SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 Commission file number 1-4698
NEVADA POWER COMPANY
(Exact name of registrant as specified in its charter)
Nevada 88-0045330
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
6226 West Sahara Avenue 89102
Las Vegas, Nevada (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (702) 367-5000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
-------------------------- -----------------------
Common Stock, $1 Par Value New York Stock Exchange
Pacific Exchange
Stock Purchase Rights New York Stock Exchange
8.2% Cumulative Quarterly Income
Preferred Securities, Series A New York Stock Exchange
* issued by NVP Capital I, a Delaware Statutory Business Trust
The payment of trust distributions and payments on liquidation or
redemption are guaranteed under certain circumstances by Nevada Power
Company. Nevada Power Company is the owner of 100% of the common
securities issued by NVP Capital I.
Securities registered pursuant to Section 12(g) of the Act:
Cumulative Preferred Stock, $20 Par Value, 5.40% Series
(Title of class)
Cumulative Preferred Stock, $20 Par Value, 5.20% Series
(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 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
----
50,690,453 shares of Common Stock were outstanding as of March 18, 1998.
The aggregate market value of Common Stock, which is the only voting stock,
held by non-affiliates as of March 18, 1998, was $1,305,279,164. (Computed
by reference to the closing price on March 18, 1998, as reported by the Wall
Street Journal as New York Stock Exchange Composite Transactions.)
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1997 are incorporated by reference into Parts II and IV
hereof.
(2) Portions of the Registrant's definitive Proxy Statement dated March 12,
1998 for the Company's annual meeting of shareholders on May 8, 1998, are
incorporated by reference into Part III hereof.
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business ...................................... 1
Item 2. Properties .................................... 8
Item 3. Legal Proceedings ............................. 9
Item 4. Submission of Matters to a Vote of Security
Holders........................................ 10
Supplemental Item.
Executive Officers of Registrant .............. 10
PART II
Item 5. Market for the Registrant's Common Stock and
Related Security Holder Matters ............... 11
Item 6. Selected Financial Data ....................... 11
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation... 11
Item 8. Consolidated Financial Statements and
Supplementary Data ............................ 12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure ........ 12
PART III
Item 10. Directors and Executive Officers of the
Registrant .................................... 12
Item 11. Executive Compensation ........................ 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management ................................ 12
Item 13. Certain Relationships and Related Transactions. 13
PART IV
Item 14. Exhibits, Consolidated Financial Statement
Schedule, and Reports on Form 8-K ............. 13
SIGNATURES .................................................. 26
PART I
ITEM 1. BUSINESS
THE COMPANY
Nevada Power Company (Company), incorporated in 1929 under the laws of
Nevada, is an operating public utility engaged in the electric utility business
in the City of Las Vegas and vicinity in southern Nevada. Most of the Company's
operations are conducted in Clark County, Nevada (with an estimated service area
population of 1,303,000 at December 31, 1997) where the Company furnishes
electric service in the communities of Las Vegas, North Las Vegas, Henderson,
Searchlight, Laughlin and adjoining areas and to Nellis Air Force Base (a
permanent military installation northeast of Las Vegas and the USAF Tactical
Fighter Weapons Center). Electric service is also supplied to the Department of
Energy at Mercury and Jackass Flats in Nye County, where the Nevada Test Site is
located. The Company will supply 40 percent of the Nevada Test Site's future
electrical power according to a settlement agreement approved by the Public
Utilities Commission of Nevada (PUCN). See the "Competition" section in this
Form 10-K.
SOURCES OF ELECTRIC ENERGY SUPPLY
The electric energy obtained from the Company's own generating facilities
will be produced at the following plants:
Number Net Capacity
Plant of Units (Megawatts)
----- -------- ------------
Coal Fuel:
Reid Gardner (Steam).............. 3 330
Reid Gardner Unit No. 4 (Steam)... 1 275(1)
Mohave (Steam).................... 2 196(2)
Navajo (Steam).................... 3 255(3)
Natural Gas and Oil Fuel:
Clark (Steam)..................... 3 175
Clark (Gas Turbine)............... 1 50
Clark (Combined Cycle)............ 2 462
Sunrise (Steam)................... 1 80
Sunrise (Gas Turbine)............. 1 69
Harry Allen (Gas Turbine)......... 1 72
-----
1,964
=====
_________________
(1) This represents 25 megawatts of base load capacity, 235 megawatts of
peaking capacity and 15 megawatts (MW) upgrade capacity accomplished in
1990. Reid Gardner Unit No. 4, placed in service July 25, 1983, is a coal-
fired unit which is owned 32.2% by the Company and 67.8% by the Department
of Water Resources of the State of California (CDWR). The Company is
entitled to use 100% of the unit's peaking capacity for 1,500 hours each
year. The Company is entitled to 9.6% of the first 260 megawatts of
capacity and associated energy and is entitled to all of the 1990 15
megawatt upgrade through August 31, 1998 when the 15 megawatt upgrade
capacity will be transferred to CDWR. The Company had options for the use
of increasing amounts of capacity and energy from the unit beginning in
1998 so that the Company would have been entitled to use all of the unit's
output 15 years from that date. However, the 1998 through 2002 options for
10.17 MW per year were not exercised by the Company and have expired.
(2) This represents the Company's 14% undivided interest in the Mohave
Generating Station as tenant in common without right of partition with
three other non-affiliated utilities, less operating restrictions.
1
(3) This represents the Company's 11.3% undivided interest in the Navajo
Generating Station as tenant in common without right of partition with
five other non-affiliated utilities.
The Company purchases Hoover Dam power pursuant to a contract with the
State of Nevada which became effective June 1, 1987 and will continue through
September 30, 2017. The Company's allocation of capacity is 235 MW.
The peak electric demand experienced by the Company was 3,469 megawatts on
August 7, 1997. This demand plus a reserve margin was served by a combination
of Company owned generation, and firm and short-term power purchases.
For 1998, the Company has contracts to purchase power from an independent
power producer (IPP) and four qualifying facilities (QF) (also known as
cogenerators) as follows:
Contract Term Net Capacity
---------------------
From To (Megawatts)
-------- -------- ------------
Independent Power Producer:
---------------------------
Nevada Sun-Peak Limited
Partnership ............. 06/08/91 05/31/16 210
Qualifying Facilities:
----------------------
Saguaro Power Company .... 10/17/91 04/30/22 90
Nevada Cogeneration
Associates #1 ........... 06/18/92 04/30/23 85
Nevada Cogeneration
Associates #2 ........... 02/01/93 04/30/23 85
Las Vegas Cogeneration
Limited Partnership ..... 05/10/94 05/31/24 45
---
515
===
The Company has total generating capacity of 2,714 megawatts, including 235
megawatts of Hoover Dam power, 210 megawatts of IPP power and 305 megawatts of
QF power. This along with agreements with other suppliers to purchase 1130
megawatts of firm capacity and associated energy, for the summer of 1998, will
not be sufficient to meet the 1998 anticipated peak load demand and reserve
margin needs. Accordingly, the Company is utilizing a competitive bidding
process as well as spot market purchases to obtain resources from other
suppliers for additional firm capacity and associated energy to meet the
projected peak needs for 1998.
FUEL SUPPLIES
The fuels used to provide energy for the Company's generating facilities
are coal, natural gas and oil. Its other sources of electricity are
hydroelectric (Hoover Dam) and purchased power.
The Company's primary fuel source for generation is coal. The following
table shows the actual sources of fuel for generation for 1997 and anticipated
sources of fuel for generation in 1998 and 1999.
1997 1998 1999
---- ---- ----
Coal........................ 67% 66% 65%
Natural Gas................. 33 34 35
--- --- ---
100% 100% 100%
=== === ===
The Company's average delivered cost per ton of coal burned was as follows:
1995 - $30.37; 1996 - $29.02; 1997 - $29.72.
