SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the Fiscal Year Ended December 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the Transition Period from ____________ to ____________
Commission File Number 1-3573
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Illinois 42-0673189
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One RiverCenter Place,
106 East Second Street, Davenport, Iowa 52801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(319) 326-7111
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Shares Chicago Stock Exchange
Common Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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 and 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 to such
filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the Company's Common Shares
was approximately $648 million based upon the New York Stock
Exchange composite transaction closing price as of February 27,
1995. The Company's $7.80 and $5.25 Series Cumulative Preference
Shares are traded in the over-the-counter market. Bid and asked
prices on all such shares are not regularly quoted. As of
February 27, 1995, 99.8% of the Company's voting shares were
owned by nonaffiliates.
The aggregate number of the Company's Common Shares
outstanding at February 27, 1995 was 29,781,296.
Documents of Which Portions are Incorporated by Reference
Part of Form 10-K Document Incorporated by Reference
I and II Annual Report to Shareholders for the year
ended December 31, 1994
III Proxy Statement dated March 15, 1995
Only the portions of such documents which are specifically
incorporated by reference herein shall be deemed to be filed as a
part of this Form 10-K.
Part I
Item 1. Business
(a) General Development of Business
Iowa-Illinois Gas and Electric Company (the Company or Iowa-
Illinois) was incorporated under the laws of the State of
Illinois in 1940 and is engaged in the business of generating,
transmitting, distributing and selling electric energy and
distributing, selling and transporting natural gas in the States
of Illinois and Iowa. Through a wholly owned subsidiary,
InterCoast Energy Company, the Company engages in non-regulated
energy-related businesses. The Company's principal executive
offices are located at One RiverCenter Place, 106 East Second
Street, Davenport, Iowa 52801 (telephone: 319-326-7111).
On December 21, 1994, the shareholders of the Company,
Midwest Resources Inc. (Midwest Resources) and Midwest Power
Systems Inc. (Midwest Power) approved a strategic merger of
equals to form MidAmerican Energy Company (MidAmerican).
MidAmerican will be structured as a utility with the Company,
Midwest Resources and Midwest Power being merged into the new
company.
Pursuant to the terms of the merger agreement, Midwest
Resources' common shareholders will receive one share of
MidAmerican common stock for each Midwest Resources share and the
Company's common shareholders will receive 1.47 shares of
MidAmerican common stock for each Company share. At the
effective date of the merger, each series of the Company's
preference shares then outstanding will be converted into an
equal number of shares of MidAmerican preferred stock.
Approval of the merger is required from the following
regulatory agencies: the Iowa Utilities Board (IUB), the
Illinois Commerce Commission (ICC) and the Federal Energy
Regulatory Commission (FERC). Approval by the Nuclear Regulatory
Commission (NRC) of the transfer of the Quad-Cities Nuclear Power
Station (Quad-Cities Station) license to MidAmerican must also be
obtained.
Applications for approval of the merger were filed with the
IUB and the ICC in October 1994. An application for approval of
the merger was filed with the FERC in November 1994. At the same
time, consistent with FERC policy, the Company filed open access,
comparable services electric tariffs with the FERC, which tariffs
will allow others to use MidAmerican's electric transmission
system in a manner comparable to its use by MidAmerican. In
January 1995, the IUB issued an order approving the merger. The
ICC and FERC are expected to issue orders on the merger by mid
1995. A filing with the NRC was made in November 1994.
Completion of the merger is expected during 1995.
The management of the Company believes that the formation of
MidAmerican will create a larger, stronger company, which will be
better positioned to grow and succeed within the emerging
competitive utility industry. In this new environment,
management believes that successful utilities will need financial
strength, market leadership and low costs. The merger will
address these elements.
The Company expects that competitive pressures in the
electric industry initially will be focused on industrial sales.
While about 25% of Iowa-Illinois' electric revenues come from
industrial customers, only about 20% of MidAmerican's electric
revenues will come from this customer group. In terms of the
competitive position of MidAmerican, the industrial rates of both
Iowa-Illinois and Midwest Power are well below national and
regional averages.
Management believes that MidAmerican also will be well-
positioned for competition in the natural gas industry, with low-
cost reliable gas supply portfolios and multiple pipeline
suppliers. The residential gas rates of Iowa-Illinois and
Midwest Power are well below national averages.
Management believes that the merger will provide
opportunities to achieve significant long-term benefits for
shareholders, customers, employees and the communities served by
the two companies. These benefits are: increased size and
stability, better use of generating capacity, coordination of
dispatch, savings on purchases, coordination of non-regulated
businesses and reduced administrative costs. It is estimated the
merger will result in savings of nearly $500 million over 10
years.
Iowa-Illinois and Midwest Power have announced plans to
reduce their combined utility work forces by a total of
approximately 15 percent in conjunction with development of a
restructured organization to be effective at the completion of
the merger. As part of these reductions, the companies are
offering incentive retirement and severance programs to salaried
employees. The companies estimate these programs will reduce
1995 after-tax earnings of MidAmerican by approximately $9
million, or 9 cents a share, if the merger is consummated in
1995.
(b) Financial Information About Industry Segments
Financial information on the Company's segments of business
is included under the Note "Segment Information" on pages 36 and
37 of the Company's Annual Report to Shareholders for 1994 which
pages are incorporated herein by reference. This information is
also included in Exhibit 13.A.4 to this Form 10-K.
(c) Narrative Description of Business
General
The Company distributes electric energy in the Quad-Cities
(Davenport and Bettendorf, Iowa and Rock Island, Moline and East
Moline, Illinois), Iowa City and Fort Dodge, Iowa and a number of
adjacent communities and areas.
The Company distributes natural gas in the Quad-Cities, and
in Iowa City, Cedar Rapids, Fort Dodge and Ottumwa, Iowa and a
number of adjacent communities and areas.
Electric and/or gas service is provided in 22 incorporated
communities in Illinois and 48 incorporated communities in Iowa.
Franchises with various expiration dates have been obtained from
all 70 communities. The length of term of the franchises is
typically 25 years.
The population of the Company's electric service territory
is approximately 425,000 and the population of its gas service
territory is approximately 600,000. As of December 31, 1994, the
Company had 202,003 retail electric customers and 244,062 gas
customers.
The Company has a residential, agricultural commercial and
diversified industrial customer group, in which no single
industry or customer accounted for more than 8.6% (primary metal
industry) of the Company's total 1994 electric operating revenues
or 4.7% (real estate) of its total 1994 gas operating revenues.
Among the primary industries served by the Company are those
which are concerned with the manufacturing, processing and
fabrication of primary metals, real estate, food products, farm
and other non-electrical machinery, cement and gypsum products.
For the year ended December 31, 1994, the Company derived
approximately 64.1% of its gross utility operating revenues from
its electric business and 35.9% from its gas business. For 1993
and 1992, the corresponding percentages were 62.1% electric and
37.9% gas, and 62.8% electric and 37.2% gas, respectively.
Historical electric sales (kwh) by customer class as a
percent of total electric sales and retail electric sales data
(kwh) by jurisdiction are shown below:
Total Electric Sales
By Customer Class
1994 1993 1992
Residential 20.1% 19.9% 19.4%
Small Commercial and
Industrial 22.3 21.5 21.5
Large Commercial and
Industrial 34.3 31.9 34.9
Public Street Lighting 0.4 0.3 0.5
Public Authorities 1.6 1.6 1.6
Sales for Resale 21.3 24.8 22.1
Total 100.0% 100.0% 100.0%
Retail Electric Sales
By Jurisdiction
1994 1993 1992
Iowa 67.1% 67.0% 65.4%
Illinois 32.9 33.0 34.6
Total 100.0% 100.0% 100.0%
Historical gas sales (ccf), including transportation, by
customer class and by jurisdiction are shown below:
Total Gas Sales
By Customer Class
1994 1993 1992
Residential 33.9% 36.5% 36.6%
Commercial 19.7 20.7 20.8
Industrial 6.0 5.3 6.5
Processing & Boiler Fuel - 0.2 0.6
Transportation 40.4 37.3 35.5
Total 100.0% 100.0% 100.0%
Retail Gas Sales
By Jurisdiction
1994 1993 1992
Iowa 81.1% 80.1% 79.4%
Illinois 18.9 19.9 20.6
Total 100.0% 100.0% 100.0%
There are seasonal variations in the Company's electric and
gas businesses, which are principally related to the use of
energy for air conditioning and heating. In 1994, 39.2% of the
Company's electric revenues were reported in the months of June,
July, August and September, reflecting the use of electricity for
cooling, and 63.1% of the Company's gas revenues were reported in
the months of January, February, March and December, reflecting
the use of gas for heating.
