communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Trust or the Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (i) with respect to the Property Trustee and the Delaware Trustee, Bankers Trust Company, Four Albany Street, New York, New York, 10006, Attention: Corporate Trust and Agency Group, Manager Public Utilities Group; Bankers Trust (Delaware), 1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801-1457, Attention: Lisa Wilkins, as the case may be; and (ii) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked Attention: Administrative Trustees of Southern Company Capital Trust III c/o Secretary. Such notice, demand or other communication to or upon the Trust or the Trustees shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the applicable Trustee.
Section 10.09 Agreement Not to Petition. Each of the Trustees and the Depositor agrees for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, it shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, reorganization, arrangement, insolvency, liquidation or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.09, the Property Trustee agrees, for the benefit of Securityholders, that it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom and such other defenses, if any, as counsel for the Trustees or the Trust may assert. The provisions of this Section 10.09 shall survive the termination of this Trust Agreement.
Section 10.10 Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Trustee Agreement and shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, such required provision shall control.
(d) The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE SUBORDINATED INDENTURE AND THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THOSE TERMS AND PROVISIONS SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
IN WITNESS WHEREOF, the parties hereto have executed this Trust Agreement or have caused this Trust Agreement to be executed on their behalf, all as of the day and year first above written.
SOUTHERN COMPANY CAPITAL
FUNDING, INC.,
as Depositor
By:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:
Title:
BANKERS TRUST (DELAWARE),
as Delaware Trustee
By:
Title:
Wayne Boston,
as Administrative Trustee
Richard A. Childs,
as Administrative Trustee
[EXHIBITS A AND B ARE INTENTIONALLY RESERVED]
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE TRUST AGREEMENT REFERRED TO HEREIN
Certificate Number Number of Common Securities
C-1 ________
Certificate Evidencing Common Securities
of
Southern Company Capital Trust III
|
Common Securities
(liquidation amount $25 per Common Security)
Southern Company Capital Trust III, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Southern Company Capital Funding, Inc. (the "Holder") is the registered owner of _____________ (_______) common securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined below) the Common Securities are not transferable, except by operation of law, and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of June 1, 1997, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of the Common Securities as set forth therein. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed this certificate this ____ day of ________, 19__.
Southern Company Capital Trust III
By:
Wayne Boston,
as Administrative Trustee
By:
Richard A. Childs,
as Administrative Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the within-mentioned Trust Agreement.
as Administrative Trustee
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
THIS AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") is made as of June 1, 1997, between The Southern Company, a Delaware corporation (the "Company"), and Southern Company Capital Trust III, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common Securities") to and receive Junior Subordinated Notes from Southern Company Capital Funding, Inc., a Delaware corporation and an indirect, wholly-owned subsidiary of the Company, and to issue and sell Southern Company Capital Trust III 7.75% Cumulative Quarterly Income Preferred Securities (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of June 1, 1997 as the same may be amended from time to time (the "Trust Agreement"); and
WHEREAS, the Company is the guarantor of the Junior Subordinated Notes.
NOW, THEREFORE, in consideration of the purchase by each holder of the Preferred Securities, which purchase the Company hereby agrees shall benefit the Company and which purchase the Company acknowledges will be made in reliance upon the execution and delivery of this Agreement, the Company and the Trust hereby agree as follows:
ARTICLE I
Section 1.01. Guarantee by the Company. Subject to the terms and conditions hereof, the Company hereby irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries") the full payment, when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any indebtedness, expenses or liabilities of the Trust, other than obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof.
Section 1.02. Term of Agreement. This Agreement shall terminate and be of no further force and effect upon the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any Obligation, under the Preferred Securities Guarantee Agreement dated the date hereof by the Company and Bankers Trust Company, as guarantee trustee, or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.03. Waiver of Notice. The Company hereby waives notice of acceptance of this Agreement and of any Obligation to which it applies or may apply, and the Company hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants, agreements and duties of the Company under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, the Company with respect to the happening of any of the foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this Agreement directly against the Company and the Company waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against the Company.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the Beneficiaries.
Section 2.02. Amendment. So long as there remains any Beneficiary or any Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities.
Section 2.03. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same against receipt therefor by facsimile transmission (confirmed by mail), telex or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer-back, if sent by telex), to-wit:
Southern Company Capital Trust III
c/o Bankers Trust Company
Four Albany Street
New York, New York 10006
Facsimile No.: (212) 250-6725
Attention: Corporate Trust and Agency Group
Manager Public Utilities Group
|
The Southern Company
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Facsimile No.: (404) 506-0808 Attention: Secretary
Section 2.04. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
THIS AGREEMENT is executed as of the date and year first above written.
THE SOUTHERN COMPANY
By:
SOUTHERN COMPANY CAPITAL TRUST III
By:
Wayne Boston, as
Administrative Trustee
EXHIBIT E
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to Southern Company Capital Trust III or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge, or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner thereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
P-1 CUSIP NO. _____ _______
Certificate Evidencing Preferred Securities
of
Southern Company Capital Trust III
7.75% Cumulative Quarterly Income Preferred Securities
(Liquidation amount $25 per Preferred Security)
Southern Company Capital Trust III, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of _______ MILLION (_______) Preferred Securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the Southern Company Capital Trust III 7.75% Cumulative Quarterly Income Preferred Securities (liquidation amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.04 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of June 1, 1997, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of Preferred Securities as set forth therein. The holder of this certificate is entitled to the benefits of a guarantee by The Southern Company, a Delaware corporation (the "Company"), pursuant to a Preferred Securities Guarantee Agreement between the Company and Bankers Trust Company, as guarantee trustee, dated as of June 1, 1997, as the same may be amended from time to time (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee to the holder of this certificate without charge upon written request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the holder of this certificate is bound by the Trust Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have executed this certificate this ____ day of ________, 19__.
SOUTHERN COMPANY CAPITAL TRUST III
By:
Wayne Boston,
as Administrative Trustee
By:
Richard A. Childs,
as Administrative Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-mentioned Trust Agreement.
as Administrative Trustee
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Preferred Securities Certificate on the books of the Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Preferred Securities Certificate)
Exhbit 4(a)8
PREFERRED SECURITIES GUARANTEE AGREEMENT
Between
The Southern Company
(as Guarantor)
and
Bankers Trust Company
(as Trustee)
dated as of
June 1, 1997
CROSS-REFERENCE TABLE1
Section of Section of Trust Indenture Act Guarantee of 1939, as amended Agreement 310(a)...............................4.01(a) 310(b).........................4.01(c), 2.08 310(c)..........................Inapplicable 311(a)...............................2.02(b) 311(b)...............................2.02(b) 311(c)..........................Inapplicable 312(a)...............................2.02(a) 312(b)...............................2.02(b) 313.....................................2.03 314(a)..................................2.04 314(b)..........................Inapplicable 314(c)..................................2.05 314(d)..........................Inapplicable 314(e)......................1.01, 2.05, 3.02 314(f)............................2.01, 3.02 315(a)...............................3.01(d) 315(b)..................................2.07 315(c)..................................3.01 315(d)...............................3.01(d) 315(e)..........................Inapplicable 316(a).........................5.04(i), 2.06 316(b)..................................5.03 316(c)..................................2.02 317(a)..........................Inapplicable 317(b)..........................Inapplicable 318(a)...............................2.01(b) 318(b)..................................2.01 318(c)...............................2.01(a) |
1This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.
TABLE OF CONTENTS
Page
ARTICLE I.....................................................1
SECTION 1.01. Definitions.....................................1
ARTICLE II....................................................3
SECTION 2.01. Trust Indenture Act; Application................3
SECTION 2.02. Lists of Holders of Securities..................4
SECTION 2.03. Reports by the Trustee..........................4
SECTION 2.04. Periodic Reports to Trustee.....................4
SECTION 2.05. Evidence of Compliance with Conditions
Precedent............................................4
SECTION 2.06. Events of Default; Waiver.......................4
SECTION 2.07. Event of Default; Notice........................5
SECTION 2.08. Conflicting Interests...........................5
ARTICLE III...................................................5
SECTION 3.01. Powers and Duties of the Trustee................5
SECTION 3.02. Certain Rights of Trustee.......................6
SECTION 3.03. Compensation; Fees; Indemnity...................8
ARTICLE IV....................................................8
SECTION 4.01. Trustee; Eligibility............................8
SECTION 4.02. Appointment, Removal and Resignation of
Trustee..............................................9
ARTICLE V....................................................10
SECTION 5.01. Guarantee......................................10
SECTION 5.02. Waiver of Notice and Demand....................10
SECTION 5.03. Obligations Not Affected.......................10
SECTION 5.04. Rights of Holders..............................11
SECTION 5.05. Guarantee of Payment...........................11
SECTION 5.06. Subrogation....................................11
SECTION 5.07. Independent Obligations........................12
ARTICLE VI...................................................12
SECTION 6.01. Subordination..................................12
ARTICLE VII..................................................12
SECTION 7.01. Termination....................................12
ARTICLE VIII.................................................12
SECTION 8.01. Successors and Assigns.........................12
SECTION 8.02. Amendments.....................................13
SECTION 8.03. Notices........................................13
SECTION 8.04. Benefit........................................14
SECTION 8.05. Interpretation.................................14
SECTION 8.06. Governing Law..................................14
|
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of June 1, 1997, between THE SOUTHERN COMPANY, a Delaware corporation (the "Guarantor"), and BANKERS TRUST COMPANY, a New York banking corporation, as trustee (the "Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of SOUTHERN COMPANY CAPITAL TRUST III, a Delaware statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of June 1, 1997, among the Trustee, the other Trustees named therein, Southern Company Capital Funding, Inc., a Delaware corporation (the "Company"), as Depositor, and the holders of undivided beneficial interests in the assets of the Trust, the Trust is issuing as of June 6, 1997 $200,000,000 aggregate liquidation amount of its 7.75% Preferred Securities (the "Preferred Securities") representing preferred undivided beneficial interests in the assets of the Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Trust and the proceeds thereof will be used to purchase the Junior Subordinated Notes (as defined in the Trust Agreement) of the Company, which will be held by the Trust as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires to irrevocably and unconditionally agree, to the extent set forth herein, to pay to the Holders the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the payment for Preferred Securities by each Holder (as defined herein) thereof, which payment the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Preferred Securities.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Common Securities" means the securities representing common undivided beneficial interests in the assets of the Trust.
"Event of Default" means a failure by the Guarantor to perform any of its payment obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Trust: (i) any accrued and unpaid distributions that are required to be paid on such Preferred Securities but if and only if and to the extent the Trust has funds legally and immediately available therefor to make such payment; (ii) the redemption price, including all accrued and unpaid distributions to the date of redemption (the "Redemption Price"), with respect to the Preferred Securities called for redemption by the Trust but if and only if and to the extent that the Trust has funds legally and immediately available therefor sufficient to make such payment; and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with the distribution of Junior Subordinated Notes to the holders of Trust Securities or the redemption of all of the Preferred Securities), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid distributions on the Preferred Securities to the date of payment, to the extent the Trust has funds legally and immediately available therefor, and (b) the amount of assets of the Trust remaining available for distribution to Holders in liquidation of the Trust (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records of the Trust, of any Preferred Securities; provided, however, that in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor, the Company or any Affiliate of the Guarantor or the Company.
"Indenture" means the Subordinated Note Indenture dated as of June 1, 1997, among the Company, as Subordinated Note Issuer, the Guarantor, as guarantor, and Bankers Trust Company, as trustee, as supplemented by the First Supplemental Indenture dated as of June 6, 1997, by and among the Company, the Guarantor and Bankers Trust Company, as trustee.
"Majority in liquidation amount of Preferred Securities" means a vote by Holder(s) of Preferred Securities, voting separately as a class, of more than 50% of the liquidation amount of all Preferred Securities outstanding at the time of determination.
"Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and delivered to the Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.
"Responsible Officer" means, with respect to the Trustee, any managing director, any vice president, any assistant vice president, any assistant secretary, any assistant treasurer, or any other officer of the Corporate Trust and Agency Group of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.
"Successor Trustee" means a successor Trustee possessing the qualifications to act as Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trustee" means Bankers Trust Company until a Successor Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Trustee.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions; and
(b) If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.02. Lists of Holders of Securities.
(a) The Guarantor shall furnish or cause to be furnished to the Trustee
(a) semiannually, not later than June 1 and December 1 in each year, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders ("List of Holders") as of a date not more than 15 days prior to the
time such list is furnished, and (b) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15 days prior to the
time such list is furnished; provided that, the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Trustee by the Guarantor or at
any time the Trustee is the Securities Registrar under the Trust Agreement. The
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Trustee. Within 60 days after May 15 of each year commencing May 15, 1998, the Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Trustee shall also comply with the other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Trustee. The Guarantor shall provide to the Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act, and shall provide, within 120 days after the end of each of its fiscal years, the compliance certificate required by Section 314(a)(4) of the Trust Indenture Act in the form and in the manner required by such Section.
SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Guarantee Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.06. Events of Default; Waiver. The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of all of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.
SECTION 2.07. Event of Default; Notice.
(a) The Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default known to the Trustee, unless such defaults have been cured before the giving of such notice, provided that the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.
(b) The Trustee shall not be deemed to have knowledge of any Event of Default unless the Trustee shall have received written notice, or a Responsible Officer charged with the administration of the Trust Agreement shall have obtained written notice, of such Event of Default.
SECTION 2.08. Conflicting Interests. The Trust Agreement shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF TRUSTEE
SECTION 3.01. Powers and Duties of the Trustee.
(a) This Guarantee Agreement shall be held by the Trustee for the benefit of the Holders, and the Trustee shall not transfer this Guarantee Agreement to any Person except the Trustee shall assign rights hereunder to a Holder to the extent such assignment is necessary to exercise such Holder's rights pursuant to Section 5.04 or to a Successor Trustee upon acceptance by such Successor Trustee of its appointment to act as Successor Trustee. The right, title and interest of the Trustee shall automatically vest in any Successor Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Trustee.
(b) If an Event of Default has occurred and is continuing, the Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06), the Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.02. Certain Rights of Trustee.
(a) Subject to the provisions of Section 3.01:
(i) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this Guarantee Agreement, the Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor;
(iv) the Trustee may consult with counsel of its choice, and the advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion; such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees; the Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction;
(v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Trustee reasonable security and indemnity satisfactory to the Trustee against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Trustee; provided that nothing contained in this Section 3.02(a)(v) shall be taken to relieve the Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement;
(vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit;
(vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and
(viii) whenever in the administration of this Guarantee Agreement the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Trustee (i) may request instructions from the Holders, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Trustee shall be construed to be a duty.
SECTION 3.03. Compensation; Fees; Indemnity.
The Guarantor agrees:
(a) to pay to the Trustee from time to time reasonable compensation for all services rendered by the Trustee hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Guarantee Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold the Trustee harmless against, any and all loss, damage, claims, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
The provisions of this Section 3.03 shall survive the termination of this Guarantee Agreement.
ARTICLE IV
TRUSTEE
SECTION 4.01. Trustee; Eligibility.
(a) There shall at all times be a Trustee which shall:
(i) not be an Affiliate of the Guarantor or the Company; and
(ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.01(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
(b) If at any time the Trustee shall cease to be eligible to so act under Section 4.01(a), the Trustee shall immediately resign in the manner and with the effect set out in Section 4.02(c).
(c) If the Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act, subject to the rights of the Trustee under the penultimate paragraph thereof.
SECTION 4.02. Appointment, Removal and Resignation of Trustee.
(a) Subject to Section 4.02(b), the Trustee may be appointed or removed without cause at any time by the Guarantor.
(b) The Trustee shall not be removed until a Successor Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Trustee and delivered to the Guarantor.
(c) The Trustee appointed to office shall hold office until a Successor Trustee shall have been appointed or until its removal or resignation. The Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Trustee and delivered to the Guarantor and the resigning Trustee.
(d) If no Successor Trustee shall have been appointed and accepted appointment as provided in this Section 4.02 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Trustee may petition any court of competent jurisdiction for appointment of a Successor Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Trust), as and when due, regardless of any defense, right of set-off or counterclaim which the Guarantor may have or assert against any Person. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Trust to pay such amounts to the Holders.
SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.
SECTION 5.03. Obligations Not Affected. The obligation of the Guarantor to make the Guarantee Payments under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Trust of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Junior Subordinated Notes permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Trust granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Trustee to be held for the benefit of the Holders; (ii) the Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Trustee under this Guarantee Agreement, provided that such direction shall not be in conflict with any rule of law or with this Guarantee Agreement, and could not involve the Trustee in personal liability in circumstances where reasonable indemnity would not be adequate; and (iv) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against or requesting or directing that action be taken by the Trustee or any other Person; it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Guarantee Agreement to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Guarantee Agreement, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication) or upon the distribution of Junior Subordinated Notes to the Holders in exchange for all of the Preferred Securities.
SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Trust in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts of Guarantee Payments are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Trust with respect to the Preferred Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.01. Subordination. This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including the Junior Subordinated Notes, except those obligations or liabilities made pari passu or subordinate by their terms, (ii) pari passu with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference securities of any Affiliate of the Guarantor, and (iii) senior to all common stock of the Guarantor.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Guarantee Agreement shall terminate and be of no further force and effect upon: (i) full payment of the Redemption Price of all Preferred Securities, (ii) the distribution of Junior Subordinated Notes to the Holders in exchange for all of the Preferred Securities, or (iii) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Preferred Securities or under this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger, conveyance, transfer, or lease involving the Guarantor that is permitted under Article Eight of the Indenture, the Guarantor shall not assign its obligations hereunder.
SECTION 8.02. Amendments. Except with respect to any changes which do not materially and adversely affect the rights of Holders (in which case no consent of Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than 66-2/3% in liquidation amount of all the outstanding Preferred Securities. The provisions of Article Six of the Trust Agreement concerning meetings of Holders shall apply to the giving of such approval.
SECTION 8.03. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Trustee and the Holders:
The Southern Company 270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Facsimile No.: (404) 506-0808
Attn: Secretary
with copy to:
Southern Company Services, Inc.
270 Peachtree Street, N.W., Suite 2000
Atlanta, Georgia 30303
Facsimile No.: (404) 506-0674
Attention: Corporate Finance Department
(b) if given to the Trust, in care of the Trustee, or to the Trustee at the Trust's (and the Trustee's) address set forth below or such other address as the Trustee on behalf of the Trust may give notice to the Holders:
Southern Company Capital Trust III c/o Bankers Trust Company Four Albany Street New York, New York 10006 Attn: Corporate Trust and Agency Group Manager Public Utilities Group
with a copy, in the case of a notice to the Trust (other than a notice from the Guarantor), to the Guarantor;
(c) if given to any Holder, at the address set forth on the books and records of the Trust.
All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.
SECTION 8.04. Benefit. This Guarantee Agreement is solely for the benefit of the Holders and, subject to Section 3.01(a), is not separately transferable from the Preferred Securities.
SECTION 8.05. Interpretation. In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
SECTION 8.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS GUARANTEE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS GUARANTEE AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above written.
THE SOUTHERN COMPANY
By: Name: W.L. Westbrook Title: Financial Vice President |
BANKERS TRUST COMPANY,
as Trustee
By:
Name:
Title:
Exhibit 10(a)21
CONFIDENTIAL
NUCLEAR OPERATING AGREEMENT
BETWEEN
GEORGIA POWER COMPANY
AND
SOUTHERN NUCLEAR OPERATING COMPANY, INC.
DATED AS OF JULY 1, 1993
TABLE OF CONTENTS
ARTICLE I............................................................ 2
1.1 "Agency Functions"............................................. 2
1.2 "Dalton" 2
1.3 "Each Plant"................................................... 2
1.4 "Effective Date"............................................... 2
1.5 "Fuel Budget".................................................. 2
1.6 "Fuel Plan" 2
1.7 "Fuel Services"................................................ 3
1.8 "Governmental Authority"....................................... 3
1.9 "GPC" 3
1.10 "Legal Requirements"........................................... 3
1.11 "Major Contract"............................................... 4
1.12 "MEAG" 5
1.13 "New Investment Budget"........................................ 5
1.14 "New Investment Services"...................................... 5
1.15 "NRC" 5
1.16 "Nuclear Interface Procedure".................................. 5
1.17 "Nuclear Managing Board," "Managing Board," or "Board"......... 6
1.18 "Nuclear Managing Board Agreement"............................. 6
1.19 "Nuclear Operating Services"................................... 6
1.20 "Nuclear Services Agreement"................................... 6
1.21 "Nuclear Services Contractor".................................. 6
1.22 "Nuclear Support Services"..................................... 6
1.23 "OEMC" 7
1.24 "Oglethorpe"................................................... 7
1.25 "Operating Agent".............................................. 7
1.26 "Operation and Maintenance Budget"............................. 7
1.27 "Operation and Maintenance Services"........................... 7
1.28 "Participants"................................................. 8
1.29 "Participants' Agent".......................................... 8
1.30 "Participation Agreements"..................................... 8
1.31 "Plant Hatch".................................................. 8
1.32 "Plant Vogtle"................................................. 8
1.33 "Prudent Utility Practice"..................................... 8
1.34 "Services Plan"................................................ 9
1.35 "Southern Electric System"..................................... 9
1.36 "Southern Nuclear"............................................. 9
1.37 "Southern Services"............................................ 9
1.38 "Strategic Plan"............................................... 9
1.39 "The Southern Company"......................................... 9
1.40 "Undivided Ownership Interest"................................. 9
1.41 "Willful Misconduct"...........................................10
ARTICLE II...........................................................10
2.1 Appointment of Southern Nuclear as Operating Agent and Scope
of Authority..................... 10
2.2 Responsibility for the Safe Operation of Each Plant...........10
2.3 Responsibility for Economic Operation.........................11
2.4 Incidental Authorities of Southern Nuclear....................11
2.4.1 Access to and Control of Each Plant...........................11
2.4.2 Licenses and Permits for Each Plant...........................12
2.4.3 Costs, Obligations and Liabilities............................12
2.5 Transition from GPC to Southern Nuclear.......................13
2.5.1 Transfer of Organization and Staff............................13
2.5.2 Assignment and Administration of Contracts....................14
2.6 Support Services to be Provided by GPC........................14
2.7 Other Authorities and Responsibilities of Southern Nuclear....15
2.7.1 Staff and Personnel 15
2.7.2 Reductions in Capacity and Outages at Each Plant............16
2.7.3 Steady State Operation........................................17
2.7.4 Membership and Participation in Industry Organizations......18
2.8 Contracting...................................................18
2.8.1 Contracts with Affiliated Entities............................18
2.8.2 Contracts with Non-affiliated Third Parties.................19
2.9 Decommissioning of Each Plant.................................22
2.10 GPC Retains Responsibility for all Agency Functions..........22
2.11 Authority to Act as Agent for GPC and Right of Third
Parties to Rely on Agency........................... 23
ARTICLE III..........................................................23
3.1 Meetings with the Nuclear Managing Board......................23
3.2 Plans and Budgets.............................................24
3.2.1 Strategic Plan 25
(i) Five-year Operating and Planned Outage Schedule...............25
(ii) Availability and Performance Goals............................25
(iii) Planned Mandatory Projects 25
(iv) Planned Improvement Projects..................................26
(v) Authorized Level of Staffing..................................26
(vi) Low Level Radioactive Waste Disposal..........................27
3.2.2 Fuel Plan 27
3.2.3 Operation and Maintenance Budget..............................28
3.2.4 New Investment Budget.........................................28
3.2.5 Fuel Budget 28
3.3 Information and Approvals.....................................29
3.3.1 Plant Performance Data........................................29
3.3.2 Plant Budget Reports..........................................29
3.3.3 Plant Specific Strategic Plan Reports.........................29
3.3.4 INPO Evaluations and Assessments..............................30
3.3.5 NRC and INPO Meetings.........................................30
3.3.6 Audit Reports 30
3.3.7 Correspondence to and from NRC................................31
3.3.8 Responses to Participant Inquiries............................31
3.3.9 Incentive Compensation Plan...................................31
3.3.10 Non-routine Information.......................................31
3.3.11 Informal Information..........................................32
3.4 Site Representatives..........................................32
3.5 Plant Tours 33
3.6 Management Audit..............................................33
3.7 Civil Penalties and Meetings..................................34
ARTICLE IV...........................................................35
4.1 Entitlement of Participants to Output.........................35
4.2 Determination of Output - Responsibility for Station Service
and Losses.................................... 35
ARTICLE V............................................................35
5.1 Costs Payable by GPC..........................................35
5.1.1 Direct Charges 36
5.1.2 Allocated Charges 37
5.1.3 Participant Charges 38
5.1.4 Revision 38
5.1.5 Advancement of Funds..........................................39
5.1.6 General Accounting Matters....................................40
5.1.7 Right to Audit Costs and Inspect Records......................40
5.2 Resolution of Disputes as to Payments.........................41
ARTICLE VI...........................................................42
6.1 Confidentiality...............................................42
6.2 Restricted Data...............................................43
6.3 Safeguards Information........................................44
ARTICLE VII..........................................................44
7.1 Absence of Warranty...........................................44
7.2 Indemnification of Southern Nuclear...........................45
7.3 Notification and Participation in Defense of Claims...........47
7.4 No Release 48
7.5 Limitation of Liability.......................................48
7.6 Severability 49
ARTICLE VIII.........................................................50
8.1 Nuclear Insurance.............................................50
8.2 Other Insurance...............................................50
8.3 Waiver of Subrogation.........................................50
8.4 Cooperation 51
8.5 Workers' Compensation Insurance...............................51
8.6 Additional Insurance..........................................52
8.7 Payment of Premiums...........................................52
8.8 Cancellation of Insurance.....................................52
ARTICLE IX...........................................................53
9.1 Term 53
9.2 Termination of the Nuclear Services Agreement.................53
ARTICLE X............................................................54
10.1 Termination 54
ARTICLE XI...........................................................56
11.1 Holidays, Business Days.......................................56
11.2 Entire Agreement..............................................56
11.3 Assignments 56
11.4 Modifications.................................................57
11.5 Governing Law.................................................57
11.6 Counterparts..................................................57
11.7 Waivers 57
11.8 Sale or Disposal of Property..................................57
11.9 No Adverse Distinction........................................58
11.10 Notices 58
11.11 Captions 59
11.12 Singular and Plural; Gender...................................59
11.13 Third-Party Beneficiaries.....................................59
11.14 Severability..................................................60
11.15 Agency 60
|
NUCLEAR OPERATING AGREEMENT
BETWEEN
GEORGIA POWER COMPANY
AND
SOUTHERN NUCLEAR OPERATING COMPANY, INC.
THIS NUCLEAR OPERATING AGREEMENT is made and entered into as of July 1, 1993, between Georgia Power Company ("GPC"), a corporation organized and existing under the laws of the State of Georgia; and SOUTHERN NUCLEAR OPERATING COMPANY, INC. ("Southern Nuclear"), a corporation organized and existing under the laws of the State of Delaware.
W I T N E S S E T H:
WHEREAS, GPC, Oglethorpe, MEAG and Dalton (collectively the
"Participants"), joint owners of Plant Hatch and Plant Vogtle, have previously
entered into the Participation Agreements pursuant to which Oglethorpe, MEAG and
Dalton have irrevocably appointed GPC as their agent in connection with the
planning, licensing, design, construction, acquisition, completion, management,
control, operation, maintenance, renewal, addition, replacement and disposal
(hereinafter the "Agency Functions") of Plant Hatch and Plant Vogtle;
WHEREAS, GPC and its affiliates are undertaking to organize their
nuclear operating expertise within Southern Nuclear, an affiliate of GPC
dedicated to the operation of nuclear power plants;
WHEREAS, GPC has determined that it can best carry out its Agency
Functions through engaging Southern Nuclear to perform Nuclear Operating
Services (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
obligations hereinafter stated, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms and phrases shall have,
respectively, the following meanings: 1.1 "Agency Functions" means the
functions of the Participants' Agent described in the first recital
of this Agreement.
1.2 "Dalton" shall mean the City of Dalton, Georgia, acting by and
through its Board of Water, Light and Sinking Fund Commissioners, and their
respective successors and assignees.
1.3 "Each Plant" shall mean and refer to, respectively, Plant Hatch and
Plant Vogtle individually; provided, that should activities concerning Plant
Hatch or Plant Vogtle be undertaken with respect to one unit of such plant
individually, the phrase Each Plant means and refers to that unit and related
common facilities.
1.4 "Effective Date" shall mean the date on which Southern Nuclear
implements the authorization by the NRC to operate and maintain Each Plant.
1.5 "Fuel Budget" shall mean the budget described in Section 3.2.5
hereof. 1.6 "Fuel Plan" shall mean the plan described in Section 3.2.2
hereof.
1.7 "Fuel Services" shall mean work relating to supplying and managing
the nuclear fuel for Each Plant including, but not limited to, planning,
procurement, contract administration, fuel cycle design, fuel core and assembly
design, fuel quality assurance, nuclear materials management, and all activities
relating to procurement, conversion, enrichment, fabrication, transportation,
installation, monitoring, repairing, storage, reprocessing and disposal of
uranium, nuclear fuel, related materials and waste products.
1.8 "Governmental Authority" shall mean any local, state, regional or
federal administrative, legal, judicial, or executive agency, commission,
department or other entity, and any person acting on behalf of any such entity.
1.9 "GPC" shall mean Georgia Power Company, a corporation organized and
existing under the laws of the State of Georgia, and its successors and assigns.
1.10 "Legal Requirements" shall mean all laws, codes, ordinances,
orders, judgments, decrees, injunctions, licenses, rules, permits, approvals,
written agreements, regulations and requirements of or issued by every
Governmental Authority having jurisdiction over the matter in question, whether
federal, regional, state or local, which may be applicable to Southern Nuclear
or to GPC or to Each Plant or any of the real or personal property comprising
Each Plant, or to Nuclear Operating Services, or to Nuclear Support Services, or
the use, occupancy, possession, operation, maintenance, construction,
decommissioning, acquisition, installation, alteration, replacement,
reconstruction or disposal of Each Plant or any part thereof.
1.11 "Major Contract" shall mean (i) any contract for the procurement
of a firm supply (excluding any options) of natural or enriched uranium (U3O8 or
UF6) from foreign or domestic sources over a term of greater than five years and
in an aggregate amount of greater than $50 million, (ii) any contract for the
procurement from domestic or foreign sources of uranium enrichment services or
fuel fabrication services (which may or may not include fuel core design
services) over a term of greater than five years and in an aggregate amount of
greater than $50 million, (iii) any contract for the procurement of major items
of equipment (e.g., steam generators or reactor coolant pumps) in an amount of
greater than $30 million for any single item of equipment, (iv) any contract for
the procurement of outage services over a term of greater than five years and in
an aggregate amount of greater than $50 million, or (v) any contract which will
require the expenditure by Southern Nuclear (including any charges associated
with a termination of such contract by Southern Nuclear without cause) in an
amount of $50 million in any one year or an aggregate amount of $100 million;
provided, however, that if any contract permits Southern Nuclear to cancel such
contract on less than one year's advance notice, and Southern Nuclear is not
obligated to pay a fee or charge for the exercise of such cancellation alone,
then the term of such contract for purposes of determining whether such contract
is a Major Contract shall be the minimum term which could result if Southern
Nuclear were to exercise such cancellation right.
1.12 "MEAG" shall mean the Municipal Electric Authority of Georgia, a
public corporation and an instrumentality of the State of Georgia, and its
successors and assigns.
1.13 "New Investment Budget" shall mean the budget described in Section
3.2.4 hereof. 1.14 "New Investment Services" shall mean work undertaken
with respect to Each Plant relating to the
planning, design, licensing, acquisition, construction, completion, renewal,
improvement, addition, repair, replacement, enlargement, or modification of any
Unit of Property as described in the Retirement Unit Manual of the Southern
Electric System, including any amendments thereof as may from time to time be
appropriate or necessary to comply with Legal Requirements, under circumstances
where expenditures for such work are to be capitalized in accordance with the
Electric Plant Instructions of the Uniform System of Accounts prescribed for
Class A and B utilities by the Federal Energy Regulatory Commission.
1.15 "NRC" shall mean the United States Nuclear Regulatory Commission
or any successor agency authorized to regulate and license utilization
facilities pursuant to the Atomic Energy Act of 1954, as amended.
1.16 "Nuclear Interface Procedure" shall have the meaning assigned in
Section 2.6 hereof.
1.17 "Nuclear Managing Board," "Managing Board," or "Board" shall mean
the board established pursuant to Section 2.1 of the Nuclear Managing Board
Agreement, the members of which are representatives of the Participants.
1.18 "Nuclear Managing Board Agreement" shall mean that certain Amended
and Restated Nuclear Managing Board Agreement among GPC, Oglethorpe, MEAG and
Dalton, dated as of the date hereof, as amended from time to time.
1.19 "Nuclear Operating Services" shall mean Fuel Services, New
Investment Services, and Operation and Maintenance Services with respect to Each
Plant.
1.20 "Nuclear Services Agreement" shall mean that certain Nuclear
Services Agreement between Southern Nuclear Operating Company, Inc. and Georgia
Power Company, dated as of October 31, 1991, for the procurement of Nuclear
Support Services in support of the operation and maintenance of Plant Hatch and
Plant Vogtle which agreement shall be terminated on the Effective Date in
accordance with Section 9.2 hereof.
1.21 "Nuclear Services Contractor" shall mean the entity who shall
provide Nuclear Support Services pursuant to the Nuclear Services Agreement.
1.22 "Nuclear Support Services" shall mean those services to be
performed by the Nuclear Services Contractor for the Operating Agent in
accordance with the Nuclear Services Agreement. Nuclear Support Services shall
not include any activity which is required by the NRC operating licenses to be
performed directly by the licensee.
1.23 "OEMC" shall mean the Oglethorpe Electric Membership Corporation,
now known as Oglethorpe Power Corporation.
1.24 "Oglethorpe" shall mean Oglethorpe Power Corporation (An Electric
Membership Generation & Transmission Corporation), an electric membership
corporation organized and existing under Title 46 of the Official Code of
Georgia Annotated, and its successors or assigns.
1.25 "Operating Agent" shall mean the entity licensed by the NRC to
operate and maintain Plant Hatch and Plant Vogtle.
1.26 "Operation and Maintenance Budget" shall mean the budget described
in Section 3.2.3 hereof.
1.27 "Operation and Maintenance Services" shall mean work for the
Participants relating to the possession, management, control, start up,
operation, availability, production of energy, maintenance, modification,
shutdown, retirements, and decommissioning, including, but not limited to, any
planning, design, engineering, labor, procurement of materials and supplies,
materials management, quality assurance, training, security, environmental
protection, and handling of any source material, special nuclear material or
by-product material together with maintaining or obtaining licenses and
regulatory approvals related thereto, governmental affairs or regulatory
relationships, and all other activity that is not included in or performed as
New Investment Services or Fuel Services, but which is required for the
operation and maintenance of Each Plant or that may be required to comply with
Legal Requirements.
1.28 "Participants" shall mean GPC, Oglethorpe, MEAG and Dalton, who
jointly own Each Plant. References to the "Participants" herein are not intended
to and do not amend or modify rights among the Participants in any Participation
Agreement or other agreement among them.
1.29 "Participants' Agent" shall mean GPC, acting in its own behalf and
as agent for the other Participants pursuant to the Participation Agreements and
pursuant to the Nuclear Managing Board Agreement.
1.30 "Participation Agreements" shall mean the agreements identified in
Section 1.31 of the Nuclear Managing Board Agreement, as the same may be amended
from time to time hereafter.
1.31 "Plant Hatch" shall have the meaning assigned in Section 1.32 of
the Nuclear Managing Board Agreement.
1.32 "Plant Vogtle" shall have the meaning assigned in Section 1.33 of
the Nuclear Managing Board Agreement.
1.33 "Prudent Utility Practice" shall mean at a particular time any of
the practices, methods and acts which, in the exercise of reasonable judgment in
light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at the lowest reasonable cost
consistent with good business practices, reliability, safety and expedition.
"Prudent Utility Practice" is not intended to be limited to the optimum
practice, method or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts having due regard for, among
other things, manufacturers' warranties and the requirements of governmental
agencies of competent jurisdiction.
1.34 "Services Plan" shall have the meaning assigned in Section 2.6
hereof.
1.35 "Southern Electric System" shall mean the electric utility
operating company subsidiaries of The Southern Company and Southern Services,
collectively.
1.36 "Southern Nuclear" shall mean Southern Nuclear Operating Company,
Inc., a corporation, organized and existing under the laws of the State of
Delaware, and its successors and assigns.
1.37 "Southern Services" shall mean Southern Company Services, Inc., a
corporation organized and existing under the laws of the State of Alabama, and
its successors and assigns.
1.38 "Strategic Plan" shall mean the plan containing the information
described in Section 3.2.1 hereof. 1.39 "The Southern Company" shall
mean The Southern Company, a corporation organized and existing under
the laws of the State of Delaware, the subsidiaries of which include, but are
not limited to, GPC, Southern Nuclear and Southern Services.
1.40 "Undivided Ownership Interest" shall mean the interest each
Participant owns as a tenant in common with the other Participants in Each
Plant.
1.41 "Willful Misconduct" shall have the meaning assigned in Section
7.2 hereof.
ARTICLE II
AUTHORITY AND RESPONSIBILITY OF SOUTHERN NUCLEAR
WITH RESPECT TO OPERATION OF EACH PLANT
.1 Appointment of Southern Nuclear as Operating Agent and Scope of Authority.
GPC, on behalf of itself and as agent for the other Participants,
hereby appoints Southern Nuclear to be the Operating Agent of Each Plant on and
after the Effective Date and Southern Nuclear hereby accepts such appointment.
As the Operating Agent of Each Plant, Southern Nuclear is authorized to perform
and shall be responsible for the performance of all Nuclear Operating Services
for Each Plant for and on behalf of GPC in accordance with (i) Legal
Requirements, including specifically, but without limitation, the NRC operating
licenses for Each Plant and the rules and regulations of the NRC in effect on
and after the Effective Date, (ii) the terms of the Participation Agreements,
Nuclear Managing Board Agreement and this Agreement to the extent such terms do
not conflict with Legal Requirements, and (iii) Prudent Utility Practice subject
to Legal Requirements and the terms of the agreements identified in clause (ii).
.2 Responsibility for the Safe Operation of Each Plant.
Notwithstanding any provisions of this Agreement or any other
agreement, on and after the Effective Date Southern Nuclear, as the Operating
Agent, shall be responsible for the safe operation and maintenance of Each Plant
and is hereby exclusively authorized to take such actions in the operation of
Each Plant, including without limitation the safe shutdown of each unit at Each
Plant, as Southern Nuclear in its sole discretion deems necessary to protect the
health and safety of the public, including the personnel engaged in the
operation and maintenance of Each Plant, or to protect the property at Each
Plant. In order that Southern Nuclear may meet such responsibility and implement
such authority, GPC shall be obligated to provide Southern Nuclear with
financial resources in accordance with the terms of this Agreement and shall
otherwise cooperate with Southern Nuclear in meeting such responsibility and
implementing such authority.
.3 Responsibility for Economic Operation.
Subject to its primary responsibility set forth in Section 2.2 and the
provisions of Section 2.1, Southern Nuclear shall in accordance with Prudent
Utility Practice endeavor to achieve reliable performance of Each Plant, to
maximize the capacity and availability factors and minimize forced outage rates
and durations of each unit at Each Plant and to produce busbar costs as low as
reasonably possible.
.4 Incidental Authorities of Southern Nuclear.
.1 Access to and Control of Each Plant. On and after the
Effective Date, Southern Nuclear is hereby granted unrestricted access
to and the exclusive right to use and control the use of all property
at Each Plant (including, without limitation, the Exclusion Area
designated in the Final Safety Analysis Report Update for Each Plant)
and all facilities, equipment and materials situated thereon, and to
determine all activities within the site boundary of Each Plant.
.2 Licenses and Permits for Each Plant. On and after the
Effective Date, Southern Nuclear shall be authorized to and responsible
for obtaining, maintaining and complying with all licenses and permits
required for the operation and maintenance and the decommissioning of
Each Plant from the NRC and other regulatory authorities. In connection
with such authority and responsibility, Southern Nuclear shall be
responsible for implementing the onsite emergency plan for Each Plant
and for coordination activities with local, state and federal
authorities in accordance with their respective offsite emergency
plans.
.3 Costs, Obligations and Liabilities. On and after the
Effective Date, Southern Nuclear is hereby authorized to incur costs,
liabilities and obligations, purchase equipment, materials and
supplies, perform or retain third parties to perform work and services,
and take all actions as may be required to meet its responsibilities
and implement its authorities under this Agreement, subject to the
reporting, accounting and auditing requirements set forth in this
Agreement, the Participation Agreements and the Nuclear Managing Board
Agreement; provided, however, to the extent that the need for any of
the foregoing actions is known in advance, then Southern Nuclear shall
comply with the provisions of Section 3.2 concerning planning and
budgeting and all other applicable provisions of this Agreement. With
respect to all other actions, Southern Nuclear shall comply with the
terms of this Agreement, the Participation Agreements and the Nuclear
Managing Board Agreement. .5 Transition from GPC to Southern Nuclear.
.1 Transfer of Organization and Staff. On the Effective Date,
GPC shall transfer intact to Southern Nuclear and Southern Nuclear
shall accept the onsite organization responsible for licensed
activities at Each Plant, in place immediately prior to the Effective
Date, or such portions thereof, if any, all in accordance with the NRC
operating licenses as amended on the Effective Date. Prior to the
Effective Date, GPC and Southern Nuclear shall in cooperation take all
measures necessary to effect such transfer without disruption and as
efficiently as possible after the Effective Date, Southern Nuclear
shall maintain such organization until such time as Southern Nuclear in
its sole discretion determines that changes in the organization or
personnel are appropriate. All changes in personnel or in the
assignments of personnel shall be in accordance with Legal Requirements
and subject to the provisions of this Agreement.
.2 Assignment and Administration of Contracts. GPC shall
assign and transfer to Southern Nuclear all contracts, agreements,
procurement documents and work authorizations in effect on the
Effective Date. Such assignments and transfers shall become effective
not later than the Effective Date and shall be accepted by Southern
Nuclear. In the event any such contract, agreement, procurement
document or work authorization is by its terms nonassignable or the
assignment thereof requires the consent of the contractor which cannot
be readily obtained without renegotiation, GPC shall authorize Southern
Nuclear to administer and enforce such contract, agreement, document or
work authorization as GPC's agent. After receipt of any such
assignment, transfer or authorization to administer, Southern Nuclear
shall have the exclusive responsibility for the administration and
enforcement thereof in accordance with the terms thereof. .6 Support
Services to be Provided by GPC. At Southern Nuclear's request GPC shall
furnish support services or assistance, materials, supplies,
licenses, offices, and real property rights including, without limitation,
emergency response services, power supply services, transmission and
distribution system repair, replacement, construction, and maintenance,
telecommunications services, public information services, environmental
services, accounting services, procurement services, maintenance personnel,
security personnel or services, and other personnel, services or assistance as
Southern Nuclear may require with respect to Each Plant. Any such support
services which GPC shall furnish to Southern Nuclear shall be provided at cost.
Southern Nuclear and GPC shall jointly prepare and maintain a nuclear interface
procedure (hereinafter a "Nuclear Interface Procedure") in order to document the
support services that GPC provides to Southern Nuclear. The Nuclear Interface
Procedure shall provide for (i) procedures by which Southern Nuclear will budget
for such services, (ii) procedures for GPC to bill Southern Nuclear for the
costs of providing such services, and (iii) such other matters as GPC and
Southern Nuclear may agree. Each requested area of support services that
involves a continuing interface between Southern Nuclear and GPC shall be
documented in a services plan (hereinafter "Services Plan") which describes the
respective responsibilities of each company.
.7 Other Authorities and Responsibilities of Southern Nuclear.
Without limiting the generality of the foregoing, the authority vested
in Southern Nuclear hereunder shall include the following:
.1 Staff and Personnel. Subject to the provisions of Section
3.2.1(v) respecting Strategic Plans, Southern Nuclear shall select,
hire, compensate, control, and discharge (when deemed appropriate by
Southern Nuclear) those persons required to satisfy its obligations
under this Agreement; provided, however, that the Managing Board shall
review and provide input to Southern Nuclear prior to the replacement
of any Southern Nuclear officer having responsibility for only Plant
Hatch, only Plant Vogtle, or only Plants Hatch and Vogtle or the
General Manager of Each Plant assigned to such positions, respectively,
on the Effective Date and each successor to such replacement, in
accordance with Section 5.1.2 of the Nuclear Managing Board Agreement.
Southern Nuclear shall consider any comments from the Participants
regarding the performance of any of Southern Nuclear's personnel, but
management decisions on whether or not to take personnel or salary
administration actions shall be made by Southern Nuclear in its sole
discretion.
Southern Nuclear shall maintain in effect at all times after
the Effective Date an incentive compensation plan for its employees who
are engaged in services for Each Plant relating to compliance with NRC
regulations which plan shall have nominal funding, shall be comparable
to other similar plans in use in the electric utility industry, and
shall address those areas with the greatest potential for
noncompliance.
.2 Reductions in Capacity and Outages at Each Plant. Southern
Nuclear shall have the exclusive right to shutdown or reduce the
capacity of Each Plant at any time Southern Nuclear determines in its
sole discretion that such action is appropriate to protect public
health and safety or to protect the personnel, property or facilities
at Each Plant. However, the Participants shall retain the authority to
determine whether Each Plant should be placed in standby status or
operated at reduced output for economic reasons, including the need of
any Participant for the capacity or energy of Each Plant.
.3 Steady State Operation. Southern Nuclear shall have the
authority and responsibility to determine in its sole discretion (i)
when it is prudent or necessary to operate Each Plant at a steady state
in order to protect the nuclear fuel or any plant equipment or to
optimize fuel usage, and (ii) the rate at which the capacity of Each
Plant may be prudently adjusted in response to any dispatch request or
demand. Southern Nuclear shall keep the dispatcher of the power and
energy generated by Each Plant informed of any such determination and
intent to operate Each Plant at a steady state and the rate at which
the capacity of Each Plant will be adjusted, if at all, to meet
dispatch requests or demands. Southern Nuclear recognizes that
reductions in capacity and unplanned outages at Each Plant could have
an adverse effect on the power supply systems of the respective
Participants, their respective costs of providing electric service or
both. Southern Nuclear will endeavor to consult with the Nuclear
Managing Board concerning any operating conditions which are expected
to result in capacity reductions of ten percent or more for periods of
time in excess of seven days or outages at either unit of Each Plant;
provided, however, that Southern Nuclear will only take such actions
when it determines they are prudent or necessary from an operating
standpoint.
.4 Membership and Participation in Industry Organizations.
Southern Nuclear shall be a member of the Institute of Nuclear Power
Operations ("INPO") and is hereby authorized to participate in all
applicable INPO programs which will benefit Each Plant, including
programs conducted by the National Academy for Nuclear Training.
Southern Nuclear is also authorized to participate in other nuclear
industry groups which will benefit Plant Hatch or Plant Vogtle. .8
Contracting.
.1 Contracts with Affiliated Entities. Southern Nuclear has
entered into a contract with Southern Services under which Southern
Nuclear may obtain certain services in support of its performance of
Nuclear Support Services or Nuclear Operating Services. Southern
Nuclear is hereby authorized to enter into additional contracts,
agreements or other arrangements with any affiliate of Southern Nuclear
as may be permitted under Legal Requirements and in accordance with
Sections 2.3.2, 2.3.3 and 2.3.10 of the Nuclear Managing Board
Agreement for the procurement of such support services as Southern
Nuclear deems can be effectively and efficiently provided by such
affiliate to enable Southern Nuclear to perform Nuclear Operating
Services. Each such contract, agreement or arrangement shall be
administered in accordance with written interface procedures, work
orders, or other formal documents which describe the scope of each
support service to be provided by such affiliate on an ongoing basis.
Southern Nuclear may modify or amend any contract, agreement or
arrangement with an affiliate in accordance with Sections 2.3.2, 2.3.3
and 2.3.10 of the Nuclear Managing Board Agreement, or as may be
necessary to comply with Legal Requirements. Additionally, Southern
Nuclear acknowledges that any liability of the Participants under each
such contract, agreement or other arrangement shall be several in
proportion to their respective Undivided Ownership Interests and not
joint or joint and several.
.2 Contracts with Non-affiliated Third Parties. Southern
Nuclear is authorized to enter into any contract with any
non-affiliated third party for the procurement of equipment, materials,
supplies or services; provided, however, that all Major Contracts shall
be approved by the Nuclear Managing Board in accordance with Section
2.3.4(1) of the Nuclear Managing Board Agreement; and provided further
that any such contract shall meet Legal Requirements. GPC is a party to
a Government Areawide Contract under which it provides electric service
to the Federal Government. Southern Nuclear shall incorporate into all
contracts with third parties respecting Each Plant the applicable
provisions of the Federal Acquisition Regulations including, but not
limited to: 48 C.F.R. ss.ss. 52.203-6 and -7; 52.215-2; 52.219-8 and
-9; 52.220-3 and -4; 52.222-4, -21, -26, -27, -35, -36 and -37; and
52.223-2 and -3.
Southern Nuclear shall notify all third parties with whom it
contracts that it is not authorized to bind the Participants to joint
or joint and several liability and that any liability of the
Participants under such contract shall be several in proportion to
their respective Undivided Ownership Interests.
Southern Nuclear shall establish procurement procedures
requiring purchasing agents to incorporate into all contracts
respecting Each Plant general terms and conditions which afford
adequate protection to the Participants against reasonably foreseeable
commercial risks in accordance with Prudent Utility Practice. Such
procedures shall also provide for review by appropriate levels of
management, commensurate with the commercial risk involved, of any
proposed deviations from such established procedures.
In such contracts with third parties, Southern Nuclear may, in
accordance with Prudent Utility Practice and all other provisions of
this Agreement, agree to certain matters including, but not limited to,
limitations on the liability of such contractors for work performed or
materials furnished, restrictions on warranties, agreements to
indemnify the contractors from liability and other provisions. GPC
waives any claims against Southern Nuclear for entering into such
contracts or agreeing to the provisions thereof. GPC also recognizes
that a number of the Southern Nuclear contracts relating to Each Plant
may contain provisions that require Southern Nuclear to obtain from GPC
an agreement by GPC that it will be bound by all of the requirements
for financial protection, waivers, releases, indemnifications,
limitations of liability and further transfers or assignments that bind
Southern Nuclear under such contracts. GPC agrees to be bound by the
requirements for financial protection, waivers, releases,
indemnification, limitation of liability and further transfers or
assignments that bind Southern Nuclear as they now exist or may in the
future exist with respect to all contracts relating to Each Plant.
GPC covenants that, without the written consent of Southern
Nuclear, GPC will not threaten suit or bring suit against third parties
or otherwise make any claim under any contract or arrangement relating
to Each Plant and GPC recognizes that Southern Nuclear has complete and
exclusive authority, with respect to all such matters. If GPC desires
for suit to be threatened or brought or otherwise for any claim to be
made, or desires that such action contemplated by Southern Nuclear
shall not be taken, GPC shall, by written notice to Southern Nuclear,
request Southern Nuclear so to act or refrain from acting. Upon receipt
of such notice, GPC and Southern Nuclear shall arrange for consultation
within ten working days thereafter on the questions raised, or such
lesser period of time as Southern Nuclear, in its sole discretion,
shall specify in the light of circumstances requiring a more
expeditious determination. Following such consultation, Southern
Nuclear shall, in its capacity as Operating Agent, take such action or
refrain from acting in accordance with the determination of GPC, in its
capacity as the Participants' Agent. 2.9 Decommissioning of Each Plant.
At such time as has been determined, pursuant to the applicable
Participation Agreements, that any unit
at Each Plant shall be permanently removed from service, Southern Nuclear shall
be authorized to and responsible for all actions required to decommission such
unit in accordance with Legal Requirements and a decommissioning plan approved
by the NRC and by the Nuclear Managing Board in accordance with Section 2.3.9 of
the Nuclear Managing Board Agreement.
2.10 GPC Retains Responsibility for all Agency Functions. In exercising
its authority as provided in this Agreement, GPC shall assure that Southern
Nuclear's performance hereunder is in furtherance of GPC's Agency Functions
under the Participation Agreements and accepts Southern Nuclear's actions as its
own.
2.11 Authority to Act as Agent for GPC and Right of Third Parties to
Rely on Agency. In the conduct of the authority vested in Southern
Nuclear in this Article II, GPC hereby designates and
authorizes Southern Nuclear to act as its attorney-in-fact and agent for such
purposes, including authority to enter into and administer contracts on behalf
of GPC for procurement of materials, equipment or services and authority to
administer contracts entered into by GPC with respect to Each Plant. As relates
to all third parties, the designation of Southern Nuclear as agent shall be
binding on GPC. Southern Nuclear accepts such appointment as agent of GPC. Upon
request from Southern Nuclear, GPC shall provide written confirmation of this
agency relationship to third parties.
ARTICLE III
OBLIGATIONS OF SOUTHERN NUCLEAR
3.1 Meetings with the Nuclear Managing Board.
In order to assure that the Participants are informed as to the status
of operations at Each Plant, an officer of Southern Nuclear, together with any
employees or consultants of Southern Nuclear as such officer may designate,
shall attend each meeting of the Nuclear Managing Board. At such meetings,
Southern Nuclear shall present information concerning plant performance, the
status and condition of Each Plant, including review of the problem status
reports and new capital projects, shall convey an overview of Each Plant and its
operations and shall address agenda items established by the Nuclear Managing
Board. Southern Nuclear will inform the Managing Board of events which are
affecting or may affect the availability of any unit at Each Plant.
3.2 Plans and Budgets.
Strategic Plans, Fuel Plans, Operation and Maintenance Budgets, New
Investment Budgets and Fuel Budgets shall be submitted to the Nuclear Managing
Board by Southern Nuclear as provided in Sections 3.2.1 through 3.2.5 hereof.
The contents of these plans and budgets shall conform to the requirements and
guidelines established in Section 4.0 and Appendix A of the Nuclear Managing
Board Agreement. The Nuclear Managing Board shall either approve or disapprove
each such plan or budget within thirty days in accordance with Section 4.0 of
the Nuclear Managing Board Agreement. In the event that the Nuclear Managing
Board disapproves a plan or budget, the members of the Board shall inform
Southern Nuclear of the basis for such disapproval. Southern Nuclear shall take
such further actions with respect to such disapproved plan or budget as may be
required in accordance with Section 4.0 of the Nuclear Managing Board Agreement.
Southern Nuclear shall attempt to provide Nuclear Operating Services in
accordance with approved plans and within the aggregate annual amount of
approved budgets. Notwithstanding the foregoing, Southern Nuclear makes no
representation, warranty or promise of any kind as to accuracy of any such plan
or budget, or that any attempt referred to in the preceding sentence will be
successful, and in no event shall GPC be relieved of its responsibility to pay
costs incurred by Southern Nuclear as required in Article V hereof.
3.2.1 Strategic Plan. A Strategic Plan for Each Plant shall be
submitted to the Nuclear Managing Board by May 15 of each year and
Southern Nuclear shall take such other actions as may be required by
Section 4.1 of the Nuclear Managing Board Agreement. Each Strategic
Plan shall contain the following six elements:
(i) Five-year Operating and Planned Outage Schedule. This
section shall identify the scheduled operating cycles and
planned outages for refueling, maintenance and other work
during the succeeding five years. The schedule shall describe
in reasonable detail the time and duration of each planned
outage and the maintenance and other work planned to be
performed during such outage. (ii) Availability and
Performance Goals. This section shall contain overall
performance goals which have been established for Each Plant,
including, without limitation, goals relating to unit
availability. (iii) Planned Mandatory Projects. A mandatory
project is any project with a total estimated cost in excess
of one million dollars or such greater amount as the Nuclear
Managing Board may establish, including any modification,
addition or program, which is needed in order to support
normal operations (including, without limitation, facilities
for spent fuel storage) in accordance with Prudent Utility
Practice or in order to comply with regulatory or safety
requirements. The associated schedule and estimated annual
funding requirements shall be included. (iv) Planned
Improvement Projects. An improvement project is any project
with a total estimated cost in excess of one million dollars
or such greater amount as the Nuclear Managing Board may
establish, including any modification, addition, or program,
which is not mandatory as defined in (iii) above. Examples of
such projects include efforts to improve plant performance or
conditions, such as improved plant capacity or efficiency,
enhanced working conditions, and appearance. The associated
schedule and estimated annual funding requirements shall be
included. (v) Authorized Level of Staffing. This section shall
provide the current authorized number of permanent staff
positions in the Southern Nuclear organization which are
assigned to Each Plant. Such number of positions shall be
broken down by functional areas (e.g., operations,
maintenance, administrative, technical, corporate support) and
shall include positions which are located either onsite or
offsite. This section shall also show any planned changes in
such authorized number of positions over the succeeding five
years. (vi) Low Level Radioactive Waste Disposal. This section
shall provide information respecting plans for disposal or
reduction, or both, of low level radioactive wastes generated
at Each Plant, including any plans for onsite disposal. 3.2.2
Fuel Plan. A ten year Fuel Plan for Each Plant shall be
submitted to the Nuclear
Managing Board by September 15 of each year. Each Fuel Plan shall
describe in reasonable detail each action or contemplated action and
payment and the dates thereof, core usage and design burn up, estimated
fueling dates and the energy expected to be generated by each unit for
each fuel period of the Fuel Plan, a cash flow analysis of forecasted
expenditures and credits for each Participant for each major component
of the fuel cycle by years, and cash flow by months for the first five
years. Each Fuel Plan will also provide the following information with
respect to the spent fuel at Each Plant: the existing spent fuel
storage capacity; the current spent fuel inventory; the projected date
when the spent fuel storage capacity will be fully utilized; the
projected dates when shipments of spent fuel for disposal will
commence; and the projected date when additional spent fuel storage
capacity may have to be provided.
3.2.3 Operation and Maintenance Budget. By August 15 of each
year, Southern Nuclear shall submit to the Nuclear Managing Board a
written Operation and Maintenance Budget estimate of the costs of
Operation and Maintenance Services of Each Plant for the next calendar
year, with a forecast of budget requirements for the succeeding four
calendar years. Southern Nuclear shall take such other actions as may
be required by Section 4.3 of the Nuclear Managing Board Agreement.
Each budget shall be supported by detail reasonably adequate for the
purpose of review by the Nuclear Managing Board.
3.2.4 New Investment Budget. By August 15 of each year,
Southern Nuclear shall submit to the Nuclear Managing Board a written
New Investment Budget estimate of the cost of New Investment Services
for Each Plant for the next calendar year, with a forecast of budget
requirements for the succeeding four calendar years. Southern Nuclear
shall take such other actions as may be required by Section 4.4 of the
Nuclear Managing Board Agreement. Each budget shall be supported by
detail reasonably adequate for the purpose of review by the Nuclear
Managing Board.
3.2.5 Fuel Budget. By August 15 of each year, Southern Nuclear
shall submit to the Nuclear Managing Board a written Fuel Budget
estimate of the costs of Fuel Services for Each Plant for the next
calendar year, with a forecast of budget requirements for the
succeeding four calendar years. Southern Nuclear shall take such other
actions as may be required by Section 4.5 of the Nuclear Managing Board
Agreement. Each budget shall be supported by detail reasonably adequate
for the purpose of review by the Nuclear Managing Board. 3.3
Information and Approvals. Southern Nuclear shall furnish to the
Nuclear Managing Board the following information and reports:
3.3.1 Plant Performance Data. At the time of submittal of each
Strategic Plan, Southern Nuclear will also furnish a comparison of the
performance of Each Plant relative to other plants using performance
indicators, including, without limitation, the unit cost of generation,
in common use in the nuclear industry or as may be specified by the
Nuclear Managing Board.
3.3.2 Plant Budget Reports. Southern Nuclear will furnish
monthly data showing actual costs for Operation and Maintenance
Services, New Investment Services and Fuel Services with comparisons to
the respective budgets for such services. This report will normally be
provided by the end of the succeeding month.
3.3.3 Plant Specific Strategic Plan Reports. At least
bimonthly, Southern Nuclear will furnish data showing actual
performance for each unit at Each Plant compared to goals contained in
the Strategic Plans for Each Plant.
3.3.4 INPO Evaluations and Assessments. Southern Nuclear will
make available for review by the representatives of each Participant
copies of evaluations and assessments of Each Plant by the Institute of
Nuclear Power operations ("INPO").
3.3.5 NRC and INPO Meetings. Each member of the Nuclear
Managing Board will be notified by Southern Nuclear and appropriate
representatives of each Participant may attend executive exit meetings
of INPO and the NRC as observers. Attendance by Participant
representatives as observers at other NRC & INPO meetings with Southern
Nuclear will be permitted unless (i) such attendance is contrary to the
policies of NRC or INPO, or (ii) the management of Southern Nuclear
requests that Participant representatives not attend in which event any
Participant may invoke the procedures specified in Section 5.2.3 of the
Nuclear Managing Board Agreement.
3.3.6 Audit Reports. Southern Nuclear will make available for
review by the Participants copies of financial or accounting reports
concerning Each Plant containing the results of audits by or for GPC,
Southern Nuclear, Southern Services or any affiliate of The Southern
Company, for any Participant or its affiliates, or by any regulatory
agency.
3.3.7 Correspondence to and from NRC. Southern Nuclear shall
furnish to any member of the Nuclear Managing Board at his or her
request copies of correspondence to and from the NRC concerning Each
Plant.
3.3.8 Responses to Participant Inquiries. In addition to the
obligation of Southern Nuclear to provide the information and access as
explicitly required herein, Southern Nuclear will respond to reasonable
written requests from any Participant for information not otherwise
provided pursuant to this Agreement regarding Nuclear Operating
Services for Each Plant. Southern Nuclear will designate a person to be
responsible for being responsive to inquiries from the Participants.
3.3.9 Incentive Compensation Plan. Southern Nuclear shall
provide to each member of the Board a copy of the incentive
compensation plan for its employees described in Section 2.7.1 hereof
and, with respect to each amendment or revision of such plan, Southern
Nuclear shall consider any comments as may be offered by the Board or
such member respecting such plan, but shall have full authority to
implement such amendment or revision when in its sole discretion it
decides that it is appropriate to do so.
3.3.10 Non-routine Information. Southern Nuclear shall
promptly provide the Participants with the following information:
information on work disruptions or stoppages, and Notices of an Unusual
Event, Alert, Site Area Emergency, or General Emergency (as such terms
are defined in the emergency plan for Each Plant). Southern Nuclear
shall also inform the Participants and the dispatcher of the power and
energy generated by Each Plant as soon as practical, or in accordance
with guidelines acceptable to the Nuclear Managing Board, after the
occurrence at Each Plant of any unplanned outage of a unit, any
significant extension of a planned unit outage, any unplanned reduction
in the capacity of a unit for an extended period, or any event or
regulatory action which may substantially affect the operation of Each
Plant. Information in this category also includes informal reports
concerning events which Southern Nuclear believes may result in public
interest or may lead to inquiries to Participants by members of the
public, and news releases issued by Southern Nuclear.
3.3.11 Informal Information. Southern Nuclear shall permit informal
communications between representatives of any Participant and Southern Nuclear's
employees of a general nature and shall give representatives of the Participants
access to routine reports and records on plant operations and conditions that
are normally readily available at Each Plant. 3.4 Site Representatives.
Each Participant shall be given the opportunity to have a reasonable
number of representatives located at Each Plant for the purpose of observing and
reporting to such Participant on plant conditions and activities in accordance
with the provisions of Sections 5.2.2 and 5.2.3 of the Nuclear Managing Board
Agreement. Reasonable office space and facilities will be made available to such
site representatives. If a Participant elects to place a representative on site,
such Participant will re-evaluate periodically the need for such onsite
representation, and if the Participant determines that there is no longer a need
for such onsite representation, the Participant will suspend its onsite
representation.
3.5 Plant Tours.
Each Participant shall have the right to have its representatives and
guests visit Each Plant, with prior approval of Southern Nuclear, to tour the
facilities, and observe plant activities; provided that such visit or tour will
not interfere with the operation of the plant, plant safety or security. Such
representatives and guests shall comply with all applicable rules and
regulations in effect at Each Plant whether imposed by Governmental Authority or
by Southern Nuclear.
3.6 Management Audit.
Each Participant shall have the right to conduct management audits, at
its own cost, of Southern Nuclear's performance hereunder either by such
Participant's own officers and employees or by its duly authorized agents or
representatives, including without limitation any auditor utilized by such
Participant, or any nationally recognized accounting firm designated by such
Participant or by the Administrator of the Rural Electrification Administration.
Southern Nuclear shall cooperate with such Participant in the conduct of such
audits and, subject to the provisions of Article VI hereof, the applicable
regulations of the NRC and the requirements of vendors, give such Participant's
representatives reasonable access to all contracts, records, and other documents
relating to Each Plant. Following any such management audit, Southern Nuclear
shall respond to the findings of such audit if requested to do so by such
Participant. Management audits by individual Participants shall be coordinated
and scheduled through the Participants' Agent so as to minimize the number of
audits required and to attempt to avoid more than one management audit in any
consecutive 12-month period.
3.7 Civil Penalties and Meetings.
In each case when a civil penalty is assessed against Southern Nuclear
with respect to Each Plant, Southern Nuclear shall provide the members of the
Nuclear Managing Board with a description of the violation, the root cause
determination of the violation, and the corrective action taken and to be taken
to avoid repeat violations. The Nuclear Managing Board upon its request will be
provided the opportunity to meet with the chief executive and senior nuclear
operations officers of Southern Nuclear. Southern Nuclear will also provide for
the Nuclear Managing Board to meet on the Nuclear Managing Board's request with
the Board of Directors of Southern Nuclear.
ARTICLE IV
ENTITLEMENT TO OUTPUT
4.1 Entitlement of Participants to Output.
The Participants shall be entitled to all of the output from Each Plant
at the time generation in such units occurs. Southern Nuclear shall have no
entitlement to output or control over scheduling of the units other than such
control as is necessary for the safe or prudent operation or shutdown of Each
Plant.
4.2 Determination of Output - Responsibility for Station Service
and Losses.
Output of Each Plant shall be the gross generation of such plant, less
station service requirements, and less adjustments for losses experienced. GPC
shall be responsible for providing all offsite electric power required at Each
Plant whenever the station service and losses exceed the gross generation of
such plant.
ARTICLE V
COSTS
5.1 Costs Payable by GPC.
GPC shall pay to Southern Nuclear the costs incurred by Southern
Nuclear in providing Nuclear Operating Services for Each Plant. The costs of
such services shall be computed in accordance with applicable rules, regulations
and orders of the Securities and Exchange Commission (including Rules 90 and 91
under the Public Utility Holding Company Act of 1935, as amended), and shall
include both Direct Charges and Allocated Charges, as hereinafter defined. The
obligation to make payments as specified herein shall continue notwithstanding
the capability (or lack of capability) of Each Plant to produce power for any
reason. Southern Nuclear shall submit to GPC on or before the last day of each
month an invoice or invoices for Each Plant for the costs of such Nuclear
Operating Services provided for such plant incurred during the preceding month
in format and detail specified from time to time by GPC.
5.1.1 Direct Charges. To the extent that the costs incurred by
Southern Nuclear in connection with Nuclear Operating Services for Each
Plant can be identified and related to a particular transaction, direct
charges will be made by Southern Nuclear against such plant
(hereinafter "Direct Charges"). Direct Charges shall include, without
limitation, (i) all payroll costs of Southern Nuclear employees
dedicated full-time to provide Nuclear Operating Services solely for
Each Plant, (ii) all payroll costs of other Southern Nuclear employees
whose entire payroll costs are not treated as Allocated Charges for
hours or portions thereof spent in performing Nuclear Operating
Services solely for Each Plant, (iii) costs incurred under contracts
that are administered by Southern Nuclear for Nuclear Operating
Services for Each Plant, (iv) liabilities and costs of Southern Nuclear
arising in connection with Each Plant that are indemnified pursuant to
Section 7.2 hereof, and (v) premiums and assessments paid for insurance
which Southern Nuclear is obligated to maintain pursuant to Article
VIII hereof solely in connection with Each Plant. Payroll costs shall
include, without limitation, wages and salaries, overtime and premium
payments, payroll taxes, retirement, insurance and other benefits and
contributions paid by Southern Nuclear in accordance with its
established personnel policies in effect from time to time.
5.1.2 Allocated Charges. "Allocated Charges" are all of those
costs of Nuclear Operating Services incurred by Southern Nuclear that
(i) are not included in the Direct Charges for Each Plant and (ii)
equitably should be shared between Plant Hatch and Plant Vogtle or
between GPC and any other company or companies for which Southern
Nuclear provides services. Allocated Charges shall not include any
costs of organizing Southern Nuclear or of terminating or shutting down
Southern Nuclear in the event that this Agreement is terminated by GPC
or Southern Nuclear with or without cause; provided, however, that
Allocated Charges shall include all costs incurred in connection with
adding Southern Nuclear to the NRC operating licenses of Each Plant.
Except as hereinafter provided with respect to costs of certain Fuel
Services, Allocated Charges shall be allocated and charged to Each
Plant in accordance with the Cost Allocation Manual and any revisions
made thereto from time to time with the approval of the Nuclear
Managing Board, in accordance with Section 2.3.8 of the Nuclear
Managing Board Agreement, and subject to required approvals, if any, by
any Governmental Authority. The plant basis of allocation as described
in the Southern Nuclear Cost Allocation Manual, will be used except as
otherwise required by the Public Utility Holding Company Act of 1935,
as amended, or approved by the Board. Southern Nuclear shall give
timely notice to each Participant of the initiation of any proceeding
to which it is a party before any Governmental Authority in which the
method of allocating Allocated Charges is an issue and shall not
contest the standing of any Participant to challenge the use of any
proposed allocation methods.
5.1.3 Participant Charges. Southern Nuclear shall list
separately on its invoice to GPC the cost of special services provided
to any Participant, including GPC, upon its written request, e.g.,
preparation or review of testimony, exhibits or analyses for any rate
case or other regulatory proceeding. The costs of any such special
services shall be the sum of the special direct charges and special
prorated charges which shall be determined in the same manner as
provided in Sections 5.1.1 and 5.1.2 hereof.
5.1.4 Revision. Should Southern Nuclear undertake to perform
services for any other affiliated company, the responsibility for the
cost of such services shall be determined in the same manner as
provided in this Section 5.1. Should Southern Nuclear desire to
undertake to perform services for any non-affiliated company where the
responsibility for the cost of such services is determined in a manner
different than provided in this Section 5.1, Southern Nuclear shall,
prior to its undertaking to do so, discuss the matter and reach an
agreement with the Participants' Agent, respecting the need for or the
terms of any amendment to this Section 5.1 as may be appropriate to
assure the continued fairness of the determination of the
responsibility for costs payable to Southern Nuclear hereunder.
5.1.5 Advancement of Funds. Southern Nuclear shall prepare
forecasts, in such frequency, form and detail as GPC shall direct, of
the funds required to pay Southern Nuclear's anticipated costs of the
Nuclear Operating Services to be provided to GPC and the dates on which
payment of such anticipated costs shall become due. GPC shall advance
funds or cause funds to be advanced to Southern Nuclear in such amounts
and at such times, determined on the basis of such forecasts, to enable
Southern Nuclear to pay its costs of Nuclear Operating Services on or
before the dates on which payment of such costs shall be due. Such
advances shall be made by deposits or bank transfers to accounts of
Southern Nuclear with a bank or banks whose deposits are insured,
subject to applicable limits, by the Federal Deposit Insurance
Corporation as Southern Nuclear shall designate. Any excess funds in
such accounts shall be invested by Southern Nuclear in accordance with
prudent cash management practices and all investment income and
appreciation received on such funds shall be credited against the cost
of Nuclear Operating Services provided to GPC.
Southern Nuclear shall have authority to draw checks on such
account(s) only as necessary to pay costs of Nuclear Operating
Services. In no event shall GPC fail to provide funds required to pay
such costs, even where a dispute arises as to the appropriateness of
such costs, it being agreed that any such dispute shall be resolved as
provided in Section 5.2 hereof.
5.1.6 General Accounting Matters. Determinations by Southern
Nuclear on all accounting matters related to the transactions
contemplated by this Agreement will be in accordance with generally
accepted accounting principles and the Securities and Exchange
Commission's Uniform System of Accounts for Mutual and Subsidiary
Service Companies, utilizing the accrual method of accounting, unless
otherwise specifically provided in this Agreement or mutually agreed by
Southern Nuclear and GPC or as prescribed by other regulatory agencies
having jurisdiction, as the case may be, from time to time.
5.1.7 Right to Audit Costs and Inspect Records. During normal
business hours and subject to conditions consistent with the conduct by
Southern Nuclear of its regular business affairs and responsibilities,
Southern Nuclear will provide GPC or any other Participant, or any of
their officers, employees, agents or representatives, or any auditor
utilized by GPC or such Participant and reasonably acceptable to
Southern Nuclear, or any nationally recognized accounting firm
designated by GPC or such Participant or by the Administrator of the
Rural Electrification Administration, with access to Southern Nuclear's
books, records, and other documents related to the performance of
Southern Nuclear's obligations under this Agreement (including, without
limitation, all Services Plans, the Nuclear Interface Procedure and
agreements between Southern Nuclear and any of its affiliates, and any
amendments to the foregoing) and, upon request, copies thereof, which
pertain to (i) costs applicable to Nuclear Operating Services for Each
Plant to the extent necessary to enable the auditors of GPC or such
Participant to verify the costs which have been billed to GPC or
charged to such Participant pursuant to the provisions of this
Agreement; (ii) compliance with all environmental Legal Requirements;
and (iii) matters relating to the design, construction, operation,
retirement and decommissioning of Each Plant in proceedings before any
Governmental Authority. 5.2 Resolution of Disputes as to Payments. GPC
shall have until the expiration of the 180-day rule pursuant to Section
9.15 of the Nuclear Managing
Board Agreement to question or contest the correctness of any respective cost
shown on a billing statement from Southern Nuclear, after which time the
correctness of such cost shall be conclusively presumed. Should a dispute arise
concerning the payment of money due under this Agreement, the parties shall
first attempt to resolve such dispute by consultation between representatives of
Southern Nuclear and GPC. In the event such representatives are unable to
resolve satisfactorily their disagreement, they shall refer the matter to senior
management of the parties. No dispute whatsoever as to the payment of costs
shall permit GPC to delay payment in full of all costs on the date required. If
GPC shall have made payments responsive to any disputed invoice and if Southern
Nuclear and GPC, or a court of competent jurisdiction, should later determine
that a disputed invoice was for an amount in excess of the correct amount due,
then Southern Nuclear shall be obligated to refund the difference to GPC.
ARTICLE VI
PROTECTION OF INFORMATION
6.1 Confidentiality.
Either party may, from time to time, come into possession of
information of the other party that is either confidential or proprietary,
including, without limitation, Safeguards Information, as that term is defined
in Section 6.3 hereof. Each party having any such information which bears the
legend "Proprietary Information" or "Safeguards Information" will not reproduce,
copy, use or disclose (except when required by a Governmental Authority) any
such information in whole or in part for any purpose without the written consent
of the other party. In the furtherance of this understanding, the receiving
Participant shall obtain, and provide to the furnishing party, a written pledge
to this effect from non-member employees, agents and other representatives to
whom such data is disclosed and, if such non-member is not a full-time, salaried
employee of a Participant, from such non-member's employer. In disclosing
confidential or proprietary information to a Governmental Authority, the
disclosing party shall cooperate with the other party in minimizing the amount
of such information furnished. At the specific request of the other party, the
disclosing party will endeavor to secure the agreement of such Governmental
Authority to maintain specified portions of such information in confidence.
Public dissemination of information by the furnishing party before or after it
is furnished shall constitute a termination of the confidentiality requirement
as to that specific information.
6.2 Restricted Data.
Both Southern Nuclear and GPC agree that they will not permit any
individual to have access to Restricted Data, as that term is defined in 42
U.S.C. ss. 2014(y), until the Office of Personnel Management shall have made an
investigation and report to the NRC on the character, associations, and loyalty
of such individual and the NRC shall have determined that permitting such person
to have access to such Restricted Data will not endanger the common defense and
security.
6.3 Safeguards Information.
Notwithstanding any other provision of this Agreement, any access to
Safeguards Information, as that term is defined in 10 C.F.R. ss. 73.2, shall be
subject to the limitations and conditions of 10 C.F.R. ss. 73.21. GPC and each
other Participant agrees that any information provided under this Agreement will
not be used nor controlled in any manner that (i) would compromise any part of
the safeguards plan for Each Plant, (ii) would be in contravention of applicable
Legal Requirements, or (iii) would cause Southern Nuclear to violate any
arrangement regarding confidentiality or proprietary rights that Southern
Nuclear has with any third party; provided, however, that Southern Nuclear shall
not refuse to furnish any information requested by a Participant on the grounds
that a third party claims such information to be confidential or proprietary if
such Participant offers to execute an agreement satisfactory to such third party
to protect such information from unwarranted disclosure.
ARTICLE VII
LIMITATION OF LIABILITY AND INDEMNIFICATION
7.1 Absence of Warranty.
Southern Nuclear does not warrant that its performance of Nuclear
Operating Services will meet the standards set forth in Section 2.1 hereof, and
its sole obligation if it fails to meet such standards is to reperform at the
request of the Participants' Agent the deficient work at cost payable by GPC in
a manner that complies with such standards. GPC acknowledges that such services
are not subject to any warranty of any nature, express or implied, including any
warranty of merchantability or fitness for a particular purpose.
7.2 Indemnification of Southern Nuclear.
GPC shall and hereby agrees to release, indemnify and save harmless and
defend Southern Nuclear, to the fullest extent permitted by applicable law, from
the payment of any sum or sums of money to GPC or any other third party on
account of, or resulting from, actions, claims, damages, losses, or liabilities
growing out of (i) injuries to or the death of any person, (ii) damage to or
loss of any property, and (iii) other damages in any way attributable to or
arising out of the performance and prosecution of any project or work performed
by Southern Nuclear, its employees, agents, subcontractors or any combination
thereof, for or on behalf of GPC for Each Plant, whether or not the same results
or allegedly results from tort (including, without limitation, negligence,
strict liability, fraud and breach of fiduciary duty), breach of contract
(including, without limitation, breach of warranty), the laws of real property
or any other legal or equitable theory of law. Further, GPC shall and does
hereby agree to release, indemnify and save harmless and defend Southern
Nuclear, to the fullest extent permitted by applicable law, (a) from any and all
liens, garnishments, attachments, claims, suits, costs, attorneys' fees, costs
of investigation and of defense resulting from, incurred in connection with, or
relating to any of the actions, claims, damages, losses or liabilities referred
to in the preceding sentence, (b) from the payment of any such sum or sums of
money, and (c) from the payment of any penalties, fines, damages, suits or
claims (and any liens or attachments asserted in connection therewith) arising
out of (1) any alleged or actual violation of Legal Requirements committed by
Southern Nuclear or its employees, agents or subcontractors, or (2) services or
labor performed or materials, provisions or supplies furnished which have been
purchased or allegedly contracted for or on behalf of GPC or its employees,
agents or subcontractors.
Notwithstanding the foregoing provisions of this Section 7.2, GPC shall
not be required to release, indemnify, save harmless or defend Southern Nuclear
for Willful Misconduct (as hereinafter defined); provided, however, that
liability attributable to Willful Misconduct shall be subject to the limitation
of liability in Section 7.5 below. As used in this Agreement, the term Willful
Misconduct shall mean any act or omission by Southern Nuclear or its agents,
subcontractors or employees, that is performed or omitted consciously with
actual knowledge that such conduct is likely to result in damage or injury to
persons or property; provided, however, that any such act or omission, if
performed or omitted by an agent, subcontractor or employee of Southern Nuclear,
shall not be deemed Willful Misconduct unless an officer of Southern Nuclear
authorized such act or omission. Southern Nuclear shall exercise reasonable and
customary supervision or control over the activities of its agents,
subcontractors and employees so as to minimize the potential for adverse willful
actions by such agents, subcontractors and employees; provided, however, that
failure of Southern Nuclear to prevent such adverse willful actions shall not in
itself be considered Willful Misconduct.
7.3 Notification and Participation in Defense of Claims.
Southern Nuclear shall within five business days after it receives
notice of any claims, action, damages, losses or liability against which it will
expect to be indemnified pursuant to Section 7.2 hereof, notify GPC of such
claims, actions, damages, losses or liabilities. Thereafter, GPC may at its own
expense, upon notice to Southern Nuclear, defend or participate in the defense
of such action or claim by a third party or any negotiation for settlement of
such action or claim, provided that unless GPC proceeds promptly and in good
faith to pay or defend such action or claim, then Southern Nuclear shall have
the right (but not the obligation), upon ten days' notice to GPC to pay, settle,
compromise or proceed to defend any such action or claim without further
participation by GPC. GPC shall immediately pay (or reimburse Southern Nuclear,
as the case may be) any payments, settlements, compromises, judgments, costs or
expenses made or incurred by Southern Nuclear in or resulting from the pursuit
by Southern Nuclear of such right. If any judgment is rendered against Southern
Nuclear in any action defended by GPC or from which Southern Nuclear is
otherwise entitled to indemnification under Section 7.2 hereof, or any lien
attaches to the assets of Southern Nuclear in connection therewith, GPC
immediately upon such entry or attachment shall pay the judgment in full or
discharge any such lien unless at its expense and direction, appeal shall be
taken under the execution of the judgment or satisfaction of the lien is stayed.
If and when a final and unappealable judgment is rendered against Southern
Nuclear in any such action GPC shall forthwith pay such judgment or discharge
such lien prior to the time that Southern Nuclear would be legally held to do
so.
7.4 No Release.
It is also understood and agreed that nothing contained herein shall be
construed to release the officers and directors of GPC from the obligation to
perform their respective duties, or to limit the exercise of their powers in
accordance with the provisions of law or otherwise.
7.5 Limitation of Liability.
Notwithstanding anything in this Agreement to the contrary, GPC agrees
that in no event shall Southern Nuclear or its agents, subcontractors or
employees be liable to GPC for any indirect, special, punitive, incidental or
consequential damages including, without limitation, (i) loss of profits or
revenues, (ii) damages suffered as a result of the loss of the use of their
power system, production facilities or equipment, (iii) cost of purchase of
replacement power (including any differential in fuel costs), or (iv) cost of
capital with respect to any claim based on or in any way connected with this
Agreement whether arising in contract (including, without limitation, breach of
warranty), tort (including, without limitation, fraud, negligence, strict
liability or breach of fiduciary duty), under the laws of real property, or
under any other legal or equitable theory of law.
GPC shall indemnify and hold harmless Southern Nuclear, its agents,
subcontractors, directors and employees from and against any claim by any
customer of a Participant for any direct, indirect, special, punitive,
incidental or consequential damages arising out of any performance or failure to
perform under this Agreement.
7.6 Severability.
In the event that any particular application of any of the limitations
of liability contained in this Article VII should be finally adjudicated to be
void as a violation of the public policy of the State of Georgia, then such
limitation of liability shall not apply with respect to such application to the
extent (but only to the extent) required in order for such limitation of
liability not to be void as a violation of such public policy, and such
limitations of liability shall remain in full force and effect with respect to
all other applications to the fullest extent permitted by law.
ARTICLE VIII
INSURANCE
8.1 Nuclear Insurance.
GPC shall obtain and maintain in effect during the term of this
Agreement the following insurance coverage:
Nuclear liability, nuclear decontamination and property damage
insurance, and government indemnification of nuclear liability arising
from the operation and maintenance of Each Plant in amounts mutually
agreed upon equal to or exceeding any amount or amounts required by
law. Southern Nuclear shall be a named insured on such insurance and
indemnification unless such insurance or indemnification provides
coverage to all persons held legally liable. 8.2 Other Insurance.
Southern Nuclear shall obtain and maintain in effect during the term of
this Agreement such insurance as
GPC and Southern Nuclear may agree including, without limitation, employers
liability and general liability insurance and officers and directors insurance.
Premiums for such insurance shall be included in the costs of Nuclear Operating
Services.
8.3 Waiver of Subrogation.
Each insurance policy obtained by Southern Nuclear hereunder shall
contain waivers of subrogation against GPC. GPC shall require its insurers to
waive all right of subrogation against Southern Nuclear and its subcontractors,
regardless of fault, for all claims, including without limitation,
decontamination of, physical damage to or loss or destruction of any property at
the location of Each Plant as defined in the decontamination and property damage
insurance policy for Each Plant and, if GPC or any other Participant obtains and
maintains insurance for the cost of replacement power, for all costs of
replacement power.
8.4 Cooperation.
Southern Nuclear will take steps to meet the requirements of such
insurance policies and cooperate with GPC to furnish information, establish
procedures, erect or change physical facilities and otherwise meet the
requirements of the insurers to maintain coverage in effect and to collect
claims that may be made under such insurance. At the request of Southern
Nuclear, GPC shall provide Southern Nuclear and Southern Nuclear shall file with
the NRC financial statements of the Participants and such other proof as may be
required to comply with the rules and regulations of NRC.
8.5 Workers' Compensation Insurance.
Southern Nuclear shall qualify as a self-insurer in Georgia and with
the U.S. Department of Labor for U.S. Longshoreman's and Harbor Workers Act, but
will provide an umbrella policy to cover benefits in excess of its assumed
liability for workers' compensation, the Longshoreman's and Harbor Worker's Act,
and employers liability. GPC and Southern Nuclear acknowledge that, pursuant to
the terms of this Agreement, all premiums for Southern Nuclear workers'
compensation insurance and all payments to Southern Nuclear employees, including
workers' compensation benefits, relating to work performed by such employees
while on the premises of Each Plant are effectively made by GPC, since such
premiums and payments constitute Direct Charges (as defined in Section 5.1.1
hereof) incurred by Southern Nuclear in relation to Nuclear Operating Services
for Each Plant. It is the intent of GPC and Southern Nuclear that for purposes
of workers' compensation GPC not be exposed to greater liability by virtue of
this Agreement than GPC would have if it had utilized GPC employees to perform
Nuclear Operating Services.
8.6 Additional Insurance.
In the event GPC or any other Participant at any time or from time to
time shall have elected to participate in supplemental insurance programs to
cover other risks arising from the ownership and operation of a nuclear power
plant, including the extra costs of replacement power, the costs of such
protection shall be borne by GPC or such other Participant, as the case may be.
8.7 Payment of Premiums.
The aggregate cost of all insurance, applicable to Each Plant and
procured by Southern Nuclear pursuant hereto, including, without limitation, any
deferred or retrospective premium assessments, shall be included in the cost of
Nuclear Operating Services.
8.8 Cancellation of Insurance.
In the event that any of the foregoing insurance policies is canceled
by a party, that party shall give written notice of such cancellation to the
other party 60 days prior to the effective date of such cancellation.
ARTICLE IX
TERM OF THIS AGREEMENT
9.1 Term.
The term of this Agreement shall commence on the Effective Date,
subject nevertheless to any applicable rules, regulations and approvals of any
regulatory authority whose approval is required, and shall expire (i) when Each
Plant has been retired and decommissioned, the NRC has terminated the NRC
operating licenses, and the plant site has been returned to a condition
acceptable to GPC, all in compliance with Legal Requirements, (ii) upon
termination pursuant to Section 10.1 hereof, or (iii) upon mutual agreement of
the parties. In no event, however, shall this Agreement terminate unless all
necessary regulatory approvals for transfer of responsibility for Each Plant
shall have been obtained. GPC's obligation to make payments to Southern Nuclear
under this Agreement that have not been satisfied prior to the expiration of the
term of this Agreement shall survive such expiration of the term.
9.2 Termination of the Nuclear Services Agreement.
Upon the Effective Date, the Nuclear Services Agreement shall terminate
and shall be superseded in its entirety by this Agreement. Any and all Nuclear
Support Services performed by Southern Nuclear after the Effective Date, as a
subset of Nuclear Operating Services, shall be governed solely by this
Agreement.
ARTICLE X
TERMINATION BY GPC OR SOUTHERN NUCLEAR
10.1 Termination.
In the event GPC determines that it is in GPC's interest to do so, or
Southern Nuclear determines that it is in Southern Nuclear's interest to do so,
then GPC or Southern Nuclear may at will terminate this Agreement subject to the
following terms. Except as may otherwise be provided in Section 5.2 and Article
VII hereof, this right of termination shall be GPC's sole and exclusive remedy,
legal or equitable, for any failure by Southern Nuclear at any time to perform
its duties, responsibilities, obligations, or functions under this Agreement, or
for any other breach by Southern Nuclear of this Agreement. The procedure for
exercise of this right of termination shall be as follows:
(i) GPC shall give written notice to Southern Nuclear of GPC's
determination to terminate this Agreement or Southern Nuclear shall
give written notice to GPC of its determination to terminate this
Agreement. It is recognized that no termination can be accomplished
until all necessary regulatory approvals have been obtained to transfer
the operating responsibility for Each Plant to GPC. Following the
giving of such notice, the parties agree to cooperate, in good faith,
to accomplish the transfer of operating responsibility in a prompt
manner.
(ii) During the period between the giving of the notice
described in clause (i), and the date on which such transfer of
operating responsibility becomes effective, Southern Nuclear agrees to
continue the provision of Nuclear Operating Services for Each Plant.
(iii) Upon receipt of all necessary governmental
authorizations for transfer of operating responsibility for Each Plant
from Southern Nuclear to GPC, this Agreement shall terminate. Except as
may otherwise be provided in Section 5.2 and Article VII hereof, GPC
hereby agrees that from and after such termination, GPC shall indemnify
and forever hold Southern Nuclear, its officers, directors and
employees, and all other agents and subcontractors except to the extent
that any such other agents and subcontractors are liable or may be held
liable under the terms of their respective contracts, harmless from and
against any and all liability, costs, expenses (including reasonable
attorney's fees) and judgments, which may thereafter be experienced by
Southern Nuclear in its capacity as Operating Agent (whether the cause
occurred before or after termination), and GPC further waives any claim
GPC may have against Southern Nuclear, its officers, directors and
employees, and all other agents and subcontractors except to the extent
that any such other agents and subcontractors are liable or may be held
liable under the terms of their respective contracts, for damage to
property of the Participants, that arose out of the activities of
Southern Nuclear, its officers, directors, employees, and other agents,
subcontractors and affiliates under this Agreement. The indemnification
and waiver contained herein shall survive termination and shall be
specifically enforceable by Southern Nuclear against GPC.
ARTICLE XI
MISCELLANEOUS
11.1 Holidays, Business Days.
Any obligations to provide payments, information, approvals or notices
under this Agreement, which shall become due on a non-business day shall become
due upon the next business day. The term "business day" shall mean any day other
than a day on which banking institutions in the City of Atlanta, Georgia are
authorized by law to close.
11.2 Entire Agreement.
This Agreement constitutes the entire understanding between the parties
hereto, superseding any and all previous understandings, oral or written,
pertaining to the subject matter contained herein. No party hereto has relied or
will rely upon any oral or other written representation or oral or other written
information made or given to such party by any representative of the other party
or anyone on its behalf.
11.3 Assignments.
This Agreement shall be binding upon the successors and assigns of the
parties hereto, provided that Southern Nuclear shall not be entitled to assign
any of its obligations under this Agreement or under any purchase order issued
hereunder without the prior written approval of GPC.
11.4 Modifications.
This Agreement may not be modified or amended in any respect except in
a writing executed by the parties hereto.
11.5 Governing Law.
This Agreement shall be construed and enforced under and in accordance
with the laws of the State of Georgia.
11.6 Counterparts.
This Agreement may be executed in counterparts, each of which when
fully executed shall be deemed to have the same dignity, force and effect as if
the original.
11.7 Waivers.
No provision of this Agreement shall be deemed waived nor breach of
this Agreement consented to unless such waiver or consent is set forth in
writing and executed by the party hereto making such waiver or consent.
11.8 Sale or Disposal of Property.
Southern Nuclear shall not sell, lease, or otherwise dispose of any
real or personal property owned individually or jointly by any or all of the
Participants, unless such sale, lease or other disposal is authorized by the
Nuclear Managing Board; provided, however, that this provision shall not apply
to any facilities, equipment or materials which are replaced with facilities,
equipment or materials, as the case may be, of like kind and of value at least
equal to that of the replaced facilities, equipment or materials. Nothing in
this Section 11.8 shall be construed as an authorization by GPC or the Managing
Board for Southern Nuclear to take any action inconsistent with the provisions
respecting plans and budgets set forth in Section 3.2 hereof.
11.9 No Adverse Distinction.
11.9.1. Under the Participation Agreements, GPC may not make
any adverse distinction between Plant Hatch or Plant Vogtle and any
other generating unit which it operates. GPC may exercise its authority
under this Agreement to assure that the performance of services by
Southern Nuclear does not cause GPC to violate this requirement.
