=============================================================================================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995MARCH 31, 1996
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 (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.
=============================================================================================================================================================
OGLETHORPE POWER CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30,MARCH 31, 1996
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of March 31, 1996 (Unaudited)
and December 31, 1995 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months Ended March 31, 1996 and 1995 5
Condensed Statements of Cash Flows (Unaudited)
for the Three Months Ended March 31, 1996 and 1995 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 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
2
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
ItemITEM 1. Financial Statements
Condensed Balance Sheets at June 30, 1995 (Unaudited)
and DecemberFINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1994 3
Condensed Statements of Revenues and Expenses (Unaudited)
for the Three Months and Six Months Ended
June 30, 1995 and 1994 5
Condensed Statements of Cash Flows (Unaudited)
for the Six Months Ended June 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 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OGLETHORPE POWER CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
------
AT AT
JUNE 30,1996 AND DECEMBER 31, 1995
1994
----------- -----------
(UNAUDITED)- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
ASSETS (Unaudited)
--------------------------
ELECTRIC PLANT, AT ORIGINAL COST:
IN SERVICE $ 5,619,987 $ 5,100,299
LESS ACCUMULATED PROVISION FOR DEPRECIATION (1,295,172) (1,231,818)
----------- -----------
4,324,815 3,868,481
NUCLEAR FUEL, AT AMORTIZED COST 99,575 105,683
PLANT ACQUISITION ADJUSTMENTS, AT AMORTIZED COST 5,745 6,275
CONSTRUCTION WORK IN PROGRESS 81,920 538,789
----------- -----------
4,512,055 4,519,228
----------- -----------In service $5,696,887 $5,699,213
Less: Accumulated provision for depreciation (1,389,588) (1,362,431)
---------- ----------
4,307,299 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
---------- ----------
4,449,940 4,471,762
---------- ----------
INVESTMENTS AND FUNDS:
BOND, RESERVE AND CONSTRUCTION FUNDS, AT MARKET 56,360 64,163
DECOMMISSIONING FUND, AT MARKET 65,099 59,164
INVESTMENT IN ASSOCIATED ORGANIZATIONS, AT COST 16,459 17,371
----------- -----------
137,918 140,698
----------- -----------Bond, 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
---------- ----------
144,233 146,856
---------- ----------
CURRENT ASSETS:
CASH AND TEMPORARY CASH INVESTMENTS, AT COST 76,587 190,642
OTHER SHORT-TERM INVESTMENTS, AT MARKET 28,130 -
RECEIVABLES 122,134 90,998
INVENTORIES, AT AVERAGE COST 102,914 95,076
PREPAYMENTS AND OTHER CURRENT ASSETS 11,937 14,857
----------- -----------
341,702 391,573
----------- -----------Cash 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
---------- ----------
441,602 477,149
---------- ----------
DEFERRED CHARGES:
PREMIUM AND LOSS ON REACQUIRED DEBT, BEING AMORTIZED 205,214 161,889
DEFERRED AMORTIZATION OF SCHERER LEASEHOLD 84,153 80,132
DISCONTINUED PROJECT, BEING AMORTIZED 25,323 26,342
DEFERRED DEBT EXPENSE, BEING AMORTIZED 21,382 20,936
OTHER 8,375 7,657
----------- -----------
344,447 296,956
----------- -----------
$ 5,336,122 $ 5,348,455
=========== ===========Premium 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
---------- ----------
356,129 342,729
---------- ----------
$5,391,904 $5,438,496
---------- ----------
---------- ----------
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
JUNE 30,OGLETHORPE 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
$171 AT JUNE 30,Patronage 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) $ 341,648 $ 309,496
LONG-TERM DEBT 4,185,641 4,128,080
OBLIGATION UNDER CAPITAL LEASES 300,799 303,749
----------- -----------
4,828,088 4,741,325
----------- -----------on 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
---------- ----------
4,824,355 4,842,689
---------- ----------
CURRENT LIABILITIES:
LONG-TERM DEBT AND CAPITAL LEASES DUE WITHIN ONE YEAR 86,991 90,086Long-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
---------- ----------
253,476 281,465
---------- ----------
DEFERRED MARGINS AND VOGTLE SURCHARGE TO BE
REFUNDED WITHIN ONE YEAR 10,056 21,476
ACCOUNTS PAYABLE 29,243 52,921
ACCRUED INTEREST 21,051 100,010
ACCRUED AND WITHHELD TAXES 15,341 1,566
ENERGY COSTS BILLED IN EXCESS OF ACTUALS 1,059 2,125
OTHER CURRENT LIABILITIES 17,581 18,177
----------- -----------
181,322 286,361
----------- -----------
DEFFERED CREDITS AND OTHER LIABILITIES:
GAIN ON SALE OF PLANT, BEING AMORTIZED 62,039 63,209
SALE OF INCOME TAX BENEFITS, BEING AMORTIZED 54,209 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 105,561 96,291
OTHER 23,825 21,955
----------- -----------
326,712 320,769
----------- -----------
$ 5,336,122 $ 5,348,455
=========== ===========Decommissioning reserve 115,688 114,049
Other 24,406 23,721
---------- ----------
314,073 314,342
---------- ----------
$5,391,904 $5,438,496
---------- ----------
---------- ----------
The accompanying notes are an integral part of these condensed statements.