2
Coal for both the Mohave and Navajo Stations is obtained from surface
mining operations conducted by Peabody Coal Company (Peabody) on portions of the
Black Mesa in Arizona within the Navajo and Hopi Indian reservations. The
supply contracts with Peabody extend to December 31, 2005 for Mohave and to June
1, 2011 for Navajo, each contract having an option to extend for an additional
15 years.
Partial requirements for coal at the Reid Gardner Generating Station are
presently under contract through the year 2007. Although the Company cannot
predict how the coal market may fluctuate in the future, the Company anticipates
no major difficulties in purchasing the remainder of its coal requirements based
upon current coal market conditions in the Western United States. All coal for
Reid Gardner presently comes from underground mines in Utah and Colorado.
CONSTRUCTION AND FINANCING PROGRAMS
The Company carries on a continuing program to extend and enlarge its
facilities to meet current and future loads on its system. Gross plant
additions and retirements for the five years ended December 31, 1997 amounted to
$956,714,000 and $88,430,000, respectively.
Excluding Allowance for Funds Used During Construction, the Company's
actual construction expenditures for 1997 were $211 million, and currently
estimated construction expenditures for 1998 and 1999 are $295 million and $255
million, respectively.
The Company's construction program and estimated expenditures are subject
to continuing review and are revised from time to time due to various factors,
including the rate of load growth, escalation of construction costs,
availability of fuel types, changes in environmental regulations, adequacy of
rate relief and the Company's ability to raise necessary capital.
The Company will utilize internally generated cash and the proceeds from
industrial development revenue bonds (IDBs), first mortgage bonds (FMBs),
unsecured borrowings, preferred securities and common stock issues through
public offerings and the Stock Purchase and Dividend Reinvestment Plan (SPP) to
meet capital expenditure requirements through 1999.
The Company has the option of issuing new shares or using open market
purchases of its common stock to meet the requirements of the SPP. The Company
issued 1,515,716 shares of its common stock in 1997 under the SPP. At the end
of 1997, common equity represented 45% of total capitalization.
On November 20, 1997, Clark County, Nevada issued $52.3 million 5.9% IDBs
Series 1997A (Nevada Power Company Project) due 2032 and Coconino County,
Arizona issued $20 million 5.8% Pollution Control Revenue Bonds (PCRBs) Series
1997B (Nevada Power Company Project) due 2032. Net proceeds from the sale of
the IDBs were placed on deposit with a trustee and will be used to finance the
construction of certain facilities which qualify for tax-exempt financing. Net
proceeds from the sale of the PCRBs were placed on deposit with a trustee and
are being used to finance the construction of the Navajo scrubber facilities
which qualify for tax-exempt financing. At December 31, 1997, $52.9 million
remained on deposit with the trustee.
The Company also remarketed $85 million Series 1995B Clark County, Nevada
(Nevada Power Company Project) variable rate IDBs due 2030 at a 5.9 percent
fixed rate on November 24, 1997.
On January 29, 1998, the Company remarketed at fixed rates $141.05 million
Clark County, Nevada (Nevada Power Company Project) variable rate revenue bonds
consisting of $76.75 million Series 1995A IDBs due 2030 at 5.6 percent, $44
million Series 1995C IDBs due 2030 at 5.5 percent and $20.3 million Series 1995D
PCRBs with $14 million due 2011 at
3
5.3 percent and $6.3 million due 2023 at 5.45
percent. On the same date, $13 million Coconino County, Arizona (Nevada Power
Company Project) Series 1995E PCRBs due 2022 were remarketed at a 5.35 percent
fixed rate.
The Indenture under which the Company's first mortgage bonds are issued
provides that no additional bonds may be issued unless earnings as defined equal
at least two and one-half times the interest requirements on all bonds to be
outstanding after the new issue. Based on its earnings through December 31,
1997 and assuming a 7.5 percent interest rate on new bonds, the Company would be
able to issue approximately $594 million of additional first mortgage bonds.
The Company's ability to issue additional debt is also limited by the need to
maintain a reasonable ratio of debt to equity.
The Company's ability to sell additional preferred stock is limited by the
necessity to meet required dividend coverages. At December 31, 1997, the
applicable dividend coverage test would permit the issuance of $429 million of
additional preferred stock at a dividend rate of 7.5 percent.
On April 2, 1997, NVP Capital I (Trust), a wholly-owned subsidiary of the
Company, issued 4,754,860 8.2% Quarterly Income Preferred Securities (QUIPS) at
$25 per security. The Company owns all of the Series A common securities,
147,058 shares issued by the Trust for $3.7 million. The QUIPS and the common
securities represent undivided beneficial ownership interests in the assets of
the Trust, a statutory business trust formed under the laws of the state of
Delaware. The existence of the Trust is for the sole purpose of issuing the
QUIPS and the common securities and using the proceeds thereof to purchase from
the Company its 8.2% Junior Subordinated Deferrable Interest Debentures (QUIDS)
due March 31, 2037, extendable to March 31, 2046 under certain conditions, in a
principal amount of $122.6 million. The sole asset of the Trust is the QUIDS.
The Company's obligations under the guarantee agreement entered into in
connection with the QUIPS when taken together with the Company's obligation to
make interest and other payments on the QUIDS issued to the Trust, and the
Company's obligations under the Indenture pursuant to which the QUIDS are issued
and its obligations under a trust agreement, including its liabilities to pay
costs, expenses, debts and liabilities of the Trust, provides a full and
unconditional guarantee by the Company of the Trust's obligations under the
QUIPS. Financial statements of the Trust are consolidated with the Company's.
Separate financial statements are not filed because the Trust is wholly-owned by
the Company and essentially has no independent operations, and the Company's
guarantee of the Trust's obligations is full and unconditional. The $118.9
million in net proceeds to the Company was used for general corporate utility
purposes and the repayment of short-term debt incurred to redeem the Company's
$38 million, 9.9% Redeemable Cumulative Preferred Stock on April 1, 1997.
RESOURCE PLANNING
The Company's rate of customer growth, especially in recent years, has been
among the highest in the nation. The annual customer growth rate was 6.4
percent, 7.2 percent, and 6.0 percent in 1997, 1996 and 1995, respectively.
The peak demand for electricity by the Company's customers increased from
3,332 megawatts in 1996 to 3,469 megawatts in 1997. The Company's 1997 energy
sales reached 14,596,228 megawatthours, an increase of 6.6 percent over 1996.
Pursuant to Nevada law, every three years the Company is required to file
with the PUCN a forecast of electricity demands for the next 20 years and the
Company's plans to meet those demands. The Company filed its 1997 Resource Plan
on June 3, 1997. On October 20, 1997, the PUCN rendered a decision on this
plan. Among the major items in the Company's 1997 Resource Plan which were
approved by the PUCN are the following:
(1) the Company will proceed to build a 500 kV transmission project known as
the Crystal Transmission Project, with an in-service date of June 1,
1999;
4
(2) the Company will continue to pursue a strategy of relying on bulk
power purchases to meet near-term incremental increases in load;
(3) the Company will proceed with a joint 230 kV transmission project with
the Colorado River Commission with costs subject to prudency review in a
future rate case;
(4) the Company received limited approval to proceed with six switchyard
projects;
(5) the Company received approval for pre-development costs to build two 144
megawatt (MW) combustion turbines in 2002 and 2003 which would be
converted to a 410 MW combined cycle plant in 2004. An amendment to the
1997 Resource Plan will need to be filed by September 1999 for full
approval if the Company wants to proceed with building the turbines.
REGULATION AND RATES
The Company is subject to regulation by the PUCN which has regulatory
powers with respect to rates, facilities, services, reports, issuance of
securities and other matters.
On January 8, 1998, the PUCN approved a $45.6 million energy rate increase
effective February 1, 1998. The Company requested the increase to recover
higher costs for natural gas and purchased power. The PUCN also decided
previously recorded revenues from the sale of sulfur dioxide emission allowances
($2.3 million, before tax) should be reversed and credited to a deferred
liability account for a later determination.
