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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q10-Q/A
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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
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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.
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OGLETHORPE POWER CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1994
PAGE NO.
________
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of September 30, 1994 (Unaudited)
and December 31, 1993 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months and Nine Months Ended
September 30, 1994 and 1993 5
Condensed Statements of Cash Flows (Unaudited)
for the Nine Months Ended September 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 16
SIGNATURES 17
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
AT AT
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
(UNAUDITED)
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $5,094,390 $5,047,739
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,205,290) (1,110,296)
------------- ------------
3,889,100 3,937,443
NUCLEAR FUEL, AT AMORTIZED COST 105,447 110,177
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,540 7,336
CONSTRUCTION WORK IN PROGRESS 521,604 450,965
------------- ------------
4,522,691 4,505,921
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 78,070 110,390
DECOMMISSIONING FUND, AT MARKET 54,803 56,911
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 17,947 19,123
OTHER 486 486
------------- ------------
151,306 186,910
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 86,654 244,173
RECEIVABLES 90,311 82,274
INVENTORIES, AT AVERAGE COST 90,600 86,468
PREPAYMENTS AND OTHER CURRENT ASSETS 16,261 14,763
------------- ------------
283,826 427,678
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 161,746 91,981
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 77,989 71,559
DEFERRED DEBT EXPENSE, BEING AMORTIZED 19,038 21,527
DISCONTINUED PROJECT, BEING AMORTIZED 17,257 18,314
OTHER 6,675 --
------------- -----------
282,705 203,381
------------- -----------
$5,240,528 $5,323,890
------------- -----------
------------- -----------
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
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
(UNAUDITED)
CAPITALIZATION:
PATRONAGE CAPITAL AND MEMBERSHIP FEES (NET OF
UNREALIZED LOSSES OF $ 3,129 ON
AVAILABLE-FOR-SALE SECURITIES) $324,933 $289,982
LONG-TERM DEBT 4,088,816 4,058,251
OBLIGATION UNDER CAPITAL LEASES 303,677 303,458
------------ ------------
4,717,426 4,651,691
------------ ------------
CURRENT LIABILITIES:
LONG-TERM DEBT DUE WITHIN ONE YEAR 68,246 78,644
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 4,261 21,577
ACCOUNTS PAYABLE 53,589 62,186
ACCRUED INTEREST 23,161 108,702
ACCRUED AND WITHHELD TAXES 21,400 9,401
ENERGY COSTS BILLED IN EXCESS OF ACTUALS 6,313 11,456
OTHER CURRENT LIABILITIES 11,866 40,234
------------ -----------
188,836 332,200
------------ -----------
DEFFERED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 63,795 65,550
GAIN ON SALE OF SCHERER COMMON FACILITIES,
BEING AMORTIZED - 7,644
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 60,761 66,838
ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510
DEFERRED MARGINS AND VOGTLE SURCHARGE 26,283 26,283
DECOMMISSIONING RESERVE 94,009 90,476
OTHER 23,908 17,698
----------- -----------
334,266 339,999
----------- -----------
$5,240,528 $5,323,890
----------- -----------
----------- -----------
The accompanying notes are an integral part of these condensed statements.
Certain prior year amounts have been reclassified to conform with current year
presentation.
