UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address, and Telephone Number Identification No.
1-11377 CINERGY CORP. 31-1385023
(A Delaware Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-1232 THE CINCINNATI GAS & ELECTRIC COMPANY 31-0240030
(An Ohio Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-3543 PSI ENERGY, INC. 35-0594457
(An Indiana Corporation)
1000 East Main Street
Plainfield, Indiana 46168
(317) 839-9611
2-7793 THE UNION LIGHT, HEAT AND POWER COMPANY 31-0473080
(A Kentucky Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
This combined Form 10-Q is separately filed by Cinergy Corp., The Cincinnati
Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power
Company. Information contained herein relating to any individual registrant
is filed by such registrant on its own behalf. Each registrant makes no
representation as to information relating to the other registrants.
The Union Light, Heat and Power Company meets the conditions set forth in
General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its
company specific information with the reduced disclosure format.
As of July 31, 1995, shares of Common Stock outstanding for each company were
as listed:
Company Shares
Cinergy Corp., par value $.01 per share 156,648,694
The Cincinnati Gas & Electric Company, par value $8.50 per share 89,663,086
PSI Energy, Inc., without par value, stated value $.01 per share 53,913,701
The Union Light, Heat and Power Company, par value $15.00 per share 585,333
TABLE OF CONTENTS
Item
Number
Glossary of Terms
PART I. FINANCIAL INFORMATION
1 Financial Statements
Cinergy Corp.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Cincinnati Gas & Electric Company
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
PSI Energy, Inc.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Union Light, Heat and Power Company
Balance Sheets
Statements of Income
Statements of Changes in Common Stock Equity
Statements of Cash Flows
Results of Operations
Notes to Financial Statements
2 Management`s Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
1 Legal Proceedings
2 Changes in Securities
6 Exhibits and Reports on Form 8-K
Signatures
GLOSSARY OF TERMS
The following abbreviations or acronyms used in the text of this combined 10-Q
are defined below:
TERM DEFINITION
AFUDC Allowance for funds used during construction
Articles Amended Articles of Incorporation
August 1993 A Public Utilities Commission of Ohio order issued in
Order August 1993
Cayuga Cayuga Generating Station
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act
CG&E The Cincinnati Gas & Electric Company (a subsidiary of
Cinergy Corp.)
CG&E`s 1994 CG&E`s 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-1232)
Cinergy Cinergy Corp.
Cinergy`s 1994 Cinergy`s 1994 Annual Report on Form 10-K, as amended
Form 10-K (Commission File Number 1-11377)
Clean Coal Wabash River Clean Coal Project
Project
CWIP Construction work in progress
Cyprus Amax Cyprus Amax Minerals Company and Amax Coal Company,
collectively
DCR Duff & Phelps Credit Rating Co.
DSM Demand-side Management
FASB Financial Accounting Standards Board
February 1995 An Indiana Utility Regulatory Commission order issued in
Order February 1995
FERC Federal Energy Regulatory Commission
Gibson Gibson Generating Station
IDEM Indiana Department of Environmental Management
IGC Indiana Gas Company
IPALCO IPALCO Enterprises, Inc.
IURC Indiana Utility Regulatory Commission
KPSC Kentucky Public Service Commission
kwh Kilowatt-hour
Lawrenceburg Lawrenceburg Gas Company (a wholly-owned subsidiary of CG&E)
May 1992 Order A Public Utility Commission of Ohio order issued in May
1992
Mcf Thousand cubic feet
MEGA-NOPR FERC Notice of Proposed Rulemaking on Open Access issued on
March 29, 1995
MGP Manufactured Gas Plant
NIPSCO Northern Indiana Public Service Company
PRP Potentially Responsible Party
PSI PSI Energy, Inc. (a subsidiary of Cinergy)
PSI`s 1994 PSI`s 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-3543)
PUCO Public Utilities Commission of Ohio
PUHCA Public Utility Holding Company Act of 1935
S&P Standard & Poor`s
SEC Securities and Exchange Commission
SFAS 121 Statement of Financial Accounting Standards No. 121,
`Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of`
ULH&P The Union Light, Heat and Power Company (a wholly-owned
subsidiary of CG&E)
ULH&P`s Form ULH&P`s 1994 Annual Report on Form 10-K (Commission File
10-K Number 2-7793)
Woodsdale Woodsdale Generating Station
Zimmer William H. Zimmer Generating Station
CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Utility Plant - original cost
In service
Electric $8 393 518 $8 292 625
Gas 664 536 645 602
Common 184 750 185 718
9 242 804 9 123 945
Accumulated depreciation 3 262 715 3 163 802
5 980 089 5 960 143
Construction work in progress 241 987 238 750
Total utility plant 6 222 076 6 198 893
Current Assets
Cash and temporary cash investments 25 206 71 880
Restricted deposits 4 646 11 288
Accounts receivable less accumulated
provision of $10,212,000 at June 30, 1995
and $9,716,000 at December 31, 1994 for
doubtful accounts 251 888 299 509
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 160 363 156 028
Gas stored for current use 21 187 31 284
Other materials and supplies 93 722 92 880
Property taxes applicable to subsequent year 134 729 112 420
Prepayments and other 46 947 36 416
738 688 811 705
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses 188 061 185 280
Phase-in deferred return and depreciation 105 211 100 943
Deferred demand-side management costs 114 768 104 127
Amounts due from customers - income taxes 393 859 408 514
Deferred merger costs 50 067 49 658
Unamortized costs of reacquiring debt 71 778 70 424
Other 81 665 86 017
Other 141 581 134 281
1 146 990 1 139 244
$8 107 754 $8 149 842
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP.
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Common Stock Equity
Common stock - $.01 par value;
authorized shares - 600,000,000;
outstanding shares - 156,567,331
at June 30, 1995 and 155,198,038
at December 31, 1994 $ 1 566 $ 1 552
Paid-in capital 1 570 873 1 535 658
Retained earnings 900 094 877 061
Total common stock equity 2 472 533 2 414 271
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 227 915 267 929
Subject to mandatory redemption 160 000 210 000
Long-term Debt 2 652 382 2 715 269
Total capitalization 5 512 830 5 607 469
Current Liabilities
Long-term debt and preferred stock
of subsidiaries due within one year 150 400 60 400
Notes payable 244 000 228 900
Accounts payable 184 400 266 467
Refund due to customers 15 796 15 482
Litigation settlement 80 000 80 000
Accrued taxes 261 787 258 041
Accrued interest 56 740 58 504
Other 39 544 36 610
1 032 667 1 004 404
Other Liabilities
Deferred income taxes 1 074 724 1 071 104
Unamortized investment tax credits 190 804 195 878
Accrued pension and other postretirement
benefit costs 153 753 133 578
Other 142 976 137 409
1 562 257 1 537 969
$8 107 754 $8 149 842
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands, except per share amounts)
Operating Revenues
Electric $611 394 $600 736 $1 245 643 $1 222 686 $2 478 494 $2 481 085
Gas 56 975 61 565 232 186 290 716 383 868 497 774
668 369 662 301 1 477 829 1 513 402 2 862 362 2 978 859
Operating Expenses
Fuel used in electric production 169 194 167 561 355 103 344 347 723 749 718 736
Gas purchased 22 587 31 021 117 080 173 046 192 327 293 123
Purchased and exchanged power 11 641 15 443 17 307 35 234 31 155 56 074
Other operation 126 816 125 576 246 704 243 350 567 004 484 177
Maintenance 43 661 49 176 87 983 95 178 193 764 195 473
Depreciation 68 215 72 822 141 671 145 023 291 043 288 214
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Post-in-service deferred operating
expenses - net ( 65) (1 520) (2 069) (2 977) (5 090) (7 969)
Phase-in deferred depreciation - ( 848) - (2 161) - (5 379)
Taxes
Federal and state income 40 371 34 340 102 841 96 071 158 951 193 438
State, local and other 63 858 61 982 127 905 124 740 247 216 238 746
548 551 555 553 1 196 798 1 251 851 2 402 392 2 454 633
Operating Income 119 818 106 748 281 031 261 551 459 970 524 226
Other Income and Expenses - Net
Allowance for equity funds used during
construction 931 801 1 885 4 331 3 755 11 894
Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 12 780
Phase-in deferred return 2 134 3 837 4 268 11 458 8 161 26 294
Write-off of a portion of Zimmer
Station - - - - - (234 844)
Income taxes
Related to write-off of a portion
of Zimmer Station - - - - - 12 085
Other 2 162 2 060 3 207 4 162 9 654 19 904
Other - net (1 105) (2 509) ( 691) (7 526) (21 609) (38 583)
4 135 6 294 11 250 16 731 8 016 (190 470)
Income Before Interest and Other Charges 123 953 113 042 292 281 278 282 467 986 333 756
Interest and Other Charges
Interest on long-term debt 51 439 53 853 106 500 110 000 215 748 223 334
Other interest 5 817 4 515 11 128 7 859 23 639 11 822
Allowance for borrowed funds used
