- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 10-Q
(MARK ONE)
[x][X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 19951996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO _____________
____________________
COMMISSION FILE NO. 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 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, 19951996
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets atas of March 31, 19951996 (Unaudited)
and December 31, 19941995 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months Ended March 31, 19951996 and 19941995 5
Condensed Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 19951996 and 19941995 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 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
AT ATPART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
1994
----------- ------------
(UNAUDITED)- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
ASSETS (Unaudited)
--------------------------
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $5,104,420 $5,100,299
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,264,679) (1,231,818)In service $5,696,887 $5,699,213
Less: Accumulated provision for depreciation (1,389,588) (1,362,431)
---------- ----------
3,839,741 3,868,481
NUCLEAR FUEL, AT AMORTIZED COST 100,483 105,683
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 6,010 6,275
CONSTRUCTION WORK IN PROGRESS 564,682 538,7894,307,299 4,336,782
Nuclear fuel, at amortized cost 96,075 94,013
Plant acquisition adjustments, at amortized cost 4,949 5,214
Construction work in progress 41,617 35,753
---------- ----------
4,510,916 4,519,2284,449,940 4,471,762
---------- ----------
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 53,694 64,163
DECOMMISSIONING FUND, AT MARKET 62,096 59,164
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 16,735 17,371Bond, reserve and construction funds, at market 53,079 56,511
Decommissioning fund, at market 75,652 74,492
Investment in associated organizations, at cost 15,502 15,853
---------- ----------
132,525 140,698144,233 146,856
---------- ----------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 62,240 190,642
OTHER SHORT-TERM INVESTMENTS, AT MARKET 17,107 -
RECEIVABLES 91,240 90,998
INVENTORIES, AT AVERAGE COST 103,367 95,076
PREPAYMENTS AND OTHER CURRENT ASSETS 11,392 14,857Cash and temporary cash investments, at cost 148,146 201,151
Other short-term investments, at market 89,118 79,165
Receivables 100,927 99,559
Inventories, at average cost 86,086 82,949
Prepayments and other current assets 17,325 14,325
---------- ----------
285,346 391,573441,602 477,149
---------- ----------
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 207,717 161,889
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 81,595 80,132
DISCONTINUED PROJECT, BEING AMORTIZED 25,885 26,342
DEFERRED DEBT EXPENSE, BEING AMORTIZED 21,683 20,936
OTHER 8,017 7,657Premium and loss on reacquired debt, being amortized 207,663 200,794
Deferred amortization of Scherer leasehold 87,994 87,134
Discontinued projects, being amortized 23,795 24,305
Deferred debt expense, being amortized 20,905 21,135
Other 15,772 9,361
---------- ----------
344,897 296,956356,129 342,729
---------- ----------
$5,273,684 $5,348,455
========== ==========$5,391,904 $5,438,496
---------- ----------
---------- ----------
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 ATOGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
1994
---------- ------------
(UNAUDITED)- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
EQUITIES AND LIABILITIES (Unaudited)
-------------------------
CAPITALIZATION:
PATRONAGE CAPITAL (NET OF UNREALIZED LOSSES OF $2,324
AT MARCHPatronage capital and membership fees (including
unrealized gains of $2,488 at March 31, 1996 and
$3,570 at December 31, 1995 AND $3,567 AT DECEMBER 31, 1994
ON AVAILABLE-FOR-SALE SECURITIES) $ 319,201 $ 309,496
LONG-TERM DEBT 4,148,284 4,128,080
OBLIGATION UNDER CAPITAL LEASES 300,108 303,749on available-for-sale
securities) $346,797 $338,891
Long-term debt 4,181,779 4,207,320
Obligations under capital leases 295,779 296,478
---------- ----------
4,767,593 4,741,3254,824,355 4,842,689
---------- ----------
CURRENT LIABILITIES:
LONG-TERM DEBT AND CAPITAL LEASES DUE WITHIN ONE YEAR 85,761 90,086
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 15,014 21,476
ACCOUNTS PAYABLE 41,822 52,921
ACCRUED INTEREST 20,229 100,010
ACCRUED AND WITHHELD TAXES 7,801 1,566