11.9.2. In the performance of services hereunder, Southern
Nuclear shall not make any adverse distinction between GPC and any
other company or between Each Plant and any other generating facility
for which Southern Nuclear provides services. 11.10 Notices. Any
notice, request, consent or other communication permitted or required
by this Agreement shall be in
writing and shall be deemed given when deposited in the United States Mail,
first class postage prepaid, and if given to Participants shall be addressed to:
Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: President
and if given to Southern Nuclear shall be addressed to:
Southern Nuclear Operating Company, Inc. P. O. Box 1295 Birmingham, Alabama 35201-1295 Attention: President
unless a different officer or address shall have been designated by the respective party by notice in writing.
11.11 Captions.
The descriptive captions of the various Articles and Sections of this Agreement have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms and provisions hereof.
11.12 Singular and Plural; Gender.
Throughout this Agreement, whenever any word in the singular number is used, it shall include the plural unless the context otherwise requires; and whenever the plural number is used, it shall include the singular unless the context otherwise requires. The use of the masculine shall include the feminine.
11.13 Third-Party Beneficiaries.
This Agreement is for the benefit of GPC, the other Participants and
Southern Nuclear, and no person or entity other than GPC, the other Participants
and Southern Nuclear is or shall be entitled to bring any action to enforce any
provision of this Agreement against either of the parties hereto or the other
Participants.
11.14 Severability.
Should any provision of this Agreement be held to be invalid or
unenforceable by a court of competent jurisdiction, the remaining provisions
shall remain in full force and effect, provided that deletion of the invalid or
unenforceable provision does not materially affect the agreement of the parties
contained herein.
11.15 Agency.
Whether or not expressly stated in the applicable provisions of this
Agreement, GPC acts herein on its own behalf and as agent for the other
Participants pursuant to the Participation Agreements.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have hereto caused this Nuclear Operating Agreement to be signed and sealed as of the date first set forth above by their respective duly authorized representatives.
GEORGIA POWER COMPANY
By:__________________________
Its:______________________
Attest:___________________
(Corporate Seal)
SOUTHERN NUCLEAR OPERATING COMPANY, INC.
By:__________________________
Its:______________________
Attest:___________________
(Corporate Seal)
Exhibit 10(a)22
TABLE OF CONTENTS
R E C I T A L S........................................................1
ARTICLE I..............................................................2
DEFINITIONS............................................................2
1.1 Actual Hourly Facility Generation..................................2
1.2 AEC................................................................3
1.3 AEC Settlement.....................................................3
1.4 Antitrust Conditions...............................................3
1.5 Availability.......................................................3
1.6 Availability Schedule..............................................3
1.7 Back-Up Capacity...................................................4
1.8 Coal and Oil Reconcilement Sheets..................................4
1.9 Contract Year......................................................4
1.10 Control Area Services.............................................4
1.11 Day...............................................................5
1.12 Effective Date....................................................5
1.13 Energy Imbalance Service..........................................5
1.14 Federal Power Act.................................................5
1.15 FERC..............................................................5
1.16 Hour..............................................................6
1.17 Hourly Pseudo Resource Utilization................................6
1.18 IIC...............................................................6
1.19 Interest..........................................................6
1.20 ITS...............................................................6
1.21 Joint Committee for Planning and Operations.......................6
1.22 Joint-Owned Facilities............................................6
1.23 Joint Ownership Agreements........................................7
1.24 Level A...........................................................7
1.25 Level A to B-1 Loss Factors.......................................7
1.26 Level A to B-2 Loss Factors.......................................7
1.27 Level B-1.........................................................7
1.28 Level B-1 to B-2 Loss Factors.....................................7
1.29 Level B-2.........................................................8
1.30 Level D...........................................................8
1.31 Level D to B-1 Loss Factors.......................................8
1.32 Marginal Replacement Fuel Cost....................................8
1.33 Maximum Utilization Level.........................................8
1.34 MEAG Non-Territorial Load.........................................9
1.35 MEAG Off-System Control Area Services.............................9
1.36 MEAG Off-System Transaction.......................................9
1.37 MEAG Territorial Control Area Services...........................10
1.38 MEAG Territorial Load............................................10
1.39 MEAG Total Load Requirements.....................................10
1.40 Minimum Utilization Level........................................10
1.41 Month............................................................10
1.42 NERC.............................................................11
1.43 Nuclear Resource.................................................11
1.44 Open Access Transmission Tariff of Southern Companies............11
1.45 Participants.....................................................11
1.46 Party............................................................11
1.47 Power Sales Contracts............................................11
1.48 Prudent Utility Practice.........................................12
1.49 Pseudo CT Resource...............................................12
1.50 Pseudo CT Resource Heat Rate.....................................12
1.51 Pseudo Energy....................................................12
1.52 Pseudo Energy Purchase...........................................13
1.53 Pseudo Energy Sale...............................................13
1.54 Pseudo Resource(s)...............................................13
1.55 Pseudo Schedule[ing] and Dispatch................................13
1.56 Pseudo SEPA Resources............................................13
1.57 Pseudo Steam Resource(s).........................................14
1.58 Pseudo Steam Resource Heat Rate..................................14
1.59 Real Time........................................................14
1.60 Revised ITSA.....................................................14
1.61 SEPA.............................................................15
1.62 SEPA Contracts...................................................15
1.63 SEPA Declaration Schedule........................................15
1.64 SEPA Resources...................................................15
1.65 SEPA Week........................................................15
1.66 Southern Companies...............................................15
1.67 Southern Control Area............................................16
1.68 Southern Dispatch................................................16
1.69 Southern Sub-Region..............................................16
1.70 System Marginal Cost.............................................16
1.71 Term.............................................................17
1.72 Territorial Marginal Cost........................................17
1.73 Utilization......................................................17
1.74 Utilization Schedule.............................................17
1.75 Week.............................................................17
ARTICLE II............................................................17
APPLICABILITY OF AGREEMENT............................................18
2.1 General...........................................................18
2.2 Nuclear Resources.................................................18
2.3 Pseudo Steam and CT Resources.....................................18
2.4 Default...........................................................18
ARTICLE III...........................................................18
OPERATING OBLIGATIONS OF THE PARTIES..................................19
3.1 Basic Planning, Operation and Maintenance Obligations Under
Existing Standards....................................................19
3.2 Violation of Basic Planning, Operation and Maintenance Obligations19
3.3 Obligations Under Future Standards................................21
3.4 Pseudo Resources..................................................23
3.5 System Security and Integrity.....................................23
3.6 Supply Deficiencies...............................................24
3.7 Power Flows.......................................................24
ARTICLE IV............................................................24
AEC SETTLEMENT AND ANTITRUST CONDITIONS...............................25
4.1 MEAG Representations and Warranties Concerning Power Sales
Contracts.........................................................25
4.2 Satisfaction of AEC Settlement and Antitrust Conditions...........25
4.3 Use of the ITS....................................................26
ARTICLE V.............................................................26
PSEUDO DISPATCH: PSEUDO STEAM RESOURCES AND PSEUDO CT RESOURCE........27
5.1 Availability Schedules............................................27
5.2 Changes to Availability Schedules.................................27
5.3 Hourly Utilization Schedules......................................28
5.4 Changes to Utilization Schedules..................................29
5.5 Pseudo Steam Resource Ramping.....................................31
5.6 Minimum Commitment Notice.........................................31
5.7 Minimum Decommitment Notice and Minimum Up-Time...................32
5.8 Minimum Downtime..................................................33
5.9 Pseudo CT Resource Test Energy....................................33
5.10 Pseudo Steam Resources Operating Off Automatic Generation Control.33
ARTICLE VI............................................................34
PSEUDO ENERGY SALES AND PURCHASES.....................................34
6.1 Pseudo Energy.....................................................34
6.2 Pseudo Energy Sale................................................34
6.3 Pseudo Energy Purchase............................................35
6.4 Coal Procurement..................................................36
ARTICLE VII...........................................................37
PSEUDO DISPATCH: SEPA RESOURCES.......................................37
7.1 Duration of Effectiveness.........................................37
7.2 SEPA Declaration Schedule.........................................37
7.3 Changes to SEPA Declaration Schedule..............................38
7.4 Hourly Utilization Schedule.......................................38
7.5 Changes to Utilization Schedule...................................40
7.6 Delivery of and Payment for Energy................................41
7.7 Coordination with SEPA Contracts..................................42
ARTICLE VIII..........................................................42
MEAG TERRITORIAL CONTROL AREA SERVICES................................42
8.1 Availability......................................................42
8.2 Scheduling, System Control and Dispatch Service...................43
8.3 Reactive Supply and Voltage Control From Generation Sources
Service...........................................................43
8.4 Regulation and Frequency Response Service.........................44
8.5 Operating Reserve - Spinning Reserve Service......................45
8.6 Operating Reserve - Supplemental Reserve Service..................48
8.7 Purchase of Regulation, Spinning Reserve and Supplemental
Reserve Services..................................................50
8.8 Energy Pricing Within the Inadvertent Energy Bandwidth............51
8.9 Special Modification to Qualifying Reserves - Supplemental........51
ARTICLE IX............................................................52
ENERGY IMBALANCE SERVICE..............................................52
9.1 Energy Imbalance..................................................52
9.2 Allowable Imbalance Bandwidth.....................................53
9.3 Inadvertent Energy Bandwidth......................................53
9.4 Back-up Capacity Charge...........................................54
9.5 Commitment Cost...................................................54
9.6 Credit for Hourly Surplus Energy..................................54
9.7 Payment for Hourly Deficit Energy.................................55
ARTICLE X.............................................................56
OFF-SYSTEM TRANSACTIONS...............................................56
10.1 Scheduling and Coordination......................................56
10.2 Information Obligations..........................................56
10.3 Transmission Responsibility......................................57
10.4 MEAG Off-System Control Area Services............................57
ARTICLE XI............................................................58
MUTUAL BUY/SELL TRANSACTIONS..........................................58
11.1 Implementation...................................................58
ARTICLE XII...........................................................59
BILLING AND COLLECTION................................................59
12.1 Invoice..........................................................59
12.2 Payment..........................................................59
12.3 Failure To Pay...................................................60
12.4 Billing Disputes.................................................61
12.5 Availability of Records..........................................62
ARTICLE XIII..........................................................62
DEVELOPMENT, IMPLEMENTATION AND ADMINISTRATION FEES...................62
13.1 Payment..........................................................62
ARTICLE XIV...........................................................64
TERM OF AGREEMENT.....................................................64
14.1 Initial Term.....................................................64
14.2 Extension of the Term............................................64
14.3 Conditions Precedent to Effectiveness............................65
ARTICLE XV............................................................66
MISCELLANEOUS PROVISIONS..............................................66
15.1 Remedies.........................................................66
15.2 Indemnification..................................................67
15.3 No Affiliate Liability...........................................67
15.4 Disclaimer of Warranty...........................................67
15.5 Service Constancy................................................68
15.6 Assignment.......................................................68
15.7 Agency...........................................................68
15.8 No Partnership...................................................69
15.9 Successors and Assigns...........................................69
15.10 Superseding Effect..............................................69
15.11 Notice..........................................................69
15.12 Counterparts....................................................70
15.13 Governing Law...................................................70
APPENDIX (LIST OF PARTICIPANTS)
.........
|
PSEUDO SCHEDULING AND SERVICES AGREEMENT
This PSEUDO SCHEDULING AND SERVICES AGREEMENT (the
"Agreement") is entered into as of this 8th day of April, 1997, between GEORGIA
POWER COMPANY, a corporation organized and existing under the laws of the State
of Georgia ("Georgia Power") and the MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA, a
public corporation and instrumentality of the State of Georgia ("MEAG").
R E C I T A L S:
WHEREAS, Georgia Power currently provides electric sales
service to MEAG pursuant to Georgia Power's Partial Requirements Tariff
effective January 1, 1993, entitled "Georgia Power Company, FERC Electric
Tariff, First Revised Volume No. 2, Wholesale For Resale, Partial Requirements
Service," as it applies to MEAG under the Parties' related Electric Service
Contract Agreement (collectively, the "PR Tariff"), presently on file with the
Federal Energy Regulatory Commission ("FERC"). In addition, Georgia Power
currently provides certain related coordination services to MEAG under the
Parties' Scheduling Services Agreement dated June 8, 1994;
WHEREAS, Georgia Power and MEAG have entered into a Partial
Requirements Service Settlement Agreement dated January 10, 1997, which, among
other things, reflects the Parties' desire to establish a new service
relationship that shall afford MEAG greater operational independence and
flexibility with respect to its generating resources located within Southern
Company's ("Southern") control area, consistent with and subject to MEAG's
rights and obligations under the Revised and Restated Integrated Transmission
System Agreement ("Revised ITSA") and certain Joint Ownership Agreements
governing joint-owned generation facilities in the state of Georgia;
WHEREAS, Georgia Power and MEAG desire to implement their new
service relationship by entering into this Agreement, which, upon its
effectiveness, shall replace in their entirety and terminate the PR Tariff as it
pertains to MEAG and the Parties' Scheduling Services Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual undertakings herein contained and for other good and valuable
consideration, the terms and sufficiency of which are hereby acknowledged,
Georgia Power and MEAG hereby agree as follows:
ARTICLE I
DEFINITIONS
In addition to the initially capitalized terms and phrases defined in
the preamble of this Agreement, the following initially capitalized terms and
phrases as and when used in this Agreement shall have the respective meanings
set forth below:
1.1 "Actual Hourly Facility Generation": the amount of energy, in
megawatt hours (MWH), net of station service energy, which is
actually generated during any one Hour by the generation
facility associated with a given Pseudo Steam or CT Resource
and delivered to Level B-1, as adjusted for losses using Level
A to B-1 Loss Factors, as appropriate. During periods in which
the amount determined pursuant to the previous sentence is
negative, the Actual Hourly Facility Generation associated
with such Pseudo Resource shall nevertheless be deemed to be
zero megawatt hours (MWH).
1.2 "AEC": the Atomic Energy Commission, predecessor to the
Nuclear Regulatory Commission.
1.3 "AEC Settlement": the settlement agreement entered into on
April 24, 1974, between and among Georgia Power, the Georgia
Municipal Association (predecessor to MEAG) and certain
municipalities, some of which are now wholesale customers of
MEAG, pursuant to which Georgia Power is obligated to provide
certain electric sales, coordination and transmission services
to MEAG in accordance with the terms of specific Antitrust
Conditions.
1.4 "Antitrust Conditions": the conditions imposed on Georgia
Power by the AEC, as set forth and described in AEC Facility
Operating License NPF-81, NPF-68, and NPF-5, issued to Georgia
Power on March 31, 1989, March 16, 1987 and June 13, 1978,
respectively.
1.5 "Availability": the readiness and ability of the generating
facility associated with a Pseudo Resource to generate power
within an Hour. A Pseudo Resource shall be deemed "Available"
for purposes of this Agreement unless it is unavailable due to
outages or deratings (as defined by NERC), or transmission
constraints (as defined by NERC).
1.6 "Availability Schedule": the list of hourly Pseudo Steam and
CT Resource Availabilities provided to MEAG by Georgia Power
pursuant to Sections 5.1 and 5.2 of this Agreement.
1.7 "Back-Up Capacity: the quantity of deficit energy in the Hour
associated with the Back-Up Capacity Charge, as defined and
set forth in Section 9.4 herein.
1.8 "Coal and Oil Reconcilement Sheets": those documents, and any
successors thereto, prepared in accordance with procedures for
separate stockpile accounting at Plant Robert W. Scherer Unit
No. 1, Plant Robert W. Scherer Unit No. 2, Plant Hal Wansley
Unit No. 1, and Plant Hal Wansley Unit No. 2.
1.9 "Contract Year": a consecutive 12-month period commencing on
the Effective Date of this Agreement and at each annual
anniversary date of such Effective Date, if and to the extent
the Term of this Agreement is extended pursuant to Section
14.2.
1.10 "Control Area Services": those services which are necessary
(a) to effectuate energy deliveries under this Agreement and
(b) to maintain the integrity of the ITS and the Southern
Control Area during transactions undertaken under this
Agreement. Control Area Services shall include the following
for purposes of this Agreement:
a. Scheduling, System Control and Dispatch Service
b. Reactive Supply and Voltage Control from Generation
Sources Service
c. Regulation and Frequency Response Service
d. Operating Reserve - Spinning Reserve Service
e. Operating Reserve - Supplemental Reserve Service.
1.11 "Day": one calendar day, commencing at one (1) minute prior to
12:01 a.m. (Birmingham, Alabama, prevailing time) of each such
calendar day and ending at one (1) minute after 11:59 p.m.
(Birmingham, Alabama, prevailing time) of the same calendar
day.
1.12 "Effective Date": the first Day of the Month immediately
following the date on which the FERC permits this Agreement to
become effective, either without modification or condition;
or, alternatively, subject to condition(s) or modification(s)
deemed acceptable to both Georgia Power and MEAG, as
determined by each Party in its sole discretion.
1.13 "Energy Imbalance Service": the service rendered to MEAG by
Georgia Power which matches MEAG's resources and MEAG Total
Load Requirements on an hourly basis and provides any
necessary back-up power to MEAG to maintain such balance.
Energy Imbalance Service shall incorporate a Back-Up Capacity
Charge, (Section 9.4), a Commitment Cost (Section 9.5), a
Credit for Hourly Surplus Energy (Section 9.6), and a Payment
for Hourly Deficit Energy (Section 9.7).
1.14 "Federal Power Act": the Federal Power Act, 16 U.S.C.A.ss.ss.
791a-828c (West 1985 & Supp. 1996), as the same may hereafter
be amended from time to time.
1.15 "FERC": the Federal Energy Regulatory Commission or any
governmental authority succeeding to the powers and functions
thereof under the Federal Power Act.
1.16 "Hour": one (1) clock hour of a Day expressed in Birmingham,
Alabama prevailing time.
1.17 "Hourly Pseudo Resource Utilization": the amount of energy, in
megawatt hours (MWH), that MEAG schedules or is deemed to have
utilized from a Pseudo Resource during any one Hour, as such
energy is determined under Articles V and VII.
1.18 "IIC": The Intercompany Interchange Contract among Georgia
Power and certain of its affiliates, as amended, approved by
the FERC in Docket No. ER86-103-001, and any successor
thereto.
1.19 "Interest": two (2) percent plus the prime rate, as stated in
the Wall Street Journal on the date payment is due.
1.20 "ITS: the "Integrated Transmission System" as such term is
defined in the Revised ITSA.
1.21 "Joint Committee for Planning and Operations": the committee
formed by representatives of Georgia Power, MEAG, and certain
other entities for the purpose of administering the
relationship among such entities, as described in that certain
Joint Committee Agreement dated August 27, 1976, as amended.
1.22 "Joint-Owned Facilities": Plant Robert W. Scherer Unit No. 1,
Plant Robert W. Scherer Unit No. 2, Plant Hal Wansley Unit No.
1, Plant Hal Wansley Unit No. 2, Edwin I. Hatch Nuclear Plant
Unit No. 1, Edwin I. Hatch Nuclear Plant Unit No. 2, Plant
Alvin W. Vogtle Unit No. 1, Plant Alvin W. Vogtle Unit No. 2,
and Plant Hal Wansley Unit No. 5A.
1.23 "Joint Ownership Agreements": the agreements among Georgia
Power, MEAG, Oglethorpe Power Corporation and the City of
Dalton, Georgia, which govern the Parties' ownership and
operating rights and obligations with respect to the
Joint-Owned Facilities.
1.24 "Level A": the generator voltage side of each step-up or
station service transformer of each generation facility of
Georgia Power or other entity that supplies power directly
into the ITS.
1.25 "Level A to B-1 Loss Factors": factors intended to reflect
energy loss from Level A to Level B-1 for generation. These
loss factors may be determined by the Joint Committee for
Planning and Operations.
1.26 "Level A to B-2 Loss Factors": factors intended to reflect
energy loss from Level A to Level B-2 for station service.
These loss factors may be determined by the Joint Committee
for Planning and Operations.
1.27 "Level B-1": the transmission voltage side of each step-up
transformer of each generation facility of Georgia Power or
other entity that supplies power directly into the ITS, or any
points of interconnection where power flows into the ITS.
1.28 "Level B-1 to B-2 Loss Factors": factors intended to reflect
energy loss from Level B-1 to Level B-2. These loss factors
may be determined by the Joint Committee for Planning and
Operations.
1.29 "Level B-2": the transmission facilities included in the ITS
which operate at 115 kV or above or any points of
interconnection where power flows out of the ITS, including,
but not limited to, station service.
1.30 "Level D": the distribution voltage side of the meter points
where power flows out of the ITS.
1.31 "Level D to B-1 Loss Factors": factors intended to reflect
energy loss from Level D to Level B-1. These loss factors may
be determined by the Joint Committee for Planning and
Operations.
1.32 "Marginal Replacement Fuel Cost": the fuel cost, in dollars
per millions of British Thermal Units (MMBTU), including the
value of SO2 allowances for affected units, as determined in
accordance with the IIC marginal fuel cost procedures filed
with FERC (as such procedures may be amended from time to
time), which is used for Southern Dispatch. Georgia Power
shall use reasonable best efforts to make available to MEAG
the Marginal Replacement Fuel Cost on or before three (3) Days
prior to the Day on which such cost will take effect.
1.33 "Maximum Utilization Level": the maximum level of allowed
resource Utilization of a Pseudo Resource by MEAG during an
Hour, as reasonably determined by Georgia Power in accordance
with Prudent Utility Practice, which shall represent as
closely as possible the actual maximum operating limitation on
the generation facility associated with such Pseudo Resource
at that time.
1.34 "MEAG Non-Territorial Load": the hourly sum of MEAG's sales to
another person or entity, excluding MEAG Territorial Load,
adjusted for losses using Level B-1 to B-2 Loss Factors or
Level D to B-1 Loss Factors, as appropriate.
1.35 "MEAG Off-System Control Area Services": Control Area Services
associated with MEAG Non-Territorial Load.
1.36 "MEAG Off-System Transaction": (i) any single sales
transaction between MEAG and another person or entity,
excluding the Participants and the City of Acworth (for so
long as and to the extent that MEAG continues to provide
requirements service to the City of Acworth); (ii) any
transaction by which MEAG takes energy or causes or allows
energy to be taken into the ITS from a generation facility or
other resource which is not interconnected with the ITS or is
located outside the Southern Control Area; or (iii) any
transaction by which MEAG provides or causes or allows to be
provided transmission service into, out of or across the ITS.
"MEAG Off-System Transactions" means, collectively, more than
one (1) MEAG Off-System Transaction. All MEAG Off-System
Transactions shall be adjusted for losses using Level B-1 to
B-2 Loss Factors, as appropriate.
1.37 "MEAG Territorial Control Area Services": Control Area
Services associated with MEAG Territorial Load.
1.38 "MEAG Territorial Load": the hourly sum of the delivery point
loads of the Participants and the City of Acworth (for so long
as and to the extent that MEAG continues to provide electric
requirements service to the City of Acworth), adjusted for
losses using Level D to B-1 Loss Factors, as appropriate, and
any net station service requirement associated with a MEAG
resource, adjusted for losses using Level A to B-2 Loss
Factors and Level B-1 to B-2 Loss Factors, as appropriate.
1.39 "MEAG Total Load Requirements": the sum of MEAG Territorial
Load and MEAG Non-Territorial Load.
1.40 "Minimum Utilization Level": the minimum level of allowed
resource Utilization of a Pseudo Resource by MEAG during an
Hour, as reasonably determined by Georgia Power in accordance
with Prudent Utility Practice, which shall represent as
closely as possible the actual minimum operating limitation on
the generation facility associated with such Pseudo Resource
at that time.
1.41 "Month": one calendar month, commencing at one (1) minute
prior to 12:01 a.m. (Birmingham, Alabama, prevailing time) on
the first Day of such month and ending at one (1) minute after
11:59 p.m. (Birmingham, Alabama, prevailing time) on the last
Day of such month.
1.42 "NERC": the North American Electric Reliability Council,
including the regional organization(s) to which the Parties
belong, and any successor organization(s).
1.43 "Nuclear Resource": the generation capacity associated with
MEAG's share of ownership in any one of the following
Joint-Owned Facilities: Edwin I. Hatch Nuclear Plant Unit No.
1, Edwin I. Hatch Nuclear Plant Unit No. 2, Plant Alvin W.
Vogtle Unit No. 1 and Plant Alvin W. Vogtle Unit No. 2.
"Nuclear Resources" means, collectively, more than one Nuclear
Resource.
1.44 "Open Access Transmission Tariff of Southern Companies": the
open access transmission tariff filed with the FERC by
Southern Companies in Docket No. OA96-27-000, as approved by,
and as revised or amended from time to time by, the FERC.
1.45 "Participants": the political subdivisions listed in the
Appendix to this Agreement, to which MEAG currently provides
requirements service under separate Power Sales Contracts.
1.46 "Party": MEAG or Georgia Power. "Parties" includes both MEAG
and Georgia Power.
1.47 "Power Sales Contracts": those contracts dated on or about
March 1, 1976, as amended, between MEAG and each of the
Participants.
1.48 "Prudent Utility Practice": at any particular time, a
practice, method or act engaged in or approved by a
significant portion of the electric utility industry prior to
such time, or a practice, method or act which, in the exercise
of reasonable judgment, can be expected to accomplish intended
results at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Prudent Utility
Practice is not intended to be limited to the optimum
practice, method or act to the exclusion of all others, but
rather to be among a spectrum of possible practices, methods
or acts, having due regard for, among other things,
manufacturers' warranties, the requirements of governmental
authorities of competent jurisdiction, and the requirements of
this Agreement.
1.49 "Pseudo CT Resource": the generation capacity associated with
MEAG's ownership interest in the following Joint-Owned
Facility: Plant Hal Wansley Unit No. 5A (combustion turbine),
adjusted for losses using Level A to B-1 Loss Factors, as
appropriate.
1.50 "Pseudo CT Resource Heat Rate": the value shown for station
economy (expressed in MMBTU/MWH) for Wansley Unit No. 5A, as
shown on the then-current IIC Informational Schedule No. 2 or
successor thereto, adjusted for losses using the appropriate
Level A to B-1 Loss Factor.
1.51 "Pseudo Energy": the integrated hourly difference between (i)
the Hourly Pseudo Resource Utilization of a Pseudo Steam or CT
Resource in megawatt hours (MWH), less (ii) the Actual Hourly
Facility Generation allocated to MEAG from the Pseudo Resource
in megawatt hours (MWH), as determined under the Joint
Ownership Agreements.
1.52 "Pseudo Energy Purchase": If the Pseudo Energy is negative in
an Hour, Georgia Power shall be deemed to have made an energy
purchase from MEAG equal to the absolute value of the amount
of such Pseudo Energy, which purchase shall be subject to the
provisions of Article VI.
1.53 "Pseudo Energy Sale": If the Pseudo Energy is positive in an
Hour, Georgia Power shall be deemed to have made an energy
sale to MEAG equal to the amount of such Pseudo Energy, which
sale shall be subject to the provisions of Article VI.
1.54 "Pseudo Resource(s): collectively, the Pseudo Steam, CT and
SEPA Resources.
1.55 "Pseudo Schedule[ing] and Dispatch": the hourly scheduling and
dispatch of Pseudo Resources by MEAG by and through Georgia
Power in accordance with Articles V and VII.
1.56 "Pseudo SEPA Resources": Subject to Section 7.1, from time to
time during the Term, the generation capacity associated with
the entitlement shares of the Participants and the City of
Acworth (for so long as the Participants and the City of
Acworth remain requirements service customers of MEAG) to the
hydroelectric generation facilities that make up the SEPA
projects and that are being operated within Southern Dispatch
at such time, as delivered at Level B-1.
1.57 "Pseudo Steam Resource(s)": the generation capacity associated
with MEAG's ownership interest in any one (or all) of the
following Joint-Owned Facilities: Plant Robert W. Scherer Unit
No. 1, Plant Robert W. Scherer Unit No. 2, Plant Hal Wansley
Unit No. 1 and Plant Hal Wansley Unit No. 2, as adjusted for
losses using Level A to B-1 Loss Factors, as appropriate.
1.58 "Pseudo Steam Resource Heat Rate": the quotient of: (a) the
MMBTU from the Coal and Oil Reconcilement Sheets associated
with the fuel that Georgia Power, MEAG and the City of Dalton,
Georgia actually burn in any Month at the generation facility
associated with each Pseudo Steam Resource, divided by (b) the
net positive generation in megawatt hours (MWH) at Level B-1
associated with Georgia Power's, MEAG's and the City of
Dalton's entitlement to energy from such facility, as
determined under the Joint Ownership Agreements.
1.59" "Real Time": when used as an adjective or an adverb, on as
near an instantaneous basis as possible.
1.60 "Revised ITSA": the Revised and Restated Integrated
Transmission System Agreement between Georgia Power and MEAG
dated as of December 7, 1990, as amended, and each of the
similar agreements between Georgia Power and Oglethorpe Power
Corporation and between Georgia Power and the City of Dalton,
Georgia.
1.61 "SEPA": the Southeastern Power Administration.
1.62 "SEPA Contracts": the contracts in effect as of the date of
this Agreement, between Southern Company Services, Inc.
("SCS"), as agent for Georgia Power, MEAG, the Participants
and SEPA, for the dispatch of, the scheduling of and the
disposition of the capacity of and energy from the SEPA
Resources. In the event of any inconsistency or ambiguity
between any such contracts, for purposes of this Agreement,
that certain Contract between The United States of America
Department of Energy acting by and through the Southeastern
Power Administration and SCS, as agent for Southern Companies,
dated as of September 30, 1996, shall control.
1.63 SEPA Declaration Schedule": the list of Pseudo SEPA Resources
Availabilities provided to MEAG by Georgia Power pursuant to
Sections 7.2 and 7.3.
1.64 "SEPA Resources": generation facilities associated with the
Pseudo SEPA Resources.
1.65 "SEPA Week": seven (7) calendar Days, commencing at one (1)
minute prior to 12:01 a.m. (Birmingham, Alabama, prevailing
time) of each Saturday and ending at one (1) minute after
11:59 p.m. (Birmingham, Alabama, prevailing time) of each
succeeding Friday.
1.66 "Southern Companies": collectively the operating company
affiliates of Southern, including Alabama Power Company,
Georgia Power Company, Gulf Power Company, Mississippi Power
Company, and Savannah Electric and Power Company.
1.67 "Southern Control Area": the area circumscribed by the tie
lines between the utility operating companies owned by
Southern (including without limitation Georgia Power) and
other utilities.
1.68 "Southern Dispatch": the ability of Southern Company Services,
Inc. (or other Affiliate of Georgia Power) to schedule and
control, directly or indirectly, manually or automatically,
the output of a generation facility in order to increase or
decrease the electricity delivered from such generation
facility into the electric system with which it is
interconnected.
1.69 "Southern Sub-Region": the sub-region of the Southeastern
Electric Reliability Council, including the Southern Control
Area, the control area of the Alabama Electric Cooperative,
Inc., the control area of South Mississippi Electric Power
Association, and the control areas of SEPA.
1.70 "System Marginal Cost": the incremental energy cost of
Southern Dispatch after serving all sales obligations, which
costs shall include fuel expense, variable operation and
maintenance expense, fuel handling expense, emissions
allowance value, and other appropriate energy related costs,
including but not limited to energy purchases.
1.71 "Term": the initial term of this Agreement specified in
Article XIV, as such term may be extended for additional
term(s) pursuant to Section 14.2.
1.72 "Territorial Marginal Cost": the incremental energy cost of
Southern Dispatch after serving all Southern Control Area
obligations but prior to serving any off-system sales, which
costs shall include fuel expense, variable operation and
maintenance expense, fuel handling expense, emissions
allowance value, and other appropriate energy related costs,
including but not limited to energy purchases.
1.73 "Utilization": the energy scheduled by MEAG from a Pseudo
Resource in an Hour, including the effect of changes submitted
from time to time by MEAG or deemed to be scheduled by MEAG,
all as determined under Articles V and VII of this Agreement,
as delivered at Level B-1.
1.74 "Utilization Schedule": the list of hourly Utilizations
provided to Georgia Power by MEAG pursuant to Sections 5.3 and
5.4 or Sections 7.4 and 7.5 hereof.
1.75 "Week": seven (7) calendar days, commencing at one (1) minute
prior to 12:01 a.m. (Birmingham, Alabama, prevailing time) of
each Monday and ending at one (1) minute after 11:59 p.m.
(Birmingham, Alabama, prevailing time) of each succeeding
Sunday.
ARTICLE II
APPLICABILITY OF AGREEMENT
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2.1 General. Pursuant to this Agreement, MEAG shall Pseudo Schedule and Dispatch its Pseudo Resources; to wit, MEAG shall continue to dedicate its entire interest in the Joint-Owned Facilities to Georgia Power or its agent for purposes of actual (physical) system control and Southern Dispatch. MEAG shall have the ability under this Agreement to direct how and when its Utilization from the Pseudo Resources shall be committed and dispatched through Georgia Power, subject to the terms and conditions set forth in Articles V and VII.
2.2 Nuclear Resources. This Agreement does not apply to or otherwise govern any of MEAG's Nuclear Resources. MEAG shall have the rights to these resources in accordance with the Joint Ownership Agreements governing the same.
2.3 Pseudo Steam and CT Resources. MEAG shall remain fully liable and
responsible for its allocated share of the operating costs associated with the
generation facilities associated with the Pseudo Steam and CT Resources, as
determined by and in accordance with the Joint Ownership Agreements.
2.4 Default. MEAG's right to Pseudo Schedule and Dispatch under this
Agreement shall continue only so long as MEAG is not in default under this
Agreement, the Joint Ownership Agreements, the SEPA Contracts or the Revised
ITSA.
ARTICLE III
OPERATING OBLIGATIONS OF THE PARTIES
3.1 Basic Planning, Operation and Maintenance Obligations Under
Existing Standards. Georgia Power and MEAG agree to plan, operate and maintain
their electric systems in accordance with Prudent Utility Practice, as measured,
in part, by NERC Operating Manual Guidelines (including the NERC-OC Reliability
Criteria for Interconnected Systems Operation and the NERC-OC Operating Guides)
and Southeastern Electric Reliability Council Guidelines (collectively, "NERC
Guidelines"), as the same may be revised from time to time.
3.2 Violation of Basic Planning, Operation and Maintenance Obligations.
(a) In the event that Georgia Power reasonably determines that MEAG has failed
to plan, operate and maintain its electric system in accordance with Prudent
Utility Practice, as stated in Section 3.1, and determines that termination of
this Agreement is warranted thereby, Georgia Power may notify MEAG of Georgia
Power's intent to terminate this Agreement at the end of sixty (60) Days
following the date of such notice. Such notice shall be in writing and shall
include a statement of reasons justifying such action on the part of Georgia
Power; provided, however, that prior to expiration of the sixty (60) Day period,
MEAG and Georgia Power shall submit the issue of MEAG's failure to perform to
the senior management of each Party for possible resolution. Should management
jointly agree that MEAG has sufficiently remedied its failure to perform,
Georgia Power's notice of termination shall be rescinded.
(b) Should management, prior to the end of the expiration of such sixty
(60) Day period, fail to resolve the issue of MEAG's failure to perform in
accordance with Prudent Utility Practice, Georgia Power may file at the FERC on
or about the sixtieth Day after notification to MEAG (as described in Section
3.2(a)) a request seeking immediate termination of this Agreement, which filing
shall effect a waiver of the notice of termination provisions included in
Section 14.2 herein. Pending the issuance of a final order by the FERC on
Georgia Power's request for termination, or until MEAG has obtained all
necessary regulatory approvals regarding a successor scheduling agreement or
control area arrangement, whichever is earlier, MEAG shall purchase Control Area
Services from Georgia Power or its agent at the standard rates then in effect
under the Open Access Transmission Tariff of Southern Companies, such payments
to be collected by Georgia Power subject to refund pending the issuance of such
final order by the FERC. For purposes of this Article, a "final order" shall
mean a FERC order which is no longer subject to rehearing under the FERC's rules
of practice and procedure.
(c) If the FERC issues a final order granting Georgia Power's request
for termination of this Agreement, Georgia Power shall so terminate the
Agreement and retain any amounts properly collected from MEAG under Section
3.2(b) from the effective date of such termination (as determined by the FERC).
After termination, unless and until MEAG has obtained all necessary regulatory
approvals regarding a successor scheduling agreement or separate control area
arrangement, MEAG (i) shall continue to purchase Control Area Services from
Georgia Power or its agent at the standard rates then in effect under the Open
Access Transmission Tariff of Southern Companies (subject to any final FERC
action on such rates); and (ii) shall continue to purchase Energy Imbalance
Service under terms and conditions in accordance with Article IX of this
Agreement. In addition, MEAG shall continue to Pseudo Schedule and Dispatch its
Pseudo Resources upon termination of this Agreement pursuant to terms and
conditions in accordance with Articles V, VI and VII of this Agreement until
MEAG has obtained all necessary regulatory approvals regarding a successor
scheduling agreement or separate control area arrangement, or until Georgia
Power is capable of providing for separate scheduling and dispatch for Plant
Scherer Unit Nos. 1 and 2 and Plant Wansley Unit Nos. 1 and 2 in accordance with
those certain amendments to the Plant Scherer and Plant Wansley Joint Ownership
Agreements dated December 31, 1990 and January 15, 1995, respectively, whichever
is earlier.
(d) If the FERC issues a final order ruling in favor of MEAG and
rejecting Georgia Power's request to terminate this Agreement, Georgia Power
shall refund to MEAG the difference between the amounts collected from MEAG at
the standard rates then in effect under the Open Access Transmission Tariff of
Southern Companies, as described in Section 3.2(b), and the amounts otherwise
payable by MEAG under this Agreement, plus interest at applicable FERC rate(s).
3.3 Obligations Under Future Standards. (a) If NERC or FERC issues
rules, standards or guidelines affecting or otherwise relevant to the Control
Area Services offered under this Agreement, Georgia Power and MEAG agree to
revise or amend, as necessary, the sections of this Agreement pertaining to
Control Area Services in order to comport therewith. To that end, the Parties
agree to develop specific performance criteria by which to determine, on an
objective basis, when such rules, standards or guidelines are violated, such
criteria to be incorporated into this Agreement.
(b) If Georgia Power and MEAG are unable to reach an agreement on the
nature or scope of revisions or amendments to this Agreement pursuant to Section
3.3(a), Georgia Power may unilaterally develop and file at the FERC any changes
or revisions to this Agreement that Georgia Power believes are appropriate and
warranted by the rules, standards or guidelines referenced in Section 3.3(a).
MEAG shall have the right to intervene in the proceeding initiated by such
filing, and may take any position on such filing it deems appropriate.
(c) If the FERC accepts the changes or revisions to this Agreement
filed by Georgia Power, and thereafter Georgia Power reasonably determines, in
accordance with Prudent Utility Practice, that MEAG has failed to comply with
the same, Georgia Power may terminate this Agreement upon sixty (60) Days prior
written notice to MEAG; provided, however, that prior to expiration of the sixty
Day period, MEAG and Georgia Power shall submit the issue of MEAG's failure to
perform to the senior management of each Party for possible resolution. Should
management jointly agree that MEAG has sufficiently remedied its failure to
perform, Georgia Power's notice of termination shall be rescinded.
(d) Should management, prior to the end of the expiration of such sixty
(60) Day period, fail to resolve the issue of MEAG's failure to perform,
termination of this Agreement shall take effect at such expiration. Upon
termination, unless and until MEAG has obtained all necessary regulatory
approvals regarding a successor scheduling agreement or separate control area
arrangement, MEAG (i) shall continue to purchase Control Area Services from
Georgia Power or its agent at the standard rates then in effect under the Open
Access Transmission Tariff of Southern Companies; and (ii) shall continue to
purchase Energy Imbalance Service under terms and conditions in accordance with
Article IX of this Agreement. In addition, MEAG shall continue to Pseudo
Schedule and Dispatch its Pseudo Resources upon termination of this Agreement
pursuant to terms and conditions in accordance with Articles V, VI and VII of
this Agreement until MEAG has obtained all necessary regulatory approvals
regarding a successor scheduling agreement or separate control area arrangement,
or until Georgia Power is capable of providing for separate scheduling and
dispatch for Plant Scherer Unit Nos. 1 and 2 and Plant Wansley Unit Nos. 1 and 2
in accordance with those certain amendments to the Plant Scherer and Plant
Wansley Joint Ownership Agreements dated December 31, 1990 and January 15, 1995,
respectively, whichever is earlier.
3.4 Pseudo Resources. From time to time during the term of this
Agreement, MEAG may request that one or more additional generation resources be
designated and treated as Pseudo Resources for purposes of this Agreement. The
Parties agree to discuss the issue of whether such resources may become Pseudo
Resources, as well as the terms and conditions related thereto.
3.5 System Security and Integrity. The Parties recognize that Georgia
Power or its agent must have the ability and means to maintain the safe and
reliable operation of the ITS and the surrounding Southern Control Area. To that
end, the Parties agree that (a) Georgia Power shall not unduly discriminate
against MEAG, Southern Companies or any other transmission owners with regard to
the redispatch of resources and curtailment of transactions (including but not
limited to dynamic scheduling) across any constrained transmission interface,
including the allocation of redispatch-related costs, if any; and (b) MEAG shall
participate in the implementation of an appropriate redispatch cost allocation
methodology for the Southern Sub-Region, such agreement to survive this
Agreement whether or not MEAG has commenced operations as a separate control
area; provided, however, that subsequent to implementation of such cost
allocation methodology, MEAG shall be reimbursed for the redispatch costs
incurred directly by MEAG, applicable to such methodology, in relieving
transmission system constraint(s), to the extent the Southern Sub-Region
security monitor has directed that such remedial measures be taken pursuant to
system security procedures in place in the Southern Sub-Region.
3.6 Supply Deficiencies. If at any time during the Term of this
Agreement (or such longer period as may be required under Sections 3.2(c),
3.3(d), 14.2(b) or 14.3(b)), Georgia Power determines that it is necessary or
appropriate to take action to eliminate a power supply deficiency on the
Parties' electric systems, and directs MEAG to participate in the elimination of
such deficiency, MEAG agrees to take reasonable corrective measures as
appropriate (including, without limitation, load shedding). Load shedding shall
be coordinated with Georgia Power and shall be implemented on a pro rata basis,
as nearly as practicable, between MEAG and Georgia Power based on each Party's
non-coincident peak load ratio, as defined in the Revised ITSA, and shall be
subject to the following curtailment priorities: (1) non-firm third-party
deliveries and interruptible native load deliveries; and (2) firm load
deliveries.
3.7 Power Flows. Georgia Power and MEAG recognize that part of any
scheduled delivery of power from MEAG to a specified entity, or vice versa, may
be dispatched or otherwise flow through electric systems outside the ITS and/or
the Southern Control Area. Georgia Power and MEAG agree to advise other
materially affected electric systems of such flows and scheduled power
transfers, to attempt to minimize any resulting burden on such other electric
systems, to compensate as appropriate such other systems for any such resulting
burden, and to maintain communications and good relationships with affected
interconnected third parties.
ARTICLE IV
AEC SETTLEMENT AND ANTITRUST CONDITIONS
4.1 MEAG Representations and Warranties Concerning Power Sales
Contracts. MEAG represents, warrants and covenants as follows: (a) MEAG
currently provides wholesale bulk power supply to each of the Participants
pursuant to the Power Sales Contracts; (b) with the exception of limited
self-generation and power allocated to the Participants from the SEPA, MEAG is
the Participants' exclusive wholesale bulk power supplier, providing
full-requirements service to each such Participant; (c) the Participants may,
subject to notice (and subject to entering into an interconnection agreement
with MEAG), elect to purchase a portion of their requirements from other
sources, such amounts being limited by Participants' respective take-or-pay
purchase commitments to MEAG; (d) by the terms of the Power Sales Contracts,
MEAG shall supply such take-or-pay amounts to the Participants until at least
the last day of February 2026; and (e) MEAG shall use its reasonable best
efforts to extend the term of the Power Sales Contracts for the useful lives of
the Joint-Owned Facilities.
4.2 Satisfaction of AEC Settlement and Antitrust Conditions. (a) MEAG
agrees that Georgia Power is deemed to have satisfied, for the entire term of
the Power Sales Contracts, any and all obligations that Georgia Power may now or
hereafter have to provide full or partial requirements service to MEAG by reason
of the AEC Settlement or the Antitrust Conditions, and hereby waives any right
to demand such services pursuant to the AEC Settlement and Antitrust Conditions
unless Georgia Power fails to comply with its commitments under this Agreement
or the Partial Requirements Service Settlement Agreement dated January 10, 1997.
(b) Further, MEAG agrees that it shall not seek to terminate or
otherwise modify the Power Sales Contracts in any way that could alter the
effectiveness of MEAG's agreement under this Article, and agrees to provide
Georgia Power reasonable notice of, and use its best efforts to defend against,
any and all actions by third parties that could have such effect. Provided,
however, that nothing herein shall prevent either MEAG or Georgia Power from
pursuing in good faith any rights it may have against the other which exist
independently of the AEC Settlement and Antitrust Conditions, and provided
further, that nothing herein shall relieve Georgia Power of any liability for
antitrust violations occurring subsequent to the date of the Partial
Requirements Service Settlement Agreement.
4.3 Use of the ITS. Georgia Power agrees that it shall not hereinafter
assert that the satisfaction and waiver of Georgia Power's service obligations
as described in this Article IV in any way affect MEAG's rights under the
Revised ITSA as amended or modified. Further, during the effectiveness of the
Revised ITSA, Georgia Power agrees that it shall not assert that the AEC
Settlement or the Antitrust Conditions preclude MEAG from engaging in MEAG
Off-System Transactions; provided that MEAG is not in default under the Revised
ITSA or this Agreement or any successor agreement thereto, and provided further
that MEAG may not engage in any MEAG Off-System Transactions to the extent MEAG
does not have adequate interface capacity under the Revised ITSA.
ARTICLE V
PSEUDO DISPATCH:
PSEUDO STEAM RESOURCES AND PSEUDO CT RESOURCE
5.1 Availability Schedules. Georgia Power or its agent shall provide
MEAG, on or before 11:00 a.m. (Birmingham, Alabama prevailing time) on the
Friday prior to the commencement of each Week during the Term (or such longer
period as may be required under Section 3.2(c), 3.3(d), 14.2(b) or 14.3(b)), a
schedule of the expected Availability of each of the Pseudo Steam and CT
Resources during each Hour of each Day of the immediately following Week and the
expected Minimum and Maximum Utilization Levels of each of the Pseudo Steam and
CT Resources ("Availability Schedule").
5.2 Changes to Availability Schedules. (a) Georgia Power or its agent
shall use good faith efforts to notify MEAG as soon as practicable after Georgia
Power learns of any actual or expected change in Availability of any Pseudo
Steam or CT Resource; provided, however, that Georgia Power or its agent shall
provide MEAG, on or before 11:00 a.m. (Birmingham, Alabama prevailing time) of
each Day during the Term, notice of any such changes to Georgia Power's
then-current Availability Schedule for the immediately following two (2) Days.
(b) Georgia Power may make changes to the Availability Schedule and to
the associated Minimum and Maximum Utilization Levels at any time Georgia Power
reasonably expects the Availability of any Pseudo Steam or CT Resource to
change, or at such time that such Availability has changed, for whatever reason,
including, without limitation, outages or deratings (as defined by NERC) or
transmission constraints (as defined by NERC).
(c) If the Maximum Utilization Level of any Pseudo Steam or CT Resource
decreases at any time by more than 20%, such decreased Maximum Utilization Level
may be implemented within the Hour, and MEAG's hourly Utilization Schedule (see
Section 5.3) for that Pseudo Steam or CT Resource may be adjusted, if necessary,
to reflect those new limits, provided, however, that MEAG is notified in advance
of such change being effective.
5.3 Hourly Utilization Schedules. (a) MEAG shall provide Georgia Power
or its agent on or before 1:30 p.m. (Birmingham, Alabama prevailing time) on the
Friday prior to the commencement of each Week during the Term, a schedule of its
anticipated hourly Utilization of the Pseudo Steam and CT Resources for each
Hour of each Day of the immediately following Week ("Utilization Schedule").
(b) MEAG's Utilization Schedule shall at all times be consistent on an
Hour by Hour basis with the most recent Availability Schedule provided by
Georgia Power to MEAG for the Pseudo Steam and CT Resources. MEAG may not add a
given Pseudo Steam or CT Resource to its Utilization Schedule for a given Hour
if such Pseudo Steam or CT Resource is not Available during such Hour, based on
such Availability Schedule. Any Utilization Schedule provided by MEAG which is
not in compliance with such Availability Schedule with respect to any Pseudo
Steam or CT Resource shall be deemed ineffective. Georgia Power shall use
reasonable best efforts to notify MEAG as soon as practicable following such
event that such Utilization Schedule has been deemed ineffective.
(c) MEAG's Utilization Schedule shall at all times be in compliance on
an Hour by Hour basis with the notice provisions of (i) Section 5.6, Minimum
Commitment Notice, (ii) Section 5.7, Minimum Decommitment Notice and Minimum
Up-Time, and (iii) Section 5.8, Minimum Downtime. Any Utilization Schedule
provided by MEAG which is not in compliance with all such notice provisions with
respect to any Pseudo Steam or CT Resource shall be deemed ineffective. Georgia
Power shall use reasonable best efforts to notify MEAG that such Utilization
Schedule has been deemed ineffective as soon as practicable following such
event.
(d) MEAG's Utilization of each committed Pseudo Steam Resource must at
no time be greater than the then-current Maximum Utilization Level or less than
the then-current Minimum Utilization Level for such Pseudo Resource, as shown on
the most recent Availability Schedule provided by Georgia Power to MEAG for the
Pseudo Steam Resources. To the extent MEAG schedules any energy from a given
Pseudo Steam Resource in excess of such Maximum Utilization Level of such Pseudo
Steam Resource, it shall be deemed to have scheduled energy at such Maximum
Utilization Level. To the extent MEAG schedules any energy from a given Pseudo
Steam Resource less than such Minimum Utilization Level, it shall be deemed to
have scheduled energy at such Minimum Utilization Level. MEAG's Utilization of
the Pseudo CT Resource must at all times be either zero (0) or the Maximum
Utilization Level, as shown on the most recent Availability Schedule provided by
Georgia Power to MEAG for the Pseudo CT Resource. To the extent MEAG schedules
any energy from the Pseudo CT Resource at any level other than such Maximum
Utilization Level of such Pseudo CT Resource, it shall be deemed to have
scheduled energy at such Maximum Utilization Level. Georgia Power shall use
reasonable best efforts to notify MEAG of such deemed changes in Utilization as
soon as practicable following such event.
5.4 Changes to Utilization Schedules. (a) MEAG may, in its discretion,
make changes to its Utilization Schedule for a given Week from time to time
during such Week, subject to the provisions of this Article. MEAG shall use good
faith efforts to notify Georgia Power or its agent of such changes as soon as
practicable after MEAG decides to make such changes; provided, however, that
MEAG shall provide Georgia Power or its agent on or before 1:30 p.m.
(Birmingham, Alabama prevailing time) of each Day during the Term, notice of any
such changes to MEAG's then-current Utilization Schedule for the immediately
following one (1) Day.
(b) MEAG shall provide notice to Georgia Power or its agent at least
twenty (20) minutes prior to the start of an Hour of the quantity of energy that
MEAG wishes to schedule from a committed Pseudo Steam or CT Resource during such
Hour. MEAG may increase or decrease the level of energy at which such Pseudo
Steam or CT Resource is to be utilized during such Hour only until twenty (20)
minutes prior to such Hour. MEAG's Utilization Schedule for all committed Pseudo
Steam and CT Resources during a given Hour shall become final after twenty (20)
minutes prior to the start of the Hour and shall not thereafter be subject to
increase or decrease by MEAG for that Hour.
(c) MEAG shall be required to make such changes to its Utilization
Schedule from time to time during a Week to reflect any changes made by Georgia
Power to the Availability Schedule of a Pseudo Steam or CT Resource for such
Week. MEAG shall make such changes as soon as practicable after being notified
of the actual or expected change in Availability; provided, however, that MEAG
shall make such changes immediately in the case of actual or imminent changes in
Availability.
(d) For purposes of calculating the Hourly Pseudo Resource Utilization
of each Pseudo Steam and CT Resource during each Hour, MEAG shall be deemed to
have utilized during such Hour all energy either (a) shown on MEAG's final and
effective Utilization Schedule during such Hour for such Pseudo Resource, or (b)
deemed to have been scheduled by MEAG during such Hour from such Pseudo
Resource, all in accordance with Sections 5.3, 5.4, 5.5, 5.9 or 5.10.
5.5 Pseudo Steam Resource Ramping. (a) During the first Hour of
scheduled Utilization of a Pseudo Steam Resource pursuant to this Article, MEAG
shall schedule Utilization from such Pseudo Steam Resource at a level equal to
the then-current Minimum Utilization Level of such Pseudo Steam Resource. If
MEAG schedules Utilization from such Pseudo Steam Resource during any such Hour
at a level greater than or less than such Minimum Utilization Level, then MEAG
shall nevertheless be deemed to have scheduled Utilization from such Pseudo
Steam Resource at its Minimum Utilization Level.
(b) During the last Hour of scheduled Utilization of a Pseudo Steam
Resource pursuant to this Article, MEAG shall schedule Utilization from such
Pseudo Steam Resource at a level equal to the then-current Minimum Utilization
Level of such Pseudo Steam Resource. If MEAG schedules Utilization from such
Pseudo Steam Resource during any such Hour at a level greater than or less than
such Minimum Utilization Level, then MEAG shall nevertheless be deemed to have
scheduled Utilization from such Pseudo Steam Resource at its Minimum Utilization
Level.
(c) If MEAG's Utilization Schedules are adjusted pursuant to this
Section, Georgia Power shall use reasonable best efforts to notify MEAG as soon
as practicable following such an event.
5.6 Minimum Commitment Notice. (a) MEAG shall give Georgia Power or its
agent at least twenty-four (24) Hours prior notice that it wishes to include a
Pseudo Steam Resource on its Utilization Schedule in order to actually commit
such Pseudo Resource. MEAG must notify Georgia Power or its agent at least
twenty (20) minutes before the Hour that it wishes to include the Pseudo CT
Resource on its Utilization Schedule in order to actually commit such Pseudo
Resource.
(b) If MEAG has given notice pursuant to this Section more than 24
Hours prior to the Hour, for a Pseudo Steam Resource, or more than 20 minutes
prior to the Hour, for a Pseudo CT Resource, that it wishes to schedule
Utilization from a given Pseudo Steam or CT Resource, then MEAG may delete such
Pseudo Steam or CT Resource from its then-current Utilization Schedule only
until twenty-four (24) Hours (Pseudo Steam Resources) or twenty (20) minutes
(Pseudo CT Resource) prior to the first Hour during which MEAG has notified
Georgia Power that MEAG wishes to schedule Utilization from such Pseudo Steam or
CT Resource(s).
(c) If, after MEAG has given Georgia Power or its agent notice pursuant
to this Section that MEAG wishes to commit a Pseudo Steam Resource in a given
Hour, such Resource becomes unavailable for such Hour, as determined by
reference to the Availability Schedule, MEAG's commitment and Utilization of
such Pseudo Steam Resource shall become ineffective; provided however, that
Georgia Power shall provide timely notice to MEAG of such ineffectiveness. In
such event, MEAG may, by notice to Georgia Power, elect to resume scheduled
Utilization at such time that the Pseudo Steam Resource again becomes Available,
without regard to the Minimum Commitment Notice and Minimum Downtime provisions
of this Article. MEAG hereby recognizes and agrees that when the Pseudo Steam
Resource returns to service, such Pseudo Resource shall be deemed to be
operating off automatic generation control for purposes of Section 5.10 until
MEAG is notified otherwise by Georgia Power.
5.7 Minimum Decommitment Notice and Minimum Up-Time. MEAG must give
Georgia Power or its agent at least four (4) Hours prior notice that MEAG wishes
to reduce its Utilization of a Pseudo Steam Resource to zero (0) MW in order to
actually decommit such Pseudo Resource. Any such decommitment shall be effective
only after the fourth Hour of scheduled Utilization. MEAG must notify Georgia
Power or its agent at least twenty (20) minutes before the Hour that MEAG wishes
to reduce its Utilization of the Pseudo CT Resource to zero (0) MW in order to
actually decommit such Pseudo Resource. Any such decommitment shall be effective
only after one (1) Hour of scheduled Utilization.
5.8 Minimum Downtime. MEAG may not schedule Utilization from any Pseudo
Steam Resource until at least forty-eight (48) Hours following the first
effective Hour of such Pseudo Steam Resource's most recent decommitment. MEAG
may not schedule Utilization from the Pseudo CT Resource until at least one (1)
Hour following the first effective Hour of such Pseudo CT Resource's most recent
decommitment.
5.9 Pseudo CT Resource Test Energy. If Plant Hal Wansley Unit No. 5A is
required to operate for test purposes at any time, and MEAG is notified in
advance of MEAG's scheduling deadline, then MEAG shall be deemed to have
scheduled Utilization from its Pseudo CT Resource at a level equal to MEAG's
undivided ownership interest in the Actual Hourly Facility Generation associated
with the Pseudo CT Resource.
5.10 Pseudo Steam Resources Operating Off Automatic Generation Control.
(a) If the generation facility associated with a Pseudo Steam Resource is
required to operate off automatic generation control, including valves wide open
and/or overpressure ("Off-AGC Operation"), and MEAG is notified of the estimated
operating level of such facility in advance of MEAG's scheduling deadline, then
MEAG is deemed to have scheduled Utilization from such Pseudo Steam Resource at
a level equal to MEAG's undivided ownership interest in the Actual Hourly
Facility Generation associated with such Pseudo Resource. Georgia Power shall
use reasonable best efforts to notify MEAG whenever a generation facility
associated with a Pseudo Steam Resource is operating at valves wide open and/or
overpressure.
(b) Notwithstanding the provisions of Section 5.10(a), whenever the
Maximum Utilization Level less the Minimum Utilization Level of the Available,
on-line Pseudo Steam Resources not restricted by "Off-AGC Operation" is less
than MEAG's Regulation and Spinning Reserve Requirements (see Article VIII),
then MEAG may adjust its Utilization Schedule for resources operating off
automatic generation control to the extent required to meet MEAG's Regulation
and Spinning Reserve Requirements, in accordance with the scheduling provisions
of Section 5.4(b).
ARTICLE VI
PSEUDO ENERGY SALES AND PURCHASES
6.1 Pseudo Energy. Each Hour of the Term, Georgia Power shall compute
the amount of the Pseudo Energy associated with each Pseudo Steam and CT
Resource for that Hour, in megawatt hours (MWH).
6.2 Pseudo Energy Sale. If the amount of the Pseudo Energy associated
with a Pseudo Steam or CT Resource for an Hour is positive, then Georgia Power
shall be deemed to have made a Pseudo Energy Sale to MEAG equal to the amount of
such Pseudo Energy. Georgia Power shall deliver such energy to MEAG from any
resources available to it at Level B-1. MEAG shall pay to Georgia Power, for
such Pseudo Energy Sale, a "Pseudo Resource Energy Charge", in dollars per
Month, equal to the product of:
(1) the sum of the hourly Pseudo Energy Sale(s) associated with such Pseudo Resource for such Month, in megawatt hours (MWH); times
(2) the sum of (i) the product equal to (a) the Pseudo
Steam or CT Resource Heat Rate, times (b) the
Marginal Replacement Fuel Cost in effect for such
Pseudo Resource at such time, plus (ii) the quotient
equal to (a) the most recent 12 Months total actual
variable operations and maintenance ("O&M") and fuel
handling expenses for the generation facility
associated with such Pseudo Resource, divided by (b)
the net positive generation from such facility over
such 12 Month period at Level B-1, as determined
pursuant to the Joint Ownership Agreement accounting
procedures employed by Georgia Power or its agent at
such time and calculated consistent with the FERC
account definitions utilized in the then-current IIC
for variable O&M and fuel handling expenses (both (i)
and (ii) as measured in dollars per megawatt hour
($/MWH)).
6.3 Pseudo Energy Purchase. If the amount of the Pseudo Energy
associated with a Pseudo Steam or CT Resource for an Hour is negative, then
Georgia Power shall be deemed to have made a Pseudo Energy Purchase from MEAG
equal to the absolute value of the amount of such Pseudo Energy. Georgia Power
shall pay to MEAG, for such Pseudo Energy Purchase, a "Pseudo Resource Energy
Credit", in dollars per Month, equal to the product of:
(1) the sum of the hourly Pseudo Energy Purchase(s) associated with such Pseudo Resource for such Month, in megawatt hours (MWH); times
(2) the sum of (i) the product equal to (a) the Pseudo
Steam or CT Resource Heat Rate, times (b) the
Marginal Replacement Fuel Cost in effect for such
Pseudo Resource at such time, plus (ii) the quotient
equal to (a) the most recent 12 Months total actual
variable O&M and fuel handling expenses for the
generation facility associated with such Pseudo
Resource, divided by (b) the net positive generation
from such facility over such 12 Month period at Level
B-1, as determined pursuant to the Joint Ownership
Agreement accounting procedures employed by Georgia
Power or its agent at such time and calculated
consistent with the FERC account definitions utilized
in the then-current IIC for variable O&M and fuel
handling expenses (both (i) and (ii) as measured in
dollars per megawatt hour ($/MWH)).
6.4 Coal Procurement. MEAG shall supply coal to the generation
facilities associated with the Pseudo Steam Resources sufficient to meet MEAG's
ownership share of the monthly coal burn, as projected by Georgia Power and
communicated to MEAG with reasonable notice, as adjusted from time to time to
reflect coal actually burned, and shall maintain coal stockpiles in accordance
with applicable coal procurement procedures developed pursuant to those certain
amendments to the Plant Scherer and Plant Wansley Joint Ownership Agreements
dated December 31, 1990 and January 15, 1995, respectively.
ARTICLE VII
PSEUDO DISPATCH: SEPA RESOURCES
7.1 Duration of Effectiveness. This Article shall become effective on
the Effective Date of this Agreement and shall continue in effect for the Term
(or such longer period as may be required under Sections 3.2(c), 3.3(d), 14.2(b)
or 14.3(b)), or until such time that MEAG exercises its option in the current
SEPA Contracts to provide for separate dispatch and scheduling of MEAG's
entitlement share of the SEPA Resources and the generating capacity associated
therewith if such event occurs before the end of the Term. The Parties agree to
negotiate how the SEPA Resources shall be treated for scheduling purposes in
this Agreement prior to MEAG implementing separate dispatch and scheduling of
the SEPA Resources.
7.2 SEPA Declaration Schedule. (a) Georgia Power or its agent shall
provide to MEAG, as soon as practicable after Georgia Power or its agent
receives SEPA's declarations for the SEPA Resources for the SEPA Week, the
declared level of Availability (of both capacity and energy) and the Minimum and
Maximum Utilization Levels for MEAG's entitlement share of the SEPA Resources
during such SEPA Week ("SEPA Declaration Schedule"). References in this Article
to MEAG's entitlement share of the SEPA Resources mean the aggregate entitlement
share to such SEPA Resources, at the relevant time, of the Participants and the
City of Acworth, for so long as and to the extent that MEAG provides
requirements service to the Participants and the City of Acworth or their
successors, as declared by SEPA.
(b) The SEPA Declaration Schedule provided to MEAG by Georgia Power for
each SEPA Week shall specify the total energy, in megawatt-hours (MWH),
available for Utilization by MEAG through its Pseudo SEPA Resources and shall
reflect any constraints imposed by SEPA on the actual utilization of the SEPA
Resources by Southern at any time during a SEPA Week, including, but not limited
to, maximum available capacity, minimum flow and associated utilization, and
flood control release requirements.
7.3 Changes to SEPA Declaration Schedule. (a) Georgia Power or its
agent may make changes to the SEPA Declaration Schedule affecting the total
energy available to MEAG or any of the other operating constraints of the SEPA
Resources for a given SEPA Week, from time to time during such SEPA Week, at any
time that Georgia Power or its agent is notified by SEPA that MEAG's entitlement
share of the SEPA declaration, or any of the associated constraints, for a given
SEPA Week has changed, or is expected to change, from the previous declaration
for such SEPA Week.
(b) Georgia Power or its agent shall use reasonable best efforts to
notify MEAG of such changes as soon as practicable after Georgia Power, or its
agent learns of any such actual or expected change in the Availability of the
SEPA Resources, or of any of the associated constraints, for a given period.
(c) Should a change in the SEPA declarations occur such that MEAG has
utilized SEPA energy in excess of the revised available energy, such excess
shall be subtracted from the immediately following SEPA Week available energy.
7.4 Hourly Utilization Schedule. (a) MEAG shall provide Georgia Power
or its agent on or before 1:30 p.m. (Birmingham, Alabama prevailing time) on the
Friday prior to the commencement of each SEPA Week during the Term, or as soon
as practicable after receipt of the SEPA Declaration Schedule, a schedule of its
anticipated hourly Utilization of the Pseudo SEPA Resources for each Hour of
each Day of the immediately following SEPA Week ("Utilization Schedule").
(b) The Minimum Utilization Level for the Pseudo SEPA Resources shall
reflect MEAG's aggregate entitlement share of any minimum operating constraints
imposed by SEPA in its declaration schedule to Southern from time to time,
including, but not limited to, any minimum flow and associated utilization and
flood control release requirements, as indicated in the SEPA Declaration
Schedule. If the Pseudo SEPA Resources are scheduled by MEAG during an Hour at a
level less than their then-current Minimum Utilization Level, MEAG nevertheless
shall be deemed to have scheduled energy utilization from such Pseudo SEPA
Resources at their then-current Minimum Utilization Level. Georgia Power shall
use reasonable best efforts to notify MEAG of such deemed change in Utilization
as soon as practicable after such event.
(c) The Maximum Utilization Level for the Pseudo SEPA Resources shall
reflect MEAG's aggregate entitlement share of any maximum operating constraints
imposed by SEPA in its declaration schedule to Southern from time to time, as
indicated in the SEPA Declaration Schedule, given that the Maximum Utilization
Level of the Pseudo SEPA Resources shall be no greater than MEAG's aggregate
entitlement share of the generating facilities associated with the Pseudo SEPA
Resources as defined in the then current SEPA Contracts, and shall never be
greater than the remaining unscheduled energy declared available to MEAG. To the
extent MEAG schedules any energy from the Pseudo SEPA Resources in excess of the
then-current Maximum Utilization Level of such Pseudo Resource, it shall be
deemed to have scheduled energy at the Pseudo SEPA Resources' then-current
Maximum Utilization Level. Georgia Power shall use reasonable best efforts to
notify MEAG of such deemed change in Utilization as soon as practicable after
such event.
7.5 Changes to Utilization Schedule. (a) MEAG may, in its discretion,
make changes to its Utilization Schedule for a given SEPA Week from time to time
during such SEPA Week, subject to the provisions of this Article.
(b) MEAG shall provide notice to Georgia Power or its agent at least
twenty (20) minutes prior to the start of an Hour of the quantity of energy that
MEAG wishes to schedule from the Pseudo SEPA Resources during such Hour. Once
such notice is provided, MEAG may increase or decrease the level of energy at
which the Pseudo SEPA Resources are to be utilized during such Hour only until
twenty (20) minutes prior to such Hour. MEAG's Utilization Schedule for the
Pseudo SEPA Resources during a given Hour shall become final after twenty (20)
minutes prior to the start of the Hour and shall not thereafter be subject to
increase or decrease by MEAG for that Hour.
(c) MEAG shall be required to make such changes to its Utilization
Schedule from time to time during a SEPA Week to reflect any changes made by
Georgia Power or its agent to the SEPA Declaration Schedule for such SEPA Week,
based upon actual or expected changes in Availability or other operating
constraints associated with the Pseudo SEPA Resources. MEAG shall make such
changes, as soon as practicable after being notified of the change in the SEPA
Declaration Schedule; provided, however, that MEAG shall make such changes
immediately in the case of actual or imminent changes in Availability.
(d) MEAG's Utilization Schedule shall at all times be consistent with
the most recent SEPA Declaration Schedule provided to MEAG by Georgia Power and
the Minimum and Maximum Utilization Levels of the Pseudo SEPA Resources. MEAG
may not utilize the Pseudo SEPA Resources in a given Hour if the Pseudo SEPA
Resources are not available during that Hour, based on such SEPA Declaration
Schedule. Any such Utilization scheduled by MEAG with respect to the Pseudo SEPA
Resources shall be deemed ineffective. Georgia Power shall use reasonable best
efforts to notify MEAG that such Utilization Schedule has been deemed
ineffective as soon as practicable following such an event.
(e) For purposes of calculating the Hourly Pseudo Resource Utilization
of the Pseudo SEPA Resources during each Hour, MEAG shall be deemed to have
utilized during such Hour all energy (i) either shown on MEAG's final and
effective Utilization Schedule during such Hour for the Pseudo SEPA Resources,
or (ii) deemed to have been scheduled by MEAG during such Hour from the Pseudo
SEPA Resources, all in accordance with Sections 7.4 and 7.5.
7.6 Delivery of and Payment for Energy. (a) Georgia Power shall deliver
the amount of energy scheduled or deemed to be scheduled by MEAG under the
provisions of this Article, and MEAG shall accept such energy, at the point(s)
of delivery for the SEPA Resources determined under the SEPA Contracts, as such
amount of energy is adjusted by Georgia Power or its agent to reflect applicable
loss factors provided for in the SEPA Contracts or Revised ITSA, as appropriate.
Georgia Power may deliver such energy from any resources available to Georgia
Power at Level B-1, in Georgia Power's or its agent's sole discretion.
(b) MEAG represents that it has made, or agrees that it shall make, its
own arrangements with SEPA concerning payment by MEAG or its Participants for
such energy made available and delivered from the generating facilities
associated with the SEPA Resources.
7.7 Coordination with SEPA Contracts. MEAG and Georgia Power
acknowledge that it shall be necessary for the procedures described in this
Article to interact with the actual operation of the generation facilities
associated with the SEPA Resources under the SEPA Contracts and that it is the
intent of MEAG and Georgia Power that this Article be compatible with such SEPA
Contracts. Accordingly, MEAG agrees to cooperate with Georgia Power or its
agent, and to make other accommodations, as Georgia Power or its agent
reasonably requests in order to carry out the foregoing intent.
ARTICLE VIII
MEAG TERRITORIAL CONTROL AREA SERVICES
8.1 Availability. MEAG Territorial Control Area Services are those
services which are necessary (i) to effectuate energy deliveries under this
Agreement and (ii) to maintain the integrity of the ITS and the Southern Control
Area during transactions undertaken pursuant to this Agreement. The MEAG
Territorial Control Area Services under this Article shall be available only
under the terms of this Agreement and shall not survive the termination of this
Agreement. In addition, the MEAG Territorial Control Area Services shall be used
solely for the purpose of serving MEAG Territorial Load, and shall not be
remarketed or resold by MEAG in any form to any entity; provided, however, that
MEAG may at all times recover the costs of such service from MEAG Territorial
Load customers; and provided further that MEAG shall not be charged for MEAG
Territorial Control Area Services to the extent that one or more Participant(s)
has elected to purchase supplemental bulk power pursuant to the terms of the
Power Sales Contracts from a third party and is receiving and paying for such
Control Area Services under the Open Access Transmission Tariff of Southern
Companies.
8.2 Scheduling, System Control and Dispatch Service. (a) MEAG shall
purchase from Georgia Power Scheduling, System Control and Dispatch Service to
serve MEAG Territorial Load within the Southern Control Area. MEAG's requirement
for such service shall equal the MEAG Territorial Load coincident with the most
recent twelve (12) monthly peak loads within the Southern Control Area, less any
power supplied to MEAG on behalf of the Participants and the City of Acworth
(for so long as the Participants and the City of Acworth remain requirements
service customers of MEAG) by SEPA under existing contractual arrangements,
provided that such power remains in Southern Dispatch.
(b) Scheduling, System Control and Dispatch Service shall be provided
at the rate in effect under the Open Access Transmission Tariff of Southern
Companies, as adjusted to reflect the removal of costs associated with the
control centers of the operating company affiliates of Georgia Power; provided,
however, that the rate for Scheduling, System Control and Dispatch Service shall
be adjusted, as necessary, to reflect any final action by the FERC on the Open
Access Transmission Tariff of Southern Companies.
8.3 Reactive Supply and Voltage Control From Generation Sources
Service. (a) MEAG may elect on a Contract Year basis (i) to self-supply Reactive
Supply and Voltage Control From Generation Sources Service in an amount equal to
MEAG's net generation from qualified resources (as defined in (b) below); or
(ii) to deem Reactive Supply and Voltage Control From Generation Sources Service
adequately provided by the Pseudo Resources and Nuclear Resources, to the extent
such service is used solely to meet MEAG Territorial Load; provided, however,
that if MEAG elects option (ii), the provisions of Section 10.4(d) shall not
apply. MEAG's election under this Section shall be provided by written notice to
Georgia Power at least 45 Days prior to the start of each Contract Year.
(b) Qualified resources for purposes of this Section and Section 10.4
shall include only those resources that (i) are located within the Southern
Control Area, (ii) are capable of operating at 0.85 power factor or less, (iii)
are operated consistent with voltage schedules as determined by the Southern
Control Area operator, and (iv) are callable at the sole discretion of the
Southern Control Area operator to provide reactive supply and voltage control.
The Joint- Owned Facilities and the Pseudo SEPA Resources, while the SEPA
Resources remain in Southern Dispatch, shall be deemed qualified resources as
defined herein.
(c) Should MEAG elect option (i) in Section 8.3(a) above, MEAG shall
purchase Reactive Supply and Voltage Control From Generation Sources Service
from Georgia Power to the extent that MEAG Territorial Load exceeds MEAG's net
generation from qualified resources in any Hour, at the hourly rate (per MWH)
for Reactive Supply and Voltage Control From Generation Sources Service set
forth in the Open Access Transmission Tariff of Southern Companies. Conversely,
to the extent that MEAG's generation from qualified resources is greater than
MEAG Territorial Load in such Hour, the Parties agree that Reactive Supply and
Voltage Control From Generation Sources Service for MEAG Territorial Load shall
be adequately provided by MEAG through self-supply.
8.4 Regulation and Frequency Response Service. (a) The Parties agree
that Regulation and Frequency Response Service ("Regulation Service"), which
matches load and resources within the Hour, shall be deemed adequately provided
for MEAG Territorial Load by MEAG's use of Pseudo Scheduling and Dispatch,
provided, however, that MEAG shall maintain adequate capacity pursuant to the
integrated hourly tests (Sections 8.5(d) and 8.6(d)) to meet its Regulation and
Frequency Response Requirement ("Regulation Requirement").
(b) Unless and until a different regulating standard is applied to the
Southern Control Area, MEAG's Regulation Requirement shall equal 2.09% of the
MEAG Territorial Load coincident with the most recent calendar year twelve (12)
monthly peak loads within the Southern Control Area, less any power supplied to
MEAG on behalf of the Participants and the City of Acworth (for so long as the
Participants and the City of Acworth remain requirements service customers of
MEAG) by SEPA under existing contractual arrangements, provided that such power
remains in Southern Dispatch.
(c) Should Georgia Power and MEAG implement a "Real Time" pseudo
scheduling arrangement, Georgia Power shall have the right to perform (or cause
to be performed) one or more regulation performance tests pursuant to guidelines
established by NERC or other appropriate regulatory body, and shall be entitled
to assess additional charges to MEAG under this Section if and to the extent
warranted by such performance test(s). Georgia Power shall file the charges
associated with MEAG's failure to meet such regulation performance tests with
the FERC and MEAG may contest the appropriateness of such charges. However, MEAG
shall not contest Georgia Power's right to seek recovery of such charges.
8.5 Operating Reserve - Spinning Reserve Service. (a) During the
effectiveness of this Agreement and prior to the implementation of any change
pursuant to Section 3.3, MEAG shall maintain or purchase from Georgia Power
spinning operating reserves for MEAG Territorial Load, based on MEAG's load
ratio share of Southern's spinning operating reserve requirements.
(b) MEAG's Spinning Reserve Requirement shall equal 2.09% of the MEAG
Territorial Load coincident with the 1996 twelve (12) monthly peak loads of the
Southern Control Area, less any power supplied to MEAG on behalf of the
Participants and the City of Acworth (for so long as the Participants and the
City of Acworth remain requirements service customers of MEAG) by SEPA under
existing contractual arrangements, provided that such power remains in Southern
Dispatch. The 2.09 % value utilized herein shall be updated and revised, if
necessary, to comport with changes in the Southern Control Area operating
reserve requirements or the resource base for the Southern Control Area.
(c) MEAG shall maintain its Regulation Requirement and Spinning Reserve
Requirement in unscheduled but on-line resources located within the Southern
Control Area ("Qualifying Resources - Spinning") which are capable of supplying
Regulation Service and Operating Reserve - Spinning Reserve Service ("Spinning
Reserve Service"). For purposes of this Section, Qualifying Resources - Spinning
shall include only Pseudo Steam Resources.
(d) An integrated hourly test shall be performed to ensure that the
available, on-line capability of the Qualifying Resources - Spinning less the
current schedule for such resources, plus any Back-up Capacity purchased by MEAG
within the Hour (collectively referred to in this Subsection as "Spinning
Capabilities"), are greater than or equal to MEAG's Regulation Requirement and
Spinning Reserve Requirement. If the integrated hourly test (Spinning
Capabilities minus MEAG's Regulation and Spinning Reserve Requirements) results
in a zero or positive value, then MEAG shall be deemed to have adequately
maintained such requirements for the Hour. However, if such integrated hourly
test results in a negative value, then MEAG shall be deemed not to have
adequately maintained such requirements for the Hour, and MEAG shall be required
to purchase its Regulation and Spinning Reserve Requirements from Georgia Power
in an amount equal to the difference between such requirements and MEAG's
Spinning Capabilities; provided, however, that if a Pseudo Steam Resource
contributing to MEAG's Regulation and Spinning Reserve Requirements in any Hour
experiences an unplanned outage, the amount of such contribution immediately
prior to the outage shall be included in MEAG's Spinning Capabilities for
purposes of the above test for the Hour in which the outage occurs and the next
Hour. (e) To the extent MEAG is required to purchase Regulation and Spinning
Reserve Requirements from Georgia Power pursuant to the provisions of Subsection
(d) hereto, such requirements shall be purchased from Georgia Power at an
initial rate of 300 dollars per megawatt hour ($/MWH). The rate of 300 dollars
per megawatt hour ($/MWH) shall remain in effect for the first Contract Year of
this Agreement. After such one-year period, Georgia Power shall adjust the rate,
on a Contract Year basis, according to the following formula:
The rate for Regulation and Frequency Response Service, as reflected in the Open Access Transmission Tariff of Southern Companies ($/kW-Yr) shall be added to the rate for Operating Reserve - Spinning Reserve Service, as reflected in the Open Access Transmission Tariff of Southern Companies ($/KW-Yr), and divided by 2 to arrive at an average. Such average shall then be divided by 2.09%, and the resulting quotient shall be divided by 300 hours. The 2.09% shall be revised as necessary consistent with changes in MEAG's Regulation and Spinning Reserve Requirements (see Subsections 8.4(b) and 8.5(b) above).
8.6 Operating Reserve - Supplemental Reserve Service. (a) During the effectiveness of this Agreement and prior to the implementation of any change pursuant to Section 3.3, MEAG shall maintain or purchase from Georgia Power supplemental operating reserves for MEAG Territorial Load, based on MEAG's load ratio share of Southern's supplemental operating reserve requirements.
(b) MEAG's Supplemental Reserve Requirement shall equal 2.09% of the
MEAG Territorial Load coincident with the 1996 twelve (12) monthly peak loads of
the Southern Control Area, less any power supplied to MEAG on behalf of the
Participants and the City of Acworth (for so long as the Participants and the
City of Acworth remain requirements service customers of MEAG) by SEPA under
existing contractual arrangements, provided that such power remains in Southern
Dispatch. The 2.09% value utilized herein shall be updated and revised, if
necessary, to comport with changes in the Southern Control Area operating
reserve requirements or the resource base for the Southern Control Area.
(c) MEAG shall maintain its Regulation, Spinning and Supplemental
Reserve Requirements from unscheduled resources in the Southern Control Area
("Qualifying Resources - Supplemental") and qualifying interruptible load
capable of supplying Operating Reserve - Supplemental Reserve Service
("Supplemental Reserve Service"). For purposes of this Section, Qualifying
Resources - Supplemental shall include only on-line Pseudo Steam Resources and
quick start resources that (i) are located within the Southern Control Area,
(ii) are capable of operating at full load within ten (10) minutes of initial
call, (iii) are telemetered to the Southern Control Area operator; and (iv) are
callable at the sole discretion of the Southern Control Area operator to provide
supplemental reserves. Qualifying interruptible loads must (i) be interruptible
within 10 minutes of initial call, (ii) be callable at the sole discretion of
MEAG, and (iii) meet NERC guidelines for the treatment of interruptible loads as
non-spinning operating reserves.
(d) An integrated hourly test shall be performed to ensure that the sum
of (i) the available, on-line capability of the Qualifying Resources -
Supplemental less the current schedule out of such resources, (ii) the
capability of qualifying off-line, but available, quick-start resources; (iii)
the current hourly load of a qualifying interruptible customer in excess of that
customer's firm contract demand; (iv) any Back-up Capacity purchased by MEAG
under Section 9.4; and (v) any Regulation and Spinning Reserve Requirements
purchased by MEAG within the Hour under Section 8.5(d) (collectively referred to
in this Subsection as "Supplemental Capabilities") is greater than or equal to
MEAG's Regulation Requirement, Spinning Reserve Requirement and Supplemental
Reserve Requirement. If the integrated hourly test (Supplemental Capabilities
minus MEAG's Regulation, Spinning Reserve and Supplemental Reserve Requirements)
results in a zero or positive value, then MEAG shall be deemed to have
adequately maintained its Supplemental Reserve Requirement for the Hour.
However, if such integrated hourly test results in a negative value, then MEAG
shall be deemed not to have adequately maintained its Supplemental Reserve
Requirement, and MEAG shall be required to purchase its Supplemental Reserve
Requirement from Georgia Power in an amount equal to the difference between
MEAG's Regulation, Spinning Reserve and Supplemental Reserve Requirements and
MEAG's Supplemental Capabilities, provided, however, that if a Pseudo Steam
Resource which is contributing to MEAG's Supplemental Reserve Requirement in any
Hour experiences an unplanned outage, the amount of such contribution
immediately prior to the outage shall be included in MEAG's Supplemental
Capabilities for purposes of the above test for the Hour in which the outage
occurs and the next Hour. This proviso explicitly excludes qualifying
interruptible loads.
(e) To the extent MEAG is required to purchase its Supplemental Reserve
Requirement from Georgia Power pursuant to the provisions of Subsection (d)
hereto, such requirement shall be purchased from Georgia Power at an initial
rate of 150 dollars per megawatt hour ($/MWH). The rate of 150 dollars per
megawatt hour ($/MWH) shall remain in effect for the first Contract Year of this
Agreement. After such one-year period, Georgia Power shall adjust the rate, on a
Contract Year basis, according to the following formula:
The rate for Operating Reserve - Supplemental Reserve Service, as
reflected in the Open Access Transmission Tariff of Southern Companies
($/kW-Yr) shall be divided by 2.09%, and the resulting quotient shall
be divided by 300 hours. The 2.09% shall be revised as necessary
consistent with changes in MEAG's Supplemental Reserve Requirement (see
Section 8.6(b) above). 8.7 Purchase of Regulation, Spinning Reserve and
Supplemental Reserve Services. (a) MEAG may
elect, on a Contract Year basis, to purchase from Georgia Power all or a portion
of its Regulation Service, Spinning Reserve Service and Supplemental Reserve
Service at the rates then in effect for such services under the Open Access
Transmission Tariff of Southern Companies. If MEAG purchases all of its
Regulation Service, Spinning Reserve Service and Supplemental Reserve Service
from Georgia Power, the tests set forth in Sections 8.5(d) and 8.6(d) shall not
apply. MEAG's election under this Section shall be provided by written notice to
Georgia Power at least 45 days prior to the start of the Contract Year.
(b) If MEAG elects to purchase only a portion of its Regulation
Service, Spinning Reserve Service and Supplemental Reserve Service from Georgia
Power at the rates then in effect under the Open Access Transmission Tariff of
Southern Companies, such purchases shall be assigned first to Regulation
Service, then to Spinning Reserve Service, and finally to Supplemental Reserve
Service. MEAG's Regulation Requirement, Spinning Reserve Requirement and
Supplemental Reserve Requirement shall be reduced by that portion of the
respective service purchased from Georgia Power, and the tests set forth in
Sections 8.5(d) and 8.6(d) shall apply to such adjusted Requirements.
8.8 Energy Pricing Within the Inadvertent Energy Bandwidth. If MEAG
purchases all of its Regulation Service and its Spinning and Supplemental
Reserve Services from Georgia Power under Section 8.7(a), then the energy price
for surplus and deficit energy, within the Inadvertent Energy Bandwidth (see
Article IX), shall be Territorial Marginal Cost.
8.9 Special Modification to Qualifying Reserves - Supplemental.
Notwithstanding the provisions of Section 8.6(c), the Parties agree that at such
time that Southern recognizes credits for supplemental reserve requirements for
resources located outside the Southern Control Area in connection with
transmission service provided under the Open Access Transmission Tariff of
Southern Companies, then item (i) of the second sentence of Section 8.6(c) shall
no longer apply to such requirements. If the resource located outside the
Southern Control Area is a system transaction and is not related to a specific
generation facility, then item (iii) of the second sentence of Section 8.6(c)
shall be replaced for that transaction with direct communication with the
supplying control area.
ARTICLE IX
ENERGY IMBALANCE SERVICE
9.1 Energy Imbalance. (a) For each Hour of the Term (or for such longer
period as may be required under Section 3.2(c), 3.3(d), 14.2(b) or 14.3(b)),
Georgia Power shall calculate the Energy Imbalance as the difference between:
(i) the sum of all MEAG resources in the Hour, on an integrated Hour basis, as
measured at or adjusted to Level B-1, including Pseudo Resources, Nuclear
Resources, MEAG controlled resources, and any purchase of capacity and/or energy
by MEAG, less (ii) MEAG Total Load Requirements.
(b) If the Energy Imbalance is positive, then MEAG has surplus energy
in such Hour and is deemed to have sold energy to Georgia Power in an amount
equal to this difference under the terms of Section 9.6 of this Agreement, and
MEAG may incur Commitment Costs associated with such sale in accordance with
Section 9.5 of this Agreement.
(c) If the Energy Imbalance is negative, then MEAG has deficit energy
in such Hour and is deemed to have purchased energy from Georgia Power in an
amount equal to the absolute value of this difference under the terms of
Sections 9.4, 9.5, and 9.7 of this Agreement.
(d) Charges for Energy Imbalance Service shall consist of the sum of
(i) Back-Up Capacity Charges, (ii) Commitment Costs, (iii) payments for deficit
energy and (iv) credits for surplus energy.
9.2 Allowable Imbalance Bandwidth. For each Hour of the Term, Georgia
Power shall calculate an Allowable Imbalance Bandwidth for hourly surplus energy
and for hourly deficit energy as follows. (a) The Allowable Imbalance Bandwidth
for surplus energy (AIBS) for an Hour is equal to (i) the sum of all Pseudo
Steam and Pseudo SEPA Resources Utilization Schedules, less (ii) the sum of the
then-current hourly Minimum Utilization Levels of all committed Pseudo Steam
Resources and the Pseudo SEPA Resources Minimum Utilization Level.
(b) The Allowable Imbalance Bandwidth for deficit energy (AIBD) for an
Hour is equal to the sum of (i) all Pseudo Steam, Pseudo CT, and Pseudo SEPA
Resources Utilization Schedules, less (ii) the sum of the then-current hourly
Maximum Utilization Levels of all committed Pseudo Steam Resources, the Maximum
Utilization Level of the Pseudo CT Resource and the Maximum Utilization Level of
the Pseudo SEPA Resources.
9.3 Inadvertent Energy Bandwidth. (a) For each Day of the Term, Georgia
Power shall calculate the average Energy Imbalance by computing the quotient of:
(i) the sum of the absolute values of the Energy Imbalance for each Hour in the
Day, divided by (ii) the total number of Hours in the Day.
(b) If such average Energy Imbalance for a Day is less than or equal to
25 megawatts, then (i) the Inadvertent Energy Bandwidth for surplus energy
(IEBS) for each Hour in the Day shall be the lesser of 50 Megawatts or the AIBS
for such Hour and (ii) the Inadvertent Energy Bandwidth for deficit energy
(IEBD) for each Hour in the Day shall be the greater of -50 megawatts or the
AIBD for such Hour.
(c) If the average Energy Imbalance for a Day is greater than 25
megawatts, then (i) the Inadvertent Energy Bandwidth for surplus energy (IEBS)
for each hour in the Day shall be the lesser of 25 megawatts or the AIBS for
such Hour and (ii) the Inadvertent Energy Bandwidth for deficit energy (IEBD)
for each Hour in the Day shall be the greater of -25 megawatts or the AIBD for
such Hour.
9.4 Back-up Capacity Charge. If MEAG has hourly deficit energy and the
absolute value of such deficit is greater than the absolute value of the AIBD
for that Hour, then MEAG shall pay Georgia Power a Back-up Capacity Charge equal
to the product of: (i) the absolute value of the hourly deficit energy minus the
absolute value of the AIBD for that Hour, and (ii) 400 dollars per megawatt hour
($/MWH).
9.5 Commitment Cost. (a) If MEAG has surplus energy during any Hour of
the Day that is greater than the AIBs for that Hour, then MEAG shall pay Georgia
Power a Commitment Cost equal to the product of: (i) the maximum amount of
hourly surplus energy in that Day and (ii) the Commitment Cost Rate for that
Day. The Commitment Cost Rate, in dollars per megawatt day, shall be calculated
pursuant to Georgia Power's current practice, as set forth in Rate Schedule A
(Paragraph c) of the Scheduling Services Agreement; provided, however, that any
changes to such practice as applied to this Agreement shall be agreed to in
advance by the Parties.
(b) If MEAG has deficit energy in any Hour of a Day that is less than
the AIBD for that Hour, then MEAG shall pay a Commitment Cost to Georgia Power
for that Day equal to the product of (i) the maximum of the absolute value of
the hourly deficit energy in that Day and (ii) the Commitment Cost Rate for that
Day.
9.6 Credit for Hourly Surplus Energy. In each Hour when MEAG has surplus energy, Georgia Power shall credit MEAG for this surplus energy an amount equal to the sum of:
(a) the product of
(i) the amount of the hourly surplus energy, up to but not
greater than the IEBS for that Hour, times (ii) the
Territorial Marginal Cost for that Hour, and
(b) the product of
(i) the amount of the hourly surplus energy, if any, which is
greater than the IEBS for that Hour, and up to but not greater
than the AIBS for that Hour, times (ii) the lesser of System
Marginal Cost for that Hour minus five dollars per megawatt
hour ($/MWH) and Territorial Marginal Cost for that Hour, and
(c) the product of
(i) the amount of the hourly surplus energy, if any, which is
greater than the AIBS for that Hour, times (ii) the lesser of
System Marginal Cost for that Hour minus ten dollars per
megawatt hour ($/MWH) and Territorial Marginal Cost for that
Hour.
9.7 Payment for Hourly Deficit Energy. In each Hour when MEAG has deficit energy, MEAG shall pay Georgia Power for this deficit energy an amount equal to the sum of:
(a) the product of
(i) the amount of the absolute value of the hourly deficit
energy, up to but not greater than the absolute value of the
IEBD for that Hour, times (ii) the System Marginal Cost for
that Hour (unless modified by Section 8.8), and
(b) the product of
(i) the amount of the absolute value of the hourly deficit
energy, if any, which is greater than the absolute value of
the IEBD for that Hour, times (ii) the System Marginal Cost
for that Hour plus ten dollars per megawatt hour ($/MWH).