4
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES & EXPENSES
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1994 1993 1994 1993
--------- --------- --------- ---------
OPERATING REVENUES:
SALES TO MEMBERS......... $244,390 $248,729 $699,005 $684,650
SALES TO NON-MEMBERS..... 22,428 36,008 98,466 155,549
--------- --------- --------- ---------
TOTAL OPERATING REVENUES... 266,818 284,737 797,471 840,199
--------- --------- --------- ---------
OPERATING EXPENSES:
FUEL .................... 57,887 56,603 157,719 134,922
PRODUCTION .............. 28,719 27,142 91,774 93,293
PURCHASED POWER.......... 60,905 74,372 172,097 210,440
DEPRECIATION AND
AMORTIZATION........... 32,375 30,945 98,648 95,534
TAXES OTHER THAN INCOME
TAXES ................ 5,920 5,995 17,952 18,071
INCOME TAXES ............ -- 1,820 -- 1,820
OTHER OPERATING EXPENSES. 12,925 11,345 33,609 29,829
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES... 198,731 208,222 571,799 583,909
--------- --------- --------- ---------
OPERATING MARGIN .......... 68,087 76,515 225,672 256,290
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
INTEREST INCOME ......... 2,842 5,860 7,976 15,306
AMORTIZATION OF DEFERRED
MARGINS................ 4,011 1,033 15,284 3,103
ALLOWANCE FOR EQUITY
FUNDS USED DURING
CONSTRUCTION............ 718 565 2,074 1,532
OTHER.................... 5,157 4,998 16,452 15,888
--------- --------- --------- ---------
TOTAL OTHER INCOME......... 12,728 12,456 41,786 35,829
--------- --------- --------- ---------
INTEREST CHARGES:
INTEREST ON LONG-TERM
OBLIGATIONS............ 85,127 96,391 255,317 285,691
ALLOWANCE FOR DEBT FUNDS
USED DURING
CONSTRUCTION........... (8,698) (7,377) (25,940) (20,299)
--------- --------- --------- ---------
NET INTEREST CHARGES....... 76,429 89,014 229,377 265,392
--------- --------- --------- ---------
MARGIN BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE..... 4,386 (43) 38,081 26,727
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
FOR INCOME TAXES......... -- -- -- 13,340
--------- --------- --------- ---------
NET MARGIN (LOSS).......... $ 4,386 $ (43) $ 38,081 $ 40,067
--------- --------- --------- ---------
--------- --------- --------- ---------
The accompanying notes are an integral part of these condensed statements.
5
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(DOLLARS IN THOUSANDS)
1994 1993
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET MARGIN $ 38,081 $ 40,067
--------- ---------
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 141,986 134,797
DEFERRED MARGINS AND AMORTIZATION OF DEFERRED MARGINS (15,284) (3,103)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (2,074) (1,532)
DEFERRED INCOME TAXES -- 1,820
OTHER (14,216) (9,489)
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 (8,037) (8,635)
INVENTORIES (4,132) 4,004
PREPAYMENTS AND OTHER CURRENT ASSETS (1,498) 877
ACCOUNTS PAYABLE (8,597) 3,732
ACCRUED INTEREST (85,541) (24,410)
ACCRUED AND WITHHELD TAXES 11,999 17,925
ENERGY COST BILLED IN EXCESS OF ACTUAL (5,143) (16,194)
OTHER CURRENT LIABILITIES (28,368) (3,426)
---------- ----------
TOTAL ADJUSTMENTS (18,905) 83,026
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 19,176 123,093
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONS (152,136) (170,863)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION
FUNDS 29,190 34,231
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 1,176 483
DECREASE IN OTHER SHORT-TERM INVESTMENTS -- 66,165
DECREASE (INCREASE) IN DECOMMISSIONING FUND 38 (5,047)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (121,732) (75,031)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NET 294,092 35,646
DEBT PAYMENTS (350,233) (132,074)
REFUND OF VOGTLE SURCHARGE (2,031) (1,300)
OTHER 3,209 (4,687)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (54,963) (102,415)
---------- ----------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (157,519) (54,353)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF
PERIOD 244,173 275,624
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 86,654 $ 221,271
---------- ----------
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED) $308,003 $280,314
INCOME TAXES -- (43)
The accompanying notes are an integral part of these condensed statements.
6
OGLETHORPE POWER CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 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
September 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 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. In accordance with the provisions of this
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 the
7
amount of the annual provision, the escalation rate was assumed to be 4% and
return on trust assets was assumed to be 8%. Oglethorpe's management is of the
opinion that any changes in cost estimates of decommissioning will be fully
recovered in future rates.