ENERGY COSTS BILLED IN EXCESS OF ACTUALS 883 2,125
OTHER CURRENT LIABILITIES 10,917 18,177Long-term debt and capital leases due within one year 98,485 89,675
Deferred margins to be refunded within one year 21,859 32,047
Accounts payable 39,759 48,855
Accrued interest 72,433 91,096
Accrued and withheld taxes 8,165 1,785
Other current liabilities 12,775 18,007
---------- ----------
182,427 286,361253,476 281,465
---------- ----------
DEFFEREDDEFERRED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 62,624 63,209
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 56,217 58,236
ACCUMULATED DEFERRED INCOME TAXESGain on sale of plant, being amortized 60,283 60,868
Sale of income tax benefits, being amortized 48,186 50,194
Accumulated deferred income taxes 65,510 65,510
DEFERRED MARGINS AND VOGTLE SURCHARGE 15,568 15,568
DECOMMISSIONING RESERVE 100,944 96,291
OTHER 22,801 21,955Decommissioning reserve 115,688 114,049
Other 24,406 23,721
---------- ----------
323,664 320,769314,073 314,342
---------- ----------
$5,273,684 $5,348,455
========== ==========$5,391,904 $5,438,496
---------- ----------
---------- ----------
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 REVENUES & EXPENSES (UNAUDITED)
(DOLLARS IN THOUSANDS)
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES AND EXPENSES (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, --------------------1996 AND 1995
1994
-------- ---------- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
------------------------------
OPERATING REVENUES:
SALES TO MEMBERS $227,849 $225,458
SALES TO NON-MEMBERSSales to Members $ 246,458 $ 227,849
Sales to non-Members 29,243 29,698
42,160
-------- ----------------- ---------
TOTAL OPERATING REVENUES 275,701 257,547
267,618
-------- ----------------- ---------
OPERATING EXPENSES:
FUELFuel 48,240 47,517
51,232
PRODUCTIONProduction 30,369 32,243
32,118
PURCHASED POWERPurchased power 69,076 59,947
53,539
DEPRECIATION AND AMORTIZATIONPower delivery 3,658 3,921
Depreciation and amortization 36,526 32,884
33,051
TAXES OTHER THAN INCOME TAXESTaxes other than income taxes 7,384 5,891
6,105
OTHER OPERATING EXPENSES 10,383 9,691
-------- --------Other operating expenses 6,880 6,462
--------- ---------
TOTAL OPERATING EXPENSES 202,133 188,865
185,736
-------- ----------------- ---------
OPERATING MARGIN 73,568 68,682
81,882
-------- ----------------- ---------
OTHER INCOME (EXPENSE):
INTEREST INCOMEInterest income 4,060 3,312
2,951
AMORTIZATION OF DEFERRED MARGINSAmortization of deferred margins 10,188 6,462
6,641
ALLOWANCE FOR EQUITY FUNDS USED
DURING CONSTRUCTIONAllowance for equity funds used during construction 47 761
681
OTHEROther 2,642 2,834
5,475
-------- ----------------- ---------
TOTAL OTHER INCOME 16,937 13,369
15,748
-------- ----------------- ---------
INTEREST CHARGES:
INTEREST ON LONG-TERM OBLIGATIONSInterest on long-term-debt and other obligations 82,031 83,008
86,302
ALLOWANCE FOR DEBT FUNDS USED
DURING CONSTRUCTIONAllowance for debt funds used during construction (514) (9,419)
(8,856)
-------- ----------------- ---------
NET INTEREST CHARGES 81,517 73,589
77,446
-------- ----------------- ---------
NET MARGIN $ 8,988 $ 8,462
$ 20,184
======== ========--------- ---------
--------- ---------
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 THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(DOLLARS IN THOUSANDS)
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
1994
-------- --------- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
-----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET MARGINNet margin $ 8,4628,988 $ 20,1848,462
-------- --------
ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATIONDepreciation and amortization 39,425 47,704
47,213
AMORTIZATION OF DEFERRED MARGINSAmortization of deferred margins (10,188) (6,462)
(6,641)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTIONAllowance for equity funds used during construction (47) (761)
(681)
OTHEROther (859) (843) (4,690)
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) 727
INVENTORIESReceivables (1,368) (1,484)
Inventories (3,137) (8,291)
1,207
PREPAYMENTS AND OTHER CURRENT ASSETSPrepayments and other current assets (3,000) 3,465
(6,937)
ACCOUNTS PAYABLEAccounts payable (9,096) (11,099)
(7,600)
ACCRUED INTERESTAccrued interest 6,380 6,235
Accrued and withheld taxes (18,663) (79,781)
(85,849)
ACCRUED AND WITHHELD TAXES 6,235 (1,573)
ENERGY COST BILLED IN EXCESS OF ACTUAL (1,242) (1,814)
OTHER CURRENT LIABILITIESOther current liabilities (5,232) (7,260)