during construction (1 986) (2 896) (4 297) (6 087) (10 542) (11 560)
Preferred dividend requirements of
subsidiaries 8 657 8 657 17 314 18 243 34 630 38 232
63 927 64 129 130 645 130 015 263 475 261 828
Net Income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928
Average Common Shares Outstanding 156 333 146 476 156 009 146 119 152 331 145 432
Earnings Per Common Share $.39 $.33 $1.04 $1.01 $1.33 $.49
Dividends Declared Per Common Share $.43 $.38 $.86 $.76 $1.60 $1.50
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $1 559 $1 553 478 $ 911 857 $2 466 894
Net income 60 026 60 026
Issuance of 646,854 shares of
common stock 7 16 133 16 140
Common stock issuance expenses (5) (5)
Dividends on common stock (67 078) (67 078)
Other 1 267 (4 711) (3 444)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Quarter Ended June 30, 1994
Balance April 1, 1994 $1 460 $1 329 588 $ 951 553 $2 282 601
Net income 48 913 48 913
Issuance of 685,909 shares of
common stock 6 14 879 14 885
Common stock issuance expenses (3) (3)
Dividends on common stock (55 854) (55 854)
Other 559 (953) (394)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Six Months Ended June 30, 1995
Balance January 1, 1995 $1 552 $1 535 658 $ 877 061 $2 414 271
Net income 161 636 161 636
Issuance of 1,369,293 shares of
common stock 14 34 137 34 151
Common stock issuance expenses (189) (189)
Dividends on common stock (133 892) (133 892)
Other 1 267 (4 711) (3 444)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Six Months Ended June 30, 1994
Balance January 1, 1994 $1 453 $1 312 426 $ 907 802 $2 221 681
Net income 148 267 148 267
Issuance of 1,409,097 shares of
common stock 13 32 070 32 083
Common stock issuance expenses (26) (26)
Dividends on common stock (111 457) (111 457)
Other 553 (953) (400)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Net income 204 511 204 511
Issuance of 9,790,238 shares of
common stock 100 229 949 230 049
Common stock issuance expenses (5 388) (5 388)
Dividends on common stock (243 797) (243 797)
Other 1 289 (4 279) (2 990)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $1 442 $1 285 766 $1 090 529 $2 377 737
Net income 71 928 71 928
Issuance of 2,547,425 shares of
common stock 24 60 503 60 527
Common stock issuance expenses (144) (144)
Dividends on common stock (217 921) (217 921)
Other (1 102) (877) (1 979)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928
Items providing (using) cash currently:
Depreciation 68 215 72 822 141 671 145 023 291 043 288 214
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Deferred income taxes and investment tax
credits - net (13 353) 19 975 (11 584) 28 566 (9 224) 56 375
Allowance for equity funds used during
construction (931) (801) (1 885) (4 331) (3 755) (11 894)
Regulatory assets
Post-in-service and phase-in cost
deferrals (2 142) (8 310) (8 815) (20 902) (2 203) (52 422)
Deferred merger costs (2 810) (4 177) (2 569) (13 691) (11 219) (21 388)
Other 1 695 6 540 6 278 8 343 (5 585) 7 342
Write-off of a portion of Zimmer Station - - - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (1) (82) 14 (126) 10 186 (278)
Accounts receivable 27 370 58 214 47 621 34 025 54 146 (24 626)
Materials, supplies, and fuel (11 910) (45 435) 4 920 (25 610) (15 419) (14 661)
Accounts payable (1 605) 17 903 (82 067) (45 694) (44 564) 42 397
Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392)
Advance under accounts receivable
purchase agreement - - - (49 940) - -
Accrued taxes and interest (35 242) (50 940) 1 982 (15 961) 23 696 37 077
Other items - net (774) 12 194 9 887 33 388 60 877 53 718
Net cash provided by (used in)
operating activities 91 006 117 076 269 676 177 133 532 951 554 234
Financing Activities
Issuance of common stock 16 135 14 882 33 962 32 057 224 661 60 383
Issuance of preferred stock of subsidiaries - - - - - 59 475
Issuance of long-term debt 149 025 - 149 025 361 025 208 935 821 041
Funds on deposit from issuance of long-term
debt 899 3 224 6 628 12 401 22 124 34 123
Retirement of preferred stock of
subsidiaries (7) (40 406) (7) (40 410) (23) (100 517)
Redemption of long-term debt (129 734) - (217 251) (313 247) (217 686) (815 569)
Change in short-term debt 13 899 72 944 15 100 141 999 (75 713) 184 736
Dividends on common stock (67 078) (55 854) (133 892) (111 457) (243 797) (217 921)
Net cash provided by (used in)
financing activities (16 861) (5 210) (146 435) 82 368 (81 499) 25 751
Investing Activities
Construction expenditures (less allowance
for equity funds used during
construction) (82 350) (121 054) (160 564) (210 050) (430 199) (508 344)
Deferred demand-side management costs (3 868) (10 374) (9 351) (18 216) (38 403) (40 698)
Net cash provided by (used in)
investing activities (86 218) (131 428) (169 915) (228 266) (468 602) (549 042)
Net increase (decrease) in cash and
temporary cash investments (12 073) (19 562) (46 674) 31 235 (17 150) 30 943
Cash and temporary cash investments at
beginning of period 37 279 61 918 71 880 11 121 42 356 11 413
Cash and temporary cash investments at
end of period $ 25 206 $ 42 356 $ 25 206 $ 42 356 $ 25 206 $ 42 356
<FN>
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
CINERGY CORP.
Below is information concerning the consolidated results of operations for
Cinergy for the quarter, six months, and twelve months ended June 30, 1995.
For information concerning the results of operations for each of the other
registrants, see the discussion under the heading RESULTS OF OPERATIONS
following the financial statements of each company.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, decreased 2.3% as compared to
the same period last year. Decreased non-firm power sales for resale and
reduced sales to domestic customers as a result of the milder weather
conditions experienced during the period accounted for most of the decline.
Higher sales by both CG&E and PSI to industrial customers, which reflected
growth in the primary metals and chemicals sectors, partially offset these
decreases.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995
increased 8.5% as compared to the second quarter of 1994, reflecting higher
sales to domestic customers attributable to an increase in the average number
of customers. In addition, the continuing trend of industrial customers
electing to purchase directly from suppliers created a significant increase in
demand for transportation services. The increased transportation volume,
primarily in the primary metals, transportation equipment, and food products
sectors, more than offset the decline in industrial sales volumes.
Revenues
Electric Operating Revenues
Electric operating revenues for the quarter ended June 30, 1995, increased $10
million (1.8%) as compared to the same period last year. This increase
primarily resulted from PSI`s 4.3% retail rate increase approved in the
February 1995 Order and a 1.9% rate increase for carrying costs on CWIP
property which was approved by the IURC on March 9, 1995. Also contributing
to the increase was the operation of fuel adjustment clauses reflecting
increases in the average cost per kwh generated. The previously discussed
decrease in kwh sales partially offset these price-related increases.
An analysis of electric operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $601
Increase (Decrease) due to change in:
Price per kwh
Retail 17
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh 16
Kwh sales
Retail 1
Sales for resale
Firm power obligations (1)
Non-firm power transactions (6)
Total change in kwh sales (6)
Electric operating revenues - June 30, 1995 $611
Gas Operating Revenues
Gas operating revenues declined $5 million (7.5%) in the second quarter of
1995 when compared to the same period last year. This decline was primarily
the result of a decrease in total retail sales volumes and the operation of
fuel adjustment clauses reflecting a lower average cost of gas purchased. An
increase in the relative volume of gas transported to gas sold, as previously
discussed, also contributed to the decrease. Providing transportation
services does not necessitate the recovery of gas purchased costs.
Consequently, the revenue per Mcf transported is below the revenue per Mcf
sold.
Operating Expenses
Gas Purchased
Gas purchased for the quarter declined $8 million (27.2%) when compared to the
same period last year. This decrease was attributable to a 9.9% decline in
volumes purchased and a 19.2% lower average cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $4 million (24.6%) for the second
quarter when compared to the same period last year. Although kwh purchases
increased slightly, the price decreased significantly due to the availability
of lower cost power from third parties.
Maintenance
The decrease in maintenance expense of $6 million (11.2%) for the second
quarter of 1995 as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on generating units. Lower
maintenance costs on gas and electric distribution facilities also contributed
to the decline.
