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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
(Mark One)
[X](MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DecemberFOR THE FISCAL YEAR ENDED DECEMBER 31, 19961997
OR
[_]/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ___________ to _____________
Commission File No.FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NO. 33-7591
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Oglethorpe Power Corporation
(An Electric Membership Corporation)------------------------
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP CORPORATION)
(Exact name of registrant as specified in its charter)
GeorgiaGEORGIA 58-1211925
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Post Office BoxPOST OFFICE BOX 1349 30085-1349
2100 East Exchange Place
Tucker, Georgia 30085-1349EAST EXCHANGE PLACE (Zip Code)
TUCKER, GEORGIA
(Address of principal executive
offices) (Zip Code)
Registrant's telephone number, including area code: (770) 270-7600
Securities registered pursuant to Section 12(b) of the Act: NoneNONE
Securities registered pursuant to Section 12(g) of the Act: NoneNONE
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]_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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_][ X ]
State the aggregate market value of the voting stockand non-voting common equity
held by nonaffiliatesnon-affiliates of the registrant. NoneNONE
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. The Registrant is a
membership corporation and has no authorized or outstanding equity securities.THE REGISTRANT IS A
MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY SECURITIES.
Documents Incorporated by Reference: None
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OGLETHORPE POWER CORPORATION
19961997 FORM 10-K ANNUAL REPORT
Table of Contents
Item Page
- ---- ----
PART I
1 Business ............................................................ 1
Oglethorpe Power Corporation....................................... 1
The Members of Oglethorpe.......................................... 8
Member Requirements and Power Supply Resources..................... 12
Other Information.................................................. 16
2 Properties........................................................... 17
Generating Facilities.............................................. 17
Co-Owners of the Plants and the Plant Agreements................... 20
Environmental and Other Regulations................................ 24
3 Legal Proceedings.................................................... 29
4 Submission of Matters to a Vote of Security Holders.................. 29
PART II
5 Market for Registrant's Common Equity and Related Stockholder
Matters.............................................................. 30
6 Selected Financial Data.............................................. 30
7 Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 31
8 Financial Statements and Supplementary Data.......................... 42
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................. 62
PART III
10 Directors and Executive Officers of the Registrant................... 62
11 Executive Compensation............................................... 65
12 Security Ownership of Certain Beneficial Owners and Management.......TABLE OF CONTENTS
ITEM PAGE
- ----------- -----
PART I
1 Business........................................................................................... 1
Oglethorpe Power Corporation..................................................................... 1
The Members...................................................................................... 9
Member Requirements and Power Supply Resources................................................... 13
Certain Factors Affecting the Electric Utility Industry.......................................... 18
Other Information................................................................................ 21
2 Properties......................................................................................... 22
Generating Facilities............................................................................ 22
Co-Owners of the Plants and the Plant Agreements................................................. 25
3 Legal Proceedings.................................................................................. 28
4 Submission of Matters to a Vote of Security Holders................................................ 28
PART II
5 Market for Registrant's Common Equity and Related Stockholder Matters.............................. 29
6 Selected Financial Data............................................................................ 29
7 Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 30
7A Quantitative and Qualitative Disclosures About Market Risk......................................... 41
8 Financial Statements and Supplementary Data........................................................ 41
9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............... 61
PART III
10 Directors and Executive Officers of the Registrant................................................. 61
11 Executive Compensation............................................................................. 65
12 Security Ownership of Certain Beneficial Owners and Management..................................... 67
13 Certain Relationships and Related Transactions..................................................... 67
PART IV
14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................... 68
13 Certain Relationships and Related Transactions....................... 68
PART IV
14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K..... 69
i
SELECTED DEFINITIONS
When used herein the following terms will have the meanings indicated below:
Term Meaning
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TERM MEANING
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ADSCR Annual Debt Service Coverage Ratio
AFUDC Allowance For Funds Used During Construction
BPSA Block Power Sale Agreement
CFC National Rural Utilities Cooperative Finance Corporation
CoBank CoBank, ACB, formerly known as the National Bank for
Cooperatives
Commission Securities and Exchange Commission
CSA Coordination Services Agreement
Dalton City of Dalton, Georgia
DSC Debt Service Coverage Ratio
EMC Electric Membership Corporation
EPI Entergy Power, Inc.
FERC Federal Energy Regulatory Commission
FFB Federal Financing Bank
GPC Georgia Power Company
GPSC Georgia Public Service Commission
GSOC Georgia System Operations Corporation
GTC Georgia Transmission Corporation (An Electric Membership Corporation)
ITS Integrated Transmission System
ITSA Revised and Restated Integrated Transmission System Agreement
kWh Kilowatt-hours
LEM LG&E Energy Regulatory Commission
FFB Federal Financing Bank
GPC Georgia Power Company
GPSC Georgia Public Service Commission
GSOC Georgia System Operations Corporation
GTC Georgia Transmission Corporation
ITS Integrated Transmission System
ITSA Revised and Restated Integrated Transmission System
Agreement
kWh Kilowatt-hours
LPM LG&E Power Marketing Inc.
Members The 39 retail distribution cooperatives that are members
of Oglethorpe
MEAG Municipal Electric Authority of Georgia
MFI Margins for Interest
Morgan Stanley Morgan Stanley Capital Group
MW Megawatts
MWh Megawatt-hours
NRC Nuclear Regulatory Commission
Oglethorpe Oglethorpe Power Corporation (An Electric Membership
Corporation)
PCBs Pollution Control Revenue Bonds
PCR Percentage Capacity Responsibility
PPA Prior Period Adjustment
PURPA Public Utility Regulatory Policies Act
RUS Rural Utilities Service
SEPA Southeastern Power Administration
SONOPCO Southern Nuclear Operating Company
TIER Times Interest Earned Ratio
TVA Tennessee Valley Authority
ii
PART I
ItemITEM 1. BUSINESS
OGLETHORPE POWER CORPORATION
GeneralGENERAL
Oglethorpe Power Corporation (An Electric Membership Corporation)
("Oglethorpe") is a Georgia electric membership corporation incorporated in 1974
and headquartered in metropolitan Atlanta. Oglethorpe is entirely owned by its 39 retail
electric distribution cooperative members (the "Members"), who, in turn, are entirely
owned by their retail consumers. Oglethorpe is the largest electric cooperative
in the United States in terms of operating revenues, assets, kilowatt-hour ("kWh")kWh sales and,
through the Members, consumers served. It is one of the ten largest electric utilities in the United States in terms of
land area served. Oglethorpe has 146 full-time and 18 part-time employees, after
reflecting the effect of a corporate restructuring and a business alliance
transaction. (See "Corporate Restructuring" and "Relationship with
Intellisource" herein.its subsidiary,
EnerVision, Inc., Tailored Energy Solutions ("EnerVision"), have approximately
170 employees.
As with cooperatives generally, Oglethorpe operates on a not-for-profit
basis. Oglethorpe's principal business is providing wholesale electric power to
the Members. (See "Power Supply Business" herein.) The Members are local
consumer-owned distribution cooperatives providing retail electric service on a
not-for-profit basis. In general, the membershipcustomer base of the distribution cooperative Members consists of
residential, commercial and industrial consumers within specific geographic
areas. The Members serve approximately 1.2 million electric consumers (meters)
representing a total population of approximately 2.62.8 million people. Corporate RestructuringFor information on the Members,
see "THE MEMBERS."
Oglethorpe's mailing address is 2100 East Exchange Place, Post Office Box
1349, Tucker, Georgia 30085-1349, and its telephone number is (770) 270-7600.
COOPERATIVE PRINCIPLES
Cooperatives like Oglethorpe are business organizations owned by their
members, which are also either their wholesale or retail customers. As
not-for-profit organizations, cooperatives are intended to provide services to
their members at the lowest possible cost, in part by eliminating the need to
produce profits or a return on equity. Cooperatives may make sales to
non-members, the effect of which is generally to reduce costs to members. Today,
cooperatives operate throughout the United States in such diverse areas as
utilities, agriculture, irrigation, insurance and credit.
All cooperatives are based on similar business principles and legal
foundations. Generally, an electric cooperative designs its rates to recover its
cost-of-service and plans to collect a reasonable amount of revenues in excess
of expenses (i.e., margins) to increase its patronage capital, which is the
equity component of its capitalization. Any such margins, which are considered
capital contributions (i.e., equity) from the members, are held for the accounts
of the members and returned to them when the board of directors of the
cooperative deems it prudent to do so. The timing and amount of any actual
return of capital to the members depends on the financial goals of the
cooperative and the cooperative's loan and security agreements.
CORPORATE RESTRUCTURING
Oglethorpe and the Members completed a corporate restructuring (the
"Corporate Restructuring") on March 11, 1997, (the "Closing") pursuant to terms
and conditions set forth in the Second Amended and Restated Restructuring
Agreement, dated February 24, 1997, by and amongwhich Oglethorpe Georgia
Transmission Corporation (An Electric Membership Corporation) ("GTC") and
Georgia System Operations Corporation ("GSOC"). Pursuant to the Corporate
Restructuring, Oglethorpewas divided itself
into three specialized operating companies to respond to increasing competition
and regulatory changes in the electric industry. As part of the Corporate Restructuring, theOglethorpe's transmission
business was sold to and is now owned and operated by GTC,Georgia Transmission
Corporation (An Electric Membership Corporation) ("GTC"), a newly formed Georgia electric
membership corporation and theformed for that purpose. Oglethorpe's system operations
business was sold to and is now owned and operated by GSOC,Georgia System Operations
Corporation ("GSOC"), a newly formed Georgia nonprofit corporation. Oglethorpe
continues to own and operate its power supply business.
On Octobercorporation formed for that purpose.
1
1996, Oglethorpe transferred to GSOC its system
operations assets, consisting of its system control center and related energy
control and revenue metering systems equipment. The purchase price totaled
approximately $9.4 million and was paid by GSOC's assumption of Oglethorpe's
obligations under an existing note held by the Rural Utilities Service ("RUS"),
by delivery of a purchase money note payable to
Oglethorpe and by the assumption39 Members are the owners and members of certain other liabilities of Oglethorpe. Since October 1, 1996,GTC. Oglethorpe, had been the
sole member of GSOC. The39 Members and GTC becameare the owners and members of GSOC at
the Closing. GSOC now operates the system control center and provides system
operations services to the Members, Oglethorpe and GTC.
At the Closing, Oglethorpe transferred toGSOC.
GTC its transmission business
and assets. The purchase price forpurchased the transmission business was based onfor an appraisal of theappraised fair market value
purchase price of such business, as determined by an
independent appraiser, and was approximately $708$709 million. The purchase price was paid
primarily by GTC's assumption of a portion (approximately 16.86%) of
Oglethorpe's long-term secured debt in an amount equal to approximately $686
million. Approximately $541 million of this debt (payable to RUS,the Rural Utilities
Service ("RUS"), the Federal Financing Bank ("FFB") and CoBank, ACB ("CoBank"))
became the sole obligation of GTC, and Oglethorpe was released from all
liability with regard to this debt. The remaining $145 million of debt assumed
by GTC in connection with the Corporate
1
Restructuring, approximately $145 million, relates to Oglethorpe's pollution control revenue bonds ("PCBs"). While
GTC assumed and agreed to pay this $145 million of debt, Oglethorpe iswas not
legally released from its obligation to pay
forrepay this debt. For financial reporting
purposes, this debt is not shown on Oglethorpe's balance sheet and is shown on
Oglethorpe's capitalization table as being assumed by GTC. (See "SELECTED
FINANCIAL DATA" in Item 6 and "FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" in
Item 8). The remainder of the purchase price was paid by GTC from cash obtained
through a borrowingloan from National Rural Utilities Cooperative Finance Corporation
("CFC") and the assumption of approximately $1$2 million of other Oglethorpe
liabilities. Oglethorpe also made a special patronage capital distribution of
approximately $49 million to the Members which was used by the Members to
establish equity in and to provide initial working capital to GTC. Oglethorpe and the 39 Members are members of GTC. GTC now
provides transmission services to the Members, Oglethorpe and Oglethorpe.third parties. GTC has
succeeded to all of Oglethorpe's rights and obligations with respect to the
Integrated Transmission System ("ITS"). (See "Relationship with GTC" herein for
further discussion of the ITS.)
The system operations business and assets sold to GSOC consist of the system
control center and related energy control and revenue metering systems
equipment. The purchase price totaled approximately $9.4 million and was paid by
(i) GSOC's assumption of Oglethorpe's obligations under an existing note held by
the RUS, (ii) delivery of a purchase money note payable to Oglethorpe, and (iii)
the assumption of certain other liabilities of Oglethorpe. GSOC now operates the
system control center and provides system operations services to the Members,
Oglethorpe and GTC.
Oglethorpe continues to operate its power supply business.business and administer its
power purchase contracts. Oglethorpe retained all of its owned and leased
generation assets and, hasas of December 31, 1997, had total assets of
approximately $4.7$4.5 billion and total long-term debt of approximately $3.9$3.6
billion. Oglethorpe also continues to administer its power purchase contracts(See "Power Supply Business" herein and provide marketing support functions to the Members."MEMBER REQUIREMENTS AND POWER
SUPPLY RESOURCES.")
Effective with the Corporate Restructuring, Oglethorpethe Members amended itsOglethorpe's
Bylaws to implement a new governance structure with an 11-member board of
directors consisting of six directors elected from the Members, four independent
outside directors and Oglethorpe's President and Chief Executive Officer. This
smaller board replaced Oglethorpe's former 39-member board comprised of
directors nominated from and by each Member. (See "DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT" in Item 10 for further information.)
Contemporaneously with the Corporate Restructuring, Oglethorpe replaced its
prior Consolidated Mortgage and Security Agreement, dated as of September 1,
1994, (the "RUS Mortgage"), by and among Oglethorpe as mortgagor,and the United States of America, acting through
the Administrator of the RUS, CoBank, Credit Suisse
First Boston, acting by and through its New York Branch ("Credit Suisse"certain other mortgagees (the "RUS Mortgage"), and
SunTrust Bank, Atlanta ("SunTrust"), as trustee under certain pollution control
bond indentures identified in the RUS Mortgage,
with an Indenture, dated as of March 1, 1997, from Oglethorpe to SunTrust Bank,
Atlanta ("SunTrust"), as trustee (the "Master(as supplemented, the "Mortgage Indenture"). As
did the RUS Mortgage, the MasterMortgage Indenture provides forconstitutes a lien on substantially
all of the owned tangible and certain intangible property of Oglethorpe. (See
"Electric Rates" herein and "General--Rates and Financial
Coverage Requirements""MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS--General--RATES AND FINANCIAL COVERAGE
REQUIREMENTS" in Item 7 for further discussion of the revenue requirements of
the MasterMortgage Indenture.)
New Wholesale2
Immediately after the Corporate Restructuring, Oglethorpe's corporate name
was changed from "Oglethorpe Power ContractsCorporation (An Electric Membership
Generation & Transmission Corporation)" to "Oglethorpe Power Corporation (An
Electric Membership Corporation)" to reflect that it no longer provides
transmission services.
In connection with the Closing,Corporate Restructuring, Oglethorpe undertook to
remove the costs of its marketing services business from its general rates and
recover these costs on a fee-for-services basis beginning in 1998. To do so,
Oglethorpe created a subsidiary, EnerVision, to which it has transferred its
marketing services business, which includes 30 full-time and 13 part-time
employees. Further, all or part of this subsidiary may be sold to third parties.
Oglethorpe does not expect any of these potential actions to have a material
effect on its financial condition or results of operations.
POWER SUPPLY BUSINESS
Oglethorpe provides wholesale electric service to the 39 Members pursuant to
long-term, take-or-pay Wholesale Power Contracts described herein that obligate
the Members on a joint and several basis to pay rates sufficient to pay all the
costs of owning and operating Oglethorpe's power supply business. (See
"Wholesale Power Contracts" herein.) Oglethorpe supplies capacity and energy to
the Members from a combination of owned and leased generating plants and power
purchased under long-term contracts with other power suppliers and power
marketers. GTC provides transmission services to the Members for delivery of the
Members' power purchases.
Oglethorpe owns or leases undivided interests in thirteen generating units.
These units provide Oglethorpe with a total of 3,335 megawatts ("MW") of
nameplate capacity, consisting of 1,500.6 MW of coal-fired capacity, 1,185 MW of
nuclear-fueled capacity, 632.5 MW of pumped storage hydroelectric capacity, 14.8
MW of oil-fired combustion turbine capacity and 2.1 MW of conventional
hydroelectric capacity. Oglethorpe's generating units consist of 30% undivided
interests in the Edwin I. Hatch Plant ("Plant Hatch"), the Hal B. Wansley Plant
("Plant Wansley") and the Alvin W. Vogtle Plant ("Plant Vogtle"), a 60%
undivided interest in the Robert W. Scherer Unit No. 1 ("Scherer Unit No. 1"), a
60% undivided interest in the Robert W. Scherer Unit No. 2 ("Scherer Unit No.
2"), a 100% interest in the Tallassee Project at the Walter W. Harrison Dam
("Tallassee") and a 74.61% undivided interest in the Rocky Mountain Pumped
Storage Hydroelectric Facility ("Rocky Mountain"). Plant Hatch consists of two
nuclear-fueled units, with nameplate ratings of 810 MW and 820 MW, respectively.
Plant Wansley consists of two coal-fired units, each with a nameplate rating of
865 MW. Plant Wansley also includes a 49.2 MW oil-fired combustion turbine.
Plant Vogtle consists of two nuclear-fueled units, each with a nameplate rating
of 1,160 MW. Plant Scherer consists of four coal-fired units, each with a
nameplate rating of 818 MW, with Oglethorpe having an interest only in Scherer
Unit No. 1 and Scherer Unit No. 2. Tallassee is a conventional hydroelectric
facility with a nameplate rating of 2.1 MW. Rocky Mountain is a 3 unit pumped
storage hydroelectric facility with a nameplate rating of 847.8 MW. (See "MEMBER
REQUIREMENTS AND POWER SUPPLY RESOURCES--General" and "GENERATING
FACILITIES--General" in Item 2.")
Participants in Plants Hatch, Wansley and Vogtle and Scherer Units No. 1 and
No. 2 also include the Municipal Electric Authority of Georgia ("MEAG"), the
City of Dalton ("Dalton") and Georgia Power Company ("GPC"). GPC serves as
operating agent for these units. GPC is also a participant in Rocky Mountain
which is operated by Oglethorpe.
Oglethorpe utilizes long-term power marketer arrangements to reduce the cost
of power to the Members. Oglethorpe has entered into power marketer agreements
with LG&E Energy Marketing Inc. ("LEM") effective January 1, 1997, for
approximately 50% of the load requirements of the Members and with Morgan
Stanley Capital Group Inc. ("Morgan Stanley") effective May 1, 1997, with
respect to 50% of the forecasted load requirements of the Members. The LEM
agreements are based on the actual requirements of the Members during the
contract term, whereas the Morgan Stanley agreement represents
3
a fixed supply obligation. Under these power marketer agreements, Oglethorpe
purchases energy at fixed prices covering a portion of the costs of energy to
its Members. LEM and Morgan Stanley, in turn, have certain rights to market
excess energy from the Oglethorpe system. All of Oglethorpe's existing
generating facilities and power purchase arrangements are available for use by
LEM and Morgan Stanley for the term of the respective agreements. Oglethorpe
continues to be responsible for all the costs of its system resources but
receives revenue from LEM and Morgan Stanley for the use of the resources. (See
"MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--General" and "--Power Marketer
Arrangements.")
Oglethorpe purchases a total of approximately 1,250 MW of power pursuant to
power purchase agreements with GPC, Big Rivers Electric Corporation ("Big
Rivers"), Entergy Power, Inc. ("EPI"), and Hartwell Energy Limited Partnership
("Hartwell"). Oglethorpe has also contracted to purchase 275 MW of peaking
capacity from Florida Power Corporation during the summer of 1998. (See "MEMBER
REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements.")
WHOLESALE POWER CONTRACTS
In connection with the Corporate Restructuring, Oglethorpe and each of the
Members entered into ansubstantially similar Amended and Restated Wholesale Power
Contract,Contracts, dated August 1, 1996 (collectively, the "New Wholesale(the "Wholesale Power Contracts"), each of which
extends through December 31, 2025. The NewEach Wholesale Power Contracts permit eachContract permits a
Member to take future incremental power requirements either from Oglethorpe or
other sources. Under the Newits Wholesale Power Contracts,Contract, a Member is unconditionally
obligated on an express "take-or-pay" basis for a fixed allocation of
Oglethorpe's costs for its existing generation and purchased power resources, as
well as the costs with respect to any future resources in which such Member
elects to participate. The NewEach Wholesale Power ContractsContract specifically provideprovides that
the Member must make payments whether or not power is delivered and whether or
not a plant has been sold or is otherwise unavailable. Oglethorpe is obligated
to use its reasonable best efforts to operate, maintain and manage its resources
in accordance with prudent utility practices. The New Wholesale Power Contracts
provide that Oglethorpe will be responsible for power supply planning, resource
procurement and sales of capacity and energy for a MemberMembers unless thea Member
notifies Oglethorpe that it does not want Oglethorpe to provide these services.those services
to it.
Each Member's cost responsibility is allocated in the Newunder its Wholesale Power Contracts by assigning each Member anContract is
based on agreed-upon fixed percentage capacity responsibilityresponsibilities ("PCR"PCRs"). PCRs
have been assigned for all of Oglethorpe's existing generation and purchased
power resources. PCRs for any future resource will be assigned only to Members
choosing to participate in that resource. The New Wholesale Power Contracts provide
that each Member will be jointly and 2
severally responsible for all costs and
expenses of all existing generation and purchased power resources, as well as
for any future resources (whether or not such Member has elected to participate
in such future resource) that are approved by 75% of Oglethorpe's Board of
Directors and 75% of the Members. For resources so approved in which less than
all Members participate, costs of a defaulting Member are shared first among the participating Members,
and if all participating Members default, each non-participating Member is
expressly obligated to pay a proportionate share of such default.
The New Wholesale Power Contracts contain covenants by theeach Member (i) to
establish, maintain and collect rates and charges for the service of its
electric system, and (ii) to conduct its business in a manner thatwhich will produce
revenues and receipts at least sufficient to enable the Member to pay to
Oglethorpe, when due, all amounts payable by the Member under the Newits Wholesale
Power ContractsContract and to pay any and all other amounts payable from, or which might
constitute a charge or a lien upon, the revenues and receipts derived from its
electric system, including all operation and maintenance expenses and the
principal of, premium, if any, and interest on all indebtedness related to the
Member's electric system.
In connection with the implementation of long-term power marketer
arrangements with LG&E Power Marketing Inc. ("LPM"), Oglethorpe and each Member
entered into supplemental agreements to the New Wholesale Power Contracts which
relate to certain provisions of the New Wholesale Power Contracts and apply
during the term of the power marketer arrangements. The supplemental agreements
clarify the application of the New Wholesale Power Contract rate schedule to the
power marketer agreements. The 75% requirement described above has been met with
respect to the LPM agreements. The supplemental agreements assure that all costs
incurred by Oglethorpe under the LPM agreement are recoverable under the New
Wholesale Power Contracts. As the expected additional power marketer
arrangements are finalized, additional supplemental agreements to the New
Wholesale Power Contracts will be entered into by Oglethorpe and the Members.
See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES" for a description of
the Members' demand and energy requirements and the related power supply
resources. Electric RatesSee also
4
"MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Marketing
Arrangements--RELATED AGREEMENTS" regarding supplemental agreements to the
Wholesale Power Contracts relating to the power marketer agreements.
ELECTRIC RATES
Each Member is required to pay Oglethorpe for capacity and energy furnished
under its New Wholesale Power Contract in accordance with rates established by
Oglethorpe. Oglethorpe reviews its rates at such intervals as it deems
appropriate but is required to do so at least once every year. Oglethorpe is
required to revise its rates as necessary so that the revenues derived from such
rates, will be sufficient, but only sufficient,together with its revenues from all other sources, will be sufficient,
but only sufficient to pay all costs of its system, including operating and
maintenance costs, the cost of purchased power, the cost of transmission
services, and principal and interest on all indebtedness (including capital
lease obligations) of Oglethorpe, all costs associated with decommissioning or
otherwise retiring any generating facility, and to provide for the establishment and
maintenance of reasonable reserves.
Rates are also required to be established so asreserves, and to enable Oglethorpe to comply with all
financial requirements under the MasterMortgage Indenture. (See "General--Rates
and Financial Coverage Requirements""MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS" in Item 7.)
Oglethorpe had been required under the prior RUS Mortgage to implement
rates designed to maintain a Times Interest Earned Ratio ("TIER") of not less
than 1.05, a Debt Service Coverage Ratio ("DSC") of not less than 1.0 and an
Annual Debt Service Coverage Ratio ("ADSCR") of not less than 1.25. Oglethorpe
has always met or exceeded the TIER, DSC and ADSCR requirements of the RUS
Mortgage. Oglethorpe's policy for 1996 was to set rates to meet a TIER of 1.07.
Under the MasterMortgage Indenture, Oglethorpe is required, subject to any
necessary regulatory approval, to establish and collect rates which are
reasonably expected, together with other revenues of Oglethorpe, to yield a Margins for Interest ("MFI")an MFI
Ratio described herein for each fiscal year equal to at least 1.10 times total1.10. Margins for
Interest ("MFI") is defined in the Mortgage Indenture to be the sum of net
margins of Oglethorpe (which includes revenues of Oglethorpe subject to refund
at a later date but excludes provisions for (i) non-recurring charges to income,
including the non-recoverability of assets or expenses, except to the extent
Oglethorpe determines to recover such charges in rates, and (ii) refunds of
revenues collected or accrued subject to refund) plus interest charges, during such fiscal yearwhether
capitalized or expensed, on all indebtedness secured under the MasterMortgage
Indenture (oror by a lien equal or prior to the lien of the Master Indenture),Mortgage Indenture,
including amortization of debt discount and expense or premium but excluding indebtedness assumed by GTC. MFI is determined
by adding (i) Oglethorpe's net margins (after certain defined adjustments), (ii)
interest charges on indebtedness secured under the Master Indenture (or by lien
equal to
3
or prior to the lien of the Master Indenture), excluding indebtedness assumed by GTC and (iii)("Interest Charges"), plus any
amount included in net margins for accruals for federal or state income taxes. The definitiontaxes
imposed on income after deduction of interest expense. MFI takes into account
any item of net margin, loss, gain or expenditure of any affiliate or subsidiary
of Oglethorpe only if Oglethorpe has received such net margins or gains as a
dividend or other distribution from such affiliate or subsidiary or if
Oglethorpe has made a payment with respect to such losses or expenditures. "MFI
Ratio" is the ratio of MFI to total Interest Charges for a given period. (See
"General--Rates and Financial Coverage Requirements""MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS" in Item 7.)
Under theThe formulary rate established by Oglethorpe in the new rate schedule to the
New Wholesale Power Contracts the rates charged by Oglethorpe
are developed usingemploys a rate methodology under which all categories
of costs are specifically separated as components of the formula to determine
Oglethorpe's revenue requirements. The rate schedule formulaalso implements the assignment of
responsibility for fixed costs assigned to each Member (i.e., the PCR). The
monthly charges for capacity and other non-energy charges are based on a rate formula using
Oglethorpe's annual budget. Such capacity and other non-energy charges may be
adjusted by the Board of Directors, if necessary, during the year through an
adjustment to the annual budget. Energy charges reflect the passthroughpass-through of
actual energy costs.
However,costs whether incurred from generation or purchased power
resources or under the supplemental agreements for the LPM agreements, each Member
pays a fixed rate for energy, plus certain adjustments, while LPM pays all
energy costs, within an agreed upon range of costs.power marketing arrangements.
The new rate schedule formula also includes a prior period adjustment ("PPA")
mechanism. The PPA
servesmechanism designed to facilitate the achievement ofensure that Oglethorpe achieves the minimum 1.10 MFI
ratio, and it
provides for the retention of margins within a range from a 1.10 MFI ratio to a
1.20 MFI ratio.Ratio. Amounts, if any, by which Oglethorpe fails to achieve a minimum 1.10 MFI
ratioRatio would be accrued as of December 31 of the applicable year and collected
from the Members during the period April through December of the following year.
Amounts if any, earned by Oglethorpe in excess ofwithin a range from a 1.10 MFI Ratio to a 1.20 MFI ratioRatio are retained as
margins. Amounts, if any, by which Oglethorpe exceeds the maximum 1.20 MFI Ratio
would be charged against revenues as of
5
December 31 of the applicable year and refunded to the Members during the period
April through December of the following year. The new rate schedule formula is
intended to permitprovide for the collection of revenues which, together with revenues
from all other sources, are equal to all costs and expenses recorded by
Oglethorpe, plus amounts necessary to achieve at least the minimum 1.10 MFI
ratio.Ratio.
Under the terms of Oglethorpe's prior RUS Mortgage, all rate revisions by
Oglethorpe were subject to the approval of RUS. Under the MasterMortgage Indenture and
related loan contract with RUS, however, adjustments to Oglethorpe's rates to
reflect changes in Oglethorpe's budgets are not subject to RUS approval, except
for reductionsany reduction in rates in a fiscal year following a fiscal year in which
Oglethorpe has failed to meet the minimum 1.10 MFI ratioRatio set forth in the
MasterMortgage Indenture. Any changeChanges to the underlying rate formula would beschedule under the Wholesale Power
Contracts are subject to RUS approval. Rate revisionsOglethorpe's rates are not subject to the
approval of any other federal or state agency or authority, including the
Georgia Public Service Commission (the "GPSC").
For information regarding future rates, see "General--Rates and
Financial Coverage Requirements" and "Results of Operations--Factors Affecting
Future Financial Performance""MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--General--RATES AND
FINANCIAL COVERAGE REQUIREMENTS" in Item 7.
Relationship withRELATIONSHIP WITH GTC
GTC purchased and is operating the transmission system as described in
"Corporate Restructuring" herein.
Oglethorpe and allthe 39 Members are members of GTC. GTC is providingprovides transmission
services to the Members for delivery of the Members' power purchases from
Oglethorpe, Southeastern Power Administration ("SEPA") and any other power
suppliers. GTC also provides transmission services to Oglethorpe and third
parties. Oglethorpe has entered into a transmission agreement with GTC to
provide transmission services for third party transactions and for service to
Oglethorpe's headquarters and the administration building at the Rocky Mountain Project, a pumped storage hydroelectric facility ("Rocky
Mountain").
In connection with the Corporate Restructuring,Mountain.
GTC and the Members have entered into transmission agreementsMember Transmission Service Agreements
(the "Transmission"Member Transmission Agreements") under which GTC provides transmission
service to the Members pursuant to a transmission tariff. The Member
Transmission Agreements have a minimum term offor network service for current load
until December 31, 2025. After an initial ten-year term, load growth above 1995
requirements may, with notice to GTC, be served by others. The Member
Transmission Agreements provide that if a Member elects to
4
purchase a part of
its network service elsewhere, it must pay appropriate stranded costs to protect
the other Members from any rate increase that could otherwise occur. Under the
Member Transmission Agreements, Members have the right to design, construct and
own new distribution substations.
The Member Transmission Agreements provide that the Members are responsible,
on a joint and several basis, for all of GTC's obligationscosts relating to its
transmission business. The Member Transmission Agreements contain an express
covenantcovenants of the Members to set and collect retail rates sufficient to allow the
Members to meet their respective obligations under the Member Transmission
Agreements. The rate formula set forth in the transmission tariff is intended to
recover all costs and expenses paid or incurred by GTC. The rate expressly
includes in the description of costs to be recovered all principal and interest
on indebtedness of GTC (including any indebtedness of Oglethorpe assumed by
GTC). The rate further expressly provides for GTC to earn sufficient margins to
satisfy the requirements of its new mortgage indenture, which is substantially
similar to Oglethorpe's MasterMortgage Indenture.
The GTC transmission tariff and associated Member Transmission Agreements
have
beenwere developed to implement the Corporate Restructuring and to be consistent with federal transmission policy as expressed in
Order No. 888 of the Federal Energy Regulatory Commission ("FERC"). FERC's Order
No. 888 mandates open access ofto essentially all transmission systems in order to
promote competition in the bulk power markets and provides that non-regulated
utilities (such as Oglethorpe and GTC) must provide access to their transmission
systems on reciprocal terms and conditions in order to obtain transmission from
FERC-regulated utilities. The transmission tariff and Member Transmission
Agreements have been designed to facilitate the operation of GTC in the new
6
regulatory environment and, accordingly, provide for GTC to serve on a
nondiscriminatory basis both member and non-member customers on terms intended
to meet FERC's reciprocity requirement. PriorFor information regarding a FERC filing
relating to GTC and Oglethorpe, see "LEGAL PROCEEDINGS" in Item 3.
GTC owns approximately 2,400 miles of transmission line and approximately
460 substations of various voltages. In connection with the Closing, Oglethorpe, together with Georgia Power Company
("GPC"), the Municipal Electric Authority of Georgia ("MEAG") and the City of
Dalton ("Dalton"), owned transmission facilities which together form the ITS.Corporate
Restructuring, GTC succeeded to Oglethorpe's rights in the ITS, at the Closing, and GTC now owns
approximately 2,267 mileswhich consists
of transmission linefacilities owned by GTC, GPC, MEAG and 426 substations of various
voltages.Dalton. Through
agreements, common access to the combined facilities that compose the ITS
enables the owners to use their combined resources to make deliveries to or for
their respective consumers, to provide transmission service to third parties and
to make off-system purchases and sales.
GTC's rights and obligations with respect to the ITS are governed by the
Revised and Restated Integrated Transmission System Agreement with GPC (the
"ITSA"), which was assigned to GTC in connection with the Corporate
Restructuring. The ITSA provides for the transmission and distribution of
electric energy in the State of Georgia, other than in certain counties, and for
bulk power transactions, through use of the ITS. The ITS was established in
order to obtain the benefits of a coordinated development of the parties'
transmission facilities and to make it unnecessary for any party to construct
duplicative facilities. The ITS consists of all transmission facilities,
including land, owned by the parties on the date the ITSA became effective and
those thereafter acquired, which are located in the State of Georgia other(other than
in the excluded countiescounties) and which are used or usable to transmit power of a
certain minimum voltage and to transform power of a certain minimum voltage and
a certain minimum capacity (the "Transmission Facilities"). GPC has entered into
agreements with MEAG and Dalton that are substantially similar to the ITSA, and
GPC may enter into such agreements with other entities. The ITSA will remain in
effect through December 31, 2012 and, if not then terminated by five years'
prior written notice by either party, will continue until so terminated.
The ITSA is administered by a committee (the "Joint Committee") composed of
two representatives from each of GTC, GPC, MEAG and Dalton. Each year, the Joint
Committee determines a four-year plan of additions to the Transmission
Facilities that will reflect the current and anticipated future transmission
requirements of the parties. Each ITS participant is generally required to
maintain an original cost investment in the Transmission Facilities in
proportion to their respective Peak Loads (as defined in the ITSA).
GTC and GPC are parties to a Transmission Facilities Operation and
Maintenance Contract (the "Transmission Operation Contract"), under which GPC
provides System Operator Services (as defined in the 5
Transmission Operation
Contract) for GTC. In addition, GPC is required to provide such supervision,
operation and maintenance supplies, spare parts, equipment and labor for the
operation, maintenance and construction of Transmission Facilities as may be
specified by GTC. GPC is also required to perform certain emergency work under
the Transmission Operation Contract. GTC is permitted, upon notice to GPC, to
perform, or contract with others for the performance of, certain services
performed by GPC. Absent termination or amendment of the Transmission Operation
Contract, however, GPC will continue to perform System Operator Services for
GTC. The term of the Transmission Operation Contract will continue from year to
year unless terminated by either party upon four years' notice. GTC is required
to pay its proportionate share of the cost for the services provided by GPC.
Relationship withRELATIONSHIP WITH GSOC
From October 1, 1996 untilOglethorpe, the Closing, Oglethorpe was the sole member
of GSOC. The39 Members and GTC becameare members of GSOC upon the Closing.GSOC. GSOC now owns and
operates the system control center and provides system operations services to
the Members, Oglethorpe and GTC. GTC has contracted with GSOC to provide certain
transmission system operation services including reliability monitoring,
switching operations, and the real-time management of the transmission system.
Relationship with7
RELATIONSHIP WITH GPC
Oglethorpe's relationship with GPC is a significant factor in several
aspects of Oglethorpe's business. GPC is one of Oglethorpe's principal suppliers
of purchased power, and Oglethorpe is one of GPC's largest customers. All of
Oglethorpe's co-owned generating facilities, except Rocky Mountain, are operated
by GPC on behalf of itself as a co-owner and as agent for the other co-owners.
GPC and Oglethorpe, through the Members, are competitors in the State of Georgia
for electric service to new customers that have a choice of supplier under the
Georgia Territorial Electric Service Act, which was enacted in 1973 (the
"Territorial Act"). For further information regarding the various relationships and
agreements with GPC, see "THE MEMBERS OF OGLETHORPE--ServiceMEMBERS--Service Area and Competition",Competition," "MEMBER
REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale
Arrangements--Power
Purchases from GPC", "--Other Power System Arrangements" herein,Arrangements--POWER PURCHASES FROM GPC," "--Power Purchase and Sale
Arrangements--OTHER POWER PURCHASES," "GENERATING FACILITIES--FuelFACILITIES-- Fuel Supply", in
Item 2, "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--Co-Owners of the
Plants--Georgia Power Company",Plants--GEORGIA POWER COMPANY" and "--The Plant Agreements" in Item 2.
Relationship withRELATIONSHIP WITH RUS
Historically, federal loan programs administered by RUS have provided the
principal source of financing for electric cooperatives. Loans guaranteed by RUS
and made by FFB have been a major source of funding for Oglethorpe. InHowever, in
recent years, there have been legislative, administrative and budgetary
initiatives intended to reduce or, in some cases, eliminate federal funding for
electric cooperatives. However, Oglethorpe does not haveIn any new generation
facilities under construction, andevent, Oglethorpe's management does not anticipate
the need for construction of any new capacityloans guaranteed by RUS well into the future. (See "MEMBER
REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements--PowerRESOURCES-- Power Marketer Arrangements" for a
discussion of the long-term power marketer arrangements.)
In connection with the Corporate Restructuring, Oglethorpe replaced its RUS
Mortgage with the Mortgage Indenture, which, like the RUS Mortgage, constitutes
a lien on substantially all of the owned tangible and certain intangible
property of Oglethorpe. Oglethorpe also entered into a new loan contract with
RUS in connection with the Mortgage Indenture. Under the new loan contract, RUS
has retained approval rights over certain significant actions and arrangements,
including, without limitation, (i) significant additions to or dispositions of
system assets, (ii) significant power purchase and sale contracts, (iii) changes
to the Wholesale Power Contracts, including the rate schedule contained therein,
(iv) changes to plant ownership and operating agreements and (v) in limited
circumstances, issuance of additional secured debt. The extent of RUS's approval
rights under the new loan contract with Oglethorpe is substantially less than
the supervision and control RUS has traditionally exercised over borrowers under
its standard loan and security documentation. In addition, the MasterMortgage
Indenture improves Oglethorpe's ability to borrow funds in the public capital
markets. See(See "THE MEMBERS OF OGLETHORPE--Members'MEMBERS--Members' Relationship with RUS" for a discussion of
the impact of changes in the RUS lending program on the Members.
Through provisions of the prior RUS Mortgage, RUS exercised substantial
control and supervision over Oglethorpe in such areas as accounting, the
issuance of secured indebtedness, rates and charges for the sale of power,
construction and acquisition of facilities, and the purchase and sale of power.
Under the Master Indenture
6
and the new loan contact entered into with RUS in connection therewith, RUS has
significantly reduced these controls.
Relationship with Intellisource)
RELATIONSHIP WITH INTELLISOURCE
In conjunction with the Corporate Restructuring and as a part of its
continuing efforts to reduce costs, effective February 1, 1997, Oglethorpe
implemented a business alliance with Intellisource, Inc., a national provider of
outsourcing services. Pursuant to an agreement with Intellisource, approximately
150 support services division employees of Oglethorpe in the areas of
accounting, auditing, communications, human resources, facility management,
purchasing, telecommunications and information technology became employees of
the
Intellisource organization.Intellisource. Oglethorpe, GTC and GSOC are key customers of Intellisource and
are being served on-site by the managers and employees of Oglethorpe's former
support services division.
Certain Factors Affecting the Utility Industry in General
The electric utility industry in the United States is undergoing
fundamental change and is becoming increasingly competitive. This change is
promoted by the Energy Policy Act of 1992 (the "Energy Policy Act"), recently
adopted and proposed policies from FERC regarding transmission access and
pricing, increased consolidation and mergers of electric utilities, the
proliferation of self-generators and independent power producers, surplus
generation in certain regional markets and other factors. The Energy Policy Act
and FERC policies allow for increased competition among wholesale electric
suppliers and increased access to transmission services by such suppliers. The
new competitive environment is subject to rapidly evolving regulatory policy at
both the federal and state levels, which is based on a shift to a market-driven
environment from a regulated one. Significant legislative developments at the
federal level and in various state legislative bodies, and regulatory
developments at FERC and in state commissions are expected to continue to
clarify the policy and regulatory framework for increased competition. The GPSC
staff has scheduled a series of workshops, the stated purpose of which is to
solicit views from the various parties impacted by electric industry
restructuring and to discuss potential resolutions to these issues. At the
conclusion of the workshops, the GPSC staff anticipates presenting a report to
the GPSC that will identify electric industry restructuring issues, potential
resolutions and the views of the parties who participated in the workshop. (See
"THE MEMBERS OF OGLETHORPE--Service Area and Competition".)
A number of other significant factors have affected the operations of
electric utilities. They include the cost of fuel for the generation of electric
energy, recovery of the cost of existing facilities, fluctuating rates of load
growth, the effects of conservation and energy management on the use of electric
energy and compliance with environmental and other governmental regulations.
All of the factors mentioned above present an increasing challenge to
companies in the electric utility industry, including Oglethorpe and the
Members, to reduce costs, improve the management of resources and respond to the
changing environment. (See "Corporate Restructuring" herein and "MEMBER
REQUIREMENTS AND POWER SUPPLY RESOURCES--General", "--Power Purchase and Sale
Arrangements--Other Power Purchases", and "ENVIRONMENTAL AND OTHER REGULATIONS"
in Item 2.)
78
THE MEMBERS
OF OGLETHORPE
Service Area and CompetitionSERVICE AREA AND COMPETITION
The Members are listed below and include 39 of the 42 electric distribution
cooperatives in the State of Georgia.
Altamaha EMC Habersham EMC Planters EMC
Amicalola EMC Hart EMC Rayle EMC
Canoochee EMC Irwin EMC Satilla Rural EMC
Carroll EMC Jackson EMC Sawnee EMC
Central Georgia EMC Jefferson EMC Slash Pine EMC
Coastal EMC Lamar EMC Snapping Shoals EMC
Cobb EMC Little Ocmulgee EMC Sumter EMC
Colquitt EMC Middle Georgia EMC Three Notch EMC
Coweta-Fayette EMC Mitchell EMC Tri-County EMC
Excelsior EMC Ocmulgee EMC Troup EMC
Flint EMC Oconee EMC Upson County EMC
Grady EMC Okefenoke Rural EMC Walton EMC
GreyStone Power Corporation Pataula EMC Washington EMC
Corporation, an EMC
The Members serve approximately 1.2 million electric consumers (meters)
representing a total population of approximately 2.62.8 million people. The Members serve a region
covering approximately 40,000 square miles, which is approximately 70% of the
land area in the State of Georgia, served by the owners of the ITS, encompassing 150 of the State's 159 counties.
Sales by the Members in 19961997 amounted to approximately 19.620 million megawatt-hours
("MWh"), with approximately 72% to residential consumers, 26% to commercial and
industrial consumers and 2% to other consumers. The Members are the principal
suppliers for the power needs of rural Georgia. While the Members do not serve
any major cities, portions of their service territories are in close proximity
to urban areas and are experiencing substantial growth due to the expansion of
urban areas, including metropolitan Atlanta, into suburban areas and the growth
of suburban areas into neighboring rural areas. The Members have experienced
average annual compound growth rates from 19941995 through 19961997 of 5%6% in number of
consumers 9%and 5% in MWh sales and 7% in electric revenues.sales.
The Territorial Act regulates the service rights of all retail electric
suppliers in the State of Georgia. Pursuant to the Territorial Act, the GPSC
assigned substantially all areas in the State to specified retail suppliers.
With limited exceptions, the Members have the exclusive right to provide retail
electric service in their respective territories, which are predominately
outside of the municipal limits existing at the time the Territorial Act was
enacted in 1973. The chief exception to this rule of exclusivity is that
electric suppliers may compete for most new retail loads of 900 kilowatts or
greater. The GPSC may not reassign territory or transfer service except in
limited circumstances provided by the Territorial Act. The GPSC may reassign territory only if it determines that an electric
supplier has breached the tenets of public convenience and necessity. The GPSC
may transfer service for specific premises only:only if: (i) upon a determination by the GPSC determines,
after joint application of electric suppliers and proper notice and hearing,
that the public convenience and necessity require a transfer of service from one
electric supplier to another; or (ii) upon a finding bythe GPSC finds, after proper notice and
hearing, that an electric supplier's service to a premise is not adequate or
dependable or that its rates, charges, service rules and regulations
unreasonably discriminate in favor of or against the consumer utilizing such
premises and the electric utility is unwilling or unable to comply with an order
from GPSC regarding such service.
As discussed above,Since 1973, unlike in the electric utility industry in general, the
Territorial Act allowshas allowed limited competition among electric utilities in
Georgia by allowing the owner of any new facility located outside of municipal
limits and having a connected demand upon initial full operation of 900
kilowatts or greater to receive electric service from the retail supplier of its
choice. The Members, with Oglethorpe's support, are
9
actively engaged in competition with other retail electric suppliers for these
new commercial and industrial loads. The number of 8
commercial and industrial
loads served by the Members continues to increase annually. Retail competition in the electric utility industry has historically
been rare. While the
competition for 900-kilowatt900 kilowatt loads represents only limited competition in
Georgia, this competition has given Oglethorpe and the Members the opportunity
to develop resources and strategies to operate in an increasingly competitive
market.
The electric utility industry in the United States is undergoing fundamental
change and is becoming increasingly competitive. (See "CERTAIN FACTORS AFFECTING
THE ELECTRIC UTILITY INDUSTRY--General" and "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Competition" in Item
7.)
From time to time, utilities are approached by other parties interested in
purchasing their systems. Some of the Members have been approached in the past
by third parties indicating an interest in purchasing their systems. The
New Wholesale Power Contracts provide that a Member may not dissolve, liquidate or
otherwise wind up its affairs without Oglethorpe's approval. TheA Member may not
consolidate or merge with any person or reorganize or change the form of its
business organization from an electric membership corporation or sell, transfer,
lease or otherwise dispose of all or substantially all of its assets to any
person, whether in a single transaction or series of transactions, unless
eithereither: (i) the transaction is approved by Oglethorpe or (ii) other specified
conditions are satisfied including, but not limited to, an assumption agreement
by the transferee, satisfactory to Oglethorpe, containing an assumption by the
transferee of the performance and observance of every covenant and condition of
the Member under the New Wholesale Power Contract, and certifications of accountants
as to certain specified financial requirements of the transferee (taking into
account the transfer).
Cooperative StructureCOOPERATIVE STRUCTURE
The Members are cooperatives that operate their systems on a not-for-profit
basis. Accumulated margins derived after payment of operating expenses and
provision for depreciation constitute patronage capital of the consumers of the
Members. Refunds of accumulated patronage capital to the individual consumers
may be made from time to time subject to limitations contained in mortgages
between the Members and RUS or loan documents with other lenders. The RUS
mortgages generally prohibit such distributions unless, after any such
distribution, the Member's total equity will equal at least 40% (30% in the case
of Members, if any, that have the new form of RUS loan documents, discussed
below) of its total assets, except that distributions may be made of up to 25%
of the margins and patronage capital received by the Member in the preceding
year. As a general matter,year (provided that equity is at least 20% in the case of Members, if any, that
borrow fromhave the new form of RUS distribute accumulated patronage capital from time to time
subject to their respective financial policies and in conformity with their
respective RUS mortgages.loan documents). (See "Members' Relationship with RUS"
herein.)
Oglethorpe is a membership corporation, and the Members are not subsidiaries
of Oglethorpe. Except with respect to the obligations of the Members under each
Member's New Wholesale Power Contract with Oglethorpe and Oglethorpe's rights under
such contracts to receive payment for power and energy supplied, Oglethorpe has
no legal interest in, or obligations in respect of, any of the assets,
liabilities, equity, revenues or margins of the Members. (See "OGLETHORPE POWER
CORPORATION--NewCORPORATION-- Wholesale Power Contracts".Contracts.") The revenues of the Members are not
pledged as security to Oglethorpe but are the source from which moneys are
derived by the Members to pay for power supplied by Oglethorpe under the
New Wholesale Power Contracts. Revenues of the Members that borrow
from RUS are, however, pledged under
their respective RUS mortgages.
Rate Regulation of Membersmortgages or loan documents with other lenders.
RATE REGULATION OF MEMBERS
Through provisions in the loan documents securing loans to the Members, RUS
exercises control and supervision over the rates for the sale of power of the
Members that borrow from it in
such areas as: (i) accounting; (ii) borrowings; (iii) rates and charges for the
sale of power; (iv) construction and acquisition of facilities; and (v) the
purchase and sale of power.it. The individual RUS mortgages of thesuch Members require them to
design rates with a view to maintaining an average TIERTimes Interest
10
Earned Ratio ("TIER") of not less than 1.50 and an average DSCDebt Service Coverage
Ratio ("DSC") of not less than 1.25 for the two highest out of every three
successive years.
Although the setting of the rates of the Members is not subject to approval
by any Federalfederal or state agency or authority other than RUS, the Territorial Act
prohibits the Members from unreasonable discrimination in the
9
setting of rates,
charges, service rules or regulations and requires the Members to obtain GPSC
approval of long-term borrowings.
Snapping Shoals EMC, Mitchell EMC, Troup EMC, Walton EMC and Cobb EMC have
prepaid their RUS indebtedness and are no longer RUS borrowers. Each of these
Members now have financial and other requirements under loan documentshas a rate covenant with their new lenders.its current lender. Other Members may also
pursue this option. To the extent that these five Members and others that in the future prepay theira Member who is not an RUS indebtedness engageborrower
engages in wholesale sales or transmission in interstate commerce, they willit would be
subject to regulation by FERC under the Federal Power Act.
Members' Relationship withMEMBERS' RELATIONSHIP WITH RUS
Through provisions in the loan documents securing loans to the Members, RUS
also exercises control and supervision over the Members that borrow from it in
such areas as accounting, borrowings, construction and acquisition of
facilities, and the purchase and sale of power.
Historically, federal loan programs providing direct loans from RUS to
electric cooperatives have been a major source of funding for the Members.
InHowever, in recent years, there have been legislative, administrative and
budgetary initiatives intended to reduce or, in some cases, eliminate federal
funding for electric cooperatives. In addition, the RUS loan and guarantee
programs have been characterized by the imposition of increasingly problematic
terms and conditions and extended delays in access to necessary funding. RUS has
adopted a
new standard formforms of mortgagemortgages and has published a proposed rule describing a new
standard form of loan contractcontracts for distribution
borrowers.borrowers the stated purpose of which is to update and modernize the loan and
security documentation employed by RUS. Distribution borrowers are required to
adopt these new forms as a condition to receiving new loans from RUS.
Recent changes and proposals for further changes have made the direct loan
program administered by RUS more costly. The Rural Electrification Loan
Restructuring Act of 1993 eliminated the long-standing 2%5% loan program and
substituted a new program, the interest rates for which are based on rates being
paid on municipal bonds with comparable maturities. Certain borrowers with
either low consumer density or higher-than-average rates and lower-than-average
consumer income are still eligible for special loans at 5%. The President's
budget proposal for fiscal year 1999 includes a 5%reduction under these loan
programs, and replacement with a new program with interest rates based on
Treasury rates. However, no legislation has yet been introduced to implement
this proposed program. The future cost, availability and amount of RUS direct
and guaranteed loans which may be available to the Members cannot be predicted.
Five Members have prepaid their RUS indebtedness and are no longer RUS
borrowers. Other Members may also pursue this option. (See "Rate Regulation of
Members" herein.)
Members' Relationship withMEMBERS' RELATIONSHIP WITH GTC andAND GSOC
For information about the Members' relationship with GTC and GSOC, see
"OGLETHORPE POWER Corporation--RelationshipCORPORATION--Relationship with GTC" and "--Relationship with
GSOC".
Contracts withGSOC."
CONTRACTS WITH SEPA
In addition to energy received from Oglethorpe under the New Wholesale Power
Contracts, the Members purchase hydroelectric power under contracts with SEPA.
In 1996,1997, the aggregate SEPA allocation to the Members was 542 megawatts
("MW")523 MW plus associated
energy, representing approximately 11%10% of total Member peak demand and
approximately 5% of total Member energy requirements. New 20-year contracts
between each of the Members and SEPA have recently been executed.executed, effective as of October
1, 1996. The provisions of the new contracts are essentially the same as the
existing contracts with a few exceptions. The MembersEach Member must schedule theirits energy
allocation, and each Member has designated Oglethorpe to perform this function.
In11
Pursuant to a separate agreement, Oglethorpe will schedule, through GSOC, the
Members' SEPA power deliveries. Further, the Memberseach Member may be required, if certain
conditions are met, to contribute funds for capital improvements for Corps of
Engineers projects from which its allocation is derived in order to retain the
allocation. SEPA and Oglethorpe have entered into new transmission arrangements under which
Oglethorpe would deliverGTC delivers the Members' SEPA purchases. GTC, as assignee of this
agreement, will
10
deliver the SEPA powerpurchases under its network tariff
and contract with each Member. The new contracts are subject to RUS approval.
The amount of capacity and energy available from SEPA is not expected to
increase in an amount sufficient to serve a material portion of the projected
growth in the Members' requirements. (See "OGLETHORPE POWER
Corporation--New WholesaleCORPORATION--Wholesale Power Contracts" and "MEMBER REQUIREMENTS AND POWER
SUPPLY RESOURCES--Member Demand and Energy Requirements" and the table
thereunder.)
During 1996, legislative proposals were made that would have resulted in the
privatization of several of the federal power marketing administrations, in
particular SEPA. Ultimately, no proposal for the privatization of the power
marketing administrations was passed by Congress. The President's Budget for
fiscal year 19981999 does not include any proposals to privatize the federal power
marketing administrations. The ultimate outcome of this issue in Congress cannot
be predicted with certainty.
1112
MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES
GeneralGENERAL
Oglethorpe supplies the current capacity and energy requirements ofto the Members from a combination of
owned and leased generating plants and from power purchased under long-term
contracts with other power suppliers and power marketers. Oglethorpe owns or
leases 3,335.03,335 MW of nameplate capacity, consisting of 1,500.6 MW of coal-fired
capacity, 1,185 MW of nuclear-fueled capacity, 632.5 MW of pumped storage
hydroelectric capacity, 14.8 MW of oil-fired combustion turbine capacity and 2.1
MW of conventional hydroelectric capacity. (SEE(See "GENERATING FACILITIES--General"
and "--Plant Performance" in Item 2 for a description of Oglethorpe's generating
facilities.) These resources are generally scheduled and dispatched so as to
minimize the operating cost of Oglethorpe's system. However, Oglethorpe has
entered into long-term arrangements with power marketers to better utilize its
resources to reduce the cost of capacity and energy delivered to the Members, in
part by giving certain dispatch rights to the power marketers. (See "Power
Purchase and Sale Arrangements--Power
Marketer Arrangements" herein.)
Member Demand and Energy RequirementsMEMBER DEMAND AND ENERGY REQUIREMENTS
The following table shows the aggregate peak demand and energy requirements
of the Members for the years 19941995 through 19961997, and also shows the amounts of
such requirements supplied by Oglethorpe and SEPA. For the years 1994From 1995 through 1996,1997,
demand and energy requirements increased at an average annual compound growth
rate of 13.2%4.1% and 9.7%5.6%, respectively.
DemandDEMAND (MW) Energy Requirements (MWh)
--------------------------------------- --------------------------------------------
Total Total
Require- Supplied by Supplied by Require- Supplied by Supplied by
ments(1) Oglethorpe(2)ENERGY REQUIREMENTS (MWH)
--------------------------------------------------- -----------------------------------------
TOTAL SUPPLIED BY SUPPLIED BY TOTAL SUPPLIED BY SUPPLIED BY
REQUIREMENTS(1) OGLETHORPE(2) SEPA(3) ments Oglethorpe(2)REQUIREMENTS OGLETHORPE(2) SEPA(3)
------------------------- --------------- --------------- ------------- ------- ----- ------------- ------------------
1994 3,938 3,396 542 17,278,812 16,285,127 993,685
19951995.............................. 4,850 4,308 542 19,403,703 18,442,153 961,550
19961996.............................. 5,045 4,503 542 20,793,864 19,807,101 986,763
1997.............................. 5,252 4,729 523 21,648,366 20,664,786 983,580
- ----------------------------------
(1) System peak demand of the Members measured at the Members' delivery points
(net of system losses).
The significant increase in peak demand in 1995
was due in large part to a milder than normal summer in 1994.
(2) Includes purchased power. (See "Power Marketer Arrangements," "Power
Purchase and Sale Arrangements--Power Purchases fromArrangements--POWER PURCHASES FROM GPC" and "--Other Power Purchases""Power
Purchase and Sale Arrangements--OTHER POWER PURCHASES" herein.)
(3) Supplied by SEPA through existing contracts with the Members. (See "THE
MEMBERS OF OGLETHORPE--ContractsMEMBERS--Contracts with SEPA".SEPA.") Under the new SEPA contracts effective
October 1, 1996, the SEPA capacity allocation has been reduced by
approximately 3.7% for losses.
