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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 10-Q
(MARK ONE)
[x](Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31,SEPTEMBER 30, 1995
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)(770) 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[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 MARCH 31,SEPTEMBER 30, 1995
PAGE NO.Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets at March 31,September 30, 1995 (Unaudited)
and December 31, 1994 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months and Nine Months Ended
March 31,September 30, 1995 and 1994 5
Condensed Statements of Cash Flows (Unaudited)
for the ThreeNine Months Ended March 31,September 30, 1995 and 1994 6
Notes to the Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 5. Other Information 1214
Item 6. Exhibits and Reports on Form 8-K 1214
SIGNATURES 1315
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
AT AT
MARCH 31,SEPTEMBER 30, DECEMBER 31,
1995 1994
------------------------ ------------
(UNAUDITED)
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $5,104,420$5,681,416 $5,100,299
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,264,679)(1,329,698) (1,231,818)
---------- ----------
3,839,741----------- -----------
4,351,718 3,868,481
NUCLEAR FUEL, AT AMORTIZED COST 100,48394,095 105,683
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,0105,479 6,275
CONSTRUCTION WORK IN PROGRESS 564,68236,329 538,789
---------- ----------
4,510,916----------- -----------
4,487,621 4,519,228
---------- --------------------- -----------
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 53,69452,942 64,163
DECOMMISSIONING FUND, AT MARKET 62,09668,980 59,164
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 16,73516,161 17,371
---------- ----------
132,525----------- -----------
138,083 140,698
---------- --------------------- -----------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 62,240183,574 190,642
OTHER SHORT-TERM INVESTMENTS, AT MARKET 17,10769,239 -
RECEIVABLES 91,24081,734 90,998
INVENTORIES, AT AVERAGE COST 103,36786,340 95,076
PREPAYMENTS AND OTHER CURRENT ASSETS 11,39216,772 14,857
---------- ----------
285,346----------- -----------
437,659 391,573
---------- --------------------- -----------
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 207,717202,861 161,889
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 81,59585,615 80,132
DISCONTINUED PROJECT, BEING AMORTIZED 25,88524,814 26,342
DEFERRED DEBT EXPENSE, BEING AMORTIZED 21,68321,116 20,936
OTHER 8,0178,730 7,657
---------- ----------
344,897----------- -----------
343,136 296,956
---------- ----------
$5,273,684----------- -----------
$5,406,499 $5,348,455
========== ===================== ===========
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,SEPTEMBER 30, DECEMBER 31,
1995 1994
----------------------- ------------
(UNAUDITED)
CAPITALIZATION:
PATRONAGE CAPITAL (NET OF UNREALIZED LOSSES OF
$2,324$ 1,391 AT MARCH 31,SEPTEMBER 30, 1995 AND $3,567$ 3,567 AT DECEMBER 31, 1994
ON AVAILABLE-FOR-SALE SECURITIES) $ 319,201351,084 $ 309,496
LONG-TERM DEBT 4,148,2844,169,025 4,128,080
OBLIGATION UNDER CAPITAL LEASES 300,108300,799 303,749
---------- ----------
4,767,5934,820,908 4,741,325
---------- ----------
CURRENT LIABILITIES:
LONG-TERM DEBT AND CAPITAL LEASES DUE WITHIN ONE YEAR 85,761102,347 90,086
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 15,0144,827 21,476
ACCOUNTS PAYABLE 41,82233,164 52,921
ACCRUED INTEREST 20,22980,275 100,010
ACCRUED AND WITHHELD TAXES 7,80122,687 1,566
ENERGY COSTS BILLED IN EXCESS OF ACTUALS 883(615) 2,125
OTHER CURRENT LIABILITIES 10,91712,292 18,177
---------- ----------
182,427254,977 286,361
---------- ----------
DEFFERED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 62,62461,454 63,209
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 56,21752,201 58,236
ACCUMULATED DEFERRED INCOME TAXES 65,510 65,510
DEFERRED MARGINS AND VOGTLE SURCHARGE 15,568 15,568
DECOMMISSIONING RESERVE 100,944111,199 96,291
