UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,June 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-2385
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THE DAYTON POWER AND LIGHT COMPANY
(Exact name of registrant as specified in its charter)
OHIO 31-0258470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Courthouse Plaza Southwest
Dayton, Ohio 45402
(Address of principal executive offices)
513-224-6000
(Registrant's telephone number, including area code)
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
----- -----
The registrant meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is
therefore filing this form with the reduced disclosure
format.
Indicate the number of shares of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value 41,172,173 shares
- - ---------------------------- ----------------------------------
(Title of each class) (Outstanding on March 31,June 30, 1994)
THE DAYTON POWER AND LIGHT COMPANY
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statement of
Results of Operations 1
Consolidated Statement of
Cash Flows 2
Consolidated Balance Sheet 3
Notes to Consolidated Financial
Statements 5
Operating Statistics 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
Part II - Other Information 1112
Signatures 1315
i
CONSOLIDATED STATEMENT OF RESULTS OF OPERATIONS
The Dayton Power and Light Company
Three Months Ended March 31Six Months Ended
June 30 June 30
------------------ ------------------
1994 1993 1994 1993
---- ---- ---- ----
--thousands-- --thousands--
INCOME
Utility service revenues--
Electric . . . . . . . . . . . . . . . . . . . . . $250,298 $232,948$226,310 $206,883 $476,608 $439,831
Gas . . . . . . . . . . . . . . . . . . . . . . . 118,876 110,13030,422 30,696 149,298 140,826
Steam . . . . . . . . . . . . . . . . . . . . . . 3,547 3,3611,167 1,082 4,714 4,443
-------- -------- -------- --------
Total utility service revenues . . . . . . . . . 372,721 346,439257,899 238,661 630,620 585,100
Interest and other income . . . . . . . . . . . . . 1,152 2,2625,713 7,229 6,865 9,491
-------- -------- -------- --------
Total Income . . . . . . . . . . . . . . . . . 373,873 348,701263,612 245,890 637,485 594,591
-------- -------- -------- --------
EXPENSES
Fuel used in electric and steam production . . . . . 58,681 59,47154,749 50,750 113,430 110,221
Gas purchased for resale . . . . . . . . . . . . . . 79,215 72,79717,572 17,658 96,787 90,455
Operating and administrative . . . . . . . . . . . . 43,931 47,87433,653 41,910 77,583 89,785
Maintenance of equipment and facilities . . . . . . 16,177 12,79418,443 16,275 34,620 29,069
Depreciation and amortization . . . . . . . . . . . 27,900 27,15627,805 27,106 55,704 54,262
General taxes . . . . . . . . . . . . . . . . . . . 28,995 27,46428,870 27,605 57,865 55,069
Interest expense . . . . . . . . . . . . . . . . . . 23,484 25,30823,307 23,981 46,792 49,288
Allowance for funds used during construction . . . . (205) 114(49) (301) (254) (187)
Regulatory deferrals (Note 2) . . . . . . . . . . . 2,630 (6,151). . . . . 2,682 (6,316) 5,312 (12,467)
-------- -------- -------- --------
Total Operating Expenses . . . . . . . . . . . 280,808 266,827207,032 198,668 487,839 465,495
-------- -------- -------- --------
Operating Income . . . . . . . . . . . . . . . . . . 93,065 81,87456,580 47,222 149,646 129,096
Income Taxes . . . . . . . . . . . . . . . . . . . . 36,847 27,08820,741 14,684 57,589 41,772
-------- -------- -------- --------
Net Income . . . . . . . . . . . . . . . . . . . . . 56,218 54,78635,839 32,538 92,057 87,324
Preferred dividends . . . . . . . . . . . . . . . . 2,120 2,3112,111 2,158 4,231 4,469
-------- -------- -------- --------
Earnings on Common Stock . . . . . . . . . . . . . . $ 54,09833,728 $ 52,47530,380 $ 87,826 $ 82,855
======== ======== ======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
1
CONSOLIDATED STATEMENT OF CASH FLOWS
The Dayton Power and Light Company
ThreeSix Months Ended
March 31June 30
--------------------
1994 1993
---- ----
--thousands--
Operating Activities
-
- --------------------
Cash received from utility customers . . . . . . . . . . . . . . . . . . $355,790 $315,232$651,463 $598,662
Other operating cash receipts . . . . . . . . . . . . . . . . . . . . . 1,330 2,4427,153 4,694
Cash paid for:
Fuel and purchased power . . . . . . . . . . . . . . . . . . . . . . . (57,443) (54,225)(120,333) (105,301)
