- - ---------------------------------------------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  ------____________

                                    FORM 10-Q
(MARK ONE)

/X/[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 _____________

                           Commission File No. 33-7591

                                  --------------------____________

                          OGLETHORPE POWER CORPORATION
         (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION)
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               GEORGIA                               58-1211925
     (State or other jurisdiction of              (I.R.S. employer
     incorporation or organization)               identification no.)

          POST OFFICE BOX 1349
        2100 EAST EXCHANGE PLACE
             TUCKER, GEORGIA                           30085-1349
 (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code   (404) 270-7600


     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 of such
filing requirements for the past 90 days.    Yes  X      No
                                                -----       -----
     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.


- - ---------------------------------------------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------------------------------------------




                          OGLETHORPE POWER CORPORATION

                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                       FOR THE QUARTER ENDED MARCH 31,JUNE 30, 1994


                                                                        Page No.PAGE NO.
                                                                        --------

PART I - FINANCIAL INFORMATION

     Item 1.   Financial Statements

          Condensed Balance Sheets at March 31,as of June 30, 1994 (Unaudited)
          and December 31, 1993                                            3

          Condensed Statements of Revenues and Expenses (Unaudited)
          for the Three Months and Six Months Ended
          March 31,June 30, 1994 and 1993                                           5

          Condensed Statements of Cash Flows (Unaudited)
          for the ThreeSix Months Ended March 31,June 30, 1994 and 1993                  6

          Notes to the Condensed Financial Statements                      7

     Item 2.   Management's Discussion and Analysis of
               Financial Condition and Results of Operations               9


PART II - OTHER INFORMATION

     Item 5.   Other Information                                          14

     Item 6.   Exhibits and Reports on Form 8-K                           1315


SIGNATURES                                                                1416


                                        2


PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS



                          OGLETHORPE POWER CORPORATION
                            CONDENSED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