OTHER 22,80124,682 21,955
---------- ----------
323,664330,614 320,769
---------- ----------
$5,273,684$5,406,499 $5,348,455
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
4
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES & EXPENSES
(UNAUDITED)
(DOLLARS IN THOUSANDS)THOUSAND)
THREE MONTHS ENDED MARCH 31,
--------------------NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1995 1994 1995 1994
-------- ----------------- -------- --------
OPERATING REVENUES:
SALES TO MEMBERS $227,849 $225,458$284,476 $244,390 $764,793 $699,005
SALES TO NON-MEMBERS 29,698 42,16033,060 22,428 91,519 98,466
-------- -------- -------- --------
TOTAL OPERATING REVENUES 257,547 267,618317,536 266,818 856,312 797,471
-------- -------- -------- --------
OPERATING EXPENSES:
FUEL 47,517 51,23262,813 57,887 164,484 157,719
PRODUCTION 32,243 32,11830,578 28,719 92,443 91,774
PURCHASED POWER 59,947 53,53985,706 60,905 207,220 172,097
DEPRECIATION AND AMORTIZATION 32,884 33,05135,820 32,375 102,959 98,648
TAXES OTHER THAN INCOME TAXES 5,891 6,1057,181 5,920 19,601 17,952
OTHER OPERATING EXPENSES 10,383 9,69112,489 12,925 35,924 33,609
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 188,865 185,736234,587 198,731 622,631 571,799
-------- -------- -------- --------
OPERATING MARGIN 68,682 81,88282,949 68,087 233,681 225,672
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
INTEREST INCOME 3,312 2,9514,806 2,842 12,717 7,976
AMORTIZATION OF DEFERRED MARGINS 6,462 6,6415,229 4,011 16,649 15,284
ALLOWANCE FOR EQUITY FUNDS USED
DURING CONSTRUCTION 761 68168 718 1,635 2,074
OTHER 2,834 5,4753,242 5,157 9,505 16,452
-------- -------- -------- --------
TOTAL OTHER INCOME 13,369 15,74813,345 12,728 40,506 41,786
-------- -------- -------- --------
INTEREST CHARGES:
INTEREST ON LONG-TERM OBLIGATIONS 83,008 86,30286,429 85,127 254,961 255,317
ALLOWANCE FOR DEBT FUNDS USED
DURING CONSTRUCTION (9,419) (8,856)(791) (8,698) (20,186) (25,940)
-------- -------- -------- --------
NET INTEREST CHARGES 73,589 77,44685,638 76,429 234,775 229,377
-------- -------- -------- --------
NET MARGIN $ 8,46210,656 $ 20,1844,386 $ 39,412 $ 38,081
======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
5
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREENINE MONTHS ENDED MARCH 31,SEPTEMBER 30, 1995 AND 1994
(DOLLARS IN THOUSANDS)
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET MARGIN $ 8,46239,412 $ 20,18438,081
-------- --------
ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 47,704 47,213149,588 141,986
AMORTIZATION OF DEFERRED GAINS (1,756) --
AMORTIZATION OF DEFERRED MARGINS (6,462) (6,641)(16,649) (15,284)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (761) (681)(1,635) (2,074)
OTHER (843) (4,690)1,340 (14,216)
CHANGE IN NET CURRENT ASSETS, EXCLUDING
LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS AND
VOGTLE SURCHARGE TO BE REFUNDED WITHIN ONE YEAR:
RECEIVABLES (242) 7279,264 (8,037)
INVENTORIES (8,291) 1,2078,736 (4,132)
PREPAYMENTS AND OTHER CURRENT ASSETS 3,465 (6,937)(1,915) (1,498)
ACCOUNTS PAYABLE (11,099) (7,600)(19,757) (8,597)
ACCRUED INTEREST (79,781) (85,849)(19,735) (85,541)
ACCRUED AND WITHHELD TAXES 6,235 (1,573)21,121 11,999
ENERGY COST BILLED IN EXCESS OF ACTUAL (1,242) (1,814)(2,740) (5,143)
OTHER CURRENT LIABILITIES (7,260) (30,095)
-------(5,885) (28,368)
-------- --------
TOTAL ADJUSTMENTS (58,577) (96,733)
-------119,977 (18,905)
-------- --------
NET CASH USED INPROVIDED BY OPERATING ACTIVITIES (50,115) (76,549)
-------159,389 19,176
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONS (36,086) (48,860)(107,989) (152,136)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 11,712 31,37213,397 29,190
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 636 2731,210 1,176
INCREASE IN OTHER SHORT-TERM INVESTMENTS (17,107) -(69,239) --
(INCREASE) DECREASE IN DECOMMISSIONING FUND (1,041) 1,842
OTHER - (3,434)
-------(5,254) 38
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (41,886) (18,806)
-------(167,875) (121,732)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NET 88,545 243,989142,341 294,092