At December 31, 1994, the Company had 1,387 employees, of
which 1,289 were employed in utility operations and 98 were
employed by InterCoast Energy Company.
Rate Matters
Under Illinois law, new rates may be put into effect by the
Company 45 days after filing with the ICC, or on such earlier
date as the ICC may approve, subject to the power of the ICC to
suspend the proposed new rates for a period not to exceed eleven
months after filing, pending a hearing.
Under Iowa law, temporary collection of higher rates can
begin (subject to refund) 90 days after filing with the IUB for
that portion of such higher rates approved by the IUB based on
prior ratemaking principles and a rate of return on common equity
previously approved. If the IUB has not issued a final order
within ten months after the filing date, the temporary rates
cease to be subject to refund and any balance of the requested
rate increase may then be collected subject to refund.
Exceptions to the ten month limitation are provided for
extensions due to a utility's lack of due diligence in the rate
proceeding, judicial appeals and situations involving new
generating units being placed in service.
In October 1994, the Company filed an application with the
IUB to recover the costs of state-mandated energy-efficiency
programs offered to Iowa electric and gas customers since 1992.
Costs of the programs are to be recovered over four years, as
required by Iowa law. The overall annual rate increase
requested, including a return on deferred amounts and an
allowance for performance rewards, is approximately $4.7 million
(1.4%). The proposed effective date for cost-recovery additions
on customer bills is June 1995.
In April 1992, the FERC issued Order No. 636, directing a
restructuring by interstate pipeline companies for their natural
gas sales and transportation services. The FERC Order
contemplated that transitional gas supply realignment costs
related to this restructuring may be billed by interstate
pipelines to their customers. At December 31, 1994, a regulatory
asset of $23.5 million, with an offsetting non-current Other
Liability, has been recorded. In addition, the Company estimates
it may incur other future billings of approximately $15 million
related to such restructuring. The Company is currently
recovering such costs through rates.
The Company has established an external trust for the
investment of funds collected for nuclear decommissioning.
Electric tariffs in effect for 1995 include provisions for annual
decommissioning costs of approximately $8.6 million. In
Illinois, nuclear decommissioning costs are included in customer
billings through a mechanism that permits annual adjustments. In
Iowa, such costs are reflected in base rates.
The Company's Iowa electric tariffs contain a Uniform
Electric Energy Adjustment Clause under which the Company's
billings reflect changes in the cost of all fuels used for
electric generation, including nuclear fuel disposition costs, as
well as the net effect of energy transactions (other than
capacity) with other utilities. Changes in the cost of gas to
the Company are reflected in its Iowa gas rates through the Iowa
Uniform Purchased Gas Adjustment Clause.
Under Illinois electric tariffs, the Company's Fuel Cost
Adjustment Clause reflects changes in the cost of all fuels used
for electric generation, including allowable fuel transportation
costs, nuclear fuel disposition costs and the effects of energy
transactions (other than capacity and margins on interchange
sales) with other utilities. Changes in the cost of gas to the
Company are reflected in its Illinois gas rates through the
Illinois Uniform Purchased Gas Adjustment Clause.
Electric Operations
The Company's accredited 1994 summer net generating capacity
was 1,430,868 kilowatts, consisting of (a) 384,750 kilowatts from
the Company's 25% undivided interest in the Quad-Cities Station,
jointly owned with ComEd, (b) 914,918 kilowatts from interests in
wholly or jointly owned coal-fired units, (c) 128,000 kilowatts
from wholly owned gas/oil fired units, and (d) 3,200 kilowatts
from wholly owned hydro-electric units. In February 1995, the
Mid-Continent Area Power Pool approved an increase in the
accreditation of the Louisa Generating Station from 650 megawatts
to 675 megawatts effective as of June 7, 1994. This action
increased the Company's summer net generating capacity from
1,430,868 kilowatts to 1,441,618 kilowatts. The net generating
capacity at any time may be less due to regulatory restrictions,
fuel restrictions and generating units being temporarily out of
service for inspection, maintenance, refueling or modifications.
On August 26, 1993, the Company established its record one-hour
peak electric demand of 1,084,965 kilowatts.
Fuel Supply for Electric Operations
The Company's sources of fuel for electric generation have
been as follows for the periods shown:
Year Ended December 31,
Fuel Source 1994 1993 1992
Coal 73.63% 63.18% 63.95%
Nuclear 25.80 36.52 35.56
Gas 0.46 0.28 0.45
Oil 0.11 0.02 0.04
In 1995 the Company projects its electric generation
requirements will be met as follows: coal - 59%, nuclear - 41%.
The average costs of fuels (including transportation and
handling costs) in cents per million BTU's consumed have been as
follows for the periods shown:
Year Ended December 31,
Fuel Source 1994 1993 1992
Nuclear 47.40 47.36 44.57
Coal 97.49 105.79 102.97
Gas 345.09 373.25 313.33
Oil 378.36 440.95 412.80
Total Weighted Average 84.93 86.62 83.93
The average cost of coal (including transportation and
handling costs) per ton for the years 1994, 1993 and 1992 has
been $17.13, $18.22 and $17.57, respectively.
The Company has been advised by ComEd that the majority of
its uranium concentrate and uranium conversion requirements for
the Quad-Cities Station for 1995 can be met under existing
supplies or commitments. ComEd foresees no problem in obtaining
the remaining requirements now or obtaining future requirements.
ComEd further advises that all enrichment requirements have been
contracted for through 1999. Commitments for fuel fabrication
have been obtained at least through 2000. ComEd does not
anticipate that it will have any difficulty in contracting for
uranium concentrates for conversion, enrichment or fabrication of
nuclear fuel needed for the Quad-Cities Station.
In June 1985, the Company satisfied its financial obligation
for Quad-Cities Station disposal costs for fuel burned prior to
April 1983 by making a lump sum payment of $24.8 million to the
Department of Energy (DOE). The payment was made principally
from funds previously collected from customers. Disposal costs
for fuel burned after April 1983 are paid quarterly. Such costs
are included in the cost of fuel and recovered through fuel and
energy adjustment clause billings. See Nuclear Regulation herein
for further information concerning the disposal of spent nuclear
fuel.
The Company believes its sources of coal for its fossil-
fueled generating stations are and will be satisfactory. Renewal
of expiring contracts and negotiations of new agreements will be
pursued as required. The coal requirements for the Riverside
Station are being met primarily through spot purchases.
Contracts for low-sulfur Wyoming coal have been executed for the
Neal Unit 3, Council Bluffs, Ottumwa and Louisa units which will
supply a portion of requirements through the years 1996, 1999,
2001 and 2003, respectively. Unit trains are being used for
transporting coal for the Riverside, Neal, Council Bluffs,
Ottumwa and Louisa units. The Company has negotiated certain
modifications to existing contracts to achieve flexibility in
volumes to be delivered while also providing reasonable assurance
of supply. In addition, the Company has used spot market
purchases of coal to effectively manage inventory levels and take
advantage of near term coal market opportunities. The Company is
continuing to monitor existing contracts and coal supply
requirements, balancing coal requirements with a combination of
contract and spot purchases.
Gas Operations
During 1994, the Company purchased over 99 percent of the
gas required to supply its customers from non-pipeline gas
suppliers on a firm or interruptible basis and transported such
gas on a firm or interruptible basis through the Natural Gas
Pipeline Company of America (NGPL), ANR Pipeline Company (ANR)
and Northern Natural Gas (NNG) systems. The remainder was
purchased from NNG.
All gas supply purchased from NNG is at rates approved by
the FERC under the Natural Gas Act. Likewise, transportation
rates negotiated with NGPL, ANR and NNG are subject to FERC
approval. Non-pipeline supply prices are negotiated.
The Company withdrew approximately 94 percent of the gas in
leased storage during the 1993-94 heating season. Storage gas
was replaced during the summer for the 1994-95 heating season.
Beginning in December 1993, the Company has rebundled a
portion of its firm pipeline transportation with firm supply from
a third party supplier. This citygate service replaces bundled
sales service previously purchased from one of the Company's
pipeline suppliers.
The Company provides natural gas transportation service
through its distribution system for end-use customers.
Transportation of customer-owned gas was 40.4 percent of the
total Company throughput during 1994.