ARTICLE X
OFF-SYSTEM TRANSACTIONS
10.1 Scheduling and Coordination. MEAG Off-System Transactions shall be
coordinated and scheduled with Georgia Power or its agent in a manner consistent
with the relevant scheduling provisions of Sections 13.8 and 14.6, as
applicable, of the Open Access Transmission Tariff of Southern Companies and
applicable to Southern's off-system transactions. For purposes of this Article
X, "Southern's off-system transactions" means energy transactions between
Southern and another person or entity, pursuant to which Southern either: (i)
delivers energy or causes or allows energy to be delivered to a destination
which is not served by the Southern Control Area or is located outside of the
Southern Control Area; (ii) takes energy or causes or allows energy to be taken
into the Southern Control Area from a generation facility or other resource
which is located outside the Southern Control Area; or (iii) provides or causes
or allows to be provided transmission service into, out of or across the
Southern Control Area. MEAG shall notify the Southern Control Area operator of
its desire to interrupt a MEAG Off-System Transaction, and the Southern Control
Area operator shall interrupt such transaction as soon as practicable, provided
that the receiving control area has consented to such interruption.
10.2 Information Obligations. MEAG shall provide to Georgia Power or
its agent information concerning all arrangements for MEAG Off-System
Transactions for or on behalf of MEAG in such detail and upon such frequency as
Georgia Power or its agent reasonably requests in order to support system
security or load regulation activities, and/or to allow Georgia Power or its
agent to complete on a timely basis Georgia Power's billing functions under this
Agreement.
10.3 Transmission Responsibility. MEAG shall be responsible for making all transmission arrangements for MEAG Off-System Transactions and shall bear all costs associated with such transmission.
10.4 MEAG Off-System Control Area Services. (a) MEAG Off-System Control
Area Services shall be provided at rates consistent with the Open Access
Transmission Tariff of Southern Companies, as described below in Section
10.4(b), (c) and (d); provided, however, that MEAG shall not incur charges for
MEAG Off-System Control Area Services in connection with sales to Alabama
Municipal Electric Authority ("AMEA") to the extent that AMEA is receiving and
paying for such Control Area Services under the Open Access Transmission Tariff
of Southern Companies.
(b) Except as otherwise provided in this Section 10.4, MEAG shall
incur, for all MEAG Non-Territorial Load and all wheeling transactions through
the ITS, MEAG Off-System Control Area Services charges for Scheduling, System
Control and Dispatch Service, and Reactive Supply and Voltage Control From
Generation Sources Service. For MEAG Non-Territorial Load inside the Southern
Control Area, MEAG shall also incur MEAG Off-System Control Area Services
charges for Regulation and Frequency Response Service, and Operating Reserve
Spinning and Supplemental Reserve Service.
(c) Notwithstanding the provisions of Section 10.4(b), to the extent a
MEAG Non-Territorial Load purchaser inside the Southern Control Area is
receiving and paying for Control Area Services for Regulation and Frequency
Response Service, and Operating Reserve - Spinning and Supplemental Reserve
Service under the Open Access Transmission Tariff of Southern Companies, Georgia
Power's invoice to MEAG shall show the charge for such Control Area Services as
determined in Section 10.4(b), and shall also reflect a credit for the amounts
paid by such purchaser to Southern. In addition, to the extent MEAG
Non-Territorial Load consists of a sale to an entity and such entity is
self-supplying such Control Area Services with respect to such sale pursuant to
a methodology substantially similar to that set forth in Section 8.4, 8.5 and
8.6 hereto, as reflected in a written agreement between such entity and Georgia
Power, Georgia Power's invoice to MEAG shall show the charge for such Control
Area Services as determined in Section 10.4(b), and shall also reflect a credit
for the value of such Control Area Services self-supplied by such entity, as
determined by the rates then in effect under the Open-Access Transmission Tariff
of Southern Companies.
(d) If MEAG has selected option (i) in Section 8.3(a), then to the
extent that MEAG's net generation from qualified resources (as defined in
Section 8.3(b)) exceeds MEAG Territorial Load in any Hour, MEAG shall receive a
credit for Reactive Supply and Voltage Control From Generation Sources Service
equal the lesser of (i) the difference between MEAG's net generation from
qualified resources and MEAG Territorial Load during such Hour, or (ii) MEAG
Non-Territorial Load during such Hour.
ARTICLE XI
MUTUAL BUY/SELL TRANSACTIONS
11.1 Implementation. Neither Party shall sell power to, nor purchase
power from, the other Party under this Agreement (with the exception of the
limited sales/purchases attributable to Pseudo Energy Sales and Purchases or
incidental to the operation of the Energy Imbalance Service provisions). To the
extent the Parties wish to engage in buy/sell transactions or otherwise sell or
purchase capacity or energy from each other, such transactions shall be
implemented and governed by separate market-based service agreements to be
executed between MEAG and Georgia Power or its agent.
ARTICLE XII
BILLING AND COLLECTION
12.1 Invoice. (a) As promptly as practicable after the commencement of
each Month during the Term, Georgia Power shall send to MEAG an invoice stating
the payments due from MEAG for MEAG Territorial Control Area Services, MEAG
Off-System Control Area Services, Energy Imbalance Service (including Back-Up
Capacity Charges, Commitment Costs, and credits and payments associated with
hourly surpluses and deficits, respectively), the Pseudo Resource Energy Charges
and Credits, and the Monthly Administration Payment, as described in Article
XIII. Such invoice shall reflect preliminary (estimated) costs for services
provided by Georgia Power during the previous Month, and actual costs for
services provided by Georgia Power during any Month prior to the previous Month,
to the extent Georgia Power has actual cost data available to it to allow for
the reconciliation or "true-up" of costs incurred during such prior Month(s).
(b) In the event the sum of the charges reflected in a monthly invoice
to MEAG show that a payment is due from Georgia Power to MEAG (for example, if
MEAG were required to "sell" energy to Georgia Power during the relevant Month,
and the cost of such energy exceeded the charges assessed to MEAG), MEAG shall
send an invoice to Georgia Power in that amount.
12.2 Payment. (a) Payment shall be due from MEAG on or before the tenth
(10th) Day after MEAG's receipt of an invoice from Georgia Power. If such tenth
Day after MEAG's receipt is not a banking Day, then payment shall be due on the
next succeeding banking Day. MEAG shall make payment to Georgia Power in
accordance with such invoice on or before the date due in immediately available
funds through wire transfer of funds or other means acceptable to Georgia Power.
If MEAG does not render payment on or before such tenth Day as described herein,
then Interest shall be added to the overdue payment from the date such overdue
payment was due until full payment, together with Interest, is received by
Georgia Power, which Interest shall accrue in simple interest terms per annum.
(b) To the extent Georgia Power owes payment to MEAG as described in
Section 12.1, such payment shall be due on of before the tenth Day after receipt
of the required invoice from MEAG. If Georgia Power fails to render payment on
or before such tenth Day, Interest shall accrue in simple interest terms per
annum and be added to the overdue payment.
12.3 Failure To Pay. (a) To the extent MEAG fails to pay when due the
full amount stated on its monthly invoice from Georgia Power, Georgia Power, in
addition to assessing Interest pursuant to Section 12.2 and/or pursuing any
other remedies available to it under this Agreement, may withhold any and all
service to MEAG under this Agreement and suspend MEAG's Pseudo Scheduling and
Dispatch rights as provided in Articles V and VII during the entire period such
payment remains overdue; provided, however, that Georgia Power shall not
withhold any services or otherwise suspend MEAG's rights hereunder prior to
affording MEAG at least twenty (20) Days written notice of MEAG's delinquency
and Georgia Power's intention to withhold service.
(b) To the extent Georgia Power fails to pay when due any amounts owing
to MEAG as described in Section 12.2, MEAG may take any action at law or in
equity to enforce this Agreement and to recover any and all unrecovered costs
and expenses incurred by MEAG as a result of Georgia Power's failure to render
payment on a timely basis.
12.4 Billing Disputes. (a) MEAG shall have 180 Days after receipt of an
invoice from Georgia Power within which to contest the correctness or validity
of any charge or credit reflected in such invoice, provided that MEAG furnishes
to Georgia Power in writing a detailed explanation of its dispute, including the
nature of such dispute and any and all bases therefor. Such written explanation
must be provided prior to 180 Days after receipt of the invoice giving rise to
such dispute. Georgia Power and MEAG agree that if no written explanation is
provided to Georgia Power within this 180-Day time period, the correctness of
all charges or credits included in the invoice shall be conclusively presumed,
and MEAG shall be estopped from raising any challenge to such charges or credits
in any forum.
(b) MEAG's ability to contest charges or credits assessed to it under
the terms of this Article XII shall in no way affect MEAG's obligation to pay in
full the amount billed to it within ten (10) Days after receipt of the invoice
giving rise to such contest, in accordance with Section 12.2; provided, however,
that such payment may be made under protest and thereafter MEAG shall be
reimbursed for any amount in error after the settlement of such dispute.
(c) After MEAG renders to Georgia Power a timely written explanation of
its dispute regarding the charges or credits under any invoice, Georgia Power
shall promptly review the questioned charges or credits and shall notify MEAG,
within sixty (60) Days following receipt of such written explanation, of the
amount of any error and the amount of any payment or reimbursement owed by or to
MEAG in respect of such error. Not later than ten (10) Days after receipt of
such notice, MEAG shall tender any payment due to Georgia Power in immediately
available funds. Similarly, not later than ten (10) Days after receiving an
invoice from MEAG stating the amount of any reimbursement owed to MEAG, Georgia
Power shall tender any reimbursement due in immediately available funds.
Payments and reimbursements made under this Section shall include Interest from
the date the original payment was due until the date such payment or
reimbursement, together with Interest, is made, which Interest shall accrue in
simple interest terms per annum. To the extent MEAG continues to challenge the
correctness of such payment, it must seek redress within sixty (60) Days after
receipt of the payment notice. Georgia Power and MEAG agree that after the
expiration of this 60-Day period, the correctness of such payment shall be
conclusively presumed.
(d) Notwithstanding the foregoing or any other provisions of this
Agreement, if either Party is in default in respect of any payments required to
be made under this Agreement, the other Party may withhold any payment or
reimbursement otherwise due under this Article to the extent of such default.
12.5 Availability of Records. With respect to each Month's invoice,
Georgia Power shall make available to MEAG, at all times prior to the end of the
period(s) as set forth in Section 12.4, such books and records as are necessary
for MEAG to calculate the charges assessed under this Agreement.
ARTICLE XIII
DEVELOPMENT,
IMPLEMENTATION AND ADMINISTRATION FEES
13.1 Payment. MEAG hereby agrees to reimburse Georgia Power for all
costs reasonably incurred by Georgia Power in connection with the development,
implementation and on-going administration of this Agreement, including without
limitation manpower, manpower overheads, equipment, computer software, and
computer time. MEAG shall make such reimbursements to Georgia Power by paying to
Georgia Power a "Monthly Administration Payment," such payment to be made in
accordance with and subject to the terms of Article XII (Billing and
Collection).
ARTICLE XIV
TERM OF AGREEMENT
14.1 Initial Term. This Agreement shall have a one (1) year Term from
its Effective Date. The Effective Date shall be the first Day of the Month
immediately after the date on which the FERC permits this Agreement to become
effective.
14.2 Extension of the Term. (a) Georgia Power and MEAG agree that the
Term of this Agreement shall extend automatically for one (1) or more successive
additional Terms of one (1) year following the end of the initial and each
additional Term, unless and until terminated by either Party upon six (6) Months
prior written notice; provided, however, that neither Party shall have the right
to give such notice until at least six Months after the Effective Date.
(b) Should either Party provide notice of termination of this Agreement
pursuant to this Section 14.2, the Parties agree to use their reasonable best
efforts to negotiate a mutually acceptable successor arrangement to the PSSA;
provided, however, that if the Parties have failed to reach an agreement on a
successor arrangement prior to the end of four (4) Months after such
notification of termination, Georgia Power may unilaterally file at the FERC an
agreement which it believes is an appropriate successor arrangement to the PSSA.
MEAG shall have the right to contest such filing in accordance with FERC
regulations. If the FERC has not issued a final order on Georgia Power's filing
before the end of six (6) Months after the notification of termination, MEAG
shall, until such final order is issued, (i) continue to purchase Control Area
Services from Georgia Power or its agent at the standard rates then in effect
under the Open Access Transmission Tariff of Southern Companies; and (ii)
continue to purchase Energy Imbalance Service under terms and conditions in
accordance with Article IX of this Agreement. In addition, MEAG shall continue
to Pseudo Schedule and Dispatch its Pseudo Resources pursuant to terms and
conditions in accordance with Articles V, VI and VII of this Agreement until
such final order is issued, or until Georgia Power is capable of providing for
separate scheduling and dispatch for Plant Scherer Unit Nos. 1 and 2 and Plant
Wansley Unit Nos. 1 and 2 in accordance with those certain amendments to the
Plant Scherer and Plant Wansley Joint Ownership Agreements dated December 31,
1990 and January 15, 1995, respectively, whichever is earlier. For purposes of
this Article XIV, a "final order" shall mean a FERC order which is no longer
subject to rehearing under the FERC's rules of practice and procedure.
14.3 Conditions Precedent to Effectiveness. (a) Consistent with the
Effective Date as defined in this Agreement, the obligations of Georgia Power
and MEAG under this Agreement are expressly conditioned upon receipt of a final
order of the FERC (i) approving this Agreement without modification or
condition, or, alternatively, with modifications or conditions deemed acceptable
to both Georgia Power and MEAG, each to make such determination in its sole
discretion; and (ii) terminating the PR Tariff as it pertains to MEAG and the
Parties' Scheduling Services Agreement. Georgia Power and MEAG shall cooperate
with each other, as the other may reasonably request, in connection with the
procurement of such approval from the FERC.
(b) Should the FERC modify this Agreement after it becomes effective,
either Party shall have the right to terminate the Agreement upon sixty (60)
Days' written notice to the other Party. Should either Party provide notice of
termination pursuant to this Section 14.3, the Parties agree to use their
reasonable best efforts to negotiate a mutually acceptable successor arrangement
to the PSSA; provided, however, that if the Parties have failed to reach an
agreement on a successor arrangement prior to end of sixty (60) Days after such
notification of termination, Georgia Power may unilaterally file at the FERC an
agreement which it believes is an appropriate successor arrangement to the PSSA.
MEAG shall have the right to contest such filing in accordance with FERC
regulations. MEAG shall, until the FERC has issued a final order on Georgia
Power's filing, (i) continue to purchase Control Area Services from Georgia
Power or its agent at the standard rates then in effect under the Open Access
Transmission Tariff of Southern Companies; and (ii) continue to purchase Energy
Imbalance Service under terms and conditions in accordance with Article IX of
this Agreement. In addition, MEAG shall continue to Pseudo Schedule and Dispatch
its Pseudo Resources pursuant to terms and conditions in accordance with
Articles V, VI and VII of this Agreement until such final order is issued, or
until Georgia Power is capable of providing for separate scheduling and dispatch
for Plant Scherer Unit Nos. 1 and 2 and Plant Wansley Unit Nos. 1 and 2 in
accordance with those certain amendments to the Plant Scherer and Plant Wansley
Joint Ownership Agreements dated December 31, 1990 and January 15, 1995,
respectively, whichever is earlier.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Remedies. Should either Party fail to perform its obligations
under this Agreement or otherwise fail to adhere to the terms of this Agreement,
such failure shall be deemed a material breach of contract, and the
non-breaching Party may take any action, at law or in equity, to enforce or
terminate this Agreement and recover from the breaching Party any and all
damages and expenses and other losses, costs and liabilities (including but not
limited to reasonable attorneys' fees) incurred as a result of such breach.
15.2 Indemnification. MEAG hereby indemnifies and holds Georgia Power
and its agent harmless from and against any and all losses, costs, liabilities,
damages and expenses (including without limitation attorney's fees and expenses)
of any kind incurred or suffered by Georgia Power or its agent pursuant to, as a
direct result of or in connection with Georgia Power's performance under this
Agreement or MEAG's performance or nonperformance under this Agreement; provided
however, that MEAG shall have no obligation to indemnify Georgia Power for
losses, costs, liabilities, damages and expenses incurred by Georgia Power or
its agent as a direct result of any action taken by Georgia Power which violates
this Agreement or which otherwise constitutes willful misconduct.
15.3 No Affiliate Liability. Notwithstanding any other provision of
this Agreement, no affiliate of Georgia Power (including, but not limited to,
any affiliate of Georgia Power acting as Georgia Power's agent under this
Agreement) shall have any liability whatsoever in connection with the Parties'
performance of this Agreement.
15.4 Disclaimer of Warranty. Georgia Power, on behalf of itself, each
of its affiliates, and each of their respective employees, officers, directors,
agents, successors and assigns, hereby disclaims any and all express, implied
and statutory warranties concerning any or all of the services to be sold or
provided by Georgia Power pursuant to this Agreement, or concerning any
information furnished by or for any one or more of them, including without
limitation any and all warranties as to merchantability, fitness for a
particular purpose, availability, accuracy, quality, quantity or otherwise.
15.5 Service Constancy. Notwithstanding any other provision of this
Agreement, Georgia Power does not guarantee or warrant that Georgia Power shall
provide uninterrupted service under this Agreement. Georgia Power shall not be
in breach of this Agreement by reason of, and shall have no liability whatsoever
to MEAG for, any failure to make service available under this Agreement, for any
interruption in service under this Agreement, or for any deficiency in the
quality of service provided under this Agreement; provided however, that the
foregoing exculpatory clause shall not apply to any failure that is the direct
result of (i) any action of Georgia Power which is not consistent with Prudent
Utility Practice or (ii) Georgia Power's willful misconduct.
15.6 Assignment. Neither MEAG nor Georgia Power may sell, assign or
otherwise transfer any or all of this Agreement or its respective rights, or
delegate any or all of its respective obligations, under this Agreement, at any
time, without the prior written consent of the other in each instance; provided,
however, that neither Georgia Power nor MEAG may unreasonably withhold its
consent to any collateral assignment by the other of this Agreement as security
for bonds or other obligations issued or to be issued; and provided, further,
that Georgia Power may at any time assign its rights and delegate its duties
under this Agreement to an affiliate of Georgia Power with the consent of MEAG,
which consent shall not be unreasonably withheld.
15.7 Agency. Notwithstanding the restrictions imposed under Section
15.6, Georgia Power and MEAG may appoint agents to act on their behalf under
this Agreement. Any action undertaken by an agent pursuant to this Agreement
shall be imputed to the appointing Party as principal, who shall assume full
responsibility for the agent's acts.
15.8 No Partnership. MEAG and Georgia Power do not intend for this
Agreement, and this Agreement shall not, create any joint venture, partnership,
association taxable as a corporation, or other entity for the conduct of any
business for profit.
15.9 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon any respective successors and assigns of MEAG and Georgia Power.
15.10 Superseding Effect. This Agreement satisfies in full the provisions of paragraph 2 of the Partial Requirements Service Settlement Agreement between the Parties dated January 10, 1997, and supersedes in its entirety Attachment A of such Settlement Agreement.
15.11 Notice. Unless otherwise provided herein, any notice, request, consent or other communication required by this Agreement shall be in writing and shall be deemed given on the Day hand-delivered to the officer identified below, or the third Day after the same is deposited in the United States Mail, first class postage prepaid:
Georgia Power Company
c/o Southern Company Services, Inc.
333 Piedmont Ave., N.E.
Atlanta, Georgia 30308
Attention: Senior Vice President, Southern Wholesale Energy
Municipal Electric Authority of Georgia
1470 Riveredge Parkway, N.W.
Atlanta, Georgia 30328
Attention: President and General Manager
15.12 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
15.13 Governing Law. The validity, interpretation and performance of this Agreement and each of its provisions shall be governed by the laws of the State of Georgia.
IN WITNESS WHEREOF, the undersigned party hereto has duly executed this Agreement in Atlanta, Georgia on the date first above written.
Signed, sealed and delivered GEORGIA POWER COMPANY in the presence of:
__________________________________ By:______________________________________
Fred Williams
Senior Vice President
Georgia Power Company
Attest:___________________________________
|
IN WITNESS WHEREOF, the undersigned party hereto has duly executed this Agreement in Atlanta, Georgia on the date first above written.
Signed, sealed and delivered MUNICIPAL ELECTRIC AUTHORITY
in the presence of: OF GEORGIA
__________________________________ By:______________________________________
James Allison
President and General Manager
Municipal Electric Authority of Georgia
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Attest:___________________________________
Exhibit 10(a)48
TABLE OF CONTENTS
RECITALS 1
ARTICLE I...............................................................2
RELATIONSHIP OF THE PARTIES.............................................2
ARTICLE II..............................................................3
DEFINITIONS.............................................................3
(1) Actual Hourly Facility Generation..........................3
(2) Actual Hourly OPC Resources Utilization....................4
(3) Actual Hourly Resource Utilization.........................4
(4) Affiliate..................................................4
(5) Available Capability.......................................5
(6) Available Capability Schedule..............................5
(7) Block Power Sale Agreement or BPSA.........................5
(8) Block Resource.............................................5
(9) Control Area Services......................................5
(10) Day 6
(11) Delivery Point............................................6
(12) Dynamic Scheduling or Dynamically Scheduled...............6
(13) Effective Date............................................7
(14) Electric Membership Corporations or EMCs..................7
(15) Energy Imbalance Service..................................7
(16) Federal Power Act.........................................7
(17) FERC......................................................8
(18) Hour......................................................8
(19) IIC 8
(20) Interest Rate.............................................8
(21) ITS 8
(22) Joint Committee...........................................8
(23) Joint-Owned Facility......................................9
(24) Joint Ownership Agreements................................9
(25) Level A..................................................11
(26) Level A to B-1 Loss Factors..............................11
(27) Level A to B-2 Loss Factors..............................11
(28) Level B-1................................................11
(29) Level B-1 to B-2 Loss Factors............................11
(30) Level B-2................................................11
(31) Level D..................................................12
(32) Level D to B-1 Loss Factors..............................12
(33) Marginal Replacement Fuel Cost...........................12
(34) Maximum Utilization Level................................12
(35) Month....................................................12
(36) Monthly CSA Administration Fee...........................13
(37) Monthly CSA Implementation Fee...........................13
(38) NERC.....................................................13
(39) Non-Territorial Control Area Services....................13
(40) Nuclear Resource.........................................14
(41) OPC-Controllable-ITS Resource............................14
(42) OPC Non-Territorial Load.................................15
(43) OPC Off-System Resource..................................15
(44) OPC Off-System Transaction...............................15
(45) OPC Operational Deficiency...............................16
(46) OPC Resource.............................................16
(47) OPC Territorial Load.....................................17
(48) OPC Total Load Requirements..............................17
(49) Open Access Transmission Tariff of Southern Companies....17
(50) Party....................................................18
(51) Peaking Block Resource...................................18
(52) Prudent Utility Practice.................................18
(53) Pseudo CT Resource.......................................19
(54) Pseudo CT Resource Heat Rate.............................19
(55) Pseudo Energy............................................19
(56) Pseudo Energy Purchase...................................19
(57) Pseudo Energy Sale.......................................20
(58) Pseudo Schedule[ing] and Dispatch........................20
(59) Quarter Hour.............................................20
(60) Real-Time................................................20
(61) Revised ITSA.............................................20
(62) SEPA.....................................................20
(63) SEPA Resource............................................20
(64) SERC.....................................................21
(65) Southern Companies.......................................21
(66) Southern Control Area....................................21
(67) Southern Dispatch........................................21
(68) Southern Sub-Region......................................21
(69) Steam Block Resource.....................................22
(70) System Marginal Cost.....................................22
(71) Term.....................................................22
(72) Territorial Control Area Services........................22
(73) Territorial Marginal Cost................................22
(74) Umbrella Agreement.......................................23
(75) Utilization..............................................23
(76) Week.....................................................23
(77) Year.....................................................23
ARTICLE III............................................................24
OPERATING OBLIGATIONS OF THE PARTIES...................................24
3.1 Basic Operation and Maintenance Obligations...............24
3.2 Obligations Under Future Standards........................24
3.3 System Security and Integrity.............................29
3.4 Supply Deficiencies.......................................29
3.5 Power Flows...............................................31
3.6 Survival..................................................31
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ARTICLE IV.............................................................31
OPC-CONTROLLABLE-ITS RESOURCES.........................................31
4.1 Energy Utilization........................................31
4.2 Transmission Responsibility...............................32
ARTICLE V..............................................................32
BLOCK RESOURCES........................................................32
5.1 Dispatch..................................................32
5.2 Changes in Schedules......................................32
5.3 Energy Utilization........................................33
5.4 Emergency Decommitment....................................33
5.5 Operability of Article....................................33
ARTICLE VI.............................................................33
SEPA RESOURCES.........................................................33
6.1 Dispatch..................................................33
6.2 Energy Utilization........................................34
6.3 Operability of Article....................................34
ARTICLE VII............................................................34
NUCLEAR RESOURCES......................................................34
7.1 Delivery of and Payment for Energy........................34
7.2 Energy Utilization........................................34
7.3 Informational Available Capability and Energy
Schedules............................................35
ARTICLE VIII...........................................................36
OPC OFF-SYSTEM TRANSACTIONS............................................36
8.1 Coordinate with Georgia Power.............................36
8.2 Minimum Scheduling Notice.................................36
8.3 Energy Utilization........................................37
8.4 Load Responsibility.......................................37
8.5 Oglethorpe Power's Information Obligations................37
8.6 Transmission Responsibility...............................38
8.7 Indemnification...........................................38
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ARTICLE IX.............................................................38
MUTUAL BUY/SELL TRANSACTIONS...........................................38
ARTICLE X..............................................................39
PSEUDO CT RESOURCE.....................................................39
10.1 Available Capability Schedule............................39
10.2 Changes to Available Capability Schedule.................39
10.3 Hourly Utilization Schedule..............................40
10.4 Changes to Utilization Schedule..........................41
10.5 Pseudo CT Resource Test Energy...........................42
10.6 Pricing of Pseudo Energy Sales and Purchases.............42
ARTICLE XI.............................................................44
TERRITORIAL CONTROL AREA SERVICES......................................44
11.1 Availability.............................................44
11.2 Scheduling, System Control and Dispatch Service..........45
11.3 Reactive Supply and Voltage Control From Generation
Sources Service......................................45
11.4 Regulation and Frequency Response Service................47
11.5 Operating Reserve - Spinning Reserve Service.............50
11.6 Operating Reserve - Supplemental Reserve Service.........54
11.7 Short-Term Purchase Of Territorial Control Area
Services.............................................59
ARTICLE XII............................................................60
ENERGY IMBALANCE SERVICE...............................................60
12.1 Energy Imbalance.........................................60
12.2 Inadvertent Energy Bandwidth.............................61
12.3 Back-Up Capacity Charge..................................61
12.4 Commitment Cost..........................................62
12.5 Credit for Hourly Surplus Energy.........................62
12.6 Payment for Hourly Deficit Energy........................63
ARTICLE XIII...........................................................64
OPERATIONAL DEFICIENCY.................................................64
13.1 Operational Responsibility...............................64
13.2 Oglethorpe Power's Real-Time Information Obligations.....64
13.3 Determination of OPC Operational Deficiency..............65
13.4 Corrective Action to Eliminate an OPC Operational
Deficiency...........................................66
13.5 No Liability; Indemnity..................................67
ARTICLE XIV............................................................68
NON-TERRITORIAL CONTROL AREA SERVICES..................................68
14.1 Load Within Southern Control Area........................68
14.2 Other Loads..............................................69
ARTICLE XV.............................................................70
CONFIDENTIALITY OF DATA................................................70
15.1 Information Obligations; Confidentiality of Data.........70
15.2 Information Related To Supply Deficiencies...............71
15.3 Information Related To Block and CT Resources............72
15.4 Information Related To Off-System Transactions...........72
15.5 Information Related To Territorial Control Area
Services/Energy Imbalance Service....................73
15.6 Information Related To Real-Time and Revenue Meter
Data.................................................74
15.7 Information Related To Non-Territorial Control Area
Services.............................................76
ARTICLE XVI............................................................77
IMPLEMENTATION AND ADMINISTRATION FEES.................................77
16.1 CSA Implementation Fee...................................77
16.2 CSA Administration Fee...................................77
ARTICLE XVII...........................................................78
BILLING AND COLLECTIONS................................................78
17.1 Billing and Payment......................................78
17.2 Billing Disputes and Final Accounting....................80
17.3 Availability of Records..................................82
17.4 Failure to Make Payments.................................83
ARTICLE XVIII..........................................................84
TERM OF AGREEMENT......................................................84
18.1 Term.....................................................84
18.2 Extension of the Term....................................85
18.3 FERC Changes; Rights to Terminate........................87
ARTICLE XIX............................................................89
MISCELLANEOUS PROVISIONS...............................................90
19.1 Approvals................................................90
19.2 Assignment...............................................90
19.3 Georgia Power's Agent....................................92
19.4 Cooperation..............................................92
19.5 No Partnership...........................................92
19.6 Successors and Assigns...................................93
19.7 No Third Party Benefit...................................93
19.8 No Consequential Damages.................................93
19.9 No Affiliate Liability...................................94
19.10 Disclaimers of Warranty.................................94
19.11 Supply Constancy........................................95
19.12 Time of Essence; No Waiver..............................95
19.13 Amendments..............................................96
19.14 Superseding Effect......................................96
19.15 Notice..................................................96
19.16 Counterparts............................................97
19.17 Article and Section Headings............................97
19.18 Including...............................................97
19.19 Governing Law...........................................97
19.20 Section 206 Rights......................................97
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REVISED AND RESTATED
COORDINATION SERVICES AGREEMENT
This REVISED AND RESTATED COORDINATION SERVICES AGREEMENT (the
"Agreement") is entered into as of this 10th day of September, 1997, between and
among GEORGIA POWER COMPANY, a corporation organized and existing under the laws
of the State of Georgia ("Georgia Power"), OGLETHORPE POWER CORPORATION (AN
ELECTRIC MEMBERSHIP CORPORATION), organized and existing under the laws of the
state of Georgia ("Oglethorpe Power" or "OPC"), and GEORGIA SYSTEM OPERATIONS
CORPORATION, a non-profit corporation organized and existing under the laws of
the state of Georgia ("GSOC").
RECITALS
WHEREAS, Georgia Power currently provides certain control area
services, scheduling services and other services to Oglethorpe Power pursuant to
that certain Coordination Services Agreement ("CSA") dated November 12, 1990;
and provides a fixed quantity of capacity to Oglethorpe Power pursuant to that
certain Block Power Sale Agreement ("BPSA") dated November 12, 1990, both of
which are presently on file with the Federal Energy Regulatory Commission
("FERC");
WHEREAS, Oglethorpe Power has implemented a restructuring plan
whereby the prior operations of Oglethorpe Power have been divided into three
specialized companies: a generation company (which retains the name of
Oglethorpe Power or OPC), a transmission company, Georgia Transmission
Corporation ("GTC"), and a system operating company, GSOC, which provides system
operations functions for the generation and transmission resources of Oglethorpe
Power, the Georgia Transmission Corporation and the members of Oglethorpe Power;
WHEREAS, Georgia Power, Oglethorpe Power and GSOC have entered
into a "Memorandum of Understanding For a Revised and Restated Coordination
Services Agreement" dated March 6, 1997, which reflects the Parties' desire to
establish a new service relationship that comports with and accommodates
Oglethorpe Power's restructuring plan by, among other things, (1) revising the
provisions of the CSA relating to the scheduling of resources and the provision
of control area services and (2) recognizing the relationship among Oglethorpe
Power, GTC, GSOC and Georgia Power as regards the services provided under this
Agreement;
WHEREAS, Georgia Power, Oglethorpe Power and GSOC desire to
implement their new service relationship by entering into this Agreement, which,
upon its effectiveness, shall supersede the CSA in its entirety.
NOW, THEREFORE, for and in consideration of the premises and
the mutual undertakings herein contained and for other good and valuable
consideration, the terms and sufficiency of which are hereby acknowledged,
Georgia Power, Oglethorpe Power and GSOC hereby agree as follows:
ARTICLE I
RELATIONSHIP OF THE PARTIES
(a) The Parties agree that all actions undertaken or representations
made by GSOC or any of its Affiliates in connection with or related to this
Agreement shall be as agent for Oglethorpe Power, and that Oglethorpe Power, as
principal, shall be fully liable for any acts, failures to act, representations
or omissions of GSOC or any of its Affiliates which in any way harm Georgia
Power or Georgia Power's Affiliates. Any references in this Agreement to (i)
facilities owned or controlled by Oglethorpe Power, (ii) transactions undertaken
by Oglethorpe Power, (iii) the performance of Oglethorpe Power, or (iv) loads of
Oglethorpe Power shall include, as appropriate, the facilities, transactions,
performance and/or loads of one or more of GTC, GSOC or the EMCs.
(b) The Parties agree that all actions undertaken or representations
made by Southern Company Services, Inc. ("SCS") or any of its Affiliates in
connection with or related to this Agreement shall be as agent for Georgia
Power, and that Georgia Power, as principal, shall be fully liable for any acts,
failures to act, representations or omissions of SCS or any of its Affiliates
which in any way harm Oglethorpe Power or Oglethorpe Power's Affiliates.
ARTICLE II
DEFINITIONS
In addition to the initially capitalized terms and phrases defined in
the preamble of this Agreement, the following initially capitalized terms and
phrases as and when used in this Agreement shall have the respective meanings
set forth below.
(1) "Actual Hourly Facility Generation" - means the amount of
energy, in megawatt hours (MWH), net of station service
energy, which is actually generated during any one Hour by the
generation facility associated with the Pseudo CT Resource and
delivered to Level B-1, as adjusted for losses using Level A
to B-1 Loss Factors, as appropriate. During periods in which
the amount determined pursuant to the previous sentence is
negative, the Actual Hourly Facility Generation associated
with such Pseudo CT Resource shall nevertheless be deemed to
be zero megawatt hours (MWH).
(2) "Actual Hourly OPC Resources Utilization" - for a given Hour
of the Term, means the sum, in megawatt hours (MWH), of the
Actual Hourly Resource Utilization during such Hour of each of
the OPC Resources.
(3) "Actual Hourly Resource Utilization" - of a given OPC Resource
during a given Hour of the Term, means the amount of energy,
in megawatt-hours (MWH), that Oglethorpe Power is deemed to
have utilized during such Hour from such OPC Resource, as such
amount of energy is determined pursuant to Articles IV, V, VI,
VII, VIII and X and adjusted for losses to Level B-1 as
appropriate.
(4) "Affiliate" - of any specified corporation, means any other
entity directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
corporation. For purposes of this definition, "control" when
used with respect to any entity means the power to direct the
management and policies of such entity, directly or
indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to
the foregoing. "Affiliates" - of any specified corporation
means, collectively, more than one (1) Affiliate of the
specified corporation. For purposes of this Agreement,
Oglethorpe Power, GSOC, GTC and the EMCs (and any successors
thereto) shall be deemed Affiliates.
(5) "Available Capability" - means the level of maximum possible
output at that time associated with a resource that is not
unavailable due to outages or deratings (as defined by NERC),
or transmission constraints (as defined by NERC).
(6) "Available Capability Schedule" - means the list of hourly Pseudo CT Resource Available Capability provided to Oglethorpe Power by Georgia Power pursuant to Article X of this Agreement.
(7) "Block Power Sale Agreement" or "BPSA" - means that certain
Block Power Sale Agreement between Georgia Power and
Oglethorpe Power dated as of November 12, 1990.
(8) "Block Resource" - means the generation capability associated
with any one (1) of the Component Blocks, as defined in the
BPSA. "Block Resources" - means, collectively, more than one
Block Resource.
(9) "Control Area Services" - means those services which are necessary (a) to effectuate energy deliveries under this Agreement and (b) to maintain the integrity of the ITS and the Southern Control Area pursuant to this Agreement. Control Area Services shall include the following for purposes of this Agreement:
a. Scheduling, System Control and Dispatch Service
b. Reactive Supply and Voltage Control From Generation Sources
Service
c. Regulation and Frequency Response Service
d. Operating Reserve - Spinning Reserve Service
e. Operating Reserve - Supplemental Reserve Service.
(10) "Day" - means a calendar day, commencing at one (1) minute
prior to 12:01 a.m. (Birmingham, Alabama prevailing time) of
each such calendar day and ending at one (1) minute after
11:59 p.m. (Birmingham, Alabama prevailing time) of such
calendar day.
(11) "Delivery Point" - means any point on Oglethorpe Power's
system at which Oglethorpe Power takes energy off of the ITS,
directly or indirectly, as contemplated by virtue of
Oglethorpe Power's and its Affiliates' ownership of a portion
of the ITS pursuant to the provisions of the Revised ITSA.
"Delivery Points" - means, collectively, more than one (1)
Delivery Point.
(12) "Dynamic Scheduling" or "Dynamically Scheduled" - with respect
to this Agreement, means that Oglethorpe Power has the
contractual right to provide a Dynamic Schedule (as defined by
NERC's "Terms Used in the Policies") for an
OPC-Controllable-ITS Resource or an OPC Non-Territorial Load,
where (i) such resource or load is physically located in a
control area immediately adjacent to the ITS, or (ii) such
resource is located within the ITS but is operated by a person
or entity engaged in the selling of wholesale power to persons
or entities other than Oglethorpe Power; provided, however,
that such Dynamic Scheduling must be performed in accordance
with appropriate industry standards and procedures and
Oglethorpe Power must pay all reasonable costs associated with
such Dynamic Scheduling.
(13) "Effective Date" - has the meaning given in Section 18.1 of this Agreement.
(14) "Electric Membership Corporations" or "EMCs" - means any one
or more of those electric membership corporations, identified
in Exhibit "A" attached hereto and incorporated herein by this
reference (for so long as and to the extent that such EMC or
its successor remains a member of Oglethorpe Power); "Electric
Membership Corporation" or "EMC" - means any one of the
Electric Membership Corporations.
(15) "Energy Imbalance Service" - means the service rendered to
Oglethorpe Power by Georgia Power which matches Actual Hourly
OPC Resources Utilization and OPC Total Load Requirements on
an hourly basis and provides any necessary back-up power to
Oglethorpe Power to maintain such balance. Energy Imbalance
Service shall incorporate a Back-Up Capacity Charge, (Section
12.3), a Commitment Cost (Section 12.4), a Credit for Hourly
Surplus Energy (Section 12.5), and a Payment for Hourly
Deficit Energy (Section 12.6).
(16) "Federal Power Act" - means the Federal Power Act, 16 U.S.C.Ass.ss. 791a-828c (West 1985 & Supp. 1990), as the same may hereafter be amended from time to time.
(17) "FERC" - means the Federal Energy Regulatory Commission or any governmental authority succeeding to the powers and functions thereof under the Federal Power Act.
(18) "Hour" - means one (1) of the twenty-four (24) clock hours of a Day. "Hourly" - has a meaning correlative to that of Hour.
(19) "IIC" - means that certain document, The Southern Company System Intercompany Interchange Contract dated October 31, 1988, among Georgia Power and certain of its Affiliates, accepted in FERC Docket No. ER89-48-000, as the same has been and may hereafter be amended, or any successor contract among Georgia Power and its Affiliates for coordinated operations.
(20) "Interest Rate" - means the rate per annum equal to the lesser of:
(i) the highest interest rate allowed by law, in
accordance with O.C.G.A. ss. 7-4-2(a)(1) (Supp.
1989); or
(ii) two (2) percent plus the prime rate, as stated in the
Wall Street Journal on the date payment is due.
(21) "ITS" - means the "Integrated Transmission System" as such term is defined in the Revised ITSA.
(22) "Joint Committee" - means the Joint Committee for Planning and Operations established under that certain Joint Committee Agreement among Georgia Power, Oglethorpe Electric Membership Corporation (Oglethorpe Power's predecessor) and certain other entities, dated as of August 27, 1976, as amended.
(23) "Joint-Owned Facility" - means any one (1) of the following generation facilities, each of which is jointly owned by Oglethorpe Power, Georgia Power and in some cases certain other entities pursuant to the respective Joint Ownership Agreements associated therewith: Plant Robert W. Scherer Unit No. 1, Plant Robert W. Scherer Unit No. 2, Plant Hal Wansley Unit No. 1, Plant Hal Wansley Unit No. 2, Plant Hal Wansley Unit No. 5A (combustion turbine), Rocky Mountain Pumped Storage Hydroelectric Generation Facility ("Rocky Mountain"), Edwin I. Hatch Nuclear Plant Unit No. 1, Edwin I. Hatch Nuclear Plant Unit No. 2, Plant Alvin W. Vogtle Unit No. 1 and Plant Alvin W. Vogtle Unit No. 2. "Joint-Owned Facilities" - means, collectively, more than one (1) Joint-Owned Facility.
(24) "Joint Ownership Agreements" - associated with a given
Joint-Owned Facility, means the following contracts, as they
may be amended from time to time:
(i) in the case of the Rocky Mountain Pumped Storage
Hydroelectric Generation Facility, that certain
Rocky Mountain Pumped Storage Hydroelectric Project
Ownership Participation Agreement dated as of
November 18, 1988; that certain Rocky Mountain
Pumped Storage Hydroelectric Project Operating
Agreement dated as of November 18, 1988; and that
certain Rocky Mountain Pumped Storage Hydroelectric
Plant Coordination Procedures Agreement dated as of
May 31, 1995;
(ii) in the case of the Nuclear Resource associated with Edwin I. Hatch Nuclear Plant Unit Nos. 1 and 2, that certain Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement dated as of January 6, 1975 and that certain Edwin I. Hatch Nuclear Plant Operating Agreement dated as of January 6, 1975;
(iii) in the case of the Nuclear Resource associated with Plant Alvin W. Vogtle Unit Nos. 1 and 2, that Plant Alvin W. Vogtle Unit Numbers 1 and 2 Purchase and Ownership Participation Agreement dated as of August 27, 1976 and that certain Plant Alvin W. Vogtle Unit Numbers 1 and 2 Operating Agreement dated as of August 27, 1976;
(iv) in the case of Plant Robert W. Scherer Unit Nos.1
and 2, that certain Plant Robert W. Scherer Units
Number 1 and 2 Purchase and Ownership Participation
Agreement dated as of May 15, 1980 and that certain
Plant Robert W. Scherer Units Number 1 and 2
Operating Agreement dated as of May 15, 1980;
(v) in the case of Plant Hal Wansley Unit Nos. 1 and 2,
that certain Plant Hal Wansley Purchase and
Ownership Participation Agreement dated as of March
26, 1976 and that certain Plant Hal Wansley
Operating Agreement dated as of March 26, 1976; and
(vi) in the case of Plant Hal Wansley Unit No. 5A (and
the associated Pseudo CT Resource), that certain
Plant Hal Wansley Combustion Turbine Agreement dated
as of August 2, 1982, as amended by that certain
letter from A.W. Dahlberg of Georgia Power to David
M. Holmes of Oglethorpe Power dated October 20,
1982.
(25) "Level A - means the generator voltage side of each step-up or
station service transformer of each generation facility of
Georgia Power or other entity that supplies power directly
into the ITS.
(26) "Level A to B-1 Loss Factors" - means factors intended to
reflect energy loss from Level A to Level B-1 for generation,
as adopted by the Joint Committee.
(27) "Level A to B-2 Loss Factors" - means factors intended to
reflect energy loss from Level A to Level B-2 for station
service, as adopted by the Joint Committee.
(28) "Level B-1" - means the transmission voltage side of each
step-up transformer of each generation facility of Georgia
Power or other entity that supplies power directly into the
ITS, or any points of interconnection where power flows into
the ITS.
(29) "Level B-1 to B-2 Loss Factors" - means factors intended to
reflect energy loss from Level B-1 to Level B-2, as adopted by
the Joint Committee.
(30) "Level B-2" - means the transmission facilities included in
the ITS which operate at 115 kV or above or any points of
interconnection where power flows out of the ITS, including,
but not limited to, station service.
(31) "Level D" - means the distribution voltage side of the meter points where power flows out of the ITS.
(32) "Level D to B-1 Loss Factors" - means factors intended to
reflect energy loss from Level D to Level B-1, as adopted by
the Joint Committee.
(33) "Marginal Replacement Fuel Cost" - means the fuel cost, in
dollars per millions of British Thermal Units (MMBTU),
including the value of SO2 allowances, for the Pseudo CT
Resource, as determined in accordance with the IIC marginal
fuel cost procedures filed with FERC (as such procedures may
be amended from time to time), which is used for Southern
Dispatch. Georgia Power shall use reasonable best efforts to
make available to Oglethorpe Power the Marginal Replacement
Fuel Cost on or before three (3) Days prior to the Day on
which such cost will take effect.
(34) "Maximum Utilization Level" - means the maximum level of
allowed resource Utilization of the Pseudo CT Resource by
Oglethorpe Power during an Hour, as reasonably determined by
Georgia Power in accordance with Prudent Utility Practice,
which shall represent as closely as possible the actual
maximum operating limitation on the generation facility
associated with such Pseudo CT Resource at that time.
(35) "Month" - means a calendar month, commencing at one (1) minute
prior to 12:01 a.m. (Birmingham, Alabama prevailing time) on
one of January 1, February 1, March 1, April 1, May 1, June 1,
July 1, August 1, September 1, October 1, November 1 or
December 1 and ending at one (1) minute after 11:59 p.m.
(Birmingham, Alabama prevailing time) of the succeeding
January 31, February 28 or 29, March 31, April 30, May 31,
June 30, July 31, August 31, September 30, October 31,
November 30 or December 31. "Monthly" - has a meaning
correlative to that of Month.
(36) "Monthly CSA Administration Fee" - for a given Month of the
Term, means the fee, in dollars per Month ($/Mo), equal to the
summation of all costs incurred by Georgia Power or its agent
during the previous Month which are reimbursable by Oglethorpe
Power under Section 16.2.
(37) "Monthly CSA Implementation Fee" - for a given Month of the
Term, means the fee, in dollars per Month ($/Mo), equal to the
summation of all costs incurred by Georgia Power or its agent
during the previous Month which are reimbursable by Oglethorpe
Power under Section 16.1.
(38) "NERC" - means the North American Electric Reliability
Council, including the regional organization(s) to which the
Parties belong, and any successor organization.
(39) "Non-Territorial Control Area Services" - means Control Area
Services associated with OPC Non-Territorial Load, as
determined pursuant to Article XIV.
(40) "Nuclear Resource" - means the generation capability associated with Oglethorpe Power's ownership in any one (1) of the following Joint-Owned Facilities: Edwin I. Hatch Nuclear Plant Unit No. 1, Edwin I. Hatch Nuclear Plant Unit No. 2, Plant Alvin W. Vogtle Unit No. 1 and Plant Alvin W. Vogtle Unit No. 2. "Nuclear Resources" - means, collectively, more than one (1) Nuclear Resource.
(41) "OPC-Controllable-ITS Resource" - from time to time during the Term, means the generation capability associated with Oglethorpe Power's or the EMCs' entitlement to any generation facility or other resource that has all of the following characteristics at such time:
(i) Oglethorpe Power's or the EMCs' entitlement to the generation facility or other resource is not being operated in Southern Dispatch;
(ii) the generation facility or other resource (a) is directly connected to the ITS or is Dynamically Scheduled, or (b) is connected to a distribution system which is directly connected to the ITS; provided, however, that such facility(ies) has a capability of one (1) megawatt or greater through a single meter; and provided further that the Delivery Point meter readings for such distribution system are adjusted to add back any energy produced by such facility(ies), if appropriate, and that all such Actual Hourly Resource Utilization and Available Capability values are adjusted by appropriate distribution loss factors prior to adjustment by the loss factors defined in this Agreement;
(iii) the generation facility or other resource is within the Southern Control Area; and (iv) the generation facility or other resource is not associated with one of the following
types of OPC Resources: a Block Resource, a SEPA Resource, a Nuclear Resource, an OPC Off-System Resource or the Pseudo CT Resource.
"OPC-Controllable-ITS Resources" - means, collectively, more than one (1) OPC-Controllable-ITS Resource.
(42) "OPC Non-Territorial Load" - means the hourly sum of
Oglethorpe Power's and the EMCs' sales to another person or
entity, excluding OPC Territorial Load, adjusted for losses
using Level B-1 to B-2 Loss Factors or Level D to B-1 Loss
Factors, as appropriate.
(43) "OPC Off-System Resource" - means any OPC Off-System
Transaction associated with the purchase of energy by
Oglethorpe Power or the EMCs. "OPC Off-System Resources" -
means, collectively, more than one (1) OPC Off-System
Resource.
(44) "OPC Off-System Transaction" - means (a) any sales
transaction, which serves OPC Non-Territorial Load, between
Oglethorpe Power or its Affiliate and another person or
entity, where such other person or entity (i) is engaged in
the selling of wholesale power, (ii) is not directly connected
to the ITS, or (iii) is outside the Southern Control Area;
provided, however, that any sale that is Dynamically Scheduled
from a single OPC Resource or any sale that is Dynamically
Scheduled to serve the load of an entity which is not engaged
in selling wholesale power shall not be an OPC Off-System
Transaction; (b) any purchase transaction between Oglethorpe
Power or its Affiliate and another person or entity, where
such other person or entity (i) is engaged in the selling of
wholesale power to person(s) or entity(ies) other than
Oglethorpe Power, (ii) is not directly connected to the ITS,
or (iii) is outside the Southern Control Area; provided,
however, that any purchase that is Dynamically Scheduled from
a single generation facility shall not be an OPC Off-System
Transaction; or (c) any transaction by which GTC provides or
causes or allows to be provided transmission service into, out
of or across the ITS. "OPC Off-System Transactions" means,
collectively, more than one (1) OPC Off-System Transaction.
All OPC Off-System Transactions shall be adjusted for losses
using Level A to B-1 Loss Factors and/or Level B-1 to B-2 Loss
factors, as appropriate.
(45) "OPC Operational Deficiency" - from time to time during the
Term, means the negative amount, if any, computed by Georgia
Power pursuant to and in accordance with Section 13.3.
(46) "OPC Resource" - means any one (1) of the following resources:
the OPC-Controllable-ITS Resources, the Block Resources, the
SEPA Resources, the Nuclear Resources, the OPC Off-System
Resources and the Pseudo CT Resource. "OPC Resources" - means,
collectively, more than one (1) OPC Resource.
(47) "OPC Territorial Load" - means the hourly sum of the Delivery Point loads associated with the retail loads of each EMC of Oglethorpe Power (for so long as and to the extent that such EMC or its successor remains a member of Oglethorpe Power), adjusted for losses using Level D to B-1 Loss Factors, as appropriate; any requirements associated with any (company-use) facilities directly served by Oglethorpe Power, adjusted for losses using Level D to B-1 Loss Factors, as appropriate; any net station service requirement associated with an OPC Resource, adjusted for losses using Level A to B-2 Loss Factors and Level B-1 to B-2 Loss Factors, as appropriate; and any pumping or motoring energy associated with Oglethorpe Power's ownership interest in Rocky Mountain, adjusted for losses using Level A to B-2 Loss Factors and Level B-1 to B-2 Loss Factors, as appropriate.
(48) "OPC Total Load Requirements" - means the sum of OPC Territorial Load and OPC Non-Territorial Load.
(49) "Open Access Transmission Tariff of Southern Companies" - means the Open Access Transmission Tariff filed with the FERC by Southern Companies in Docket No. OA96-27-000, as accepted by the FERC and as revised or amended from time to time at the direction of or under the authority of the FERC. To the extent Oglethorpe Power is subject to rates under the Open Access Transmission Tariff of Southern Companies pursuant to the terms of this Agreement, such rates shall be subject to adjustment (refund with interest, or surcharge with interest) consistent with any changes to such rates required by final FERC order in Docket No. OA96-27-000 or any subsequent rate proceeding under the Federal Power Act.
(50) "Party" - means Georgia Power, Oglethorpe Power or GSOC.
"Parties" means any two or more of Georgia Power, Oglethorpe
Power and GSOC.
(51) "Peaking Block Resource" - means the generation capability
associated with any one (1) of the "Component Peaking Blocks"
(as such term is defined in the Block Power Sale Agreement).
"Peaking Block Resources" - means, collectively, more than one
(1) Peaking Block Resource.
Each Peaking Block Resource is a Block Resource.
(52) "Prudent Utility Practice" - means, at a particular time, any
of the practices, methods and acts engaged in or approved by a
significant portion of the electric utility industry prior to
such time, or any of the practices, methods and acts which, in
the exercise of reasonable judgment in light of the facts
known at the time the decision was made, could have been
expected to accomplish the desired results at the lowest
reasonable cost consistent with good business practices,
reliability, safety and expedition. Prudent Utility Practice
is not intended to be limited to the optimum practice, method
or act to the exclusion of all others, but rather to be a
spectrum of possible practices, methods or acts expected to
accomplish the desired results, having due regard for, among
other things, manufacturers' warranties and the requirements
of governmental authorities of competent jurisdiction and the
requirements of this Agreement.
(53) "Pseudo CT Resource" - means the generation capability associated with Oglethorpe Power's ownership in the following Joint-Owned Facility: Plant Hal Wansley Unit No. 5A (combustion turbine).
(54) "Pseudo CT Resource Heat Rate" - means the value shown for
station economy (expressed in MMBTU/MWH) for Wansley Unit No.
5A, as shown on the then-current IIC Informational Schedule
No. 2 or successor thereto, adjusted for losses using the
appropriate Level A to B-1 Loss Factor.
(55) "Pseudo Energy" - means the integrated hourly difference
between (i) the Actual Hourly Resource Utilization of the
Pseudo CT Resource in megawatt hours (MWH), less (ii) the
Actual Hourly Facility Generation allocated to Oglethorpe
Power from the Pseudo CT Resource in megawatt hours (MWH), as
determined under the Joint Ownership Agreement governing the
Pseudo CT Resource.
(56) "Pseudo Energy Purchase" - means, if the Pseudo Energy is
negative in an Hour, Georgia Power shall be deemed to have
made an energy purchase from Oglethorpe Power equal to the
absolute value of the amount of such Pseudo Energy, which
purchase shall be subject to the provisions of Section 10.6.
(57) "Pseudo Energy Sale" - means, if the Pseudo Energy is positive
in an Hour, Georgia Power shall be deemed to have made an
energy sale to Oglethorpe Power equal to the amount of such
Pseudo Energy, which sale shall be subject to the provisions
of Section 10.6.
(58) "Pseudo Schedule[ing] and Dispatch" - means the hourly
scheduling and dispatch of the Pseudo CT Resource by
Oglethorpe Power by and through Georgia Power in accordance
with Article X.
(59) "Quarter Hour" - means any one of the 15 minute increments
starting on each Hour, at 15 minutes past each Hour, at 30
minutes past each Hour, and at 45 minutes past each Hour.
(60) "Real-Time" - when used as an adjective or adverb, means on as near an instantaneous basis as possible.
(61) "Revised ITSA" - means that certain Revised and Restated
Integrated Transmission System Agreement between Georgia Power
and Oglethorpe Power dated as of November 12, 1990, and each
of the similar agreements between Georgia Power and the
Municipal Electric Authority of Georgia and between Georgia
Power and the City of Dalton, Georgia, as amended.
(62) "SEPA" - means the Southeastern Power Administration.
(63) "SEPA Resource" - from time to time during the Term, means the
generation capability associated with Oglethorpe Power's and
the EMCs' entitlement to the output of the hydroelectric
generation facilities that make up any one (1) SEPA project.
"SEPA Resources" - means, collectively, more than one (1) SEPA
Resource (or if Oglethorpe Power is scheduling with SEPA as a
single resource, pursuant to Section 6.1, at a given time
during the Term, then at such time it means that one (1) OPC
Resource).
(64) "SERC" - means the Southeastern Electric Reliability Council, a regional organization within NERC.
(65) "Southern Companies" - means, collectively, the operating
company affiliates of Southern Company, including Alabama
Power Company, Georgia Power Company, Gulf Power Company,
Mississippi Power Company, and Savannah Electric and Power
Company.
(66) "Southern Control Area" - means the electric service area
encompassed by the tie lines, including, but not limited to,
the pseudo tie lines (as defined by NERC's "Terms Used in the
Policies"), between the Southern Companies and other
utilities.
(67) "Southern Dispatch" - means the ability of Southern Company
Services, Inc. (or other Affiliate of Georgia Power) to
schedule and control, directly or indirectly, manually or
automatically, the output of a generation facility in the
Southern Control Area in order to increase or decrease the
electricity delivered from such generation facility into the
electric system with which it is interconnected.
(68) "Southern Sub-Region" - means the sub-region of the
Southeastern Electric Reliability Council, including the
Southern Control Area, the control area of the Alabama
Electric Cooperative, Inc., the control area of South
Mississippi Electric Power Association, and the control areas
of SEPA.
(69) "Steam Block Resource" - means the generation capability
associated with any one (1) of the "Component Steam Blocks"
(as such term is defined in the Block Power Sale Agreement).
"Steam Block Resources" -means, collectively, more than one
(1) Steam Block Resource. Each Steam Block Resource is a Block
Resource.
(70) "System Marginal Cost" - means the incremental energy cost of
Southern Dispatch after serving all sales obligations, which
costs shall include fuel expense, variable operating and
maintenance expense, fuel handling expense, emissions
allowance value, and other appropriate energy-related costs,
including, but not limited to, energy purchases, as permitted
by the IIC and as determined in the Hour immediately prior to
the applicable Hour.
(71) "Term" - means the initial term of this Agreement specified in
Section 18.1, as such initial or any additional term may be
extended for additional term(s) from time to time pursuant to
Section 18.2.
(72) "Territorial Control Area Services" - means Control Area
Services associated with OPC Territorial Load, as determined
pursuant to Article XI.
(73) "Territorial Marginal Cost" - means the incremental energy
cost of Southern Dispatch after serving all Southern Control
Area obligations but prior to serving any sales outside the
Southern Control Area, which costs shall include fuel expense,
variable operating and maintenance expense, fuel handling
expense, emissions allowance value, and other appropriate
energy-related costs, including, but not limited to, energy
purchases, as permitted by the IIC and as determined in the
Hour immediately prior to the applicable Hour.
(74) "Umbrella Agreement" - means that certain ITSA, Power Sale and
Coordination Umbrella Agreement entered into between Georgia
Power and Oglethorpe Power as of November 12, 1990. Upon its
effectiveness, this Agreement shall be considered a "Packaged
Document," as defined in the Umbrella Agreement.
(75) "Utilization" - means the energy scheduled by Oglethorpe Power
from the Pseudo CT Resource in an Hour, including the effect
of changes submitted from time to time by Oglethorpe Power or
deemed to be scheduled by Oglethorpe Power, all as determined
under Article X, as delivered at Level B-1.
(76) "Week" - means each period of seven (7) Days, commencing at
one (1) minute prior to 12:01 a.m. (Birmingham, Alabama
prevailing time) of each Monday and ending at one (1) minute
after 11:59 p.m. (Birmingham, Alabama prevailing time) of each
succeeding Sunday.
(77) "Year" - means a calendar year, commencing at one (1) minute
prior to 12:01 a.m. (Birmingham, Alabama prevailing time) of
each January 1 and ending at one (1) minute after 11:59 p.m.
(Birmingham, Alabama prevailing time) of each succeeding
December 31. "Yearly" - has a meaning correlative to that of
Year.
ARTICLE III
OPERATING OBLIGATIONS OF THE PARTIES
3.1 Basic Operation and Maintenance Obligations. Oglethorpe Power and
Georgia Power will each maintain sufficient generating capacity resources,
including reserves to supply its own and its customers' requirements at all
times in the future. Further, Oglethorpe Power and Georgia Power agree to
operate and maintain their systems in accordance with the North American
Electric Reliability Council Operating Manual (including the NERC-OC Reliability
Criteria for Interconnected Systems Operation and the NERC-OC Operating Guides)
and SERC Guidelines (collectively, "NERC Guidelines"), as the same may be
revised from time to time.
3.2 Obligations Under Future Standards. (a) If NERC or FERC issues
rules, standards or guidelines affecting or otherwise relevant to the Control
Area Services offered under this Agreement, Georgia Power and Oglethorpe Power
agree to revise or amend the sections of this Agreement pertaining to Control
Area Services if and as appropriate in order to comport therewith. To that end,
the Parties agree to use their reasonable best efforts to develop mutually
acceptable, specific performance criteria by which to determine, on an objective
basis, when such rules, standards or guidelines are violated, such criteria to
be incorporated into this Agreement; provided, however, that if Georgia Power
reasonably believes that the Parties will fail to reach an agreement on such
criteria prior to the end of ninety (90) Days, Georgia Power may, at any time
during such negotiations, unilaterally develop and file any changes or revisions
to this Agreement that it believes are appropriate and warranted by such rules,
standards or guidelines (which filing shall include specific performance
criteria by which to determine, on an objective basis, when such rules,
standards or guidelines are violated), to be effective ninety (90) Days after
Georgia Power provides written notice to Oglethorpe Power of the issuance of the
rules, standards or guidelines which it believes are applicable to the
Agreement. Oglethorpe Power shall have the right to challenge Georgia Power's
proposed changes in accordance with FERC regulations and shall have the right to
request that the FERC approve alternative revisions pursuant to FERC
regulations. Upon such filing by Georgia Power or Oglethorpe Power, any Party
shall have the right to terminate this Agreement upon ninety (90) Days prior
written notice to the other Parties, provided, however, that such notice must be
given within 15 Days after a final FERC order on such filing.
(b) Upon notice of termination under Section 3.2(a), the Parties agree
to use their reasonable best efforts to negotiate a mutually acceptable
successor arrangement to this Agreement (to the extent necessary to recognize
and accommodate the interrelated nature of the Parties' transmission systems and
control area functions within the state of Georgia); provided, however, that, at
any time during such negotiations, Georgia Power may file at the FERC a notice
of termination, effective no earlier than 90 Days following the above notice,
and a proposed successor arrangement with Oglethorpe Power if Georgia Power
reasonably believes that the Parties will fail to reach an agreement on a
successor arrangement prior to the end of ninety (90) Days. Oglethorpe Power
shall have the right to challenge Georgia Power's proposed successor arrangement
in accordance with FERC regulations, shall have the right to request, pursuant
to FERC regulations, that the FERC accept an alternative arrangement between
Georgia Power and Oglethorpe Power, and shall have the right to enter into a
separate arrangement with any other party. However, any election by Oglethorpe
Power to enter into an arrangement with a third party shall not affect Georgia
Power's right to file a proposed successor agreement with Oglethorpe Power which
Georgia Power believes is necessary or appropriate in recognition of and to
accommodate the interrelated nature of the Parties' transmission systems and
control area functions within the state of Georgia. At the end of ninety (90)
Days following any Party's notice of termination to the other Parties, if the
FERC has not issued a final order (a) establishing the terms and conditions of a
successor arrangement between Georgia Power and Oglethorpe Power or (b)
determining that a successor arrangement between Georgia Power and Oglethorpe
Power is not necessary or appropriate, Oglethorpe Power shall, until such final
order is issued, (i) purchase Control Area Services, with the exception of
Reactive Supply and Voltage Control From Generation Sources Service, from
Georgia Power or its agent at the standard rates then in effect under the Open
Access Transmission Tariff of Southern Companies; (ii) continue to purchase
Energy Imbalance Service (including Back-Up Capacity) in accordance with Article
XII of this Agreement; and (iii) continue to self-supply or purchase Reactive
Supply and Voltage Control From Generation Sources Service under this Agreement
in accordance with Section 11.3. In addition, Oglethorpe Power shall continue to
Pseudo Schedule and Dispatch the Pseudo CT Resource in accordance with Article X
of this Agreement until such final order is issued. Any amounts collected from
Oglethorpe Power under this Section 3.2(b) shall be subject to adjustment in
accordance with the terms of a final FERC order accepting Georgia Power's notice
of termination and either (i) establishing the terms and conditions of a
successor arrangement between Georgia Power and Oglethorpe Power or (ii)
determining that a successor arrangement between Georgia Power and Oglethorpe
Power is not necessary or appropriate. For purposes of this Article, a "final
order" shall mean a FERC order which is no longer subject to rehearing under the
FERC's Rules of Practice and Procedure.
(c) If the FERC accepts the changes or revisions to this Agreement
pursuant to Section 3.2(a), and thereafter Georgia Power reasonably determines,
in accordance with Prudent Utility Practice, that Oglethorpe Power has failed to
comply with the same, Georgia Power may terminate this Agreement upon ninety
(90) Days prior written notice to Oglethorpe Power; provided, however, that the
Parties shall, during such 90-day period prior to termination, review both the
data relied on to support such notice of termination as well as Oglethorpe
Power's performance, and Georgia Power shall rescind such notice if it
reasonably determines that the data is in error such that Oglethorpe Power did
not fail to adequately meet the specified criteria, or if Georgia Power
determines, in its sole discretion, that Oglethorpe Power has adequately
remedied its failure to comply with the specified criteria in accordance with
Prudent Utility Practice. Upon notice of termination, the Parties agree to use
their reasonable best efforts to negotiate a mutually acceptable successor
arrangement to this Agreement (to the extent necessary to recognize and
accommodate the interrelated nature of the Parties' transmission systems and
control area functions within the state of Georgia); provided, however, that at
any time during such negotiations, Georgia Power may file at the FERC a notice
of termination, effective no earlier than 90 Days following the above notice,
and a proposed successor arrangement with Oglethorpe Power if Georgia Power
reasonably believes that the Parties will fail to reach an agreement on a
successor arrangement prior to the end of ninety (90) Days. Oglethorpe Power
shall have no right to challenge Georgia Power's right to seek termination under
this Section 3.2(c). However, Oglethorpe Power (1) shall have the right to
challenge (i) the validity of the data relied on by Georgia Power to support its
notice of termination or (ii) the terms and conditions of Georgia Power's
proposed successor arrangement in accordance with FERC regulations, (2) shall
have the right to request, pursuant to FERC regulations, that the FERC accept an
alternative arrangement between Georgia Power and Oglethorpe Power, and (3)
shall have the right to enter into a separate arrangement with any other party.
However, any election by Oglethorpe Power to enter into an arrangement with a
third party shall not affect Georgia Power's right to file a proposed successor
agreement with Oglethorpe Power which Georgia Power believes is necessary or
appropriate in recognition of and to accommodate the interrelated nature of the
Parties' transmission systems and control area functions within the state of
Georgia. At the end of ninety (90) Days following Georgia Power's notice of
termination to Oglethorpe Power under this Section 3.2(c), if the FERC has not
issued a final order (a) establishing the terms and conditions of a successor
arrangement between Georgia Power and Oglethorpe Power or (b) determining that a
successor arrangement between Georgia Power and Oglethorpe Power is not
necessary or appropriate, Oglethorpe Power shall, until such final order is
issued, (i) purchase Control Area Services, subject to (iii) below, from Georgia
Power or its agent at the standard rates then in effect under the Open Access
Transmission Tariff of Southern Companies; (ii) continue to purchase Energy
Imbalance Service (including Back-Up Capacity) in accordance with Article XII of
this Agreement; and (iii) if the cause for Georgia Power's notice of termination
is not due to Oglethorpe Power's failure to comply with a request for altered
reactive dispatch under Section 11.3, continue to self-supply or purchase
Reactive Supply and Voltage Control From Generation Sources Service under this
Agreement in accordance with Section 11.3. In addition, Oglethorpe Power shall
continue to Pseudo Schedule and Dispatch the Pseudo CT Resource in accordance
with Article X of this Agreement until such final order is issued. Any amounts
collected from Oglethorpe Power under this Section 3.2(c) shall be subject to
adjustment in accordance with the terms of a final FERC order accepting Georgia
Power's notice of termination and either (i) establishing the terms and
conditions of a successor arrangement between Georgia Power and Oglethorpe Power
or (ii) determining that a successor arrangement between Georgia Power and
Oglethorpe Power is not necessary or appropriate.
3.3 System Security and Integrity. The Parties recognize that Georgia
Power or its agent must have the ability and means to maintain the safe and
reliable operation of the ITS and the surrounding Southern Control Area. To that
end, the Parties agree that (a) Georgia Power shall not unduly discriminate
against Oglethorpe Power, Southern Companies or any other transmission owners
with regard to the redispatch of resources and/or the curtailment of
transactions across any constrained interface, including the allocation of
redispatch-related costs, if any; and (b) Oglethorpe Power shall participate in
the implementation of an appropriate redispatch cost allocation methodology for
the Southern Sub-Region of SERC, such agreement to survive this Agreement.
3.4 Supply Deficiencies. This Section 3.4 shall apply only if
Oglethorpe Power has elected, for the current Year, to declare interruptible
loads as supplemental operating reserves pursuant to Section 11.6(c) herein. (a)
If, at any time during the Term of this Agreement, Georgia Power or its agent
determines that it is necessary or appropriate to take action to eliminate a
power supply deficiency in the Southern Control Area, and directs Oglethorpe
Power to participate in the elimination of such deficiency, Oglethorpe Power
agrees to take reasonable corrective measures as appropriate, including, without
limitation, load shedding and operations at valves wide open and overpressure,
unless Oglethorpe Power reasonably determines that such operation will be
detrimental to the reliability of the unit or Oglethorpe Power's system.
Oglethorpe Power may sell any energy surpluses resulting from operation at
valves wide open and overpressure to Southern Companies at market rates. Load
shedding shall be coordinated with Georgia Power and shall be implemented on a
pro rata basis, as nearly as practicable, among Oglethorpe Power, Georgia Power
and other ITS participants based on each ITS participant's non-coincident peak
load ratio, as defined in the Revised ITSA, of the quantities assigned to the
ITS (consistent with the IIC allocation procedures for the Southern Control Area
on file at the FERC), and shall be subject to the following curtailment
priorities: (1) non-firm third-party deliveries and interruptible native load
deliveries; and (2) firm load deliveries.
(b) To the extent action under this Section causes energy surpluses or
Regulation Energy Variance, as described in Article XII and Section 11.4,
respectively, Georgia Power agrees to waive any Regulation Energy Variance
charges, and such Hours shall be excluded from the determination of Commitment
Cost under Section 12.4 of this Agreement. In addition, during the period of
such curtailment, Georgia Power shall credit Oglethorpe Power for any surplus
energy associated with such curtailment at Territorial Marginal Cost in lieu of
the credit determined in accordance with Section 12.5. To the extent Oglethorpe
Power curtails non-firm third-party sales under this Section, Georgia Power
shall credit Oglethorpe Power for such surpluses at the higher of the rates
stated in Section 12.5 or the highest price disclosed by Oglethorpe Power, if
any, of curtailed non-firm transactions of Oglethorpe Power. Similarly, to the
extent Southern curtails non-firm third-party sales under this Section,
Oglethorpe Power shall purchase from Georgia Power deficit energy at the higher
of the rates stated in Section 12.6 or the highest price disclosed by Georgia
Power, if any, of such curtailed non-firm transactions of Southern Companies.
3.5 Power Flows. Since the systems of Oglethorpe Power, GTC and Georgia
Power are now, or may in the future be, directly interconnected with other
electric systems, it is recognized that because of the physical and electrical
characteristics of the facilities involved, there may be flows of power from
Oglethorpe Power to Georgia Power, or vice versa, through other electric
systems, or from other electric systems through the electric system of
Oglethorpe Power, GTC or Georgia Power. It is likewise recognized that part of
any scheduled delivery of power from Oglethorpe Power to Georgia Power, or vice
versa, may flow through or be displaced through other electric systems.
Oglethorpe Power, GSOC and Georgia Power agree to advise other materially
affected electric systems of such flows and scheduled power transfers, to
attempt to minimize any resulting burden on such other electric systems, as
appropriate, to compensate such other systems for any such resulting burden, and
to maintain communication and good relationships with affected interconnected
third parties.
3.6 Survival. The provisions of Sections 3.1 and 3.5 shall survive termination of this Agreement.
ARTICLE IV
OPC-CONTROLLABLE-ITS RESOURCES
4.1 Energy Utilization. For purposes of calculating the Actual Hourly Resource Utilization of each OPC-Controllable-ITS Resource during each Hour of the Term, Oglethorpe Power shall be deemed to have utilized all energy delivered into the ITS by or on behalf of Oglethorpe Power from the generation facility or other resource associated with each such OPC-Controllable-ITS Resource during such Hour, as determined by Oglethorpe Power and verified by Georgia Power or its agent. The amount of such energy utilization shall be measured by Oglethorpe Power and verified by Georgia Power or its agent in megawatt hours (MWH), at the point of delivery to the ITS.
4.2 Transmission Responsibility. Oglethorpe Power shall be responsible for making all transmission arrangements for the delivery of energy from OPC-Controllable-ITS Resources and shall bear all costs associated with any and all such transmission.
ARTICLE V
BLOCK RESOURCES
5.1 Dispatch. Except as provided in this Article V, Oglethorpe Power
hereby agrees to commit and schedule energy utilization of the Block Resources
in accordance with, and otherwise to abide by and comply with, the provisions of
the BPSA.
5.2 Changes in Schedules. Oglethorpe Power shall provide notice to
Georgia Power or its agent at least fifteen (15) minutes prior to the start of
each Quarter Hour of the quantity of energy that Oglethorpe Power wishes to
schedule from a committed Steam Block Resource or any Peaking Block Resource for
such Quarter Hour. Oglethorpe Power may increase or decrease the level of energy
at which a Steam Block Resource is to be utilized during such Quarter Hour until
fifteen (15) minutes prior to the start of such Quarter Hour. Oglethorpe Power
may increase or decrease the level of energy at which a Peaking Block Resource
is to be utilized only once in any thirty (30) minute period, and only upon
fifteen (15) minutes prior notice to Georgia Power, to be effective at the start
of a Quarter Hour.
5.3 Energy Utilization. For purposes of calculating the Actual Hourly
Resource Utilization of each Block Resource during each Hour of the Term,
Oglethorpe Power shall be deemed to have utilized during such Hour that amount
of energy determined by averaging the four Quarter Hour schedules submitted for
that Hour under Section 5.2 above.
5.4 Emergency Decommitment. If all OPC Off-System Resources have been
interrupted pursuant to Section 8.1 and Oglethorpe Power continues to have
surplus energy as defined in Article XII, Oglethorpe Power may decommit a Steam
Block Resource on 15 minutes prior notice to Georgia Power, effective at the
start of any Quarter Hour.
5.5 Operability of Article. This Article V shall be operable from the
Effective Date through the earlier of the date this Agreement terminates or the
date, if any, upon which the BPSA expires; provided, however, that the Parties
may agree to any other mutually satisfactory date through which this Article
shall be operable.
ARTICLE VI
SEPA RESOURCES
6.1 Dispatch. Oglethorpe Power hereby agrees to commit and schedule
energy utilization of the SEPA Resources in accordance with, and otherwise to
abide by and comply with, the Oglethorpe Power Corporation Scheduling Contract
between Oglethorpe Power and SEPA (Contract No. 89-00-1501-1059), or any
successor contract, and any related procedures adopted by Oglethorpe Power and
SEPA.
6.2 Energy Utilization. For purposes of calculating the Actual Hourly
Resource Utilization of the SEPA Resources during each Hour of the Term,
Oglethorpe Power shall be deemed to have utilized during such Hour that amount
of energy scheduled by Oglethorpe Power and delivered by SEPA pursuant to the
Oglethorpe Power Corporation Scheduling Contract between Oglethorpe Power and
SEPA (Contract No. 89-00-1501-1059), or any successor contract.
6.3 Operability of Article. This Article VI shall be operable from the
Effective Date until the earlier of the termination of this Agreement or the
expiration of the Oglethorpe Power Corporation Scheduling Contract between
Oglethorpe Power and SEPA (Contract No. 89-00-1501-1059), or any successor
contract; provided, however, that the Parties may agree to any other mutually
satisfactory date through which this Article shall be operable.
ARTICLE VII
NUCLEAR RESOURCES
7.1 Delivery of and Payment for Energy. Georgia Power's and Oglethorpe
Power's respective rights and obligations concerning the delivery of and payment
for energy from the generation facilities associated with each of the Nuclear
Resources during any given Hour of the Term shall be as set forth in the
respective Joint Ownership Agreements associated with each such Nuclear
Resource.
7.2 Energy Utilization. For purposes of calculating the Actual Hourly
Resource Utilization of each Nuclear Resource during each Hour of the Term,
Oglethorpe Power shall be deemed to have utilized all energy delivered to
Oglethorpe Power from the generation facility associated with each such Nuclear
Resource during such Hour, as determined by Georgia Power or its agent and
verified by Oglethorpe Power under the Joint Ownership Agreements associated
with each such Nuclear Resource. The amount of such energy utilization shall be
measured by Georgia Power or its agent in megawatt hours (MWH) at the point of
delivery to the ITS.
7.3 Informational Available Capability and Energy Schedules. (a)
Georgia Power or its agent will provide Oglethorpe Power on or before 11:00 a.m.
(Birmingham, Alabama prevailing time) of the Friday prior to the commencement of
each Week during the Term, for informational purposes under this Agreement only,
a schedule of the expected levels of Available Capability and energy of each of
the Nuclear Resources during each Hour of each Day of the immediately following
Week.
(b) Georgia Power or its agent shall use good faith efforts to notify
Oglethorpe Power, for informational purposes under this Agreement only, of any
changes to the Available Capability and energy schedule of the Nuclear Resources
for a given Week from time to time during such Week as soon as practicable after
Georgia Power learns of any actual or expected unavailability (or reduction of
Available Capability or energy) of any Nuclear Resource. Notwithstanding the
previous sentence, Georgia Power or its agent, as determined by Georgia Power,
shall provide Oglethorpe Power, on or before 11:00 a.m. (Birmingham, Alabama
prevailing time) of each Day during the Term, for informational purposes under
this Agreement only, notice of any changes to Georgia Power's then-current
Available Capability and energy schedule of the Nuclear Resources for the
immediately following two (2) Days.
ARTICLE VIII
OPC OFF-SYSTEM TRANSACTIONS
8.1 Coordinate with Georgia Power. Oglethorpe Power hereby agrees to
coordinate all OPC Off-System Transactions with Georgia Power or its agent.
Oglethorpe Power further agrees that Georgia Power or its agent shall have to
take instructions for or concerning any OPC Off-System Transaction only from
Oglethorpe Power and that Georgia Power or its agent will ignore instructions
for or concerning any such transaction given by or received from any person or
entity other than Oglethorpe Power. Oglethorpe Power shall notify the Southern
Control Area operator of its desire to interrupt an OPC Off-System Transaction,
and the Southern Control Area operator shall interrupt such transaction as soon
as practicable, provided that all affected parties and control areas have
consented to such interruption.
8.2 Minimum Scheduling Notice. (a) Any OPC Off-System Transactions
shall be coordinated and scheduled with Georgia Power or its agent in a manner
consistent with the relevant scheduling provisions of Sections 13.8 and 14.6, as
applicable, of the Open Access Transmission Tariff of Southern Companies as they
apply to the initiation of or change in transaction schedules.
(b) Except as set forth in this Article, this Agreement does not impose
any restrictions upon the right of Oglethorpe Power to schedule OPC Off-System
Transactions.
8.3 Energy Utilization. For purposes of calculating the Actual Hourly
Resource Utilization associated with each OPC Off-System Resource during each
Hour of the Term, Oglethorpe Power shall be deemed to have utilized all energy
scheduled by Oglethorpe Power during such Hour, in megawatt hours (MWH), as
thereafter verified by Georgia Power or its agent.
8.4 Load Responsibility. For purposes of calculating the OPC
Non-Territorial Load for each Hour of the Term, Oglethorpe Power shall have a
load responsibility associated with each OPC Off-System Transaction associated
with an energy delivery during such Hour. The amount of such load responsibility
shall be the amount of energy associated with such OPC Off-System Transaction
delivered by or on behalf of Oglethorpe Power, in megawatt hours (MWH), as
finally scheduled by Oglethorpe Power and thereafter verified by Georgia Power
or its agent.
8.5 Oglethorpe Power's Information Obligations. Oglethorpe Power shall
provide Georgia Power or its agent information concerning all OPC Off-System
Transactions in such detail and upon such frequency as Georgia Power or its
agent reasonably requests in order to schedule each such transaction, support
system security, support load regulation activities and/or support Georgia
Power's or its agent's timely completion of Georgia Power's billing functions
under Article XVII. Such information shall include for each such OPC Off-System
Transaction, without limiting Georgia Power's or its agent's aforesaid right to
reasonably request additional information, all information necessary to
implement NERC Policy 3 or its successor, including, but not limited to, NERC
tagging procedures therein, unless the FERC rules that NERC Policy 3 or the
tagging procedures therein shall not be obligatory. Oglethorpe Power shall not
be required to provide Georgia Power or its agent transaction price information
unless it is required for billing calculations pursuant to Sections 3.4(b),
11.5(f) or 11.6(f) of this Agreement.
8.6 Transmission Responsibility. Oglethorpe Power shall be responsible for making all transmission arrangements for any and all OPC Off-System Transactions and shall bear all costs associated with any and all such transmission.
8.7 Indemnification. Oglethorpe Power shall indemnify and hold Georgia
Power and its agent harmless from and against any and all losses, costs,
liabilities, damages and expenses (including without limitation attorneys' fees
and expenses) of any kind incurred or suffered by Georgia Power or its agent
pursuant to, as a result of or in connection with Georgia Power's performance
under this Article VIII or the performance or nonperformance of Oglethorpe Power
under this Article VIII, except for losses, costs, liabilities, damages and
expenses (including without limitation attorneys' fees and expenses) incurred or
suffered by Georgia Power or its agent as a direct result of any action of
Georgia Power that violates this Article VIII and that is not in accordance with
Prudent Utility Practice or as a direct result of Georgia Power's or its agent's
willful misconduct.
ARTICLE IX
MUTUAL BUY/SELL TRANSACTIONS
To the extent the Parties wish to engage in buy/sell transactions,
other than pursuant to the BPSA, or otherwise sell or purchase capacity or
energy from each other, such transactions shall be implemented and governed by
separate market-based service agreements to be executed between Oglethorpe Power
and Georgia Power or its agent. These buy/sell transactions shall be declared
and treated as OPC Off-System Transactions.
ARTICLE X
PSEUDO CT RESOURCE
10.1 Available Capability Schedule. (a) The provisions of this Article
shall be applicable for the Term of this Agreement; provided, however, that the
Parties may agree to any other mutually satisfactory date through which this
Article shall be operable.
(b) Georgia Power or its agent shall provide Oglethorpe Power, on or
before 11:00 a.m. (Birmingham, Alabama prevailing time) on the Friday prior to
the commencement of each Week during the Term, a schedule of the expected
Available Capability of the Pseudo CT Resource during each Hour of each Day of
the immediately following Week and the expected Maximum Utilization Level
thereof ("Available Capability Schedule").
10.2 Changes to Available Capability Schedule. (a) Georgia Power or its
agent shall use good faith efforts to notify Oglethorpe Power as soon as
practicable after Georgia Power learns of any actual or expected change in
Available Capability of the Pseudo CT Resource; provided, however, that Georgia
Power or its agent shall provide Oglethorpe Power, on or before 11:00 a.m.
(Birmingham, Alabama prevailing time) of each Day during the Term, notice of any
such changes to Georgia Power's then-current Available Capability Schedule for
the immediately following two (2) Days.
(b) Georgia Power may make changes to the Available Capability Schedule
and to the associated Maximum Utilization Level at any time Georgia Power
reasonably expects the Available Capability of the Pseudo CT Resource to change,
or at such time that such Available Capability has changed, for whatever reason,
including, without limitation, outages or deratings (as defined by NERC), or
transmission constraints (as defined by NERC) affecting the operation of the
Pseudo CT Resource.
10.3 Hourly Utilization Schedule. (a) Oglethorpe Power shall provide
Georgia Power or its agent on or before 1:30 p.m. (Birmingham, Alabama
prevailing time) on each Day during the Term, a schedule of its anticipated
hourly Utilization of the Pseudo CT Resource for each Hour of the immediately
following Day ("Utilization Schedule").
(b) Oglethorpe Power's Utilization Schedule shall at all times be
consistent on an Hour by Hour basis with the most recent Available Capability
Schedule provided by Georgia Power to Oglethorpe Power. Any Utilization Schedule
provided by Oglethorpe Power which is not in compliance with such Available
Capability Schedule shall be deemed ineffective. Georgia Power shall use
reasonable best efforts to notify Oglethorpe power that such Utilization
Schedule has been deemed ineffective as soon as practicable following such
event.
(c) Oglethorpe Power's Utilization of the Pseudo CT Resource must at
all times be either zero or the Maximum Utilization Level. To the extent
Oglethorpe Power schedules any energy from the Pseudo CT Resource at any level
other than zero or such Maximum Utilization Level of the Pseudo CT Resource, it
shall be deemed to have scheduled energy at such Maximum Utilization Level.
10.4 Changes to Utilization Schedule. (a) Oglethorpe Power may, in its
discretion, make changes to its Utilization Schedule for a given Day from time
to time during such Day, subject to the provisions of this Article. Oglethorpe
Power shall use good faith efforts to notify Georgia Power or its agent of such
changes as soon as practicable after Oglethorpe Power decides to make such
changes.
(b) Oglethorpe Power shall provide notice to Georgia Power or its agent
at least twenty (20) minutes prior to the start of an Hour of the quantity of
energy that Oglethorpe Power wishes to schedule from the Pseudo CT Resource
during such Hour. Oglethorpe Power may increase or decrease the level of energy
at which the Pseudo CT Resource is to be utilized during such Hour only until
twenty (20) minutes prior to such Hour. The Utilization Schedule for the Pseudo
CT Resource during a given Hour shall become final after twenty (20) minutes
prior to the start of the Hour and shall not thereafter be subject to increase
or decrease by Oglethorpe Power for that Hour.
(c) Oglethorpe Power shall be required to make such changes to the
Utilization Schedule from time to time during a Day to reflect any changes made
by Georgia Power to the Available Capability Schedule of the Pseudo CT Resource
for such Day. Oglethorpe Power shall make such changes as soon as practicable
after being notified of the actual or expected change in Available Capability;
provided, however, that Oglethorpe Power shall make such changes immediately in
the case of actual or imminent changes in Available Capability.
(d) For purposes of calculating the Actual Hourly Resource Utilization
of the Pseudo CT Resource during each Hour, Oglethorpe Power shall be deemed to
have utilized during such Hour all energy either (i) shown on the final and
effective Utilization Schedule during such Hour for the Pseudo CT Resource, or
(ii) deemed to have been scheduled by Oglethorpe Power during such Hour from the
Pseudo CT Resource, all in accordance with Sections 10.3, 10.4, or 10.5.
10.5 Pseudo CT Resource Test Energy. If Plant Hal Wansley Unit No. 5A
is required to operate for test purposes at any time, and Oglethorpe Power is
notified in advance of the scheduling deadline in Section 10.4(b), then
Oglethorpe Power shall be deemed to have scheduled Utilization from the Pseudo
CT Resource at a level equal to Oglethorpe Power's undivided ownership interest
in the Actual Hourly Facility Generation associated with the Pseudo CT Resource.
10.6 Pricing of Pseudo Energy Sales and Purchases. (a) Each Hour of the Term, Georgia Power shall compute the amount of the Pseudo Energy associated with the Pseudo CT Resource for that Hour, in megawatt hours (MWH).
(b) If the amount of the Pseudo Energy associated with the Pseudo CT Resource for an Hour is positive, then Georgia Power shall be deemed to have made a Pseudo Energy Sale to Oglethorpe Power equal to the amount of such Pseudo Energy. Georgia Power shall deliver such energy to Oglethorpe Power from any resources available to it at Level B-1. Oglethorpe Power shall pay to Georgia Power, for such Pseudo Energy Sale, a "Pseudo Resource Energy Charge", in dollars per Month, equal to the product of:
(1) the sum of the hourly Pseudo Energy Sale(s) associated with the Pseudo CT Resource for such Month, in megawatt hours (MWH); times
(2) the sum of (i) the product equal to (a) the Pseudo CT
Resource Heat Rate, times (b) the Marginal
Replacement Fuel Cost in effect for the Pseudo CT
Resource at such time, plus (ii) the quotient equal
to (a) the most recent 12 Months total actual
variable operations and maintenance ("O&M") and fuel
handling expenses for the generation facility
associated with the Pseudo CT Resource, divided by
(b) the net positive generation from such facility
over such 12 Month period, as determined pursuant to
the Joint Ownership Agreement accounting procedures
employed by Georgia Power or its agent at such time
and calculated consistent with the FERC account
definitions utilized in the then-current IIC for
variable O&M and fuel handling expenses (both (i) and
(ii) as measured in dollars per megawatt hour
($/MWH)).
(c) If the amount of the Pseudo Energy associated with the Pseudo CT
Resource for an Hour is negative, then Georgia Power shall be deemed to have
made a Pseudo Energy Purchase from Oglethorpe Power equal to the absolute value
of the amount of such Pseudo Energy. Georgia Power shall provide to Oglethorpe
Power, for such Pseudo Energy Purchase, a "Pseudo Resource Energy Credit", in
dollars per Month, equal to the product of:
(1) the sum of the hourly Pseudo Energy Purchase(s) associated with the Pseudo CT Resource for such Month, in megawatt hours (MWH); times
(2) the sum of (i) the product equal to (a) the Pseudo CT
Resource Heat Rate, times (b) the Marginal
Replacement Fuel Cost in effect for the Pseudo CT
Resource at such time, plus (ii) the quotient equal
to (a) the most recent 12 Months total actual
variable O&M and fuel handling expenses for the
generation facility associated with the Pseudo CT
Resource, divided by (b) the net positive generation
from such facility over such 12 Month period, as
determined pursuant to the Joint Ownership Agreement
accounting procedures employed by Georgia Power or
its agent at such time and calculated consistent with
the FERC account definitions utilized in the
then-current IIC for variable O&M and fuel handling
expenses (both (i) and (ii) as measured in dollars
per megawatt hour ($/MWH)).
ARTICLE XI
TERRITORIAL CONTROL AREA SERVICES
11.1 Availability. (a) Territorial Control Area Services are those
services which are necessary (i) to effectuate energy deliveries under this
Agreement and (ii) to maintain the integrity of the ITS and the Southern Control
Area pursuant to this Agreement. On a Yearly basis, Oglethorpe Power shall elect
either (i) to purchase all of the Territorial Control Area Services described in
Sections 11.4, 11.5 and 11.6, or (ii) to self-supply all of the Territorial
Control Area Services described in Sections 11.4, 11.5 and 11.6 in the manner
set forth below. If Oglethorpe Power does not notify Georgia Power of its
election to purchase Territorial Control Area Services at least 45 Days prior to
the start of a given Year, Oglethorpe Power shall be deemed to have elected to
self-supply the Territorial Control Area Services described in Sections 11.4,
11.5, and 11.6.
(b) The Territorial Control Area Services provided under this Article
shall be available only under the terms of this Agreement and shall not survive
the termination of this Agreement. In addition, the Territorial Control Area
Services shall be used solely for the purpose of serving OPC Territorial Load,
and shall not be remarketed or resold by Oglethorpe Power or its Affiliates in
any form to any entity, provided, however, that Oglethorpe Power may at all
times recover the costs of such service from OPC Territorial Load customers.
11.2 Scheduling, System Control and Dispatch Service. Oglethorpe Power
shall purchase from Georgia Power Scheduling, System Control and Dispatch
Service to serve OPC Territorial Load. Oglethorpe Power shall pay Georgia Power
for Scheduling, System Control and Dispatch Service a charge equal to $0.044960
per kilowatt per month (kW-month) times the OPC Territorial Load coincident with
the most recent twelve (12) monthly peak loads within the Southern Control Area.
Oglethorpe Power and its Affiliates hereby agree that no Party will oppose or
object to the level of the Scheduling, System Control and Dispatch Service rate
proposed by Southern Companies in the proceeding in Docket No. OA96-27 or in any
subsequent proceeding(s) during the Term of this Agreement, provided that no
Party has given notice of termination of this Agreement or, if such notice has
been given, provided that no successor arrangement to this Agreement has been
effectuated.
11.3 Reactive Supply and Voltage Control From Generation Sources Service. (a) Oglethorpe Power and GSOC agree that if the Southern Control Area requires additional or altered reactive dispatch, then the Southern Control Area operator shall have the right to call for an altered reactive dispatch from OPC Resources within the Southern Control Area, to the extent such resources are capable of such operation, including, but not limited to, the operation of resources which may have been off-line at the time of such request, without adverse distinction to Oglethorpe Power or GSOC; provided, however, that all generation facilities that become OPC Resources following the date of execution of this Agreement shall be capable of operating continuously at a leading power factor of 0.85. To the extent such requested operation results in additional costs, such costs shall be treated in accordance with the redispatch cost allocation methodology, if any, referenced in Section 3.3. Subject to the provisions of Section 11.3(b) below, Reactive Supply and Voltage Control From Generation Sources Service ("Reactive Service") will be deemed adequately provided by OPC Resources within the Southern Control Area as long as and to the extent that Oglethorpe Power complies with the Southern Control Area operator's calls for altered reactive dispatch. If Georgia Power reasonably determines, in accordance with Prudent Utility Practice, that Oglethorpe Power has failed to comply with the Southern Control Area operator's calls for altered reactive dispatch, Georgia Power shall treat Oglethorpe Power's failure to comply as a failure to meet specific performance criteria under Section 3.2(c) of this Agreement, and may terminate this Agreement upon ninety (90) Days prior written notice to Oglethorpe Power, in accordance with and subject to the procedures set forth in Section 3.2(c) of this Agreement.