Purchased gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . (53,057) (42,425)(87,772) (83,309)
Operation and maintenance labor . . . . . . . . . . . . . . . . . . . (25,111) (20,677)(45,437) (38,939)
Non-labor operating expenditures . . . . . . . . . . . . . . . . . . . (46,399) (67,340)(80,838) (123,546)
Interest (net of amounts capitalized) . . . . . . . . . . . . . . . . (23,365) (11,326)(46,051) (37,125)
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) 4,595(42,910) (25,419)
Property, excise and payroll taxes . . . . . . . . . . . . . . . . . . (45,710) (41,145)(65,559) (63,557)
-------- --------
Net cash provided by operating activities . . . . . . . . . . . . . . . 106,031 85,131169,716 126,160
-------- --------
Investing Activities
-
- --------------------
Net cash used for property expenditures and other . . . . . . . . . . . (17,195) (16,975)(32,232) (37,543)
-------- --------
Financing Activities
-
- --------------------
Dividends paid on common and preferred stock . . . . . . . . . . . . . . . (31,120) (29,181)(54,365) (58,328)
Retirement of preferred stock . . . . . . . . . . . . . . . . . . . . . . (94,249) (8,500)
Retirement of short-term debt . . . . . . . . . . . . . . . . . . . . . . (25,000) (62,000)(37,300)
Retirement of long-term debt . . . . . . . . . . . . . . . . . . . . . . . (38) (330,035)(3,137) (433,131)
Issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . - 446,000
Capital contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,184 -
-------- --------
Net cash provided by (used for)used for financing activities . . . . . . . . . . (56,158) 24,784. . . . . . . (113,567) (91,259)
-------- --------
Net increase (decrease) in cash and temporary cash investments . . . . . . . . . . 32,678 92,94023,917 (2,642)
Cash and temporary cash investments at beginning of period . . . . . . . . 5,980 3,679
-------- --------
Cash and temporary cash investments at end of period . . . . . . . . . . . $ 38,65829,897 $ 96,6191,037
======== ========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
2
CONSOLIDATED BALANCE SHEET
The Dayton Power and Light Company
At At
March 31,June 30, December 31,
1994 1993
------------- ------------
--thousands--
ASSETS
Electric property and plant . . . . . . . . . . . . . . . . . . . . . . . $2,935,533$2,940,637 $2,923,842
Gas property and plant . . . . . . . . . . . . . . . . . . . . . . . . . . 241,347243,685 240,126
Steam and other property and plant . . . . . . . . . . . . . . . . . . . . . . . . . 31,978 31,97838,186 38,199
Construction work in progress . . . . . . . . . . . . . . . . . . . . . . 35,82840,670 35,825
---------- ----------
3,244,686 3,231,7713,263,178 3,237,992
Less--
Accumulated depreciation and amortization . . . . . . . . . . . . . . . (974,687)(998,152) (950,546)
---------- ----------
Net property and plant . . . . . . . . . . . . . . . . . . . . . . . . 2,269,999 2,281,2252,265,026 2,287,446
---------- ----------
Current Assets
Cash and temporary cash investments, at cost . . . . . . . . . . . . . . . 38,65829,897 5,980
Accounts receivable, less provision for uncollectible accounts (Note 1) . 207,242. . . . . 93,907 130,113
Inventories, at average cost . . . . . . . . . . . . . . . . . . . . . . . 68,44377,377 85,356
Taxes applicable to subsequent years . . . . . . . . . . . . . . . . . . . 46,68272,853 72,751
Gas costs recoverable . . . . . . . . . . . . . . . . . . . . . . . . . . 11,1582,877 23,052
Prepayments and other . . . . . . . . . . . . . . . . . . . . . . . . . . 43,87411,169 44,874
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 416,057288,080 362,126
---------- ----------
Other Assets
Regulatory deferrals (Note 2) . . . . . . . . . . . . . . . . . . . . . . 175,471177,441 172,832
Income taxes recoverable through future revenues . . . . . . . . . . . . . 263,944259,341 269,144
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131,565 129,003147,147 122,782
---------- ----------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . 570,980 570,979583,929 564,758
---------- ----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,257,036$3,137,035 $3,214,330
========== ==========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
3
CONSOLIDATED BALANCE SHEET
(continued)
The Dayton Power and Light Company
At At
March 31,June 30, December 31,
1994 1993
------------- ------------
--thousands--