Following is a summary of the rate increases and decreases that have been
granted the Company during the past three years.
SUMMARY OF RATE ADJUSTMENTS 1995 THROUGH 1997
Amount in
Effective Millions
Date Nature of Increase (Decrease) of Dollars
------------- ------------------------------ ----------
October 1, 1995 Energy rate decrease $(20.1)
December 1, 1995 Energy and resource plan
net rate decrease (17.6)
February 1, 1997 Energy rate decrease (45.0)
All amounts are on an annual basis.
As permitted by state statute, the Company defers differences between the
current cost of fuel plus net purchased power and base energy costs as defined.
Under regulations adopted by the PUCN, the balance in the deferred energy
account at the end of twelve months should be cleared over a subsequent period.
Recovery of increased costs is permitted to the extent that the Company has not
realized its authorized overall rate of return. If the Company has exceeded the
authorized rate of return, the portion of deferred energy costs represented in
such excess is transferred to the next deferred energy recovery period. The
energy costs deferred are included as a current item in determining taxable
income for federal income tax purposes. However, for financial statement
purposes, the federal income tax effect is deferred and amortized to income as
the deferred energy account is cleared. PUCN regulations allow the fuel base
portion of the Company's general rates to be changed at the time of a hearing to
clear the balance in the deferred energy account. This permits the recovery of
fuel expenses on a deferred basis, but, recovery will have no effect on the
Company's earnings. Effective February 1, 1997, explicit capacity costs
associated with certain purchased power contracts were included in general rates
rather than the deferred energy cost accounting mechanism.
The Company recovers the costs of developing its 20-year resource plan in
general rates effective February 1997. In the past, the recovery of these costs
was administered
5
under the state's deferred accounting procedures. Also, by an
order of the PUCN in June 1988, the Company is allowed to capitalize certain
costs associated with Commission approved conservation programs.
ENVIRONMENTAL MATTERS
The Company is subject to regulation by federal, state and local
authorities with regard to air and water quality control and other environmental
matters.
Environmental expenditures made by the Company are currently being
recovered through customer rates. The following is a discussion of pending
environmental matters:
The Federal Clean Air Act Amendments of 1990 (Amendments) include
provisions for reduction of emissions of oxides of nitrogen by establishing new
emission limits for coal-fired generating units. This will require the
installation of additional pollution-control technology at some of the Reid
Gardner Station generating units before 2000 at an estimated cost to the Company
of no more than $6 million; $3 million has been spent to date.
Also, the United States Congress authorized the EPA to study the potential
impact the Mohave Generating Station (Mohave) may have on visibility in the
Grand Canyon area. Results of this study are expected in 1998. The majority
owner has estimated that control costs, if required, could total between $200
and $300 million. (See the Legal Proceedings section of this Form 10-K.)
In 1991, the EPA published an order requiring the Navajo Generating Station
(Navajo) to install scrubbers to remove 90 percent of sulfur dioxide emissions
beginning in 1997. As an 11.3 percent owner of Navajo, the Company will be
required to fund an estimated $50.9 million for installation of the scrubbers.
The first of three scrubber units was placed in commercial operation in November
1997. At that point, the project was approximately 50 percent complete. The
first of the other two units is expected to be on line in 1998 and the last unit
in 1999. The Company has spent approximately $40.7 million through December
1997 on the scrubbers' construction. In 1992, the Company received resource
planning approval from the PUCN for its share of the cost of the scrubbers.
COMPETITION
On January 22, 1998 the Nevada Supreme Court reversed an order of the
Eighth Judicial District Court for Clark County, Nevada (District Court) in
which the District Court concluded that the PUCN had erred in its interpretation
of a 1963 territorial agreement between the Company and Valley Electric
Association. The District Court's order found that under the 1963 territorial
agreement each of those two electric suppliers had an exclusive right to provide
service to a portion of the Nevada Test Site (Test Site). The Nevada Supreme
Court agreed with the PUCN that the 1963 territorial agreement did not envision
the creation of exclusive service areas within the Test Site. Both the Company
and Valley Electric Association could provide service for the Test Site's entire
load and the Test Site could choose the supplier of service. In February 1998,
the United States Department of Energy (DOE) on behalf of the Test Site filed
with the District Court a Motion for Order Consistent with the Nevada Supreme
Court's ruling.
During the above proceedings, Valley Electric, the Company, the PUCN
Regulatory Operations Staff and Lincoln County Power District No. 1 (Lincoln
Power)(a governmental electric supplier that holds itself out as providing
electric service in Lincoln County, Nevada, where a portion of the Test Site is
located), entered into a Stipulation, Settlement Agreement and Release
(Settlement Agreement) for service to the Test Site. Under the Settlement
Agreement, the Test Site's electrical usage would be split among Valley Electric
(40 percent), the Company (40 percent) and Lincoln Power (20 percent), and each
of the three electric suppliers unconditionally released and forever discharged
each other from any and all claims for damages based directly or indirectly on
the geographic
6
scope of the service provided to the Test Site before and during
the term of the Settlement Agreement. On May 12, 1997 the PUCN approved the
Settlement Agreement. Except for the release and discharge for damage claims,
the term of the Settlement Agreement is three years, beginning May 12, 1997.
The Settlement Agreement also provides, however, that, except for the release
and discharge, under certain specified conditions it may be reopened,
renegotiated or modified by PUCN orders terminating or modifying its terms. One
of the conditions is reversal of the District Court's order. The PUCN must
approve any changes to the Settlement Agreement. Regardless of the outcome of
this matter, the Company believes there will not be a material impact on its
operations, or upon its competitive position generally.
On July 16, 1997, the Governor of the state of Nevada signed into law
Assembly Bill 366 (AB 366) which provides for competition to be implemented in
the electric utility industry in the state no later than December 31, 1999
unless the PUCN determines a different date is necessary to protect the public
interest. AB 366 also changed the name of the Public Service Commission to the
PUCN, reduced it from five to three members, and removed the regulation of
transportation matters to another agency. It is expected that the generation,
aggregation (buying and reselling electricity to customers) and marketing of
electricity and possibly other utility services will be deemed competitive,
while transmission and distribution services will be deemed noncompetitive and
will continue to be regulated. The Company is required to submit a plan to the
PUCN to unbundle its integrated rates. A provider of a noncompetitive service
will be prohibited from providing a potentially competitive service except
through an affiliate which the PUCN has determined, after a hearing, has an
arm's length relationship with the provider of the noncompetitive service. Each
provider of a noncompetitive service that is necessary to the provision of a
potentially competitive service is required to make its facilities or services
available to all alternative sellers on equal and nondiscriminatory terms and
conditions. Alternative sellers of electricity must be licensed under rules yet
to be determined by the PUCN. AB 366 allows the PUCN to authorize full recovery
of costs which they determine to be stranded but does not guarantee full
recovery of those costs. Costs that were incurred by utilities to serve their
customers with the understanding that state regulatory commissions would allow
the costs to be recovered through electric rates are potentially stranded costs.
The greater part of the Company's potentially stranded costs are related to
contracts with qualifying facilities all of which were previously approved by
the PUCN. The PUCN shall designate a vertically integrated electric utility or
another entity to provide electric service to customers who are unable to obtain
electric service from an alternative seller or who fail to select an alternative
seller. The provider of last resort so designated by the PUCN is obligated to
provide electric service to those customers. The PUCN may authorize the right
to buy from alternative sellers in gradual phases. The rate charged for
residential service for customers who are unable to obtain electric service from
an alternative seller or who fail to select an alternative seller must not
exceed the rate charged for that service on July 1, 1997, however, the PUCN may
approve an increase in residential rates in an amount necessary to ensure
recovery by the Company of its just and reasonable costs. The residential rate
restriction will remain in place until 2003. Two-tenths of one percent of all
electric energy sold must come from a renewable resource produced in Nevada by
January 1, 2001. Fifty percent of this energy must be derived from solar power.