                                     ASSETS

AT AT MARCH 31,JUNE 30, DECEMBER 31, 1994 1993 ----------- ----------------------- (UNAUDITED) ELECTRIC PLANT, AT ORIGINAL COST: IN SERVICE $ 5,049,415 $ 5,047,739$5,071,109 $5,047,739 LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,142,994)(1,174,805) (1,110,296) ---------- ---------- 3,906,4213,896,304 3,937,443 NUCLEAR FUEL, AT AMORTIZED COST 107,097104,625 110,177 PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 7,0716,806 7,336 CONSTRUCTION WORK IN PROGRESS 488,907508,050 450,965 ---------- ---------- 4,509,4964,515,785 4,505,921 ---------- ---------- INVESTMENTS AND FUNDS: BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 79,01778,976 110,390 DECOMMISSIONING FUND, AT MARKET 55,06954,725 56,911 INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 18,85018,523 19,123 OTHER 486 486 ---------- ---------- 153,422152,710 186,910 ---------- ---------- CURRENT ASSETS: CASH AND TEMPORARY CASH INVESTMENTS, AT COST 73,843100,131 244,173 RECEIVABLES 81,54792,233 82,274 INVENTORIES, AT AVERAGE COST 85,26195,968 86,468 PREPAYMENTS AND OTHER CURRENT ASSETS 21,70018,047 14,763 ---------- ---------- 262,351306,379 427,678 ---------- ---------- DEFERRED CHARGES: PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 165,203163,464 91,981 DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 73,70375,846 71,559 DEFERRED DEBT EXPENSE, BEING AMORTIZED 19,34819,503 21,527 DISCONTINUED PROJECT, BEING AMORTIZED 17,96117,609 18,314 ---------- ---------- 276,215276,422 203,381 ---------- ---------- $ 5,201,484 $ 5,323,890$5,251,296 $5,323,890 ---------- ---------- ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.The accompanying notes are an integral part of these condensed statements. 3 OGLETHORPE POWER CORPORATION CONDENSED BALANCE SHEETS (DOLLARS IN THOUSANDS) EQUITY AND LIABILITIES
AT AT MARCH 31,JUNE 30, DECEMBER 31, 1994 1993 ----------- ----------------------- ------------- (UNAUDITED) CAPITALIZATION: PATRONAGE CAPITAL AND MEMBERSHIP FEES (NET OF UNREALIZED LOSSES OF $ 1,5142,583 ON AVAILABLE-FOR-SALE SECURITIES) $ 308,652321,094 $ 289,982 LONG-TERM DEBT 4,065,9344,101,657 4,058,251 OBLIGATION UNDER CAPITAL LEASES 303,531303,604 303,458 ---------- ---------- 4,678,1174,726,355 4,651,691 ---------- ---------- CURRENT LIABILITIES: LONG-TERM DEBT DUE WITHIN ONE YEAR 67,40768,379 78,644 DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR 19,13113,494 26,777 ACCOUNTS PAYABLE 54,58657,267 62,186 ACCRUED INTEREST 22,85326,751 108,702 ACCRUED AND WITHHELD TAXES 7,82814,655 9,401 ENERGY COSTS BILLED IN EXCESS OF ACTUALS 9,6427,361 11,456 OTHER CURRENT LIABILITIES 12,37611,420 40,234 ---------- ---------- 193,823199,327 337,400 ---------- ---------- DEFFERED CREDITS AND OTHER LIABILITIES: GAIN ON SALE OF PLANT, BEING AMORTIZED 64,96564,380 65,550 GAIN ON SALE OF SCHERER COMMON FACILITIES, BEING AMORTIZED 5,0962,548 7,644 SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 64,81262,787 66,838 ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510 DEFERRED MARGINS AND VOGTLE SURCHARGE 21,083 21,083 DECOMMISSIONING RESERVE 90,45691,842 90,476 OTHER 17,62217,464 17,698 ---------- ---------- 329,544325,614 334,799 ---------- ---------- $ 5,201,484 $ 5,323,890$5,251,296 $5,323,890 ---------- ---------- ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.The accompanying notes are an integral part of these condensed statements. 4 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF REVENUEREVENUES & EXPENSES (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, ----------------------SIX MONTHS ENDED JUNE 30, JUNE 30, ----------------------- ----------------------- 1994 1993 1994 1993 -------- -------- -------- -------- OPERATING REVENUES: SALES TO MEMBERS $ 225,458 $ 212,114$229,157 $223,807 $454,615 $435,921 SALES TO NON-MEMBERS 42,160 60,029 --------- ---------33,878 59,512 76,038 119,541 -------- -------- -------- -------- TOTAL OPERATING REVENUES 267,618 272,143 --------- ---------263,035 283,319 530,653 555,462 -------- -------- -------- -------- OPERATING EXPENSES: FUEL 51,232 35,87448,600 42,444 99,832 78,318 PRODUCTION 32,118 28,83630,937 37,316 63,055 66,152 PURCHASED POWER 53,539 65,89357,652 70,175 111,192 136,068 DEPRECIATION AND AMORTIZATION 33,051 32,25433,222 32,358 66,273 64,612 TAXES OTHER THAN INCOME TAXES 6,105 6,0625,927 6,014 12,032 12,076 OTHER OPERATING EXPENSES 9,691 9,417 --------- ---------10,993 9,067 20,684 18,484 -------- -------- -------- -------- TOTAL OPERATING EXPENSES 185,736 178,336 --------- ---------187,331 197,374 373,068 375,710 -------- -------- -------- -------- OPERATING MARGIN 81,882 93,807 --------- ---------75,704 85,945 157,585 179,752 -------- -------- -------- -------- OTHER INCOME (EXPENSE): INTEREST INCOME 2,951 3,7172,183 5,729 5,134 9,446 AMORTIZATION OF DEFERRED MARGINS 6,6414,632 1,035 11,273 2,070 ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION 681 447675 520 1,356 967 OTHER 5,475 5,648 --------- ---------5,819 5,265 11,295 10,913 -------- -------- -------- -------- TOTAL OTHER INCOME 15,748 10,847 --------- ---------13,309 12,549 29,058 23,396 -------- -------- -------- -------- INTEREST CHARGES: INTEREST ON LONG-TERM OBLIGATIONS 86,302 94,24683,888 95,054 170,190 189,300 ALLOWANCE FOR DEBT FUNDS USED DURING CONSTRUCTION (8,856) (6,342) --------- ---------(8,386) (6,580) (17,242) (12,922) -------- -------- -------- -------- NET INTEREST CHARGES 77,446 87,904 --------- ---------75,502 88,474 152,948 176,378 -------- -------- -------- -------- MARGIN BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 20,184 16,75013,511 10,020 33,695 26,770 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES -- -- -- 13,340 --------- ----------------- -------- -------- -------- NET MARGIN $ 20,18413,511 $ 30,090 --------- --------- --------- ---------10,020 $ 33,695 $ 40,110 -------- -------- -------- -------- -------- -------- -------- --------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.The accompanying notes are an integral part of these condensed statements. 5 OGLETHORPE POWER CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREESIX MONTHS ENDED MARCH 31,JUNE 30, 1994 AND 1993 (DOLLARS IN THOUSANDS)