DEBT PAYMENTS (124,534) (318,056)(139,730) (350,233)
REFUND OF VOGTLE SURCHARGE - (1,005)-- (2,031)
OTHER (412) 97
-------(1,193) 3,209
-------- --------
NET CASH USED INPROVIDED BY (USED IN) FINANCING ACTIVITIES (36,401) (74,975)
-------1,418 (54,963)
-------- --------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (128,402) (170,330)(7,068) (157,519)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 190,642 244,173
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $183,574 $ 62,240 $ 73,84386,654
======== ========
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED) $149,265 $161,096$239,485 $308,003
INCOME TAXES - --- --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED STATEMENTS.
6
OGLETHORPE POWER CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
MARCH 31,SEPTEMBER 30, 1995 AND 1994
(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,September 30, 1995 and 1994. 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) In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". This Statement imposes stricter criteria for regulatory assets by
requiring that such assets be probable of future recovery at each
balance sheet date. Oglethorpe anticipates adopting this standard on
January 1, 1996 and does not expect that adoption will have a material
impact on the financial position or results of operations based on the
current regulatory structure in which Oglethorpe operates. See Note 1.m.
of Notes to Financial Statements in Oglethorpe's Annual Report on Form
10-K for the year ending December 31, 1994 for a summary of Oglethorpe's
regulatory assets and liabilities.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 31,SEPTEMBER 30, 1995
Oglethorpe's net margin for the quarter ended March 31,September 30, 1995 was $8.5$10.7
million compared to $20.2$4.4 million for the same period of 1994. Historically, most of
Oglethorpe's annual netNet margin was
earned by May 31 of each year. This pattern
of earnings occurred because non-Member revenues declined significantly on June
1 of each year through the end of such year due to scheduled reductions in
capacity sell-back to Georgia Power Company (GPC) while monthly fixed costs
recovered from the Member Systems (Members) remained virtually unchanged
throughout the year. (See discussion of non-Member revenues from GPC under
"Operating Revenues" below.) Oglethorpe's capacity revenues from the Members
reflect recovery in nearly equal monthly amounts of all budgeted fixed costs
plus the annual net margin goal, less fixed costs projected to be recovered from
GPC pursuant to plant operating agreements. The capacity sell-back arrangement
with GPC will expire on May 31, 1995. The minimal non-Member revenues from GPC
in 1995 has resulted in net margins being earned in a more even manner
throughout the year as opposed to being earned primarily during the first five
months in prior years. Oglethorpe's budgeted net margin for the year 1995 is
approximately the same level as 1994.
OPERATING REVENUES
Total operating revenues have declinedhigher in the firstthird quarter of 1995 compared to the firstthird quarter of 1994
primarily due to increased capacity revenues from Members resulting from the
unusually warm weather and to savings in purchased power capacity and
decommissioning expenses. Oglethorpe's net margin for the nine months ended
September 30, 1995 was $39.4 million compared to $38.1 million for the first
nine months of 1994. Net margin for the first nine months of 1995 exceeded
the net margin goal by $23 million resulting from, in addition to those
savings mentioned above, unbudgeted savings from continued capitalization of
fixed costs of the Rocky Mountain Project (Rocky Mountain) due to the changedelay
in commercial operation of the patterninitial unit from April 1995 to June 1995 and
savings in fixed production costs. Net margin for the same period of capacity cost
recovery described above.1994 was
higher than the 1994 net margin goal due to savings in interest expense as a
result of debt refinancing efforts.