Depreciation
Depreciation expense decreased $5 million (6.3%) for the quarter ended June
30, 1995, as compared to the same period last year. This decrease primarily
reflected the adoption of lower depreciation rates for PSI effective in March
1995, pursuant to the February 1995 Order. This decrease was partially offset
by additions to utility plant in service.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales decreased 3.1% for the six months ended June 30, 1995, when compared
to the same period last year. This decline primarily reflects a decrease in
short-term sales to other utilities. A slight decrease in retail sales
resulted from lower domestic sales due to milder weather conditions.
Partially offsetting these decreases were increased industrial sales resulting
from growth in the primary metals and chemicals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30,
1995, remained relatively constant when compared to the same period of 1994.
Decreases in domestic and commercial sales volumes were attributable to milder
weather conditions. A decrease in industrial sales was attributable to the
trend of industrial customers electing to purchase directly from suppliers,
creating additional demand for transportation services. This increased demand
for transportation services more than offset the decrease in industrial sales
volumes and resulted from growth in the primary metals, transportation
equipment, and food products sectors.
Revenues
Electric Operating Revenues
As compared to the same period last year, electric operating revenues
increased $23 million (1.9%) primarily as a result of CG&E`s retail electric
rate increase which became effective May 1994, PSI`s electric rate increases
which became effective February 1995 and March 1995, and the operation of fuel
adjustment clauses reflecting increases in the average cost per kwh generated.
Reduced non-firm power sales for resale, as previously discussed, partially
offset these increases.
An analysis of electric operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $1 223
Increase (Decrease) due to change in:
Price per kwh
Retail 41
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh 40
Kwh sales
Retail (1)
Sales for resale
Firm power obligations (5)
Non-firm power transactions (12)
Total change in kwh sales (18)
Other 1
Electric operating revenues - June 30, 1995 $1 246
Gas Operating Revenues
Gas operating revenues declined $59 million (20.1%) in the first six months of
1995 when compared to the same period last year. This decrease reflects the
decline in total retail volumes sold and the operation of fuel adjustment
clauses reflecting a lower average cost of gas purchased. An increase in the
relative volume of gas transported to gas sold also contributed to the
decrease. Providing transportation services does not necessitate the recovery
of gas purchased costs. Consequently, the revenue per Mcf transported is
below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy`s largest operating expense, increased $11
million (3.1%) for the six months ended June 30, 1995, when compared to the
same period last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $344
Increase (Decrease) due to change in:
Price of fuel 12
Kwh generation (1)
Fuel expense - June 30, 1995 $355
Gas Purchased
Gas purchased for the six month period ended June 30, 1995, decreased $56
million (32.3%) when compared to the same period last year. This decrease was
attributable to a 12.9% decline in volumes purchased and a 22.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $18 million (50.9%) for the six months
ended June 30, 1995, when compared to the same period last year, as the
coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to
service more of its native load with its own generating units.
Maintenance
The decrease in maintenance of $7 million (7.6%) for the six months ended June
30, 1995, as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on generating units. Lower
maintenance costs on gas and electric distribution facilities also contributed
to the decline.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
Other Income and Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (62.8%) for the first six months
of 1995 from the comparable period of 1994 as a result of implementing the
final increase of the three-year rate phase-in plan in May 1994.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales declined 3.3% for the twelve months ended June 30, 1995, when
compared to the same period last year. This decline primarily reflects a
decrease in short-term sales to other utilities. A decrease in retail sales
resulted from lower domestic sales due to milder weather conditions.
Partially offsetting these decreases were increased industrial sales resulting
from growth in the primary metals and chemicals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30,
1995, decreased 3.7% when compared to the same period of 1994. Decreases in
domestic and commercial sales volumes were attributable to milder weather
conditions. A decrease in industrial sales was attributable to the trend of
industrial customers electing to purchase directly from suppliers, creating
additional demand for transportation services. This increased demand for
transportation more than offset the decrease in industrial sales volumes and
resulted from growth in the primary metals, food products, chemicals, and
paper products sectors.
Revenues
Electric Operating Revenues
Compared to the same period last year, electric operating revenues decreased
$3 million (.1%) as the previously discussed decline in kwh sales was
partially offset by a number of rate increases.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $2 481
Increase (Decrease) due to change in:
Price per kwh
Retail 47
Sales for resale
Firm power obligations 2
Non-firm power transactions (4)
Total change in price per kwh 45
Kwh sales
Retail (19)
Sales for resale
Firm power obligations (9)
Non-firm power transactions (22)
Total change in kwh sales (50)
Other 2
Electric operating revenues - June 30, 1995 $2 478
Gas Operating Revenues
Gas operating revenues declined $114 million (22.9%) for the twelve months
ended June 30, 1995, when compared to the same period last year. This
decrease was primarily the result of decreases in sales volumes and fuel
adjustment clauses reflecting a decline in the average cost of gas purchased.
An increase in the relative volume of gas transported to gas sold also
contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs. Consequently, the revenue
per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy`s largest operating expense, increased $5 million
(.7%) for the twelve months ended June 30, 1995, when compared to the same
period last year.
An analysis of these fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $719
Increase (Decrease) due to change in:
Price of fuel 11
Kwh generation (6)
Fuel expense - June 30, 1995 $724
Gas Purchased
Gas purchased for the twelve months ended June 30, 1995, decreased $101
million (34.4%) when compared to the same period last year. This decrease was
attributable to a 16.6% decline in volumes purchased and a 21.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $25 million (44.4%) for the twelve
months ended June 30, 1995, when compared to the same period last year, as the
coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to
service more of its native load through its own generating units.
Other Operation
Other operation expenses for the twelve months ended June 30, 1995, increased
$83 million (17.1%) as compared to the same period in 1994. The primary
factor contributing to this increase was charges of approximately $62 million
for merger-related costs and other expenditures which cannot be recovered from
customers under the merger savings sharing mechanisms authorized by
regulators. The inclusion of postretirement benefits in rates on an accrual
basis, an increase in the level of ongoing DSM expenses, and the amortization
of deferred DSM costs, all of which were authorized in the February 1995
Order, also contributed to the increase. The increase was partially offset by
reductions in administrative and general expenses and the May 1994 write-off
of previously deferred litigation expenses.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
Phase-in Deferred Depreciation
Phase-in deferred depreciation resulted from the three-year rate phase-in plan
for Zimmer included in the May 1992 Order. The change of $5 million for
phase-in deferred depreciation for the twelve months ended June 30, 1995,
versus the same period of 1994, reflects discontinuance of the deferral of
depreciation when the final increase of the phase-in plan became effective in
May 1994.
State, Local and Other Taxes
State, local and other taxes increased $8 million (3.5%) over the same period
of 1994 primarily due to increased property taxes resulting from higher
property tax rates.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $8 million (68.4%) for the twelve
month period ended June 30, 1995, as compared to the same period last year.
This decrease was due primarily to an increase in borrowings of short-term
debt which resulted in a decrease in the equity component of the AFUDC
rate. In addition, a scrubber at Gibson was placed in service in September
1994, which resulted in a large decrease in CWIP for the period.
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $5 million (37.0%) for the twelve
months ended June 30, 1995, when compared to the same period last year.
Accrual of carrying costs on the first five units of Woodsdale ceased after
the August 1993 Order which reflected Woodsdale in retail electric rates.
Additional environmental compliance projects completed by PSI which qualified,
under IURC authority, for continued accrual of the debt component of AFUDC
(post-in-service carrying costs) partially offset this decrease.
Phase-in Deferred Return
Phase-in deferred return decreased $18 million (69.0%) for the twelve month
period ended June 30, 1995, from the comparable period of 1994, as a result of
implementing the final increase of the three-year rate phase-in plan in May
1994.
Write-off of a Portion of Zimmer
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May
1992 Order.
Other - net
Other - net is comprised of miscellaneous income and deduction items.
The increase of $17 million (44.0%) is primarily due to the write-off in late
1993 and early 1994 of $22 million incurred in defense of the IPALCO takeover
attempt.
Interest and Other Charges
Interest on Long-term Debt
Interest on long-term debt decreased $8 million (3.4%) for the twelve
months ended June 30, 1995, as compared to the same period in 1994.
Cinergy refinanced $215 million and $305 million of long-term debt in 1995
and 1994, respectively.