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholder's equity--
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 412 $ 412
Other paid-in capital (Note 1) . . . . . . . . . . . . . . . . . . . 738,466. . . . 738,453 675,176
Earnings reinvested in the business . . . . . . . . . . . . . . . . 398,656390,661 373,605
---------- ----------
Total common shareholder's equity . . . . . . . . . . . . . . . 1,137,5341,129,526 1,049,193
Preferred stock--
Without mandatory redemption provisions (Note 1) . . . . . . . . . . 22,851 82,850
With mandatory redemption provisions (Note 1). . . . . . . . . . . . . . 82,850 82,850
With mandatory redemption provisions . . . . . . . . . . . . . . . . 30,000- 30,000
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,012,8671,009,785 1,012,889
---------- ----------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . 2,263,2512,162,162 2,174,932
---------- ----------
Current Liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,14277,126 113,742
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,8054,806 29,805
Current portion of first mortgage bonds and preferred stock . . . . . 8,9804,730 8,980
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,522109,534 113,618
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,67420,858 21,089
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,32647,022 51,353
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 284,449264,076 338,587
---------- ----------
Deferred Credits and Other
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534,122532,981 536,202
Unamortized investment tax credit . . . . . . . . . . . . . . . . . . 84,11082,728 84,858
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,10495,088 79,751
---------- ----------
Total deferred credits and other . . . . . . . . . . . . . . . . 709,336710,797 700,811
---------- ----------
Total Capitalization and Liabilities . . . . . . . . . . . . . . . . . $3,257,036$3,137,035 $3,214,330
========== ==========
See Notes to Consolidated Financial Statements.
These interim statements are unaudited.
4
Notes to Consolidated Financial Statements
1. On March 28, 1994, DPL Inc. issued 3,200,000 shares of
common stock through an Underwriting Agreement. The net proceeds
of $63.2 million included in Accounts Receivable and Other
Paid-In Capital at March 31, 1994, were used to provide a capital contribution to
The Dayton Power and Light Company ("the Company.Company"). This capital
contribution was used, along with internal cash, to redeem all of
the outstanding shares of the Company's Preferred Stock Series
D, E, F, H and I onOn May 6, 1994.
2. Pursuant to the Public Utilities Commission of Ohio
("PUCO")-approved phased in electric rate increase, the third and
final increase of 6.4% took effect January 1, 1994. Deferrals
(including carrying charges) which were capitalized through 1993,
are being recovered over seven years commencing in 1994. Regulatory deferrals on the balance sheet were:
March 31,June 30, Dec. 31,
1994 1993
--------- --------
--millions--
Phase-in $ 83.581.1 $ 85.8
Demand Side Management 28.9Demand-side management 34.0 23.3
Deferred interest - Zimmer 63.162.3 63.7
------ ------
Total $175.5$177.4 $172.8
====== ======
5
3. Statement of Cash Flow Reconciliation.
Reconciliation of Net Income to Net Cash Provided by
Operating Activities:
ThreeSix Months Ended
March 31June 30
1994 1993
---- ----
--millions--
Net Income . . . . . . . . . . . . . . . . . $ 56.292.1 $ 54.887.3
Adjustments for non-cash items:
Depreciation and amortization . . . . . . 27.9 27.155.7 54.3
Deferred income taxes . . . . . . . . . . (4.0) 4.17.5
Taxes applicable to subsequent years . . . 26.1 25.453.4 51.0
Allowance for equity funds used
during construction . . . . . . . . . . (0.1) 0.1(0.1)
Regulatory deferrals (Note 2) . . . . . . 2.6 (6.2). . . . . 5.3 (12.5)
Changes in Working Capital:
Accounts receivable and unbilled revenue . (13.9) (26.8)36.2 4.3
Accounts payable . . . . . . . . . .. . . (23.0) (3.2). . (35.5) (22.3)
Other . . . . . . . . . . . . . . . . . . 31.5 31.9(17.9) (15.2)
Other operating activities . . . . . . . . . 2.7 (22.1)(15.5) (28.1)
------ ------
Net cash provided by operating activities . $106.0 $ 85.1$169.7 $126.2
====== ======
5
4. Reclassifications have been made in certain prior years'
amounts to conform to the current reporting presentation of the
Company.presentation.