Every two years the standard increases by two-tenths of one percent until a
total of one percent of all electricity consumed comes from renewable resources.
In August 1997, the PUCN opened an investigatory docket of the issues to be
considered as a result of restructuring of the electric industry. The docket
sets forth the issues to be addressed as well as the steps the PUCN will take to
address them. Issues to be addressed include the following:
(1) Identification of all cost components in utility service and
establishment of allocation methods necessary for later pricing
of noncompetitive services;
(2) Designation of services as potentially competitive or noncompetitive;
7
(3) Determination of rate design and non-price terms and conditions
for noncompetitive services;
(4) Establishment of licensing requirements for alternative sellers
of potentially competitive services;
(5) Past (stranded) costs;
(6) Criteria and standards by which the PUCN will apply the legislative
requirements concerning affiliate relations;
(7) Criteria and process by which the PUCN will appoint providers of
bundled electric service;
(8) Consumer protection;
(9) Anti-competitive behavior codes of conduct and enforcement;
(10) Price regulation for potentially competitive services in immature
markets;
(11) Compliance plans in accordance with regulation;
(12) Options for complying with legislative mandates for integrated
resource planning and portfolio standards;
(13) Innovative pricing for noncompetitive services.
In its Order dated November 4, 1997, the PUCN designated unbundled services
in eight major categories with twenty-six unbundled services in total. The
major categories include Generation Capacity and Energy Supply, Generation
Services Necessary to Support Transmission Service, Arranging for Power
Supplies, Power Delivery, End-Use Metering, Customer Accounting, Marketing and
Sales, and Public Good Services. The PUCN evaluated the cost unbundling
methodologies for the unbundled services set forth in its Order and, after
hearings, issued an Interim Order describing the process the parties should
follow to complete developing cost unbundling methodologies and to work toward
consensus on that issue.
The PUCN has the authority to classify a service as a potentially
competitive service if it finds the service meets specific requirements. The
PUCN has proposed regulations and held a hearing on the contents of applications
by any person seeking a designation of an unbundled service as potentially
competitive.
On January 21, 1998, the PUCN issued an Order to solicit comments on the
Classification of Components of Electric Service as Potentially Competitive
Services; Non-price Terms and Conditions for Distribution Tariffs; Licensing
of Alternative Sellers; and Consumer Protection. PUCN workshops have been
scheduled for March and April 1998 on these issues.
In response to the PUCN investigatory docket, the Company formed a
team of high level employees who have left their present positions to
work exclusively on the issues set forth in the docket. These
individuals will assist the officers of the Company in preparing for
potential policy making.
EMPLOYEES
The Company had 1,909 employees at December 31, 1997.
8
ITEM 2. PROPERTIES
The Company's generating facilities are described under "Item 1. Business,
Sources of Electric Energy Supply".
The Company shares ownership in a 59-mile, 500 kilovolt line and two 15-
mile, 230 kilovolt lines that transmit power from the Mohave Generating Station
near Davis Dam on the Colorado River via Eldorado Substation to Mead Substation
located near Boulder City, Nevada. The Company has 32 miles of 230 kilovolt
line from Mead Substation to Las Vegas. This line, together with two Company-
owned 230 kilovolt lines presently connected to the Bureau of Reclamation lines
between Mead Substation and Henderson, Nevada, transmit the Mohave Generating
Station power to the Las Vegas area. A 25-mile, 230 kilovolt line between the
Mead Substation and the Company's Winterwood Substation was energized in 1988.
This line brings the additional Hoover energy to the Las Vegas Area and
increases the Company's interconnected transmission capabilities. The Company
shares ownership in 76 miles of 500 kilovolt transmission line from the Navajo
Generating Station to the Moenkopi Switchyard in Coconino County, Arizona (the
Southern Transmission System) and 274 miles of 500 kilovolt transmission line
from the Navajo Generating Station to the McCullough Substation in Clark County,
Nevada (the Western Transmission System). Power is transmitted from the
McCullough Substation to the Las Vegas area via three 230 kilovolt lines of 23
miles, 25 miles and 32 miles in length, respectively. The 25-mile line was
energized in May 1992. Two 230 kilovolt lines transmit power from the Reid
Gardner Station located near Glendale, Nevada. One is a 39 mile line to the
Pecos Substation and the other a 25 mile line to the Harry Allen Substation. In
1994, 20 miles of a 230 kilovolt line from the Harry Allen Substation to the
Pecos Substation was energized. One 39-mile, 230 kilovolt line transmits power
from the Reid Gardner Station located near Glendale, Nevada to the Pecos
Substation near North Las Vegas. A 7 mile, 230 kilovolt line between Westside
and Decatur Substations, both located in Las Vegas, was energized in 1991. In
addition to the above, the Company has 300 miles of 138 kilovolt and 489 miles
of 69 kilovolt transmission lines in service.
In 1990 the Company added a new transmission interconnection consisting of
a 345 kilovolt line from Harry Allen Substation in Southern Nevada to the
Nevada-Utah border where it connects with a PacifiCorp line to Red Butte
Substation in Southern Utah near the City of St. George and a 230 kilovolt line
from Harry Allen Substation to Westside Substation which is located in Las
Vegas. The Company owns the 50-mile, 230 kilovolt line and the 69 miles of the
345 kilovolt line from Harry Allen Substation to the Nevada-Utah border;
PacifiCorp owns the portion of the 345 kilovolt line from the Nevada-Utah border
to Red Butte Substation.
At December 31, 1997, the Company owned 108 transmission and distribution
substations with a total installed transformer capacity of 10,987,183 kilovolt-
amperes. In addition it co-owns with others the above mentioned Eldorado
Substation with installed transformer capacity of 1,000,000 kilovolt-amperes,
the McCullough Substation with installed transformer capacity of 1,250,000
kilovolt-amperes, the Reid Gardner Unit No. 4 Substation with installed capacity
of 318,000 kilovolt-amperes and Mead Substation with 250,000 kilovolt-amperes.
At Harry Allen Substation, the Company has a 336,000 kilovolt-ampere
transformer and two 336,000 kilovolt-ampere 345 kilovolt phase shifting
transformers which are used for necessary voltage transformations and to control
flows on the interconnection.
As of December 31, 1997, there were approximately 3,162 miles of pole line
together with approximately 8,957 cable miles of underground in the Company's
distribution system with a total installed distribution transformer capacity of
6,676,565 kilovolt-amperes.
9
ITEM 3. LEGAL PROCEEDINGS
The Grand Canyon Trust and Sierra Club filed a lawsuit in the U.S. District
Court, District of Nevada, in February 1998 against the owners of the Mohave
Generating Station (Mohave) alleging violations of the Clean Air Act regarding
emissions of sulfur dioxide and particulates. The owners believe the emission
limits referenced in the suit are not applicable to Mohave. The owners
previously partnered with the Environmental Protection Agency (EPA) and the
National Park Service on a multi-year study to determine the impacts, if any, of
Mohave emissions on visibility in the Grand Canyon (see the Environmental
Matters section of this Form 10-K). The environmental groups want the owners to
install pollution control equipment at an estimated cost of $200 to $300
million. The Company owns a 14 percent interest in Mohave. The outcome of this
action can not be determined at this time.
The Company is involved in litigation arising in the normal course of
business. While the results of such litigation cannot be predicted with
certainty, management, based upon advice of counsel, believes that the final
outcome will not have a material adverse effect on the Company's financial
position, results of operations and net cash flow.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report, through the solicitation of
proxies or otherwise.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF REGISTRANT
The Company's executive officers are as follows:
Age as of
Name December 31, 1997 Position
---- ----------------- --------
Charles A. Lenzie 60 Chairman of the Board and Chief
Executive Officer
Michael R. Niggli 48 President and Chief Operating Officer
David G. Barneby 52 Vice President, Power Delivery
Sally L. Galati 36 Vice President, Distribution
Cynthia K. Gilliam 49 Vice President, Retail Customer Services
Richard L. Hinckley 42 Vice President, Secretary and General
Counsel
Steven W. Rigazio 43 Vice President, Finance and
Planning, Treasurer, Chief Financial
Officer
Gloria T. Banks Weddle 48 Vice President, Corporate Services
Each of the executive officers has been actively engaged in the business of
the Company for more than five years with the exception of Mr. Niggli.