Other Interest
Other interest increased $12 million over the same period last year. The
increase was driven primarily by higher interest rates and an increase in the
average short-term debt outstanding
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Utility Plant - original cost
In service
Electric $4 530 815 $4 502 840
Gas 664 536 645 602
Common 184 750 185 718
5 380 101 5 334 160
Accumulated depreciation 1 665 213 1 613 505
3 714 888 3 720 655
Construction work in progress 74 400 74 989
Total utility plant 3 789 288 3 795 644
Current Assets
Cash and temporary cash investments 3 500 52 516
Restricted deposits 100 98
Accounts receivable less accumulated
provision of $9,053,000 at June 30, 1995
and $8,999,000 at December 31, 1994 for
doubtful accounts 217 774 269 020
Materials, supplies, and fuel - at average
cost
Fuel for use in electric production 40 555 42 167
Gas stored for current use 21 187 31 284
Other materials and supplies 58 150 57 864
Property taxes applicable to subsequent
year 134 729 112 420
Prepayments and other 42 206 31 327
518 201 596 696
Other Assets
Regulatory assets
Post-in-service carrying costs and
deferred operating expenses 151 727 155 138
Phase-in deferred return and
depreciation 105 211 100 943
Deferred demand-side management costs 14 246 10 002
Amounts due from customers -
income taxes 366 924 381 380
Deferred merger costs 12 437 12 013
Unamortized costs of reacquiring debt 36 041 33 426
Other 49 893 55 987
Other 49 969 40 436
786 448 789 325
$5 093 937 $5 181 665
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Common Stock Equity
Common stock - $8.50 par value; authorized
shares - 120,000,000; outstanding shares -
89,663,086 at June 30, 1995 and
December 31, 1994 $ 762 136 $ 762 136
Paid-in capital 339 135 337 874
Retained earnings 427 623 432 962
Total common stock equity 1 528 894 1 532 972
Cumulative Preferred Stock
Not subject to mandatory redemption 40 000 80 000
Subject to mandatory redemption 160 000 210 000
Long-term Debt 1 774 404 1 837 757
Total capitalization 3 503 298 3 660 729
Current Liabilities
Preferred stock due within one year 90 000 -
Notes payable 13 500 14 500
Accounts payable 85 830 120 817
Accrued taxes 234 609 227 651
Accrued interest 30 572 31 902
Other 35 709 32 658
490 220 427 528
Other Liabilities
Deferred income taxes 744 678 747 060
Unamortized investment tax credits 132 440 135 417
Accrued pension and other postretirement
benefit costs 110 947 102 254
Other 112 354 108 677
1 100 419 1 093 408
$5 093 937 $5 181 665
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Revenues
Electric $336 523 $329 675 $686 479 $663 065 $1 369 201 $1 346 801
Gas 56 975 61 565 232 186 290 716 383 868 497 774
393 498 391 240 918 665 953 781 1 753 069 1 844 575
Operating Expenses
Fuel used in electric production 84 464 79 548 168 537 161 429 332 578 342 781
Gas purchased 22 587 31 021 117 080 173 046 192 327 293 123
Purchased and exchanged power 10 912 4 217 21 417 11 531 30 818 17 731
Other operation 65 801 68 818 134 723 137 453 333 300 277 792
Maintenance 21 446 26 860 44 979 52 802 98 987 110 055
Depreciation 39 687 39 051 79 224 77 820 158 080 155 407
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Post-in-service deferred operating
expenses - net 822 822 1 645 1 645 3 290 785
Phase-in deferred depreciation - ( 848) - (2 161) - (5 379)
Taxes
Federal and state income 24 217 22 225 67 563 64 669 107 022 119 764
State, local and other 50 331 49 204 100 987 99 137 199 231 189 940
322 540 320 918 738 428 777 371 1 457 906 1 501 999
Operating Income 70 958 70 322 180 237 176 410 295 163 342 576
Other Income and Expenses - Net
Allowance for equity funds used during
construction 281 434 877 892 1 956 1 696
Post-in-service carrying costs - - - - - 4 072
Phase-in deferred return 2 134 3 837 4 268 11 458 8 161 26 294
Write-off of a portion of Zimmer
Station - - - - - (234 844)
Income taxes -
Related to write-off of a portion
of Zimmer Station - - - - - 12 085
Other 1 620 1 677 2 827 3 533 5 913 9 937
Other - net ( 560) 119 405 134 (6 455) (7 474)
3 475 6 067 8 377 16 017 9 575 (188 234)
Income Before Interest 74 433 76 389 188 614 192 427 304 738 154 342
Interest
Interest on long-term debt 33 490 36 755 70 601 76 378 144 609 155 338
Other interest 1 421 821 2 247 1 702 3 376 2 989
Allowance for borrowed funds used
during construction ( 900) ( 653) (1 880) (1 310) (3 547) (2 589)
34 011 36 923 70 968 76 770 144 438 155 738
Net Income (Loss) 40 422 39 466 117 646 115 657 160 300 (1 396)
Preferred Dividend Requirement 5 362 5 362 10 724 11 652 21 449 24 233
Net Income (Loss) on Common Shares $ 35 060 $ 34 104 $106 922 $104 005 $ 138 851 $ (25 629)
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $762 136 $337 874 $ 453 174 $1 553 184
Net income 40 422 40 422
Dividends on preferred stock (5 362) (5 362)
Dividends on common stock (55 900) (55 900)
Other 1 261 (4 711) (3 450)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1 528 894
Quarter Ended June 30, 1994
Balance April 1, 1994 $752 236 $321 593 $ 488 513 $1 562 342
Net income 39 466 39 466
Issuance of 570,296 shares of
common stock 4 848 7 565 12 413
Common stock issuance expenses 1 1
Dividends on preferred stock (5 362) (5 362)
Dividends on common stock (38 100) (38 100)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Six Months Ended June 30, 1995
Balance January 1, 1995 $762 136 $337 874 $ 432 962 $1 532 972
Net income 117 646 117 646
Dividends on preferred stock (10 724) (10 724)
Dividends on common stock (107 550) (107 550)
Other 1 261 (4 711) (3 450)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1,528 894
Six Months Ended June 30, 1994
Balance January 1, 1994 $748 528 $314 218 $ 456 511 $1 519 257
Net income 115 657 115 657
Issuance of 1,006,582 shares of
common stock 8 556 14 949 23 505
Common stock issuance expenses (8) (8)
Dividends on preferred stock (11 652) (11 652)
Dividends on common stock (75 999) (75 999)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Net income 160 300 160 300
Issuance of 594,421 shares of
common stock 5 052 8 193 13 245
Common stock issuance expenses (31) (31)
Dividends on preferred stock (21 449) (21 449)
Dividends on common stock (190 521) (190 521)
Other 1 261 (4 271) (3 010)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1 528 894
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $741 765 $299 290 $ 660 110 $1 701 165
Net income (loss) (1 396) (1 396)
Issuance of 1,802,242 shares of
common stock 15 319 29 883 45 202
Common stock issuance expenses (14) (14)
Dividends on preferred stock (24 233) (24 233)
Dividends on common stock (149 964) (149 964)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 40 422 $ 39 466 $ 117 646 $ 115 657 $ 160 300 $ (1 396)
Items providing (using) cash currently:
Depreciation 39 687 39 051 79 224 77 820 158 080 155 407
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Deferred income taxes and investment tax
credits - net (13 903) 11 918 (15 959) 12 570 (14 849) 21 239
Allowance for equity funds used during
construction (281) (434) (877) (892) (1 956) (1 696)
Regulatory assets
Post-in-service and phase-in cost
deferrals (1 312) (3 863) (2 623) (11 974) (4 871) (34 960)
Deferred merger costs (320) (2 143) (424) (6 513) 7 048 (9 475)
Other 1 494 1 110 6 094 3 796 (5 593) 6 059
Write-off of a portion of Zimmer Station - - - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (1) (49) (2) 24 (4) 67
Accounts receivable 34 818 63 043 51 246 54 430 39 961 (2 122)
Materials, supplies, and fuel (7 444) (12 940) 11 423 30 208 2 417 21 618
Accounts payable (4 443) 6 389 (34 987) (24 853) (18 227) 16 157
Accrued taxes and interest (21 734) (44 619) 5 628 (20 531) 34 370 1 765
Other items - net (16 244) 6 339 (6 263) 15 688 55 417 44 681
Net cash provided by (used in)
operating activities 53 012 103 268 212 399 245 430 414 366 452 188
Financing Activities
Issuance of common stock - 12 414 - 23 497 13 214 45 188
Issuance of long-term debt 149 025 - 149 025 311 957 149 025 608 957
Retirement of preferred stock - (40 400) - (40 400) - (40 400)
Redemption of long-term debt (129 734) - (217 196) (313 247) (217 471) (607 689)
Change in short-term debt 12 500 (8 000) (1 000) (25 500) 8 000 (46 080)
Dividends on preferred stock (5 362) (6 290) (10 724) (12 580) (20 521) (25 160)
Dividends on common stock (55 900) (38 100) (107 550) (75 999) (190 521) (149 964)
Net cash provided by (used in)
financing activities (29 471) (80 376) (187 445) (132 272) (258 274) (215 148)
Investing Activities
Construction expenditures (less allowance
for equity funds used during
construction) (33 999) (44 055) (69 726) (79 011) (180 669) (197 180)
Deferred demand-side management costs (2 105) (1 279) (4 244) (2 702) (7 938) (4 502)
Net cash provided by (used in)
investing activities (36 104) (45 334) (73 970) (81 713) (188 607) (201 682)
Net increase (decrease) in cash and
temporary cash investments (12 563) (22 442) (49 016) 31 445 (32 515) 35 358
Cash and temporary cash investments at
beginning of period 16 063 58 457 52 516 4 570 36 015 657
Cash and temporary cash investments at
end of period $ 3 500 $ 36 015 $ 3 500 $ 36 015 $ 3 500 $ 36 015
<FN>
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
THE CINCINNATI GAS & ELECTRIC COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, increased 9.9% over the same
period of 1994, due in large part to non-firm power sales for resale
reflecting increased third party short-term power sales to other utilities.