5. The consolidated financial statements in this report
have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto in the Company's 1993 Annual Report on Form 10-K.
The information included in this Form 10-Q reflects all
adjustments which are, in the opinion of management, necessary
for a fair statement of the results of operations for the
periods presented. Any adjustments are of a normal recurring
nature.
6
OPERATING STATISTICS
The Dayton Power and Light Company
Three Months Ended March 31
------------------Six Month Ended
June 30 June 30
1994 1993 1994 1993
---- ---- ---- ----
ELECTRIC
Sales (millions of kWh)--
Residential . . . . . . . . . . . . . . . . . 1,426 1,372970 925 2,396 2,297
Commercial . . . . . . . . . . . . . . . . . 749 733727 691 1,476 1,424
Industrial . . . . . . . . . . . . . . . . . 1,039 9411,102 1,038 2,141 1,979
Other . . . . . . . . . . . . . . . . . . . . 544 843617 681 1,161 1,524
------- ------- ------- -------
Total . . . . . . . . . . . . . . . . . . . 3,758 3,8893,416 3,335 7,174 7,224
Revenues (thousands of dollars)--
Residential . . . . . . . . . . . . . . . . . 115,575 105,21587,202 78,512 202,777 183,727
Commercial . . . . . . . . . . . . . . . . . 53,005 48,54853,232 47,098 106,237 95,646
Industrial . . . . . . . . . . . . . . . . . 55,170 47,79457,461 52,175 112,631 99,969
Other . . . . . . . . . . . . . . . . . . . . 26,548 31,39128,415 29,098 54,963 60,489
------- ------- ------- -------
Total . . . . . . . . . . . . . . . . . . . 250,298 232,948226,310 206,883 476,608 439,831
Other Electric Statistics--
Average price per kWh--
retail and wholesale customers (cents) . . 6.60 5.926.56 6.11 6.58 6.01
Fuel cost per net kWh
generated (cents) . . . . . . . . . . . . . 1.47 1.421.39 1.36 1.43 1.40
Electric customers at end of period . . . . . 465,934 461,464466,716 461,276 466,716 461,276
Average kWh use per residential customer . . 3,417 3,3172,322 2,233 5,739 5,550
Peak demand--maximum
one hour use (mw), (net) . . . . . . . . . 2,747 2,4342,824 2,449 2,824 2,449
7
OPERATING STATISTICS
(continued)
The Dayton Power and Light Company
Three Months Ended March 31Six Months Ended
June 30 June 30
------------------ ----------------
1994 1993 1994 1993
---- ---- ---- ----
GAS
Sales (thousands of mcf)--
Residential . . . . . . . . . . . . . . . . . 14,753 13,9523,497 3,459 18,250 17,411
Commercial . . . . . . . . . . . . . . . . . 4,284 3,911952 1,076 5,236 4,987
Industrial . . . . . . . . . . . . . . . . . 1,894 1,503341 452 2,235 1,955
Other . . . . . . . . . . . . . . . . . . . . 1,415 1,389371 415 1,786 1,804
Transportation gas delivered . . . . . . . . 5,177 4,3423,285 2,951 8,462 7,293
------ ------ ------ ------
Total . . . . . . . . . . . . . . . . . . . 8,446 8,353 35,969 33,450
Revenues (thousands of dollars)--
Residential . . . . . . . . . . . . . . . . . 20,138 19,337 99,142 93,081
Commercial . . . . . . . . . . . . . . . . . 4,958 5,275 26,863 25,180
Industrial . . . . . . . . . . . . . . . . . 1,801 2,097 10,598 9,225
Other . . . . . . . . . . . . . . . . . . . . 3,525 3,987 12,695 13,340
------- ------- ------- -------
Total . . . . . . . . . . . . . . . . . . . 27,523 25,097
Revenues (thousands of dollars)--
Residential . . . . . . . . . . . . . . . . . 79,004 73,744
Commercial . . . . . . . . . . . . . . . . . 21,905 19,905
Industrial . . . . . . . . . . . . . . . . . 8,797 7,128
Other . . . . . . . . . . . . . . . . . . . . 9,170 9,353
------- -------
Total . . . . . . . . . . . . . . . . . . . 118,876 110,13030,422 30,696 149,298 140,826
Other Gas Statistics--
Average price per mcf--
retail customers (dollars) . . . . . . . . 5.21 5.175.55 5.30 5.28 5.20
Gas customers at end of period . . . . . . . 287,640 284,820287,271 284,193 287,271 284,193
DEGREE DAYS (based on calendar month)--
Heating . . . . . . . . . . . . . . . . . . . 3,194 2,953600 625 3,794 3,578
Cooling . . . . . . . . . . . . . . . . . . . 0 0350 226 350 226
8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Company's earnings increased $3.3 million and
$5.0 million, respectively, for the first quarter ofand six months
ending June 30, 1994, increased $1.6 millionas compared to the first quartersame periods last
year. Electric sales were strong, reflecting significantly
warmer weather and the continued strength of 1993.