Charles A. Lenzie was elected Chairman of the Board and Chief Executive
Officer on May 1, 1989. Prior to that time he was President of the Company.
Michael R. Niggli joined the Company as President and Chief Operating
Officer in February 1998. Prior to joining the Company, he was Senior Vice
President of the Custom Accounts Market Unit for Entergy, a New Orleans-based
global energy company. At Entergy, Mr. Niggli served as Vice President of Fuels
Management, Vice President of Strategic Planning and Vice President for Customer
Service in Louisiana. He was promoted to Senior Vice President of Marketing in
1993 and Senior Vice President of the Custom Accounts Market Unit in 1996.
David G. Barneby was elected Vice President, Power Delivery effective
October 14, 1993. He joined the Company in 1965 as a Student Engineer and was
made a Junior Engineer in 1967. He was promoted to Superintendent of the Reid
Gardner Generating Station in
10
1976; Project Manager - Reid Gardner Unit 4 in
1979 and in 1985 appointed Manager - Generation Engineering and Construction.
He was elected Vice President - Generation in 1989. His title was changed to
Vice President - Power Supply later that year.
Sally L. Galati was named Vice President, Distribution on March 13, 1997.
She first joined the Company in 1984 as an Engineer working in the Customer
Technical Services, Distribution and Transmission departments and was promoted
to Supervisor, Major Projects in 1992, Acting Manager, Builder Services in 1993,
Director, Distribution System Services in 1994 and Division Director,
Distribution Operations & Construction in 1995.
Cynthia K. Gilliam was elected Vice President, Retail Customer Services
effective October 14, 1993. She joined the Company in 1974 as a Rate Analyst
and was promoted to Rates Administrator in 1979 and to Manager of Financial
Planning in 1983. In 1987, she was appointed Manager of Human Resource
Planning. She was elected Vice President - Personnel in 1988 and her title was
changed to Vice President - Human Resources in 1989. In 1992, she was elected
Vice President - Customer Service.
Richard L. Hinckley was elected Vice President, Secretary and General
Counsel on May 15, 1991. He joined the Company as Staff Counsel in 1985 and was
promoted to Assistant Secretary and Chief Counsel in 1989. Prior to joining the
Company, he served as Staff Attorney with the PUCN and as Assistant Attorney
General in Utah.
Steven W. Rigazio was elected Vice President, Finance and Planning,
Treasurer, Chief Financial Officer effective October 14, 1993. He joined the
Company in 1984 as a Rates Administrator and was promoted to Supervisor of Rates
and Regulations in 1985, Manager of Rates and Regulatory Affairs in 1986,
Director of System Planning in 1990, Vice President - Planning in 1991 and Vice
President and Treasurer, Chief Financial Officer in 1992.
Gloria T. Banks Weddle was named Vice President, Corporate Services
effective January 1, 1996. She first joined the Company in 1973, was promoted
to Manager of Compensation and Benefits in 1988 and Director of Human Resources
in 1991. She was elected Vice President - Human Resources in 1992. On October
14, 1993, she was elected Vice President, Human Resources and Corporate
Services. Her title was changed to Vice President - Corporate Services in 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS
Information with respect to the principal market for the Company's common
stock, securities exchange, shareholders of record, quarterly high and low sales
prices and quarterly dividend payments for 1997 and 1996 are hereby incorporated
by reference from page 49 of the Company's Annual Report to Shareholders for the
year ended December 31, 1997, which is filed herewith as Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is hereby incorporated by reference from
page 52 of the Company's Annual Report to Shareholders for the year ended
December 31, 1997, which is filed herewith as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by Item 7 is hereby incorporated by reference from
pages 27 to 31 of the Company's Annual Report to Shareholders for the year ended
December 31, 1997, which are filed herewith as Exhibit 13.
11
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements for the years ended
December 31, 1997, 1996 and 1995 together with the auditors' report thereon
required by Item 8 are incorporated by reference from the following pages of the
Company's Annual Report to Shareholders for the year ended December 31, 1997,
which are filed herewith as Exhibit 13.
Annual
Report
Page
------
Consolidated Statements of Income for the Years Ended
December 31, 1997, 1996 and 1995....................... 32
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995................ 33
Consolidated Balance Sheets - December 31, 1997
and 1996.............................................. 34-35
Consolidated Schedules of Capitalization -
December 31, 1997 and 1996............................. 36
Consolidated Schedules of Long-Term Debt -
December 31, 1997 and 1996............................. 37
Consolidated Statements of Retained Earnings for the
Years Ended December 31, 1997, 1996 and 1995.......... 38
Notes to Consolidated Financial Statements.............. 39-49
Independent Auditors' Report............................ 50
Report of Management.................................... 51
See Note 12 of Notes to Consolidated Financial Statements in the Company's
Annual Report to Shareholders for the unaudited selected quarterly financial
data required to be presented in this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no Report on Form 8-K filed within the twenty-four months
prior to the date of the most recent consolidated financial statements, December
31, 1997, reporting a change of accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by Item 10 with respect to the Company's executive
officers is set forth in Part I, Item 4., under the preceding heading
"Supplemental Item. Executive Officers of Registrant." The other information
required by Item 10 is hereby incorporated by reference from the Company's
definitive Proxy Statement dated March 12, 1998 and heretofore filed with the
Securities and Exchange Commission (SEC.) (See the heading therein "Election of
Directors.")
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by reference
from the Company's definitive Proxy Statement dated March 12, 1998 and
heretofore filed with the SEC. (See the heading therein "Executive
Compensation.")
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is hereby incorporated by reference
from the Company's definitive Proxy Statement dated March 12, 1998 and
heretofore filed with the SEC. (See the heading therein "Security Ownership of
Management.")
12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Management of the Company has no knowledge of any transaction,
relationship or indebtedness which is required to be disclosed by Item 13.
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
The Company's consolidated financial statements for the years ended
December 31, 1997, 1996 and 1995 together with the auditors' report appearing on
pages 32 to 50 of Nevada Power Company's 1997 Annual Report to Shareholders are
incorporated herein by reference and filed as Exhibit 13.
CONSOLIDATED FINANCIAL STATEMENT SCHEDULE FOR THE
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 PAGE
- -------------------------------------------- ----
Independent Auditors' Consent and Report on Schedule.............. 24
Schedule II - Valuation and Qualifying Accounts................... 25
All other schedules are omitted because they are not applicable, not
required, or because the information is included in the consolidated financial
statements or notes thereto.