In 1996,1997, Cobb EMC and Jackson EMC accounted for approximately 12.5%12.9% and
11.2%11.8% of Oglethorpe's total revenues, respectively. Seasonal VariationsNone of the other Members
accounted for as much as 10% of Oglethorpe's total revenues in 1997. Due to
greater than average growth rates, certain of Oglethorpe's customers, including
its larger customers such as Cobb EMC and Jackson EMC, have historically
accounted for an increasing percentage of Oglethorpe's total revenues. However,
under the new Wholesale Power Contracts described above, a Member may choose to
supply all or a portion of its increased requirements with purchases from other
suppliers. Although the Members have contracted for significant portions of
their anticipated future needs by participating in Oglethorpe's power marketer
agreements, certain of the Members' future needs during the terms of the power
marketer agreements could still be purchased from other suppliers. (See "Power
Marketer Arrangements" herein.)
SEASONAL VARIATIONS
The demand for energy by the Members is influenced by seasonal weather
conditions. Historically, Oglethorpe's peak demand occurshas occurred during the
months of June through September.August. (See "OGLETHORPE POWER Corporation--Electric Rates".CORPORATION--Electric
Rates.") Energy revenues track energy costs as they are incurred and also
fluctuate month to month. Capacity revenues reflect the recovery of Oglethorpe's
fixed
13
costs, which do not vary significantly from month to month; therefore, thecapacity
charges are billed and capacity revenues are billed and recognized in equal monthly
amounts.
12
Demand ManagementPOWER MARKETER ARRANGEMENTS
In 1996, Oglethorpe and the Members have implemented various demand management
programs. The program goal, developed in conjunction with Oglethorpe's
integrated resource planning process, has been to modify demand patterns so that
current resources are used efficiently and the need for additional generating
resources is delayed. The programs that have been implemented include an energy
efficient home program (the "Good Cents Home" program), remote-controlled
switching of air conditioners, water heaters and irrigation pumps, residential
energy audits and public appeals to encourage consumers to use less energy
during periods of peak demand. The demand management programs have reduced the
growth of peak demand and have also resulted in an increase in off-peak sales.
(See "Power Purchase and Sale Arrangements--Other Power Purchases" herein.)
Power Purchase and Sale Arrangements
Power Marketer Arrangements
As a means of reducing the cost of power provided to the Members,
Oglethorpe utilized short-term power marketer arrangements during 1996 with two
different power marketers. Under both of the arrangements, the power marketer
was required to provide to Oglethorpe at a favorable fixed rate all of the
energy needed to meet the Members' requirements, and Oglethorpe was required to
provide upon request to the power marketers at cost (subject to certain
limitations) all energy available from Oglethorpe's total power resources. Under
these arrangements, Oglethorpe continued to operate the power supply system and
continued to dispatch the generating resources to ensure system reliability.
Oglethorpe is nowbegan utilizing power marketer arrangements on a long-term
basis to reduce
the cost of power. It haspower to the Members. During 1997, Oglethorpe entered into long-term
power marketer agreements with LPMLEM for approximately 50% of the load
requirements of the Members and is working to
finalize an agreement with Morgan Stanley Capital Group ("Morgan Stanley") for
the remainingwith respect to 50% of the
Members' then forecasted load requirements. The LEM agreements are based on the
actual requirements of the Members during the contract term, whereas the Morgan
Stanley agreement represents a fixed supply obligation. Generally, these
arrangements reduce the cost of supplying power to the Members by limiting the
risk of unit availability, by providing a guaranteed benefit for the use of
excess resources and by providing future power needs at a fixed price. All of
Oglethorpe's existing generating facilities and power purchase arrangements are
available for use by LEM and Morgan Stanley for the term of the respective
agreements. Oglethorpe continues to be responsible for all of the costs of its
system resources but receives revenue, as described below, from LEM and Morgan
Stanley for the use of the resources.
LEM AGREEMENTS
Effective January 1, 1997, Oglethorpe entered into power marketer agreements
with LPMLEM for 50% of the load requirements of the Members. Under the agreements,
LPMLEM is obligated to deliver, and Oglethorpe is obligated to take, approximately
50% of the load requirements of the participating Members less the load
requirements for certain customer choice loads (900 kilowatt or greater),customers who have the right to choose electric
suppliers, plus 50% of the delivery obligations under Oglethorpe's existing firm
power off-system sale contracts. For certain smaller customer choice loads, of three megawatts or less,
LPMLEM
is obligated to deliver, if Oglethorpe requests, 50% of the associated load
requirements. Oglethorpe has the option of purchasing the energy requirements
for any customer choice loadsload from another supplier. Oglethorpe is obligated to
sell and LPMLEM is obligated to buy 50% of the output of each participating
Member's PCR share of the "must run" units (primarily nuclear units). Oglethorpe
is also obligated to make available the same share of all other resources, which
LPMLEM may schedule. LPMLEM does not have the right to the output of upgrades to these
resources. LPM must payLEM pays Oglethorpe the cost of fuelcosts associated with the energy taken. There is a price adjustment if the plant performance does not meet
specified levels of availability and output.taken,
subject to certain adjustments. Oglethorpe must pay LPMLEM a contractually
specified price for each MWh purchased.
Oglethorpe has contracted with GTC to provide available transmission
services to deliver to the border of the ITS any energy sold to LPM. Each Member
will use its Transmission Agreement for delivery of energy purchased from LPM
and others.
Effective with the Corporate Restructuring and the execution of
supplemental agreements to the New Wholesale Power Contracts, the LPMThe LEM agreement relating to 37 of the 39 Members has a term extending
tothrough 2011. With one years'year's notice, Oglethorpe has the right to terminate the
LPMLEM agreement for any year
beginning within 2002. With one years'18 months' notice, LPMLEM has the right to
terminate the LPMLEM agreement for any year beginning within 2005. The LPMLEM agreement relating to the
other two Members has a term extending through the end of 1999.
The
13
supplemental agreements are the vehicle through which Oglethorpe and the Members
assure that the Members receive the benefits of and support the obligations for
the new power marketer arrangements under the New Wholesale Power Contracts.
LPMLEM is an indirect wholly owneda subsidiary of LG&E Energy Corp., a Kentucky corporation, which is a
diversified energy services holding company. LG&E Energy Corp. is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and, in accordance therewith, files reports and other information with the
Securities and Exchange Commission (the
"Commission"). Copies of this material can be obtained at prescribed rates from
the Commission's Public Reference Section at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Certain securities of LG&E Energy Corp. are listed on
the New York Stock Exchange, and reports and other information concerning LG&E
Energy Corp. can be inspected at the office of such Exchange.Commission.
MORGAN STANLEY AGREEMENT
Effective May 1, 1997, Oglethorpe is now working to finalizeentered into a power marketer arrangementsagreement
with Morgan Stanley that would supply the remainingwith respect to 50% of the Members' then forecasted load
requirements. The agreement is expected to allow each Member to have Oglethorpe
elect a term from three to eight years. Each Member is currently deciding
whether to have Oglethorpe obtain its remaining load requirements from Morgan
Stanley. The proposed agreement would obligateobligates Oglethorpe to purchase fixed quantities of
energy averagingat fixed prices. Each Member selected a term for its obligation, as well
as the portion of its then forecasted requirements to be purchased as a fixed
quantity. Oglethorpe is obligated to sell and Morgan Stanley is obligated to buy
50% of the Members' forecasted requirements
duringoutput, in contractually fixed amounts, of each Member's PCR share
(for the term and portion selected) of the agreement. Initially,"must run" units (primarily nuclear
units). Oglethorpe wouldis also obligated to make available the same share of all
other
14
resources, in contractually fixed amounts, which Morgan Stanley may schedule for
each 24-hour day. This schedule is set the day prior based on availability
limitations in the contract. Morgan Stanley pays a contractually fixed amount
each month and an amount for the scheduled energy based on contractually fixed
prices. The agreement has a term extending to March 31, 2005, but the purchases
for certain Members decline to zero prior to that date. Oglethorpe plans to
manage the portion of the system resources covered by the Morgan Stanley
agreement through scheduling and dispatching such resources. Oglethorpe will
also make purchases orand sales to balance thisthe fixed requirementpurchase obligation against
the actual requirements. Oglethorpe would have considerably more discretion inrequirements and to optimize the managementuse of the power supply system underresources after receiving
the proposeddaily schedule from Morgan Stanley.
Morgan Stanley contract
than underis a subsidiary of Morgan Stanley, Dean Witter, Discover &
Co., a diversified investment banking and financial services company. Morgan
Stanley, Dean Witter, Discover & Co. is subject to the LPM contract. In order to complete the implementationinformational
requirements of the Securities Exchange Act of 1934, as amended, and, in
accordance therewith, files reports and other information with the Commission.
RELATED AGREEMENTS
Oglethorpe has contracted with GTC to provide available transmission
services to deliver to the border of the ITS any energy sold to LEM or Morgan
Stanley, as well as any other wholesale power marketer arrangements, Oglethorpe and each participatingpurchase. Each Member will enteruse its
Member Transmission Agreement for delivery of energy purchased by Oglethorpe
from LEM, Morgan Stanley and others.
In connection with the LEM and Morgan Stanley arrangements, each Member has
entered into supplemental agreements to the Newits Wholesale Power Contract to conformContract. The
supplemental agreements are the provisionsvehicle through which Oglethorpe and the Members
assure that the Members receive the benefits of and support the obligations for
the power marketer arrangements under the Wholesale Power Contracts.
Each Member has approved the agreements with LEM and Morgan Stanley as
"future resources" under the Wholesale Power Contracts. Accordingly, each Member
has a PCR for each of the NewLEM and Morgan Stanley agreements and all costs
incurred by Oglethorpe under such agreements are recovered from the Members
under the Wholesale Power Contracts on a joint and several basis. To this
extent, the Members have elected, under the Wholesale Power Contracts, to
the
terms of the power marketing arrangements. Any Member that elects not to
participate in the Morgan Stanley agreement would have other options available,
including having Oglethorpe manage thispurchase a substantial portion of the Member's load
requirements and, beginning as early as January 1, 1998, contract with other
power marketers.
In the interim, Oglethorpe is supplying this portion of the Members'their future requirements from its own resourcesOglethorpe.
(See "--Future Power Resources" herein and by off-system purchase and sales. In the
event Oglethorpe does not enter into power marketer agreements for the remainder
of its load, it can continue to operate effectively in this manner
Oglethorpe will continue to plan for each Member's requirements beyond
the term of the respective power marketer agreements, including decisions
regarding early termination."OGLETHORPE POWER
CORPORATION--Wholesale Power Purchases fromContracts.")
POWER PURCHASE AND SALE ARRANGEMENTS
POWER PURCHASES FROM GPC
Oglethorpe currently purchases 1,000750 MW of capacity and associated energy from GPC on a
take-or-pay basis under the Block Power Sale Agreement ("BPSA"), which extends
through December 31, 2003. The capacity purchases under the BPSA are from fivefour
Component Blocks (as defined in the BPSA), composed of threetwo Component Blocks of
250 MW each (coal-fired units) and two Component Blocks of 125 MW each
(combustion turbine units). The capacity in one or more Component Blocks may,
however, be less than the MW stated above, as the result of scheduled retirement
of units or retirements due to force majeure events. All
units in the combustion turbine Component Blocks are scheduled to be retired by
2003. Although Oglethorpe may not
increase its capacity purchases under the BPSA, it may reduce or extend its
purchases of one or more Component Blocks upon proper notice to GPC. Oglethorpe
has given notice of its intent to reduce its purchases by two 250 MW Component
Blocks (coal-fired units) effective September 1, 19971998 and September 1, 1998.1999.
Also, pursuant to its long-term power marketer agreements with LPM,LEM, Oglethorpe
has committed to continue reducing its purchases from GPC as permitted under the
BPSA and thus will no longer purchase any energy under the BPSA effective
September 1, 2001. (See "Power Marketer Arrangements"Arrangements--LEM AGREEMENTS" herein for
a discussion of the LPMLEM agreement.)
1415
Other Power PurchasesOTHER POWER PURCHASES
Oglethorpe purchases 100 MW of capacity from each of Entergy Power,
Inc. ("EPI")EPI and Big Rivers, Electric Corporation ("Big Rivers"),
under agreements extending through June and July 2002, respectively. The
availability of capacity under the EPI contract is dependent on the availability
of two specific generating units available to EPI. The Tennessee Valley
Authority ("TVA") provides the transmission service to deliver the power from
the Big Rivers electric system to the ITS. TVA and Southern Company Services, as
agent for Alabama Power Company and Mississippi Power Company, provide the
transmission service necessary to deliver the power from EPI to the ITS. (See
Note 9 of Notes to Financial Statements in Item 8.)
Oglethorpe also has a contract through 2019 to purchase approximately 300 MW
of capacity withfrom Hartwell, Energy Limited Partnership ("Hartwell"), a partnership owned 50% by Destec Energy, Inc.NGC Corporation and 50% by
American National Power, Inc., a subsidiary of National Power, PLC. This
capacity is provided by two 150 MW gas-fired turbine generating units on a site
near Hartwell, Georgia. Oglethorpe intends to use the units for peaking capacity
but has the right to dispatch the units fully. Prior to the merger of Destec
Energy, Inc. and NGC Corporation, Oglethorpe notified Hartwell that Oglethorpe's
rights under the power purchase agreement to consent to the merger or to
exercise its rights of first refusal to purchase equity interests in the
partnership would be triggered by the merger. Hartwell, however, refused to
recognize Oglethorpe's rights and the parties are seeking a court order to
clarify Oglethorpe's contractual rights with respect to the merger.
In addition to the purchases from GPC, Big Rivers, EPI and EPI,Hartwell,
Oglethorpe also purchases small amounts of capacity and energy from "qualifying
facilities" under the Public Utility Regulatory Policies Act of 1978 ("PURPA").
Under a waiver order from FERC, Oglethorpe has historically made all purchases the
Members would have otherwise been required to make under PURPA and Oglethorpe
was relieved of its obligation to sell certain services to "qualifying
facilities" so long as the Members make those sales. Oglethorpe has historically
provided the Members with the necessary services to fulfill these sale
obligations. Purchases by Oglethorpe from such qualifying facilities provided
0.2% of Oglethorpe's energy requirements for the Members in 1996.1997. As a result of
the Corporate Restructuring, the MemberMembers may make such purchases in the future.future
instead of Oglethorpe.
Finally, Oglethorpe has contracted with Florida Power Corporation to
purchase 50
MW of peaking capacity during the summer of 1997 and 275 MW of peaking capacity during the summer of 1998.
Under the New Wholesale Power Contracts, Oglethorpe will provide joint
planning services for all participating Members. A Member may elect not to have
Oglethorpe provide joint planning, procurement or bulk power marketing. Although
the long-term power marketer arrangements may provide substantially all of the
Members' requirements for the contract term, Oglethorpe will continue to supply
these planning services for requirements beyond the contract term as well as for
evaluation of contract options.
Long-Term Power SalesLONG-TERM POWER SALES
Oglethorpe has an agreement to sell 100 MW of base capacity to Alabama
Electric Cooperative beginning June 1, 1998, and extending through December 31,
2005. Other Power System ArrangementsDuring the term of the power marketer agreements, LEM and Morgan Stanley
will be responsible for supplying Oglethorpe with sufficient power to fulfill
these power sales.
OTHER POWER SYSTEM ARRANGEMENTS
Oglethorpe has interchange, transmission and/or short-term capacity and
energy purchase or sale agreements with over 2060 utilities, power marketers and
other power suppliers. The agreements provide variously for the purchase and/or
sale of capacity and energy and/or for the purchase of transmission service. The
development of and access to a statewide transmission networkthe ITS and the interconnections with other
utilities are key elements in Oglethorpe's ability to make off-system sales and
purchases through its transmission contract with GTC and to compete in an
increasingly competitive market.
FUTURE POWER RESOURCES
Under the Wholesale Power Contracts, Oglethorpe provides joint planning
services for all participating Members. A Member may elect not to have
Oglethorpe provide joint planning, procurement or bulk power marketing services.
Although the existing long-term power marketer arrangements with LEM and
16
Morgan Stanley were designed to provide substantially all of the Members'
requirements during their contract terms, Oglethorpe will continue to offer
these planning services for requirements beyond the contract terms as well as
for evaluation of contract options and balancing of actual requirements against
fixed purchase obligations. Consequently, Oglethorpe has forecasted that peak
requirements for the Members will exceed contracted purchases over the next
several years and has issued a request for proposals for an aggregate of 100 MW
to 1,100 MW to supply these additional requirements. Oglethorpe has signed
contracts for an aggregate of 160 MW for delivery during the summer months of
1998, and may sign additional contracts up to 350 MW in the aggregate for supply
during that period. Oglethorpe is continuing to analyze proposals for deliveries
after 1998. All Members currently participate in joint planning.
17
CERTAIN FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY
GENERAL
The electric utility industry has been and in the future will continue to be
affected by a number of factors which could have an impact on the financial
condition of an electric utility such as Oglethorpe. These factors likely would
affect individual utilities in different ways. Such factors include, among
others: (i) the transition to increasing competition in the generation of
electricity and the corresponding increase in competition from other suppliers
of electricity, (ii) fluctuations in the market price for electricity, (iii)
effects of compliance with changing environmental, licensing and regulatory
requirements, (iv) regulatory and other changes in national and state energy
policy, including open access transmission, (v) uncertain access to low cost
capital for replacement of aging fixed assets, (vi) increases in operating
costs, including the cost of fuel for the generation of electric energy, (vii)
uncertain recovery of the cost of existing facilities, (viii) fluctuations in
demand, including rates of load growth and changes in competitive market share,
(ix) unbundling of services and corresponding corporate and functional
restructurings by electric utility companies, and (x) the effects of
conservation and energy management on the use of electric energy. These factors
present an increasing challenge to companies in the electric utility industry,
including Oglethorpe and the Members, to reduce costs, improve the management of
resources and respond to the changing environment. (See "Environmental and Other
Regulation" herein, "OGLETHORPE POWER CORPORATION--Corporate Restructuring,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--Competition" in Item 7, "MEMBER REQUIREMENTS AND POWER SUPPLY
RESOURCES--General" and "--Power Purchase and Sale Arrangements--OTHER POWER
PURCHASES.")
COMPETITION
The electric utility industry in the United States is undergoing fundamental
change and is becoming increasingly competitive. (See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Competition" in
Item 7.)
ENVIRONMENTAL AND OTHER REGULATION
GENERAL
As is typical for electric utilities, Oglethorpe is subject to various
federal, state and local air and water quality requirements which, among other
things, regulate emissions of pollutants, such as particulate matter, sulfur
oxides and nitrogen oxides into the air and discharges of other pollutants,
including heat, into waters of the United States. Oglethorpe is also subject to
federal, state and local waste disposal requirements that regulate the manner of
transportation, storage and disposal of various types of waste.
In general, environmental requirements are becoming increasingly stringent.
New requirements may substantially increase the cost of electric service, by
requiring changes in the design or operation of existing facilities or changes
or delays in the location, design, construction or operation of new facilities.
Failure to comply with these requirements could result in the imposition of
civil and criminal penalties as well as the complete shutdown of individual
generating units not in compliance. There is no assurance that Oglethorpe's
units will always remain subject to the regulations currently in effect or will
always be in compliance with future regulations.
Compliance with environmental standards will continue to be reflected in
Oglethorpe's capital expenditures and operating costs. Based on the current
status of regulatory requirements, Oglethorpe does not anticipate that any
capital expenditures or operating expenses associated with its compliance with
current laws and regulations will have a material effect on its results of
operations or its financial
18
condition. Oglethorpe's direct capital costs to achieve compliance with current
environmental requirements are expected to be minimal for 1998, 1999 and 2000.
As further discussed below, however, capital costs to achieve compliance with
potential future environmental requirements could be significant.
CLEAN AIR ACT
Environmental concerns of the public, the scientific community and Congress
have resulted in the enactment of legislation that has had and will continue to
have a significant impact on the electric utility industry. In particular, on
November 15, 1990, legislation was enacted (the "1990 Amendments") that
substantially revised the Clean Air Act. One of the principal purposes of the
1990 Amendments is to improve air quality by reducing the emissions of sulfur
dioxide and nitrogen oxides from affected utility units, which include the
coal-fired units that generate electric power at Plants Wansley and Scherer.
These sulfur dioxide reductions are being imposed through a sulfur dioxide
emission allowance trading program. An emission allowance, which gives the
holder the authority to emit one ton of sulfur dioxide during a calendar year,
is transferable and can be bought, sold or banked for use in the years following
its issuance. Allowances are issued by the U.S. Environmental Protection Agency
("EPA") to impose limited reductions on certain affected units in Phase I
(1995-1999) and more stringent reductions on all affected units in Phase II
(after the year 1999). After 1999, aggregate emissions of sulfur dioxide from
all units subject to this program will be capped at 8.9 million tons per year.
Oglethorpe is now complying with this program by using lower-sulfur fuel at
Plant Wansley. After 1999, Oglethorpe could use a variety of options for
compliance at Plants Wansley and Scherer, including the use of emission
allowances (issued, banked or purchased, if needed), fuel-switching or
installation of flue gas desulfurization equipment.
A number of recently finalized regulations, proposed regulations, petitions
and on-going studies could result in more stringent controls on all emissions,
including utility emissions. The most significant of these appear to be the
following. First, because nitrogen oxides are considered to be a precursor to
ozone, coupled with the fact that metropolitan Atlanta is classified as a
"serious nonattainment area" under the one hour ozone National Ambient Air
Quality Standards ("NAAQS"), EPA and the State of Georgia may impose further
limits on emissions of nitrogen oxides at Plants Wansley and/or Scherer. Second,
EPA has tightened the NAAQS for both ozone and particulate matter, an action
that could affect any source that emits nitrogen oxides and sulfur dioxide,
including utility units. Court challenges to both standards are now being made.
Third, EPA has issued a proposed regulation for the regional control of ozone
which, if implemented as proposed, could require substantial reductions in
nitrogen oxides emissions from Plants Wansley and Scherer. Fourth, EPA has
proposed a new regional haze program, an action that could affect any source
that emits nitrogen oxides or sulfur dioxide and that may contribute to the
degradation of visibility in mandatory federal Class I areas, including utility
units. Fifth, various Northeastern states have filed petitions under the Clean
Air Act asking EPA to set more stringent nitrogen oxides limits on sources that
are significantly contributing to ozone nonattainment in their own states.
Georgia was named in only one of these petitions. Sixth, although EPA has
decided not to impose a new NAAQS for sulfur dioxide, that decision has been
remanded (after appeal) to EPA for further rulemaking, so it is still possible
that a new short-term standard for sulfur dioxide could be established. Finally,
the 1990 Amendments require that several studies be conducted regarding the
health effects from power plant emissions of certain hazardous air pollutants.
These studies, which have now been completed, indicate that further research is
needed before decisions can be made on whether additional controls of utility
emissions of such pollutants are necessary.
Depending on the final outcome of these developments, and the implementation
approach selected by EPA and the State of Georgia, significant capital
expenditures and increased operation expenses could be incurred by Oglethorpe
for the continued operation of Plants Wansley and/or Scherer. The power marketer
arrangements generally do not provide for the recovery from the power marketers
of increased environmental costs. (See "MEMBER REQUIREMENTS AND POWER SUPPLY
RESOURCES--
19
Power Marketer Arrangements.") Because of the uncertainty associated with these
various developments, Oglethorpe cannot now predict the effect that any of these
potential requirements may have on the operations of Plants Wansley and/or
Scherer.
Compliance with the requirements of the Clean Air Act may also require
increased capital or operating expenses on the part of GPC. Any increases in
GPC's capital or operating expenses may cause an increase in the cost of power
purchased from GPC. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power
Purchase and Sale Arrangements--POWER PURCHASES FROM GPC.")
NUCLEAR REGULATION
Oglethorpe is subject to the provisions of the Atomic Energy Act of 1954, as
amended (the "Atomic Energy Act"), which vests jurisdiction in the Nuclear
Regulatory Commission ("NRC") over the construction and operation of nuclear
reactors, particularly with regard to certain public health, 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. Plants Hatch and Vogtle are being
operated under licenses issued by the NRC. All aspects of the operation and
maintenance of nuclear power plants are regulated by the NRC. From time to time,
new NRC regulations require changes in the design, operation and maintenance of
existing nuclear reactors. Operating licenses issued by the NRC are subject to
revocation, suspension or modification, and the operation of a nuclear unit may
be suspended if the NRC determines that the public interest, health or safety so
requires. The operating licenses issued for each unit of Plants Hatch and Vogtle
expire in 2014 and 2018 and 2027 and 2029, respectively.
Pursuant to the Nuclear Waste Policy Act of 1982, as amended, the Federal
government has the regulatory responsibility for the final disposition of
commercially produced high-level radioactive waste materials, including spent
nuclear fuel. Such Act requires the owner of nuclear facilities to enter into
disposal contracts with the Department of Energy ("DOE") for such material.
These contracts require each such owner to pay a fee, which is currently one
dollar per MWh for the net electricity generated and sold by each of its
reactors. Oglethorpe is a party to agreements with DOE regarding Plants Hatch
and Vogtle. Plants Hatch and Vogtle currently have on-site spent fuel storage
capacity. Based on normal operations and retention of all spent fuel in the
reactor, it is anticipated that existing on-site pool capacity would be
sufficient until 2003 and 2008, respectively, to accept the number of spent fuel
assemblies that would normally be removed from the reactor during a refueling.
Contracts with the DOE have been executed to provide for the permanent disposal
of spent nuclear fuel produced at Plants Hatch and Vogtle. The services to be
provided by DOE were scheduled to begin in 1998; however, the DOE has stated
that permanent nuclear waste storage facilities are not available, and it is
uncertain when they will be available. If DOE does not begin receiving the spent
fuel from Plant Hatch in 2003 or from Plant Vogtle in 2008, alternative methods
of spent fuel storage will be needed. Activities for adding dry cask storage
capacity at Plant Hatch by 2000 are in progress. (See Note 1 of Notes to
Financial Statements regarding nuclear fuel cost in Item 8.)
For information concerning nuclear insurance, see Note 8 of Notes to
Financial Statements in Item 8. For information regarding NRC's regulation
relating to decommissioning of nuclear facilities and regarding DOE's
assessments pursuant to the Energy Policy Act for decontamination and
decommissioning of nuclear fuel enrichment facilities, see Note 1 of Notes to
Financial Statements in Item 8.
OTHER ENVIRONMENTAL REGULATION
In 1993, EPA issued a ruling confirming the non-hazardous status of coal
ash. That ruling may apply, however, only to situations where those wastes are
not co-managed, I.E., not mixed with other wastes. Pursuant to court order, EPA
has until the Spring of 1999 to classify co-managed utility wastes as either
20
hazardous or non-hazardous. If the wastes are classified as hazardous,
substantial additional costs for the management of such wastes might be required
of Oglethorpe, although the full impact would depend on the subsequent
development of requirements pertaining to these wastes.
Oglethorpe is subject to other environmental statutes including, but not
limited to, the Clean Water Act, the Georgia Water Quality Control Act, the
Georgia Hazardous Site Response Act, the Toxic Substances Control Act, the
Resource Conservation & Recovery Act, the Endangered Species Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Emergency Planning and Community Right to Know Act, and to the regulations
implementing these statutes. Oglethorpe does not believe that compliance with
these statutes and regulations will have a material impact on its financial
condition or results of operations. Changes to any of these laws, some of which
are being reviewed by Congress, could affect many areas of Oglethorpe's
operations. Although compliance with new environmental legislation could have a
significant impact on Oglethorpe, those impacts cannot be fully determined at
this time and would depend in part on the final legislation and the development
of implementing regulations.
The scientific community, regulatory agencies and the electric utility
industry are continuing to examine the issues of global warming and the possible
health effects of electromagnetic fields. While no definitive scientific
conclusions have been reached, it is possible that new laws or regulations
pertaining to these matters could increase the capital and operating costs of
electric utilities, including Oglethorpe or entities from which Oglethorpe
purchases power. In addition, the potential for liability exists from lawsuits
that might be brought alleging damages from electromagnetic fields.
OTHER INFORMATION
Information with respect to fuel supply for Oglethorpe's plants is set forth
under the caption "GENERATING FACILITIES--Fuel Supply" included in Item 2 and is
incorporated herein by reference.
Information with respect to
environmental and other regulations affecting Oglethorpe and its plants is set
forth under the caption "ENVIRONMENTAL AND OTHER REGULATIONS" included in Item 2
and is incorporated herein by reference.
1621
ItemITEM 2. PROPERTIES
GENERATING FACILITIES
GeneralGENERAL
The following table sets forth certain information with respect to the
generating facilities in which Oglethorpe currently has ownership or leasehold
interests, all of which are in commercial operation. The Edwin I.Plant Hatch, Plant ("Plant Hatch"), the Hal B. Wansley,
Plant ("Plant Wansley"), the Alvin W. Vogtle Plant ("Plant Vogtle") and the Robert W. Scherer UnitsUnit No. 1 and Scherer Unit No. 2 ("Scherer
Units No. 1 and No. 2") are co-owned by
Oglethorpe, GPC, MEAG and Dalton. GPC is the operating agent for each of these
co-owned plants. Rocky Mountain is co-owned by Oglethorpe and GPC, and
Oglethorpe is the operating agent. Oglethorpe is the sole owner of the Tallassee Project at the Walter W. Harrison
Dam ("Tallassee").Tallassee.
(See "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant Agreements".Agreements.")
Oglethorpe's
Share of Name- Commercial License
Percentage Plate Capacity Operation Expiration
Type of Fuel Interest(1)OGLETHORPE'S
SHARE OF
NAMEPLATE COMMERCIAL LICENSE
TYPE OF PERCENTAGE CAPACITY OPERATION EXPIRATION
FACILITIES FUEL INTEREST(1) (MW) Date DateDATE DATE
- -------------------------------------------------- --------- ----------- ------------ ------------- ----------- ---- ---- ----
FACILITIES IN SERVICE:
Plant Hatch (near Baxley)Baxley, Ga.)
Unit No. 11...................................... Nuclear 30 243.0 1975 2014
Unit No. 22...................................... Nuclear 30 246.0 1979 2018
Plant Vogtle (near Waynesboro)Waynesboro, Ga.)
Unit No. 11...................................... Nuclear 30 348.0 1987 2027
Unit No. 22...................................... Nuclear 30 348.0 1989 2029
Plant Wansley (near Carrollton)Carrollton, Ga.)
Unit No. 11...................................... Coal 30 259.5 1976 N/A(2)
Unit No. 22...................................... Coal 30 259.5 1978 N/A(2)
Combustion TurbineTurbine.............................. Oil 30 14.8 1980 N/A(2)
Plant Scherer (near Forsyth)Forsyth, Ga.)
Unit No. 11...................................... Coal 60 490.8 1982 N/A(2)
Unit No. 22...................................... Coal 60 490.8 1984 N/A(2)
Tallassee (near Athens)Athens, Ga.)...................... Hydro 100 2.1 1986 2023
Rocky Mountain (near Rome, Ga.)................... Pumped
Storage
(near Rome)
Hydro 74.61 632.5 1995 2027
---------------------
Total OwnershipOwnership............................. 3,335.0
=========------------
------------
- ----------------------------------------
(1) Oglethorpe has an ownership interest in all of the facilities except
Scherer Unit No. 2. The 60% interest in Scherer Unit No. 2 is leased under leases that expire in
2013, subject to options to renew for a total of 8.5 years. The 74.61%
interest in Rocky Mountain is leased under leases that expire in 2016.
Oglethorpe has an ownership interest in all of the other facilities. (See
"CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant
Agreements--ROCKY MOUNTAIN.")
(2) Coal-fired units and combustion turbines do not operate under operating
licenses similar to those granted to nuclear units by the Nuclear Regulatory
Commission and to hydroelectric plants by FERC.
1722
Plant PerformancePLANT PERFORMANCE
The following table sets forth certain operating performance information of
each of the major generating facilities in which Oglethorpe currently has
ownership or leasehold interests:
Equivalent Availability (1) Capacity Factor (2)
------------------------------ -------------------------
Unit 1996 1995 1994 1996 1995 1994
- ---- ---- ---- ---- ---- ---- ----EQUIVALENT AVAILABILITY(1) CAPACITY
FACTOR(2)
------------------------------------- -----------
UNIT 1997 1996 1995 1997
- --------------------------------------------------------------------- ----- ----- ----- -----
Plant Hatch
Unit No. 1...................1......................................................... 86% 83% 98% 84% 83% 100% 85%86%
Unit No. 2...................2......................................................... 85 97 75 78 99 75 7984
Plant Vogtle
Unit No. 1...................1......................................................... 81 80 98 86 80 98 8681
Unit No. 2...................2......................................................... 100 88 89 91 89 90 91101
Plant Wansley
Unit No. 1...................1......................................................... 91 88 90 92 58 56 62
Unit No. 2...................2......................................................... 92 91 89 88 62 56 5859
Plant Scherer
Unit No. 1...................1......................................................... 76 92 95 57
Unit No. 2......................................................... 99 84 97 84
Rocky Mountain(3)
Unit No. 1......................................................... 96 94 83 20
Unit No. 2......................................................... 96 95 92 13
Unit No. 3......................................................... 97 95 92 19
UNIT 1996 1995
- --------------------------------------------------------------------- ----- -----
Plant Hatch
Unit No. 1......................................................... 83% 100%
Unit No. 2......................................................... 99 75
Plant Vogtle
Unit No. 1......................................................... 80 98
Unit No. 2......................................................... 89 90
Plant Wansley
Unit No. 1......................................................... 58 56
Unit No. 2......................................................... 62 56
Plant Scherer
Unit No. 1......................................................... 74 73
64
Unit No. 2................... 84 97 852......................................................... 72 85
60
Rocky Mountain (3)Mountain(3)
Unit No. 1................... 94 83 N/A1......................................................... 15 16
N/A
Unit No. 2................... 95 92 N/A2......................................................... 13 15
N/A
Unit No. 3................... 95 92 N/A3......................................................... 10 16 N/A
- ---------------------------------------------------
(1) Equivalent Availability is a measure of the percentage of time that a unit
was available to generate if called upon, adjusted for periods when the unit
is partially derated from the "maximum dependable capacity" rating.
(2) Capacity Factor is a measure of the output of a unit as a percentage of the
maximum output, based on the "maximum dependable capacity" rating, over the
period of measure.
(3) Rocky Mountain Commercial Operation Dates: Unit 1 - July1--July 24, 1995; Unit
2
- June2--June 19, 1995; Unit 3 - June3--June 1, 1995. This information was calculated
beginning from the commercial operation date for each unit. As a pumped
storage plant, Rocky Mountain primarily operates in peaking service.
The nuclear refueling cycle for Plants Hatch and Vogtle exceeds twelve
months. Therefore, in some calendar years the units at these plants are not
taken out of service for refueling, resulting in higher levels of equivalent
availability and capacity factor.
Fuel SupplyFUEL SUPPLY
COAL. Coal for Plant Wansley is currently purchased under long-term
contracts which are
estimated to be sufficient to provide the majority of the coal requirements of
Plant Wansley through 1997, with the remainder being provided throughand in spot market transactions. As of February 28, 1997,1998, there was a
38-day33-day coal supply at Plant Wansley based on nameplate rating.
Low-sulfur "compliance" coal for Scherer Units No. 1 and No. 2 is purchased
under long-term contracts and in spot market transactions. As of February 28,
1997,1998, the coal stockpile at Plant Scherer contained a 37-day
18
33-day supply based on
nameplate rating. During 1994, Plant Scherer was converted to burn both
sub-bituminous and bituminous coals, and a separate stockpile of sub-bituminous
coal was built in addition to the stockpile of bituminous coal.
The Plant Scherer and Wansley ownership and operating agreements were
amended in 1993 and 1996, respectively, to allow each co-owner (i) to dispatch
separately its respective ownership interest in conjunction with contracting
separately for long-term coal purchases procured by GPC and (ii) to procure
separately long-term coal purchases. Pursuant to the amendments, Oglethorpe
implemented separate
23
dispatch of Plant Scherer in 1994. Oglethorpe expects to
implement separate dispatch1994 and at Plant Wansley by early to mid-summerin May 1997. Oglethorpe
continues to use GPC as its agent for fuel procurement.
To take advantage of these changes at Plants Scherer and Wansley, Oglethorpe
formed a wholly owned subsidiary, to acquire rail cars designed for
hauling coal from the western coal mining regions. The subsidiary, Black Diamond Energy, Inc., to acquire rail
cars. This subsidiary has purchased or leased 299approximately 300 rail cars.
Oglethorpe has entered into an initial 15-year lease with thethis subsidiary which
obligates Oglethorpe to pay all of the ownership and operating expenses of the
subsidiary relating to the rail cars during the lease term.
For information relating to the impact that the Clean Air Act will have on
Oglethorpe, see "ENVIRONMENTAL AND OTHER REGULATIONS--Clean Air Act"."CERTAIN FACTORS AFFECTING THE ELECTRIC UTILITY
INDUSTRY--Environmental and Other Regulations--CLEAN AIR ACT" in Item 1.
NUCLEAR FUEL. GPC, as operating agent, has the responsibility to procure
nuclear fuel for Plants Hatch and Vogtle. GPC has contracted with Southern
Nuclear Operating Company ("SONOPCO"), a subsidiary of The Southern Company
specializing in nuclear services, to provide nuclear services,operate these plants, including nuclear
fuel procurement. (See "CO-OWNERS OF THE PLANTS AND PLANT AGREEMENTS--The Plant
Agreements.") SONOPCO employs both spot purchases and long-term contracts to
satisfy nuclear fuel requirements. The nuclear fuel supply and related services
are expected to be adequate to satisfy current and future nuclear generation
requirements.
Plants Hatch and Vogtle currently have on-site spent fuel storage
capacity. Based on normal operations and retention of all spent fuel in the
reactor, it is anticipated that existing on-site pool capacity would not be
sufficient in 2003 and 2008, respectively, to accept the number of spent fuel
assemblies that would normally be removed from the reactor during a refueling.
Contracts with the Department of Energy ("DOE") have been executed to provide
for the permanent disposal of spent nuclear fuel produced at Plants Hatch and
Vogtle. The services to be provided by DOE are scheduled to begin in 1998;
however, the DOE has stated that permanent nuclear waste storage facilities will
not be available by that date, and it is uncertain when they will be available.
If DOE does not begin receiving the spent fuel from Plant Hatch in 2003 or from
Plant Vogtle in 2008, alternative methods of spent fuel storage will be needed.
Activities for adding dry cast storage capacity at Plant Hatch by as early as
1999 are in progress. (See "ENVIRONMENTAL AND OTHER REGULATIONS--Nuclear
Regulation" for a discussion of the Nuclear Waste Policy Act and Note 1 of Notes
to Financial Statements in Item 8 regarding nuclear fuel cost.)
1924
CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS
Co-owners of the PlantsCO-OWNERS OF THE PLANTS
Plants Hatch, Vogtle, Wansley and Scherer Units No. 1 and No. 2 are co-owned
by Oglethorpe, GPC, MEAG and Dalton, and Rocky Mountain is co-owned by
Oglethorpe and GPC. Each such co-owner owns, and Oglethorpe owns or leases,
undivided interests in the amounts shown in the following table (which excludes
the Plant Wansley combustion turbine). Oglethorpe is the operating agent for
Rocky Mountain. GPC is the operating agent for each of these plants, except for Rocky Mountain for which Oglethorpe is the operating
agent.other plants. (See
"The Plant Agreements" herein.)
Nuclear Coal-Fired Pumped Storage
----------------------------- ---------------------------------- --------------
Plant Plant Plant Scherer Units Rocky
Hatch Vogtle Wansley No.NUCLEAR COAL-FIRED
-------------------- --------------------------------------------
PLANT PLANT PLANT SCHERER UNITS
HATCH VOGTLE WANSLEY NO. 1 & No.NO. 2
Mountain Total
----------- -------------- -------------- ---------------- -------------- ------------------------- -------------------- -------------------- --------------------
% MW(1) % MW(1) % MW(1) % MW(1)
% MW(1) MW(1)
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------------- -------- -------- -------- -------- -------- -------- --------
Oglethorpe.Oglethorpe..... 30.0 489 30.0 696 30.0 519 60.0(2) 982
74.61 633 3,319
GPC........GPC............ 50.1 817 45.7 1,060 53.5 926 8.4 137
25.39 215 3,155
MEAG.......MEAG........... 17.7 288 22.7 527 15.1 261 30.2 494
-- -- 1,570
Dalton.....Dalton......... 2.2 36 1.6 37 1.4 24 1.4 23
-- -- 120
--------------------- ------- ------- ------- ------- ------- ------ ------ ------
Total......-------- -------- -------- -------- -------- -------- -------- --------
Total.......... 100.0 1,630 100.0 2,320 100.0 1,730 100.0 1,636
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
PUMPED
STORAGE
------------------------
ROCKY
MOUNTAIN
------------------------ TOTAL
% MW(1) MW(1)
---------- ---------- --------
Oglethorpe..... 74.61 (2) 633 3,319
GPC............ 25.39 215 3,155
MEAG........... -- -- 1,570
Dalton......... -- -- 120
---------- ----- --------
Total.......... 100.00 848 8,164
===== ===== ===== ===== ===== ===== ===== ===== ====== === =====---------- ----- --------
---------- ----- --------
- ----------------------------------------
(1) Based on nameplate ratings.
(2) Oglethorpe leases its interest in Scherer Unit No. 2 and Rocky Mountain
pursuant to long-term net leases.
Georgia Power CompanyGEORGIA POWER COMPANY
GPC is a wholly owned subsidiary of The Southern Company, a registered
holding company under the Public Utility Holding Company Act, and is engaged
primarily in the generation and purchase of electric energy and the
transmission, distribution and sale of such energy 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 to
Oglethorpe, MEAG and three municipalities. GPC is the largest supplier of
electric energy in the State of Georgia. (See "OGLETHORPE POWER CORPORATION--RelationshipCORPORATION--
Relationship with GPC" in Item 1.) GPC is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and, in
accordance therewith, files reports and other information with the Commission.
Copies of this material can be
obtained at prescribed rates from the Commission's Public Reference Section at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Certain securities of
GPC are listed on the New York Stock Exchange, and reports and other information
concerning GPC can be inspected at the office of such Exchange.
Municipal Electric Authority of GeorgiaMUNICIPAL ELECTRIC AUTHORITY OF GEORGIA
MEAG, an instrumentality of the State of Georgia, was created for the
purpose of providing electric capacity and energy to those political
subdivisions of the State of Georgia that owned and operated electric
distribution systems at that time. MEAG, (who also markets under the name ofknown as MEAG Power)Power, has entered
into power sales contracts with each of 48 cities and one county in the State of
Georgia. Such political subdivisions, located in 39 of the State's 159 counties,
collectively serve approximately 270,000 electric customers.
20
City of Dalton, GeorgiaCITY OF DALTON, GEORGIA
The City of Dalton, located in northwest Georgia, supplies electric capacity
and energy to consumers in Dalton, and presently serves more than 10,000
residential, commercial and industrial customers.
The Plant Agreements
Hatch, Wansley, Vogtle and Scherer25
THE PLANT AGREEMENTS
HATCH, WANSLEY, VOGTLE AND SCHERER
Oglethorpe's rights and obligations with respect to Plants Hatch, Wansley,
Vogtle and Scherer are contained in a number of contracts between Oglethorpe and
GPC and, in some instances, MEAG and Dalton. Oglethorpe is a party to four
Purchase and Ownership Participation Agreements ("Ownership Agreements") under
which it acquired from GPC a 30% undivided interest in each of Plants Hatch,
Wansley and Vogtle, a 60% undivided interest in Scherer Units No. 1 and No. 2
and a 30% undivided interest in those facilities at Plant Scherer intended to be
used in common by Scherer Units No. 1, No. 2, No. 3 and No. 4 (the "Scherer
Common Facilities"). Oglethorpe has also entered into four Operating Agreements
("Operating Agreements") relating to the operation and maintenance of Plants
Hatch, Wansley, Vogtle and Scherer, respectively. The OperatingOwnership Agreements and
OwnershipOperating Agreements relating to Plants Hatch and Wansley are two-party
agreements between Oglethorpe and GPC. The otherOwnership Agreements and Operating
Agreements relating to Plants Vogtle and Ownership AgreementsScherer are agreements among
Oglethorpe, GPC, MEAG and Dalton. The parties to each Ownership Agreement and
each Operating Agreement are referred to as "Participants" with respect to each such
agreement.
SALE AND LEASEBACK TRANSACTIONS. In 1985, in four separate transactions, Oglethorpe
sold its entire 60% undivided ownership interest in Scherer Unit No. 2 to four
separate owner trusts (the "Lessors") established by four different
institutional investors.investors (the "Sale and Leaseback Transaction"). (See Note 4 of
Notes to Financial Statements in Item 8.) Oglethorpe retained all of its rights
and obligations as a Participant under the Ownership and Operating Agreements
relating to Scherer Unit No. 2 for the term of the leases. (In the following
discussion, references to Participants "owning" a specified percentage of
interests include Oglethorpe's rights as a deemed owner with respect to its
leased interests in Scherer Unit No. 2.)
The Ownership Agreements appoint GPC as agent with sole authority and
responsibility for, among other things, the planning, licensing, design,
construction, renewal, addition, modification and disposal of Plants Hatch,
Vogtle, Wansley and Scherer Units No. 1 and No. 2 and the Scherer Common
Facilities. The Operating Agreements gives GPC, as agent, sole authority and
responsibility for the management, control, maintenance and operation of the
plant to which it relates and provides for the use of power and energy from such
plant and the sharing of the costs thereof by the parties thereto in accordance
with their respective interests therein. In performing its responsibilities
under the Ownership and Operating Agreements, GPC is required to comply with
prudent utility practices. GPC's liabilities with respect to its duties under
the Ownership and Operating Agreements are limited by the terms thereof.
Under the Ownership Agreements, Oglethorpe is obligated to pay a percentage
of capital costs of the respective plants, as incurred, equal to the percentage
interest which it owns or leases at each plant. GPC has responsibility for
budgeting capital expenditures subject to, in the case of Scherer Units No. 1
and No. 2, certain limited rights of the Participants to disapprove capital
budgets proposed by GPC and to substitute alternative capital budgets and, in
the case of Plants Hatch and Vogtle, the right of any co-owner to disapprove
large discretionary capital improvements.
Each Operating Agreement gives GPC, as agent, sole authority and
responsibility for the management, control, maintenance, operation, scheduling
and dispatching of the plant to which it relates. However, as provided in the
amendments to the Plant Scherer Ownership and Operating Agreements, Oglethorpe
is separately dispatching its ownership share of Scherer Units No. 1 and No. 2.
Similar amendments to the Plant Wansley Operating Agreement have recently been
entered into and Oglethorpe expects to begin dispatching separately its
ownership share in Plant Wansley in 1997. (See "GENERATING FACILITIES--Fuel
Supply".) In 1990, the co-owners of Plants Hatch and Vogtle entered into the Nuclear
Managing Board Agreement which amended the Plant Hatch and Plant Vogtle
Ownership and Operating agreements,Agreements, primarily with respect to GPC's reporting
requirements, but did not alter GPC's role as agent with respect to the nuclear
plants. In 1993, the co-owners entered into the Amended and Restated Nuclear
Managing Board Agreement (the "Amended and Restated NMBA") which provides for a
managing board (the "Nuclear Managing Board") to coordinate the implementation
and administration of the Plant Hatch and Plant Vogtle Ownership and Operating
Agreements, and provides for increased rights for the co-owners regarding certain
decisions and allowedallows GPC to contract with a
21
third party for the operation of the
nuclear units. Upon approval in March 1997 by the NRC of GPC's application to
add SONOPCO to the operating
26
license of each unit of Plants Hatch and Vogtle and designate SONOPCO as the
operator, the Nuclear Operating Agreement between GPC and SONOPCO, which the
co-owners had previously approved, became effective. In connection with the
recent
amendments to the Plant Scherer Ownership and Operating Agreements, the
co-owners of Plant Scherer entered into the Plant Scherer Managing Board
Agreement which provides for a managing board (the "Plant Scherer Managing
Board") to coordinate the implementation and administration of the Plant Scherer
Ownership and Operating Agreements and provides for increased rights for the
co-owners regarding certain decisions, but does not alter GPC's role as agent
with respect to Plant Scherer.
The Operating Agreements provide that Oglethorpe is entitled to a percentage
of the net capacity and net energy output of each plant or unit equal to its
percentage undivided interest owned or leased in such plant or unit,
subject to its obligation to sell capacity and energy tounit. GPC, as
described below.agent, schedules and dispatches Plants Hatch and Vogtle. Pursuant to amendments
to the plant agreements, Oglethorpe began separately dispatching its ownership
share of Scherer Units No. 1 and No. 2 in 1993 and of Plant Wansley in 1997.
(See "GENERATING FACILITIES--Fuel Supply.") Except as otherwise provided, each
party is responsible for a percentage of Operating Costs (as defined in the
Operating Agreements) and fuel costs of each plant or unit equal to the
percentage of its undivided interest which is owned or leased in such plant or
unit. For Scherer Units No. 1 and No. 2 and for Plant Wansley, once Oglethorpe begins separate dispatch there, each party will
be responsible for its fuel costs and for variable Operating Costs in proportion
to the net energy output for its ownership interest, while responsibility for
fixed Operating Costs will continue to be equal to the percentage undivided
ownership interest which is owned or leased in such unit. GPC is required to
furnish budgets for Operating Costs, fuel plans and scheduled maintenance plans
subject to, in the case of Scherer Units No. 1 and No. 2, certain limited rights
of the Participants to disapprove such budgets proposed by GPC and to substitute
alternative budgets. The Ownership Agreements and Operating Agreements provide
that, should a Participant fail to make any payment when due, among other
things, such nonpaying Participant's rights to output of capacity and energy
would be suspended.
The Operating Agreement for Plant Hatch will remain in effect with respect
to Hatch Units No. 1 and No. 2 until 2009 and 2012, respectively. The Operating
Agreement for Plant Vogtle will remain in effect with respect to each unit at
Plant Vogtle until 2018. The Operating Agreement for Plant Wansley will remain
in effect with respect to Wansley Units No. 1 and No. 2 until 2016 and 2018,
respectively. The Operating Agreement for Scherer Units No. 1 and No. 2 will
remain in effect with respect to Scherer Units No. 1 and No. 2 until 2022 and
2024, respectively. Upon termination of each Operating Agreement, following any
extension agreed to by the parties, GPC will retain such powers as are necessary
in connection with the disposition of the property of the applicable plant, and
the rights and obligations of the parties shall continue with respect to actions
and expenses taken or incurred in connection with such disposition.
Proposed Changes to Nuclear Plant Operating Arrangements
In September 1992, GPC filed applications with the Nuclear Regulatory
Commission (the "NRC") to add SONOPCO to the operating license of each unit of
Plants Hatch and Vogtle and designate SONOPCO as the operator. The application
has been recently approved by the Atomic Safety and Licensing Board and became
effective in late March. SONOPCO, a subsidiary of The Southern Company
specializing in nuclear services, currently provides certain operating,
maintenance, and other services to GPC in accordance with the Amended and
Restated NMBA and the agreements referenced in the Amended and Restated NMBA.
The co-owners had previously agreed to a Nuclear Operating Agreement between GPC
and SONOPCO, which became operative on the effective date of the license
amendment.
Rocky MountainROCKY MOUNTAIN
Oglethorpe's rights and obligations with respect to Rocky Mountain are
contained in several contracts between Oglethorpe and GPC, the co-owners of
Rocky Mountain.Mountain (the "Co-Owners"). Pursuant to Rocky Mountain Pumped Storage
Hydroelectric Ownership Participation Agreement, by and between Oglethorpe and
GPC (the "Ownership Participation"Rocky Mountain Ownership Agreement"), Oglethorpe initially acquired a
3% undivided interest in Rocky Mountain which interest increased as Oglethorpe
expended funds to complete construction of Rocky Mountain. The final ownership
percentages for Rocky Mountain are Oglethorpe 74.61% and GPC 25.39%. In
connection with this 22
acquisition, Oglethorpe and GPC also entered into the Rocky
Mountain Pumped Storage Hydroelectric Project Operating Agreement (the "Rocky
Mountain Operating Agreement").
The Rocky Mountain Ownership Participation Agreement appoints Oglethorpe as agent with
sole authority and responsibility for, among other things, the planning,
licensing, design, construction, operation, maintenance and disposal of Rocky
Mountain. The Rocky Mountain Operating Agreement gives Oglethorpe, as
27
agent, sole authority and responsibility for the management, control,
maintenance and operation of Rocky Mountain.
In general, each co-ownerCo-Owner is responsible for payment of its respective
ownership share of all Operating Costs and Pumping Energy Costs (as defined in
the Rocky Mountain Operating Agreement) as well as costs incurred as the result
of any separate schedule or independent dispatch. A co-owner'sCo-Owner's share of net
available capacity and net energy is the same as its respective ownership
interest under the Rocky Mountain Ownership Participation Agreement. Oglethorpe and GPC have
each elected to schedule separately their respective ownership interests. The
Rocky Mountain Operating Agreement will terminate in 2035. Oglethorpe completed, in two separate closings on December 31,The Rocky Mountain
Ownership and Operating Agreements provide that, should a Co-Owner fail to make
any payment when due, among other things, such non-paying Co-Owner's rights to
output of capacity and energy or to exercise any other right of a Co-Owner would
be suspended until all amounts due, together with interests, had been paid. The
capacity and energy of a non-paying Co-Owner may be purchased by a paying
Co-Owner or sold to a third party.
In late 1996 and January 3,early 1997, Oglethorpe completed lease transactions for its
74.61% undivided ownership interest in Rocky Mountain. Under the terms of these
transactions, Oglethorpe leased the facility to three institutional investors
for a termthe useful life of 71 years,the facility, who in turn leased it back to Oglethorpe
for a term of 30 years. The transactions are
characterized as a sale and lease-back for income tax purposes, but not for
financial reporting purposes. Oglethorpe will continue to control and operate the plantRocky
Mountain during the lease-backleaseback term, and it fully intends to repurchase tax
ownership andwill exercise its fixed price
purchase option at the end of the leaseback period so as to retain all other
rights of ownership with respect to the plant if it is advantageous for
Oglethorpe to exercise such option.
ITEM 3. LEGAL PROCEEDINGS
On June 17, 1997, PECO Energy Company--Power Team ("PECO") filed an
application with FERC pursuant to Section 211 of the Federal Power Act
requesting FERC to compel Oglethorpe and/or GTC to provide PECO with 250 MW of
firm point-to-point transmission service from the TVA-ITS interface to the
Florida-ITS interface for an initial three-year period, with an automatic
roll-over provision. PECO also seeks $10,000 per day in penalties from
Oglethorpe and/or GTC, alleging bad faith and delays in negotiations. In their
response to FERC, GTC and Oglethorpe contend that they negotiated with PECO in
good faith, and thus there is no reasonable basis for imposing the penalties
sought by PECO. GTC also responded that it does not have firm "available
transfer capability" at the endTVA-ITS interface to fulfill PECO's request, after
taking into account the need to protect system reliability, existing firm
commitments, and use of the lease-back period.TVA-ITS interface to serve "native load," in
accordance with North American Electric Reliability Council guidelines. In the
event GTC is ordered by FERC to provide the requested service, PECO would be
required to compensate GTC at rates set by FERC in the order. As a resultconsequence
of these transactions,any such order, power purchased by Oglethorpe received net proceeds of approximately $96 million which is being
recorded as a deferred creditfor delivery through the
TVA-ITS interface would probably be curtailed (based on past operational
experience at that interface), and will be recognized in income over the term of
the lease-back. Approximately $91 million of the proceeds will be used for the
early retirement of FFB debt, with the remaining $5 million being used to pay
alternative minimum taxes on the transactions. The combination of the debt
prepayment and the amortized gain willcould result in an estimated $11 million in
annual savings. In connection with these transactions, Oglethorpehigher purchased power cost
than would otherwise be the case. Although FERC transmission pricing policy is
obligateddesigned to maintain liquidity from various sources of approximately $50 million.
23
ENVIRONMENTAL AND OTHER REGULATIONS
General
Asensure that a transmission provider is typical in the utility industry, Oglethorpe is subject to
Federal, State and local air and water quality requirements which, among other
things, regulate emissions of pollutants, such as particulate matter ("PM"),
sulfur oxides and nitrogen oxides ("NOx") into the air and discharges of other
pollutants, including heat, into waters of the United States. Oglethorpe is also
subject to Federal, State and local waste disposal requirements which regulate
the manner of transportation, storage and disposal of solid and other waste. In
general, environmental requirements are becoming increasingly stringent, and
further or new requirements may substantially increasefully compensated for the
cost of electricproviding transmission service, by requiring changes in the design or operation of existing facilities
as well as changes or delays in the location, design, construction or operation
of new facilities. Failure to comply with these requirements could result in the
imposition of civil and criminal penalties as well as the complete shutdown of
individual generating units not in compliance. There ispotentially including opportunity cost,
there can be no assurance that rates ordered by FERC for service to PECO would
fully compensate GTC, Oglethorpe and the units in operation will always remain subject to the regulations currently in
effect or will always be in compliance with future regulations.
Compliance with environmental standards or deadlines will continue to
be reflected in Oglethorpe's capital and operating costs. Oglethorpe's direct
capital costs to achieve compliance with environmental requirements are expected
to be an aggregate of approximately $250,000Members for 1997, 1998 and 1999.