The improved first quarter earnings are due to continued cost
containment and increased energy sales, resulting from the
strong West Central Ohio economy and cold winter weather.
Electric retail sales grew 5% in the first quarter with business
sales increasing 7%. On January 18, 1994, the Company'sOhio's
economy. DP&L customers established a new winterrecently set an all time peak demand
for electricity usage of 2,7472,824 MW exceeding the previous winter peak by 9%. Naturalon June 20. Year-to-date
electric and natural gas retail sales have both increased by 10%5%
over the first quarter of 1993.prior year.
An analysis of the financial condition and results of
operationoperations for the firstsecond quarter and six months ended March 31,June 30,
1994 and 1993 is discussed below.
Financial Condition
-
- -------------------
Construction plans are subject to continuing review and are
expected to be revised in light of changes in financial and
economic conditions, load forecasts, legislative and regulatory
developments and changing environmental standards, among other
factors. The Company's ability to complete its capital projects
and the reliability of future service will be affected by its
financial condition, the availability of external funds at
reasonable cost and adequate and timely rate increases.
In late March and early April 1994, DPL Inc. completed a
public offering of 3.2 million common shares. The net proceeds
were used on May 6, 1994, along with internal cash, to redeem
all of the outstanding shares of the Company's Preferred Stock
Series D, E, F, H and I. The preferred dividend savings will
have a positive impact on earnings.
As of March 31,June 30, 1994, the Company's cash and temporary cash
investment balance was $39$30 million.
The Company has available to it $97 million in short-term
informal lines of credit. As of March 31,June 30, 1994, the Company had
no short-term debt outstanding. DPL Inc. and its subsidiaries
have $200 million available through a Revolving Credit
Agreement. As of March 31,June 30, 1994, DPL Inc. had no outstanding
borrowings under this Credit Agreement. The Company has
authority from the PUCO to issue long and short-termshort term debt up to
$200 million with a maximum debt limit of $300 million which could includeincluding
loans from DPL Inc. under the terms of the Credit Agreement. The Company's
short-term debt is limited to up to $200 million pursuant to
that PUCO authorization.
9
The Company anticipates that it has sufficient capacity to
issue First Mortgage Bonds to satisfy its requirements in
connection with the financing of its construction and
refinancing programs during the five year period 1994-1998.
9
Results of Operations
-
- ---------------------
Electric revenues increased $17.4$19.4 million and
$36.8 million, respectively, for the second quarter and six
months ended June 30, 1994, over the corresponding periods in
1993. Energy sales remained strong in the second quarter and
first quarterhalf of 1994.1994 reflecting the continued strength of the West
Central Ohio economy and unusually warm weather. Total retail
electric sales increased 5% due
to cold weather andfor the strong local economy. Implementationfirst six months of the
third and finalyear, contributing to the increases in revenues. The electric
revenue increase also includes the effects of the last phase of
the electric rate increase of 6.4%
effective in January 1994 also contributed to the increase in
revenues.increase.
Fuel used in electric and steam production decreased
$0.8increased
$4.0 million from last year. A decrease in purchased power
costs resulted from lower salesand $3.2 million, respectively, over the second
quarter and year-to-date 1993, primarily related to other utilities.increased
electric sales.
Gas revenues and gas purchased for resale remained constant
for the quarter compared to the corresponding quarter last
year. Year-to-date gas revenues and gas purchased for resale
increased $8.7$8.5 million and $6.4$6.3 million, respectively, over the
first
quarter ofsame period in 1993. The higher amounts resulted from a weather-relatedtotal
gas retail sales increase of 8% and a higher gas cost recovery factor.