Also contributing to the higher total kwh sales levels were increased sales to
commercial and industrial customers. Higher commercial sales resulted from an
increase in the average number of commercial customers. The increased
industrial sales primarily reflect growth in the primary metals and chemical
sectors. A slight decrease in retail kwh sales was attributable to lower
domestic sales due to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995
increased 8.5% as compared to the second quarter of 1994, reflecting higher
sales to domestic customers attributable to an increase in the average number
of customers. In addition, the continuing trend of industrial customers
electing to purchase directly from suppliers created a significant increase in
demand for transportation services. The increased transportation volume,
primarily in the primary metals, transportation equipment, and food products
sectors, more than offset a decline in industrial sales volumes.
Revenues
Electric Operating Revenues
Electric operating revenues increased $7 million (2.1%) for the quarter ended
June 30, 1995, over the comparable period of 1994. This increase primarily
reflects the higher kwh sales associated with non-firm power sales for resale.
An analysis of electric operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $330
Increase (Decrease) due to change in:
Price per kwh
Retail (3)
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh (4)
Kwh sales
Retail (1)
Sales for resale
Non-firm power transactions 12
Total change in kwh sales 11
Operating revenues - June 30, 1995. $337
Gas Operating Revenues
Gas operating revenues declined $5 million (7.5%) in the second quarter of
1995 when compared to the same period last year. This decline was primarily
the result of a decrease in total retail sales volumes and the operation of
fuel adjustment clauses reflecting a lower average cost of gas purchased. An
increase in the relative volume of gas transported to gas sold, as previously
discussed, also contributed to the decrease. Providing transportation
services does not necessitate the recovery of gas purchased costs by CG&E.
Consequently, the revenue per Mcf transported is below the revenue per Mcf
sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $4 million (6.2%) for the quarter as compared to
last year.
An analysis of these fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $80
Increase (Decrease) due to change in:
Price of fuel 1
Kwh generation 3
Fuel expense - June 30, 1995 $84
Gas Purchased
Gas purchased for the quarter declined $8 million (27.2%) when compared to the
same period last year. This decrease was attributable to a 9.9% decline in
volumes purchased and a 19.2% lower average cost per Mcf of gas purchased.
Purchased & Exchange Power
Purchased and exchanged power for the quarter ended June 30, 1995, increased
$7 million over the comparable period of 1994. This primarily reflects
increased third party power sales to other utilities.
Other Operation
Other operation expense decreased $3 million (4.4%) for the quarter ended June
30, 1995, as compared to the same period last year due to several factors,
including reductions in administrative and general expenses. In addition,
lower gas and electric distribution expenses contributed to the decrease.
Maintenance
The decrease in maintenance expense of $5 million (20.2%) for the second
quarter of 1995 as compared to the same period last year was primarily due to
improved scheduling of routine maintenance on generating units. Lower
maintenance costs on gas and electric distribution facilities also contributed
to the decline.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Interest
Interest charges decreased $3 million (7.9%) for the quarter ended June 30,
1995, from the same period of 1994. This decrease was due to a reduction in
interest on long-term debt resulting from the refinancing of $215 million
principal amount of first mortgage bonds, during 1995.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the six months ended June 30, 1995, increased 8.2% over the same
period of 1994, due in large part to increases in non-firm power sales for
resale reflecting third party short-term power sales to other utilities. Also
contributing to the higher total kwh sales levels were increased sales to
commercial and industrial customers. Higher commercial sales resulted from an
increase in the average number of commercial customers. The increased
industrial sales primarily reflects growth in the primary metals and chemical
sectors. A slight decrease in retail kwh sales was attributable to lower
domestic sales due to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30,
1995, remained relatively constant when compared to the same period of 1994.
Decreases in domestic and commercial sales volumes were attributable to milder
weather conditions. A decrease in industrial sales was attributable to the
trend of industrial customers electing to purchase directly from suppliers,
creating additional demand for transportation services. This increased demand
for transportation more than offset the decrease in industrial sales volumes
and resulted from growth in the primary metals, transportation equipment, and
food products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $23 million (3.5%) for the six months
ended June 30, 1995, over the comparable period of 1994. This increase
primarily reflects the higher kwh sales associated with non-firm power sales
for resale to other utilities and the retail electric rate increase which
became effective May 1994.
An analysis of electric operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $663
Increase (Decrease) due to change in:
Price per kwh
Retail 4
Sales for resale
Firm power obligations 1
Non-firm power transactions (1)
Total change in price per kwh 4
Kwh sales
Retail (4)
Sales for resale
Non-firm power transactions 24
Total change in kwh sales 20
Other (1)
Operating revenues - June 30, 1995. $686
Gas Operating Revenues
Gas operating revenues declined $59 million (20.1%) in the first six months of
1995 when compared to the same period last year. This decrease reflects the
decline in total retail volumes sold and the operation of fuel adjustment
clauses reflecting a lower average cost of gas purchased. An increase in the
relative volume of gas transported to gas sold also contributed to the
decrease. Providing transportation services does not necessitate the recovery
of gas purchased costs. Consequently, the revenue per Mcf transported is
below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $8 million (4.4%) for the first six months of
1995 as compared to last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $161
Increase (Decrease) due to change in:
Price of fuel (1)
Kwh generation 9
Fuel expense - June 30, 1995 $169
Gas Purchased
Gas purchased for the first six months ended June 30, 1995, decreased $56
million (32.3%) when compared to the same period last year. This decrease was
attributable to a 12.9% decline in volumes purchased and a 22.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchange Power
Purchased and exchanged power for the six months ended June 30, 1995,
increased $10 million (85.7%) over the comparable period of 1994. This
primarily reflects increased third party power sales to other utilities.
Other Operation
Other operation expenses decreased $3 million (2.0%) for the six months ended
June 30, 1995, as compared to the same period last year due to several
factors, including reductions in administrative and general expenses. In
addition, a decrease in gas and electric distribution expenses contributed to
the decrease.
Maintenance
The decrease in maintenance expense of $8 million (14.8%) for the six month
period ended June 30, 1995, as compared to the same period last year was
primarily due to improved scheduling of routine maintenance on generating
units. Lower maintenance costs on gas and electric distribution facilities
also contributed to the decline.
Depreciation
Depreciation expense increased $1 million (1.8%) for the six month period
ended June 30, 1995, as compared to the same period last year. This increase
primarily reflects additions to gas utility plant in service.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated in the May 1992 Order.
Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (62.8%) for the first six months
of 1995 from the comparable period of 1994, as a result of implementing the
final increase of the three-year rate phase-in plan in May 1994.
Interest
Interest decreased $6 million (7.6%) for the six months ended June 30, 1995,
from the same period of 1994. This decrease was due to a reduction in
interest on long-term debt resulting from the refinancing of $215 million
principal amount of first mortgage bonds, during 1995.
Preferred Dividend Requirement
The decrease in CG&E`s preferred dividend requirement of $1 million (8.0%)
for the six months ended June 30, 1995, from the same period of 1994 was
attributable to the early redemption on April 1, 1994 of 400,000 shares of
$100 par value cumulative preferred stock (9.28% Series).