OPERATING REVENUES
- ------------------
The increases in Member revenues increased slightly during the first quarter of 1995 compared to
the first quarter of 1994. Energy sales were virtually unchanged for the first
quarter ofthree-month and nine-month periods
ended September 30, 1995 compared to the same periods of 1994 were due
primarily to 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) and due to the additional fixed costs of
Rocky Mountain. Energy revenues from sales to Members for the three-month and
nine-month periods of 1995 were 15.5% and 4.5% higher than the same period of
1994.the prior year, however, megawatt-hour (MWh) sales increased 25.2% and
12.5%, respectively. The lower percentage increase in revenues compared to
MWhs was due to the pass-through of lower net energy costs in 1995, as
discussed under "Operating Expenses" below.
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 nine months ended September 30,
1995 and 1994:
Three Months Ended March 31,Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
1995 1994 -------- --------1995 1994
---- ---- ---- ----
(dollars in thousands)
Plant operating agreements $ 5,892 $19,09489 $ 5,557 $10,096 $39,076
Power supply arrangements 7,316 9,23712,139 4,237 30,712 19,696
Transmission agreements 2,995 3,1993,770 2,771 9,377 8,503
Other utilities 13,495 10,63017,062 9,863 41,334 31,191
------- ------- ------- -------
Total $29,698 $42,160$33,060 $22,428 $91,519 $98,466
======= ======= ======= =======
8
The decreaseincrease in revenues from non-Members infor the first quarter ofthree months ended
September 30, 1995 compared to the same period of 1994 was primarily attributable to higher
revenues from power supply arrangements and from sales to other utilities.
For the nine months ended September 30, 1995 compared to 1994, revenues from
non-Members decreased due 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-backSell-back percentages for both of the Plant Vogtle
units. Effective June 1, 1995, revenues from GPC pursuant to plant operating
agreements will end.ended.
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 arising from dispatch situations whereby GPC causes Plant Wansley to
be operated when Oglethorpe's system does not require all of its contractual
entitlement to the generation. These revenues compensate Oglethorpe for its
costs since, under the operating agreements, Oglethorpe is responsible for
its share of fuel costs any time a unit operates. Such sales were
significantly higher in the third quarter of 1995 compared to the same period
of 1994.
Revenues from other non-Member utilities increased substantially due to a 55%16%
increase in MWh sales in the three months ended MarchSeptember 30, 1995 and a 33%
increase in MWh sales in the nine months ended September 30, 1995 compared to
the same period of 1994. 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 slight increase in operating expenses for the three months and nine months ended
September 30, 1995 compared to the same period of 1994 was primarily
attributable to an increase in purchased power.power required due to the additional
Member and non-Member sales.
Purchased power expenses increased in the first quarter of 1995 primarilypartly as the result of capacity
and energy purchases from Hartwell Energy Limited Partnership (Hartwell). The
agreement to purchase capacity and energy from Hartwell commenced in April
1994,1994; therefore, there were no corresponding purchases for the first quarterthree
months of 1994. In addition,Additionally, there was a 7%significant increase in purchases
from utilities other than GPC. Overall, there was a 39% increase in MWh
purchases from all sources in 1995 compared to the first nine months of 1994.
However, the net per unit variable costs of fuel, production and purchased
power was 4.7% lower in the first nine months of 1995 compared to 1994. Such
decrease arose from lower prices of purchased power and savings in fuel costs
and maintenance expenses.
OTHER INCOME
The decrease in other- ------------
Other income wasfor the three-month and nine-month periods ended September 30,
1995 varied
9
slightly compared to the same periods of 1994. However, the caption "other"
decreased due to the completion of amortization in October 1994 of a gain on
the sale of Plant Scherer common facilities. For a discussion of the gain on
the sale of Plant Scherer common facilities, see Note 6 of Notes to Financial
Statements in Oglethorpe's Annual Report on Form 10-K for the year ending
December 31, 1994. Interest income throughout the nine-month period ended
September 30, 1995 increased due to higher earnings from the decommissioning
fund.