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
Oglethorpe's net margin for the quarter ended September 30, 1994 was $4.4
million as compared to a net loss of $43,000 for the same period of 1993.
Oglethorpe's net margin (before cumulative effect of the change in accounting
for income taxes) for the nine months ended September 30, 1994 was $38.1 million
as compared to $26.7 million for the first nine months of 1993. Net margin was
higher for the 1994 periods due to unbudgeted savings in interest costs as a
result of the refinancing efforts discussed under "Interest Charges" below.
OPERATING REVENUES
The changes in Member revenues for the three month and nine month periods
ended September 30, 1994 as compared to the same periods of 1993 were the
result of lower energy revenues and increased billings of fixed costs resulting
from the decline in Sell-back revenues from Georgia Power Company (GPC) under
the plant operating agreements (as discussed below). Oglethorpe implemented a
new rate in January 1994 which has increased revenues to address the Members'
increasing share of fixed costs.
Member energy revenues have declined in 1994 as a result of the flow through of
reduced fuel costs and in addition, for the three month period, due to lower
megawatt-hour (MWh) sales to Members. For the three months ended September 30,
1994, energy revenues from Members declined by 18.4% compared to the same period
of 1993 whereas corresponding MWh sales decreased by only 13%. For the nine
month period ended September 30, 1994, energy revenues were 9.4% lower than in
the prior year despite a 1.0% increase in MWh sales. See "Operating Expenses"
below for a discussion of the reduction in average fuel costs.
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 three months and nine months ended September 30, 1994
and 1993:
THREE MONTHS ENDED SEPT. 30, NINE MONTHS ENDED SEPT. 30,
---------------------------- --------------------------
1994 1993 1994 1993
---- ---- ---- ----
(dollars in thousands)
Plant operating agreements $ 5,557 $19,895 $39,076 $ 86,070
Power supply arrangements 4,237 4,715 19,696 35,798
Transmission agreements 2,771 3,392 8,503 12,706
Other utilities 9,863 8,006 31,191 20,975
------- ------- -------- -------
Total $22,428 $36,008 $98,466 $155,549
------- ------- ------- --------
------- ------- ------- --------
9
The decreases in revenues from non-Members for 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 decreases in revenues of this type were
due to scheduled reductions in sell-back percentages for both of the Plant
Vogtle units and for Plant Scherer Unit No. 2.
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
coal-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 lower average fuel costs of the coal-fired generating units in
1994. Revenues from sales of this type to GPC were lower for the nine month
period ended September 30, 1994 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 those units more attractive than certain purchased
resources. Pursuant to the amendments to the Plant Scherer ownership and
operating agreements (effective October 1993), OPC elected to separately
dispatch its ownership interest in Plant Scherer beginning May 1, 1994. This
election removed Plant Scherer as a source for energy sales to GPC pursuant to
the power supply arrangements. Accordingly, parts of the decreases in both
comparable periods are due to the Plant Wansley units being the only source for
this type of sale after May 1, 1994.
Revenues from other non-Member utilities increased substantially due to a 47%
increase in MWh sales in the nine months ended September 30, 1994 as compared
to the same period of 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 decreases in total operating expenses for the three months and nine months
ended September 30, 1994 as compared to the same periods of 1993 were primarily
attributable to lower energy costs due to greater utilization of owned
generation instead of purchased power resources.
Most of the increases in fuel expenses for both comparable periods were
attributable to substantially greater generation from Plant Scherer Units
No. 1 and 2. Output from these units was approximately 213,000 and 1.7 million
MWh higher, respectively, for the three months and nine months ended
September 30, 1994. Oglethorpe began receiving shipments at Plant Scherer of
lower-priced coal from the mining regions of the western United States in the
last quarter of 1993. Due primarily to the use of this lower-priced coal, the
average fuel cost for the Plant Scherer units decreased by approximately 9%
10
from last year's third quarter and by 10% from the first nine months of 1993.