EXHIBITS
FILED DESCRIPTION
- -------- -----------
10.83 Financing Agreement between Clark County, Nevada and
Nevada Power Company dated November 1, 1997
10.84 Financing Agreement between Coconino County, Arizona Pollution
Control Corporation and Nevada Power Company
dated November 1, 1997
10.85 Loan Agreement dated as of November
21, 1997 between Nevada Power
Company, certain banks, Nationsbank of Texas, N.A.
as Documentation Agent and Wells Fargo Bank,
National Association as Arranger and
Administrative Agent
13 Pages 27 to 52 of Nevada Power Company's Annual Report to
Shareholders for the Year Ended December 31, 1997
(incorporated by reference in Parts II and IV hereof)
23 Independent Auditors' Consent and Report on Schedule
27 Financial Data Schedule - December 31, 1997
13
In addition to those Exhibits shown above, the Company hereby incorporates
the following Exhibits pursuant to Exchange Act Rule 12B-32 and Regulation
#201.24 by reference to the filings set forth below:
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
3.1 Restated Articles of Incorporation 3.8 to Form 10-K 1-4698
filed June 10, 1988 Year 1988
3.2 Amendment to Restated Articles of 4.7 to Form S-8 33-32372
Incorporation filed May 23, 1989
3.3 Amendment to Restated Articles of 4.8 to Form S-3 33-55698
Incorporation filed June 8, 1992
3.4 Restated Bylaws, as amended 3.4 to Form 10-K 1-4698
March 9, 1995 Year 1995
4.1 Certificate of Designation of Cumulative
Preferred Stock as follows:
5.40% Series 2.1 to Form S-1 2-16968
5.20% Series 2.1 to Form S-1 2-20618
4.70% Series 3.2 to Form 8-K 1-4698
July 1965
8% Series 2.1 to Form S-7 2-44513
8.70% Series 2.1 to Form S-7 2-49622
11.50% Series 2.1 to Form S-7 2-52238
9.75% Series 2.1 to Form S-7 2-56788
Auction Series A 4.6 to Form S-3 33-15554
Auction Series A as amended
November 14, 1991 4.9 to Form S-3 33-44460
Auction Series A as amended
December 12, 1991 4.1 to Form 10-K 1-4698
Year 1992
9.90% Series 4.1 to Form 10-K 1-4698
Year 1992
4.2 Indenture of Mortgage and Deed of 4.2 to Form S-1 2-10932
Trust Providing for First Mortgage
Bonds, dated October 1, 1953 and
Twenty-Six Supplemental Indentures
as follows:
First Supplemental Indenture, 4.2 to Form S-1 2-11440
dated August 1, 1954
Second Supplemental Indenture, 4.9 to Form S-1 2-12566
dated September 1, 1956
Third Supplemental Indenture, 4.13 to Form S-1 2-14949
dated May 1, 1959
Fourth Supplemental Indenture, 4.5 to Form S-1 2-16968
dated October 1, 1960
Fifth Supplemental Indenture, 4.6 to Form S-16 2-74929
dated December 1, 1961
Sixth Supplemental Indenture, 4.6A to Form S-1 2-21689
dated October 1, 1963
Seventh Supplemental Indenture, 4.6B to Form S-1 2-22560
dated August 1, 1964
Eighth Supplemental Indenture, 4.6C to Form S-9 2-28348
dated April 1, 1968
Ninth Supplemental Indenture, 4.6D to Form S-1 2-34588
dated October 1, 1969
Tenth Supplemental Indenture, 4.6E to Form S-7 2-38314
dated October 1, 1970
Eleventh Supplemental Indenture, 2.12 to Form S-7 2-45728
dated November 1, 1972
14
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
Twelfth Supplemental Indenture, 2.13 to Form S-7 2-52350
dated December 1, 1974
Thirteenth Supplemental 4.14 to Form S-16 2-74929
Indenture, dated October 1,
1976
Fourteenth Supplemental 4.15 to Form S-16 2-74929
Indenture, dated May 1, 1977
Fifteenth Supplemental 4.16 to Form S-16 2-74929
Indenture, dated September 1,
1978
Sixteenth Supplemental Indenture, 4.17 to Form S-16 2-74929
dated December 1, 1981
Seventeenth Supplemental 4.2 to Form 10-K 1-4698
Indenture, dated August 1, 1982 Year 1982
Eighteenth Supplemental Indenture, 4.6 to Form S-3 33-9537
dated November 1, 1986
Nineteenth Supplemental Indenture, 4.2 to Form 10-K 1-4698
dated October 1, 1989 Year 1989
Twentieth Supplemental Indenture, 4.21 to Form S-3 33-53034
dated May 1, 1992
Twenty-First Supplemental 4.22 to Form S-3 33-53034
Indenture, dated June 1, 1992
Twenty-Second Supplemental 4.23 to Form S-3 33-53034
Indenture, dated June 1, 1992
Twenty-Third Supplemental 4.23 to Form S-3 33-53034
Indenture, dated October 1, 1992
Twenty-Fourth Supplemental 4.23 to Form S-3 33-53034
Indenture, dated October 1, 1992
Twenty-Fifth Supplemental 4.23 to Form S-3 33-53034
Indenture, dated January 1, 1993
Twenty-Sixth Supplemental 4.2 to Form 10-K 1-4698
Indenture, dated May 1, 1995 Year 1995
4.3 Instrument of Further Assurance 4.8 to Form S-1 2-12566
dated April 1, 1956 to Indenture
of Mortgage and Deed of Trust
dated October 1, 1953
4.4 Rights Agreement dated October 15, 4.1 to Form 8-A 1-4698
1990 between Manufacturers Hanover Year 1990
Trust Company and Nevada Power
Company
4.5 Junior Subordinated Indenture 4.01 to Form S-3 333-21091
between Nevada Power and IBJ Schroder
Bank & Trust Company, as Debenture
Trustee dated March 1, 1997
4.6 Trust Agreement of NVP Capital I 4.03 to Form S-3 333-21091
dated March 1, 1997
4.7 Form of Amended and Restated Trust 4.10 to Form S-3 333-21091
Agreement dated March 1, 1997
4.8 Form of Preferred Security 4.11 to Form S-3 333-21091
Certificate for NVP Capital I
and NVP Capital II dated
March 1, 1997
4.9 Form of Guarantee Agreement 4.12 to Form S-3 333-21091
dated March 1, 1997
15
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
4.10 Form of Supplemental Indenture 4.13 to Form S-3 333-21091
between Nevada Power and IBJ Schroder
Bank & Trust Company, as Debenture
Trustee dated March 1, 1997
4.11 Form of Agreement as to Expenses 4.14 to Form S-3 333-21091
and Liabilities between Nevada
Power and NVP Capital I
dated March 1, 1997
10.1 Contract for Sale of Electrical 13.9A to Form S-1 2-10932
Energy between State of Nevada
and the Company, dated October
10, 1941
10.2 Amendment dated June 30, 1953 to 13.9A to Form S-1 2-10932
Exhibit 10.1
10.3 Contract for Sale of Electrical 13.10 to Form S-1 2-10932
Energy between State of Nevada
and the Company, dated June 1,
1951
10.4 Agreement dated November 10, 1948 13.18 to Form S-1 2-12697
between the Company and Lincoln
County Power District No. 1 and
Overton Power District No. 5
10.5 Agreement dated October 21, 1949 13.19 to Form S-9 2-12697
between the Company and Lincoln
County Power District No. 1 and
Overton Power District No. 5
10.6 Mohave Project Plant Site 13.27 to Form S-9 2-28348
Conveyance and Co-tenancy
Agreement dated May 29, 1967
between the Company and Salt
River Project Agricultural
Improvement and Power District
and Southern California Edison
Company
10.7 Eldorado System Conveyance and 13.30 to Form S-9 2-28348
Co-tenancy Agreement dated
December 20, 1967 between the
Company and Salt River Project
Agricultural Improvement and
Power District and Southern
California Edison Company
10.8 Mohave Operating Agreement dated 13.26F to Form S-1 2-38314
July 6, 1970 between the Company,
Salt River Project Agricultural
Improvement and Power District,
Southern California Edison
Company and Department of Water
and Power of the City of Los
Angeles
16
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
10.9 Navajo Project Participation 13.27A to Form S-1 2-38314
Agreement dated September 30,
1969 between the Company, the
United States of America,
Arizona Public Service Company,
Department of Water and Power of
the City of Los Angeles, Salt
River Project Agricultural
Improvement and Power District
and Tucson Gas & Electric
Company
10.10 Navajo Project Coal Supply 13.27B to Form S-1 2-38314
Agreement dated June 1, 1970
between the Company, the United
States of America, Arizona
Public Service Company,
Department of Water and Power
of the City of Los Angeles,
Salt River Project Agricultural
District, Tucson Gas & Electric
Company and the Peabody Coal
Company
10.11 Contract dated January 1, 1968 13.32 to Form S-1 2-34588
between the Company and United
States Bureau of Reclamation for
interconnections at Mead Station
10.12 Note Agreement dated December 11, 5.35 to Form S-7 2-49622
1973 relating to $25,000,000
8-1/2% Promissory Notes due 1998
10.13 Reclaimed Wastewater Purchase 5.36 to Form S-7 2-52238
Agreement dated June 21, 1974
among City of Las Vegas, Nevada,
Clark County Sanitation District
No. 1, County of Clark, Nevada
and Nevada Power Company
10.14 Equipment Lease dated as of 5.37 to Form 8-K 1-4698
March 1, 1974 between Nevada Power April 1974
Company, Lessor, and Clark County,
Nevada, Lessee
10.15 Sublease Agreement dated as of 5.38 to Form 8-K 1-4698
March 1, 1974 between Clark April 1974
County, Nevada, Sublessor,
and Nevada Power Company,
Sublessee
10.16 Guaranty Agreement dated as of 5.39 to Form 8-K 1-4698
March 1, 1974 between Nevada April 1974
Power Company and Commerce
Union Bank as Trustee
17
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
10.17 Navajo Project Co-tenancy 5.31 to Form 8-K 1-4698
Agreement dated March 23, 1976 April 1974
between the Company, Arizona
Public Service Company,
Department of Water and
Power of the City of Los Angeles,
Salt River Project Agricultural
Improvement and Power District,
Tucson Gas & Electric Company
and the United States of America
10.18 Amended Mohave Project Coal Supply 5.35 to Form S-7 2-56356
Agreement dated May 26, 1976
between the Company and Southern
California Edison Company,
Department of Water and Power of
the City of Los Angeles, Salt
River Project Agricultural
Improvement and Power District
and the Peabody Coal Company
10.19 Amended Mohave Project Coal Slurry 5.36 to Form S-7 2-56356
Pipeline Agreement dated May 26,
1976 between Peabody Coal Company
and Black Mesa Pipeline, Inc.