INTEREST CHARGES
- ----------------
The increase in net interest charges for the three-month and nine-month
periods of 1995 compared to 1994 resulted from the three units of Rocky
Mountain becoming commercially operable in June and July 1995; therefore,
allowance for debt funds used during construction decreased, accordingly.
MEMBER CONTRACTS AND WITHDRAWAL ACTIVITIES
As stated in the Annual Report on Form 10-K for the fiscal year ended December
31, 1994,previously reported, in response to an increasingly competitive utility
environment, Oglethorpe has been discussing the needtaken actions to provide its Members with various
options for a more flexiblemeeting their power supply arrangement with its Members. The Oglethorpeneeds. During June and July 1995,
Oglethorpe's Board of Directors has authorizedapproved a plan that allows for substantial
changes to the studyCorporation's contractual relationship with its Members to
provide them with greater flexibility in their power supply arrangements and,
at the same time, established the method by which Oglethorpe will recover the
costs of severalexisting resources.
The new plan offers the Members a choice of service options which would alterthat can help
them better meet the existing contractual
relationships betweenindividual needs and load characteristics of their
systems. Options offered to the Members range from having Oglethorpe continue
to perform all power supply functions, to performing some or all of those
functions themselves, or to withdrawing from membership in accordance with
the process, provisions and the Members. Management andconditions approved by the Board of Directors are continuing to develop these options under whichDirectors.
Members who sign the existing "all-
requirements"new wholesale power contract would be changedwill have the option to allow a Memberown
dispersed generation for customer reliability and competitive advantage and
to elect to meet its future capacity and energy requirements above current levelsengage in bilateral transactions with Member-owned generation or through purchases from Oglethorpe or from other power suppliers. Managementsuppliers so long as all
of their load and resources are committed to the dispatch of a new power
pool. Oglethorpe's and any Member-secured resources will be committed to
economic dispatch (pooled) for the benefit of all the pool participants. The
pool cost settlement methodology will price at market rates the hourly
differences between a participating EMC's allocation of power supply
resources and its load. This power pool arrangement will also allow the
participants to pool resource reserves. The pool participants will invite
other utilities to participate in the pool and will pursue additional
customers.
Operation of the power pool will be directed by the Pool Operation
Consultants or "the POC". The POC will determine operating policies for the
pool, such as targets for planning reserves, the energy cost settlement
methodology and other administrative functions.
The pool participants have selected the following individuals for the POC:
- - Newton A. Campbell, retired Chairman and CEO, Burns & McDonnell Engineering
Company
- - John A. Casazza, Chairman, CSA Energy Consultants
- - Duejean C. Garrett, partner in the law firm of Baker & Daniels
- - Thomas N. Hand, retired Executive Manager, East Central Area Reliability
Coordination Agreement (ECAR)
- - Royce Lyles, retired Chief Executive Officer, Jacksonville Electric
Authority
10
Under each of the service options approved by the Board of Directors, also are continuing to
develop specific implementation procedures for the existing bylaw provision that
9
grants a Member the right to withdraw from membership in Oglethorpe upon
satisfying certain conditions. Oglethorpe's willingness to consider the above
changes in its power supply arrangements with its Members is predicated on the
Members' commitment to honor their current financial obligations to Oglethorpe
under their existing wholesale power contracts.
Under the options currently being evaluated, each
Member or withdrawing Member would remain financially responsible for the
costs of, and required to purchase, all capacity and related energy from
Oglethorpe's existing plants committed projects and
existing power supply contracts based on a fixed
percentage allocation. The
methodology for allocating costs of existingallocation and committed resources among the
39 Members wasa formulary rate approved by the Board to recover
all of Oglethorpe's costs for existing commitments. Under this approved
methodology, a withdrawing Member could satisfy its existing financial
obligation to Oglethorpe Board of Directors on May 8, 1995 for
implementation as early as January 1, 1996.by entering into a 30-year power sale agreement.