The average fuel cost for the Plant Wansley units also decreased from 1993
levels, by 9% in the third quarter and by 11% in the first nine months. These
decreases were the result of increased spot purchases of coal.
The significant increase in coal-fired generation (prompted by declining
average fuel costs) as well as declining sales from these coal-fired resources
to GPC pursuant to power supply arrangements (see discussion under "Operating
Revenues" above) have resulted in substantially lower utilization of purchased
power resources. Energy purchases decreased by 41% and 43%, respectively, in
the three months and nine months ended September 30, 1994 as compared to the
same periods of 1993.
Other Income
Other income was higher in 1994 primarily as a result of an increase in the
amount of deferred 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 being returned is $19.5 million 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 in the fourth quarter of 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 8.11% at September 30, 1993 to 7.16% at September 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 September 30, 1994 were
$5.2 billion which was $83 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 nine-month period of $62.4 million for Rocky
Mountain Project construction. Oglethorpe is nearing completion of
construction of the Rocky Mountain Project. Based on current arrangements,
Oglethorpe's ultimate ownership interest upon completion is
11
expected to be approximately 75%, with GPC owning the remaining 25%. As of
September 30, 1994, the Rocky Mountain Project was 97% complete, and
Oglethorpe's investment was approximately $477 million. The current schedule
anticipates completion and commercial operation of the three units of the
Rocky Mountain Project in early to mid-1995. Construction at the Rocky
Mountain Project is currently on schedule and under budget.
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.
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 the premium and loss on reacquired debt resulted from premiums
paid in connection with both FFB note modifications and the PCB refunding.
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 $17.3 million, which is the amount that was refunded to Members
for the nine months ended September 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.
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.
12
Energy costs billed in excess of actuals decreased as a net result of the
refunding to Members of amounts over-collected in 1993 and the realization of
1994 energy cost savings compared to budgeted amounts.
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 timing variations.
Changes in Liquidity
In September 1994, Oglethorpe reassessed its overall liquidity needs and
determined that its commercial paper program (which then authorized the
issuance of up to $355 million) was higher than needed. Under its current
program, Oglethorpe may issue commercial paper not to exceed $300 million
outstanding at any time.
13
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
MEMBER RELATIONS
As stated in its Quarterly Report on Form 10-Q for the period ended June 30,
1994, Oglethorpe and its Members believe that 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 its Members.
Cobb EMC, Snapping Shoals EMC, and Walton EMC, three large Members of
Oglethorpe, have initiated a feasibility study of, among other things,
separating from Oglethorpe by acquiring their pro rata shares of Oglethorpe's
assets and either paying or assuming their corresponding portions of
Oglethorpe's debt. Oglethorpe has furnished data to these Members to be used
in their study.
The Oglethorpe Board of Directors recently reviewed several alternatives to the
relationship between Oglethorpe and some or all of the Members, including the
three Members' asset acquisition concept. Oglethorpe's preliminary analysis
indicates a lack of feasibility of the asset acquisition concept. Accordingly,
the Board directed the Oglethorpe staff to limit its study to two other
alternatives. The first is a study of the feasibility of a change in the
current all-requirements Wholesale Power Contracts between Oglethorpe and each
of the Members to allow for some portion of any Member's future capacity and
energy to be supplied from sources other than Oglethorpe, including the use of
dispersed generation. Initial analysis indicates some economics may be
available to Oglethorpe and the Members through a small amount of Member-owned,
Oglethorpe-dispatched dispersed generation. Amendments to the Wholesale Power
Contract to permit this type of generation may, therefore, prove to be
desirable.
The second alternative authorized by the Board to be studied involves the
development of specific implementation procedures for the existing bylaw
provision that grants any Member the right to withdraw from Oglethorpe upon
satisfying certain conditions. These conditions include, but are not limited
to, satisfying or making adequate provisions for the satisfaction of the
Members' obligations under their Wholesale Power Contract. The Board directed
the staff to consider a contract by which a Member could withdraw and freeze
its power purchase obligation at its current pro rata share of existing
plants, committed generating projects and power supply contracts.