Interest and other income decreased in the second quarter
and first six months of 1994 from 1993 amounts. The 1994
periods included $3.4 million of interest on federal income tax
refunds, compared to $5.8 million in 1993.
Operating and administrative expenses decreased
$3.9$8.3 million in 1994 as compared to 1993.during the second quarter and $12.2 million
year-to-date from the same periods a year ago. Bond redemption
costs of $15 million are includedand $7.5 million were incurred in the 1993 expenses, partially
offsetfirst
and second quarters of 1993. Benefits and claims costs
increased in 1994 by increased benefits and claims costs.versus 1993.
Maintenance expenses increased $3.4$2.2 million and
$5.6 million, respectively, for the second quarter and six
months ended June 30, 1994, over the first
quarter ofcorresponding periods in
1993 due to electric generating station and distribution
maintenance activities.
General taxes expense increased $1.3 million during the
second quarter and $2.8 million year-to-date over the same
periods a year ago. The increase is primarily related to higher
gross receipts taxes due to higher revenues.
10
Interest expense decreased $1.8$2.5 million year-to-date in
1994 due to the issuance of new First Mortgage Bonds in 1993
overlapping the related debt series to bewhich were subsequently
redeemed in 1993 and lower interest rates on long term debt
obtained through the refinancings.
Phase-in deferrals capitalized in years prior to 1994 are
being recovered over a seven year period commencing in 1994.
Income taxes increased $9.8$6.1 million and $15.8 million,
respectively, for the second quarter and year-to-date 1994, over
the first quarter
of 1993 resultingcorresponding periods in 1993. The higher amounts result
from a corresponding increase in taxable income over the same
period a year ago.
10periods in the prior year.
11
Part II. Other Information
---------------------------
Item 5. Other Information.
Electric Operations and Fuel Supply
- -----------------------------------
1. A merger agreement between The Cincinnati Gas &
Electric Company and PSI Resources, Inc. is currently pending.
The Company intervened in the merger proceedings at the Federal
Energy Regulatory Commission ("FERC") in January 1993 and at the
Securities and Exchange Commission in June 1994 to ensure that
the operations of its commonly owned generating units will not
be adversely impacted by the merger.
2. The Company provides partial requirements service to
twelve municipal customers which distribute electricity within
their corporate limits. The Company has negotiated a new
service agreement with these municipalities that is subject
to review and approval by each municipality's government body
and the FERC.
3. The Company has also negotiated a new interconnection
agreement with its only municipal customer that can generate all
or a portion of its energy requirements. This agreement is
currently pending approval by FERC. Sales to municipal
customers represented 1.3% of total electric sales for the
twelve month period ended June 30, 1994.
Gas Operations and Gas Supply
- - -----------------------------
1. On July 31, 1991, Columbia Gas System Inc. and Columbia
Gas Transportation Corporation ("Columbia"), one of the
Company's major pipeline suppliers, filed separate Chapter 11
petitions in U.S. Bankruptcy Court. The PUCO supports open access, nondiscriminatory
transportationbankruptcy court
permitted Columbia to break approximately 4,500 long term
natural gas contracts with upstream suppliers on August 22,
1991, January 6, 1992, and January 8, 1992. On February 13,
1992, the bankruptcy court ruled on a motion by Columbia to flow
through to its customers all appropriate refunds, including
take-or-pay refunds which were received from its upstream
suppliers and excessive rate refunds except for approximately
$18 million of pre-petition take-or-pay refunds. However, on
July 6, 1992, the U.S. District Court for Delaware reversed the
bankruptcy court. On July 8, 1993, the Third Circuit Court of
Appeals reversed the District Court for Delaware and reinstated
12
the U.S. Bankruptcy Court's ruling that Columbia may flow
through to its customers all post petition take-or-pay refunds
which were received from its upstream suppliers. The U.S.
Supreme Court denied an appeal on February 18, 1994 of the Third
Circuit Court of Appeals' decision. The Company has recovered
all appropriate post petition take-or-pay refunds from Columbia
as ordered by the Third Circuit Court of Appeals. Pre-petition
refunds will remain in the bankruptcy estate until a plan of
reorganization is approved.