(b) At such time that the industry develops a methodology for
accounting for MVAR utilization, the Parties agree to incorporate such
methodology and any resulting fees or charges into this Agreement. Should the
Parties fail to agree on the application of such methodology, Georgia Power may
file at the FERC to incorporate such changes. Oglethorpe Power and its
Affiliates shall have the right to contest the amount of such charge, but may
not contest Georgia Power's right to seek recovery of MVAR-related charges if
implemented pursuant to Section 11.3(b). Likewise, Georgia Power shall not
contest the right of Oglethorpe Power or its Affiliates to seek recovery of
appropriate MVAR-related charges, provided, however, that Georgia Power reserves
the right to contest the amount of any such charges and/or the appropriateness
of recovery from Georgia Power or Southern Companies.
11.4 Regulation and Frequency Response Service. (a) During the
effectiveness of this Agreement, Oglethorpe Power may elect, pursuant to Section
11.1 (i) to purchase from Georgia Power Regulation and Frequency Response
Service for OPC Territorial Load at rates then in effect under the Open Access
Transmission Tariff of Southern Companies, (ii) to maintain, subject to the
provisions below or any change implemented pursuant to Section 3.2, an adequate
Regulation Energy Variance (see Subsection (b) below) and adequate capacity to
meet its Regulation and Frequency Response Requirement for OPC Territorial Load
("Regulation Requirement"), or (iii) to purchase short term Regulation Service
pursuant to Section 11.7.
(b) Unless and until a revised test is adopted pursuant to Section
11.4(f), Oglethorpe Power's Regulation Energy Variance shall equal the absolute
value of the difference between the Actual Hourly OPC Resources Utilization and
the Real-Time OPC Total Load Requirements at Level B-1, on an integrated hourly
basis; provided, however, that the absolute value of the difference between
Oglethorpe Power's total metered load and its integrated Real-Time total load is
equal to or less than one percent of the total metered load for at least 95
percent of the Hours in the Month, and, provided further, that the absolute
value of the difference between (i) the integrated total output of the
Joint-Owned Facilities operated by Georgia Power, excluding Plant Hal Wansley
Unit No. 5A, as transmitted by Georgia Power to Oglethorpe Power and (ii) the
total metered output of such facilities is equal to or less than one (1) percent
of the total metered output of such facilities for at least 95 percent of the
Hours in the Month. If the absolute value of the difference between Oglethorpe
Power's total metered load and Oglethorpe Power's integrated Real-Time total
load is greater than one (1) percent of the total metered load for more than
five (5) percent of the Hours in the Month, then, in the discretion of Georgia
Power, total metered loads may be used in lieu of integrated Real-Time total
load for the OPC Total Load Requirements for purposes of the Regulation Energy
Variance for that Month. The comparison of total metered load to integrated Real
Time total load shall exclude all scheduled loads (i.e., those which do not rely
on meters, such as OPC Off-System Transactions). If the absolute value of the
difference between (i) the integrated total output of the Joint-Owned Facilities
operated by Georgia Power, excluding Plant Hal Wansley Unit No. 5A, as
transmitted by Georgia Power to Oglethorpe Power and (ii) the total metered
output of such facilities is greater than one (1) percent of the total metered
output of such facilities for more than five (5) percent of the Hours in the
Month, then such integrated output shall be used in lieu of the Actual Hourly
Resource Utilization of such facilities for purposes of the Regulation Energy
Variance, Spinning Capabilities (Section 11.5(d)) and Supplemental Capabilities
(Section 11.6(d)) for that Month. The comparison of integrated total output to
total metered output for Spinning and Supplemental Capabilities shall only
include the Joint-Owned Facilities operated by Georgia Power and deemed
Qualifying Resources - Spinning.
(c) Unless and until a different regulating standard is applied to the
Southern Control Area in accordance with Prudent Utility Practice or a revised
test is adopted pursuant to Section 11.4(f), Oglethorpe Power's Regulation
Requirement shall equal 2.09% of the OPC Territorial Load coincident with the
most recent calendar year twelve (12) monthly peak loads of the Southern Control
Area.
(d) An integrated hourly test shall be performed to ensure that
Oglethorpe Power's Regulation Energy Variance is less than or equal to
Oglethorpe Power's L10, as determined annually in accordance with NERC's
prescribed methodology applied to the maximum OPC Territorial Load from the
preceding Year. If the integrated hourly test (Oglethorpe Power's Regulation
Energy Variance minus Oglethorpe Power's L10) results in a zero or negative
value, then Oglethorpe Power shall be deemed to have adequately maintained its
Regulation Energy Variance for the Hour. However, if such integrated hourly test
results in a positive value, then Oglethorpe Power shall be deemed not to have
adequately maintained such Regulation Energy Variance for the Hour, and
Oglethorpe Power shall be required to purchase its Regulation Energy Variance
from Georgia Power in an amount equal to the difference between its Regulation
Energy Variance in such Hour and Oglethorpe Power's L10 at such time. Until such
time as the Southern Control Area operator releases Plant Wansley Unit Nos. 1
and 2 and Plant Scherer Unit Nos. 1 and 2 for Automatic Generation Control
operation by Oglethorpe Power, Oglethorpe Power's L10 shall be replaced with the
Inadvertent Energy Bandwidth in effect for that Hour, as defined in Section
12.2.
(e) To the extent Oglethorpe Power is required to purchase its
Regulation Energy Variance from Georgia Power pursuant to the provisions of
Subsection (d) hereto, such requirement shall be purchased from Georgia Power at
a rate calculated in accordance with Exhibit C.
(f) At such time that the Parties determine that it is practical to do
so, Georgia Power and Oglethorpe Power shall use reasonable best efforts to
negotiate a Real Time regulation performance test, based on applicable
performance criteria adopted by NERC, to replace the test described in Section
11.4(d) above. Unless mutually agreed otherwise, at such time, Oglethorpe
Power's Regulation Requirement for Real Time performance shall be zero megawatts
(such changes to be implemented concurrently for regulation and operating
reserves).
11.5 Operating Reserve - Spinning Reserve Service. (a) During the
effectiveness of this Agreement, Oglethorpe Power may elect, pursuant to Section
11.1, (i) to purchase from Georgia Power Operating Reserve Spinning Reserve
Service for OPC Territorial Load at rates then in effect under the Open Access
Transmission Tariff of Southern Companies, (ii) to maintain, subject to the
provisions below or any change implemented pursuant to Section 3.2, spinning
operating reserves for OPC Territorial Load, ("Spinning Reserve Requirement"),
or (iii) to purchase short term Spinning Reserve Service pursuant to Section
11.7.
(b) Oglethorpe Power's Spinning Reserve Requirement shall equal 2.09%
of the OPC Territorial Load coincident with the 1996 twelve (12) monthly peak
loads of the Southern Control Area. The 2.09% value utilized herein shall be
updated and revised, if necessary, to comport with changes in the Southern
Control Area spinning operating reserve requirements, effectuated in accordance
with Prudent Utility Practice, or changes in the resource base for the Southern
Control Area (either an increase or decrease in the contingency size).
(c) Oglethorpe Power shall maintain its Regulation Requirement and
Spinning Reserve Requirement in unscheduled but on-line OPC Resources which are
qualified to supply Operating Reserve - Spinning Reserve Service ("Spinning
Reserve Service"). In order for an OPC Resource to qualify as a "Qualifying
Resource - Spinning," it must (i) be located within the Southern Control Area;
(ii) be telemetered to the Southern Control Area operator; (iii) be capable of
responding to AGC; (iv) respond to frequency deviations; and (v) be immediately
callable by the Southern Control Area operator, by verbal notification to
Oglethorpe Power's system operator, to produce energy on a pro rata basis, as
nearly as practicable, with the other regulation and spinning operating reserves
of the Southern Control Area. For purposes of this Section, Qualifying Resources
- Spinning shall initially be limited to Steam Block Resources, Plant Scherer
Unit No. 1, Plant Scherer Unit No. 2, Plant Wansley Unit No. 1, Plant Wansley
Unit No. 2 and Rocky Mountain (units which are in the generation mode). From
time to time during the term of this Agreement, Oglethorpe Power may request
that one or more additional OPC Resources be designated and treated as
Qualifying Resources - Spinning. The Parties agree to discuss the issue of
whether such additional OPC Resources meet the above requirements to be
Qualifying Resources - Spinning, as well as the terms and conditions related
thereto, at the time of such request. Oglethorpe Power shall not be precluded
from submitting Dynamically Scheduled OPC Resources or OPC-Controllable-ITS
Resources which are connected to a distribution system for credit as Qualifying
Resources - Spinning; provided, however, that in addition to the above
requirements, such resources must be callable at the sole discretion of
Oglethorpe Power.
(d) An integrated hourly test shall be performed to ensure that the sum
of (i) the on-line Available Capability of the Qualifying Resources - Spinning
less the Actual Hourly Resource Utilization for such resources (subject to
Section 11.4(b)) and (ii) any Back-Up Capacity purchased by Oglethorpe Power
within the Hour pursuant to Section 12.3 (collectively referred to in this
Subsection as "Spinning Capabilities") are greater than or equal to Oglethorpe
Power's Regulation Requirement and Spinning Reserve Requirement. If the
integrated hourly test (Spinning Capabilities minus Oglethorpe Power's
Regulation and Spinning Reserve Requirements) results in a zero or positive
value, then Oglethorpe Power shall be deemed to have adequately maintained its
Regulation and Spinning Reserve Requirements for the Hour. However, if such
integrated hourly test results in a negative value, then Oglethorpe Power shall
be deemed not to have adequately maintained such requirements for the Hour, and
Oglethorpe Power shall be required to purchase its Regulation and Spinning
Reserve Requirements from Georgia Power in an amount equal to the difference
between Oglethorpe Power's Regulation and Spinning Reserve Requirements and
Oglethorpe Power's Spinning Capabilities.
(e) To the extent Oglethorpe Power is required to purchase its
Regulation and Spinning Reserve Requirements from Georgia Power pursuant to the
provisions of Subsection (d) hereto, such requirements shall be purchased from
Georgia Power at a rate calculated in accordance with Exhibit D.
(f) If Oglethorpe Power has elected to maintain its Regulation and
Spinning Reserve Requirements in accordance with Section 11.1, in any Hour in
which the Southern Control Area Operator calls for energy production from
Oglethorpe Power's regulation or spinning operating reserves and Oglethorpe
Power produces surplus energy in connection with such requested operation of OPC
Resources other than Block Resources, Georgia Power shall waive any charges
associated with the Regulation Energy Variance in Section 11.4(d) and shall
credit Oglethorpe Power for such surplus energy at the higher of 1.1 times the
highest off-system transaction price disclosed by Oglethorpe Power, if any, in
effect at the time of the call (either a purchase or a sale) or the credit
determined in accordance with Section 12.5. In addition, such Hour shall be
excluded from the determination of Commitment Cost in Section 12.4. For any such
Hour in which Oglethorpe Power incurs any charges associated with the integrated
hourly tests performed in accordance with Sections 11.5(d) and 11.6(d), the
computation of such charges shall be reduced by an amount commensurate with
Oglethorpe Power's surplus energy production, such surplus to be applied first
to the test set forth in Section 11.6(d) and second to the test set forth in
Section 11.5(d). The foregoing shall in no way restrict Oglethorpe Power's use
of the Block Resources, and any surplus energy produced in such Hour shall be
first credited to the increased output of OPC Resources other than Block
Resources, with any remainder being credited in accordance with Section 12.5.
For any Hour in which the Southern Control Area operator has called for
energy production from Oglethorpe Power's regulation or spinning operating
reserves prior to ten (10) minutes before the end of such Hour and Oglethorpe
Power does not produce surplus energy, the on-line Available Capability of any
OPC Resource not operated by Georgia Power shall be deemed equal to Oglethorpe
Power's entitlement to the greater of (i) the integrated hourly output of such
resource, or (ii) the minimum output level maintained by the resource between
ten (10) minutes following the call and the earlier of the end of the call or
the end of each such Hour. The on-line Available Capability of any Georgia Power
operated resources shall continue to be determined in accordance with the
operating procedures for such resources. In addition, the rate for deficit
energy in excess of the Actual Hourly Resource Utilization of the committed
Block Resources less the then current load carrying capability of such Block
Resources shall be the higher of 1.1 times the highest off-system transaction
price disclosed by Georgia Power, if any, in effect at the time of the call
(either a purchase or a sale) or the rate determined in accordance with Section
12.6.
(g) At such time that the Parties determine that it is practical to do
so, Georgia Power and Oglethorpe Power shall use reasonable best efforts to
negotiate a Real Time spinning operating reserve performance test to replace the
test in Section 11.5(d) above, based on Oglethorpe Power's highest instantaneous
load within the Hour (such changes to be implemented concurrently for regulation
and operating reserves).
11.6 Operating Reserve - Supplemental Reserve Service. (a) During the
effectiveness of this Agreement, Oglethorpe Power may elect, pursuant to Section
11.1, (i) to purchase from Georgia Power Operating Reserve - Supplemental
Reserve Service for OPC Territorial Load at rates then in effect under the Open
Access Transmission Tariff of Southern Companies, (ii) to maintain, subject to
the provisions below or any change implemented pursuant to Section 3.2,
supplemental operating reserves for OPC Territorial Load ("Supplemental Reserve
Requirement"), or (iii) to purchase short term Supplemental Reserve Service
pursuant to Section 11.7.
(b) Oglethorpe Power's Supplemental Reserve Requirement shall equal
2.09% of the OPC Territorial Load coincident with the 1996 twelve (12) monthly
peak loads of the Southern Control Area. The 2.09% value utilized herein shall
be updated and revised, if necessary, to comport with changes in the Southern
Control Area supplemental operating reserve requirements, effectuated in
accordance with Prudent Utility Practice, or changes in the resource base for
the Southern Control Area (either an increase or decrease in the contingency
size).
(c) Oglethorpe Power shall maintain its Regulation, Spinning and
Supplemental Reserve Requirements from unscheduled OPC Resources which are
qualified to supply Spinning Reserve Service or Operating Reserve Supplemental
Reserve Service ("Supplemental Reserve Service") and qualifying interruptible
load. In order for an OPC Resource to qualify as a "Qualifying Resource -
Supplemental," it must (i) be located in the Southern Control Area; (ii) be
telemetered to the Southern Control Area operator; (iii) be capable of
synchronous operation at the output level declared by Oglethorpe Power for
Supplemental Reserve Service within ten (10) minutes of initial call by the
Southern Control Area operator to the Oglethorpe Power system operator; and (iv)
be immediately callable by the Southern Control Area operator, by verbal
notification to the Oglethorpe Power system operator, to produce energy on a pro
rata basis, as nearly as practicable, with the other supplemental operating
reserves of the Southern Control Area. For purposes of this Section, Qualifying
Resources Supplemental shall initially be limited to fifteen (15) percent of the
Peaking Block Resources and Rocky Mountain (pumping load, and/or synchronous
condensing in the generation direction or off-line units while operating in a
mode which permits the declared level of synchronous output within 10 minutes of
initial call). From time to time during the term of this Agreement, Oglethorpe
Power may request that one or more additional OPC Resources be designated and
treated as Qualifying Resources - Supplemental. The Parties shall discuss the
issue of whether such additional OPC Resources meet the above requirements to be
Qualifying Resources - Supplemental, as well as the terms and conditions related
thereto, at the time of such request. Oglethorpe Power shall not be precluded
from submitting Dynamically Scheduled OPC Resources or OPC-Controllable-ITS
Resources which are connected to a distribution system for credit as Qualifying
Resources - Supplemental; provided, however, that, in addition to the above
requirements, such resources must be callable at the sole discretion of
Oglethorpe Power. Qualifying interruptible loads must (i) be interruptible
within 10 minutes of initial call by the Southern Control Area operator to the
Oglethorpe Power system operator, (ii) be callable at the sole discretion of
Oglethorpe Power, and (iii) meet NERC guidelines for the treatment of
interruptible loads as non-spinning operating reserves. Oglethorpe Power must
declare which, if any, interruptible loads shall be included as qualifying
interruptible loads at least 45 Days prior to the commencement of each Year,
This declaration shall constitute an election for purposes of Section 3.4.
(d) An integrated hourly test shall be performed to ensure that the sum
of (i) the on-line Available Capability of the Qualifying Resources - Spinning
less the Actual Hourly Resource Utilization of such resources (subject to
Section 11.4(b)), (ii) the Available Capability of Qualifying Resources -
Supplemental less the Actual Hourly Resource Utilization of such resources;
(iii) the current hourly loads of each qualifying interruptible customer in
excess of that customer's firm contract demand; (iv) any Back-Up Capacity
purchased by Oglethorpe Power within the Hour under Section 12.3; and (v) any
Regulation and Spinning Reserve Requirements purchased by Oglethorpe Power
within the Hour pursuant to Section 11.5 (collectively referred to in this
Subsection as "Supplemental Capabilities") is greater than or equal to
Oglethorpe Power's Regulation Requirement, Spinning Reserve Requirement and
Supplemental Reserve Requirement. If the integrated hourly test (Supplemental
Capabilities minus Oglethorpe Power's Regulation, Spinning Reserve and
Supplemental Reserve Requirements) results in a zero or positive value, then
Oglethorpe Power shall be deemed to have adequately maintained its Supplemental
Reserve Requirement for the Hour. However, if such integrated hourly test
results in a negative value, then Oglethorpe Power shall be deemed not to have
adequately maintained such requirement, and Oglethorpe Power shall be required
to purchase its Supplemental Reserve Requirement from Georgia Power in an amount
equal to the difference between Oglethorpe Power's Regulation, Spinning Reserve
and Supplemental Reserve Requirements and Oglethorpe Power's Supplemental
Capabilities.
(e) To the extent Oglethorpe Power is required to purchase its
Supplemental Reserve Requirement from Georgia Power pursuant to the provisions
of Subsection (d) hereto, such requirement shall be purchased from Georgia Power
at a rate calculated in accordance with Exhibit E.
(f) If Oglethorpe Power has elected to maintain its Supplemental
Reserve Requirement in accordance with Section 11.1, in any Hour in which the
Southern Control Area Operator calls for energy production from Oglethorpe
Power's supplemental operating reserves and Oglethorpe Power produces surplus
energy in connection with such requested operation of OPC Resources other than
Block Resources, Georgia Power shall waive any charges associated with the
Regulation Energy Variance in Section 11.4(d), and shall credit Oglethorpe Power
for such surplus energy at the higher of 1.1 times the highest off-system
transaction price disclosed by Oglethorpe Power, if any, in effect at the time
of the call (either a purchase or a sale) or the credit determined in accordance
with Section 12.5. In addition, such Hour shall be excluded from the
determination of Commitment Cost in Section 12.4. For any such Hour in which
Oglethorpe Power incurs any charge associated with the integrated hourly test
performed in accordance with Section 11.6(d), the computation of such charge
shall be reduced by an amount commensurate with Oglethorpe Power's surplus
energy production, such surplus to be applied to the test set forth in Section
11.6(d). The foregoing shall in no way restrict Oglethorpe Power's use of the
Block Resources, and any surplus energy produced in such Hour shall be first
credited to the increased output of OPC Resources other than Block Resources,
with any remainder being credited in accordance with Section 12.5.
For any Hour in which the Southern Control Area operator has called for
energy production from Oglethorpe Power's supplemental operating reserves prior
to ten (10) minutes before the end of such Hour and Oglethorpe Power does not
produce surplus energy, the Available Capability of any OPC Resource not
operated by Georgia Power shall be deemed equal to Oglethorpe Power's
entitlement to the greater of (i) the integrated hourly output of such resource,
or (ii) the minimum output level maintained by the resource between ten (10)
minutes following the call and the earlier of the end of the call or the end of
each such Hour. The Available Capability of any Georgia Power operated resources
shall continue to be determined in accordance with the operating procedures for
such resources. In addition, the rate for deficit energy in excess of the Actual
Hourly Resource Utilization of the committed Block Resources less the then
current load carrying capability of such Block Resources shall be the higher of
1.1 times the highest off-system transaction price disclosed by Georgia Power,
if any, in effect at the time of the call (either a purchase or a sale) or the
rate determined in accordance with Section 12.6.
(g) At such time that the Parties determine that it is practical to do
so, Georgia Power and Oglethorpe Power shall use reasonable best efforts to
negotiate a Real Time supplemental operating reserve performance test to replace
the test in Section 11.6(d) above, based on Oglethorpe Power's highest
instantaneous load within the Hour (such changes to be implemented concurrently
for regulation and operating reserves).
11.7 Short-Term Purchase Of Territorial Control Area Services. (a) Oglethorpe Power may purchase short-term Regulation Service in accordance with the terms of Section 11.7(c) and (d) below if (i) Oglethorpe Power's control center computer or communication equipment is inoperable such that Oglethorpe Power cannot reasonably determine its instantaneous load and generation or (ii) one or more of the following generation facilities is unavailable due to an unplanned outage (as defined by NERC): Plant Scherer Unit No. 1, Plant Scherer Unit No. 2, Plant Wansley Unit No. 1 or Plant Wansley Unit No. 2.
(b) Oglethorpe Power may purchase short-term Spinning and Supplemental
Reserve Services in accordance with the terms of Section 11.7(c) and (d) below
if any two or more of the Qualifying Resources Spinning and/or Supplemental (i)
are unavailable due to unplanned outages (as defined by NERC), or (ii) in the
case of Block Resources, are derated to zero MW load carrying capability, in
accordance with the BPSA.
(c) A short-term purchase under this Section shall commence at midnight
following Oglethorpe Power's request; provided, however, that such request shall
be made no later than four (4) o'clock p.m. (Birmingham, Alabama time) on the
Monday through Friday following a 12-Hour period after such qualifying event
occurs. A short-term purchase of Regulation Service under this Section shall end
at midnight following (i) the repair of Oglethorpe Power's control center
equipment or (ii) a change in operating status of the applicable generating
units, such that the qualifying condition no longer exists, subject to the
minimum service duration set forth in Section 11.7(d) below. A short-term
purchase of Spinning and Supplemental Reserve Services under this Section shall
end at midnight following a change in operating status of the applicable
generating units, such that the qualifying condition no longer exists, subject
to the minimum service duration set forth in Section 11.7(d) below.
(d) In its request for short-term Regulation Service and/or short-term
Spinning and Supplemental Reserve Services, Oglethorpe Power shall identify the
event(s) which qualify Oglethorpe Power for such service(s), the service(s)
Oglethorpe Power wishes to purchase, and the minimum duration of such
service(s), either 30 Days or 120 Days. Oglethorpe Power may purchase Regulation
Service separately from Spinning and Supplemental Reserve Services, but must
purchase Spinning Reserve Service and Supplemental Reserve Service together. The
rates for all short term services under this Section are set forth in Exhibit F.
ARTICLE XII
ENERGY IMBALANCE SERVICE
12.1 Energy Imbalance. (a) For each Hour of the Term, Georgia Power shall calculate the Energy Imbalance as the difference between: (i) the Actual Hourly OPC Resources Utilization in the Hour, as measured at or adjusted to Level B-1, less (ii) OPC Total Load Requirements.
(b) If the Energy Imbalance is positive, then Oglethorpe Power has
surplus energy in such Hour and is deemed to have sold energy to Georgia Power
in an amount equal to this difference under the terms of Section 12.5 of this
Agreement, and Oglethorpe Power may incur Commitment Costs associated with such
sale in accordance with Section 12.4 of this Agreement.
(c) If the Energy Imbalance is negative, then Oglethorpe Power has
deficit energy in such Hour and is deemed to have purchased from Georgia Power
energy in an amount equal to the absolute value of this difference under the
terms of Sections 12.3, 12.4, and 12.6 of this Agreement.
12.2 Inadvertent Energy Bandwidth. (a) For each Day of the Term, Georgia Power shall calculate the average Energy Imbalance by computing the quotient of: (i) the sum of the absolute values of the Energy Imbalance for each Hour in the Day, divided by (ii) the total number of Hours in the Day.
(b) If such average Energy Imbalance for a Day is less than or equal to
60 megawatts, then (i) the Inadvertent Energy Bandwidth for surplus energy
(IEBS) for each Hour in the Day shall be 100 Megawatts and (ii) the Inadvertent
Energy Bandwidth for deficit energy (IEBD) for each Hour in the Day shall be
-100 megawatts.
(c) If the average Energy Imbalance for a Day is greater than 60
megawatts, then (i) the Inadvertent Energy Bandwidth for surplus energy (IEBS)
for each hour in the Day shall be 60 megawatts and (ii) the Inadvertent Energy
Bandwidth for deficit energy (IEBD) for each Hour in the Day shall be -60
megawatts.
(d) Until such time as the Southern Control Area operator releases Plant Wansley Unit Nos. 1 and 2 and Plant Scherer Unit Nos. 1 and 2 for Automatic Generation Control operation by Oglethorpe Power, the 60 megawatt value referenced in (b) and (c) above shall be replaced with 80 megawatts.
12.3 Back-Up Capacity Charge. If Oglethorpe Power has hourly deficit
energy and the absolute value of such deficit is greater than the absolute value
of the difference between (i) the sum of the Actual Hourly Resource Utilization
of all Block Resources and the Pseudo CT Resource, less (ii) the sum of the
then-current load carrying capability of all Block Resources and the Maximum
Utilization Level of the CT Resource ("Difference"), then Oglethorpe Power shall
pay Georgia Power a Back-Up Capacity Charge equal to the product of: (i) the
absolute value of the hourly deficit energy minus the absolute value of the
Difference for that Hour, and (ii) the greater of the Critical Period rate for
Regulation and Spinning Reserve Requirements (see Exhibit D) and 400 dollars per
megawatt hour ($/MWH).
12.4 Commitment Cost. (a) If Oglethorpe Power has surplus energy during
any Hour of the Day that is greater than the IEBs for that Hour, then, unless
such Hour is excluded pursuant to Section 3.4(b), 11.5(f) or 11.6(f), Oglethorpe
Power shall pay Georgia Power a Commitment Cost equal to the product of: (i) the
maximum amount of hourly surplus energy in that Day and (ii) the Commitment Cost
Rate for that Day. The Commitment Cost Rate, in dollars per megawatt day, shall
be calculated pursuant to Georgia Power's current practice, as set forth in
Exhibit B; provided, however, that any changes to such practices as applied to
this Agreement shall be agreed to in advance by the Parties.
(b) If Oglethorpe Power has deficit energy in any Hour of a Day that is
less than the IEBD for that Hour, then Oglethorpe Power shall pay a Commitment
Cost to Georgia Power for that Day equal to the product of (i) the maximum of
the absolute value of the hourly deficit energy in that Day and (ii) the
Commitment Cost Rate for that Day.
12.5 Credit for Hourly Surplus Energy. In each Hour when Oglethorpe
Power has surplus energy, Georgia Power shall credit Oglethorpe Power for this
surplus energy an amount equal to the sum of:
(a) the product of
(i) the amount of the hourly surplus energy, up to but not
greater than the IEBS for that Hour, times (ii) the
Territorial Marginal Cost for that Hour (unless
modified by Sections 3.4(b), 11.5(f) or 11.6(f)), and
(b) the product of
(i) the amount of the hourly surplus energy, if any,
which is greater than the IEBS for that Hour, times
(ii) the lesser of System Marginal Cost for that Hour
minus ten dollars per megawatt hour ($/MWH) and
Territorial Marginal Cost for that Hour (unless
modified by Sections 3.4(b), 11.5(f) or 11.6(f)).
12.6 Payment for Hourly Deficit Energy. In each Hour when Oglethorpe Power has deficit energy, Oglethorpe Power shall pay Georgia Power for this deficit energy an amount equal to the sum of:
(a) the product of
(i) the amount of the absolute value of the hourly
deficit energy, up to but not greater than the
absolute value of the IEBD for that Hour, times
(ii)the System Marginal Cost for that Hour (unless
modified by Sections 3.4(b), 11.5(f) or 11.6(f)), and
(b) the product of
(i) the amount of the absolute value of the hourly
deficit energy, if any, which is greater than the
absolute value of the IEBD for that Hour, times (ii)
the System Marginal Cost for that Hour plus ten
dollars per megawatt hour ($/MWH) (unless modified by
Sections 3.4(b), 11.5(f) or 11.6(f)).
ARTICLE XIII
OPERATIONAL DEFICIENCY
13.1 Operational Responsibility. Oglethorpe Power and Georgia Power
shall each be responsible for committing sufficient resources, scheduling energy
utilization therefrom and maintaining sufficient actual or deemed spinning
reserve levels to meet reasonably foreseeable operating contingencies, to
accommodate load forecast errors, transmission and generation equipment failures
and similar matters and to ensure that its resources as nearly as possible equal
its resource requirements on an instantaneous basis.
13.2 Oglethorpe Power's Real-Time Information Obligations. (a)
Oglethorpe Power shall provide Georgia Power or its agent information concerning
the output levels of the OPC-Controllable-ITS Resources and the scheduled output
of the SEPA Resources on a Real-Time basis, in such detail as Georgia Power or
its agent reasonably requests in order to support system security or load
regulation activities. Oglethorpe Power shall provide such Real-Time information
through a combination of telemetered and estimated values consistent with
Prudent Utility Practice. Oglethorpe Power shall not be required to provide
Hourly individual unit output levels to Georgia Power or its agent unless it is
necessary or appropriate for the above purposes. In addition, Oglethorpe Power
shall also provide Georgia Power or its agent revenue metering records, in
electronic form if available, of the actual output of the OPC-Controllable-ITS
Resources and the delivered output of the SEPA Resources in such detail and upon
such frequency as Georgia Power or its agent reasonably requests in order to
support, verify and timely complete either or both Oglethorpe Power's
calculation of the Actual Hourly Resource Utilization of the
OPC-Controllable-ITS Resources under Section 4.1 and Georgia Power's billing
functions under Article XVII.
(b) Oglethorpe Power shall provide Georgia Power or its agent Real-Time
information concerning energy usage by Oglethorpe Power as measured at each of
Oglethorpe Power's Delivery Points, in such detail as Georgia Power or its agent
reasonably requests to support system security or load regulation activities.
Oglethorpe Power shall provide such Real-Time information through a combination
of telemetered and estimated values in such form as is reasonably suitable to
Georgia Power or its agent. In addition, Oglethorpe Power shall provide Georgia
Power or its agent revenue metering records, in electronic form, of the actual
energy flows at each of the Delivery Points in such detail and upon such
frequency as Georgia Power or its agent reasonably requests in order to support,
verify and timely complete Georgia Power's calculation of OPC Total Load
Requirements and Georgia Power's billing functions under Article XVII.
13.3 Determination of OPC Operational Deficiency. (a) Oglethorpe Power
shall provide Georgia Power or its agent, on a Real-Time basis, (1) the sum of
the instantaneous Actual Hourly Resource Utilization of each of the OPC
Resources at Level B-1, and (2) Oglethorpe Power's instantaneous values for OPC
Total Load Requirements at Level B-1.
(b) Georgia Power or its agent shall, using the information provided by
Oglethorpe Power pursuant to Section 13.3(a), as verified by Georgia Power or
its agent, determine if there is an OPC Operational Deficiency, from time to
time during the Term on as near an instantaneous basis as practicable given the
timing of Oglethorpe Power's provision of such information. An OPC Operational
Deficiency is the amount equal to the difference between (1) the sum provided by
Oglethorpe Power pursuant to Section 13.3(a)(1); minus (2) the amount provided
by Oglethorpe Power pursuant to Section 13.3(a)(2), if such difference is
negative.
(c) Oglethorpe Power shall provide Georgia Power or its agent the
Real-Time information required pursuant to this Article through a combination of
telemetered and estimated values in such form consistent with Prudent Utility
Practice.
(d) The existence of an OPC Operational Deficiency is an indicator to
the Parties of a circumstance relevant to monitoring system conditions to ensure
system security and reliability.
13.4 Corrective Action to Eliminate an OPC Operational Deficiency. This
Section 13.4 shall apply only if Oglethorpe Power has not elected, for the
current Year, to declare interruptible loads as supplemental operating reserves
pursuant to Section 11.6(c) herein. (a) If at any time during the Term an OPC
Operational Deficiency exists and Georgia Power or its agent determines that it
is necessary or appropriate, in accordance with the CSA-IOD Interruption
Procedures developed by Georgia Power or its agent, for Oglethorpe Power to take
action to eliminate such OPC Operational Deficiency, then Oglethorpe Power, at
the direction of Georgia Power or its agent, shall take such action or actions
as Oglethorpe Power, in its sole discretion, deems necessary or appropriate
(including, without limitation, load shedding) to eliminate such OPC Operational
Deficiency.
(b) Should Georgia Power or its agent have given a direction to
Oglethorpe Power to eliminate an OPC Operational Deficiency pursuant to Section
13.4(a), and if after a reasonable time, in accordance with the CSA-IOD
Interruption Procedures developed by Georgia Power or its agent, Oglethorpe
Power shall not have eliminated such OPC Operational Deficiency, then Georgia
Power or its agent may take such action or actions consistent with Prudent
Utility Practice as Georgia Power or its agent deems necessary or appropriate to
eliminate the OPC Operational Deficiency, including, without limitation, load
shedding and opening any of the interconnections between Georgia Power and
Oglethorpe Power.
(c) Neither Georgia Power nor Oglethorpe Power shall be required to
shed load in order to allow the other to maintain an operational deficiency.
13.5 No Liability; Indemnity. (a) Neither Georgia Power nor its agent
shall have any liability to Oglethorpe Power or any other person or entity for
any losses, costs, liabilities, damages or expenses (including without
limitation attorneys' fees and expenses) of any kind incurred or suffered
pursuant to, as a result of, or in connection with any action taken by or at the
direction of Georgia Power under this Article XIII, except for losses, costs,
liabilities, damages or expenses (including without limitation attorneys' fees
and expenses) resulting directly from actions taken by or directions given by
Georgia Power that are in violation of this Article XIII and that are not
Prudent Utility Practice or resulting directly from willful misconduct of
Georgia Power or its agent.
(b) Oglethorpe Power hereby indemnifies and holds Georgia Power and its
agent harmless from and against any and all losses, costs, liabilities, damages
and expenses (including without limitation attorneys' fees and expenses) of any
kind incurred or suffered by Georgia Power or its agent pursuant to, as a result
of or in connection with Oglethorpe Power's performance or nonperformance under
Section 13.4, including, but not limited to, any action taken by or at the
direction of Georgia Power under Section 13.4, except for losses, costs,
liabilities, damages or expenses (including without limitation attorneys' fees
and expenses) resulting directly from actions taken by or directions given by
Georgia Power that are not Prudent Utility Practice or from willful misconduct
of Georgia Power or its agent.
(c) With respect to data and information provided by Oglethorpe Power
pursuant to Section 13.3, Oglethorpe Power shall indemnify Georgia Power for any
and all damages awarded to a third party by a court of competent jurisdiction in
connection with action(s) taken by Georgia Power in reliance on data or
information provided by Oglethorpe Power which understates Oglethorpe Power's
Operational Deficiency.
ARTICLE XIV
NON-TERRITORIAL CONTROL AREA SERVICES
14.1 Load Within Southern Control Area. (a) Any OPC Non-Territorial
Load which is within the Southern Control Area will be provided with
Non-Territorial Control Area Services as follows: (i) Scheduling System Control
and Dispatch Service, and Reactive Supply and Voltage Control From Generation
Sources Service will be made available on terms consistent with the provisions
of this Agreement for OPC Territorial Load; and (ii) Regulation and Frequency
Response Service and Operating Reserve - Spinning and Supplemental Reserve
Services will be made available at the standard rates then in effect under the
Open Access Transmission Tariff of Southern Companies.
(b) Notwithstanding the provisions of Section 14.1(a), to the extent an
OPC Non-Territorial Load purchaser inside the Southern Control Area is receiving
and paying for Control Area Services for Regulation and Frequency Response
Service, Operating Reserve - Spinning Reserve Service and Operating Reserve -
Supplemental Reserve Service under the Open Access Transmission Tariff of
Southern Companies, Georgia Power's invoice to Oglethorpe Power shall show the
charge for such Control Area Services as determined in Section 14.1(a), and
shall also reflect a credit for the amounts paid by such purchaser to Southern
Companies. In addition, to the extent OPC Non-Territorial Load consists of a
sale to an entity and such entity is self-supplying one or more Control Area
Services with respect to such sale pursuant to a written agreement between such
entity and Georgia Power or its agent, Georgia Power's invoice to Oglethorpe
Power shall show the charge for such Control Area Services as determined in
Section 14.1(a), and shall also reflect a credit for the value of such Control
Area Services self-supplied by such entity, as determined by the rates then in
effect under the Open Access Transmission Tariff of Southern Companies.
14.2 Other Loads. Any OPC Non-Territorial Load which is not within the
Southern Control Area will be provided with Non-Territorial Control Area
Services as follows: (i) Scheduling, System Control and Dispatch Service will be
charged a rate of $.092637 per megawatt hour (MWH); and (ii) Reactive Supply and
Voltage Control From Generation Sources Service will be provided in accordance
with the provisions of Section 11.3 of this Agreement. Regulation and Frequency
Response Service and Operating Reserve - Spinning and Supplemental Reserve
Services will not be provided under this Agreement.
ARTICLE XV
CONFIDENTIALITY OF DATA
15.1 Information Obligations; Confidentiality of Data. (a) The Parties
agree to make available to each other certain information, as set forth in this
Article XV, in fulfillment of their obligations under this Agreement. Except as
provided in Sections 15.1(b), 15.1(c) and 15.1(d) below, the following
information, when acquired from another Party which is not an Affiliate, shall
be treated as confidential, and shall not be disclosed to any third party or
Affiliate at any time without the prior written consent of the other Party(ies);
provided, however, that nothing in this Article shall restrict any Party's use
or disclosure of its own information.
(b) The Parties shall have no obligation to treat as confidential or
otherwise withhold from disclosure to any third party or Affiliate any
information that is available through sources in the public domain or becomes
available without violating the terms of this Agreement or without the
disclosing Party violating any applicable legal requirements through such
disclosure. In addition, no Party shall be prohibited from providing to a
regulatory authority or court of competent jurisdiction information received
pursuant to this Agreement if ordered or otherwise compelled to do so; provided,
however, that such Party shall use its reasonable best efforts to notify the
other Party(ies) in advance of such disclosure.
(c) Any aggregate information provided in regulatory reports in
accordance with this Article shall include only that information required by the
applicable regulatory authority, in only the form required by such regulatory
authority.
(d) Any information not specifically addressed in this Article XV which
relates to the services provided under this Agreement, as currently defined or
as modified by the terms of this Agreement or by FERC order, shall be provided
in the reasonable discretion of the Parties, as determined at the time of
request by one Party to the other(s).
15.2 Information Related To Supply Deficiencies. (a) All megawatt-hour
quantities and negotiated market rates associated with sales of surplus energy
associated with participation in control area supply deficiencies shall be
disclosed to other Parties solely for internal use by those Parties or their
agents, and the Party(ies) in receipt of such information shall at no time
disclose the same to any third party without the prior written consent of the
disclosing Party, such consent not to be unreasonably withheld; provided,
however, that no Party shall be required to obtain the consent of any Party to
use aggregate megawatt-hour quantities and dollar amounts in financial and
regulatory reports.
(b) Aggregate megawatt-hour quantities (i.e., not per customer,
Delivery Point or EMC) associated with load shedding (interruptible and firm
load) shall be disclosed after-the-fact to other Parties solely for internal use
by those Parties or their agents, and the Party(ies) in receipt of such
information shall at no time disclose the same to any third party without the
prior written consent of the disclosing Party, such consent not to be
unreasonably withheld.
(c) Transaction-specific data related to load shedding of interruptible
third-party load shall be treated consistent with the treatment of OPC
Off-System Transaction information, as set forth in Section 15.4 below.
Transaction-specific information related to load shedding of interruptible
native load and estimated Delivery Point information related to load shedding of
firm load shall be disclosed solely to each Party's operations and billing/audit
personnel, and the Party(ies) in receipt of such information shall at no time
disclose the same to any marketing personnel (including Affiliates) or any third
party.
15.3 Information Related To Block and CT Resources. Block Resource and
Pseudo CT Resource information (schedules and prices) shall be disclosed to
other Parties solely for internal use by those Parties or their agents, and the
Party(ies) in receipt of such information shall at no time disclose the same to
any third party without the prior written consent of the disclosing Party, such
consent not to be unreasonably withheld; provided, however, that no Party shall
be required to obtain the consent of any Party to use aggregate megawatt-hour
quantities and dollar amounts in financial and regulatory reports.
15.4 Information Related To Off-System Transactions. OPC Off-System
Transaction specific scheduling information shall be disclosed solely to Georgia
Power's or its agent's operations and billing/audit personnel, and Georgia Power
and its agent shall at no time disclose the same to any marketing personnel
(including Affiliates) or any third party. Transaction specific pricing
information related to off-system transactions shall be disclosed solely to the
other Party's billing/audit personnel; provided, however, that such information
shall be disclosed only to the extent required under Sections 3.4(b), 11.5(f)
and 11.6(f) of this Agreement. Megawatt-hour scheduling quantities shall be
disclosed, upon request by any one of the Parties, in accordance with the
information disclosure requirements set forth in FERC Order Nos. 889 and 889-A
(and their successors) and the regulations promulgated thereunder.
15.5 Information Related To Territorial Control Area Services/Energy
Imbalance Service. (a) All Scheduling, System Control and Dispatch Service sales
information (quantities and prices) shall be disclosed to other Parties solely
for internal use by those Parties or their agents, and the Party(ies) in receipt
of such information shall at no time disclose the same to any third party
without the prior written consent of the disclosing Party, such consent not to
be unreasonably withheld; provided, however, that no Party shall be required to
obtain the consent of any Party to use aggregate megawatt-hour quantities and
dollar amounts in financial and regulatory reports.
(b) All sales information related to Reactive Service, Regulation
Energy Variance, Spinning Reserve Service and Supplemental Reserve Service
(quantities and prices), all information necessary to calculate (i) Oglethorpe
Power's L10, (ii) Regulation and Spinning Reserve Requirements, (iii)
Supplemental Reserve Requirements and (iv) the rate adjustment ratios in
Exhibits C, D, and E to this Agreement, and all megawatt-hour quantities and
resulting rates associated with sales of surplus energy from operating reserves
shall be disclosed to other Parties solely for internal use by those Parties or
their agents, and the Party(ies) in receipt of such information shall at no time
disclose the same to any third party without the prior written consent of the
disclosing Party, such consent not to be unreasonably withheld; provided,
however, that no Party shall be required to obtain the consent of any Party to
use aggregate MVAR quantities, megawatt-hour quantities (i.e., no less than
daily and excluding statistical analyses), and dollar amounts in financial and
regulatory reports. The information used to determine the quantity of Reactive
Service, Regulation Energy Variance, Spinning Reserve Service and Supplemental
Reserve Service, to the extent not otherwise provided for under this Article XV,
shall be disclosed solely to each Party's operations and billing/audit personnel
and to the senior management of each Party in such detail as is reasonably
required to clarify billing or performance disputes.
(c) All Energy Imbalance Service sales information, including Back-Up
Capacity, Commitment Cost, Credits for Hourly Surplus Energy and Payments for
Hourly Deficit Energy (quantities and prices) shall be disclosed to other
Parties solely for internal use by those Parties or their agents, and the
Party(ies) in receipt of such information shall at no time disclose the same to
any third party without the prior written consent of the disclosing Party, such
consent not to be unreasonably withheld; provided, however, that no Party shall
be required to obtain the consent of any Party to use aggregate megawatt-hour
quantities (i.e., no less than daily and excluding statistical analyses) and
dollar amounts in financial and regulatory reports. The information used to
determine the quantity of Energy Imbalance, to the extent not otherwise provided
for under this Article XV, shall be disclosed solely to each Party's
billing/audit personnel and to the senior management of each Party in such
detail as is reasonably required to clarify billing or performance disputes.
15.6 Information Related To Real-Time and Revenue Meter Data. (a)
Oglethorpe Power shall disclose facility-specific information related to
OPC-Controllable-ITS Resources and SEPA Resources under Sections 4.1, 6.2, and
13.2(a) of this Agreement (to the extent not disclosed pursuant to the Joint
Ownership Agreements) solely to Georgia Power's or its agent's operations and
billing/audit personnel (operations personnel to receive only Real-Time
information and billing/audit personnel to receive Real-Time and revenue meter
information), and Georgia Power or its agent shall at no time disclose such
information to any marketing personnel (including Affiliates) or any third
party; provided, however, Oglethorpe Power's NERC/GADS type information, to the
extent and in the form available, shall be disclosed to Georgia Power's or its
agent's marketing personnel (but not to third parties) to the extent such
information relates to facilities which constitute Qualifying Resources Spinning
or Qualifying Resources - Supplemental under this Agreement. Neither Georgia
Power nor its agent shall be obligated to disclose any information regarding any
resources of Georgia Power or its Affiliates (to the extent not disclosed
pursuant to the Joint Ownership Agreements); provided, however, that to the
extent Oglethorpe Power receives such information through access to computer
interfaces with Georgia Power or its agent, Oglethorpe Power shall provide such
information solely to its operations personnel and shall not disclose the same
to any other personnel (including Affiliates) or any third parties. No Party
shall be required to obtain the consent of any Party to use aggregate
megawatt-hour quantities (i.e., one hourly number each for OPC-Controllable-ITS
Resources and for SEPA Resources) in financial and regulatory reports.
(b) Oglethorpe Power shall disclose Delivery Point information under
Section 13.2(b) of this Agreement solely to Georgia Power's or its agent's
operations and billing/audit personnel (operations personnel to receive only
Real-Time information and billing/audit personnel to receive Real-Time and
revenue meter information), and Georgia Power or its agent shall at no time
disclose such information to any marketing personnel (including Affiliates) or
any third party. Aggregate megawatt-hour quantities (i.e., one hourly total
value each for OPC Territorial Load and OPC Non-Territorial Load within the
Southern Control Area which is not an OPC Off-System Transaction) shall be
disclosed after-the-fact to other Parties solely for internal use by those
Parties or their agents, and the Party(ies) in receipt of such information shall
at no time disclose the same to any third party without the prior written
consent of the disclosing Party, such consent not to be unreasonably withheld;
provided, however, that no Party shall be required to obtain the consent of any
Party to use aggregate megawatt-hour quantities (i.e., one hourly total value
each for OPC Territorial Load and OPC Non-Territorial Load within the Southern
Control Area which is not an OPC Off-System Transaction) in financial and
regulatory reports.
(c) The Real-Time generation and load information used to determine
Oglethorpe Power's Operational Deficiency under Section 13.3 of this Agreement
shall be disclosed solely to Georgia Power's or its agent's operations and
billing/audit personnel and to the senior management of Georgia Power or its
agent in such detail as is reasonably required to clarify billing or performance
disputes. Georgia Power or its agent shall at no time disclose such information
to any marketing personnel (including Affiliates) or any third party. The
Real-Time value of Oglethorpe Power's Operational Deficiency, as determined in
Article XIII of this Agreement, shall be disclosed to other Parties solely for
internal use by those Parties or their agents, and the Party(ies) in receipt of
such information shall at no time disclose the same to any third party without
the prior written consent of the disclosing Party, such consent not to be
unreasonably withheld.
15.7 Information Related To Non-Territorial Control Area Services. The
hourly total megawatt-hour quantities and dollar amounts associated with sales
of Non-Territorial Control Area Services within and outside the Southern Control
Area (to the extent such information is not disclosed under other provisions of
this Article XV) shall be disclosed to other Parties solely for internal use by
those Parties or their agents, and the Party(ies) in receipt of such information
shall at no time disclose the same to any third party without the prior written
consent of the disclosing Party, such consent not to be unreasonably withheld;
provided, however, that no Party shall be required to obtain the consent of any
Party to use aggregate megawatt-hour quantities and dollar amounts in financial
and regulatory reports.
ARTICLE XVI
IMPLEMENTATION AND ADMINISTRATION FEES
16.1 CSA Implementation Fee. Oglethorpe Power hereby agrees to
reimburse Georgia Power for all reasonable costs incurred by Georgia Power or
its agent in connection with implementing this Agreement. Such monthly CSA
Implementation Fee shall include costs associated with, without limitation,
manpower, manpower overheads, equipment, computer software, and computer time,
and other reasonable costs associated with the implementation of this Agreement,
with the exception of attorneys' fees. Georgia Power agrees to provide
Oglethorpe Power a prior estimate of the scope and cost of any implementation
projects, including, but not limited to, the initial implementation of this
Agreement, for which the estimated cost exceeds Twenty Thousand Dollars
($20,000).
16.2 CSA Administration Fee. Oglethorpe Power hereby agrees to
reimburse Georgia Power for all reasonable costs incurred by Georgia Power or
its agent in connection with the administration of this Agreement. Such monthly
CSA Administration Fee shall include costs associated with, without limitation,
manpower, manpower overheads, equipment, computer software, computer time and
other reasonable costs associated with the administration of this Agreement,
with the exception of attorneys' fees. Georgia Power agrees to provide
Oglethorpe Power a prior estimate of the scope of any administration projects,
for which the estimated cost exceeds Five Thousand Dollars ($5,000).
ARTICLE XVII
BILLING AND COLLECTIONS
17.1 Billing and Payment. (a) As promptly as practicable after the
commencement of each Month during the Term, Georgia Power shall send Oglethorpe
Power an invoice stating the amounts due from Oglethorpe Power for Territorial
Control Area Services (Article XI), Non-Territorial Control Area Services
(Article XIV), Energy Imbalance Service (including Back-Up Capacity Charges,
Commitment Costs and credits and payments associated with hourly surpluses and
deficits, respectively) (Article XII), the Pseudo Resource Energy Charges and
Credits (Article X), the Monthly CSA Implementation Fee (Section 16.1) and the
Monthly CSA Administration Fee (Section 16.2), together with any other amounts
then due by Oglethorpe Power to Georgia Power or (except for amounts covered by
Section 17.2) by Georgia Power to Oglethorpe Power pursuant to the provisions of
this Agreement. Georgia Power will provide Oglethorpe Power, along with such
invoices, all supporting data necessary to compute the above quantities, subject
to the confidentiality provisions of Article XV, in electronic form, as it is
available to Georgia Power from time to time.
(b) All such invoices showing a net amount due from Oglethorpe Power to
Georgia Power shall be due and payable on or before the tenth (10th) Day after
Oglethorpe Power's receipt of such notice. If such tenth (10th) Day after
Oglethorpe Power's receipt is not a banking Day, then payment shall be due on
the next succeeding banking Day. Oglethorpe Power shall make payment to Georgia
Power in accordance with such invoices on or before the date due in immediately
available funds through wire transfer of funds or other means acceptable to
Georgia Power. If Oglethorpe Power does not make any of the payments referenced
above on or before such tenth (10th) Day, then interest shall be added to the
overdue payment, from the date such overdue payment was due until such overdue
payment together with interest is paid, which interest shall accrue in simple
interest terms per annum at the Interest Rate defined herein.
(c) In the event the calculation set forth in Section 17.1(a) shows a
net amount due from Georgia Power to Oglethorpe Power, Oglethorpe Power shall
send an invoice to Georgia Power in that amount. Such invoice shall be due and
payable on or before the tenth (10th) Day after Georgia Power's receipt of such
notice. If such tenth (10th) Day after Georgia Power's receipt is not a banking
Day, then payment shall be due on the next succeeding banking Day. Georgia Power
shall make payment to Oglethorpe Power in accordance with such invoices on or
before the date due in immediately available funds through wire transfer of
funds or other means acceptable to Oglethorpe Power. If Georgia Power does not
make any of the payments reflected above on or before such tenth (10th) Day,
then interest shall be added to the overdue payment, from the date such overdue
payment was due until such overdue payment together with interest is paid, which
interest shall accrue in simple interest terms per annum at the Interest Rate
defined herein.
(d) Oglethorpe Power agrees that Georgia Power may render invoices
pursuant to Section 17.1(a) stating the aggregate net amount required pursuant
to said Section 17.1(a) based wholly or partially upon preliminary data. If
Georgia Power elects to render such a preliminary invoice, Georgia Power shall
provide for an adjustment in the subsequent Month's invoice reflecting a true-up
to actual data of all calculations based upon preliminary data. Any payment
required to be made by Oglethorpe Power to Georgia Power or by Georgia Power to
Oglethorpe Power to reflect such adjustment shall be made concurrently with the
next Month's payment pursuant to Section 17.1(b) or 17.1(c), as appropriate.
Neither Oglethorpe Power nor Georgia Power shall owe interest to the other on
the amount of any such adjustment calculated under this Section 17.1(d).
17.2 Billing Disputes and Final Accounting. (a) If Oglethorpe Power
questions or contests the amount of any payment claimed by Georgia Power to be
due pursuant to this Agreement, Oglethorpe Power may make such payment under
protest and thereafter shall be reimbursed by Georgia Power for any amount in
error after the settlement of such question or contest, in accordance with this
Section 17.2; provided, however, that no disagreement or dispute of any kind
between Oglethorpe Power and Georgia Power concerning any matter, including
without limitation the amount of any payment due from Oglethorpe Power or the
correctness of any charge made by Georgia Power to Oglethorpe Power, shall
permit Oglethorpe Power to delay or withhold any payment pursuant to this
Agreement.
(b) In the event that Oglethorpe Power, by timely notice to Georgia
Power, questions or contests the correctness of any such charge or credit,
Georgia Power shall promptly review the questioned charge or credit and shall
notify Oglethorpe Power, within sixty (60) Days following receipt by Georgia
Power of such notice from Oglethorpe Power, of the amount of any error and the
amount of any payment or reimbursement that Oglethorpe Power is required to make
or is entitled to receive in respect of such alleged error. Not later than the
tenth (10th) banking Day after receipt by Oglethorpe Power of such notice from
Georgia Power as to the amount of any payment that Oglethorpe Power is required
to make, Oglethorpe Power shall make payment to Georgia Power in immediately
available funds. If Georgia Power is required to make any reimbursement to
Oglethorpe Power, Georgia Power shall make such reimbursement not later than the
tenth (10th) banking Day after Georgia Power receives an invoice from Oglethorpe
Power in the amount of such required reimbursement. Payments and reimbursements
made by either Oglethorpe Power or Georgia Power under this Section 17.2(b)
shall include interest from the date the original payment was due until the date
such payment or reimbursement together with interest is made, which interest
shall accrue in simple interest terms per annum at the Interest Rate defined
herein. Oglethorpe Power shall have until the 180th Day after receipt of an
invoice to question or contest the correctness of any charge or credit made to
Oglethorpe Power during such Month pursuant to Section 17.1, after which time
the correctness of all such charges and credits shall be conclusively presumed.
(c) If Oglethorpe Power disputes Georgia Power's resolution under
Section 17.2(b) of any question or contest by Oglethorpe Power of the
correctness of any charge or credit made to Oglethorpe Power pursuant to Section
17.1, then at Oglethorpe Power's request Georgia Power and Oglethorpe Power
agree to use their reasonable best efforts to achieve a mutually acceptable
solution to such dispute. In the event that either Georgia Power or Oglethorpe
Power believes that any such efforts by Georgia Power and Oglethorpe Power have
been or will be unsuccessful, then it may submit such dispute to, for resolution
by, the Joint Committee. If the Joint Committee fails to resolve such dispute by
the third (3rd) regularly scheduled meeting following the meeting at which
Oglethorpe Power or Georgia Power first submitted such dispute to the Joint
Committee, then either Oglethorpe Power or Georgia Power may submit such dispute
to, for resolution by, the respective Chief Executive Officers of Oglethorpe
Power and Georgia Power. If the Chief Executive Officers fail to resolve such
dispute within a reasonable period of time after it is submitted to them, then
either Oglethorpe Power or Georgia Power may resort to any remedy, at law or in
equity, that may be available therefor. If either Georgia Power or Oglethorpe
Power submits such dispute to the Joint Committee, then neither of them shall
thereafter have any further obligation to use its reasonable best efforts to
achieve a mutually acceptable solution as aforesaid.
(d) Notwithstanding the foregoing provisions of Section 17.2, if
Oglethorpe Power is then in default with respect to any payments required to be
made under this Agreement, Georgia Power may withhold any reimbursement due
Oglethorpe Power under this Section 17.2 up to the amount of the payments in
default.
(e) Georgia Power will provide Oglethorpe Power with such information
as is reasonably required by Oglethorpe Power in order to account for payments
made pursuant to this Section 17.2 on Oglethorpe Power's books.
17.3 Availability of Records. (a) Georgia Power will for each Month of
the Term, at all times prior to the end of such 180 Day period set forth in
Section 17.2(b), make available to Oglethorpe Power, subject to the
confidentiality provisions of Article XV, and Oglethorpe Power may audit, such
books and records of Georgia Power as are necessary for Oglethorpe Power to
calculate the payments to be made hereunder and thereby to verify the accuracy
of the amounts billed to or for Oglethorpe Power pursuant to Section 17.1. No
payment made pursuant to the provisions of this Article shall constitute a
waiver of any right of Oglethorpe Power under Section 17.2 to question or
contest the correctness of any charge or credit by Georgia Power or to dispute
Georgia Power's resolution of any such question or contest.
(b) Oglethorpe Power shall for each Month of the Term, at all times
prior to the end of such 180 Day period set forth in Section 17.2(b), make
available to Georgia Power, subject to the confidentiality provisions of Article
XV, and Georgia Power may audit, such books and records of Oglethorpe Power as
are necessary for Georgia Power to obtain or verify information to calculate or
for the calculation of the payments to be made hereunder and thereby to verify
the accuracy of the amounts billed to or for Oglethorpe Power during such Month
pursuant to Section 17.1. No invoice sent pursuant to the provisions of this
Article shall constitute a waiver of any right of Georgia Power under Section
17.2 to question or contest the correctness of any Oglethorpe Power information.
(c) In addition to Section 17.3(b), Oglethorpe Power's metering records
shall be available at all times during the Term to authorized agents and
employees of the Parties for purposes of this Agreement, subject to the
confidentiality provisions of Article XV.
17.4 Failure to Make Payments. (a) If Oglethorpe Power fails to pay
when due the full amounts of any payment(s) required by Section 17.1, then
subject to the requirements of Section 17.4(b), Georgia Power may withhold
provision of services hereunder to Oglethorpe Power until Oglethorpe Power has
paid the full amounts of such overdue payment(s) to Georgia Power (including
without limitation interest) as required by Section 17.1.
(b) Before Georgia Power may withhold provision of service to
Oglethorpe Power pursuant to Section 17.4(a), Georgia Power shall give
Oglethorpe Power written notice of Oglethorpe Power's delinquency and at least
twenty (20) Days advance written notice of Georgia Power's intent to withhold
service if Oglethorpe Power's delinquency is not remedied and provided that
Georgia Power has filed the written notice of the intended suspension of service
with the FERC.
(c) Georgia Power shall not withhold service from Oglethorpe Power or
shall cease withholding service under this Section 17.4 if and when Oglethorpe
Power cures the delinquency that gave rise to the notice.
(d) In addition to the rights granted in Sections 17.2 and 17.3,
Georgia Power may take any action, at law or in equity, to enforce this
Agreement and to recover any and all unrecovered damages and expenses and other
losses, costs and liabilities (including without limitation reasonable
attorneys' fees and expenses) incurred or suffered by Georgia Power as a result
of or in connection with any default in payment by Oglethorpe Power under this
Agreement.
ARTICLE XVIII
TERM OF AGREEMENT
18.1 Term. (a) This Agreement shall take effect on the first Day of the
first Month after the date this Agreement is accepted for filing and permitted
to become effective by the FERC ("Effective Date"). On the Effective Date, this
Agreement shall supersede the CSA in its entirety and the CSA shall be
irrevocably terminated. If the FERC does not accept this Agreement for filing,
the CSA shall remain in effect; provided, however, that Georgia Power shall have
the right to file unilaterally any agreement which it reasonably believes is
appropriate, which agreement shall become effective, and shall supersede and
terminate the CSA in its entirety upon FERC acceptance of such agreement for
filing.
(b) This Agreement shall remain in effect through December 31, 1998,
unless otherwise terminated in accordance with the provisions of this Agreement.
18.2 Extension of the Term. (a) This Agreement shall continue in effect
after December 31, 1998 for successive one (1) year terms unless terminated by
Georgia Power, Oglethorpe Power or GSOC upon six (6) months prior written notice
to the other Parties. No such notice of termination shall be permitted to be
submitted to any Party until at least six (6) Months after the Effective Date of
this Agreement.
(b) Notwithstanding the provisions of Sections 3.2 and 18.3, any Party
may exercise its right to terminate pursuant to this Section 18.2. If any Party
exercises its right to terminate under this Section 18.2, the Parties agree to
use their reasonable best efforts to negotiate a mutually acceptable amendment
to this Agreement (to the extent necessary to recognize and accommodate the
interrelated nature of the Parties' transmission systems and control area
functions within the state of Georgia). If the Parties have failed to
successfully negotiate an amended Agreement prior to the end of two (2) months
after notice of termination is provided under Section 18.2(a), Oglethorpe Power
or GSOC may request that Georgia Power file a proposed amendment to this
Agreement to become effective as soon as possible, but in no event earlier than
six (6) months following such notice of termination; provided, however, that
Oglethorpe Power or GSOC must fully disclose to Georgia Power at the time of
such request all terms and conditions relevant to the services provided under
this Agreement of any separate coordination or operating arrangement between
Oglethorpe Power, GSOC and any third party, in order to allow Georgia Power to
prepare a proposed amendment which it believes is necessary or appropriate, in
recognition of and to accommodate the interrelated nature of the Parties'
transmission systems and control area functions in the state of Georgia. Georgia
Power shall not disclose to third parties the terms and conditions of such
separate coordination or operating arrangement; provided, however, that Georgia
Power may provide such information to the FERC to the extent necessary to
support its filing. Georgia Power shall, on or before the later of 150 days
following any Party's notice of termination under Section 18.2(a) or 90 days
following Oglethorpe Power's or GSOC's request under this Section 18.2(b), file
a proposed amendment to this Agreement, to become effective as soon as possible,
but in no event earlier than six (6) months following any notice of termination
under Section 18.2(a), which it believes is necessary or appropriate in
recognition of and to accommodate the interrelated nature of the Parties'
transmission systems and control area functions within the state of Georgia.
Following Georgia Power's filing, Oglethorpe Power and GSOC shall have the right
to challenge Georgia Power's proposed amendment in accordance with FERC
regulations and shall have the right to request, pursuant to FERC regulations,
that the FERC either accept an alternative proposed amendment or determine that
this Agreement is no longer necessary or appropriate.
If Oglethorpe Power or GSOC has requested that Georgia Power file an
amendment to this Agreement to recognize a separate third-party coordination or
operating arrangement, and if, at the end of six months following a notice of
termination pursuant to Section 18.2(a), the FERC has not issued an order on
Georgia Power's filing or Oglethorpe Power has not received the necessary
regulatory approvals, if any, for the separate third-party coordination or
operating arrangement disclosed to Georgia Power in conjunction with the above
request, this Agreement shall remain in effect until (i) Georgia Power's
proposed amendment is accepted for filing and otherwise permitted to take
effect, or (ii) Oglethorpe Power receives any necessary regulatory approvals in
connection with and implements its third-party arrangement, whichever is later.
Upon the later of (i) or (ii), the Parties agree to adhere to the terms of any
notice of filing or interim FERC order until the FERC issues a final order
either establishing the terms and conditions of an amendment to this Agreement
or determining that a successor arrangement between Georgia Power and Oglethorpe
Power is not necessary or appropriate. Once such final order is issued, any
amounts collected from Oglethorpe Power pursuant to this Section 18.2 on and
after the effective date of Georgia Power's filing under this Section shall be
subject to adjustment in accordance with the terms of such final FERC order.
If Oglethorpe Power or GSOC has not requested that Georgia Power file
an amendment to this Agreement to recognize a separate third-party coordination
or operating arrangement, and if, at the end of six months following a notice of
termination under Section 18.2(a), the FERC has not issued an order on Georgia
Power's filing, this Agreement shall remain in effect until the FERC issues an
order accepting Georgia Power's filing and otherwise permitting it to take
effect. The Parties agree to adhere to the terms of any notice of filing or
interim FERC order until the FERC issues a final order either establishing the
terms and conditions of an amendment to this Agreement or determining that a
successor arrangement between Georgia Power and Oglethorpe Power is not
necessary or appropriate. Once such final order is issued, any amounts collected
from Oglethorpe Power pursuant to this Section 18.2 on and after the effective
date of Georgia Power's filing under this Section shall be subject to adjustment
in accordance with the terms of such final FERC order. For purposes of this
Article, a "final FERC order" shall mean a FERC order which is no longer subject
to rehearing under the FERC's Rules of Practice and Procedure.
18.3 FERC Changes; Rights to Terminate. (a) Subject to the provisions
of this Section 18.3, either Georgia Power, Oglethorpe Power or GSOC may
terminate this Agreement, upon ninety (90) Days written notice to the other
Party, following the issuance of a final FERC order (i) rejecting this
Agreement, (ii) approving the same in a modified form where a material condition
imposed by the FERC is unacceptable to one or more Parties, or otherwise (iii)
requiring modification of this Agreement after it becomes effective, where a
material condition imposed by the FERC is unacceptable to one or more Parties;
provided, however, that no Party shall exercise such right to terminate after
ninety (90) Days following the expiration of all periods within which an appeal
of such an order could be filed by any person or entity.
(b) Notwithstanding the provisions of Section 3.2 and 18.2, any Party
may exercise its right to terminate this Agreement pursuant to Section 18.3(a).
If any Party exercises its right to terminate under Section 18.3(a), the Parties
agree to use their reasonable best efforts to negotiate a mutually acceptable
successor arrangement to this Agreement (to the extent necessary to recognize
and accommodate the interrelated nature of the Parties' transmission systems and
control area functions within the state of Georgia); provided, however, that
Georgia Power may, at any time during such negotiations, unilaterally file at
the FERC a notice of termination, effective no earlier than 90 Days following
the above notice, and a proposed successor arrangement with Oglethorpe Power to
the extent Georgia Power reasonably believes that the Parties will fail to reach
an agreement on a successor arrangement prior to the end of ninety (90) Days
after notification of termination under this Section 18.3. Oglethorpe Power
shall have the right to challenge Georgia Power's proposed successor arrangement
in accordance with FERC regulations, shall have the right to request, pursuant
to FERC regulations, that the FERC accept an alternative arrangement between
Georgia Power and Oglethorpe Power, and shall have the right to enter into a
separate arrangement with any other party. However, any election by Oglethorpe
Power to enter into an arrangement with a third party shall not affect Georgia
Power's right to file a proposed successor agreement with Oglethorpe Power which
Georgia Power believes is necessary or appropriate in recognition of and to
accommodate the interrelated nature of the Parties' transmission systems and
control area functions within the state of Georgia. If the FERC has issued an
order as described in Section 18.3(a)(ii) or Section 18.3(a)(iii), and has not
issued a final order either (i) establishing the terms and conditions of a
successor arrangement between Georgia Power and Oglethorpe Power or (ii)
determining that a successor arrangement between Georgia Power and Oglethorpe
Power is not necessary or appropriate before the end of ninety (90) Days after
any Party's notification of termination to the other Parties, this Agreement
shall remain in effect until such order is issued. If the FERC issues an order
as described in Section 18.3(a)(i) prior to allowing this Agreement to go into
effect, the Coordination Services Agreement dated November 12, 1990 shall remain
in effect until a successor arrangement is filed and put into effect in
accordance with Section 18.1. If the FERC issues an order as described in
Section 18.3(a)(i) after allowing this Agreement to go into effect, the Parties
shall operate pursuant to whatever arrangement or agreement the FERC determines
is appropriate until a successor arrangement is filed and put into effect in
accordance with this Section 18.3. Any amounts collected from Oglethorpe Power
pursuant to this Section 18.3 shall be subject to adjustment in accordance with
the terms of a final FERC order accepting Georgia Power's notice of termination
and either (i) establishing the terms and conditions of a successor arrangement
between Georgia Power and Oglethorpe Power or (ii) determining that a successor
arrangement between Georgia Power and Oglethorpe Power is not necessary or
appropriate.
ARTICLE XIX
MISCELLANEOUS PROVISIONS
19.1 Approvals. (a) Oglethorpe Power, GSOC and Georgia Power commit to
use their best efforts to apply for promptly and to pursue diligently any
regulatory approvals necessary for the Parties to consummate transactions under
and otherwise comply fully with the terms of this Agreement. Oglethorpe Power
and GSOC represent that approval by the Rural Utilities Service (or its
successor) is not required in order for Oglethorpe Power and GSOC to execute and
implement this Agreement. This Section 19.1 is not intended to subject this
Agreement to the jurisdiction of any governmental authority that does not have
such jurisdiction over this Agreement at the time of execution of this
Agreement.
(b) It is further agreed that Georgia Power, Oglethorpe Power and GSOC
will actively support and defend this Agreement against any and all claims which
may prevent or delay the consummation of transactions under this Agreement, or
otherwise prevent the Parties from complying fully with the terms of this
Agreement, including any and all claims raised by any governmental authority.
19.2 Assignment. (a) Except to the extent provided in Section 19.2(b),
(c) and (d), neither Oglethorpe Power, GSOC nor Georgia Power may sell, assign
or otherwise transfer any or all of this Agreement or its respective rights, or
delegate any or all of its respective obligations, under this Agreement, at any
time, without the prior written consent of the other in each instance; provided,
however, that Georgia Power may assign this Agreement and its respective rights,
and delegate its respective obligations, under this Agreement to a generation
Affiliate succeeding to substantially all of Georgia Power's interests in
substantially all of Georgia Power's intermediate steam and combustion turbine
generating facilities, without the consent of Oglethorpe Power and GSOC.
(b) Notwithstanding the provisions of Section 19.2(a), Georgia Power
acknowledges that it is aware of that certain Indenture dated as of March 1,
1997, from Oglethorpe Power to SunTrust Bank, Atlanta, as trustee (together with
any successors or assigns in the trust created thereby, the "Trustee") as the
same may hereafter be supplemented (the "Indenture"), and hereby consents to the
conveyance by Oglethorpe Power to the Trustee, of a security interest in this
Agreement as security for obligations of Oglethorpe Power issued or to be issued
pursuant to the Indenture; provided, however, that in no event shall the Trustee
convey or assign any interest in this Agreement to any other person or entity
without the prior written consent of Georgia Power in each instance. As a
consequence of the restrictions on assignability and conveyance under this
Section, the Trustee, shall have no right to sell or otherwise dispose of any
interest in this Agreement upon any Event of Default by Oglethorpe Power, as
defined in the Indenture, without the prior written consent of Georgia Power.
Georgia Power hereby agrees to accept any funds paid to it under this Agreement
on behalf of Oglethorpe Power by any entity as though such funds were paid
directly by Oglethorpe Power.
(c) Notwithstanding the provisions of Section 19.2(a), actions
identified herein as being accomplished by Georgia Power may be accomplished
either by Georgia Power or by its agent(s), and actions identified herein as
being accomplished by Oglethorpe Power may be accomplished either by Oglethorpe
Power or its agent(s); provided, however, that the Parties shall assume full and
primary responsibility for all actions undertaken by their agents.
(d) Notwithstanding the provisions of Section 19.2(a), the use of
GSOC's and GTC's employees to carry out Oglethorpe Power's obligations under
this Agreement, and the transfer to GTC and GSOC (as well as the ownership by
GTC and GSOC) of equipment necessary for Oglethorpe Power to carry out its
obligations under this Agreement, shall not constitute a violation by Oglethorpe
Power of the terms of this Agreement. Georgia Power hereby consents to
Oglethorpe Power's assignment of those rights, and delegation of those
obligations, under the CSA to GSOC as are necessary to perform the system
operations services contemplated by Oglethorpe Power's restructuring documents
provided to Georgia Power (as supplemented) commencing upon the effective date
of such restructuring; provided however, that such assignment and delegation
shall not expand or diminish the rights and obligations of Oglethorpe Power
under this Agreement.
19.3 Georgia Power's Agent. Wherever this Agreement requires Oglethorpe
Power or GSOC to provide information, schedules, notice or the like to, or to
take direction from, Georgia Power or its agent, Oglethorpe Power and GSOC shall
provide such information, schedules, notice or the like to, or take direction
from, whichever of Georgia Power, its agent or both that Georgia Power may
direct from time to time.
19.4 Cooperation. Georgia Power, Oglethorpe Power and GSOC agree to
cooperate with each other as reasonably necessary or appropriate to implement
the provisions and carry out the intent of this Agreement.
19.5 No Partnership. Oglethorpe Power, GSOC and Georgia Power do not
intend for this Agreement to, and this Agreement shall not, create any joint
venture, partnership, association taxable as a corporation, or other entity for
the conduct of any business for profit.
19.6 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon any respective successors and assigns of Oglethorpe
Power, GSOC and Georgia Power.
19.7 No Third Party Benefit. Subject to the provisions of Section 19.2,
nothing in this Agreement shall be construed to create any duty, obligation or
liability of Georgia Power to any person or entity not a Party to this
Agreement. Subject to the provisions of Section 19.2, nothing in this Agreement
shall be construed to create any direct rights to or in favor of any person or
entity not a Party to this Agreement.
19.8 No Consequential Damages. (a) Notwithstanding any other provision
of this Agreement, Georgia Power shall not be liable to Oglethorpe Power or GSOC
for any indirect, incidental or consequential damages arising out of, due to, or
in connection with Georgia Power's performance or nonperformance of this
Agreement or any of its obligations herein, whether based on contract, tort
(including, without limitation, negligence), strict liability, warranty or
otherwise.
(b) Notwithstanding any other provision of this Agreement, Oglethorpe
Power and GSOC shall not be liable to Georgia Power for any indirect, incidental
or consequential damages arising out of, due to, or in connection with
Oglethorpe Power's and GSOC's performance or nonperformance of this Agreement or
any of their obligations herein, whether based on contract, tort (including,
without limitation, negligence), strict liability, warranty or otherwise;
provided; however, that nothing in this Section 19.8 shall limit or otherwise
affect Georgia Power's rights under Sections 8.7, 13.5 and 17.4.
19.9 No Affiliate Liability. Notwithstanding any other provision of
this Agreement, no Affiliate of Georgia Power (including without limitation any
Affiliate of Georgia Power acting as Georgia Power's agent where Georgia Power's
agent is given certain authorities hereunder) shall have any liability
whatsoever for any Party's performance, nonperformance or delay in performance
under this Agreement. Georgia Power may be liable for its Affiliates' actions,
failures to act, representations or omissions, in accordance with Article I.
19.10 Disclaimers of Warranty. (a) GEORGIA POWER, ON BEHALF OF ITSELF,
EACH OF ITS AFFILIATES AND EACH OF THEIR RESPECTIVE EMPLOYEES, OFFICERS,
DIRECTORS, AGENTS, SUCCESSORS AND ASSIGNS, HEREBY DISCLAIMS ANY AND ALL EXPRESS,
IMPLIED OR STATUTORY WARRANTIES CONCERNING ANY OR ALL OF THE SERVICES OR ENERGY
(OR CAPACITY) TO BE SOLD BY GEORGIA POWER HEREUNDER OR CONCERNING ANY
INFORMATION FURNISHED BY GEORGIA POWER HEREUNDER, INCLUDING WITHOUT LIMITATION
ANY AND ALL WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
AVAILABILITY, QUALITY, QUANTITY OR OTHERWISE.
(b) OGLETHORPE POWER, ON BEHALF OF ITSELF, EACH OF ITS AFFILIATES AND
EACH OF THEIR RESPECTIVE EMPLOYEES, OFFICERS, DIRECTORS, AGENTS, SUCCESSORS AND
ASSIGNS, HEREBY DISCLAIMS ANY AND ALL EXPRESS, IMPLIED OR STATUTORY WARRANTIES
CONCERNING ANY OR ALL OF THE SERVICES OR ENERGY (OR CAPACITY) TO BE SOLD BY
OGLETHORPE POWER HEREUNDER OR CONCERNING ANY INFORMATION FURNISHED BY OGLETHORPE
POWER HEREUNDER, INCLUDING WITHOUT LIMITATION ANY AND ALL WARRANTIES AS TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AVAILABILITY, QUALITY,
QUANTITY OR OTHERWISE; PROVIDED, HOWEVER, THAT THIS SECTION 19.10(b) SHALL NOT
EXTINGUISH OR IN ANY WAY AFFECT OGLETHORPE POWER'S OBLIGATION TO INDEMNIFY
GEORGIA POWER UNDER SECTION 13.5(c).
19.11 Supply Constancy. Notwithstanding any other provision of this
Agreement, Georgia Power does not guarantee or warrant that it shall provide an
uninterrupted supply of capacity or energy to Oglethorpe Power under this
Agreement. Georgia Power shall not be in breach of this Agreement by reason of,
and shall have no liability whatsoever to Oglethorpe Power for any failure to
supply capacity or energy under this Agreement, for any interruption in supply
under this Agreement, or for any deficiency in the quality of supply provided
under this Agreement; provided however, that the foregoing exculpatory clause
shall not apply to any failure that is the direct result of (i) any action of
Georgia Power which is not consistent with Prudent Utility Practice or (ii)
Georgia Power's willful misconduct.
19.12 Time of Essence; No Waiver. Time is of the essence in this
Agreement. Neither Georgia Power's, Oglethorpe Power's nor GSOC's failure to
enforce any provision or provisions of this Agreement shall in any way be
construed as a waiver of any such provision or provisions as to any future
violation thereof, nor prevent it from enforcing each and every other provision
of this Agreement at such time or at any time thereafter. The waiver by either
Georgia Power, Oglethorpe Power or GSOC of any right or remedy shall not
constitute a waiver of its right to assert said right or remedy, at any time
thereafter, or any other rights or remedies available to it at the time of or
any time after such waiver.
19.13 Amendments. Except as otherwise provided in this Agreement, the
Parties agree that this Agreement may be amended by and only by a written
instrument duly executed by each of Oglethorpe Power, GSOC and Georgia Power,
which has received all regulatory approvals necessary for the effectiveness
thereof.
19.14 Superseding Effect. This Agreement satisfies in full the
Memorandum of Understanding between the Parties dated March 6, 1997, and
supersedes in their entirety both the Memorandum of Understanding and the CSA.
19.15 Notice. Any notice, request, consent or other communication
permitted or required by this Agreement shall be in writing and shall be deemed
given on the Day hand-delivered to the officer identified below, or the third
(3rd) Day after the same is deposited in the United States Mail, first class
postage prepaid, and if given to Georgia Power shall be addressed to:
Georgia Power Company
c/o Southern Company Services 333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
Attention: Senior Vice President Southern Wholesale Energy
If given to Oglethorpe Power shall be addressed to:
Oglethorpe Power Corporation
2100 East Exchange Place
P.O. Box 1349
Tucker, Georgia 30085-1349
Attention: Senior Vice President - Power Supply
If given to GSOC shall be addressed to:
Georgia System Operations Corporation
2100 East Exchange Place
P.O. Box 2087
Tucker, Georgia 30085-2087
Attention: Chief Operating Officer
unless Georgia Power, Oglethorpe Power or GSOC shall have designated a different
officer or address for itself by notice to the other Parties.
19.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
19.17 Article and Section Headings. The descriptive headings of the
various Articles, Sections and Parts of this Agreement and the Exhibits hereto
have been inserted for convenience of reference only and shall in no way modify
or restrict any of the terms or provisions hereof.
19.18 Including. Wherever the term "including" is used in this
Agreement, such term shall not be construed as limiting the generality of any
statement, clause, phrase or term.
19.19 Governing Law. The validity, interpretation and performance of this Agreement and each of its provisions shall be governed by the laws of the State of Georgia.
19.20 Section 206 Rights. Unless otherwise provided in this Agreement, Oglethorpe Power shall retain any and all rights it may have under Section 206 of the Federal Power Act.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Agreement under seal in Atlanta, Georgia, as of the date set forth in the introductory paragraph hereof.
GEORGIA POWER COMPANY
ATTEST:
_______________________ By:___________________________
Name: Fred D. Williams
Title: Senior Vice President
Georgia Power Company
|
(CORPORATE SEAL)
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Agreement under seal in Atlanta, Georgia, as of the date set forth in the introductory paragraph hereof.
OGLETHORPE POWER CORPORATION (AN ELECTRIC
MEMBERSHIP CORPORATION)
ATTEST:
_______________________ By:___________________________
Name: Clarence D. Mitchell
Title: Senior Vice President
Power Supply
|
(CORPORATE SEAL)
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Agreement under seal in Atlanta, Georgia, as of the date set forth in the introductory paragraph hereof.
GEORGIA SYSTEM OPERATIONS
CORPORATION
ATTEST:
_______________________ By:___________________________ Name: Jerry J. Saacks Title: Chief Operating Officer |
(CORPORATE SEAL)
Exhibit 10(a)59
AMENDMENT AND RESTATEMENT OF
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EFFECTIVE JANUARY 1, 1997
TROUTMAN SANDERS LLP
NationsBank Plaza
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308
(404) 885-3000
March 25, 1997
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of the Southern Company Productivity Improvement Plan are to provide a financial incentive which will focus the efforts of participants on areas that will have a direct and significant influence on corporate performance and to provide the potential for levels of compensation that will enhance the Employing Companies' abilities to attract, retain and motivate key management employees. In order to achieve these objectives, the Plan will be based upon corporate performance.
The amendment and restatement shall be effective as of January 1, 1997.
ARTICLE I
Definitions
For purposes of the Plan, the following terms shall have the following meanings unless a different meaning is plainly required by the context:
1.1 "Annual Salary" shall mean base salary or wages paid to a Participant before deductions for taxes, social security, etc., including all amounts contributed by an Employing Company to The Southern Electric System Flexible Benefits Plan or The Southern Company Flexible Benefits Plan on behalf of a Participant, amounts contributed by any Employing Company to The Southern Company Employee Savings Plan as Elective Employer Contributions, as said term is defined in Section 4.1 therein, pursuant to the Participant's exercise of his deferral option made in accordance with Section 401(k) of the Internal Revenue Code, and amounts contributed to the Deferred Compensation Plan for The Southern Company, but excluding all awards under The Southern Company Performance Pay Plan and the Southern Company Productivity Improvement Plan, overtime pay, shift differential and substitution pay.
1.2 "Average Common Equity" shall mean the total average common equity of Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Nuclear Operating Company and Southern Company Services, Inc.
1.3 "Average Return on Common Equity" for a Computation Period shall mean the result obtained by (a) dividing Core Net Income by Average Common Equity for each year in the Computation Period, (b) adding the result, and (c) dividing the sum by the number of years in the Computation Period.
1.4 "Award" shall mean the award opportunity multiplied by the performance unit value determined under Section 3.2 of the Plan.
1.5 "Award Opportunity" shall mean the target award opportunity determined under Section 3.1 of the Plan.
1.6 "Award Percentage" shall mean the award percentage set forth on Exhibit B hereto. Such Exhibit may be modified from time to time by the Committee to reflect changes in Exhibit C hereto.
1.7 "Board of Directors" shall mean the Board of Directors of Southern Company Services, Inc.
1.8 "Chief Executive Officer" shall mean the individual designated as such by the Board of Directors of an Employing Company and of Southern Company.
1.9 "Committee" shall mean the individuals then serving in the positions of Director, System Compensation and Benefits of Southern Company; Vice President, Human Resources of Southern Company; and Comptroller of Southern Company or any other position or positions that succeed to the duties of the foregoing positions.
1.10 "Common Stock" shall mean the common stock of Southern Company.
1.11 "Computation Period" shall mean a four-year period commencing on the first day of the initial year of participation and thereafter it shall mean a four-year period commencing the first day of January each year.
1.12 "Core Business" shall mean the operations of Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Nuclear Operating Company and the operations of Southern Company Services, Inc. with respect to such companies.
1.13 "Core Net Income" shall mean the combined net income (or net loss) of Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company and The Southern Company "corporate", provided, that the net income (or net loss) of The Southern Company "corporate" shall be adjusted by eliminating interest expense not attributable to Core Business and one-half of The Southern Company's "corporate" administration and general expenses.
1.14 "Employee" shall mean any person who is currently employed by an Employing Company but shall not include any individual who is eligible to participate in the Southern Company Executive Productivity Improvement Plan or any person who is eligible to participate in any incentive compensation program maintained by an Employing Company that specifically provides that an eligible employee under such program shall not be entitled to also receive Awards under this Plan.
1.15 "Employing Company" shall mean Southern Company Services, Inc., or any affiliate or subsidiary (direct or indirect) of Southern Company, which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them.
1.16 "Grade Level" shall mean the evaluation assigned under the job evaluation system as of January 1 of each calendar year.
1.17 "Grade Level Value" shall mean the assigned dollar value within the Annual Salary range for a Grade Level in a Computation Period, upon which Awards are based.
1.18 "Non-Adopting Company" shall mean any subsidiary or affiliate of Southern Company which is not an Employing Company.
1.19 "Participant" shall mean all Employees described in Section 2.1 hereof.
1.120 "Payment Date" shall mean the date the check evidencing the Award is endorsed by an authorized person of an Employing Company.
1.21 "Peer Group Companies" shall mean the companies set forth on Exhibit C attached hereto and as may be revised from time to time by the Committee to reflect mergers, acquisitions, reorganizations, etc. of such companies.
1.22 "Plan" shall mean the Southern Company Productivity Improvement Plan, as described herein or as from time to time amended.
1.23 "Prior Plan" shall mean the Plan as amended and restated effective January 1, 1995.
1.24 "Southern Company" shall mean The Southern Company.
1.25 "Termination for Cause" or "Cause" shall mean the termination of a Participant's employment by an Employing Company under any of the following circumstances:
a. The Participant willfully neglects or refuses to discharge his or her duties to the Employing Company as an employee or refuses to comply with any lawful or reasonable instructions given to him or her by the Employing Company without reasonable excuse;
b. The Participant is guilty of gross misconduct. For purposes of this Plan, the following acts shall constitute gross misconduct:
i) any act involving fraud or dishonesty or breach of appropriate regulations of competent authorities;
ii) the carrying out of any activity or the making of any statement which would prejudice and/or reduce the good name and standing of Southern Company or an Employing Company or would bring Southern Company or an Employing Company any into contempt, ridicule or would reasonably shock or offend any community in which Southern Company or an Employing Company is located;
iii) attendance at work in a state of intoxication or otherwise being found in possession at his or her workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
iv) assault or other act of violence against any employee or other person during the course of the Participant's employment; and
v) conviction of any felony or misdemeanor involving moral turpitude.
Where the context requires, words in the masculine gender shall include the feminine and neuter genders, words in the singular shall include the plural, and words in the plural shall include the singular.
ARTICLE II
Participants
2.1 The Participants in the Plan shall be limited to those Employees of an Employing Company who occupy Grade Level 7 and higher as of January 1 of any Computation Period, as well as any other Employee who occupies a grade recommended for inclusion in the Plan by the Chief Executive Officer of an Employing Company with the concurrence of the Chief Executive Officer of the Southern Company, on January 1 of each calendar year; provided, however, that any additional Employees who are recommended for inclusion in the Plan by the Chief Executive Officer of an Employing Company with the concurrence of the Chief Executive Officer of Southern Company shall be identified by Grade Level Value and/or title in an exhibit to the Plan each January 1.
2.2 Any Participant who vacates an eligible Grade Level prior to the close of a Computation Period and who is not immediately re-employed with a subsidiary or an affiliate of Southern Company in an eligible Grade Level shall forfeit any Award for any Computation Periods that have not closed as of the date the Participant vacates such eligible Grade Level.
2.3 If a Participant's employment is terminated by reason of death, disability or retirement, such Participant or his or her estate shall be eligible to receive an Award for the Computation Period ending in the year of such death, disability or retirement. For purposes of this Plan, the date of disability or retirement shall be the last day of active service by the Participant and shall not mean any date subsequent to such last date of active service which is deemed to be a retirement or disability date under the terms of any pension, severance, retirement or disability plan or arrangement. Any Participant who terminates employment for any other reason shall receive only any unpaid Award for a completed Computation Period and shall not be eligible to receive an Award for the Computation Period ending in the year of such termination of employment, provided, however, that any Participant who's employment is Terminated for Cause shall forfeit any and all unpaid Awards as of the date of termination.
2.4 Notwithstanding the provisions of Section 2.3 above, in the case of an individual transferring from an Employing Company to a Non-Adopting Employer any Award paid for any Computation Period not yet closed as of the date of a Participant's transfer shall be paid to the Participant by the Employing Company from which the Participant is transferring on the following basis:
(i) 100% of the Award for the Computation Period ending in the year of transfer;
(ii) 75% of the Award for the Computation Period ending in the first year following the year of transfer;
(iii) 50% of the Award for the Computation Period ending in the second year following the year of transfer; and
(iv) 25% of the Award for the Computation Period ending in the third year following the year of transfer.
Such transferring Participant shall receive no award for any Computation Period which has not begun on the date of the Participant's transfer or if Participant shall no longer be in an eligible Grade Level after such transfer.
Any Awards payable under this Section 2.4 shall be based on the Grade Level at the time of transfer.
2.5 In the case of an individual transferring from a Non-Adopting Employer to an Employing Company whose Grade Level and length of service at the Non-Adopting Employer would have caused the Employee to have been a Participant in the Plan if the Non-Adopting Employer were an Employing Company and whose Grade Level after the transfer would enable the Employee to participate in the Plan, such individual shall be deemed to have been employed by an Employing Company while employed with the Non-Adopting Employer and shall, for any Computation Period ending after such transfer, be deemed a Participant in the plan as if the Non-Adopting Employer was an Employing Company.
Any Awards payable under this Section 2.5 shall be based on the Grade Levels at the Employing Company.
2.6 The administration of Awards for Participants who are promoted or transferred from one Grade Level included in the Plan to another Grade Level included in the Plan shall be based on the Participant's Grade Level Value on the first day of the Computation Period for which an Award is being granted.
2.7 Any individual who initially became a Participant in the Plan as of January 1, 1995 shall be considered to have been participating in the Plan as of January 1, 1993 for purposes of determining benefits payable for any Computation Period that began or begins on or after January 1, 1993 and such Participant will therefore be eligible for an Award equal to seventy-five percent (75%) of the Award Opportunity for the Computation Period ending December 31, 1995.
2.8 In the case of an individual who becomes a Participant subsequent to January 1, 1995, said Participant will participate in each Computation Period which ends not less than two (2) years after becoming a Participant.
ARTICLE III
Corporate Financial Performance Award
3.1 The Award Opportunity for each Participant shall be based upon his Grade Level(s) and shall range from fifteen percent (15%) to sixty-five percent (65%) of the Grade Level Value held by the Participant at the beginning of any Computation Period. The Award Opportunity for each Grade Level held by a Participant shall be determined in accordance with the chart set forth in Exhibit A herein. Such Exhibit A shall be modified from time to time by the Committee to reflect any changes in Exhibit C hereto.
3.2 Each Award Opportunity shall be multiplied by the Award Percentage set forth in Exhibit B herein, which is based on Southern Company's Average Return on Common Equity ranking during a Computation Period as compared to the average return on common equity ranking of the Peer Group Companies to determine a Participant's Award. The return on common equity of Southern Company Peer Group Companies shall be determined annually by an independent certified public accountant based on generally accepted accounting principles and shall be properly adjusted and annualized by such accountant so that each Peer Group Company return on common equity may be accurately compared to that of Southern Company. The average return on common equity for each Peer Group Company for a Computation Period under this Section 3.2 shall be determined by (a) calculating the average return on common equity for each company for each year in the Computation Period, (b) adding the average return on common equity calculations for each company all years in the Computation Period; and (c) dividing the total for each company by the number of years in the Computation Period.
3.3 Notwithstanding the above provisions, an Award will not be granted for any Computation Period ending with the calendar year in which the current earnings of Southern Company are less than the amount necessary to fund the dividends on its Common Stock at the rate such dividends were paid for the immediately preceding calendar year.
3.4 In the discretion of the Committee or the Board of Directors, the Award for one or more Computation Period(s) may be calculated without regard to any extraordinary item of income or expense incurred by Southern Company or any Employing Company, provided such determination is made prior to the close of the Computation Period.
3.5 The Awards to the Participants will be paid in cash as soon as is practicable after all evaluations are completed. An Award payment may not be deferred under this Plan. In the event an Award was deferred under the Prior Plan, such deferral shall be governed by the terms of the Prior Plan.