Clean Air Act
The Clean Air Act seeks to improve air quality throughout the United
States. The acid rain provisions of the Clean Air Act require the reduction of
sulfur dioxide ("SO2") and NOx emissions from affected units, including
coal-fired electric power facilities. The SO2 reductions required by the Clean
Air Act will be achieved in two phases. Phase I addresses specific generating
units named in the Clean Air Act. Both units of Plant Wansley are "affected
units" under Phase I. Scherer Units No. 1 and No. 2 are not "affected units"
under Phase I but are "affected units" under Phase II. Beginning in 1995, Phase
I affected units became subject to the SO2 emission allowance trading program.
Emission allowances are issued by the U.S. Environmental Protection Agency
("EPA"), based on statutory allocations in Phase I and on fossil fuel
consumption for affected units from 1985 through 1987 for Phase II. An
allowance, which gives the holder the authority to emit one ton of SO2 during a
calendar year, is transferable and can be bought, sold or banked for use in the
years following its issuance. Oglethorpe expects to comply with Phase I
requirements through the use of its allowances coupled with switching to lower
sulfur coal, a compliance strategy that has required some equipment upgrades at
Plant Wansleythe transmission
system and may result in unused allowances that can be banked for future
use or sold.
For Phase II, which begins in the year 2000, when total U.S. emissions
of SO2 will be capped at 8.9 million tons, Oglethorpe could use a variety of
options for SO2 compliance, including use of emission allowances (allocated,
banked or purchased, if needed), fuel-switching or installation of flue gas
desulfurization equipment. Achieving compliance with Phase II has already
resulted in some equipment upgrades at Scherer Units No. 1 and No. 2.
Although some NOx regulations implementing the requirements of the
Clean Air Act have been finalized for some time, others have recently been
promulgated and there remains the possibility that further regulation of NOx
emissions from utility sources could be imposed. EPA recently issued a final
rule lowering the NOx emission standard for boiler types such as those found at
Scherer Units No. 1 and No. 2. These rules have been challenged, however, and
whether the new NOx emission standards will ultimately be imposed at Plant
Scherer Units No. 1 and
24
No. 2 is not known. Depending on the form those NOx rules take after the
associated litigation has ended, additional expenditures for pollution control
equipment may be incurred.
In general, compliance with the Clean Air Act will continue to require
expenditures for monitoring and permitting, and in some instances may involve
increased operating or maintenance expenses. Capital expenditures of Oglethorpe
through 1996 for pollution control equipment needed to comply with the Clean Air
Act at Plant Wansley have been approximately $7,200,000 and at Scherer Units No.
1 and No. 2 have been approximately $720,000. Although the estimated cost of any additional improvements at Plant Wansley and Scherer Units No. 1 and No. 2
remains dependent upon the chosen compliance plan and may be affected by future
plan amendments and/or future regulation, Oglethorpe has budgeted approximately
$250,000 in capital expenditures for Clean Air Act and related projects over the
next three years. In addition, the final capital cost of improvements and anyresulting effect on operating costs will be determined by the compliance plan as finally
implemented and any applicable regulatory changes.
Metropolitan Atlanta is classified as a "serious nonattainment area"
with regard to the ozone ambient air quality standards. The Clean Air Act, under
which these standards are promulgated, requires the State of Georgia to conduct
specific studies and establish new rules regulating sources of NOx and volatile
organic compounds ("VOC"), to achieve attainment of the standards by 1999 and to
maintain compliance thereafter. These studies could result in new rules for
power plants in the State, including Plants Wansley and Scherer. Further, along
with 36 other states in the eastern half of the U.S., Georgia, as a member of
the Ozone Transport Assessment Group ("OTAG"), is performing extensive
photochemical grid modeling in an effort to reach a consensus among its member
states as to the strategies needed to reduce ozone and its precursors (including
NOx). Large, stationary sources of NOx have been a focus for OTAG. Originally,
each OTAG state was to have new emission reduction strategies in place by late
springreliability or early summer of 1997. However, EPA has stated its intention to specify
the overall amount of NOx and VOC emission reductions that must be achieved by
each OTAG state.
Plant Wansley is near the non-attainment area while Plant Scherer is
located further away. The results of these studies and new rules could require
NOx controls more stringent than those now required under the acid rain
provisions of the Clean Air Act for compliance. Portions of Subchapter I of the
Clean Air Act also require that several studies be conducted regarding the
health effects of power plant emissions of certain hazardous air pollutants. The
studies will be used in making decisions on whether additional controls of these
pollutants are necessary. The effect of any of these potential regulatory
changes under the Clean Air Act, including new rules under the amended
provisions, can not now be predicted.
The Clean Air Act also requires EPA to review all National Ambient Air
Quality Standards ("NAAQS") periodically, revising such standards as necessary.
Last year, EPA decided not to impose a new short-term standard for sulfur oxides
(measured as SO2). That decision has been appealed, however, so that it is still
possible that a new SO2 standard could be promulgated. If a new short-term NAAQS
for SO2 were imposed, it might require new emission controls at Plants Wansley
and Scherer, which could result in substantial costs to Oglethorpe.
EPA has also proposed to revise the NAAQS for both ozone and PM. Either
of these proposals, if finalized, could have a substantial effect on the types
of controls that might be needed at Plants Wansley or Scherer for compliance.
However, the final impacts (and any associated expenditures) at either plant can
not now be predicted with any certainty. In fact, the impact of any change in
these NAAQS can not now be determined, because the effect of any change would
depend in part on the final ambient standards developed.
Although Oglethorpe's management is currently unable to determine the
overall effect that compliance with requirements under the Clean Air Act will
have on its operations, it does not believe that any required increases in
capital or operating expenses would have a material effect on its results of
operations or its financial condition. Compliance with the requirements under
the Clean Air Act may also require increased capital or operating expenses on
the part of GPC. Any increases in GPC's capital or operating expenses may cause
an
25
increase in the cost of
power purchased from GPC. (See "MEMBER REQUIREMENTS
AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements--Power
Purchases from GPC" in Item 1.)
Clean Water Act
For some time now, Congress has been considering reauthorization of the
Clean Water Act. If that occurs, Oglethorpe's operations could be affected.
However, the full impact of any reauthorization cannot now be determined and
will depend on the specific changes to the statute, as well as to any
implementing state or federal regulations that might be promulgated.
At the state level, EPA is under Federal court order to begin
development of Total Maximum Daily Loads ("TMDLs") for all of Georgia's stream
segments that do not yet meet established water quality standards. The order
calls for a strict schedule for the development of such TMDLs, beginning in the
summer of 1997. Oglethorpe cannot now predict what impact, if any, such
development will have on the operations of Plants Wansley, Scherer, Hatch or
Vogtle, because the effect will depend on the final TMDLs to be developed and
EPA's (and the state's) approach for revising National Pollutant Discharge
Elimination System permits to achieve the desired TMDLs and ultimately achieve
the required water quality standards.
Georgia Hazardous Site Response Act ("GHSRA")
GHSRA requires the compilation and listing of an inventory of all known
or suspected sites where "regulated substances" have been disposed of or
released in quantities deemed reportable by the state. In developing this list,
which includes hundreds of sites, one site co-owned by Oglethorpe was listed.
The site is located at Plant Wansley and consists of an ash pond. As the
operating agent of the plant, GPC will conduct the required remedial
investigation in late 1997 or early 1998, to determine if any clean-up
activities are required. At this time, it is uncertain whether any remediation
will be required and what the timing of any required remediation might be. If
remediation is required, Oglethorpe could incur up to an estimated $800,000 in
clean-up costs and $6 million in capital costs, associated with the
redevelopment of the ash pond. Additional sites may require investigation and
remediation expenses, a portion or all of which Oglethorpe may be liable for. At
this time, Oglethorpe does not believe that any capital or operating costs
associated with GHSRA clean-ups would have a material effect on its results of
operations or its financial condition.
Nuclear Regulation
Oglethorpe is subject to the provisions of the Atomic Energy Act of
1954, as amended (the "Atomic Energy Act"), which vests jurisdiction in the NRC
over the construction and operation of nuclear reactors, particularly with
regard to certain public health, 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. Plants Hatch and Vogtle are being operated under licenses issued by
the NRC. All aspects of the operation and maintenance of nuclear power plants
are regulated by the NRC. From time to time, new NRC regulations require changes
in the design, operation and maintenance of existing nuclear reactors. Operating
licenses issued by the NRC are subject to revocation, suspension or
modification, and the operation of a nuclear unit may be suspended if the NRC
determines that the public interest, health or safety so requires. (See
"CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant
Agreements--Proposed Changes to Nuclear Plant Operating Arrangements".)
Pursuant to the Nuclear Waste Policy Act of 1982, as amended, the
Federal government has the regulatory responsibility for the final disposition
of commercially produced high-level radioactive waste materials, including
26
spent nuclear fuel. Such Act requires the owner of nuclear facilities to enter
into disposal contracts with DOE for such material. These contracts require each
such owner to pay a fee which is currently one dollar per MWh for the net
electricity generated and sold by each of its reactors. (See "GENERATING
FACILITIES--Fuel Supply".)
For information concerning nuclear insurance, see Note 8 of Notes to
Financial Statements in Item 8. For information regarding NRC's regulation
relating to decommissioning of nuclear facilities and regarding DOE's
assessments pursuant to the Energy Policy Act for decontamination and
decommissioning of nuclear fuel enrichment facilities, see Note 1 of Notes to
Financial Statements in Item 8.
Other Environmental Regulation
In 1993, EPA issued a ruling confirming the non-hazardous status of
coal ash. That ruling may apply, however, only to situations where those wastes
are not co-managed, i.e. not mixed with other wastes. Pursuant to court order,
EPA has until 1998 to classify co-managed utility wastes as either hazardous or
non-hazardous. If the wastes are classified as hazardous, substantial additional
costs for the management of such wastes might be required, although the full
impact would depend on the subsequent development of requirements pertaining to
these wastes.
Oglethorpe is subject to other environmental statutes including, but
not limited to, the Toxic Substances Control Act ("TSCA"), the Resource
Conservation & Recovery Act ("RCRA"), the Endangered Species Act ("ESA"), the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
the Emergency Planning and Community Right to Know Act, and to the regulations
implementing these statutes. Oglethorpe does not believe that compliance with
these statutes and regulations will have a material impact on its operations.
Changes to any of these laws, however, could affect many areas of Oglethorpe's
operations. Congress is considering amending the ESA and reauthorizing CERCLA,
TSCA and perhaps RCRA. Although compliance with new environmental legislation
could have a significant impact on Oglethorpe, those impacts cannot be fully
determined at this time and would depend in part on the final legislation and
the development of implementing regulations.
The scientific community, regulatory agencies and the electric utility
industry are continuing to examine the issues of global warming and the possible
health effects of electromagnetic fields. While no definitive scientific
conclusions have been reached regarding these issues, it is possible that new
laws or regulations pertaining to these matters could increase the capital and
operating costs of electric utilities, including Oglethorpe or entities from
which Oglethorpe purchases power. In addition, the potential for liability
exists from lawsuits alleging damages from electromagnetic fields.
Energy Policy Act
The Energy Policy Act allows for increased competition among wholesale
electric suppliers and increased access to transmission services by such
suppliers. It created a new class of utilities called Exempt Wholesale
Generators ("EWGs"), which are exempt from certain restrictions otherwise
imposed by the Public Utility Holding Company Act. The effect of this exemption
is to facilitate the development of independent third-party generators
potentially available to satisfy utilities' needs for increased power supplies.
Unlike purchases from qualifying facilities under PURPA (see "MEMBER
REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sales
Arrangements--Other Power Purchases" in Item 1), utilities have no statutory
obligation to purchase power from EWGs. Furthermore, EWGs are precluded from
making direct sales to retail electricity customers.
The Energy Policy Act also broadened the authority of FERC to require a
utility to transmit power to or on behalf of other participants in the electric
utility industry, including EWGs and qualifying facilities, but FERC is
precluded from requiring a utility to transmit power from another entity
directly to a retail customer. In 1996,
27
FERC issued two final rules (Orders 888 and 889) and a notice of proposed
rulemaking regarding capacity reservation tariffs that would make significant
changes in the form of transmission services performed by public utilities
subject to FERC's jurisdiction. See "OGLETHORPE POWER CORPORATION--Relationship
with GTC" in Item 1 for information regarding GTC's transmission tariff.
28
Item 3. LEGAL PROCEEDINGS
Oglethorpe is a party to various other actions and proceedings incident to
its normal business. Liability in the event of final adverse determinations in
any of these matters is either covered by insurance or, in the opinion
of
Oglethorpe's management, after consultation with counsel, should not in the
aggregate have a material adverse effect on the financial position or results of
operations of Oglethorpe.
ItemITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
2928
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Not applicable.NOT APPLICABLE.
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected historical financial data of
Oglethorpe. The financial data presented as of the end of and for each year in
the five-year period ended December 31, 1997, have been derived from the audited
financial statements of Oglethorpe. Due to the Corporate Restructuring, the
results of operations and financial condition reflect operations as a combined
power supply, transmission and system operations company through March 31, 1997,
and operations solely as a power supply company thereafter. These data should be
read in conjunction with the financial statements of Oglethorpe and the notes
thereto included in Item 8, "OGLETHORPE POWER CORPORATION-Corporate
Restructuring" in Item 1 and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" in Item 7.
(dollars in thousands)(DOLLARS IN
THOUSANDS)
1997 1996 1995 1994 1993
1992------------ ------------ -------------------- ------------ ------------
Operating revenues:OPERATING REVENUES:
Sales to Members .....................Members............ $ 1,000,319 $ 1,023,094 $ 1,030,797 $ 930,875 $ 899,720
$ 816,000
Sales to non-Members .................non-Members........ 47,533 78,343 118,764 125,207 200,940
268,763
------------ ------------ ----------- ------------ ------------
------------
Total operating revenues .............TOTAL OPERATING REVENUES...... 1,047,852 1,101,437 1,149,561 1,056,082 1,100,660
1,084,763
------------ ------------ ----------- ------------ ------------
------------
Operating expenses:
Fuel .................................OPERATING EXPENSES:
Fuel........................ 206,315 206,524 219,062 203,444 176,342
167,288
Production .............................. 129,178 133,858 132,723 129,972 115,915Production.................. 157,932 150,787 155,549 153,174 150,027
Purchased power .........................power............. 266,875 229,089 264,844 227,477 271,970
230,510
Depreciation and
amortization ............................amortization.............. 126,730 163,130 139,024 131,056 128,060
126,047
Taxes ...................................Taxes....................... 26,293 30,262 27,561 24,741 25,148
19,634
Other operating expenses ................ 60,505 56,535 49,234 44,876 50,578expenses.... 4,032 38,896 34,844 28,783 24,821
------------ ------------ ----------- ------------ ------------
------------
Total operating expenses ................TOTAL OPERATING EXPENSES...... 788,177 818,688 840,884 768,675 776,368
709,972
------------ ------------ ----------- ------------ ------------
------------
Operating margin ........................OPERATING MARGIN.............. 259,675 282,749 308,677 287,407 324,292
374,791
Other income, net .......................OTHER INCOME, NET............. 46,646 65,334 33,710 40,795 38,741
45,928
Net interest charges ....................NET INTEREST CHARGES.......... (283,916) (326,331) (320,129) (305,120) (350,652)
(393,247)
Margin before cumulative effect of change
in accounting principle .............------------ ------------ ----------- ------------ ------------
MARGIN BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE........ 22,405 21,752 22,258 23,082 12,381
27,472
Cumulative effect of change in accounting
for income taxes ....................CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR INCOME
TAXES..................... -- -- -- -- 13,340
--
------------ ------------ ----------- ------------ ------------
------------
Net margin ..............................NET MARGIN.................... $ 22,405 $ 21,752 $ 22,258 $ 23,082 $ 25,721
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
ELECTRIC PLANT, NET:
In service.................. $ 27,472
============ ============ ============ ============ ============
Electric plant, net:
In service ...........................3,588,204 $ 4,345,200 $ 4,436,009 $ 3,980,439 $ 4,054,956
$ 4,122,411
Construction work in
progress ...........progress.................. 13,578 31,181 35,753 538,789 450,965
322,628
------------ ------------ ----------- ------------ ------------
------------$ 3,601,782 $ 4,376,381 $ 4,471,762 $ 4,519,228 $ 4,505,921
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
TOTAL ASSETS.................. $ 4,445,039
============ ============ ============ ============ ============
Total assets ............................4,509,857 $ 5,362,175 $ 5,438,496 $ 5,346,330 $ 5,323,890
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
CAPITALIZATION:
Long-term debt.............. $ 5,359,597
============ ============ ============ ============ ============
Capitalization:
Long-term debt .......................3,258,046 $ 4,052,470 $ 4,207,320 $ 4,128,080 $ 4,058,251
$ 4,095,796
Obligation under capital
leases .........leases.................... 288,638 293,682 296,478 303,749 303,458
302,061
Other obligations ....................obligations........... 52,176 41,685 -- -- -- --
Patronage capital and
membership feesfees............. 330,509 356,229 338,891 309,496 289,982
264,261
------------ ------------ ----------- ------------ ------------
------------$ 3,929,369 $ 4,744,066 $ 4,842,689 $ 4,741,325 $ 4,651,691
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
PROPERTY ADDITIONS............ $ 4,662,118
============ ============ ============ ============ ============
Property additions ......................63,527 $ 93,704 $ 138,921 $ 206,345 $ 235,285
$ 232,283
============ ============ ============ ============ ============
Energy supply (megawatt-hours)------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
ENERGY SUPPLY (MEGAWATT-
HOURS):
Generated ............................Generated................... 17,722,059 17,866,143 18,402,839 16,924,038 14,575,920
13,805,683
Purchased ...............................Purchased................... 6,377,643 6,606,931 5,738,634 4,381,087 7,620,815
6,233,262------------ ------------ ----------- ------------ ------------
Available for sale.......... 24,099,702 24,473,074 24,141,473 21,305,125 22,196,735
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ Available for sale ...................... 24,473,074 24,141,473 21,305,125 22,196,735 20,038,945
============ ============ ============ ============ ============
Member revenue per kWh sold ............. 5.11(cent) 5.53(cent) 5.65(cent) 5.47(cent) 5.55(cent)
============ ============ ============ ============ ============------------
MEMBER REVENUE PER KWH SOLD... 4.83 cents 5.11 cents 5.53 cents 5.65 cents 5.47 cents
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
29
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Corporate RestructuringCORPORATE RESTRUCTURING
Oglethorpe and the Members completed a corporate restructuring (the
Corporate Restructuring)"Corporate Restructuring") on March 11, 1997, (the Closing) pursuant to terms and
conditions set forth in the Second Amended and Restated Restructuring Agreement
(the Restructuring Agreement). Pursuant to the Corporate Restructuring,which Oglethorpe was divided itself
into three specialized operating companies to respond to increasing competition
and regulatory changes in the electric industry. As part of the Corporate
Restructuring, theOglethorpe's transmission business was sold to, and is now owned
and operated by, a newly formed Georgia electric membership corporation, Georgia Transmission Corporation (An Electric Membership Corporation) (GTC), and the("GTC"). Oglethorpe's system
operations business was sold to, and is now owned and operated by, a newly formed Georgia
nonprofit corporation, Georgia
System Operations Corporation (GSOC)("GSOC"). (See Note 11 of Notes to Financial
Statements.) Oglethorpe continues to own and operate the power supply business.
On October 1, 1996, Oglethorpe transferred to GSOC its system operations
assets, consisting of its system control center and related energy control and
revenue metering systems equipment. The purchase price of these assets totaled
approximately $9.4 million and was funded by GSOC's assumption of Oglethorpe's
obligations under an existing note held by the Rural Utilities Service (RUS), by
delivery of a purchase money note payable to Oglethorpe and by the assumption of
certain other liabilities of Oglethorpe. Since October 1, 1996, Oglethorpe has
been the sole member of GSOC. The Members and GTC became members of GSOC on the
Closing. GSOC will operate the system control center and provide system
operations services to the Members, Oglethorpe and GTC.
At the Closing, Oglethorpe transferred its transmission business and assets
to GTC. The purchase price for the transmission business was based on an
appraisal of the fair market value of such business, as determined by an
independent appraiser, and was approximately $708 million. The purchase price
was paid primarily by GTC's assumption of a portion (approximately 16.86%) of
Oglethorpe's long-term secured debt in an amount equal to approximately $686
million. Approximately $541 million of this debt (payable to RUS, Federal
Financing Bank (FFB) and CoBank, ACB (CoBank)) became the sole obligation of
GTC, and Oglethorpe was released from all liability with regard to this
indebtedness. The remaining debt assumed by GTC in connection with the Corporate
Restructuring, approximately $145 million, relates to Oglethorpe's pollution
control revenue bonds (PCBs). While GTC assumed and agreed to pay this $145
million of debt, Oglethorpe is not legally released from its liability for this
debt. The remainder of the purchase price was paid by GTC from cash obtained
through a borrowing from National Rural Utilities Cooperative Finance
Corporation (CFC) and the assumption of approximately $1 million of other
Oglethorpe liabilities. Oglethorpe also made a special patronage capital
distribution of approximately $49 million to the Members which was used by the
Members to establish equity in and to provide initial working capital to GTC.
Oglethorpe and the 39 Members are members of GTC. GTC now owns and operates the
transmission system and provides transmission services to the Members and
Oglethorpe. GTC has succeeded to all of Oglethorpe's rights and obligations with
respect to the Integrated Transmission System (ITS).
Oglethorpe continues to operate the power supply business.
Oglethorpe retained all of its owned and leased generation assets and has total assets of
approximately $4.7 billion and total long-term debt of approximately $3.9
billion.assets. Oglethorpe
also continues to administer its power purchase contracts and, through a wholly
owned subsidiary, EnerVision, Inc., Tailored Energy Solutions ("EnerVision"),
provide marketing support functions to the Members.
In connection with the Corporate Restructuring, Oglethorpe, GTC, GSOC and
the Members entered into a Member Agreement (Member Agreement) which specifies
the form of the new wholesale power contracts (New Wholesale Power Contracts),
transmission agreements (Transmission Agreements) and system operations
contracts to be signed by the Members. The New Wholesale Power Contracts provide
that the Members are responsible, on a joint and several basis, for all of
Oglethorpe's obligations relating to its existing generation business. The
Transmission Agreements provide that the Members are responsible, on a joint and
several basis, for all of GTC's obligations with respect to its transmission
business.
Pursuant to the Member Agreement, in connection with the Closing, Oglethorpe
and each of the Members entered into New Wholesale Power Contracts which extend
through December 31, 2025. Under the New Wholesale Power Contracts, each Member
is assigned an agreed-upon fixed percentage capacity responsibility (PCR) for
all of Oglethorpe's existing resources. PCR responsibility for any future
resource will be assigned only to Members choosing to participate in that
resource. The New Wholesale Power Contracts permit each Member to take future
incremental power requirements either from Oglethorpe or other sources. Under
the New Wholesale Power Contracts, a Member is unconditionally obligated on an
express "take-or-pay" basis for a fixed allocation of Oglethorpe's costs for its
31
existing resources, as well as the costs with respect to any future resources in
which such Member elects to participate. The New Wholesale Power Contracts
specifically provide that the Member must make payments whether or not power is
delivered and whether or not a plant has been sold. Oglethorpe is obligated to
use its reasonable best efforts to operate, maintain and manage its resources in
accordance with prudent utility practices. The New Wholesale Power Contracts
provide that Oglethorpe will be responsible for power supply planning, resource
procurement and sales of capacity and energy for a Member unless the Member
notifies Oglethorpe that it does not want Oglethorpe to provide these services.
The New Wholesale Power Contracts provide that each Member will be jointly
and severally responsible for all costs and expenses of all existing resources
and any future resources (whether or not such Member has elected to participate
in such future resource) that have been approved by 75% of Oglethorpe's Board of
Directors and 75% of the Members. For resources so approved in which less than
all Members participate, costs of a defaulting Member are shared first among the
participating Members, and if all participating Members default, each
non-participating Member is expressly obligated to pay a proportionate share of
such default.
In connection with the implementation of new power marketer arrangements
with LG&E Power Marketing Inc. ("LPM"), Oglethorpe and each Member have entered
into supplemental agreements to the New Wholesale Power Contracts which relate
to certain provisions of the New Wholesale Power Contracts and apply during the
term of the power marketer arrangements. The supplemental agreements clarify the
application of the New Wholesale Power Contract rate schedule to the power
marketer agreements. The 75% requirement described above has been met with
respect to the LPM agreements. The supplemental agreement assures that all costs
incurred by Oglethorpe under the LPM agreement are recoverable under the New
Wholesale Power Contracts. As the expected additional power marketer
arrangements are finalized, additional supplemental agreements to the New
Wholesale Power Contracts will be entered into by Oglethorpe and the Members.
See "Results of Operations-Factors Affecting Future Financial Performance" for a
description of the power supply arrangements.
The rate set forth in the New Wholesale Power Contracts is intended to
recover all costs and expenses paid or incurred by Oglethorpe. The rate
expressly includes in the description of costs to be recovered all principal and
interest on indebtedness of Oglethorpe and all costs associated with
decommissioning or otherwise retiring any generating facility. The rate further
expressly provides for Oglethorpe to earn sufficient margins to satisfy the
requirements of the Master Indenture (defined below). The New Wholesale Power
Contracts contain covenants by the Member (i) to establish, maintain and collect
rates and charges for the service of its electric system and (ii) to conduct its
business in a manner that will produce revenues and receipts at least sufficient
to enable the Member to pay to Oglethorpe, when due, all amounts payable by the
Member under the New Wholesale Power Contracts and to pay any and all other
amounts payable from, or which might constitute a charge and a lien upon, the
revenues and receipts derived from its electric system, including all operation
and maintenance expenses and the principal of, premium (if any) and interest on
all indebtedness related to the Member's electric system.
The New Wholesale Power Contracts provide that a Member will not dissolve,
liquidate or otherwise wind up its affairs without Oglethorpe's approval. The
Member will not consolidate or merge with any person or reorganize or change the
form of its business organization from an electric membership corporation or
sell, transfer, lease or otherwise dispose of all of its assets to any person,
whether in a single transaction or series of transactions, unless either (i) the
transaction is approved by Oglethorpe or (ii) other specified conditions are
satisfied including, but not limited to, an assumption agreement by the
transferee, satisfactory to Oglethorpe, containing an assumption by the
transferee of the performance and observance of every covenant and condition of
the Member under the New Wholesale Power Contract, and certifications of
accountants as to certain specified financial requirements of the transferee
(taking into account the transfer).
Effective with the Corporate Restructuring, Oglethorpe amended its Bylaws to
implement a new governance structure with an 11-member board of directors
consisting of six directors elected from the Members, four independent outside
directors and Oglethorpe's President and Chief Executive Officer. This smaller
board replaced Oglethorpe's former 39-member board comprised of directors
nominated from and by each Member. The new directors will be nominated by
representatives from each Member on a weighted-voting method, based on the
number of retail customers served by such Member. However, each director will
continue to be elected by a vote of the Member representatives on a one-Member,
one-vote basis. Except for two of the four outside directors, all of
Oglethorpe's new directors have been elected and began their terms at the
Closing. The remaining two outside directors are expected to be elected on March
27, 1997.
Contemporaneously with the Corporate Restructuring, Oglethorpe replaced its
existing Consolidated Mortgage and Security Agreement, dated as of September 1,
1994, by and among Oglethorpe, as Mortgagor, the United States of
32
America, acting through the Administrator of the RUS and certain other
mortgagees (the RUS Mortgage) with the Indenture, dated as of March 1, 1997,
from Oglethorpe to SunTrust Bank, Atlanta, as trustee, (the Master Indenture)
providing for a lien on substantially all of the owned tangible and certain
intangible property of Oglethorpe. See "Rates and Financial Coverage
Requirements" below for a further description of the Master Indenture.
In conjunction with the Corporate Restructuring and as a part of its
continuing efforts to reduce costs, effective February 1, 1997, Oglethorpe
implemented a business alliance with Intellisource, Inc., a national provider of
outsourcing services. Pursuant to an agreement with Intellisource, approximately
150 support services division employees in the areas of accounting, auditing,
communications, human resources, facility management, purchasing,
telecommunications and information technology became employees of the
Intellisource organization. Oglethorpe, GTC and GSOC are key customers of
Intellisource and are being served on-site by the managers and employees of
Oglethorpe's former support services division.
Margins and Patronage CapitalMARGINS AND PATRONAGE CAPITAL
Oglethorpe operates on a not-for-profit basis and, accordingly, seeks only
to generate revenues sufficient to recover its cost of service and to generate
margins sufficient to establish reasonable reserves and meet certain financial
coverage requirements. Revenues in excess of current period costs in any year
are designated as net margin in Oglethorpe's statements of revenues and expenses
and patronage capital as net margin.capital. Retained net margins are designated on Oglethorpe's
balance sheets as patronage capital, which is allocated to each of the Members
on the basis of its electricity purchases from Oglethorpe. Since its formation
in 1974, Oglethorpe has generated a positive net margin in each year and had a
balance of $356 million in patronage capital as of December 31, 1996.year.
Oglethorpe's equity ratio (patronage capital and membership fees divided by
total capitalization) increased from 7.0% at December 31, 1995 to 7.5% at December 31, 1996.1996 to 8.4% at
December 31, 1997.
In connection with the Corporate Restructuring, Oglethorpe made a $49
million special patronage capital distribution to the Members which was used
by the Members to establish equity in and to provide initial working capital
to GTC. This distribution was offset primarily by current year margins and
resulted in a net decrease in patronage capital from $356 million at
December 31, 1996, to $331 million at December 31, 1997.
Patronage capital constitutes the principal equity of Oglethorpe. Under
Oglethorpe's patronage capital retirement policy, margins are to be returned to
the Members 30 years after the year in which the margins are earned. Pursuant to
such policy, no patronage capital would be retired until 2010, at which time the
1979 patronage capital would be returned. Any
distributions of patronage capital are subject to the discretion of the Board
of Directors. See "Corporate
Restructuring" above regarding a special patronage capital distribution made in
connection with the Corporate Restructuring.
Now that the Master Indenture has been substituted for the prior RUS
Mortgage, distributions of patronage capital are no longerDirectors, subject to the
approval of RUS, but are subject to certain restrictions set forth in the Master
Indenture.Indenture rerquirements. Under the Master Indenture, dated
as of March 1, 1997, from Oglethorpe to SunTrust Bank, Atlanta, as trustee
("Mortgage Indenture"), Oglethorpe is prohibited from making any distribution
of patronage capital to the Members if, at the time thereof or after giving
effect thereto, (i) an event of default exists under the MasterMortgage Indenture,
(ii) Oglethorpe's equity as of the end of the immediately preceding fiscal
quarter is less than 20% of Oglethorpe's total capitalization, or (iii) the
aggregate amount expended for distributions on or after the date on which
Oglethorpe's equity first reaches 20% of Oglethorpe's total capitalization
exceeds 35% of Oglethorpe's aggregate net margins earned after such date.
This last restriction, however, will not apply if, after giving effect ofto
such distribution, Oglethorpe's equity as of the end of the immediately
preceding fiscal quarter is not less than 30% of Oglethorpe's total
capitalization.
Rates and Financial Coverage RequirementsRATES AND REGULATION
Pursuant to the NewAmended and Restated Wholesale Power Contract,Contracts between
Oglethorpe and each of the Members dated as of August 1, 1996 ("Wholesale
Power Contracts"), Oglethorpe is required to design capacity and energy rates
that generate sufficient revenues to recover all costs as described in such
contracts, to establish and maintain reasonable margins and to meet its
financial coverage requirements. Oglethorpe reviews its capacity rates at
least annually to ensure that its fixed costs are being adequately recovered
and, if necessary, adjusts its rates to meet its net margin goals.
Oglethorpe's energy rate is established to recover actual fuel and variable
operations and maintenance costs.
Under the terms of Oglethorpe's prior
RUS Mortgage, rate revisions by Oglethorpe were subject to the approval of RUS.
Under the Master Indenture, Oglethorpe's rates are not subject to RUS approval
except in limited circumstances.
The capacity rate applied by Oglethorpe in 1994 utilized a proportional
allocation of fixed costs based on the previous year's billing demand for each
Member. Consequently, the 1994 rate produced capacity revenues which were
virtually unaffected by current year factors. In 1995, Oglethorpe implemented two additionalnew capacity rate options in an effort
to provide greater flexibility to the Members. These options allocated fixed
costs using billing determinants of the current year. These rates produced
differing monthly amounts of capacity revenues throughout the year1995 and introduced
some variability and uncertainty as to the level of revenues and margins to be
received. Due to extreme weather conditions and other factors, the 1995 rates
options produced $2.5 million of revenues in excess
30
of budgeted amounts. Such excess amounts were returned to the Members in 1996.
Under a capacity rate mechanism effective throughout 1996, each Member was
responsible for 33
an assigned share of fixed costs based on an agreed-upon
allocation. Under this approach, capacity costs were collected in equal monthly
amounts. This interim rate mechanism has now beenwas extended through March 31, 1997. A1997 until a
new rate schedule will becomebecame effective under the New Wholesale Power Contracts on April
1, 1997.1997, in connection with the Corporate Restructuring. This new rate schedule
implements on a long-term basis the assignment of responsibility for fixed
costs. The monthly charges for capacity and other non-energy charges are based
on a rate formula using the Oglethorpe budget. SuchThe Board of Directors may adjust
such capacity and other non-energy charges may be adjusted by the Board of Directors,
if necessary, during the year through an adjustment
to the annual budget. Energy charges are based on actual energy costs. However,costs, whether
incurred from generation or purchased power resources or under the supplemental
agreementspower
marketing arrangements.
Under the Mortgage Indenture, Oglethorpe is required, subject to any
necessary regulatory approval, to establish and collect rates that are
reasonably expected, together with other revenues of Oglethorpe, to yield a
Margins for Interest ("MFI") Ratio for each fiscal year equal to at least
1.10. The MFI Ratio is determined by dividing the LPM agreements, each Member payssum of (i) Oglethorpe's net
margins (after certain defined adjustments), (ii) Interest Charges and (iii)
any amount included in net margins for accruals for federal or state income
taxes by Interest Charges. The definition of MFI takes into account any item
of net margin, loss, gain or expenditure of any affiliate or subsidiary of
Oglethorpe only if Oglethorpe has received such net margins or gains as a
fixed rate for energy,
plus certain adjustments, while LPM pays all energy costs, within certain risk
bands.dividend or other distribution from such affiliate or subsidiary or if
Oglethorpe has made a payment with respect to such losses or expenditures.
The new rate schedule also includes a prior period adjustment (PPA)
mechanism. The PPA servesPrior Period Adjustment ("PPA") mechanism
designed to facilitate the achievement ofensure that Oglethorpe achieves the minimum 1.10 MFI ratio, and it provides for the retention of margins within a range from a 1.10
MFI ratio to a 1.20 MFI ratio.Ratio. Amounts,
if any, by which Oglethorpe fails to achieve a minimum 1.10 MFI ratioRatio would be
accrued as of December 31 of the applicable year and collected from the Members
during the period April through December of the following year. Amounts if any, earned by Oglethorpe in excess ofwithin a
range from a 1.10 MFI Ratio to a 1.20 MFI ratioRatio are retained as patronage
capital. Amounts, if any, by which Oglethorpe exceeds the maximum 1.20 MFI Ratio
would be charged against revenues as of December 31 of the applicable year and
refunded to the Members during the period April through December of the
following year. The rate schedule formula is intended to provide for the
collection of revenues which, together with revenues from all other sources, are
equal to all costs and expenses recorded by Oglethorpe, plus amounts necessary
to achieve at least the minimum 1.10 MFI Ratio.
For 1997, Oglethorpe achieved an MFI Ratio of 1.10. For comparative purposes
only, the pro forma MFI Ratio for 1996 would have been 1.09.
Under the terms of Oglethorpe's prior mortgage, all rate revisions by
Oglethorpe were subject to the approval of the Rural Utilities Service ("RUS").
Under the Mortgage Indenture and related loan contract with RUS, adjustments to
Oglethorpe's rates to reflect changes in Oglethorpe's budgets are not subject to
RUS approval, except for any reduction in rates in a fiscal year following a
fiscal year in which Oglethorpe has failed to meet the minimum 1.10 MFI Ratio
set forth in the Mortgage Indenture. Changes to the rate schedule under the
Wholesale Power Contracts are subject to RUS approval. Oglethorpe's rates are
not subject to the approval of any other federal or state agency or authority,
including the Georgia Public Service Commission.
Prior to 1997, Oglethorpe utilized a Times Interest Earned Ratio (TIER)("TIER") as
the basis for establishing its annual net margin goal. TIER is
determined by dividing the sum ofUnder Oglethorpe's net margin plus interest on
long-term debt (including interest charged to construction) by Oglethorpe's
interest on long-term debt (including interest charged to construction). The RUS
Mortgageprior
mortgage, Oglethorpe was required Oglethorpe to implement rates that arewere designed to
maintain an annual TIER of not less than 1.05. Oglethorpe's Board of Directors
set an annual net margin goal to be the amount required to produce a TIER of
1.07 in 1994
through 1996.1995 and 1996, and such TIER was achieved in each year. In addition to
the TIER requirement under the RUS Mortgage,prior mortgage, Oglethorpe was also required
under the RUS Mortgageprior mortgage to implement rates designed to maintain a Debt Service
Coverage Ratio (DSC)("DSC") of not less than 1.0 and an Annual Debt Service Coverage
Ratio (ADSCR)("ADSCR") of not less than 1.25. Oglethorpe always met or exceeded the
TIER, DSC and ADSCR requirements of the prior mortgage.
TIER is determined by dividing the sum of Oglethorpe's net margin plus
interest on long-term debt (including interest charged to construction) by
Oglethorpe's interest on long-term debt (including interest charged to
construction). DSC is determined by dividing the sum of Oglethorpe's net margin
plus interest on long-term debt (including interest charged to construction)
plus depreciation and amortization (excluding amortization of nuclear fuel and
debt discount and expense) by Oglethorpe's interest and principal payable on
long-term debt (including interest charged to construction). ADSCR is determined
by dividing the sum of Oglethorpe's net margin plus interest on long-term debt
(excluding interest charged to construction) plus depreciation and
31
amortization (excluding amortization of nuclear fuel and debt discount and
expense) by Oglethorpe's interest and principal payable on long-term debt
secured under the RUS Mortgageprior mortgage (excluding interest charged to construction).
Oglethorpe always met or exceeded the TIER, DSC and ADSCR requirements of
the RUS Mortgage. TIER, DSC and ADSCR for the years 1994 through 1996 were as
follows:
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
TIER 1.07 1.07 1.07
DSC 1.25 1.21 1.19
ADSCR 1.32 1.27 1.25
- --------------------------------------------------------------------------------
Under the Master Indenture, Oglethorpe is required to establish and collect
rates which are reasonably expected, together with other revenues of Oglethorpe,
to yield a Margins for Interest (MFI) for each fiscal year equal to at least
1.10 times total interest charges during such fiscal year on all indebtedness
secured under the Master Indenture (or by a lien equal or prior to the lien of
the Master Indenture), excluding indebtedness assumed by GTC. MFI is determined
by adding (i) Oglethorpe's net margins (after certain defined adjustments), (ii)
interest charges on indebtedness secured under the Master Indenture (or by lien
equal to or prior to the lien of the Master Indenture), and (iii) any amount
included in net margins for accruals for federal or state income taxes. The
definition of MFI takes into account any item of net margin, loss, gain or
expenditure of any affiliate or subsidiary of Oglethorpe only if Oglethorpe has
received such net margins or gains as a dividend or other distribution or if
Oglethorpe has made a payment with respect to such losses or expenditures.
The MFI ratio requirement went into effect upon the substitution of the
Master Indenture for the prior RUS Mortgage. For comparative purposes only, the
pro-forma MFI ratio for 1996 would have been 1.09.
Miscellaneous
Currently, Oglethorpe is subject to the provisions of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation". Oglethorpe has recorded regulatory assets and liabilities related
to its generation and transmission operations. In the event that Oglethorpe is
no longer subject to the provisions of Statement No. 71, Oglethorpe would be
required to write off related regulatory assets and liabilities. In addition,
Oglethorpe would be required to determine any impairment of other assets,
including utility plant, and
34
write down the plant assets, if impaired, to their fair value. See Note 1 of
Notes to Financial Statements for additional information.
The staff of the Securities and Exchange Commission has questioned certain
of the current accounting practices of the electric utility industry regarding
the recognition, measurement and classification of decommissioning costs for
nuclear generating facilities in financial statements of electric utilities. In
response to these questions, the Financial Accounting Standards Board has issued
an Exposure Draft of a proposed Statement on "Accounting for Certain Liabilities
Related to Closure or Removal of Long-Lived Assets". The proposed Statement
would require the recognition of the entire obligation for decommissioning at
its present value as a liability in the financial statements. Rate-regulated
utilities would also recognize an offsetting asset for differences in the timing
of recognition of the costs of decommissioning for financial reporting and
rate-making purposes. Oglethorpe's management does not believe that this
proposed Statement would have an adverse effect on results of operations due to
its current and future ability to recover decommissioning costs through rates.
Beginning in years 2014 through 2029, it is expected that Plant Hatch and
Vogtle units will begin the decommissioning process. The expected timing of
payments for decommissioning costs will extend for a period of 9 to 14 years.
Oglethorpe's management does not expect such payments to have an adverse impact
on liquidity or capital resources due to available amounts which have been set
aside in reserves for this purpose.
RESULTS OF OPERATIONS
Historical Factors Affecting Financial Performance
Over the past three years,HISTORICAL FACTORS AFFECTING FINANCIAL PERFORMANCE
Oglethorpe has utilized both long-term contractual arrangements with
Georgia Power Company ("GPC") and a rate mechanism utilizing deferred margins
to allow for a gradual absorption of costs of generating plants into rates
over several years. As of May 31, 1995, Oglethorpe's Members have fully
absorbed into rates
additional responsibility for the cost of its ownership interests in
Plant Vogtle Units No. 1 and No. 2. These generating units were placed in commercial
operation in 19872, and 1989, respectively. Oglethorpe has utilized both long-term
contractual arrangements with GPC and a rate mechanism to allow for a gradual
absorptionas of costs over several years. In addition, Oglethorpe utilized this
rate mechanism to mitigate the impact of absorbingDecember 31, 1996, Oglethorpe's
Members have fully absorbed into rates the costs of the Rocky Mountain, Pumped Storage Hydroelectric Project (Rocky Mountain) which wasthe last
of Oglethorpe's generating plants to be placed in service during June and July 1995.into service.
Contractual arrangements with GPC provided that Oglethorpe sell to GPC a
declining percentage of Oglethorpe's entitlement to the capacity and energy of
certain co-owned generating plants during the initial seven to ten years of
operation of such units (GPC Sell-back)(the "GPC Sell-back"). As of May 31, 1995, the GPC
Sell-back has expired for all units. The historical ability of Oglethorpe to sell power
from new units to GPC under the GPC Sell-back enabled Oglethorpe to moderate the
effects of the higher costs associated with new generating units on Oglethorpe's
cost of service and, therefore, on the rates charged to Members. Furthermore,
the GPC Sell-back enabled Oglethorpe to obtain the generating capacity needed to
serve anticipated increases in Member loads while minimizing the risks and costs
of excess generating capacity.
Prior to the completion of the first unit of Plant Vogtle in 1987,
Oglethorpe's Board of Directors implemented policies that resulted in the
gradual absorption of the costs of Plant Vogtle by the Members. In each of the
years 1985 through 1995, Oglethorpe exceeded its net margin goal. The Board
adopted resolutions in each of these years requiring that these excess margins
be retained and used to mitigate rate increases associated with Plant Vogtle
and, subsequently, with Rocky Mountain. In each year beginning with 1989, a
portion of these margins was returned to the Members through billing credits.
(See Note 1 of Notes to Financial Statements.) As of December 31, 1996, all
amounts previously retained have been returned to the Members and this rate
mechanism ended.
Operating Revenues
Oglethorpe's operating revenues are derived from sales of electric servicesPOWER MARKETER ARRANGEMENTS
Oglethorpe is utilizing long-term power marketer arrangements to the Members and non-Members. Revenues from Members are collected pursuant to
wholesale power contracts and are a function of the demand for power by the
Members' consumers and Oglethorpe's cost of service. Historically, most of
Oglethorpe's non-Member revenues resulted from various plant operating
agreements with GPC as discussed below. However, in recent years, an increasing
amount of non-Member revenues has been derived by off-system sales to other
utilities and power marketers.
For the period 1994 through 1996, although total revenues have varied
slightly, the scheduled reduction of the GPC Sell-back has resulted in the
planned decrease of non-Member revenues from GPC of about $45 million. As
expected, the capacity and energy no longer being sold to GPC have been used by
Oglethorpe to meet increased Member requirements. In addition to increasing
sales to Members, Oglethorpe achieved reductions in fixed and operating costs in
order to mitigate the need to recover from the Members costs which were
previously recovered through sales to GPC. The refinancing transactions
discussed under "Financial Condition-Refinancing Transactions" below have
resulted in a reduction in gross interest charges from $330 million in 1994 to
$308 million in 1996, or a 7% decrease in that fixed cost component of the
capacity rates.
As a means of further reducingreduce the
cost of power provided to the Members. Oglethorpe has entered into power marketer
agreements with LG&E Energy Marketing Inc. ("LEM") effective January 1, 1997,
for approximately 50% of the load requirements of the Members and with Morgan
Stanley Capital Group Inc. ("Morgan Stanley"), effective May 1, 1997, with
respect to 50% of the Members' then forecasted load requirements. The LEM
agreements are based on the actual requirements of the Members during the
contract term, whereas the Morgan Stanley agreement represents a fixed supply
obligation. Under these power marketer agreements, Oglethorpe purchases energy
at fixed prices covering a portion of the costs of energy to its Members. LEM
and Morgan Stanley, in turn, have certain rights to market excess energy from
the Oglethorpe system. All of Oglethorpe's existing generating facilities and
power purchase arrangements are available for use by LEM and Morgan Stanley for
the term of the respective agreements. Oglethorpe continues to be responsible
for all of the costs of its system resources but receives revenue from LEM and
Morgan Stanley for the use of the resources.
Oglethorpe utilized short-term power supplymarketer arrangements during 1996. The
35
initial agreement was with Enron Power Marketing, Inc. (EPMI)("EPMI") and was in place
January through August. From September through December 1996, another power
supplymarketer arrangement was utilized with Duke/Louis Dreyfus L.L.C. (DLD)("DLD"). Under
botheach of the agreements, the power marketer was required to provide to Oglethorpe
at a favorable fixed rate all the energy needed to meet the Members'
requirements and Oglethorpe was required to provide to the power marketer at
cost, subject to certain limitations, upon request, all energy available from
Oglethorpe's total power resources. Under both agreements, Oglethorpe continued
to operate the power supply system and continued to dispatch the generating
resources to ensure system reliability.
SalesCORPORATE RESTRUCTURING
As a result of the Corporate Restructuring, the Statements of Revenues
and Expenses for 1997 reflect operations as a combined power supply,
transmission and system operations company through March 31, 1997, and
operations solely as a power supply company thereafter. (See Note 11 of Notes
to Members.Financial Statements for a pro forma Statement of Revenues and Expenses
for the year ended December 31, 1997). Although the Corporate Restructuring
was completed on March 11, 1997, pursuant to the restructuring agreement
among Oglethorpe, GTC and GSOC, all transmission-related and systems
operations-related revenues were assigned to Oglethorpe, and all
transmission-related and systems operations-related costs were paid or
reimbursed by Oglethorpe during the period March 11, 1997 through March 31,
1997.
Decreases in operating revenues, power delivery expenses, depreciation and
amortization, taxes other than income taxes, operating margin and net interest
charges from 1996 to 1997 are primarily attributable to the Corporate
Restructuring.
32
OPERATING REVENUES
SALES TO MEMBERS. Revenues from Members are collected pursuant to the
Wholesale Power Contracts and are a function of the demand for power by the
Members' consumers and Oglethorpe's cost of service. Revenues from sales to
Members decreased by 2.2% for 1997 compared to 1996 and decreased by 0.7% in
1996 compared to 1995 and increased 10.7% in 19951995. For 1997 compared to 1994. These changes1996, four factors primarily
contributed to the change in revenues. Two factors were the result of the
Corporate Restructuring and affected comparability, as follows: (1) Member
capacity revenues declined by approximately $75 million due to the transfer
of the transmission and system operations businesses to GTC and GSOC in
connection with the Corporate Restructuring; and (2) as discussed under
"OTHER INCOME (EXPENSE)" herein, Member revenues for 1997 of approximately
$19.5 million related to EnerVision were reflected in "Other Income" since
these marketing support activities are no longer part of operations of the
power supply business. In addition, revenues were significantly affected by
two operational factors: (1) Member energy revenues increased by $80 million
primarily because the short-term power marketer arrangements with DLD and
EPMI allowed Oglethorpe to pass through significant savings during 1996 (see
the discussion of purchased power under "OPERATING EXPENSES" herein); and (2)
in August 1997, capacity revenues were reduced by a $4 million refund to the
Members as a result of an interim budget adjustment to reflect both cost-related and volume-related factors. Thehigher than
anticipated investment income.
Revenues from Members for 1996 revenues decreased compared to 1995 due to the
fact that the pass-through of savings in energy costs, (see the discussion of savings in purchased power under "Operating
Expenses" herein)which more than offset higher
capacity revenue requirements and the effect of increased amounts of energy
sold. The increase in revenues between
1995 and 1994 was due to the fact that higher capacity revenue requirements and
additional amounts of energy sold more than offset savings in energy costs (see the discussion of savings in fuel and purchased power costs under "Operating
Expenses""OPERATING
EXPENSES" herein).
As non-Member revenues from GPC have declined, Oglethorpe's Member capacity
revenues have increased to reflect the recovery of the fixed costs which had
previously been recovered from GPC through the GPC Sell-back. (See the
discussion of this type of revenues under "Sales to non-Members" herein.) Member capacity revenues in 1996 and 1995 were also
affected by additional fixed costs related to the commercial operation of
Rocky Mountain beginning in June 1995.
The energy portion of Member energy revenues per kilowatt-hour (kWh)("kWh") increased
24.4% in 1997 compared to 1996 and declined 13.2% in 1996 compared to 1995 and declined 7.6%1995.
Actual energy costs are passed through to the Members such that energy
revenues equal energy costs. The increase in 1995 compared to 1994.1997 resulted from the $80
million increase in net energy costs discussed above. The decrease in 1996
resulted from savings of approximately $32 million in energy costs (compared
to budget) achieved under the power supply arrangements. In 1995, the
decrease reflected savingsmarketer arrangements in fuel and production costs and lower average
purchased power costs. Actual energy costs are passed through to the Members
such that energy revenues equal energy costs.effect during
1996.
The following table summarizes the amounts of kWh sold to Members and
revenues per kWh during each of the past three years:
KILOWATT-HOURS CENTS PER
(IN THOUSANDS) KILOWATT-HOUR
------------------- -------------------
1997..... 20,664,786 4.83(1)
1996..... 19,807,101 5.11
1995..... 18,442,153 5.53
- --------------------------------------------------------------------------------
Kilowatt-hours
(in thousands)
- --------------------------------------------------------------------------------------------------------
(1) Excludes revenues related to the transmission business effective
April 1, 1997.
In spite of mild weather in 1997, kWh sales to Members increased by 4.3%
compared to 1996 19,807,101
1995 18,442,153
1994 16,285,127
- --------------------------------------------------------------------------------
Member sales have been significantly affected by abnormal weather conditions
during two of the past three years. In 1995 prolonged hot weather boosted sales,
while in 1994 record-breaking rainfall amounts statewide moderated Member sales.
Member sales increased 7.4% in 1996 despite a summer in which temperatures were
lower than 1995, due to continued growth in the Member systems' service
territories. The net impact ofMember sales increased 7.4% in 1996 also due to Member growth,
despite a summer in which temperatures were lower than the above capacity and energy rate factors, combined with
the spreading of fixed capacity costs over an increasing number of kWh sold each
year, have resultedprolonged hot
weather in the following decreasing trend in average Member revenue
requirements:
- --------------------------------------------------------------------------------
Cents per Kilowatt-hour
- --------------------------------------------------------------------------------
1996 5.11(cent)
1995 5.53
1994 5.65
- --------------------------------------------------------------------------------
Sales to non-Members.1995.
SALES TO NON-MEMBERS. Sales of electric services to non-Members arewere
primarily madefrom energy sales to other utilities and power marketers, and
pursuant to three different types of contractual arrangements with GPC and
from off-system sales to other non-Member utilities.GPC. The following table summarizes
the amounts of non-Member revenues from these sources for the past three
years:
- --------------------------------------------------------------------------------
1996 1995 1994
(dollars in thousands)
- --------------------------------------------------------------------------------
GPC-plant operating agreements $ -- $ 10,096 $ 45,392
GPC-power supply arrangements 13,703 43,226 26,280
ITS transmission agreements 9,789 12,614 10,974
Sales to power marketers 15,895 -- --
Sales to other utilities 38,956 52,828 42,561
------- -------- --------
Total $78,343 $118,764 $125,207
======= ======== ========
- --------------------------------------------------------------------------------
1997 1996 1995
--------- --------- ----------
(DOLLARS IN THOUSANDS)
Sales to other utilities.......................... $ 17,533 $ 38,956 $ 52,828
Sales to power marketers.......................... 14,623 15,895 --
GPC power supply arrangements..................... 13,169 13,703 43,226
ITS transmission agreements....................... 2,208 9,789 12,614
GPC plant operating agreements.................... -- -- 10,096
--------- --------- ----------
Total............................................. $ 47,533 $ 78,343 $ 118,764
--------- --------- ----------
--------- --------- ----------
Revenues from sales to non-Members declined in 1997 compared to 1996 and
in 1996 compared to 1995. Sales to other utilities in 1997 represent sales
made directly by Oglethorpe. Oglethorpe sells for its own account any energy
available from the portion of its resources dedicated to Morgan Stanley that
is not scheduled by Morgan Stanley pursuant to its power marketer
arrangements. EPMI and DLD initiated sales to other utilities in 1996. In
1996, where the power marketer did not have a contractual relationship with
the purchaser and Oglethorpe did, Oglethorpe recorded the sale and credited
the revenues to the power marketer in its monthly billing. In 1995,
Oglethorpe made these sales directly to other utilities.
Under the LEM and Morgan Stanley power marketer arrangements, and
previously, under the EPMI and DLD power marketer arrangements, sales to the
power marketers represented the net energy trans-
33
mitted on behalf of LEM, Morgan Stanley, EPMI and DLD off-system on a daily
basis from Oglethorpe's total resources. Such energy was sold to LEM, EPMI
and DLD at Oglethorpe's cost, subject to certain limitations, and to Morgan
Stanley at a contractually fixed price. The volume of sales to power
marketers depends primarily on the power marketers' decisions for servicing
their load requirements.
The third source of non-Member revenues was power supply arrangements
with GPC. These revenues were derived, for the most part, from energy sales
arising from dispatch situations whereby GPC caused co-owned coal-fired
generating resources to be operated when Oglethorpe's system did not require
all of its contractual entitlement to the generation. These revenues
compensated Oglethorpe for its costs because, under the operating agreements
(before the agreements were recently amended as discussed below), Oglethorpe
was responsible for its share of fuel costs any time a unit operated.
Revenues from sales of this type to GPC varied slightly in 1997 compared to
1996 and were lower in 1996 compared to 1995. In 1996, the power marketers
elected to retain more of the output from Plant Wansley than in 1995.
Pursuant to the amendments to the Plant Wansley ownership and operating
agreements, Oglethorpe elected to separately dispatch its ownership interest
in Plant Wansley beginning May 1, 1997. Thereafter, Plant Wansley ceased to
be a source of this type of sales transaction; therefore, this type of sale
to GPC has ended.
The fourth source of non-Member revenues was primarily payments from GPC
for use of the Integrated Transmission System ("ITS") and related
transmission interfaces. GPC compensated Oglethorpe to the extent that
Oglethorpe's percentage of investment in the ITS exceeded its percentage use
of the system. In such case, Oglethorpe was entitled to compensation for the
use of its investment by the other ITS participants. As a result of the
Corporate Restructuring, all of the revenues in this category have accrued to
GTC since April 1, 1997. The change in revenues for 1996 compared to 1995
resulted from normal variations of Oglethorpe's investment percentages and
in
1995 compared to 1994.its use of the system.
The first two typesfifth source of non-Member revenues were derived
from contractualrevenue was plant operating agreements
with GPC. First, theThe elimination of the revenues from the plant operating agreements
was due to the scheduled conclusion, effective June 1, 1995, of the GPC
Sell-back with respect to Plant Vogtle.
The second source of non-Member revenues is
36
power supply arrangements with GPC. These revenues are derived, for the most
part, from energy sales arising from dispatch situations whereby GPC causes
co-owned coal-fired generating resources to be operated whenOPERATING EXPENSES
Oglethorpe's system
does not require all of its contractual entitlement to the generation. These
revenues essentially represent reimbursement of costs to Oglethorpe because,
under the operating agreements, Oglethorpe is responsible for its share of fuel
costs any time a unit operates. Revenues from sales of this type to GPC were
lowerexpenses decreased 3.7% in 19961997 compared to 1995 and were higher in 1995 compared to 1994. In
1996, the power marketers elected to retain more of the output from Plant
Wansley, whereas, in 1995, Oglethorpe retained less of its share of the output
from Plant Wansley units because the added cost associated with emission
allowances made those units less attractive than certain purchased resources.
The 1994 revenues reflect the fact that Oglethorpe retained much of its share of
the output from the Plant Scherer and Plant Wansley units because the lower
average fuel costs made those units more attractive than certain purchased
resources. Emission allowances for Plant Wansley were not required in 1994. See
the discussion under "Operating Expenses" herein of the lower average fuel costs
of the coal-fired generating units in 1996
and 1995. Pursuant to the amendments
to the Plant Scherer ownership and operating agreements, Oglethorpe elected to
separately dispatch its ownership interest in Plant Scherer beginning May 1,
1994. Thereafter, Plant Scherer ceased to be a source of this type of sales
transaction. Pursuant to similar amendments to the Plant Wansley operating
agreement, Oglethorpe expects to begin separately dispatching its ownership
interest in Plant Wansley this year.