4
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENT OF REVENUES & EXPENSES (UNAUDITED)
(DOLLARS IN THOUSANDS)
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF REVENUES AND EXPENSES (UNAUDITED)
FOR THE THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------MARCH 31, 1996 AND 1995
1994- -------------------------------------------------------------------------------------
(dollars in thousands)
1996 1995
1994
-------- -------- -------- --------------------------------------
OPERATING REVENUES:
SALES TO MEMBERS $252,468 $229,157 $480,317 $454,615
SALES TO NON-MEMBERS 28,760 33,878 58,459 76,038
-------- -------- -------- --------Sales to Members $ 246,458 $ 227,849
Sales to non-Members 29,243 29,698
--------- ---------
TOTAL OPERATING REVENUES 281,228 263,035 538,776 530,653
-------- -------- -------- --------275,701 257,547
--------- ---------
OPERATING EXPENSES:
FUEL 54,154 48,600 101,671 99,832
PRODUCTION 29,623 30,937 61,865 63,055
PURCHASED POWER 61,567 57,652 121,514 111,192
DEPRECIATION AND AMORTIZATION 34,255 33,222 67,139 66,273
TAXES OTHER THAN INCOME TAXES 6,529 5,927 12,420 12,032
OTHER OPERATING EXPENSES 13,052 10,993 23,435 20,684
-------- -------- -------- --------Fuel 48,240 47,517
Production 30,369 32,243
Purchased power 69,076 59,947
Power delivery 3,658 3,921
Depreciation and amortization 36,526 32,884
Taxes other than income taxes 7,384 5,891
Other operating expenses 6,880 6,462
--------- ---------
TOTAL OPERATING EXPENSES 199,180 187,331 388,044 373,068
-------- -------- -------- --------202,133 188,865
--------- ---------
OPERATING MARGIN 82,048 75,704 150,732 157,585
-------- -------- -------- --------73,568 68,682
--------- ---------
OTHER INCOME (EXPENSE):
INTEREST INCOME 4,599 2,183 7,911 5,134
AMORTIZATION OF DEFERRED MARGINS 4,958 4,632 11,420 11,273
ALLOWANCE FOR EQUITY FUNDS USED
DURING CONSTRUCTION 806 675 1,567 1,356
OTHER 3,429 5,819 6,263 11,295
-------- -------- -------- --------Interest income 4,060 3,312
Amortization of deferred margins 10,188 6,462
Allowance for equity funds used during construction 47 761
Other 2,642 2,834
--------- ---------
TOTAL OTHER INCOME 13,792 13,309 27,161 29,058
-------- -------- -------- --------16,937 13,369
--------- ---------
INTEREST CHARGES:
INTEREST ON LONG-TERM OBLIGATIONS 85,524 83,888 168,532 170,190
ALLOWANCE FOR DEBT FUNDS USED
DURING CONSTRUCTION (9,976) (8,386) (19,395) (17,242)
-------- -------- -------- --------Interest on long-term-debt and other obligations 82,031 83,008
Allowance for debt funds used during construction (514) (9,419)
--------- ---------
NET INTEREST CHARGES 75,548 75,502 149,137 152,948
-------- -------- -------- --------81,517 73,589
--------- ---------
NET MARGIN $ 20,2928,988 $ 13,511 $ 28,756 $ 33,695
======== ======== ======== ========8,462
--------- ---------
--------- ---------
The accompanying notes are an integral part of these condensed statements.