ARTICLE IV
Miscellaneous Provisions
4.1 Neither the Participant, his beneficiary, nor his personal representative shall have any rights to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.
4.2 The Employing Company shall not reserve or otherwise set aside funds for the payments of Awards deferred in accordance with the Prior Plan.
4.3 The Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to payments which have been deferred under the Prior Plan prior to such amendment, modification, or termination.
4.4 It is expressly understood and agreed that the Awards made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he may be eligible, whether funded or unfunded, by reason of his employment with the Employing Company.
4.5 There shall be deducted from the payment of each Award under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by the Employing Company to such governmental authority for the account of the person entitled to such distribution.
4.6 Any Awards paid to a Participant while employed by an Employing Company shall not be considered in the calculation of the Participant's benefits under any other employee welfare or pension benefit plan maintained by an Employing Company, unless otherwise specifically provided therein.
4.7 The Committee shall have the authority to interpret the provisions of this Plan and to develop such rules and regulations as are necessary to carry out the terms of the Plan. Any such interpretations, rules or regulations shall be binding upon all Participants.
4.8 The Committee shall have the authority to delegate any of its duties and obligations hereunder and shall have the authority to engage such agents as it deems necessary to carry out its duties and obligations hereunder.
4.9 This Plan, and all rights under it, shall be governed by and construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, Southern Company Services, Inc., through its duly authorized officers, hereby amends and restates Southern Company Productivity Improvement Plan as approved by the Board of Directors on February 17, 1997, to be effective January 1, 1997.
SOUTHERN COMPANY SERVICES, INC.
By:
Its:
Attest:
By:
Its:
[CORPORATE SEAL]
.
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Grade Target Award Opportunity
-------------- ------------------------
1/1/95 6/1/95 Percentage of Grade Level Value
President/CEO 50/65%
29/30 (15) 50%
27/28 (14) 45%
25/26 (13) 40%
23/24 (12) 35%
21/22 (11) 30%
19/20 (10) 25%
17/18 (9) 25%
15/16 (8) 20%
13/14 (7) 15%
|
The Southern Company
Productivity Improvement Plan
Exhibit B
Award Percentage Schedule
Position Ranking
Value of
Performance Unit 12-14 15-17 18-20
($) Companies Companies Companies
--- --------- --------- ---------
$2.00 Top Top Top
1.80 1.0 1.0 1.0
1.60 2.0 2.0 2.0
1.40 2.5 3.0 3.0
1.20 3.0 4.0 4.0
1.00 4.0 4.5 5.0
0.90 4.5 5.0 6.0
0.80 5.0 6.0 7.0
0.70 6.0 7.0 8.0
0.60 6.5 8.0 9.0
0.50 7.0 8.5 10.0
0 Below 7.0 Below 8.5 Below 10
Percentage of Total Award Factor
Computation Period Ending Factor
December 31, 1997 75%
December 31, 1998 50%
December 31, 1999 25%
Thereafter 0%
|
SOUTHERN COMPANY
PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT C
The Peer Group Companies are as follows:
Allegheny Power System American Electric Power Carolina Power & Light Central & South West (4 utility subs will be combined*) Central Louisiana Electric Constellation Energy (previously BG&E & Potomac Electric) Delmarva Power & Light Duke Power Entergy Florida Power & Light (previously used FPL Group, Inc.) Florida Power Corp. (previously used Florida Progress) Kentucky Utilities Company (previously used KU Energy) South Carolina Electric & Gas (previously used SCANA) Southern Company (Core only) Tampa Electric (previously used TECO Energy) Virginia Electric & Power (previously used Dominion Resources) |
*Central Power & Light Co., Public Service Co. of Oklahoma, Southwestern Electric Power Co. and West Texas Utilities Co.
Exhibit 10(a)60
AMENDMENT AND RESTATEMENT OF
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EFFECTIVE JANUARY 1, 1997
TROUTMAN SANDERS LLP
NationsBank Plaza
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308
(404) 885-3000
March 22, 1998
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
Purposes
The purposes of the Southern Company Executive Productivity Improvement Plan (the "Plan") are to provide a financial incentive which will focus the efforts of certain executives on areas that will have a direct and significant influence on corporate performance and to provide the potential for levels of compensation that will enhance the Employing Companies' abilities to attract, retain and motivate such executives. In order to achieve these objectives, the Plan will be based upon corporate performance.
This Amendment and Restatement shall be effective as of January 1, 1997.
ARTICLE I
Definitions
For purposes of the Plan, the following terms shall have the following meanings unless a different meaning is plainly required by the context:
1.1 "Annual Salary" shall mean base salary or wages paid to a Participant before deductions for taxes, social security, etc., including all amounts contributed by an Employing Company to The Southern Electric System Flexible Benefits Plan or The Southern Company Flexible Benefits Plan on behalf of a Participant, amounts contributed by any Employing Company to The Southern Company Employee Savings Plan as Elective Employer Contributions, as said term is defined in Section 4.1 therein, pursuant to the Participant's exercise of his deferral option made in accordance with Section 401(k) of the Internal Revenue Code, and amounts contributed to the Deferred Compensation Plan for The Southern Company, but excluding all awards under The Southern Company Performance Pay Plan and the Southern Company Executive Productivity Improvement Plan, overtime pay, shift differential and substitution pay.
1.2 "Average ROE" shall mean the mathematical result obtained by (a) calculating the return on equity for each year in the Computation Period, (b) adding the return on equity calculations for all years in the Computation Period; and (c) dividing the total by the number of years in the Computation Period.
1.3 "Award" shall mean the Award Opportunity or Award Units multiplied by the Performance Unit Value determined under Sections 3.2 and 3.4 of the Plan.
1.4 "Award Opportunity" shall mean the award opportunity determined under Section 3.1 of the Plan.
1.5 "Award Unit" shall mean the unit opportunity determined under
Section 3.3 of the Plan.
1.6 "Board of Directors" shall mean the Board of Directors of Southern Company Services, Inc.
1.7 "Chief Executive Officer" shall mean the individual designated as such by the Board of Directors of an Employing Company and of Southern Company.
1.8 "Committee" or "Compensation Committee" shall mean the Compensation Committee of the Board of Directors of Southern Company or the Employing Company.
1.9 "Common Stock" shall mean the common stock of Southern Company.
1.10 "Computation Period" shall mean a four-year period commencing on the first day of the initial year of participation and thereafter it shall mean a four-year period commencing the first day of January each year made up of the ROE Computation Period and the TSR Computation Period, if any, respectively.
1.11 "Employing Company" shall mean Southern Company Services, Inc., or any affiliate or subsidiary (direct or indirect) of Southern Company, which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them.
1.12 "Executive Employee" shall mean any person who is currently employed by an Employing Company who is a "covered employee" as that term is defined in Section 162(m) of the Internal Revenue Code (the "Code") who is designated as an Executive Employee by the Compensation Committee and such other persons employed by an Employing Company as the Compensation Committee in its discretion shall designate.
1.13 "Grade Level" shall mean the evaluation assigned under the job evaluation system.
1.14 "Grade Level Value" shall mean the assigned dollar value within the Annual Salary range for a Grade Level in a Computation Period, upon which awards are based.
1.15 "Non-Adopting Employer" shall mean any subsidiary or affiliate of Southern Company which is not an Employing Company.
1.16 "Participant" shall mean an Executive Employee who satisfies the criteria referred to in Article II at the beginning of a Computation Period but shall not include any individual who ceased to be an Executive Employee by reason of the amendment of Section 1.11 hereof by this Amendment and Restatement.
1.17 "Payment Date" shall mean the date the check evidencing the Award is endorsed by an authorized person of an Employing Company.
1.18 "Percentage of Total Award" shall have the meaning ascribed in Exhibits B and E hereof.
1.19 "Plan" shall mean the Southern Company Executive Productivity Improvement Plan, as described herein or as from time to time amended.
1.20 "Prior Plan" shall mean the Plan as amended and restated effective January 1, 1995.
1.21 "Southern Company" shall mean The Southern Company.
1.22 "ROE Computation Period" shall have the meaning ascribed in
Section 3.1 hereof.
1.23 "ROE Peer Group Companies" shall mean the companies set forth on Exhibit C attached hereto and as may be revised from time to time by the Committee to reflect mergers, acquisitions, reorganizations, etc. of such companies.
1.24 "Termination for Cause" or "Cause" shall mean the termination of a Participant's employment by an Employing Company under any of the following circumstances:
a. The Participant willfully neglects or refuses to discharge his or her duties to the Employing Company as an employee or refuses to comply with any lawful and reasonable instructions given to him or her by the Employing Company without reasonable excuse;
b. The Participant is guilty of gross misconduct. For purposes of this Plan, the following acts shall constitute gross misconduct:
i) any act involving fraud or dishonesty or breach of appropriate regulations of competent authorities;
ii) the carrying out of any activity or the making of any statement which would prejudice or impair the good name and standing of the Company or an Employing Company or would bring the Company or an Employing Company any into contempt, ridicule or would reasonably shock or offend any community in which the Company or an Employing Company is located;
iii) attendance at work in a state of intoxication or otherwise being found in possession at his or her workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
iv) assault or other act of violence against any employee or other person during the course of the Participant's employment; and
v) conviction of any felony or misdemeanor involving moral turpitude.
1.25 "Total Shareholder Return" or "TSR" shall mean the total amount an investor would receive by investing $100 per quarter in Common Stock or in TSR Peer Group Common Stock, as the case may be, as determined by measuring the total dividends which would have been paid on such Common Stock or TSR Peer Group Common Stock by reinvesting such dividends on a quarterly basis in additional shares of Common Stock or TSR Peer Group Common Stock as the case may be and the total gain or loss on such Common Stock or Peer Group Common Stock as if such stock had been sold at the closing price on the last day of the respective Computation Period.
1.26 "TSR Computation Period" shall have the meaning ascribed in
Section 3.3 hereof.
1.27 "TSR Peer Group Common Stock" shall mean the common stock of the Peer Group Companies.
1.28 "TSR Peer Group Companies" shall mean those Companies designated by Goldman Sachs as the 80 Utility Peer Group Companies as published quarterly and as composed from time to time. In the event that Goldman Sachs no longer publishes the 80 Utility Peer Group Companies, the Committee shall choose such other and similar list of national peer group companies as published by a similarly nationally recognized firm.
1.29 "Value of Performance Unit" shall have the meaning ascribed in Exhibits B and E attached hereto.
Where the context requires, words in the masculine gender shall include the feminine and neuter genders, words in the singular shall include the plural, and words in the plural shall include the singular.
ARTICLE II
Participants
2.1 Participation in the Plan shall be limited to Executive Employees of the Employing Companies.
2.2 Any Participant who vacates an eligible Grade Level prior to the close of a Computation Period and who is not immediately re-employed with an affiliate of an Employing Company shall forfeit any Award for any Computation Periods that have not closed as of the date the Participant vacates such eligible Grade Level.
2.3 If a Participant's employment is terminated by reason of death, disability or retirement, such Participant or his or her estate shall be eligible to receive an Award for the Computation Period ending in the year of such death, disability or retirement unless such death, disability or retirement shall have occurred on January 1 in which case the Participant or his or her estate shall only be entitled to an Award for the Computation Period ending December 31 of the previous year. Any Participant who terminates employment for any other reason shall receive only any unpaid Award for a completed Computation Period and shall not be eligible to receive an Award for the Computation Period ending in the year of such termination of employment, provided, however, that any Participant who's employment is Terminated for Cause shall forfeit any and all unpaid Awards as of the date of termination.
2.4 Notwithstanding the provisions of Section 2.3 above, in the case of an individual transferring from an Employing Company to a Non-Adopting Employer any Award paid for any Computation Period not yet closed as of the date of a Participant's transfer shall be paid to the Participant by the Employing Company from which the Participant is transferring on the following basis:
(i) 100% of the Award for the Computation Period ending in the year of transfer;
(ii) 75% of the Award for the Computation Period ending in the first year following the year of transfer;
(iii) 50% of the Award for the Computation Period ending in the second year following the year of transfer; and
(iv) 25% of the Award for the Computation Period ending in the third year following the year of transfer.
Such transferring Participant shall receive no award for any Computation Period which has not begun on the date of the Participant's transfer or if Participant shall no longer be in an eligible Grade Level after such transfer.
Any Awards payable under this Section 2.4 shall be based on the Grade Level at the time of transfer.
2.5 In the case of an individual transferring from a Non-Adopting Employer to an Employing Company whose Grade Level and length of service at the Non-Adopting Employer would have caused the Employee to have been a Participant in the Plan if the Non-Adopting Employer were an Employing Company and whose Grade Level after the transfer would enable the Employee to participate in the Plan, such individual shall be deemed to have been employed by an Employing Company while employed with the Non-Adopting Employer and shall, for any Computation Period ending after such transfer, be deemed a Participant in the plan as if the Non-Adopting Employer was an Employing Company.
Any Awards payable under this Section 2.5 shall be based on the Grade Levels at the Employing Company.
2.6 Notwithstanding any other provision of this Plan, no employee whose employment is Terminated for Cause shall be eligible to receive an Award under this Plan.
2.7 The administration of Awards for Participants who are promoted or transferred from one Grade Level included in the Plan to another Grade Level included in the Plan shall be based on the Participant's Grade Level Value on the first day of the Computation Period for which an Award is being granted. For the Computation Periods ending December 31, 1995, December 31, 1996, December 31, 1997 and December 31, 1998 a Participant's Grade Level Value for determining Awards shall be the Participant's Grade Level Value on January 1, 1995.
2.8 Notwithstanding any other provision of this Plan, the maximum Award for any Computation Period payable to any Participant shall be two million dollars ($2,000,000).
2.9 Any individual who initially becomes a Participant in the Plan as of January 1, 1995 shall be considered to have been participating in the Plan as of January 1, 1993 for purposes of determining benefits payable for any Computation Period that began or begins on or after January 1, 1993 and such Participant will therefore be eligible for an Award equal to seventy-five percent (75%) of the Award Opportunity for the Computation Period ending December 31, 1995.
2.10 In the case of an individual who becomes a Participant subsequent to January 1, 1995, said Participant will participate in each Computation Period which ends not less than two (2) years after becoming a Participant.
ARTICLE III
Corporate Financial Performance Award
3.1 For Computation Period years beginning before January 1, 1997 (the "ROE Computation Period"), the Award Opportunity for each Participant shall be based upon either his Grade Level Value (as determined based on his Grade Level at the beginning of such period) or, in the Committee's discretion, upon his Annual Salary at the beginning of such period and in either case shall range from fifty percent (50%) to sixty-five percent (65%) of such Grade Level Value or Annual Salary, as applicable. The Award Opportunity for each Grade Level or Annual Salary shall be determined in accordance with the chart set forth in Exhibit A hereof.
3.2 Each Award Opportunity granted in the ROE Computation Period shall be multiplied by the Value of Performance Unit factor and the Percentage of Total Award factor set forth in Exhibit B hereof, which is based on Southern Company's Average ROE ranking during the ROE Computation Period as compared to the Average ROE ranking of the ROE Peer Group Companies to determine a Participant's Award. The return on common equity of the ROE Peer Group Companies shall be determined annually by an independent certified public accountant based on generally accepted accounting principles and shall be properly adjusted and annualized by such accountant so that each ROE Peer Group Company return on common equity may be accurately compared to that of Southern Company.
3.3 For Computation Period years beginning on or after January 1, 1997 (the "TSR Computation Period"), the Award Units for each Participant shall be based upon either his Grade Level Value (as determined based upon his Grade Level at the beginning of such period) or, in the Committee's discretion, upon his Annual Salary at the beginning of such period and, in either case shall range from fifty percent (50%) to sixty-five percent (65%) of such Grade Level Value or Annual Salary, as applicable. The Award Units for each Grade Level or Annual Salary shall be determined in accordance with the charts set forth in Exhibit D hereof.
3.4 Each Award Unit granted in the TSR Computation Period shall be multiplied by the Value of Performance Unit factor and the Percentage of Total Award factor set forth in Exhibit E hereof which is based on Total Shareholder Return of Southern Company as compared to the Total Shareholder Return for the TSR Peer Group Companies. The Total Shareholder Return of Southern Company and the TSR Peer Group Companies shall be determined annually by an independent certified public accountant based on generally accepted accounting principles and shall be properly adjusted and amortized by such accountant so that each TSR Peer Group Company's total shareholder return may be accurately compared to that of Southern Company.
3.5 Notwithstanding the above provisions, an Award will not be granted for any Computation Period ending with the calendar year in which the current earnings of Southern Company are less than the amount necessary to fund the dividends on its Common Stock at the rate such dividends were paid for the immediately preceding calendar year.
3.6 In the exercise of negative discretion, the Compensation Committee may calculate the Award for one or more Computation Period(s) without regard to any extraordinary income item (but not loss) otherwise recorded by Southern Company or any Employing Company, provided such determination that an item of income is extraordinary is made by the Committee prior to the close of the Computation Period.
3.7 The Awards to the Participants will be paid in cash as soon as is practicable after all evaluations are completed. An Award payment may not be deferred under this Plan. In the event an Award was deferred under the Prior Plan, such deferral shall be governed by the terms of the Prior Plan.
ARTICLE IV
Miscellaneous Provisions
4.1 Neither the Participant, his beneficiary, nor his personal representative shall have any rights to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payments of this Plan shall be void and have no effect.
4.2 The Employing Company shall not reserve or otherwise set aside funds for the payments of Awards deferred in accordance with the Prior Plan.
4.3 The Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to payments which have been deferred under the Prior Plan prior to such amendment, modification, or termination.
4.4 It is expressly understood and agreed that the Awards made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he may be eligible, whether funded or unfunded, by reason of his employment with the Employing Company.
4.5 There shall be deducted from the payment of each Award under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by the Employing Company to such governmental authority for the account of the person entitled to such distribution.
4.6 Any Awards paid to a Participant while employed by an Employing Company shall not be considered in the calculation of the Participant's benefits under any other employee welfare or pension benefit plan maintained by an Employing Company, unless otherwise specifically provided therein.
4.7 This Plan, and all its rights under it, shall be governed by and construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, Southern Company Services, Inc., through its duly authorized officers, hereby amends and restates the Southern Company Executive Productivity Improvement Plan as approved by the Board of Directors on February 17, 1997, to be effective January 1, 1997.
SOUTHERN COMPANY SERVICES, INC.
By: ______________________________
Its: ______________________________
Attest: ________________________
By: ________________________
Its: ________________________
[CORPORATE SEAL]
|
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT A
Award Opportunity
Grade Award Opportunity
1/1/95 6/1/95 Percentage of Grade Level Value
or Annual Salary
President/CEO 50/65%
29/30 (15) 50%
|
The Southern Company
Executive Productivity Improvement Plan
Exhibit B
Award Percentage Schedule
Position Ranking
Value of
Performance Unit 12-14 15-17 18-20
($) Companies Companies Companies
--- --------- --------- ---------
$2.00 Top Top Top
1.80 1.0 1.0 1.0
1.60 2.0 2.0 2.0
1.40 2.5 3.0 3.0
1.20 3.0 4.0 4.0
1.00 4.0 4.5 5.0
0.90 4.5 5.0 6.0
0.80 5.0 6.0 7.0
0.70 6.0 7.0 8.0
0.60 6.5 8.0 9.0
0.50 7.0 8.5 10.0
0 Below 7.0 Below 8.5 Below 10
Percentage of Total Award Factor
Computation Period Ending Factor
December 31, 1997 75%
December 31, 1998 50%
December 31, 1999 25%
Thereafter 0%
|
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT C
ROE Peer Group Companies
Allegheny Power System American Electric Power Carolina Power & Light Central & South West (4 utility subs will be combined*) Central Louisiana Electric Constellation Energy (previously BG&E & Potomac Electric) Delmarva Power & Light Duke Power Entergy Florida Power & Light (previously used FPL Group, Inc.) Florida Power Corp. (previously used Florida Progress) Kentucky Utilities Company (previously used KU Energy) South Carolina Electric & Gas (previously used SCANA) Southern Company (Core only) Tampa Electric (previously used TECO Energy) Virginia Electric & Power (previously used Dominion Resources) |
*Central Power & Light Co., Public Service Co. of Oklahoma, Southwestern Electric Power Co. and West Texas Utilities Co.
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT D
Award Units
Grade
1/1/95 6/1/95 Award Units
Percentage of Grade Level Value
or Annual Salary
President/CEO 50/65%
29/30 (15) 50%
|
SOUTHERN COMPANY
EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
EXHIBIT E
Performance Unit Factor
Value of Unit Percentage of Southern TSR
vs.
Investor Utility
$ 2.00 90th and above
$ 1.50 70th and above
$ 1.00 50th and above
$ .50 30th and above
$ .00 Below 30th
|
Percentage Of Total Award Factor
Computation Period Ending Factor
December 31, 1997 25%
December 31, 1998 50%
December 31, 1999 75%
Thereafter 100%
|
Exhibit 10(a)63
THIRD AMENDMENT TO THE
SOUTHERN COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, the Employee Stock Ownership Plan Committee ("Committee") heretofore adopted the amendment and restatement of The Southern Company Employee Stock Ownership Plan ("Plan"), effective as of April 1, 1995, which was amended by the Board of Directors of Southern Company Services, Inc. ("Company") effective as of August 1, 1995 and by the Committee to be effective as provided in the Second Amendment; and
WHEREAS, the Committee desires again to amend the Plan in order to make certain clarifying changes; and
WHEREAS, the Committee is authorized pursuant to Section 15.1 of the Plan to amend the Plan at any time, provided that the amendment does not involve a substantial increase in cost to any Employing Company or is necessary or desirable to comply with the laws and regulations applicable to the Plan;
NOW, THEREFORE, the Committee hereby amends the Plan as follows:
I.
Effective as of the date hereof, Section 2.3 shall be amended by deleting such Section in its entirety and substituting a new Section 2.3 as follows:
2.3 "Aggregation Group" shall mean either a Required Aggregation Group or a Permissive Aggregation Group.
II.
Effective as of January 1, 1996, Section 2.25 shall be amended by deleting such Section in its entirety and substituting a new Section 2.25 as follows:
2.25 "Enrollment Date" shall mean the day on which the Eligible Employee meets the requirements for participation in this Plan under Article III.
III.
Effective as of the date hereof, a new Section 2.37A shall be added to the Plan as follows:
2.37A "Permissive Aggregation Group" shall mean a group of plans consisting of the Required Aggregation Group and, at the election of the Affiliated Employers, such other plan or plans not required to be included in the Required Aggregation Group, provided the resulting group, taken as a whole, would continue to satisfy the provisions of Code Section 401(a)(4) or 410.
IV.
Effective as of the date hereof, a new Section 2.42A shall be added to the Plan as follows:
2.42A "Required Aggregation Group" shall mean those plans that are required to be aggregated as determined under this Section 2.42A. In determining a Required Aggregation Group hereunder, each plan of the Affiliated Employers in which a Key Employee is a participant and each other plan of the Affiliated Employers which enables any plan in which a Key Employee participates to meet the requirements of Code Section 401(a)(4) or 410 will be required to be aggregated.
V.
Effective as of January 1, 1996, Section 6.8 shall be amended by deleting the first sentence thereof and inserting a new sentence as follows:
Before each annual or special meeting of shareholders of The Southern Company, there shall be sent to each Participant a copy of the proxy soliciting material for the meeting, together with a form requesting instructions to the Trustee on how to vote the shares of Common Stock credited to such Participant's Account as of the record date of the Common Stock.
VI.
Except as amended herein by this Third Amendment, the Plan shall remain in full force and effect as amended and restated by the Company prior to the adoption of this Third Amendment.
IN WITNESS WHEREOF, Southern Company Services, Inc. through its duly authorized officers has adopted this Third Amendment to The Southern Company Employee Stock Ownership Plan this ____ day of _________________________, 1997 to be effective as stated herein.
SOUTHERN COMPANY SERVICES, INC.
By:
Its:
ATTEST:
By:
Its:
Exhibit 10(a)68
FIRST AMENDMENT TO
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
WHEREAS, the Board of Directors of Southern Company Services, Inc. (the "Company") heretofore adopted the amendment and restatement of The Southern Company Performance Pay Plan, effective as of January 1, 1996 (the "Plan"); and
WHEREAS, the Plan provides for the payment of incentive pay awards based on individual, organizational and corporate performance; and
WHEREAS, the Company desires to make certain technical changes and to protect employees who are transferred to subsidiaries or affiliates of The Southern Company which are not under the Plan from forfeiting their pro rata share of benefits from the Plan accrued in the year of transfer; and
WHEREAS, the Board of Directors of the Company is authorized pursuant to Section 6.3 of the Plan to amend the Plan at any time.
NOW THEREFORE, the Company hereby amends the Plan to be effective as stated below:
1.
Article I shall be amended effective January 1, 1996 by adding Section 1.12A which shall read as follows:
"Funding Unit" shall mean each organizational unit established by an Operating Company which Company Goals are established and assessed for the purpose of paying Incentive Pay Awards.
2.
Article I shall be amended effective January 1, 1997 by adding Section 1.12B which shall read as follows:
"Non-Adopting Company" shall mean any subsidiary or affiliate of The Southern Company which is not an Operating Company.
3.
Section 2.1(b)(4) shall be deleted in its entirety effective January 1, 1997 and restated as follows:
termination of employment, but only in the event the Participant shall transfer to or be reemployed by a Non-Adopting Company, or any successor thereto, during such Performance Period, or 4.
Except as amended herein by this First Amendment, the Plan shall remain in full force and effect as amended and restated by the Company.
IN WITNESS WHEREOF, the Company, through its duly authorized officer, has adopted the First Amendment to The Southern Company Performance Pay Plan as amended and restated January 1, 1996 this ____ day of ______________, 1998.
SOUTHERN COMPANY SERVICES, INC.
By: __________________________
Title: __________________________
SECOND AMENDMENT TO
THE SOUTHERN COMPANY
PERFORMANCE PAY PLAN
WHEREAS, the Board of Directors of Southern Company Services, Inc. (the "Company") heretofore adopted the amendment and restatement of The Southern Company Performance Pay Plan, effective as of January 1, 1996 (the "Plan"); and
WHEREAS, the Plan provides for the payment of incentive pay awards based on individual, organizational and corporate performance; and
WHEREAS, upon the transfer of employment by a participant within The Southern Company, the Plan currently allocates funding responsibilities for payment of incentive pay awards to the transferee funding unit; and
WHEREAS, the Company desires to clarify the allocation of such funding responsibilities with respect to certain employees which have been transferred in 1997 to Southern Company Services, Inc.; and
WHEREAS, the Board of Directors of the Company is authorized pursuant to Section 6.3 of the Plan to amend the Plan at any time.
NOW THEREFORE, the Company hereby amends the Plan to be effective as stated below:
1.
A new Section 3.2(d) shall be included effective January 1, 1997 as set forth below:
Notwithstanding Section 3.2(c) above, if a Non-Covered Employee Participant transfers to Southern Company Services, Inc. from an Operating Company during the Performance Period commencing January 1, 1997 who is identified on a schedule acceptable to the Plan Administrator, the Operating Company will fund such Participants' Incentive Pay Award in accordance with Article III for that portion of the Performance Period for which such Participant is employed by the Operating Company. Southern Company Services, Inc. shall be responsible for funding the remaining Incentive Pay Award in accordance with Article III for that portion of the Performance Period for which such Participant was employed at Southern Company Services, Inc. Southern Company Services, Inc. shall be responsible for paying the entire Incentive Pay Award to the Non-Covered Employee Participant in accordance with Section 4.1(c).
2.
Except as amended herein by this Second Amendment, the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the Company, through its duly authorized officer, has adopted the Second Amendment to The Southern Company Performance Pay Plan as amended and restated January 1, 1996 this ____ day of ______________, 1998.
SOUTHERN COMPANY SERVICES, INC.
By: ___________________________
Title:_________________________
Exhibit 10(a)77
SOUTHERN COMPANY
PERFORMANCE DIVIDEND PLAN
EFFECTIVE JANUARY 1, 1997
SOUTHERN COMPANY
PERFORMANCE DIVIDEND PLAN
Purposes
The purposes of the Southern Company Performance Dividend Plan are to provide a financial incentive which will focus the efforts of certain key employees on areas which will have a direct and significant influence on corporate performance and to provide the potential for levels of compensation which will enhance the Employing Companies' abilities to attract, retain and motivate such key employees. In order to achieve these objectives, the Plan will be based upon corporate performance as measured by total shareholder return or such other performance measure which the Committee may determine under the terms of the Plan.
ARTICLE I
Definitions
For purposes of the Plan, the following terms shall have the following meanings unless a different meaning is plainly required by the context:
1.1 "Annual Dividend" shall mean the aggregate, annual dividend declared by the Company on Common Stock for the Plan Year in which an Award is made.
1.2 "Award" shall mean the awards granted pursuant to Article IV hereof.
1.3 "Board of Directors" shall mean the Board of Directors of Southern Company Services, Inc.
1.4 "Committee" shall mean the Compensation Committee of the Board of Directors of the Company or the Employing Company.
1.5 "Common Stock" shall mean the common stock of the Company.
1.6 "Company" shall mean The Southern Company.
1.7 "Computation Period" shall mean a four-year period commencing the first day of January of each year, provided, however, that the Computation Period for the first three years beginning in the year of the effective date of the Plan shall be one year, two years and three years, respectively, beginning January 1, 1997.
1.8 "Employing Company" shall mean Southern Company Services, Inc., or any affiliate or subsidiary (direct or indirect) of the Company, which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them.
1.9 "Key Employee" shall mean any person who is or was employed by an Employing Company who has been granted Stock Options.
1.10 "Participant" shall mean an Employee who satisfies the criteria set forth in Article III.
1.11 "Payment Date" shall mean the date the check evidencing an Award is endorsed by an authorized person of an Employing Company.
1.12 "Peer Group Common Stock" shall mean the common stock of the Peer Group Companies.
1.13 "Peer Group Companies" shall mean those Companies designated by Goldman Sachs as the 80 Utility Peer Group Companies as published quarterly and as composed from time to time. In the event that Goldman Sachs no longer publishes the 80 Utility Peer Group Companies, the Committee shall choose such other and similar list of national peer group companies as published by a similarly nationally recognized firm.
1.14 "Performance Based" shall mean compensation which qualifies as "performance based" within the meaning of Code Section 162(m)(4)(c) and the regulations thereunder.
1.15 "Permanent Disability" shall mean such permanent disability as defined in The Southern Company Pension Plan.
1.16 "Phantom Stock" shall mean phantom shares of Common Stock as defined by The Southern Company Deferred Compensation Plan.
1.17 "Plan" shall mean the Southern Company Performance Dividend Plan.
1.18 "Plan Year" shall mean the calendar year.
1.19 "Retirement" shall mean the termination of employment with an Employing Company under the terms of The Southern Company Pension Plan or such other retirement or early retirement plan or arrangement which the Committee shall adopt and make available to a Participant.
1.20 "Stock Option" shall mean those options to acquire Common Stock awarded to Participants pursuant to the Southern Company Performance Stock Plan.
1.21 "Termination for Cause" or "Cause" shall mean the termination of a Participant's employment by an Employing Company under any of the following circumstances:
a. The Participant willfully neglects or refuses to discharge his or her duties to the Employing Company as an employee or refuses to comply with any lawful or reasonable instructions given to him or her by the Employing Company without reasonable excuse;
b. The Participant is guilty of gross misconduct. For purposes of this Plan, the following acts shall constitute gross misconduct:
i) any act involving fraud or dishonesty or breach of appropriate regulations of competent authorities;
ii) the carrying out of any activity or the making of any statement which would prejudice and/or reduce the good name and standing of the Company or an Employing Company or would bring the Company or an Employing Company any into contempt, ridicule or would reasonably shock or offend any community in which the Company or an Employing Company is located;
iii) attendance at work in a state of intoxication or otherwise being found in possession at his or her workplace of any prohibited drug or substance, possession of which would amount to a criminal offense;
iv) assault or other act of violence against any employee or other person during the course of the Participant's employment; and
v) conviction of any felony or misdemeanor involving moral turpitude.
1.22 "Total Shareholder Return" or "TSR" shall mean the total amount an investor would receive by investing $100 per quarter in Common Stock or in Peer Group Common Stock, as the case may be, as determined by measuring the total dividends which would have been paid on such Common Stock or Peer Group Common Stock by reinvesting such dividends on a quarterly basis in additional shares of Common Stock or Peer Group Common Stock as the case may be and the total gain or loss on such Common Stock or Peer Group Common Stock as if such stock had been sold at the closing price on the last day of the respective Computation Period.
Where the context requires, words in the masculine gender shall include the feminine and neuter genders, words in the singular shall include the plural, and words in the plural shall include the singular.
ARTICLE II
2.1 Plan Administration. The Plan shall be administered by the Committee. The Committee is authorized to establish such rules and to appoint such agents as it deems appropriate for the proper administration of the Plan, and to make such determinations and to take such steps in connection with the Plan or the benefits provided hereunder as it deems necessary or advisable.
2.2 Plan Interpretation. The Committee shall have the exclusive authority to interpret the Plan. The decision of the Committee with respect to any question arising as to the grant of an Award to a Participant in the Plan, the amount, term, form, and time of payment of Awards under the Plan, or any other matter concerning the Plan shall be final, conclusive, and binding on both the Company and the Participants.
ARTICLE III
Participants
3.1 Participation in the Plan shall be limited to Key Employees of the Employing Companies, or in the case of death, their estates or beneficiaries, holding Stock Options as of the last day of any Computation Period.
3.2 Any Participant who terminates his or her employment with an Employing Company and who is not immediately re-employed with an affiliate of an Employing Company prior to the Payment Date of any Award due under this Plan for reasons other than death, Permanent Disability, or Retirement shall forfeit any Award due under this Plan. If a Participant terminates his or her employment by reason of death, Permanent Disability or Retirement, such Participant or his or her estate or representative shall continue to be eligible to receive Awards with respect to any Stock Options which remain outstanding in accordance with their terms.
3.3 Notwithstanding any other provision of this Plan, no Participant whose employment is terminated by an Employing Company for Cause shall be eligible to receive an Award under this Plan.
3.4 Notwithstanding any other provision of this Plan, the maximum Award for any Plan Year payable to any Participant with respect to Stock Options awarded during such Plan Year shall be six million dollars ($6,000,000).
3.5 In the case of an individual who becomes a Participant subsequent to January 1, 1997, such Participant shall participate in each Computation Period which ends not less than two (2) years after becoming a Participant. A new four-year measuring period shall begin each year in order to recognize the need to link objectives over longer periods of time, to recognize changes in the operating environment, and to encourage Participants to make long-term decisions.
ARTICLE IV
Performance Dividend Award
4.1 Each Participant shall receive an Award on the last day of each Computation Period which shall be based upon the number of vested and unvested, outstanding Stock Options held by the Participant on the last day of such Computation Period multiplied by the Annual Dividend multiplied by the Payout Percentage determined in accordance with the following schedule:
Percentage of Southern TSR Payout Percentage
Versus Peer Group TSR
90th 100%
70th 75%
50th 50%
30th 25%
Below 30th 0%
|
The Payout Percentage for performance levels falling between the percentiles listed above shall be extrapolated for any given Plan Year. The Committee may increase the Payout Percentage by up to a factor of two (2) with respect to such Participants and under such circumstances as the Committee in its discretion shall deem appropriate.
4.2 The Payout Percentage set forth herein shall be based on the Company's Total Shareholder Return ranking during a Computation Period as compared to the Total Shareholder Return ranking of the Peer Group Companies for such Computation Period. The Total Shareholder Return of the Peer Group Companies shall be determined annually by an independent certified public accountant based on generally accepted accounting principles and shall be properly adjusted and annualized by such accountant so that the Peer Group Companies' Total Shareholder Return may be accurately compared to that of the Company.
4.3 Notwithstanding the above provisions, an Award shall not be granted for any Computation Period ending with the Plan Year in which the current earnings of The Southern Company are less than the amount necessary to fund dividends on its Common Stock at the rate such dividends were paid for the immediately preceding Plan Year.
4.4 Awards shall be paid in cash on or before the 15th day of the third month following the last day of the Computation Period or, with respect to those Participants who are otherwise eligible to participate in The Southern Company Deferred Compensation Plan, may be deferred by exercising an option to do so no later than 12 months before any amount would otherwise be distributed pursuant to this Section 4.4. If an election is made to defer the receipt of the amount of any Award, such amount shall be deemed to be invested in Phantom Stock. Dividend equivalents earned on such Phantom Stock shall be automatically invested in additional shares of Phantom Stock.
ARTICLE V
Miscellaneous Provisions
5.1 Neither the Participant, his or her beneficiary, nor his or her personal representative shall have any rights to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the rights thereto are expressly declared to be nonassignable and nontransferable. Any attempt to assign or transfer the right to payments under this Plan shall be void and have no effect.
5.2 An Employing Company shall neither reserve nor otherwise set aside funds for the payments of any Awards under this Plan.
5.3 The Plan may be amended, modified, or terminated by the Board of Directors in its sole discretion at any time and from time to time; provided, however, that no such amendment, modification, or termination shall impair any rights to payments which have accrued under the Plan prior to such amendment, modification, or termination.
5.4 It is expressly understood and agreed that Awards made in accordance with the Plan are in addition to any other benefits or compensation to which a Participant may be entitled or for which he or she may be eligible, whether funded or unfunded, by reason of his or her employment with an Employing Company.
5.5 There shall be deducted from the payment of each Award under the Plan the amount of any tax required by any governmental authority to be withheld and paid over by an Employing Company to such governmental authority for the account of the person entitled to such distribution.
5.6 Any Awards paid to a Participant while employed by an Employing Company shall not be considered in the calculation of the Participant's benefits under any other employee welfare or pension benefit plan maintained by an Employing Company, unless otherwise specifically provided therein.
5.7 This Plan, and all rights under it, shall be governed by and construed in accordance with the laws of the State of Georgia.
IN WITNESS WHEREOF, Southern Company Services, Inc., through its duly authorized officers, hereby adopts the Southern Company Performance Dividend Plan as approved by the Board of Directors on February 17, 1997, to be effective January 1, 1997.
SOUTHERN COMPANY SERVICES, INC.
By:
Its: Executive Vice President
Attest:
By:
Its: Assistant Secretary
[CORPORATE SEAL]
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Exhibit 10(a)79
FIRST AMENDMENT TO
THE SOUTHERN COMPANY
PENSION PLAN
WHEREAS, the Board of Directors of Southern Company Services, Inc. (the "Company") heretofore adopted The Southern Company Pension Plan, as amended and restated (the "Plan"), effective January 1, 1997; and
WHEREAS, the Company wishes to amend the Plan to merge the Employees' Retirement Plan of Savannah Electric and Power Company as amended and restated effective January 1, 1997 and to make other miscellaneous and technical changes; and
WHEREAS, the Company is authorized pursuant to Section 13.1 of the Plan to amend the Plan at any time.
NOW, THEREFORE, effective January 1, 1998, the Company hereby amends the Plan as follows:
1.
Section 1.1 is amended by deleting it in its entirety and replacing it with the following:
"Accrued Retirement Income" means with respect to any Employee at any particular date, the Retirement Income, determined pursuant to Section 5.1 as may be modified by Article XV or XVII, commencing on his Normal Retirement Date which would be payable to such Employee in the form of a single life annuity on the basis of his Accredited Service to the date as of which the computation of Retirement Income is made.
2.
Section 1.16 is amended by adding to the end thereof the following:
Notwithstanding the preceding, "Employee" shall not mean any person who is classified by an Employing Company as an independent contractor or a temporary employee (unless such temporary employee is grandfathered pursuant to Section 2.6 of the Plan and 3.07 of the SEPCO Plan) regardless of whether such classification is in error.
3.
Section 4.2(e) is amended by deleting it in its entirety and replacing it with the following:
Notwithstanding the above, the maximum number of years of Accredited Service with respect to any Employee participating in the Plan shall not exceed forty-three (43), except with respect to Employees eligible under Section 15.1 whose Accredited Service shall not be limited to any maximum number where their benefit is calculated under Section 15.2.
4.
Section 4.4 shall be amended by adding the following new paragraph to the end thereof:
(f) Notwithstanding any other provisions of this
Section 4.4, any Employee who (1) has an initial date of
disability on or after January 1, 1998, and (2) is not covered
by the terms of a collective bargaining agreement or (3) is
covered by the terms of a collective bargaining agreement but
where the bargaining unit representative and an Employing
Company have mutually agreed to this provision, shall be
ineligible for a Disability Leave under this Section 4.4 or
such Employee's Disability Leave shall terminate if the
Employee has already become eligible if such Employee accepts
a benefit under an Employing Company's "career transition
plan" or such other severance plan or agreement where such
other plan or agreement stipulates that the Employee is
ineligible or ceases to be on Disability Leave under this
Plan.
5.
The second paragraph of Section 5.2 is amended by deleting it in its entirety and replacing it with the following:
Any provisions of this Article V to the contrary notwithstanding, Retirement Income determined in accordance with this Article V with respect to an Employee who retires on his Normal Retirement Date or Deferred Retirement Date shall not be less than the Retirement Income which would have been payable with respect to such Employee commencing on an earlier Retirement Date which would have resulted in the greatest Retirement Income if such Retirement Income had been payable in the same form as his Retirement Income commencing on his Normal Retirement Date or Deferred Retirement Date.
6.
Section 6.1(c)(1) is amended by deleting it in its entirety and replacing it with the following:
(1) Affiliated Employer contributions under Code
Section 402(g)(3) and any amount contributed by an Employing
Company on behalf of an Employer under any Code Section 125
and 457 arrangement prior to January 1, 1998 which are not
included in the Employee's gross income for the taxable year
in which contributed or Affiliated Employer contributions
under a simplified employee pension plan to the extent such
contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
7.
The first sentence of Section 8.4(a) is deleted in its entirety and replaced with the following:
(a) Notwithstanding any other provision of this Plan, if the present value of Accrued Retirement Income of an Employee whose service terminates for any reason other than transfer to an Affiliated Employer or retirement under Article III is not more than $3,500 for distributions prior to January 1, 1998 or is not more than $5,000 for distributions on or after January 1, 1998 (or such greater amount as permitted by the regulations prescribed by the Secretary of the Treasury), the present value of the Employee's Accrued Retirement Income shall be paid in a lump sum, in cash, to such terminated Employee.
8.
Section 14.2 shall be amended to add to the end of the third paragraph thereof the following:
In addition, the Retirement Board and Trustee shall permit alienation, assignment or other attachment where otherwise permitted under Code Section 401(a)(13).
9.
Section 15.2(d) shall be deleted in its entirety and replaced with the following:
(a) Notwithstanding paragraphs (a) and (b) above, Retirement Income determined with respect to an Employee who retires on his Normal Retirement Date or Deferred Retirement Date shall not be less than the Retirement Income which would have been payable with respect to such Employee commencing on his earlier Retirement Date had (1) the Employee retired on his earlier Retirement Date which would have resulted in the greatest Retirement Income and (2) such Retirement Income commencing on such earlier Retirement Date been payable in the same form as his Retirement Income commencing on his Normal Retirement Date or Deferred Retirement Date.
10.
Section 16.1 shall be deleted in its entirety and replaced with the following:
Article XVI
Special Provisions Concerning Certain Employees of Southern Energy, Inc.
16.1 Eligibility and Recognition of Service for Former Employees.
(a) Former Scott Paper Company Employees. Effective
January 1, 1995, notwithstanding any other provision of the
Plan to the contrary, with respect to a former, non-collective
bargaining unit employee of Scott Paper Company who was
employed by Southern Electric International, Inc. as of
December 17, 1994 as set forth on Schedule 2.1 of the Employee
Transition Agreement entered into by and among Mobile Energy
Services Company, Inc., Southern Electric International, Inc.
and Scott Paper Company (hereinafter referred to in this
Section 16.1(a) as the "Scott Scheduled Employee"),
(1) Such Scott Scheduled Employee shall be eligible to participate in the Plan effective January 1, 1995.
(2) Such Scott Scheduled Employee, if and when he attains his Early Retirement Date, Normal Retirement Date, or Deferred Retirement Date, or terminates service for any other reason subject to the requirements of Section 8.1 or 8.2, shall be entitled to receive Retirement Income based on both his Accredited Service with an Employing Company and the service accrued under the Scott Paper Company Pension Plan for Salaried Employees (the "Scott Salaried Plan") which shall be treated as if Accredited Service under this Plan. To calculate such Scott Scheduled Employee's Retirement Income, the Scott Scheduled Employee's Accrued Retirement Income, as determined in accordance with Section 5.1, shall first be reduced by the Employee's accrued benefit in the Scott Salaried Plan, determined as if he retired from Scott Paper Company at his normal retirement age, as that term is defined in the Scott Salaried Plan on December 17, 1994. Thereafter, such Employee's Retirement Income shall be subject to applicable reductions, if any, in accordance with Article V, Section 8.1 and Section 8.2, as appropriate.
(3) For purposes of calculating such Scott
Scheduled Employee's Social Security Offset under
Section 5.4, the Social Security Offset shall be
determined by using the actual salary history of the
Scott Scheduled Employee during his employment with
any Affiliated Employer, and Scott Paper Company. If
the actual salary history is not available from Scott
Paper Company, such history shall be estimated in
accordance with Section 5.4.
(4) For vesting purposes, such Scott Scheduled Employee shall be entitled to receive Vesting Years of Service as provided in Section 1.41 and, in addition, shall be entitled to vesting service equal to the sum of the years of vesting service accrued under each defined benefit pension plan maintained by Scott Paper Company in which such Scott Scheduled Employee participated.
(b) Former Commonwealth Edison of Indiana Employees. Effective January 1, 1998, notwithstanding any other provision of the Plan to the contrary, with respect to a former employee of Commonwealth Edison of Indiana ("ComEd") who was employed by Southern Energy, Inc. as set forth on a schedule of employees acknowledged by the Retirement Board (hereinafter referred to in this Section 16.1(b) as "ComEd Scheduled Employee"),
(1) Such ComEd Scheduled Employee shall be eligible to participate in the Plan effective January 1, 1998.
(2) Such ComEd Scheduled Employee, if and when he attains his Early Retirement Date, Normal Retirement Date, or Deferred Retirement Date, or terminates service for any other reason subject to the requirements of Section 8.1 or 8.2, shall be entitled to receive Retirement Income based on both his Accredited Service with an Employing Company and the service accrued under the Commonwealth Edison Company of Indiana Service Annuity System Plan (the "ComEd Plan") which shall be treated as if Accredited Service under this Plan. To calculate such ComEd Scheduled Employee's Retirement Income, the ComEd Scheduled Employee's Accrued Retirement Income, as determined in accordance with Section 5.1, shall first be reduced by the Employee's accrued benefit in the ComEd Plan, determined as if he retired from ComEd at his normal retirement age, as that term is defined in the ComEd Plan on December 31, 1997. Thereafter, such Employee's Retirement Income shall be subject to applicable reductions, if any, in accordance with Article V, Section 8.1 and Section 8.2, as appropriate.
(3) For purposes of calculating such ComEd
Scheduled Employee's Social Security Offset under
Section 5.4, the Social Security Offset shall be
determined by using the actual salary history of the
ComEd Scheduled Employee during his employment with
any Affiliated Employer, and ComEd. If the actual
salary history is not available from ComEd, such
history shall be estimated in accordance with Section
5.4.
(4) For vesting purposes, such ComEd Scheduled Employee shall be entitled to receive Vesting Years of Service as provided in Section 1.41 and, in addition, shall be entitled to vesting service equal to the sum of the years of vesting service accrued under the ComEd Plan.
11.
The Plan shall be amended to add Article XVII as set forth below:
Article XVII
17.1 Definition of Terms Used in this Article XVII and the SEPCO Schedule.
(a) "SEPCO" shall mean Savannah Electric and Power Company.
(b) "SEPCO Plan" shall mean the Employees' Retirement Plan of Savannah Electric and Power Company, as amended and restated January 1, 1997.
(c) "SEPCO Schedule" shall mean the Schedule attached to the Plan and made apart thereof containing the provisions of the SEPCO Plan as merged into the Plan effective January 1, 1998 which shall apply to SEPCO Employees and Covered SEPCO Employees.
(d) "SEPCO Employee" shall mean an Employee as defined in the SEPCO Plan having an Hour of Service under the SEPCO Plan on or after January 1, 1997. This shall include persons represented by a collective bargaining agent where such agent and SEPCO have mutually agreed to participate in the Plan. This shall not include employees who are hired or rehired at SEPCO after December 31, 1997, rescind a waiver of participation under Section 3.8 of the SEPCO Plan or SEPCO Schedule on or after January 1, 1998 that was in effect on December 31, 1997, or are Covered SEPCO Employees.
(e) "Covered SEPCO Employee" shall mean an Employee as defined in the SEPCO Plan having an Hour of Service under the Plan on or after January 1, 1998 who is represented by a collective bargaining agent where such agent and SEPCO have not mutually agreed to participate in the Plan but have agreed to participate in the SEPCO Schedule.
17.2 Covered SEPCO Employees. On and after January 1, 1998, Covered SEPCO Employees shall be subject to and receive an Allowance in accordance with the provisions set forth in the SEPCO Schedule.
17.3 SEPCO Employees Eligibility in the New Pension Program
(a) The following SEPCO Employees shall be subject to this Section 17.3 of the Plan:
(1) SEPCO Employees who are actively employed by SEPCO on January 1, 1997 but who will not attain their fortieth (40th) birthday on or before January 1, 2002, or
(2) SEPCO Employees who are not members of an eligible class of SEPCO Employees on or after January 1, 1997 and have not previously participated in the SEPCO Plan.
(b) The monthly Retirement Income payable as a single life annuity to a SEPCO Employee (or his Provisional Payee) who retires from the service of SEPCO or another Employing Company at his Normal Retirement Date or Deferred Retirement Date (before adjustment for a Provisional Payee designation, if any) after January 1, 1997, subject to the limitations in Article VI, shall be the greater of (1) and (2) below:
(1) 1.0% of his Average Monthly Earnings multiplied by his years (and fraction of a year) of Accredited Service, without application of the limitation described in Section 4.2(e), to his Normal Retirement Date or Deferred Retirement Date; or
(2) $25 multiplied by his years (and fraction of a year) of Accredited Service, without application of the limitation described in Section 4.2(e), to his Normal Retirement Date or Deferred Retirement Date.
(c) Notwithstanding paragraph (b) above, if the Allowance of a SEPCO Employee determined under the SEPCO Schedule as of the earlier of his retirement or termination of employment with SEPCO or December 31, 2001 would be greater, such SEPCO Employee shall be entitled when eligible to receive payments such greater Allowance upon his retirement or termination of employment with SEPCO or another Employing Company.
(d) Notwithstanding paragraphs (b) and (c) above, Retirement Income or Allowance, as the case may be, determined with respect to a SEPCO Employee under this Article XVII who retires on his Normal Retirement Date or Deferred Retirement Date shall not be less than the Retirement Income or Allowance which would have been payable with respect to such SEPCO Employee commencing on his earlier Retirement Date had (1) the SEPCO Employee retired on his earlier Retirement Date which would have resulted in the greatest Retirement Income and (2) such Retirement Income or Allowance commencing on such earlier Retirement Date been payable in the same form as his Retirement Income or Allowance commencing on his Normal Retirement Date or Deferred Retirement Date.
(e) With respect to SEPCO Employees described in this
Section 17.1 who retire before their Normal Retirement Date,
the monthly amount of Retirement Income provided in paragraph
(b) above shall be reduced in accordance with Section 5.5.
17.4 SEPCO Employees Not Described in 17.2 or 17.3. SEPCO Employees not described in Section 17.2 or 17.3 above shall be eligible for a benefit under the Plan as described in this Section 17.4 notwithstanding any other provision of the Plan or SEPCO Schedule to the contrary.
(a) A SEPCO Employee shall be eligible to participate in the Plan and receive Retirement Income thereunder as determined under the Plan's terms and this Article XVII. Notwithstanding the preceding sentence, if such SEPCO Employee's Allowance determined as of the earlier of his retirement or termination of employment with SEPCO or December 31, 2001 would be greater, such SEPCO Employee shall be entitled when eligible to commence payments such greater Allowance upon his retirement or termination of employment with SEPCO or another Employing Company.
(b) Notwithstanding paragraph (a) above, only with respect to SEPCO Employees who have attained age fifty (50) and have ten (10) Years of Credited Service or who have attained age 55 on or before January 1, 1997, such SEPCO Employees shall be entitled to receive the greater of their Allowance or Retirement Income upon retirement.
17.5 Special Transition Rules. Notwithstanding any other provisions in the Plan to the contrary, SEPCO Employees who participate in the Plan shall be subject to the following transition rules.
(a) In determining the greater benefit as required under Sections 17.3 and 17.4, the form of payment and any early retirement reductions with respect to the payment of Retirement Income as set forth in Articles V and VII of the Plan and of an Allowance as set forth in Articles 5 and 7 of the SEPCO Schedule shall be considered. For purposes of making the preceding determination, (1) the applicable Allowance shall first be converted to a monthly payment, and (2) the Retirement Annuities described in Article 2 of the SEPCO Schedule shall be taken into account consistent with Section 5.01 of the SEPCO Schedule.
(b) With respect to eligibility to participate in the Plan, all SEPCO Employees employed by SEPCO on December 31, 1997 who are not already eligible to participate in the Plan shall be immediately eligible to participate in the Plan.
(c) SEPCO Employees eligible to participate in the SEPCO Plan on December 31, 1997 shall have their Vesting Year of Service determined as if their anniversary date of hire is January 1. All SEPCO Employees who participate in the Plan shall be credited with Vesting Years of Service based upon the terms of the Plan for periods of service on and after January 1, 1998, and based upon the Continuous Service such SEPCO Employees accrued under the SEPCO Plan prior to January 1, 1998.
(d) (1) For periods of service on and after January 1, 1998, Accredited Service for SEPCO Employees shall be determined in accordance with the Plan.
(2) For periods of service on and after January 1, 1998, with respect to any Allowance a SEPCO Employee may be entitled to under the SEPCO Schedule, such Allowance shall be determined using Accredited Service in place of Credited Service.
(3) For periods of service prior to January 1, 1998, the Credited Service of a SEPCO Employee shall be used to determine such SEPCO Employee's Allowance and Retirement Income accrued prior to January 1, 1998.
(4) When calculating a SEPCO Employee's Retirement Income, the maximum amount of Accredited Service and Credited Service that will be considered is forty-three (43).
(e) For purposes of calculating Retirement Income for a SEPCO Employee, Compensation determined under the SEPCO Plan excluding unused accrued vacation shall be used in place of Earnings for periods of service prior to January 1, 1998.
(f) The Normal Retirement Date of a SEPCO Employee shall always be determined in accordance with the SEPCO Plan prior to January 1, 1998 and the SEPCO Schedule on and after January 1, 1998.
(g) (1) A SEPCO Employee may retire if he has either
attained age fifty-five (55) or attained age fifty
(50) and has at least ten (10) Years of Accredited
Service as determined under this Article XVII. A
SEPCO Employee who retires because he has attained
age fifty (50) and has ten (10) Years of Accredited
Service may not commence receipt of his Retirement
Income or Allowance until on or after January 1,
1998.
(2) A SEPCO Employee that retires under
paragraph (1) above having at least ten (10) Years of
Accredited Service shall be entitled to the greater
of his (A) Retirement Income determined under Section
5.5 (excluding the third paragraph thereof) and this
Article XVII or (B) Allowance determined under this
Article XVII and in addition applying a reduction of
one-third of one percent ([GRAPHIC OMITTED]%) for
each calendar month by which the commencement date
precedes the first day of the month following any
such Employee's attainment of his fifty-fifth (55th)
birthday.
(3) A SEPCO Employee that retires or terminates under paragraph (1) above having less than ten (10) Years of Accredited Service shall be entitled to the greater of his (A) Retirement Income determined under Section 8.2 (without regard to the ten (10) Years of Accredited Service requirement) and this Article XVII or (B) Allowance determined under this Article XVII.
(h) On and after January 1, 1998, the Provisional Payees of SEPCO Employees shall only be entitled to benefits as provided in Article VII of the Plan.
(i) With respect to the accrual of Retirement Income or an Allowance during a period of total disability, SEPCO Employees incurring a disability on and after January 1, 1998 shall only be subject to the provisions of Section 4.4 of the Plan.
(j) (1) The options for payment described in Sections 7.1(c) and (d) and Sections 7.6(c) and (d) may be elected by SEPCO Employees who retire or terminate on or after January 1, 1998.
(2) Notwithstanding Section 17.3, SEPCO Employees who terminate or retire in 1997 and commence receipt of an Allowance shall not be eligible to change the form of benefit elected under the SEPCO Plan even if such SEPCO Employees are entitled to receive Retirement Income under this Article XVII.
(3) Notwithstanding Section 7.07(a)(Option
ii) of the SEPCO Schedule, SEPCO Employees shall not
be eligible to elect a 75% joint and survivor
annuity.
(k) SEPCO Employees may elect in accordance with the SEPCO Schedule to have their benefit, whether paid as Retirement Income or an Allowance, adjusted to take into account their old-age insurance benefit under Title II of the Social Security Act. In the event that a SEPCO Employee's Retirement Income is greater than his Allowance under Section 17.3 or 17.4, the old age insurance benefit used to compute such Retirement Income shall be used to determine the amount payable under Section 5.04 of the SEPCO Schedule.
(l) Notwithstanding anything in this Article XVII to the contrary, the Accrued Benefit of any SEPCO Employee shall not be less than the Accrued Benefit such SEPCO Employee derived under the SEPCO Plan as of the earlier of retirement, termination or December 31, 1997.
17.6 Transfers of SEPCO Employees.
(a) With respect to a transfer of employment from an Employing Company other than SEPCO to SEPCO, (1) occurring prior to January 1, 1998, the person will be treated as a SEPCO Employee under this Article XVII or (2) occurring on or after January 1, 1998, the person will be treated as an Employee under the terms of the Plan.
(b) With respect to a transfer of employment from
SEPCO to an Employing Company, (1) occurring prior to January
1, 1997, the person will be treated like an Employee under
Sections 4.6(a), (c) and (d) of the Plan provided that any
Retirement Income or Allowance payable to the Employee shall
be determined in accordance with Section 17.5(a), (g), (j) and
(k) or (2) occurring on or after January 1, 1997, the person
will be treated as a SEPCO Employee under this Article XVII.
17.7 Application of Plan to SEPCO Employees. To the extent not inconsistent with the provisions of this Article XVII, all the provisions of the Plan are applicable to SEPCO Employees and Covered SEPCO Employees.
12.
The Plan shall be amended to add the SEPCO Schedule as set forth below:
SEPCO SCHEDULE
Effective January 1, 1998
TABLE OF CONTENTS
Page No.
ARTICLE 1 DEFINITIONS..............................13
ARTICLE 2 RETIREMENT ANNUITIES PURCHASED
UNDER GROUP ANNUITY CONTRACT AND CHANGE
OF FUNDING...............................19
ARTICLE 3 MEMBERSHIP...............................19
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ARTICLE 4 SERVICE..................................21
4.01 Continuous Service.......................21
4.02 Credited Service.........................21
4.03 Breaks in Service........................22
4.04 Disabled Members.........................23
4.05 Service with Certain Other
Employers................................24
ARTICLE 5 BENEFITS.................................24
5.01 Normal and Late Retirement...............25
5.02 Early Retirement.........................27
5.03 Termination of Employment................27
5.04 Adjustment of Retirement Allowance
for Social Security
Benefits.................................28
5.05 Restoration of Retired Member or
Former Member to Service.................28
5.06 Additional Monthly Benefit...............31
5.07 Written Application......................33
ARTICLE 6 LIMITATIONS ON BENEFITS..................33
6.01 Maximum Benefits.........................33
ARTICLE 7 DISTRIBUTION OF BENEFITS.................37
7.01 Surviving Spouse Benefit.................37
7.02 Qualified Joint and Survivor
Annuity..................................38
7.03 Qualified Preretirement Survivor
Annuity..................................38
7.04 Definitions..............................41
7.05 Notice Requirements......................42
7.06 Transitional Rules.......................43
7.07 Alternative Forms of Distribution........43
7.08 Cash-Out of Annuity Benefits.............45
7.09 Commencement of Benefits.................46
7.10 Requirement for Direct Rollovers.........46
ARTICLE 8 RETIREE MEDICAL BENEFITS.................46
8.01 Definitions..............................46
8.02 Medical benefits.........................50
8.03 Termination of coverage..................50
8.04 Contributions or Qualified
Transfers to fund medical benefits.......51
8.05 Pensioned Employee Contributions.........52
8.06 Amendment of Article 8...................52
8.07 Termination of Article 8.................53
8.08 Reversion of Assets upon
Termination..............................53
Effective January 1, 1998, the Employees' Retirement
Plan of Savannah Electric and Power Company, as amended and
restated effective January 1, 1997, (the "SEPCO Plan") is
merged into The Southern Company Pension Plan. The SEPCO Plan
as merged is now set forth as the "SEPCO Schedule" and
incorporated into The Southern Company Pension Plan. This
SEPCO Schedule must be read in conjunction with and is limited
by Article XVII of the Plan.
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ARTICLE 1 - DEFINITIONS
The foregoing definitions will be applicable to the provisions of this SEPCO Schedule only, unless otherwise expressly indicated. Defined terms in this Schedule shall also be set forth in Articles I and XVII of the Plan.
1.01 "Accrued Benefit" shall mean the amount of retirement Allowance computed at a specific date, in accordance with Article 5 of the SEPCO Schedule, based on Compensation and Credited Service to such date.
1.02 "Affiliated Company" shall mean Affiliated Employer as defined in the Plan.
1.03 "Allowance" shall mean payments made in accordance with Article 5 and Article 7 of the SEPCO Schedule.
1.04 "Annuity Starting Date" shall mean the first day of the first period for which an amount is paid as an annuity or in any other form.
1.05 "Board of Directors" shall mean the Board of Directors of Southern Company Services, Inc..
1.06 "Break in Service" shall mean a period which constitutes a break in an Employee's Continuous Service, as provided in Section 4.03 of the SEPCO Schedule.
1.07 "Code" means the Internal Revenue Code of 1986, as amended from time to time.
1.08 "Company" shall mean for purposes of this SEPCO Schedule only Savannah Electric and Power Company or any successor by merger, purchase or otherwise.
1.09 "Compensation" shall mean the actual remuneration paid to an employee for services rendered to the Company, determined prior to any pre-tax contributions under a "qualified cash or deferred arrangement" (as defined under Code ss. 401(k) and its applicable regulations) or under a "cafeteria plan" (as defined under Code ss. 125 and its applicable regulations), including payments made under any short term disability plan maintained by the Company which shall equal the rate of Compensation of the Member at the time of disability, but excluding any bonuses, pay for overtime, compensation deferred under any deferred compensation plan or arrangement, separation pay, imputed income and relocation pay, and excluding the Company's cost for any public or private employee benefit plan, including this Plan and SEPCO Schedule, under rules uniformly applicable to all employees similarly situated, provided further, effective as of January 1, 1989, any workers' compensation received by an employee shall be excluded from "compensation" for purposes of determining his benefit under the SEPCO Schedule.
For purposes of this Section 1.09, actual remuneration means regular straight time pay, straight time differential pay, substitution straight time pay, substitution flat rate pay, earned vacation pay and the difference between military pay and regular straight time pay a Member would have been paid if such Member had been working for the Company.
Notwithstanding the foregoing, effective as of January 1, 1989, compensation taken into account for any purpose under the SEPCO Schedule shall not exceed $200,000 per year, provided that the imposition of the limit on compensation shall not reduce a Member's Accrued Benefit below the amount of Accrued Benefit determined as of December 31, 1988. As of January 1 of each calendar year on and after January 1, 1990, the applicable limitation as determined by the Commissioner of the Internal Revenue Service for that calendar year shall become effective as the maximum compensation to be taken into account for SEPCO Schedule purposes for that calendar year in lieu of the $200,000 limitation set forth in the preceding sentence.
In addition to other applicable limitations set forth in the SEPCO Schedule, and notwithstanding any other provision of the SEPCO Schedule to the contrary, for Plan Years beginning on or after January 1, 1994, the annual compensation of each Employee taken into account under the SEPCO Schedule shall not exceed the Omnibus Budget Reconciliation Act of 1993 ("OBRA '93") annual compensation limit. The OBRA '93 annual compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with Code ss. 401(a) (17) (B). The cost of living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA '93 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this SEPCO Schedule to the limitation under Code ss. 401(a) (17) shall mean the OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account in determining an Employee's benefits accruing in the current Plan Year, the compensation for that prior determination period is subject to the OBRA '93 annual compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning on or after January 1, 1994, the OBRA '93 annual compensation limit is $150,000.
1.10 "Computation Year" shall mean the calendar year.
1.11 "Continuous Service" shall mean service recognized for purposes of determining eligibility for membership in the Plan and SEPCO Schedule and eligibility for certain benefits under the SEPCO Schedule, determined as provided in Section 4.01 of the SEPCO Schedule.
1.12 "Credited Service" shall mean service recognized for purposes of computing the amount of any benefit under the SEPCO Schedule, determined as provided in Section 4.02 of the SEPCO Schedule.
1.13 "Effective Date of the SEPCO Plan" as amended, shall mean April 1, 1959. The "Amendment and Restatement Effective Date" shall mean January 1, 1997.
1.14 "Employee" shall mean any person regularly employed
by the Company who receives regular stated salary, or
wages paid directly by the Company as (a) a regular
full-time employee, (b) a regular part-time employee,
(c) a cooperative education employee or (d) a
temporary employee paid directly or indirectly by the
Company. Notwithstanding the preceding sentence, on
and after January 1, 1998, "Employee" shall be
limited to Covered SEPCO Employees as defined in
Article XVII of the Plan. For purposes of this
Section 1.14, temporary employee means a full-time or
part-time employee who provides services to the
Company for a stated period of time after which
period such employee will be terminated from
employment. The term Employee shall also include
Leased Employees within the meaning of Code ss.
414(n) (2). Notwithstanding the foregoing, if such
Leased Employees constitute less than twenty percent
(20%) of the Employer's non-highly compensated
workforce within the meaning of Code ss.
414(n)(5)(C)(ii), the term Employee shall not include
those Leased Employees covered under the SEPCO
Schedule described in Code ss. 414(n)(5). The term
Employee for participation purposes shall not include
any individual who is classified by the Company as an
independent contractor or temporary employee (unless
with respect to a temporary employee who is
grandfathered under this SEPCO Schedule) regardless
of whether such classification is in error.
1.15 "Equivalent Actuarial Value" shall mean equivalent value when computed at 6 per centum per annum on the basis of the 1971 Group Annuity Mortality Table (Male) for Members, and 1971 Group Annuity Mortality Table (Female) for contingent annuitants under optional forms of Allowances.
1.16 "Fund" shall mean the "Trust" as defined in the Plan.
1.17 "Group Annuity Contract" shall mean Group Annuity Contract No. AC 766 issued by The Equitable Life Assurance Society of the United States to Savannah Electric and Power Company.
1.18 "Hour of Service" means, with respect to any applicable computation period:
(a) each hour for which the Employee is paid or entitled to payment for the performance of duties for the Company or an Affiliated Company;
(b) each hour for which an Employee is paid or entitled to payment by the Company or an Affiliated Company on account of a period during which no duties are performed, whether or not the employment relationship has terminated, due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence, but not more than 501 hours for any single continuous period;
(c) each hour for which back pay, irrespective
of mitigation of damages, is either awarded
or agreed to by the Company or an Affiliated
Company, excluding any hour credited under
(a) or (b), which shall be credited to the
computation period or periods to which the
award, agreement or payment pertains, rather
than to the computation period in which the
award, agreement or payment is made; and
(d) solely for purposes of determining whether an Employee has incurred a Break in Service under the SEPCO Schedule, each hour for which an Employee would normally be credited under Paragraphs (a) or (b) above during a period of Parental Leave but not more than 501 hours for any single continuous period. However, the number of hours credited to an Employee under this Paragraph (d) during the computation period in which the Parental Leave began, when added to the hours credited to an Employee under Paragraphs (a) through (c) above during that computation period, shall not exceed 501. If the number of hours credited under this Paragraph (d) for the computation period in which the Parental Leave began is zero, the provisions of this Paragraph (d) shall apply as though the Parental Leave began in the immediately following computation period.
No hours shall be credited on account of any period during which the Employee performs no duties and receives payment solely for the purpose of complying with unemployment compensation, workers' compensation or disability insurance laws. The Hours of Service credited shall be determined as required by Title 29 of the Code of Federal Regulations, ss.ss. 2530.200b-2(b) and (c).
1.19 "Leased Employee" means any person as so defined in Code ss. 414(n). In the case of a person who is a Leased Employee immediately before or after a period of service as an Employee, the entire period during which he has performed services for the Company as a Leased Employee shall be counted as Continuous Service for purposes of determining eligibility for participation and vesting, to the extent such service would be recognized with respect to other employees under the SEPCO Schedule; however, he shall not, by reason of that status, be eligible to become a Member of the Plan.
1.20 "Member" shall mean any person included in the membership of the Plan pursuant to the SEPCO Schedule as provided in Article 3 of the SEPCO Schedule.
1.21 "Normal Retirement Date" shall mean the first day of the calendar month next following the 65th anniversary of an Employee's birth.
1.22 "Parental Leave" means a period in which the Employee is absent from work because of the pregnancy of the Employee, the birth of a child of the Employee or the placement of a child with the Employee in connection with adoption proceedings, or for purposes of caring for that child for a period beginning immediately following such birth or placement.
1.23 "Plan" shall mean The Southern Company Pension Plan as amended and restated January 1, 1997.
1.24 "Plan Year" shall mean the 12-month period from January 1 to December 31.
1.25 "Qualified Joint and Survivor Annuity" shall mean an annuity of Equivalent Actuarial Value to the Allowance otherwise payable, providing for a reduced Allowance payable to the Member during his life, and after his death providing that one-half of that reduced Allowance will continue to be paid during the life of, and to, the spouse to whom he was married at his Annuity Starting Date.
1.26 "Qualified Preretirement Survivor Annuity" shall mean annuity for the life of a Surviving Spouse calculated in accordance with Section 7.03 of the SEPCO Schedule.
1.27 "Retirement Annuity" shall mean the amount of the annuity purchased under the Group Annuity Contract as provided by that Contract at actual retirement date, at or after the attainment of age 65, prior to any conversion to a contingent annuity.
1.28 "Retirement Committee" shall mean the Retirement Board as defined in the Plan.
1.29 "Social Security Benefit" shall mean the annual primary old-age insurance benefit which the Member is entitled to receive under Title II of the Social Security Act as in effect on the date he retires or otherwise terminates employment, or would be entitled to receive if he did not disqualify himself by receiving the same by entering into covered employment or otherwise. In the case of early retirement, the Social Security Benefit shall be computed on the assumption that he will receive no income after early retirement and before age 65 which would be treated as wages for purposes of the Social Security Act. In the case of vested retirement, the Social Security Benefit shall be computed on the assumption that he will continue to receive compensation until age 65 which would be treated as wages for purposes of the Social Security Act at the same rate as in effect on his termination of service.
In computing any Social Security Benefit, no wage index adjustment or cost-of-living adjustment shall be assumed with respect to any period after the end of the calendar year before the year in which the Member retires or terminates service. The Member's Social Security Benefit shall be determined on the basis of the Employee's actual earnings, where available from Company records, in conjunction with a salary increase assumption based on the actual yearly change in national average wages as determined by the Social Security Administration for all other years prior to retirement or other termination of employment with the Company where actual earnings are not so available. If, within three months after the later of the date of retirement or other termination of employment or the date on which a Member is notified of the Allowance to which he is entitled, the Member provides documentation as to his actual earnings history with respect to those prior years, his Allowance shall be redetermined using the actual earnings history, if the recalculation would result in an increased benefit. Any adjustment to Allowance payments shall be made retroactively.
1.30 The term "Spouse or Surviving Spouse" shall mean the spouse or surviving spouse of a Member, provided that a former Spouse will be treated as the spouse or surviving spouse and a current spouse will not be treated as the spouse or surviving spouse to the extent provided under a qualified domestic relations order as described in Code ss. 414(p).
1.31 "Suspendible Month" means a month in which the Member completes at least 40 hours of service with the Company.
1.32 "Trustee" shall mean the Trustee as defined in the Plan.
ARTICLE 2 - RETIREMENT ANNUITIES PURCHASED UNDER
GROUP ANNUITY CONTRACT AND CHANGE OF FUNDING
All Retirement Annuities payable under the SEPCO Plan as in effect prior to April 1, 1959 with respect to service thereunder prior to such date, have been purchased from The Equitable Life Assurance Society of the United States pursuant to the terms of Group Annuity Contract No. AC 766.
Effective as of April 1, 1959, the purchase of Retirement Annuities under the Group Annuity Contract was discontinued in accordance with the terms and provisions of such Contract. Subject to the provisions of the SEPCO Schedule, with respect to service under the SEPCO Plan from and after April 1, 1959, and as a supplement to the Retirement Annuities purchased under the Group Annuity Contract for service prior to April 1, 1959, retirement Allowances will be provided as described in the SEPCO Plan, this SEPCO Schedule or the Plan, as the case may be. Such retirement Allowances or Retirement Income will be in addition to Retirement Annuities purchased as described in the preceding paragraph with respect to services prior to April 1, 1959.
The rights of Members of the Retirement Annuities purchased for them under the Group Annuity Contract with respect to service prior to April 1, 1959 will not be adversely affected by the discontinuance of such purchases and such Retirement Annuities will be payable by The Equitable Life Assurance Society of the United States in accordance with the terms, conditions and provisions of the Group Annuity Contract.
ARTICLE 3 - MEMBERSHIP
3.01 Every Employee in Company service on January 1, 1997, who was a Member on December 31, 1996, shall continue to be a Member of the SEPCO Plan or Plan, as the case may be, on and after January 1, 1997, provided he remains eligible under the terms of the SEPCO Plan or SEPCO Schedule, as the case may be.
3.02 Subject to Article XVII of the Plan, every other Employee on January 1, 1997, and every person becoming an Employee after that date shall become a Member of the SEPCO Plan or Plan, as the case may be, on the first day of the calendar month, beginning with January 1, 1997, coincident with or next following (i) the date he completes one year of Continuous Service or (ii) the 21st anniversary of his birth, whichever is later. For this purpose, a year of Continuous Service shall be a 12-month period during which an Employee completes at least 1,000 hours commencing with the date of employment, or if in such period he has not completed at least 1,000 hours, commencing with the first day of the Computation Year after the date of his employment. If an Employee has incurred a one-year Break in Service prior to becoming eligible for membership, any Continuous Service prior to the break shall be disregarded in determining eligibility for membership unless he shall complete at least one year of Continuous Service following the Break in Service; provided that an Employee's Continuous Service prior to the break shall not be recognized for purposes of determining his eligibility for membership if his consecutive number of one-year Breaks in Service equal or exceed the greater of (i) five or (ii) his aggregate years of Continuous Service prior to the Break in Service.
3.03 An Employee who is represented by a collective bargaining agent may participate in the Plan and SEPCO Schedule if the representative(s) of his bargaining unit and the Company mutually agree to participation in the Plan and SEPCO Schedule provided such participation is consistent with such agreement.
3.04 An Employee's membership in the Plan shall terminate
only if he dies or his employment with the Company
terminates other than by reason of retirement or
termination with vested benefits. Membership shall be
continued during a period while on leave of absence
from service without pay approved by the Company, but
no benefit credit shall be allowed with respect to
such period unless credit is allowed for service in
the Armed Forces of the United States as provided in
Section 4.03(c) of the SEPCO Schedule. Membership
shall be continued during a period of disability for
which Continuous Service is granted as provided in
Section 4.04 of the SEPCO Schedule.
3.05 In the event a Member ceases to participate because he enters an ineligible class under Article III and becomes ineligible to participate, but has not incurred a break in service under Section 4.03(a) of the SEPCO Schedule, such Employee will participate as of the first day of the month coinciding with or next following his return to an eligible class of Employees. If such Employee incurs a break in service under Section 4.03(a) of the SEPCO Schedule, eligibility will be determined under Section 3.02 of the SEPCO Schedule. In the event an Employee who is not in an eligible class to participate enters an eligible class, such Employee will participate as of the first day of the month coinciding with or next following his employment if he has satisfied Section 3.02 of the SEPCO Schedule and would have otherwise previously been eligible to participate in the Plan pursuant to the SEPCO Schedule.
3.06 Subject to Section 3.05 of the SEPCO Schedule, if an Employee's membership in the Plan terminates and he again becomes an Employee, he shall be considered a new Employee for all purposes of the Plan, except as provided in Section 5.05 of the SEPCO Schedule.
3.07 Notwithstanding any other provision of this Article 3, Leased Employees shall not be eligible to participate. In addition, temporary employees as defined in Section 1.14 of the SEPCO Schedule who were not participating in the SEPCO Plan as temporary employees prior to October 13, 1994, shall not be eligible to participate in the Plan.
3.08 An Employee may, subject to the approval of the Retirement Committee, elect voluntarily not to participate in the Plan. The election not to participate must be communicated in writing and acknowledged by the Retirement Committee (or its delegee) and shall be effective on the date set forth in such written waiver.
ARTICLE 4 - SERVICE
4.01 Continuous Service
(a) Effective January 1, 1997, except as hereinafter provided, all service performed as an Employee of the Company or an Affiliated Company shall be Continuous Service for SEPCO Plan and SEPCO Schedule purposes. If an Employee completes at least 1,000 Hours of Service in any Computation Year, he shall receive credit for a full year of Continuous Service. If an Employee completes fewer than 1,000 Hours of Service in any Computation Year, no Continuous Service shall be recognized for such Computation Year.
(b) Any person employed by the Company on December 31, 1996 shall receive Continuous Service for service performed before that date equal to the Credited Service recognized through December 31, 1996 under the SEPCO Plan.
4.02 Credited Service
(a) Credited Service shall be calculated based on Periods of Service.
A "Period of Service" shall mean twelve (12) month periods of employment as a Member, or fractions thereof, running from the date that a Member commences participation under the SEPCO Plan or SEPCO Schedule, as the case may be, and terminates on his first severance from service date. A severance from service shall occur as of the earlier of the date a Member quits, retires, is discharged or dies, or the first anniversary of absence for any other reason. Thereafter, subject to 4.03(b), if a Member becomes reemployed, his Period of Service for each subsequent period shall commence with the reemployment commencement date, which is the first date following a one year period of severance on which a Member performs an Hour of Service and shall terminate on his next severance from service.
In the case of an Employee who transfers from a class of employees whose service is determined on the basis of Hours of Service to a class of employees whose service is determined under this Paragraph (a), such Employee shall receive credit for a Period of Service consisting of (i) a number of years equal to the number of years of service credited to the Employee before the computation period during which the transfer occurs and (ii) the greater of (1) the Period of Service that would be credited to the Employee under this Paragraph (a) during the entire computation period in which the transfer occurs or (2) the service taken into account under the Hours of Service method as of the date of the transfer.
In addition, the Employee shall receive credit for Periods of Service subsequent to the transfer commencing on the day after the last day of the computation period in which the transfer occurs.
In the case of an Employee who transfers
from a class of employees whose service is
determined pursuant to this Paragraph (a) to
a class of employees whose service is
determined on the basis of Hours of Service
(i) the Employee shall receive credit, as of
the date of transfer, for the numbers of
Years of Service equal to the number of one
year Periods of Service credited to the
Employee as of the date of the transfer and
(ii) the Employee shall receive credit in
the computation period which includes the
date of the transfer, for a number of Hours
of Service determined by applying the
equivalency set forth in 29 C.F.R. ss.
2530.200b-3(e)(l)(i) to any fractional part
of a year credited to the Employee under
this Section as of the date of the transfer.
4.03 Breaks in Service
(a) There shall be a Break in Service of one
year for any Computation Year after the year
in which a person first becomes employed
during which he does not complete more than
500 Hours of Service. If an Employee
terminates his service with the Company and
is reemployed after incurring a Break in
Service, his service before the Break in
Service shall be excluded from his
Continuous Service, except as provided in
Section 5.05 of the SEPCO Schedule.
(b) For purposes of calculating Credited Service only, there shall be a one year Period of Severance if during the 12 consecutive month period after a severance from service date, as defined in Section 4.02(a) of the SEPCO Schedule the Employee fails to perform an Hour of Service. If an Employee terminates his service with the Company and is reemployed after incurring a one year Period of Severance, his service before the Period of Severance shall be excluded unless he thereafter completes a one year Period of Service. In the case of a non-vested member, the Period of Service accrued prior to a one year Period of Severance shall not be taken into account if at such time the consecutive Period of Severance equals or exceeds the greater of 5 or the number of one year Periods of Service, whether or not consecutive.
(c) Notwithstanding any provision of the SEPCO Schedule to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code ss. 414(u).
4.04 Disabled Members
If a Member is eligible for and continuously
receiving disability benefits under the long-term disability
plan provided by the Company, he shall continue to be a Member
and shall continue to accrue service until he retires in the
same amount and manner as though he had continued in the
active employment of the Company and he shall be deemed to
receive Compensation during such period based upon his rate of
Compensation at the time of disability. In the event that a
Member no longer qualifies for benefits under the long-term
disability plan before his Normal Retirement Date and he does
not resume active employment with the Company, he shall be
eligible to receive a vested retirement Allowance as provided
in Section 5.03 of the SEPCO Schedule or to retire on an early
retirement Allowance as provided in Section 5.02 of the SEPCO
Schedule, if otherwise eligible for such Allowance as of the
date of such disqualification. In either case, the Allowance
shall be computed on the basis of his Compensation and
Credited Service at the date of such disqualification. In the
event that a Member does not qualify for disability benefits
under the Social Security Act, the Allowance accrued under
Section 5.01(c)(i)(A) of the SEPCO Schedule for purposes of
this Section 4.04 for Credited Service during such period of
nonqualification shall be increased by 5/6 per centum of the
part of each year's Compensation which is not in excess of
$3,600 per annum.
4.05 Service with Certain Other Employers
(a) An Employee hired prior to November 9, 1989, who becomes a Member and continues as a Member without a break in membership, shall receive Continuous Service and Credited Service for all service not otherwise recognized, in the employ of another electric utility company or a company or corporation furnishing advisory or consulting service to the Company, provided that such service would be recognized if it had been rendered to the Company and provided that any benefit payable under the Plan on account of such service, so recognized, shall be reduced by the amount of benefit provided under the pension or retirement plan of such other company with respect to the same period. The Retirement Committee shall calculate such service based on actual employment records where available, but if such records are not available, the Retirement Committee shall request that the Employee obtain information from the Social Security Administration which documents the Employee's Social Security eligible compensation or from such other entity as the Retirement Committee deems appropriate. Based on such documents, the Retirement Committee shall calculate the Employee's service and Compensation for purposes of this Section 4.05. In the event no such documentation can be obtained, the Retirement Committee shall make its best effort to estimate such service and Compensation.
(b) An Employee hired on or after November 9, 1989, who becomes a Member and continues as a Member without a break in membership, shall receive Continuous Service and Credited Service for all service not otherwise recognized, in the employ of an Affiliated Company, provided that such service would be recognized if it had been rendered to the Company and provided that any benefit payable under the Plan on account of such service, so recognized shall be reduced by the amount of benefit provided under the pension or retirement plan of such other Affiliated Company with respect to the same period.
ARTICLE 5 - BENEFITS
5.01 Normal and Late Retirement
(a) The right of a Member to his normal retirement Allowance shall be non-forfeitable upon attaining age 65. A Member may retire from service on a normal retirement Allowance upon reaching his Normal Retirement Date or he may postpone his retirement and remain in service after his Normal Retirement Date. During any such deferment the Member shall be retired from service on a normal retirement Allowance on the first day of the calendar month next following receipt by the Retirement Committee of written application therefor made by the Member.
(b) Subject to the provisions of Section 5.01(e) below, the annual normal retirement Allowance payable upon retirement on the Normal Retirement Date shall be computed pursuant to Paragraphs (c) and (d) below. The annual retirement Allowance payable upon retirement after a Member's Normal Retirement Date shall be equal to (i) the amount determined in accordance with Paragraphs (c) and (d) below, based on the Member's Credited Service and average annual Compensation as of his late retirement date or, if greater, (ii) the amount of Allowance to which the Member would have been entitled under Paragraphs (c) and (d) below as of his Normal Retirement Date increased by an amount of Equivalent Actuarial Value to the monthly payments which would have been payable with respect to each month during the postponement period which is not a Suspendible Month, with any such monthly payment amount determined as if the Member had retired as of the first day of the Plan Year during which payment would have been made or, if later, his Normal Retirement Date.
(c) The normal retirement Allowance shall be computed as an annuity payable for the life of the Member and shall consist of:
(i) For service credited while a Member on or after April 1, 1969, an Allowance equal to 1-1/6 per centum of the part of each year's Compensation which is not in excess of $3,600 per annum plus 2 per centum of the part of such Compensation in excess of $3,600 per annum; and
(ii) For service credited between the effective date of the SEPCO Plan and March 31, 1969, an Allowance equal to 1 per centum of the part of each year's Compensation which is not in excess of $3,000 per annum plus 2 per centum of the part of such Compensation in excess of $3,000 per annum; and
(iii) For service credited prior to the Effective Date of the SEPCO Plan, an Allowance which, when added to his Retirement Annuity, shall be equal to 1 per centum of the part of the Member's average annual Compensation for the three calendar years (1956, 1957 and 1958) which is not in excess of $3,000 plus 1 1/2per centum of the part of such Compensation in excess of $3,000, multiplied by the number of years of his Credited Service to the Effective Date of the SEPCO Plan.
(d) The benefit determined in Paragraph (c) above, when added to a Member's Retirement Annuity, if any, shall not be less than:
(i) 1-2/3 per centum of his average annual Compensation, multiplied by his years of Credited Service not in excess of 36 years, reduced by
(ii) 1 1/2 per centum of his primary Social Security Benefit multiplied by his years of Credited Service, the product not to exceed 50 per centum of his primary Social Security Benefit, where average annual Compensation is calculated during the 36 highest consecutive months within the 120 months preceding retirement.
(iii) Effective January 1, 1994 for purposes of determining a Member's average annual Compensation under this paragraph (d), the determination of the 36 highest consecutive months within the 120 months preceding retirement shall only include those months in which the Member receives Compensation.
(e) If the Member is married on his Annuity
Starting Date and if he has not elected an
optional form of benefit as provided in
Section 7.07 of the SEPCO Schedule, the
retirement Allowance shall be payable in the
form of a Qualified Joint and Survivor
Annuity.
(f) Notwithstanding any other provision of the SEPCO Schedule, each Member's normal retirement Allowance is the greater of
(i) the sum of:
(A) the normal retirement Allowance determined under this Section 5.01 as of December 31, 1993, plus
(B) the normal retirement Allowance
determined under this Section 5.01
based on Credited Service and
Compensation after December 31,
1993 (with Credited Service used in
this paragraph (f) (i) (B) being
added to the Credited Service used
in paragraph (f) (i) (A) for
purposes of determining whether
paragraph (d) (i) 36-year limit and
(d) (ii) 50 per centum offset limit
have been exceeded); or
(ii) the normal retirement Allowance determined under this Section 5.01 as applied to all Credited Service and Compensation.
5.02 Early Retirement
(a) A Member who has not reached his Normal Retirement Date but who has reached the 55th anniversary of his birth shall be retired from service on an early retirement Allowance on the first day of the calendar month next following receipt by the Retirement Committee of written application thereof or made by the Member.
(b) At the time of retirement the Member may elect to receive either (i) a deferred early retirement Allowance commencing on the Member's Normal Retirement Date which shall be computed as a normal retirement Allowance, in accordance with Section 5.01(b) of the SEPCO Schedule, on the basis of his Compensation and Credited Service at the time of early retirement or (ii) an immediate early retirement Allowance beginning on the first day of any month before his Normal Retirement Date which shall be computed in accordance with Sections 5.01(c) and (d) of the SEPCO Schedule and shall be reduced by 1/12 of 5% for each month by which the date the Member's early retirement Allowance begins precedes age 62.
(c) If the Member is married on the date his retirement Allowance commences, the early retirement Allowance shall be computed on the same basis as in Paragraph (b) above, in accordance with Section 5.01(e) of the SEPCO Schedule.
5.03 Termination of Employment
(a) A Member shall be 100% vested in, and have a
non-forfeitable right to, his Accrued
Benefit upon completion of five years of
Continuous Service since the first day of
the Computation Period in which the 18th
anniversary of his birth occurs. If the
Member's employment with the Company is
subsequently terminated for reasons other
than retirement or death, he shall be
eligible for a vested Allowance upon
application therefor. If a Member's
employment with the Company terminates
before completion of five (5) years of
Continuous Service or before becoming
eligible for an early retirement or normal
retirement Allowance, such Member's Accrued
Benefit shall be forfeited upon termination
of employment subject to restoration under
Section 5.05 of the SEPCO Schedule.
(b) The vested Allowance shall be a deferred Allowance commencing on the former Member's Normal Retirement Date and shall be determined by computing a normal retirement Allowance, in accordance with Section 5.01 of the SEPCO Schedule, on the basis of his Compensation and Credited Service at his date of termination and the benefit formula in effect on that date.
(c) Instead of deferring his Allowance to his Normal Retirement Date, the Member can elect to receive a reduced Allowance commencing on the first day of any month next following his attainment of age 55 but prior to his Normal Retirement Date. The reduction shall be 1/12 of 5% for each month by which his Annuity Starting Date precedes his Normal Retirement Date, provided that such reduction shall be made prior to the application of the maximum limitation provided under Article 6 of the SEPCO Schedule and such reduced Allowance shall be subject to such limitation.
5.04 Adjustment of Retirement Allowance for Social Security Benefits
When an Allowance commences prior to the attainment of age 65, the Member may elect to convert the Allowance otherwise payable to him into an Allowance of Equivalent Actuarial Value of such amount that, with his Retirement Annuity, if any, and his old-age insurance benefit under Title II of the Social Security Act, he will receive, so far as possible, the same amount each year before and after such
benefit commences.
5.05 Restoration of Retired Member or Former Member to
Service
(a) If a Member in receipt of an Allowance is
restored to service as an Employee on or
after his Normal Retirement Date, the
following shall apply, except with respect
to temporary employees:
(i) His Allowance shall be suspended
for each month during the period of
restoration which is a Suspendible
Month.
(ii) Upon the death of the Member during
the period of restoration, any
Allowance that would have been
payable to his surviving Spouse had
he not been restored to service
shall be payable or, alternatively,
any payments under optional benefit,
if one has been elected and becomes
effective, shall begin.
(iii) Upon later retirement, payment of
the Member's Allowance shall resume
no later than, the third month after
the latest Suspendible Month during
the period of restoration, and shall
be adjusted, if necessary, in
compliance with Title 29 of the Code
of Federal Regulations, ss.
2530.203-3 in a consistent and
nondiscriminatory manner.
(b) If a Member in receipt of an Allowance is
restored to service as an Employee before
his Normal Retirement Date, the following
shall apply, except with respect to
temporary employees:
(i) His Allowance shall cease and any
election of an optional benefit in
effect shall be void.
(ii) Any Continuous and credited Service
to which he was entitled when he
retired or terminated service shall
be restored to him.
(iii) Upon later retirement or
termination, his Allowance shall be
based on the benefit formula then in
effect and his Compensation and
Credited Service before and after
the period when he was not in the
service of the Company, reduced by
an amount of Equivalent Actuarial
Value to the benefits, if any, he
received before the date of his
restoration to service.
(iv) The part of the Member's Allowance
upon later retirement payable with
respect to Credited Service rendered
before his previous retirement or
termination of service shall never
be less than the amount of his
previous Allowance modified to
reflect any option in effect on his
later retirement.
(c) If a Member not in receipt of an Allowance
or a former Member is restored to service
without having had a Break in Service, his
Continuous Service shall be determined as
provided in Section 4.01 of the SEPCO
Schedule, and, if applicable, he shall again
become a Member as of his date of
restoration to service.
(d) If a vested Member not in receipt of an
Allowance or a former Member who received a
lump sum settlement in lieu of his Allowance
is restored to service with the Company
after having had a Break in Service, the
following shall apply:
(i) Upon completion of one year of
Continuous Service following the
Break in Service, the Continuous
Service to which he was previously
entitled shall be restored to him,
and, if applicable, he shall again
become a Member as of his date of
restoration to service.
(ii) If a Member has received a
distribution of his Allowance and
the Member is restored to service
with the Company, the Member shall
have the right to restore his or
her Accrued Benefit to the extent
forfeited upon the repayment to the
Plan of the full amount of the
distribution plus interest,
compounded annually from the date
of distribution at the rate
determined for purposes of Codess.