The results of Oglethorpe's and any Member's studies 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 arrangements be structured
so as not to have a material adverse effect on Oglethorpe or the other Members.
The Rural Electrification Administration (REA) must also approve any changes to
these contracts.
14
The three Members who have expressed an interest in considering altering their
relationship with Oglethorpe have stated their commitment to Oglethorpe and REA
to honor their current financial obligations to Oglethorpe under their Wholesale
Power Contracts.
DISPERSED GENERATION
Oglethorpe's Board of Directors has adopted a policy to allow for greater use of
dispersed generation units installed by Oglethorpe's Members. Such policy has
been submitted to REA for approval. If permitted by REA and subject to any
other required approvals, such units could be used to maintain reliability of
electric service during emergencies on a Member's distribution system, to
serve specific customer needs, or by Oglethorpe to serve the demands of
Members on its system. The installation and use of dispersed generation
units by any Member would also be governed by other procedures to be developed
and individual contracts with the Members, giving Oglethorpe control of the
dispersed generation units to meet system requirements and emergencies.
Some of Oglethorpe's Members, including Cobb EMC, Snapping Shoals EMC and
Walton EMC, have installed small diesel generating units. The aggregate
capacity of these units amounts to approximately 1% of Oglethorpe's total
capacity requirements. During the 1994 summer season, some or all of these
units were operated. While it is possible to operate such units in a manner
that violates the existing Wholesale Power Contracts between such Members and
Oglethorpe, the Members involved have assured Oglethorpe that the manner of
operation was not in violation of the Wholesale Power Contract. At
present, Oglethorpe has not been able to make any such determination but has
requested more specific information from these Members in order to make its own
determination as to whether any violation occurred.
Each of the concerned Members has agreed with Oglethorpe that they will not
operate such units in violation of the Wholesale Power Contracts and has agreed
to furnish Oglethorpe with such information as is required for Oglethorpe to
complete its review of the matter. Oglethorpe intends to enforce the Wholesale
Power Contracts. Oglethorpe has advised REA of the situation and intends to
consult with REA as more information is developed. With the exception of
Snapping Shoals EMC, all of the Members involved in this matter remain
REA borrowers.
As discussed above under "Member Relations", Oglethorpe and certain of its
Members continue to study the feasibility of altering certain aspects of their
relationship. The installation and use of generating units such as those
discussed above is likely to be encompassed within any resulting revision to
the relationship.
15
ELECTRIC RATES
As required by the Wholesale Power Contract with each Member, Oglethorpe is
currently engaged in the annual review of its wholesale rates to Members. The
rates have a capacity charge and an energy charge. The capacity charge is a
proportional allocation of fixed costs over the previous year's billing demand
for each Member. The energy charge is the projected energy cost (primarily
fuel) over the projected kilowatt-hour sales for 1995. Oglethorpe is in the
process of developing its 1995 budget and based on current estimates,
management expects a net increase in fixed costs for 1995. Because of this
increase and the weather-related decline in the Members' 1994 peak demand,
Oglethorpe's capacity rate for 1995 is expected to increase. However, because
of increasing energy sales and decreasing fuel costs, management expects average
Member revenues (measured in cents per kilowatt-hour) to remain constant with
1994 levels. Oglethorpe's Board of Directors is scheduled to take action on the
1995 capacity rate at its December meeting. The level of any capacity rate
increase will also depend upon the amounts of credits for deferred margins
elected to be taken by the Members in 1995.