The third source of non-Member revenues is primarily payments from GPC for
use of the ITS and related transmission interfaces. GPC compensates Oglethorpe
to the extent that Oglethorpe's percentage of investment in the ITS exceeds its
percentage use of the system. In such case, Oglethorpe is entitled to
compensation for the use of its investment by the other ITS participants. The
change in revenues for 1996 through 1994 resulted from normal variations of
Oglethorpe's investment percentages and its use of the system.
Under the EPMI and DLD power supply agreements, sales to the power marketers
represented the net energy transmitted off-system on behalf of EPMI and DLD on a
daily basis from Oglethorpe's total resources. Such energy was sold to EPMI and
DLD at Oglethorpe's cost, subject to certain limitations. Sales to other
non-Member utilities were initiated by EPMI and DLD in 1996 while in 1995 and
1994 these sales were made by Oglethorpe directly with the non-Member utilities.
While Oglethorpe maintains the contractual relationship with these other
utilities and administers the transactions, all profits in 1996 on these sales
to other utilities from Oglethorpe's total resources accrued to EPMI and DLD.
See "Factors Affecting Future Financial Performance" herein regarding
Oglethorpe's new long-term power supply arrangements.
Operating Expenses
Oglethorpe's operating expenses decreased 2.6% in 1996 compared to 1995 and
increased 9.4%1995. The overall decrease in
1995operating expenses for 1997 compared to 1994.1996 was primarily attributable to
the expenses relating to the transmission business assumed by GTC in
connection with the Corporate Restructuring. The decrease in operating
expenses in 1996 compared to 1995 was primarily attributable to energy cost
savings achieved under the short-term power supplymarketer arrangements offset
somewhat by an increase in depreciation and amortization.
The increase in operating expenses in 1995
compared to 19941997 production operations and maintenance costs was
primarilypartly attributable to a 13% increase in kWhs sold to
Members and non-Members.maintenance outage at Scherer Unit No. 1. In
addition, depreciationeffective January 1, 1996, the costs of nuclear refueling outages
are deferred and amortization, sales, and
administrative and general expenses were also higher.amortized over the 18-month period following the outage.
Such change in accounting resulted in a $12.4 million deferral of maintenance
costs in 1996.
The decrease in total fuel costs in 1996 as compared to 1995 resulted
partly from unplanned outages at Plant Scherer and Plant Wansley Unit No. 1
and partly from the power marketer electing to dispatch the fossil units
less. These factors resulted in 3.1% lower fossil generation in 1996 compared
to 1995.
The
increasePurchased power cost increased 16.5% in total fuel costs in 1995 versus 1994 resulted from 23% higher
generation at Plant Scherer. The continued use of lower-priced western coal
combined with a greater reliance on a favorable spot market for coal resulted in
a per unit fuel cost decrease for Plant Scherer of 5% in 1995 from 1994 levels.
Because1997 compared to 1996, despite
the fact that effective September 1, 1997 another 250 megawatt ("MW")
component block (coal-fired units) of the declineBlock Power Sale Agreement (the
"BPSA") between Oglethorpe and GPC was eliminated. Although 3.5% fewer
megawatt-hours ("MWhs") were purchased in fuel cost per kWh at Plant Scherer, the usage of the
units increased significantly. Oglethorpe retained significantly less of its
output from Plant Wansley in 19951997 compared to 1994 primarily as a result of
relatively higher costs compared to Plant Scherer due to its emission allowance
requirement1996, average
purchased power cost increased by 20.7%. As noted below, significant energy
cost savings were realized in 1996 from the EPMI and due to cost reductions at Plant Scherer discussed above.DLD power marketer
arrangements. Purchased power cost decreased by 14% in 1996 compared to 1995 and increased
by 16% in 1995 compared to 1994.1995.
Lower purchased power costs were achieved in 1996 despite the fact thata 15% increase in
energy purchases increased 15% in 1996 from 1995 levels. The 1996 cost reduction was due to
(1) energy cost savings of $32 million realized from the short-term power
supplymarketer arrangements and (2) reductions in purchased power capacity costs
due to (a) proceeds of $10.8 million from the settlement of a lawsuit with
GPC and (b) savings resulting from the elimination effective September 1,
1996, of a 250 MW Component Blockcomponent block (coal-fired units) of the Block
Power Sale Agreement (BPSA) effective September 1, 1996. In 1995, the 13% higher
kWh sales, including the increased Member salesBPSA between
Oglethorpe and sales to GPC pursuant to
power supply arrangements (see the discussion under "Operating Revenues" herein)
37
resulted in higher utilization of purchased power resources. Energy purchases
increased 31% in 1995 compared to 1994.GPC.
Purchased power expenseexpenses for 1994the years 1995 through 19961997 reflect the cost
of capacity and energy purchases under various long-term power purchase
agreements. These long-term agreements have, in some cases, take-or-pay
minimum energy requirements.require-
34
ments. For 19941995 through 1996,1997, Oglethorpe utilized its energy from these
purchase power agreements in excess of the take-or-pay requirements.
Oglethorpe's power purchases from these agreements amounted to approximately
$196$176 million in 1997, $191 million in 1996 and $207 million in 1995 and $183 million in 1994. For1995. (For a
discussion of the power purchase agreements, see Note 9 of Notes to Financial
Statements.)
The increase in depreciation and amortization in 1996 iswas partly due to a
full year of depreciation on Rocky Mountain which began commercial operation
in June 1995 and due to $14 million of Board- approvedBoard-approved accelerated amortization of
deferred charges of the discontinued Pickens County pumped storage
hydroelectric project. All remaining unamortized charges related to this
project were expensed in 1996.
Sales, administrativeOther operating expenses for 1996 and general1995 represent marketing services
expenses. As discussed under "Other Income (Expense)" herein, such expenses
increasedfor 1997 of approximately $18.3 million related to EnerVision were shown in
1995 as compared to
1994 primarily resulting from increased"OTHER INCOME (EXPENSE)" since these marketing efforts in support activities are no
longer part of operations of the Members.
Other Income/Expensepower supply business.
OTHER INCOME (EXPENSE)
Interest income increased infor 1997 compared to 1996 and 1996 compared to
19951995. Interest income was higher in 1997 as a result of higher earnings from
the decommissioning fund and 1995 comparedpartly due to 1994.income from the deposits from the
Rocky Mountain transactions. The deposits were made in December 1996 and
January 1997. In 1996, interest income was higher due to higher average
investment balances.
In 1995, interestcontemplation of separating its marketing support services from the
power supply business, in 1997 Oglethorpe began accounting for the revenues
and expenses relating to EnerVision as a non-operating "Other income
increased partly due to higher short-term
interest rates(expense)" item. Such activities produced a margin of approximately $1.2
million and due to higher investment returnsare reflected in the decommissioning trust
fund."Other" caption of "Other income (expense)"
on the Statement of Revenues and Expenses.
In 1996, Oglethorpe utilized all remaining amounts available ($32
million) under its deferred margin rate mechanism, and, as scheduled, this
mechanism ended. Likewise, deferred margins of $16 million and $18 million were amortized as
credits against Member revenue requirements in 1995 and 1994, respectively, to mitigate the rate
impact of increased capacity costs related to Plant Vogtle and Rocky
Mountain. Also, in 1995, and 1994, Oglethorpe's Board of Directors authorized the
retention of approximately $14 million and $9 million,
respectively, in excess of the 1.07 TIER margin
requirement as deferred margins under the mechanism. (See Note 1 of Notes to
Financial Statements for a discussion of deferred margins and amortization of
deferred margins.)
The
decrease in amortization of deferred gains in 1996 and 1995 asINTEREST CHARGES
Net interest charges for 1997 decreased compared to 1994
resulted from1996 primarily due to
the completion of amortizationdebt assumed by GTC in September 1994 of a gain onconnection with the sale of Plant Scherer common facilities. (Also see Note 1 of Notes of Financial
Statements for a discussion of the sale.)
Interest ChargesCorporate Restructuring. Net
interest charges increased in 1996 compared to 1995 and in 1995 compared
to 1994. The increases were due to the fact that the allowancesdecrease in
allowance for debt and
equity funds used during construction (AFUDC) decreased in 1996 compared to 1995
and 1995 compared to 1994("AFUDC") as a result of
the three units of Rocky Mountain becoming commercially operable in June and
July 1995. The continued decrease in gross interest on long-term debt and capital
leases in 1996 andcompared to 1995 was due to the refinancing efforts discussed
under "Financial Condition(RefinancingCondition--Refinancing Transactions" below.
The change in other interest expense in 1995 compared to
1994 was due to higher investment returns in the decommissioning trust fund.
(See Note 1 of Notes to Financial Statements for explanation of Oglethorpe's
accounting for decommissioning gains and losses.)
Factors Affecting Future Financial Performance
Effective January 1, 1997, Oglethorpe entered into power supply agreements
with LPM for 50% of the load requirements of the Members. Under the agreements,
LPM is obligated to deliver, and Oglethorpe is obligated to take, 50% of the
load requirements of the participating Members less the load requirements for
certain customer choice loads (900 kilowatt or greater), plus 50% of the
delivery obligations under Oglethorpe's existing firm power off-system sale
contracts. For customer choice loads of three megawatts or less, LPM is
obligated to deliver if Oglethorpe requests 50% of the associated load
requirements. Oglethorpe is obligated to sell and LPM is obligated to buy, 50%
of the output of each participating Member's PCR share of the "must run" units
(primarily nuclear units). Oglethorpe is also obligated to make available the
same share of all other resources, which LPM may schedule. LPM does not have the
right to the output of upgrades to these resources. LPM must pay Oglethorpe the
cost of fuel associated with the energy taken. There is a price adjustment if
the plant performance does not meet specified levels of availability and output.
Oglethorpe must pay LPM a contractually specified price for each MWh purchased.
Oglethorpe has the option of purchasing the energy requirements for customer
choice loads from another supplier.
Oglethorpe will cause GTC to provide available transmission to deliver to
the border of the ITS any energy sold to LPM. Each Member will use its
Transmission Agreement for delivery of energy purchased from LPM and others.
Effective with the Corporate Restructuring and the execution of supplemental
agreements to the New Wholesale Power Contracts, the LPM agreement relating to
37 of the 39 Members has a term extending to 2011. With one years' notice,
Oglethorpe has the right to terminate the contract for any year beginning with
38
2002. LPM has the right to terminate the contract for any year beginning with
2005. The LPM agreement relating to the other two Members has a term extending
through the end of 1999.
Oglethorpe is now working to finalize a power supply agreement with Morgan
Stanley Capital Group (Morgan Stanley) that would supply the remaining 50% of
the Members' load requirements. The contract is expected to have a term of up to
eight years. Each Member is currently deciding individually whether to have
Oglethorpe obtain its remaining load requirements from Morgan Stanley. Any
Member that elects not to participate in the Morgan Stanley agreement would have
other options available, including having Oglethorpe manage this portion of the
Member's load requirements. In the interim, Oglethorpe is supplying this portion
of its requirements from its own resources and by off-system purchase and sales.
In the event Oglethorpe does not enter into power marketer agreements for the
remainder of its load, it can continue to operate effectively in this manner.
In order to complete the implementation of power marketer arrangements,
Oglethorpe and each Member will enter into supplemental agreements to the New
Wholesale Power Contracts to implement the terms of each power marketing
arrangement under the New Wholesale Power Contracts.
The electric utility industry in the United States is undergoing fundamental
change and is becoming increasingly competitive. This change is promoted by the
Energy Policy Act of 1992 (the "Energy Policy Act"), recently adopted and
proposed policies from FERC regarding transmission access and pricing, increased
consolidation and mergers of electric utilities, the proliferation of
self-generators and independent power producers, surplus generation in certain
regional markets and other factors. The Energy Policy Act and FERC policies
allow for increased competition among wholesale electric suppliers and increased
access to transmission services by such suppliers. The new competitive
environment is subject to rapidly evolving regulatory policy at both the federal
and state levels which is based on a shift to a market-driven environment from a
regulated one. Significant legislative developments at the federal level and in
various state legislative bodies, and regulatory developments at the Federal
Energy Regulatory Commission (FERC) and in state commissions, are expected to
continue to clarify policy and the regulatory framework for increased
competition. All of these factors present an increasing challenge to Oglethorpe
and the Members to reduce costs, manage resources and respond to the changing
environment.
Inflation
As with utilities generally, inflation has the effect of increasing the cost
of Oglethorpe's operations and construction program. Operating and construction
costs have been less affected by inflation over the last few years because rates
of inflation have been relatively low.
FINANCIAL CONDITION
GeneralGENERAL
The principal changes in Oglethorpe's financial condition in 19961997 were
due to property additions, reductions in the cost of $43 million to gross utility plantcapital and a special
patronage capital distribution. Property additions totaled $64 million and
were funded entirely with funds from operations.
A decrease in the cost of capital was achieved through the refinancing of
$106$237 million of long-term debt and the prepayment of an additional $116
million of long-term debt. The average interest rate on long-term debt
decreased from 6.76% at December 31,
1995 to 6.56% at December 31, 1996.
In addition, Oglethorpe completed a long-term lease transaction on its share
of Rocky Mountain which produced approximately $96 million of net proceeds.1996 to 6.46% at December 31, 1997. (For
a further discussion of this transaction,the refinancing transactions, see "Rocky Mountain Transactions"
below."REFINANCING
TRANSACTIONS" and "ROCKY MOUNTAIN LEASE TRANSACTIONS" herein.)
Capital RequirementsFinally, Oglethorpe's equity was reduced by $49 million due to a special
patronage capital distribution made to the Members in conjunction with the
Corporate Restructuring.
CAPITAL REQUIREMENTS
As part of its ongoing capital planning, Oglethorpe forecasts
expenditures required for generation facilities and other capital projects.
The table below details these expendituresexpenditure forecasts for 19971998 through 1999.2000.
Actual construction costscapital expenditures may vary from the
35
estimates listed below because of factors such as changes in business
conditions, fluctuating rates of load growth, environmental requirements,
design changes and rework required by regulatory bodies, delays in obtaining
necessary federal and other regulatory approvals, construction delays, and cost
of capital, equipment, material and labor.labor, and decisions to construct, rather
than purchase, additional capacity.
CAPITAL EXPENDITURES
(DOLLARS IN THOUSANDS)
------------------------------------------------------------
GENERATING NUCLEAR GENERAL
YEAR PLANT(1) FUEL PLANT AFUDC(2) TOTAL
- -------------------------- ----------- ---------- ----------- ----------- ----------
1998...................... $ 15,303 $ 35,337 $ 1,940 $ 1,290 $ 53,870
1999...................... 13,147 33,301 1,875 1,800 50,123
2000...................... 10,916 39,780 1,931 1,800 54,427
--------- ---------- --------- --------- ----------
Total..................... $ 39,366 $ 108,418 $ 5,746 $ 4,890 $ 158,420
--------- ---------- --------- --------- ----------
--------- ---------- --------- --------- ----------
- --------------------------------------------------------------------------------
Capital Expenditures(1)
(dollars in thousands)
- --------------------------------------------------------------------------------
Generating Nuclear General
Year Plant(2) Fuel Plant AFUDC(3) Total
1997 $14,753 $ 44,271 $ 3,715 $1,882 $ 64,621
1998 14,142 33,148 3,827 1,804 52,921
1999 11,250 35,549 3,941 1,435 52,175
------- -------- ------- ------ --------
Total $40,145 $112,968 $11,483 $5,121 $169,717
======= ======== ======= ====== ========------------------------
(1) Not included in the above amounts are capital expenditures which became the
responsibility of GTC and GSOC as of the Closing of the Corporate Restructuring.
For the period 1997 through 1999, these expenditures total $135 million for GTC
and $1 million for GSOC.
(2) Consists of capital expenditures required for replacements and additions
to facilities in service and compliance with environmental regulations..
(3)regulations.
Oglethorpe currently does not have any new generation facilities under
construction.
(2) Allowance for funds used during construction of generation and general
plant facilities.
- --------------------------------------------------------------------------------
Currently, Oglethorpe does not have any new generation facilities under
construction, and management does not anticipate the need for construction of
any new capacity well into the future. (See "Results of Operations-Factors
Affecting Future Financial Performance" for a discussion of the long-term power
supply arrangements.)
Oglethorpe's investment in electric plant, net of depreciation, was
approximately $4.4$3.6 billion as of December 31, 1996.1997. The reduction in net
plant compared to December 31, 1996 was primarily due to the transfer of
assets to GTC and GSOC in connection with the Corporate Restructuring.
Expenditures for property additions during 19961997 amounted to $94$64 million of which
39
$91 million was providedand
were funded entirely from operations. These expenditures were primarily for
additions and replacements to generation facilities, and prior to the
Corporate Restructuring, also for transmission facilities.
In addition to the funds needed for capital expenditures, approximately
$271$268 million will be required over the next three years (1998-2000) for
current sinking fund requirements and maturities of long-term debt. Of this
amount, $216$201 million, or 80%75%, relates to the repayment of RUS and FFBFederal
Financing Bank ("FFB") debt. Excluded from these amounts is the amount of
debt assumed by GTC and GSOC as part of the Corporate Restructuring.
(See
"General-Corporate Restructuring" and Note 5 of Notes to Financial Statements
for further discussion regarding long-term debt maturities.)
Liquidity and Sources of CapitalLIQUIDITY AND SOURCES OF CAPITAL
In the past, Oglethorpe like most other G&Ts, has obtained the majority of its long-term
financing from RUS-guaranteed loans funded by FFB. Oglethorpe has also
obtained a substantial portion of its long-term financing requirements from
tax-exempt PCBs.pollution control revenue bonds ("PCBs").
In addition, Oglethorpe's operations have consistently provided a sizable
contribution to theits funding of capital requirements, such that internally
generated funds have provided interim funding or long-term capital for
nuclear fuel reloads, new generation, transmission and general plant
facilities, replacements and additions to existing facilities, and retirement
of long-term debt. Oglethorpe anticipates that it will meet its future
capital requirements through 19992000 primarily with funds generated from
operations and, if necessary, with short-term borrowings.
To meet short term cash needs and liquidity requirements, Oglethorpe had,
as of December 31, 1996,1997, (i) approximately $133$63 million in cash and temporary
cash investments, (ii) $91$97 million in other short term investments and (iii)
up to $330 million total available under the following credit facilities as follows:
- --------------------------------------------------------------------------------
Short-Term Credit Facilities Authorized Amount
- --------------------------------------------------------------------------------
Commercial Paper ..............................................$250,000,000
Committed lines($92
million of credit:
SunTrust Bank, Atlanta .......................................30,000,000
Uncommitted lines of credit:
National Rural Utilities Cooperative
Finance Corporation (CFC) ...............................50,000,000
- --------------------------------------------------------------------------------which was in use):
SHORT-TERM CREDIT FACILITIES AMOUNT
- ---------------------------------------------------------- --------------
Commercial Paper.......................................... $ 280,000,000
Committed lines of credit: SunTrust Bank.................. 30,000,000
Uncommitted lines of credit: CFC.......................... 50,000,000
Under its commercial paper program, Oglethorpe may issue commercial paper
not to exceed $250$280 million outstanding at any one time. The commercial paper
is backed 100% by committed lines of credit provided by a group of banks for
which SunTrust Bank Atlanta acts as agent. Proceeds from the issuance of commercial
paper may be used for working capital requirements and for general corporate
purposes. The maximum amount that can be outstanding
at any one time under the commercial paper program and the other lines of
credit totals $250$330 million due to certain restrictions contained in the
SunTrust Bank and CFCcommitted line of credit agreements.agreement. As of December 31, 1996, no1997,
$92 million of commercial paper was outstanding and
therewhich was no outstanding balance on any line of credit. In March 1997,
Oglethorpe issued approximately $92 million of commercial paper to fund the
defeasance of certain PCBs in conjunction with the Corporate Restructuring.
(See "Refinancing Transactions""REFINANCING TRANSACTIONS" below for a further discussion of this
defeasance.)
Refinancing TransactionsREFINANCING TRANSACTIONS
Over the past few years, Oglethorpe has implemented a program to reduce
its interest costs by refinancing or prepaying a sizable portion of its high-interest rate PCB and FFB
debt. Since the first transaction was completed in June 1992, Oglethorpe has
refinanced $1.2 billion in FFB debt, $1.1 billion in PCB debt and $1.2
billion in FFB debt and has prepaid another $105$225
million in FFBserial facility bond debt. IncludedRefinancings completed in these amounts are a January 19961997 include
the $225 million of serial facility bonds and the refinancing of $89$14.6
million of maturing PCB principal.
36
Oglethorpe has also prepaid $222 million of FFB debt, and
an October 1996 refinancingincluding 1997
prepayments of $16$92 million of PCB debt.FFB debt in connection with the Rocky Mountain
transactions described herein and a prepayment of $25 million of FFB debt in
connection with the Corporate Restructuring. (See Note 5 of Notes to
Financial Statements.)
The net result of the 1996these transactions washas been to reduce the average
interest rate on Oglethorpe's total long-term debt from 6.76%8.83% at December 31,
19951991 to 6.56%6.46% at December 31, 1996.1997.
Oglethorpe has implemented a program under which it is refinancing, on a
continued tax-exempt basis, the annual principal maturities of certain
tax-exempt serial bonds and tax-exempt term bonds under their mandatory
sinking fund schedules. The refinancings completed since therefinancing of these principal maturities allows
Oglethorpe to preserve a low-cost source of financing while conserving cash.
To date, Oglethorpe has refinanced approximately $53 million under this
program, began
resulted in total annual savings in 1996 of more than $90including $14.6 million in gross
interest expense1997, and $80has a plan in place to
refinance principal maturities relating to certain PCB issues through the
year 2002.
In connection with the Corporate Restructuring, Oglethorpe defeased
approximately $92 million in net interest expense (netprincipal amount of prepayment
penaltiesSeries 1992 PCBs. Initially
these bonds have been defeased with proceeds from the issuance of
approximately $92 million in commercial paper. Oglethorpe has a plan in place
to refinance the commercial paper issuance with a medium-term loan in 1998
and transaction costs)ultimately expects to refinance the loan with an issuance of PCBs at some
point in the future.
Also, in connection with the Corporate Restructuring, Oglethorpe
refinanced approximately $217 million in principal amount of Series 1992A
PCBs through the issuance of PCBs maturing on December 1, 1997 (the "Series
1997A Bonds"), which were in turn refinanced through the issuance of PCBs
maturing on May 28, 1998 (the "Series 1997B Bonds"). Oglethorpe's use of financial derivatives is for the purpose of mitigating
business risksOglethorpe has a plan in
place and is not used for speculative purposes. Derivatives have been
used onin the final stages of a very limited basis,debt offering to refund the Series
1997B Bonds in March 1998 through the issuance of the Series 1998A and Series
1998B PCBs (the "Series 1998 Bonds"), having a January 1, 2019 maturity. The
Series 1998 Bonds will be issued as discussed below,variable rate bonds and at December 31, 1996, any
credit risk for derivatives outstanding was not material.will be supported
by both a municipal bond insurance policy and bank liquidity agreements.
INTEREST RATE SWAP TRANSACTIONS
To refinance high-interest rate PCBs, Oglethorpe entered into two
interest rate swap transactions with a swap counterparty, AIG Financial
Products Corp. (AIG-FP)("AIG-FP"), which were designed to create a contractual fixed
rate of interest on $322 million of variable rate PCBs. These transactions
were entered into in early 1993 on a forward basis, pursuant to which
approximately $200 million of variable rate PCBs were issued on November 30,
1993 and approximately $122 million of variable rate PCBs were issued on
December 1, 1994. Oglethorpe is obligated to pay the variable interest rate
that accrues on these PCBs; however, the swap agreementsarrangements provide a
mechanism for Oglethorpe to achieve a contractual fixed rate which is lower
than Oglethorpe would have obtained had it issued fixed rate bonds.
Oglethorpe's use of financial derivatives is for the purpose of mitigating
business risks and is not for speculative purposes. Oglethorpe's use of
derivatives is currently limited to these two swap transactions.
In connection with GTC's assumption of liability on a portion of the PCBs
pursuant to the Corporate Restructuring, commencing April 1, 1997, GTC
assumed and agreed to pay 16.86% of any amounts due from Oglethorpe under
these swap arrangements, including the net swap payments and termination
payments described below. Should GTC fail to make such payments under the
assumption, Oglethorpe remains obligated for the full amount of such payments.
Under the swap agreements,arrangements, Oglethorpe is obligated to make periodic
payments to AIG-FP based on a notional principal amount equal to the
aggregate prin-
40
cipalprincipal amount of the bonds outstanding during the period and a
contractual fixed rate (Fixed Rate)("Fixed Rate"), and AIG-FP is obligated to make
periodic payments to Oglethorpe based on a notional principal amount equal to
the aggregate principal amount of the bonds outstanding during the period and
a variable rate equal to the variable rate of interest accruing on the bonds
during the period (Variable
Rate)("Variable Rate"). These payment obligations are netted,
such that if the Variable Rate is less than the Fixed Rate, Oglethorpe makes
a net payment to AIG-FP. Likewise, if the Variable Rate is higher than the
Fixed Rate, Oglethorpe receives a net payment from AIG-FP. Thus, although
changes in the Variable Rate affectsaffect whether Oglethorpe is obligated to make
payments to AIG-FP or is entitled to receive payments from AIG-FP, the
effective interest rate Oglethorpe pays with respect to the PCBs is not
affected by changes in interest rates. The Fixed Rate for the $200 million of
variable rate bonds issued in 1993 is 5.67% and the Fixed Rate for the $122
million of variable rate bonds issued in 1994 is 6.01%. For the three years
ended December 31, 1994, 1995, 1996 and 1996,1997, Oglethorpe has made in connection
with both interest rate swap arrangements combined net swap payments to
AIG-FP of $6.0 million, $6.4 million, and $8.2 million and $6.4 million, respectively.
37
The swap arrangements extend for the life of these PCBs.pcbs. If the swap
arrangements were to be terminated while the PCBs are still outstanding,
Oglethorpe or AIG-FP may owe the other party a termination payment depending
on a number of factors, including whether the fixed rate then being offered
under comparable swap arrangements is higher or lower than the Fixed Rate.
Under the terms of the swap agreements, AIG-FP has limited rights to
terminate the swaps only upon the occurrence of specified events of default
or a reduction in ratings on Oglethorpe's PCBs, without credit enhancement,
to a level that is below investment grade. Oglethorpe estimates that its
maximum aggregate liability (net of GTC's assumed percentage) for termination
payments under both swap arrangements had such payments been due on December
31, 19961997 would have been approximately $34$38 million. (For additional information about the swap arrangements, see Note 2 of
Notes to Financial Statements.)
In connection with these interest rate swap agreements,arrangements, Oglethorpe (but
not GTC) is obligated to maintain minimum liquidity in an amount equal to 25%
of the principal amount of the variable rate refunding bondsPCBs outstanding. ThisAs of December
31, 1997, the minimum liquidity requirement currently equalsequaled $81 million and will
decrease proportionately as such bonds are retired as a result of scheduled
sinking fund payments.
In connection with the Corporate Restructuring, Oglethorpe defeased
approximately $92 million in principal amount of Series 1992 PCBs. Initially
these bonds have been defeased through the issuance of commercial paper.
Oglethorpe may refinance the commercial paper issuance with medium-term notes at
some point in the future and expects to refinance the commercial paper or such
medium-term notes in late 2002 with PCBs.
Also, in connection with the Corporate Restructuring, Oglethorpe refinanced
approximately $217 million in principal amount of Series 1992A PCBs through the
issuance of refunding bonds having a nine-month maturity (the Series 1997A
bonds). Payment of principal and interest on the Series 1997A bonds are insured
by a municipal bond insurance policy issued by AMBAC Indemnity Corporation. In
connection with the AMBAC insurance, Oglethorpe is obligated to maintain
liquidity in an amount at least equal to the principal amount of the Series
1997A bonds outstanding plus interest accrued thereon. The maximum amount of
this liquidity requirement during the nine-month period equals approximately
$223 million. Oglethorpe currently expects to refinance the Series 1997A bonds
in the second half of 1997 with another series of PCBs.
Rocky Mountain TransactionsROCKY MOUNTAIN LEASE TRANSACTIONS
Oglethorpe completed, in two separate closings on December 31, 1996 and
January 3, 1997, lease transactions for its 74.61% undivided ownership
interest in Rocky Mountain. Under the terms of these transactions, Oglethorpe
leased the facility to three institutional investors for a termthe useful life of
71 years,the facility, who in turn leased it back to Oglethorpe for a term of 30
years. The transactions are
characterized as a sale and lease-back for income tax purposes, but not for
financial reporting purposes. Rocky Mountain is subject to the lien of the MasterMortgage Indenture. The
leasehold interest transferred is subject and subordinate to such lien.
Oglethorpe will continue to control and operate the plant during the
lease-backleaseback term, and it fully intends to repurchase tax ownership andwill exercise its fixed price purchase option at the end
of the leaseback period so as to retain all other rights of ownership with
respect to the plant at the end of the
lease-back period.if it is advantageous for Oglethorpe to exercise such
option. As a result of these transactions, Oglethorpe received net proceedspresent
value cash benefits of approximately $96 million whichthat is being recorded as a
deferred credit and will be recognized in income over the term of the
lease-back.leaseback. Approximately $91$92 million of the proceeds will bewas used for the early retirement of FFB
debt with the remaining $5and approximately $4 million beingwas used to pay alternative minimum taxes
on the transactions. The combination of the debt prepayment and the amortized
gain will result in an estimated $11 million in annual savings.savings through 2001,
and additional savings in declining amounts for the remaining 25 years of the
lease. In connection with these transactions, Oglethorpe is obligated to
maintain minimum liquidity of approximately $50 million.
41SCHERER UNIT NO. 1 LEASE TRANSACTION
Oglethorpe is considering a lease transaction for its 60% interest in
Scherer Unit No. 1. Should Oglethorpe decide to proceed with this
transaction, it could close in mid-to-late 1998. This transaction, if
completed, would provide a substantial up-front cash payment to Oglethorpe
which would be amortized over the term of the lease to reduce revenue
requirements from the Members. Oglethorpe expects that substantially all of
any such net cash benefit would be used to prepay a portion of FFB debt.
COMPETITION
The electric utility industry in the United States is undergoing
fundamental change and is becoming increasingly competitive. This change is
promoted by the Energy Policy Act of 1992, recently adopted and proposed
policies from the Federal Energy Regulatory Commission ("FERC") regarding
transmission access and pricing, state deregulation initiatives, increased
consolidation and mergers of electric utilities, the proliferation of power
marketers and independent power producers, surplus generation in certain
regional markets and other factors.
Several states are in the process of implementing varying forms of
"retail wheeling" (the transmission of power for a third party directly to a
retail customer) and most others are in the various stages of considering
retail competition. Proposed federal legislation could mandate retail
wheeling in every state. No legislation related to retail wheeling has yet
been enacted in Georgia, and, currently, no bill is pending in the Georgia
legislature which would amend the Georgia Territorial Electric Service Act
(the "Territorial Act") or otherwise affect the exclusive right of the
Members to supply power to their current service territories. In 1997, the
staff of the GPSC conducted a series of workshops to solicit views from the
various parties impacted by electric industry restructuring and to discuss
potential resolutions of these issues. The GPSC has issued a report
identifying electric industry restructuring issues, potential resolutions and
the views of the parties who participated in the workshops. The GPSC does not
have the authority under Georgia law to order retail wheeling or amend the
Territorial Act. Oglethorpe and the Members participated in the GPSC staff
workshops and are actively monitoring and studying legislative initiatives in
Congress and in other states to take advantage of the experiences of
cooperatives and other utilities in other states to protect their interests
in future legislative activities in Georgia.
Under current Georgia law, the Members general-
38
ly have the exclusive right to provide retail electric service in their
respective territories. Since 1973, however, Georgia has permitted limited
competition among electric utilities located in Georgia for sales of
electricity to certain large commercial or industrial customers. Pursuant to
the Territorial Act, the owner of any new facility may receive electric
service from the power supplier of its choice if the facility is located
outside of municipal limits and has a connected demand upon initial full
operation of 900 kilowatts or more. The Members, with Oglethorpe's support,
are actively engaged in competition with other retail electric suppliers for
these new commercial and industrial loads. While the competition for 900
kilowatt loads represents only limited competition in Georgia, this
competition has given Oglethorpe and the Members the opportunity to develop
resources and strategies to operate in an increasingly competitive market.
Over the past years, Oglethorpe has taken several steps to prepare for
and adapt to the fundamental changes that have occurred or are likely to
occur in the electric utility industry and to reduce the possibility of
incurring stranded costs. Most importantly, Oglethorpe completed the
Corporate Restructuring and divided itself into generation, transmission and
system operations companies in order to better serve its Members in a
deregulated and competitive environment. (See "General"Corporate
Restructuring" herein.) Since 1992, Oglethorpe also has pursued an interest
cost reduction program. As a result of this program, Oglethorpe has prepaid
$222 million of FFB debt and refinanced $1.2 billion of FFB debt, $1.1
billion of PCB debt and $225 million of serial facility bond debt. These
steps have reduced Oglethorpe's interest costs significantly. (See "Financial
Condition"Refinancing Transactions" herein.)
Oglethorpe and the Members also amended the Wholesale Power Contracts in
connection with the Corporate Restructuring. The Wholesale Power Contracts
provide that the Members are jointly and severally responsible for all costs
and expenses of all existing generation and purchased power resources of
Oglethorpe, as well as certain future power resources. Each Wholesale Power
Contract specifically provides that the Member must make payments whether or
not power has been delivered and whether or not a plant has been sold or is
otherwise unavailable. The formulary rate established by Oglethorpe in the
rate schedule to the Wholesale Power Contracts employs a rate methodology
under which all categories of costs are specifically separated as components
of a formula to determine Oglethorpe's revenue requirements. The rate
schedule also allocates to the Members the responsibility for all of
Oglethorpe's fixed costs. The Board of Directors may adjust Oglethorpe's
charges under the Wholesale Power Contracts. With respect to Oglethorpe, the
RUS has retained certain approval rights over the changes to the Wholesale
Power Contracts, including the rate schedule. (See "General-RATES AND
FINANCIAL COVERAGE REQUIREMENTS" herein.) As a result of these contractual
agreements, the Members ultimately are liable for the existing power
resources of Oglethorpe.
Oglethorpe has also entered into arrangements with power marketers to
obtain the value that can be brought by power marketers and to provide for
future load requirements without taking all the risk associated with
traditional suppliers. (See "Results of Operations-POWER MARKETER
ARRANGEMENTS" herein.)
Oglethorpe and the Members continue to consider and evaluate a wide array
of other potential actions to reduce costs and to maintain their
competitiveness in anticipation of future competition. These activities on
the part of Oglethorpe and the Members are in various stages of study or
preliminary consideration. Many Members are now providing or considering
proposals to provide non-traditional products and services such as
telecommunications and other services. Depending on the nature of future
competition in Georgia, there could be reasons for the Members to separate
their physical distribution business from their energy business, or otherwise
restructure their current businesses to operate effectively under retail
competition. Oglethorpe continues to seek to identify and evaluate
opportunities to reduce the cost of wholesale power to the Members.
Oglethorpe currently defers certain costs of providing services to the
Members pursuant to Statement of Financial Accounting Standards ("SFAS") No.
71, "Accounting for the Effects of Certain Types of Regulation." Note 1 of
Notes to Financial Statements sets forth the regulatory assets and
liabilities reflected on Oglethorpe's balance sheet as of December 31, 1997.
Regulatory assets represent probable future revenues to Oglethorpe associated
with certain costs that will be recovered from Members through the ratemaking
process. Regulatory liabilities represent probable future reduction in
revenues associated with amounts that are to be credited to Members through
the ratemaking process. (See "General-RATES AND FINANCIAL COVERAGE
REQUIREMENTS" herein.) In the event that Oglethorpe is no longer subject to
the provisions of SFAS No. 71, Oglethorpe would be required to write off
regulatory assets and liabilities. In addition, Oglethorpe would be required
to determine any
39
impairment to other assets, including plant, and write down the assets, if
impaired, to their fair value.
At this time, Oglethorpe cannot predict the outcome of the various
developments that may lead to increased competition in the electric utility
industry or the effect of such developments on Oglethorpe or the Members.
MISCELLANEOUS
DECOMMISSIONING COSTS
The staff of the Securities and Exchange Commission (the "Commission")
has questioned certain of the current accounting practices of the electric
utility industry regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating facilities in financial
statements of electric utilities. In response to these questions, the
Financial Accounting Standards Board has issued an Exposure Draft of a
proposed Statement on "Accounting for Certain Liabilities Related to Closure
or Removal of Long-Lived Assets". The proposed Statement would require the
recognition of the entire obligation for decommissioning at its present value
as a liability in the financial statements. Rate-regulated utilities would
also recognize an offsetting asset for differences in the timing of
recognition of the costs of decommissioning for financial reporting and
ratemaking purposes. Oglethorpe's management does not believe that this
proposed Statement would have an adverse effect on results of operations due
to its current and future ability to recover decommissioning costs through
rates.
Beginning in years 2014 through 2029, it is expected that Plant Hatch and
Plant Vogtle units will begin the decommissioning process. The expected
timing of payments for decommissioning costs will extend for a period of 9 to
14 years. Oglethorpe's management does not expect such payments to have an
adverse impact on liquidity or capital resources due to available amounts
that have been placed in reserves for this purpose.
INFLATION
As with utilities generally, inflation has the effect of increasing the
cost of Oglethorpe's operations and construction program. Operating and
construction costs have been less affected by inflation over the last few
years because rates of inflation have been relatively low.
YEAR 2000 ISSUE
Many information systems have been designed to function based on years
that begin with "19". Oglethorpe expects that by the year 2000 it will have
adapted its systems, to the extent it considers necessary, to process years
that begin with "20", and does not expect that the year 2000 issue will have
a material adverse effect on its financial condition or results of operations.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Annual Report on Form 10-K contains forward-looking statements,
including statements regarding, among other items, (i) anticipated trends in
Oglethorpe's business and (ii) Oglethorpe's future liquidity requirements and
capital resources. These forward-looking statements are based largely on
Oglethorpe's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond Oglethorpe's control. For factors
that could cause actual results to differ materially from those anticipated
by these forward-looking statements, see "Competition" herein and "CERTAIN
FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY" in Item 1. In light of these
risks and uncertainties, there can be no assurance that events anticipated by
the forward-looking statements contained in this Annual Report will in fact
transpire.
40
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index To Financial Statements
Page
----
Statements of Revenues and Expenses, For the Years Ended
December 31, 1996, 1995 and 1994...................................... 43
Statements of Patronage Capital, For the Years Ended
December 31, 1996, 1995 and 1994...................................... 43
Balance Sheets, As of December 31, 1996 and 1995......................... 44
Statements of Capitalization, As of December 31, 1996 and 1995........... 46
Statements of Cash Flows, For the Years Ended December 31, 1996,
1995 and 1994......................................................... 47
Notes to Financial Statements, including pro-forma financial
statements relating to the Corporate Restructuring.................... 48
Report of Management.....................................................INDEX TO FINANCIAL STATEMENTS
PAGE
-----
Statements of Revenues and Expenses,
For the Years Ended December 31, 1997, 1996 and 1995..................................................... 42
Statements of Patronage Capital,
For the Years Ended December 31, 1997, 1996 and 1995..................................................... 42
Balance Sheets, As of December 31, 1997 and 1996........................................................... 43
Statements of Capitalization, As of December 31, 1997 and 1996............................................. 45
Statements of Cash Flows, For the Years Ended
December 31, 1997, 1996 and 1995......................................................................... 46
Notes to Financial Statements.............................................................................. 47
Report of Management....................................................................................... 60
Report of Independent Public Accountants................................................................... 60
Reports of Independent Public Accountants................................ 60
42
41
STATEMENTS OF REVENUESREVENUE AND EXPENSES
For the years ended DecemberFOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 and 1994
- ------------------------------------------------------------------------------------------------------
(dollars in thousands)
1997 1996 1995
1994------------ ------------ ------------
Operating revenues (Note
OPERATING REVENUES (NOTE 1):
Sales to MembersMembers.......................................... $ 1,000,319 $ 1,023,094 $ 1,030,797
$ 930,875
Sales to non-Membersnon-Members...................................... 47,533 78,343 118,764
125,207
----------- ----------- -----------
Total operating revenues------------ ------------ ------------
TOTAL OPERATING REVENUES.................................... 1,047,852 1,101,437 1,149,561
1,056,082
----------- ----------- -----------
Operating expenses:
Fuel------------ ------------ ------------
OPERATING EXPENSES:
Fuel...................................................... 206,315 206,524 219,062
203,444
Production 129,178 133,858 132,723Production................................................ 157,932 150,787 155,549
Purchased power (Note 9).................................. 266,875 229,089 264,844
227,477
Power deliverydelivery............................................ 4,032 18,216 17,520
16,965
Sales, administrative and general 42,289 39,015 32,269
Depreciation and amortizationamortization............................. 126,730 163,130 139,024 131,056
Taxes other than income taxestaxes............................. 26,293 30,262 27,561 24,741
Income taxes (Note 3)..................................... -- -- --
----------- ----------- -----------
TotalOther operating expensesexpenses.................................. -- 20,680 17,324
------------ ------------ ------------
TOTAL OPERATING EXPENSES.................................... 788,177 818,688 840,884
768,675
----------- ----------- -----------
Operating margin------------ ------------ ------------
OPERATING MARGIN............................................ 259,675 282,749 308,677
287,407
----------- ----------- -----------
Other income (expense)------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest incomeincome........................................... 29,303 23,485 18,031 10,518
Amortization of deferred gains (Notes 1 and 4)............ 2,441 2,341 2,341 9,985
Amortization of net benefit of sale of income tax benefits
(Note 1)................................................ 11,195 8,054 8,043 8,102
Amortization of deferred margins (Note 1)................. -- 32,047 15,959 18,072
Deferred margins (Note 1)................................. -- -- (14,282) (9,287)
Allowance for equity funds used during construction
(Note 1)................................................ 157 238 1,715
2,907
OtherOther..................................................... 3,550 (831) 1,903
498
----------- ----------- -----------
Total other income------------ ------------ ------------
TOTAL OTHER INCOME.......................................... 46,646 65,334 33,710
40,795
----------- ----------- -----------
Interest charges:------------ ------------ ------------
INTEREST CHARGES:
Interest on long-term debt and capital leasesleases............. 261,290 308,013 317,968
329,738
Other interestinterest............................................ 13,845 10,006 12,979 3,856
Allowance for debt funds used during construction
(Note 1)................................................ (1,674) (2,576) (21,114) (36,113)
Amortization of debt discount and expenseexpense................. 10,455 10,888 10,296
7,639
----------- ----------- -----------
Net interest charges------------ ------------ ------------
NET INTEREST CHARGES........................................ 283,916 326,331 320,129
305,120
----------- ----------- -----------
Net margin------------ ------------ ------------
NET MARGIN.................................................. $ 22,405 $ 21,752 $ 22,258
$ 23,082
=========== =========== ===========------------ ------------ ------------
------------ ------------ ------------
STATEMENTS OF PATRONAGE CAPITAL
For the years ended DecemberFOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 and 1994
- ------------------------------------------------------------------------------------------------------
(dollars in thousands)
1997 1996 1995
1994---------- ---------- ----------
Patronage capital and membership fees - beginningfees--beginning of year (Note 1)............ $ 356,229 $ 338,891 $ 309,496
$ 289,982
Net marginmargin................................................................... 22,405 21,752 22,258
23,082Special patronage capital distribution (Note 11)............................. (48,863) -- -00
Change in unrealized gain (loss) on available-for-sale securities, net of
income taxes (Note 2)...................................................... 738 (4,414) 7,137
(3,568)
----------- ----------- --------------------- ---------- ----------
Patronage capital and membership fees-end of yearyear............................ $ 330,509 $ 356,229 $ 338,891
---------- ---------- ----------
---------- ---------- ----------
The accompanying notes are an integral part of these financial statements.
42
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(dollars in thousands)
ASSETS 1997 1996
------------ ------------
ELECTRIC PLANT (NOTES 1, 4 AND 6):
In service............................................................ $ 309,496
=========== =========== ===========4,910,067 $ 5,742,597
Less: Accumulated provision for depreciation.......................... (1,412,287) (1,488,272)
------------ ------------
3,497,780 4,254,325
Nuclear fuel, at amortized cost....................................... 90,424 86,722
Plant acquisition adjustments, at amortized cost...................... -- 4,153
Construction work in progress......................................... 13,578 31,181
------------ ------------
3,601,782 4,376,381
------------ ------------
INVESTMENTS AND FUNDS (NOTES 1 AND 2):
Decommissioning fund, at market....................................... 105,817 86,269
Deposit on Rocky Mountain transactions, at cost....................... 52,176 41,685
Bond, reserve and construction funds, at market....................... 33,161 53,955
Investment in associated organizations, at cost....................... 15,940 15,379
Other, at cost........................................................ 4,640 --
------------ ------------
211,734 197,288
------------ ------------
CURRENT ASSETS:
Cash and temporary cash investments, at cost (Note 1)................. 63,215 132,783
Other short-term investments, at market............................... 97,021 91,499
Receivables........................................................... 105,993 113,289
Inventories, at average cost (Note 1)................................. 65,528 89,825
Prepayments and other current assets.................................. 12,530 14,625
------------ ------------
344,287 442,021
------------ ------------
DEFERRED CHARGES:
Premium and loss on reacquired debt, being amortized (Note 5)......... 196,583 201,007
Deferred amortization of Scherer leasehold (Note 4)................... 96,303 90,717
Deferred debt expense, being amortized................................ 15,345 21,703
Other (Note 1)........................................................ 43,823 33,058
------------ ------------
352,054 346,485
------------ ------------
$ 4,509,857 $ 5,362,175
------------ ------------
------------ ------------
The accompanying notes are an integral part of these financial statements.
43
BALANCE SHEETS
December 31, 1996 and 1995
- --------------------------------------------------------------------------------------------
(dollars in thousands)
AssetsEQUITY AND LIABILITIES 1997 1996
1995------------ ------------
Electric plant (Notes 1, 4 and 6):
In service $ 5,742,597 $ 5,699,213
Less: Accumulated provision for depreciation (1,488,272) (1,362,431)
----------- -----------
4,254,325 4,336,782
Nuclear fuel, at amortized cost 86,722 94,013
Plant acquisition adjustments, at amortized cost 4,153 5,214
Construction work in progress 31,181 35,753
----------- -----------
4,376,381 4,471,762
----------- -----------
Investments and funds (Notes 1 and 2):
Bond, reserve and construction funds, at market 53,955 56,511
Decommissioning fund, at market 86,269 74,492
Investment in associated organizations, at cost 15,379 15,853
Deposit on Rocky Mountain transactions, at cost 41,685 --
----------- -----------
197,288 146,856
----------- -----------
Current assets:
Cash and temporary cash investments, at cost (Note 1) 132,783 201,151
Other short-term investments, at market 91,499 79,165
Receivables 113,289 99,559
Inventories, at average cost (Note 1) 89,825 82,949
Prepayments and other current assets 14,625 14,325
----------- -----------
442,021 477,149
----------- -----------
Deferred charges:
Premium and loss on reacquired debt, being amortized (Note 5) 201,007 200,794
Deferred amortization of Scherer leasehold (Note 4) 90,717 87,134
Deferred debt expense, being amortized 21,703 21,135
Other (Note 1) 33,058 33,666
----------- -----------
346,485 342,729
----------- -----------
$ 5,362,175 $ 5,438,496
=========== ===========
The accompanying notes are an integral part of these balance sheets.
44
- ------------------------------------------------------------------------------------------------
(dollars in thousands)
Equity and Liabilities 1996 1995
Capitalization (see accompanying statements)CAPITALIZATION (SEE ACCOMPANYING STATEMENTS):
Patronage capital and membership fees (Note 1)...................................... $ 330,509 $ 356,229
$ 338,891
Long-term debtdebt...................................................................... 3,258,046 4,052,470 4,207,320
Obligation under capital leases (Note 4)............................................ 288,638 293,682 296,478
Obligation under Rocky Mountain transactions (Note 1)............................... 52,176 41,685
--
---------- ---------------------- ------------
3,929,369 4,744,066
4,842,689
---------- ----------
Current liabilities:------------ ------------
CURRENT LIABILITIES:
Long-term debt and capital leases due within one yearyear............................... 89,556 159,622
89,675
Deferred margins to be refunded within one year (Note 1) -- 32,047
Accounts payablepayable.................................................................... 51,103 42,891
48,855
Accrued interestinterest.................................................................... 12,961 15,931 91,096
Accrued and withheld taxestaxes.......................................................... 517 4,940 1,785
Other current liabilitiesliabilities........................................................... 8,428 14,022
18,007
---------- ---------------------- ------------
162,565 237,406
281,465
---------- ----------
Deferred credits and other liabilities:------------ ------------
DEFERRED CREDITS AND OTHER LIABILITIES:
Gain on sale of plant, being amortized (Note 4)..................................... 60,756 58,527 60,868
Net benefit of sale of income tax benefits, being amortized (Note 1)................ 34,039 42,049 50,194
Net benefit of Rocky Mountain transactions, being amortized (Note 1)................ 92,375 70,701 --
Accumulated deferred income taxes (Note 3).......................................... 63,117 61,985 65,510
Decommissioning reserve (Note 1).................................................... 142,354 124,468
114,049
OtherOther............................................................................... 25,282 22,973
23,721
---------- ---------------------- ------------
417,923 380,703
314,342
---------- ----------
Commitments and Contingencies (Notes------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTES 4 9 and 11)
$5,362,175 $5,438,496
========== ==========AND 9)
$ 4,509,857 $ 5,362,175
------------ ------------
------------ ------------
4544
STATEMENTS OF CAPITALIZATION
DecemberDECEMBER 31, 1997 AND 1996 and 1995
- ----------------------------------------------------------------------------------------------------------
(dollars in
thousands)
1996 1995
Long-term debt (Note1997 1996
--------- ---------
LONG-TERM DEBT (NOTE 5):
Mortgage notes payable to the Federal Financing Bank (FFB) at
interest rates varying from 5.27% to 9.51%8.43% (average rate of 6.95%6.89%
at December 31, 1996)1997) due in quarterly installments through
2023 ............................................................. $ 3,172,851 $ 3,253,6362023............................................................. $2,456,300 $3,172,851
Mortgage notes payable to the Rural Utilities Service (RUS) at an
interest rate of 5% due in monthly installments through 2021 ..........2021..... 14,499 22,475 22,983
Mortgage notes issued in conjunction with the sale by public
authorities of pollution control revenue bonds:
obonds (PCBs):
- Series 1982
Serial bonds, 10.60%, due serially through 1997 ..........................1997................ -- 6,675
6,675
o- Series 1992
Term bonds, 7.50% to 8.00%, due 2003 to 2022 .............................2022................... -- 92,130
92,130
oSeries-Series 1992A
Adjustable tender bonds, 3.40% to 3.70%, due 2025 ........................ 216,9252025.............. -- 216,925
Serial bonds, 5.35% to 6.80%, due serially from 1998 through
2012 ........2012......................................................... 124,690* 124,690
129,760
o- Series 1993
Serial bonds, 3.55%3.75% to 5.25%, due serially from 19971998 through
2013 ........2013......................................................... 36,380* 37,255
38,110
o- Series 1993A
Adjustable tender bonds, 4.00%3.65%, due 2016 .................................2016....................... 199,690* 199,690
199,690
o- Series 1993B
Serial bonds, 3.75% to 5.05%, due serially from 1998 through
2008 ........2008......................................................... 126,935* 126,935
136,745
o- Series 1994
Serial bonds, 4.20%5.45% to 7.125%, due serially from 19971998 through
2015 .......2015......................................................... 10,035* 10,365 10,690
Term bonds, 7.15% due 2021 ...............................................2016 to 2021............................. 11,550* 11,550
11,550
o- Series 1994A
Adjustable tender bonds, 4.00%3.65%, due 2019 .................................2000 to 2019............... 122,740* 122,740
122,740
o- Series 1994B
Serial bonds, 5.45% to 6.45%, due serially from 1998 through
2005 ........2005......................................................... 11,140* 11,140
12,475- Series 1997A
Adjustable rate bonds, 3.90% to May 1998, due 2018............. 5,330* --
- Series 1997B
Term bonds, 3.80% due May 1998................................. 216,925* --
- Series 1997C
Adjustable rate bonds, 3.90% to May 1998, due 2018............. 9,305* --
Unsecured notes issued in conjunction with the sale by public
authorities of pollution control revenue bonds:
o Series 1995
Adjustable rate bonds, 3.70% to June 1996, due in 2015 ................... -- 21,670
o- Series 1996
Adjustable rate bonds, 3.88%3.90% to April 1997,May 1998, due in 2017 ..................2017.......... 37,885 --37,885
CoBank, ACB notes payable:
o- Headquarters note payable: fixed at 6.60%6.46% through April 1997,August 1998,
due in quarterly installments through January 1, 2009 ...................2009.......... 4,380 4,672
5,159
o- Transmission note payable: fixed at 6.50%6.78% through September 1997;February
1998; due in bimonthly installments through November 1, 2018 ...2018... 1,844 2,237
2,261
o- Transmission note payable: fixed at 6.50%6.61% through October 1997;February
1998; due in bimonthly installments through September 1,
2019 ......................2019........................................................... 7,060 8,556
8,637
----------- -----------Commercial Paper, 5.84% to 6.15%, due at various maturities through
February 1998.................................................... 91,992 --
--------- ---------
3,488,680 4,208,771
4,291,836*Less: Portion (16.86%) of PCBs assumed by Georgia Transmission
Corporation...................................................... (147,513) --
--------- ---------
3,341,167 4,208,771
--------- ---------
Less:Unamortized debt discount .............................................discount.................................... -- (766)
(832)
----------- -------------------- ---------
Total long-term debt, net ..................................................net.......................................... 3,341,167 4,208,005 4,291,004
Less:Long-term debt due within one year ....................................year............................ (83,121) (155,535)
(83,684)
----------- -----------
Total long-term debt, excluding amount due within one year ....................--------- ---------
TOTAL LONG-TERM DEBT, EXCLUDING AMOUNT DUE WITHIN ONE YEAR........... 3,258,046 4,052,470
4,207,320
Obligation under capital leases, long-term (NoteOBLIGATION UNDER CAPITAL LEASES, LONG-TERM (NOTE 4) ............................................. 288,638 293,682
296,478
Obligation under Rocky Mountain transactions, long-term (NoteOBLIGATION UNDER ROCKY MOUNTAIN TRANSACTIONS, LONG-TERM (NOTE 1) ................... 52,176 41,685
--
Patronage capital and membership fees (NotePATRONAGE CAPITAL AND MEMBERSHIP FEES (NOTE 1) ....................................................... 330,509 356,229
338,891
----------- -----------
Total capitalization .......................................................... $ 4,744,066 $ 4,842,689
=========== ===========--------- ---------
TOTAL CAPITALIZATION................................................. $3,929,369 $4,744,066
--------- ---------
--------- ---------
The accompanying notes are an integral part of these financial statements.
4645
STATEMENTS OF CASH FLOWS
For the years ended DecemberFOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 and 1994
(dollars in thousands)
(DOLLARS IN THOUSANDS)
1997 1996 1995
1994
Cash flows from operating activities:--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net margin ...................................................margin........................................................................ $ 22,405 $ 21,752 $ 22,258 $ 23,082
--------- --------- ---------
Adjustments to reconcile net margin to net cash provided by operating activities:
Depreciation and amortization ............................amortization................................................. 171,573 196,593 196,920 193,351
Net benefit of Rocky Mountain transactions ...............transactions.................................... 21,673 70,701 -- --
Interest on decommissioning reserve ......................reserve........................................... 12,113 7,167 9,951 1,291
Amortization of deferred gains ...........................gains................................................ (2,441) (2,341) (2,341) (9,985)
Deferred margins and amortization of deferred margins ....margins......................... -- (32,047) (1,677) (8,785)
Amortization of net benefit of sale of income tax benefitsbenefits.................... (11,195) (8,145) (8,043) (8,102)
Allowance for equity funds used during construction ......construction........................... (157) (238) (1,715)
(2,907)
Deferred income taxes ....................................taxes......................................................... 1,132 (3,525) -- --
Option payment on power swap agreement ...................agreement........................................ (2,042) (3,750) --
--
Other .................................................... (13)Other......................................................................... (3) (13) (13)
Change in net current assets, excluding long-term debt due within one year and
deferred margins and Vogtle surcharge to be refunded within one year:
Receivables ............................................Receivables................................................................... 7,297 (13,731) (10,686)
(18,055)
Inventories ............................................Inventories................................................................... 15,316 (6,875) 12,127 (8,608)
Prepayments and other current assets ...................assets.......................................... 2,025 (299) 532
(94)
Accounts payable .......................................payable.............................................................. 8,797 (5,964) (4,066)
(10,569)
Accrued interest .......................................interest.............................................................. (2,850) (75,165) (8,914) (8,692)
Accrued and withheld taxes .............................taxes.................................................... (4,423) 3,155 219
(7,835)
Other current liabilities ..............................liabilities..................................................... 2,903 (3,985) (169) (24,124)
--------- --------- ---------
Total adjustments ............................................adjustments................................................................. 219,718 121,538 182,125 86,873
--------- --------- ---------
Net cash provided by operating activities .......................NET CASH PROVIDED BY OPERATING ACTIVITIES........................................... 242,123 143,290 204,383 109,955
--------- --------- ---------
Cash flows from investing activities:CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions ...........................................additions.............................................................. (63,527) (93,704) (138,921) (206,345)
Activity in decommissioning fund - Purchases .................fund--Purchases..................................... (435,799) (327,233) (410,597)
(297,492)
- Proceeds ........................--Proceeds...................................... 419,930 316,542 399,077 293,990
Activity in bond, reserve and construction funds - Purchases .funds--Purchases..................... (35,646) (107,890) (27,762)
(498,052)
- Proceeds ...........--Proceeds...................... 57,035 109,230 39,566 540,712
Activity in other short-term investments - Purchases .........investments--Purchases............................. (5,380) (15,532) (76,180)
--
DecreaseIncrease (decrease) in investment in associated organizations ...........organizations................... (561) 474 1,518
1,752Net cash received in Corporate Restructuring (Note 11).......................... 24,540 -- --
--------- --------- ---------
Net cash used in investing activities ...........................NET CASH USED IN INVESTING ACTIVITIES............................................... (39,408) (118,113) (213,299) (165,435)
--------- --------- ---------
Cash flows from financing activities:CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds, net ..........................................net.............................................................. 5,671 2,243 132,874
523,518
Debt payments ...............................................payments................................................................... (229,242) (95,367) (108,481) (517,530)
Return of Vogtle surcharge ..................................surcharge...................................................... -- -- (3,320)
(2,031)
Other .......................................................Special patronage capital distribution.......................................... (48,863) -- --
Other......................................................................... 151 (421) (1,648) (2,008)
--------- --------- ---------
Net cash provided by (used in) financing activities .............NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES................................. (272,283) (93,545) 19,425 1,949
--------- --------- ---------
Net increase (decrease) in cash and temporary cash investments ..NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS...................... (69,568) (68,368) 10,509
(53,531)
Cash and temporary cash investments at beginning of year ........CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF YEAR............................ 132,783 201,151 190,642 244,173
--------- --------- ---------
Cash and temporary cash investments at end of year ..............CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR.................................. $ 63,215 $ 132,783 $ 201,151
$ 190,642
========= ========= =========
Cash paid for:--------- --------- ---------
--------- --------- ---------
CASH PAID FOR:
Interest (net of amounts capitalized) .................................................................. $ 277,294 $ 383,440 $ 308,797
$ 304,882
Income taxes ................................................ --taxes.................................................................... 830 -- --
The accompanying notes are an integral part of these financial statements.