5
OGLETHORPE POWER CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 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 $ 28,7568,988 $ 33,6958,462
-------- --------
ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 98,020 93,318
AMORTIZATION OF DEFERRED GAINS (1,171) (6,266)
AMORTIZATION OF DEFERRED MARGINS (11,420) (11,273)
ALLOWANCE FOR EQUITY FUNDS USED DURING CONSTRUCTION (1,567) (1,356)
OTHER 598 (3,452)Depreciation and amortization 39,425 47,704
Amortization of deferred margins (10,188) (6,462)
Allowance for equity funds used during construction (47) (761)
Other (859) (843)
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 (31,136) (9,959)
INVENTORIES (7,838) (9,500)
PREPAYMENTS AND OTHER CURRENT ASSETS 2,920 (3,284)
ACCOUNTS PAYABLE (23,678) (4,919)
ACCRUED INTEREST (78,959) (81,951)
ACCRUED AND WITHHELD TAXES 13,775 5,254
ENERGY COST BILLED IN EXCESS OF ACTUAL (1,066) (4,095)
OTHER CURRENT LIABILITIES (596) (28,814)Receivables (1,368) (1,484)
Inventories (3,137) (8,291)
Prepayments and other current assets (3,000) 3,465
Accounts payable (9,096) (11,099)
Accrued interest 6,380 6,235
Accrued and withheld taxes (18,663) (79,781)
Other current liabilities (5,232) (7,260)
-------- --------
TOTAL ADJUSTMENTS (42,118) (66,297)(5,785) (58,577)
-------- --------
NET CASH USED INPROVIDED BY (USED IN) OPERATING ACTIVITIES (13,362) (32,602)3,203 (50,115)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
PROPERTY ADDITIONS (84,070) (100,213)
NET PROCEEDS FROM BOND, RESERVE AND CONSTRUCTION FUNDS 11,200 28,831
DECREASE IN INVESTMENT IN ASSOCIATED ORGANIZATIONS 912 600
INCREASE IN OTHER SHORT-TERM INVESTMENTS (28,130) -
(INCREASE) DECREASE IN DECOMMISSIONING FUND (3,274) 48Property additions (24,824) (36,086)
Net proceeds from bond, reserve and construction funds 2,397 11,712
Decrease in investment in associated organizations 351 636
Increase in other short-term investments (10,000) (17,107)
Increase (decrease) in decommissioning fund 729 (1,041)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (103,362) (70,734)(31,347) (41,886)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
DEBT PROCEEDS, NET 142,112 293,731
DEBT PAYMENTS (139,424) (337,176)
REFUND OF VOGTLE SURCHARGEDebt proceeds, net - (2,010)
OTHER (19) 4,74988,545
Debt payments (25,366) (124,534)
Other 505 (412)
-------- --------
NET CASH PROVIDED BY (USED IN)USED IN FINANCING ACTIVITIES 2,669 (40,706)(24,861) (36,401)
-------- --------
NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS (114,055) (144,042)(53,005) (128,402)
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 $ 76,587 $100,13162,240
======== ========
CASH PAID FOR:
INTEREST (NET OF AMOUNTS CAPITALIZED) $218,476 $230,599
INCOME TAXESInterest (net of amounts capitalized) $96,769 $149,265
Income taxes - -
The accompanying notes are an integral part of these condensed statements.
6
OGLETHORPE POWER CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
JUNE 30,MARCH 31, 1996 AND 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 June 30, 1995March 31, 1996 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 AND SIX MONTHS ENDED JUNE 30, 1995
Oglethorpe's net margin for the quarter ended June 30, 1995March 31, 1996 was $20.3$9.0 million
compared to $13.5$8.5 million for the first quarter of 1995.
OPERATING REVENUES
The increase in Member revenues for the three months ended March 31, 1996
compared to the same period of 1994. Net margin1995 was higher
in the second quarter of 1995 compareddue to the second quarterrecovery of 1994
primarily due to unbudgeted savings from the continued capitalization ofadditional
fixed costs of the Rocky Mountain Project (Rocky Mountain) due toand the delay in
commercial operation of the initial unit from April 1995 to June 1995.
Despite this additional $6.8 million of net margin in the second quarter of
1995, Oglethorpe's net margin for the six months ended June 30, 1995 was
$28.8 million as compared to $33.7 million for the first six months of 1994.