For the 1994-95 heating season, the Company's peak-day
supply delivery availability consists of firm capacity on the
NGPL, ANR and NNG systems for the transportation of firm non-
pipeline gas. In addition, peak-day supply is available from gas
previously purchased by the Company and held in leased pipeline
storage. The Company leases storage from NGPL, ANR and NNG.
Liquefied natural gas (LNG) stored in the Company's LNG facility
is also available for peak-day use. Following are the current
peak-day supply sources for the Company which are available for
the 1994-95 heating season by volume and proportions:
Millions Percent
of Cubic of
Feet Total
Underground Storage 205.1 42.1
Firm Non-Pipeline Supply 141.4 29.0
Rebundled Service 96.9 19.9
LNG Facility 40.0 8.2
Pipeline System
Management Service 4.0 0.8
487.4 100.0
Peak-day firm demand for the 1994-95 heating season was
projected to be 464.4 million cubic feet for the Company. The
actual highest demand for peak-day firm sales for the 1994-95
heating season for the Company was 353 million cubic feet on
January 4, 1995. The average temperature on that day was 1
degree above zero.
On January 17, 1994, a new record was set for total Company
gas throughput (sales and transportation) of 516 million cubic
feet.
In the Spring of 1995, the Company will begin construction
on a 63-mile, 16-inch diameter pipeline from NNG's main line near
Dubuque, Iowa, to the Company's facilities in Davenport, Iowa.
The interconnection will give the Company and its customers more
supply and pipeline transportation options, which will help
ensure continued access to the lowest-cost gas supplies.
A 1994 ruling by the IUB will enhance gas earnings. The
Company has firm rights to pipeline capacity to transport gas
from the production area to its service territory. With the
restructuring of the industry, if the Company does not need the
capacity (due to fluctuations in anticipated system demand), it
can "sublease" such capacity to other companies. To provide
incentives for the achievement of optimum use of available
transportation capacity, the IUB ruling allows the Company to
retain 30% of Iowa revenues earned on the "subleased" capacity
and returns 70% to customers through the purchased gas
adjustment.
See Rate Matters for a discussion of certain transition
costs.
Construction Program
The table below shows actual construction expenditures for
1994 and budgeted expenditures for 1995 and for the period 1996-
1999:
1994 1995 1996-99
Actual Budgeted Budgeted
(Thousands of Dollars)
Electric
Production $ 18,279 $ 15,651 $ 56,497
Transmission 1,429 1,307 6,912
Distribution 10,128 13,345 37,196
Gas 12,246 31,118 59,268
General Plant 26,875 13,633 19,982
Subtotal 68,957 75,054 179,855
Nuclear Fuel 11,316 9,283 35,669
Total $ 80,273 $ 84,337 $215,524
The amounts shown above include allowance for funds used
during construction. Of the $72.1 million of budgeted electric
production expenditures for the 1995-1999 period, $35.9 million
are for expenditures at the Quad-Cities Station. In addition to
the amounts shown above, the Company also expects to contribute a
total of $43.2 million to an external trust for nuclear
decommissioning during the 1995-1999 period. The Company's above
budgeted construction expenditures do not include any amounts
that may be required to pay the Company's share of the cost of
replacing certain stainless steel piping at the Quad-Cities
Station. Such expenditures are currently not expected to be
required. See Nuclear Regulation.
General Regulation
The Company is a public utility under the laws of Illinois
and is regulated by the ICC as to retail rates, services,
accounts, issuance of securities, affiliate transactions,
construction, acquisition and sale of utility property,
acquisition and sale of securities and in other respects as
provided by the laws of Illinois. The Company is also a public
utility under the laws of Iowa and is regulated by the IUB as to
retail rates, services, accounts, construction of utility
property and in other respects as provided by the laws of Iowa.
The Company is subject to the jurisdiction of the FERC with
respect to certain matters, including short-term borrowings,
rates for transmission and sale of electric energy at wholesale,
interconnection of electric transmission facilities, acquisition
and sale of certain electric utility property, installation and
replacement of certain gas utility property and accounting
policies and practices.
Nuclear Regulation
The Company is subject to the jurisdiction of the NRC with
respect to the Quad-Cities Station. The NRC regulations control
the granting of permits and licenses for the construction and
operation of nuclear generating stations and subject such
stations to continuing review and regulation. The NRC review and
regulatory process covers, among other things, operations,
maintenance, and environmental and radiological aspects of such
stations. The NRC may modify, suspend or revoke licenses and
impose civil penalties for failure to comply with the Atomic
Energy Act, the regulations under such Act or the terms of such
licenses. Attempts are made from time to time by various
individuals or citizen groups to prohibit the development or use
of nuclear power through initiation of proceedings before the
NRC, other agencies or courts. Such proceedings frequently
involve attacks on the validity of NRC rules which, if
successful, could provide a basis for challenges to permits and
licenses granted by the NRC in the past.
The Illinois Department of Nuclear Safety (IDNS) has
jurisdiction over certain activities in Illinois relating to
nuclear power and safety and radioactive materials. Effective
June 1987, the IDNS replaced the NRC as the regulator and
licensor of certain source, by-product and special nuclear
material in quantities not sufficient to form a critical mass,
including such material contained in various measuring devices
used at fossil-fuel power plants. The IDNS has promulgated
regulations which are substantially similar to the corresponding
federal regulations. The IDNS also has authority to license a
low-level radioactive waste disposal facility and to regulate
alternative methods for disposing of materials which contain only
trace amounts of radioactivity.
Under the Nuclear Waste Policy Act of 1982 (NWPA), the DOE
is responsible for the selection and development of repositories
for, and the permanent disposal of, spent nuclear fuel and high-
level radioactive wastes. ComEd, as required by the NWPA, has
signed a contract with the DOE to provide for the disposal of
spent nuclear fuel and high-level radioactive waste beginning not
later than January 1998. The DOE has stated, however, that the
delivery schedule for spent nuclear fuel may be delayed, and
ComEd expects that it will be significantly delayed. The costs
incurred by the DOE for disposal activities will be financed by
fees charged to owners and generators thereof. The primary
responsibility for the interim storage of spent nuclear fuel and
high-level radioactive wastes will rest with the owners and
generators thereof. ComEd has informed the Company that there is
on-site storage capability at the Quad-Cities Station sufficient
to permit such interim storage at least through 2009. Meeting
spent nuclear fuel storage requirements beyond such time could
require a new and separate storage facility, the cost of which
has not been determined at this time. Industry activities are
underway to utilize dry cask storage for high-level radioactive
waste. This may provide an alternative for interim on-site
storage of such waste. ComEd anticipates the possibility of
serious difficulties in disposing of high-level radioactive
waste.
The federal Low-Level Radioactive Waste Policy Act of 1980
provides that states may enter into compacts to provide for
regional disposal facilities for such waste, subject to approval
by the U.S. Congress of each such compact. Under the 1985
amendments to that Act, a compact could restrict the use of a
region's disposal facilities after January 1993 to wastes
generated within the region. Illinois has entered into a compact
with the State of Kentucky which has been approved by Congress.
The IDNS had previously estimated that a low-level radioactive
waste disposal facility would be operational in Illinois by March
1994 at the earliest. However, in 1992 an independent panel
rejected the only site in Illinois then being considered for a
low-level disposal facility. Illinois has since enacted
legislation changing the procedures for siting a low-level waste
disposal facility. Since the loss of access to the only low-
level radioactive waste site (at Barnwell, South Carolina)
available to the Quad-Cities Station, effective June 30, 1994,
Quad-Cities Station has constructed a temporary storage facility
for on-site storage of this material. Quad-Cities Station will
continue to store all low-level radioactive waste on-site until
an off-site facility is again available. ComEd anticipates the
possibility of serious difficulties in disposing of low-level
radioactive waste.
The continuing viability of commercial nuclear power is
subject to resolution of the issues of spent nuclear fuel storage
and disposal of radioactive waste.
Quad-Cities Station continues to be considered by the NRC as
a plant that is safe to operate. However, the NRC has
characterized the plant as "adversely trending" with respect to
certain performance expectations. ComEd has undertaken measures
to correct this performance trend.
Federal regulations provide that any operating facility may
be required to cease operation if the NRC determines there are
deficiencies in state, local or utility emergency preparedness
plans relating to such facility and the deficiencies are not
corrected within four months of such determination. Under the
regulations, the NRC may permit operation of facilities, even
though the emergency preparedness plans are deficient, upon an
examination of other factors, including whether the deficiencies
are significant for the facility in question, whether adequate
interim compensatory actions have been or will be taken promptly
and whether other compelling reasons exist for operation
consistent with public health and safety. ComEd has advised the
Company that emergency preparedness plans for the Quad-Cities
Station have been approved by the NRC. ComEd has also advised
the Company that state and local plans relating to the Quad-
Cities Station have been approved by the Federal Emergency
Management Agency. ComEd continues to cooperate with the NRC and
appropriate state and local agencies on emergency preparedness
issues.