4746
NOTES TO FINANCIAL STATEMENTS
For the years ended DecemberFOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
and 1994
1. Summary of significant accounting policies:
a. Business descriptionSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. BUSINESS DESCRIPTION
Oglethorpe Power Corporation (Oglethorpe) is an electric generation and
transmission (G&T) cooperativemembership
corporation incorporated in 1974 and headquartered in suburban Atlanta.
Oglethorpe provides wholesale electric service, on a not-for-profit basis, to 39
of Georgia's 42 Electric Membership Corporations (EMCs). These 39 electric
distribution cooperatives (Members) in turn distribute energy on a retail basis
to more than 2.6approximately 2.8 million people across two-thirds of the State. Oglethorpe
is the nation's largest G&Telectric cooperative in terms of operating revenues,
assets, kilowatt-hour sales and, through its Members, consumers served.
Oglethorpe supplies energy to the Members fromowns or leases undivided interests in thirteen generating units
totaling 3,335 megawatts (MW) of owned
or leased generating capacity and purchases the remainder from other power
suppliers.capacity. Oglethorpe also purchases a total of
1,250 MW of power pursuant to power purchase agreements. In addition Oglethorpe
has accesscontracted to over 16,000 milespurchase 435 MW of transmission line
through its ownership inpeaking capacity during the statewide Integrated Transmission System.summer of 1998.
Oglethorpe and the Members completed on March 11, 1997, a corporate
restructuring.restructuring (the Corporate Restructuring) in which Oglethorpe, effective April
1, 1997, was divided into three specialized operating companies to respond to
increasing competition and regulatory changes in the electric industry.
Oglethorpe's transmission business was sold to, and is now owned and operated by
Georgia Transmission Corporation (GTC), a Georgia electric membership
corporation formed for that purpose. Oglethorpe's system operations business was
sold to and is now owned and operated by, Georgia System Operations Corporation
(GSOC), a Georgia nonprofit corporation formed for that purpose. Oglethorpe
continues to own and operate its power supply business. For a discussion ofmore information
regarding the corporate restructuring,Corporate Restructuring, see Note 11.
b. Basis of accountingB. BASIS OF ACCOUNTING
Oglethorpe follows generally accepted accounting principles and the
practices prescribed in the Uniform System of Accounts of the Federal Energy
Regulatory Commission (FERC) as modified and adopted by the Rural Utilities
Service (RUS).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of December 31, 19961997 and 19951996
and the reported amounts of revenues and expenses for each of the three years
ending December 31, 1996.1997. Actual results could differ from those estimates.
c. Patronage capital and membership feesC. PATRONAGE CAPITAL AND MEMBERSHIP FEES
Oglethorpe is organized and operates as a cooperative. The Members paid a
total of $195 in membership fees. Patronage capital is the retained net margin
of Oglethorpe. As provided in the bylaws, any excess of revenue over
expenditures from operations is treated as advances of capital by the Members
and is allocated to each of them on the basis of their electricity purchases
from Oglethorpe.
Under Oglethorpe'sAny distributions of patronage capital retirements policy, margins are subject to be
returnedthe discretion of
the Board of Directors, subject to Indenture requirements. Under the Mortgage
Indenture, Oglethorpe is prohibited from making any distribution of patronage
capital to the Members 30 yearsif, at the time thereof or giving effect thereto, (i)
an event of default exists under the Mortgage Indenture, (ii) Oglethorpe's
equity as of the end of the immediately preceding fiscal quarter is less than
20% of Oglethorpe's total capitalization, or (iii) the aggregate amount
expended for distributions on or after the year indate on which theOglethorpe's equity
first reaches 20% of Oglethorpe's total capitalization exceeds 35% of
Oglethorpe's aggregate net margins are earned.
Pursuantearned after such date. This last
restriction, however will not apply if, after giving effect to such
policy, no patronage capital would be returned to the Members
until 2010, at which time the 1979 patronage capital would be returned.
Since the RUS Mortgage was replaced with the Master Indenture in connection
withdistribution, Oglethorpe's corporate restructuring, patronage distributions also will be
restricted by the termsequity as of the Master Indenture.
d. Margin policyend of the immediately preceding
fiscal quarter is not less than 30% of Oglethorpe's total capitalization.
D. MARGIN POLICY
Under Oglethorpe's prior RUS mortgage, Oglethorpe's margin policy was based
on the provision of a Times Interest Earned Ratio (TIER) established annually by
the Oglethorpe Board of Directors. Pursuant to this policy, the annual net
margin goal for 1996 1995 and 19941995 was the amount required to produce a TIER of 1.07.
The RUS Mortgage was replaced with the MasterMortgage Indenture in connection with
Oglethorpe's corporate restructuring. UnderFor 1997 under the MasterMortgage Indenture,
Oglethorpe is required to produce a Margins for Interest (MFI) Ratio of at least
1.10.
The Oglethorpe Board of Directors adopted resolutions annually requiring
that Oglethorpe's net margins for the years 1985 through 1995 in excess of its
47
annual margin goals be deferred and used to mitigate rate increases associated
with Plant Vogtle and Rocky Mountain. In addition, during 1986 and 1987,
Oglethorpe's wholesale electric rate to its Members provided for a one mill per
kilowatt-hour charge (Vogtle Surcharge), also to be used to mitigate the effect
of Plant Vogtle on rates.
Pursuant to rate actions by Oglethorpe's Board of Directors, specified
amounts of deferred margins and Vogtle Surcharge were returned in 1989 through
1995 and all remaining amounts were returned in 1996.
A summary of deferred
margins and Vogtle Surcharge as of December 31, 1996 and 1995 is as follows:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- --------------------------------------------------------------------------------
Deferred margins
1985-92 $ 165,552 $ 165,552
1993 5,083 5,083
1994 9,287 9,287
1995 14,282 14,282
--------- ---------
194,204 194,204
Vogtle Surcharge
1986-87 36,613 36,613
--------- ---------
Subtotal 230,817 230,817
Less: Amounts returned in:
1989-93 (159,388) (159,388)
1994 (20,103) (20,103)
1995 (19,279) (19,279)
1996 (32,047) --
--------- ---------
-- 32,047
Less: Current portion -- (32,047)
--------- ---------
Long-term balance $ -- $ --
========= =========
- --------------------------------------------------------------------------------
48
e. Operating revenuesE. OPERATING REVENUES
Operating revenues consist primarily of electricity sales pursuant to
long-term wholesale power contracts which Oglethorpe maintains with each of its
Members. These wholesale power contracts obligate each Member to pay Oglethorpe
for capacity and energy furnished in accordance with rates established by
Oglethorpe. Energy furnished is determined based on meter readings which are
conducted at the end of each month. Actual energy costs are compared, on a
monthly basis, to the billed energy costs, and an adjustment to revenues is made
such that energy revenues are equal to actual energy costs.
Revenues from Cobb EMC and Jackson EMC, two of Oglethorpe's Members,
accounted for 12.9% and 11.8% in 1997, 12.5% and 11.2% in 1996, and 11.3% and
10.4% in 1995, and 11.0% and
10.5% in 1994, respectively, of Oglethorpe's total operating revenues.
f. Nuclear fuel costF. NUCLEAR FUEL COST
The cost of nuclear fuel, including a provision for the disposal of spent
fuel, is being amortized to fuel expense based on usage. The total nuclear fuel
expense for 1997, 1996 1995 and 19941995 amounted to $47,123,000, $49,298,000 $54,588,000 and
$55,229,000,$54,588,000, respectively.
Contracts with the U.S. Department of Energy (DOE) have been executed to
provide for the permanent disposal of spent nuclear fuel for the life of Plant
Hatch and Plant Vogtle. The services to be provided by DOE were scheduled to
begin in 1998. However,1998; however, the actual yearDOE has stated that these servicespermanent nuclear waste storage
facilities are not available, and it is uncertain when they will begin is
uncertain.be available.
The Plant Hatch spent fuel storage is expected to be sufficient into 2003. The
Plant Vogtle spent fuel storage is expected to be sufficient into 2008.
Activities for adding dry castcask storage capacity at Plant Hatch by as early
as 19992000 are in
progress.
The Energy Policy Act of 1992 required that utilities with nuclear plants be
assessed over a 15-year period an amount which will be used by DOE for the
decon-taminationdecontamination and decommissioning of its nuclear fuel enrichment facilities.
The amount of each utility's assessment was based on its past purchases of
nuclear fuel enrichment services from DOE. Based on its ownership in Plants
Hatch and Vogtle, Oglethorpe has a remaining nuclear fuel asset of approximately
$14,900,000,$13,500,000, which is being amortized to nuclear fuel expense over the next 1110
years. Oglethorpe has also recorded an obligation to DOE which approximated
$11,800,000$10,600,000 at December 31, 1996.
g. Nuclear decommissioning1997.
G. NUCLEAR DECOMMISSIONING
Oglethorpe's portion of the costs of decommissioning co-owned nuclear
facilities is estimated as follows:
- --------------------------------------------------------------------------------
(dollars in thousands) Hatch Hatch Vogtle Vogtle
Unit No. 1 Unit No. 2 Unit No. 1 Unit No. 2
- --------------------------------------------------------------------------------
Year of site study 1994 1994 1994 1994
Expected start date
of decommissioning 2014 2018 2027 2029
Decommissioning cost:
Discounted $ 92,000 $ 109,000 $ 82,000 $ 106,000
Undiscounted
HATCH HATCH VOGTLE VOGTLE
(DOLLARS IN THOUSANDS) UNIT NO. 1 UNIT NO. 2 UNIT NO. 1 UNIT NO. 2
- ----------------------------------------------------------------- ----------- ---------- ----------- ----------
Year of site study............................................... 1994 1994 1994 1994
Expected start date of decommissioning........................... 2014 2018 2027 2029
Decommissioning cost:
Discounted....................................................... $ 92,000 $ 109,000 $ 82,000 $ 106,000
Undiscounted..................................................... 157,000 207,000 198,000 271,000
- --------------------------------------------------------------------------------
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 regulatory requirements, changes in technology, and
changes in costs of labor, materials and equipment.
The annual provision for decommissioning for 1997, 1996 1995 and 19941995 was
$2,597,000, $4,156,000$2,597,000 and $5,948,000,$4,156,000, respectively. In developing the amount of
the annual provision for 19961997 and 1997,1998, the escalation rate was assumed to be
2.72% and return on trust assets was assumed to be 8%. Oglethorpe accounts for
this provision for decommissioning as depreciation expense with an offsetting
credit to a decommissioning reserve. Oglethorpe's management is of the opinion
that any changes in cost estimates of decommissioning willcan be fully recovered in future
rates.
In compliance with a Nuclear Regulatory Commission (NRC) regulation,
Oglethorpe maintains an external trust fund to provide for a portion of the cost
of decommissioning its nuclear facilities. The NRC regulation requires funding
levels based on average expected cost to decommission only the radioactive
portions of a typical nuclear facility. Oglethorpe's decommissioning reserve
reflects its obligation to decommission both the radioactive and most of the
non-radioactive portions of its nuclear facilities.
Realized investment earnings from the external trust fund, while increasing
the fund and interest income, also are applied to the decommissioning
48
reserve and charged to interest expense. Interest income earned from the
external trust fund is offset by the recognition of interest expense such
that there is no effect on Oglethorpe's net margin.
49
h. DepreciationH. DEPRECIATION
Depreciation is computed on additions when they are placed in service using
the composite straight-line method. Annual depreciation rates in effect in 1997,
1996 1995 and 19941995 were as follows:
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Steam production 2.13% 2.13% 2.47%
Nuclear production 2.73% 2.78% 2.84%
Hydro production 2.00% 2.00% 2.00%
Other production 3.75% 3.75% 2.42%
Transmission 2.75% 2.75% 2.75%
Distribution 2.88% 2.88% 2.88%
General
1997 1996 1995
----------- ----------- -----------
Steam production......................................................... 2.13% 2.13% 2.13%
Nuclear production....................................................... 2.74% 2.73% 2.78%
Hydro production......................................................... 2.00% 2.00% 2.00%
Other production......................................................... 3.75% 3.75% 3.75%
Transmission............................................................. 2.75% 2.75% 2.75%
Distribution............................................................. 2.88% 2.88% 2.88%
General.................................................................. 2.00-20.00% 2.00-20.00% 2.00-20.00%
- --------------------------------------------------------------------------------
i. Electric plant
I. ELECTRIC PLANT
Electric plant is stated at original cost, which is the cost of the plant
when first dedicated to public service, plus the cost of any subsequent
additions. Cost includes an allowance for the cost of equity and debt funds used
during construction. The cost of equity and debt funds is calculated at the
embedded cost of all such funds. The plant acquisition adjustments represent the
excess of the cost of the plant to Oglethorpe over the original cost, less
accumulated depreciation at the time of acquisition, and are being amortized
over a ten-year period.
Maintenance and repairs of property and replacements and renewals of items
determined to be less than units of property are charged to expense.
Replacements and renewals of items considered to be units of property are
charged to the plant accounts. At the time properties are disposed of, the
original cost, plus cost of removal, less salvage of such property, is charged
to the accumulated provision for depreciation.
j. Bond, reserve and construction funds:J. BOND, RESERVE AND CONSTRUCTION FUNDS:
Bond, reserve and construction funds for pollution control revenue bonds
(PCBs) are maintained as required by Oglethorpe's bond agreements. Bond funds
serve as payment clearing accounts, reserve funds maintain amounts equal to the
maximum annual debt service of each bond issue and construction funds hold bond
proceeds for which construction expenditures have not yet been made. As of
December 31, 19961997 and 1995,1996, substantially all of the funds were invested in U.S.
Government securities.
k. Cash and temporary cash investmentsK. CASH AND TEMPORARY CASH INVESTMENTS
Oglethorpe considers all temporary cash investments purchased with a
maturity of three months or less to be cash equivalents. Temporary cash
investments with maturities of more than three months are classified as other
short-term investments.
At December 31, 1997, $12,167,000 was restricted by PCBs trust indentures
and was utilized in January 1998 for payment of principal on certain PCBs. Of
the amount reported as cash and temporary cash investments at December 31, 1996,
approximately $65,600,000 iswas restricted by RUS and was utilized by Oglethorpe
for the purpose of prepaying certain Federal Financing Bank (FFB) long-term debt
on or beforein March 31, 1997.
l. InventoriesL. INVENTORIES
Oglethorpe maintains inventories of fossil fuels for its generation plant
and spare parts for certain of its generation and transmission plant. These
inventories are stated at weighted average cost on the accompanying balance
sheets.
At December 31, 19961997 and 1995,1996, fossil fuels inventories were $23,062,000$7,288,000 and
$12,296,000,$23,062,000, respectively. Inventories for spare parts at December 31, 1997 and
1996 were $58,240,000 and 1995 were $66,763,000, and $70,653,000, respectively.
m. Deferred chargesM. DEFERRED CHARGES
Prior to 1996, Oglethorpe expensed nuclear refueling outage costs as
incurred. In 1996, Oglethorpe began accounting for these costs on a
normalized basis. Under this method of accounting, refueling outage costs are
deferred and subsequently amortized to expense over the 18-month operating
cycle of each unit. Deferred nuclear outage costs at December 31, 1997 and
1996 were $12,961,000.$19,802,000 and $12,961,000, respectively.
As a result of the availability of long-term capacity purchases at similar
costs but with reduced risks to Oglethorpe and its Members, Oglethorpe
determined that the Smarr Combustion Turbine Project was not needed within the
present planning horizon. Therefore, Oglethorpe is amortizing the accumulated
project costs in excess of the current value of the land purchased. The
remaining project costs of $6,445,000$5,947,000 are reflected as deferred charges on the
accompanying balance sheets. In 1995, Oglethorpe's Board of Directors authorized
that these project costs be amortized and fully recovered through future rates
over a period of 15 years beginning in that year.
n. Deferred credits
In October 1989, Oglethorpe sold to Georgia Power Company (GPC) a 24.45%
ownership interest in the Plant Scherer common facilities as required under the
Plant Scherer Purchase and Ownership Agreement to adjust its ownership in the
Scherer units. Oglethorpe realized a gain on the sale of $50,600,000. RUS and
Oglethorpe's Board of Directors approved a plan whereby this gain was deferred
and was amortized over 60 months ending in September 1994.49
N. DEFERRED CREDITS
In April 1982, Oglethorpe sold to three purchasers certain of the income tax
benefits associated with Scherer Unit No.1 and related common facilities
pursuant to the safe harbor lease provisions of the Economic Recovery Tax Act of
1981. Oglethorpe received a total of approximately $110,000,000 from the safe
harbor lease transactions. Oglethorpe accounts for the net benefits as a
deferred credit and 50
is amortizing the amount over the 20-year term of the
leases.
In December 1996 and January 1997, Oglethorpe entered into long-term lease
transactions for a
portion of its 74.6% undivided ownership interest in the Rocky Mountain
Pumped Storage Hydroelectric Project (Rocky Mountain). The lease transactions
are characterized as a sale and lease-back for income tax purposes, but not for
financial reporting purposes. As a result of these leases, Oglethorpe recorded a
net benefit of $70,701,000$95,560,000 which was deferred and will beis being amortized to income
over the 30-year lease-back period. The lease transactions initially increased
Oglethorpe's Capitalization and Investments and funds by $41,685,000,$57,495,000,
respectively (see Note 2 where discussed further).
In January 1997, Oglethorpe completed long-term lease transactions for the
remainder of its interest in Rocky Mountain resulting in a net benefit of
$24,859,000. The net benefit will be deferred and amortized to income over the
30-year term of the leases. Oglethorpe will increase Capitalization and
Investments and funds by $15,810,000, respectively.
o. Regulatory assets and liabilitiesO. REGULATORY ASSETS AND LIABILITIES
Oglethorpe is subject to the provisions of Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of Regulation."
Regulatory assets represent probable future revenues to Oglethorpe associated
with certain costs which will be recovered from Members through the rate-making
process. Regulatory liabilities represent probable future reduction in revenues
associated with amounts that are to be credited to Members through the
rate-making process. The following regulatory assets and liabilities were
reflected on the accompanying balance sheets as of December 31, 19961997 and 1995:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- --------------------------------------------------------------------------------
Premium and loss on reacquired debt $ 201,007 $ 200,794
Deferred amortization of Scherer leasehold 90,717 87,134
Other regulatory assets 29,308 33,666
Net benefit of sale of income tax benefits (42,049) (50,194)
Net benefit of Rocky Mountain transactions (70,701) --
Deferred margins -- (32,047)
Energy costs -- 4,237
--------- ---------
$ 208,282 $ 243,590
========= =========
- --------------------------------------------------------------------------------1996:
(DOLLARS IN THOUSANDS) 1997 1996
- ------------------------------------------------------------------------------------------ ---------- ----------
Premium and loss on reacquired debt....................................................... $ 196,583 $ 201,007
Deferred amortization of Scherer leasehold................................................ 96,303 90,717
Other regulatory assets................................................................... 38,318 29,934
Net benefit of sale of income tax benefits................................................ (34,039) (42,049)
Net benefit of Rocky Mountain transactions................................................ (92,375) (70,701)
---------- ----------
$ 204,790 $ 208,908
---------- ----------
---------- ----------
In the event that Oglethorpe is no longer subject to the provisions of
Statement No. 71, Oglethorpe would be required to write off related regulatory
assets and liabilities. In addition, Oglethorpe would be required to determine
any impairment to other assets, including plant, and write down the assets, if
impaired, to their fair value.
p. PresentationP. PRESENTATION
Certain prior year amounts have been reclassified to conform with current
year presentation.
50
2. Fair value of financial instruments:FAIR VALUE OF FINANCIAL INSTRUMENTS:
A detail of the estimated fair values of Oglethorpe's financial instruments
as of December 31, 19961997 and 19951996 is as follows:
1997 1996
-------------------------- --------------------------
FAIR FAIR
(DOLLARS IN THOUSANDS) COST VALUE COST VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
Fair Fair
Cost Value Cost Value
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ------------ ------------ ------------ ------------
Cash and temporary cash investments:CASH AND TEMPORARY
CASH INVESTMENTS:
Commercial paperpaper....................................... $ 62,772 $ 62,772 $ 52,700 $ 52,700
$ 179,055 $ 179,055
Certificates of depositdeposit................................ -- -- 10,000 10,000 20,000 20,000
Cash and money market securitiessecurities....................... 443 443 70,083 70,083
2,096 2,096
---------- ---------- ---------- ----------
Total------------ ------------ ------------ ------------
TOTAL.................................................... $ 63,215 $ 63,215 $ 132,783 $ 132,783
$ 201,151 $ 201,151
========== ========== ========== ==========
Other short term
investments:------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
OTHER SHORT TERM INVESTMENTS:
Commingled investment fundfund............................. $ 97,092 $ 97,021 $ 91,712 $ 91,499
------------ ------------ ------------ ------------
TOTAL.................................................... $ 76,18097,092 $ 79,165
---------- ---------- ---------- ----------
Total97,021 $ 91,712 $ 91,499
$ 76,180 $ 79,165
========== ========== ========== ==========
Bond, reserve and construction funds:------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
BOND, RESERVE AND CONSTRUCTION FUNDS:
U. S. Government securitiessecurities............................ $ 20,542 $ 20,505 $ 36,505 $ 35,873
$ 49,348 $ 49,932
Repurchase agreementsagreements.................................. 12,655 12,656 18,082 18,082
6,579 6,579
---------- ---------- ---------- ----------
Total------------ ------------ ------------ ------------
TOTAL.................................................... $ 33,197 $ 33,161 $ 54,587 $ 53,955
$ 55,927 $ 56,511
========== ========== ========== ==========
Decommissioning fund:------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
DECOMMISSIONING FUND:
U. S. Government securitiessecurities............................ $ 21,070 $ 21,668 $ 24,034 $ 23,950
$ 23,087 $ 23,568
ForiegnForeign government securitiessecurities.......................... 641 695 1,228 1,278
Commercial paper....................................... 5,507 5,506 -- --
Commercial paperCorporate bonds........................................ 12,537 12,967 11,953 11,868
Equity securities...................................... 45,044 51,252 30,339 34,073
Asset-backed securities................................ 9,202 9,237 3,103 3,125
Other bonds............................................ -- -- 4,036 4,036
Corporate bonds 11,953 11,868 5,875 6,073
Equity securities 30,339 34,073 19,514 21,271
Asset-backed securities 3,103 3,125 12,484 12,614
Other bonds 5,445 5,453 -- --
Cash and money market securitiessecurities....................... 4,492 4,492 6,522 6,522
6,937 6,930
---------- ---------- ---------- ----------
Total------------ ------------ ------------ ------------
TOTAL.................................................... $ 98,493 $ 105,817 $ 82,624 $ 86,269
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
LONG-TERM DEBT........................................... $ 71,9333,258,046 $ 74,492
========== ========== ========== ==========
Long-term debt $4,118,117 $4,228,317 $4,207,320 $4,506,925
========== ========== ========== ==========
Interest rate swap3,497,842 $ 4,052,470 $ 4,162,670
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
INTEREST RATE SWAP (UNREALIZED LOSS)..................... $ -- $ 33,938(38,349) $ -- $ 52,089
========== ========== ========== ==========
- ------------------------------------------------------------------------------------------------------------------------------------(33,938)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
The contractual maturities of debt securities available for sale at December
31, 19961997 and 1995,1996, regardless of their balance sheet classification, are as
follows:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
Fair Fair
Cost Value Cost Value
- --------------------------------------------------------------------------------
Due within one year $33,944 $33,819 $21,050 $21,300
Due after one year through five years 17,439 17,266 37,172 37,452
Due after five years through ten years 27,912 27,302 27,628 27,966
Due after ten years 15,610 15,789 11,523 12,049
------- ------- ------- -------
$94,905 $94,176 $97,373 $98,767
======= ======= ======= =======
- --------------------------------------------------------------------------------
1997 1996
-------------------- --------------------
FAIR FAIR
(DOLLARS IN THOUSANDS) COST VALUE COST VALUE
- ---------------------------------------------------------------------- --------- --------- --------- ---------
Due within one year................................................... $ 14,147 $ 14,158 $ 33,944 $ 33,819
Due after one year through five years................................. 18,798 18,825 17,439 17,266
Due after five years through ten years................................ 22,677 22,781 27,912 27,302
Due after ten years................................................... 21,025 21,964 15,610 15,789
--------- --------- --------- ---------
$ 76,647 $ 77,728 $ 94,905 $ 94,176
--------- --------- --------- ---------
--------- --------- --------- ---------
Oglethorpe uses the methods and assumptions described below to estimate the
fair value of each class of financial instruments. For cash and temporary cash
investments, the carrying amount approximates fair value because of the
short-term maturity of those 51
instruments. The fair value of Oglethorpe's
long-term debt and the swap arrangements is estimated based on the quoted market
prices for the same or similar issues or on the current rates offered to
Oglethorpe for debt of similar maturities.
A portion (16.86%) of the interest rate swap arrangements was assumed by
GTC as part of the Corporate Restructuring. Under the interest rate swap
arrangements, Oglethorpe makes payments to the counterparty based on the
notional principal at a contractually fixed rate and the counterparty makes
payments to Oglethorpe based on the notional principal at the existing variable
rate of the refunding bonds. The differential to be paid or received is accrued
as interest rates change and is recognized as an adjustment to interest expense.
Oglethorpe entered into the swap arrangements for the purpose of securing a
fixed rate lower than otherwise would have been available to Oglethorpe had it
issued fixed rate bonds. For the Series 1993A notes, the notional principal was
$199,690,000 (includes the portion assumed by GTC) and the fixed swap rate is
5.67% (the variable rate at December 31, 1997 and 1996 was 3.65% and 1995 was 4.00% and 5.15%4. %
respectively). With respect to the Series 1994A notes, the notional principal
was $122,740,000 (includes the portion assumed by GTC) and the fixed swap rate
is 6.01% (the variable rate at December 31, 1997 and 1996 was 3.65% and 1995 was 4.00% and 5.05%,
respectively). The notional principal amount is used to measure the amount of
the swap payments and does not represent additional principal due to the
counterparty. The swap arrangements extend for the life of the refunding bonds,
with reductions in the outstanding principal amounts of the refunding bonds
causing corresponding reductions in the notional amounts of the swap payments.
TheOglethorpe's portion of the estimated fair value of Oglethorpe's liability
under the swap arrangements at
December 31, 1997 and 1996 was an unrealized loss of $38,349,000 and
1995 was $33,938,000, and
$52,089,000, respectively. This amount representsrespectively, representing the payment Oglethorpe would pay if the
swap arrangements were terminated. Oglethorpe may be exposed to losses in the
event of nonperformance of the counterparty, but does not anticipate such
nonperformance.
Oglethorpe adopted51
Under Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," as of
January 1, 1994. Under this Statement, investment securities held
by Oglethorpe are classified as either available-for-sale or held-to-maturity.
Available-for-sale securities are carried at market value with unrealized gains
and losses, net of any tax effect, added to or deducted from patronage capital.
Unrealized gains and losses from investment securities held in the
decommissioning fund, which are also classified as available-for-sale, are
directly added to or deducted from the decommissioning reserve. Held-to-maturity
securities are carried at cost. All realized and unrealized gains and losses are
determined using the specific identification method. Gross unrealized gains and
losses at December 31, 19961997 were $7,785,000$12,800,000 and $4,985,000,$5,583,000, respectively. Gross
unrealized gains and losses at December 31, 19951996 were $6,497,000$7,785,000 and $368,000,$4,985,000
respectively. For 19961997 and 1995,1996, proceeds from sales of available-for-sale
securities totaled $476,965,000 and $425,772,000, respectively. Gross realized
gains and $438,643,000,losses from the 1997 sales were $11,415,000 and $3,010,000,
respectively. Gross realized gains and losses from the 1996 sales were
$6,410,000 and $3,671,000,respectively. Gross realized gains and losses from the 1995 sales
were $5,098,000 and $1,308,000, respectively.
Investments in associated organizations were as follows at December 31, 19961997
and 1995:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- --------------------------------------------------------------------------------
National Rural Utilities
Cooperative Finance Corp. (CFC) $13,476 $13,476
CoBank, ACB 1,664 2,132
Other 239 245
------- -------
Total $15,379 $15,853
======= =======
- --------------------------------------------------------------------------------1996:
(DOLLARS IN THOUSANDS) 1997 1996
- -------------------------------------------------------------------------------------------- --------- ---------
National Rural Utilities Cooperative Finance Corp. (CFC).................................... $ 13,476 $ 13,476
CoBank, ACB................................................................................. 1,955 1,664
Other....................................................................................... 509 239
--------- ---------
Total....................................................................................... $ 15,940 $ 15,379
--------- ---------
--------- ---------
The investments in these associated organizations are similar to
compensating bank balances in that they are required in order to maintain
current financing arrangements. Accordingly, there is no market for these
investments.
The $41,685,000 deposit on the Rocky Mountain transactions (see Note 1 where discussed) as of December 31, 1996
is invested in a guaranteed investment contract which will be held to maturity
(the end of the 30-year lease-back period). At maturity, Oglethorpe fully
intends to use the deposit to repurchase tax ownership and to retain all other
rights of ownership with respect to the plant. The deposit is carried at cost.
In addition, from the proceeds of the Rocky Mountain transactions,
Oglethorpe paid $460,769,000$640,611,000 to a financial institution. In return, this
financial institution undertook to pay a portion of Oglethorpe's lease
obligations. Both Oglethorpe's interest in this payment undertaking agreement
and the corresponding lease obligations have been extinguished for financial
reporting purposes.
3. Income taxesINCOME TAXES
Oglethorpe is a not-for-profit membership corporation subject to Federal and
state income taxes. As a taxable electric cooperative, Oglethorpe has annually
allocated its income and deductions between Member and non-Member activities.
Any Member taxable income has been offset with a patronage exclusion and member
loss carryforwards.
Oglethorpe accounts for its income taxes pursuant to Statement of Financial
Accounting Standards (SFAS) No. 109. SFAS No. 109 requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
52
A detail of the provision for income taxes in 1997, 1996 1995 and 19941995 is shown
as follows:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Current
Federal $ 3,525 $ -- $ --
State -- -- --
------- ------- -------
3,525 -- --
------- ------- -------
Deferred
Federal (3,525) -- --
State -- -- --
------- ------- -------
(3,525) -- --
------- ------- -------
Income taxes charged
to operations $ -- $ -- $ --
======= ======= =======
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) 1997 1996 1995
- --------------------------------------------------------------------------------------- --------- --------- -------
Current
Federal.............................................................................. $ (1,132) $ 3,525 $ --
State................................................................................ -- -- --
--------- --------- -------
(1,132) 3,525 --
--------- --------- -------
Deferred
Federal.............................................................................. 1,132 (3,525) --
State................................................................................ -- -- --
--------- --------- --------
1,132 (3,525) --
--------- --------- --------
Income taxes charged to operations..................................................... $ -- $ -- $ --
--------- --------- --------
--------- --------- --------
The difference between the statutory federal income tax rate on income
before income taxes and Oglethorpe's effective income tax rate is summarized as
follows:
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Statutory federal income tax rate 35.0% 35.0% 35.0%
Patronage exclusion (35.7%) (35.6%) (35.4%)
Other 0.7% 0.6% 0.4%
------ ------ ------
Effective income tax rate 0.0% 0.0% 0.0%
====== ====== ======
- --------------------------------------------------------------------------------
1997 1996 1995
--------- --------- ---------
Statutory federal income tax rate............... 35.0% 35.0% 35.0%
Patronage exclusion............................. (35.4)% (35.7%) (35.6%)
Other........................................... 0.4% 0.7% 0.6%
--------- --------- ---------
Effective income tax rate....................... 0.0% 0.0% 0.0%
--------- --------- ---------
--------- --------- ---------
52
The components of the net deferred tax liabilities as of December 31, 19961997
and 19951996 were as follows:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- --------------------------------------------------------------------------------
Deferred tax assets
Net operating losses $ 473,114 $ 538,067
Member loss carryforwards 328,912 342,370
Tax credits (alternative minimum tax
and other) 256,205 252,680
Accounting for Rocky Mountain
transactions 233,045 --
Accounting for sale of income tax benefits 77,429 86,599
Accrued nuclear decommissioning expense 49,127 45,042
Accounting for asset dispositions 32,545 33,496
Other 3,318 18,277
(DOLLARS IN THOUSANDS) 1997 1996
- ------------------------------------------- ----------- -----------
DEFERRED TAX ASSETS
Net operating losses....................... $ 444,590 $ 473,114
Member loss carryforwards.................. 189,414 328,912
Tax credits (alternative minimum tax and
other)................................... 243,707 256,205
Accounting for Rocky Mountain
transactions............................. 213,575 233,045
Accounting for sale of income tax
benefits................................. 75,041 77,429
Accrued nuclear decommissioning expense.... 51,713 49,127
Accounting for asset dispositions.......... 31,584 32,545
Other...................................... 2,742 3,318
----------- -----------
1,252,366 1,453,695
Less: Valuation allowance.................. (241,483) (252,680)
----------- -----------
1,010,883 1,201,015
----------- -----------
DEFERRED TAX LIABILITIES
Depreciation............................... (848,585) (1,008,714)
Accounting for Rocky Mountain
transactions............................. (145,805) (156,557)
Accounting for debt extinguishment......... (61,094) (64,841)
Other...................................... (18,516) (32,888)
----------- -----------
(1,074,000) (1,263,000)
----------- -----------
Net deferred tax liabilities............... $ (63,117) (61,985)
----------- -----------
----------- -----------
1,453,695 1,316,531
Less: Valuation allowance (252,680) (252,680)
----------- -----------
1,201,015 1,063,851
----------- -----------
Deferred tax liabilities
Depreciation (1,008,714) (1,034,153)
Accounting for Rocky Mountain
transactions (156,557) --
Accounting for debt extinguishment (64,841) (64,006)
Other (32,888) (31,202)
----------- -----------
(1,263,000) (1,129,361)
----------- -----------
Net deferred tax liabilities $ (61,985) $ (65,510)
=========== ===========
- --------------------------------------------------------------------------------
As of December 31, 1996,1997, Oglethorpe has federal tax net operating loss
carryforwards (NOLs), alternative minimum tax credits (AMT) and unused general
business credits (consisting primarily of investment tax credits) as follows:
- --------------------------------------------------------------------------------
(dollars in thousands)
- --------------------------------------------------------------------------------
Alternative
Minimum
Expiration Date Tax Credits Tax Credits NOLs
1997 $ -- $ 11,197 $ --
1998 -- 6,934 --
1999 -- 37,206 --
2000 -- 3,198 --
2001 -- 7,264 --
2002 -- 130,377 --
2003 -- 652 242,187
2004 -- 55,663 114,285
2005 -- 189 213,080
2006 -- -- 209,009
2007 -- -- 86,779
2008 -- -- 94,927
2009 -- -- 96,394
2010 -- -- 77,970
None 3,525 -- --
-------- ---------- ----------
$ 3,525 $ 252,680 $1,134,631
======== ========== ==========
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------------------
ALTERNATIVE
MINIMUM
EXPIRATION DATE TAX CREDITS TAX CREDITS NOLS
- ------------------------------------------------- ----------- ----------- ------------
1998............................................. -- 6,934 --
1999............................................. -- 37,206 --
2000............................................. -- 3,198 --
2001............................................. -- 7,264 --
2002............................................. -- 130,377 --
2003............................................. -- 652 250,461
2004............................................. -- 55,663 114,285
2005............................................. -- 189 213,080
2006............................................. -- -- 209,009
2007............................................. -- -- 86,779
2008............................................. -- -- 94,927
2009............................................. -- -- 96,394
2010............................................. -- -- 77,970
None............................................. 2,224 -- --
----------- ----------- ------------
$ 2,224 $ 241,483 $1,142,905
----------- ----------- ------------
----------- ----------- ------------
Based on Oglethorpe's historical taxable transactions, the timing of the
reversal of existing temporary differences, future income, and tax planning
strategies, it is more likely than not that Oglethorpe's future taxable income
will be sufficient to realize the benefit of NOLs before their respective
expiration dates. The NOLs expiration dates start in the year 20032 3 and end in the
year 2010. However, as reflected in the above valuation allowance, it is more
likely than not that the tax credits will not be utilized before expiration. It
is more likely than not that the AMT credit will be utilized.
53
4. Capital leases:CAPITAL LEASES:
In December 1985, Oglethorpe sold and subsequently leased back from four
purchasers its 60% undivided ownership interest in Scherer Unit No. 2. The gain
from the sale is being amortized over the 36-year term of the leases. The
minimum lease payments under the capital leases together with the present
value of net minimum lease payments as of December 31, 19961997 are as follows:
- --------------------------------------------------------------------------------
Year Ending December 31, (dollars in thousands)
- --------------------------------------------------------------------------------
1997 $ 36,531
1998 37,302
1999 37,890
2000 37,755
2001 37,629
2002-2021 569,179
YEAR ENDING DECEMBER 31, (DOLLARS IN THOUSANDS)
- --------------------------------------------- ----------------------
1998................................... $ 37,302
1999................................... 37,890
2000................................... 37,755
2001................................... 37,629
2002................................... 37,491
2003-2021.............................. 531,688
---------
Total minimum lease payments........... 719,755
Less: Amount representing interest..... (424,682)
---------
Present value of net minimum
lease payments....................... 295,073
Less: Current portion.................. (6,435)
---------
Long-term balance...................... $ 288,638
---------
---------
Total minimum lease payments 756,286
Less: Amount representing interest (458,517)
---------
Present value of net minimum lease payments 297,769
Less: Current portion (4,087)
---------
Long-term balance $ 293,682
=========
- --------------------------------------------------------------------------------
The capital leases provide that Oglethorpe's rental payments vary to the
extent of interest rate changes associated with the debt used by the lessors to
finance their purchase of undivided ownership shares in Scherer Unit No. 2. In
December 1997, Oglethorpe refinanced the debt supporting the Scherer Unit No. 2
lease. The refunded debt consisted of $143,200,000 in serial facility bonds with
a 9.70% fixed interest rate (pertaining to three of the lessors is financed at fixed interest rates averaging
9.70%. As of December 31, 1996, thelessors) and $81,500,000
in bank debt with variable interest rates ranging from 6.4% to 6.9% (pertaining
to the remaining lessor). The debt was refinanced through a $224,700,000 issue
of serial facility bonds due June 30, 2011 with a 6.97% fixed interest rate. The
transaction costs related to this transaction are reported as deferred charges
on the balance sheet and are being amortized over the remaining life of the
debt of the
remaining lessor ranged from 6.40% to 8.05% for an average rate of 6.83%.leases. Oglethorpe's future rental payments
53
under its leases will vary from amounts shown in the table above to the extent
that the actual interest rates associated with the fixed and variable rate debt of the lessors varyvaries
from the 11.05% debt rate assumed in the table.
The Scherer Unit No. 2 lease meets the definitional criteria to be reported
on Oglethorpe's balance sheets as a capital lease. For rate-making purposes,
however, Oglethorpe treats this lease as an operating lease; that is, Oglethorpe
considers the actual rental payment on the leased asset in its cost of service.
Oglethorpe's accounting treatment for this capital lease has been modified,
therefore, to reflect its rate-making treatment. Interest expense is applied to
the obligation under the capital lease; then, amortization of the leasehold is
recognized, such that interest and amortization equal the actual rental payment.
Through 1994, the level of actual rental payments was such that amortization of
the Scherer Unit No. 2 leasehold calculated in this manner was less than zero.
Thereafter, the scheduled cash rental payments increase such that positive
amortization of the leasehold occurs and the entire cost of the leased asset is
recovered through the rate-making process. The difference in the amortization
recognized in this manner on the statements of revenues and expenses and the
straight-line amortization of the leasehold is reflected on Oglethorpe's balance
sheets as a deferred charge.
In 1991 and 1992, all four of the lessors received Notices of Proposed
Adjustments from the IRS proposing adjustments to the tax benefits claimed by
these lessors in connection with their purchase and ownership of an undivided
interest in Scherer Unit No 2. In 1994, the IRS issued a revised Notice of
Proposed Adjustments to one of the lessors which reduced the proposed
adjustments. During 1995, this lessor advised Oglethorpe that it had settled
this issue on the basis of the revised Notice of Proposed Adjustments.
Oglethorpe subsequently made a lump sum indemnity payment of $362,000 to the
lessor in order to compensate for the reduction in the lessor's tax benefits
resulting from the sale and leaseback transaction. The IRS has indicated that
it will take consistent positions with the other three lessors. If the IRS's
current positions regarding the sale and leaseback transactions were
ultimately upheld, Oglethorpe would be required to indemnify the other three
lessors. Oglethorpe's indemnification liability to the three lessors is
estimated to be approximately $1,290,000$1,391,000 as of December 31, 1996.1997. This
liability has been reflected on the accompanying balance sheet.
5. Long-term debt:LONG-TERM DEBT:
Long-term debt consists of mortgage notes payable to the United States of
America acting through the FFB and the RUS, mortgage notes issued in conjunction
with the sale by public authorities of pollution control revenue bonds,PCBs, and mortgage notes payable to
CoBank. Oglethorpe's headquarters facility is pledged as collateral for the
CoBank headquarters note; substantially all of the owned tangible and certain of
the intangible assets of Oglethorpe are pledged as collateral for the FFB and
RUS notes, the remaining CoBank notes and the notes issued in conjunction with
the sale of pollution control revenue bonds.PCBs. The detail of the notes is included in the statements of
capitalization.
As part of the Corporate Restructuring effective April 1, 1997, 16.86% of
the then outstanding PCBs was assumed by GTC. Because Oglethorpe currently has ten RUS-guaranteed FFB noteswas not legally
released from its obligation to pay this debt, the entire debt is shown in the
Statement of which $3,172,851,000
and $3,253,636,000 were outstanding at December 31, 1996 and 1995, respectively,Capitalization as a liability of Oglethorpe with rates ranging from 5.27% to 9.51%. In January 1996, Oglethorpe completed
note modifications pursuant to which it repriced $89,447,000 of FFB advances.an offsetting
amount reflecting the portion assumed by GTC.
In connection with such modification,the Corporate Restructuring in March 1997, Oglethorpe
paiddefeased approximately $92,000,000 in principal amount of Series 1992 PCBs.
Initially these bonds have been defeased with the proceeds from the issuance of
approximately $92,000,000 in commercial paper. Oglethorpe has a premiumplan in place to
refinance the commercial paper issuance with a medium-term loan in 1998 and
ultimately expects to refinance the loan with an issuance of $9,332,000.
These amountsPCBs at some point
in the future.
In connection with the Corporate Restructuring in March 1997, Oglethorpe
refinanced $216,925,000 (includes portion assumed by GTC) in principal amount of
Series 1992A PCBs through the issuance of Series 1997A PCBs which matured on
December 1, 1997, which in turn were refunded through the issuance of Series
1997B PCBs which will mature on May 28, 1998 (the Series 1997B Bonds).
Oglethorpe has a plan in place and is in the final stages of a debt offering to
refund the Series 1997B Bonds in March 1998 through the issuance of Series 1998A
and Series 1998B PCBs (the Series 1998 Bonds) having a January 1, 2019 maturity.
The Series 1998 Bonds will initially be issued as variable rate bonds and will
be supported by both a municipal bond insurance policy and bank liquidity
agreements. The unamortized transaction costs related to the 1997A PCBs are
reported as deferred charges on the balance sheet and will beare being amortized over
22 years, the longest remainingtwenty-year life of the subject advances.
54
Series 1998 Bonds.
In October 1996,December 1997, Oglethorpe completed a current refunding transaction
whereby $37,885,000$14,635,000 (includes portion assumed by GTC) of fixed rate pollution control revenue bondsPCBs were
54
issued. The proceeds of this transaction were used to retire $37,885,000$14,635,000 of
existing bonds.bonds in January 1998. At December 31, 1997 both the current and
existing bonds were reported as outstanding debt on the balance sheet. The
unamortized transaction costs related to this transaction have been reported
as a deferred charge on the balance sheet and are being amortized over the
life of the related bonds.
The annual interest requirement for 19971998 is estimated to be $294,000,000.$242,000,000.
Maturities for the long-term debt through 20012002 are as follows:
- --------------------------------------------------------------------------------
(dollars in thousands) 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------
FFB and RUS $147,279 $ 86,894 $ 91,123 $ 98,867 $105,941
CoBank 376 502 516 532 550
PCB Bonds 7,880 17,970 19,730 23,995 26,260
Capital Leases 4,087 5,143 6,240 7,075 7,775
-------- -------- -------- -------- --------
Total $159,622 $110,509 $117,609 $130,469 $140,526
======== ======== ======== ======== ========
- --------------------------------------------------------------------------------
The estimated annual interest expense and the long-term debt maturities
described above do not take into account Oglethorpe's proposed corporate
restructuring, discussed in Note 11.
(DOLLARS IN THOUSANDS) 1998 1999 2000 2001 2002
- ------------------------------------------------------ --------- ---------- ---------- ---------- ----------
FFB and RUS........................................... $ 69,432 $ 72,662 $ 78,952 $ 84,470 $ 89,199
CoBank................................................ 483 495 508 523 540
PCBs.................................................. 13,206 14,540 17,949 19,678 20,264
Capital Leases........................................ 6,435 6,240 7,075 7,775 8,544
--------- ---------- ---------- ---------- ----------
Total................................................. $ 89,556 $ 93,937 $ 104,484 $ 112,446 $ 118,547
--------- ---------- ---------- ---------- ----------
--------- ---------- ---------- ---------- ----------
Oglethorpe has a commercial paper program under which it may issue
commercial paper not to exceed a $250,000,000$280,000,000 balance outstanding at any time.
The commercial paper may be used for working capital requirements and for
general corporate purposes. Oglethorpe's commercial paper is backed 100% by
committed lines of credit provided by a group of banks.
As of December 31, 1996 and 1995,1997, approximately $92,000,000 of commercial paper was
outstanding in connection with the defeasance of the Series 1992 PCBs discussed
above. There was no commercial paper was outstanding.outstanding at December 31, 1996.
Oglethorpe has a $50,000,000 uncommitted short-term line of credit with CFC
and a $30,000,000 committed line of credit with SunTrust Bank, Atlanta
(SunTrust). The maximum combined amount that can be outstanding under these
lines of credit and the commercial paper program at any one time totals
$250,000,000$330,000,000 due to certain restrictions contained in the CFC and SunTrust line of
credit agreements.agreement. No balance was outstanding on either of these two lines of
credit at either December 31, 19961997 or 1995.1996.
6. Electric plant and related agreements:ELECTRIC PLANT AND RELATED AGREEMENTS:
Oglethorpe and GPCGeorgia Power Company (GPC) have entered into agreements
providing for the purchase and subsequent joint operation of certain of GPC's
electric generating plants
and transmission facilities.plants. A summary of Oglethorpe's plant investments and
related accumulated depreciation as of December 31, 19961997 is as follows:
- --------------------------------------------------------------------------------
(dollars in thousands)
Accumulated
Plant Investment Depreciation
- --------------------------------------------------------------------------------
In-service
Owned property
Vogtle Units No. 1 & No. 2
(Nuclear - 30% ownership) $2,781,446 $ 665,953
Hatch Units No. 1 & No. 2
(Nuclear - 30% ownership) 523,163 208,687
Wansley Units No. 1 & No. 2
(Fossil - 30% ownership) 173,192 84,388
Scherer Unit No. 1
(Fossil - 60% ownership) 429,299 193,129
Rocky Mountain Units No. 1,
No. 2 & No. 3
(Hydro - 74.6% ownership) 556,470 17,401
Tallassee (Harrison Dam)
(Hydro - 100% ownership) 9,270 1,797
Wansley (Combustion Turbine -
30% ownership) 3,718 1,319
Generation step-up substations 55,877 19,173
Transmission and distribution plant 815,929 179,960
Other 94,002 25,060
Property under capital lease
Scherer Unit No. 2
(Fossil - 60% leasehold) 300,231 91,405
---------- ----------
Total in-service $5,742,597 $1,488,272
========== ==========
Construction work in progress
Generation improvements $ 11,963
Transmission and distribution plant 18,715
Other 503
----------
Total construction work in progress $ 31,181
==========
- --------------------------------------------------------------------------------
In 1988,
(DOLLARS IN THOUSANDS)
ACCUMULATED
PLANT INVESTMENT DEPRECIATION
- --------------------------------------------------------------------- ------------ ------------
In-service
Owned property
Vogtle Units No. 1 & No. 2 (NUCLEAR--30% OWNERSHIP)............. $2,781,172 $ 736,999
Hatch Units No. 1 & No. 2 (NUCLEAR--30% OWNERSHIP).............. 520,512 217,406
Wansley Units No. 1 & No. 2 (FOSSIL--30% OWNERSHIP)............. 171,916 85,997
Scherer Unit No. 1 (FOSSIL--60% OWNERSHIP)...................... 427,275 199,892
Rocky Mountain Units No. 1, No. 2 & No. 3
(HYDRO-- 74.6% OWNERSHIP)..................................... 556,715 28,533
Tallassee (Harrison Dam) (HYDRO--100% OWNERSHIP)................. 9,270 1,975
Wansley (COMBUSTION TURBINE-30% OWNERSHIP)...................... 3,655 1,236
Generation step-up substations.................................. 58,196 20,349
Other........................................................... 80,541 20,083
Property under capital lease
Scherer Unit No. 2 (FOSSIL--60% LEASEHOLD)........................ 300,815 99,817
------------ ------------
Total in-service..................................................... $4,910,067 $1,412,287
----------- ------------
----------- ------------
Construction work in progress
Generation improvements........................................... $ 12,530
Other............................................................. 1,048
-----------
Total construction work in progress.................................. $ 13,578
-----------
-----------
Oglethorpe, acquired from GPC an undivided ownership interest in
Rocky Mountain. Under the Rocky Mountain agreements, Oglethorpe assumed
responsibility for construction of the facility, which was commenced by GPC.
Under the agreements, GPC retained its current investment in Rocky Mountain with
the ultimate ownership interests of Oglethorpe and GPC in the facility based on
the ratio of each party's direct construction costs to total project direct
construction costs with certain adjustments.
On June 1, 1995, Unit 3 and the completed Unit Common facilities were
declared to be in commercial operation by Oglethorpe. Unit 2 and Unit 1 were
declared to be in commercial operation on June 19, 1995 and July 24, 1995,
respectively. In accordance with the Rocky Mountain agreements, the final
ownership interests of Oglethorpe and GPC in Rocky Mountain is 74.6% and 25.4%,
respectively. The final ownership interests in the project will be applied to
all future capital costs.
55
Oglethorpe is engaged in a continuous construction program and, as of December 31, 1996,1997, estimates property additions (including
capitalized interest)interest but excluding nuclear fuel) to be approximately $108,000,000 in 1997, $98,000,000$19,000,000
in 1998, and $100,000,000$17,000,000 in 1999 and $15,000,000 in 2000, primarily for replacements
and additions to generation and transmission facilities.
Oglethorpe's proportionate share of direct expenses of joint operation of
the above plants is included in the corresponding operating expense captions
(e.g., fuel, production or depreciation) on the accompanying statements of
revenues and expenses.
55
7. Employee benefit plans:EMPLOYEE BENEFIT PLANS:
Oglethorpe has a noncontributory defined benefit pension plan covering
substantially all employees. Oglethorpe's pension cost was approximately
$654,000 in 1997, $1,388,000 in 1996 and $1,954,000 in 1995 and $1,262,000 in 1994.1995. For 1995,
pension cost increased by $912,000 related to termination benefits. The
termination benefits resulted from an early retirement program undertaken in
the fourth quarter of 1995. Plan benefits are based on years of service and
the employee's compensation during the last ten years of employment.
Oglethorpe's funding policy is to contribute annually an amount not less than
the minimum required by the Internal Revenue Code and not more than the
maximum tax deductible amount.
The plan's funded status also reflects Oglethorpe's retention of the
unfunded pension liability for employees as of the date they were transferred
to Intellisource Services Solutions in February 1997.
The plan's pension cost recognized in 1997, 1996 1995 and 19941995 was shown as
follows:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Pension cost was comprised of the
following
Service cost - benefits earned
during the year $ 1,149 $ 913 $ 1,084
Interest cost on projected benefit
obligation 872 742 714
Actual return on plan assets (984) (1,889) 387
Net amortization and deferral 351 1,288 (911)
Net gain from a plan curtailment
(DOLLARS IN THOUSANDS) 1997 1996 1995
- --------------------------------------------------------- ------- ------- -------
Service cost--benefits earned during the year............ $ 560 $ 1,149 $ 913
Interest cost on projected benefit obligation............ 791 872 742
Actual return on plan assets............................. (1,872) (984) (1,889)
Net amortization and deferral............................ 1,175 351 1,288
Net gain from a plan curtailment......................... -- -- (12) (12)
------- ------- -------
Net pension cost......................................... $ 654 $ 1,388 $ 1,042
------- ------- -------
------- ------- -------
Net pension cost $ 1,388 $ 1,042 $ 1,262
======= ======= =======
- --------------------------------------------------------------------------------
The plan's funded status in Oglethorpe's financial statements as of
December 31, 1997 and 1996 and 1995 werewas as follows:
- --------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- --------------------------------------------------------------------------------
Actuarial present value of accumulated
plan benefits
Vested $ 7,554 $ 6,868
Nonvested 540 591
-------- --------
$ 8,094 $ 7,459
======== ========
Projected benefit obligation $(13,211) $(12,326)
Plan assets at fair value 9,218 7,760
-------- --------
Projected benefit obligation in excess of
plan assets (3,993) (4,566)
Unrecognized net loss (gain) from past
experience different from that assumed
and effects of changes in assumptions (880) 223
Prior service cost not yet recognized in net
periodic pension cost 498 548
Unrecognized net asset at transition date
being recognized over 19 years (109) (121)
-------- --------
Pension accrual $ (4,484) $ (3,916)
======== ========
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) 1997 1996
- ---------------------------------------------------------------------- ---------- ---------
Actuarial present value of accumulated plan benefits
Vested.............................................................. $ 7,197 $ 7,554
Nonvested........................................................... 400 540
--------- ---------
$ 7,597 $ 8,094
--------- ---------
--------- ---------
Projected benefit obligation.......................................... $ (11,294) $ (13,211)
Plan assets at fair value........................................... 9,568 9,218
Projected benefit obligation in excess of plan assets................. (1,726) (3,993)
Unrecognized net loss (gain) from past experience different
from that assumed and effects of changes in assumptions.............. (2,243) (880)
Prior service cost not yet recognized in net periodic pension cost.... 355 498
Unrecognized net asset at transition date being recognized
over 19 years....................................................... (77) (109)
--------- ---------
Pension accrual....................................................... $ (3,691) $ (4,484)
--------- ---------
--------- ---------
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit
obligations shown above were 7.50% and 5.0% in 1996, and 7.25% and 5.0% in 1995,1997, and 7.5% and 5.0% in
1996, respectively. The expected long-term rate of return on plan assets was
8.5% in 1997, 1996 and 1995 and 8% in 1994, and the discount rate used in determining the
pension expense was 7.5% in 1997, 7.25% in 1996 and 8.5% in 1995 and 7.5% in 1994.1995.
Oglethorpe has a contributory employee retirement savings plan covering
substantially all employees. Employee contributions to the plan may be
invested in one or more of nine funds. The employee may contribute, subject
to IRSlimitations, up to 16% of his annual compensation. Oglethorpe will
match the employee's contribution up to one-half of the first 6% of the
employee's annual compensation, as long as there is sufficient net margin to
do so. Oglethorpe's contributions to the plan were approximately $248,000 in
1997, $561,000 in 1996 and $589,000 in 1995
and $565,000 in 1994.1995.