411(c)(2)(C). Such repayment must
be made before the earlier of five
(5) years after the first date on
which the Member is subsequently
reemployed by the Company, or the
date the Member incurs five (5)
consecutive one year Breaks in
Service following the date of
distribution.
If a Member has been deemed to
receive a distribution under the
Plan, and the Member is restored to
service with the Company, upon the
reemployment of such Member, the
Accrued Benefit will be restored to
the amount of such Accrued Benefit
on the date of deemed distribution.
(iii) Upon later termination or retirement
of a Member whose previous Credited
Service has been restored under this
Paragraph (d), his Allowance shall
be based on the benefit formula then
in effect and his Compensation and
Credited Service before and after
the period when he was not in the
service of the Company.
(e) If any other former Member is restored to
service with the Company after having had a
Break in Service, the following shall apply:
(i) Upon completion of one year of
Continuous Service following the
Break in Service, he shall again
become a Member as of his date of
restoration to service.
(ii) Upon becoming a Member in
accordance with (i) above, the
Continuous Service to which he was
previously entitled shall be
restored to him, if the total
number of consecutive one-year
Breaks in Service does not equal or
exceed the greater of (a) five, or
(b) the total number of years of
his Continuous Service before the
Break in Service, determined at the
time of the Break in Service,
excluding any Continuous Service
disregarded under this Paragraph
(e) by reason of any earlier Break
in Service.
(iii) Any Credited Service to which the
Member was entitled at the time of
his termination of service which is
included in the Continuous Service
so restored shall be restored to
him.
(iv) Upon later termination or retirement
of a Member whose previous Credited
Service has been restored under this
Paragraph (e), his Allowance, if
any, shall be based on the benefit
formula then in effect and his
Compensation and Credited Service
before and after the period when he
was not in the service the Company.
5.06 Additional Monthly Benefit
(a) In addition to other benefits provided in
this Article 5, the following monthly
benefits are payable as a life annuity to
eligible Members as defined in Paragraph (b)
or (c) below, as applicable.
The "additional monthly amount" is
calculated as (i) a percentage of the
Member's first $300 of monthly Allowance set
forth below, multiplied by (ii) the number
of years the Member was retired (A) prior to
January 1, 1990, and (B) prior to January 1,
1995 but after January 1, 1990, as
applicable in any event, for both the
additional monthly amount effective June 1,
1991 and June 1, 1996, the minimum
additional monthly amount to be added to a
Member's Allowance shall equal $25.00 per
month.
Effective June 1, 1991, the percentage
increases and the years of retirement for
which they are applicable are as follows:
Percentage
Years of Increase for
Retirement all Prior Years
as of 1/1/90
Less than 5 3.75%
5 to 10 4.0%
10 to 15 4.5%
15 or more 5.0%
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Effective June 1, 1996, the percentage increases and the years of retirement for which they are applicable are as follows:
Percentage
Increase for
Years of Each Year of
Retirement Retirement
as of 1/1/95 Since 1/1/90
Less than 5 3.5%
5 to 9 4.0%
10 to 14 4.5%
15 or more 5.0%
(b) Members eligible for the additional monthly
amount made effective as of June 1, 1991 are
those retired Members who retired directly
from active status on or before June 1,
1991.
(c) Members eligible for the additional monthly
amount made effective June 1, 1996 are those
Members who retired directly from active
status before January 1, 1994.
(d) If an adjustment of retirement Allowance for
Social Security benefits option was elected
pursuant to Section 5.04 of the SEPCO
Schedule, the additional monthly benefit
shall be calculated on the Allowance before
such adjustment.
(e) Upon the death of a Member eligible for an
additional monthly amount, such amount shall
be paid to the Member's Spouse regardless of
the method of distribution elected by a
Member. With regard to the additional
monthly amount made effective June 1, 1996,
it shall be determined (i) based on the
Allowance being paid as of June 1, 1996, or
(ii) if no allowance is being paid but the
Member's Spouse is receiving an additional
monthly amount in accordance with the
preceding sentence, based on the amount such
Spouse is receiving as of June 1, 1996.
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5.07 Written Application
Each Member, before any benefit shall be payable to him or his account under the Plan, shall file with the Retirement Committee such information as it shall require to establish his rights and benefits.
ARTICLE 6 - LIMITATIONS ON BENEFITS
6.01 Maximum Benefits
(a) The maximum annual retirement Allowance payable to a Member under the SEPCO Schedule, when added to any retirement Allowance attributable to contributions of the Company or an Affiliated Company provided to the Member under any other qualified defined benefit plan, shall be equal to the lesser of (1) $90,000, as adjusted under Code Section 415(d), or (2) the Member's average annual remuneration during the three consecutive calendar years in his Credited Service as a Member affording the highest such average, or during all of the years in his Credited Service as a Member, if less than three years, subject to the following adjustments:
(i) If the Member has not been a Member under the SEPCO Plan and SEPCO Schedule for at least 10 years, the maximum annual retirement Allowance in clause (1) above shall be multiplied by the ratio which the number of years of his membership in the Plan bears to 10. This adjustment shall be applied separately to the amount of the Member's retirement Allowance resulting from each change in the benefit structure of the Plan, with the number of the years of membership in the Plan being measured from the effective date of each such change.
(ii) If the Member has not completed 10 years of Continuous Service, the maximum annual retirement Allowance in clause (2) above shall be multiplied by the ratio which the number of years of his Continuous Service bears to 10.
(iii) If the retirement Allowance begins before the Member's social security retirement age (as defined below), but on or after his 62nd birthday, the maximum retirement Allowance in clause (1) above shall be reduced by 5/9 of 1% for each of the first 36 months plus 5/12 of 1% for each additional month by which the Member is younger than the social security retirement age at the date his retirement Allowance begins. If the retirement Allowance begins before the Member's 62nd birthday, the maximum retirement Allowance in clause (1) above shall be of Equivalent Actuarial Value to the maximum benefit payable to age 62 as determined in accordance with the preceding sentence.
(iv) If the retirement Allowance begins after the Member's social security retirement age (as defined below), the maximum retirement Allowance in clause (1) above shall be of Equivalent Actuarial Value, based on an interest rate of 5% per year in lieu of the interest rate otherwise used in the determination of Equivalent Actuarial Value, to that maximum benefit payable at the social security retirement age.
(v) If the Member's retirement Allowance is payable as a joint and survivor Allowance with his Spouse as the contingent annuitant, the modification of the retirement Allowance for that form of payment shall be made before the application of the maximum limitation, and, as so modified, shall be subject to the limitation.
(b) As of January 1 of each calendar year on or after January 1, 1988, the dollar limitation as determined by the Commissioner of Internal Revenue for that calendar year shall become effective as the maximum permissible dollar amount of retirement Allowances payable under the Plan and SEPCO Schedule during that calendar year, including retirement Allowances payable to Members who retired prior to that calendar year, in lieu of the dollar amount in (1) of Paragraph (a) above.
(c) For limitation years beginning before January 1, 2000, in the case of a Member who is also a Member of a defined contribution plan of the Company or an Affiliated Company, his maximum benefit limitation shall not exceed an adjusted limitation computed as follows:
(i) Determine the defined contribution fraction.
(ii) Subtract the result of (i) from 1.0.
(iii) Multiply the dollar amount in (1) of Paragraph (a) above by 1.25.
(iv) Multiply the amount described in
(2) of Paragraph (a) above by 1.4.
(v) Multiply the lesser of the result of
(iii) or the result of (iv) by the
result of (ii) to determine the
adjusted maximum benefit limitation
applicable to a Member.
(d) For purposes of this Section:
(i) the defined contribution fraction for a Member who is a Member of one or more defined contribution plans of the Company or an Affiliated Company shall be a fraction the numerator of which is the sum of the following:
(A) the Company's and
Affiliated Companies'
contributions credited to
the Member's accounts under
the defined contribution
plan or plans.
(B) with respect to calendar
years beginning before
1987, the lesser of the
part of the Member's
contributions in excess of
6% of his Compensation or
one-half of his total
contributions to such plan
or plans, and with respect
to calendar years beginning
after 1986, all Member's
contributions to such plan
or plans, and
(C) any forfeitures allocated
to his accounts under such
plan or plans, but reduced
by any amount permitted by
regulations promulgated by
the Commissioner of
Internal Revenue; and the
denominator of which is the
lesser of the following
amounts determined for each
year of the Member's
Continuous Service.
(D) 1.25 multiplied by the
maximum dollar amount
allowed by law for that
year; or
(E) 1.4 multiplied by 25% of
the Member's remuneration
for that year.
At the direction of the
Retirement Committee, the
portion of the denominator
of that fraction with
respect to calendar years
before 1983 shall be
computed as the denominator
for 1982, as determined
under the law as then in
effect, multiplied by a
fraction of the numerator
of which is the lesser of:
(F) $51,875, or
(G) 1.4 multiplied by 25% of
the Member's remuneration
for 1981; and the
denominator of which is
the
lesser of:
(H) $41,500, or
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(I) 25% of the Member's remuneration for 1981;
(ii) a defined contribution plan means a
pension plan which provides for an
individual account for each Member
and for benefits based solely upon
the amount contributed to the
Member's account, and any income,
expenses, gains and losses, and any
forfeitures of accounts of other
Members which may be allocated to
that Member's accounts, subject to
(iii) below; and
(iii) a defined benefit plan means any pension plan which is not a defined contribution plan; however, in the case of a defined benefit which is based partly on the balance of the separate account of a Member, that plan shall be treated as a defined contribution plan to the extent benefits are based on the separate account of a Member and as a defined benefit plan with respect to remaining portion of the benefits under the plan.
(iv) the term "remuneration" with
respect to any Member shall mean
the wages, salaries and other
amounts paid in respect of such
Member by the Company or an
Affiliated Company for personal
services actually rendered, and
shall include, but not by way of
limitation, bonuses, overtime
payments, commissions and, for
limitation years beginning on and
after January 1, 1998, any elective
deferrals as defined in Code
Section 402(g)(3) and any amount
contributed by an Employer on
behalf of the Employee under any
Code Section 125 or 457
arrangement, and shall exclude
other deferred compensation, stock
options and other distributions
which receive special tax benefits
under the Code; and
(v) the term "social security retirement age" shall mean age 65 with respect to a Member who was born before January 1, 1938; age 66 with respect to a Member who was born after December 1, 1937 and before December 1, 1955; and age 67 with respect to a Member who was born after December 31, 1954.
(e) Notwithstanding the preceding paragraphs of this Section, a Member's annual retirement Allowance payable under this SEPCO Schedule, prior to any reduction required by operation of Paragraph (c) above, shall in no event be less than:
(i) the benefit that the Member had accrued under the SEPCO Plan as of the end of the Plan Year beginning in 1982, with no changes in the terms and conditions of the SEPCO Plan on or after July 1, 1982 taken into account in determining that benefit, or
(ii) the benefit that the Member had accrued under the SEPCO Plan as of the end of the Plan Year beginning in 1986, with no changes in the terms and conditions of the SEPCO Plan on or after May 5, 1986 taken into account in determining that benefit.
(f) Notwithstanding any provisions contained
herein to the contrary, in the event that,
for limitation years beginning before
January 1, 2000, a Member participates in a
defined contribution plan or defined benefit
plan required to be aggregated with this
Plan under Code Section 415(g) and the
combined benefits with respect to a Member
exceed the limitations contained in Code
Section 415(e), corrective adjustments shall
be as provided under Article VI of the Plan.
(g) Notwithstanding anything contained in this Article of the SEPCO Schedule to the contrary, the limitations, adjustments and other requirements prescribed in this Article shall at all times comply with the provisions of Code ss. 415 and the regulations thereunder, the terms of which are specifically incorporated herein by reference.
ARTICLE 7 - DISTRIBUTION OF BENEFITS
7.01 Surviving Spouse Benefit
On and after August 23, 1984, if a married Member:
(a) dies in active service prior to his Annuity Starting Date after having met the requirements for an Allowance, or
(b) dies after retiring on any Allowance or after terminating service on or after August 23, 1984, with entitlement to a vested Allowance, but in either case before his Annuity Starting Date, or
(c) dies after he is credited with at least one Hour of Service with the Company on or after August 23, 1984 but prior to his Annuity Starting Date, there shall be payable to his Surviving Spouse a Qualified Preretirement Survivor Annuity as provided in Section 7.03 below.
7.02 Qualified Joint and Survivor Annuity
Provided an optional form of benefit as set forth in
Section 7.07 below is not elected pursuant to a Qualified
Election within the 90-day period ending on the Annuity
Starting Date, a married Member's Accrued Benefit will be paid
in the form of a Qualified Joint and Survivor Annuity and an
unmarried Member's Accrued Benefit will be paid in the form of
an annuity for his lifetime.
7.03 Qualified Preretirement Survivor Annuity
(a) Provided that a Member and his or her Spouse
have been married throughout the one-year
period ending on his or her date of death
and provided an optional form of benefit as
set forth in Section 7.07 below has not been
elected by a Member eligible to waive the
Qualified Preretirement Survivor Annuity
within the Election Period pursuant to a
Qualified Election, if a Participant dies
before the Annuity Starting Date, the
Member's Accrued Benefit shall be payable as
an annuity for the life of the Surviving
Spouse in accordance with this Section 7.03.
(b) The Qualified Preretirement Survivor Annuity
shall commence on what would have been the
Member's Normal Retirement Date or, on the
first day of the month following the death
of the Member, if later, and shall cease
with the last monthly payment prior to the
death of the Spouse. However:
(i) if the Member dies in active service
after having met the requirements
for early retirement, after having
completed twenty years of service,
or after retiring early but before
payments commence, the Spouse may
elect to begin receiving payments as
of the first day of the month
following the Member's date of
death; and
(ii) in the case of the death of any
other Member, the Spouse may elect
to begin receiving payments as of
the first day of any month following
what would have been the Member's
Earliest Retirement Age which is his
55th birthday.
(c) Before reduction in accordance with
Paragraph (d) below, the Qualified
Preretirement Survivor Annuity shall be
equal to:
(i) in the case of a Member who dies
while in active service after
having met the requirements for
early retirement, after having
completed twenty years of service,
or after retiring early but before
payments commence, the following
per centum of a normal retirement
Allowance computed as provided in
Section 5.01(c) and 5.01(d) of the
SEPCO Schedule on the basis of the
deceased Member's Compensation and
Credited Service prior to his
death, provided that if the Spouse
was born more than 60 months after
the deceased Member, the Qualified
Preretirement Survivor Annuity so
determined shall be reduced by 1/6
of 1% for each month in excess of
60 by which her date of birth
followed the deceased Member's date
of birth.
Age Member
Would Have Been
At Commencement Per Centum
40 to 45 40%
46 41%
47 42%
48 43%
49 44%
50 45%
51 46%
52 47%
53 48%
54 49%
55 or over 50%
(ii) in the case of any other Member, 50%
of the amount of vested Allowance to
which the Member would have been
entitled at his Normal Retirement
Date, reduced as follows:
- reduction for a 50% joint and
survivor annuity option (based on
the Member's age and his Spouse's
age had the Member survived to the
date benefits commence), and
- reduction to reflect early
commencement, if applicable, of
payments in accordance with Section
5.03(c) of the SEPCO Schedule.
(iii) If within the 90 day period prior
to his Annuity Starting Date a
Member has elected Option (ii)
under Section 7.07 below naming his
spouse as contingent annuitant, the
amount payable to his spouse under
this Section 7.03 as a Qualified
Preretirement Survivor Annuity
shall be the amount that would have
been payable to his spouse under
Option (ii) if such amount is
greater than the amount of the
Qualified Preretirement Survivor
Annuity otherwise payable under
subparagraphs (c)(i) or (c)(ii)
above, as applicable.
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(d) The Allowance subsequently payable to a Member whose Spouse would have been entitled to a Qualified Preretirement Survivor Annuity under this Section 7.03 had the Member's death occurred, or the Qualified Preretirement Survivor Annuity payable to his Spouse after his death, whichever is applicable, shall be reduced by the applicable percentage shown in the following table for the period, or periods, that the provisions of this Section 7.03 are in effect with respect to the Member. No such reduction shall be made with respect to:
(i) coverage during active employment, or
(ii) any period before the commencement of the election period specified in Paragraph (e) below.
Annual Reduction for Spouse's coverage after Retirement or Other Termination
of Service
Age Reduction
Under 35 0%
35 -39 2/10 of 1%
40 -49 3/10 of 1%
50 -54 4/10 of 1%
55 -59 5/10 of 1%
60 and over 1%
(e) The Retirement Committee shall furnish to
each married Member within the one year
period commencing on the date he terminates
service a written explanation in
non-technical language which describes (1)
the terms and conditions of the Qualified
Preretirement Survivor Annuity, (2) the
Member's right to make, and the effect of,
an election to waive the Qualified
Preretirement Survivor Annuity, (3) the
rights of the Member's Spouse and (4) the
right to make, and the effect of, a
revocation of such election.
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7.04 Definitions
For purposes of this, Article 7, the following definitions shall apply:
(a) The term "Election Period" shall mean the period which begins on the first day of the Plan Year in which a Member attains age 35 and ends on the date of the Member's death. If a Member separates from service prior to the first day of the Plan Year in which age 35 is attained, with respect to the Accrued Benefit as of the date of separation, the Election Period shall begin on the date of separation.
(b) The term "Earliest Retirement Age" shall mean the earliest date on which, under the SEPCO Schedule, the Member could elect to receive retirement benefits.
(c) The term "Qualified Election" shall mean waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity shall not be effective unless: (a) the Member's Spouse consents in writing to the election; (b) the election designates a contingent annuitant, which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent); (c) the Spouse's consent acknowledges the effect of the election; and (d) the Spouse's consent is witnessed by a Plan representative designated by the Retirement Committee or notary public. Additionally, a Member's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the Spouse expressly permits designations by the Member without any further spousal consent). If it is established to the satisfaction of a the Retirement Committee that there is no Spouse or that the Spouse cannot be located, a waiver without spousal consent will be deemed a Qualified Election.
Any consent by a Spouse obtained under this provision (or establishment that the consent of a Spouse may not be obtained) shall be effective only with respect to such Spouse.
A consent that permits designations by the
Member without any requirement of further
consent by such Spouse must acknowledge that
the Spouse has the right to limit consent to
a specific Beneficiary, and a specific form
of benefit where applicable, and that the
Spouse voluntarily elects to relinquish both
of such rights. A revocation of a prior
waiver may be made by a Member without the
consent of the Spouse at any time before the
commencement of benefits. The number of
revocations shall not be limited. No consent
obtained under this provision shall be valid
unless the Member has received notice as
provided in Section 7.05 below.
7.05 Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity or a single life annuity, the Retirement Committee shall provide, no less than 30 days and no more than 90 days prior to the Annuity Starting Date, each Member with a written explanation of: (1) the terms and conditions of a Qualified Joint and Survivor Annuity or single life annuity; (2) the Member's right to make and the effect of an election to waive the Qualified Joint and Survivor Annuity or single life annuity form of benefit; (3) the rights of a Member's Spouse; and (4) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity or single life annuity.
(b) In the case of a Qualified Preretirement Survivor Annuity, the Retirement Committee shall provide each Member within the applicable period for such Member a written explanation of the Qualified Preretirement Survivor Annuity in such terms and in such manner as would be comparable to the explanation provided for meeting the requirements of Paragraph (a) above applicable to a Qualified Joint and Survivor Annuity or a single life annuity.
The applicable period for a Member is whichever of the following periods ends last: (1) the period beginning with the first day of the Plan Year in which the Member attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Member attains age 35; (2) a reasonable period ending after the individual becomes a Member; (3) a reasonable period ending after the Member's Qualified Preretirement Survivor Annuity ceases to be fully subsidized; (4) a reasonable period ending after this Article first applies to the Member. Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation from service in the case of a Member who separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period ending after the enumerated events described in (2), (3) and (4) is the end of the two-year period beginning one year prior to the date the applicable event occurs, and ending one year after that date. In the case of a Member who separates from service before the Plan Year in which age 35 is attained, notice shall be provided within the two-year period beginning one year prior to separation and ending one year after separation. If such a Member thereafter returns to employment with the employer, the applicable period for such Member shall be redetermined.
7.06 Transitional Rules
Any living Member not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous Sections of this Article must be given the opportunity to elect to have the prior Sections of this Article apply if such Member is credited with at least one Hour of Service under this SEPCO Schedule or SEPCO Plan in a Plan Year beginning on or after January 1, 1976, and such Member is entitled to a vested Allowance.
7.07 Alternative Forms of Distribution
(a) Any Member may, subject to the election procedures applicable to Qualified Joint and Survivor Annuities and Qualified Preretirement Survivor Annuities, elect to convert his retirement Allowance into an optional benefit of Equivalent Actuarial Value determined as of the Annuity Starting Date, in accordance with one of the options named below:
Option (i) a retirement Allowance payable for the Member's life, with no Allowance payable after his death; or
Option (ii) a modified retirement Allowance payable during the Member's life with the provision that after his death either a 50%, 75% or a 100% joint and survivor annuity shall be paid during the life of, and to, the contingent annuitant nominated by him.
(b) The election of an optional form of benefit shall become effective as follows:
(i) If the Member retired on his Normal Retirement Date, or if he retires on an early retirement Allowance or a vested retirement Allowance deferred to commence on his Normal Retirement Date, the election shall become effective on his Normal Retirement Date.
(ii) If the Member retires on an early retirement Allowance commencing prior to his Normal Retirement Date, the election shall become effective on the due date of the first monthly installment.
(iii) If the Member continues in service as an Employee after his Normal Retirement Date and the notice of his election is received by the Retirement Committee prior to his Normal Retirement Date, election shall become effective on his Normal Retirement Date, or if the notice of the election is received by the Retirement Committee after the Member's Normal Retirement Date, the election shall become effective on the date it is received by the Retirement Committee. In the event of the death of a Member in service as an Employee on or after his Normal Retirement Date and after his election has become effective, payments of the benefit under the option shall commence on the first day of the month next following the month of death if the contingent annuitant designated under the option is then living; or, upon the retirement of such a Member, the amount under the option shall be payable to the Member, but no payments shall commence or accrue to him until the date of retirement.
7.08 Cash-Out of Annuity Benefits
(a) Although Allowances shall normally be payable in monthly installments, a lump sum payment of Equivalent Actuarial Value shall be made in lieu thereof if the present value of a Member's Allowance upon termination of employment is less than or equal to $3,500 (and if the present value of such Member's Allowance never exceeded $3,500) for distributions before January 1, 1998, or if the present value of a Member's Allowance upon termination of employment is less than or equal to $5,000 (and if the present value of such Member's Allowance never exceeded $5,000) for distributions on or after January 1, 1998. The lump sum payment shall be made as soon as practicable on or after the date the Member terminates employment. Notwithstanding the foregoing, if the present value of the Member's vested Allowance is zero, the Member shall be deemed to have received a distribution of such Member's Accrued Benefit.
(b) This Section 7.08(b) shall apply to all
distributions from the Plan pursuant to the
SEPCO Schedule and from annuity contracts
purchased to provide benefits other than
distributions described in Section
1.417-1T(e)(3) of the income tax regulations
issued under the Retirement Equity Act of
1984. For purposes of determining whether
the present value of (A) a Member's vested
accrued benefit; (B) a qualified joint and
survivor annuity, within the meaning of
Section 417(b) of the Code; or (C) a
qualified preretirement survivor annuity
within the meaning of Section 417(c)(1) of
the Code exceeds $3,500 for distributions
before January 1, 1998, or $5,000 for
distributions on or after January 1, 1998,
the present value of such benefits or
annuities shall be calculated by using an
interest rate no greater than the Applicable
Interest Rate and in no event shall the
present value of any such benefit or annuity
determined under this Section 7.08(b) be
less than the present value of such benefits
or annuities determined using the Applicable
Interest Rate. "Applicable Interest Rate"
for this purpose shall be calculated by
using the annual rate of interest on 30-year
Treasury securities for the month of
November in the Plan Year which precedes the
Plan Year in which such present value is
determined and by using the prevailing
commissioners' standard table used to
determine reserves for group annuity
contracts as in effect on the date as of
which the present value is being determined.
In no event shall the amount of any benefit
or annuity determined under this Section
7.08(b) exceed the maximum benefit permitted
under Section 415 of the Code.
7.09 Commencement of Benefits
An Allowance under this SEPCO Schedule shall be paid in accordance with Section 5.9 of the Plan.
7.10 Requirement for Direct Rollovers
An Allowance paid in a lump sum shall be subject to
Section 8.7 of the Plan.
ARTICLE 8 - RETIREE MEDICAL BENEFITS
8.01 Definitions.
The following words and phraseology as used herein shall have the following meanings unless a different meaning is plainly required by the context:
(a) "Pensioned Employee" means effective
September 15, 1993, a Member who retires and
is receiving a distribution from the SEPCO
Plan pursuant to Sections 5.01 and 5.02 of
the SEPCO Schedule or a retired Member who
is entitled to receive a distribution under
the Plan pursuant to Sections 5.01 or 5.02
of the SEPCO Schedule after retirement will
be eligible for reimbursement or payment of
covered medical expenses, as hereinafter
described, provided the Member (1) was
covered by the Georgia Power Company Medical
Benefits Plan immediately before retirement;
(2) is not eligible as a spouse or dependent
or otherwise for coverage under the Georgia
Power Company Medical Benefits Plan; and (3)
continues to satisfy the eligibility
requirements applicable to retired employees
as set forth in the provisions of the
Georgia Power Company Medical Benefits Plan,
which is attached hereto as Exhibit A and
incorporated herein by reference and may be
changed in accordance with the terms of the
Georgia Power Company Medical Benefits Plan.
Notwithstanding the foregoing, a former
employee who was a "key employee" as defined
in the Plan on the date of his retirement
shall not be eligible to receive any
benefits under this Article 8.
(b) "Dependents" means the spouses and
dependents of retired Members who are
eligible for reimbursement or payment of
covered medical expenses pursuant to
paragraph (a) and who were covered under the
Georgia Power Company Medical Benefits Plan
immediately prior to the Member's retirement
are also eligible for reimbursement or
payment of covered medical expenses to the
extent, if any, provided in the Georgia
Power Company Medical Benefits Plan, a copy
of which is attached as Exhibit A.
Notwithstanding the foregoing, a spouse or
dependent who is eligible for coverage under
the "active employee" portion of the Georgia
Power Company Medical Benefits Plan shall
not be eligible for reimbursement of medical
expenses or payment of premiums hereunder.
(c) "Qualified Transfer" means a transfer of
Excess Pension Assets of the Plan to a
Health Benefits Account after December 31,
1990, but before December 31, 2000, which
satisfies the requirements set forth in
paragraphs (1) through (6) below.
(1) No more than 1 transfer per Plan
Year may be treated as a Qualified
Transfer.
(2) The amount of Excess Pension Assets
which may be transferred in a
Qualified Transfer shall not exceed
a reasonable estimate of the amount
the Company will pay (directly or
through reimbursement) out of the
Health Benefits Accounts for
Qualified Current Retiree Health
Liabilities during the Plan Year of
the transfer.
(3)(A) Any assets transferred to a
Health Benefits Account in a
Qualified Transfer (and any income
allocated thereto) shall only be
used to pay Qualified Current
Retiree Health Liabilities (whether
directly or through reimbursement).
(B) Any assets transferred to a Health
Benefits Account in a Qualified
Transfer (and any income allocable
thereto) which are not used as
provided in Section 8.01(c)(3)(A)
above shall be transferred from the
Health Benefits Account back to the
Plan.
(C) For purposes of this Section
8.01(c)(3), any amount transferred
from a Health Benefits Account
shall be treated as paid first out
of the assets and income described
in Section 8.01(c) (3)(A) above.
(4) The Accrued Benefit of any Pensioned
Employee or Dependent under the
SEPCO Schedule shall become
nonforfeitable in the same manner
which would be required if the Plan
had terminated immediately before
the Qualified Transfer (or in the
case of a Pensioned Employee who
terminated service during the 1 year
period ending on the date of the
Qualified Transfer, immediately
before such termination).
(5) Effective for Qualified Transfers
occurring on or before December 8,
1994, the Applicable Company Cost
for each Plan Year during the Cost
Maintenance Period shall not be less
than the higher of the Applicable
Company Cost for each of the two
Plan Years immediately preceding the
Plan Year of the Qualified Transfer.
Effective for Qualified Transfers
occurring after December 8, 1994,
the medical benefits plan set forth
in Exhibit A shall provide that the
Applicable Health Benefits provided
by the Company during each Plan Year
during the Benefit Maintenance
Period shall be substantially the
same as the Applicable Health
Benefits provided by the Company
during the Plan Year immediately
preceding the Plan Year of the
Qualified Transfer. Notwithstanding
any other provision to the contrary
in this Section 8.01(c)(5), the
Company may elect at any time during
the Plan Year to have this Section
8.01(c)(5) applied separately with
respect to Pensioned Employees
eligible for benefits under Title
XVIII of the Social Security Act and
with respect to Pensioned Employees
which are not so eligible.
(6) For purposes of this Section
8.01(c), the following words and
phraseology shall have the following
meanings unless a different meaning
is plainly required by the context:
(A) "Applicable Company Cost" means,
with respect to any Plan Year, the
amount determined by dividing
(i) the Qualified Current Retiree
Health Liabilities of the Company
for such Plan Year determined (I)
without regard to any reduction
under Section 8.01(c)(6)(G), and
(II) in the case of a Plan Year in
which there was no Qualified
Transfer in the same manner as if
there had been such a transfer at
the end of the Plan Year, by
(ii) the number of individuals to whom
coverage for Applicable Health
Benefits was provided during such
Plan Year.
(B) "Applicable Health Benefits" means
health benefits or coverage which
are provided to Pensioned Employees
who immediately before the
Qualified Transfer are eligible to
receive such benefits and their
Dependents.
(C) "Benefit Maintenance Period" means
the period of five (5) Plan Years
beginning with the Plan Year in
which the Qualified Transfers
occurs.
(D) "Cost Maintenance Period" means the
period of five (5) Plan Years
beginning with the taxable year in
which the Qualified Transfer
occurs. If a Plan Year is in two
(2) or more overlapping Cost
Maintenance periods, this Section
8.01(c)(6)(D) shall be applied by
taking into account the highest
Applicable Company Cost required to
be provided under Section
8.01(c)(6)(A) above for such Plan
Year.
(E) "Excess Pension Assets" means the
excess, if any, of
(i) the amount determined under Code
Section 412(c)(7)(A)(ii), over
(ii) the greater of: (I) the amount
determined under Code Section
412(c)(7)(A)(i), or (II) 125
percent of current liability (as
defined in Code Section
412(c)(7)(B)).
The determination under
this paragraph shall be
made as of the most recent
valuation date of the Plan
preceding the Qualified
Transfer.
(F) "Health Benefits Account" means an
account established and maintained
under Code Section 401(h).
(G) "Qualified Current Retiree Health
Liabilities" means, with respect to
any Plan Year, the aggregate
amounts, including administrative
expenses, which would have been
allowable as a deduction to the
Company for payment of Applicable
Health Benefits provided during the
Plan Year assuming such Applicable
Health Benefits were provided
directly by the Company and the
Company used the cash receipts and
disbursements method of accounting.
For purposes of the preceding
sentence, the rule of Code Section
419(c)(3)(B) shall apply.
Effective for Qualified
Transfers occurring on or
before December 8, 1994,
the amount determined in
the paragraph above shall
be reduced by any amount
previously contributed to a
Health Benefits Account or
welfare benefit fund, as
defined in Code Section
419(e)(1), to pay for the
Qualified Current Retiree
Health Liabilities.
Effective for Qualified
Transfers occurring after
December 8, 1994, the
amount determined under the
preceding paragraph shall
be reduced by the amount
which bears the same ratio
to such amount as the value
(as of the close of the
Plan Year preceding the
year of the Qualified
Transfer) of the assets in
all Health Benefits
Accounts or welfare benefit
funds, as defined in Code
Section 419(e)(1), set
aside to pay the Qualified
Current Retiree Health
Liability, bears to the
present value of the
Qualified Current Retiree
Health Liabilities for all
Plan Years determined
without regard to this
paragraph.
|
(d) "Georgia Power Medical Benefits Plan" means that Plan or any successor thereto.
8.02 Medical Benefits
Medical benefits under the Plan shall be provided through the Georgia Power Company Medical Benefits Plan by the payment of premiums thereunder, or through reimbursement to the Company for its payment to Pensioned Employees or their Dependents of medical expenses in accordance with the terms and conditions of the Georgia Power Company Medical Benefits Plan attached hereto as Exhibit A. Medical benefits shall be provided under the Plan only to the extent there are sufficient funds to provide such benefits. In no event shall any benefits be paid under the Plan to the extent the same benefits are payable under any other plan, program or arrangement of the Company. The Retirement Committee may establish claims procedures and administrative rules relating to the provision of medical benefits hereunder to the extent that the claims procedures and administrative rules under the applicable group medical plan do not apply.
8.03 Termination of Coverage.
(a) Coverage of any Pensioned Employee shall cease as follows:
(1) when this Article 8 is amended, terminated, or discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due any required contribution; or
(3) as otherwise provided in Exhibit A.
(b) Coverage of any Dependent shall cease as follows:
(1) when this Article 8 is amended, terminated, or discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due any required contribution; or
(3) as otherwise provided in Exhibit A.
8.04 Contributions or Qualified Transfers to Fund Medical Benefits.
(a) Any contributions which the Company deems necessary to provide the medical benefits under Article 8 will be made from time to time by or on behalf of the Company, and contributions shall be required of the Pensioned Employees to the Company's medical benefit plan in amounts determined in the sole discretion of the Company from time to time. All Company contributions shall be made to the Trustee and shall be allocated to a separate account maintained solely to fund the medical benefits provided under this Article 8. The Company shall designate that portion of any contribution to the plan allocable to the funding of medical benefits under this Article 8. In the event that a Pensioned Employee's interest in an account, or his Dependents', maintained pursuant to this Article 8 is forfeited prior to termination of the plan, the forfeited amount shall be applied as soon as possible to reduce Company contributions made under this Article 8. In no event at any time prior to the satisfaction of all liabilities under this Article 8 shall any part of the corpus or income of such separate account be used for, or diverted to, purposes other than for the exclusive purpose of providing benefits under this Article 8.
The amount of contributions to be made by or on behalf of the Company for any Plan Year, if any, shall be reasonable and ascertainable and shall be determined in accordance with any generally accepted actuarial method which is reasonable in view of the provisions and coverage of this Article 8, the funding medium, and any other applicable considerations. However, the Company is under no obligation to make any contributions under this Article 8 after Article 8 is terminated, except to fund claims for medical expenses incurred prior to the date of termination.
The medical benefits provided under this Article 8, when added to any life insurance protection provided under the Plan, shall be subordinate to the retirement benefits provided under the Plan.
Anything in the Plan and SEPCO Schedule to the contrary notwithstanding, the aggregate amount of the actual contributions made pursuant to this Article 8 may not exceed 25% of the total actual contributions to the Plan for all benefits under the Plan (exclusive of contributions that may be made to fund past service credits) on and after September 15, 1993.
(b) Effective September 15, 1993, the Company shall have the right, in its sole discretion, to make a Qualified Transfer of all or a portion of any Excess Pension Assets contributed to fund Retirement Income or Allowance under the Plan to the Health Benefits Accounts to fund medical benefits under this Article 8.
8.05 Pensioned Employee Contributions.
It shall be the sole responsibility of the Pensioned Employee to notify the Company promptly in writing when a change in the amount of the Pensioned Employee's contribution is in order because a Dependent has become ineligible for coverage under this Article 8. No person shall become covered under this Article 8 for whom the Pensioned Employee has not made the required contribution. Any contribution paid by a Pensioned Employee for any person after such person shall have become ineligible for coverage under this Article 8 shall be returned upon written request but only provided such written request by or on behalf of the Pensioned Employee is received by the Company within ninety (90) days from the date coverage terminates with respect to such ineligible person.
8.06 Amendment of Article 8.
The Board of Directors reserves the right to amend Article 8 (including Exhibit A) without the consent of any Pensioned Employee, or his Dependents, provided, however, that no amendment of this Article or the Trust shall cancel the payment or reimbursement of expenses for claims already incurred by a Pensioned Employee or his Dependent prior to the date of any amendment, nor shall any such amendment increase the duties and obligations of the Trustee except with its consent. This Article 8, as set forth in the SEPCO Schedule, is not a contract and non-contributory benefits hereunder are provided gratuitously, without consideration from any Pensioned Employee or his Dependents. The Board of Directors makes no promise to continue these benefits in the future and rights to future benefits will never vest. In particular, retirement or the fulfillment of the prerequisites for a retirement benefit pursuant to the terms of the Plan and SEPCO Schedule or under the terms of any other employee benefit plan maintained by the Company shall not confer upon any Pensioned Employee or Dependents any right to continued benefits under this Article 8.
8.07 Termination of Article 8.
Although it is the intention of the Board of Directors that this Article shall be continued and the contribution shall be made regularly thereto each year, the Board of Directors may terminate this Article 8 or permanently discontinue contributions at any time in its sole discretion. This Article 8, as set forth in the SEPCO Schedule, is not a contract and non-contributory benefits hereunder are provided gratuitously, without consideration from any Pensioned Employee or his Dependents. The Board of Directors makes no promise to continue these benefits in the future and rights to future benefits will never vest. In particular, retirement or the fulfillment of the prerequisites for a retirement benefit pursuant to the terms of the SEPCO Schedule or under the terms of any other employee benefit Plan maintained by the Company shall not confer upon any Pensioned Employee or his Dependents any right to continued benefits under this Article 8.
8.08 Reversion of Assets upon Termination. Upon the termination of this Article 8 and the satisfaction of all liabilities under this Article 8, all remaining assets in the separate account described in this Article 8 shall be returned to the Company in accordance with the terms of the Fund.
IN WITNESS WHEREOF, Southern Company Services, Inc. through its duly authorized officer, has adopted this First Amendment to The Southern Company Pension Plan this ____ day of _________________, 1997, to be effective as stated herein.
SOUTHERN COMPANY SERVICES, INC.
By: ____________________________
Title:__________________________
ATTEST:
By: _________________
Title:________________
Exhibit 10(a)80
SOUTHERN COMPANY PERFORMANCE STOCK PLAN
EFFECTIVE FEBRUARY 17, 1997
SOUTHERN COMPANY PERFORMANCE STOCK PLAN
Purposes
This Southern Company Performance Stock Plan is intended to maximize the long-term success of Southern Company, ensure a balanced emphasis on both current and long-term performance, enhance Participants' identification with shareholders' interests, and facilitate the attraction and retention of key individuals with outstanding ability.
ARTICLE I
1.1 Definitions. Whenever used in the Plan, the following terms shall have the meaning set forth below:
(a) "Award" shall mean, individually and collectively, any Option, Stock Appreciation Right, or Restricted Stock granted under the Plan.
(b) "Award Document" shall mean the written document evidencing the grant of an Award and setting forth the terms and conditions thereof.
(c) "Base Value" shall mean the Fair Market Value of a Stock Appreciation Right on the date of its grant.
(d) "Board" or "Board of Directors" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Compensation Committee of the
Board of Directors of the Company composed solely of not less than
three (3) Nonemployee Directors and, to the extent necessary for any
Award intended to qualify as performance based compensation under
Section 162(m) of the Code to so qualify, each member of the Committee
shall be an Outside Director.
(g) "Common Stock" shall mean the Common Stock of the Company.
(h) "Company" shall mean The Southern Company or any successor thereto.
(i) "Covered Employee" shall mean a Participant who is as of the last day of the Company's fiscal year in which the Participant shall be required to recognize taxable income with respect to an Award, a "covered employee" within the meaning of Code section 162(m)(3) and the regulations thereunder.
(j) "Director" shall mean any person who is currently a member of the Board of Directors of the Company or an Employing Company.
(k) "Disability" shall mean total and permanent disability as determined by the Social Security Administration.
(l) "Effective Date" shall mean the date the Plan is adopted by the Board of Directors of the Company, subject to approval by the shareholders of the Company at a meeting held within twelve (12) months following the date of adoption by the Board of Directors.
(m) "Employee" shall mean any person who is currently employed by an Employing Company.
(n) "Employing Company" shall mean any affiliate or subsidiary (direct or indirect) of the Company, which the Board of Directors may from time to time determine to bring under the Plan and which may adopt the Plan, and any successor of any of them.
The Employing Companies as of January 1, 1997 are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Communications, Inc.
Southern Company Services, Inc.
Southern Energy, Inc.
Southern Nuclear Operating Company
Southern Development and Investment Group, Inc.
(o) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(p) "Fair Market Value" shall mean the average of the high and low prices at which a share of Common Stock shall have been traded on the date of grant or the exercise of an Award, or on the next preceding trading day if such date was not a trading date, as reported on the New York Stock Exchange-Composite Transactions Listing, or as otherwise determined by the Committee. In no event shall the Fair Market Value equal less than the par value of the Common Stock.
(q) "Incentive Stock Option" shall mean a stock option satisfying the requirements of Section 422 of the Code granted pursuant to Section 4.1(b) and designated by the Committee as an Incentive Stock Option.
(r) "Nonemployee Director" shall mean a Director of the Company who is a "nonemployee director" within the meaning of Rule 16b-3 promulgated under the Exchange Act.
(s) "Nonqualified Stock Option" shall mean an Option, other than an Incentive Stock Option, granted pursuant to Section 4.1(c).
(t) "Option" shall mean, individually and collectively, an Incentive Stock Option or a Nonqualified Stock Option to purchase Common Stock.
(u) "Optionee" shall mean a person to whom an Option has been granted under the Plan.
(v) "Option Price" shall mean the price per share of Common Stock set by the grant of an Option, but in no event less than the Fair Market Value of the Common Stock on the date of grant.
(w) "Outside Director" shall mean a Director of the Company who is an "outside director" within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.
(x) "Participant" shall mean any Director or Employee who satisfies the criteria set forth in Article III.
(y) "Performance-Based" shall mean compensation which qualifies as "performance-based" within the meaning of Code section 162(m)(4)(c) and the regulations thereunder.
(z) "Restricted Stock" shall mean an Award granted pursuant to
Section 4.1(e).
(aa) "Retirement" shall mean the termination of service or employment by a Participant on or after age 65 or as otherwise determined by the Committee in its sole discretion.
(bb) "Separation Date" shall mean, as determined by the Committee, the date on which a Participant's service or employment with the Company or Employing Company terminates for reasons other than his transfer of service or employment to the Company or another Employing Company. Whether any leave of absence shall constitute termination of service or employment for the purposes of the Plan shall be determined in each case by the Committee in its sole discretion.
(cc) "Stock Appreciation Right" or "SAR" shall mean a right to
any appreciation in value of shares of Common Stock granted pursuant to
Section 4.1(d).
1.2 Construction. Where the context requires, words in the masculine gender shall include the feminine and neuter genders, words in the singular shall include the plural, and words in the plural shall include the singular.
1.3 Term. The Plan shall remain in effect for ten (10) years from the
Effective Date or until terminated by the Board of Directors, whichever occurs
first.
ARTICLE II
2.1 Plan Administration. The Plan shall be administered by the
Committee. The Committee is authorized to establish such rules, to appoint such
agents and to delegate such authority as it deems appropriate for the proper
administration of the Plan, including, but not limited to, the delegation of
authority to such person or persons to exercise the discretion provided in
Section 5.1 hereof to determine whether a Participant may exercise an Award
subsequent to termination of employment, and to make such determinations and to
take such steps in connection with the Plan or the benefits provided hereunder
as it deems necessary or advisable.
2.2 Plan Interpretation. The Committee shall have the exclusive authority to interpret the Plan. The decision of the Committee with respect to any question arising as to the grant of an Award to a Participant in the Plan, the amount, term, form, and time of payment of Awards under the Plan, or any other matter concerning the Plan shall be final, conclusive, and binding on both the Company and the Participants.
ARTICLE III
3.1 Eligibility. The Participants in the Plan shall be limited to Directors and to those Employees, as determined by the Committee, who have a significant impact on the long-term performance and success of the Company. Subject to the terms of the Plan, the Committee shall identify individuals eligible to become Participants in the Plan, select from time to time the Participants to whom Awards shall be granted and shall determine the number of Awards to be granted.
ARTICLE IV
4.1 Awards.
(a) General. Beginning February 17, 1997 and thereafter not more frequently than once each calendar year, the Committee shall determine the forms and amounts of Awards for Participants, provided that in no event shall any Award be granted until the shareholders of the Company have approved the Plan. All Awards shall be subject to the terms and conditions of the Plan and to such other terms and conditions consistent with the Plan as the Committee deems appropriate. Awards under the Plan need not be uniform and Awards under two (2) or more paragraphs may be combined in one Award Document. Any combination of Awards may be granted at one time and on more than one occasion to the same Participant. Such Awards may take the following forms, in the Committee's sole discretion:
(b) Incentive Stock Options. These shall be stock options within the meaning of Section 422 of the Code to purchase Common Stock. In addition to other restrictions contained in the Plan, an Incentive Stock Option (1) shall not be exercised more than ten (10) years after the date it is granted, (2) shall not have an Option Price less than the Fair Market Value of Common Stock on the date the Incentive Stock Option is granted, (3) shall otherwise comply with Section 422 of the Code, (4) shall be granted only to Employees and (5) shall be designated as an "Incentive Stock Option" by the Committee. The aggregate Fair Market Value of Common Stock determined at the time of each grant for which any Optionee may vest in Incentive Stock Options under this Plan for any calendar year shall not exceed $100,000.
(c) Nonqualified Stock Options. These shall be stock options to purchase Common Stock which are not designated by the Committee as "Incentive Stock Options." At the time of the grant, the Committee shall determine the Option exercise period, the Option Price, and such other conditions or restrictions on the exercise of the Nonqualified Stock Option as the Committee deems appropriate. In addition to other restrictions contained in the Plan, a Nonqualified Stock Option (1) shall not be exercised more than ten (10) years after the date it is granted, and (2) shall not have an Option Price less than 100% of the Fair Market Value of Common Stock on the date the Nonqualified Stock Option is granted.
(d) Stock Appreciation Rights. These shall be rights that on exercise entitle the holder to receive the excess of (1) the Fair Market Value of Common Stock on the date of exercise over (2) its Base Value multiplied by (3) the number of SAR's exercised. Such rights shall be satisfied in cash, stock, or a combination thereof, as determined by the Committee. Stock Appreciation rights granted under the Plan may be granted in the sole discretion of the Committee in conjunction with an Incentive Stock Option or Nonqualified Stock Option under the Plan. The Committee may impose such conditions or restrictions on the exercise of SAR's as it deems appropriate and may terminate, amend, or suspend such SAR's at any time. SAR's granted under this Plan shall not be exercised more than ten (10) years after the date of grant.
(e) Restricted Stock. Restricted Stock shall be shares of Common Stock held by the Company for the benefit of a Participant without payment of consideration, except as otherwise may be determined by the Committee in its discretion, with restrictions or conditions upon the Participant's right to retain, transfer or sell such shares. The following provisions shall be applicable to Restricted Stock Awards:
(1) Stock Power. Each certificate for Restricted Stock shall be registered in the name of the Participant and shall be deposited by him with the Company, together with a stock power endorsed in blank.
(2) Restriction Period. At the time of making a Restricted Stock Award, the Committee shall establish the "Restriction Period" applicable thereto. Such Restriction Period may be up to ten (10) years as determined by the Committee. The Committee may provide for the annual lapse of restrictions with respect to a specified percentage of the Restricted Stock, provided the Participant satisfies all eligibility requirements at such time.
(3) Dividends. The Participant shall be entitled to receive dividends during the Restriction Period and shall have the right to vote such Common Stock and all other shareholder's rights except the following:
(i) the Participant shall not be entitled to delivery of the stock certificate during the Restriction Period,
(ii) the Company shall retain custody of the Common Stock during the Restriction Period, and
(iii) a breach of a restriction or a breach of the terms and conditions established by the Committee with respect to the Restricted Stock shall cause a forfeiture of the Restricted Stock.
4.2 Award Document. After the Committee determines the form and amount of a Participant's Award, it shall cause the Company to prepare an Award Document to be delivered to the Participant setting forth the form and amount of the Award and any conditions and restrictions on the Award imposed by the Plan and the Committee.
4.3 Exercise and Payment. The exercise of an Option shall be made only by a written notice delivered in person or by mail to the Secretary of the Company at the Company's principal executive office, specifying the number of shares of Common Stock to be purchased and accompanied by payment therefore and otherwise in accordance with the Award Document pursuant to which the Option was granted. The purchase price for any shares of Common Stock purchased pursuant to the exercise of an Option shall be paid, as determined by the Committee in its discretion and set forth in the Award Document at the time of grant, in either of the following forms (or any combination thereof): (i) cash or (ii) the transfer of shares of Common Stock with a Fair Market Value equal to the aggregate exercise price of the Option to the Company upon such terms and conditions as determined by the Committee. In addition, Options may be exercised through a registered broker-dealer pursuant to such cashless exercise procedures (other than the withholding of shares of Common Stock that would otherwise be acquired upon the exercise of such Option) which are, from time to time, deemed acceptable by the Committee, and the Committee may authorize that the purchase price payable upon exercise of an Option may be paid by having shares of Common Stock withheld that otherwise would be acquired upon such exercise. Any shares of Common Stock transferred to the Company (or withheld upon exercise) as payment of the purchase price under an Option shall be valued at their Fair Market Value on the day preceding the date of exercise of such Option. The Optionee shall deliver the Award Document evidencing the Option to the Secretary of the Company who shall endorse thereon a notation of such exercise and return such Award Document to the Optionee. No fractional shares of Common Stock (or cash in lieu thereof) shall be issued upon exercise of an Option and the number of shares of Common Stock that may be purchased upon exercise shall be rounded to the nearest number of whole shares of Common Stock.
ARTICLE V
5.1 Termination of Service or Employment. A Participant whose service as a Director or employment terminates for reasons other than Retirement, Disability, or death shall, in the discretion of the Committee, have no right to receive any benefit or payment for existing Awards under the Plan. Any outstanding Award shall terminate on the Participant's Separation Date; provided, however, that the Committee or its designee, in its or his sole discretion, may permit the exercise of any outstanding Award after the Participant's Separation Date, at such time and in such manner as the Committee or such designee may determine, but in no event in the case of Incentive Stock Options shall such exercise be beyond the earlier of (a) three (3) months from the Participant's Separation Date or (b) the expiration date of the Award, to the extent exercisable on such Participant's Separation Date.
5.2 Death of a Participant. Unless otherwise provided in the Award Document, in the event of the death of a Participant prior to the exercise of all Incentive Stock Options, Nonqualified Stock Options, and Stock Appreciation Rights granted to such Participant, the administrator of the deceased Participant's estate, the executor under his will, or the person or persons to whom the Options or SAR's shall have been validly transferred by such executor or administrator pursuant to the will or laws of intestate succession shall have the right, within thirty-six (36) months from the date of such Participant's death, but not beyond the expiration date of the Options or SAR's, to exercise such Options or SAR's to the extent exercisable on such Participant's Separation Date.
5.3 Retirement.
(a) Incentive Stock Options. In the event of the termination of a Participant's employment as result of his Retirement prior to the exercise of all Incentive Stock Options granted to the Participant, such Participant shall have the right, within three (3) months of his Separation Date, but not beyond the expiration date of such Options, to exercise such Incentive Stock Options to the extent exercisable on his Separation Date.
(b) Nonqualified Stock Options and SARs. Unless otherwise provided in the Award Document, in the event of the termination of a Participant's employment as a result of his Retirement prior to the exercise of all Nonqualified Stock Options or Stock Appreciation Rights granted to the Participant, such Participant shall have the right, within thirty-six (36) months of his Separation Date, but not beyond the expiration date of such Nonqualified Stock Options or SAR's, to exercise such Nonqualified Stock Options or SAR's to the extent exercisable on his Separation Date.
5.4 Disability.
(a) Incentive Stock Options. In the event of the termination
of a Participant's employment due to Disability prior to the exercise
of all Incentive Stock Options granted to the Participant, such
Participant or his legal representative shall have the right, within
twelve (12) months of his Separation Date, but not beyond the
expiration date of such Incentive Stock Options, to exercise such
Incentive Stock Options to the extent exercisable on his Separation
Date.
(b) Nonqualified Stock Options and SARs. Unless otherwise
provided in the Award Document, in the event of the termination of a
Participant's employment due to Disability prior to the exercise of all
Nonqualified Stock Options and Stock Appreciation Rights granted to the
Participant, such Participant or his legal representative shall have
the right, within thirty-six (36) months of his Separation Date, but
not beyond the expiration date of such Nonqualified Stock Options or
SAR's, to exercise such Nonqualified Stock Options or SAR's to the
extent exercisable on his Separation Date.
ARTICLE VI
6.1 Limitation of Shares of Common Stock Available under the Plan.
(a) Share Limit. The total number of shares of Common Stock available to be granted by the Committee as Awards to the Participants under the Plan shall not exceed 40,000,000 shares. Upon a change in capitalization, the maximum number of shares of Common Stock referred to in the preceding sentence shall be adjusted in number and kind pursuant to Section 7.1 hereof.
(b) Share Reduction. The total number of shares available under Section 6.1(a) shall be reduced from time to time in the manner specified:
(1) Incentive Stock Options and Nonqualified Stock Options. The grant of an Incentive Stock Option and Nonqualified Stock Option shall reduce the available shares by the number of shares subject to such Option.
(2) Stock Appreciation Rights. The grant of Stock Appreciation Rights shall reduce the available shares by the number of SAR's granted; provided, however, if SAR's are granted in conjunction with an Option and the exercise of such Option would cancel the SAR's and vice versa, then the grant of the SAR's will only reduce the amount available by the excess, if any, of the number of SAR's granted over the number of shares subject to the related Option.
(3) Restricted Stock. The grant of Restricted Stock shall reduce the available shares by the number of shares of Restricted Stock granted.
(c) Share Increase. The total number of shares available under
Section 6.1(a) shall be increased from time to time in the manner
specified:
(1) Incentive Stock Options and Nonqualified Stock
Options. The lapse or cancellation of an Incentive Stock
Option or Nonqualified Stock Option shall increase the
available shares by the number of shares released from such
Option; provided, however, in the event the cancellation of an
Option is due to the exercise of SAR's related to such Option,
the cancellation of such Option shall only increase the amount
available by the excess, if any, of the number of shares
released from such Option over the number of SAR's exercised.
(2) Stock Appreciation Rights. The lapse or
cancellation of Stock Appreciation Rights shall increase the
available shares by the number of SAR's which lapse or are
canceled; provided, however, in the event the cancellation of
such SAR's is due to the exercise of an Option related to such
SAR's, the cancellation of such SAR's shall only increase the
available shares by the excess, if any, of the number of SAR's
canceled over the number of shares delivered on the exercise
of such Option.
(3) Restricted Shares. The reversion of Restricted Stock to the Company due to the breach or occurrence of a restriction or failure to satisfy a condition on such shares shall increase the available shares by the number of shares of Restricted Stock reverted.
6.2 Maximum Shares to Participant. The maximum number of shares of Common Stock which may be the subject of Awards to a Participant during any calendar year during the term of the Plan shall be 1,000,000.
ARTICLE VII
7.1 Adjustment Upon Changes in Capitalization. The total number of shares of Common Stock available for Awards under the Plan or allocable to any individual Participant, the number of shares of Common Stock subject to outstanding Options, the exercise price for such Options, the number of outstanding SAR's, the Base Value of such SAR's and the Award limit set forth in subsection 6.2 shall be appropriately adjusted by the Committee in the event of any increase or decrease in the number of outstanding shares of Common Stock resulting from any change in the Company's capital structure, including but not limited to any stock dividend, subdivision or combination of shares, or reclassification.
7.2 Merger, Consolidation or Tender Offer. In the event of a merger or consolidation of the Company or a tender offer for shares of Common Stock, the Committee may make such adjustments with respect to Awards under the Plan and take such other action as it deems necessary or appropriate to reflect, or in anticipation of, such merger, consolidation, or tender offer, including without limitation the substitution of new Awards, the termination or adjustment of outstanding Awards, the acceleration of Awards, or the removal of limitations or restrictions on outstanding Awards.
ARTICLE VIII
8.1 Withholding Taxes. The Company or the Employing Company, as the case may be, of the Participant shall deduct from all payments and distributions in cash under the Plan any taxes required to be withheld for federal, state, or local governments. In the event distributions are made in shares of Common Stock, the Company shall retain the value of sufficient shares to equal the amount of the tax required to be withheld in respect of such distributions.
8.2 Service or Employment. The establishment of the Plan and Awards hereunder shall not be construed as conferring on any Participant any right to continued service or employment, and the service or employment of any Participant may be terminated without regard to the effect which such action might have upon him or her as a Participant.
8.3 Non-Alienation of Benefits. Unless otherwise provided in the Participant's Award Document with respect to Awards other than Incentive Stock Options, and other than as specifically provided with regard to the death of a Participant, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, excluding the use of Options under this Plan as collateral in exercising such Options. Any attempt to do so shall be null and void. No such benefits shall, prior to receipt thereof by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagement, or torts of the Participant.
8.4 Non-Alienation of Election or Exercise Rights. Unless otherwise provided in the Participant's Award Document with respect to Awards other than Incentive Stock Options, no election as to benefits or exercise of Options, Stock Appreciation Rights, or other rights may be made during a Participant's lifetime by anyone other than the Participant.
8.5 Amendment, Modification, and Termination of the Plan. The Board of Directors, at any time, may terminate and in any respect amend or modify the Plan; provided, however, that no such action by the Board of Directors, without approval of the Company's shareholders, may increase the total number of shares of Common Stock available under the Plan; and further provided that, except as provided in Section 7.2, no amendment, modification, or termination of the Plan shall in any manner adversely affect the rights of any Participant under the Plan without the consent of such Participant.
8.6 Indemnification. Each person who is or shall have been a member of the Committee or of the Board of Directors shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by him in satisfaction of judgment in any such action, suit, or proceeding against him. Such person shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
8.7 Reliance on Reports. Each member of the Committee and each member of the Board of Directors shall be fully justified in relying or acting in good faith upon any report made by the independent public accountants of the Company and any Employing Company and upon any other information furnished in connection with the Plan by any person or persons other than himself. In no event shall any person who is or shall have been a member of the Committee or the Board of Directors be liable for any determination made or other action taken or any omission to act in reliance upon any such report or information or for any action taken, including the furnishing of information, or failure to act, if in good faith.
8.8 Governing Law. To the extent that federal law shall not be held to have preempted local law, this Plan shall be governed by the laws of the State of Delaware. If any provision of the Plan shall be held invalid or unenforceable, the remaining provisions hereof shall continue in full force and effect.
IN WITNESS WHEREOF, the Company has caused the Southern Company Performance Stock Plan to be executed by its duly authorized officers pursuant to resolutions of the Board of Directors as of the 17th day of February 1997, to be effective February 17, 1997.
THE SOUTHERN COMPANY
By: ___________________________________
A. William Dahlberg
President
Attest:
By: ____________________________
Patricia L. Roberts
Assistant Secretary
[CORPORATE SEAL]
Exhibit 10(a)81
THE SOUTHERN COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
January 1, 1997
THE SOUTHERN COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption: Southern Company Services, Inc. hereby adopts and establishes The Southern Company Supplemental Executive Retirement Plan. The Plan shall be an unfunded deferred compensation arrangement whose benefits shall be paid solely from the general assets of the Company.
1.2 Purpose: The Plan is designed to provide deferred compensation benefits primarily for a select group of management or highly compensated employees which are not otherwise payable under The Southern Company Pension Plan as a result of the exclusion of incentive pay from the definition of earnings set forth under such plan.
ARTICLE II - DEFINITIONS
2.1 "Administrative Committee" shall mean the Retirement Board of the Pension Plan.
2.2 "Affiliated Employer" shall mean any corporation which is a member of the controlled group of corporations of which The Southern Company is the common parent corporation which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of any of them.
2.3 "Beneficiary" shall mean any person, estate, trust or organization entitled to receive any payment under the Plan upon the death of a Participant.
2.4 "Board of Directors" shall mean the Board of Directors of the Company.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
2.6 "Company" shall mean Southern Company Services, Inc.
2.7 "Effective Date" shall mean January 1, 1997.
2.8 "Employee" shall mean any person who is employed by an Affiliated
Employer excluding any persons represented by a collective bargaining agent.
2.9 "Incentive Pay" shall mean the incentive award earned while an
Employee, if any, under the terms of The Southern Company Performance Pay Plan,
The Southern Company Productivity Improvement Plan, The Southern Company
Executive Productivity Improvement Plan provided such incentive award was earned
on and after January 1, 1994. If a person was formerly represented by a
collective bargaining agent with respect to any corporation which is a member of
the controlled group of corporations of which The Southern Company is the common
parent and such person subsequently becomes an Employee, incentive awards
described in the preceding sentence shall include awards earned on and after
January 1, 1994 while represented by such collective bargaining agent.
2.10 "Participant" shall mean an Employee or former Employee of an
Affiliated Employer who is eligible to participate in the Plan pursuant to
Sections 4.1 and 4.2.
2.11 "Pension Plan" shall mean The Southern Company Pension Plan, as amended from time to time.
2.12 "Plan" shall mean The Southern Company Supplemental Executive Retirement Plan, as amended from time to time.
2.13 "Plan Year" shall mean the calendar year.
2.14 "SERP Benefit" shall mean the benefit described in Section 5.1.
2.15 "Supplemental Pension Benefit" shall mean the pension benefit, if any, that is payable to a Participant under a supplemental benefit plan of an Affiliated Employer (as such term is defined therein).
Where the context requires, the definitions of all terms set forth in the Pension Plan shall apply with equal force and effect for purposes of interpretation and administration of the Plan, unless said terms are otherwise specifically defined in the Plan. The masculine pronoun shall be construed to include the feminine pronoun and the singular shall include the plural, where the context so requires.
ARTICLE III - ADMINISTRATION OF PLAN
3.1 Administrator. The general administration of the Plan shall be placed in the Administrative Committee.
3.2 Powers. The Administrative Committee shall administer the Plan in
accordance with its terms and shall have all powers necessary to carry out the
provisions of the Plan more particularly set forth herein. The Administrative
Committee shall have the discretionary authority to interpret the Plan and shall
determine all questions arising in the administration, interpretation and
application of the Plan. Any such determination by it shall be conclusive and
binding on all persons. It may adopt such regulations as it deems desirable for
the conduct of its affairs. It may appoint such accountants, counsel, actuaries,
specialists and other persons as it deems necessary or desirable in connection
with the administration of this Plan, and shall be the agent for the service of
process.
3.3 Duties of the Administrative Committee.
(a) The Administrative Committee is responsible for the
daily administration of the Plan. It may appoint other persons or entities to
perform any of its fiduciary functions. The Administrative Committee and any
such appointee may employ advisors and other persons necessary or convenient to
help it carry out its duties, including its fiduciary duties. The Administrative
Committee shall have the right to remove any such appointee from his position.
Any person, group of persons or entity may serve in more than one fiduciary
capacity.
(b) The Administrative Committee shall maintain accurate and
detailed records and accounts of Participants and of their rights under the Plan
and of all receipts, disbursements, transfers and other transactions concerning
the Plan. Such accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by persons designated by the
Administrative Committee.
(c) The Administrative Committee shall take all steps
necessary to ensure that the Plan complies with the law at all times. These
steps shall include such items as the preparation and filing of all documents
and forms required by any governmental agency; maintaining adequate
Participants' records; recording and transmission of all notices required to be
given to Participants and their Beneficiaries; the receipt and dissemination, if
required, of all reports and information received from an Affiliated Employer;
securing of such fidelity bonds as may be required by law; and doing such other
acts necessary for the proper administration of the Plan. The Administrative
Committee shall keep a record of all of its proceedings and acts, and shall keep
all such books of account, records and other data as may be necessary for proper
administration of the Plan.
3.4 Indemnification. The Company shall indemnify the Administrative
Committee against any and all claims, losses, damages, expenses and liability
arising from an action or failure to act, except when the same is finally
judicially determined to be due to gross negligence or willful misconduct. The
Company may purchase at its own expense sufficient liability insurance for the
Administrative Committee to cover any and all claims, losses, damages and
expenses arising from any action or failure to act in connection with the
execution of the duties as Administrative Committee. No member of the
Administrative Committee shall receive any compensation from the Plan for his
service as such.
ARTICLE IV - ELIGIBILITY
4.1 Eligibility Requirements. All Employees who are determined to be
eligible to participate in the Plan in accordance with Section 4.2 whose
benefits under the Pension Plan are limited by the exclusion of Incentive Pay
from the definition of Earnings thereunder (or their spouses, as the case may
be) shall be eligible to receive benefits under the Plan provided such Employees
are (a) participating in the Plan at the time they terminate from an Affiliated
Employer and are retirement eligible or (b) die while in active service while
with an Affiliated Employer provided each such Employee's spouse is eligible to
receive a survivor benefit under Article VII of the Pension Plan at each
eligible Employee's death. Notwithstanding the foregoing sentence, any former
Employee who is rehired by an Affiliated Employer on or after January 1, 1997,
shall also be required to complete one (1) year of continuous paid service with
an Affiliated Employer before being eligible to participate in the Plan.
4.2 Determination of Eligibility. The Administrative Committee shall
determine which Employees are eligible to participate. Upon becoming a
Participant, an Employee shall be deemed to have assented to the Plan and to any
amendments hereafter adopted. The Administrative Committee shall be authorized
to rescind the eligibility of any Participant if necessary to ensure that the
Plan is maintained primarily for the purpose of providing deferred compensation
to a select group of management or highly compensated employees under the
Employee Retirement Income Security Act of 1974, as amended.
ARTICLE V - BENEFITS
5.1 SERP Benefit.
(a) Subject to Article XV of the Pension Plan, a Participant shall be entitled to a monthly SERP Benefit equal to:
(1) 1.70% of the Participant's Average Monthly Earnings multiplied by his years (and fraction of a year) of Accredited Service to his Retirement Date, death or other termination of service, including a Social Security Offset, as adjusted, if necessary, under the terms of the Pension Plan for commencement prior to the Participant's Normal Retirement Date; less
(2) such Participant's Retirement Income that is payable under the Pension Plan; less
(3) such Participant's Supplemental Pension Benefit.
(b) For purposes of Section 5.1(a)(1), the Participant's
Average Monthly Earnings shall be calculated based on the Participant's Earnings
that are considered under the Pension Plan in calculating his Retirement Income,
but without regard to the limitation of Section 401(a)(17) of the Code, and
including the following additional amounts:
(1) any portion of such Participant's
base pay that he may have elected to
defer under The Southern Company
Deferred Compensation Plan, but
excluding Incentive Pay he deferred
under such plan; and
(2) any Incentive Pay which was earned
as of the applicable Plan Year in
excess of 25% of the Participant's
corresponding base pay for the
applicable Plan Year determined
under this Section 5.1(b).
In addition, to determine the Plan Years which produce the highest monthly
average to calculate Average Monthly Earnings under the Plan, a Participant's
Earnings should include those additional amounts provided for in Section 5.1(b).
(c) For purposes of Section 5.1(a)(1), the Participant's
years of Accredited Service shall include any deemed Accredited Service provided
under the terms of any agreement concerning supplemental pension payments
between the Participant and an Affiliated Employer.
(d) To the extent that a Participant's Retirement Income
under the Pension Plan is recalculated as a result of an amendment to the
Pension Plan in order to increase the amount of his Retirement Income, the
Participant's SERP Benefit shall also be recalculated in order to properly
reflect such increase in determining payments of the Participant's SERP Benefit
made on or after the effective date of such increase.
5.2 Distribution of Benefits. A Participant's SERP Benefit, as
determined in accordance with Section 5.1, shall be payable in monthly
increments on the first day of the month concurrently with and in the same
manner as the Participant's Retirement Income under the Pension Plan. The
Beneficiary of a Participant's SERP Benefit shall be the same as the beneficiary
of the Participant's Retirement Income under the Pension Plan.
5.3 Allocation of SERP Benefit Liability. In the event that a
Participant eligible to receive a SERP Benefit has been employed at more than
one Affiliated Employer, the SERP Benefit liability shall be apportioned so that
each such Affiliated Employer is obligated in accordance with Section 5.4 to
cover the percentage of the total SERP Benefit as determined below. Each
Affiliated Employer's share of the SERP Benefit liability shall be calculated by
multiplying the SERP Benefit by a fraction where the numerator of such fraction
is the pay, as defined by the Administrative Committee, received by the
Participant at the respective Affiliated Employer multiplied by the Accredited
Service earned by the Participant at the respective Affiliated Employer and
where the denominator of such fraction is the sum of all numerators calculated
for each respective Affiliated Employer for which the Participant has been
employed. In the event that a Participant receives additional Accredited Service
in accordance with Section 5.1(c), for purposes of determining liability under
this Section 5.3, such Accredited Service shall be allocated to each Affiliated
Employer which has contracted with the Participant in accordance with such
contract and this allocation will be utilized to adjust the appropriate
components of the fraction in the preceding sentence in determining each
Affiliated Employer's share of the SERP benefit liability.
5.4 Funding of Benefits. The Company shall not reserve or otherwise set
aside funds for the payment of its obligations under the Plan, and such
obligations shall be paid solely from the general assets of the Company.
5.5 Withholding. There shall be deducted from the payment of any SERP
Benefit due under the Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Company to such governmental
authority for the account of the Participant or Beneficiary entitled to such
payment.
ARTICLE VI - MISCELLANEOUS
6.1 Assignment. Neither the Participant, his Beneficiary nor his legal
representative shall have any rights to sell, assign, transfer or otherwise
convey the right to receive the payment of any SERP Benefit due hereunder, which
payment and the right thereto are expressly declared to be nonassignable and
nontransferable. Any attempt to assign or transfer the right to payment under
the Plan shall be null and void and of no effect.
6.2 Amendment and Termination. The Plan may be amended or terminated at
any time by the Board of Directors, provided that no amendment or termination
shall cause a forfeiture or reduction in any benefits accrued as of the date of
such amendment or termination.
6.3 No Guarantee of Employment. Participation hereunder shall not be
construed as creating any contract of employment between an Affiliated Employer
and a Participant, nor shall it limit the right of an Affiliated Employer to
suspend, terminate, alter or modify, whether or not for cause, the employment
relationship between the Affiliated Employer and a Participant.
6.4 Construction. This Plan shall be construed in accordance with and
governed by the laws of the State of Georgia, to the extent such laws are not
otherwise superseded by the laws of the United States.
IN WITNESS WHEREOF, the Plan has been executed by duly authorized officers of Southern Company Services, Inc. pursuant to resolutions of the Board of Directors of Southern Company Services, Inc. this day of , 1997.
SOUTHERN COMPANY SERVICES, INC.
By:
ATTEST:
By:
Exhibit 10(a)82
THE SOUTHERN COMPANY
PERFORMANCE SHARING PLAN
Effective January 1, 1997
THE SOUTHERN COMPANY
PERFORMANCE SHARING PLAN
TABLE OF CONTENTS
ARTICLE I....................................................1
ARTICLE II...................................................2
2.1 "Account".......................................2
2.2 "Affiliated Employer"...........................2
2.3 "Aggregate Account".............................2
2.4 "Aggregation Group".............................3
2.5 "Annual Addition"...............................3
2.6 "Beneficiary"...................................3
2.7 "Board of Directors"............................4
2.8 "Break-in-Service Date".........................4
2.9 "Code"..........................................4
2.10 "Committee"....................................4
2.11 "Company"......................................4
2.12 "Compensation".................................5
2.13 "Defined Benefit Plan Fraction"................5
2.14 "Defined Contribution Plan Fraction"...........5
2.15 "Determination Date"...........................6
2.16 "Determination Year"...........................6
2.17 "Distributee"..................................6
2.18 "Direct Rollover"..............................6
2.19 "Eligible Employee"............................6
2.20 "Eligible Retirement Plan".....................7
2.21 "Eligible Rollover Distribution"...............8
2.22 "Employee".....................................8
2.23 "Employer Contribution"........................8
2.24 "Employing Company"............................8
2.25 "Enrollment Date"..............................8
2.26 "ERISA"........................................8
2.27 "Forfeiture"...................................9
2.28 "Highly Compensated Employee"..................9
2.29 "Hour of Service"..............................9
2.30 "Investment Fund"..............................9
2.31 "Key Employee".................................9
2.32 "Limitation Year"..............................9
2.33 "Look-Back Year"...............................9
2.34 "Non-Highly Compensated Employee".............10
2.35 "Normal Retirement Date"......................10
2.36 "One-Year Break in Service"...................10
2.37 "Participant".................................10
2.38 "Permissive Aggregation Group"................10
2.39 "Plan"........................................10
2.40 "Plan Year"...................................10
2.41 "Present Value of Accrued Retirement
Income"...................................10
2.42 "Required Aggregation Group"..................11
2.43 "Super-Top-Heavy Group".......................11
2.44 "Surviving Spouse"............................11
2.45 "Suspense Account"............................11
2.46 "Top-Heavy Group".............................11
2.47 "Trust" or "Trust Fund".......................12
2.48 "Trust Agreement".............................12
2.49 "Trustee".....................................12
2.50 "Valuation Date"..............................12
2.51 "Year of Service".............................12
ARTICLE III.................................................14
3.1 Eligibility Requirements.......................14
3.2 Participation upon Reemployment................14
3.3 No Restoration of Previously Distributed
Benefits..................................14
3.4 Loss of Eligible Employee Status...............15
3.5 Military Leave.................................15
ARTICLE IV..................................................16
4.1 Amount of Employer Contributions..............16
4.2 Allocation of Employer Contributions..........16
4.3 Reversion of Employer Contributions...........17
4.4 Correction of Prior Incorrect Allocations
and Distributions.........................18
ARTICLE V...................................................19
5.1 Section 415 Limitations........................19
5.2 Correction of Contributions in Excess of
Section 415 Limits........................20
5.3 Combination of Plans...........................20
ARTICLE VI..................................................22
6.1 Investment Funds...............................22
6.2 Investment of Contributions....................22
6.3 Investment of Earnings.........................22
6.4 Transfer of Assets between Funds...............22
6.5 Change in Investment Direction.................22
6.6 Section 404(c) Plan............................23
ARTICLE VII.................................................24
7.1 Establishment of Account.......................24
7.2 Valuation of Investment Funds..................24
7.3 Rights in Investment Funds.....................24
ARTICLE VIII................................................25
8.1 Vesting........................................25
8.2 Forfeitures....................................25
8.3 Deemed Cash-out and Deemed Buy-back............25
8.4 Vesting after One-Year Break in Service........26
ARTICLE IX..................................................27
9.1 Distribution upon Retirement...................27
9.2 Distribution upon Disability...................27
9.3 Distribution upon Death........................27
9.4 Designation of Beneficiary in the Event of
Death.....................................28
9.5 Distribution upon Termination of Employment....29
9.6 Method of Payment..............................29
9.7 Commencement of Benefits.......................30
9.8 Transfer between Employing Companies...........31
9.9 Distributions to Alternate Payees..............31
9.10 Requirement for Direct Rollovers..............31
9.11 Consent and Notice Requirements...............31
9.12 Form of Payment...............................32
ARTICLE X...................................................33
10.1 Membership of Committee.......................33
10.2 Acceptance and Resignation....................33
10.3 Transaction of Business.......................33
10.4 Responsibilities in General...................33
10.5 Committee as Named Fiduciary..................34
10.6 Rules for Plan Administration.................34
10.7 Employment of Agents..........................34
10.8 Co-Fiduciaries................................34
10.9 General Records...............................35
10.10 Liability of the Committee...................35
10.11 Reimbursement of Expenses and
Compensation of Committee.................35
10.12 Expenses of Plan and Trust Fund..............36
10.13 Responsibility for Funding Policy............36
10.14 Management of Assets.........................36
10.15 Notice and Claims Procedures.................37
10.16 Bonding......................................37
10.17 Multiple Fiduciary Capacities................37
10.18 Change in Administrative Procedures..........37
ARTICLE XI..................................................38
11.1 Trustee.......................................38
11.2 Voting of Other Investment Fund Shares........38
11.3 Uninvested Amounts............................38
11.4 Independent Accounting........................39
ARTICLE XII.................................................40
12.1 Amendment of the Plan.........................40
12.2 Termination of the Plan.......................40
12.3 Merger or Consolidation of the Plan...........41
ARTICLE XIII................................................42
13.1 Top-Heavy Plan Requirements...................42
13.2 Determination of Top-Heavy Status.............42
13.3 Minimum Allocation for Top-Heavy Plan
Years.....................................43
13.4 Minimum Vesting...............................44
13.5 Adjustments to Maximum Benefit Limits for
Top-Heavy Plans...........................44
ARTICLE XIV.................................................46
14.1 Plan Not an Employment Contract...............46
14.2 No Right of Assignment or Alienation..........46
14.3 Payment to Minors and Others..................47
14.4 Source of Benefits............................47
14.5 Unclaimed Benefits............................47
14.6 Governing Law.................................48
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ARTICLE I
PURPOSE
The purpose of the Plan is to create added employee interest in the
affairs of The Southern Company particularly with respect to its performance
relative to peer companies, to supplement retirement and death benefits, and to
create a competitive compensation program for employees through the
establishment of a formal plan under which the Employing Companies shall
contribute on behalf of eligible Participants. This Plan is intended to be a
profit sharing plan, and all contributions made by an Employing Company to this
Plan are expressly conditioned upon the qualification of the Plan under Code
Section 401(a) and the deductibility of such contributions under Code Section
404. The effective date of this Plan is January 1, 1997.
ARTICLE II
DEFINITIONS
2
All references to articles, sections, subsections, and paragraphs shall
be to articles, sections, subsections, and paragraphs of this Plan unless
another reference is expressly set forth in this Plan. Any words used in the
masculine shall be read and be construed in the feminine where they would so
apply. Words in the singular shall be read and construed in the plural, and all
words in the plural shall be read and construed in the singular in all cases
where they would so apply.
For purposes of this Plan, unless otherwise required by the context, the following terms shall have the meanings set forth opposite such terms:
2.1 "Account"shall mean the total amount credited to the account of a Participant, as described in Section 7.1.
2.2 "Affiliated Employer" shall mean an Employing Company and (a) any
corporation which is a member of a controlled group of corporations (as defined
in Section 414(b) of the Code) which includes such Employing Company, (b) any
trade or business (whether or not incorporated) which is under common control
(as defined in Section 414(c) of the Code) with such Employing Company, (c) any
organization (whether or not incorporated) which is a member of an affiliated
service group (as defined in Section 414(m) of the Code) which includes such
Employing Company, and (d) any other entity required to be aggregated with such
Employing Company pursuant to regulations under Section 414(o) of the Code.
Notwithstanding the foregoing, for purposes of applying the limitations of
Article V, the term Affiliated Employer shall be adjusted as required by Code
Section 415(h).
2.3 "Aggregate Account" shall mean with respect to a Participant as of the Determination Date, the sum of the following:
(a) the Account balance of such Participant as of the most recent valuation occurring within a twelve-month period ending on the Determination Date;
(b) an adjustment for any contributions due as of the Determination Date;
(c) any Plan distributions, including unrelated rollovers and plan-to-plan transfers (ones which are both initiated by the Employee and made from a plan maintained by one employer to a plan maintained by another employer), but not related rollovers or plan-to-plan transfers (ones either not initiated by the Employee or made to a plan maintained by the same employer), made within the Plan Year that includes the Determination Date or within the four preceding Plan Years, including distributions made prior to January 1, 1984, and distributions made under a terminated plan which if it had not been terminated would have been required to be included in an Aggregation Group;
(d) any Employee contributions, whether voluntary or mandatory;
(e) unrelated rollovers and plan-to-plan transfers to this Plan; and
(f) related rollovers and plan-to-plan transfers to this Plan.
2.4 "Aggregation Group" shall mean either a Required Aggregation Group or a Permissive Aggregation Group.
2.5 "Annual Addition" shall mean the amount allocated to a Participant's Account and accounts under all defined contribution plans maintained by the Affiliated Employers during a Limitation Year that constitutes
(a) Affiliated Employer contributions,
(b)......voluntary participant contributions,
(c) Forfeitures, if any, allocated to a Participant's Account or accounts under all defined contribution plans maintained by the Affiliated Employers, and
(d) amounts described in Sections 415(l)(1) and 419A(d)(2) of the Code.
2.6 "Beneficiary" shall mean any person(s) who, or estate(s), trust(s), or organization(s) which, in accordance with the provisions of Section 9.4, become entitled to receive benefits upon the death of a Participant.
2.7 "Board of Directors" shall mean the Board of Directors of Southern Company Services, Inc.
2.8 "Break-in-Service Date" means the earlier of:
(a) the date on which an Employee terminates employment, is discharged, retires, or dies; or
(b) the last day of an approved leave of absence including any extension.
In the case of an individual who is absent from work for maternity or paternity reasons, such individual shall not incur a Break-in-Service Date earlier than the expiration of the second anniversary of the first date of such absence; provided, however, that the twelve-consecutive-month period beginning on the first anniversary of the first date of such absence shall not constitute a Year of Service. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (a) by reason of the pregnancy of the Employee, (b) by reason of a birth of a child of the Employee, (c) by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee, or (d) for purposes of caring for such child for a period beginning immediately following such birth or placement.
2.9 "Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, and the rulings and regulations promulgated thereunder. In the event an amendment to the Code renumbers a section of the Code referred to in this Plan, any such reference automatically shall become a reference to such section as renumbered.
2.10 "Committee" shall mean the committee appointed pursuant to Section 10.1 to serve as plan administrator.
2.11 "Company" shall mean Southern Company Services, Inc., and its successors.
2.12 "Compensation" shall mean the base salary or wages paid to a Participant by an Affiliated Employer for the Plan Year during which he is eligible to participate, including all amounts contributed by an Affiliated Employer to The Southern Company Employee Savings Plan and/or The Southern Company Flexible Benefits Plan on behalf of a Participant pursuant to a salary reduction arrangement under such plans. Compensation shall also include all awards under The Southern Company Performance Pay Plan, The Southern Company Productivity Improvement Plan, The Southern Company Executive Productivity Improvement Plan, and the Incentive Compensation Plan for Southern Energy, Inc., monthly shift and monthly seven-day schedule differentials, geographic premiums, monthly nuclear plant premiums, and monthly customer service premiums. Compensation shall exclude overtime pay, any hourly shift differentials, substitution pay, such amounts which are reimbursements to a Participant paid by any Affiliated Employer including, but not limited to, reimbursement for such items as moving expenses and travel and entertainment expenses, and imputed income for automobile expenses, tax preparation expenses and health and life insurance premiums paid by the Affiliated Employer.
The Compensation of each Participant taken into account for purposes of
this Plan shall not exceed $150,000 (as adjusted pursuant to Code Section
401(a)(17)).
2.13 "Defined Benefit Plan Fraction" shall mean the following fraction:
(numerator) Sum of the projected annual benefits of the Participant under all Affiliated Employer defined benefit plans (whether or not terminated) determined as of the close of the Plan Year.
(denominator) The lesser of (a) the product of 1.25 multiplied by the dollar limitation in effect for the Plan Year under Code Sections 415(b)(1)(A) or 415(d), or (b) 1.4 multiplied by 100% of the Participant's average compensation for his highest three (3) consecutive Plan Years of participation as may be adjusted under Treasury Regulation Section 1.415-5.
2.14 "Defined Contribution Plan Fraction" shall mean the following fraction:
(numerator) The sum of all Annual Additions to the account of the Participant as of the close of the Plan Year under all defined contribution plans maintained by the Affiliated Employers for the current and prior Limitation Years (whether or not terminated), including this Plan.
(denominator) The sum of the lesser of the following amounts
determined for such Plan Year and for each prior Plan Year in
which the Participant has a Year of Service: (a) 1.25
multiplied by the dollar limitation in effect under Code
Section 415(c)(1)(A) for the Plan Year (determined without
regard to Code Section 415(c)(6)), or (b) 1.4 multiplied by
the amount that may be taken into account under Code Section
415(c)(1)(B) with respect to a Participant for the Plan Year.
2.15 "Determination Date" shall mean with respect to a Plan Year, the last day of the preceding Plan Year, or in the case of the first Plan Year, the last day of such Plan Year.
2.16 "Determination Year" shall mean the Plan Year being tested.
2.17 "Distributee" shall include an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse.
2.18 "Direct Rollover" shall mean a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.
2.19 "Eligible Employee" shall mean an Employee who is employed by an Employing Company and who is classified by the Employing Company as a regular full-time, regular part-time, cooperative education employee, or temporary employee (which temporary employee was a participant in the pension plan of an Employing Company before July 1, 1991 (or July 1, 1990 for employees of Georgia Power Company)) who:
(a) was actively employed on December 31, 1996 but who will not attain his fortieth (40th) birthday on or before January 1, 2002 or who was not a member of an eligible class of employees under a pension plan of an Employing Company on December 31, 1996 and has not previously participated in any such pension plan;
(b) was actively employed on December 31, 1996 and properly elects to participate in this Plan pursuant to the procedures established under the Plan for making such election; or
(c) was employed or reemployed on or after January 1, 1997 or who rescinded a waiver of participation in The Southern Company Pension Plan pursuant to Section 2.7 thereof on or after January 1, 1997 that was in effect on December 31, 1996.
"Eligible Employee" shall not include:
(w) an Employee who is classified as such solely by reason of the "leased employee" rules of Code Section 414(n);
(x) any Employee who is represented by a collective bargaining agent unless the representatives of his bargaining unit and the Employing Company mutually agree to participation in the Plan subject to its terms by members of his bargaining unit;
(y) any individual or Employee who is classified by the Employing Company as an independent contractor regardless of whether such classification is in error; or
(z) any individual or Employee who has voluntarily waived participation in the Plan for any reason, including any individual or Employee who has waived benefits upon employment by the Employing Company.
2.20 "Eligible Retirement Plan" shall mean an individual retirement
account described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in Section 401(a) of
the Code that accepts the Distributee's Eligible Rollover Distribution. However,
in the case of an Eligible Rollover Distribution to a surviving spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
2.21 "Eligible Rollover Distribution" shall mean any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: (a) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee, the joint lives (or joint life expectancies) of the Distributee and the Distributee's Beneficiary, or for a specified period of 10 years or more; (b) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and (c) the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities).
2.22 "Employee" shall mean each individual who is employed by an Affiliated Employer under common law and each individual who is required to be treated as an employee pursuant to the "leased employee" rules of Code Section 414(n) other than a leased employee described in Code Section 414(n)(5).
2.23 "Employer Contribution" shall mean a contribution made by an Employing Company pursuant to Section 4.1.
2.24 "Employing Company" shall mean the Company and any affiliate or subsidiary of The Southern Company which the Board of Directors may from time to time determine to bring under the Plan and which shall adopt the Plan, and any successor of them. The Employing Companies are set forth on Appendix A to the Plan as updated from time to time. No such entity shall be treated as an Employing Company prior to the date it adopts the Plan.
2.25 "Enrollment Date" shall mean the day on which the Eligible Employee meets the requirements for participation in this Plan under Article III.
2.26 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor statute, and the rulings and regulations promulgated thereunder. In the event an amendment to ERISA renumbers a section of ERISA referred to in this Plan, any such reference automatically shall become a reference to such section as renumbered.
2.27 "Forfeiture" shall mean that portion of a Participant's Account that is forfeitable as determined under the vesting schedule set forth in Article VIII hereof. Forfeitures shall be applied against and proportionately reduce future Employer Contributions; provided, however, that any such Forfeitures shall not be so applied until the last day of the month immediately following the month in which occurs the termination of employment of a Participant with zero percent (0%) vesting.
Therefore, a Forfeiture will only occur in the event of an occurrence described in the preceding sentence, and only then shall the nonvested portion of a Participant's Account be used to offset future Employer Contributions. Such offset shall take place as of the last day of the Plan Year in which the Forfeiture occurs.
2.28 "Highly Compensated Employee" shall mean any Employee or former
Employee (excluding any Employees who may be excluded pursuant to Code Section
414(q)(8)) who is treated as a highly compensated employee under Code Section
414(q) as determined under the applicable rulings and regulations thereunder.
2.29 "Hour of Service" shall mean each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliated Employer.
2.30 "Investment Fund" shall mean any one of the funds described in Article VI which constitutes part of the Trust Fund.
2.31 "Key Employee" shall mean any Employee or former Employee (and his Beneficiary) who is a key employee within the meaning of Code Section 416(i)(1).
2.32 "Limitation Year" shall mean the Plan Year.
2.33 "Look-Back Year" shall mean the Plan Year preceding the Determination Year.
2.34 "Non-Highly Compensated Employee" shall mean an Employee who is not a Highly Compensated Employee.
2.35 "Normal Retirement Date" shall mean the later of a Participant's sixty-fifth (65th) birthday or the fifth anniversary of the Participant's date of initial participation in the Plan.
2.36 "One-Year Break in Service" shall mean each twelve-consecutive-month period within the period commencing with an Employee's Break-in-Service Date and ending on the date the Employee is again credited with an Hour of Service.
2.37 "Participant" shall mean (a) an Eligible Employee who has met the eligibility requirements for participation in the Plan as provided in Article III and whose participation in the Plan at the time of reference has not been terminated as provided in the Plan and (b) an Employee or former Employee who has ceased to be a Participant under (a) above, but for whom an Account is maintained under the Plan.
2.38 "Permissive Aggregation Group" shall mean a group of plans consisting of the Required Aggregation Group and, at the election of the Affiliated Employers, such other plan or plans not required to be included in the Required Aggregation Group, provided the resulting group, taken as a whole, would continue to satisfy the provisions of Code Section 401(a)(4) or 410.
2.39 "Plan" shall mean The Southern Company Performance Sharing Plan as described herein or as from time to time amended.
2.40 "Plan Year" shall mean the twelve-month period commencing January 1st and ending on the last day of December next following.
2.41 "Present Value of Accrued Retirement Income" shall mean an amount determined solely for the purpose of determining if the Plan, or any other plan included in a Required Aggregation Group of which the Plan is a part, is top heavy in accordance with Code Section 416.
2.42 "Required Aggregation Group" shall mean those plans that are required to be aggregated as determined under this Section 2.42. In determining a Required Aggregation Group hereunder, each plan of the Affiliated Employers in which a Key Employee is a participant and each other plan of the Affiliated Employers which enables any plan in which a Key Employee participates to meet requirements of Code Section 401(a)(4) or 410 will be required to be aggregated.
2.43 "Super-Top-Heavy Group" shall mean an Aggregation Group that would be a Top-Heavy Group if 90% were substituted for 60% in Section 2.46.
2.44 "Surviving Spouse" shall mean the person to whom the Participant
is married on the date of his death, if such spouse is then living, provided
that the Participant and such spouse shall have been married throughout the one
(1) year period ending on the date of the Participant's death.
2.45 "Suspense Account" shall mean the total forfeitable portion of all terminated or former Participants' Accounts which have not yet become available to offset future Employer Contributions. The Suspense Account shall represent the total of separate bookkeeping accounts established in the name of each terminated or former Participant to represent his forfeitable percentage. (This account shall be separate from the Code Section 415 suspense account referenced in Section 5.2 hereof.) The Suspense Account shall always share in earnings or losses of the Trust Fund and at the appropriate time shall be used to offset future Employer Contributions. Forfeitures shall only remain in the Suspense Account until such time as they become available to reduce future Employer Contributions in accordance with Sections 2.27 and 8.2 hereof.
2.46 "Top-Heavy Group" shall mean an Aggregation Group in which, as of the Determination Date, the sum of:
(a) the Present Value of Accrued Retirement Income of Key Employees under all defined benefit plans included in that group, and
(b) the Aggregate Accounts of Key Employees under all defined contribution plans included in the group,
exceeds 60% of a similar sum determined for all employees.
2.47 "Trust" or "Trust Fund" shall mean the trust established pursuant to the Trust Agreement.
2.48 "Trust Agreement" shall mean the trust agreement between the Company and the Trustee, as described in Article XI.
2.49 "Trustee" shall mean the person or corporation designated as trustee under the Trust Agreement, including any successor or successors.
2.50 "Valuation Date" shall mean each business day of the New York Stock Exchange.
2.51 "Year of Service" shall mean a twelve-month period of employment as an Employee, including any fractions thereof. Calculation of the twelve-month periods shall commence with the Employee's first day of employment, which is the date on which an Employee first performs an Hour of Service, and shall terminate on his Break-in-Service Date. Thereafter, if he has more than one period of employment as an Employee, his Years of Service for any subsequent period shall commence with the Employee's reemployment date, which is the first date following a Break-in-Service Date on which the Employee performs an Hour of Service, and shall terminate on his next Break-in-Service Date. An Employee who has a Break-in-Service Date and resumes employment with the Affiliated Employers within twelve months of his Break-in-Service Date shall receive a fractional Year of Service for the period of such cessation of employment.