As described in Oglethorpe's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1995 under "Results of Operations", even though
Oglethorpe's manner of collecting net margins is more uniform each month in
1995 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
The increases in Member revenues for the three-month and six-month periods
ended June 30, 1995 compared to the same periods of 1994 were due to
increased
billings of fixed costscost responsibility resulting from the decline inscheduled end of Sell-back
revenues from Georgia Power Company (GPC)GPC under the plant operating agreements (as discussed(discussed below).
Energy revenues from sales to Members infor the first six monthsthree-month period of 19951996 were
lower thanvirtually unchanged from the same period of the prior year despite an increase inthe fact
that megawatt-hour (MWh) sales of 4.9%. Such
reduction wasincreased 15.5% due to the pass-through of lower netprolonged colder than
normal weather. Oglethorpe achieved substantial savings in energy costs in
1995, as
discussedthe first quarter under "Operating Expenses" below.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 three months ended March 31, 1996 and six months ended June 30, 1995
and 1994:1995:
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------March 31,
1996 1995
1994 1995 1994
---- ---- ---- ------------------------------
(dollars in thousands)
(dollars in thousands)
Plant operating agreements $ 1,781 $14,425- $ 7,674 $33,5195,892
Power supply arrangements 11,257 6,222 18,573 15,4594,718 7,316
Transmission agreements 2,612 2,533 5,607 5,7323,372 2,995
Other utilities 13,110 10,698 26,605 21,328
------- -------21,153 13,495
------- -------
Total $28,760 $33,878 $58,459 $76,038
======= =======$29,243 $29,698
======= =======
8
The decrease inWhile total revenues from non-Members in 1995 compared to 1994 was
primarily attributable to lowerwere virtually the same, 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 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 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 essentially represent
reimbursement ofcompensate Oglethorpe for its costs to Oglethorpe since,
under the operating agreements, Oglethorpe is responsible for its share of
fuel costs any time a unit operates. Such sales were significantly higherlower in
the secondfirst quarter of 19951996 compared to the same period of 1994.1995.
Revenues from othersales to non-Member utilities (other than GPC) increased
substantially due to a 43%12.5% increase in MWh sales in the sixthree months ended
June 1995March 31, 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 increase in operating expenses for the three months and six months ended June 30, 1955March 31, 1996
compared to the same period of 19941995 was primarily attributable to an increase
in fuel expenses during the second quarter and to an increase
inpurchased power. In 1996, purchased power throughoutenergy 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 six-month period.
Fuel expenses increased duringcommercial operation of Rocky Mountain in June
1995.
OTHER INCOME
Other income for the secondfirst quarter of 19951996 increased compared to 1994the same
period of 1995 primarily as a result of a 13% increase in generation, primarilyhigher income from Plant
Scherer. Purchased power expenses increased in 1995 primarilyamortization of
deferred margins. Oglethorpe's Board of Directors authorizes the amount of
deferred margins to be returned to the Members each year. For 1996, the
remaining amount of $32 million was authorized 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 purchases for
the first three months of 1994. Overall, there was a 12% increase in MWh
purchases from all sources in 1995 compared to the first six months of 1994.
However, the net per unit variable costs of fuel, production and purchased
power was 4.8% lower in the first six 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 income$16 million for
the six months ended June 30, 1995 was 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
9
31, 1994.1995. Interest income for the second quarter increased due to higher earnings fromaverage cash balances during
the decommissioning fund.
MEMBER CONTRACTS
As statedfirst quarter of 1996 compared to the same period of 1995.
INTEREST CHARGES
The increase in Oglethorpe's Annual Report on Form 10-Knet interest charges for the fiscal year
ended December 31, 1994 and in its Quarterly Report on Form 10-Q for the
quarterly periodthree months ended March 31,
1996 compared to 1995 resulted from Rocky Mountain becoming commercially
operable in response to an increasingly
competitive utility environment, Oglethorpe has been discussing the need for
a more flexible power supply arrangement with its Members. During June and
July 1995, Oglethorpe's Board of Directors approved a plan that allows for
substantial changes to the Corporation's contractual relationship with its
Members to provide them with greater flexibility in their power supply
arrangements and to establish the method by which Oglethorpe recovers the
costs of existing resources.
The new arrangement offers the Members a choice of service options that can help
them better meet the individual needs and load characteristics of their systems.