In June 1988, the NRC adopted final regulations with respect
to the decommissioning of nuclear power plants. Among other
things the regulations address the planning and funding of the
eventual decommissioning of nuclear power plants. In response to
these regulations, the Company submitted a report to the NRC in
July 1990 indicating that it will provide "reasonable assurance"
that funds will be available to pay the costs of decommissioning
its nuclear power plants by making monthly deposits to an
external trust fund.
Inter-granular stress corrosion was discovered in 1983 in
certain stainless steel piping at the Quad-Cities Station.
Remedial actions intended to avoid the need to replace such
piping continue and the replacement of such piping is not
expected to be required. Accordingly, the Company's budgeted
construction expenditures do not include the amounts which would
be required to pay the Company's share of the cost of replacing
such piping. If replacement of all such piping were required,
the Company's share of the costs of such replacement is estimated
to be approximately $55 million at current price levels.
Replacement of such piping would result in an extended outage and
require the purchase of replacement power.
The Company is a member of Nuclear Mutual Limited (NML), an
industry mutual insurer established to provide property damage
coverage for members' nuclear generating facilities. The Company
would be subject to a maximum retrospective premium assessment of
approximately $2 million based on its 25% share of the NML
premium for Quad-Cities coverage in the event covered losses of
NML members exceed the financial resources of the insurance
company. A reserve has been established for this contingency.
At December 31, 1994, NML had accumulated capital to a level that
would make it unlikely the Company would have an exposure to a
retrospective premium assessment in the event of a single
incident to a member's facility.
The Company is also a member of Nuclear Electric Insurance
Limited (NEIL), an industry mutual insurance company, and an
insured of American Nuclear Insurers/Mutual Atomic Energy
Liability Underwriters (ANI/MAELU). The related policy
provisions provide that expenses for decontamination and the
removal of debris shall be paid before any payment in respect of
claims for property damage. A separate NEIL insurance policy
covers the extra costs that would be incurred in obtaining
replacement power during a prolonged covered outage of a member's
nuclear plant. The Company is subject to retrospective premium
assessments of approximately $4.1 million and $843,000 for its
25% share of the premium under the NEIL portion of the property
damage coverage and the replacement power coverage, respectively.
At December 31, 1994, NEIL had accumulated capital to a level
that would make it unlikely the Company would have an exposure to
a retrospective premium assessment in the event of a single
incident to a member's facility.
A Master Worker Policy issued by ANI/MAELU provides coverage
for worker tort claims filed for bodily injury caused by the
nuclear energy hazard. The coverage applies to workers whose
"nuclear related employment" began after January 1, 1988. Under
this policy, the Company could be subject to a maximum
retrospective premium assessment of $1.5 million.
Under the Price-Anderson federal legislation adopted in
1988, nuclear public liability coverage is supported by a
mandatory industry-wide program under which owners of nuclear
generating facilities could be assessed in the event of nuclear
incidents. The Company would currently be subject to a maximum
assessment of $39.6 million in the event of an incident, to be
paid in increments of no more than $5 million per year per
incident.
Environmental Regulation
The Company is subject to regulation regarding air, water,
solid waste, hazardous and toxic materials and noise pollution by
agencies of the federal government and of the States of Illinois
and Iowa and may become subject to additional regulation as to
these and other matters in the future. The Quad-Cities Station
is subject to the jurisdiction of the NRC and IDNS as to atomic
radiation.
State and federal environmental laws and regulations as
currently in effect have, and future modifications may have, the
effect of (i) increasing the lead time for the construction of
new facilities, (ii) significantly increasing the total cost of
new facilities, (iii) requiring modification of certain of the
Company's existing facilities, (iv) increasing the risk of delay
on construction projects, (v) increasing the Company's cost of
waste disposal and (vi) possibly reducing the reliability of
service provided by the Company and the amount of energy
available from the Company's facilities. Any of such items could
have a substantial impact on amounts required to be expended by
the Company in the future.
Air Quality. Air quality regulations, promulgated by both
the Iowa and Illinois pollution control boards in accordance with
federal standards, impose restrictions on the emission of sulfur
dioxide, nitrogen oxides and other air pollutants and require
permits from the respective state environmental protection agency
for the operation of emission sources. Permits authorizing
operation of the Company's fossil-fueled generating facilities
subject to this requirement have been obtained and, when such
permits are to expire, the Company has, in a timely manner, filed
applications for renewal.
Clean Air Act legislation was signed into law in November
1990. Under the acid deposition control section of this
legislation, national utility emissions of sulfur dioxide will be
reduced in phased increments by 10 million tons from 1980 levels
by the year 2000 and permanently capped at that level. National
nitrogen oxide emissions will also be reduced in phased
increments by 2 million tons from 1980 levels by the year 2000.
In addition, continuous emission monitoring systems will be
required at all affected facilities. This legislation also
requires the government to study what controls, if any, should be
imposed on utilities to control air toxics. The impact, if any,
of the air toxics study on the Company cannot be determined at
this time.
The Company has four jointly and one wholly owned coal-fired
generating stations, which represent approximately 65 percent of
the Company's electric generating capability. Each of these
facilities will be impacted to varying degrees by the
legislation.
Only one unit at the wholly owned generating station,
representing approximately 10 percent of the Company's electric
generating capability, is impacted by the emission reduction
requirements effective in 1995. Under such requirements,
beginning in 1995, this unit is required to hold allowances,
issued by the federal government, in order to emit sulfur
dioxide. The compliance strategy for this unit includes
modifications to allow for burning low-sulfur coal, modifications
for nitrogen oxide control and installation of a new emission
monitoring system. The Company's remaining construction
expenditures relative to this work are estimated to be $2.5
million.
The four generating stations not affected until 2000 already
burn low-sulfur coal, so additional capital costs will not be
incurred for sulfur dioxide emission reduction requirements.
Beginning in 2000, these facilities will be required to hold
allowances, issued by the federal government, in order to emit
sulfur dioxide. Installation of low nitrogen oxide burners is
required at one of these facilities and existing emission
monitoring systems at all four facilities require upgrading. The
Company's remaining construction cost for this work is estimated
to be $1.4 million.
It is anticipated that any costs incurred by the Company to
comply with the Clean Air Act legislation would be included in
the cost of service on which the Company's rates for utility
service are based.
Water Quality. Under the Federal Water Pollution Control
Act Amendments of 1972, as amended, the Company is required to
obtain National Pollutant Discharge Elimination System (NPDES)
permits to discharge effluents (including thermal discharges)
from its properties into various waterways. All NPDES permits
are subject to renewal after specified time periods not to exceed
five years. The Company has obtained all necessary NPDES permits
for its generating stations and, when such permits are expected
to expire, the Company will file applications for renewal.
Hazardous Materials and Waste Management. The Company is
investigating five properties currently owned by the Company
which were, at one time, sites of gas manufacturing plants. The
purpose of these investigations is to determine whether waste
materials are present, whether such materials constitute an
environmental or health risk, and whether the Company has any
responsibility for remedial action. One site is located in
Illinois and four sites are located in Iowa. With regard to the
Illinois property, the Company has signed a working agreement
with the Illinois Environmental Protection Agency to perform
further investigation to determine whether waste materials are
present and, if so, whether such materials constitute an
environmental or health risk. At December 31, 1994, an estimated
liability of $3.3 million has been recorded for litigation,
investigation and remediation related to the Illinois site. A
regulatory asset has been recorded reflecting anticipated cost
recovery through rates in Illinois. With regard to the Iowa
sites, no agreement or consent order has been negotiated to
perform any site investigations or remediation. Approximately
$218,000 and $154,000 has been budgeted in 1995 and 1996,
respectively, for site studies. The Company has recorded a $4
million estimated liability for the Iowa sites. A regulatory
asset has been recorded based on the current regulatory treatment
of comparable costs in Iowa. The estimated recorded liabilities
for these properties are based upon preliminary data. Thus,
actual costs could vary significantly from the estimates. In
addition, insurance recoveries for some or all of the costs may
be possible, but the liabilities recorded have not been reduced
by any estimate of such recoveries. Although the timing of
incurred costs, recoveries and the inclusion of provision for
such costs in rates may affect the results of operations in
individual periods, management believes that the outcome of these
issues will not have a material adverse effect on the Company's
financial position or results of operations.