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, increased 1.7% when
compared to the same period of 1994. This increase was primarily attributable
to an increase in non-firm power sales for resale reflecting third party
short-term power sales to other utilities. In addition, industrial sales
increased due, in large part, to growth in the primary metals and chemicals
sectors. Part of this increase was offset by a reduction in domestic sales
volume attributable to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30,
1995, decreased 3.7% when compared to the same period of 1994. Decreases in
domestic and commercial sales volumes were attributable to milder weather
conditions. A decrease in industrial sales was attributable to the trend of
industrial customers electing to purchase directly from suppliers, creating
additional demand for transportation services. This increased demand for
transportation more than offset the decrease in industrial sales volumes and
resulted from growth in the primary metals, food products, chemicals, and
paper products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $22 million (1.7%) for the twelve months
ended June 30, 1995, over the comparable period of 1994. This increase
primarily reflects two electric retail rate increases granted by the PUCO. An
increase in May 1994 was related to the phase-in plan included in the May 1992
Order and the second increase was effective in August 1993 pursuant to the
August 1993 Order. Also contributing to the increase were the higher kwh
sales associated with non-firm power sales for resale to other utilities.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $1 347
Increase (Decrease) due to change in:
Price per kwh
Retail 22
Sales for Resale
Firm power obligations 1
Non-firm power transactions 1
Total change in price per kwh 24
Kwh sales
Retail (15)
Sales for Resale
Firm power obligations -
Non-firm power transactions 14
Total change in kwh sales (1)
Other (1)
Operating revenues - June 30, 1995. $1 369
Gas Operating Revenues
Gas operating revenues declined $114 million (22.9%) for the twelve months
ended June 30, 1995, when compared to the same period last year. This
decrease was primarily the result of decreases in sales volumes and fuel
adjustment clauses reflecting a decline in the average cost of gas purchased.
An increase in the relative volume of gas transported to gas sold also
contributed to the decrease. Providing transportation services does not
necessitate the recovery of gas purchased costs. Consequently, the revenue
per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $10 million (3.0%) for the twelve months ended
as compared to last year.
An analysis of these fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $343
Increase (Decrease) due to change in:
Price of fuel (8)
kwh generation (2)
Fuel expense - June 30, 1995 $333
Gas Purchased
Gas purchased for the twelve months ended June 30, 1995, decreased $101
million (34.4%) when compared to the same period last year. This decrease was
attributable to a 16.6% decline in volumes purchased and a 21.3% lower average
cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power for the twelve months ended June 30, 1995,
increased $13 million (73.8%) over the comparable period of 1994. This
primarily reflects increased third party power sales to other utilities.
Other Operation
Other operation expenses increased $56 million (20%) for the twelve months
ended June 30, 1995, as compared to the same period last year due to several
factors. The primary factor contributing to this increase was charges of
approximately $52 million for merger-related costs and other expenditures
which cannot be recovered from customers under the merger savings sharing
mechanisms authorized by regulators.
Maintenance
The decrease in maintenance expense of $11 million (10%) for the twelve months
ended June 30, 1995, as compared to the same period last year, was primarily
due to improved scheduling of routine maintenance on generating units. Also
contributing to the decrease was lower maintenance costs on gas and electric
distribution facilities.
Depreciation
Depreciation expense increased $3 million (1.7%) for the twelve months ended
June 30, 1995, as compared to the same period last year. This increase
primarily reflects additions to gas utility plant in service.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the
amortization of previously deferred depreciation and deferred return resulting
from the three-year rate phase-in plan for Zimmer included in the May 1992
Order. These deferrals will be recovered over a seven-year period as
contemplated by the May 1992 Order.
Phase-in Deferred Depreciation
Phase-in deferred depreciation resulted from the three-year rate phase-in plan
for Zimmer included in the May 1992 Order. The change of $5 million for
phase-in deferred depreciation for the twelve months ended June 30, 1995,
versus the same period of 1994, reflects discontinuance of the deferral of
depreciation when the final increase of the three-year rate phase-in plan
became effective in May 1994.
State, Local and Other Taxes
State, local and other taxes increased $9 million (4.9%) for the twelve months
ended June 30, 1995, over the comparable period of 1994, primarily due to
increased property taxes resulting from higher property tax rates.
Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $18 million (69.0%) for the twelve months
ended June 30, 1995, from the comparable period of 1994, as a result of
implementing the final increase of the three-year rate phase-in plan in May
1994.
Write-off of a Portion of Zimmer
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May
1992 Order.
Interest
Interest charges decreased $11 million (7.3%) for the twelve months ended June
30, 1995, from the same period of 1994. The decrease was due to a reduction
in interest on long-term debt resulting from the refinancing of $215 and $305
million principal amount of long-term debt, during 1995 and 1994,
respectively.
Preferred Dividend Requirement
The decrease of CG&E`s preferred dividend requirement of $3 million (11.5%)
for the twelve months ended June 30, 1995, from the same period of 1994 was
attributable to the early redemption on April 1, 1994 of 400,000 shares of
$100 par value cumulative preferred stock (9.28% Series).
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Electric Utility Plant - original cost
In service $3 862 703 $3 789 785
Accumulated depreciation 1 597 502 1 550 297
2 265 201 2 239 488
Construction work in progress 167 587 163 761
Total electric utility plant 2 432 788 2 403 249
Current Assets
Cash and temporary cash investments 5 106 6 341
Restricted deposits 4 546 11 190
Accounts receivable less accumulated provision
of $957,000 at June 30, 1995 and $440,000 at
December 31, 1995 for doubtful accounts 48 112 36 061
Materials, supplies, and fuel - at average cost
Fuel 119 808 113 861
Other materials and supplies 30 195 29 363
Prepayments and other 4 543 4 758
212 310 201 574
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
depreciation 36 334 30 142
Deferred demand-side management costs 100 522 94 125
Amounts due from customers - income taxes 26 935 27 134
Deferred merger costs 37 630 37 645
Unamortized costs of reacquiring debt 35 737 36 998
Other 31 772 30 030
Other 84 452 84 027
353 382 340 101
$2 998 480 $2 944 924
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC.
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Common Stock Equity
Common stock - without par value; $.01 stated value;
authorized shares - 60,000,000; outstanding shares -
53,913,701 at June 30, 1995 and December 31, 1994 $ 539 $ 539
Paid-in capital 389 316 389 309
Accumulated earnings subsequent to November 30, 1986,
quasi-reorganization 549 202 493 103
Total common stock equity 939 057 882 951
Cumulative Preferred Stock
Not subject to mandatory redemption 187 915 187 929
Long-term Debt 877 978 877 512
Total capitalization 2 004 950 1 948 392
Current Liabilities
Long-term debt due within one year 60 400 60 400
Notes payable 209 500 193 573
Accounts payable 106 800 142 775
Refund due to customers 15 796 15 482
Litigation settlement 80 000 80 000
Accrued taxes 27 876 30 784
Accrued interest 26 012 25 685
Other 3 085 3 202
529 469 551 901
Other Liabilities
Deferred income taxes 332 962 324 738
Unamortized investment tax credits 58 364 60 461
Accrued pension and other postretirement benefit costs 42 806 31 324
Other 29 929 28 108
464 061 444 631
$2 998 480 $2 944 924
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Revenues $289 743 $271 652 $588 791 $560 287 $1 142 016 $1 132 947
Operating Expenses
Fuel used in electric production 84 730 88 013 186 566 182 918 391 171 375 955
Purchased and exchanged power 17 971 13 566 29 670 28 226 42 844 45 205
Other operation 57 944 54 119 105 759 100 615 218 266 195 666
Maintenance 22 215 22 316 43 004 42 376 94 777 85 418
Depreciation 28 528 33 771 62 447 67 203 132 963 132 807
Post-in-service deferred operating
expenses - net ( 887) (2 342) (3 714) (4 622) (8 380) (8 754)
Taxes
Federal and state income 16 482 12 347 35 655 32 701 53 320 75 659
State, local and other 13 407 12 689 26 699 25 471 47 563 48 576
240 390 234 479 486 086 474 888 972 524 950 532
Operating Income 49 353 37 173 102 705 85 399 169 492 182 415
Other Income and Expenses - Net
Allowance for equity funds used during
construction 650 367 1 008 3 439 1 799 10 198
Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 8 708
Income taxes 349 136 46 323 (1 589) 2 071
Other - net ( 384) (2 748) (2 296) (5 515) (4 674) (9 269)
628 ( 140) 1 339 2 553 3 591 11 708
Income Before Interest 49 981 37 033 104 044 87 952 173 083 194 123
Interest
Interest on long-term debt 17 949 17 098 35 899 33 622 71 139 67 996
Other interest 3 896 3 286 7 873 5 382 17 783 7 427
Allowance for borrowed funds used during
construction (1 086) (2 243) (2 417) (4 777) (6 995) (8 971)
20 759 18 141 41 355 34 227 81 927 66 452
Net Income 29 222 18 892 62 689 53 725 91 156 127 671