(30,095)
--------------- --------
TOTAL ADJUSTMENTS (5,785) (58,577)
(96,733)
--------------- --------
NET CASH USED INPROVIDED BY (USED IN) OPERATING ACTIVITIES 3,203 (50,115)
(76,549)
--------------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONSProperty additions (24,824) (36,086)
(48,860)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDSNet proceeds from bond, reserve and construction funds 2,397 11,712
31,372
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONSDecrease in investment in associated organizations 351 636
273
INCREASE IN OTHER SHORT-TERM INVESTMENTSIncrease in other short-term investments (10,000) (17,107)
-
(INCREASE) DECREASE IN DECOMMISSIONING FUNDIncrease (decrease) in decommissioning fund 729 (1,041)
1,842
OTHER - (3,434)
--------------- --------
NET CASH USED IN INVESTING ACTIVITIES (31,347) (41,886)
(18,806)
--------------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NETDebt proceeds, net - 88,545
243,989
DEBT PAYMENTSDebt payments (25,366) (124,534)
(318,056)
REFUND OF VOGTLE SURCHARGE - (1,005)
OTHEROther 505 (412)
97
--------------- --------
NET CASH USED IN FINANCING ACTIVITIES (24,861) (36,401)
(74,975)
--------------- --------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (53,005) (128,402) (170,330)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD 201,151 190,642 244,173
-------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD $148,146 $ 62,240 $ 73,843
======== ========
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED)Interest (net of amounts capitalized) $96,769 $149,265
$161,096
INCOME TAXESIncome taxes - -
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, 19951996 AND 19941995
(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, 19951996 and 1994.1995. 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
GENERAL
As a means of reducing the cost of power provided to the Members, on January
3, 1996, Oglethorpe entered into a power supply swap agreement with Enron
Power Marketing, Inc. (EPMI). The agreement, effective January 4, 1996
through April 30, 1996, required EPMI to sell to Oglethorpe at a favorable
fixed rate all the energy necessary to meet the Members' requirements.
Pursuant to the agreement, Oglethorpe was required to sell to EPMI at cost,
subject to certain limitations, upon request all energy available from
Oglethorpe's total power resources. Under the agreement, Oglethorpe
maintained the responsibility of operating the power supply system and
continued to dispatch the generating resources to ensure system reliability.
See "OPERATING REVENUES" and "OPERATING EXPENSES" below for a discussion of
the impact of the power supply swap agreement on first quarter 1996 results
of operations. On April 30, 1996, Oglethorpe and EPMI entered into an
agreement which extended the term of this power supply swap agreement, with
certain modifications, from May 1, 1996 through August 31, 1996.
On February 7, 1996, Oglethorpe issued a Request for Proposals (RFP) to
selected bidders for a long-term power supply arrangement. This RFP did not
seek a specific amount of power; instead, it requested proposals for meeting
the combined power needs of the Members with term options ranging from two to
15 years. Currently, discussions are focused on proposals from EPMI, LG&E
Power Marketing Inc. and a joint proposal from Duke/Louis Dreyfus LLC &
Georgia Power Company (GPC). The current four-month agreement with EPMI will
provide the energy needed to serve the Members while Oglethorpe finalizes a
long-term power supply arrangement.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
Oglethorpe's net margin for the quarter ended March 31, 19951996 was $8.5$9.0 million
compared to $20.2$8.5 million for the same period of 1994. Historically, most of
Oglethorpe's annual net 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 declined in the first quarter of 1995 compared to
the first quarter of 1994 due to the change in the pattern of capacity cost
recovery described above.
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 of 19951995.
OPERATING REVENUES
The increase in Member revenues for the three months ended March 31, 1996
compared to the same period of 1994.1995 was due to the recovery of additional
fixed costs of the Rocky Mountain Project (Rocky Mountain) and the increased
fixed cost responsibility resulting from the scheduled end of Sell-back
revenues from GPC under the plant operating agreements (discussed below).