Pursuant to the Toxic Substances Control Act, a federal law
administered by the Environmental Protection Agency, the Company
developed a comprehensive program for the use, handling, control
and disposal of all polychlorinated biphenyls (PCB's) contained
in electrical equipment. The future use of equipment containing
PCB's will be minimized. Capacitors, transformers and other
miscellaneous equipment are being purchased with a non-PCB
dielectric fluid. The Company's exposure to PCB liability has
been reduced through the orderly replacement of a number of such
electrical devices with similar non-PCB electrical devices.
An unresolved issue is whether exposure to electric and
magnetic fields (EMFs) may result in adverse health effects.
EMFs are produced by all devices carrying or using electricity,
including transmission and distribution lines and home
appliances. The Company cannot predict the effect on
construction costs of electric utility facilities if EMF
regulations were to be adopted. Although the Company is not the
subject of any suit involving EMFs, litigation has been filed in
a number of jurisdictions against a variety of defendants
alleging that EMFs had an adverse effect on health. If such
litigation were successful, the impact on the Company and on the
electric utility industry generally could be significant.
InterCoast Energy Company
InterCoast Energy Company (InterCoast) is a wholly owned
non-regulated subsidiary of the Company. The non-regulated
activities emphasize energy-related diversification, credit
quality and liquidity.
InterCoast takes advantage of a core expertise in energy,
participating in the energy industry through three non-regulated
business groups: oil and gas (Medallion Production Company),
energy services (InterCoast Energy Services Company) and
financial investments (InterCoast Capital Company).
Medallion Production Company (Medallion) is an independent
oil and gas company based in Tulsa, Oklahoma. Medallion's oil
and gas assets at December 31, 1994 and 1993 were $142.4 million
and $121 million, respectively. In September 1993, Medallion
acquired DKM Resources, Inc. The transaction totaled in excess
of $50 million and more than doubled Medallion's oil and gas
reserve base. Medallion's reserves totaled 32.1 million barrels
of oil equivalent at December 31, 1994. Principal oil and gas
production facilities are in Texas, Louisiana, California,
Oklahoma and Colorado.
InterCoast Energy Services Company (Energy Services)
consolidates passive energy investment activities with actively
managed energy operations through development efforts and
acquisitions to provide a full spectrum of energy services.
Energy Services' assets at December 31, 1994 and 1993 were $50.3
million and $48.8 million, respectively.
InterCoast Power Marketing Company (IPM), a subsidiary of
Energy Services, was established in September 1993 to offer
wholesale power brokering and marketing services to utilities and
other power supply agencies. IPM brokers wholesale electric
power nationwide. In August 1994, FERC conditionally accepted
IPM's request for marketer status to enable it to directly buy
and sell power. FERC's acceptance of IPM's request was
conditioned upon Iowa-Illinois filing an open access, comparable
services electric transmission tariff within 30 days of its
order. In September 1994, FERC granted IPM an extension of time
in which Iowa-Illinois or MidAmerican could file such tariffs,
and on or about November 10, 1994, the tariffs were filed by
MidAmerican. While IPM can continue to broker power, it will not
be able to market power until the MidAmerican open access,
comparable services transmission tariffs become effective.
Continental Power Exchange, Inc. (CPE), a subsidiary of
Energy Services, was established in March 1994. CPE was formed
to operate a computerized information system facilitating the
real-time exchange of power in the electric industry. The
services will be initially available to those who buy and sell
bulk power in the next-hour bulk power market. In August 1994,
the FERC issued an order disclaiming jurisdiction over CPE and
its proposed National Interchange Agreement (NIA). Although the
FERC disclaimed jurisdiction over CPE, it accepted for filing on
January 9, 1995 the formula rates submitted in conjunction with
the NIA by Central Illinois Public Service Company (CIPS), the
utility sponsor of CPE. Other utilities may either apply to the
FERC to use the same rate formulas as CIPS or transact business
through CPE's system under rate schedules or tariffs already on
file with the FERC.
InterCoast Gas Marketing Company, a subsidiary of Energy
Services, owns a 50 percent partnership interest in Tenaska
Marketing Ventures (TMV), a natural gas marketer located in
Omaha, Nebraska. TMV provides a full range of natural gas
related services to industrial and utility customers, with
primary emphasis on owners of natural gas-fired electric
generation.
Energy Services also has indirect investments in a variety
of non-regulated energy production technologies including wind,
solar, hydroelectric, and natural gas and coal-fueled generation.
A subsidiary of Energy Services has an ownership interest in a 70
megawatt wind plant that operates in northern California and has
ownership interests in four solar electric generating stations in
southern California's Mojave Desert. In addition, IWG Co. 8, a
subsidiary of Energy Services, has an equity interest in a
hydroelectric operating and development company located in
Annapolis, Maryland and is a participant in a closed-end fund
created to invest in independent power projects. Energy Services
also has equity investments in two developing companies which
produce products and services for the electric and gas utility
industries.
InterCoast Capital Company (InterCoast Capital),
headquartered in Dallas, Texas, manages InterCoast's financial
investments. Such investments consist primarily of investment
grade marketable securities. InterCoast Capital also has
investments in aircraft leases, special purpose funds and real
estate. InterCoast Capital's total financial investments at
December 31, 1994 and 1993 were $297.1 million and $332.1
million, respectively.
InterCoast Capital's marketable securities portfolio,
totaling $199.5 million and $233.4 million at December 31, 1994
and 1993, respectively, focuses on energy securities consisting
primarily of preferred stocks issued by utility companies. All
such preferred stocks have been issued by companies having
investment grade senior debt ratings by Moody's or Standard &
Poor's. In addition to the preferred stocks, InterCoast Capital
has investments in independently managed mutual funds.
InterCoast Capital holds InterCoast's equity participations
in equipment leases for passenger and freight transport aircraft.
Such investments totaled $57.3 million and $56.6 million at
December 31, 1994 and 1993, respectively. InterCoast Capital
also had invested $2.8 million and $3.3 million at December 31,
1994 and 1993, respectively, in safe harbor leases under the
provisions of the Economic Recovery Tax Act of 1981, as amended.
Such safe harbor lease transactions are considered leases for
income tax purposes only.
InterCoast Capital has equity interests in special purpose
funds that invest in venture capital and leveraged buyout
opportunities totaling $34.8 million and $36 million at December
31, 1994 and 1993, respectively.
InterCoast Capital has interests in two real estate
partnerships totaling $2.7 million and $2.8 million at December
31, 1994 and 1993, respectively.
Item 2. Properties
The Company's utility properties consist of physical assets
necessary and appropriate to rendering electric and gas service
in its service territories.
Electric property may be classified principally as
distribution, transmission or generation.
Gas property consists principally of distribution plant,
including feeder lines to communities served from natural gas
pipelines owned by others.
The following table sets forth certain information with
respect to the Company's accredited 1994 summer net generating
capacity. All electric energy generated by the Company is 60-
cycle alternating current, and the Company's generating units are
steam turbine, combustion turbine, and hydro.
1994
Year Nameplate Total Summer
Placed Ratings of Nameplate Net
In Generators Rating Capacity
Station Service in KW In KW in KW Fuel
Quad-Cities 1972 207,079(1) 414,158(1) 384,750(1) Nuclear
Nuclear 207,079(1)
Power
Station
Cordova,
Illinois
Neal Station, 1975 159,445(2) 159,445(2) 149,350(2) Coal
Unit No. 3,
Sergeant
Bluff, Iowa
Council 1978 235,175(3) 235,175(3) 218,700(3) Coal
Bluffs
Station,
Unit No. 3,
Council
Bluffs, Iowa
Ottumwa 1981 134,282(4) 134,282(4) 132,368(4) Coal
Station,
Chillicothe,
Iowa
Louisa 1983 317,379(5) 317,379(5) 279,500(5) Coal
Station,
Fruitland,
Iowa
Riverside 1949 5,000 141,000 135,000 Coal-Gas
Station, 1961 136,000
Bettendorf,
Iowa
Moline 1970 4 @ 18,000 72,000 64,000 Gas-Oil
Station, 1941-42 4 @ 900 3,600 3,200 Hydro
Moline,
Illinois
Coralville 1970 4 @ 18,000 72,000 64,000 Gas-Oil
Station,
Coralville,
Iowa
1,549,039 1,430,868(5)
(1) Company's share (25%) of jointly owned station with ComEd
(operator of the station). Station has two units each
having a generator nameplate rating of 828,315 KW (920,350
KVA at 0.90 power factor).