8. Nuclear insurance:NUCLEAR INSURANCE:
GPC, on behalf of all the co-owners of Plants Hatch and Vogtle, is a
member of Nuclear Mutual Limited (NML)Electric Insurance, Ltd. (NEIL), a mutual insurer
established to provide property damage insurance coverage in an amount up to
$500,000,000 for members' nuclear generating facilities. In the event that
losses exceed accumulated reserve funds, the members are subject to
retroactive assessments (in proportion to their participation in the mutual
insurer). The portion of the current maximum annual assessment for GPC that
would be payable by Oglethorpe, based on ownership share, is limited to
approximately $6,351,000$5,959,000 for each nuclear incident.
56
GPC, on behalf of all the co-owners of Plants Hatch and Vogtle, is also a
member of Nuclear Electric Insurance Limited (NEIL), a mutual insurer, and
Oglethorpe has
coverage under NEIL II, which provides insurance to cover decontamination,
debris removal and premature decommissioning as well as excess property
damage to nuclear generating facilities for an additional $2,250,000,000 for
losses in excess of the $500,000,000 NMLprimary coverage described above. Under
the NEIL policies, members are subject to retroactive assessments in
proportion to their participation if losses exceed the accumulated funds
available to the insurer under the policy. The portion of the current maximum
annual assessment for GPC that would be payable by Oglethorpe, based on
ownership share, is limited to approximately $12,960,000.$9,563,000.
For all on-site property damage insurance policies for commercial nuclear
power plants, the NRC requires that the proceeds of such policies issued or
annually renewed on or after April 2, 1991 shall be
56
dedicated first for the sole purpose of placing the reactor in a safe and
stable condition after an accident. Any remaining proceeds are next to be
applied 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.
The Price-Anderson Act, as amended in 1988, limits public liability
claims that could arise from a single nuclear incident to $8,900,000,000,
which amount is to be covered by private insurance and agreements of
indemnity with the NRC. Such private insurance (in the amount of $200,000,000
for each plant, the maximum amount currently available) is carried by GPC for
the benefit of all the co-owners of Plants Hatch and Vogtle. Agreements of
indemnity have been entered into by and between each of the co-owners and the
NRC. In the event of a nuclear incident involving any commercial nuclear
facility in the country involving total public liability in excess of
$200,000,000, a licensee of a nuclear power plant could be assessed a
deferred premium of up to $79,275,000 per incident for each licensed reactor
operated by it, but not more than $10,000,000 per reactor per incident to be
paid in a calendar year. On the basis of its sell-back adjusted ownership
interest in four nuclear reactors, Oglethorpe could be assessed a maximum of
$95,130,000 per incident, but not more than $12,000,000 in any one year.
Oglethorpe participates in an insurance program for nuclear workers that
provides coverage for worker tort claims filed for bodily injury caused at
commercial nuclear power plants. In the event that claims for this insurance
exceed the accumulated reserve funds, Oglethorpe could be subject to a total
maximum assessment of $3,365,000.
All retrospective assessments, whether generated for liability or
property, may be subject to applicable state premium taxes.
9. PowerPOWER PURCHASE AND SALE AGREEMENTS:
Oglethorpe is utilizing long-term power marketer arrangements to reduce
the cost of power to the Members. Oglethorpe has entered into power marketer
agreements with LG&E Energy Marketing, Inc. (LEM) effective January 1, 1997,
for approximately 50% of the load requirements of the Members and with Morgan
Stanley, effective May 1, 1997, with respect to 50% of the Members' then
forecasted load requirements. These agreements extend through 2011 and into
2005, respectively. The LEM agreements are based on the actual requirements
of the Members during the contract term, whereas the Morgan Stanley agreement
represents a fixed supply obligation. Under these power marketer agreements,
Oglethorpe purchases energy at fixed prices covering a portion of the costs
of energy to its Members. LEM and Morgan Stanley, in turn, have certain
rights to market excess energy from the Oglethorpe system. All of
Oglethorpe's existing generating facilities and power purchase arrangements
are available for use by LEM and sale agreements:Morgan Stanley for the term of the
respective agreements. Oglethorpe continues to be responsible for all of the
costs of its system resources but receives payment from LEM and Morgan
Stanley for the use of the resources. The Morgan Stanley agreement requires
both Oglethorpe and Morgan Stanley to make minimum purchases from each other,
however, the net requirement between the parties is immaterial. Under the LEM
agreement there is no minimum purchase required.
Oglethorpe has entered into long-term power purchase agreements with GPC,
Big Rivers Electric Corporation (Big Rivers), and Entergy Power, Inc. (EPI).
Under the agreement with GPC, Oglethorpe purchased on a take-or-pay basis
1,2501,000 megawatts (MW) of capacity through the period ending August 31, 1996. Effective
September 1, 1996, Oglethorpe will purchase 1,000 MW of capacity through the period ending August 31, 1997.
Effective September 1, 1997, Oglethorpe will purchase 750 MW of capacity
through the period ending August 31, 1998. Effective September 1,1998,1, 1998,
Oglethorpe will purchase 500 MW of capacity through the period ending August
31, 1998. Effective September 1, 1999, Oglethorpe will purchase 250 MW of
capacity through the period ending December 31,2004,31, 2003, subject to reductions
or extension with proper notice. The Big Rivers agreement commenced in August
1992 and is effective through July 2002. Oglethorpe is obligated under this
agreement to purchase on a take-or-pay basis 100 MW of firm capacity and
certain minimum energy amounts associated with that capacity. The EPI
agreement commenced in July 1992, has a term of ten years and represents a
take-or-pay commitment by Oglethorpe to purchase 100 MW of capacity.
Oglethorpe has a contract with Hartwell Energy Limited Partnership for
the purchase of approximately 300 MW of capacity for a 25-year period
commencing in April 1994.
Oglethorpe has entered into a short-term seasonal power purchase
agreement with Florida Power Corporation. Under the agreement, Oglethorpe
will purchasepurchased 50 MW of capacity on a take-or-pay basis for the period June 1,
1997 through September 30, 1997 and will purchase 275 MW for the period June
1, 1998 through September 30, 1998.
As of December 31, 1996,1997, Oglethorpe's minimum purchase commitments under
the above agreements, without regard to capacity reductions or adjustments
for changes in costs, for the next five years are as follows:
- --------------------------------------------------------------------------------
Year Ending December 31, (dollars in thousands)
- --------------------------------------------------------------------------------
1997 $ 130,457
1998 111,539
1999 92,873
2000 94,917
2001 97,116
- --------------------------------------------------------------------------------
YEAR ENDING DECEMBER 31, (DOLLARS IN THOUSANDS)
- ---------------------------------------------------- ----------------------
1998................................................ $ 111,494
1999................................................ 84,578
2000................................................ 69,075
2001................................................ 70,071
2002................................................ 57,875
57
Oglethorpe's power purchases from these agreements amounted to
approximately $175,818,000 in 1997, $190,760,000 in 1996 and $206,641,000 in
1995 and $182,965,000 in 1994.1995.
Oglethorpe has entered into an agreement with Alabama Electric
Cooperative to sell 100 MW of 57
capacity for the period June 1998 through
December 2005.
As a means of reducing the cost of power provided to the Members, in 1996,
Oglethorpe utilized short-term power supply agreements. The initial agreement
was with Enron Power Marketing, Inc. and was in place from January 4, 1996
through August 31, 1996. From September 1, 1996 through December 31, 1996,
Oglethorpe utilized a short-term power supply transaction with Duke/Louis
Dreyfus L.L.C. Under both of the agreements, the power marketer was required to
provide to Oglethorpe at a favorable fixed rate all the energy necessary to meet
the Members' requirements and Oglethorpe was required to provide to the power
marketer at cost, subject to certain limitations, upon request all energy
available from Oglethorpe's total power resources. Under both agreements,
Oglethorpe continued to operate the power supply system and continued to
dispatch the generating resources to ensure system reliability.
10. Quarterly financial data (unaudited)QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized quarterly financial information for 19961997 and 19951996 is as follows:
- --------------------------------------------------------------------------------
First Second Third Fourth
(dollars in thousands) Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
1996
Operating revenues $270,689 $275,228 $286,648 $ 268,872
Operating margin 73,568 72,514 75,009 61,658
Net margin
FIRST SECOND THIRD FOURTH
(DOLLARS IN THOUSANDS) QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------- ----------- ----------- ----------- -----------
1997
Operating revenues....................... $ 271,485 $ 242,876 $ 286,579 $ 246,912
Operating margin......................... 77,818 61,423 56,753 63,681
Net margin............................... 9,436 5,510 (872) 8,331
1996
Operating revenues....................... $ 270,689 $ 275,228 $ 286,648 $ 268,872
Operating margin......................... 73,568 72,514 75,009 61,658
Net margin............................... 8,988 4,732 12,508 (4,476)
1995
Operating revenues $257,547 $281,228 $317,536 $ 293,250
Operating margin 68,682 82,048 82,949 74,998
Net margin 8,462 20,292 10,656 (17,152)
- --------------------------------------------------------------------------------
Oglethorpe's business is influenced by seasonal weather conditions. Second
quarter 1996The
negative net margin for the third quarter of 1997 reflects a $4,000,000
reduction in revenue requirement approved by Oglethorpe's Board of Directors.
Such reduction in revenues was lower thanimplemented by reducing the same period of 1995 primarily as a
result of unbudgeted savingscapacity charges
billed to Members in 1995 from the continued capitalization of costs
of Rocky Mountain due to delay in commercial operation of the initial unit from
April 1995 to June 1995.August 1997. The negative net margin for the fourth
quarter of 1996 is consistent with expectations and reflects incurrencerecognition of
certain nonrecurring expenses.
The negative net margin for the fourth quarter of 1995 was primarily
attributable to the deferral of excess margin. For a discussion of the amount of
excess margin deferred, see Note 1.
11. Subsequent events:
a. Power supply arrangements
Oglethorpe has entered into power supply agreements for approximately 50% of
its Members' load requirements with LG&E Power Marketing Inc. These agreements
commenced on January 1, 1997, initially on a short-term basis. These agreements
converted to a long-term arrangement upon the closing of the Corporate
Restructuring discussed below. Oglethorpe is now working to complete a long-term
contract for the remaining approximately 50% of its load.
b. Corporate restructuringCORPORATE RESTRUCTURING
Oglethorpe and the Members completed on March 11, 1997, a corporate
restructuring (the Corporate Restructuring). Pursuant to the Corporate
Restructuring in which Oglethorpe, effective April 1, 1997, was divided itself into
three specialized companies to
respond to increasing competition and deregulation in the electric industry. As
part of the Corporate Restructuring, Oglethorpe transferred itsoperating companies. Oglethorpe's transmission business was
sold to, and assets to a newly formed Georgia electric membership corporation,
Georgia Transmission Corporation (An Electric Membership Corporation) (GTC),is now owned and transferred itsoperated by GTC. Oglethorpe's system operations
business was sold to, a newly formed Georgia nonprofit
corporation, Georgia System Operations Corporation (GSOC). Oglethorpe retained
its generation business and is now owned and leased generation assets.operated by GSOC. Oglethorpe
continues to own and operate its power supply business.
The following unaudited pro-forma balance sheet as of December 31, 1996
reflects the financial position oftotal purchase price GTC and GSOC paid Oglethorpe as reported and as restated
reflecting the exclusion of the transmission business as though the Corporate
Restructuring had occurred at December 31, 1996.
The following unaudited pro-forma statement of revenues and expenses for the
year ended December 31, 1996 reflects the operations of Oglethorpe as reported
and as restated, reflecting the exclusion of the transmission business as though
the Corporate Restructuring had occurred at the beginning of 1996.
These unaudited pro-forma financial statements have been prepared based on
assumptions and estimates deemed appropriate and are presented for illustrative
purposes only and are not necessarily indicative of the financial position or
results of operations which would have actually been reported had the
transactions occurred in the period reported.
The columns titled Oglethorpe post-restructuring in the following unaudited
pro-forma financial statements have been restated reflecting the exclusion of
the system operations business as though the Corporate Restructuring had
occurred in the period reported. The system operations business is not shown
separately due to immateriality.
58
Pro-Forma Balance Sheet
(Unaudited)
As of December 31,1996
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
Oglethorpe Transmission
Oglethorpe Pro-Forma Pro-Forma
(Pre- (Post- (Post-
Restructuring) Restructuring) Restructuring)
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Electric plant, at original cost:
In service $ 5,742,597 $ 4,908,752 $ 815,929
Less: Accumulated provision for depreciation (1,488,272) (1,299,328) (179,960)
----------- ----------- -----------
4,254,325 3,609,424 635,969
Nuclear Fuel, at amortized cost 86,722 86,722 --
Plant acquisition adjustments, at amortized cost 4,153 -- 8,780
Construction work in progress 31,181 12,466 18,715
----------- ----------- -----------
4,376,381 3,708,612 663,464
----------- ----------- -----------
Investments and funds 197,288 200,812 --
----------- ----------- -----------
Current assets:
Cash and temporary cash investments, at cost 224,282 245,424 --
Receivables 113,289 113,289 --
Inventories, at average cost 89,825 84,018 5,807
Prepayments and other current assets 14,625 14,264 361
----------- ----------- -----------
442,021 456,995 6,168
----------- ----------- -----------
Deferred charges:
Premium and loss on reacquired debt,
being amortized 201,007 169,081 31,926
Deferred debt expense, being amortized 21,703 18,256 3,447
Other 123,775 123,775 --
----------- ----------- -----------
346,485 311,112 35,373
----------- ----------- -----------
$ 5,362,175 $ 4,677,531 $ 705,005
=========== =========== ===========
Equities and Liabilities
Capitalization:
Patronage capital and membership fees $ 356,229 $ 356,229 $ --
Long-term debt 4,052,470 3,380,581 688,878
Obligations under capital leases 293,682 293,682 --
Obligations under Rocky Mountain
transactions 41,685 41,685 --
----------- ----------- -----------
4,744,066 4,072,177 688,878
----------- ----------- -----------
Current liabilities:
Long-term debt and capital leases due
within one year 159,622 144,565 15,057
Accounts payable 42,891 41,788 --
Accrued interest 15,931 15,931 --
Accrued and witheld taxes 4,940 4,940 --
Other current liabilities 14,022 12,799 1,070
----------- ----------- -----------
237,406 220,023 16,127
----------- ----------- -----------
Deferred credits and other liabilities 380,703 385,331 --
----------- ----------- -----------
$ 5,362,175 $ 4,677,531 $ 705,005
=========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
Pro-Forma Statement of Revenues and Expenses
(Unaudited)
For the year ended December 31,1996
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
Oglethorpe Transmission
Oglethorpe Pro-Forma Pro-Forma
(Pre- (Post- (Post-
Restructuring) Restructuring) Restructuring)
- ------------------------------------------------------------------------------------------------------------------------------------
Operating revenues:
Sales to Members $ 1,023,094 $ 927,156 $ 95,938
Sales to non-Members 78,343 68,554 9,789
----------- ----------- -----------
Total operating revenues 1,101,437 995,710 105,727
----------- ----------- -----------
Operating expenses:
Fuel 206,524 206,524 --
Production 129,178 129,178 --
Purchased power 229,089 229,089 --
Power delivery 18,216 -- 18,216
Depreciation and amortization 163,130 138,008 25,122
Taxes other than income taxes 30,262 22,728 7,534
Other operating expenses 42,289 33,307 8,982
----------- ----------- -----------
Total operating expenses 818,688 758,834 59,854
----------- ----------- -----------
Operating margin 282,749 236,876 45,873
----------- ----------- -----------
Other income (expense):
Interest income 23,485 20,129 3,356
Amortization of deferred margins 32,047 29,336 2,711
Allowance for equity funds used during
construction 238 114 124
Other 9,564 10,270 (706)
----------- ----------- -----------
Total other income 65,334 59,849 5,485
----------- ----------- -----------
Interest charges:
Interest on long-term debt and other obligations 328,907 279,542 49,365
Allowance for debt funds used during
construction (2,576) (1,231) (1,345)
----------- ----------- -----------
Net interest charges 326,331 278,311 48,020
----------- ----------- -----------
Net margin $ 21,752 $ 18,414 $ 3,338
=========== =========== ===========
- ------------------------------------------------------------------------------------------------------------------------------------
The above pro-forma balance sheet reflects the transfer of the
transmission and system operations businesses,business was approximately $717 million.
The following summarizes the assets and liabilities sold by Oglethorpe to GTC
and GSOC as a result of the related financing activities related
to the transfer based on the purchase price formula.restructuring:
ASSETS (DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------
Plant in service.................................. $ 847,172
Accumulated depreciation.......................... (195,944)
Construction work in progress..................... 13,313
Plant acquisition adjustment...................... 3,887
Inventories....................................... 8,980
Prepayments....................................... 71
Premium on reacquired debt........................ 33,410
Deferred debt expense............................... 1,920
----------
TOTAL ASSETS SOLD................................. 712,809
Deferred gain on sale............................... 4,670
----------
TOTAL PURCHASE PRICE.............................. $ 717,479
----------
----------
EQUITY AND LIABILITIES
Long-term debt.................................... $ 686,054
Accounts payable.................................. 585
Accrued interest.................................. 121
Accrued pension cost.............................. 1,047
Deferred revenues................................. 310
----------
TOTAL LIABILITIES EXTINGUISHED.................. 688,117
Notes received from GSOC.......................... 4,822
Net cash received................................. 24,540
----------
TOTAL PURCHASE PRICE............................ $ 717,479
----------
----------
In connection with the
Corporate Restructuring,addition, Oglethorpe also made a special patronage capital
distribution to the Members totaling $48,863,000 which was used by the Members to establish equity
in and to provide initial working capital to GTC.
The following unaudited pro forma statement of revenues and expenses for
the year ended December 31, 1997 reflects the operations of Oglethorpe as
reported and restated, reflecting the exclusion of the transmission and
system operations businesses as though the Corporate Restructuring had
occurred at the beginning of 1997.
58
This unaudited pro forma statement of revenues and expenses has been
prepared based on assumptions and estimates deemed appropriate and is
presented for illustrative purposes only and is not necessarily indicative of
results of operations which would have actually been reported had the
transaction occurred at the beginning of the period.
PRO FORMA STATEMENT OF REVENUES AND EXPENSES
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31,1997
(dollars in thousands)
OGLETHORPE
OGLETHORPE PRO FORMA (POST-
HISTORICAL ADJUSTMENTS(1) RESTRUCTURING)
------------ -------------- --------------
OPERATING REVENUES:
Sales to Members............................ $ 1,000,319 $ (25,764) $ 974,555
Sales to non-Members........................ 47,533 (2,180) 45,353
----------- --------- -----------
TOTAL OPERATING REVENUES.................. 1,047,852 (27,944) 1,019,908
----------- --------- -----------
----------- --------- -----------
OPERATING EXPENSES:
Fuel........................................ 206,315 -- 206,315
Production.................................. 157,932 (2,968) 154,964
Purchased power............................. 266,875 (66) 266,809
Power delivery.............................. 4,032 (3,584) 448
Depreciation and amortization............... 126,730 (5,453) 121,277
Taxes other than income taxes............... 26,293 (1,855) 24,438
Income taxes................................ -- -- --
----------- --------- -----------
TOTAL OPERATING EXPENSES.................. 788,177 (13,926) 774,251
----------- --------- -----------
OPERATING MARGIN.............................. 259,675 (14,018) 245,657
----------- --------- -----------
OTHER INCOME (EXPENSE):
Interest income............................. 29,303 (139) 29,164
Amortization of net benefit of sale of
income tax benefits........................ 11,195 -- 11,195
Allowance for equity funds used during
construction............................... 157 (68) 89
Other....................................... 5,991 25 6,016
----------- --------- -----------
TOTAL OTHER INCOME........................ 46,646 (182) 46,464
----------- --------- -----------
INTEREST CHARGES:
Interest on long-term debt and other
obligations................................ 285,590 (12,073) 273,517
Allowance for debt funds used during
construction............................... (1,674) 161 (1,513)
----------- --------- -----------
NET INTEREST CHARGES...................... 283,916 (11,912) 272,004
----------- --------- -----------
NET MARGIN.................................... $ 22,405 $ (2,288) $ 20,117
----------- --------- -----------
----------- --------- -----------
- ------------------------
(1) IN ANTICIPATION OF THE CORPORATE RESTRUCTURING, OGLETHORPE BEGAN KEEPING
SEPARATE BOOKS AND RECORDS FOR GTC AND GSOC BEGINNING JANUARY 1, 1997.
THEREFORE, THE PRO FORMA ADJUSTMENTS REFLECT SEPARATELY IDENTIFIED
TRANSACTIONS AND SPECIFIC ALLOCATIONS.
59
REPORT OF MANAGEMENT
The management of Oglethorpe Power Corporation has prepared this 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 best estimates and judgments of management.
Financial information throughout this annual report is consistent with the
financial statements.
Oglethorpe 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. Limitations exist in any system
of internal control based upon the recognition that the cost of the system
should not exceed its benefits. Oglethorpe believes that its system of
internal accounting control, together with the internal auditing function,
maintains appropriate cost/benefit relations.
Oglethorpe's system of internal controls is evaluated on an ongoing basis
by its qualified internal audit staff. The Corporation's independent public
accountants (Coopers & Lybrand L.L.P.) 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.
Coopers & Lybrand L.L.P. also provides an objective assessment of how
well management meets its responsibility for fair financial reporting.
Management believes that its policies and procedures provide reasonable
assurance that Oglethorpe'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 Oglethorpe Power Corporation.Oglethorpe.
T. D. Kilgore
President and Chief Executive Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Oglethorpe Power Corporation:
We have audited the accompanying balance sheets and statements of
capitalization of Oglethorpe Power Corporation (a Georgia corporation) as of
December 31, 19961997 and 19951996 and the related statements of revenues and
expenses, patronage capital, and cash flows for each of the three years then ended.in
the period ended December 31, 1997. These financial statements are the
responsibility of Oglethorpe'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 referred to above present
fairly, in all material respects, the financial position of Oglethorpe Power
Corporation as of December 31, 19961997 and 19951996 and the results of its
operations and its cash flows for each of the three years thenin the period ended
December 31, 1997, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Atlanta, Georgia,
February 21, 1997, except for Note 11, as to which the date is March 11,
1997.17, 1998.
60
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Oglethorpe Power Corporation:
We have audited the statement of revenues and expenses, patronage capital,
and cash flows of Oglethorpe Power Corporation (a Georgia corporation) for the
year ended December 31, 1994. These financial statements are the responsibility
of Oglethorpe's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations, changes in patronage capital,
and cash flows of Oglethorpe Power Corporation for the year ended December 31,
1994 in conformity with generally accepted accounting principles.
As explained in Note 2 of notes to financial statements, effective January 1,
1994, Oglethorpe Power Corporation changed its method of accounting for certain
investments in debt and equity securities.
Arthur Andersen LLP
Atlanta, Georgia,
February 24, 1995.
61
ItemITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ItemITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors:
As part of the Corporate Restructuring, Oglethorpe amended its Bylaws to
provide for an eleven member board of directors consisting of six directors
elected from the Members (the "Member Directors"), four independent outside
directors (the "Outside Directors") and Oglethorpe's President and Chief
Executive Officer. TheEach Member DirectorsDirector must be a director or general manager of
an Oglethorpe Member. Five of the six Member Directors must be located in oneeach
of five geographical regions of the State of Georgia. The sixth Member Director
is elected statewide. TheNone of the four Outside Directors must notmay be a director,
officer or employee of OglethorpeGTC, GSOC or any Member. All eleven directors are
nominated by representatives from each Member whose weighted nomination is based
on the number of retail customers served by each Member. After nomination, the
directors are elected by a majority vote of each Member, voting on a one-Member,
one-vote basis.
All of the new directors have been elected with terms beginning on
March 11, 1997, except for two of the four Outside Directors which are expected
to be elected at the annual meeting of Members on March 27, 1997. The Bylaws provide for staggering the terms of the directorsMember Directors and
Outside Directors by dividing the number of directors into three groups. As
noted below, some of the directors were elected to an initial term of 1one year,
some 2two years and some 3three years. As these initial terms expire, directors
will thereafter be elected for a term of three years.
Oglethorpe is managed and operated under the direction of a President and
Chief Executive Officer, who is appointed by the Board of Directors. The Senior
Officers and Directors of Oglethorpe and significant employees of subsidiaries
of Oglethorpe are as follows:
Larry N. Chadwick, age 56, is
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
J. Calvin Earwood.................................... 56 Chairman of the Board of Directors, Member Director,
Statewide
T. D. Kilgore........................................ 50 President and Chief Executive Officer and Director
Clarence D. Mitchell................................. 44 Senior Vice President, Power Supply
Thomas A. Smith...................................... 43 Senior Financial Officer
Nelson G. Hawk....................................... 48 President and Chief Executive Officer, EnerVision
Larry N. Chadwick.................................... 57 Member Director, Northwest Region
Benny W. Denham...................................... 67 Member Director, Southwest Region and Vice Chairman
Sammy M. Jenkins..................................... 71 Member Director, Southeast Region
Mac F. Oglesby....................................... 65 Member Director, Northeast Region and Treasurer
J. Sam L. Rabun...................................... 66 Member Director, Central Region
Ashley C. Brown...................................... 51 Outside Director
Newton A. Campbell................................... 69 Outside Director
Wm. Ronald Duffey.................................... 56 Outside Director
John S. Ranson....................................... 68 Outside Director
from the Northwest
Region. He is the owner of Chadwick's Hardware in Woodstock, Georgia. He has
served on the Board of Directors of Oglethorpe since July 1989. His present term
will expire in March 1999. Mr. Chadwick is an engineer, with experience in the
design of hydrogen gas plants. He is Chairman of the Board of Cobb EMC.
Benny W. Denham, age 66, is the Vice Chairman of the Board and is the
Member Director from the Southwest Region. Mr. Denham has served as an executive
officer of Oglethorpe since March 1993. He has served on the Board of Directors
of Oglethorpe since December 1988. His present term will expire in March 1998.
He was previously the Vice-Chairman of the Executive Committee and a member of
the Power Planning and Technical Advisory Committee. Mr. Denham is co-owner of
Denham Farms in Turner County, Georgia. He served on the Turner County
Commission from 1980 to 1990, and was Chairman for six of those years. Mr.
Denham is a Director of Community National Bank in Ashburn, Georgia and a
Director of Irwin EMC.
J. Calvin Earwood age 55, is the Chairman of the Board and is the Member Director
elected statewide. Mr. Earwood has served as an executive officer of Oglethorpe
since March 1984 (from March 1984 to July 1986, as Vice President; from July
1986 to March 1989, as Vice Chairman of the Board; and since March 1989, as
Chairman of the Board). Mr. Earwood has served as a
Directoron the Board of Directors of
Oglethorpe
61
since March 1981. His present term will expire in March 2000. He was previously
a member of the Operations Review Committee. From 1965 through
62
1982, Mr. Earwood
was a salesman and part owner of Builders Equipment Company. Since January 1983,
he has been the owner and President of Sunbelt Fasteners, Inc., which sells
specialty tools and fasteners to the commercial construction trade. He is also
Vice Chairman of the Board of Directors of both Community Trust Financial
Services and Community Trust Bank in Hiram, Georgia and a Director of GreyStone
Power Corporation.
T. D. Kilgore is the President and Chief Executive Officer of Oglethorpe and
has served as a senior officer of Oglethorpe since July 1984 (from July 1984 to
July 1986, as Division Manager, Power Supply; July 1986 to July 1991, as Senior
Vice President, Power Supply; and since July 1991, as President and Chief
Executive Officer). He also currently serves as the President and Chief
Executive Officer and as a director of both GTC and GSOC. Mr. Kilgore has over
20 years of experience in the electric utility industry, including five years in
senior management positions with Arkansas Power & Light Co. and seven years as a
civilian employee with the Department of the Army in positions ranging from
reliability engineering to construction management. Mr. Kilgore has served on
various industry committees including Electric Power Research Institute's Board
of Directors and its Advanced Power Systems Division and Coal System Division
Advisory Committees. He has also served on the Boards of Directors of the U.S.
Committee for Energy Awareness, the Advanced Reactor Corporation, on the Edison
Electric Institute's Power Plant Availability Improvement Task Force and the
Nuclear Power Oversight Committee. Mr. Kilgore currently serves on the Board of
Directors of the Georgia Chamber of Commerce and on the National Rural Electric
Cooperative Association's Power and Generation Committee. Mr. Kilgore has a
Bachelor of Science degree in Mechanical Engineering from the University of
Alabama, where he has been recognized as a Distinguished Engineering Fellow, and
a Masters of Engineering degree in industrial engineering from Texas A&M.
Clarence D. Mitchell is the Senior Vice President, Power Supply and has
served as a senior officer of Oglethorpe since January 1995. Prior to that time,
Mr. Mitchell served as Assistant to the Senior Vice President for Generation
from February 1994 to December 1994; Manager of Corporate Planning from
September 1992 to January 1994; Manager of Construction from January 1992 to
August 1992; Program Director of Technical Services (environmental, survey and
mapping, land acquisition and R&D) from January 1989 to December 1991; and from
April 1981 to December 1988 held various positions in the generation area,
including supervisor, project engineer and generation engineer. Before coming to
Oglethorpe, Mr. Mitchell spent four years as a field engineer with General
Electric Company and worked various installation and maintenance projects
related to coal, nuclear, gas and oil-fired generation. Mr. Mitchell has a
Masters of Science degree in Management from Georgia State University, a
Bachelor of Science degree in Mechanical Engineering from Georgia Institute of
Technology and a Bachelor of Science degree in Interdisciplinary Science from
Morehouse College. Mr. Mitchell is presently the Oglethorpe representative on
both the Nuclear Managing Board and the Plant Scherer Managing Board. (For
information about the Managing Boards see "CO-OWNERS OF THE PLANTS AND THE PLANT
AGREEMENTS--The Plant Agreements" in Item 2.) Mr. Mitchell also serves as a
Trustee of the Foundation of the Southern Polytechnic State University.
Thomas A. Smith is the Senior Financial Officer and has served as a senior
officer of Oglethorpe since August 1997. He previously served as Vice President,
Finance of Oglethorpe from 1986 to 1990, Manager of Finance from 1983 to 1986
and Manager, Financial Services from 1979 to 1983. From 1990 to 1997, Mr. Smith
was Senior Vice President of the Rural Utility Banking Group of CoBank, where he
managed the bank's eastern division, rural utilities. Mr. Smith is a Certified
Public Accountant, has a Master of Science degree in Industrial
Management-Finance from the Georgia Institute of Technology, a Master of Science
degree in Analytical Chemistry from Purdue University and a Bachelor of Arts
degree in Mathematics and Chemistry from Catawba College.
Nelson G. Hawk is the President and Chief Executive Officer of EnerVision, a
wholly owned subsidiary of Oglethorpe that began operations as a marketing
services business in 1998. Prior to that time,
62
Mr. Hawk was the Senior Vice President and Group Executive, Marketing and served
as a senior officer of Oglethorpe, responsible for Market Planning, Economic
Development, Commercial/Industrial Marketing and Pricing, Commercial/Industrial
Services, and Residential Marketing from February 1994 through December 1997.
Prior to coming to Oglethorpe, Mr. Hawk spent almost 24 years with the Florida
Power & Light Company and related subsidiaries, serving as Director of
Regulatory Affairs from October 1993 to January 1994, Director of Market
Planning from July 1991 to September 1993, and as Director of Strategic Business
from April 1989 to June 1991. Mr. Hawk has a wide range of utility management
experience in energy management, finance, strategic planning, marketing, system
planning, quality assurance, and distribution engineering. Mr. Hawk is a board
member of the Georgia Electrification Council, Inc. and the Georgia Partnership
for Excellence in Education, and served on the board of directors as well as
President of the National Association of Energy Services Companies (NAESCO), a
national trade association, during the late 1980s. Mr. Hawk is a registered
Professional Engineer in Florida and has a Bachelor of Science degree in
Electrical Engineering from the Georgia Institute of Technology and a Master of
Business Administration degree from Florida International University.
Larry N. Chadwick is the Member Director from the Northwest Region. He has
been the owner of Chadwick's Hardware in Woodstock, Georgia since 1983. He has
served on the Board of Directors of Oglethorpe since July 1989. His present term
will expire in March 1999. Mr. Chadwick is an engineer, with experience in the
design of hydrogen gas plants. He is Chairman of the Board of Cobb EMC.
Benny W. Denham is the Vice Chairman of the Board and is the Member Director
from the Southwest Region. He has served on the Board of Directors of Oglethorpe
since December 1988. His present term will expire in March 1998. He was
previously the Vice-Chairman of the Executive Committee and a member of the
Power Planning and Technical Advisory Committee. Mr. Denham has been co-owner of
Denham Farms in Turner County, Georgia since 1980. He served on the Turner
County Commission from 1980 to 1990, and was Chairman for six of those years.
Mr. Denham is a Director of Community National Bank in Ashburn, Georgia and a
Director of Irwin EMC.
Sammy M. Jenkins age 70, is the Member Director from the Southeast Region. He is in the farm machinery business and has
been a self-employed farmer for over 20 years. In addition, from 1973 to 1995,
he was President of Jenkins Ford Tractor Co., Inc. since 1973., a seller of farm machinery.
He has served on the Board of Directors of Oglethorpe since March 1988. His
present term will expire in March 1999. He was Vice Chairman of the Board of
Oglethorpe from March 1989 to March 1990.
Mac F. Oglesby age 64, is the Member Director from the Northeast Region.Region and the
Treasurer of Oglethorpe. He served as Assistant Secretary-Treasurer of the Board
of Directors of Hart EMC from July 1986 through December 1987, when he was
appointed President.President of the Board. He has served as a
Directoron the Board of Directors of
Oglethorpe since February 1987. His present term will expire in March 2000. Mr.
Oglesby was a U.S. Postal Service Rural Carrier for 30 years.years until he retired in
1991.
J. Sam L. Rabun age 65, is the Member Director from the Central Region. He ishas been
the owner and operator of a farm in Jefferson County, Ga.Georgia since 1979. He is
also a 50% owner of R&R Livestock Farms, Inc. He has served as a Directoron the Board of
Directors of Oglethorpe since March 1993, with his1993. His present term towill expire in March
1998. Mr. Rabun served as the President of the Board of Jefferson EMC from 1993
to 1996.1996, was employed as General Manager from 1974 to 1979 and as Office Manager
and Accountant from 1970 to 1974.
Ashley C. Brown age 51, is an Outside Director. He has served on the Board of
Directors of Oglethorpe since March 1997. His present term will expire in March
1999. He ishas been Executive Director of the Harvard Electricity Policy Group at
Harvard University's John F. Kennedy School of Government. HeGovernment since 1993. In
addition, he is Of
Counsela consultant to the law firm of Verner, Liipfert, Bernhard, McPhersonLeBouef, Lamb, Greene and
Hand of
Washington, D.C. In addition, he is a Principal Consultant with the firm of
Hagler Bailly Consulting, Inc.MacRae. From April 1983 through April 1993, Mr. Brown served as Commissioner of
the Public Utilities Commission of Ohio. Prior to his appointment to the Ohio
Commission, he was Coordinator and Counsel of the Montgomery County, Ohio, Fair
Housing Center. From 1979 to 1981, he was Managing Attorney for the Legal Aid
Society of
63
Dayton (Ohio), Inc. From 1977 to 1979, he was Legal Advisor of the Miami Valley
Regional Planning Commission in Dayton, Ohio. While practicing law, he specialized in litigation in federal and state
courts, as well as before administrative bodies. In addition, Mr. Brown has
extensive teaching experience in public schools and universities and has
published widely in the field of utility regulation. Mr. Brown has a law degree
from the University of Dayton School of Law, a Master of AdministrationArts degree from the
University of Cincinnati, and a Bachelor of Science degree from Bowling Green
State University.
Newton A. Campbell age 68, is an Outside Director. He has served on the Board of
Directors of Oglethorpe since March 1997. His term will expire in March 2000. He
retired in January 1994 as Chairman and Chief Executive Officer of Burns &
McDonnell Engineering Company after serving 41 years with the firm. Mr. Campbell
directed the overall operations of Burns & McDonnell from 1982 until his
retirement. From 1976 through 1982, he served as Vice President and General
Manager of the Power Division, and was responsible for directing the company's
work in the planning and design of fossil fueled power generation facilities,
high voltage transmission systems, and other power related facilities. Mr.
Campbell has been involved in feasibility, planning and financial studies for
numerous new and existing public and privately owned electric utilities during
various phases of their organization and development. He also has considerable
experience in conceptual studies, design, and project management for large
electric utility generation, transmission, substation and distribution
facilities throughout the United States. Mr. Campbell received a Master of
Business Administration degree from the University of Missouri at Kansas City
with a concentration in finance. He also holds a Bachelor of Science degree in
Electrical Engineering from the University of Illinois. T. D. Kilgore, age 49,Mr. Campbell is a
Director of UMB Financial Corporation in Kansas City, Missouri.
Wm. Ronald Duffey is an Outside Director. He has served on the Board of
Directors of Oglethorpe since March 1997. His term will expire in March 1998.
Mr. Duffey is the President and Chief Executive Officer of
Oglethorpe and has served as an executive of Oglethorpe since July 1984 (from
July 1984 to July 1986, as Division Manager, Power Supply; July 1986 to July
1991, as Senior Vice President, Power Supply; and since July 1991, as President
and Chief Executive Officer). He also currently serves as the President and
Chief Executive Officer and as a director of
both GTCPeachtree National Bank in Peachtree City, Georgia, a wholly owned subsidiary of
Synovus Financial Corp. Prior to his employment in 1985 with Peachtree National
Bank, Mr. Duffey served as Executive Vice President and GSOC. Mr. Kilgore has
over 20 yearsMember of experience, including five years in senior management positions
with
63
Arkansas Power & Light Co. and seven years as a civilian employee with the
Department of the Army in positions ranging from reliability engineering to
construction management. Mr. Kilgore has served on various industry committees
including Electric Power Research Institute's Board of
Directors for First National Bank in Newnan, Georgia. He holds a Bachelor of
Business Administration from Georgia State College with a concentration in
finance and its
Advanced Power Systems Divisionhas completed banking courses at the Banking School of the South,
the American Bankers Association School of Bank Investments, and Coal System Division Advisory Committees.The Stonier
Graduate School of Banking, Rutgers University.
John S. Ranson is an Outside Director. He has also served on the Boards of Directors of the U.S. Committee for Energy
Awareness, the Advanced Reactor Corporation, on the Edison Electric Institute's
Power Plant Availability Improvement Task Force and the Nuclear Power Oversight
Committee. Mr. Kilgore currently serves on the Board of
Directors of Oglethorpe since March 1997. His term will expire in March 1999. He
has been the Georgia
ChamberPresident of CommerceRanson Municipal Consultants, L.L.C. in Wichita,
Kansas since 1994. From 1990 to 1994, Mr. Ranson was Chairman of Ranson Capital
Corp. an investment banking firm. Mr. Ranson has approximately 40 years
experience in the investment banking business. His public finance clients have
included the Kansas Local Utility Improvement Authority, the Kansas Municipal
Energy Agency, the Kansas Municipal Gas Agency, and on the National Rural Electric Cooperative Association's
Power and Generation Committee.Kansas City (Kansas)
Board of Public Utilities. Mr. Kilgore has aRanson received his Bachelor of Science degree in
Mechanical EngineeringBusiness Administration from the University of Alabama, where he has been
recognized as a Distinguished Engineering Fellow,Kansas (Lawrence, Kansas) and
an Masters of Engineering
degreeattended the Navy Supply Corps School in industrial engineering from Texas A&M.
(b) Identification of Senior Executives:
Oglethorpe is managed and operated under the direction of a President
and Chief Executive Officer, who is appointed by the Board of Directors. The
senior executives assisting Mr. Kilgore, their areas of responsibility and a
brief summary of their experience are as follows:
Clarence D. Mitchell, Senior Vice President, Power Supply, age 43, has
served as an executive of Oglethorpe since January 1995. Prior to that time, Mr.
Mitchell served as Assistant to the Senior Vice President for Generation from
February 1994 to December 1994; Manager of Corporate Planning from September
1992 to January 1994; Manager of Construction from January 1992 to August 1992;
Program Director of Technical Services (environmental, survey and mapping, land
acquisition and R&D) from January 1989 to December 1991; and from April 1981 to
December 1988 held various positions in the generation area, including
supervisor, project engineer and generation engineer. Before coming to
Oglethorpe, Mr. Mitchell spent four years as a field engineer with General
Electric Company and worked various installation and maintenance projects
related to coal, nuclear, gas and oil-fired generation. Mr. Mitchell has an MS
degree in Management from Georgia State University, a Bachelor of Science degree
in Mechanical Engineering from Georgia Institute of Technology and a Bachelor of
Science degree in Interdisciplinary Science from Morehouse College. Mr. Mitchell
is presently the Oglethorpe representative on both the Nuclear Managing Board
and the Plant Scherer Managing Board. For information about the Managing Boards
see "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant Agreements" in
Item 2. Mr. Mitchell also serves as a Trustee of the Foundation of the Southern
Polytechnic State University.
Nelson G. Hawk, Senior Vice President and Group Executive, Marketing,
age 47, has served as an executive at Oglethorpe since February 1994,
responsible for Market Planning, Economic Development, Commercial/Industrial
Marketing and Pricing, Commercial/Industrial Services, and Residential
Marketing. Prior to coming to Oglethorpe, Mr. Hawk spent almost 24 years with
the Florida Power & Light Company and related subsidiaries, serving as Director
of Regulatory Affairs from October 1993 to January 1994, Director of Market
Planning from July 1991 to September 1993, and as Director of Strategic Business
and President of FPL Enersys Services, Inc. (A utility subsidiary providing
energy services to commercial/industrial customers) from April 1989 to June
1991. Mr. Hawk has a wide range of utility management experience in energy
management, finance, strategic planning, marketing, system planning, quality
assurance, and distribution engineering. Mr. Hawk is a board member of the
Georgia Electrification Council, Inc. and the Georgia Partnership for Excellence
in Education, and served on the board of directors as well as President of the
National Association of Energy Services Companies (NAESCO), a national trade
association, during the late 1980s. Mr. Hawk is a registered Professional
Engineer in Florida and has a Bachelor of Science degree in Electrical
Engineering from the Georgia Institute of Technology and a Master of Business
Administration degree from Florida International University.Bayonne, New Jersey.
64
ItemITEM 11. EXECUTIVE COMPENSATION
Summary Compensation TableSUMMARY COMPENSATION TABLE
The following table sets forth, for Oglethorpe's President and Chief
Executive Officer and the two other five most highly compensated senior
executives, all compensation paid or accrued for services rendered in all
capacities during the years ended December 31, 1997, 1996 1995 and 1994.1995. Amounts
included in the table under "Bonus" represent payments based on an incentive
compensation policy. All amounts paid under this policy are fully at risk each
year and are earned based upon the achievement of corporate goals and each
individual's contribution to achieving those goals. In conjunction with this
policy, base salaries are targeted below the market valuations for similar
positions and remain fairly stable unless the job content changes.
Annual
Name and Compensation All Other
Principal Position Year Salary Bonus (2) Compensation
------------------ANNUAL
COMPENSATION
NAME AND -------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION
- ----------------------------------- ---- ----------------- ---------- ------------
T. D. Kilgore 1996 $265,627 $0 $6,246 (1)Kilgore...................... 1997 $300,368 $ 0 $6,316(2)
President and Chief Executive 1996 265,627 0 6,246
Officer 1995 235,000 10,000 6,012
1994 224,997 0 6,758
W. Clayton Robbins (3) 1996 144,460 17,112 5,425 (1)
Sr. Vice President, 1995 142,310 10,631 4,716
Support Services 1994 140,366 11,946 4,986
Nelson G. Hawk (3)................. 1997 155,210 N/A(4) 5,658(2)
President and Chief Executive 1996 142,535 16,530 5,246
(1)
Sr. Vice President,Officer, EnerVision 1995 140,000 10,899 4,589
Marketing 1994 116,005 9,620 32,821
Clarence D. MitchellMitchell............... 1997 155,210 N/A(4) 3,774(2)
Sr. Vice President, Power Supply 1996 133,369 17,112 3,887
(1)
Sr. Vice President, 1995 110,058 7,776 4,251
Power Supply 1994 91,705 5,765 3,354
Wiley H. Sanders (4) 1996 123,750 9,340 82,715 (1) (4)
Vice President, Transmission 1995 135,000 9,295 5,703
1994 119,785 12,737 25,178
Eugen Heckl (5) 1996 99,480 16,734 117,245 (1) (5)
Sr. Vice President, Finance 1995 142,114 13,174 7,651
1994 142,114 13,919 7,600
- ----------------------------------------
(1) Includes contributions made in 1996 by Oglethorpe under the 401(k)
Retirement Savings Plan on behalf of Messrs. Kilgore, Robbins, Hawk, Mitchell,
Sanders and Heckl of $4,750, $4,072, $4,446, $2,969, $3,654 and $2,958,
respectively; and insurance premiums paid on term life insurance on behalf of
Messrs. Kilgore, Robbins, Hawk, Mitchell, Sanders and Heckl of $1,496, $1,353,
$800, $918, $2,831 and $2,200, respectively.
(2) All executives listed above, except Mr. Kilgore, participate in an incentive
compensation program. Mr. Kilgore's compensation is governed solely by the
Board of Directors.
(2) Includes contributions made in 1997 by Oglethorpe under the 401(k)
Retirement Savings Plan on behalf of Messrs. Kilgore, Hawk and Mitchell of
$4,750, $4,750 and $2,856, respectively; and insurance premiums paid on term
life insurance on behalf of Messrs. Kilgore, Hawk and Mitchell of $1,566,
$908 and $918, respectively.
(3) In conjunctionconnection with the Corporate Restructuring,Oglethorpe's transfer of its marketing services business
to EnerVision, a wholly owned subsidiary of Oglethorpe, Mr. RobbinsHawk ceased to
be a
senior executivean employee of Oglethorpe as of JanuaryDecember 31, 1997. Mr. Robbins now serves as
Vice President of Intellisource's Southeast operations, including support
services to Oglethorpe, GTC and GSOC. See(See "OGLETHORPE POWER
CORPORATION--Relationship with Intellisource"CORPORATION--Corporate Restructuring" in Item 1 for further discussion.)
(4) Mr. Sanders retired from Oglethorpe as of November 30, 1996. Mr. Sanders'
1996 compensation includes accrued severance benefits of $59,114, payment of
accrued vacationBonus amounts earned in 1997 by Messrs. Hawk and sick benefits of $4,998Mitchell have not been
determined but are expected to be determined and relocation costs of $12,118.
65
(5) Mr. Heckl elected to retire from Oglethorpe under the provisions of an early
retirement program as of September 11, 1996. Mr. Heckl's 1996 compensation
includes severance benefits of $65,258, retirement-related contributions to his
deferred compensation account of $34,938 and payment of accrued vacation and
sick benefits of $11,891.
Pension Plan Tablepaid in 1998.
PENSION PLAN TABLE
Years of Credited Service
-----------------------------------------------
Average CompensationYEARS OF CREDITED SERVICE
------------------------------------------------------
AVERAGE COMPENSATION 5 10 15 20 25
- ------------------------------------------------------------------------------ --------- --------- --------- ---------- ---------
---------
$ 50,000.................................................. $12,684 $16,911 $21,139$ 4,179 $ 8,359 $ 12,538 $ 16,718 $ 20,897
75,000.................................................. 20,184 26,911 33,6396,679 13,359 20,038 26,718 33,397
100,000.................................................. 27,684 36,911 46,1399,179 18,359 27,538 36,718 45,897
125,000.................................................. 35,184 46,911 58,63911,679 23,359 35,038 46,718 58,397
150,000.................................................. 42,684 56,911 71,13914,179 28,359 42,538 56,718 70,897
175,000.................................................. 50,184 66,911 83,63916,679 33,359 50,038 66,718 83,397
200,000.................................................. 57,684 76,911 96,13919,179 38,359 57,538 76,718 95,897
225,000.................................................. 65,184 86,911 108,63921,679 43,359 65,038 86,718 108,397
250,000.................................................. 72,684 96,911 121,13924,179 48,359 72,538 96,718 120,897
275,000.................................................. 80,184 106,911 133,63926,679 53,359 80,038 106,718 133,397
65
The preceding table shows estimated annual straight life annuity benefits
payable upon retirement to persons in specified compensation and
years-of-service classifications assuming such persons had attained age 65 and
retired during 1996.1997. For purposes of calculating pension benefits, compensation
is defined as total salary and bonus, as shown in the above Summary Compensation
Table. Because covered compensation changes each year, the estimated pension
benefits for the classifications above will also change in future years. The
above pension benefits are not subject to any deduction for Social Security or
other offset amounts.
As of December 31, 1996,1997, the years of credited service under the Pension
Plan for the individuals listed in the Summary Compensation Table are as
follows:
Years of
Name Credited Service
---- ----------------
Mr. Kilgore.......................................... 11
Mr. Robbins.......................................... 10
Mr. Hawk ............................................ 1
Mr. Mitchell......................................... 15
Mr. Sanders.......................................... 1
Mr. Heckl............................................ 20
Compensation
YEARS OF
NAME CREDITED SERVICE
- ------------------------------------------------------------------------------------ -------------------
Mr. Kilgore......................................................................... 13
Mr. Hawk............................................................................ 3
Mr. Mitchell........................................................................ 16
COMPENSATION OF DIRECTORS
Under a policy adopted by the Board of Directors Under a proposed policy which is scheduled for approval at thein March 27,
1997, Board meeting, Oglethorpe
will paypays its Outside Directors a per diem fee of $5,500 per Board meeting for the first four meetings
in a year; a per diemfee of $1,000 per Board meeting will be paid for the fifth and subsequentremaining
other Board meetings in a year. Outside Directors willare also be paid $1,000 per day
for attending committee meetings, annual meetings of the Members or other
official meetings of Oglethorpe. Under the proposed policy, Member Directors will beare paid a per diem fee of $1,000 per
Board meeting and a per diem of $300 per day for attending committee meetings, annual meetings
of the Members or other official meetingsbusiness of Oglethorpe. In addition, Oglethorpe
will reimbursereimburses all Directors for
66
out-of-pocket expenses incurred in attending a
meeting. All Directors will beare paid a per diem fee of $50 per day when participating in meetings conducted by
conference call. The Chairman of the Board will beis paid an additional 20% of the
per diemhis
Director's fee per Board meeting for time involved in preparing for the
meetings.
Employment ContractsPrior to March 1997, Oglethorpe paid its Directors a fee of $200 for
meetings attended or $50 for participating in meetings by conference call, and
reimbursed Directors for out-of-pocket expenses incurred in attending a meeting.
The Chairman of the Board was also paid at least one day's per diem of $200 each
month for time involved in carrying out his official duties in addition to the
regularly scheduled Board meetings.
EMPLOYMENT CONTRACTS
Effective January 1, 1996, Oglethorpe entered into an employment agreement
with its President and Chief Executive Officer. The term of the
agreement extends to
December 31, 1998, with certain automatic annual extension
provisions beyond that date unless either party gives notice of termination 60
days prior to an extension.1999. Pursuant to the agreement, Mr. Kilgore's base salary and
bonus will be determined by Oglethorpe's Board, with annual base salary being at
least $240,000. Under the agreement, if Oglethorpe terminates Mr. Kilgore's
employment without cause, he will be entitled to a severance payment equal to
all salary and benefits he would have received between the date of termination
to the end of the agreement. In addition, ifIf Oglethorpe terminates Mr. Kilgore's employment
without cause or meaningfully reduces his stated duties or prerogatives within
three months prior to or 24 months subsequent to a Change in Control of
Oglethorpe (as defined in the agreement), asuch severance payment will not be paid in an
amount not
less than two times Mr. Kilgore's annual base salary on the date of termination
or the date on which his duties or prerogatives are reduced, whichever is
applicable. If such reduction in duties occurs, Mr. Kilgore will be entitled to
severance regardless whether he is terminated or resigns. If Mr. Kilgore
voluntarily separates himself from Oglethorpe, he will be prohibited from
working with a competitor of Oglethorpe for a period of one year thereafter and
will be paid an amount equal to his then current salary, bonus and benefits for
such period.
Compensation Committee Interlocks and Insider Participation
E. J. Martin, Jr.,66
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J. Calvin Earwood, John B. Floyd, Jr.,Newton A. Campbell and J. G.
McCalmonSam L. Rabun served as members
of the Oglethorpe Human Resources ManagementPower Corporation Compensation Committee which functioned as Oglethorpe's compensation committee for 1996. J.
Calvinin 1997. Mr. Earwood
has served as an executive officer of Oglethorpe since 1984 and has served as
the Chairman of the Board since 1989.
67
ItemITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Not applicable.
ItemITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
T. D. Kilgore is the President and Chief Executive Officer and a Director of
Oglethorpe, GTC and GSOC. Oglethorpe plans to makemade payments to GSOC for system operations
services in 1997 of approximately $6.8$4.9 million, which is
55%was 57% of GSOC's budgeted revenues.revenues
for 1997. Oglethorpe made payments to GTC for point-to-point transmission
service in 1997 of approximately $5.2 million, which was 6% of GTC's total
operating revenues for 1997. (See "OGLETHORPE POWER CORPORATION--Corporate
Restructuring" in Item 1.)
6867
PART IV
ItemITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page
----
List of Documents Filed as a Part of This Report.
(1) Financial Statements (Included under "Item 8. Financial
Statements and Supplementary Data")
Statements of Revenues and Expenses, For the Years
Ended December 31, 1996, 1995 and 1994.............................. 43
Statements of Patronage Capital, For the Years Ended
December 31, 1996, 1995 and 1994.................................... 43
Balance Sheets, As of December 31, 1996 and 1995...................... 44
Statements of Capitalization, As of December 31, 1996
and 1995............................................................ 46
Statements of Cash Flows, For the Years Ended December 31,
1996, 1995 and 1994................................................. 47
Notes to Financial Statements, including pro-forma financial
statements relating to the Corporate Restructuring.................. 48
Report of Management.................................................. 60
Reports of Independent Public Accountants............................. 60
(2) Financial Statement Schedules
None applicable.
(3) Exhibits
PAGE
---------
(A) LIST OF DOCUMENTS FILED AS A PART OF THIS REPORT.
(1) FINANCIAL STATEMENTS (Included under "Item 8. Financial
Statements and Supplementary Data")
Statements of Revenues and Expenses, For the Years
Ended December 31, 1997, 1996 and 1995.................................................... 42
Statements of Patronage Capital, For the Years Ended
December 31, 1997, 1996 and 1995.......................................................... 42
Balance Sheets, As of December 31, 1997 and 1996............................................ 43
Statements of Capitalization, As of December 31, 1997
and 1996.................................................................................. 45
Statements of Cash Flows, For the Years Ended December 31,
1997, 1996 and 1995....................................................................... 46
Notes to Financial Statements............................................................... 47
Report of Management........................................................................ 60
Report of Independent Public Accountants.................................................... 60
(2) FINANCIAL STATEMENT SCHEDULES
None applicable.
(3) EXHIBITS
Exhibits marked with an asterisk (*) are hereby incorporated by reference to
exhibits previously filed by the Registrant as indicated in parentheses
following the description of the exhibit.
Number Description
2.1(1) -- Second Amended and Restated Restructuring Agreement,
dated February 24, 1997, by and among Oglethorpe,
Georgia Transmission Corporation (An Electric Membership
Corporation) and Georgia System Operations Corporation.
2.2(1) -- Member Agreement, dated August 1, 1996, by and among
Oglethorpe, Georgia Transmission Corporation (An
Electric Membership Corporation), Georgia System
Operations Corporation and the Members of Oglethorpe.
*3(i)(a)
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*2.1 -- Second Amended and Restated Restructuring Agreement, dated February 24, 1997, by and
among Oglethorpe, Georgia Transmission Corporation (An Electric Membership
Corporation) and Georgia System Operations Corporation. (Filed as Exhibit 2.1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*2.2 -- Member Agreement, dated August 1, 1996, by and among Oglethorpe, Georgia Transmission
Corporation (An Electric Membership Corporation), Georgia System Operations
Corporation and the Members of Oglethorpe. (Filed as Exhibit 2.2 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*3.1(a) -- Restated Articles of Incorporation of Oglethorpe, dated as of July 26, 1988. (Filed as
Exhibit 3.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1988,
File No. 33-7591.)
*3.1(b) -- Amendment to Articles of Incorporation of Oglethorpe, dated as of March 11, 1997.
(Filed as Exhibit 3(i)(b) to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
3(i)(b) -- Amendment to Articles of Incorporation of Oglethorpe,
dated
68
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*3.2 -- Bylaws of Oglethorpe, as amended on February 24, 1997, and effective as of March 11,
1997. (Filed as Exhibit 3(ii) to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*4.1 -- Form of Serial Facility Bond Due June 30, 2011 (included in Collateral Trust Indenture
filed as Exhibit 4.2.)
*4.2 -- Collateral Trust Indenture, dated as of December 1, 1997, between OPC Scherer 1997
Funding Corporation A, Oglethorpe and SunTrust Bank, Atlanta, as Trustee. (Filed as
Exhibit 4.2 to the Registrant's Form S-4 Registration Statement, File No. 333-42759.)
*4.3 -- Nonrecourse Promissory Lessor Note No. 2, with a Schedule identifying three other
substantially identical Nonrecourse Promissory Lessor Notes and any material
differences. (Filed as Exhibit 4.3 to the Registrant's Form S-4 Registration
Statement, File No. 333-42759.)