(Exhibit B to Exhibit 10.18)
10.20 Coal Supply Agreement dated October 5.38 to Form S-7 2-56356
15, 1975 between the Company and
United States Fuel Company
10.21 Amendment dated November 19, 1976 5.30 to Form S-7 2-62105
to Exhibit 10.20
10.22 Participation Agreement Reid 5.34 to Form S-7 2-65097
Gardner Unit No. 4 dated July
11, 1979 between the Company
and California Department of
Water Resources
10.23 Coal Supply Agreement dated 5.37 to Form S-7 2-62509
March 1, 1980 between the
Company and Beaver Creek
Coal Company
10.24 Coal Supply Agreement dated 5.38 to Form S-7 2-62509
March 1, 1980 between the
Company and Trail Mountain
Coal Company
10.25 Coal Supply Agreement dated 10.26 to Form 10-K 1-4698
December 8, 1980 between the Year 1981
Company and Plateau Mining
Company
10.26 Coal Supply Agreement dated 10.26 to Form 10-K 1-4698
August 31, 1982 between Year 1982
the Company and CO-OP
Mining Company
10.27 Coal Supply Agreement dated 10.27 to Form 10-K 1-4698
September 8, 1982 between the Year 1982
Company and Getty Mining
Company
18
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
10.28 Coal Supply Agreement dated 10.28 to Form 10-K 1-4698
September 8, 1982 between the Year 1982
Company and Tower Resources,
Inc.
10.29 Coal Supply Agreement dated 10.29 to Form 10-K 1-4698
September 22, 1982 between the Year 1982
Company and Beaver Creek Coal
Company
10.30 Memorandum of Understanding 10.30 to Form 10-K 1-4698
Concerning Interconnection Year 1983
between Utah Power & Light
Company and Nevada Power
Company dated February 2, 1984
10.31 Sublease Agreement between Powveg 10.31 to Form 10-K 1-4698
Leasing Corp., as Lessor and Year 1983
Nevada Power Company as Lessee,
dated January 11, 1984 for
lease of administrative
headquarters
10.32 Participation Agreement between 10.32 to Form 10-K 1-4698
Utah Power & Light Company and Year 1985
the Company dated December 19,
1985
10.33 Sale and Purchase Agreement dated 10.33 to Form 10-K 1-4698
as of December 23, 1985 by and Year 1985
between Nevada Power Company and
CP National Corporation
10.34 Restated Coal Sales Agreement as 10.34 to Form 10-K 1-4698
of July 1, 1985 by and between Year 1985
Nevada Power Company and Trail
Mountain Coal Company
10.35 Summary of Supplemental Executive 10.35 to Form 10-K 1-4698
Retirement Plan as approved Year 1985
November 14, 1985
10.36 Financing Agreement dated as of 10.36 to Form 10-K 1-4698
February 1, 1983 between Clark Year 1985
County, Nevada and Nevada Power
Company
10.37 Financing Agreement between Clark 10.37 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1985
Company dated as of December 1,
1985
10.38 Reimbursement Agreement dated 10.38 to Form 10-K 1-4698
as of December 1, 1985 between Year 1986
The Fuji Bank, Limited and
Nevada Power Company
10.39 Contract for Sale of Electrical 10.39 to Form 10-K 1-4698
Energy between the State of Year 1987
Nevada and the Company, dated
July 8, 1987
10.40 Power Sales Agreement between 10.40 to Form 10-K 1-4698
Utah Power & Light Company and Year 1987
the Company, dated August 17,
1987
19
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
10.41 Transmission Facilities Agreement 10.41 to Form 10-K 1-4698
between Utah Power & Light Year 1987
Company and the Company, dated
August 17, 1987
10.42 Financing Agreement between Clark 10.42 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1988
Company dated as of November 1,
1988
10.43 Reimbursement Agreement dated 10.43 to Form 10-K 1-4698
as of November 1, 1988 between Year 1988
The Fuji Bank, Limited and
Nevada Power Company
10.44 Power Purchase Contract dated 10.45 to Form 10-K 1-4698
February 15, 1990 between Year 1989
Mission Energy Company and
Nevada Power Company
10.45 Contact for Long-Term Power 10.46 to Form 10-K 1-4698
Purchases from Qualifying Year 1989
Facilities dated May 1, 1989
between Oxford Energy of Nevada
and Nevada Power Company
10.46 Contract A for Long-Term Power 10.47 to Form 10-K 1-4698
Purchases from Qualifying Year 1989
Facilities dated May 2, 1989
between Bonneville Nevada
Corporation and Nevada Power
Company
10.47 Contract for Long-Term Power 10.48 to Form 10-K 1-4698
Purchases from Qualifying Year 1989
Facilities dated April 10, 1989
between Magna Energy Systems,
Eastern Sierra Energy Company
and Nevada Power Company
10.48 Contract B for Long-Term Power 10.49 to Form 10-K 1-4698
Purchases from a Qualifying Year 1989
Facility dated October 27, 1989
between Bonneville Nevada
Corporation and Nevada Power
Company
10.49 Contract for Long-Term Power 10.50 to Form 10-K 1-4698
Purchases from Qualified Year 1989
Facilities dated February 12,
1990 between Las Vegas
Co-generation, Inc. and Nevada
Power Company
10.50 Agreement for Transmission 10.51 to Form 10-K 1-4698
Service dated March 29, 1989 Year 1989
between Overton Power District
No. 5 , Lincoln County Power
District No. 1 and Nevada Power
Company
10.51 Contract dated June 30, 1988 10.52 to Form 10-K 1-4698
between United States Department Year 1989
of Energy Western Area Power
Administration and Nevada Power
Company
20
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
10.52 Executive Performance Incentive 10.53 to Form 10-K 1-4698
Plan dated as of January 1, 1989 Year 1989
10.53 Severance Allowance Plan 10.54 to Form 10-K 1-4698
adopted September 14, 1989 Year 1989
10.54 Power Purchase Contract dated 10.55 to Form 10-K 1-4698
July 5, 1990 between Year 1990
Mission Energy Company and
Nevada Power Company
10.55 Contract B for Long-Term Power 10.56 to Form 10-K 1-4698
Purchases from a Qualifying Year 1990
Facility dated May 24, 1990
between Bonneville Nevada
Corporation and Nevada Power
Company
10.56 Amendment dated June 15, 1989 to 10.57 to Form 10-K 1-4698
Exhibit 10.45 Year 1990
10.57 Amendment dated August 23, 1989 10.58 to Form 10-K 1-4698
to Exhibit 10.45 Year 1990
10.58 Amendment dated April 23, 1990 10.59 to Form 10-K 1-4698
to Exhibit 10.45 Year 1990
10.59 Exhibit H dated August 13, 1990 10.60 to Form 10-K 1-4698
to Exhibit 10.45 Year 1990
10.60 Western Systems Power Pool 10.61 to Form 10-K 1-4698
Agreement (Agreement) dated Year 1990
January 2, 1991 between
thirty-nine other Western
Systems Power Pool members as
listed on pages 1 and 2 of the
Agreement and Nevada Power
Company
10.61 Financing Agreement between Clark 10.62 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1990
Company dated June 1, 1990
10.62 Restated Power Sales Agreement 10.63 to Form 10-K 1-4698
dated March 25, 1991 between Year 1991
Pacificorp and Nevada Power
Company
10.63 Amendment dated July 17, 1990 to 10.64 to Form 10-K 1-4698
Exhibit 10.54 Year 1991