1994 1993 ---- -------------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: NET MARGIN $ 20,18433,695 $ 30,090 --------- ---------40,110 ---------- ---------- ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH PROVIDED BY OPERATING ACTIVITIES: CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES -- (13,340) DEPRECIATION AND AMORTIZATION 47,213 46,73593,318 91,135 DEFERRED MARGINS AND AMORTIZATION OF DEFERRED MARGINS (6,641) (1,035)(11,273) (2,070) ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (681) (447)(1,356) (967) OTHER (4,690) (3,377)(9,718) (6,829) DECREASE (INCREASE) 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 727 (3,037)(9,959) (11,594) INVENTORIES 1,207 (5,503)(9,500) (9,523) PREPAYMENTS AND OTHER CURRENT ASSETS (6,937) (606)(3,284) 3,828 ACCOUNTS PAYABLE (7,600) (14,611)(4,919) (13,277) ACCRUED INTEREST (85,849) (22,996)(81,951) (9,878) ACCRUED AND WITHHELD TAXES (1,573) 4,8455,254 11,301 ENERGY COST BILLED IN EXCESS OF ACTUAL (1,814) (253)(4,095) (6,036) OTHER CURRENT LIABILITIES (30,095) (4,715) --------- ---------(28,814) (1,197) ---------- ---------- TOTAL ADJUSTMENTS (96,733) (18,340) --------- ---------(66,297) 31,553 ---------- ---------- NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (76,549) 11,750 --------- ---------(32,602) 71,663 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: PROPERTY ADDITIONS (48,860) (42,846)(100,213) (102,159) NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 31,373 33,78628,831 31,422 DECREASE (INCREASE) IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 273 (91) INCREASE600 212 DECREASE IN OTHER SHORT-TERM INVESTMENTS -- (72,076)20,105 DECREASE (INCREASE) IN DECOMMISSIONING FUND 1,842 (1,549) OTHER (3,434) -- --------- ---------48 (2,856) ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (18,806) (82,776) --------- ---------(70,734) (53,276) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: DEBT PROCEEDS, NET 243,989 --293,731 36,066 DEBT PAYMENTS (318,056) (110,207)(337,176) (121,040) REFUND OF VOGTLE SURCHARGE (1,005) --(2,010) (1,000) OTHER 97 (777) --------- ---------4,749 (2,541) ---------- ---------- NET CASH USED IN FINANCING ACTIVITIES (74,975) (110,984) --------- ---------(40,706) (88,515) ---------- ---------- NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (170,330) (182,010)(144,042) (70,128) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 244,173 275,624 --------- ------------------- ---------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 73,843100,131 $ 93,614 --------- --------- --------- ---------205,496 ---------- ---------- ---------- ---------- CASH PAID FOR: INTEREST (NET OF AMOUNTS CAPITALIZED) $ 161,096230,599 $ 107,955180,431 INCOME TAXES (REFUND) -- (43)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.The accompanying notes are an integral part of these condensed statements. 6 OGLETHORPE POWER CORPORATION NOTES TO THE CONDENSED FINANCIAL STATEMENTS MARCH 31,JUNE 30, 1994 AND 1993 (A) The condensed financial statements included herein have been prepared by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the information furnished herein reflects all adjustments (which included only normal recurring adjustments) necessary to present fairly, in all material respects, the results for the periods ended March 31,June 30, 1994 and 1993. 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 SEC rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in Oglethorpe's latest Annual Report on Form 10-K, as filed with the SEC. (B) Oglethorpe adopted Statement of Financial Accounting Standards Board Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities", as of January 1, 1994. Under this statement,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. In accordance with the provisions of this statement,Statement, the amounts classified as bond, reserve and construction funds and decommissioning fund on the accompanying Condensed Balance Sheets are carried at cost as of December 31, 1993. (C) Oglethorpe's share of the undiscounted cost of decommissioning co-owned nuclear facilities, assuming decommissioning occurs promptly after the unit is taken out of service, is estimated at approximately $254 million for Hatch Unit No. 1, $356 million for Hatch Unit No. 2, $416 million for Vogtle Unit No. 1 and $543 million for Vogtle Unit No. 2. The years in which the above plants are expected to begin decommissioning are 2014, 2018, 2027 and 2029, respectively. The annual provision for decommissioning, which totaled $5.9 million in 1993, is currently recovered from Members as depreciation expense. In developing these estimates,the amount of the annual provision, the escalation rate was assumed to be 4% and return on trust assets was assumed to be 8%. The annual provision for decommissioning, which totaled $5.9 million in 1993, is currently recovered from Members as depreciation expense. Oglethorpe's management is of the 7 opinion that any changes in cost estimates of decommissioning will be fully recovered in future rates. 