On June 24, 1994, in Baltimore Gas & Electric Company
v. FERC, the U.S. Court of Appeals for the District of Columbia
Circuit decided in favor of Columbia's customers by holding that
a 1985 settlement between the parties should have prohibited
Columbia from collecting pre-1987 upstream take-or-pay costs
from its customers. FERC has been ordered by the Court of
Appeals to determine the actual amount of the refund due to the
Company and other customers. Such refunds will remain in the
bankruptcy estate until a plan of reorganization is approved.
The parties to the bankruptcy are currently evaluating
Columbia's proposed plan of reorganization. Based upon a July
1993 FERC order disallowing the recovery of natural gas byproducer
contracts rejected in the state's local distribution
companies for end-use customers. The PUCO has guidelinesbankruptcy case, the Company does not
expect the bankruptcy proceedings to providehave a standardized structure for end-use transportation
programs which require a tariff providing the prices, terms and
conditions for such service. The Company filed a transportation
tariff to comply with these guidelines in December 1993. That
tariff was approved by the PUCOmaterial adverse
effect on March 30, 1994 and became
effective on April 6, 1994. The tariff governs the Company's
sales to end-use transportation customers. For the twelve
months ended March 31,its earnings or competitive position.
2. In January 1994, the Company, had 208 end-use customers
transporting 14.2 million cubic feetthe Staff of natural gas under pre-
existing natural gas transportation agreements or this tariff.
Rate Regulationsthe Public
Utilities Commission of Ohio ("PUCO") and Government Legislation
- - -------------------------------------------
The Company has in place a percentage of income payment
plan ("PIPP") for eligible low-income households as required by
the PUCO. This plan prohibits disconnections for nonpayment of
customer bills if eligible low-income households pay a specified
percentage of their household income toward their utility bill.
The PUCO has approved a surcharge by way of a temporary base
rate tariff rider which allows companies to recover arrearages
accumulated under PIPP. In 1993 the Company reached a
settlement with the PUCO staff, the Office of the Ohio
Consumers' Counsel andsubmitted to the Legal Aid SocietyPUCO an agreement which
resolves issues relating to provide new and
expanded programs for PIPP eligible customers. The expanded
programs include greater arrears crediting, lower monthly
payments, educational programs and information reports. In
exchange,the recovery of Order 636
"transition costs" to be billed to the Company may accelerate recovery of PIPP and
pre-PIPP arrearages and recover program costs.by FERC natural
gas interstate pipeline companies. The settlement
also established a four year moratorium on changes to the
program. The PUCO approved the settlement on December 2, 1993.
Pursuant to the terms of the settlement, the Company filed an
application on January 21, 1994 to lower its PIPP rate. The
applicationagreement, which was
approved by the PUCO on March 24,July 14, 1994, provides for the full
recovery of these transition costs from the Company's
customers. The interstate pipelines will file with the FERC for
authority to recover these transition costs, the exact magnitude
of which has not been established.
Rate Regulation and Government Legislation
- -------------------------------------------
1. On April 13, 1994, Ms. Jolynn Barry-Butler was
reappointed as a PUCO commissioner.
13
2. On June 1, 1994, the Company filed its natural gas
Long-Term Forecast Report ("LTFR") with the PUCO. The Company
filed its electric LTFR with the PUCO on June 15, 1994. 11
An
Integrated Resource Plan filed as part of the electric LTFR
included plans for the construction of a series of 70 MW
combustion turbine generating units, the first of which is
scheduled for completion in June 1995, and also the
implementation of demand-side management programs.
Environmental Considerations
- ----------------------------
Land Use
- --------
The Company and numerous other parties received
notification from the Ohio Environmental Protection Agency on
July 27, 1994 that it considers them Potentially Responsible
Parties for clean-up of hazardous substances at the North
Sanitary (a.k.a. Valleycrest) Landfill in Dayton, Ohio. The
Company does not believe it will be required to participate in
the remediation of this site since available information does
not demonstrate that the Company contributed wastes to the
site. The final resolution will not have a material effect on
the Company's financial position or earnings.
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Company during
the quarter ended March 31,June 30, 1994.
1214
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE DAYTON POWER AND LIGHT COMPANY
----------------------------------
(Registrant)
Date: May 16,August 15, 1994 Paul R. Anderson
-
- ------------------------ ----------------------------------
Paul R. Anderson
Controller
(Principal Accounting Officer)
Date: May 16,August 15, 1994 Thomas M. Jenkins
-
- ------------------------ ----------------------------------
Thomas M. Jenkins
Group Vice President and Treasurer
(Principal Financial Officer)
1315