10.64 Financing Agreement between Clark 10.65 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1992
Company dated June 1, 1992
(Series 1992A)
10.65 Financing Agreement between Clark 10.66 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1992
Company dated June 1, 1992
(Series 1992B)
10.66 Financing Agreement between Clark 10.67 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1992
Company dated October 1, 1992
10.67 Power Sales Agreement dated 10.68 to Form 10-K 1-4698
October 19, 1992 between the Year 1992
Department of Water and Power
of the City of Los Angeles
and Nevada Power Company
21
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
10.68 Long-Term Incentive Plan dated 10.69 to Form 10-K 1-4698
as of January 1, 1993 Year 1993
10.69 Contract for Long-Term Power 10.70 to Form 10-K 1-4698
Purchases from Qualifying Year 1993
Facilities dated May 27, 1992
between Las Vegas Co-generation,
Inc. and Nevada Power Company
Replaces Exhibit 10.49
10.70 Settlement Agreement and Promissory 10.71 to Form 10-K 1-4698
Note between Mountain Coal Company Year 1993
and Atlantic Richfield Company and
Nevada Power Company dated
March 9, 1994
10.71 401(k) Savings Plan, as amended 99.1 to Form S-8 33-50809
and restated January 1, 1990
10.72 Amendment dated January 1, 1991 99.2 to Form S-8 33-50809
to Exhibit 10.71
10.73 Letter of Credit and Reimbursement 10.72 to Form 10-K 1-4698
Agreement dated as of April 12, Year 1994
1994 between Nevada Power Company
and Societe Generale, Los Angeles
Branch and Amendment No. 1 thereto
dated as of May 3, 1994
10.74 Loan Agreement dated as of November 10.73 to Form 10-K 1-4698
21, 1994 between Nevada Power Year 1994
Company, certain banks, and First
Interstate Bank of Nevada, N.A. as
the Administrative Agent
10.75 Financing Agreement between Clark 10.75 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1995
Company dated October 1, 1995
(Series 1995A)
10.76 Financing Agreement between Clark 10.76 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1995
Company dated October 1, 1995
(Series 1995B)
10.77 Financing Agreement between Clark 10.77 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1995
Company dated October 1, 1995
(Series 1995C)
10.78 Financing Agreement between Clark 10.78 to Form 10-K 1-4698
County, Nevada and Nevada Power Year 1995
Company dated October 1, 1995
(Series 1995D)
10.79 Financing Agreement between 10.79 to Form 10-K 1-4698
Coconino County, Arizona Pollution Year 1995
Control Corporation and Nevada Power
Company dated October 1, 1995
(Series 1995E)
10.80 Letter of Credit and Reimbursement 10.80 to Form 10-K 1-4698
Agreement dated as of October 1, Year 1995
1995 among Nevada Power Company,
The Banks Named Herein, and Societe
Generale, Los Angeles Branch
22
EXHIBIT ORIGINALLY FILED
NO. DESCRIPTION AS EXHIBIT FILE NO.
- ------- ----------- ---------------- --------
10.81 Letter of Credit and Reimbursement 10.81 to Form 10-K 1-4698
Agreement dated as of October 1, Year 1995
1995 among Nevada Power Company,
The Banks Named Herein, and Barclays
Bank PLC, New York Branch
10.82 Financing Agreement between Coconino 10.82 to Form 10-K 1-4698
County, Arizona Pollution Control Year 1996
Corporation and Nevada Power
Company dated October 1, 1996
REPORTS ON FORM 8-K
The Company filed no current report on Form 8-K during the quarter
ended December 31, 1997.
23
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
We consent to the incorporation by reference in Registration Statements No.
333-46567 and 333-21091 on Form S-3 and in Registration Statements No. 33-34011
and 33-61365 on Form S-8 of Nevada Power Company of our report dated February
13, 1998 incorporated by reference in this Annual Report on Form 10-K of Nevada
Power Company for the year ended December 31, 1997.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the consolidated financial statement
schedule of Nevada Power Company, listed in Item 14. This consolidated
financial statement schedule is the responsibility of Nevada Power Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, such consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
March 19, 1998
24
NEVADA POWER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS OF DOLLARS)
RESERVE FOR
DOUBTFUL
ACCOUNTS
-----------
BALANCE AT JANUARY 1, 1995............................... $ 1,395
Provision charged to income............................. 3,590
Amounts written off, less recoveries.................... (3,658)
-------
BALANCE AT DECEMBER 31, 1995............................. 1,327
Provision charged to income............................. 3,829
Amounts written off, less recoveries.................... (2,264)
-------
BALANCE AT DECEMBER 31, 1996............................. 2,892
Provision charged to income............................. 2,737
Amounts written off, less recoveries.................... (3,338)
-------
BALANCE AT DECEMBER 31, 1997............................. $ 2,291
=======
25
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.
NEVADA POWER COMPANY
-------------------------------------
(Registrant)
March 23, 1998 By CHARLES A. LENZIE
-------------------------------------
Charles A. Lenzie
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities 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.
March 23, 1998 By CHARLES A. LENZIE
-------------------------------------
Charles A. Lenzie, Chairman of
the Board and Chief Executive
Officer and Director
(Principal Executive Officer)
March 23, 1998 By STEVEN W. RIGAZIO
-------------------------------------
Steven W. Rigazio, Vice President,
Finance and Planning, Treasurer,
Chief Financial Officer
(Principal Financial and
Principal Accounting Officer)
March 23, 1998 By MARY KAYE CASHMAN
-------------------------------------
Mary Kaye Cashman, Director
March 23, 1998 By MARY LEE COLEMAN
-------------------------------------
Mary Lee Coleman, Director
March 23, 1998 By FRED D. GIBSON JR.
-------------------------------------
Fred D. Gibson Jr., Director
March 23, 1998 By JOHN L. GOOLSBY
-------------------------------------
John L. Goolsby, Director
March 23, 1998 By JERRY E. HERBST
-------------------------------------
Jerry E. Herbst, Director
March 23, 1998 By MICHAEL R. NIGGLI
-------------------------------------
Michael R. Niggli, President, Chief
Operating Officer and Director
March 23, 1998 By JOHN F. O'REILLY
-------------------------------------
John F. O'Reilly, Director
March 23, 1998 By FRANK E. SCOTT
-------------------------------------
Frank E. Scott, Director
By
-------------------------------------
Arthur M. Smith, Director
March 23, 1998 By JELINDO A. TIBERTI
-------------------------------------
Jelindo A. Tiberti, Director
26