For purposes of determining an Employee's eligibility to participate, all Years of Service with an Affiliated Company shall be counted. For purposes of determining an Employee's Years of Service for vesting credit, all Years of Service with an Affiliated Company shall be counted provided that such Years of Service are credited on or after the later of (i) January 1, 1997 or (ii) the Employee's date of hire.
Notwithstanding anything in this Section 2.51 to the contrary, an Employee shall not receive credit for more than one Year of Service with respect to any twelve-consecutive-month period.
ARTICLE III
PARTICIPATION
3
3.1 Eligibility Requirements. Each Eligible Employee who has completed
one (1) Year of Service for eligibility purposes on or before January 1, 1997
shall become a Participant in the Plan on January 1, 1997. Each other Eligible
Employee shall become a Participant in the Plan as of the Enrollment Date on
which he has completed one (1) Year of Service. Each Eligible Employee shall
direct the investment of his Account in accordance with Article VI and the
procedures established by the Committee.
3.2 Participation upon Reemployment. If an Employee terminates his employment with an Affiliated Employer and is subsequently reemployed as an Eligible Employee, he shall become a Participant in the Plan as of the date of his reemployment. Notwithstanding the foregoing, if such Eligible Employee did not have a vested right to any portion of his Account balance at the time of his termination from employment and at the time of his reemployment his consecutive One-Year Breaks in Service exceed the greater of five (5) or his aggregate Years of Service earned prior to his One-Year Break in Service, he shall be treated as a new Employee for eligibility purposes.
3.3 No Restoration of Previously Distributed Benefits. A Participant who has terminated his employment with the Affiliated Employers at a time when he is 100% vested in his Account and has received a full distribution of his vested benefits pursuant to Section 9.5 hereof shall not be entitled to restore the amount of such distribution to his Account if he is reemployed and again becomes a Participant in the Plan. Notwithstanding the foregoing, a Participant who terminates employment at a time when he is zero percent (0%) vested in his Account and is deemed cashed-out of the Plan pursuant to Section 8.3 hereof, and who returns to the employ of an Affiliated Employer before incurring five (5) consecutive One-Year Breaks in Service shall be deemed to have bought back into the Plan and shall be entitled to a restoration of his benefits as provided under Section 8.3 hereof.
3.4 Loss of Eligible Employee Status. If a Participant loses his status as an Eligible Employee, but remains an Employee, such Participant shall be ineligible to participate until the Enrollment Date coinciding with or next following the date such Employee again becomes an Eligible Employee.
3.5 Military Leave. Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code.
ARTICLE IV
EMPLOYER CONTRIBUTIONS
4
4.1 Amount of Employer Contributions. The Board of Directors, in its
sole and absolute discretion, shall determine the amount of Employer
Contributions, if any, that shall be made by each Employing Company on behalf of
each Participant in its employ. The amount of Employer Contributions may be
determined based upon the performance of The Southern Company for the Plan Year
in question or by any other method determined by the Board of Directors that
provides for a definitely determinable benefit. The amount of Employer
Contributions shall be fixed by resolutions of the Board of Directors and
communicated to each Employing Company prior to the date such contribution, if
any, is required to be made. Contributions made pursuant to this Section 4.1
shall be paid to the Trustee no later than the time prescribed by law for filing
the Federal income tax return of the Employing Company, including any extensions
which have been granted for the filing of such tax return. The Employing
Companies may make contributions to the Plan without regard to current or
accumulated net profits for the taxable year ending with the Plan Year in
question. Notwithstanding the foregoing, the Plan shall be operated in a manner
so as to qualify as a profit sharing plan for purposes of Sections 401(a), 402,
412 and 417 of the Code.
4.2 Allocation of Employer Contributions. The amount of the Employer Contributions for a Plan Year shall be allocated as of the Valuation Date coincident with the close of the Plan Year for which such contributions are made. Notwithstanding the foregoing, such contributions shall not share in the earnings or losses of the Trust Fund until the amounts are actually contributed to the Trust Fund. Only those Participants who (i) are employed by an Employing Company as an Eligible Employee on the last day of the Plan Year or (ii) were employed by an Employing Company as an Eligible Employee during the Plan Year, but retired, became disabled or died as an Eligible Employee during the Plan Year shall be eligible to share in the allocation.
Employer Contributions shall be allocated to each eligible Participant's Account in proportion to the ratio which his Compensation for such Plan Year bears to the Compensation of all Participants eligible to share in the allocation.
4.3 Reversion of Employer Contributions. Employer Contributions computed in accordance with the provisions of this Plan shall revert to the Employing Company under the following circumstances:
(a) Mistake. In the case of an Employing Company contribution which is made by reason of a mistake of fact, such contribution shall be returned to the Employing Company within one (1) year after the payment of the contribution.
(b) Qualification. In the event that the Commissioner of Internal Revenue determines that the Plan is not initially qualified under the Internal Revenue Code, any Employing Company contributions made incident to that initial qualification shall be returned to the Employing Company within one (1) year after the date the initial qualification is denied, but only if the application for qualification is made by the time prescribed by law for filing the Employing Company's return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe.
(c) Deductibility. If any Employing Company contribution is determined to be nondeductible under Section 404 of the Code, then such Employing Company contribution, to the extent that it is determined to be nondeductible, shall be returned to the Employing Company within one (1) year after the disallowance of the deduction.
The amount which may be returned to the Employing Company under this
Section 4.3 is the excess of (a) the amount contributed over (b) the amount that
would have been contributed had there not occurred a mistake of fact or a
mistake in determining the deduction. Earnings attributable to the excess
contribution shall not be returned to the Employing Company, but losses
attributable thereto shall reduce the amount to be so returned. If the
withdrawal of the amount attributable to the mistaken contribution would cause
the balance of the Account of any Participant to be reduced to less than the
balance which would have been in the Account had the mistaken amount not been
contributed, then the amount to be returned to the Employing Company shall be
limited so as to avoid such reduction.
4.4 Correction of Prior Incorrect Allocations and Distributions. Notwithstanding any provisions contained herein to the contrary, in the event that, as of any Valuation Date, adjustments are required in any Participants' Account to correct any incorrect allocation of contributions or investment earnings or losses, or such other discrepancies in Account balances that may have occurred previously, the Employing Companies may make additional contributions to the Plan to be applied to correct such incorrect allocations or discrepancies. The additional contributions shall be allocated by the Committee to adjust such Participants' Accounts to the value which would have existed on said Valuation Date had there been no prior incorrect allocation or discrepancies. The Committee shall also be authorized to take such other actions as it deems necessary to correct prior incorrect allocations or discrepancies in the Accounts of Participants under the Plan.
ARTICLE V
LIMITATIONS ON CONTRIBUTIONS
5
5.1 Section 415 Limitations.
(a) Notwithstanding any provision of the Plan to the contrary, the total Annual Additions allocated to the Account (and the accounts under all defined contribution plans maintained by an Affiliated Employer) of any Participant for any Limitation Year in accordance with Code Section 415 and the regulations thereunder, which are incorporated herein by this reference, shall not exceed the lesser of the following amounts:
(1) twenty-five percent (25%) of the Participant's compensation in the Limitation Year; or
(2) $30,000 (as adjusted pursuant to Code Section
415(d)(1)(C)).
(b) If a Participant is also a participant in any Affiliated
Employer's defined benefit plan, then in addition to the limitations in
(a) above, the sum of the Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction shall not exceed 1.0 for any Limitation
Year.
(c) For purposes of this Section 5.1, wherever the term
"compensation" is used, such term shall mean all amounts paid or made
available to an Employee which are treated as compensation from an
Affiliated Employer under Treasury Regulation Section 1.415-2(d)(2) and
which are not excluded from compensation under Treasury Regulation
Section 1.415-2(d)(3).
(d) If the Participant was a participant in one or more defined benefit plans maintained by the Affiliated Employers which were in existence on July 1, 1982, the denominator of the Defined Benefit Plan Fraction shall not be less than 1.25% of the sum of the annual benefits under such plans which the Participant had accrued as of the later of September 30, 1983 or the end of the last Limitation Year beginning before January 1, 1983. The preceding sentence applies only if the defined benefit plans individually, and in the aggregate, satisfy the requirements of Code Section 415 as in effect at the end of the 1982 Limitation Year.
5.2 Correction of Contributions in Excess of Section 415 Limits. If the Annual Additions for a Participant exceed the limits of Section 5.1 as a result of the allocation of Forfeitures, if any, a reasonable error in estimating a Participant's annual compensation for purposes of the Plan or under other limited facts and circumstances that the Commissioner of the Treasury finds justify the availability of the rules set forth in this Section 5.2, the excess amounts shall not be deemed Annual Additions if corrected by forfeiture of that portion, or all, of the Employer Contributions (as adjusted for income and loss) and any Forfeitures of Employer Contributions that were allocated to the Participant's Account, if any, (as adjusted for income and loss), as is necessary to ensure compliance with Section 5.1.
Any amounts forfeited under this Section 5.2 shall be held in a
suspense account (which shall be separate from that Suspense Account defined in
Section 2.45 hereof) and shall be applied, subject to Section 5.1, toward
funding the Employer Contributions for the next succeeding Plan Year. Such
application shall be made prior to any Employing Company contributions that
would constitute Annual Additions. No income or investment gains and losses
shall be allocated to the suspense account provided for under this Section 5.2.
If any amount remains in a suspense account provided for under this Section 5.2
upon termination of this Plan, such amount will revert to the Employing
Companies notwithstanding any other provision of this Plan.
5.3 Combination of Plans. Notwithstanding any provisions contained herein to the contrary, in the event that a Participant participates in a defined contribution plan or defined benefit plan required to be aggregated with this Plan under Code Section 415(g) and the sum of the Defined Contribution Plan Fraction and Defined Benefit Plan Fraction with respect to a Participant exceeds the limitations contained in Section 5.1(b), corrective adjustments (a) for an Employee shall not be made under this Plan until made under such other defined benefit plan but (b) for an Employee whose distribution of benefit payments has commenced under such other defined benefit plan shall be made under The Southern Company Employee Stock Ownership Plan ("ESOP") and then, to the extent necessary, under this Plan and then, to the extent necessary, under such other defined benefit plan and then, to the extent necessary, under The Southern Company Employee Savings Plan ("ESP"). If an Employee participates in more than one defined contribution plan maintained by an Affiliated Employer and his Annual Additions exceed the limitations of Section 5.1(a), corrective adjustments shall be made first under the ESP and then, to the extent necessary, under this Plan and then, to the extent necessary, under the ESOP.
ARTICLE VI
INVESTMENT OF CONTRIBUTIONS
6
6.1 Investment Funds. Employer Contributions which are paid to the
Trustee shall be added to such one or more of the Investment Funds constituting
part of the Trust Fund and in such proportions and amounts as may be determined
in accordance with this Article VI. The Investment Funds shall be selected from
time to time by the Pension Fund Investment Review Committee of the Southern
Company System.
6.2 Investment of Contributions. Each Participant shall direct, upon his initial participation in the Plan and at such other times as may be directed by the Committee, that his Account be invested in one or more of the Investment Funds, provided such investments are made in one-percent (1%) increments. If a Participant fails to make an investment direction upon his initial participation in the Plan, such Participant's Account shall be invested in accordance with procedures established by the Committee.
6.3 Investment of Earnings. Interest, dividends, if any, and other distributions received by the Trustee with respect to an Investment Fund shall be invested in such Investment Fund.
6.4 Transfer of Assets between Funds. A Participant may direct in
accordance with the provisions of this Section 6.4 and such procedures
established by the Committee that all of his interest in an Investment Fund or
Funds attributable to amounts in his Account or any portion of such amount
(expressed in number of shares, whole dollar amounts, or one-percent (1%)
increments) to the credit of his Account be transferred and invested by the
Trustee as of such date in any other Investment Fund as designated by the
Participant. Such direction shall be effective as soon as practicable after it
is made.
6.5 Change in Investment Direction. Any investment direction given by a Participant shall continue in effect until changed by the Participant. A Participant may change his investment direction as to the future contributions and allocations to his Account in accordance with the procedures established by the Committee, and such direction shall be effective as soon as practicable after it is made.
6.6 Section 404(c) Plan. This Plan is intended to be a plan described in ERISA Section 404(c) and shall be interpreted in accordance with Department of Labor Regulations Section 1.404c-1, which is incorporated herein by this reference. The Committee shall take such actions as it deems necessary or appropriate in its discretion to cause the Plan to comply with such requirements, including, but not limited to, providing Participants with the right to request and receive written confirmation of their investment instructions.
ARTICLE VII
MAINTENANCE AND VALUATION OF PARTICIPANTS' ACCOUNTS
7
7.1 Establishment of Account. An Account shall be established for each
Participant to reflect his allocable share of Employer Contributions and the
earnings and/or losses thereon. Each Participant will be furnished a statement
of his Account at least annually and upon any distribution.
7.2 Valuation of Investment Funds. A Participant's Account in respect of his interest in each Investment Fund shall be credited or charged, as the case may be, as of each Valuation Date with the dividends, income, gains, appreciation, losses, depreciation, forfeitures, expenses, and other transactions with respect to such Investment Fund for the Valuation Date as of which such credit or charge accrued. Such credits or charges to a Participant's Account shall be made in such proportions and by such method or formula as shall be deemed by the Committee to be necessary or appropriate to account for each Participant's proportionate beneficial interest in the Trust Fund in respect of his interest in each Investment Fund. Investments of each Investment Fund shall be valued at their fair market values as of each Valuation Date as determined by the Trustee, and such valuation shall conclusively establish such value.
7.3 Rights in Investment Funds. Nothing contained in this Article VII shall be deemed to give any Participant any interest in any specific property in any Investment Fund or any interest, other than the right to receive payments or distributions in accordance with the Plan.
ARTICLE VIII
VESTING AND FORFEITURES
8 8.1 Vesting. The amount to the credit of a Participant's Account shall become fully vested and nonforfeitable upon the earlier of:
(a) the date the Participant completes five (5) Years of Service for vesting purposes; or
(b) the date the Participant reaches his Normal Retirement Date.
8.2 Forfeitures. That portion of the Account to which the Participant is not entitled shall be credited to the Suspense Account (which will always share in earnings or losses of the Trust) and at such time as the amount becomes available as a Forfeiture shall be applied to reduce the next ensuing Employer Contribution.
8.3 Deemed Cash-out and Deemed Buy-back. Any Participant who terminates employment for any reason at a time when he is zero percent (0%) vested in his Account shall be deemed cashed out of the Plan as of the last day of the month immediately following the month in which occurs his termination of employment. If the terminated Participant returns to the employ of an Affiliated Employer before incurring five (5) consecutive One-Year Breaks in Service, he shall be entitled to a restoration of his benefits under the Plan in an amount not less than that amount determined as of the last day of the month immediately following the month in which occurs his termination of employment, unadjusted by any subsequent gains or losses. The permissible sources for restoration of accrued benefits are subsequent (a) income or gain to the Plan; (b) Forfeitures; or (c) Employer Contributions. Restoration of accrued benefits to which an Employee is entitled under this Section shall be made, as deemed necessary and proper by the Committee, from one or more of the permissible sources named above prior to the normal allocation of such funds under this Plan.
8.4 Vesting after One-Year Break in Service.
(a) A terminated Participant who is reemployed after incurring a One-Year Break in Service shall be entitled to receive credit for vesting purposes for Years of Service earned prior to the One-Year Break in Service subject to the following rules:
(1) If he had a vested right to all or a portion of his Account balance derived from Employer Contributions at the time of his termination of employment, he shall receive credit for Years of Service earned prior to his One-Year Break in Service upon his date of reemployment.
(2) If he did not have a vested right to all or any portion of his Account balance derived from Employer Contributions at the time of his termination of employment, he shall receive credit for Years of Service earned prior to his One-Year Break in Service provided his number of consecutive One-Year Breaks in Service is less than the greater of five (5) or his aggregate Years of Service earned before his One-Year Break in Service.
(b) No Years of Service earned after five (5) consecutive One-Year Breaks in Service shall be taken into account in determining a Participant's nonforfeitable percentage in his Account balance attributable to Employer Contributions that were made prior to such five-year period.
ARTICLE IX
DISTRIBUTION TO PARTICIPANTS
9.1 Distribution upon Retirement. When a Participant attains his Normal Retirement Date as an Employee, the full value of his Account shall become nonforfeitable. If a Participant's employment with the Affiliated Employers is terminated as a result of his retirement pursuant to the defined benefit pension plan of an Affiliated Employer, the entire balance credited to his Account shall be payable to him in such method as elected under Section 9.6 hereof, at such time as requested by the Participant subject to Section 9.7 hereof, and in accordance with the procedures established by the Committee.
Notwithstanding the foregoing, the Committee shall direct payment in a single lump sum to such Participant if the balance of his Account does not exceed $3,500 in accordance with the requirements of Code Section 411(a)(11). The Committee shall not cash out any Participant whose Account balance exceeds $3,500 without the written consent of the Participant.
9.2 Distribution upon Disability. If a Participant's employment with the Affiliated Employers is terminated prior to his Normal Retirement Date by reason of his total and permanent disability, as determined by the Social Security Administration and evidenced in a writing provided to the Committee, such disabled Participant shall be entitled to receive the vested balance credited to his Account in a single lump sum in cash, at such time as requested by the Participant or such legal representative subject to Section 9.7 hereof, and in accordance with the procedures established by the Committee.
Notwithstanding the foregoing, the Committee shall direct payment in a single lump sum to such Participant or his legal representative if the balance of such Participant's Account does not exceed $3,500 in accordance with the requirements of Code Section 411(a)(11). The Committee shall not cash out any Participant whose Account balance exceeds $3,500 without the written consent of Participant.
9.3 Distribution upon Death. If a Participant's employment with the Affiliated Employers is terminated by reason of death, the vested balance credited to the Participant's Account shall be distributed as soon as practicable to the Participant's surviving Beneficiary or Beneficiaries in a single lump sum in cash.
9.4 Designation of Beneficiary in the Event of Death. A Participant may designate a Beneficiary or Beneficiaries (who may be designated contingently) to receive all or part of the amount credited to his Account in case of his death before his receipt of all of his benefits under the Plan, provided that the Beneficiary of a married Participant shall be the Participant's Surviving Spouse, unless such Surviving Spouse shall consent in a writing witnessed by a notary public, which writing acknowledges the effect of the Participant's designation of a Beneficiary other than such Surviving Spouse. However, if such Participant establishes to the satisfaction of the Committee that such written consent may not be obtained because the Surviving Spouse cannot be located or because of such other circumstances as the Secretary of the Treasury may by regulations prescribe, a designation by such Participant without the consent of the Surviving Spouse shall be valid.
Any consent necessary under this Section 9.4 shall be valid and effective only with respect to the Surviving Spouse who signs the consent or, in the event of a deemed consent, only with respect to a designated Surviving Spouse.
A designation of Beneficiary may be revoked by the Participant without the consent of any Beneficiary (or the Participant's Surviving Spouse) at any time before the commencement of the distribution of benefits. A Beneficiary designation or change or revocation of a Beneficiary designation shall be made in accordance with the procedures established by the Committee.
If no designated Beneficiary shall be living at the death of the Participant and/or such Participant's Beneficiary designation is not valid and enforceable under applicable law or the procedures of the Committee, such Participant's Beneficiary or Beneficiaries shall be the person or persons in the first of the following classes of successive preference, if then living:
(a) the Participant's spouse on the date of his death,
(b) the Participant's children, equally,
(c) the Participant's parents, equally,
(d) the Participant's brothers and sisters, equally, or
(e) the Participant's executors or administrators.
Payment to such one or more persons shall completely discharge the Plan and the Trustee with respect to the amount so paid.
9.5 Distribution upon Termination of Employment. If a Participant's employment with the Affiliated Employers is terminated for any reason other than in accordance with Sections 9.1, 9.2, and 9.3, and the Participant has completed five (5) Years of Service for vesting purposes, the balance to the credit of the Participant's Account shall be payable to him in a single lump sum distribution in cash, at such time requested by the Participant subject to Section 9.7 hereof, and in accordance with procedures established by the Committee.
Notwithstanding the foregoing, the Committee shall direct payment in a single lump sum to such Participant if the balance of his Account does not exceed $3,500 in accordance with the requirements of Code Section 411(a)(11). The Committee shall not cash out any Participant whose Account balance exceeds $3,500 without the written consent of the Participant.
9.6 Method of Payment Upon Retirement. A Participant separating from service with the Affiliated Employers pursuant to Section 9.1 shall elect a form of benefit payment and a time for commencement of distribution of any benefits under the Plan as provided hereinafter. The Participant shall select one of the following alternative forms of distribution of the Participant's Account:
(a) A single lump sum distribution in cash; or
(b) Annual installments in cash not to exceed twenty (20), as selected by the Participant, or the Participant's life expectancy. The amount of cash in each installment shall be equal to the proportionate value as of each Valuation Date immediately preceding payment of the balance then to the credit of the Participant in his Account determined by dividing the amount credited to his Account as of such Valuation Date by the number of payments remaining to be made.
If a Participant who is receiving installment payments in accordance with paragraph (b) above shall establish to the satisfaction of the Committee, in accordance with principles and procedures established by the Committee which are applicable to all persons similarly situated, that a financial emergency exists in his affairs, such as illness or accident to the Participant or a member of his immediate family or other similar contingency, the Committee may, for the purpose of alleviating such emergency, accelerate the time of payment of some or all of the remaining installments. If a Participant dies before receiving all of the amount to the credit of his Account in accordance with paragraph (b) above, the amount remaining to the credit of his Account at his death shall be distributed to his Beneficiary as soon as practicable in accordance with Section 9.4.
9.7 Commencement of Benefits.
(a) Notwithstanding any other provision of the Plan, and except as further provided in Section 9.7(b) below, if the Participant does not elect to defer commencement of his benefit payments, the payment of his benefits shall begin at the Participant's election no later than the sixtieth (60th) day after the close of the Plan Year in which the latest of the following events occurs:
(1) the Participant attains the earlier of age sixty-five (65) or his Normal Retirement Date,
(2) the Participant's tenth (10th) anniversary of participation under the Plan, or
(3) the Participant's separation from service with the Affiliated Employers.
(b) In no event shall the distribution of amounts in a Participant's Account commence later than the April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70 1/2 or terminates employment with the Affiliated Employers, in accordance with regulations prescribed by the Secretary of the Treasury. Notwithstanding the foregoing, the payment of benefits to a Participant who is more than a five-percent (5%) owner of The Southern Company or any Affiliated Employer (as determined pursuant to Code Section 416) with respect to the Plan Year ending in the calendar year in which the Participant attains age 70 1/2 shall begin not later than April 1, of the calendar year following the calendar year in which the Participant attains age 70 1/2 regardless of the Participant's termination from employment.
Any distribution made under this Plan shall be made in accordance with the minimum distribution requirements of Code Section 401(a)(9), including the incidental death benefits requirements under Code Section 401(a)(9)(G) and the Treasury Regulations thereunder.
9.8 Transfer between Employing Companies. A transfer by a Participant from one Employing Company to another Employing Company shall not affect his participation in the Plan. A transfer by a Participant from an Employing Company to an Affiliated Employer that is not an Employing Company shall not be deemed to be a termination of employment with an Employing Company.
9.9 Distributions to Alternate Payees. If the Participant's Account under the Plan shall become subject to any domestic relations order which (a) is a qualified domestic relations order satisfying the requirements of Section 414(p) of the Code and (b) requires the immediate distribution in a single lump sum of the entire portion of the Participant's Account required to be segregated for the benefit of an alternate payee, then the entire interest of such alternate payee shall be distributed in a single lump sum within ninety (90) days following the Employing Company's notification to the Participant and the alternate payee that the domestic relations order is qualified under Section 414(p) of the Code, or as soon as practicable thereafter. Such distribution to an alternate payee shall be made even if the Participant has not separated from the service of the Affiliated Employers. Any other distribution pursuant to a qualified domestic relations order shall not be made earlier than the Participant's termination of service, or his attainment of age fifty (50), if earlier, and shall not commence later than the date the Participant's (or his Beneficiary's) benefit payments otherwise commence. Such distribution to an alternate payee shall be made only in a manner permitted under this Article IX.
9.10 Requirement for Direct Rollovers. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Article IX, a Distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover.
9.11 Consent and Notice Requirements. If the value of the vested
portion of a Participant's Account derived from Employing Company contributions
exceeds $3,500 determined in accordance with the requirements of Code Section
411(a)(11), the Participant must consent to any distribution of such vested
account balance prior to his Normal Retirement Date. The consent of the
Participant shall be obtained within the ninety-day period ending on the first
day of the first period for which an amount is payable as an annuity or in any
other form under this Plan.
The Committee shall notify the Participant of the right to defer any distribution until the Participant's Account balance is no longer immediately distributable. Such notification shall include a general description of the material features and an explanation of the relative values of the optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code; such notification shall be provided no less than 30 days and no more than 90 days prior to the annuity starting date.
Distributions may commence less than 30 days after the notice required under Section 1.411(a)-11(c) of the Treasury Regulations is given, provided that:
a) the Committee informs the Participant that the Participant has a right to a period of at least thirty (30) days after receiving the notice to consider the decision of whether or not to elect a distribution and a particular distribution option, and
b) the Participant, after receiving the notice, affirmatively elects a distribution.
9.12 Form of Payment. All distributions under this Article IX shall be made in the form of cash.
ARTICLE X
ADMINISTRATION OF THE PLAN
10.1 Membership of Committee. The Plan shall be administered by the Committee, which shall consist of the individuals then serving in the positions of Director, System Compensation and Benefits of The Southern Company; Vice-President, Human Resources of The Southern Company; and Comptroller of The Southern Company or any other position or positions that succeed to the duties of the foregoing positions. The Committee shall be chaired by the Vice-President, Human Resources of The Southern Company and may select a Secretary (who may, but need not, be a member of the Committee) to keep its records or to assist it in the discharge of its duties.
10.2 Acceptance and Resignation. Any person appointed to be a member of the Committee shall signify his acceptance in writing to the Chairman of the Committee. Any member of the Committee may resign by delivering his written resignation to the Committee and such resignation shall become effective upon delivery or upon any later date specified therein.
10.3 Transaction of Business. A majority of the members of the Committee at the time in office shall constitute a quorum for the transaction of business at any meeting. Any determination or action of the Committee may be made or taken by a majority of the members present at any meeting thereof or without a meeting by a resolution or written memorandum concurred in by a majority of the members then in office.
10.4 Responsibilities in General. The Committee shall administer the Plan and shall have the discretionary authority, power, and the duty to take all actions and to make all decisions necessary or proper to carry out the Plan and to control and manage the operation and administration of the Plan. The Committee shall have the discretion to interpret the Plan, including any ambiguities herein, and to determine the eligibility for benefits under the Plan in its sole discretion. The determination of the Committee as to any question involving the general administration and interpretation of the Plan shall be final, conclusive, and binding on all persons, except as otherwise provided herein or by law, and may be relied upon by the Company, all Employing Companies, the Trustee, the Participants, and their Beneficiaries. Any discretionary actions to be taken under the Plan by the Committee with respect to Employees and Participants or with respect to benefits shall be uniform in their nature and applicable to all persons similarly situated.
10.5 Committee as Named Fiduciary. For the purpose of compliance with the provisions of ERISA, the Committee shall be deemed the administrator of the Plan as the term "administrator" is defined in ERISA, and the Committee shall be, with respect to the Plan, a "named fiduciary" as that term is defined in ERISA. For the purpose of carrying out its duties, the Committee may, in its discretion, allocate its responsibilities under the Plan among its members and may, in its discretion, designate persons (in writing or otherwise) other than members of the Committee to carry out such responsibilities of the Committee under the Plan as it may see fit.
10.6 Rules for Plan Administration. The Committee may make and enforce rules and regulations for the administration of the Plan consistent with the provisions thereof and may prescribe the use of such forms or procedures as it shall deem appropriate for the administration of the Plan.
10.7 Employment of Agents. The Committee may employ "independent qualified public accountants," as such term is defined in ERISA, who may be accountants to The Southern Company and any Affiliated Employer, legal counsel who may be counsel to The Southern Company and any Affiliated Employer, other specialists, and other persons as the Committee deems necessary or desirable in connection with the administration of the Plan. The Committee and any person to whom it may delegate any duty or power in connection with the administration of the Plan, the Company and the officers and directors thereof shall be entitled to rely conclusively upon and shall be fully protected in any action omitted, taken, or suffered by them in good faith in reliance upon any independent qualified public accountant, counsel, or other specialist, or other person selected by the Committee, or in reliance upon any tables, evaluations, certificates, opinions, or reports which shall be furnished by any of them or by the Trustee.
10.8 Co-Fiduciaries. It is intended that to the maximum extent permitted by ERISA, each person who is a "fiduciary," as that term is defined in ERISA, with respect to the Plan shall be responsible for the proper exercise of his own powers, duties, responsibilities, and obligations under the Plan and the Trust, as shall each person designated by any fiduciary to carry out any fiduciary responsibilities with respect to the Plan or the Trust. No fiduciary or other person to whom fiduciary responsibilities are allocated shall be liable for any act or omission of any other fiduciary or of any other person delegated to carry out any fiduciary or other responsibility under the Plan or the Trust.
10.9 General Records. The Committee shall maintain or cause to be maintained an Account which accurately reflects the interest of each Participant, as provided for in Section 7.1, and shall maintain or cause to be maintained all necessary books of account and records with respect to the administration of the Plan. The Committee shall mail or cause to be mailed to Participants reports to be furnished to Participants in accordance with the Plan or as may be required by ERISA. Any notices, reports, or statements to be given, furnished, made, or delivered to a Participant shall be deemed duly given, furnished, made, or delivered when addressed to the Participant and delivered to the Participant in person or mailed by ordinary mail to his address last communicated to the Committee (or its delegate) or of his Employing Company.
10.10 Liability of the Committee. In administering the Plan, except as may be prohibited by ERISA, neither the Committee nor any person to whom it may delegate any duty or power in connection with administering the Plan shall be liable for any action or failure to act except for its or his own gross negligence or willful misconduct; nor for the payment of any amount under the Plan; nor for any mistake of judgment made by him or on his behalf as a member of the Committee; nor for any action, failure to act, or loss unless resulting from his own gross negligence or willful misconduct; nor for the neglect, omission, or wrongdoing of any other member of the Committee. No member of the Committee shall be personally liable under any contract, agreement, bond, or other instrument made or executed by him or on his behalf as a member of the Committee.
10.11 Reimbursement of Expenses and Compensation of Committee. Members of the Committee shall be reimbursed by the Company for expenses they may individually or collectively incur in the performance of their duties. Each member of the Committee who is a full-time employee of the Company or of any Employing Company shall serve without compensation for his services as such member; each other member of the Committee shall receive such compensation, if any, for his services as the Board of Directors may fix from time to time.
10.12 Expenses of Plan and Trust Fund. The expenses of establishment of the Plan and the Trust Fund, including all fees of the Trustee, auditors, and counsel, shall be paid by the Company or the Employing Companies. Notwithstanding the foregoing, all other expenses related to the administration of the Plan shall be paid from the Trust Fund either directly or through reimbursement of the Company or the Employing Companies. Any expenses directly related to the investments of the Trust Fund, such as stock transfer taxes, brokerage commissions, or other charges incurred in the acquisition or disposition of such investments, shall be paid from the Trust Fund (or from the particular Investment Fund to which such fees or expenses relate) and shall be deemed to be part of the cost of such securities or deducted in computing the proceeds therefrom, as the case may be. Investment management fees for the Investment Funds shall be paid from the particular Investment Fund to which they relate either directly or through reimbursement of the Company or the Employing Companies unless the Company or the Employing Company do not elect to receive reimbursement for payment of such expenses. Taxes, if any, on any assets held or income received by the Trustee shall be charged appropriately against the Accounts of Participants as the Committee shall determine. Any expenses paid by the Company pursuant to Section 10.11 and this Section shall be subject to reimbursement by other Employing Companies of their proportionate shares of such expenses as determined by the Committee.
10.13 Responsibility for Funding Policy. The Pension Fund Investment Review Committee of The Southern Company System shall have responsibility for providing a procedure for establishing and carrying out a funding policy and method for the Plan consistent with the objectives of the Plan and the requirements of Title I of ERISA.
10.14 Management of Assets. The Committee shall not have responsibility with respect to the control or management of the assets of the Plan. The Trustee shall have the sole responsibility for the administration of the assets of the Plan as provided in the Trust Agreement, except to the extent that an investment advisor (who qualifies as an "investment manager" as that term is defined in ERISA) who may be appointed by the Board of Directors (upon recommendation by the Pension Fund Investment Review Committee) shall have responsibility for the management of the assets of the Plan, or some part thereof (including the powers to acquire and dispose of the assets of the Plan, or some part thereof).
10.15 Notice and Claims Procedures. Consistent with the requirements of ERISA and the regulations thereunder of the Secretary of Labor from time to time in effect, the Committee shall:
(a) provide adequate notice in writing to any Participant or Beneficiary whose claim for benefits under the Plan has been denied, setting forth specific reasons for such denial, written in a manner calculated to be understood by such Participant or Beneficiary, and
(b) afford a reasonable opportunity to any Participant or Beneficiary whose claim for benefits has been denied for a full and fair review of the decision denying the claim.
10.16 Bonding. Unless otherwise determined by the Board of Directors or required by law, no member of the Committee shall be required to give any bond or other security in any jurisdiction.
10.17 Multiple Fiduciary Capacities. Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan, and any fiduciary with respect to the Plan may serve as a fiduciary with respect to the Plan in addition to being an officer, employee, agent, or other representative of a party in interest, as that term is defined in ERISA.
10.18 Change in Administrative Procedures. Notwithstanding any provision in the Plan to the contrary, the Committee shall be authorized to take whatever actions it deems necessary or appropriate in its discretion to implement administrative procedures, including, but not limited to, suspending plan participation (to the extent permitted by applicable law), and suspending changes in investment directions and fund transfers, even though otherwise permitted or required under the Plan.
ARTICLE XI
TRUSTEE OF THE PLAN
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11.1 Trustee. The Company has entered into a Trust Agreement with the
Trustee to hold the funds necessary to provide the benefits set forth in the
Plan. If the Board of Directors so determines, the Company may enter into a
Trust Agreement or Trust Agreements with additional trustees. Any Trust
Agreement may be amended by the Company from time to time in accordance with its
terms. Any Trust Agreement shall provide, among other things, that all funds
received by the Trustee thereunder will be held, administered, invested, and
distributed by the Trustee, and that no part of the corpus or income of the
Trust held by the Trustee shall be used for or diverted to purposes other than
for the exclusive benefit of Participants or their Beneficiaries, except as
otherwise provided in the Plan. Any Trust Agreement may also provide that the
investment and reinvestment of the Trust Fund, or any part thereof may be
carried out in accordance with directions given to the Trustee by any investment
manager or investment managers, as that term is defined in ERISA, who may be
appointed by the Board of Directors (upon recommendation by the Pension Fund
Investment Review Committee). The Board of Directors may remove any Trustee or
any successor Trustee, and any Trustee or any successor Trustee may resign. Upon
removal or resignation of a Trustee, the Board of Directors shall appoint a
successor Trustee.
11.2 Voting of Investment Fund Shares. The Pension Fund Investment Review Committee or its delegate may direct the Trustee with respect to voting the shares in any Investment Fund. To the extent an investment manager has been designated with respect to an Investment Fund, such investment manager (and not the Pension Fund Investment Review Committee) shall direct the Trustee with respect to voting the shares in such Investment Fund. If the investment manager does not direct the Trustee with respect to voting such shares, the Pension Fund Investment Review Committee may direct the Trustee with respect to voting such shares. If the Pension Fund Investment Review Committee does not provide the Trustee or its designated agent with timely voting instructions, the Trustee, if required to do so by applicable law, may vote such shares.
11.3 Uninvested Amounts. The Trustee may keep uninvested an amount of cash sufficient in its opinion to enable it to carry out the purposes of the Plan.
11.4 Independent Accounting. The Board of Directors shall select a firm of independent public accountants to examine and report annually on the financial position and the results of operation of the Trust forming a part of the Plan.
ARTICLE XII
AMENDMENT AND TERMINATION OF THE PLAN
12
12.1 Amendment of the Plan. The Plan may be amended or modified by the
Board of Directors pursuant to its written resolutions at any time and from time
to time; provided, however, that no such amendment or modification shall make it
possible for any part of the corpus or income of the Trust Fund to be used for
or diverted to purposes other than for the exclusive benefit of Participants or
their Beneficiaries under the Plan, including such part as is required to pay
taxes and administration expenses of the Plan. The Plan may also be amended or
modified by the Committee (a) if such amendment or modification does not involve
a substantial increase in cost to any Employing Company, or (b) as may be
necessary, proper, or desirable in order to comply with laws or regulations
enacted or promulgated by any federal or state governmental authority and to
maintain the qualification of the Plan under Sections 401(a) and 501(a) of the
Code and the applicable provisions of ERISA.
No amendment to the Plan shall have the effect of decreasing a
Participant's vested interest in his Account, determined without regard to such
amendment, as of the later of the date such amendment is adopted or the date it
becomes effective. In addition, if the vesting schedule of the Plan is amended,
any Participant who has completed at least three (3) Years of Service and whose
vested interest is at any time adversely affected by such amendment may elect to
have his vested interest determined without regard to such amendment during the
election period defined under Section 411(a)(10) of the Code. Finally, no
amendment shall eliminate an optional form of benefit in violation of Code
Section 411(d)(6).
If the vesting schedule of the Plan is amended, in the case of an Eligible Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Eligible Employee's right to his Account will not be less than his percentage computed under the Plan without regard to such amendment.
12.2 Termination of the Plan. It is the intention of the Employing Companies to continue the Plan indefinitely. However, the Board of Directors pursuant to its written resolutions may at any time and for any reason suspend or terminate the Plan or suspend or discontinue the making of contributions by all Employing Companies. Any Employing Company may, by action of its board of directors and approval of the Board of Directors, suspend or terminate the making of contributions by such Employing Company.
In the event of termination of the Plan or partial termination or upon complete discontinuance of contributions under the Plan by all Employing Companies or by any one Employing Company, the amount to the credit of the Account of each Participant whose Employing Company shall be affected by such termination, partial termination or discontinuance shall be immediately fully vested and nonforfeitable. Each affected Participant's Account balances shall be determined as of the next Valuation Date and shall be distributed to him or his Beneficiary thereafter at such time or times and in such nondiscriminatory manner as is determined by the Committee.
12.3 Merger or Consolidation of the Plan. The Plan shall not be merged or consolidated with nor shall any assets or liabilities thereof be transferred to any other plan unless each Participant of the Plan would (if the Plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately prior to the merger, consolidation, or transfer (if the Plan had then terminated).
ARTICLE XIII
TOP-HEAVY REQUIREMENTS
13.1 Top-Heavy Plan Requirements. For any Plan Year the Plan shall be determined to be a top-heavy plan, the Plan shall provide the minimum allocation and vesting requirements of Sections 13.3 and 13.4.
13.2 Determination of Top-Heavy Status.
(a) The Plan shall be determined to be a top-heavy plan, if, as of the Determination Date, the sum of the Aggregate Accounts of Key Employees under this Plan exceeds 60% of the Aggregate Accounts of all Employees entitled to participate in this Plan.
(b) The Plan shall be determined to be a super-top-heavy plan, if, as of the Determination Date, the sum of the Aggregate Accounts of Key Employees under this Plan exceeds 90% of the Aggregate Accounts of all Employees entitled to participate in this Plan.
(c) In the case of a Required Aggregation Group, each plan in the group will be considered a top-heavy plan if the Required Aggregation Group is a Top-Heavy Group. No plan in the Required Aggregation Group will be considered a top-heavy plan if the Aggregation Group is not a Top-Heavy Group.
In the case of a Permissive Aggregation Group, only a plan that is part of the Required Aggregation Group will be considered a top-heavy plan if the Permissive Aggregation Group is a Top-Heavy Group. A plan that is not part of the Required Aggregation Group but that has nonetheless been aggregated as part of the Permissive Aggregation Group will not be considered a top-heavy plan even if the Permissive Aggregation Group is a Top-Heavy Group.
(d) For purposes of this Article XIII, if any Employee is a non-Key Employee for any Plan Year, but such Employee was a Key Employee for any prior Plan Year, such Employee's Present Value of Accrued Retirement Income and/or Aggregate Account balance shall not be taken into account for purposes of determining whether this Plan is a top-heavy or super-top-heavy plan (or whether any Aggregation Group which includes this Plan is a Top-Heavy Group). In addition, if an Employee or former Employee has not performed any services for any Employing Company maintaining the Plan at any time during the five-year period ending on the Determination Date, the Aggregate Account and/or Present Value of Accrued Retirement Income shall be excluded in determining whether this Plan is a top-heavy or super-top-heavy plan.
(e) Only those plans of the Affiliated Employers in which the Determination Dates fall within the same calendar year shall be aggregated in order to determine whether such plans are top-heavy plans.
13.3 Minimum Allocation for Top-Heavy Plan Years.
(a) Notwithstanding anything herein to the contrary, for any top-heavy Plan Year, the Employing Company contribution allocated to the Account of each non-Key Employee shall be an amount not less than the lesser of: (1) 3% of such Participant's compensation for that Plan Year, or (2) a percentage of that Participant's compensation not to exceed the percentage at which contributions are made under the Plan for the Key Employee for whom such percentage is highest for that Plan Year.
(b) For purposes of the minimum allocation of Section 13.3(a), the percentage allocated to the Account of any Key Employee shall be equal to the ratio of the Employing Company contributions allocated on behalf of such Key Employee divided by the compensation of such Key Employee for that Plan Year.
(c) For any top-heavy Plan Year, the minimum allocations of
Section 13.3(a) shall be allocated to the Accounts of all non-Key
Employees who are Participants and who are employed by the Affiliated
Employers on the last day of the Plan Year.
(d) Notwithstanding the foregoing, in any Plan Year in which a non-Key Employee is a Participant in both this Plan and a defined benefit plan, and both such plans are top-heavy plans, the Affiliated Employers shall not be required to provide a non-Key Employee with both the full separate minimum defined benefit and the full separate defined contribution plan allocations. Therefore, if a non-Key Employee is participating in a defined benefit plan maintained by the Affiliated Employers and the minimum benefit under Code Section 416(c)(1) is provided the non-Key Employee under such defined benefit plan, the minimum allocation provided for above shall not be applicable, and no minimum allocation shall be made on behalf of the non-Key Employee. Alternatively, the Employing Company may satisfy the minimum allocation requirement of Code Section 416(c)(2) for the non-Key Employee by providing any combination of benefits and/or contributions that satisfy the safe harbor rules of Treasury Regulation Section 1.416-1(M-12).
13.4 Minimum Vesting. Notwithstanding the provisions of Section 8.1(a) hereof, if a Participant's termination of employment occurs while the Plan is a Top-Heavy Plan, such Participant's vested percentage in his Account shall not be less than the percentage determined in accordance with the following schedule:
Completed Nonforfeitable Forfeitable Years of Service Percentage Percentage Less than 3 0% 100% 3 or more 100% 0% |
If in any subsequent Plan Year the Plan ceases to be a Top-Heavy Plan, the Committee may, in its sole discretion, elect to (a) continue to apply this vesting schedule in determining the vested portion of any Participant's Account, or (b) revert to the vesting schedule set forth in Section 8.1(a) hereof. Any such reversion shall be treated as an amendment to the Plan.
13.5 Adjustments to Maximum Benefit Limits for Top-Heavy Plans.
(a) In the case of an Employee who is a participant in a defined benefit plan and a defined contribution plan maintained by the Affiliated Employers, and such plans as a group are determined to be top heavy for any limitation year beginning after December 31, 1983, "1.0", shall be substituted for "1.25" in each place it appears in the denominators of the Defined Benefit Plan Fraction and Defined Contribution Plan Fraction, unless the extra minimum benefit is provided pursuant to Section 13.5(b) below. Super-top-heavy plans and plans in a Super-Top-Heavy Group shall be required at all times to substitute "1.0" for "1.25" in the denominator of each plan fraction.
(b) If a Key Employee is a participant in both a defined benefit plan and a defined contribution plan that are both part of a Top-Heavy Group (but neither of such plans is a super-top-heavy plan), the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction shall remain unchanged, provided the Account of each non-Key Employee who is a Participant receives an extra allocation (in addition to the minimum allocation in Section 13.3(a)) equal to not less than 1% of such non-Key Employee's compensation.
(c) For purposes of this Section 13.5, if the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction shall exceed 1.0 in any Plan Year for any Participant in this Plan, the Affiliated Employers shall eliminate any amounts in excess of the limits set forth in Section 5.1(b), pursuant to Section 5.3 of the Plan.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Plan Not an Employment Contract. The Plan shall not be deemed to constitute a contract between an Affiliated Employer and any Employee, nor shall anything herein contained be deemed to give any Employee any right to be retained in the employ of an Employing Company or to interfere with the right of an Employing Company to discharge any Employee at any time and to treat him without regard to the effect which such treatment might have upon him as a Participant.
14.2 No Right of Assignment or Alienation. Except as may be otherwise permitted or required by law, no right or interest in the Plan of any Participant or Beneficiary and no distribution or payment under the Plan to any Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer (except by death), assignment (either at law or in equity), pledge, encumbrance, charge, attachment, garnishment, levy, execution, or other legal or equitable process, whether voluntary or involuntary, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, attach, garnish, levy, or execute or enforce any other legal or equitable process against the same shall be void, nor shall any such right, interest, distribution, or payment be in any way liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person entitled to such right, interest, distribution, or payment. If any Participant or Beneficiary is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge any such right, interest, distribution, or payment, voluntarily or involuntarily, or if any action shall be taken which is in violation of the provisions of the immediately preceding sentence, the Committee may hold or apply or cause to be held or applied such right, interest, distribution, or payment or any part thereof to or for the benefit of such Participant or Beneficiary in such manner as is in accordance with applicable law.
Notwithstanding the above, the Committee and the Trustee shall comply with any domestic relations order (as defined in Section 414(p)(1)(B) of the Code) which is a qualified domestic relations order satisfying the requirements of Section 414(p) of the Code. The Committee shall establish procedures for (a) notifying Participants and alternate payees who have or may have an interest in benefits which are the subject of domestic relations orders, (b) determining whether such domestic relations orders are qualified domestic relations orders under Section 414(p) of the Code, and (c) distributing benefits which are subject to qualified domestic relations orders.
14.3 Payment to Minors and Others. If the Committee determines that any person entitled to a distribution or payment from the Trust Fund is an infant or incompetent or is unable to care for his affairs by reason of physical or mental disability, it may cause all distributions or payments thereafter becoming due to such person to be made to any other person for his benefit, without responsibility to follow the application of payments so made. Payments made pursuant to this provision shall completely discharge the Company, the Trustee, and the Committee with respect to the amounts so paid. No person shall have any rights under the Plan with respect to the Trust Fund, or against the Trustee or any Employing Company, except as specifically provided herein.
14.4 Source of Benefits. The Trust Fund established under the Plan shall be the sole source of the payments or distributions to be made in accordance with the Plan. No person shall have any rights under the Plan with respect to the Trust Fund, or against the Trustee or any Employing Company, except as specifically provided herein.
14.5 Unclaimed Benefits. If the Committee is unable, within five (5) years after any distribution becomes payable to a Participant or Beneficiary, to make or direct payment to the person entitled thereto because the identity or whereabouts of such person cannot be ascertained, notwithstanding the mailing of due notice to such person at his last known address as indicated by the records of either the Committee or his Employing Company, then such benefit or distribution will be disposed of as follows:
(a) If the whereabouts of the Participant is unknown to the Committee, distribution will be made to the Participant's Beneficiary or Beneficiaries.
Payment to such one or more persons shall completely discharge the Company, the Trustee, and the Committee with respect to the amounts so paid.
(b) If none of the persons described in (a) above, can be located, then the benefit payable under the Plan shall be forfeited and shall be applied to reduce future Employer Contributions. Notwithstanding the foregoing sentence, such benefit shall be reinstated if a claim is made by the Participant or Beneficiary for the forfeited benefit.
14.6 Governing Law. The provisions of the Plan and the Trust shall be construed, administered, and enforced in accordance with the laws of the State of Georgia, except to the extent such laws are preempted by the laws of the United States.
IN WITNESS WHEREOF, the Company has caused The Southern Company Performance Sharing Plan to be executed this day of _______________, 1997, to be effective as of January 1, 1997.
SOUTHERN COMPANY SERVICES, INC.
By:
Its:
Attest:
By:
Its:
APPENDIX A - EMPLOYING COMPANIES
The Employing Companies as of January 1, 1997 are:
Alabama Power Company
Georgia Power Company
Gulf Power Company
Mississippi Power Company
Savannah Electric and Power Company
Southern Communications Services, Inc.
Southern Company Services, Inc.
Southern Development and Investment Group, Inc.
Southern Energy, Inc.
Southern Nuclear Operating Company, Inc.
Exhibit 10(f)16
EMPLOYEES' RETIREMENT PLAN
OF
SAVANNAH ELECTRIC AND POWER COMPANY
As Amended and Restated Effective January 1, 1997
EMPLOYEES' RETIREMENT PLAN
OF
SAVANNAH ELECTRIC AND POWER COMPANY
As Amended to and Including
TABLE OF CONTENTS
Page No.
ARTICLE 1 DEFINITIONS.....................................1
ARTICLE 2 RETIREMENT ANNUITIES PURCHASED UNDER GROUP
ANNUITY CONTRACT AND CHANGE OF FUNDING..........7
ARTICLE 3 MEMBERSHIP......................................8
ARTICLE 4 SERVICE........................................10
4.01 Continuous Service.............................10
4.02 Credited Service...............................10
4.03 Breaks in Service..............................11
4.04 Disabled Members...............................11
4.05 Service with Certain Other Employers...........12
ARTICLE 5 BENEFITS.......................................13
5.01 Normal and Late Retirement.....................13
5.02 Early Retirement...............................14
5.03 Termination of Employment......................15
5.04 Adjustment of Retirement Allowance for Social
Security Benefits..............................15
5.05 Restoration of Retired Member or Former Member
to Service.....................................16
5.06 Additional Monthly Benefit.....................18
5.07 Written Application............................19
ARTICLE 6 LIMITATIONS ON BENEFITS........................20
6.01 Maximum Benefits...............................20
ARTICLE 7 DISTRIBUTION OF BENEFITS.......................24
7.01 Surviving Spouse Benefit.......................24
7.02 Qualified Joint and Survivor Annuity...........24
7.03 Qualified Preretirement Survivor Annuity.......24
7.04 Definitions....................................27
7.05 Notice Requirements............................27
7.06 Transitional Rules.............................28
7.07 Alternative Forms of Distribution..............28
7.08 Cash-Out of Annuity Benefits...................29
7.09 Commencement of Benefits.......................30
7.10 TEFRA 242(b)(2) Transitional Rules.............31
7.11 Requirement for Direct Rollovers...............32
ARTICLE 8 CONTRIBUTIONS..................................34
ARTICLE 9 ADMINISTRATION OF THE PLAN.....................35
ARTICLE 10 MANAGEMENT OF FUNDS............................37
ARTICLE 11 CERTAIN RIGHTS AND LIMITATIONS.................38
ARTICLE 12 NON-ALIENATION OF BENEFITS.....................40
ARTICLE 13 AMENDMENTS.....................................41
ARTICLE 14 CONSTRUCTION...................................42
ARTICLE 15 TOP-HEAVY PROVISIONS...........................43
15.01 Top-Heavy Plan Requirements....................43
15.02 Determination of Top-Heavy Status..............43
15.03 Minimum Retirement Income for Top-Heavy Plan
Years..........................................46
15.04 Vesting Requirements for Top-Heavy Plan Years..47
15.05 Adjustments to Maximum Benefits for Top-Heavy
Plans..........................................48
ARTICLE 16 RETIREE MEDICAL BENEFITS.......................49
16.01 Definitions....................................49
16.02 Medical benefits...............................52
16.03 Termination of coverage........................52
16.04 Contributions or Qualified Transfers to fund
medical benefits...............................52
16.05 Pensioned Employee Contributions...............53
16.06 Amendment of Article 16........................54
16.07 Termination of Article 16......................54
16.08 Reversion of Assets upon Termination...........54
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The Employees' Retirement Plan of Savannah Electric and Power Company, as amended and restated effective January 1, 1997, (the "Plan") is a continuation and modification of the Retirement Annuity Plan for Employees of Savannah Electric and Power Company effective as of April 1, 1947, which was last amended and restated effective January 1, 1989. The Plan, except as specifically provided herein and hereinafter set forth, is designed to provide a retirement Allowance to eligible employees and their Spouses following the termination of their employment with Savannah Electric and Power Company (the "Company"). It is intended that the Plan and the Employees' Retirement Plan of Savannah Electric and Power Company Trust (the "Trust"), meet all the requirements of the Internal Revenue Code of 1986 (the "Code"), and that the Plan and Trust shall be interpreted, wherever possible, to comply with the terms of the Code and the Employee Retirement Income Security Act of 1974 ("ERISA"), and all formal regulations and rulings issued under the Code and ERISA.
ARTICLE 1 - DEFINITIONS
1.01 "Accrued Benefit" shall mean the amount of retirement Allowance
computed at a specific date, in accordance with Article 5, based on
Compensation and Credited Service to such date.
1.02 "Affiliated Company" shall mean any company not participating in the
Plan which is a Member of a controlled group of corporations
(determined under Code ss. 1563(a) without regard to ss.ss. 1563(a)(4)
and (e)(3)(C)) which also includes as a member the Company, except that
with respect to Section 6.01 "more than 50 percent" shall be
substituted for "at least 80 percent" where it appears in Code ss.
1563(a)(1). The term "Affiliated Company" shall also include any trade
or business under common control (as defined in Code ss. 414(c)) with
the Company, or a Member of an affiliated service group (as defined in
Code ss. 414(m)) which includes the Company or any other entity
required to be aggregated with the Company pursuant to regulations
under Code ss. 414(o).
1.03 "Allowance" shall mean payments under the Plan payable as provided in
Article 5 or Article 7.
1.04 "Annuity Starting Date" shall mean the first day of the first period
for which an amount is paid as an annuity or in any other form.
1.05 "Board of Directors" shall mean the Board of Directors of Savannah
Electric and Power Company or the board of directors of any successor.
1.06 "Break in Service" shall mean a period which constitutes a break in an
Employee's Continuous Service, as provided in Section 4.03.
1.07 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.08 "Company" shall mean Savannah Electric and Power Company or any
successor by merger, purchase or otherwise, with respect to its
employees; or any other company participating in the Plan as provided
in Section 4.05, with respect to its employees.
1.09 "Compensation" shall mean the actual remuneration paid to an
employee for services rendered to the Company, determined prior to
any pre-tax contributions under a "qualified cash or deferred
arrangement" (as defined under Code ss. 401(k) and its applicable
regulations) or under a "cafeteria plan" (as defined under Code
ss. 125 and its applicable regulations), including payments made
under any short term disability plan maintained by the Company
which shall equal the rate of Compensation of the Member at the
time of disability, but excluding any bonuses, pay for overtime,
compensation deferred under any deferred compensation plan or
arrangement, separation pay, imputed income and relocation pay,
and excluding the Company's cost for any public or private
employee benefit plan, including this Plan, under rules uniformly
applicable to all employees similarly situated, provided further,
effective as of January 1, 1989, any workers' compensation
received by an employee shall be excluded from "compensation" for
purposes of determining his benefit under the Plan.
For purposes of this Section 1.09, actual remuneration means
regular straight time pay, straight time differential pay,
substitution straight time pay, substitution flat rate pay, earned
vacation pay and the difference between military pay and regular
straight time pay a Member would have been paid if such Member had
been working for the Company.
Notwithstanding the foregoing, effective as of January 1, 1989,
compensation taken into account for any purpose under the Plan
shall not exceed $200,000 per year, provided that the imposition
of the limit on compensation shall not reduce a Member's Accrued
Benefit below the amount of Accrued Benefit determined as of
December 31, 1988. As of January 1 of each calendar year on and
after January 1, 1990, the applicable limitation as determined by
the Commissioner of the Internal Revenue Service for that calendar
year shall become effective as the maximum compensation to be
taken into account for Plan purposes for that calendar year in
lieu of the $200,000 limitation set forth in the preceding
sentence.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual compensation of each Employee taken into account under
the Plan shall not exceed the Omnibus Budget Reconciliation Act of
1993 ("OBRA '93") annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Code ss.
401(a) (17) (B). The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over
which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer
than 12 months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which
is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Code ss. 401(a)
(17) shall mean the OBRA '93 annual compensation limit set forth
in this provision.
If compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the
current Plan Year, the compensation for that prior determination
period is subject to the OBRA '93 annual compensation limit in
effect for that prior determination period. For this purpose, for
determination periods beginning on or after January 1, 1994, the
OBRA '93 annual compensation limit is $150,000.
For purposes of this Section 1.09, for Plan Years beginning before
January 1, 1997, the rules of Code ss. 414(q) shall apply in
determining the adjusted $150,000 limitation above, except in
applying such rules, the term "family" shall include only the
Spouse of the Employee and any lineal descendants of the Employee
who have not attained age nineteen (19) before the close of the
Plan Year. If as a result of the application of such rules, the
adjusted $150,000 limitation is exceeded, then the limitation
shall be prorated among the affected individuals in proportion to
each individual's compensation determined under this Section 1.09
prior to the application of this limitation.
1.10 "Computation Year" shall mean the calendar year.
1.11 "Continuous Service" shall mean service recognized for purposes of
determining eligibility for membership in the Plan and eligibility for
certain benefits under the Plan, determined as provided in Section
4.01.
1.12 "Credited Service" shall mean service recognized for purposes of
computing the amount of any benefit under the Plan, determined as
provided in Section 4.02.
1.13 "Effective Date of the Plan" as amended, shall mean April 1, 1959. The
"Amendment and Restatement Effective Date" shall mean January 1, 1997.
1.14 "Employee" shall mean any person regularly employed by the Company
who receives regular stated salary, or wages paid directly by the
Company as (a) a regular full-time employee, (b) a regular
part-time employee, (c) a cooperative education employee or (d) a
temporary employee paid directly or indirectly by the Company. For
purposes of this Section 1.14, temporary employee means a
full-time or part-time employee who provides services to the
Company for a stated period of time after which period such
employee will be terminated from employment. The term Employee
shall also include Leased Employees within the meaning of Code ss.
414(n) (2). Notwithstanding the foregoing, if such Leased
Employees constitute less than twenty percent (20%) of the
Employer's non-highly compensated workforce within the meaning of
Code ss. 414(n)(5)(C)(ii), the term Employee shall not include
those Leased Employees covered by a plan described in Code ss.
414(n)(5). The term Employee for participation purposes shall not
include any individual who is classified by the Company as an
independent contractor regardless of whether such classification
is in error.
1.15 "Equivalent Actuarial Value" shall mean equivalent value when computed
at 6 per centum per annum on the basis of the 1971 Group Annuity
Mortality Table (Male) for Members, and 1971 Group Annuity Mortality
Table (Female) for contingent annuitants under optional forms of
Allowances.
1.16 "Fund" shall mean the trust fund established under the trust agreement
with the Trustee from which the amounts of retirement Allowances are to
be paid.
1.17 "Group Annuity Contract" shall mean Group Annuity Contract No. AC
766 issued by The Equitable Life Assurance Society of the United
States to Savannah Electric and Power Company.
1.18 "Hour of Service" means, with respect to any applicable computation
period:
(a) each hour for which the Employee is paid or entitled to
payment for the performance of duties for the Company or an
Affiliated Company;
(b) each hour for which an Employee is paid or entitled to
payment by the Company or an Affiliated Company on account
of a period during which no duties are performed, whether or
not the employment relationship has terminated, due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence, but not more than 501 hours for any single
continuous period;
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Company or an
Affiliated Company, excluding any hour credited under (a) or
(b), which shall be credited to the computation period or
periods to which the award, agreement or payment pertains,
rather than to the computation period in which the award,
agreement or payment is made; and
(d) solely for purposes of determining whether an Employee has
incurred a Break in Service under the Plan, each hour for
which an Employee would normally be credited under Paragraphs
(a) or (b) above during a period of Parental Leave but not
more than 501 hours for any single continuous period. However,
the number of hours credited to an Employee under this
Paragraph (d) during the computation period in which the
Parental Leave began, when added to the hours credited to an
Employee under Paragraphs (a) through (c) above during that
computation period, shall not exceed 501. If the number of
hours credited under this Paragraph (d) for the computation
period in which the Parental Leave began is zero, the
provisions of this Paragraph (d) shall apply as though the
Parental Leave began in the immediately following computation
period.
No hours shall be credited on account of any period during which
the Employee performs no duties and receives payment solely for
the purpose of complying with unemployment compensation, workers'
compensation or disability insurance laws. The Hours of Service
credited shall be determined as required by Title 29 of the Code
of Federal Regulations, ss.ss. 2530.200b-2(b) and (c).
1.19 "Leased Employee" means any person as so defined in Code ss.
414(n). In the case of a person who is a Leased Employee
immediately before or after a period of service as an Employee,
the entire period during which he has performed services for the
Company as a Leased Employee shall be counted as Continuous
Service for purposes of determining eligibility for participation
and vesting, to the extent such service would be recognized with
respect to other employees under the Plan; however, he shall not,
by reason of that status, be eligible to become a Member of the
Plan.
1.20 "Member" shall mean any person included in the membership of the Plan
as provided in Article 3.
1.21 "Normal Retirement Date" shall mean the first day of the calendar month
next following the 65th anniversary of an Employee's birth.
1.22 "Parental Leave" means a period in which the Employee is absent
from work because of the pregnancy of the Employee, the birth of a
child of the Employee or the placement of a child with the
Employee in connection with adoption proceedings, or for purposes
of caring for that child for a period beginning immediately
following such birth or placement.
1.23 "Plan" shall mean Employees' Retirement Plan of Savannah Electric
and Power Company as previously described in the Group Annuity
Contract and as described and amended herein or as hereafter
amended.
1.24 "Plan Year" shall mean the 12-month period from January 1 to December
31.
1.25 "Qualified Joint and Survivor Annuity" shall mean an annuity of
Equivalent Actuarial Value to the Allowance otherwise payable,
providing for a reduced Allowance payable to the Member during his
life, and after his death providing that one-half of that reduced
Allowance will continue to be paid during the life of, and to, the
spouse to whom he was married at his Annuity Starting Date.
1.26 "Qualified Preretirement Survivor Annuity" shall mean annuity for the
life of a Surviving Spouse calculated in accordance with Section 7.03.
1.27 "Retirement Annuity" shall mean the amount of the annuity
purchased under the Group Annuity Contract as provided by that
Contract at actual retirement date, at or after the attainment of
age 65, prior to any conversion to a contingent annuity.
1.28 "Retirement Committee" shall mean the administrator of the Plan as
provided in Article 9. The Administrative Benefits Committee of the
Company shall comprise the Retirement Committee for purposes of
administration of the Plan.
1.29 "Social Security Benefit" shall mean the annual primary old-age
insurance benefit which the Member is entitled to receive under
Title II of the Social Security Act as in effect on the date he
retires or otherwise terminates employment, or would be entitled
to receive if he did not disqualify himself by receiving the same
by entering into covered employment or otherwise. In the case of
early retirement, the Social Security Benefit shall be computed on
the assumption that he will receive no income after early
retirement and before age 65 which would be treated as wages for
purposes of the Social Security Act. In the case of vested
retirement, the Social Security Benefit shall be computed on the
assumption that he will continue to receive compensation until age
65 which would be treated as wages for purposes of the Social
Security Act at the same rate as in effect on his termination of
service.
In computing any Social Security Benefit, no wage index adjustment
or cost-of-living adjustment shall be assumed with respect to any
period after the end of the calendar year before the year in which
the Member retires or terminates service. The Member's Social
Security Benefit shall be determined on the basis of the
Employee's actual earnings, where available from Company records,
in conjunction with a salary increase assumption based on the
actual yearly change in national average wages as determined by
the Social Security Administration for all other years prior to
retirement or other termination of employment with the Company
where actual earnings are not so available. If, within three
months after the later of the date of retirement or other
termination of employment or the date on which a Member is
notified of the Allowance to which he is entitled, the Member
provides documentation as to his actual earnings history with
respect to those prior years, his Allowance shall be redetermined
using the actual earnings history, if the recalculation would
result in an increased benefit. Any adjustment to Allowance
payments shall be made retroactively.
1.30 The term "Spouse or Surviving Spouse" shall mean the spouse or
surviving spouse of a Member, provided that a former Spouse will be
treated as the spouse or surviving spouse and a current spouse will not
be treated as the spouse or surviving spouse to the extent provided
under a qualified domestic relations order as described in
Codess.414(p).
1.31 "Suspendible Month" means a month in which the Member completes at
least 40 hours of service with the Company.
1.32 "Trustee" shall mean the trustee or trustees by whom the funds of the
Plan are held as provided in Article 10.
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ARTICLE 2 - RETIREMENT ANNUITIES PURCHASED UNDER
GROUP ANNUITY CONTRACT AND CHANGE OF FUNDING
All Retirement Annuities payable under the Plan as in effect prior to April 1, 1959 with respect to service thereunder prior to such date, have been purchased from The Equitable Life Assurance Society of the United States pursuant to the terms of Group Annuity Contract No. AC 766.
Effective as of April 1, 1959, the purchase of Retirement Annuities under the Group Annuity Contract was discontinued in accordance with the terms and provisions of such Contract. Subject to the provisions of the Plan, with respect to service under the Plan from and after April 1, 1959, and as a supplement to the Retirement Annuities purchased under the Group Annuity Contract for service prior to April 1, 1959, retirement Allowances will be provided by means of contributions to the Fund by the Company. Such retirement Allowances will be in addition to Retirement Annuities purchased as described in the preceding paragraph with respect to services prior to April 1, 1959.
The rights of Members of the Retirement Annuities purchased for them under the Group Annuity Contract with respect to service prior to April 1, 1959 will not be adversely affected by the discontinuance of such purchases and such Retirement Annuities will be payable by The Equitable Life Assurance Society of the United States in accordance with the terms, conditions and provisions of the Group Annuity Contract.
ARTICLE 3 - MEMBERSHIP
3.01 Every Employee in Company service on January 1, 1997, who was a Member
on December 31, 1996, shall continue to be a Member of the Plan on and
after January 1, 1997, provided he remains eligible under the terms of
the Plan.
3.02 Every other Employee on January 1, 1997, and every person becoming
an Employee after that date shall become a Member on the first day
of the calendar month, beginning with January 1, 1997, coincident
with or next following (i) the date he completes one year of
Continuous Service or (ii) the 21st anniversary of his birth,
whichever is later. For this purpose, a year of Continuous Service
shall be a 12-month period during which an Employee completes at
least 1,000 hours commencing with the date of employment, or if in
such period he has not completed at least 1,000 hours, commencing
with the first day of the Computation Year after the date of his
employment. If an Employee has incurred a one-year Break in
Service prior to becoming eligible for membership, any Continuous
Service prior to the break shall be disregarded in determining
eligibility for membership unless he shall complete at least one
year of Continuous Service following the Break in Service;
provided that an Employee's Continuous Service prior to the break
shall not be recognized for purposes of determining his
eligibility for membership if his consecutive number of one-year
Breaks in Service equal or exceed the greater of (i) five or (ii)
his aggregate years of Continuous Service prior to the Break in
Service.
3.03 An Employee who is represented by a collective bargaining agent may
participate in the Plan if the representative(s) of his bargaining unit
and the Company mutually agree to participation in the Plan by the
members of his bargaining unit.
3.04 An Employee's membership in the Plan shall terminate only if he
dies or his employment with the Company terminates other than by
reason of retirement or termination with vested benefits under the
Plan. Membership shall be continued during a period while on leave
of absence from service without pay approved by the Company, but
no benefit credit shall be allowed with respect to such period
unless credit is allowed for service in the Armed Forces of the
United States as provided in Section 4.03(c). Membership shall be
continued during a period of disability for which Continuous
Service is granted as provided in Section 4.04.
3.05 In the event a Member ceases to participate because he enters an
ineligible class under Article III and becomes ineligible to
participate, but has not incurred a break in service under Section
4.03(a), such Employee will participate as of the first day of the
month coinciding with or next following his return to an eligible
class of Employees. If such Employee incurs a break in service
under Section 4.03(a), eligibility will be determined under
Section 3.02. In the event an Employee who is not in an eligible
class to participate enters an eligible class, such Employee will
participate as of the first day of the month coinciding with or
next following his employment if he has satisfied Section 3.02 and
would have otherwise previously been eligible to participate in
the Plan.
3.06 Subject to Section 3.05, if an Employee's membership in the Plan
terminates and he again becomes an Employee, he shall be considered a
new Employee for all purposes of the Plan, except as provided in
Section 5.05.
3.07 Notwithstanding any other provision of this Article 3, Leased
Employees shall not be eligible to participate. In addition,
temporary employees as defined in Section 1.14 of the Plan who
were not participating in the Plan as temporary employees prior to
October 13, 1994, shall not be eligible to participate in the
Plan.
3.08 An Employee may, subject to the approval of the Retirement Committee,
elect voluntarily not to participate in the Plan. The election not to
participate must be communicated in writing to the Retirement Committee
effective on an Employee's date of hire or anniversary thereof.
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ARTICLE 4 - SERVICE
4.01 Continuous Service
(a) Effective January 1, 1997, except as hereinafter provided, all service performed as an Employee of the Company or an Affiliated Company shall be Continuous Service for Plan purposes. If an Employee completes at least 1,000 Hours of Service in any Computation Year, he shall receive credit for a full year of Continuous Service. If an Employee completes fewer than 1,000 Hours of Service in any Computation Year, no Continuous Service shall be recognized for such Computation Year.
(b) Any person employed by the Company on December 31, 1996
shall receive Continuous Service for service performed
before that date equal to the Credited Service recognized
through December 31, 1996 under the Plan as in effect on
that date.
4.02 Credited Service
(a) Credited Service shall be calculated based on Periods of
Service.
A "Period of Service" shall mean twelve (12) month periods of
employment as a Member, or fractions thereof, running from the
date that a Member commences participation in the Plan and
terminates on his first severance from service date. A severance
from service shall occur as of the earlier of the date a Member
quits, retires, is discharged or dies, or the first anniversary of
absence for any other reason. Thereafter, subject to 4.03(b), if a
Member becomes reemployed, his Period of Service for each
subsequent period shall commence with the reemployment
commencement date, which is the first date following a one year
period of severance on which a Member performs an Hour of Service
and shall terminate on his next severance from service.
In the case of an Employee who transfers from a class of employees
whose service is determined on the basis of Hours of Service to a
class of employees whose service is determined under this
Paragraph (a), such Employee shall receive credit for a Period of
Service consisting of (i) a number of years equal to the number of
years of service credited to the Employee before the computation
period during which the transfer occurs and (ii) the greater of
(1) the Period of Service that would be credited to the Employee
under this Paragraph (a) during the entire computation period in
which the transfer occurs or (2) the service taken into account
under the Hours of Service method as of the date of the transfer.
In addition, the Employee shall receive credit for Periods of
Service subsequent to the transfer commencing on the day after the
last day of the computation period in which the transfer occurs.
In the case of an Employee who transfers from a class of employees
whose service is determined pursuant to this Paragraph (a) to a
class of employees whose service is determined on the basis of
Hours of Service (i) the Employee shall receive credit, as of the
date of transfer, for the numbers of Years of Service equal to the
number of one year Periods of Service credited to the Employee as
of the date of the transfer and (ii) the Employee shall receive
credit in the computation period which includes the date of the
transfer, for a number of Hours of Service determined by applying
the equivalency set forth in 29 C.F.R. ss. 2530.200b-3(e)(l)(i) to
any fractional part of a year credited to the Employee under this
Section as of the date of the transfer.
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4.03 Breaks in Service
(a) There shall be a Break in Service of one year for any
Computation Year after the year in which a person first
becomes employed during which he does not complete more than
500 Hours of Service. If an Employee terminates his service
with the Company and is reemployed after incurring a Break
in Service, his service before the Break in Service shall be
excluded from his Continuous Service, except as provided in
Section 5.05.
(b) For purposes of calculating Credited Service only, there shall be a one year Period of Severance if during the 12 consecutive month period after a severance from service date, as defined in Section 4.02(a) the Employee fails to perform an Hour of Service. If an Employee terminates his service with the Company and is reemployed after incurring a one year Period of Severance, his service before the Period of Severance shall be excluded unless he thereafter completes a one year Period of Service. In the case of a non-vested member, the Period of Service accrued prior to a one year Period of Severance shall not be taken into account if at such time the consecutive Period of Severance equals or exceeds the greater of 5 or of prior Periods of Service, whether or not consecutive.
(c) Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to
qualified military service will be provided in accordance
with Code ss. 414(u).
4.04 Disabled Members
If a Member is eligible for and continuously receiving disability
benefits under the long-term disability plan provided by the
Company, he shall continue to be a Member of the Plan and shall
continue to accrue service until he retires in the same amount and
manner as though he had continued in the active employment of the
Company and he shall be deemed to receive Compensation during such
period based upon his rate of Compensation at the time of
disability. In the event that a Member no longer qualifies for
benefits under the long-term disability plan before his Normal
Retirement Date and he does not resume active employment with the
Company, he shall be eligible to receive a vested retirement
Allowance as provided in Section 5.03 or to retire on an early
retirement Allowance as provided in Section 5.02, if otherwise
eligible for such Allowance as of the date of such
disqualification. In either case, the Allowance shall be computed
on the basis of his Compensation and Credited Service at the date
of such disqualification. In the event that a Member does not
qualify for disability benefits under the Social Security Act, the
Allowance accrued under Section 5.01(c)(i)(A) for purposes of this
Section 4.04 for Credited Service during such period of
nonqualification shall be increased by 5/6 per centum of the part
of each year's Compensation which is not in excess of $3,600 per
annum.
4.05 Service with Certain Other Employers
(a) An Employee hired prior to November 9, 1989, who becomes a
Member and continues as a Member without a break in
membership, shall receive Continuous Service and Credited
Service for all service not otherwise recognized, in the
employ of another electric utility company or a company or
corporation furnishing advisory or consulting service to the
Company, provided that such service would be recognized if it
had been rendered to the Company and provided that any benefit
payable under this Plan on account of such service, so
recognized, shall be reduced by the amount of benefit provided
under the pension or retirement plan of such other company
with respect to the same period. The Company shall calculate
such service based on actual employment records where
available, but if such records are not available, the Company
shall request that the Employee obtain information from the
Social Security Administration which documents the Employee's
Social Security eligible compensation or from such other
entity as the Company deems appropriate. Based on such
documents, the Company shall calculate the Employee's service
and Compensation for purposes of this Section 4.05. In the
event no such documentation can be obtained, the Company shall
make its best effort to estimate such service and
Compensation.
(b) An Employee hired on or after November 9, 1989, who becomes
a Member and continues as a Member without a break in
membership, shall receive Continuous Service and Credited
Service for all service not otherwise recognized, in the
employ of an Affiliated Company, provided that such service
would be recognized if it had been rendered to the Company
and provided that any benefit payable under this Plan on
account of such service, so recognized shall be reduced by
the amount of benefit provided under the pension or
retirement plan of such other company with respect to the
same period.
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ARTICLE 5 - BENEFITS
5.01 Normal and Late Retirement
(a) The right of a Member to his normal retirement Allowance shall be non-forfeitable upon attaining age 65. A Member may retire from service on a normal retirement Allowance upon reaching his Normal Retirement Date or he may postpone his retirement and remain in service after his Normal Retirement Date. During any such deferment the Member shall be retired from service on a normal retirement Allowance on the first day of the calendar month next following receipt by the Retirement Committee of written application therefor made by the Member.
(b) Subject to the provisions of Section 5.01(e), the annual normal retirement Allowance payable upon retirement on the Normal Retirement Date shall be computed pursuant to Paragraphs (c) and (d) below. The annual retirement Allowance payable upon retirement after a Member's Normal Retirement Date shall be equal to (i) the amount determined in accordance with Paragraphs (c) and (d) below, based on the Member's Credited Service and average annual Compensation as of his late retirement date or, if greater, (ii) the amount of Allowance to which the Member would have been entitled under Paragraphs (c) and (d) below as of his Normal Retirement Date increased by an amount of Equivalent Actuarial Value to the monthly payments which would have been payable with respect to each month during the postponement period which is not a Suspendible Month, with any such monthly payment amount determined as if the Member had retired as of the first day of the Plan Year during which payment would have been made or, if later, his Normal Retirement Date.
(c) The normal retirement Allowance shall be computed as an annuity payable for the life of the Member and shall consist of:
(i) For service credited while a Member on or after April 1, 1969, an Allowance equal to 1-1/6 per centum of the part of each year's Compensation which is not in excess of $3,600 per annum plus 2 per centum of the part of such Compensation in excess of $3,600 per annum; and
(ii) For service credited between the effective date of the Plan and March 31, 1969, an Allowance equal to 1 per centum of the part of each year's Compensation which is not in excess of $3,000 per annum plus 2 per centum of the part of such Compensation in excess of $3,000 per annum; and
(iii) For service credited prior to the effective date of the Plan, an Allowance which, when added to his Retirement Annuity, shall be equal to 1 per centum of the part of the Member's average annual Compensation for the three calendar years (1956, 1957 and 1958) which is not in excess of $3,000 plus 1 1/2 per centum of the part of such Compensation in excess of $3,000, multiplied by the number of years of his Credited Service to the effective date of the Plan.
(d) The benefit determined in Paragraph (c) above, when added to a Member's Retirement Annuity, if any, shall not be less than:
(i) 1-2/3 per centum of his average annual Compensation, multiplied by his years of Credited Service not in excess of 36 years, reduced by
(ii) 1 1/2 per centum of his primary Social Security Benefit multiplied by his years of Credited Service, the product not to exceed 50 per centum of his primary Social Security Benefit, where average annual Compensation is calculated during the 36 highest consecutive months within the 120 months preceding retirement.
(iii) Effective January 1, 1994 for purposes of determining a Member's average annual Compensation under this paragraph (d), the determination of the 36 highest consecutive months within the 120 months preceding retirement shall only include those months in which the Member receives Compensation.
(e) If the Member is married on his Annuity Starting Date and if he has not elected an optional form of benefit as provided in Section 7.07, the retirement Allowance shall be payable in the form of a Qualified Joint and Survivor Annuity.
(f) Notwithstanding any other provision of the Plan, each Member's normal retirement allowance is the greater of
(i) the sum of:
(A) the normal retirement allowance determined under this Section 5.01 as of December 31, 1993, plus
(B) the normal retirement allowance determined
under this Section 5.01 based on Credited
Service and Compensation after December 31,
1993 (with Credited Service used in this
paragraph (f) (i) (B) being added to the
Credited Service used in paragraph (f) (i) (A)
for purposes of determining whether paragraph
(d) (i) 36-year limit and (d) (ii) 50 per
centum offset limit have been exceeded); or
(ii) the normal retirement allowance determined under this
Section 5.01 as applied to all Credited Service and
Compensation.
5.02 Early Retirement
(a) A Member who has not reached his Normal Retirement Date but who has reached the 55th anniversary of his birth shall be retired from service on an early retirement Allowance on the first day of the calendar month next following receipt by the Retirement Committee of written application thereof or made by the Member.
(b) At the time of retirement the Member may elect to receive either (i) a deferred early retirement Allowance commencing on the Member's Normal Retirement Date which shall be computed as a normal retirement Allowance, in accordance with Section 5.01(b), on the basis of his Compensation and Credited Service at the time of early retirement or (ii) an immediate early retirement Allowance beginning on the first day of any month before his Normal Retirement Date which shall be computed in accordance with Sections 5.01(c) and (d) and shall be reduced by 1/12 of 5% for each month by which the date the Member's early retirement Allowance begins precedes age 62.
(c) If the Member is married on the date his retirement
Allowance commences, the early retirement Allowance shall be
computed on the same basis as in Paragraph (b) above, in
accordance with Section 5.01(e).
5.03 Termination of Employment
(a) A Member shall be 100% vested in, and have a non-forfeitable
right to, his Accrued Benefit upon completion of five years of
Continuous Service since the first day of the Computation
Period in which the 18th anniversary of his birth occurs. If
the Member's employment with the Company is subsequently
terminated for reasons other than retirement or death, he
shall be eligible for a vested Allowance upon application
therefor. If a Member's employment with the Company terminates
before completion of five (5) years of Continuous Service or
before becoming eligible for an early retirement or normal
retirement Allowance, such Member's Accrued Benefit shall be
forfeited upon termination of employment subject to
restoration under Section 5.05.
(b) The vested Allowance shall be a deferred Allowance
commencing on the former Member's Normal Retirement Date and
shall be determined by computing a normal retirement
Allowance, in accordance with Section 5.01, on the basis of
his Compensation and Credited Service at his date of
termination and the benefit formula in effect on that date.
(c) Instead of deferring his Allowance to his Normal Retirement
Date, the Member can elect to receive a reduced Allowance
commencing on the first day of any month next following his
attainment of age 55 but prior to his Normal Retirement
Date. The reduction shall be 1/12 of 5% for each month by
which his Annuity Starting Date precedes his Normal
Retirement Date, provided that such reduction shall be made
prior to the application of the maximum limitation provided
under Article 6 and such reduced Allowance shall be subject
to such limitation.
5.04 Adjustment of Retirement Allowance for Social Security Benefits
When an Allowance commences prior to the attainment of age 65, the
Member may elect to convert the Allowance otherwise payable to him
into an Allowance of Equivalent Actuarial Value of such amount
that, with his Retirement Annuity, if any, and his old-age
insurance benefit under Title II of the Social Security Act, he
will receive, so far as possible, the same amount each year before
and after such benefit commences.
5.05 Restoration of Retired Member or Former Member to Service
(a) If a Member in receipt of an Allowance is restored to
service as an Employee on or after his Normal Retirement
Date, the following shall apply, except with respect to
temporary employees:
(i) His Allowance shall be suspended for each month
during the period of restoration which is a
Suspendible Month.
(ii) Upon the death of the Member during the period of
restoration, any Allowance that would have been
payable to his surviving Spouse had he not been
restored to service shall be payable or,
alternatively, any payments under optional benefit,
if one has been elected and becomes effective, shall
begin.
(iii) Upon later retirement, payment of the Member's
Allowance shall resume no later than, the third month
after the latest Suspendible Month during the period
of restoration, and shall be adjusted, if necessary,
in compliance with Title 29 of the Code of Federal
Regulations, ss. 2530.203-3 in a consistent and
nondiscriminatory manner
(b) If a Member in receipt of an Allowance is restored to
service as an Employee before his Normal Retirement Date,
the following shall apply, except with respect to temporary
employees:
(i) His Allowance shall cease and any election of an
optional benefit in effect shall be void.
(ii) Any Continuous and credited Service to which he was
entitled when he retired or terminated service shall
be restored to him.
(iii) Upon later retirement or termination, his Allowance
shall be based on the benefit formula then in effect
and his Compensation and Credited Service before and
after the period when he was not in the service of
the Company, reduced by an amount of Equivalent
Actuarial Value to the benefits, if any, he received
before the date of his restoration to service.
(iv) The part of the Member's Allowance upon later
retirement payable with respect to Credited Service
rendered before his previous retirement or
termination of service shall never be less than the
amount of his previous Allowance modified to reflect
any option in effect on his later retirement.
(c) If a Member not in receipt of an Allowance or a former
Member is restored to service without having had a Break in
Service, his Continuous Service shall be determined as
provided in Section 4.01, and, if applicable, he shall again
become a Member as of his date of restoration to service.
(d) If a vested Member not in receipt of an Allowance or a
former Member who received a lump sum settlement in lieu of
his Allowance is restored to service with the Company after
having had a Break in Service, the following shall apply:
(i) Upon completion of one year of Continuous Service
following the Break in Service, the Continuous
Service to which he was previously entitled shall be
restored to him, and, if applicable, he shall again
become a Member as of his date of restoration to
service.
(ii) If a Member has received a distribution of his
Allowance and the Member is restored to service with
the Company, the Member shall have the right to
restore his or her Accrued Benefit to the extent
forfeited upon the repayment to the Plan of the full
amount of the distribution plus interest, compounded
annually from the date of distribution at the rate
determined for purposes of Codess. 411(c)(2)(C). Such
repayment must be made before the earlier of five (5)
years after the first date on which the Member is
subsequently reemployed by the Company, or the date
the Member incurs five (5) consecutive one year
Breaks in Service following the date of distribution.
If a Member has been deemed to receive a distribution
under the Plan, and the Member is restored to service
with the Company, upon the reemployment of such
Member, the Accrued Benefit will be restored to the
amount of such Accrued Benefit on the date of deemed
distribution.
(iii) Upon later termination or retirement of a Member
whose previous Credited Service has been restored
under this Paragraph (d), his Allowance shall be
based on the benefit formula then in effect and his
Compensation and Credited Service before and after
the period when he was not in the service of the
Company.
(e) If any other former Member is restored to service with the
Company after having had a Break in Service, the following
shall apply:
(i) Upon completion of one year of Continuous Service
following the Break in Service, he shall again become
a Member as of his date of restoration to service.
(ii) Upon becoming a Member in accordance with (i) above,
the Continuous Service to which he was previously
entitled shall be restored to him, if the total
number of consecutive one-year Breaks in Service does
not equal or exceed the greater of (a) five, or (b)
the total number of years of his Continuous Service
before the Break in Service, determined at the time
of the Break in Service, excluding any Continuous
Service disregarded under this Paragraph (e) by
reason of any earlier Break in Service.
(iii) Any Credited Service to which the Member was entitled
at the time of his termination of service which is
included in the Continuous Service so restored shall
be restored to him.
(iv) Upon later termination or retirement of a Member
whose previous Credited Service has been restored
under this Paragraph (e), his Allowance, if any,
shall be based on the benefit formula then in effect
and his Compensation and Credited Service before and
after the period when he was not in the service the
Company.
5.06 Additional Monthly Benefit
(a) In addition to other benefits provided in this Article 5,
the following monthly benefits are payable as a life annuity
to eligible Members as defined in Paragraph (b) or (c)
below, as applicable.
The "additional monthly amount" is calculated as (i) a
percentage of the Member's first $300 of monthly
Allowance set forth below, multiplied by (ii) the
number of years the Member was retired (A) prior to
January 1, 1990, and (B) prior to January 1, 1995 but
after January 1, 1990, as applicable in any event, for
both the additional monthly amount effective June 1,
1991 and June 1, 1996, the minimum additional monthly
amount to be added to a Member's Allowance shall equal
$25.00 per month.
Effective June 1, 1991, the percentage increases and
the years of retirement for which they are applicable
are as follows:
Years of Retirement Percentage Increase
as of 1/1/90 for All Prior Years
Less than 5 3.75%
5 to 10 4.0%
10 to 15 4.5%
15 or more 5.0%
Effective June 1, 1996, the percentage increases and
the years of retirement for which they are applicable
are as follows:
Percentage Increase
Years of Retirement for Each Year of
as of 1/1/95 Retirement Since 1/1/90
Less than 5 3.5%
5 to 9 4.0%
10 to 14 4.5%
15 or more 5.0%
(b) Members eligible for the additional monthly amount
made effective as of June 1, 1991 are those retired
Members who retired directly from active status on or
before June 1, 1991.
(c) Members eligible for the additional monthly amount
made effective June 1, 1996 are those Members who
retired directly from active status before January 1,
1994.
(d) If an adjustment of retirement Allowance for Social
Security benefits option was elected pursuant to
Section 5.04, the additional monthly benefit shall be
calculated on the Allowance before such adjustment.
(e) Upon the death of a Member eligible for an additional
monthly amount, such amount shall be paid to the
Member's Spouse regardless of the method of
distribution elected by a Member. With regard to the
additional monthly amount made effective June 1,
1996, it shall be determined (i) based on the
Allowance being paid as of June 1, 1996, or (ii) if
no allowance is being paid but the Member's Spouse is
receiving an additional monthly amount in accordance
with the preceding sentence, based on the amount such
Spouse is receiving as of June 1, 1996.
5.07 Written Application
Each Member, before any benefit shall be payable to him or his
account under the Plan, shall file with the Retirement Committee such
information as it shall require to establish his rights and benefits
under the Plan.
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ARTICLE 6 - LIMITATIONS ON BENEFITS
6.01 Maximum Benefits
(a) The maximum annual retirement Allowance payable to a Member
under the Plan, when added to any retirement Allowance
attributable to contributions of the Company or an
Affiliated Company provided to the Member under any other
qualified defined benefit plan, shall be equal to the lesser
of (1) $90,000, as adjusted under Code Section 415(d), or
(2) the Member's average annual remuneration during the
three consecutive calendar years in his Credited Service as
a Member affording the highest such average, or during all
of the years in his Credited Service as a Member, if less
than three years, subject to the following adjustments:
(i) If the Member has not been a Member of the Plan for at least 10 years, the maximum annual retirement Allowance in clause (1) above shall be multiplied by the ratio which the number of years of his membership in the Plan bears to 10. This adjustment shall be applied separately to the amount of the Member's retirement Allowance resulting from each change in the benefit structure of the Plan, with the number of the years of membership in the Plan being measured from the effective date of each such change.
(ii) If the Member has not completed 10 years of Continuous Service, the maximum annual retirement Allowance in clause (2) above shall be multiplied by the ratio which the number of years of his Continuous Service bears to 10.
(iii) If the retirement Allowance begins before the Member's social security retirement age (as defined below), but on or after his 62nd birthday, the maximum retirement Allowance in clause (1) above shall be reduced by 5/9 of 1% for each of the first 36 months plus 5/12 of 1% for each additional month by which the Member is younger than the social security retirement age at the date his retirement Allowance begins. If the retirement Allowance begins before the Member's 62nd birthday, the maximum retirement Allowance in clause (1) above shall be of Equivalent Actuarial Value to the maximum benefit payable to age 62 as determined in accordance with the preceding sentence.
(iv) If the retirement Allowance begins after the Member's social security retirement age (as defined below), the maximum retirement Allowance in clause (1) above shall be of Equivalent Actuarial Value, based on an interest rate of 5% per year in lieu of the interest rate otherwise used in the determination of Equivalent Actuarial Value, to that maximum benefit payable at the social security retirement age.
(v) If the Member's retirement Allowance is payable as a joint and survivor Allowance with his Spouse as the contingent annuitant, the modification of the retirement Allowance for that form of payment shall be made before the application of the maximum limitation, and, as so modified, shall be subject to the limitation.
(b) As of January 1 of each calendar year on or after January 1, 1988, the dollar limitation as determined by the Commissioner of Internal Revenue for that calendar year shall become effective as the maximum permissible dollar amount of retirement Allowances payable under the Plan during that calendar year, including retirement Allowances payable to Members who retired prior to that calendar year, in lieu of the dollar amount in (1) of Paragraph (a) above.
(c) For limitation years beginning before January 1, 2000, in the case of a Member who is also a Member of a defined contribution plan of the Company or an Affiliated Company, his maximum benefit limitation shall not exceed an adjusted limitation computed as follows:
(i) Determine the defined contribution fraction.
(ii) Subtract the result of (i) from 1.0.
(iii) Multiply the dollar amount in (1) of Paragraph (a) above by 1.25.
(iv) Multiply the amount described in (2) of Paragraph (a) above by 1.4.
(v) Multiply the lesser of the result of (iii) or the result of (iv) by the result of (ii) to determine the adjusted maximum benefit limitation applicable to a Member.
(d) For purposes of this Section:
(i) the defined contribution fraction for a Member who is a Member of one or more defined contribution plans of the Company or an Affiliated Company shall be a fraction the numerator of which is the sum of the following:
(A) the Company's and Affiliated Companies' contributions credited to the Member's accounts under the defined contribution plan or plans.
(B) with respect to calendar years beginning before 1987, the lesser of the part of the Member's contributions in excess of 6% of his Compensation or one-half of his total contributions to such plan or plans, and with respect to calendar years beginning after 1986, all Member's contributions to such plan or plans, and
(C) any forfeitures allocated to his accounts under such plan or plans, but reduced by any amount permitted by regulations promulgated by the Commissioner of Internal Revenue; and the denominator of which is the lesser of the following amounts determined for each year of the Member's Continuous Service.
(D) 1.25 multiplied by the maximum dollar amount allowed by law for that year; or
(E) 1.4 multiplied by 25% of the Member's remuneration for that year.