Options now available 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 the System in accordance with the process,
provisions and conditions recently approved by the Board of Directors. Under
these options, 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 and power supply contracts based on a
fixed percentage allocation and a formulary rate approved by the Board of
Directors to recover all of Oglethorpe's costs for existing commitments. The
cost of future commitments will be recovered from the Members in a similar
fashion. 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 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.
In addition, the plan creates a power pool arrangement that allows Oglethorpe,
its Members and eventually third parties to pool energy and reserves.
Oglethorpe and any Member-secured resources will be committed to economic
dispatch (pooled) for the benefit of all the pool participants. The pool
participants may also invite other utilities to participate in the pool and
will pursue additional customers. Members who sign the new wholesale power
contract will also have the option to engage in power supply transactions on
their own so long as all of their load and resources are committed to pool
dispatch.
The plan requests each Member to notify Oglethorpe by August 31 of its
intention to (1) maintain their current all-requirements wholesale power
contract, (2) sign a new wholesale power contract for increased flexibility
or (3) initiate the plan of withdrawal. Implementation of the plan, which is
planned for January 1, 1996, is subject to several steps, including approval
by the Rural Utilities Service (RUS).
10
Cobb EMC, Snapping Shoals EMC and Walton EMC have indicated their desire to
continue studying withdrawal from membership in Oglethorpe and have recently
proposed a concept for withdrawal in lieu of the one approved by Oglethorpe's
Board of Directors. Oglethorpe is awaiting further details of this
alternative concept; at which time, Oglethorpe expects to engage in further
discussions with them regarding a mutually acceptable plan for withdrawal.1995.
FINANCIAL CONDITION
Total assets and total equity andplus liabilities as of June 30, 1995March 31, 1996 were $5.3$5.4
billion which was $12$47 million less than the total at December 31, 1994.1995.
ASSETS
The increase in electric plant in service resulted from the commercial
operation of two of the three units of Rocky Mountain totaling $501 million
during June 1995. The third unit went into commercial operation in July 1995.
Construction work in progress decreased by this amount.
Property additions for the sixthree months ended June 30, 1995March 31, 1996 totaled $84
million. Construction of the Rocky Mountain accounted for $46$25
million of this
amount. Borrowings under the loan commitment for Rocky Mountain totaled $98
million in the first six months of 1995.
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 which did not require a debt service reserve fund.included additions, replacements and improvements to transmission
and 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 due)property 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 these 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 at the endwith maturities of 1994.
The increase in receivables resulted primarily from a $23.4 million higher
billing to Oglethorpe's Members for the month of June 1995 compared to
December 1994.more than three months.
Prepayments and other current assets decreasedincreased primarily due to a $1.8$3 million
decreaseincrease in the payment made to GPC for estimates of Plant Hatch and Plant
Wansley coal purchasesoperations and maintenance costs for August 1995April 1996 compared to the
estimate paid for January 1995.
11
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 $11.4$10.2 million
which is the amount that was refunded to the Members for the first sixthree
months of 1995.1996.
Accounts payable declined as of June 30, 1995March 31, 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 billedOther current liabilities decreased partly due to the year-end accrual for
employee incentive pay (subsequently paid in excess of actuals decreased as a result of actual
energy costs exceeding budgeted costs by $1.1 million.
12March 1996) and partly due to
normal activity.
11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)(A) EXHIBITS
NUMBER DESCRIPTION
--------Number Description
- ----------- -----------
*10.27(a) Extension and Modification Agreement between Enron Power
Marketing, Inc. and Oglethorpe, dated as of April 30, 1996.
27.1 Financial Data Schedule (for SEC use only).
(b)_______________________
* Certain portions of this document have been omitted as confidential and
filed separately with the SEC.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended June 30, 1995.
13March
31, 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: AugustMay 14, 19951996 By: /S//s/ T. D. KILGORE
---------------------------------------Kilgore
---------------------------------
T. D. Kilgore
President and Chief Executive Officer
(Principal Executive Officer)
Date: AugustMay 14, 1995 /S/ GARY1996 /s/ Gary M. BULLOCK
---------------------------------------Bullock
---------------------------------
Gary M. Bullock
Secretary-Treasurer
(Principal Financial Officer)
Date: AugustMay 14, 1995 /S/ EUGEN HECKL
---------------------------------------1996 /s/ Eugen Heckl
---------------------------------
Eugen Heckl
Senior Vice President and Chief
Financial Officer (Principal Financial
Officer)
1413