Preferred Dividend Requirement 3 295 3 295 6 590 6 591 13 181 13 999
Net Income on Common Shares $ 25 927 $ 15 597 $ 56 099 $ 47 134 $ 77 975 $ 113 672
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Accumulated Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $539 $389 309 $523 275 $913 123
Net income 29 222 29 222
Dividends on preferred stock (3 295) (3 295)
Other 7 7
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Quarter Ended June 30, 1994
Balance April 1, 1994 $539 $229 282 $498 809 $728 630
Net income 18 892 18 892
Dividends on preferred stock (3 295) (3 295)
Dividends on common stock (16 622) (16 622)
Other 5 5
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
Six Months Ended June 30, 1995
Balance January 1, 1995 $539 $389 309 $493 103 $882 951
Net income 62 689 62 689
Dividends on preferred stock (6 590) (6 590)
Other 7 7
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Six Months Ended June 30, 1994
Balance January 1, 1994 $539 $229 288 $483 242 $713 069
Net income 53 725 53 725
Dividends on preferred stock (6 591) (6 591)
Dividends on common stock (32 592) (32 592)
Other (1) (1)
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $539 $229 287 $497 784 $727 610
Net income 91 156 91 156
Dividends on preferred stock (13 181) (13 181)
Dividends on common stock (26 550) (26 550)
Capital contribution from parent company 159 999 159 999
Other 30 (7) 23
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $539 $230 936 $448 476 $679 951
Net income 127 671 127 671
Dividends on preferred stock (14 081) (14 081)
Dividends on common stock (64 358) (64 358)
Other (1 649) 76 (1 573)
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 29 222 $ 18 892 $ 62 689 $ 53 725 $ 91 156 $ 127 671
Items providing (using) cash currently:
Depreciation 28 528 33 771 62 447 67 203 132 963 132 807
Deferred income taxes and investment tax
credits - net 1 087 12 760 6 597 20 703 10 021 35 002
Allowance for equity funds used during
construction (650) (367) (1 008) (3 439) (1 799) (10 198)
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses (830) (4 447) (6 192) (8 928) (16 332) (17 462)
Deferred merger costs (2 490) (2 034) (2 145) (7 178) (18 267) (11 913)
Other 201 5 430 184 4 547 8 1 283
Changes in current assets and current
liabilities
Restricted deposits - (81) 16 (150) 10 190 (345)
Accounts receivable (14 278) (5 352) (12 051) (19 478) 23 (24 202)
Income tax refunds - 5 500 - 25 100 3 800 14 200
Materials, supplies, and fuel (4 535) (32 205) (6 779) (55 350) (18 126) (35 663)
Accounts payable 7 138 11 294 (35 975) (20 925) (16 368) 25 879
Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392)
Advance under accounts receivable
purchase agreement - - - (49 940) - -
Accrued taxes and interest (13 311) (10 468) (2 581) 1 571 (7 080) 31 171
Other items - net 15 146 2 616 13 291 (4 824) 13 143 (3 434)
Net cash provided by (used in)
operating activities 45 423 25 569 78 807 (41 587) 161 520 152 404
Financing Activities
Issuance of preferred stock - - - - - 59 475
Issuance of long-term debt - - - 49 068 59 910 212 084
Funds on deposit from issuance of
long-term debt 899 3 224 6 628 12 401 22 124 34 123
Retirement of preferred stock (7) (6) (7) (10) (23) (60 117)
Redemption of long-term debt - - (55) - (215) (207 880)
Change in short-term debt 1 399 79 744 15 927 166 299 (83 500) 233 199
Dividends on preferred stock (3 295) (3 295) (6 590) (6 591) (13 181) (14 081)
Dividends on common stock - (16 622) - (32 592) (26 550) (64 358)
Contribution from parent company - - - - 159 999 7
Net cash provided by (used in)
financing activities (1 004) 63 045 15 903 188 575 118 564 192 452
Investing Activities
Utility plant additions (49 001) (77 366) (91 846) (134 478) (251 329) (321 362)
Allowance for equity funds used
during construction 650 367 1 008 3 439 1 799 10 198
Deferred demand-side management costs (1 763) (9 095) (5 107) (15 514) (30 465) (36 196)
Net cash provided by (used in)
investing activities (50 114) (86 094) (95 945) (146 553) (279 995) (347 360)
Net increase (decrease) in cash and
temporary cash investments (5 695) 2 520 (1 235) 435 89 (2 504)
Cash and temporary cash investments at
beginning of period 10 801 2 497 6 341 4 582 5 017 7 521
Cash and temporary cash investments at
end of period $ 5 106 $ 5 017 $ 5 106 $ 5 017 $ 5 106 $ 5 017
<FN>
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
PSI ENERGY, INC.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, decreased 2.5% when compared
to the same period last year. This decrease primarily reflects a decline
in short-term sales to other utilities. In addition, milder weather in the
period led to a decrease in domestic and commercial sales. These decreases
were partially offset by increased industrial sales which reflected growth
in the primary metals sector.
Operating Revenues
Total operating revenues increased $18 million (6.7%) in the second quarter
of 1995 as compared to the same period last year. This increase primarily
reflects the 4.3% retail rate increase approved in the February 1995 Order
and a 1.9% rate increase for carrying costs on CWIP property which was
approved by the IURC on March 9, 1995. In addition, the operation of fuel
clause adjustment factors reflecting a higher average cost of kwh generated
during the period led to an increase in operating revenues. These
increases were partially offset by the decreased kwh sales previously
discussed.
An analysis of operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $272
Increase (Decrease) due to change in:
Price per kwh
Retail 21
Sales for resale
Firm power obligations (1)
Non-firm power transactions 1
Total change in price per kwh 21
Kwh sales
Retail 2
Sales for resale
Firm power obligations (1)
Non-firm power transactions (4)
Total change in kwh sales (3)
Operating revenues - June 30, 1995 $290
Operating Expenses
Fuel Used in Electric Production
Fuel costs, PSI`s largest operating expense, decreased $3 million (3.7%)
for the quarter as compared to the same period last year.
An analysis of fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $88
Increase (Decrease) due to change in:
Price of fuel 3
Kwh generation (6)
Fuel expense - June 30, 1995 $85
Purchased and Exchanged Power
For the quarter ended June 30, 1995, purchased and exchanged power
increased $4 million (32.5%) as compared to the same period last year,
reflecting increased purchases of power to meet PSI`s own load. This
increase was partially offset by a decline in third party short-term power
sales to other utilities.
Other Operation
Other operation expenses for the quarter ended June 30, 1995, increased $4
million (7.1%) as compared to the same period last year. This increase was
primarily due to the inclusion of postretirement benefits in rates on a
accrual basis, an increase in the level of ongoing DSM expenses, and the
amortization of deferred DSM costs, all of which were authorized in the
February 1995 Order. Partially offsetting the increase was the May 1994
write-off of previously deferred litigation expenses.
Depreciation
Depreciation expense decreased $5 million (15.5%) for the quarter ended
June 30, 1995, as compared to the same period last year. This decrease
primarily reflects the adoption of lower depreciation rates effective in
March 1995 pursuant to the February 1995 Order. The decrease was partially
offset by additions to utility plant in service.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
For the six months ended June 30, 1995, kwh sales decreased 5.1% when
compared to the same period last year. The decrease primarily reflects a
decline in short-term sales to other utilities. In addition, milder
weather in the period led to a decrease in domestic and commercial sales.
Increased industrial sales reflecting growth in the primary metals sector
partially offset the decrease.
Operating Revenues
Total operating revenues increased $29 million (5.1%) for the six months
ended June 30, 1995, when compared to the same period last year. This
increase primarily reflects the 4.3% retail rate increase and 1.9% rate
increase for carrying costs on CWIP property as previously discussed. In
addition, changes in fuel clause adjustment factors reflecting increases in
the average cost of kwh generated led to an increase in operating revenues
during the period. These increases were partially offset by the decrease
in kwh sales.
An analysis of operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $ 560
Increase (Decrease) due to change in:
Price per kwh
Retail 38
Sales for resale
Non-firm power transactions 5
Total change in price per kwh 43
Kwh sales
Retail 2
Sales for resale
Firm power obligations (5)
Non-firm power transactions (13)
Total change in kwh sales (16)
Other 2
Operating revenues - June 30, 1995 $ 589
Operating Expenses
Fuel Used in Electric Production
Fuel costs for the six months ended June 30, 1995, increased $4 million
(2.0%) when compared to the same period last year.
An analysis of fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $183
Increase (Decrease) due to change in:
Price of fuel 13
Kwh generation (9)
Fuel expense - June 30, 1995 $187
Other Operation
Other operation expenses increased $5 million (5.1%) for the six months
ended June 30, 1995, as compared to the same period last year. This
increase was primarily the result of the inclusion of postretirement
benefits in rates on an accrual basis, an increase in the level of ongoing
DSM expenses, and the amortization of deferred DSM costs, all of which were
authorized in the February 1995 Order. Partially offsetting the increase
was the May 1994 write-off of previously deferred litigation expenses.
Depreciation
Depreciation expense for the six months ended June 30, 1995, decreased $5
million (7.1%) when compared to the same period last year. This decrease,
which was primarily driven by the adoption of lower depreciation rates
effective March 1995 pursuant the February 1995 Order, was partially offset
by additions to utility plant in service.