7 Beginning in the years noted above in which the units begin decommissioning, 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. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1994 Oglethorpe's net margin for the quarter ended March 31,June 30, 1994 was $20.2$13.5 million as compared to $30.1$10.0 million for the same period of 1993. Oglethorpe's net margin for the six months ended June 30, 1994 was $33.7 million as compared to $40.1 million for the first six months of 1993. Net margin was higher in the first quartersix months of 1993 because of the implementation of Statement of Financial Accounting Standards Board Statement No. 109, which resulted in the reversal of $13.3 million of accumulated deferred income taxes which had been previously expensed. This amount is reflected in the Condensed Statements of Revenues and Expenses as the cumulative effect of a change in accounting principle. OPERATING REVENUES The increaseincreases in Member revenues wasfor the three month and six month periods ended June 30, 1994 as compared to the same periods of 1993 were due, for the most part, to a 17% increase in energy sales in the first quarterincreased billings of 1994 and to the recovery of additional fixed costs resulting from the decline in sell-backSell-back revenues from Georgia Power Company (GPC) under the plant operating agreements noted below. Higher megawatt-hour (MWh) sales were attributable to a colder than normal January in Georgia in 1994.(as discussed below). Oglethorpe implemented a new rate in January 1994 which will increasehas increased revenues for 1994 to address the Members' increasing share of fixed costs. These higher capacity revenues were partially offset by lower energy revenues derived from the flow through to the Members of reduced energy costs. (See "Operating Expenses" below for a discussion of average fuel costs.) For the three months and six months ended June 30, 1994, energy revenues from Members declined by 9.9% and 2.8%, respectively, compared to the prior year despite increases in megawatt-hour (MWh) sales of 7.2% and 11.7%, respectively. Sales to non-Members are primarily made pursuant to three different types of contractual arrangements with GPC and from energy sales to other non-Member utilities. The following table summarizes the amounts of non-Member revenues from these sources for the first quarter ofthree months and six months ended June 30, 1994 and 1993:
Three Months Ended March 31, ----------------------------June 30, Six Months Ended June 30, -------------------------- ------------------------- 1994 1993 1994 1993 ---- ---- ---- ---- (dollars in thousands) 1994 1993 ------- ------- Plant operating agreements $19,094 $34,964$14,425 $31,211 $33,519 $ 66,175 Power supply arrangements 9,237 17,1716,222 13,912 15,459 31,083 Transmission agreements 3,199 5,3112,533 4,003 5,732 9,314 Other utilities 10,630 2,58310,698 10,386 21,328 12,969 ------- ------- ------- -------- Total $42,160 $60,029$33,878 $59,512 $76,038 $119,541 ------- ------- ------- -------- ------- ------- ------- --------
9 The decreasedecreases in revenues from non-Members in the first quarter of 1994 compared to the same period of 1993 wasfor both comparable periods were primarily attributable to lower revenues from GPC pursuant to plant operating agreements. Under the plant operating agreements, GPC purchases capacity and energy from Oglethorpe on a declining scale in the early years of operation of certain co-owned generating units. The decreasedecreases in revenues of this type waswere due to scheduled reductions in sell-back percentages for both of the Plant Vogtle units and for Plant Scherer Unit No. 2. 9 The second source of non-Member revenues is derived pursuant to 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 steamcoal-fired generating resources to be operated when Oglethorpe's system does not require all of its contractual entitlement to the generation. These revenues essentially represent reimbursement of costs to Oglethorpe since, under the operating agreements, Oglethorpe is responsible for its share of fuel costs any time a unit operates. See the discussion under "Operating Expenses" below of the increased operation and lower average fuel costs of the Plant Scherercoal-fired generating units in first quarter 1994. Revenues from sales of this type to GPC were lower in both comparable periods due to the fact that Oglethorpe retained much of its share of the output from the Plant Scherer and Wansley units because the lower average fuel costs made Plant Schererthose units more attractive than certain purchased resources. Other revenuesRevenues from non-Membersother non-Member utilities increased significantlysubstantially in the first quartersix months ended June 30, 1994 as compared to the same period of 1994. This increase reflects greater revenues from off-system sales.1993. Oglethorpe is continuing to pursue energy and capacity sales to other utilities as a means of reducing