Since the Members and any withdrawing Member must maintain responsibility for
their allocated portions of all current financial obligations to Oglethorpe,
Oglethorpe's future revenues associated with the Members'its current obligations would be
unaffected. However, to the extent the Members or any withdrawing Member
choose to secure their projected load growth from sources other than
Oglethorpe, the growth in Oglethorpe's revenues would decrease as would the
growth in related expenses.
TheTo date, Oglethorpe has received signed new wholesale power contracts from 25
Members and four Members have indicated by resolution of their Board of
Directors is expectedthey intend to address these revisions to the existingmaintain their current all-requirements wholesale
power contract,contract. Seven Members, including, as previously reported, Cobb EMC,
Snapping Shoals EMC and Walton EMC, have indicated by resolution of their
Board of Directors their desire to withdraw from membership. Some of the
Members that have given withdrawal proceduresnotices and several other implementation issues
duringEMCs are
continuing to evaluate their options. It is not certain at this time how many
Members will withdraw from Oglethorpe or how many will remain Members.
Several of the next several months; however, any actionMembers who are desiring to withdraw have proposed a concept
for withdrawal in lieu of the one approved by Oglethorpe's Board of
DirectorsDirectors. These Members desire to acquire a percentage interest in
Oglethorpe's assets equal to their allocated share of costs responsibility
and to assume the same share of Oglethorpe's debt. Oglethorpe's management
has serious questions as to whether the conceptual approach put forward by
these Members is feasible but has indicated a willingness to discuss such a
concept as well as other options. The parties are utilizing the services of a
mediator to facilitate their discussions and to assist in reaching a mutually
agreeable solution. Representatives of the Rural Utilities Service (RUS) are
also participating in these discussions and have expressed a willingness to
explore alternative concepts, including a transfer of assets and assumption
of debt.
Due to unresolved issues relating to Member withdrawal, RUS has indicated
that it may not approve for implementation as of January 1, 1996 the new
energy pool settlement process and its cost allocation methodology. RUS
desires that Oglethorpe and all Members achieve a stronger consensus before
it will take action on the new arrangements. It is uncertain what effect the
delay in implementing the new power supply arrangements and the disagreements
among the Members might take relatingwill have on Oglethorpe and its Members.
11
POWER PURCHASE ARRANGEMENTS
Oglethorpe currently purchases 1,250 megawatts (MW) of capacity and
associated energy from GPC under the Block Power Sale Agreement. Because
Oglethorpe intends to these options cannot be
predicted at this time.obtain more economical alternatives, it has, pursuant
to the terms of the Agreement, given notice (in August 1994 and 1995) of its
election to reduce its purchases from GPC by 250 MW beginning September 1,
1996, and by an additional 250 MW beginning September 1, 1997.
FINANCIAL CONDITION
Total assets and total equity andplus liabilities as of March 31,September 30, 1995 were
$5.3$5.4 billion which was $75$58 million lessmore than the total at December 31, 1994.
This
reduction wasASSETS
- ------
The increase in electric plant in service resulted from the resultcommercial
operation of the paymentthree units of interest on long-term debt accrued at
year-end on the first business day of JanuaryRocky Mountain totaling $546 million during
June and July 1995. ASSETSConstruction work in progress decreased by this amount.
Property additions for the first quarter ofnine months ended September 30, 1995 totaled $36$108
million. Construction of the Rocky Mountain Project (Rocky Mountain), a pumped storage
hydroelectric facility, accounted for $18$52 million of this
amount.amount Borrowings under the loan commitment for Rocky Mountain totaled $59$98
million in the first quarternine months of 1995. Rocky Mountain was approximately 99% complete as of March 31,
1995. The initial unit of Rocky Mountain is currently scheduled for commercial
operation on June 1, 1995. All three units of Rocky Mountain are scheduled to
be available for use during peak periods this summer.
The decrease in bond, reserve and construction funds resulted primarily from
the utilization of a portion of the debt service reserve funds for debt
service payments. The available funds resulted from an interest rate swap
refinancing project in early 1995 which did not require a debt service
reserve fund.