POWER PURCHASE ARRANGEMENTS
Oglethorpe currently purchases 1,250 MW of capacity and associated energy from
GPC under the Block Power Sale Agreement. Because Oglethorpe intends to obtain
more economical alternatives, it has, pursuant to the terms of such Agreement,
given notice of its election to reduce its purchases from GPC by 250 MW
beginning September 1, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
NUMBER DESCRIPTION
27.1 Financial Data Schedule (for SEC use only).
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended
September 30, 1994.
16
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: NOVEMBER 10, 1994 By: /s/ T. D. Kilgore
------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: NOVEMBER 10, 1994 /s/ John S. Dean, Sr.
---------------------
John S. Dean, Sr.
Secretary-Treasurer
(Principal Financial Officer)
Date: NOVEMBER 10, 1994 /s/ Eugen Heckl
---------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
17
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
AT AT
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
(UNAUDITED)
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $5,094,390 $5,047,739
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,205,290) (1,110,296)
------------- ------------
3,889,100 3,937,443
NUCLEAR FUEL, AT AMORTIZED COST 105,447 110,177
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,540 7,336
CONSTRUCTION WORK IN PROGRESS 521,604 450,965
------------- ------------
4,522,691 4,505,921
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 78,070 110,390
DECOMMISSIONING FUND, AT MARKET 54,803 56,911
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 17,947 19,123
OTHER 486 486
------------- ------------
151,306 186,910
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 86,654 244,173
RECEIVABLES 90,311 82,274
INVENTORIES, AT AVERAGE COST 90,600 86,468
PREPAYMENTS AND OTHER CURRENT ASSETS 16,261 14,763
------------- ------------
283,826 427,678
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 161,746 91,981
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 77,989 71,559
DEFERRED DEBT EXPENSE, BEING AMORTIZED 19,038 21,527
DISCONTINUED PROJECT, BEING AMORTIZED 17,257 18,314
OTHER 6,675 --
------------- -----------
282,705 203,381
------------- -----------
$5,240,528 $5,323,890
------------- -----------
------------- -----------
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
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------- ------------
(UNAUDITED)
CAPITALIZATION:
PATRONAGE CAPITAL AND MEMBERSHIP FEES (NET OF
UNREALIZED LOSSES OF $ 3,129 ON
AVAILABLE-FOR-SALE SECURITIES) $324,933 $289,982
LONG-TERM DEBT 4,088,816 4,058,251
OBLIGATION UNDER CAPITAL LEASES 303,677 303,458
------------ ------------
4,717,426 4,651,691
------------ ------------
CURRENT LIABILITIES:
LONG-TERM DEBT DUE WITHIN ONE YEAR 68,246 78,644
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 4,261 21,577
ACCOUNTS PAYABLE 53,589 62,186
ACCRUED INTEREST 23,161 108,702
ACCRUED AND WITHHELD TAXES 21,400 9,401
ENERGY COSTS BILLED IN EXCESS OF ACTUALS 6,313 11,456
OTHER CURRENT LIABILITIES 11,866 40,234
------------ -----------
188,836 332,200
------------ -----------
DEFFERED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 63,795 65,550
GAIN ON SALE OF SCHERER COMMON FACILITIES,
BEING AMORTIZED - 7,644
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 60,761 66,838
ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510
DEFERRED MARGINS AND VOGTLE SURCHARGE 26,283 26,283
DECOMMISSIONING RESERVE 94,009 90,476
OTHER 23,908 17,698
----------- -----------
334,266 339,999
----------- -----------
$5,240,528 $5,323,890
----------- -----------
----------- -----------
The accompanying notes are an integral part of these condensed statements.
Certain prior year amounts have been reclassified to conform with current year
presentation.