(2) Company's share (29%) of jointly owned unit with Midwest
Power Systems Inc. (operator of the unit) and IES Utilities,
Inc. Unit has a generator nameplate rating of 549,810 KW
(610,900 KVA at 0.90 power factor).
(3) Company's share (32.4%) of jointly owned unit with Midwest
Power Systems Inc. (operator of the unit), Cedar Falls
Municipal Electric Utility, Central Iowa Power Cooperative,
Corn Belt Power Cooperative, Inc., and Atlantic Municipal
Utilities. Unit has a generator nameplate rating of 725,850
KW (806,500 KVA at 0.90 power factor).
(4) Company's share (18.5%) of jointly owned unit with IES
Utilities, Inc. (operator of the unit) and Midwest
Power Systems Inc. Unit has a generator nameplate
rating of 725,850 KW (806,500 KVA at 0.90 power
factor).
(5) Company's share (43%) of jointly owned station with Midwest
Power Systems Inc., Central Iowa Power Cooperative,
Interstate Power Company, the city of Geneseo, Illinois and
the cities of Waverly, Harlan, Tipton and Eldridge, Iowa.
Station has one unit with a generator nameplate rating of
738,090 KW (820,100 KVA at 0.90 power factor). The Company
is the operator of this station.
In February 1995, the Mid-Continent Area Power Pool approved
an increase in the accreditation of the Louisa Generating
Station from 650 MW to 675 MW effective as of June 7, 1994.
This action increased the Company's summer net generating
capacity from 1,430,868 KW to 1,441,618 KW.
The electric system of the Company at December 31, 1994
included 305 miles of 345-kV transmission lines, 381 miles of
161-kV lines and 282 miles of 69-kV lines. Distribution lines
included 13,959 miles of overhead conductor and 1,510 miles of
underground conductor at December 31, 1994.
The gas distribution facilities of the Company at December
31, 1994 included 4,271 miles of gas mains.
Substantially all of the fixed utility property and
franchises of the Company, consisting principally of electric
generating plants, electric transmission and distribution lines
and systems, gas feeder and distribution lines and systems and
buildings, are subject to the lien of the Company's Indenture of
Mortgage and Deed of Trust dated as of March 1, 1947, as amended
and supplemented, relating to its First Mortgage Bonds.
The Company's principal plants and properties, insofar as
they constitute real estate, are owned in fee, except for minor
encroachments and other inconsequential defects of title not
interfering, in the opinion of counsel for the Company, with the
Company's operations or use of its property. The Company's
electric and gas distribution facilities and its electric
transmission lines (which constitute a substantial portion of the
Company's investment in physical property) are located over and
under streets, alleys, highways and other public places or on
property owned by others for which permits, grants, easements and
licenses (deemed satisfactory but without examination of
underlying land titles) have been obtained. Some of the
Company's overhead lines and appurtenant equipment are attached
to poles owned by others pursuant to contractual arrangements and
certain transformer vaults and other property are located in
buildings owned by others.
Item 3. Legal Proceedings
See Item 1. Business for discussion of merger, rate and
environmental matters.
Item 4. Submission of Matters to a Vote of Security Holders
At a special meeting held December 21, 1994, shareholders of
the Company approved the Merger Agreement, providing for the
merger of the Company, Midwest Resources Inc. and Midwest Power
Systems Inc. with and into MidAmerican. The votes cast were as
follows:
Number of Votes
Common Preference Total
For 22,480,332 396,250 22,876,582
Against 557,579 - 557,579
Abstain 343,884 6,000 349,884
Broker
Non-votes 4,023,425 97,750 4,121,175
Item 4a. Executive Officers of the Registrant
Age at
Position Incumbent Dec. 31, 1994
Chairman, President
and Chief Executive
Officer Stanley J. Bright (a) 54
Vice President-Finance
and Chief Financial
Officer Lance E. Cooper (b) 51
Vice President Brent E. Gale (c) 43
Vice President Stephen E. Hollonbeck (d) 44
Vice President David J. Levy (e) 40
Vice President Stephen E. Shelton 47
Vice President Ronald W. Stepien (f) 48
Controller Peter E. Burks (g) 59
President and Chief
Operating Officer,
InterCoast Energy
Company Donald C. Heppermann (h) 51
All incumbents have held their respective positions for at
least five years, except where noted. Officers are elected
annually by the Board of Directors.
(a) Elected May 1, 1991. Prior to that time Mr. Bright was
President and Chief Operating Officer (elected
effective April 1, 1990) and Vice President-Finance and
Chief Financial Officer (elected effective September 1,
1986).
(b) Elected effective October 9, 1991. Prior to that time
Mr. Cooper was Vice President-Control, Atlantic City
Electric Company.
(c) Elected effective January 23, 1992. Prior to that time
Mr. Gale was General Counsel, Associate General
Counsel, Assistant General Counsel and Attorney.
(d) Elected effective April 1, 1990. Prior to that time
Mr. Hollonbeck was Manager, Gas Department and Manager,
Gas Supply and System Design.
(e) Elected effective July 1, 1993. Prior to that time Mr.
Levy was Director, Energy Services and Director,
Marketing and Industrial Engineering.
(f) Elected effective August 15, 1990. Prior to that time
Mr. Stepien was Manager for International Parts and
Service After Market Sales of General Electric Company.
(g) Elected effective April 1, 1990. Prior to that time
Mr. Burks was Director, Accounting.
(h) Elected effective June 1, 1990. Prior to that time Mr.
Heppermann was Vice President and Treasurer of Pinnacle
West Capital Corporation. Previous to that position,
he was Vice President-Finance and Administration with
Enron Corporation.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Incorporated by reference to the caption "Shareholders of
Record (1994)" on page 39 and "Stock Listings" on page 41 of the
Company's Annual Report to Shareholders for 1994. This
information is also included in Exhibit 13.A.1 to this Form 10-K.
The quarterly high and low prices for the Company's Common
Shares as reported on the New York Stock Exchange Composite
Transactions Tape for the years 1994 and 1993 are as follows:
1994 High Low 1993 High Low
1st Quarter $24.75 $22.38 1st Quarter $22.88 $19.25
2nd Quarter 24.50 19.88 2nd Quarter 23.75 22.38
3rd Quarter 22.50 19.25 3rd Quarter 26.63 23.63
4th Quarter 20.63 18.88 4th Quarter 26.38 22.63
The $1.73 per Common Share annual dividend was paid
quarterly in 1994 and 1993.
Item 6. Selected Financial Data
Incorporated by reference to the following captions for the
years 1990-1994 on page 39 of the Company's Annual Report to
Shareholders for 1994:
(1) Utility Revenues
(2) Net Income
(3) Net Income on Common Shares
(4) Common Share Statistics-Earnings per Share
(5) Total Assets
(6) Capitalization
(7) Common Share Statistics-Annual Dividend Rate at
December 31
This information is also included in Exhibit 13.A.2 to this Form
10-K.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Incorporated by reference to pages 17-21 of the Company's
Annual Report to Shareholders for 1994. This information is also
included in Exhibit 13.A.3 to this Form 10-K.
Item 8. Financial Statements and Supplementary Data
Incorporated by reference to pages 22-38 of the Company's
Annual Report to Shareholders for 1994. This information is also
included in Exhibit 13.A.4 to this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information relating to directors is incorporated by
reference to pages 2-5 of the Company's Proxy Statement dated
March 15, 1995. Information relating to executive officers is
set forth in Part I, Item 4a. of this Annual Report of Form 10-K.
Item 11. Executive Compensation
Incorporated by reference to: the last paragraph of page 4,
page 6 -- "Executive Compensation" and pages 7 and 8 -- "Pension
Plan", "Long-Term Incentive Plan (LTIP) Awards Table",
"Supplemental Retirement Plan for Designated Officers" and
"Severance Plan" of the Company's Proxy Statement dated March 15,
1995.
Item 12. Principal Holders of Voting Securities and Security
Ownership of Management
Incorporated by reference to pages 1 and 5 of the Company's
Proxy Statement dated March 15, 1995.