Energy revenues from sales to Members for the three-month period of 1996 were
virtually unchanged from the same period of the prior year despite the fact
that megawatt-hour (MWh) sales increased 15.5% due to prolonged colder than
normal weather. Oglethorpe achieved substantial savings in energy costs in
the first quarter under the power supply swap agreement with EPMI which were
passed through to the Members. Oglethorpe's average energy revenue per MWh
for the first quarter of 1996 was 14% less than the same period of 1995.
8
Sales to non-Members arewere 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 of 1995three months ended March 31, 1996 and 1994:1995:
Three Months Ended March 31,
----------------------------1996 1995
1994
-------- ----------------------------------
(dollars in thousands)
Plant operating agreements $ - $ 5,892 $19,094
Power supply arrangements 4,718 7,316 9,237
Transmission agreements 3,372 2,995 3,199
Other utilities 21,153 13,495 10,630
------- -------
Total $29,243 $29,698 $42,160
======= =======
8
The decrease inWhile total revenues from non-Members in the first quarter of 1995 compared
towere virtually the same, period of 1994 was primarily attributable to lower revenues from
sales to utilities other than GPC pursuant toincreased significantly and revenues from
the plant operating agreements.agreements and power supply arrangements with GPC were
significantly lower.
Under the plant operating agreements, GPC purchasespurchased capacity and energy from
Oglethorpe on a declining scale in the early years of operation of certain
co-owned generating units. The decrease in
revenues of this type was due toAs scheduled, reductions in sell-back percentages
for both of the Plant Vogtle units. Effectiveeffective June 1, 1995, revenues
from GPC pursuant to the 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 from energy sales 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 lower in
the first quarter of 1996 compared to the same period of 1995.
Revenues from othersales to non-Member utilities (other than GPC) increased
substantially due to a 55%12.5% increase in MWh sales in the three months ended
March 199531, 1996 compared to the same period of 1994.1995. As discussed under
"General" above, this increase was due to EPMI marketing available energy
from Oglethorpe's total power resources. Under the power supply swap
agreement, sales to non-Member utilities are effectively transacted with EPMI
while in 1995 these sales were made by Oglethorpe is continuing to pursue energy and capacitydirectly with the
non-Member utilities. All profits on sales made by EPMI to other utilities
as a means of reducing amounts that must be recovered from Members.Oglethorpe's resources accrue to EPMI.
OPERATING EXPENSES
The slight increase in operating expenses for the three months ended March 31, 1996
compared to the same period of 1995 was primarily attributable to an increase
in purchased power. PurchasedIn 1996, purchased power expensesenergy costs and MWhs increased
by 42% and 39%, respectively, as EPMI utilized purchased resources to provide
Oglethorpe's Member load and for increased sales to other utilities.
9
Depreciation and amortization and taxes other than income taxes (property
taxes) increased due to the commercial operation of Rocky Mountain in the first quarter of 1995 primarily 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, therefore, there were no corresponding purchasesJune
1995.
OTHER INCOME
Other income for the first quarter of 1994. In addition, there was a 7% increase in MWh
purchases in 19951996 increased compared to 1994.
OTHER INCOME
The decrease in otherthe same
period of 1995 primarily as a result of higher income was due to the completionfrom amortization 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.
MEMBER CONTRACTS
As stated in the Annual Report on Form 10-K for the fiscal year ended December
31, 1994, in response to an increasingly competitive utility environment,
Oglethorpe has been discussing the need for a more flexible power supply
arrangement with its Members. The Oglethorpe Board of Directors has authorized
the study of several options which would alter the existing contractual
relationships between Oglethorpe and the Members. Management and the Board of
Directors are continuing to develop these options under which the existing "all-
requirements" wholesale power contract would be changed to allow a Member to
elect to meet its future capacity and energy requirements above current levels
with Member-owned generation or through purchases from Oglethorpe or from other
power suppliers. Management and 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 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 existing and committed resources among the
39 Members was approved by the Oglethorpe Board of Directors on May 8, 1995 for
implementation as early as January 1, 1996.
Since the Members must maintain responsibility for their allocated portions of
all current financial obligations to Oglethorpe, Oglethorpe's future revenues
associated with the Members' current obligations would be unaffected. However,
to the extent the Members choose to secure their projected load growth from
sources other than Oglethorpe, the growth in Oglethorpe's revenues would
decrease as would the related expenses.