At the direction of the Retirement Committee, the portion of the denominator of that fraction with respect to calendar years before 1983 shall be computed as the denominator for 1982, as determined under the law as then in effect, multiplied by a fraction of the numerator of which is the lesser of:
(F) $51,875, or
(G) 1.4 multiplied by 25% of the Member's remuneration for 1981; and the denominator of which is the lesser of:
(H) $41,500, or
(I) 25% of the Member's remuneration for 1981;
(ii) a defined contribution plan means a pension plan which provides for an individual account for each Member and for benefits based solely upon the amount contributed to the Member's account, and any income, expenses, gains and losses, and any forfeitures of accounts of other Members which may be allocated to that Member's accounts, subject to (iii) below; and
(iii) a defined benefit plan means any pension plan which is not a defined contribution plan; however, in the case of a defined benefit which is based partly on the balance of the separate account of a Member, that plan shall be treated as a defined contribution plan to the extent benefits are based on the separate account of a Member and as a defined benefit plan with respect to remaining portion of the benefits under the plan.
(iv) the term "remuneration" with respect to any Member
shall mean the wages, salaries and other amounts paid
in respect of such Member by the Company or an
Affiliated Company for personal services actually
rendered, and shall include, but not by way of
limitation, bonuses, overtime payments, commissions
and, for limitation years beginning on and after
January 1, 1998, any elective deferrals as defined in
Code Section 402(g)(3) and any amount contributed by
an Employer on behalf of the Employee under any Code
Section 125 or 457 arrangement, and shall exclude
other deferred compensation, stock options and other
distributions which receive special tax benefits
under the Code; and
(v) the term "social security retirement age" shall mean age 65 with respect to a Member who was born before January 1, 1938; age 66 with respect to a Member who was born after December 1, 1937 and before December 1, 1955; and age 67 with respect to a Member who was born after December 31, 1954.
(e) Notwithstanding the preceding paragraphs of this Section, a Member's annual retirement Allowance payable under this Plan, prior to any reduction required by operation of Paragraph (c) above, shall in no event be less than:
(i) the benefit that the Member had accrued under the Plan as of the end of the Plan Year beginning in 1982, with no changes in the terms and conditions of the Plan on or after July 1, 1982 taken into account in determining that benefit, or
(ii) the benefit that the Member had accrued under the Plan as of the end of the Plan Year beginning in 1986, with no changes in the terms and conditions of the Plan on or after May 5, 1986 taken into account in determining that benefit.
(f) Notwithstanding any provisions contained herein to the contrary, in the event that, for limitation years beginning before January 1, 2000, a Member participates in a defined contribution plan or defined benefit plan required to be aggregated with this Plan under Code Section 415(g) and the combined benefits with respect to a Member exceed the limitations contained in Code Section 415(e), corrective adjustments shall first be made under this Plan. However, if a Member's Allowance under this Plan has already commenced, corrections shall first be made under The Southern Company Employee Stock Ownership Plan, if possible, and if not possible, then correction shall be made to the Member's Accrued Benefit under this Plan.
(g) Notwithstanding anything contained in this Article to the contrary, the limitations, adjustments and other requirements prescribed in this Article shall at all times comply with the provisions of Code ss. 415 and the regulations thereunder, the terms of which are specifically incorporated herein by reference.
ARTICLE 7 - DISTRIBUTION OF BENEFITS
7.01 Surviving Spouse Benefit
On and after August 23, 1984, if a married Member:
(a) dies in active service prior to his Annuity Starting Date
after having met the requirements for an Allowance, or
(b) dies after retiring on any Allowance or after terminating
service on or after August 23, 1984, with entitlement to a
vested Allowance, but in either case before his Annuity
Starting Date, or
(c) dies after he is credited with at least one Hour of Service
with the Company on or after August 23, 1984 but prior to
his Annuity Starting Date, there shall be payable to his
Surviving Spouse a Qualified Preretirement Survivor Annuity
as provided in Section 7.03.
7.02 Qualified Joint and Survivor Annuity
Provided an optional form of benefit as set forth in Section 7.07
is not elected pursuant to a Qualified Election within the 90-day
period ending on the Annuity Starting Date, a married Member's
Accrued Benefit will be paid in the form of a Qualified Joint and
Survivor Annuity and an unmarried Member's Accrued Benefit will be
paid in the form of an annuity for his lifetime.
7.03 Qualified Preretirement Survivor Annuity
(a) Provided that a Member and his or her Spouse have been
married throughout the one-year period ending on his or her
date of death and provided an optional form of benefit as
set forth in Section 7.07 has not been elected by a Member
eligible to waive the Qualified Preretirement Survivor
Annuity within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity Starting
Date, the Member's Accrued Benefit shall be payable as an
annuity for the life of the Surviving Spouse in accordance
with this Section 7.03.
(b) The Qualified Preretirement Survivor Annuity shall commence
on what would have been the Member's Normal Retirement Date
or, on the first day of the month following the death of the
Member, if later, and shall cease with the last monthly
payment prior to the death of the Spouse. However:
(i) if the Member dies in active service after having met
the requirements for early retirement, after having
completed twenty years of service, or after retiring
early but before payments commence, the Spouse may
elect to begin receiving payments as of the first day
of the month following the Member's date of death;
and
(ii) in the case of the death of any other Member, the
Spouse may elect to begin receiving payments as of
the first day of any month following what would have
been the Member's Earliest Retirement Age which is
his 55th birthday.
(c) Before reduction in accordance with Paragraph (d) below, the
Qualified Preretirement Survivor Annuity shall be equal to:
(i) in the case of a Member who dies while in active
service after having met the requirements for early
retirement, after having completed twenty years of
service, or after retiring early but before payments
commence, the following per centum of a normal
retirement Allowance computed as provided in Section
5.01(c) and 5.01(d) on the basis of the deceased
Member's Compensation and Credited Service prior to
his death, provided that if the Spouse was born more
than 60 months after the deceased Member, the
Qualified Preretirement Survivor Annuity so
determined shall be reduced by 1/6 of 1% for each
month in excess of 60 by which her date of birth
followed the deceased Member's date of birth.
Age Member
Would Have Been
At Commencement Per Centum
40 to 45 40%
46 41%
47 42%
48 43%
49 44%
50 45%
51 46%
52 47%
53 48%
54 49%
55 or over 50%
(ii) in the case of any other Member, 50% of the amount of
vested Allowance to which the Member would have been
entitled at his Normal Retirement Date, reduced as
follows:
- reduction for a 50% joint and survivor
annuity option (based on the Member's age
and his Spouse's age had the Member survived
to the date benefits commence), and
- reduction to reflect early commencement, if
applicable, of payments in accordance with
Section 5.03(c).
(iii) If within the 90 day period prior to his Annuity
Starting Date a Member has elected Option (ii) under
Section 7.07 naming his spouse as contingent
annuitant, the amount payable to his spouse under
this Section 7.03 as a Qualified Preretirement
Survivor Annuity shall be the amount that would have
been payable to his spouse under Option (ii) if such
amount is greater than the amount of the Qualified
Preretirement Survivor Annuity otherwise payable
under subparagraphs (c)(i) or (c)(ii) above, as
applicable.
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(d) The Allowance subsequently payable to a Member whose Spouse would have been entitled to a Qualified Preretirement Survivor Annuity under this Section had the Member's death occurred, or the Qualified Preretirement Survivor Annuity payable to his Spouse after his death, whichever is applicable, shall be reduced by the applicable percentage shown in the following table for the period, or periods, that the provisions of this Section 7.03 are in effect with respect to the Member. No such reduction shall be made with respect to:
(i) coverage during active employment, or
(ii) any period before the commencement of the election
period specified in Paragraph (e) below.
Annual Reduction for Spouse's coverage
after Retirement or Other Termination
of Service
Age Reduction
Under 35 0%
35 -39 2/10 of 1%
40 -49 3/10 of 1%
50 -54 4/10 of 1%
55 -59 5/10 of 1%
60 and over 1%
(e) The Company shall furnish to each married Member within the
one year period commencing on the date he terminates service
a written explanation in non-technical language which
describes (1) the terms and conditions of the Qualified
Preretirement Survivor Annuity, (2) the Member's right to
make, and the effect of, an election to waive the Qualified
Preretirement Survivor Annuity, (3) the rights of the
Member's Spouse and (4) the right to make, and the effect
of, a revocation of such election.
7.04 Definitions
For purposes of this, Article 7, the following definitions shall
apply:
(a) The term "Election Period" shall mean the period which
begins on the first day of the Plan Year in which a Member
attains age 35 and ends on the date of the Member's death.
If a Member separates from service prior to the first day of
the Plan Year in which age 35 is attained, with respect to
the Accrued Benefit as of the date of separation, the
Election Period shall begin on the date of separation.
(b) The term "Earliest Retirement Age" shall mean the earliest
date on which, under the Plan, the Member could elect to
receive retirement benefits.
(c) The term "Qualified Election" shall mean waiver of a
Qualified Joint and Survivor Annuity or a Qualified
Preretirement Survivor Annuity. Any waiver of a
Qualified Joint and Survivor Annuity or a Qualified
Preretirement Survivor Annuity shall not be effective
unless: (a) the Member's Spouse consents in writing
to the election; (b) the election designates a
contingent annuitant, which may not be changed
without spousal consent (or the Spouse expressly
permits designations by the Participant without any
further spousal consent); (c) the Spouse's consent
acknowledges the effect of the election; and (d) the
Spouse's consent is witnessed by a Plan
representative designated by the Retirement Committee
or notary public. Additionally, a Member's waiver of
the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of
benefit payment which may not be changed without
spousal consent (or the Spouse expressly permits
designations by the Member without any further
spousal consent). If it is established to the
satisfaction of a the Retirement Committee that there
is no Spouse or that the Spouse cannot be located, a
waiver without spousal consent will be deemed a
Qualified Election.
Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained)
shall be effective only with respect to such Spouse. A consent
that permits designations by the Member without any requirement of
further consent by such Spouse must acknowledge that the Spouse
has the right to limit consent to a specific Beneficiary, and a
specific form of benefit where applicable, and that the Spouse
voluntarily elects to relinquish both of such rights. A revocation
of a prior waiver may be made by a Member without the consent of
the Spouse at any time before the commencement of benefits. The
number of revocations shall not be limited. No consent obtained
under this provision shall be valid unless the Member has received
notice as provided in Section 7.05 below.
7.05 Notice Requirements
(a) In the case of a Qualified Joint and Survivor Annuity or a
single life annuity, the Retirement Committee shall provide,
no less than 30 days and no more than 90 days prior to the
Annuity Starting Date, each Member with a written explanation
of: (1) the terms and conditions of a Qualified Joint and
Survivor Annuity or single life annuity; (2) the Member's
right to make and the effect of an election to waive the
Qualified Joint and Survivor Annuity or single life annuity
form of benefit; (3) the rights of a Member's Spouse; and (4)
the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity or single life annuity.
(b) In the case of a Qualified Preretirement Survivor Annuity,
the Retirement Committee shall provide each Member within
the applicable period for such Member a written explanation
of the Qualified Preretirement Survivor Annuity in such
terms and in such manner as would be comparable to the
explanation provided for meeting the requirements of
Paragraph (a) above applicable to a Qualified Joint and
Survivor Annuity or a single life annuity.
The applicable period for a Member is whichever of the following
periods ends last: (1) the period beginning with the first day of
the Plan Year in which the Member attains age 32 and ending with
the close of the Plan Year preceding the Plan Year in which the
Member attains age 35; (2) a reasonable period ending after the
individual becomes a Member; (3) a reasonable period ending after
the Member's Qualified Preretirement Survivor Annuity ceases to be
fully subsidized; (4) a reasonable period ending after this
Article first applies to the Member. Notwithstanding the
foregoing, notice must be provided within a reasonable period
ending after separation from service in the case of a Member who
separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (2), (3)
and (4) is the end of the two-year period beginning one year prior
to the date the applicable event occurs, and ending one year after
that date. In the case of a Member who separates from service
before the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to
separation and ending one year after separation. If such a Member
thereafter returns to employment with the employer, the applicable
period for such Member shall be redetermined.
7.06 Transitional Rules
Any living Member not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by the
previous Sections of this Article must be given the opportunity to
elect to have the prior Sections of this Article apply if such
Member is credited with at least one Hour of Service under this
Plan or a predecessor plan in a Plan Year beginning on or after
January 1, 1976, and such Member is entitled to a vested
Allowance.
7.07 Alternative Forms of Distribution
(a) Any Member may, subject to the election procedures
applicable to Qualified Joint and Survivor Annuities and
Qualified Preretirement Survivor Annuities, elect to convert
his retirement Allowance into an optional benefit of
Equivalent Actuarial Value determined as of the Annuity
Starting Date, in accordance with one of the options named
below:
Option (i) a retirement Allowance payable for the
Member's life, with no Allowance
payable after his death; or
Option (ii) a modified retirement Allowance payable
during the Member's life with the provision
that after his death either a 50%, 75% or a
100% joint and survivor annuity shall be
paid during the life of, and to, the
contingent annuitant nominated by him.
(b) The election of an optional form of benefit shall
become effective as follows:
(i) If the Member retired on his Normal Retirement Date,
or if he retires on an early retirement Allowance or
a vested retirement Allowance deferred to commence on
his Normal Retirement Date, the election shall become
effective on his Normal Retirement Date.
(ii) If the Member retires on an early retirement
allowance commencing prior to his Normal Retirement
Date, the election shall become effective on the due
date of the first monthly installment.
(iii) If the Member continues in service as an Employee
after his Normal Retirement Date and the notice of
his election is received by the Retirement Committee
prior to his Normal Retirement Date, election shall
become effective on his Normal Retirement Date, or if
the notice of the election is received by the
Retirement Committee after the Member's Normal
Retirement Date, the election shall become effective
on the date it is received by the Retirement
Committee. In the event of the death of a Member in
service as an Employee on or after his Normal
Retirement Date and after his election has become
effective, payments of the benefit under the option
shall commence on the first day of the month next
following the month of death if the contingent
annuitant designated under the option is then living;
or, upon the retirement of such a Member, the amount
under the option shall be payable to the Member, but
no payments shall commence or accrue to him until the
date of retirement.
7.08 Cash-Out of Annuity Benefits
(a) Although Allowances shall normally be payable in monthly
installments, a lump sum payment of Equivalent Actuarial Value
shall be made in lieu thereof if the present value of a
Member's Allowance upon termination of employment is less than
or equal to $3,500 (and if the present value of such Member's
Allowance never exceeded $3,500) for distributions before
January 1, 1998, or if the present value of a Member's
Allowance upon termination of employment is less than or equal
to $5,000 (and if the present value of such Member's Allowance
never exceeded $5,000) for distributions on or after January
1, 1998. The lump sum payment shall be made as soon as
practicable on or after the date the Member terminates
employment. Notwithstanding the foregoing, if the present
value of the Member's vested Allowance is zero, the Member
shall be deemed to have received a distribution of such
Member's Accrued Benefit.
(b) This Section 7.08(b) shall apply to all distributions from the
Plan and from annuity contracts purchased to provide benefits
other than distributions described in Section 1.417-1T(e)(3)
of the income tax regulations issued under the Retirement
Equity Act of 1984. For purposes of determining whether the
present value of (A) a Member's vested accrued benefit; (B) a
qualified joint and survivor annuity, within the meaning of
Section 417(b) of the Code; or (C) a qualified preretirement
survivor annuity within the meaning of Section 417(c)(1) of
the Code exceeds $3,500 for distributions before January 1,
1998, or $5,000 for distributions on or after January 1, 1998,
the present value of such benefits or annuities shall be
calculated by using an interest rate no greater than the
Applicable Interest Rate and in no event shall the present
value of any such benefit or annuity determined under this
Section 7.08(b) be less than the present value of such
benefits or annuities determined using the Applicable Interest
Rate. "Applicable Interest Rate" for this purpose shall be
calculated by using the annual rate of interest on 30-year
Treasury securities for the month of November in the Plan Year
which precedes the Plan Year in which such present value is
determined and by using the prevailing commissioners' standard
table used to determine reserves for group annuity contracts
as in effect on the date as of which the present value is
being determined. In no event shall the amount of any benefit
or annuity determined under this Section 7.08(b) exceed the
maximum benefit permitted under Section 415 of the Code.
7.09 Commencement of Benefits
(a) Required Distributions
Once a written claim for benefits is filed with the
Retirement Committee and unless the Member elects to have
payment begin at a later date, payment of benefits to the
Member shall begin not later than sixty (60) days after the
last day of the Plan Year in which the latest of the
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following events occur:
(i) the Member's Normal Retirement Date;
(ii) the tenth (10th) anniversary of the date the Employee became a Member; or
(iii) the Member's separation from service.
(b) Required Minimum Distributions
(i) The payment of benefits to any Member shall begin no later than April 1 of the calendar year following the calendar year in which the Member attains age 70-1/2 or if later, the calendar year in which the Member retires.
(ii) Notwithstanding paragraph (i) above, with respect to
any member who is a five-percent owner as defined in
Section 15.02(g)(iii) with regard to the Plan Year
ending in which the member attains age 701/2or any
member who commenced receipt of his benefits in
accordance with the Required Minimum Distributions
provisions as they existed prior to January 1, 1997,
the payment of his benefits shall commence no later
than April 1 of the Plan Year following the Plan Year
in which the Member attains age 701/2. With respect
to a Member who commences receipt of his allowance
while in active service, the amount of his Allowance
shall be recomputed as of such April 1 and as of the
close of each Plan Year after his Allowance commences
and preceding his actual retirement date as if each
such date were the Member's late retirement date. Any
additional Allowance he accrues at the close of any
such Plan Year shall be offset (but not below zero)
by the value of the benefit payments received in such
Plan Year. The receipt by a Member of any payments or
distributions as a result of his attaining age 70-1/2
prior to his actual retirement or death shall in no
way affect the entitlement of an otherwise eligible
Member to additional accrued benefits.
(iii) With respect to a Member who retires after attaining age 70-1/2 and who has not previously commenced receipt of his Allowance while on active service, he shall receive his Allowance based on his actual retirement date, but which his Allowance shall not be less than the Equivalent Actuarial Value of his Allowance as of the first of the month following attainment of age 70-1/2.
(c) Distribution Upon Death of Member
(i) Death After Commencement of Benefits
If the Member dies before his entire non-forfeitable interest has been distributed to him, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution selected by the Member as of the date of his death.
(ii) Death Prior to Commencement of Benefits
If the Member dies before the distribution of his nonforfeitable interest has begun, the entire interest shall be distributed within five years after the death of such Member.
(e) Determining Required Minimum Distributions
Notwithstanding anything in this Plan to the contrary, all
distributions under this Plan shall be made in accordance
with Section 401(a) (9) of the Code and the regulations
thereunder and the minimum amount which must be distributed
each calendar year shall be determined in accordance with
the provisions of Code Section 401(a) (9) and applicable
Treasury Regulations.
7.10 TEFRA 242(b)(2) Transitional Rules
Any distribution made pursuant to a TEFRA transitional rule
distribution election shall meet the requirements of Code ss.
401(a)(9) as in effect on December 31, 1983, and shall also
satisfy Code ss.ss. 401(a)(11) and 417.
7.11 Requirement for Direct Rollovers
This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a Distributee's election under this
Article 7, a Distributee may elect, at the time and in the manner
prescribed by the Retirement Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover.
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(a) Definitions
(i) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include:
(A) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated beneficiary, or for a specified period of 10 years or more;
(B) any distribution to the extent such
distribution is required under Code ss.
401(a)(9); and
(C) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities).
(ii) Eligible Retirement Plan
An Eligible Retirement Plan is an individual
retirement account described in ss. Code 408(a), an
individual retirement annuity described in Code ss.
408(b), an annuity plan described in Code ss. 403(a),
or a qualified trust described in Code ss. 401(a)
that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible
Rollover Distribution to a surviving Spouse, an
Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(iii) Distributee
A Distributee includes a Member or former Member. In addition, the Member's or former Member's Surviving Spouse and the Member's or former Member's Spouse or former Spouse who is an alternate payee under a qualified domestic relations order, as defined in Code ss. 414(p), are Distributees with regard to the interest of the Spouse or former Spouse.
(iv) Direct Rollover
A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee.
ARTICLE 8 - CONTRIBUTIONS
8.01 It is the intention, of the Company to continue the Plan and make
such contributions to the Trustee each year in such amounts as are
necessary to maintain the Plan on a sound actuarial basis and to
meet minimum funding standards as prescribed by any applicable
law. However, subject to the provisions of Article 9, the Company
may discontinue its contributions for any reason at any time. Any
forfeitures shall be used to reduce the Company contributions
otherwise payable, and will not be applied to increase the
benefits any Member would otherwise receive under the Plan.
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ARTICLE 9 - ADMINISTRATION OF THE PLAN
9.01 The general administration of the Plan and the responsibility for
carrying out the provisions of the Plan shall be placed in a
Retirement Committee of not less than three persons appointed from
time to time by the Board of Directors to serve at the pleasure of
the Board of Directors. Any Member of the Retirement Committee may
resign by delivering his written resignation to the Board of
Directors and the Secretary of the Retirement Committee.
9.02 The Members of the Retirement Committee shall elect a Chairman
from their number and a Secretary who may be but need not be one
of the Members of the Retirement Committee; may appoint from their
number such committees with such powers as they shall determine;
may authorize one or more of their number or any agent to execute
or deliver any instrument or make any payment on their behalf; may
retain counsel, employ agents and provide for such clerical,
accounting and actuarial services as they may require in carrying
out the provisions of the Plan; and may allocate among themselves
or delegate to other persons all or such portion of their duties
hereunder, other than those granted to the Trustee under the Trust
instrument adopted for use in implementing the Plan, as they, in
their sole discretion shall decide.
9.03 The Retirement Committee, in addition to the functions and duties
provided for elsewhere in the Plan, shall have exclusive discretionary
authority for the following:
(a) Construing and interpreting the Plan;
(b) Determining all questions affecting the eligibility of any
Member, retired Member, Spouse or beneficiary;
(c) Determining all questions affecting the amount of the
Allowance payable hereunder;
(d) Ascertaining the persons to whom benefits shall be payable
under the provisions hereof;
(e) To the extent provided in the Plan, authorizing and directing
disbursements of benefits from the Plan
(f) Making final and binding determinations connection with any
questions of fact which may arise regarding the operation of
the Plan;
(g) Making such rules and regulations with reference to the
operation of the Plan as it may deem necessary or advisable,
provided that such rules and regulations shall not be
inconsistent with the express terms of the Plan or ERISA;
(h) Prescribing such procedures and adopting such forms as it
determines necessary under the terms of the Plan;
(i) Reviewing such denials of claims for benefits as may
arise under Section 9.04 below and making decisions
on such review. (claims procedure)
Any decision, determination, construction, interpretation,
ascertainment, authorization, direction, rule, regulation,
prescription or review that the Retirement Committee may
make or give in carrying out its duties or functions under
this Section 9.03 shall be binding and conclusive.
9.04 Consistent with the requirements of ERISA and the regulations
thereunder of the Secretary of Labor as from time to time in
effect, the Retirement Committee shall: (a) provide adequate
notice in writing to any Member or contingent annuitant (each
being hereinafter in this paragraph referred to as "Member") whose
claim for benefits under the Plan has been denied setting forth
specific reasons for such denial, written in a manner calculated
to be understood by such Member; and (b) afford a reasonable
opportunity to any Member whose claim for benefits has been denied
for a full and fair review of the decision denying the claim.
9.05 The Retirement Committee shall hold meetings upon such notice, at such
place or places, and at such time or times as it may from time to time
determine.
9.06 Any act which the Plan authorizes or requires the Retirement
Committee to do may be done by a majority of its Members. The
action of such majority expressed from time to time by a vote at a
meeting or in writing without a meeting shall constitute the
action of the Retirement Committee and shall have the same effect
for all purposes as if assented to by all Members of the
Retirement Committee at the time in office.
9.07 No Member of the Retirement Committee shall receive Compensation for
his services as such.
9.08 Subject to the limitations of the Plan, the Retirement Committee from
time to time shall establish rules for the administration of the Plan
and the transaction of its business. The determination of the
Retirement Committee as to any disputed question shall be conclusive.
9.09 As an aid to the Retirement Committee fixing the rates of Company
contributions payable to the Plan, the actuary designated by the
Retirement Committee shall make annual actuarial valuations and
shall submit to the Retirement Committee such amounts of
contribution as he recommends for use. The Retirement Committee
shall maintain accounts showing the fiscal transactions of the
Plan, and shall keep in convenient form such data as may be
necessary for actuarial valuations of the Plan. The Retirement
Committee shall submit a report each year to the Board of
Directors, giving a brief account of the operation of the Plan
during the past year.
9.10 The Members of the Retirement Committee shall use that degree of care,
skill, prudence and diligence that a prudent man acting in a like
capacity and familiar with such matters would use in his conduct of a
similar situation.
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ARTICLE 10 - MANAGEMENT OF FUNDS
All the funds of the Plan except those held by an insurance company shall be held by Trustee or Trustees appointed from time to time by the Board of Directors, in trust under a trust instrument adopted, or as amended, by the Board of Directors for use in providing the benefits of the Plan and paying its expenses not paid directly by the Company; provided that, except as otherwise herein provided, no part of the corpus or income of the Trust shall be used for, or diverted to, purposes other than for the exclusive benefit of Members and contingent annuitants under the Plan, prior to the satisfaction of all liabilities with respect to them; and provided that no person shall have any interest in or right to any part of the earnings of the Trust, or any rights in, or to, or under the Trust or any part of the assets thereof, except as and to the extent expressly provided in the Plan and in the trust instrument, and the Company shall have no liability for the payment of benefits under the Plan nor for the administration of the funds paid over to the Trustee or Trustees.
The Company's contributions to the Plan are conditioned upon their deductibility under Code ss. 404. If all or part of the Company's deductions for contributions to the Plan are disallowed by the Internal Revenue Service, the portion of the contributions to which that disallowance applies shall be returned to the Company without interest, but reduced by any investment loss attributable to those contributions. The return shall be made within one year after the date of the disallowance of deduction. The Company may recover without interest the amount of its contributions to the Plan made on account of a mistake in fact, reduced by any investment loss attributable to those contributions, if recovery is made within one year after the date of those contributions. Furthermore, if permitted under federal common law, the Company may recover any other contributions to the Plan or payments to any other entity to the extent such contributions or payments unjustly enrich or otherwise gratuitously benefit such entity(s).
ARTICLE 11 - CERTAIN RIGHTS AND LIMITATIONS
The following provisions shall apply in all cases whenever a Member or other person is affected thereby.
11.01 The Board of Directors may terminate the Plan for any reason at
any time. In case of complete or partial termination of the Plan,
the rights of affected Members to the benefits accrued under the
Plan to the date of such termination, to the extent then funded,
shall be non-forfeitable. The funds of the Plan shall be used for
the exclusive benefit of Members, Spouses, former Members, retired
Members, and contingent annuitants under the Plan as of the date
of such termination except that any residual assets which are not
required to satisfy all liabilities of the Plan for benefits
because of erroneous actuarial computation as defined in Treasury
Regulation S 1.401-2 shall be returned to the Company. Upon
termination, the Retirement Committee shall determine and pay
benefits to each Member, Spouse, and contingent annuitant in
accordance with the provisions of Title IV of ERISA.
11.02 The establishment of the Plan shall not be construed as conferring
any legal rights upon any Employee or other person for a
continuation of employment, nor shall it interfere with the rights
of the Company to discharge any Employee and to treat him without
regard to the effect which such treatment might have upon him as a
Member of the Plan.
11.03 (a) The annual payments to a Member described in
subparagraph (b) below shall not exceed an amount equal to
the payments that would be made to or on behalf of such
Member under a single life annuity that is the Actuarial
Equivalent of the sum of the Member's Accrued Benefit and
the Member's other benefits under this Plan (other than a
Social Security supplement) and any Social Security
supplement that the restricted employee is entitled to
receive. The restrictions in this subparagraph (a) do not
apply, however, if --
(i) after payment to a Member described subparagraph (b)
of all benefits pay; to such Member under this Plan,
the value of this Plan's assets equals or exceeds
110% of the value of current liabilities, as defined
in Code Section 412(a)(7), or
(ii) the value of the benefits payable to such Member
under this Plan for a Member described in
subparagraph (b) below is less than 1% of the value
of current liabilities before distribution.
(b) The Members whose benefits are restricted on distribution
include all highly compensated employees and highly
compensated former employees (as such terms are defined in
Treasury Regulation Section 1.401 (a) (4)-12); provided,
however, that Members whose benefits are subject to
restriction under this Section 11.03 shall be limited to
only those Members who in the current or in any previous
Plan Year were one of the 25 non-excludable Members of the
Company with the greatest compensation from the Company.
11.04 In the event that the Retirement Committee shall find that a
Member or other person entitled to a benefit is unable to care for
his affairs because of illness or accident or is a minor or has
died, the Retirement Committee may direct that any benefit payment
due him, unless a claim shall have been made therefor by a duly
appointed legal representative, be paid to his Spouse, a child, a
parent or other blood relative, or to a person with whom he
resides, and any such payment so made shall be a complete
discharge of the liabilities of the Plan therefor.
11.05 The Retirement Committee shall, upon direction of the Board of
Directors uniformly applicable to all Employees similarly
situated, deduct from the part of any retirement Allowance under
the Plan, all or part of any amount paid or payable to or on
account of any Member under the provisions of any present or
future law, pension or benefit scheme of any sovereign government,
or any political subdivision thereof, on account of which
contributions have been made or premiums or taxes paid by the
Company with respect thereto; provided that benefits payable under
Title II of the Social Security Act are not to be used to reduce
the benefits otherwise provided under this Plan except as
specifically provided in Section 5.01(d) (ii).
11.06 If any company hereafter becomes a subsidiary Affiliated Company
of the Company, the Board of Directors may include the employees
of such subsidiary or Affiliated Company in the membership of the
Plan upon appropriate action by such company necessary to adopt
the Plan. In such event, or if any persons become Employees of the
Company as the result of merger or consolidation or as the result
of acquisition by the Company of all or part of the assets or
business of another company, the Board of Directors shall
determine to what extent, if any, credit and benefits shall be
granted for previous service with such subsidiary, affiliated or
other company, but subject to the continued qualification of the
trust for the Plan as a tax exempt trust under the Code. Any such
subsidiary or Affiliated Company may terminate its participation
in the Plan upon appropriate action by it, in which event the
funds of the Plan held on account of Members of such company shall
be determined by the Retirement Committee on the basis of
actuarial valuation, and shall be applied as provided in Section
11.01 in the manner there provided if the Plan should be
terminated, or shall be segregated by the Trustee as a separate
trust, pursuant to certification to the Trustee by the Retirement
Committee, continuing the Plan as a separate Plan for the
Employees of such company under which the board of directors of
such company shall succeed to all the powers and duties of the
Board of Directors including the appointment of the Members of the
Retirement Committee.
11.07 The Plan may not be merged or consolidated with, nor may its
assets or liabilities be transferred to, any other plan unless
each Member, Spouse, former Member, retired Member, or contingent
annuitant under the Plan would, if the resulting plan were then
terminated, receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately before
the merger, consolidation, or transfer if the Plan had then
terminated.
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ARTICLE 12 - NON-ALIENATION OF BENEFITS
Except as required or permitted by Code ss. 401(a)(13) or by any other applicable law, no benefit under the Plan shall in any manner be anticipated, assigned or alienated, and any attempt to do so shall be void. However, payment shall be made in accordance with the provisions of any judgment, decree, or order which:
(a) creates for, or assigns to, a Spouse, former Spouse, child or other dependent of a Member the right to receive all or a portion of the Member's benefits under the Plan for the purpose of providing child support, alimony payments or marital property rights to that Spouse, child or dependent,
(b) is made pursuant to a State domestic relations law,
(c) does not require the Plan to provide any type of benefit, or any option, not otherwise provided under the Plan, and
(d) otherwise meets the requirements of Code ss. 414(p).
ARTICLE 13 - AMENDMENTS
The Board of Directors reserves the right at any time and from time to time, and retroactively if deemed necessary or appropriate to conform with governmental regulations or other policies, to modify or amend in whole or in part any or all of the provisions of the Plan; provided that no such modification or amendment shall make it possible for any part of the funds of the Plan to be used for, or diverted to, purposes other than for the exclusive benefit of Members or contingent annuitants under the Plan, prior to the satisfaction of all liabilities with respect to them; that no modification or amendment may be made in Section 11.01 without the consent of every participating Company; and that no modification or amendment shall be made which has the effect of decreasing the accrued benefit of any Member or of reducing the non-forfeitable percentage of the accrued benefit of a Member below that non-forfeitable percentage thereof computed under the Plan as in effect on the later of the date on which the amendment is adopted or becomes effective pursuant to Code ss. 411(d) (6). Any modification or amendment of the provisions of the Plan shall be voted on by a quorum of the Board of Directors necessary to transact business and such modifications or amendments shall be set forth in resolutions duly adopted by the Board of Directors.
ARTICLE 14 - CONSTRUCTION
14.01 The Plan shall be construed, regulated and administered under the laws
of the State of Georgia.
14.02 The masculine pronoun shall mean the feminine pronoun, and feminine the
masculine, wherever appropriate.
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ARTICLE 15 - TOP-HEAVY PROVISIONS
15.01 Top-Heavy Plan Requirements
For any Plan Year the Plan shall be determined to be a Top-Heavy Plan, the Plan shall provide the following:
(a) the minimum benefit requirement of Section 15.03; and
(b) the vesting requirement of Section 15.04.
15.02 Determination of Top-Heavy Status
(a) For any Plan Year commencing after December 31, 1983, the Plan
shall be determined to be a "Top-Heavy Plan," if, as of the
Determination Date, (1) the Present Value of Accrued
Retirement Income of Key Employees or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any
plan of an Aggregation Group, exceeds sixty percent (60%) of
the Present Value of Accrued Retirement Income or the
Aggregate Accounts of all Members entitled to participate in
this Plan and any Plan of an Aggregation Group. For purposes
of determining whether the Plan is top-heavy, proportional
subsidies shall be ignored while non-proportional subsidies
shall be taken into account.
(b) For Plan Years beginning after December 31, 1986, the
Accrued Retirement Income of a Non-Key Employee shall be
determined under the accrual method under the Plan.
(c) For any Plan Year commencing after December 31, 1983, the
Plan shall be determined to be a "Super Top-Heavy Plan," if,
as of the Determination Date, (1) the Present Value of
Accrued Retirement Income of Key Employees or (2) the sum of
the Aggregate Accounts of Key Employees under this Plan and
any plan in an Aggregation Group, exceeds ninety percent
(90%) of the Present Value of Accrued Retirement Income or
the Aggregate Accounts of all Members entitled to
participate in this Plan and any plan of an Aggregation
Group.
For purposes of Sections 15.02(a) and 15.02(b), if any
Member is a Non-Key Employee for any Plan Year, but such
Member was a Key Employee for any prior Plan Year, such
Member's Present Value of Accrued Retirement Income and/ or
Aggregate Account balance shall not be taken into account
for purposes of determining whether this Plan is a Top-Heavy
or Super Top-Heavy Plan (or whether any Aggregation Group
which includes this Plan is a Top-Heavy Group). In addition,
for Plan Years beginning after December 31, 1984, if a
Member or former Member has not performed any services for
the Company or any Affiliated Company maintaining the Plan
at any time during the five (5) year period ending on the
Determination Date, the Aggregate Account and/or Present
Value of Accrued Retirement Income for such Member or former
Member shall not be taken into account for purposes of
determining whether this Plan is a Top-Heavy or Super
Top-Heavy Plan.
(d) An Member's "Aggregate Account" as of the Determination Date
shall be determined under applicable provisions of the
defined contribution plan used in determining Top-Heavy
status.
(e) An "Aggregation Group" shall mean either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(i) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Company
in which a Key Employee is a participant, and each
other plan of the Company which enables any plan in
which a Key Employee participates to meet the
requirements of Code 55 401(a) (4) or 410, will be
required to be aggregated. Such group shall be known
as a Required Aggregation Group.
In the case of a Required Aggregation Group, each
plan in the group will be considered a Top-Heavy Plan
if the Required Aggregation Group is a Top-Heavy
Group. No plan in the Required Aggregation Group will
be considered a Top-Heavy Plan if the Aggregation
Group is not a Top-Heavy Group.
(ii) Permissive Aggregation Group: The Company may also
include any other plan not required to be included in
the Required Aggregation Group, provided the
resulting group, taken as a whole, would continue to
satisfy the provisions of Code ss.ss. 401(a)(4) or
410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group
will be considered a Top-Heavy Plan if the Permissive
Aggregation Group is a Top-Heavy Group. A plan that
is not part of the Required Aggregation Group but
that has nonetheless been aggregated as part of the
Permissive Aggregation Group will not be considered a
Top-Heavy Plan even if the Permissive Group is a
Top-Heavy Group.
(iii) Only those plans of the Employer in which the
Determination Dates fall within the same calendar
year shall be aggregated in order to determine
whether such plans are Top-Heavy Plans.
(f) The "Determination Date" shall mean with respect to any Plan
Year, the last day of the preceding Plan Year, or in the
case of the first Plan Year, the last day of such Plan Year.
(g) A "Key Employee" shall mean any Member or former Member (and
his beneficiaries) who, at any time during the Plan Year or
any of the four (4) preceding Plan Years, is:
(i) an officer of the Company having an annual
compensation from the Company greater than fifty
percent (50%) of the amount in effect under Codess.
415(b) (1)(A) for any such Plan Year. For purposes of
this Section 15.02(g) (i), only those employers which
incorporated shall be considered as having officers,
and no more than fifty (50) Members (or, if lesser,
the greater of three (3) or ten percent (10%) of the
Members) shall be treated as officers. Annual
compensation means compensation as defined in Codess.
415(c)(3), but including amounts contributed by the
Company pursuant to a salary reduction agreement
which are excludable from the Member's gross income
under Codess. 125, Codess. 402(a)(8), Codess. 402(h),
or Codess. 403(b).
(ii) one of the ten (10) Members (A) having annual
compensation from the Company greater than the
limitation in effect under Code ss.ss. 415(c)(1)(A)
and (B) owning (or considered as owning within the
meaning of Code ss. 318) the largest interests in the
Company. For purposes of this Section 15.06(g)(ii),
if two (2) Members have the same interest in the
Company, the Member having the greater annual
compensation from the Company shall be treated as
having a larger interest.
(iii) a "five percent owner" of the Company. The term "five
percent owner" shall mean any person who owns (or is
considered as owning within the meaning of Code ss.
318) more than five percent (5%) of the outstanding
stock of the Company or stock possessing more than
five percent (5%) of the total combined voting power
of all stock of the Company. In determining
percentage ownership hereunder, employers that would
otherwise be aggregated under Code ss.ss. 414(b),
(c), and (m) shall be treated as separate employers.
(iv) a "one percent owner" of the Company having an annual
compensation from the Company of more than $150,000.
The term "one percent owner" shall mean any person
who owns (or is considered as owning within the
meaning of Codess.318) more than one percent (1%) of
the outstanding stock of the Company or stock
possessing more than one percent (1%) of the total
combined voting power of all stock of Company. In
determining percentage ownership hereunder, employers
that would otherwise be aggregated under Codess.ss.
414(b), (c), and (m) shall be treated as separate
employers. However, in determining whether an
individual has compensation of more than $150,000,
compensation from each employer required to be
aggregated under Codess.ss. 414(b), (c) and (m) shall
be taken into account.
(h) A "Non-Key Employee" shall mean any Employee who is not a
Key Employee as defined in Section 15.02(g).
(i) An Employee's "Present Value of Accrued Retirement Income"
shall mean as of the Determination Date, the sum of the
following:
(i) the Present Value of his Accrued Benefit as of the
most recent valuation occurring within a twelve (12)
month period ending on the Determination Date.
(ii) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four
(4) preceding Plan Years. However, in the case of
distributions made after the valuation date and prior
to the Determination Date, such distributions are not
included as distributions for Top-Heavy purposes to
the extent that such distributions are already
included in the Member's Present Value of Accrued
Retirement Income as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated
plan which if it had not been terminated would have
been required to be included in an Aggregation Group,
will be counted.
(iii) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the
Member and made from a plan maintained by one
employer to a plan maintained by another employer),
if this Plan provides for rollovers or plan-to-plan
transfers, it shall always consider such rollover or
plan-to-plan transfer as a distribution for purposes
of this Section. If this Plan is the plan accepting
such rollovers or plan-to-plan transfers, it shall
not consider such rollovers or plan-to-plan transfers
accepted after December 31, 1983 as part of the
Employee's Present Value of Accrued Retirement
Income. However, rollovers or plan-to-plan transfers
accepted prior to January 1, 1984 shall be considered
as part of the Employee's Present Value of Accrued
Retirement Income.
(iv) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee
or made to a plan maintained by the same employer),
if this Plan provides for rollovers or plan-to-plan
transfers, it shall not be counted as a distribution
for purposes of this Section. If this Plan is the
plan accepting such rollover or plan-to-plan
transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Employee's
Present Value of Accrued Retirement Income,
irrespective of the date on which such rollover or
plan-to-plan transfer is accepted.
(j) A "Top-Heavy Group" shall mean an Aggregation Group in
which, as of the Determination Date, the sum of:
(i) the Present Value of Accrued Retirement Income of Key
Employees under all defined benefit plans included in
that group, and
(ii) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum
determined for all Employees.
15.03 Minimum Retirement Income for Top-Heavy Plan Years
Notwithstanding anything herein to the contrary, for any Top-Heavy
Plan Year, the minimum Accrued Retirement Income derived from
Company contributions for each Non-Key Employee, including
benefits accrued in years in which the Plan is not a Top-Heavy
Plan, shall equal a percentage of such Non-Key Employee's highest
average compensation not less than the lesser of: (a) two percent
(2%) multiplied by the Member's number of Credited Service with
the Company, or (b) twenty per (20%). For purposes of the minimum
benefit, a Member's Credited Service shall exclude (a) Plan Years
in which the Plan is not a Top-Heavy Plan, and (b) Credited
Service completed prior to January 1, 1984. The minimum benefit
required by this Section 15.03 shall be calculated using the
Member's total compensation and expressed in the form of a single
life annuity (with no ancillary benefits) beginning at such
Member's Normal Retirement Date. A Member's average compensation
shall be based on the five (5) consecutive years for which the
Member had the highest compensation.
Notwithstanding the foregoing, in any Plan Year in which a Non-Key
Employee participates in both this Plan and a defined contribution
plan, and both such plans are Top-Heavy Plans, the Company shall
not be required to provide a Non-Key Employee with both the full
separate minimum defined benefit and the full separate minimum
defined contribution plan allocation. Therefore, if a Non-Key
Employee is participating in a defined contribution plan
maintained by the Employer and the minimum allocation under Code
ss. 416(c) (2) is allocated to the Non-Key Employee under such
defined contribution plan, the minimum Accrued Retirement Income
provided for above shall not be applicable, and no minimum benefit
shall accrue on behalf of the Non-Key Employee. Alternatively, the
Company may satisfy the minimum benefit requirement of Code ss.
416(c)(1) for the Non-Key Employee by providing any combination of
benefits and/or contributions that satisfy the safe harbor rules
of Treasury Regulation ss. 1.416-l(m-12).
15.04 Vesting Requirements for Top-Heavy Plan Years
Notwithstanding any other provisions of the Plan, for any
Top-Heavy Plan Year, the vested portion of a Member's Accrued
Retirement Income shall be determined on the basis of the Member's
Continuous Service according to the following schedule:
Years of Service Vested Percentage
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
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The minimum Retirement Income for any Top-Heavy Plan Year shall not be forfeited during any period for which the payment of the Member's Retirement Income is required to be suspended under the Plan.
If in any subsequent Plan Year, the Plan ceases to be a Top-Heavy
Plan, the Retirement Committee may, in its sole discretion, elect
to (a) continue to apply this vesting schedule in determining the
vested percentage of an Employee's Accrued Retirement Income or
(b) revert to the vesting schedule in effect before the Plan
became a Top-Heavy Plan. Any such reversion shall be treated as a
Plan amendment pursuant to the terms of the Plan. No decrease in
an Employee's non-forfeitable percentage may occur in the event
the Plan's status as a Top-Heavy Plan changes for any Plan Year.
Members with three (3) or more years of Continuous Service may elect to remain under the above Top-Heavy Plan vesting schedule in any year the Plan ceases to be top heavy.
15.05 Adjustments to Maximum Benefits for Top-Heavy Plans
(a) In the case of a Member who is a participant in a defined benefit plan and a defined contribution plan maintained by the Company, and such plans as a group are determined to be Top-Heavy for any limitation year beginning after December 31, 1983,t "1.0" shall be substituted for "1.25" in each place it appears in the denominators of fractions, as set forth in Article 6 of the Plan, unless the extra minimum benefit is provided pursuant to Section 15.01(b). Super Top-Heavy Plans shall be required at all times to substitute "1.0" for "1.25" in the denominator of each plan fraction.
(b) If a Key Employee is a participant in both a defined benefit
plan and a defined contribution plan that are both part of a
Top-Heavy Group (but neither of such plans is a Super
Top-Heavy Plan), the defined benefit and defined
contribution fractions set forth in Article 6 shall remain
unchanged, provided that in Section 15.03 above, "three
percent (3%)" shall be substituted for "two percent (2%)"
and "twenty percent (20%)" shall increased by one (1)
percentage point (but not than ten (10) percentage points)
for each year of Service included in the computations under
Section 15.03.
(c) For purposes of this Section 15.05, if the sum of the defined benefit plan fraction and the defined contribution fraction shall exceed 1.0 in any Plan Year for any Member in this Plan, the Company shall eliminate any amounts in excess of the limits set forth in Article 6, pursuant to Section 6.01(f) of the Plan.
ARTICLE 16 - RETIREE MEDICAL BENEFITS
16.01 Definitions. The following words and phraseology as used herein shall
have the following meanings unless a different meaning is plainly
required by the context:
(a) "Pensioned Employee" means effective September 15, 1993, a
Member who retires and is receiving a distribution from the
Plan pursuant to Sections 5.01 and 5.02 or a retired Member
who is entitled to receive a distribution from the Plan
pursuant to Sections 5.01 or 5.02 after retirement will be
eligible for reimbursement or payment of covered medical
expenses, as hereinafter described, provided the Member (1)
was covered by the Georgia Power Company Medical Benefits Plan
immediately before retirement; (2) is not eligible as a spouse
or dependent or otherwise for coverage under the Georgia Power
Company Medical Benefits Plan; and (3) continues to satisfy
the eligibility requirements applicable to retired employees
as set forth in the provisions of the Georgia Power Company
Medical Benefits Plan, which is attached hereto as Exhibit A
and incorporated herein by reference and may be changed in
accordance with the terms of the Georgia Power Company Medical
Benefits Plan. Notwithstanding the foregoing, a former
employee who was a key employee pursuant to Section 15.02(g)
on the date of his retirement shall not be eligible to receive
any benefits under this Article 16.
(b) "Dependents" means the spouses and dependents of retired
Members who are eligible for reimbursement or payment of
covered medical expenses pursuant to paragraph (a) and who
were covered under the Georgia Power Company Medical Benefits
Plan immediately prior to the Member's retirement are also
eligible for reimbursement or payment of covered medical
expenses to the extent, if any, provided in the Georgia Power
Company Medical Benefits Plan, a copy of which is attached as
Exhibit A. Notwithstanding the foregoing, a spouse or
dependent who is eligible for coverage under the "active
employee" portion of the Georgia Power Company Medical
Benefits Plan shall not be eligible for reimbursement of
medical expenses or payment of premiums hereunder.
(c) "Qualified Transfer" means a transfer of Excess Pension Assets
of the Plan to a Health Benefits Account after December 31,
1990, but before December 31, 2000, which satisfies the
requirements set forth in paragraphs (1) through (6) below.
(1) No more than 1 transfer per Plan Year may be treated as a
Qualified Transfer.
(2) The amount of Excess Pension Assets which may be
transferred in a Qualified Transfer shall not exceed a reasonable
estimate of the amount the Company will pay (directly or through
reimbursement) out of the Health Benefits Accounts for Qualified
Current Retiree Health Liabilities during the Plan Year of the
transfer.
(3) (A) Any assets transferred to a Health Benefits Account in
a Qualified Transfer (and any income allocated thereto) shall only be
used to pay Qualified Current Retiree Health Liabilities (whether
directly or through reimbursement).
(B) Any assets transferred to a Health Benefits
Account in a Qualified Transfer (and any income allocable
thereto) which are not used as provided in Section
16.01(c)(3)(A) above shall be transferred from the Health
Benefits Account back to the Plan.
(C) For purposes of this Section 16.01(c)(3), any
amount transferred from a Health Benefits Account shall be
treated as paid first out of the assets and income described
in Section 16.01(c)(3)(A) above.
(4) The Accrued Retirement Income of any Pensioned Employee or
Dependent under the Plan shall become nonforfeitable in the same manner
which would be required if the Plan had terminated immediately before
the Qualified Transfer (or in the case of a Pensioned Employee who
terminated service during the 1 year period ending on the date of the
Qualified Transfer, immediately before such termination).
(5) Effective for Qualified Transfers occurring on or before
December 8, 1994, the Applicable Company Cost for each Plan Year during
the Cost Maintenance Period shall not be less than the higher of the
Applicable Company Cost for each of the two Plan Years immediately
preceding the Plan Year of the Qualified Transfer. Effective for
Qualified Transfers occurring after December 8, 1994, the medical
benefits plan set forth in Exhibit A shall provide that the Applicable
Health Benefits provided by the Company during each Plan Year during
the Benefit Maintenance Period shall be substantially the same as the
Applicable Health Benefits provided by the Company during the Plan Year
immediately preceding the Plan Year of the Qualified Transfer.
Notwithstanding any other provision to the contrary in this Section
16.01(c)(5), the Company may elect at any time during the Plan Year to
have this Section 16.01(c)(5) applied separately with respect to
Pensioned Employees eligible for benefits under Title XVIII of the
Social Security Act and with respect to Pensioned Employees which are
not so eligible.
(6) For purposes of this Section 16.01(c), the following words
and phraseology shall have the following meanings unless a different
meaning is plainly required by the context:
(A) "Applicable Company Cost" means, with respect to
any Plan Year, the amount determined by dividing
(i) the Qualified Current Retiree Health
Liabilities of the Company for such Plan Year
determined (I) without regard to any reduction under
Section 16.01(c)(6)(G), and (II) in the case of a
Plan Year in which there was no Qualified Transfer in
the same manner as if there had been such a transfer
at the end of the Plan Year, by
(ii) the number of individuals to whom
coverage for Applicable Health Benefits was provided
during such Plan Year.
(B) "Applicable Health Benefits" means health
benefits or coverage which are provided to Pensioned Employees
who immediately before the Qualified Transfer are eligible to
receive such benefits and their Dependents.
(C) "Benefit Maintenance Period" means the period of
five (5) Plan Years beginning with the Plan Year in which the
Qualified Transfers occurs.
(D) "Cost Maintenance Period" means the period of
five (5) Plan Years beginning with the taxable year in which
the Qualified Transfer occurs. If a Plan Year is in two (2) or
more overlapping Cost Maintenance periods, this Section
16.01(c)(6)(D) shall be applied by taking into account the
highest Applicable Company Cost required to be provided under
Section 16.01(c)(6)(A) for such Plan Year.
(E) "Excess Pension Assets" means the excess, if any,
of
(i) the amount determined under Code Section
412(c)(7)(A)(ii), over
(ii) the greater of: (I) the amount
determined under Code Section 412(c)(7)(A)(i), or
(II) 125 percent of current liability (as defined in
Code Section 412(c)(7)(B)).
The determination under this paragraph shall
be made as of the most recent valuation date of the
Plan preceding the Qualified Transfer.
(F) "Health Benefits Account" means an account
established and maintained under Code Section 401(h).
(G) "Qualified Current Retiree Health Liabilities"
means, with respect to any Plan Year, the aggregate amounts,
including administrative expenses, which would have been
allowable as a deduction to the Company for payment of
Applicable Health Benefits provided during the Plan Year
assuming such Applicable Health Benefits were provided
directly by the Company and the Company used the cash receipts
and disbursements method of accounting. For purposes of the
preceding sentence, the rule of Code Section 419(c)(3)(B)
shall apply.
Effective for Qualified Transfers occurring on or
before December 8, 1994, the amount determined in the
paragraph above shall be reduced by any amount previously
contributed to a Health Benefits Account or welfare benefit
fund, as defined in Code Section 419(e)(1), to pay for the
Qualified Current Retiree Health Liabilities. Effective for
Qualified Transfers occurring after December 8, 1994, the
amount determined under the preceding paragraph shall be
reduced by the amount which bears the same ratio to such
amount as the value (as of the close of the Plan Year
preceding the year of the Qualified Transfer) of the assets in
all Health Benefits Accounts or welfare benefit funds, as
defined in Code Section 419(e)(1), set aside to pay the
Qualified Current Retiree Health Liability, bears to the
present value of the Qualified Current Retiree Health
Liabilities for all Plan Years determined without regard to
this paragraph.
16.02 Medical benefits Medical benefits under the Plan shall be provided
through the Georgia Power Company Medical Benefits Plan by the payment
of premiums thereunder, or through reimbursement to the Company for its
payment to Pensioned Employees or their Dependents of medical expenses
in accordance with the terms and conditions of the Georgia Power
Company Medical Benefits Plan attached hereto as Exhibit A. Medical
benefits shall be provided under the Plan only to the extent there are
sufficient funds to provide such benefits. In no event shall any
benefits be paid under the Plan to the extent the same benefits are
payable under any other plan, program or arrangement of the Company.
The Retirement Committee may establish claims procedures and
administrative rules relating to the provision of medical benefits
hereunder to the extent that the claims procedures and administrative
rules under the applicable group medical plan do not apply.
16.03 Termination of coverage.
(a) Coverage of any Pensioned Employee shall cease as follows:
(1) when Article 16 is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
(b) Coverage of any Dependent shall cease as follows:
(1) when Article 16 is amended, terminated, or
discontinued in accordance with its terms; or
(2) when the Pensioned Employee fails to make when due
any required contribution; or
(3) as otherwise provided in Exhibit A.
16.04 Contributions or Qualified Transfers to fund medical benefits.
(a) Any contributions which the Company deems necessary to provide
the medical benefits under Article 16 will be made from time
to time by or on behalf of the Company, and contributions
shall be required of the Pensioned Employees to the Company's
medical benefit plan in amounts determined in the sole
discretion of the Company from time to time. All Company
contributions shall be made to the Trustee under the Trust
Agreement provided for in Article 10 and shall be allocated to
a separate account maintained solely to fund the medical
benefits provided under this Article 16. The Company shall
designate that portion of any contribution to the Plan
allocable to the funding of medical benefits under this
Article 16. In the event that a Pensioned Employee's interest
in an account, or his Dependents', maintained pursuant to this
Article 16 is forfeited prior to termination of the Plan, the
forfeited amount shall be applied as soon as possible to
reduce Company contributions made under this Article 16. In no
event at any time prior to the satisfaction of all liabilities
under this Article 16 shall any part of the corpus or income
of such separate account be used for, or diverted to, purposes
other than for the exclusive purpose of providing benefits
under this Article 16.
The amount of contributions to be made by or on behalf of the
Company for any Plan Year, if any, shall be reasonable and
ascertainable and shall be determined in accordance with any
generally accepted actuarial method which is reasonable in
view of the provisions and coverage of Article 16, the funding
medium, and any other applicable considerations. However, the
Company is under no obligation to make any contributions under
Article 16 after Article 16 is terminated, except to fund
claims for medical expenses incurred prior to the date of
termination.
The medical benefits provided under this Article 16, when
added to any life insurance protection provided under the
Plan, shall be subordinate to the retirement benefits provided
under the Plan.
Anything in this Plan to the contrary notwithstanding, the
aggregate amount of the actual contributions made pursuant to
this Article 16 may not exceed 25% of the total actual
contributions to the Plan for all benefits under the Plan
(exclusive of contributions that may be made to fund past
service credits) on and after September 15, 1993.
(b) Effective September 15, 1993, the Company shall have the
right, in its sole discretion, to make a Qualified Transfer of
all or a portion of any Excess Pension Assets contributed to
fund Retirement Income under the Plan to the Health Benefits
Accounts to fund medical benefits under this Article 16.
16.05 Pensioned Employee Contributions. It shall be the sole responsibility
of the Pensioned Employee to notify the Company promptly in writing
when a change in the amount of the Pensioned Employee's contribution is
in order because a Dependent has become ineligible for coverage under
this Article 16. No person shall become covered under this Article 16
for whom the Pensioned Employee has not made the required contribution.
Any contribution paid by a Pensioned Employee for any person after such
person shall have become ineligible for coverage under this Article 16
shall be returned upon written request but only provided such written
request by or on behalf of the Pensioned Employee is received by the
Company within ninety (90) days from the date coverage terminates with
respect to such ineligible person.
16.06 Amendment of Article 16. The Company reserves the right, through action
of its Board of Directors, to amend Article 16 (including Exhibit A)
pursuant to Article 13 or the Trust without the consent of any
Pensioned Employee, or his Dependents, provided, however, that no
amendment of this Article or the Trust shall cancel the payment or
reimbursement of expenses for claims already incurred by a Pensioned
Employee or his Dependent prior to the date of any amendment, nor shall
any such amendment increase the duties and obligations of the Trustee
except with its consent. This Article 16, as set forth in the Plan
document, is not a contract and non-contributory benefits hereunder are
provided gratuitously, without consideration from any Pensioned
Employee or his Dependents. The Company makes no promise to continue
these benefits in the future and rights to future benefits will never
vest. In particular, retirement or the fulfillment of the prerequisites
for a retirement benefit pursuant to the terms of the Plan or under the
terms of any other employee benefit plan maintained by the Company
shall not confer upon any Pensioned Employee or Dependents any right to
continued benefits under this Article 16.
16.07 Termination of Article 16. Although it is the intention of the Company
that this Article shall be continued and the contribution shall be made
regularly thereto each year, the Company, by action of its Board of
Directors pursuant to Article 13, may terminate this Article 16 or
permanently discontinue contributions at any time in its sole
discretion. This Article 16, as set forth in the Plan document, is not
a contract and non-contributory benefits hereunder are provided
gratuitously, without consideration from any Pensioned Employee or his
Dependents. The Company makes no promise to continue these benefits in
the future and rights to future benefits will never vest. In
particular, retirement or the fulfillment of the prerequisites for a
retirement benefit pursuant to the terms of the Plan or under the terms
of any other employee benefit plan maintained by the Company shall not
confer upon any Pensioned Employee or his Dependents any right to
continued benefits under this Article 16.
16.08 Reversion of Assets upon Termination. Upon the termination of this
Article 16 and the satisfaction of all liabilities under this Article
16, all remaining assets in the separate account described in this
Article 16 shall be returned to the Company.
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IN WITNESS WHEREOF, the Board of Directors of Savannah Electric and Power Company, through its authorized officers has adopted this amendment and restatement of the Employees' Retirement Plan of Savannah Electric and Power Company this ____ day of __________________ 199_, to be effective January 1, 1997.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
ATTEST:
By:
[CORPORATE SEAL)
Exhibit 10(f)18
SECOND AMENDMENT TO THE
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
OF SAVANNAH ELECTRIC AND POWER COMPANY
WHEREAS, the Board of Directors of Savannah Electric and Power Company (the "Company") heretofore adopted the Supplemental Executive Retirement Plan of Savannah Electric and Power Company, as amended and restated January 1, 1996 (the "Plan"); and
WHEREAS, the Company desires to amend the Plan to provide Participants who incur certain adverse events with additional benefits; and
WHEREAS, the Board of Directors of the Company is authorized pursuant to Section 9.1 of the Plan to amend the Plan at any time.
NOW, THEREFORE, effective July 15, 1997, the Board of Directors of the Company hereby amends the Plan as follows:
I.
Delete Section 4.6 in its entirety and replace it with the following:
4.6 Transfers between Companies and Other Special Events. Except as provided below, following a transfer of employment or after incurring certain other enumerated events, the Participant shall not be entitled to or accrue any benefits under the Plan except as provided in this Section 4.6.
(a) (1) In the event a Participant in the Plan incurs one or more of the following adverse events prior to commencement of payment of his benefits under the Plan but after the Participant is eligible to retire as of an Early Retirement Date, such Participant will be entitled to the benefit described in Section 4.6(a)(2):
(A) Participant is involuntarily transferred to another subsidiary or affiliate of The Southern Company ("Transferee Company") on account of the functionalization of his job or on account of a merger or consolidation of the Company and for reasons other than for cause is terminated by the Transferee Company, demoted to a lower grade level position or incurs a salary reduction or freeze, provided he otherwise remains eligible to participate in this Plan as a key management level employee as determined in Article III; or
(B) For reasons other than for cause, Participant is terminated, demoted to a lower grade level position or incurs a salary reduction or freeze by the Company on account of the functionalization of his job, merger or consolidation of the Company or an announced restructuring of management level job positions, provided he otherwise remains eligible to participate in this Plan as a key management level employee as determined in Article III.
(2) Participant shall be entitled to a benefit described in Section 4.1 as if he had attained his Normal Retirement Date commencing upon the later of age 55 or the first day of the month first following his termination of employment from the Transferee Company or Company, as applicable. In the event a Participant elects to commence his benefit prior to attainment of age 55, his benefit shall be calculated as provided in Section 4.1 as if he had attained his Normal Retirement Date but shall be reduced by one-twelfth (1/12) of five percent (5%) for each month the benefit commences prior to the date the Participant would attain age 55.
(3) For purposes of calculating any benefit paid to a Participant pursuant to this Section 4.6(a), the Participant's Final Average Salary, Social Security Amount, Assumed Pension Plan Retirement Benefit and any other component of the benefit formula under this Plan shall be determined as of the Participant's date of termination from the Company or, if later, from the Transferee Company.
(b) In the event a Participant in the Plan voluntarily transfers to a Transferee Company prior to commencement of payment of his benefits under the Plan and subsequently retires from the Transferee Company or another subsidiary or affiliate of The Southern Company, the benefits to be paid to such Participant under the Plan shall be the amount determined by multiplying the amount determined in accordance with Section 4.6(b)(1) times the amount determined in accordance with Section 4.6(b)(2) below.
(1) Seventy percent (70%) of such Participant's Final Average Salary reduced by both of the following:
(A) fifty percent (50%) of such Participant's Social Security Amount.
(B) such Participant's Assumed Pension Plan Retirement Benefit as of the effective date of such transfer of employment.
(2) The Participant's number of years and months of Credited Service as of the effective date of such transfer plus one year of Credited Service for each year of subsequent employment at the other subsidiary or affiliate of The Southern Company, divided by the number of years and months of Credited Service which the Participant will have completed at age 62 if he remains employed until such age.
For purposes of calculating any benefit paid a transferred Participant pursuant to this Section 4.6(b), the Participant's Final Average Salary, Social Security Amount, Assumed Pension Plan Retirement Benefit and any other such component of the benefit formula under this Plan, except for Credited Service as set forth in Section 4.6(b)(2) above, shall be determined as of the Participant's date of transfer.
If the transferred Participant retires from another subsidiary or affiliate of The Southern Company or the Company on a date other than his Normal Retirement Date, dies, becomes disabled or otherwise ceases to be employed by another subsidiary or affiliate of The Southern Company or the Company, such Participant, or surviving spouse in the event of the death of the Participant, shall receive the benefit available under this Plan due upon the occurrence of such event as if the Participant continued to accrue service under this Section 4.6(b). Any such alternative benefit shall be subject to all applicable limitations, adjustments and reductions described in this Plan that apply in the event that a Participant retires on a date other than his Normal Retirement Date, dies, becomes disabled or otherwise terminates employment with the Company, including but not limited to those set forth in Sections 4.2, 4.3 and 4.6 hereof and Articles V, VI and VII hereof.
II.
Delete Section 4.7 in its entirety and replace it with the following:
4.7 Effect of Other Arrangement on Plan Benefits. In the event a Participant in the Plan enters into a supplemental benefit arrangement with the Company or Transferee Company other than in accordance with this Plan, in the sole discretion of the Chief Executive Officer of the Company or any comparable successor thereto the benefits to be paid to such Participant under this Plan may be reduced on an actuarially equivalent basis by the benefits payable to such Participant under the other supplemental benefit arrangement. The determination as to whether there exists another supplemental benefit arrangement shall be made by the Chief Executive Officer of the Company or any comparable successor thereto in its sole discretion.
IN WITNESS WHEREOF, the Company, through its duly authorized officer, has adopted the Second Amendment to the Supplemental Executive Retirement Plan of Savannah Electric and Power Company this ______ day of _____________, 1998.
SAVANNAH ELECTRIC AND POWER COMPANY
By:
Title:_____________________________
ATTEST:
By:
Title:__________________
(CORPORATE SEAL)
Exhibit 10(f)23
1997 DEFERRED COMPENSATION PLAN
FOR
DIRECTORS OF SAVANNAH ELECTRIC AND POWER COMPANY
Effective April 1, 1997
Article I
Definitions
1.1 "Account shall mean the Deferred Compensation Account established for each Director electing to participate in the Plan pursuant to Article VI.
1.2 "Accrued Pension" means the U.S. dollar amount of the
actuarially-determined present value of the accrued and unpaid past
service pension benefits under The Southern Company Outside Directors
Pension Plan (the "Directors Pension Plan") of a Director acting as
such at and as of December 31, 1996, as calculated as of the
termination date of the Directors Pension Plan (the "Termination
Date"), taking into account the Director's age and years and months of
past service and such other assumptions as shall be reasonable and
uniformly applied to all Directors.
1.3 "Board of Directors" or "Board" shall mean the Board of Directors of
Savannah Electric and Power Company.
1.4 "Common Stock" shall mean the common stock of Southern Company.
1.5 "Company" shall mean Savannah Electric and Power Company.
1.6 "Committee" shall mean the Administrative Benefits Committee of the
Company.
1.7 "Compensation" shall mean the compensation payable to the Directors of
the Company, including retainer fees and meeting fees but excluding any
amount paid in the form of stock, as determined from time to time by
the Board of Directors.
1.8 "Deferral Election" shall mean the written election by a Director to
defer payment of all or a portion of his Compensation under the Plan
pursuant to Article VI.
1.9 "Director" shall mean a member of the Board of Directors and shall
include an Advisory Director.
1.10 "Investment Election" shall mean the written election by a Director to
have his deferred Compensation invested pursuant to Section 7.2 or
Section 7.3.
1.11 "Market Value" shall mean the average of the high and low prices of the
Common Stock, as published in the Wall Street Journal in its report of
New York Stock Exchange composite transactions, on the date such Market
Value is to be determined, as specified herein (or the average of the
high and low sale prices on the trading day immediately preceding such
date if the Common Stock is not traded on the New York Stock Exchange
on such date).
1.12 "Plan" shall mean the 1997 Deferred Compensation Plan for Directors of
Savannah Electric and Power Company.
1.13 "Plan Period" shall mean the period designated in Article V.
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Article II Purpose
2.1 The Plan provides a method of deferring payment to a Director of his Compensation until a date following the termination of his membership on the Board of Directors.
Article III Eligibility
3.1 An individual who serves as a Director and is not otherwise actively employed by the Company or any of its subsidiaries or affiliates shall be eligible to participate in the Plan.
Article IV Administration
4.1 The Plan shall be administered by the Committee, as appointed from time to time. The Committee shall have the power to interpret the Plan and, subject to its provisions, to make all determinations necessary or desirable for the Plan's administration.
Article V Plan periods
5.1 The first Plan Period shall commence April 1, 1997. Said first Plan Period shall be a nine-month period and all subsequent Plan periods shall be on a calendar year basis, except that the initial Plan Period applicable to any person elected to fill a vacancy on the Board of Directors who was not a Director on the preceding December 31 shall begin on the first day of such Director's membership on the Board of Directors.
Article VI Participation
6.1 Prior to the beginning of any Plan Period, a Director may elect to participate in the Plan by directing that payment of all or any part of the Compensation which would otherwise be paid to the Director in the next succeeding Plan Period be deferred until the Director terminates his membership on the Board of Directors and elects to commence distribution of his Deferred Compensation Account pursuant to the terms of the Plan.
6.2 The Deferral Election shall be in writing on a form prescribed by the Committee and shall state (a) that the Director wishes to make an election to defer payment of his Compensation, (b) the percentage/dollar amount of Compensation to be deferred, (c) the method of payment, which shall be the payment of a lump sum or a series of annual payments not to exceed ten (10), and (d) the time for commencement of distribution of his Account balance, which shall be not later than the first day of the month coinciding with or next following the second anniversary of the termination of his membership on the Board of Directors. Each Director making a Deferral Election in accordance with the terms of the Plan, and his successors, heirs and assigns shall be bound as to any action taken pursuant to the terms thereof and to the terms of the Plan.
6.3 Deferred Pension Election
(a) Any Director, who has an Accrued Pension as of the Termination Date, may make a single one-time election, on or before April 1, 1997 in writing and on a form to be furnished by the Committee, to convert his or her Accrued Pension into a deferred pension account under the Plan (a "Deferred Pension Account"). Upon making a deferred pension election (a "Deferred Pension Election"), a new Deferred Pension Account will be established in the Director's name and will be credited with the amount of his or her Accrued Pension so converted.
(b) Once made, a Deferred Pension Election cannot be changed or revoked.
(c) A Deferred Pension Election shall defer the starting date for the payment of the designated amount of the Director's Accrued Pension, and any investment return credited thereon, until the termination of the Director's membership on the Board.
(d) In the event of any such Deferred Pension Election, the form of payment of any distribution (i.e., in a lump sum or in up to ten approximately equal annual installments) and the starting date of such distribution, (which may not be later than the date which is twenty-four (24) months following the date of termination of membership on the Board) shall be elected at the same time. Except as herein provided, such form-of-payment election shall not be changed or revoked.
6.4 The Deferral Election shall be made by written notice delivered to the Secretary of the Company prior to the first day of the next succeeding Plan Period and shall be effective on the first day of such succeeding Plan Period. The Deferral Election made in accordance with this Article shall be irrevocable. Such Deferral Election shall continue from Plan Period to Plan Period unless the Director terminates participation or changes the Deferral Election regarding future payments by submitting a written request to the Secretary of the Company on a form prescribed by the Committee. Any such termination or change shall become effective as of the first day of the Plan Period next following the Plan period in which such request is given. A termination of participation in the Plan or change in Deferral Election regarding future payments shall not affect amounts previously deferred. The initial Deferral Election made after the effective date of this Amendment and Restatement with respect to (a) the method of payment, whether it be lump sum or installments, including the number of installments selected, and (b) the time for commencement of distribution of a Participant's Account may not be revoked and shall govern the distribution of a participant's Account, except as provided in Section 6.6. Notwithstanding the foregoing, if the Compensation paid to a Director is increased during a Plan Period, such Director shall receive a Deferral Election form prescribed by the Committee and shall be entitled to make a new deferral election regarding increased future Compensation effective as of the date the increase in Compensation occurs.
6.5 A Director who has filed a termination of Deferral Election may thereafter file a new Deferral Election to participate for Plan periods subsequent to the Plan Period of the filing of such Deferral Election. The new Deferral Election shall not affect amounts previously deferred.
6.6 Except as provided below, with the approval of the Committee, a Director may amend a prior Deferral Election on a form prescribed by the Committee not prior to the 390th day nor later than the 360th day prior to his termination of membership on the Board of Directors in order to change (a) the form, and/or (b) the time for commencement of the distribution of his Deferred Compensation Account in accordance with the terms of the Plan. Any such amendment to a prior Deferral Election, as described in this Section 6.6, shall be contingent upon the Director's completion of his term of membership on the Board of Directors, except in the event of the disability or death of such Director.
Article VII Deferred Compensation Accounts
7.1 An Account shall be established on the Company books for each Director electing to defer all or a portion of his Compensation, which shall be credited with (a) any Compensation deferred in accordance with Article VI and (b) pursuant to each Director's Investment Election, the amounts computed in accordance with Section 7.2 and/or the number of shares computed in accordance with Section 7.3.
7.2 The Deferred Compensation Account of each Director electing to invest his deferred Compensation for a Plan period pursuant to this Section 7.2 shall be credited with an amount computed by the Company by treating the amount deferred as a sum certain to which the Company will add in lieu of interest an amount equal to the prime rate of interest as published in the Wall Street Journal. Interest shall be computed as if credited from the date such Compensation would otherwise have been paid and shall be compounded quarterly at the end of each calendar quarter. The prime rate in effect on the first day of each calendar quarter shall be deemed the prime rate in effect for each calendar quarter. Interest will be treated as if accrued and will be compounded on any balance until such amount is fully distributed.
7.3 The Deferred Compensation Account of each Director electing to invest his deferred Compensation for a Plan Period pursuant to this Section 7.3 shall be credited with the number of shares (including fractional shares) of Common Stock which could have been purchased on the date such deferred Compensation otherwise would have been paid based upon the Common Stock's Market Value. As of each date of payment of dividends on the Common Stock, there shall be credited with respect to shares of Common Stock in the Director's Deferred Compensation Account such additional shares (including fractional shares) of Common Stock as follows:
(a) In the case of cash dividends, such additional shares as could be purchased at the Market Value as of the dividend payment date with the dividends which would have been payable if the credited shares had been outstanding;
(b) In the case of dividends payable in property other than cash or Common Stock, such additional shares as could be purchased at the Market Value as of the payment date with the fair market value of the property which would have been payable if the credited shares had been outstanding; or
(c) In the case of dividends payable in Common Stock, such additional shares as would have been payable on the credited shares if they had been outstanding.
7.4 The Investment Election by a Director with respect to his Deferred Compensation Account shall be made in writing on a form prescribed by the Committee and delivered to the Secretary of the Company prior to the first day of the next succeeding Plan Period and shall be effective on the first day of such succeeding Plan Period. The Investment Election made in accordance with this Article VII shall be irrevocable. Such Investment Election shall continue from Plan Period to Plan Period unless the Director changes the Investment Election regarding future deferred Compensation by submitting a written request to the Secretary of the Company on a form prescribed by the Committee. Any such change shall become effective as of the first day of the Plan Period next following the Plan Period in which such request is given.
7.5 At the end of each Plan Period, a report shall be issued to each Director who has a Deferred Compensation Account which sets forth the amount and Market Value of any shares of Common Stock (and fractions thereof) reflected in such Account.
Article VIII Distribution of Accounts
8.1 When a Director terminates his membership on the Board of Directors, said Director shall be entitled to receive the entire amount and the Market Value of any shares of Common Stock (and fractions thereof) reflected in his Deferred Compensation Account payable in cash in accordance with his Deferral Election. No portion of a Director's Deferred Compensation Account shall be distributed in Common Stock. In the event a Director shall have elected to receive the balance of his Deferred Compensation Account in a lump sum, distribution shall be made on the first day of the month selected by the Director in accordance with the terms of the Plan, or as soon as reasonably possible thereafter. In the event the Director shall have elected to receive annual installments, the first payment shall be on the first day of the month selected by a Director, or as soon as reasonably possible thereafter, and shall be paid an amount equal to the balance in the Director's Account on such date divided by the number of annual installment payments. Each subsequent annual payment shall be an amount equal to the balance in the Director's Account on the payment date divided by the number of remaining annual payments and shall be paid on the anniversary of the preceding payment date. Notwithstanding a Director's election to receive his Deferred Compensation Account Balance in annual installments, the Committee, in its sole discretion upon request of the Director or his legal representative may accelerate the payment of any such installments for cause. The Market Value of any shares of Common Stock credited to a Director's Deferred Compensation Account shall be determined as of the twenty-fifth (25th) day of the month immediately preceding the date of any lump sum or installment distribution.
8.2 Upon the death of a Director, or a former Director prior to the
payment of all amounts and the Market Value of any shares of Common
Stock (and fractions thereof) credited to said Director's Account, the
unpaid balance shall be paid in the sole discretion of the Committee
(a) in a lump sum to the designated beneficiary of such Director or
former Director within thirty (30) days of the date of death (or as
soon as reasonably possible thereafter) or (b) in accordance with the
Deferral Election made by such Director or former Director. In the
event a beneficiary designation has not been made, or the designated
beneficiary is deceased or cannot be located, payment shall be made to
the estate of the Director or former Director. The Market Value of any
shares of Common Stock credited to a Director's Deferred Compensation
Account shall be determined as of the twenty-fifth (25th) day of the
month immediately preceding the date of any lump sum or installment
distribution.
8.3 The beneficiary designation referred to above may be changed by a Director or former Director at any time, and without the consent of the prior beneficiary, on a form to be provided by the Secretary of the Company.
Article IX Miscellaneous
9.1 No Director or beneficiary shall have any right to sell, assign, transfer, encumber or otherwise convey the right to receive payment of any benefit payable hereunder, which payment and the right thereto are expressly declared to be nonassignable and nontransferable. Any attempt to do so shall be null and void and of no effect.
9.2 The Company shall not reserve or otherwise set aside funds for the payment of its obligations hereunder, which obligations will be paid from the general assets of the Company. Notwithstanding that a Director shall be entitled to receive the entire amount in his Deferred Compensation Account as provided in Section 8.1, any amounts credited to a Director's Account to be paid to such Director shall at all times be subject to the claims of the Company's creditors.
9.3 The Board of Directors may terminate the Plan at any time or may, from time to time, amend the Plan; provided however, that no such amendment or termination shall impair any rights to payments which had been deferred under the Plan prior to the termination or amendment.
9.4 This Plan shall be construed in accordance with and governed by the laws of the State of Georgia.
IN WITNESS WHEREOF, the Plan has been executed pursuant to resolutions of the Executive Committee of the Board of Directors of Savannah Electric and Power Company, this _____ day of ________________, 1997.
SAVANNAH ELECTRIC AND POWER COMPANY
By:________________________________
Attest:
By: ______________________________
Savannah Electric and Power Company
[Corporate Seal]
Exhibit 24(a)
February 16, 1998
A. W. Dahlberg, W. L. Westbrook, Tommy Chisholm, and Wayne Boston
Dear Sirs:
The Southern Company proposes to file or join in the filing of
statements under the Securities Exchange Act of 1934, as amended, with the
Securities and Exchange Commission with respect to the following: (1) the filing
of this Company's Annual Report on Form 10-K for the year ended December 31,
1997, (2) the filing of Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K during 1998, and (3) the filing of a registration statement for the
Universal Shelf Registration Program.
The Southern Company and the undersigned directors and officers of said
Company, individually as a director and/or as an officer of the Company, hereby
make, constitute and appoint each of you our true and lawful Attorney for each
of us and in each of our names, places and steads to sign and cause to be filed
with the Securities and Exchange Commission in connection with the foregoing
said Annual Report on Form 10-K and any appropriate amendment or amendments
thereto and any necessary exhibits, said Quarterly Reports on Form 10-Q and any
necessary exhibits, any Current Reports on Form 8-K and any necessary exhibits,
and said registration statement and any amendments thereto in connection with
the Universal Shelf Registration Program.
Yours very truly,
THE SOUTHERN COMPANY
By /s/A. W. Dahlberg
A. W. Dahlberg
Chairman, President and
Chief Executive Officer
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/s/John C. Adams ________________________________
John C. Adams William A. Parker, Jr.
/s/A. D. Correll /s/William J. Rushton, III
A. D. Correll William J. Rushton, III
/s/A. W. Dahlberg /s/Gloria M. Shatto
A. W. Dahlberg Gloria M. Shatto
/s/Paul J. DeNicola /s/Gerald J. St. Pe'
Paul J. DeNicola Gerald J. St. Pe'
/s/Jack Edwards /s/Herbert Stockham
Jack Edwards Herbert Stockham
/s/H. Allen Franklin /s/Stephen A. Wakefield
H. Allen Franklin Stephen A. Wakefield
/s/Bruce S. Gordon /s/W. L. Westbrook
Bruce S. Gordon W. L. Westbrook
/s/L. G. Hardman III /s/Tommy Chisholm
L. G. Hardman III Tommy Chisholm
/s/Elmer B. Harris /s/W. Dean Hudson
Elmer B. Harris W. Dean Hudson
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Extract from minutes of meeting of the board of directors of The Southern Company.
RESOLVED: That for the purpose of signing the Company's Annual Report on Form 10-K for the year ended December 31, 1997, and 1998 Form 10-Q's and Form 8-K's and of remedying any deficiencies with respect thereto by appropriate amendment or amendments, this Company, the members of its board of directors, and its officers, are authorized to give their several powers of attorney to A. W. Dahlberg, W. L. Westbrook, Tommy Chisholm, and Wayne Boston.
The undersigned officer of The Southern Company does hereby certify that the foregoing is a true and correct copy of a resolution duly and regularly adopted at a meeting of the board of directors of The Southern Company, duly held on February 16, 1998, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated March 25, 1998 THE SOUTHERN COMPANY
By /s/Tommy Chisholm
Tommy Chisholm
Secretary
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Exhibit 24(b)
January 23, 1998
W. L. Westbrook Wayne Boston 270 Peachtree Street, N.W. 241 Ralph McGill Blvd. NE Atlanta, Georgia 30303 Atlanta, Georgia 30308-3374
Dear Sirs:
Alabama Power Company proposes to file with the Securities and Exchange Commission, under the Securities Exchange Act of 1934, (1) its Annual Report on Form 10-K for the year ended December 31, 1997, and (2) its quarterly reports on Form 10-Q during 1998.
Alabama Power Company and the undersigned directors and officers of said Company, individually as a director and/or as an officer of the Company, hereby make, constitute and appoint W. L. Westbrook and Wayne Boston our true and lawful Attorneys for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, quarterly reports on Form 10-Q, and any appropriate amendment or amendments thereto and any necessary exhibits.
Yours very truly,
ALABAMA POWER COMPANY
By /s/Elmer B. Harris
Elmer B. Harris
President and Chief Executive
Officer
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/s/Whit Armstrong /s/John T. Porter
Whit Armstrong John T. Porter
______________________ /s/Robert D. Powers
A. W. Dahlberg Robert D. Powers
/s/Peter V. Gregerson, Sr. /s/C. Dowd Ritter
Peter V. Gregerson, Sr. C. Dowd Ritter
/s/Bill M. Guthrie /s/John W. Rouse
Bill M. Guthrie John W. Rouse
/s/Elmer B. Harris ______________________________
Elmer B. Harris William J. Rushton, III
/s/Carl E. Jones, Jr. /s/James H. Sanford
Carl E. Jones, Jr. James H. Sanford
/s/Patricia M. King /s/John Cox Webb, IV
Patricia M. King John Cox Webb, IV
/s/James K. Lowder /s/William B. Hutchins, III
James K. Lowder William B. Hutchins, III
/s/Wallace D. Malone, Jr. /s/Art P. Beattie
Wallace D. Malone, Jr. Art P. Beattie
______________________ /s/Andreas Renschler
William V. Muse Andreas Renschler
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Extract from minutes of meeting of the board of directors of Alabama Power Company.
RESOLVED: That for the purpose of signing and filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934, Alabama Power Company's annual report on Form 10-K for the year ended December 31, 1997, and of remedying any deficiencies with respect thereto by appropriate amendment or amendments, and also filing quarterly reports on Form 10-Q, Alabama Power Company, the members of its Board of Directors, and its officers are authorized to give their several powers of attorney to W. L. Westbrook and Wayne Boston, in substantially the form of power of attorney presented to this meeting.
The undersigned officer of Alabama Power Company does hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Alabama Power Company, duly held on January 23, 1998, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated March 23, 1998 ALABAMA POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
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Exhibit 24(c)
February 18, 1998
W. L. Westbrook and Wayne Boston
Dear Sirs:
Georgia Power Company proposes to file or join in the filing of
statements under the Securities Exchange Act of 1934 with the Securities and
Exchange Commission with respect to the following: (1) the filing of its Annual
Report on Form 10-K for the year ended December 31, 1997, and (2) the filing of
its quarterly reports on Form 10-Q during 1998.
Georgia Power Company and the undersigned directors and officers of
said Company, individually as a director and/or as an officer of the Company,
hereby make, constitute and appoint each of you our true and lawful Attorney for
each of us and in each of our names, places and steads to sign and cause to be
filed with the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on Form 10-Q and
any appropriate amendment or amendments thereto and any necessary exhibits.
Yours very truly,
GEORGIA POWER COMPANY
By /s/H. Allen Franklin
H. Allen Franklin
President and Chief Executive
Officer
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/s/Daniel P. Amos /s/G. Joseph Prendergast
Daniel P. Amos G. Joseph Prendergast
/s/Juanita P. Baranco /s/Herman J. Russell
Juanita P. Baranco Herman J. Russell
/s/A. W. Dahlberg /s/Gloria M. Shatto
A. W. Dahlberg Gloria M. Shatto
/s/William A. Fickling, Jr. /s/William Jerry Vereen
William A. Fickling, Jr. William Jerry Vereen
/s/H. Allen Franklin /s/Carl Ware
H. Allen Franklin Carl Ware
/s/L. G. Hardman III /s/Thomas R. Williams
L. G. Hardman III Thomas R. Williams
/s/Warren Y. Jobe /s/Cliff S. Thrasher
Warren Y. Jobe Cliff S. Thrasher
/s/James R. Lientz, Jr. /s/Judy M. Anderson
James R. Lientz, Jr. Judy M. Anderson
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Extract from minutes of meeting of the board of directors of Georgia Power Company.
RESOLVED: That for the purpose of signing reports under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to (a) the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 1997, and (b) quarterly filings on Form 10-Q during 1998; and of remedying any deficiencies with respect thereto by appropriate amendment or amendments, this Company and the members of its Board of Directors authorize their several powers of attorney to W. L. Westbrook and Wayne Boston.
The undersigned officer of Georgia Power Company does hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Georgia Power Company, duly held on February 18, 1998, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated March 23, 1998 GEORGIA POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
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Exhibit 24(d)
February 27, 1998
Mr. W. L. Westbrook Mr. Wayne Boston The Southern Company Southern Company Services, Inc. 270 Peachtree Street, N.W. 241 Ralph McGill Blvd. NE Atlanta GA 30303 Atlanta GA 30308-3374 |
Dear Sirs:
Re: Forms 10-K and 10-Q
Gulf Power Company proposes to file or join in the filing of statements under the Securities Exchange Act of 1934 with the Securities and Exchange Commission with respect to the following: (1) its Annual Report on Form 10-K for the year ended December 31, 1997, and (2) its 1998 quarterly reports on Form 10-Q.
Gulf Power Company and the undersigned Directors and Officers of said Company, individually as a Director and/or as an Officer of the Company, hereby make, constitute and appoint each of you our true and lawful Attorney for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, quarterly reports on Form 10-Q and any appropriate amendment or amendments thereto and any necessary exhibits.
Sincerely,
By /s/Travis J. Bowden
Travis J. Bowden
President and Chief Executive Officer
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/s/Travis J. Bowden /s/Barbara H. Thames
Travis J. Bowden Barbara H. Thames
/s/Paul J. DeNicola /s/Arlan E. Scarbrough
Paul J. DeNicola Arlan E. Scarbrough
/s/Fred C. Donovan /s/Ronnie R. Labrato
Fred C. Donovan Ronnie R. Labrato
/s/W. D. Hull, Jr. /s/Warren E. Tate
W. D. Hull, Jr. Warren E. Tate
/s/Joseph K. Tannehill
Joseph K. Tannehill
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Extract from minutes of meeting of the board of directors of Gulf Power Company.
RESOLVED, That for the purpose of signing the statements under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to the filing of this Company's Annual Report on Form 10-K for the year ended December 31, 1997, and its 1998 quarterly reports on Form 10-Q, and of remedying any deficiencies with respect thereto by appropriate amendment or amendments (both before and after such statements become effective), this Company, the members of its Board of Directors, and its Officers, are authorized to give their several powers of attorney to W. L. Westbrook and Wayne Boston.
The undersigned officer of Gulf Power Company does hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Gulf Power Company, duly held on February 27, 1998, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated March 23, 1998 GULF POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
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Exhibit 24(e)
March 3, 1998
W. L. Westbrook and Wayne Boston
Dear Sirs:
Mississippi Power Company proposes to file or join in the filing of
statements under the Securities Exchange Act of 1934 with the Securities and
Exchange Commission with respect to the following: (1) the filing of its Annual
Report on Form 10-K for the year ended December 31, 1997, and (2) the filing of
its quarterly reports on Form 10-Q during 1998.
Mississippi Power Company and the undersigned directors and officers of
said Company, individually as a director and/or as an officer of the Company,
hereby make, constitute and appoint each of you our true and lawful Attorney for
each of us and in each of our names, places and steads to sign and cause to be
filed with the Securities and Exchange Commission in connection with the
foregoing said Annual Report on Form 10-K, quarterly reports on Form 10-Q and
any appropriate amendment or amendments thereto and any necessary exhibits.
Yours very truly,
MISSISSIPPI POWER COMPANY
By /s/Dwight H. Evans
Dwight H. Evans
President and Chief Executive Officer
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/s/Paul J. DeNicola /s/George A. Schloegel
Paul J. DeNicola George A. Schloegel
/s/Edwin E. Downer /s/Philip J. Terrell
Edwin E. Downer Philip J. Terrell
/s/Dwight H. Evans /s/Gene Warr
Dwight H. Evans Gene Warr
/s/Robert S. Gaddis /s/Michael W. Southern
Robert S. Gaddis Michael W. Southern
/s/Walter H. Hurt, III /s/Frances V. Turnage
Walter H. Hurt, III Frances V. Turnage
/s/Aubrey K. Lucas
Aubrey K. Lucas
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Extract from minutes of meeting of the board of directors of Mississippi Power Company.
RESOLVED: That the members of this Company's Board of Directors and its officers are authorized to give their several powers of attorney to W. L. Westbrook and Wayne Boston for the purpose of signing the statements under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission with respect to the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 1997, and the filing of this Company's quarterly reports to the Securities and Exchange Commission on Form 10-Q for the year 1998.
The undersigned officer of Mississippi Power Company does hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Mississippi Power Company, duly held on March 3, 1998, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated March 23, 1998 MISSISSIPPI POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
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February 24, 1998
W. L. Westbrook and Wayne Boston
Dear Sirs:
Savannah Electric and Power Company proposes to file with the
Securities and Exchange Commission, under the Securities Exchange Act of 1934,
(1) its Annual Report on Form 10-K for the year ended December 31, 1997, and (2)
its quarterly reports on Form 10-Q during 1998.
Savannah Electric and Power Company and the undersigned directors and officers of said Company, individually as a director and/or as an officer of the Company, hereby make, constitute and appoint W. L. Westbrook and Wayne Boston our true and lawful Attorneys for each of us and in each of our names, places and steads to sign and cause to be filed with the Securities and Exchange Commission in connection with the foregoing said Annual Report on Form 10-K, quarterly reports on Form 10-Q, and any appropriate amendment or amendments thereto and any necessary exhibits.
Yours very truly,
SAVANNAH ELECTRIC AND POWER COMPANY
By /s/G. Edison Holland, Jr.
G. Edison Holland, Jr.
President and Chief Executive
Officer
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/s/Archie H. Davis /s/Robert B. Miller, III
Archie H. Davis Robert B. Miller, III
/s/Paul J. DeNicola /s/Arnold M. Tenenbaum
Paul J. DeNicola Arnold M. Tenenbaum
/s/Walter D. Gnann /s/K. R. Willis
Walter D. Gnann K. R. Willis
/s/G. Edison Holland, Jr. /s/Nancy E. Frankenhauser
G. Edison Holland, Jr. Nancy E. Frankenhauser
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Extract from minutes of meeting of the board of directors of Savannah Electric and Power Company.
RESOLVED: That for the purpose of signing statements required to be filed by the Company under the Securities Exchange Act of 1934 to be filed with the Securities and Exchange Commission including (a) the filing of this Company's Annual Report on Form 10-K for the year ended December 31, 1997, and (b) quarterly reports on Form 10-Q during calendar year 1998; and of remedying any deficiencies with respect thereto by appropriate amendment or amendments, this Company and the members of its Board of Directors, and its officers, be and they are hereby authorized to give their several powers of attorney to W. L. Westbrook and Wayne Boston for the purposes set out above.
The undersigned officer of Savannah Electric and Power Company does hereby certify that the foregoing is a true and correct copy of resolution duly and regularly adopted at a meeting of the board of directors of Savannah Electric and Power Company, duly held on February 24, 1998, at which a quorum was in attendance and voting throughout, and that said resolution has not since been rescinded but is still in full force and effect.
Dated March 23, 1998 SAVANNAH ELECTRIC AND POWER COMPANY
By /s/Wayne Boston
Wayne Boston
Assistant Secretary
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