*4.4 -- Amended and Restated Indenture of Trust, Deed to Secure Debt and Security Agreement
No. 2, dated December 1, 1997, between Wilmington Trust Company and NationsBank, N.A.
collectively as Owner Trustee, under Trust Agreement No. 2, dated December 30, 1985,
with DFO Partnership, as assignee of Ford Motor Credit Company, and The Bank of New
York Trust Company of Florida, N.A. as Indenture Trustee, with a Schedule identifying
three other substantially identical Amended and Restated Indentures of Trust, Deeds to
Secure Debt and Security Agreements and any material differences. (Filed as Exhibit
4.4 to the Registrant's Form S-4 Registration Statement, File No. 333-42759.)
*4.5(a) -- Lease Agreement No. 2 dated December 30, 1985, between Wilmington Trust Company and
William J. Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30,
1985, with Ford Motor Credit Company, Lessor, and Oglethorpe, Lessee, with a Schedule
identifying three other substantially identical Lease Agreements. (Filed as Exhibit
4.5(b) to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*4.5(b) -- First Supplement to Lease Agreement No. 2 (included as Exhibit B to the Supplemental
Participation Agreement No. 2 listed as 10.1.1(b)).
*4.5(c) -- First Supplement to Lease Agreement No. 1, dated as of June 30, 1987, between The
Citizens and Southern National Bank as Owner Trustee under Trust Agreement No. 1 with
IBM Credit Financing Corporation, as Lessor, and Oglethorpe, as Lessee. (Filed as
Exhibit 4.5(c) to the Registrant's Form 10-K for the fiscal year ended December 31,
1987, File No. 33-7591.)
*4.5(d) -- Second Supplement to Lease Agreement No. 2, dated as of December 17, 1997, between
NationsBank, N.A., acting through its agent, The Bank of New York, as an Owner Trustee
under the Trust Agreement No. 2, dated December 30, 1985, among DFO Partnership, as
assignee of Ford Motor Credit Company, as the Owner Participant, and the Original
Trustee, as Lessor, and Oglethorpe, as Lessee, with a Schedule identifying three other
substantially identical Second Supplements to Lease Agreements and any material
differences. (Filed as Exhibit 4.5(d) to the Registrant's Form S-4 Registration
Statement, File No. 333-42759.)
69
3(ii) -- Bylaws of Oglethorpe, as amended on February 24, 1997,
and effective as of March 11, 1997.
*4.1 -- Serial Facility Bond (included in Collateral Trust
Indenture listed as Exhibit 4.2).
*4.2 -- Collateral Trust Indenture, dated as of October 15,
1986, between OPC Scherer Funding Corporation,
Oglethorpe and Trust Company Bank, a banking
corporation, as Trustee. (Filed as Exhibit 4.2 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*4.3 -- Refunding Lessor Notes. (Filed as Exhibit 4.3.1 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*4.4(a) -- Nonrecourse Promissory Secured Note, due June 30, 2011,
from Wilmington Trust Company and William J. Wade, as
Owner Trustees, to Columbia Bank for Cooperatives.
(Filed as Exhibit 4.3.4 to the Registrant's Form S-1
Registration Statement, File No. 33-7591, filed on
October 9, 1986.)
*4.4(b) -- First Amendment to Nonrecourse Promissory Secured Note,
dated as of June 30, 1987, by Wilmington Trust Company
and The Citizens and Southern National Bank, as Owner
Trustee under Trust Agreement No. 1 with IBM Credit
Financing Corporation, to Columbia Bank for
Cooperatives. (Filed as Exhibit 4.3.4(a) to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1987,
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*4.6 -- Amended and Consolidated Loan Contract, dated as of March 1, 1997, between Oglethorpe
and the United States of America, together with four notes executed and delivered
pursuant thereto. (Filed as Exhibit 4.7 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
*4.5(a) -- Indenture of Trust, Deed to Secure Debt and Security
Agreement No. 2, dated December 30, 1985, between
Wilmington Trust Company and William J. Wade, as Owner
Trustees under Trust Agreement No. 2 dated December 30,
1985, with Ford Motor Credit Company and The First
National Bank of Atlanta, as Indenture Trustee, together
with a Schedule identifying three other substantially
identical Indentures of Trust, Deeds to Secure Debt and
Security Agreements. (Filed as Exhibit 4.4(b) to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*4.5(b) -- First Supplemental Indenture of Trust, Deed to Secure
Debt and Security Agreement No. 2 (included as Exhibit A
to the Supplemental Participation Agreement No. 2 listed
as 10.1.1(b)).
*4.5(c) -- First Supplemental Indenture of Trust, Deed to Secure
Debt and Security Agreement No. 1, dated as of June 30,
1987, between Wilmington Trust Company and The Citizens
and Southern National Bank, collectively as Owner
Trustee under Trust Agreement No. 1 with IBM Credit
Financing Corporation, and The First National Bank of
Atlanta, as Indenture Trustee. (Filed as Exhibit 4.4(c)
to the Registrant's Form 10-K for the fiscal year ended
December 31, 1987, File No. 33-7591.)
*4.6(a) -- Lease Agreement No. 2 dated December 30, 1985, between
Wilmington Trust Company and William J. Wade, as Owner
Trustees under Trust Agreement No. 2, dated December 30,
1985, with Ford Motor Credit Company, Lessor, and
Oglethorpe, Lessee, with a Schedule identifying three
other substantially identical Lease Agreements. (Filed
as Exhibit 4.5(b) to the Registrant's Form S-1
Registration Statement, File No. 33-7591, filed on
October 9, 1986.)
*4.7.1(a) -- Indenture, dated as of March 1, 1997, made by Oglethorpe to SunTrust Bank, Atlanta, as
trustee. (Filed as Exhibit 4.8.1 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1996, File No. 33-7591.)
*4.7.1(b) -- First Supplemental Indenture, dated as of October 1, 1997, made by Oglethorpe to
SunTrust Bank, Atlanta, as trustee, relating to the Series 1997B (Burke) Note. (Filed
as Exhibit 4.8.1(b) to the Registrant's Form 10-Q for the quarterly period ended
September 30, 1997, File No. 33-7591).
4.7.1(c) -- Second Supplemental Indenture, dated as of January 1, 1998, made by Oglethorpe to
SunTrust Bank, Atlanta, as trustee, relating to the Series 1997C (Burke) Assumption
Agreement.
4.7.1(d) -- Third Supplemental Indenture, dated as of January 1, 1998, made by Oglethorpe to
SunTrust Bank, Atlanta, as trustee, relating to the Series 1997A (Monroe) Assumption
Agreement.
*4.7.2 -- Security Agreement, dated as of March 1, 1997, made by Oglethorpe to SunTrust Bank,
Atlanta, as trustee. (Filed as Exhibit 4.8.2 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996, File No. 33-7591.
4.8.1(1) -- Loan Agreement, dated as of October 1, 1992, between Development Authority of Monroe
County and Oglethorpe relating to Development Authority of Monroe County Pollution
Control Revenue Bonds (Oglethorpe Power Corporation Scherer Project), Series 1992A,
and six other substantially identical loan agreements.
4.8.2(1) -- Note, dated October 1, 1992, from Oglethorpe to Trust Company Bank, as trustee acting
pursuant to a Trust Indenture, dated as of October 1, 1992, between Development
Authority of Monroe County and Trust Company Bank, and six other substantially
identical notes.
4.8.3(1) -- Trust Indenture, dated as of October 1, 1992, between Development Authority of Monroe
County and Trust Company Bank, Trustee, relating to Development Authority of Monroe
County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Scherer Project),
Series 1992A, and six other substantially identical trust indentures.
4.9.1(1) -- Loan Agreement, dated as of December 1, 1992, between Development Authority of Burke
County and Oglethorpe relating to Development Authority of Burke County Adjustable
Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project),
Series 1993A, and one other substantially identical loan agreement.
4.9.2(1) -- Note, dated December 1, 1992, from Oglethorpe to Trust Company Bank, as trustee acting
pursuant to a Trust Indenture, dated as of December 1, 1992, between Development
Authority of Burke County and Trust Company Bank, and one other substantially
identical note.
70
*4.6(b) -- First Supplement To Lease Agreement No. 2 (included as
Exhibit B to the Supplemental Participation Agreement
No. 2 listed as 10.1.1(b)).
*4.6(c) -- First Supplement to Lease Agreement No. 1, dated as of
June 30, 1987, between The Citizens and Southern
National Bank as Owner Trustee under Trust Agreement No.
1 with IBM Credit Financing Corporation, as Lessor, and
Oglethorpe, as Lessee. (Filed as Exhibit 4.5(c) to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1987, File No. 33-7591.)
4.7 -- Amended and Consolidated Loan Contract, dated as of
March 1, 1997, between Oglethorpe and the United States
of America, together with four notes executed and
delivered pursuant thereto.
4.8.1 -- Indenture, dated as of March 1, 1997, made by Oglethorpe
to SunTrust Bank, Atlanta, as trustee.
4.8.2 -- Security Agreement, dated as of March 1, 1997, made by
Oglethorpe to SunTrust Bank, Atlanta, as trustee.
4.9.1(3) -- Loan Agreement, dated as of October 1, 1992, between
Development Authority of Monroe County and Oglethorpe
relating to Development Authority of Monroe County
Pollution Control Revenue Bonds (Oglethorpe Power
Corporation Scherer Project), Series 1992A.
4.9.2(3) -- Note, dated October 1, 1992, from Oglethorpe to Trust
Company Bank, as trustee acting pursuant to a Trust
Indenture, dated as of October 1, 1992, between
Development Authority of Monroe County and Trust Company
Bank.
4.9.3(3) -- Trust Indenture, dated as of October 1, 1992, between
Development Authority of Monroe County and Trust Company
Bank, Trustee, relating to Development Authority of
Monroe County Pollution Control Revenue Bonds
(Oglethorpe Power Corporation Scherer Project), Series
1992A.
4.10.1(4) -- Loan Agreement, dated as of December 1, 1992, between
Development Authority of Burke County and Oglethorpe
relating to Development Authority of Burke County
Adjustable Tender Pollution Control Revenue Bonds
(Oglethorpe Power Corporation Vogtle Project), Series
1993A.
4.10.2(4) -- Note, dated December 1, 1992, from Oglethorpe to Trust
Company Bank, as trustee acting pursuant to a Trust
Indenture, dated as of December 1, 1992, between
Development Authority of Burke County and Trust Company
Bank.
4.10.3(4) -- Trust Indenture, dated as of December 1, 1992, from
Development Authority of Burke County to Trust Company
Bank, as trustee, relating to Development Authority of
Burke County Adjustable Tender Pollution Control Revenue
Bonds (Oglethorpe Power Corporation Vogtle Project),
Series 1993A.
4.10.4(4) -- Interest Rate Swap Agreement, dated as of December 1,
1992, by and between Oglethorpe and AIG Financial
Products Corp. relating to Development Authority of
Burke County Adjustable Tender Pollution Control Revenue
Bonds (Oglethorpe Power Corporation Vogtle Project),
Series 1993A.
71
4.10.5(4) -- Liquidity Guaranty Agreement, dated as of December 1,
1992, by and between Oglethorpe and AIG Financial
Products Corp. relating to Development Authority of
Burke County Adjustable Tender Pollution Control Revenue
Bonds (Oglethorpe Power Corporation Vogtle Project),
Series 1993A.
4.10.6(2) -- Standby Bond Purchase Agreement, dated as of December
14, 1995, between Oglethorpe and Canadian Imperial Bank
of Commerce, New York Agency, relating to Development
Authority of Burke County Adjustable Tender Pollution
Control Revenue Bonds (Oglethorpe Power Corporation
Vogtle Project), Series 1993A.
4.10.7(2) -- Standby Bond Purchase Agreement, dated as of November
30, 1994, between Oglethorpe and Credit Local de France,
Acting through its New York Agency, relating to the
Development Authority of Burke County Adjustable Tender
Pollution Control Revenue Bonds (Oglethorpe Power
Corporation Vogtle Project), Series 1994A.
4.11.1(4) -- Loan Agreement, dated as of October 1, 1996, between
Development Authority of Burke County and Oglethorpe
relating to Development Authority of Burke County
Pollution Control Revenue Bonds (Oglethorpe Power
Corporation Vogtle Project), Series 1996.
4.11.2(4) -- Note, dated October 1, 1996, from Oglethorpe to SunTrust
Bank, Atlanta, as trustee pursuant to an Indenture of
Trust, dated as of October 1, 1996, between Development
Authority of Burke County and SunTrust Bank, Atlanta.
4.11.3(4) -- Indenture of Trust, dated as of October 1, 1996, between
Development Authority of Burke County and SunTrust Bank,
Atlanta, as trustee, relating to Development Authority
of Burke County Pollution Control Revenue Bonds
(Oglethorpe Power Corporation Vogtle Project), Series
1996.
4.12.1(2) -- Loan Agreement, dated as of April 2, 1992, between the
Development Authority of Burke County and Oglethorpe, as
amended and supplemented by First Amendatory and
Supplemental Loan Agreement, dated as of March 1, 1997,
relating to Development Authority of Burke County
Pollution Control Revenue Bonds (Oglethorpe Power
Corporation Vogtle Project), Series 1997A.
4.12.2(2) -- Note, dated March 1, 1997, from Oglethorpe to SunTrust
Bank, Atlanta, as trustee acting pursuant to a Trust
Indenture, dated as of April 1, 1992, between
Development Authority of Burke County and SunTrust Bank,
Atlanta, as supplemented by First Supplemental Trust
Indenture, dated as of March 1, 1997.
4.12.3(2) -- Trust Indenture, dated as of April 2, 1992, between
Development Authority of Burke County and SunTrust Bank,
Atlanta, as trustee, as supplemented by a First
Supplemental Trust Indenture, dated as of March 1, 1997,
relating to Development Authority of Burke County
Pollution Control Revenue Bonds (Oglethorpe Power
Corporation Vogtle Project), Series 1997A.
4.13.1 -- Indemnity Agreement, dated as of March 1, 1997, by and
between Oglethorpe and Georgia Transmission Corporation
(An Electric Membership Corporation).
4.13.2
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
4.9.3(1) -- Trust Indenture, dated as of December 1, 1992, from Development Authority of Burke
County to Trust Company Bank, as trustee, relating to Development Authority of Burke
County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation
Vogtle Project), Series 1993A, and one other substantially identical trust indenture.
4.9.4(1) -- Interest Rate Swap Agreement, dated as of December 1, 1992, by and between Oglethorpe
and AIG Financial Products Corp. relating to Development Authority of Burke County
Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle
Project), Series 1993A, and one other substantially identical agreement.
4.9.5(1) -- Liquidity Guaranty Agreement, dated as of December 1, 1992, by and between Oglethorpe
and AIG Financial Products Corp. relating to Development Authority of Burke County
Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle
Project), Series 1993A, and one other substantially identical agreement.
4.9.6(1) -- Standby Bond Purchase Agreement, dated as of December 14, 1995, between Oglethorpe and
Canadian Imperial Bank of Commerce, New York Agency, relating to Development Authority
of Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power
Corporation Vogtle Project), Series 1993A.
4.9.7(1) -- Standby Bond Purchase Agreement, dated as of November 30, 1994, between Oglethorpe and
Credit Local de France, Acting through its New York Agency, relating to the
Development Authority of Burke County Adjustable Tender Pollution Control Revenue
Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1994A.
4.10.1(1) -- Loan Agreement, dated as of October 1, 1996, between Development Authority of Burke
County and Oglethorpe relating to Development Authority of Burke County Pollution
Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1996, and
three other substantially identical loan agreements.
4.10.2(1) -- Note, dated October 1, 1996, from Oglethorpe to SunTrust Bank, Atlanta, as trustee
pursuant to an Indenture of Trust, dated as of October 1, 1996, between Development
Authority of Burke County and SunTrust Bank, Atlanta, and three other substantially
identical notes.
4.10.3(1) -- Indenture of Trust, dated as of October 1, 1996, between Development Authority of
Burke County and SunTrust Bank, Atlanta, as trustee, relating to Development Authority
of Burke County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle
Project), Series 1996, and three other substantially identical indentures.
*4.12.1 -- Indemnity Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia
Transmission Corporation (An Electric Membership Corporation). (Filed as Exhibit
4.13.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File
No. 33-7591.)
*4.12.2 -- Indemnification Agreement, dated as of March 11, 1997, by Oglethorpe and Georgia
Transmission Corporation (An Electric Membership Corporation) for
the benefit of the
United States of America.
72
71
4.14.1(2) -- Master Loan Agreement, dated as of March 1, 1997,
between Oglethorpe and CoBank, ACB, MLA No. 0459.
4.14.2(2) -- Consolidating Supplement, dated as of March 1, 1997,
between Oglethorpe and CoBank, ACB, relating to Loan No.
ML0459T1.
4.14.3(2) -- Promissory Note, dated March 1, 1997, in the original
principal amount of $7,102,740.26, from Oglethorpe to
CoBank, ACB, relating to Loan No. ML0459T1.
4.14.4(2) -- Consolidating Supplement, dated as of March 1, 1997,
between Oglethorpe and CoBank, ACB, relating to Loan No.
ML0459T2.
4.14.5(2) -- Promissory Note, dated March 1, 1997, in the original
principal amount of $1,856,475.12, made by Oglethorpe to
CoBank, ACB, relating to Loan No. ML0459T2.
*4.15.1 -- Loan Agreement, Loan No. T-830404, between Oglethorpe
and Columbia Bank for Cooperatives, dated as of April
29, 1983. (Filed as Exhibit 4.18.1 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591, filed
on October 9, 1986.)
*4.15.2 -- Promissory Note, Loan No. T-830404-1, in the original
principal amount of $9,935,000, from Oglethorpe to
Columbia Bank for Cooperatives, dated as of April 29,
1983. (Filed as Exhibit 4.18.2 to the Registrant's Form
S-1 Registration Statement, File No. 33-7591, filed on
October 9, 1986.)
*4.15.3
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
the benefit of the United States of America. (Filed as Exhibit 4.13.2 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
4.13.1(1) -- Master Loan Agreement, dated as of March 1, 1997, between Oglethorpe and CoBank, ACB,
MLA No. 0459.
4.13.2(1) -- Consolidating Supplement, dated as of March 1, 1997, between Oglethorpe and CoBank,
ACB, relating to Loan No. ML0459T1.
4.13.3(1) -- Promissory Note, dated March 1, 1997, in the original principal amount of
$7,102,740.26, from Oglethorpe to CoBank, ACB, relating to Loan No. ML0459T1.
4.13.4(1) -- Consolidating Supplement, dated as of March 1, 1997, between Oglethorpe and CoBank,
ACB, relating to Loan No. ML0459T2.
4.13.5(1) -- Promissory Note, dated March 1, 1997, in the original principal amount of
$1,856,475.12, made by Oglethorpe to CoBank, ACB, relating to Loan No. ML0459T2.
*4.14.1 -- Loan Agreement, Loan No. T-830404, between Oglethorpe and Columbia Bank for
Cooperatives, dated as of April 29, 1983. (Filed as Exhibit 4.18.1 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591.)
*4.14.2 -- Promissory Note, Loan No. T-830404-1, in the original principal amount of $9,935,000,
from Oglethorpe to Columbia Bank for Cooperatives, dated as of April 29, 1983. (Filed
as Exhibit 4.18.2 to the Registrant's Form S-1 Registration Statement, File No.
33-7591.)
*4.14.3 -- Security Deed and Security Agreement, dated April 29, 1983, between Oglethorpe and
Columbia Bank for Cooperatives. (Filed as Exhibit 4.18.3 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.1.1(a) -- Participation Agreement No. 2 among Oglethorpe as
Lessee, Wilmington Trust Company as Owner Trustee, The
First National Bank of Atlanta as Indenture Trustee,
Columbia Bank for Cooperatives as Loan Participant and
Ford Motor Credit Company as Owner Participant, dated
December 30, 1985, together with a Schedule identifying
three other substantially identical Participation
Agreements. (Filed as Exhibit 10.1.1(b) to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.1.1(b) -- Supplemental Participation Agreement No. 2. (Filed as
Exhibit 10.1.1(a) to the Registrant's Form S-1
Registration Statement, File No. 33-7591, filed on October 9, 1986.)
*4.15 -- Exchange and Registration Rights Agreement, dated December 17, 1997, by and among
Oglethorpe, OPC Scherer 1997 Funding Corporation A, and Goldman, Sachs & Co. as
representative of the purchasers identified therein. (Filed as Exhibit 4.15 to the
Registrant's Form S-4 Registration Statement, File No. 333-42759.)
*10.1.1(a) -- Participation Agreement No. 2 among Oglethorpe as Lessee, Wilmington Trust Company as
Owner Trustee, The First National Bank of Atlanta as Indenture Trustee, Columbia Bank
for Cooperatives as Loan Participant and Ford Motor Credit Company as Owner
Participant, dated December 30, 1985, together with a Schedule identifying three other
substantially identical Participation Agreements. (Filed as Exhibit 10.1.1(b) to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.1(b) -- Supplemental Participation Agreement No. 2. (Filed as Exhibit 10.1.1(a) to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.1(c) -- Supplemental Participation Agreement No. 1, dated as of June 30, 1987, among
Oglethorpe as Lessee, IBM Credit Financing Corporation as Owner Participant,
Wilmington Trust Company and The Citizens and Southern National Bank as Owner Trustee,
The First National Bank of Atlanta, as Indenture Trustee, and
Columbia Bank for
Cooperatives, as Loan Participant. (Filed as Exhibit
10.1.1(c) to the Registrant's Form 10-K for the fiscal
year ended December 31, 1987, File No. 33-7591.)
*10.1.2 -- General Warranty Deed and Bill of Sale No. 2 between
Oglethorpe, Grantor, and Wilmington Trust Company and
William J. Wade, as Owner Trustees under Trust Agreement
No. 2, dated December 30, 1985, with Ford Motor Credit
Company, Grantee, together with a Schedule identifying
three substantially identical General Warranty Deeds
73
72
and Bills of Sale. (Filed as Exhibit 10.1.2 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.1.3(a) -- Supporting Assets Lease No. 2, dated December 30, 1985,
between Oglethorpe, Lessor, and Wilmington Trust Company
and William J. Wade, as Owner Trustees, under Trust
Agreement No. 2, dated December 30, 1985, with Ford
Motor Credit Company, Lessee, together with a Schedule
identifying three substantially identical Supporting
Assets Leases. (Filed as Exhibit 10.1.3 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.1.3(b) -- First Amendment to Supporting Assets Lease No. 2, dated
as of November 19, 1987, together with a Schedule
identifying three substantially identical First
Amendments to Supporting Assets Leases. (Filed as
Exhibit 10.1.3(a) to the Registrant's Form 10-K for the
fiscal year ended December 31, 1987, File No. 33-7591.)
*10.1.4(a) -- Supporting Assets Sublease No. 2, dated December 30,
1985, between Wilmington Trust Company and William J.
Wade, as Owner Trustees under Trust Agreement No. 2
dated December 30, 1985, with Ford Motor Credit Company,
Sublessor, and Oglethorpe, Sublessee, together with a
Schedule identifying three substantially identical
Supporting Assets Subleases. (Filed as Exhibit 10.1.4 to
the Registrant's Form S-1 Registration Statement, File
No. 33-7591, filed on October 9, 1986.)
*10.1.4(b) -- First Amendment to Supporting Assets Sublease No. 2,
dated as of November 19, 1987, together with a Schedule
identifying three substantially identical First
Amendments to Supporting Assets Subleases. (Filed as
Exhibit 10.1.4(a) to the Registrant's Form 10-K for the
fiscal year ended December 31, 1987, File No. 33-7591.)
*10.1.5
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
Columbia Bank for Cooperatives, as Loan Participant. (Filed as Exhibit 10.1.1(c) to
the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No.
33-7591.)
*10.1.1(d) -- Second Supplemental Participation Agreement No. 2, dated as of December 17, 1997,
among Oglethorpe as Lessee, DFO Partnership, as assignee of Ford Motor Credit Company,
as Owner Participant, Wilmington Trust Company and NationsBank, N.A. as Owner Trustee,
The Bank of New York Trust Company of Florida, N.A. as Indenture Trustee, CoBank, ACB
as Loan Participant, OPC Scherer Funding Corporation, as Original Funding Corporation,
OPC Scherer 1997 Funding Corporation A, as Funding Corporation, and SunTrust Bank,
Atlanta, as Original Collateral Trust Trustee and Collateral Trust Trustee, with a
Schedule identifying three substantially identical Second Supplemental Participation
Agreements and any material differences. (Filed as Exhibit 10.1.1(d) to Registrant's
Form S-4 Registration Statement, File No. 333-4275.)
*10.1.2 -- General Warranty Deed and Bill of Sale No. 2 between Oglethorpe, Grantor, and
Wilmington Trust Company and William J. Wade, as Owner Trustees under Trust Agreement
No. 2, dated December 30, 1985, with Ford Motor Credit Company, Grantee, together with
a Schedule identifying three substantially identical General Warranty Deeds and Bills
of Sale. (Filed as Exhibit 10.1.2 to the Registrant's Form S-1 Registration Statement,
File No. 33-7591.)
*10.1.3(a) -- Supporting Assets Lease No. 2, dated December 30, 1985, between Oglethorpe, Lessor,
and Wilmington Trust Company and William J. Wade, as Owner Trustees, under Trust
Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, Lessee,
together with a Schedule identifying three substantially identical Supporting Assets
Leases. (Filed as Exhibit 10.1.3 to the Registrant's Form S-1 Registration Statement,
File No. 33-7591.)
*10.1.3(b) -- First Amendment to Supporting Assets Lease No. 2, dated as of November 19, 1987,
together with a Schedule identifying three substantially identical First Amendments to
Supporting Assets Leases. (Filed as Exhibit 10.1.3(a) to the Registrant's Form 10-K
for the fiscal year ended December 31, 1987, File No. 33-7591.)
*10.1.4(a) -- Supporting Assets Sublease No. 2, dated December 30, 1985, between Wilmington Trust
Company and William J. Wade, as Owner Trustees under Trust Agreement No. 2 dated
December 30, 1985, with Ford Motor Credit Company, Sublessor, and Oglethorpe,
Sublessee, together with a Schedule identifying three substantially identical
Supporting Assets Subleases. (Filed as Exhibit 10.1.4 to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
*10.1.4(b) -- First Amendment to Supporting Assets Sublease No. 2, dated as of November 19, 1987,
together with a Schedule identifying three substantially identical First Amendments to
Supporting Assets Subleases. (Filed as Exhibit 10.1.4(a) to the Registrant's Form 10-K
for the fiscal year ended December 31, 1987, File No. 33-7591.)
*10.1.5(a) -- Tax Indemnification Agreement No. 2, dated December 30, 1985, between Ford Motor
Credit Company, Owner Participant, and Oglethorpe, Lessee, together with a Schedule
identifying three substantially identical Tax Indemnification
Agreements. (Filed as Exhibit 10.1.5 to
the Registrant's Form S-1 Registration Statement, File
No. 33-7591, filed on October 9, 1986.)
*10.1.6 -- Assignment of Interest in Ownership Agreement and
Operating Agreement No. 2, dated December 30, 1985,
between Oglethorpe, Assignor, and Wilmington Trust
Company and William J. Wade, as Owner Trustees under
Trust Agreement No. 2, dated December 30, 1985, with
Ford Motor Credit Company, Assignee, together with
Schedule identifying three substantially identical
Assignments of Interest in Ownership Agreement and
Operating Agreement. (Filed as Exhibit 10.1.6 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.
73
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
Agreements. (Filed as Exhibit 10.1.5 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.1.5(b) -- Amendment No. 1 to the Tax Indemnification Agreement No. 2, dated December 17, 1997,
between DFO Partnership, as assignee of Ford Motor Credit Company, as Owner
Participant, and Oglethorpe, as Lessee, with a Schedule identifying three
substantially identical Amendments No. 1 to the Tax Indemnification Agreements and any
material differences. (Filed as Exhibit 10.1.5(b) to the Registrant's Form S-4
Registration Statement, File No. 333-42759.)
*10.1.6 -- Assignment of Interest in Ownership Agreement and Operating Agreement No. 2, dated
December 30, 1985, between Oglethorpe, Assignor, and Wilmington Trust Company and
William J. Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30,
1985, with Ford Motor Credit Company, Assignee, together with Schedule identifying
three substantially identical Assignments of Interest in Ownership Agreement and
Operating Agreement. (Filed as Exhibit 10.1.6 to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
*10.1.7 -- Consent, Amendment and Assumption No. 2 dated December 30, 1985, among Georgia Power
Company and Oglethorpe and Municipal Electric Authority of Georgia and City of Dalton,
Georgia and Gulf Power Company and Wilmington Trust Company and William J. Wade, as
Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor
Credit Company, together with a Schedule identifying three substantially identical
Consents, Amendments and Assumptions. (Filed as Exhibit 10.1.9 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591.)
*10.1.7(a) -- Amendment to Consent, Amendment and Assumption No. 2, dated as of August 16, 1993,
among Oglethorpe, Georgia Power Company, Municipal Electric Authority of Georgia, City
of Dalton, Georgia, Gulf Power Company, Jacksonville Electric Authority, Florida Power
& Light Company and Wilmington Trust Company and NationsBank of Georgia, N.A., as
Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor
Credit Company, together with a Schedule identifying three substantially identical
Amendments to Consents, Amendments and Assumptions. (Filed as Exhibit 10.1.9(a) to the
Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File No.
33-7591.)
*10.2.1 -- Section 168 Agreement and Election dated as of April 7, 1982, between Continental
Telephone Corporation and Oglethorpe. (Filed as Exhibit 10.2 to the Registrant's Form
S-1 Registration Statement, File No. 33-7591.)
*10.2.2 -- Section 168 Agreement and Election dated as of April 9, 1982, between National Service
Industries, Inc. and Oglethorpe. (Filed as Exhibit 10.3 to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
*10.2.3 -- Section 168 Agreement and Election dated as of April 9, 1982, between Rollins, Inc.
and Oglethorpe. (Filed as Exhibit 10.4 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.2.4 -- Section 168 Agreement and Election dated as of December 13, 1982, between Selig
Enterprises, Inc. and Oglethorpe. (Filed as Exhibit 10.5 to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
74
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*10.3.1(a) -- Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation
Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of
Georgia and City of Dalton, Georgia, dated as of May 15, 1980. (Filed as Exhibit
10.6.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.3.1(b) -- Amendment to Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership
Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated as of December 30, 1985.
(Filed as Exhibit 10.1.8 to the Registrant's Form S-1 Registration Statement, File No.
33-7591.)
*10.3.1(c) -- Amendment Number Two to the Plant Robert W. Scherer Units Numbers One and Two Purchase
and Ownership Participation Agreement among Georgia Power Company, Oglethorpe,
Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of July
1, 1986. (Filed as Exhibit 10.6.1(a) to the Registrant's Form 10-K for the fiscal year
ended December 31, 1987, File No. 33-7591.)
*10.3.1(d) -- Amendment Number Three to the Plant Robert W. Scherer Units Numbers One and Two
Purchase and Ownership Participation Agreement among Georgia Power Company,
Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated
as of August 1, 1988. (Filed as Exhibit 10.6.1(b) to the Registrant's Form 10-Q for
the quarterly period ended September 30, 1993, File No. 33-7591.)
*10.3.1(e) -- Amendment Number Four to the Plant Robert W. Scherer Units Number One and Two Purchase
and Ownership Participation Agreement among Georgia Power Company, Oglethorpe,
Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of
December 31, 1990. (Filed as Exhibit 10.6.1(c) to the Registrant's Form 10-Q for the
quarterly period ended September 30, 1993, File No. 33-7591.)
*10.3.2(a) -- Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among Georgia
Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton,
Georgia, dated as of May 15, 1980. (Filed as Exhibit 10.6.2 to the Registrant's Form
S-1 Registration Statement, File No. 33-7591.)
*10.3.2(b) -- Amendment to Plant Robert W. Scherer Units Numbers One and Two Operating Agreement
among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and
City of Dalton, Georgia, dated as of December 30, 1985. (Filed as Exhibit 10.1.7 to
the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
75
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*10.3.2(c) -- Amendment Number Two to the Plant Robert W. Scherer Units Numbers One and Two
Operating Agreement among Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated as of December 31, 1990.
(Filed as Exhibit 10.6.2(a) to the Registrant's Form 10-Q for the quarterly period
ended September 30, 1993, File No. 33-7591.)
*10.3.3 -- Plant Scherer Managing Board Agreement among Georgia Power Company, Oglethorpe,
Municipal Electric Authority of Georgia, City of Dalton, Georgia, Gulf Power Company,
Florida Power & Light Company and Jacksonville Electric Authority, dated as of
December 31, 1990. (Filed as Exhibit 10.6.3 to the Registrant's Form 10-Q for the
quarterly period ended September 30, 1993, File No. 33-7591.)
*10.4.1(a) -- Alvin W. Vogtle Nuclear Units Numbers One and Two Purchase and Ownership Participation
Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of
Georgia and City of Dalton, Georgia, dated as of August 27, 1976. (Filed as Exhibit
10.7.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.4.1(b) -- Amendment Number One, dated January 18, 1977, to the Alvin W. Vogtle Nuclear Units
Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power
Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton,
Georgia. (Filed as Exhibit 10.7.3 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1986, File No. 33-7591.)
*10.4.1(c) -- Amendment Number Two, dated February 24, 1977, to the Alvin W. Vogtle Nuclear Units
Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power
Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton,
Georgia. (Filed as Exhibit 10.7.4 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1986, File No. 33-7591.)
*10.4.2 -- Alvin W. Vogtle Nuclear Units Numbers One and Two Operating Agreement among Georgia
Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton,
Georgia, dated as of August 27, 1976. (Filed as Exhibit 10.7.2 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591.)
*10.5.1 -- Plant Hal Wansley Purchase and Ownership Participation Agreement between Georgia Power
Company and Oglethorpe, dated as of March 26, 1976. (Filed as Exhibit 10.8.1 to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.5.2(a) -- Plant Hal Wansley Operating Agreement between Georgia Power Company and Oglethorpe,
dated as of March 26, 1976. (Filed as Exhibit 10.8.2 to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
*10.5.2(b) -- Amendment, dated as of January 15, 1995, to the Plant Hal Wansley Operating Agreements
by and among Georgia Power Company, Oglethorpe, Municipal Electric Authority of
Georgia and City of Dalton, Georgia. (Filed as Exhibit 10.5.2(a) to the Registrant's
Form 10-Q for the quarterly period ended September 30, 1996, File No. 33-7591.)
*10.5.3 -- Plant Hal Wansley Combustion Turbine Agreement between Georgia Power Company and
Oglethorpe, dated as of August 2, 1982 and Amendment No. 1, dated October 20, 1982.
(Filed as Exhibit 10.18 to the Registrant's Form S-1 Registration Statement, File No.
33-7591.)
76
NUMBER DESCRIPTION
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*10.6.1 -- Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement between
Georgia Power Company and Oglethorpe, dated as of January 6, 1975. (Filed as Exhibit
10.9.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.6.2 -- Edwin I. Hatch Nuclear Plant Operating Agreement between Georgia Power Company and
Oglethorpe, dated as of January 6, 1975. (Filed as Exhibit 10.9.2 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591.)
*10.7.1 -- Rocky Mountain Pumped Storage Hydroelectric Project Ownership Participation Agreement,
dated as of November 18, 1988, by and between Oglethorpe and Georgia Power Company.
(Filed as Exhibit 10.22.1 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1988, File No. 33-7591.)
*10.7.2 -- Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement, dated as of
November 18, 1988, by and between Oglethorpe and Georgia Power Company. (Filed as
Exhibit 10.22.2 to the Registrant's Form 10-K for the fiscal year ended December 31,
1988, File No. 33-7591.)
*10.8.1 -- Amended and Restated Wholesale Power Contract, dated as of August 1, 1996, between
Oglethorpe and Altamaha Electric Membership Corporation and all schedules thereto,
together with a Schedule identifying 37 other substantially identical Amended and
Restated Wholesale Power Contracts, and an additional Amended and Restated Wholesale
Power Contract that is not substantially identical. (Filed as Exhibit 10.8.1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.8.2 -- Amended and Restated Supplemental Agreement, dated as of August 1, 1996, by and
between Oglethorpe, Altamaha Electric Membership Corporation and the United States of
America, together with a Schedule identifying 38 other substantially identical Amended
and Restated Supplemental Agreements. (Filed as Exhibit 10.8.2 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.8.3 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as
of January 1, 1997, by and among Georgia Power Company, Oglethorpe and Altamaha
Electric Membership Corporation, together with a Schedule identifying 38 other
substantially identical Supplemental Agreements. (Filed as Exhibit 10.8.3 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.8.4 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as
of March 1, 1997, by and between Oglethorpe and Altamaha Electric Membership
Corporation, together with a Schedule identifying 36 other substantially identical
Supplemental Agreements, and an additional Supplemental Agreement that is not
substantially identical. (Filed as Exhibit 10.8.4 to the Registrant's Form 10-K for
the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.8.5 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as
of March 1, 1997, by and between Oglethorpe and Coweta-Fayette Electric Membership
Corporation, together with a Schedule identifying 1 other substantially identical
Supplemental Agreement. (Filed as Exhibit 10.8.5 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996, File No. 33-7591.)
77
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*10.8.6 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as
of May 1, 1997 by and between Oglethorpe and Altamaha Electric Membership Corporation,
together with a Schedule identifying 38 other substantially identical Supplemental
Agreements. (Filed as Exhibit 10.8.6 to the Registrant's Form 10-Q for the quarterly
period ended June 30, 1997, File No. 33-7591.)
*10.9(a) -- Joint Committee Agreement among Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and the City of Dalton, Georgia, dated as of August 27, 1976.
(Filed as Exhibit 10.14(b) to the Registrant's Form S-1 Registration Statement, File
No. 33-7591.)
*10.9(b) -- First Amendment to Joint Committee Agreement among Georgia Power Company, Oglethorpe,
Municipal Electric Authority of Georgia and the City of Dalton, Georgia, dated as of
June 19, 1978. (Filed as Exhibit 10.14(a) to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.10 -- Letter of Commitment (Firm Power Sale) Under Service Schedule J-- Negotiated
Interchange Service between Alabama Electric Cooperative, Inc. and Oglethorpe, dated
March 31, 1994. (Filed as Exhibit 10.11(b) to the Registrant's Form 10-Q for the
quarter ended June 30, 1994, File No. 33-7591.)
*10.11.1 -- Assignment of Power System Agreement and Settlement Agreement, dated January 8, 1975,
by Georgia Electric Membership Corporation to Oglethorpe. (Filed as Exhibit 10.20.1 to
the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.11.2 -- Power System Agreement, dated April 24, 1974, by and between Georgia Electric
Membership Corporation and Georgia Power Company. (Filed as Exhibit 10.20.2 to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.11.3 -- Settlement Agreement, dated April 24, 1974, by and between Georgia Power Company,
Georgia Municipal Association, Inc., City of Dalton, Georgia Electric Membership
Corporation and Crisp County Power Commission. (Filed as Exhibit 10.20.3 to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.12 -- Long-Term Firm Power Purchase Agreement between Big Rivers Electric Corporation and
Oglethorpe, dated as of December 17, 1990. (Filed as Exhibit 10.24.3 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.)
*10.13 -- Block Power Sale Agreement between Georgia Power Company and Oglethorpe, dated as of
November 12, 1990. (Filed as Exhibit 10.25 to the Registrant's Form 8-K, filed January
4, 1991, File No. 33-7591.)
10.14 -- Revised and Restated Coordination Services Agreement between and among Georgia Power
Company, Oglethorpe and Georgia System Operations Corporation, dated as of September
10, 1997.
*10.15 -- ITSA, Power Sale and Coordination Umbrella Agreement between Oglethorpe and Georgia
Power Company, dated as of November 12, 1990. (Filed as Exhibit 10.28 to the
Registrant's Form 8-K, filed January 4, 1991, File No. 33-7591.)
*10.16 -- Amended and Restated Nuclear Managing Board Agreement among Georgia Power Company,
Oglethorpe Power Corporation, Municipal Electric Authority of Georgia and City of
Dalton, Georgia dated as of July 1, 1993. (Filed as Exhibit 10.36 to the Registrant's
10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.)
78
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*10.17 -- Supplemental Agreement by and among Oglethorpe, Tri-County Electric Membership
Cooperation and Georgia Power Company, dated as of November 12, 1990, together with a
Schedule identifying 38 other substantially identical Supplemental Agreements. (Filed
as Exhibit 10.30 to the Registrant's Form 8-K, filed January 4, 1991, File No.
33-7591.)
*10.18 -- Unit Capacity and Energy Purchase Agreement between Oglethorpe and Entergy Power
Incorporated, dated as of October 11, 1990. (Filed as Exhibit 10.31 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.)
*10.19 -- Power Purchase Agreement between Oglethorpe and Hartwell Energy Limited Partnership,
dated as of June 12, 1992. (Filed as Exhibit 10.35 to the Registrant's Form 10-K for
the fiscal year ended December 31, 1992, File No. 33-7591).
*10.20(3) -- Employment Agreement between Oglethorpe and T. D. Kilgore, dated as of December 20,
1995. (Filed as Exhibit 10.28 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1995, File No. 33-7591.)
*10.21(2) -- Power Purchase and Sale Agreement among LG&E Power Marketing Inc., LG&E Energy Corp.
and Oglethorpe, dated as of November 19, 1996. (Filed as Exhibit 10.30 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.22(2) -- Power Purchase and Sale Agreement among LG&E Power Marketing Inc., LG&E Power Inc. and
Oglethorpe, dated as of January 1, 1997. (Filed as Exhibit 10.31 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.1 -- Participation Agreement (P1), dated as of December 30, 1996, among Oglethorpe, Rocky
Mountain Leasing Corporation, Fleet National Bank, as Owner Trustee, SunTrust Bank,
Atlanta, as Co-Trustee, the Owner Participant named therein and Utrecht-America
Finance Co., as Lender, together with a Schedule identifying five other substantially
identical Participation Agreements. (Filed as Exhibit 10.32.1 to the Registrant's Form
10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.2 -- Rocky Mountain Head Lease Agreement (P1), dated as of December 30, 1996, between
Oglethorpe and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule
identifying five other substantially identical Rocky Mountain Head Lease Agreements.
(Filed as Exhibit 10.32.2 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.23.3 -- Ground Lease Agreement (P1), dated as of December 30, 1996, between Oglethorpe and
SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other
substantially identical Ground Lease Agreements. (Filed as Exhibit 10.32.3 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.4 -- Rocky Mountain Agreements Assignment and Assumption Agreement (P1), dated as of
December 30, 1996, between Oglethorpe and SunTrust Bank, Atlanta, as Co-Trustee,
together with a Schedule identifying five other substantially identical Rocky Mountain
Agreements Assignment and Assumption Agreements. (Filed as Exhibit 10.32.4 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
79
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*10.23.5 -- Facility Lease Agreement (P1), dated as of December 30, 1996, between SunTrust Bank,
Atlanta, as Co-Trustee and Rocky Mountain Leasing Corporation, together with a
Schedule identifying five other substantially identical Facility Lease Agreements.
(Filed as Exhibit 10.32.5 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.23.6 -- Ground Sublease Agreement (P1), dated as of December 30, 1996, between SunTrust Bank,
Atlanta, as Co-Trustee and Rocky Mountain Leasing Corporation, together with a
Schedule identifying five other substantially identical Ground Sublease Agreements.
(Filed as Exhibit 10.32.6 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.23.7 -- Rocky Mountain Agreements Re-assignment and Assumption Agreement (P1), dated as of
December 30, 1996, between SunTrust Bank, Atlanta, as Co-Trustee and Rocky Mountain
Leasing Corporation, together with a Schedule identifying five other substantially
identical Rocky Mountain Agreements Re-assignment and Assumption Agreements. (Filed as
Exhibit 10.32.7 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996, File No. 33-7591.)
*10.23.8 -- Facility Sublease Agreement (P1), dated as of December 30, 1996, between Oglethorpe
and Rocky Mountain Leasing Corporation, together with a Schedule identifying five
other substantially identical Facility Sublease Agreements. (Filed as Exhibit 10.32.8
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No.
33-7591.)
*10.23.9 -- Ground Sub-sublease Agreement (P1), dated as of December 30, 1996, between Rocky
Mountain Leasing Corporation and Oglethorpe, together with a Schedule identifying five
other substantially identical Ground Sub-sublease Agreements. (Filed as Exhibit
10.32.9 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996,
File No. 33-7591.)
*10.23.10 -- Rocky Mountain Agreements Second Re-assignment and Assumption Agreement (P1), dated as
of December 30, 1996, between Rocky Mountain Leasing Corporation and Oglethorpe,
together with a Schedule identifying five other substantially identical Rocky Mountain
Agreements Second Re-assignment and Assumption Agreements. (Filed as Exhibit 10.32.10
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No.
33-7591.)
*10.23.11 -- Payment Undertaking Agreement (P1), dated as of December 30, 1996, between Rocky
Mountain Leasing Corporation and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
New York Branch, as the Bank, together with a Schedule identifying five other
substantially identical Payment Undertaking Agreements. (Filed as Exhibit 10.32.11 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No.
33-7591.)
*10.23.12 -- Payment Undertaking Pledge Agreement (P1), dated as of December 30, 1996, between
Rocky Mountain Leasing Corporation, Fleet National Bank, as Owner Trustee, and
SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other
substantially identical Payment Undertaking Pledge Agreements. (Filed as Exhibit
10.32.12 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996,
File No. 33-7591.)
80
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*10.23.13 -- Equity Funding Agreement (P1), dated as of December 30, 1996, between Rocky Mountain
Leasing Corporation, AIG Match Funding Corp., the Owner Participant named therein,
Fleet National Bank, as Owner Trustee, and SunTrust Bank, Atlanta, as Co-Trustee,
together with a Schedule identifying five other substantially identical Equity Funding
Agreements. (Filed as Exhibit 10.32.13 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
*10.23.14 -- Equity Funding Pledge Agreement (P1), dated as of December 30, 1996, between Rocky
Mountain Leasing Corporation and SunTrust Bank, Atlanta, as Co-Trustee, together with
a Schedule identifying five other substantially identical Equity Funding Pledge
Agreements. (Filed as Exhibit 10.32.14 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
*10.23.15 -- Deed to Secure Debt, Assignment of Surety Bond and Security Agreement (P1), dated as
of December 30, 1996, between Rocky Mountain Leasing Corporation, SunTrust Bank,
Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially
identical Collateral Assignment, Assignment of Surety Bond and Security Agreements.
(Filed as Exhibit 10.32.15 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.23.16 -- Subordinated Deed to Secure Debt and Security Agreement (P1), dated as of December 30,
1996, among Oglethorpe, AMBAC Indemnity Corporation and SunTrust Bank, Atlanta, as
Co-Trustee, together with a Schedule identifying five other substantially identical
Subordinated Deed to Secure Debt and Security Agreements. (Filed as Exhibit 10.32.16
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No.
33-7591.)
*10.23.17 -- Tax Indemnification Agreement (P1), dated as of December 30, 1996, between Oglethorpe
and the Owner Participant named therein, together with a Schedule identifying five
other substantially identical Tax Indemnification Agreements. (Filed as Exhibit
10.32.17 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996,
File No. 33-7591.)
*10.23.18 -- Consent No. 1, dated as of December 30, 1996, among Georgia Power Company, Oglethorpe,
SunTrust Bank, Atlanta, as Co-Trustee, and Fleet National Bank, as Owner Trustee,
together with a Schedule identifying five other substantially identical Consents.
(Filed as Exhibit 10.32.18 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.23.19(a) -- OPC Intercreditor and Security Agreement No. 1, dated as of December 30, 1996, among
the United States of America, acting through the Administrator of the Rural Utilities
Service, SunTrust Bank, Atlanta, Oglethorpe, Rocky Mountain Leasing Corporation,
SunTrust Bank, Atlanta, as Co-Trustee, Fleet National Bank, as Owner Trustee,
Utrecht-America Finance Co., as Lender and AMBAC Indemnity Corporation, together with
a Schedule identifying five other substantially identical Intercreditor and Security
Agreements. (Filed as Exhibit 10.32.19 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
81
NUMBER DESCRIPTION
- ----------------------- --------------------------------------------------------------------------------------
*10.23.19(b) -- Supplement to OPC Intercreditor and Security Agreement No. 1, dated as of March 1,
1997, among the United States of America, acting through the Administrator of the
Rural Utilities Service, SunTrust Bank, Atlanta, Oglethorpe, Rocky Mountain Leasing
Corporation, SunTrust Bank, Atlanta, as Co-Trustee, Fleet National Bank, as Owner
Trustee, Utrecht-America Finance Co., as Lender and AMBAC Indemnity Corporation,
together with a Schedule identifying five other substantially identical Supplements to
OPC Intercreditor and Security Agreements. (Filed as Exhibit 10.32.19(b) to the
Registrant's Form S-4 Registration Statement, File No. 333-42759.)
*10.24.1 -- Member Transmission Service Agreement, dated as of March 1, 1997, by and between
Oglethorpe and Georgia Transmission Corporation (An Electric Membership Corporation).
(Filed as Exhibit 10.33.1 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.24.2 -- Generation Services Agreement, dated as of March 1, 1997, by and between Oglethorpe
and Georgia System Operations Corporation. (Filed as Exhibit 10.33.2 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.24.3 -- Operation Services Agreement, dated as of March 1, 1997, by and between Oglethorpe and
Georgia System Operations Corporation. (Filed as Exhibit 10.33.3 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.25(2) -- Power Purchase and Sale Agreement between Morgan Stanley Capital Group Inc. and
Oglethorpe, dated as of April 7, 1997. (Filed as Exhibit 10.34 to the Registrant's
Form 10-Q for the quarterly period ended March 30, 1997, File No. 33-7591.)
21.1 -- Rocky Mountain Leasing Corporation, a Delaware corporation.
27.1 -- Financial Data Schedule (for SEC use only).
- ------------------------
(1) Pursuant to 17 C.F.R. 229.601(b)(4)(iii), this document(s) is not filed
herewith; however the registrant hereby agrees that such document(s) will be
provided to the Commission upon request.
(2) Certain portions of this document have been omitted as confidential and
filed separately with the Commission.
(3) Indicates a management contract or compensatory arrangement required to be
filed as an exhibit to this Report.
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by Oglethorpe for the quarter ended
December 31, 1997.
82
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 11th day of
March, 1998.
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP CORPORATION)
By: /s/ J. CALVIN EARWOOD
-----------------------------------------
J. CALVIN EARWOOD
Chairman of the Board
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.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ J. CALVIN EARWOOD Chairman of the Board,
- ------------------------------ Director (Principal March 11, 1998
J. CALVIN EARWOOD Executive Officer)
President and Chief
/s/ T. D. KILGORE Executive Officer
- ------------------------------ (Principal Executive March 11, 1998
T. D. KILGORE Officer)
/s/ MAC F. OGLESBY Treasurer, Director
- ------------------------------ (Principal Financial March 11, 1998
MAC F. OGLESBY Officer)
/s/ THOMAS A. SMITH Senior Financial Officer
- ------------------------------ (Principal Financial March 11, 1998
THOMAS A. SMITH Officer)
/s/ ROBERT D. STEELE
- ------------------------------ Controller March 11, 1998
ROBERT D. STEELE
/s/ ASHLEY C. BROWN
- ------------------------------ Director March 11, 1998
ASHLEY C. BROWN
/s/ NEWTON A. CAMPBELL
- ------------------------------ Director March 11, 1998
NEWTON A. CAMPBELL
83
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ LARRY N. CHADWICK
- ------------------------------ Director March 11, 1998
LARRY N. CHADWICK
/s/ BENNY W. DENHAM
- ------------------------------ Director March 11, 1998
BENNY W. DENHAM
/s/ WM. RONALD DUFFEY
- ------------------------------ Director March 11, 1998
WM. RONALD DUFFEY
/s/ SAMMY M. JENKINS
- ------------------------------ Director March 11, 1998
SAMMY M. JENKINS
/s/ J. SAM L. RABUN
- ------------------------------ Director March 11, 1998
J. SAM L. RABUN
/s/ JOHN S. RANSON
- ------------------------------ Director March 11, 1998
JOHN S. RANSON
84
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
The registrant is a membership corporation and has no authorized or outstanding
equity securities. Proxies are not solicited from the holders of Oglethorpe's
public bonds. No annual report or proxy material has been sent to such
bondholders.
85
EXHIBIT INDEX
Exhibits marked with an asterisk (*) are hereby incorporated by reference to
exhibits previously filed by the Registrant as indicated in parentheses
following the description of the exhibit.
NUMBER DESCRIPTION
- -------------- -------------------------------------------------------------------------------------------------
*2.1 -- Second Amended and Restated Restructuring Agreement, dated February 24, 1997, by and among
Oglethorpe, Georgia Transmission Corporation (An Electric Membership Corporation) and Georgia
System Operations Corporation. (Filed as Exhibit 2.1 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
*2.2 -- Member Agreement, dated August 1, 1996, by and among Oglethorpe,
*3.1(a) -- Restated Articles of Incorporation of Oglethorpe, dated as of July 26, 1988. (Filed as Exhibit
3.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1988, File No. 33-7591.)
*3.1(b) -- Amendment to Articles of Incorporation of Oglethorpe, dated as of March 11, 1997. (Filed as
Exhibit 3(i)(b) to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File
No. 33-7591.)
*3.2 -- Bylaws of Oglethorpe, as amended on February 24, 1997, and effective as of March 11, 1997. (Filed
as Exhibit 3(ii) to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File
No. 33-7591.)
*4.1 -- Form of Serial Facility Bond Due June 30, 2011 (included in Collateral Trust Indenture filed as
Exhibit 4.2.)
*4.2 -- Collateral Trust Indenture, dated as of December 1, 1997, between OPC Scherer 1997 Funding
Corporation A, Oglethorpe and SunTrust Bank, Atlanta, as Trustee. (Filed as Exhibit 4.2 to the
Registrant's Form S-4 Registration Statement, File No. 333-42759.)
*4.3 -- Nonrecourse Promissory Lessor Note No. 2, with a Schedule identifying three other substantially
identical Nonrecourse Promissory Lessor Notes and any material differences. (Filed as Exhibit 4.3
to the Registrant's Form S-4 Registration Statement, File No. 333-42759.)
*4.4 -- Amended and Restated Indenture of Trust, Deed to Secure Debt and Security Agreement No. 2, dated
December 1, 1997, between Wilmington Trust Company and NationsBank, N.A. collectively as Owner
Trustee, under Trust Agreement No. 2, dated December 30, 1985, with DFO Partnership, as assignee
of Ford Motor Credit Company, and The Bank of New York Trust Company of Florida, N.A. as
Indenture Trustee, with a Schedule identifying three other substantially identical Amended and
Restated Indentures of Trust, Deeds to Secure Debt and Security Agreements and any material
differences. (Filed as Exhibit 4.4 to the Registrant's Form S-4 Registration Statement, File No.
333-42759.)
*4.5(a) -- Lease Agreement No. 2 dated December 30, 1985, between Wilmington Trust Company and William J.
Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor
Credit Company, Lessor, and Oglethorpe, Lessee, with a Schedule identifying three other
substantially identical Lease Agreements. (Filed as Exhibit 4.5(b) to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
*4.5(b) -- First Supplement to Lease Agreement No. 2 (included as Exhibit B to the Supplemental
Participation Agreement No. 2 listed as 10.1.1(b)).
*4.5(c) -- First Supplement to Lease Agreement No. 1, dated as of June 30, 1987, between The Citizens and
Southern National Bank as Owner Trustee under Trust Agreement No. 1 with IBM Credit Financing
Corporation, as Lessor, and Oglethorpe, as Lessee. (Filed as Exhibit 4.5(c) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1987, File No. 33-7591.)
*4.5(d) -- Second Supplement to Lease Agreement No. 2, dated as of December 17, 1997, between NationsBank,
N.A., acting through its agent, The Bank of New York, as an Owner Trustee under the Trust
Agreement No. 2, dated December 30, 1985, among DFO Partnership, as assignee of Ford Motor Credit
Company, as the Owner Participant, and the Original Trustee, as Lessor, and Oglethorpe, as
Lessee, with a Schedule identifying three other substantially identical Second Supplements to
Lease Agreements and any material differences. (Filed as Exhibit 4.5(d) to the Registrant's Form
S-4 Registration Statement, File No. 333-42759.)
*4.6 -- Amended and Consolidated Loan Contract, dated as of March 1, 1997, between Oglethorpe and the
United States of America, together with four notes executed and delivered pursuant thereto.
(Filed as Exhibit 4.7 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996,
File No. 33-7591.)
*4.7.1(a) -- Indenture, dated as of March 1, 1997, made by Oglethorpe to SunTrust Bank, Atlanta, as trustee.
(Filed as Exhibit 4.8.1 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996, File No. 33-7591.)
*4.7.1(b) -- First Supplemental Indenture, dated as of October 1, 1997, made by Oglethorpe to SunTrust Bank,
Atlanta, as trustee, relating to the Series 1997B (Burke) Note. (Filed as Exhibit 4.8.1(b) to the
Registrant's Form 10-Q for the quarterly period ended September 30, 1997, File No. 33-7591).
4.7.1(c) -- Second Supplemental Indenture, dated as of January 1, 1998, made by Oglethorpe to SunTrust Bank,
Atlanta, as trustee, relating to the Series 1997C (Burke) Assumption Agreement.
4.7.1(d) -- Third Supplemental Indenture, dated as of January 1, 1998, made by Oglethorpe to SunTrust Bank,
Atlanta, as trustee, relating to the Series 1997A (Monroe) Assumption Agreement.
*4.7.2 -- Security Agreement, dated as of March 1, 1997, made by Oglethorpe to SunTrust Bank, Atlanta, as
trustee. (Filed as Exhibit 4.8.2 to the Registrant's Form 10-K for the fiscal year ended December
31, 1996, File No. 33-7591.)
4.8.1(1) -- Loan Agreement, dated as of October 1, 1992, between Development Authority of Monroe County and
Oglethorpe relating to Development Authority of Monroe County Pollution Control Revenue Bonds
(Oglethorpe Power Corporation Scherer Project), Series 1992A, and six other substantially
identical loan agreements.