amounts that must be recovered from Members. OPERATING EXPENSES The increasedecreases in total operating expenses wasfor the three months and six months ended June 30, 1994 as compared to the same periods of 1993 were primarily attributable to increasesreductions in fuelpurchased power expenses and production expenses which were partially offset somewhat by increases in fuel expenses. Most of the reduction in purchased power expenses. The increaseincreases in fuel expenses was due, in large part,for both comparable periods were attributable to substantially greater generation from Plant Scherer Units No. 1 and 2 in the first quarter of 1994 as compared to the same period of 1993.2. Output from these units was almost oneapproximately 520,000 and 1.5 million MWh higher, inrespectively, for the first quarter ofthree months and six months ended June 30, 1994. Oglethorpe began receiving shipments at Plant Scherer of lower pricedlower-priced coal from the mining regions of the western United States in the last quarter of 1993. As a result ofDue primarily to the receiptuse of this lower pricedlower-priced coal, the average fuel cost for the Scherer units decreased by 16.5%approximately 11% from last year's second quarter and from the first quarter.six months of 1993. The lower average fuel cost made utilization of Plant Scherer more attractive than certain purchased resources. Additional energy was necessary to provide for the Plant Wansley units also decreased, by almost 18%, in the second quarter of 1994. This decrease was the result of increased needsspot purchases of the Members andcoal. The significant increase in coal-fired generation (prompted by declining average fuel costs) as well as declining sales from these coal-fired resources to provide for the higher salesGPC pursuant to other utilitiespower supply arrangements (see discussion under "Operating Revenues" above). have resulted in substantially lower utilization 10 of purchased power resources. Energy purchases decreased by 47% and 44%, respectively, in the three months and six months ended June 30, 1994 as compared to the same periods of 1993. The increasedecrease in production expenses in the second quarter of 1994 was due to an adjustment in first quartera lower number of nuclear refueling outages. One of Oglethorpe's nuclear units underwent a scheduled outage during the spring of 1994 as compared to two scheduled outages during the same period of the amount of administrative and general costs paid to GPC in connection with GPC's role as operating agent of co-owned generating units. Purchased power expenses declined in the first quarter of 1994. This decrease resulted from a 40.5% reduction in energy purchases. As discussed above, energy from Plant Scherer was often utilized instead of higher priced purchased resources. 10 1993. OTHER INCOME Other income was higher for the firstsecond quarter of 1994 primarily as a result of increased income from amortizationan increase in the amount of deferred margins.margins being amortized. Oglethorpe's Board of Directors authorizes the amount of deferred margins to be returned to the Members each year. For 1994, the annual amount authorized was $26.6$19.0 million as compared to $4.1 million for 1993. Interest income declined due to lower average cash balances. (See "Assets" under FINANCIAL CONDITION for a discussion of the change in cash balances.) INTEREST CHARGES The decrease in net interest charges resulted from the refinancing efforts completed during 1993 and in the first quarter of 1994. For a discussion of the refinancing transactions, see the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Oglethorpe's Annual Report on Form 10-K for the year ended December 31, 1993. As a result of Oglethorpe's refinancing transactions, the average interest rate on long-term debt declined from 8.10% at June 30, 1993 to 7.15% at June 30, 1994. Allowance for debt funds used during construction continues to increase in proportion to the level of investment at the Rocky Mountain Project, a pumped storage hydroelectric facility. FINANCIAL CONDITION Total assets and total equity and liabilities as of March 31,June 30, 1994 were $5.2$5.3 billion as compared to $5.3 billionwhich was $73 million less than the total at December 31, 1993. ASSETS The increase in construction work in progress is primarily the result of property additions during the six-month period of $40.6 million for Rocky Mountain Project construction. The decrease in bond, reserve and construction funds primarily resulted from the utilization of a portion of the debt service reserve funds for debt service payments. The available funds resulted from refinancing projects which did not require a debt service reserve fund or which required a lower debt service reserve fund than the refunded bonds. 