1012
The decreaseincrease in total cash and temporary cash investments was primarily due to the December 31, 1994 Federal Financing Bank (FFB) interest payment being made as
due on January 3, 1995 and due toeffects
of the prepaymentrate options selected by 11 Members which resulted in planned
over-collections of two FFB advances in Januarycapacity revenues of $41 million during the third quarter
of 1995. For a discussion of the refinancing transactions,this rate option, see Note 5"Management's Discussion
and Analysis of Notes to
Financial StatementsCondition and Results of Operations" in
Oglethorpe's Annual Report on Form 10-K for the year endingended December 31, 1994.
Other short-term investments represent investments whose maturity periods
exceed Oglethorpe's policy of three months or less for classification as cash
equivalents. There were no corresponding investments at the end of 1994.
Prepayments and other current assets increased primarily due to a $3.7
million increase in 1994.the payment made to GPC for estimates of Plant Hatch O&M
for October 1995 compared to the estimate paid for January 1995.
The increase in the premium and loss on reacquired debt resulted from
premiums paid in connection with FFBFederal Financing Bank (FFB) note
modifications and prepayments, and from a pollution control bond (PCB)
refunding.
EQUITY AND LIABILITIES
- ----------------------
Long-term debt due within one year increased 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 $6.4$16.6 million which is the amount that was refunded to the
Members for the first threenine months of 1995.
Accounts payable declined as of March 31,1995September 30, 1995 as a result of normal
variations in the timing of payables activity.
Accrued interest decreased as discussed under cashprimarily due to normal payments and temporary cash
investments above.accruals of
interest.
Accrued and withheld taxes increased as a result of the normal monthly
accruals of property taxes, which are generally paid in the fourth quarter of
the year.
Energy costs billed in excess of actuals decreased as a result of actual
energy costs exceeding budgetedbilled costs by $1.2 million.$2.7 million during the nine months
ended September 30, 1995.
Other current liabilities decreased as a result ofpartly due to the year-end accrual for
performance pay (subsequently paid in March 1995) and partly due to normal
activity.
11The increase in other liabilities resulted primarily from normal accruals
for Oglethorpe's portion of GPC's post-retirement benefits related to the
co-owned plants.
13
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
NEW OFFICER OF OGLETHORPE
Gary M. Bullock was electedCHANGE IN MANAGEMENT
- --------------------
The Board of Directors has been advised by Tom Kilgore, its President and
Chief Executive Officer, that he intends to leave Oglethorpe to pursue other
business opportunities. While Kilgore has not resigned and continues in his
position, he requested that the Board begin the process for selecting his
successor. Kilgore has placed no time limit on March 31, 1995 ashis continued tenure and
intends to remain with Oglethorpe to assist in the new Secretary-Treasurer of
Oglethorpe for a one-year term.transition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITSExhibits
--------
Number Description
- ------------------- -----------
+4.10.4(d) Third Amendment to First Amended and Restated Letter of
Credit Reimbursement Agreement, dated April 15, 1995,
between Oglethorpe and Credit Suisse.
27.1 Financial Data Schedule (for SEC use only).
___________________
+ Pursuant to 17 C.F.R. 229.601(b)(4)(iii), this document is
not filed herewith, however the registrant hereby agrees
that such document will be provided to the Commission upon
request.
(b) Reports on Form 8-K
No reports-------------------
A report on Form 8-K weredescribing a change in Oglethorpe's certifying
accountant from Arthur Andersen LLP to Coopers & Lybrand L.L.P. was filed by
Oglethorpe for the quarter ended
March 31,on September 14, 1995.
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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 12,November 14, 1995 By: /s/ T. D. Kilgore
-------------------------------------KILGORE
------------------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 12,November 14, 1995 /s/ GaryGARY M. Bullock
-------------------------------------BULLOCK
------------------------------------------
Gary M. Bullock
Secretary-Treasurer
(Principal Financial Officer)
Date: May 12,November 14, 1995 /s/ Eugen Heckl
-------------------------------------EUGEN HECKL
------------------------------------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
1315