2
4.8.2(1) -- Note, dated October 1, 1992, from Oglethorpe to Trust Company Bank, as trustee acting pursuant to
a Trust Indenture, dated as of October 1, 1992, between Development Authority of Monroe County
and Trust Company Bank, and six other substantially identical notes.
4.8.3(1) -- Trust Indenture, dated as of October 1, 1992, between Development Authority of Monroe County and
Trust Company Bank, Trustee, relating to Development Authority of Monroe County Pollution Control
Revenue Bonds (Oglethorpe Power Corporation Scherer Project), Series 1992A, and six other
substantially identical trust indentures.
4.9.1(1) -- Loan Agreement, dated as of December 1, 1992, between Development Authority of Burke County and
Oglethorpe relating to Development Authority of Burke County Adjustable Tender Pollution Control
Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A, and one other
substantially identical loan agreement.
4.9.2(1) -- Note, dated December 1, 1992, from Oglethorpe to Trust Company Bank, as trustee acting pursuant
to a Trust Indenture, dated as of December 1, 1992, between Development Authority of Burke County
and Trust Company Bank, and one other substantially identical note.
4.9.3(1) -- Trust Indenture, dated as of December 1, 1992, from Development Authority of Burke County to
Trust Company Bank, as trustee, relating to Development Authority of Burke County Adjustable Tender
Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A , and
one other substantially identical trustindenture.
4.9.4(1) -- Interest Rate Swap Agreement, dated as of December 1, 1992, by and between Oglethorpe and AIG
Financial Products Corp. relating to Development Authority of Burke County Adjustable Tender
Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A, and
one other substantially identical agreement.
4.9.5(1) -- Liquidity Guaranty Agreement, dated as of December 1, 1992, by and between Oglethorpe and AIG
Financial Products Corp. relating to Development Authority of Burke County Adjustable Tender
Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A, and
one other substantially identical agreement.
4.9.6(1) -- Standby Bond Purchase Agreement, dated as of December 14, 1995, between Oglethorpe and Canadian
Imperial Bank of Commerce, New York Agency, relating to Development Authority of Burke County
Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project),
Series 1993A.
4.9.7(1) -- Standby Bond Purchase Agreement, dated as of November 30, 1994, between Oglethorpe and Credit
Local de France, Acting through its New York Agency, relating to the Development Authority of
Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation
Vogtle Project), Series 1994A.
4.10.1(1) -- Loan Agreement, dated as of October 1, 1996, between Development Authority of Burke County and
Oglethorpe relating to Development Authority of Burke County Pollution Control Revenue Bonds
(Oglethorpe Power Corporation Vogtle Project), Series 1996, and three other substantially
identical loan agreements.
3
4.10.2(1) -- Note, dated October 1, 1996, from Oglethorpe to SunTrust Bank, Atlanta, as trustee pursuant to an
Indenture of Trust, dated as of October 1, 1996, between Development Authority of Burke County
and SunTrust Bank, Atlanta, and three other substantially identical notes.
4.10.3(1) -- Indenture of Trust, dated as of October 1, 1996, between Development Authority of Burke County
and SunTrust Bank, Atlanta, as trustee, relating to Development Authority of Burke County
Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1996, and
three other substantially identical indentures.
*4.12.1 -- Indemnity Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia
Transmission Corporation (An Electric Membership Corporation). (Filed as Exhibit 4.13.1 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*4.12.2 -- Indemnification Agreement, dated as of March 11, 1997, by Oglethorpe and Georgia Transmission
Corporation (An Electric Membership Corporation) for the benefit of the United States of America.
(Filed as Exhibit 4.13.2 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996, File No. 33-7591.)
4.13.1(1) -- Master Loan Agreement, dated as of March 1, 1997, between Oglethorpe and CoBank, ACB, MLA
No. 0459.
4.13.2(1) -- Consolidating Supplement, dated as of March 1, 1997, between Oglethorpe and CoBank, ACB, relating
to Loan No. ML0459T1.
4.13.3(1) -- Promissory Note, dated March 1, 1997, in the original principal amount of $7,102,740.26, from
Oglethorpe to CoBank, ACB, relating to Loan No. ML0459T1.
4.13.4(1) -- Consolidating Supplement, dated as of March 1, 1997, between Oglethorpe and CoBank, ACB, relating
to Loan No. ML0459T2.
4.13.5(1) -- Promissory Note, dated March 1, 1997, in the original principal amount of $1,856,475.12, made by
Oglethorpe to CoBank, ACB, relating to Loan No. ML0459T2.
*4.14.1 -- Loan Agreement, Loan No. T-830404, between Oglethorpe and Columbia Bank for Cooperatives, dated
as of April 29, 1983. (Filed as Exhibit 4.18.1 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*4.14.2 -- Promissory Note, Loan No. T-830404-1, in the original principal amount of $9,935,000, from
Oglethorpe to Columbia Bank for Cooperatives, dated as of April 29, 1983. (Filed as Exhibit
4.18.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*4.14.3 -- Security Deed and Security Agreement, dated April 29, 1983, between Oglethorpe and Columbia Bank
for Cooperatives. (Filed as Exhibit 4.18.3 to the Registrant's Form S-1 Registration Statement,
File No. 33-7591, filed on October 9, 1986.)
*4.15 -- Exchange and Registration Rights Agreement, dated December 17, 1997, by and among Oglethorpe, OPC
Scherer 1997 Funding Corporation A, and Goldman, Sachs & Co. as representative of the purchasers
identified therein. (Filed as Exhibit 4.15 to the Registrant's Form S-4 Registration Statement,
File No. 333-42759.)
4
*10.1.1(a) -- Participation Agreement No. 2 among Oglethorpe as Lessee, Wilmington Trust Company as Owner
Trustee, The First National Bank of Atlanta as Indenture Trustee, Columbia Bank for Cooperatives
as Loan Participant and Ford Motor Credit Company as Owner Participant, dated December 30, 1985,
together with a Schedule identifying three other substantially identical Participation
Agreements. (Filed as Exhibit 10.1.1(b) to the Registrant's Form S-1 Registration Statement, File
No. 33-7591.)
*10.1.1(b) -- Supplemental Participation Agreement No. 2. (Filed as Exhibit 10.1.1(a) to the Registrant's Form
S-1 Registration Statement, File No. 33-7591.)
*10.1.1(c) -- Supplemental Participation Agreement No. 1, dated as of June 30, 1987, among Oglethorpe as
Lessee, IBM Credit Financing Corporation as Owner Participant, Wilmington Trust Company and The
Citizens and Southern National Bank as Owner Trustee, The First National Bank of Atlanta, as
Indenture Trustee, and Columbia Bank for Cooperatives, as Loan Participant. (Filed as Exhibit
10.1.1(c) to the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No.
33-7591.)
*10.1.1(d) -- Second Supplemental Participation Agreement No. 2, dated as of December 17, 1997, among
Oglethorpe as Lessee, DFO Partnership, as assignee of Ford Motor Credit Company, as Owner
Participant, Wilmington Trust Company and NationsBank, N.A. as Owner Trustee, The Bank of New
York Trust Company of Florida, N.A. as Indenture Trustee, CoBank, ACB as Loan Participant, OPC
Scherer Funding Corporation, as Original Funding Corporation, OPC Scherer 1997 Funding
Corporation A, as Funding Corporation, and SunTrust Bank, Atlanta, as Original Collateral Trust
Trustee and Collateral Trust Trustee, with a Schedule identifying three substantially identical
Second Supplemental Participation Agreements and any material differences. (Filed as Exhibit
10.1.1(d) to Registrant's Form S-4 Registration Statement, File No. 333-4275.)
*10.1.2 -- General Warranty Deed and Bill of Sale No. 2 between Oglethorpe, Grant or, and Wilmington Trust
Company and William J. Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30,
1985, with Ford Motor Credit Company, Grantee, together with a Schedule identifying three
substantially identical General Warranty Deeds and Bills of Sale. (Filed as Exhibit 10.1.2 to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.3(a) -- Supporting Assets Lease No. 2, dated December 30, 1985, between Oglethorpe, Lessor, and
Wilmington Trust Company and William J. Wade, as Owner Trustees, under Trust Agreement No. 2,
dated December 30, 1985, with Ford Motor Credit Company, Lessee, together with a Schedule
identifying three substantially identical Supporting Assets Leases. (Filed as Exhibit 10.1.3 to
the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.3(b) -- First Amendment to Supporting Assets Lease No. 2, dated as of November 19, 1987, together with a
Schedule identifying three substantially identical First Amendments to Supporting Assets Leases.
(Filed as Exhibit 10.1.3(a) to the Registrant's Form 10-K for the fiscal year ended December 31,
1987, File No. 33-7591.) 5
5
*10.1.4(a) -- Supporting Assets Sublease No. 2, dated December 30, 1985, between Wilmington Trust Company and
William J. Wade, as Owner Trustees under Trust Agreement No. 2 dated December 30, 1985, with Ford
Motor Credit Company, Sublessor, and Oglethorpe, Sublessee, together with a Schedule identifying
three substantially identical Supporting Assets Subleases. (Filed as Exhibit 10.1.4 to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.4(b) -- First Amendment to Supporting Assets Sublease No. 2, dated as of November 19, 1987, together with
a Schedule identifying three substantially identical First Amendments to Supporting Assets
Subleases. (Filed as Exhibit 10.1.4(a) to the Registrant's Form 10-K for the fiscal year ended
December 31, 1987, File No. 33-7591.)
*10.1.5(a) -- Tax Indemnification Agreement No. 2, dated December 30, 1985, between Ford Motor Credit Company,
Owner Participant, and Oglethorpe, Lessee, together with a Schedule identifying three
substantially identical Tax Indemnification Agreements. (Filed as Exhibit 10.1.5 to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.5(b) -- Amendment No. 1 to the Tax Indemnification Agreement No. 2, dated December 17, 1997, between DFO
Partnership, as assignee of Ford Motor Credit Company, as Owner Participant, and Oglethorpe, as
Lessee, with a Schedule identifying three substantially identical Amendments No. 1 to the Tax
Indemnification Agreements and any material differences. (Filed as Exhibit 10.1.5(b) to the
Registrant's Form S-4 Registration Statement, File No. 333-42759.)
*10.1.6 -- Assignment of Interest in Ownership Agreement and Operating Agreement No. 2, dated December 30,
1985, between Oglethorpe, Assignor, and Wilmington Trust Company and William J. Wade, as Owner
Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company,
Assignee, together with Schedule identifying three substantially identical Assignments of
Interest in Ownership Agreement and Operating Agreement. (Filed as Exhibit 10.1.6 to the
Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.7 -- Consent, Amendment and Assumption No. 2 dated December 30, 1985, among Georgia Power Company and
Oglethorpe and Municipal Electric Authority of Georgia and City of Dalton, Georgia and Gulf Power
Company and Wilmington Trust Company and William J. Wade, as Owner Trustees under Trust Agreement
No. 2, dated December 30, 1985, with Ford Motor Credit Company, together with a Schedule
identifying three substantially identical Consents, Amendments and Assumptions. (Filed as Exhibit
10.1.9 to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.1.7(a) -- Amendment to Consent, Amendment and Assumption No. 2, dated as of August 16, 1993, among
Oglethorpe, Georgia Power Company, Municipal Electric Authority of
74
Georgia, City of Dalton,
Georgia, Gulf Power Company, Jacksonville Electric Authority, Florida Power & Light Company and
Wilmington Trust Company and NationsBank of Georgia, N.A., as Owner Trustees under Trust
Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, together with a
Schedule identifying three substantially identical Amendments to Consents, Amendments and
Assumptions. (Filed as Exhibit 10.1.9(a) to the Registrant's Form 10-Q for the quarterly period
ended September 30, 1993, File No. 33-7591.)
*10.2.1 -- Section 168 Agreement and Election dated as of April 7,
1982, between Continental Telephone Corporation and
Oglethorpe. (Filed as Exhibit 10.2 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591, filed
on October 9, 1986.)
*10.2.2 -- Section 168 Agreement and Election dated as of April 9,
1982, between National Service Industries, Inc. and
Oglethorpe. (Filed as Exhibit 10.3 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591, filed
on October 9, 1986.)
*10.2.3 -- Section 168 Agreement and Election dated as of April 9,
1982, between Rollins, Inc. and Oglethorpe. (Filed as
Exhibit 10.4 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591, filed on October 9, 1986.)
*10.2.4 -- Section 168 Agreement and Election dated as of December
13, 1982, between Selig Enterprises, Inc. and
Oglethorpe. (Filed as Exhibit 10.5 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591, filed
on October 9, 1986.)
*10.3.1(a) -- Plant Robert W. Scherer Units Numbers One and Two
Purchase and Ownership Participation Agreement among
Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated
as of May 15, 1980. (Filed as Exhibit 10.6.1 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.3.1(b) -- Amendment to Plant Robert W. Scherer Units Numbers One
and Two Purchase and Ownership Participation Agreement
among Georgia Power Company, Oglethorpe, Municipal
Electric Authority of Georgia and City of Dalton,
Georgia, dated as of December 30, 1985. (Filed as
Exhibit 10.1.8 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591, filed on October 9, 1986.
6
*10.2.1 -- Section 168 Agreement and Election dated as of April 7, 1982, between Continental Telephone
Corporation and Oglethorpe. (Filed as Exhibit 10.2 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.2.2 -- Section 168 Agreement and Election dated as of April 9, 1982, between National Service
Industries, Inc. and Oglethorpe. (Filed as Exhibit 10.3 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.2.3 -- Section 168 Agreement and Election dated as of April 9, 1982, between Rollins, Inc. and
Oglethorpe. (Filed as Exhibit 10.4 to the Registrant's Form S-1 Registration Statement, File No.
33-7591.)
*10.2.4 -- Section 168 Agreement and Election dated as of December 13, 1982, between Selig Enterprises, Inc.
and Oglethorpe. (Filed as Exhibit 10.5 to the Registrant's Form S-1 Registration Statement, File
No. 33-7591.)
*10.3.1(a) -- Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation Agreement
among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of
Dalton, Georgia, dated as of May 15, 1980. (Filed as Exhibit 10.6.1 to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
*10.3.1(b) -- Amendment to Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership
Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of
Georgia and City of Dalton, Georgia, dated as of December 30, 1985. (Filed as Exhibit 10.1.8 to
the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.3.1(c) -- Amendment Number Two to the Plant Robert W. Scherer Units Numbers One and Two Purchase and
Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated as of July 1, 1986. (Filed as Exhibit
10.6.1(a) to the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No.
33-7591.)
*10.3.1(d) -- Amendment Number Three to the Plant Robert W. Scherer Units Numbers One and Two Purchase and
Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated as of August 1, 1988. (Filed as Exhibit
10.6.1(b) to the Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File
No. 33-7591.)
*10.3.1(e) -- Amendment Number Four to the Plant Robert W. Scherer Units Number One and Two Purchase and
Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated as of December 31, 1990. (Filed as
Exhibit 10.6.1(c) to the Registrant's Form 10-Q for the quarterly period ended September 30,
1993, File No. 33-7591.)
*10.3.2(a) -- Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among Georgia Power
Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated
as of May 15, 1980. (Filed as Exhibit 10.6.2 to the Registrant's Form S-1 Registration Statement,
File No. 33-7591.)
*10.3.1(d) -- Amendment Number Three to the Plant Robert W. Scherer
Units Numbers One and Two Purchase and Ownership
Participation Agreement among Georgia Power Company,
Oglethorpe, Municipal Electric Authority of Georgia and
City of Dalton, Georgia, dated as of August 1, 1988.
(Filed as Exhibit 10.6.1(b)
7
*10.3.2(b) -- Amendment to Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among Georgia
Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia,
dated as of December 30, 1985. (Filed as Exhibit 10.1.7 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.3.2(c) -- Amendment Number Two to the Plant Robert W. Scherer Units Numbers One and Two Operating Agreement
among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of
Dalton, Georgia, dated as of December 31, 1990. (Filed as Exhibit 10.6.2(a) to the Registrant's
Form 10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.)
*10.3.3 -- Plant Scherer Managing Board Agreement among Georgia Power Company, Oglethorpe, Municipal
Electric Authority of Georgia, City of Dalton, Georgia, Gulf Power Company, Florida Power & Light
Company and Jacksonville Electric Authority, dated as of December 31, 1990. (Filed as Exhibit
10.6.3 to the Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File No.
33-7591.)
*10.4.1(a) -- Alvin W. Vogtle Nuclear Units Numbers One and Two Purchase and Ownership Participation Agreement
among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of
Dalton, Georgia, dated as of August 27, 1976. (Filed as Exhibit 10.7.1 to the Registrant's Form
S-1 Registration Statement, File No. 33-7591.)
*10.4.1(b) -- Amendment Number One, dated January 18, 1977, to the Alvin W. Vogtle Nuclear Units Numbers One
and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe,
Municipal Electric Authority of Georgia and City of Dalton, Georgia. (Filed as Exhibit 10.7.3 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1986, File No. 33-7591.)
*10.4.1(c) -- Amendment Number Two, dated February 24, 1977, to the Alvin W. Vogtle Nuclear Units Numbers One
and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe,
Municipal Electric Authority of Georgia and City of Dalton, Georgia. (Filed as Exhibit 10.7.4 to
the Registrant's Form 10-K for the fiscal year ended December 31, 1986, File No. 33-7591.)
*10.4.2 -- Alvin W. Vogtle Nuclear Units Numbers One and Two Operating Agreement among Georgia Power
Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated
as of August 27, 1976. (Filed as Exhibit 10.7.2 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.5.1 -- Plant Hal Wansley Purchase and Ownership Participation Agreement between Georgia Power Company
and Oglethorpe, dated as of March 26, 1976. (Filed as Exhibit 10.8.1 to the Registrant's Form S-1
Registration Statement, File No. 33-7591.)
*10.5.2(a) -- Plant Hal Wansley Operating Agreement between Georgia Power Company and Oglethorpe, dated as of
March 26, 1976. (Filed as Exhibit 10.8.2 to the Registrant's Form S-1 Registration Statement,
File No. 33-7591.)
*10.3.1(e) -- Amendment Number Four to the Plant Robert W. Scherer
Units Number One and Two Purchase and Ownership
Participation Agreement among Georgia Power Company,
Oglethorpe, Municipal Electric Authority of Georgia and
City of Dalton, Georgia, dated
75
8
as of December 31, 1990. (Filed as Exhibit 10.6.1(c) to
the Registrant's Form 10-Q for the quarterly period
ended September 30, 1993, File No. 33-7591.)
*10.3.2(a) -- Plant Robert W. Scherer Units Numbers One and Two
Operating Agreement among Georgia Power Company,
Oglethorpe, Municipal Electric Authority of Georgia and
City of Dalton, Georgia, dated as of May 15, 1980.
(Filed as Exhibit 10.6.2 to the Registrant's Form S-1
Registration Statement, File No. 33-7591, filed on
October 9, 1986.)
*10.3.2(b) -- Amendment to Plant Robert W. Scherer Units Numbers One
and Two Operating Agreement among Georgia Power Company,
Oglethorpe, Municipal Electric Authority of Georgia and
City of Dalton, Georgia, dated as of December 30, 1985.
(Filed as Exhibit 10.1.7 to the Registrant's Form S-1
Registration Statement, File No. 33-7591, filed on
October 9, 1986.)
*10.3.2(c) -- Amendment Number Two to the Plant Robert W. Scherer
Units Numbers One and Two Operating Agreement among
Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated
as of December 31, 1990. (Filed as Exhibit 10.6.2(a) to
the Registrant's Form 10-Q for the quarterly period
ended September 30, 1993, File No. 33-7591.)
*10.3.3 -- Plant Scherer Managing Board Agreement among Georgia
Power Company, Oglethorpe, Municipal Electric Authority
of Georgia, City of Dalton, Georgia, Gulf Power Company,
Florida Power & Light Company and Jacksonville Electric
Authority, dated as of December 31, 1990. (Filed as
Exhibit 10.6.3 to the Registrant's Form 10-Q for the
quarterly period ended September 30, 1993, File No.
33-7591.)
*10.4.1(a) -- Alvin W. Vogtle Nuclear Units Numbers One and Two
Purchase and Ownership Participation Agreement among
Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia, dated
as of August 27, 1976. (Filed as Exhibit 10.7.1 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.4.1(b) -- Amendment Number One, dated January 18, 1977, to the
Alvin W. Vogtle Nuclear Units Numbers One and Two
Purchase and Ownership Participation Agreement among
Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia. (Filed
as Exhibit 10.7.3 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1986, File No. 33-7591.)
*10.4.1(c) -- Amendment Number Two, dated February 24, 1977, to the
Alvin W. Vogtle Nuclear Units Numbers One and Two
Purchase and Ownership Participation Agreement among
Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and City of Dalton, Georgia. (Filed
as Exhibit 10.7.4 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1986, File No. 33-7591.)
*10.4.2 -- Alvin W. Vogtle Nuclear Units Numbers One and Two
Operating Agreement among Georgia Power Company,
Oglethorpe, Municipal Electric Authority of Georgia and
City of Dalton, Georgia, dated as of August 27, 1976.
(Filed as Exhibit 10.7.2 to the Registrant's Form S-1
Registration Statement, File No. 33-7591, filed on
October 9, 1986.)
*10.5.1 -- Plant Hal Wansley Purchase and Ownership Participation
Agreement between Georgia Power Company and Oglethorpe,
dated as of March 26, 1976. (Filed as Exhibit 10.8.1 to
76
the Registrant's Form S-1 Registration Statement, File
No. 33-7591, filed on October 9, 1986.)
*10.5.2(a) -- Plant Hal Wansley Operating Agreement between Georgia
Power Company and Oglethorpe, dated as of March 26,
1976. (Filed as Exhibit 10.8.2 to the Registrant's Form
S-1 Registration Statement, File No. 33-7591, filed on
October 9, 1986.)
*10.5.2(b) -- Amendment, dated as of January 15, 1995, to the Plant Hal Wansley Operating Agreements by and
among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of
Dalton, Georgia. (Filed as Exhibit 10.5.2(a) to the Registrant's Form 10-Q for the quarterly
period ended September 30, 1996, File No. 33-7591.)
*10.5.3 -- Plant Hal Wansley Combustion Turbine Agreement between Georgia Power Company and Oglethorpe,
dated as of August 2, 1982 and Amendment No. 1, dated October 20, 1982. (Filed as Exhibit 10.18
to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.6.1 -- Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement between Georgia Power
Company and Oglethorpe, dated as of January 6, 1975. (Filed as Exhibit 10.9.1 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591.)
*10.6.2 -- Edwin I. Hatch Nuclear Plant Operating Agreement between Georgia Power Company and Oglethorpe,
dated as of January 6, 1975. (Filed as Exhibit 10.9.2 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.7.1 -- Rocky Mountain Pumped Storage Hydroelectric Project Ownership Participation Agreement, dated as
of November 18, 1988, by and between Oglethorpe and Georgia Power Company. (Filed as Exhibit
10.22.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1988, File No.
33-7591.)
*10.7.2 -- Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement, dated as of November 18,
1988, by and between Oglethorpe and Georgia Power Company. (Filed as Exhibit 10.22.2 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1988, File No. 33-7591.)
*10.8.1 -- Amended and Restated Wholesale Power Contract, dated as of August 1, 1996, between Oglethorpe and
Altamaha Electric Membership Corporation and all schedules thereto, together with a Schedule
identifying 37 other substantially identical Amended and Restated Wholesale Power Contracts, and
an additional Amended and Restated Wholesale Power Contract that is not substantially identical.
(Filed as Exhibit 10.8.1 to the Registrant's Form 10-K for the fiscal year ended December 31,
1996, File No. 33-7591.)
*10.8.2 -- Amended and Restated Supplemental Agreement, dated as of August 1, 1996, by and between
Oglethorpe, Altamaha Electric Membership Corporation and the United States of America, together
with a Schedule identifying 38 other substantially identical Amended and Restated Supplemental
Agreements. (Filed as Exhibit 10.8.2 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.8.3 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of January
1, 1997, by and among Georgia Power Company, Oglethorpe and Altamaha Electric Membership
Corporation, together with a Schedule identifying 38 other substantially identical Supplemental
Agreements. (Filed as Exhibit 10.8.3 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.5.3 -- Plant Hal Wansley Combustion Turbine Agreement between
Georgia Power Company and Oglethorpe, dated as of August
2, 1982 and Amendment No. 1, dated October 20, 1982.
(Filed as Exhibit 10.18 to the Registrant's Form S-1
Registration Statement, File No. 33-7591, filed on
October
9
1986.)
*10.6.1 -- Edwin I. Hatch Nuclear Plant Purchase and Ownership
Participation Agreement between Georgia Power Company
and Oglethorpe, dated as of January 6, 1975. (Filed as
Exhibit 10.9.1 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591, filed on October 9, 1986.)
*10.6.2 -- Edwin I. Hatch Nuclear Plant Operating Agreement between
Georgia Power Company and Oglethorpe, dated as of
January 6, 1975. (Filed as Exhibit 10.9.2 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.7.1 -- Rocky Mountain Pumped Storage Hydroelectric Project
Ownership Participation Agreement, dated as of November
18, 1988, by and between Oglethorpe and Georgia Power
Company. (Filed as Exhibit 10.22.1 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1988,
File No. 33-7591.)
*10.7.2 -- Rocky Mountain Pumped Storage Hydroelectric Project
Operating Agreement, dated as of November 18, 1988, by
and between Oglethorpe and Georgia Power Company. (Filed
as Exhibit 10.22.2 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1988, File No. 33-7591.)
10.8.1 -- Amended and Restated Wholesale Power Contract, dated as
of August 1, 1996, between Oglethorpe and Altamaha
Electric Membership Corporation and all schedules
thereto, together with a Schedule identifying 37 other
substantially identical Amended and Restated Wholesale
Power Contracts, and an additional Amended and Restated
Wholesale Power Contract that is not substantially
identical.
10.8.2 -- Amended and Restated Supplemental Agreement, dated as of
August 1, 1996, by and between Oglethorpe, Altamaha
Electric Membership Corporation and the United States of
America, together with a Schedule identifying 38 other
substantially identical Amended and Restated
Supplemental Agreements.
10.8.3 -- Supplemental Agreement to the Amended Restated Wholesale
Power Contract, dated as of January 1, 1997, by and
among Georgia Power Company, Oglethorpe and Altamaha
Electric Membership Corporation, together with a
Schedule identifying 38 other substantially identical
Supplemental Agreements.
77
10.8.4 -- Supplemental Agreement to the Amended Restated Wholesale
Power Contract, dated as of March 1, 1997, by and
between Oglethorpe and Altamaha Electric Membership
Corporation, together with a Schedule identifying 36
other substantially identical Supplemental Agreements,
and an additional Supplemental Agreement that is not
substantially identical.
10.8.5 -- Supplemental Agreement to the Amended Restated Wholesale
Power Contract, dated as of March 1, 1997, by and
between Oglethorpe and Coweta-Fayette Electric
Membership Corporation, together with a Schedule
identifying 1 other substantially identical Supplemental
Agreement.
*10.9 -- Transmission Facilities Operation and Maintenance
Contract between Georgia Power Company and Oglethorpe
dated as of June 9, 1986. (Filed as Exhibit 10.13 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.10(a) -- Joint Committee Agreement among Georgia Power Company,
Oglethorpe, Municipal Electric Authority of Georgia and
the City of Dalton, Georgia, dated as of August 27,
1976. (Filed as Exhibit 10.14(b) to the Registrant's
Form S-1 Registration Statement, File No. 33-7591, filed
on October 9, 1986.)
*10.10(b) -- First Amendment to Joint Committee Agreement among
Georgia Power Company, Oglethorpe, Municipal Electric
Authority of Georgia and the City of Dalton, Georgia,
dated as of June 19, 1978. (Filed as Exhibit 10.14(a) to
the Registrant's Form S-1 Registration Statement, File
No. 33-7591, filed on October 9, 1986.)
*10.11 -- Interconnection Agreement between Oglethorpe and Alabama
Electric Cooperative, Inc., dated as of November 12,
1990. (Filed as Exhibit 10.16(a) to the Registrant's
Form 10-K for the fiscal year ended December 31, 1990,
File No. 33-7591.)
*10.11(a) -- Amendment No. 1 to Interconnection Agreement between
Alabama Electric Cooperative, Inc. and Oglethorpe, dated
as of April 22, 1994. (Filed as Exhibit 10.11(a) to the
Registrant's Form 10-Q for the quarter ended June 30,
1994, File No. 33-7591.)
*10.11(b) -- Letter of Commitment (Firm Power Sale) Under Service
Schedule J - Negotiated Interchange Service between
Alabama Electric Cooperative, Inc. and Oglethorpe, dated
March 31, 1994. (Filed as Exhibit 10.11(b) to the
Registrant's Form 10-Q for the quarter ended June 30,
1994, File No. 33-7591.)
*10.12 -- Oglethorpe Deferred Compensation Plan for Key Employees,
as Amended and Restated January, 1987. (Filed as Exhibit
10.19 to the Registrant's Form 10-K for the fiscal year
ended December 31, 1986, File No. 33-7591.)
*10.13.1 -- Assignment of Power System Agreement and Settlement
Agreement, dated January 8, 1975, by Georgia Electric
Membership Corporation to Oglethorpe. (Filed as Exhibit
10.20.1 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591, filed on October 9, 1986.)
*10.13.2 -- Power System Agreement, dated April 24, 1974, by and
between Georgia Electric Membership Corporation and
Georgia Power Company. (Filed as Exhibit 10.20.2 to the
78
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.13.3 -- Settlement Agreement, dated April 24, 1974, by and
between Georgia Power Company, Georgia Municipal
Association, Inc., City of Dalton, Georgia Electric
Membership Corporation and Crisp County Power
Commission. (Filed as Exhibit 10.20.3 to the
Registrant's Form S-1 Registration Statement, File No.
33-7591, filed on October 9, 1986.)
*10.14 -- Distribution Facilities Joint Use Agreement between
Oglethorpe and Georgia Power Company, dated as of May
12, 1986. (Filed as Exhibit 10.21 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1986,
File No. 33-7591.)
*10.15.1 -- Long Term Firm Power Purchase Agreement, dated as of
July 19, 1989, by and between Oglethorpe and Big Rivers
Electric Corporation. (Filed as Exhibit 10.24.1 to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1989, File No. 33-7591.)
*10.15.2 -- Coordination Services Agreement, dated as of August 21,
1989, by and between Oglethorpe and Georgia Power
Company. (Filed as Exhibit 10.24.2 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1989,
File No. 33-7591.)
*10.15.3 -- Long Term
*10.8.4 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of March 1,
1997, by and between Oglethorpe and Altamaha Electric Membership Corporation, together with a
Schedule identifying 36 other substantially identical Supplemental Agreements, and an additional
Supplemental Agreement that is not substantially identical. (Filed as Exhibit 10.8.4 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.8.5 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of March 1,
1997, by and between Oglethorpe and Coweta-Fayette Electric Membership Corporation, together with
a Schedule identifying 1 other substantially identical Supplemental Agreement. (Filed as Exhibit
10.8.5 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No.
33-7591.)
*10.8.6 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of May 1,
1997 by and between Oglethorpe and Altamaha Electric Membership Corporation, together with a
Schedule identifying 38 other substantially identical Supplemental Agreements. (Filed as Exhibit
10.8.6 to the Registrant's Form 10-Q for the quarterly period ended June 30, 1997, File No.
33-7591.)
*10.9(a) -- Joint Committee Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority
of Georgia and the City of Dalton, Georgia, dated as of August 27, 1976. (Filed as Exhibit
10.14(b) to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.9(b) -- First Amendment to Joint Committee Agreement among Georgia Power Company, Oglethorpe, Municipal
Electric Authority of Georgia and the City of Dalton, Georgia, dated as of June 19, 1978. (Filed
as Exhibit 10.14(a) to the Registrant's Form S-1 Registration Statement, File No. 33-7591.)
*10.10 -- Letter of Commitment (Firm Power Sale) Under Service Schedule J--Negotiated Interchange Service
between Alabama Electric Cooperative, Inc. and Oglethorpe, dated March 31, 1994. (Filed as
Exhibit 10.11(b) to the Registrant's Form 10-Q for the quarter ended June 30, 1994, File No.
33-7591.)
*10.11.1 -- Assignment of Power System Agreement and Settlement Agreement, dated January 8, 1975, by Georgia
Electric Membership Corporation to Oglethorpe. (Filed as Exhibit 10.20.1 to the Registrant's
Form S-1 Registration Statement, File No. 33-7591.)
*10.11.2 -- Power System Agreement, dated April 24, 1974, by and between Georgia Electric Membership Corporation
and Georgia Power Company. (Filed as Exhibit 10.20.2 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.11.3 -- Settlement Agreement, dated April 24, 1974, by and between Georgia Power Company, Georgia
Municipal Association, Inc., City of Dalton, Georgia Electric Membership Corporation and Crisp
County Power Commission. (Filed as Exhibit 10.20.3 to the Registrant's Form S-1 Registration
Statement, File No. 33-7591.)
*10.12 -- Long-Term Firm Power Purchase Agreement between Big Rivers Electric Corporation and Oglethorpe,
dated as of December 17, 1990. (Filed as Exhibit 10.24.3 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1990, File No. 33-7591.)
*10.15.4 -- Interchange Agreement between Oglethorpe and Big Rivers
Electric Corporation, dated as of November 12, 1990.
(Filed as Exhibit 10.24.4
10
*10.13 -- Block Power Sale Agreement between Georgia Power Company and Oglethorpe, dated as of November 12,
1990. (Filed as Exhibit 10.25 to the Registrant's Form 8-K, filed January 4, 1991, File No.
33-7591.)
10.14 -- Revised and Restated Coordination Services Agreement between and among Georgia Power Company,
Oglethorpe and Georgia System Operations Corporation, dated as of September 10, 1997.
*10.15 -- ITSA, Power Sale and Coordination Umbrella Agreement between Oglethorpe and Georgia Power
Company, dated as of November 12, 1990. (Filed as Exhibit 10.28 to the Registrant's Form 8-K,
filed January 4, 1991, File No. 33-7591.)
*10.16 -- Amended and Restated Nuclear Managing Board Agreement among Georgia Power Company, Oglethorpe
Power Corporation, Municipal Electric Authority of Georgia and City of Dalton, Georgia dated as
of July 1, 1993. (Filed as Exhibit 10.36 to the Registrant's 10-Q for the quarterly period ended
September 30, 1993, File No. 33-7591.)
*10.17 -- Supplemental Agreement by and among Oglethorpe, Tri-County Electric Membership Cooperation and
Georgia Power Company, dated as of November 12, 1990, together with a Schedule identifying 38
other substantially identical Supplemental Agreements. (Filed as Exhibit 10.30 to the
Registrant's Form 8-K, filed January 4, 1991, File No. 33-7591.)
*10.18 -- Unit Capacity and Energy Purchase Agreement between Oglethorpe and Entergy Power Incorporated,
dated as of October 11, 1990. (Filed as Exhibit 10.31 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1990, File No. 33-7591.)
*10.19 -- Power Purchase Agreement between Oglethorpe and Hartwell Energy Limited Partnership, dated as of
June 12, 1992. (Filed as Exhibit 10.35 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1992, File No. 33-7591).
*10.20(3) -- Employment Agreement between Oglethorpe and T. D. Kilgore, dated as of December 20, 1995. (Filed
as Exhibit 10.28 to the Registrant's Form 10-K for the fiscal year ended December 31, 1995, File
No. 33-7591.)
*10.21(2) -- Power Purchase and Sale Agreement among LG&E Power Marketing Inc., LG&E Energy Corp. and
Oglethorpe, dated as of November 19, 1996. (Filed as Exhibit 10.30 to the Registrant's Form 10-K
for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.22(2) -- Power Purchase and Sale Agreement among LG&E Power Marketing Inc., LG&E Power Inc. and
Oglethorpe, dated as of January 1, 1997. (Filed as Exhibit 10.31 to the Registrant's Form 10-K
for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.1 -- Participation Agreement (P1), dated as of December 30, 1996, among Oglethorpe, Rocky Mountain
Leasing Corporation, Fleet National Bank, as Owner Trustee, SunTrust Bank, Atlanta, as
Co-Trustee, the Owner Participant named therein and Utrecht-America Finance Co., as Lender,
together with a Schedule identifying five other substantially identical Participation Agreements.
(Filed as Exhibit 10.32.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No.
33-7591.)
*10.16 -- Block Power Sale Agreement between Georgia Power Company
and Oglethorpe, dated as of November 12, 1990. (Filed as
Exhibit 10.25 to the Registrant's Form 8-K, filed
January 4, 1991, File No. 33-7591.)
*10.17 -- Coordination Services Agreement between Georgia Power
Company and Oglethorpe, dated as of November 12, 1990.
(Filed as Exhibit 10.26 to the Registrant's Form 8-K,
filed January 4, 1991, File No. 33-7591.)
*10.18 -- Revised and Restated Integrated Transmission System
Agreement between Oglethorpe and Georgia Power Company,
dated as of November 12, 1990. (Filed as Exhibit 10.27
to the Registrant's Form 8-K, filed January 4, 1991,
File No. 33-7591.)
*10.19 -- ITSA, Power Sale and Coordination Umbrella Agreement
between Oglethorpe and Georgia Power Company, dated as
of November 12, 1990. (Filed as Exhibit 10.28 to the
Registrant's Form 8-K, filed January 4, 1991, File No.
33-7591.)
*10.20 -- Amended and Restated Nuclear Managing Board Agreement
among Georgia Power Company, Oglethorpe Power
Corporation, Municipal Electric Authority of Georgia and
City of Dalton, Georgia dated as of July 1, 1993. (Filed
as Exhibit 10.36 to the Registrant's 10-Q for the
quarterly period ended September 30, 1993, File No.
33-7591.)
*10.21 -- Supplemental Agreement by and among Oglethorpe,
Tri-County Electric Membership Cooperation and Georgia
Power Company, dated as of November 12, 1990, together
with
79
a Schedule identifying 38 other substantially identical
Supplemental Agreements. (Filed as Exhibit 10.30 to the
Registrant's Form 8-K, filed January 4, 1991, File No.
33-7591.)
*10.22 -- Unit Capacity and Energy Purchase Agreement between
Oglethorpe and Entergy Power Incorporated, dated as of
October 11, 1990. (Filed as Exhibit 10.31 to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1990, File No. 33-7591.)
*10.23 -- Interchange Agreement between Oglethorpe and Arkansas
Power & Light Company, Louisiana Power & Light Company,
Mississippi Power & Light Company, New Orleans Public
Service, Inc., Energy Services, Inc., dated as of
November 12, 1990. (Filed as Exhibit 10.32 to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1990, File No. 33-7591.)
*10.24 -- Interchange Agreement between Oglethorpe and Seminole
Electric Cooperative, Inc., dated as of November 12,
1990. (Filed as Exhibit 10.33 to the Registrant's Form
10-K for the fiscal year ended December 31, 1990, File
No. 33-7591.)
*10.25.1 -- Excess Energy and Short-term Power Agreement between
Oglethorpe and Tennessee Valley Authority, effective as
of January 23, 1991. (Filed as Exhibit 10.34.1 to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1990, File No. 33-7591.)
*10.25.2 -- Transmission Service Agreement between Oglethorpe and
Tennessee Valley Authority, effective as of January 23,
1991. (Filed as Exhibit 10.34.2 to the Registrant's Form
10-K for the fiscal year ended December 31, 1990, File
No. 33-7591.)
*10.26 -- Power Purchase Agreement between Oglethorpe and Hartwell
Energy Limited Partnership, dated as of June 12, 1992.
(Filed as Exhibit 10.35 to the Registrant's Form 10-K
for the fiscal year ended December 31, 1992, File No.
33-7591).
*10.27(5) -- Master Power Purchase and Sale Agreement between Enron
Power Marketing, Inc. and Oglethorpe, dated as of
January 3, 1996. (Filed as Exhibit 10.27 to the
Registrant's Form 10-K for the fiscal year ended
December 31, 1995, File No. 33-7591.)
*10.27(a) (5) -- Extension and Modification Agreement between Enron Power
Marketing, Inc. and Oglethorpe, dated as of April 30,
1996. (Filed as Exhibit 10.27(a) to the Registrant's
Form 10-Q for the quarterly period ended March 31,
1996, File No. 33-7591.)
*10.28(6) -- Employment Agreement between Oglethorpe and T. D.
Kilgore, dated as of December 20, 1995. (Filed as
Exhibit 10.28
11
*10.23.2 -- Rocky Mountain Head Lease Agreement (P1), dated as of December 30, 1996, between Oglethorpe and
SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other
substantially identical Rocky Mountain Head Lease Agreements. (Filed as Exhibit 10.32.2 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.3 -- Ground Lease Agreement (P1), dated as of December 30, 1996, between Oglethorpe and SunTrust Bank,
Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical
Ground Lease Agreements. (Filed as Exhibit 10.32.3 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
*10.23.4 -- Rocky Mountain Agreements Assignment and Assumption Agreement (P1), dated as of December 30,
1996, between Oglethorpe and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule
identifying five other substantially identical Rocky Mountain Agreements Assignment and
Assumption Agreements. (Filed as Exhibit 10.32.4 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
*10.23.5 -- Facility Lease Agreement (P1), dated as of December 30, 1996, between SunTrust Bank, Atlanta, as
Co-Trustee and Rocky Mountain Leasing Corporation, together with a Schedule identifying five
other substantially identical Facility Lease Agreements. (Filed as Exhibit 10.32.5 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.6 -- Ground Sublease Agreement (P1), dated as of December 30, 1996, between SunTrust Bank, Atlanta, as
Co-Trustee and Rocky Mountain Leasing Corporation, together with a Schedule identifying five
other substantially identical Ground Sublease Agreements. (Filed as Exhibit 10.32.6 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.7 -- Rocky Mountain Agreements Re-assignment and Assumption Agreement (P1), dated as of December 30,
1996, between SunTrust Bank, Atlanta, as Co-Trustee and Rocky Mountain Leasing Corporation,
together with a Schedule identifying five other substantially identical Rocky Mountain Agreements
Re-assignment and Assumption Agreements. (Filed as Exhibit 10.32.7 to the Registrant's Form 10-K
for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.8 -- Facility Sublease Agreement (P1), dated as of December 30, 1996, between Oglethorpe and Rocky
Mountain Leasing Corporation, together with a Schedule identifying five other substantially
identical Facility Sublease Agreements. (Filed as Exhibit 10.32.8 to the Registrant's Form 10-K
for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.9 -- Ground Sub-sublease Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing
Corporation and Oglethorpe, together with a Schedule identifying five other substantially
identical Ground Sub-sublease Agreements. (Filed as Exhibit 10.32.9 to the Registrant's Form 10-K
for the fiscal year ended December 31, 1995, File No. 33-7591.)
*10.29(5) -- Master Power Purchase and Sale Agreement between
Duke/Louis Dreyfus L.L.C. and Oglethorpe, dated as of
August 31, 1996. (Filed as Exhibit 10.29 to the
Registrant's Form 10-Q for the quarterly period ended
September 30, 1996, File No. 33-7591.)
10.30(5) -- Power Purchase and Sale Agreement among LG&E Power
Marketing Inc., LG&E Energy Corp. and Oglethorpe, dated
as of November 19, 1996.
10.31(5) -- Power Purchase and Sale Agreement among LG&E Power
Marketing Inc., LG&E Power Inc. and Oglethorpe, dated as
of January 1, 1997.
80
12
10.32.1 -- Participation Agreement (P1), dated as of December 30,
1996, among Oglethorpe, Rocky Mountain Leasing
Corporation, Fleet National Bank, as Owner Trustee,
SunTrust Bank, Atlanta, as Co-Trustee, the Owner
Participant named therein and Utrecht-America Finance
Co., as Lender, together with a Schedule identifying
five other substantially identical Participation
Agreements.
10.32.2 -- Rocky Mountain Head Lease Agreement (P1), dated as of
December 30, 1996, between Oglethorpe and SunTrust Bank,
Atlanta, as Co-Trustee, together with a Schedule
identifying five other substantially identical Rocky
Mountain Head Lease Agreements.
10.32.3 -- Ground Lease Agreement (P1), dated as of December 30,
1996, between Oglethorpe and SunTrust Bank, Atlanta, as
Co-Trustee, together with a Schedule identifying five
other substantially identical Ground Lease Agreements.
10.32.4 -- Rocky Mountain Agreements Assignment and Assumption
Agreement (P1), dated as of December 30, 1996, between
Oglethorpe and SunTrust Bank, Atlanta, as Co-Trustee,
together with a Schedule identifying five other
substantially identical Rocky Mountain Agreements
Assignment and Assumption Agreements.
10.32.5 -- Facility Lease Agreement (P1), dated as of December 30,
1996, between SunTrust Bank, Atlanta, as Co-Trustee and
Rocky Mountain Leasing Corporation, together with a
Schedule identifying five other substantially identical
Facility Lease Agreements.
10.32.6 -- Ground Sublease Agreement (P1), dated as of December 30,
1996, between SunTrust Bank, Atlanta, as Co-Trustee and
Rocky Mountain Leasing Corporation, together with a
Schedule identifying five other substantially identical
Ground Sublease Agreements.
10.32.7 -- Rocky Mountain Agreements Re-assignment and Assumption
Agreement (P1), dated as of December 30, 1996, between
SunTrust and Rocky Mountain Leasing Corporation,
together with a Schedule identifying five other
substantially identical Rocky Mountain Agreements
Re-assignment and Assumption Agreements.
10.32.8 -- Facility Sublease Agreement (P1), dated as of December
30, 1996, between Oglethorpe and Rocky Mountain Leasing
Corporation, together with a Schedule identifying five
other substantially identical Facility Sublease
Agreements.
10.32.9 -- Ground Sub-sublease Agreement (P1), dated as of December
30, 1996, between Rocky Mountain Leasing Corporation and
Oglethorpe, together with a Schedule identifying five
other substantially identical Ground Sub-sublease
Agreements.
10.32.10 -- Rocky Mountain Agreements Second Re-assignment and
Assumption Agreement (P1), dated as of December 30,
1996, between Rocky Mountain Leasing Corporation and
Oglethorpe, together with a Schedule identifying five
other substantially identical Rocky Mountain Agreements
Second Re-assignment and Assumption Agreements.
10.32.11 -- Payment Undertaking Agreement (P1), dated as of December
30, 1996, between Rocky Mountain Leasing Corporation and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
New York Branch, as the Bank, together with a Schedule
identifying five other substantially identical Payment
Undertaking Agreements.
10.32.12 -- Payment Undertaking Pledge Agreement (P1), dated as of
December 30, 1996, between Rocky Mountain Leasing
Corporation, Fleet National Bank, as Owner Trustee, and
81
*10.23.10 -- Rocky Mountain Agreements Second Re-assignment and Assumption Agreement (P1), dated as of
December 30, 1996, between Rocky Mountain Leasing Corporation and Oglethorpe, together with a
Schedule identifying five other substantially identical Rocky Mountain Agreements Second
Re-assignment and Assumption Agreements. (Filed as Exhibit 10.32.10 to the Registrant's Form 10-K
for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.11 -- Payment Undertaking Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing
Corporation and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., New York Branch, as the
Bank, together with a Schedule identifying five other substantially identical Payment Undertaking
Agreements. (Filed as Exhibit 10.32.11 to the Registrant's Form 10-K for the fiscal year ended
December 31, 1996, File No. 33-7591.)
*10.23.12 -- Payment Undertaking Pledge Agreement (P1), dated as of December 30, 1996, between Rocky Mountain
Leasing Corporation, Fleet National Bank, as Owner Trustee, and SunTrust Bank, Atlanta, as
Co-Trustee, together with a Schedule identifying five other substantially identical Payment
Undertaking Pledge Agreements. (Filed as Exhibit 10.32.12 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.13 -- Equity Funding Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing
Corporation, AIG Match Funding Corp., the Owner Participant named therein, Fleet National Bank,
as Owner Trustee, and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying
five other substantially identical Equity Funding Agreements. (Filed as Exhibit 10.32.13 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.14 -- Equity Funding Pledge Agreement (P1), dated as of December 30, 1996, between Rocky Mountain
Leasing Corporation and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule
identifying five other substantially identical Equity Funding Pledge Agreements. (Filed as
Exhibit 10.32.14 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File
No. 33-7591.)
*10.23.15 -- Deed to Secure Debt, Assignment of Surety Bond and Security Agreement (P1), dated as of December
30, 1996, between Rocky Mountain Leasing Corporation, SunTrust Bank, Atlanta, as Co-Trustee,
together with a Schedule identifying five other substantially identical Collateral Assignment,
Assignment of Surety Bond and Security Agreements. (Filed as Exhibit 10.32.15 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.16 -- Subordinated Deed to Secure Debt and Security Agreement (P1), dated as of December 30, 1996,
among Oglethorpe, AMBAC Indemnity Corporation and SunTrust Bank, Atlanta, as Co-Trustee, together
with a Schedule identifying five other substantially identical Subordinated Deed to Secure Debt
and Security Agreements. (Filed as Exhibit 10.32.16 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
*10.23.17 -- Tax Indemnification Agreement (P1), dated as of December 30, 1996, between Oglethorpe and the
Owner Participant named therein, together with a Schedule identifying five other substantially
identical Tax Indemnification Agreements. (Filed as Exhibit 10.32.17 to the Registrant's Form
10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
13
SunTrust Bank, Atlanta, as Co-Trustee, together with a
Schedule identifying five other substantially identical
Payment Undertaking Pledge Agreements.
10.32.13 -- Equity Funding Agreement (P1), dated as of December 30,
1996, between Rocky Mountain Leasing Corporation, AIG
Match Funding Corp., the Owner Participant named
therein, Fleet National Bank, as Owner Trustee, and
SunTrust Bank, Atlanta, as Co-Trustee, together with a
Schedule identifying five other substantially identical
Equity Funding Agreements.
10.32.14 -- Equity Funding Pledge Agreement (P1), dated as of
December 30, 1996, between Rocky Mountain Leasing
Corporation and SunTrust Bank, Atlanta, as Co-Trustee,
together with a Schedule identifying five other
substantially identical Equity Funding Pledge
Agreements.
10.32.15 -- Deed to Secure Debt, Assignment of Surety Bond and
Security Agreement (P1), dated as of December 30, 1996,
between Rocky Mountain Leasing Corporation, SunTrust
Bank, Atlanta, as Co-Trustee, together with a Schedule
identifying five other substantially identical
Collateral Assignment, Assignment of Surety Bond and
Security Agreements.
10.32.16 -- Subordinated Deed to Secure Debt and Security Agreement
(P1), dated as of December 30, 1996, among Oglethorpe,
AMBAC Indemnity Corporation and SunTrust Bank, Atlanta,
as Co-Trustee, together with a Schedule identifying five
other substantially identical Subordinated Deed to
Secure Debt and Security Agreements.
10.32.17 -- Tax Indemnification Agreement (P1), dated as of December
30, 1996, between Oglethorpe and the Owner Participant
named therein, together with a Schedule identifying five
other substantially identical Tax Indemnification
Agreements.
10.32.18 -- Consent No. 1, dated as of December 30, 1996, among
Georgia Power Company, Oglethorpe, SunTrust Bank,
Atlanta, as Co-Trustee, and Fleet National Bank, as
Owner Trustee, together with a Schedule identifying five
other substantially identical Consents.
10.32.19 -- OPC Intercreditor and Security Agreement No. 1, dated as
of December 30, 1996, among the United States of
America, acting through the Administrator of the Rural
Utilities Service, SunTrust Bank, Atlanta, Oglethorpe,
Rocky Mountain Leasing Corporation, SunTrust Bank,
Atlanta, as Co-Trustee, Fleet National Bank, as Owner
Trustee, Utrecht-America Finance Co., as Lender and
AMBAC Indemnity Corporation, together with a Schedule
identifying five other substantially identical
Intercreditor and Security Agreements.
10.33.1
*10.23.18 -- Consent No. 1, dated as of December 30, 1996, among Georgia Power Company, Oglethorpe, SunTrust
Bank, Atlanta, as Co-Trustee, and Fleet National Bank, as Owner Trustee, together with a Schedule
identifying five other substantially identical Consents. (Filed as Exhibit 10.32.18 to the
Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.23.19(a) -- OPC Intercreditor and Security Agreement No. 1, dated as of December 30, 1996, among the United
State of America, acting through the Administrator of the Rural Utilities Service, SunTrust Bank,
Atlanta, Oglethorpe, Rocky Mountain Leasing Corporation, SunTrust Bank, Atlanta, as Co-Trustee,
Fleet National Bank, as Owner Trustee, Utrecht-America Finance Co., as Lender and AMBAC Indemnity
Corpoation, together with a Schedule identifying five other substantially identical Intercreditor
and Security Agreements. (Filed as Exhibit 10.32.19 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1996, File No. 33-7591.)
10.23.19(b) -- Supplement to OPC Intercreditor and Security Agreement No. 1, dated as of March 1, 1997, among the
United States of America, acting through the Administrator of the Rural Utilities Service, SunTrust
Bank, Atlanta, Oglethorpe, Rocky Mountain Leasing Corporation, SunTrust Bank, Atlanta, as Co-Trustee,
Fleet National Bank, as Owner Trustee, Utrecht-America Finance Co., as Lender and AMBAC Indemnity
Corporation, together with a Schedule identifying five other substantially identical Supplements to OPC
Intercreditor and Security Agreements. (Filed as Exhibit 10.32.19(b) to the Registrant's Form S-4
Registration Statement, File No. 333-42759.)
*10.24.1 -- Member Transmission Service Agreement, dated as of March 1, 1997, by and between Oglethorpe and
Georgia Transmission Corporation (An Electric Membership Corporation). (Filed as Exhibit 10.33.1
to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
*10.24.2 -- Generation Services Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia
System Operations Corporation. (Filed as Exhibit 10.33.2 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996, File No. 33-7591.)
*10.24.3 -- Operation Services Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia
System Operations Corporation. (Filed as Exhibit 10.33.3 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1996, File No. 33-7591.)
*10.25(2) -- Power Purchase and Sale Agreement between Morgan Stanley Capital Group Inc. and Oglethorpe, dated
as of April 7, 1997. (Filed as Exhibit 10.34 to the Registrant's Form 10-Q for the quarterly
period ended March 30, 1997, File No. 33-7591.)
21.1 -- Rocky Mountain Leasing Corporation, a Delaware corporation.
27.1 -- Financial Data Schedule (for SEC use only).
10.33.2 -- Generation Services Agreement, dated as of March 1,
1997, by and between Oglethorpe and Georgia System
Operations Corporation.
10.33.3 -- Operation Services Agreement, dated as of March 1, 1997,
by and between Oglethorpe and Georgia System Operations
Corporation.
21.1 -- Rocky Mountain Leasing Corporation, a Delaware
corporation.
82
27.1 -- Financial Data Schedule (for SEC use only)
- ----------------------------------
(1) Pursuant to 17 C.F.R. 229.601(b)(2), the schedules and exhibits to this
document are identified on a list of schedules and exhibits included
within this document and are not filed herewith; however the registrant
hereby agrees that such schedules and exhibits will be provided to the
Commission upon request.
(2) Pursuant to 17 C.F.R. 229.601(b)(4)(iii), this documentdocument(s) is not filed
herewith; however the registrant hereby agrees that such documentdocument(s) will be
provided to the Commission upon request.
(3) For the reason stated in footnote (2), this document and five other
substantially identical documents are not filed as exhibits to this
Registration Statement.
(4) For the reason stated in footnote (2), this document and another
substantially identical document are not filed as exhibits to this
Registration Statement.
(5) Certain portions of this document have been omitted as confidential and
filed separately with the Commission.
(6)(3) Indicates a management contract or compensatory plan or arrangement required to be
filed as an exhibit to this form pursuant to Item 14(c) of
this report.
All other schedules and exhibits are omitted because of the absence of the
conditions under which they are required or because the required information is
included in the financial statements and related notes to financial statements.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by Oglethorpe for the quarter ended
December 31, 1996.
83
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 26th day of
March 1997.
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP CORPORATION)
By: /s/ J. CALVIN EARWOOD
----------------------------------------------
J. Calvin EARWOOD, CHAIRMAN OF THE BOARD
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.
Signature Title Date
--------- ----- ----
/s/ J. CALVIN EARWOOD Chairman of the Board, March 26, 1997
- ------------------------------------- Director (Principal Executive
J. CALVIN EARWOOD Officer)
/s/ T. D. KILGORE President and Chief Executive March 26, 1997
- ------------------------------------- Officer (Principal Executive
T. D. KILGORE Officer)
/s/ VACANT (Principal Financial Officer) March 26, 1997
- -------------------------------------
VACANT
/s/ ROBERT D. STEELE Controller March 26, 1997
- ------------------------------------- (Principal Accounting Officer)
ROBERT D. STEELE
/s/ ASHLEY C. BROWN Director March 26, 1997
- -------------------------------------
ASHLEY C. BROWN
/s/ NEWTON A. CAMPBELL Director March 26, 1997
- -------------------------------------
NEWTON A. CAMPBELL
/s/ LARRY N. CHADWICK Director March 26, 1997
- -------------------------------------
LARRY N. CHADWICK
/s/ BENNY W. DENHAM Director March 26, 1997
- -------------------------------------
BENNY W. DENHAM
/s/ SAMMY M. JENKINS Director March 26, 1997
- -------------------------------------
SAMMY M. JENKINS
/s/ MAC F. OGLESBY Director March 26, 1997
- -------------------------------------
MAC F. OGLESBY
/s/ J. SAM L. RABUN Director March 26, 1997
- -------------------------------------
J. SAM L. RABUN
84
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
The registrant is a membership corporation and has no authorized or outstanding
equity securities. Proxies are not solicited from the holders of Oglethorpe's
public bonds. No annual report or proxy material has been sent to such
bondholders.
85Report.
14