Item 13. Certain Relationships and Related Transactions
NONE
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a)(1) Financial Statements
The following financial statements (including the
notes thereto) and the related audit reports,
incorporated herein by reference, are included in
the Company's 1994 Annual Report to Shareholders
(except as noted):
Page No.
in 1994
Annual
Report
to Share-
holders
22 Consolidated statements of income and retained
earnings for the three years ended December 31,
1994
23,24 Consolidated balance sheets and statements of
capitalization as of December 31, 1994 and 1993
25 Consolidated statements of cash flows for the
three years ended December 31, 1994
26-37 Notes to consolidated financial statements
38 Independent Auditors' Report - 1994 and 1993
Report of Independent Public Accountants - 1992
(included in this Report on Form 10-K at page 33)
(2) Financial statement schedule
The following schedule is included herein:
Page No.
of this
Annual
Report on
Form 10-K
34 Independent Auditors' Report - 1994 and 1993
35 Report of Independent Public Accountants - 1992
36 II Valuation and qualifying accounts for the
years ended December 31, 1994, 1993 and 1992.
(3) Exhibits
See Exhibit Index on pages 39 through 46.
(b) A report on Form 8-K dated December 21, 1994 was
filed. The report included under "Item 5 Other Events"
information related to the special meeting held
December 21, 1994 at which the shareholders of the
Company approved the merger of the Company, Midwest
Resources Inc. and Midwest Power Systems Inc. with and
into MidAmerican Energy Company.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Iowa-Illinois Gas and Electric Company:
We have audited the consolidated balance sheet and statement of
capitalization of Iowa-Illinois Gas and Electric Company (an Illinois
corporation) and Subsidiary Company as of December 31, 1992, and the
related consolidated statements of income, retained earnings and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Iowa-
Illinois Gas and Electric Company and Subsidiary Company as of
December 31, 1992, and the results of their operations and their cash
flows for the year then ended, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 28, 1993
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Iowa-Illinois Gas and Electric Company:
We have audited the consolidated financial statements of Iowa-Illinois
Gas and Electric Company as of December 31, 1994 and 1993 and for each
of the two years in the period ended December 31, 1994, and have
issued our report thereon dated January 25, 1995; such financial
statements and report are included in your 1994 Annual Report to
Shareholders and are incorporated herein by reference. Our audits
also included the financial statement schedule of Iowa-Illinois Gas
and Electric Company as of December 31, 1994 and 1993 and for each of
the two years in the period ended December 31, 1994, listed in Item
14. The financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects
the information set forth therein.
Deloitte & Touche LLP
Davenport, Iowa
January 25, 1995
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Iowa-Illinois Gas and Electric Company:
We have audited in accordance with generally accepted auditing
standards, the consolidated balance sheet and statement of
capitalization of Iowa-Illinois Gas and Electric Company and
Subsidiary Company as of December 31, 1992, and the related
consolidated statements of income, retained earnings and cash flows
for the year then ended, included in the Company's annual report to
shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated January 28, 1993.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item
14(a)(2) as of December 31, 1992, and for the year then ended is the
responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's
rules and is not part of the basic financial statements. This
financial statement schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial
data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 28, 1993
SCHEDULE II
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY AND SUBSIDIARY COMPANY
VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
Balance Additions Balance
Beginning Charged to End of
Description of Period Income Deductions Period
YEAR ENDED DECEMBER 31, 1994
ACCUMULATED PROVISION DEDUCTED FROM APPLICABLE ASSETS:
Uncollectible Accounts $1,164,997 $1,504,048 ($1,504,040) $1,165,005
ACCUMULATED PROVISIONS NOT DEDUCTED FROM ASSETS:
Property Insurance 2,561,285 200,000 (536,950) 2,224,335
Injuries and Damages 974,539 473,452 (444,168) 1,003,823
YEAR ENDED DECEMBER 31, 1993
ACCUMULATED PROVISION DEDUCTED FROM APPLICABLE ASSETS:
Uncollectible Accounts $1,171,314 $882,951 ($889,268) $1,164,997
ACCUMULATED PROVISIONS NOT DEDUCTED FROM ASSETS:
Property Insurance 2,426,440 134,845 2,561,285
Injuries and Damages 741,663 591,998 (359,122) 974,539
YEAR ENDED DECEMBER 31, 1992
ACCUMULATED PROVISION DEDUCTED FROM APPLICABLE ASSETS:
Uncollectible Accounts $1,149,069 $825,283 ($803,038) $1,171,314
ACCUMULATED PROVISIONS NOT DEDUCTED FROM ASSETS:
Property Insurance 2,605,000 43,000 (221,560) 2,426,440
Injuries and Damages 795,943 671,860 (726,140) 741,663
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
March 22, 1995 By L. E. Cooper
L. E. Cooper
Vice President-Finance and CFO
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
S. J. Bright Chairman, President, Chief
S. J. Bright Executive Officer and Director
(Principal executive officer) March 22, 1995
L. E. Cooper Vice President-Finance, Chief
L. E. Cooper Financial Officer and Director
(Principal financial officer) March 22, 1995
P. E. Burks Controller March 22, 1995
P. E. Burks (Principal accounting officer)
John W. Colloton Director March 22, 1995
John W. Colloton
Frank S. Cottrell Director March 22, 1995
Frank S. Cottrell
William C. Fletcher Director March 22, 1995
William C. Fletcher
Mel Foster, Jr. Director March 22, 1995
Mel Foster, Jr.
Signature Title Date
Nancy L. Seifert Director March 22, 1995
Nancy L. Seifert
S. E. Shelton Director March 22, 1995
S. E. Shelton
W. Scott Tinsman Director March 22, 1995
W. Scott Tinsman
L. L. Woodruff Director March 22, 1995
L. L. Woodruff
EXHIBIT INDEX
EXHIBITS FILED HEREWITH
13.A.1 "Shareholders of Record (1994)" appearing on page 39 and
"Stock Listing" appearing on page 41 of the Company's
Annual Report to Shareholders for 1994, incorporated by
reference into Item 5 of this Form 10-K.
13.A.2 "Utility Revenues," "Net Income," "Net Income on Common
Shares," "Common Share Statistics--Earnings per Share,"
"Total Assets," "Capitalization" and "Common Share
Statistics--Annual Dividend Rate at December 31" for the
years 1990-1994, appearing on page 39 of the Company's
Annual Report to Shareholders for 1994, incorporated by
reference into Item 6 of this Form 10-K.
13.A.3 "Management's Discussion and Analysis of Financial
Condition and Results of Operations," appearing on pages
17-21 of the Company's Annual Report to Shareholders for
1994, incorporated by reference into Item 7 of this Form
10-K.
13.A.4 "Financial Statements and Supplementary Data," appearing
on pages 22-38 of the Company's Annual Report to
Shareholders for 1994, incorporated by reference into
Items 1(b), 8 and 14(a)(1) of this Form 10-K.
21 Subsidiaries of the Registrant.
23.A Consent of Deloitte & Touche LLP.
23.B Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
EXHIBITS INCORPORATED BY REFERENCE
The following Exhibits previously filed with the Commission are
incorporated herein by reference. The file number for the
Company's Annual Reports on Form 10-K and Quarterly Reports on
Form 10-Q is 1-3573.
Ex. File No. or Previous
No. Description Ex. No. Description of Document
2 Registration 2(a) Agreement and Plan of Merger
Statement dated as of July 26, 1994 as
on Form S-4 amended and restated as of
(33-56153) of September 27, 1994 among Iowa-
MidAmerican Illinois, Midwest Resources,
Energy Co. Inc., an Iowa corporation, and
Midwest Power Systems, an Iowa
corporation and a subsidiary of
Resources, and a newly-formed
corporation MidAmerican Energy
Company.
3.A Form 10-K 3.A First Restated Articles of
1993 Incorporation of Iowa-Illinois
Gas and Electric Company.
3.B Form 10-Q 3.A Article Eleven of the First
6/30/94 Restated Articles of
Incorporation of Iowa-Illinois
Gas and Electric Company.
3.C Form 10-K 3.B By-laws as amended through April
1993 25, 1991.
4.B.1 2-6922 7B Indenture of Mortgage and Deed of
Trust, dated as of March 1, 1947.
4.B.2 2-6922 7C Supplemental Indenture dated as
of March 1, 1947.
4.B.3 2-8112 7B Second Supplemental Indenture
dated as of October 1, 1949.
4.B.4 2-9990 4.04 Third Supplemental Indenture
dated as of January 15, 1953.
4.B.5 2-62330 2.03E Resignation and appointment of
successor Individual Trustee.
4.B.6 2-17786 2.06 Fourth Supplemental Indenture
dated as of April 15, 1960.
4.B.7 2-26675 2.07 Fifth Supplemental Indenture
dated as of May 1, 1961.
4.B.8 2-28806 2.08 Sixth Supplemental Indenture
dated as of July 1, 1967.