4
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES & EXPENSES
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1994 1993 1994 1993
--------- --------- --------- ---------
OPERATING REVENUES:
SALES TO MEMBERS......... $244,390 $248,729 $699,005 $684,650
SALES TO NON-MEMBERS..... 22,428 36,008 98,466 155,549
--------- --------- --------- ---------
TOTAL OPERATING REVENUES... 266,818 284,737 797,471 840,199
--------- --------- --------- ---------
OPERATING EXPENSES:
FUEL .................... 57,887 56,603 157,719 134,922
PRODUCTION .............. 28,719 27,142 91,774 93,293
PURCHASED POWER.......... 60,905 74,372 172,097 210,440
DEPRECIATION AND
AMORTIZATION........... 32,375 30,945 98,648 95,557
TAXES OTHER THAN INCOME
TAXES ................ 5,920 5,995 17,952 18,071
INCOME TAXES ............ -- 1,820 -- 1,820
OTHER OPERATING EXPENSES. 12,925 11,345 33,609 29,829
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES... 198,731 208,222 571,799 583,932
--------- --------- --------- ---------
OPERATING MARGIN .......... 68,087 76,515 225,672 256,267
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
INTEREST INCOME ......... 2,842 5,860 7,976 15,306
AMORTIZATION OF DEFERRED
MARGINS................ 4,011 1,033 15,284 3,103
ALLOWANCE FOR EQUITY
FUNDS USED DURING
CONSTRUCTION............ 718 565 2,074 1,532
OTHER.................... 5,157 4,998 16,452 15,911
--------- --------- --------- ---------
TOTAL OTHER INCOME......... 12,728 12,456 41,786 35,852
--------- --------- --------- ---------
INTEREST CHARGES:
INTEREST ON LONG-TERM
OBLIGATIONS............ 85,127 96,391 255,317 285,691
ALLOWANCE FOR DEBT FUNDS
USED DURING
CONSTRUCTION........... (8,698) (7,377) (25,940) (20,299)
--------- --------- --------- ---------
NET INTEREST CHARGES....... 76,429 89,014 229,377 265,392
--------- --------- --------- ---------
MARGIN BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE..... 4,386 (43) 38,081 26,727
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
FOR INCOME TAXES......... -- -- -- 13,340
--------- --------- --------- ---------
NET MARGIN (LOSS).......... $ 4,386 $ (43) $ 58,081 $ 40,067
--------- --------- --------- ---------
--------- --------- --------- ---------
The accompanying notes are an integral part of these condensed statements.
5
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(DOLLARS IN THOUSANDS)
1994 1993
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET MARGIN $ 38,081 $ 40,067
--------- ---------
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 141,986 134,797
DEFERRED MARGINS AND AMORTIZATION OF DEFERRED MARGINS (15,284) (3,103)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (2,074) (1,532)
DEFERRED INCOME TAXES -- 1,820
OTHER (14,216) (9,489)
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 (8,037) (8,635)
INVENTORIES (4,132) 4,004
PREPAYMENTS AND OTHER CURRENT ASSETS (1,498) 877
ACCOUNTS PAYABLE (8,597) 3,732
ACCRUED INTEREST (85,541) (24,410)
ACCRUED AND WITHHELD TAXES 11,999 17,925
ENERGY COST BILLED IN EXCESS OF ACTUAL (5,143) (16,194)
OTHER CURRENT LIABILITIES (28,368) (3,426)
---------- ----------
TOTAL ADJUSTMENTS (18,905) 83,026
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 19,176 123,093
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONS (152,136) (170,863)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION
FUNDS 29,190 34,231
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 1,176 483
DECREASE IN OTHER SHORT-TERM INVESTMENTS -- 66,165
DECREASE (INCREASE) IN DECOMMISSIONING FUND 38 (5,047)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (121,732) (75,031)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NET 294,092 35,646
DEBT PAYMENTS (350,233) (132,074)
REFUND OF VOGTLE SURCHARGE (2,031) (1,300)
OTHER 3,209 (4,687)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (54,963) (102,415)
---------- ----------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (157,519) (54,353)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF
PERIOD 244,173 275,624
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $ 86,654 $ 221,271
---------- ----------
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED) $308,003 $280,314
INCOME TAXES -- (43)
The accompanying notes are an integral part of these condensed statements.
6