11 The decrease in cash and temporary cash investments is partly due to the December 31, 1993 Federal Financing Bank (FFB) interest payment being made as due on January 3, 1994 and partly due to premiums paid in connection with FFB note modifications and a pollution control bond (PCB) refunding. For a discussion of the refinancing transactions, see the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Oglethorpe's Annual Report on Form 10-K for the year ended December 31, 1993. The increase in receivables resulted primarily from a $6.5 million higher billing to Oglethorpe's Members for the month of June 1994 compared to December 1993. Inventories increased primarily as a result of coal inventories for Plants Scherer and Wansley returning to normal levels at June 30, 1994 from lower levels at year-end. Prepayments and other current assets increased primarily due to an $8.5a $2.3 million increase in the payment made to GPC for estimates of Plant Wansley and Plant Hatch production expenses and Plant Wansley coal purchases for AprilAugust 1994 compared to the estimate paid for January 1994. The increase in the premium and loss on reacquired debt resulted from premiums paid in connection with both FFB note modifications and the PCB refunding. 11 EQUITY AND LIABILITIES For a discussion of unrealized losses on available-for-sale securities see Note B of Notes to the Condensed Financial Statements. Long-term debt due within one year decreased due to normal maturities of PCBs and mortgage notes payable to the FFB. Deferred margins and Vogtle surcharge to be refunded within one year decreased by $7.6$13.3 million, which is the amount that was refunded to Members for the threesix months ended March 31,June 30, 1994. See "Other Income" under RESULTS OF OPERATIONS for a discussion of the 1994 amortization of deferred margins. For a description of the Vogtle Surcharge, see Note 1 of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K for the year ended December 31, 1993. Accounts payable declined as of March 31, 1994 as a result of normal variations in the timing of payables activity. Accrued interest decreased as discussed under cash and temporary investments above. Accrued and withheld taxes increased as a result of the normal monthly accruals of property taxes, which are generally paid in the last quarter of the year. Energy costs billed in excess of actuals decreased as a net result of the refunding to Members of approximately $10 million of amounts over-collected in 1993 and the realization of $8 million of energy cost savings compared to budgeted amounts. 12 The decrease in other current liabilities is partly due to an $11 million refund to GPC of an option payment related to the canceled Pickens County Pumped Storage Hydroelectric Project and partly due to normal variations in the timing of liabilities activity. 12variations. 13 PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION As stated in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, the electric utility industry is becoming increasingly competitive, and this increasing competition presents a challenge to companies in the electric utility industry, including Oglethorpe and its Members, to reduce costs and improve the management of resources. The 1993 Form 10-K reports a number of actions taken and being taken by Oglethorpe to accomplish these objectives. Oglethorpe and the Members believe that the changes in the industry, along with the growing diversity of needs of the Members, make it beneficial to study the feasibility of altering certain aspects of the relationship between Oglethorpe and the Members, so as to allow for the possibility that the Members could satisfy some or all of their additional future needs from sources other than Oglethorpe. The Members currently discussing these matters with Oglethorpe have stated their commitment to Oglethorpe and the Rural Electrification Administration (REA) to honor their current financial obligations to Oglethorpe under the Wholesale Power Contracts. The study of these matters has recently been initiated. The results of the study and any action Oglethorpe and the Members might take based thereon cannot be predicted at this time. However, Oglethorpe's Board of Directors must approve any changes to the current Wholesale Power Contracts and intends that any new arrangement be structured so as not to have an adverse effect on Oglethorpe or the other Members. REA must also approve any changes to these contracts. Recently, one of the Members prepaid all of its REA indebtedness, and thus, is no longer an REA borrower. This prepayment does not affect this Member's relationship with Oglethorpe under its Wholesale Power Contract. Certain other Members may prepay all of their REA indebtedness in the future. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Number Description - - ------ ----------- 10.11(a) Amendment No. 1 to Interconnection Agreement between Alabama Electric Cooperative, Inc. and Oglethorpe, dated as of April 22, 1994. 14 Number Description - - ----- ----------- 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. (b) REPORTS ON FORM 8-K No reports on Form 8-K were filed by Oglethorpe for the quarter ended March 31,June 30, 1994. 1315 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. Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation) Date: May 13,AUGUST 12, 1994 By: /s/ T. D. Kilgore ------------ ---------------------------------------------------------------------------- T. D. Kilgore President and Chief Executive Officer (Principal Executive Officer) Date: May 13,AUGUST 12, 1994 /s/ John S. Dean, Sr. ------------ ---------------------------------------------------------------------------- John S. Dean, Sr. Secretary-Treasurer (Principal Financial Officer) Date: May 13,AUGUST 12, 1994 /s/ Eugen Heckl ------------ ---------------------------------------------------------------------------- Eugen Heckl Senior Vice President and Chief Financial Officer (Principal Financial Officer) 1416