The Board of Directors is expected to address these revisions to the existing
wholesale power contract, withdrawal procedures and other implementation issues
during the next several months; however, any actiondeferred margins. Oglethorpe's Board of Directors andauthorizes the amount of
deferred margins to be returned to the Members might take relatingeach year. For 1996, the
remaining amount of $32 million was authorized as compared to these options cannot be
predicted at this time.$16 million for
1995. Interest income increased due to higher average cash balances during
the first quarter of 1996 compared to the same period of 1995.
INTEREST CHARGES
The increase in net interest charges for the three months ended March 31,
1996 compared to 1995 resulted from Rocky Mountain becoming commercially
operable in June 1995.
FINANCIAL CONDITION
Total assets and total equity andplus liabilities as of March 31, 19951996 were $5.3$5.4
billion which was $75$47 million less than the total at December 31, 1994. This
reduction was the result of the payment of interest on long-term debt accrued at
year-end on the first business day of January 1995.
ASSETS
Property additions for the first quarter of 1995 totaled $36 million.
Construction of the Rocky Mountain Project (Rocky Mountain), a pumped storage
hydroelectric facility, accounted for $18 million of this amount. Borrowings
under the loan commitment for Rocky Mountain totaled $59 million in the first
quarter of 1995. Rocky Mountain was approximately 99% complete as ofthree months ended 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 scheduled1996 totaled $25
million and included additions, replacements and improvements to be available for use during peak periods this summer.
The decrease in bond, reservetransmission
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 which did not require a debt service reserve fund.
10
distribution facilities and existing generation facilities.
The decrease in cash and temporary cash investments was primarilypartly due to
the
December 31, 1994 Federal Financing Bank (FFB) interest payment being made as
dueproperty additions funded from cash, premiums paid on January 3, 1995refinanced debt and
due to the prepayment of two FFB advances in January
1995. For a discussion of the refinancing transactions, see Note 5 of Notes to
Financial Statements in Oglethorpe's Annual Report on
Form 10-K for the year ending December 31, 1994.scheduled debt service payments.
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 correspondingDuring the first quarter of 1996, an additional $10 million was
transferred into investments with maturities of more than three months.
Prepayments and other current assets increased primarily due to a $3 million
increase in 1994.the payment made to GPC for estimates of Plant Hatch and Plant
Wansley operations and maintenance costs for April 1996 compared to the
estimate paid for January 1996.
The increase in the premium and loss on reacquired debtother deferred charges primarily resulted from premiums
paid in connection with FFB note modificationsthe deferral
of $6.3 million of nuclear refueling outage costs related to Vogtle Unit No.
1 and prepayments, and fromHatch Unit No. 1 which will be recovered through rates over a pollution control bond (PCB) refunding.period of
eighteen months.
10
EQUITY AND LIABILITIES
Deferred margins and Vogtle surcharge to be refunded within one year decreased by $6.4$10.2 million
which is the amount that was refunded to the Members for the first three
months of 1995.1996.
Accounts payable declined as of March 31,199531, 1996 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 budgeted costs by $1.2 million.
Other current liabilities decreased as a result ofpartly due to the year-end accrual for
employee incentive pay (subsequently paid in March 1996) and partly due to
normal activity.
11
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
NEW OFFICER OF OGLETHORPE
Gary M. Bullock was elected on March 31, 1995 as the new Secretary-Treasurer of
Oglethorpe for a one-year term.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)(A) EXHIBITS
Number Description
- --------- ----------- +4.10.4(d) Third Amendment to First Amended-----------
*10.27(a) Extension and Restated LetterModification Agreement between Enron Power
Marketing, Inc. and Oglethorpe, dated as of Credit Reimbursement Agreement, dated April 15, 1995,
between Oglethorpe and Credit Suisse.30, 1996.
27.1 Financial Data Schedule (for SEC use only).
___________________
+ Pursuant to 17 C.F.R. 229.601(b)(4)(iii),_______________________
* Certain portions of this document is
nothave been omitted as confidential and
filed herewith, howeverseparately with the registrant hereby agrees
that such document will be provided to the Commission upon
request.
(b) Reports on FormSEC.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended March
31, 1995.1996.
12
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, 199514, 1996 By: /s/ T. D. Kilgore
----------------------------------------------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 199514, 1996 /s/ Gary M. Bullock
----------------------------------------------------------------------
Gary M. Bullock
Secretary-Treasurer
(Principal Financial Officer)
Date: May 12, 199514, 1996 /s/ Eugen Heckl
----------------------------------------------------------------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
13