4.B.9 2-34089 2.10 Seventh Supplemental Indenture
dated as of April 1, 1969.
4.B.10 2-38102 2.10 Eighth Supplemental Indenture
dated as of August 15, 1969.
4.B.11 2-38102 2.12 Ninth Supplemental Indenture
dated as of September 1, 1970.
4.B.12 2-45994 2.04L Resignation and appointment of
successor Individual Trustee.
4.B.13 2-53814 2.03M.2 Tenth Supplemental Indenture
dated as of June 15, 1975.
4.B.14 2-55527 2.03N.1 Eleventh Supplemental Indenture
dated as of March 15, 1976.
4.B.15 2-57912 2.03O.1 Twelfth Supplemental Indenture
dated as of January 15, 1977.
4.B.16 2-58838 2.03P Thirteenth Supplemental Indenture
dated as of October 1, 1977.
4.B.17 2-62330 2.03Q.1 Fourteenth Supplemental Indenture
dated as of September 1, 1979.
4.B.18 2-66779 2.03R Fifteenth Supplemental Indenture
dated as of July 15, 1979.
4.B.19 2-66779 2.03S Sixteenth Supplemental Indenture
dated as of January 15, 1980.
4.B.20 2-68600 2.03T Seventeenth Supplemental
Indenture dated as of June 15,
1980.
4.B.21 Form 10-K 4.B.21 Eighteenth Supplemental Indenture
1980 dated as of February 15, 1981.
4.B.22 Form 10-K 4.B.22 Nineteenth Supplemental Indenture
1981 dated as of October 1, 1981.
4.B.23 Form 10-Q 4.B.23 Twentieth Supplemental Indenture
6/30/82 dated as of May 1, 1982.
4.B.24 Form 10-Q 4.B.24 Twenty-First Supplemental
6/30/82 Indenture dated as of July 1,
1982.
4.B.25 Form 10-K 4.B.25 Twenty-Second Supplemental
1983 Indenture dated as of February
15, 1984.
4.B.26 Form 10-K 4.B.26 Twenty-Third Supplemental
1984 Indenture dated as of November 1,
1984.
4.B.27 Form 10-Q 4.B.27 Twenty-Fourth Supplemental
9/30/85 Indenture dated as of September
1, 1985.
4.B.28 Form 10-Q 4.B.28 Twenty-Fifth Supplemental
9/30/86 Indenture dated as of September
15, 1986.
4.B.29 Form 10-K 4.B.29 Twenty-Sixth Supplemental
1986 Indenture dated as of February
15, 1987.
4.B.30 Reg. No. 4.B.30 Resignation and Appointment of
33-39211 successor Individual Trustee.
4.B.31 Form 8-K 4.31.A Twenty-Seventh Supplemental
dated Indenture dated as of October 1,
10/1/91 1991.
4.B.32 Form 8-K 4.31.B Twenty-Eighth Supplemental
dated Indenture dated as of May 15,
5/21/92 1992.
4.B.33 Form 8-K 4.32.A Twenty-Ninth Supplemental
dated Indenture dated as of March 15,
3/24/93 1993.
4.B.34 Form 8-K 4.34.A Thirtieth Supplemental Indenture
dated dated as of October 1, 1993.
10/7/93
10.A.1 2-62331 5.01A Quad-Cities Station Ownership
Agreement dated as of March 17,
1967 between the Company and
Commonwealth Edison Company.
10.A.2 2-45994 5.01B Amendment No. 1 dated as of April
20, 1972 to Quad-Cities Station
Ownership Agreement and Quad-
Cities Operating Agreement.
10.A.3 2-45994 5.02 Quad-Cities Operating Agreement
dated as of November 24, 1967
between the Company and
Commonwealth Edison Company.
10.B 2-45994 5.03 Agreement dated February 2, 1971
re Unit 3 George Neal Generating
Station between the Company, Iowa
Power and Light Company, Iowa
Southern Utilities Company and
Iowa Public Service Company.
10.C 2-45994 5.04 Transmission Facilities Agreement
dated July 28, 1972 between the
Company, Iowa Power and Light
Company, Iowa Southern Utilities
Co. and Iowa Public Service Co.
10.D 2-45994 5.07 Financing Agreement dated as of
April 15, 1972 among the Company,
The First National Bank of Saint
Paul, First National Bank of
Muscatine, the institutions named
in Section 2 thereof and United
States Trust Company of New York.
10.E Form 10-K 10.E Mid-Continent Area Power Pool
1981 Agreement as amended through
Amendment No. 14 effective May 1,
1982.
10.F.1 2-49376 5.08 Agreement dated July 31, 1973 re
Unit 3 Council Bluffs Generating
Station between the Company,
Cedar Falls Municipal Electric
Utility, Central Iowa Power
Cooperative, Inc., Corn Belt
Power Co-operative, Inc., Eastern
Iowa Light and Power Cooperative
Inc. and Iowa Power and Light Co.
10.F.2 2-57912 5.08B Amendment No. 1 to Council Bluffs
Generating Station Unit 3 Agree-
ment, dated January 31, 1975.
10.F.3 2-57912 5.08C Amendment No. 2 to Council Bluffs
Generating Station Unit 3 Agree-
ment, dated September 5, 1975.
10.G 2-53814 5.09 Agreement dated April 16, 1975 re
Unit 1 Ottumwa Generating Station
between the Company, Iowa Power
and Light Company, Iowa Southern
Utilities Company and Iowa Public
Service Company.
10.H.1 2-53814 5.10 Ownership Agreement dated as of
August 15, 1974 re Units 1 and 2
Carroll County Station among the
Company, Commonwealth Edison Co.
and Interstate Power Company.
10.H.2 2-53814 5.11 Operating Agreement dated as of
August 15, 1974 re Units 1 and 2
Carroll County Station among the
Company, Commonwealth Edison Co.
and Interstate Power Company.
10.I.1 2-58838 5.12 Agreement dated October 4, 1977
re Unit 1 Louisa Generating
Station among the Company, Iowa
Power and Light Company, Iowa
Public Service Company, Eastern
Iowa Light and Power Cooperative
and City of Tipton.
10.I.2 Form 10-K 10.J.2 Amendment No. 1 to Unit 1 Louisa
1980 Generating Station Agreement,
dated May 23, 1980.
10.I.3 Form 10-K 10.I.3 Amendment No. 2 to Unit 1 Louisa
1982 Generating Station Agreement,
dated April 26, 1982.
10.I.4 Form 10-K 10.I.4 Amendment No. 3 to Unit 1 Louisa
1982 Generating Station Agreement,
dated February 2, 1983.
10.I.5 Form 10-K 10.I.5 Amendment No. 4 to Unit 1 Louisa
1983 Generating Station Agreement,
dated May 26, 1983.
10.I.6 Form 10-K 10.I.6 Amendment No. 5 to Unit 1 Louisa
1983 Generating Station Agreement
dated October 11, 1983.
10.I.7 Form 10-K 10.I.7 Amendment No. 6 to Unit 1 Louisa
1985 Generating Station Agreement
dated May 29, 1985.
10.J Form 8-K II Rights Agreement dated as of
dated February 25, 1992 between the
2/26/92 Company and First Chicago Trust
Co. of New York, as Rights Agent.
10.K.1* Form 10-K 10.K.1 Severance Plan In The Event Of A
1993 Change In Control, as amended as
of July 1, 1993.
10.K.2* Form 10-K 10.K.2 Supplemental Retirement Plan for
1993 Principal Officers, as amended as
of July 1, 1993.
10.K.3* Form 10-K 10.K.2 Compensation Deferral Plan for
1993 Principal Officers, as amended as
of July 1, 1993.
10.K.4* Form 10-K 10.K.4 Board of Directors' Compensation
1992 Deferral Plan.
10.K.5* Form 10-K 10.K.5 Trust Agreement.
1992
10.K.6* Form 10-K 10.K.6 Key Employee Sustained
1993 Performance Plan.
10.L.1 Form 10-K 10.L.1 Employee Stock Purchase Plan.
1992
10.M Registration 2(a) Agreement and Plan of Merger
Statement dated as of July 26, 1994 as
on Form S-4 amended and restated as of
(33-56153) of September 27, 1994 among Iowa-
MidAmerican Illinois, Midwest Resources,
Energy Co. Inc., an Iowa corporation, and
Midwest Power Systems, an Iowa
corporation and a subsidiary of
Resources, and a newly-formed
corporation MidAmerican Energy
Company.
* Compensatory Plan or Arrangement for Directors or Executive
Officers of the Company.