RESULTS OF OPERATIONS FOR TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, decreased 2.6% when
compared to the same period last year. The decrease primarily reflects the
milder weather conditions experienced in the period as compared to the same
period last year. In addition, short-term sales to other utilities also
decreased during the period. These decreases were partially offset by an
increase in industrial sales reflecting growth in the primary metals and
transportation equipment sectors.
Operating Revenues
Total operating revenues increased $9 million (.8%) for the twelve months
ended June 30, 1995, as compared to the same period last year. This
increase was driven by the 4.3% retail rate increase and the 1.9% rate
increase for carrying costs on CWIP property as previously discussed. In
addition, the operation of fuel clause adjustment factors reflecting
increases in the average cost of kwh generated led to an increase in
operating revenues for the period. These increases were partially offset
by lower sales due to the milder weather conditions.
An analysis of operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $1 133
Increase (Decrease) due to change in:
Price per kwh
Retail 26
Sales for resale
Firm power obligations 1
Non-firm power transactions 2
Total change in price per kwh 29
Kwh sales
Retail (5)
Sales for resale
Firm power obligations (9)
Non-firm power transactions (7)
Total change in kwh sales (21)
Other 1
Operating revenues - June 30, 1995 $1 142
Operating Expenses
Fuel Used in Electric Production
Fuel costs for the twelve months ended June 30, 1995, increased $15 million
(4.0%) as compared to the same period last year.
An analysis of fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $376
Increase (Decrease) due to change in:
Price of fuel 19
Kwh generation (4)
Fuel expense - June 30, 1995 $391
Purchased and Exchanged Power
For the twelve months ended June 30, 1995, purchased and exchanged power
decreased $2 million (5.2%) when compared to the same period last year.
The decrease primarily resulted from a decline in third party short-term
power sales to other utilities.
Other Operation
Other operation expenses for the twelve months ended June 30, 1995,
increased $23 million (11.6%) as compared to the same period last year.
This increase reflects the inclusion of postretirement benefits in rates on
an accrual basis, an increase in the level of ongoing DSM expenses, and the
amortization of deferred DSM costs, all of which were authorized in the
February 1995 Order. In addition, charges for severance benefits to former
officers of approximately $10 million were expensed in December 1994.
These increases were partially offset by the May 1994 write-off of
previously deferred litigation expenses.
Maintenance
Maintenance expenses for the twelve months ended June 30, 1995, as compared
to the same period last year increased $9 million (11.0%). This increase
was primarily driven by increased maintenance on a number of generating
units.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $8 million (82.4%) for the twelve
month period ended June 30, 1995, as compared to the same period last year.
This decrease was due primarily to an increase in borrowings of short-term
debt which resulted in a decrease in the equity component of the AFUDC
rate. In addition, a scrubber at Gibson was placed in service in September
1994 which resulted in a large decrease in CWIP for the period.
Interest
Other Interest
Other interest increased $10 million over the same period last year. The
increase was driven primarily by higher interest rates and an increase in the
average short-term debt outstanding.
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Utility Plant - original cost
In service
Electric $184 035 $179 098
Gas 137 949 134 103
Common 19 082 19 122
341 066 332 323
Accumulated depreciation 107 847 104 113
233 219 228 210
Construction work in progress 7 266 8 638
Total utility plant 240 485 236 848
Current Assets
Cash and temporary cash investments 3 248 1 071
Accounts receivable less accumulated
provision of $863,000 at June 30, 1995,
and $457,000 at December 31, 1995,
for doubtful accounts 25 801 33 892
Materials, supplies, and fuel - at average cost
Gas stored for current use 4 268 6 216
Other materials and supplies 1 270 1 406
Property taxes applicable to subsequent year 2 258 2 200
Prepayments and other 520 593
37 365 45 378
Other Assets
Regulatory assets
Deferred merger costs 1 785 1 785
Unamortized costs of reacquiring debt 971 -
Other 2 633 2 718
Other 542 399
5 931 4 902
$283 781 $287 128
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
THE UNION LIGHT, HEAT AND POWER COMPANY
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
Common Stock Equity
Common stock - $15.00 par value; authorized
shares - 1,000,000; outstanding shares - 585,333
at June 30, 1995 and December 31, 1994 $ 8 780 $ 8 780
Paid-in capital 18 839 18 839
Retained earnings 80 002 74 203
Total common stock equity 107 621 101 822
Long-term Debt 74 438 89 238
Total capitalization 182 059 191 060
Current Liabilities
Notes payable 13 500 14 500
Accounts payable 22 895 21 655
Accrued taxes 5 126 2 876
Accrued interest 2 032 2 123
Other 4 605 4 123
48 158 45 277
Other Liabilities
Deferred income taxes 22 120 23 226
Unamortized investment tax credits 5 222 5 364
Accrued pension and other postretirement benefit costs 11 399 10 356
Income taxes refundable through rates 5 188 4 282
Other 9 635 7 563
53 564 50 791
$283 781 $287 128
<CAPTION
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Revenues
Electric $ 47 823 $43 736 $ 87 382 $ 88 926 $176 020 $181 006
Gas 9 372 9 587 39 875 46 387 65 459 78 964
57 195 53 323 127 257 135 313 241 479 259 970
Operating Expenses
Electricity purchased from parent
company for resale 36 936 32 552 66 975 68 107 133 755 138 310
Gas purchased 4 156 4 800 21 716 27 209 35 015 45 007
Other operation 7 258 7 721 15 053 15 341 32 001 31 349
Maintenance 984 1 489 2 137 2 742 4 868 6 268
Depreciation 2 871 2 633 5 646 5 249 11 041 10 592
Taxes
Federal and state income 873 446 3 961 4 227 5 076 6 381
State, local and other 971 990 1 979 2 015 3 966 3 712
54 049 50 631 117 467 124 890 225 722 241 619
Operating Income 3 146 2 692 9 790 10 423 15 757 18 351
Other Income And Expenses - Net
Allowance for equity funds used
during construction 67 13 56 11 123 32
Income taxes (34) 14 (38) 44 (26) 79
Other - net 71 (34) 67 335 (32) 49
104 (7) 85 390 65 160
Income Before Interest 3 250 2 685 9 875 10 813 15 822 18 511
Interest
Interest on long-term debt 1 914 2 039 3 953 4 082 8 032 8 159
Other interest 54 64 219 217 397 487
Allowance for borrowed funds used
during construction (31) (45) (96) (75) (204) (143)
1 937 2 058 4 076 4 224 8 225 8 503
Net Income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $8 780 $18 839 $78 689 $106 308
Net income 1 313 1 313
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Quarter Ended June 30, 1994
Balance April 1, 1994 $8 780 $18 839 $75 289 $102 908
Net income 627 627
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
Six Months Ended June 30, 1995
Balance January 1, 1995 $8 780 $18 839 $74 203 $101 822
Net income 5 799 5 799
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Six Months Ended June 30, 1994
Balance January 1, 1994 $8 780 $18 839 $69 327 $ 96 946
Net income 6 589 6 589
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $8 780 $18 839 $75 916 $103 535
Net income 7 597 7 597
Dividends on common stock (3 511) (3 511)
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $8 780 $18 839 $68 835 $ 96 454
Net income 10 008 10 008
Dividends on common stock (2 927) (2 927)
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008
Items providing (using) cash currently:
Depreciation 2 871 2 633 5 646 5 249 11 041 10 592
Deferred income taxes and investment tax
credits - net 506 1 111 (342) 210 1 490 1 168
Allowance for equity funds used during
construction (67) (13) (56) (11) (123) (32)
Regulatory assets
Deferred merger costs - - - - (1 785) -
Other 43 43 85 85 170 201
Changes in current assets and current
liabilities
Accounts receivable 2 996 9 983 8 091 8 385 8 507 (1 778)
Materials, supplies, and fuel (1 391) (2 220) 2 084 2 410 717 476
Accounts payable 5 248 539 1 240 (3 922) 2 785 2 132
Accrued taxes and interest (1 634) (1 453) 2 159 3 604 1 862 (178)
Other items - net (409) (54) 3 973 3 588 3 165 5 506
Net cash provided by (used in)
operating activities 9 476 11 196 28 679 26 187 35 426 28 095
Financing Activities
Redemption of long-term debt (15 734) - (15 734) - (15 734) (6 500)
Change in short-term debt 12 500 (8 000) (1 000) (19 500) 8 000 2 000
Dividends on common stock - - - - (3 511) (2 927)
Net cash provided by (used in)
financing activities (3 234) (8 000) (16 734) (19 500) (11 245) (7 427)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (4 535) (4 458) (9 768) (8 494) (21 603) (21 716)
Net cash provided by (used in)
investing activities (4 535) (4 458) (9 768) (8 494) (21 603) (21 716)
Net increase (decrease) in cash and
temporary cash investments 1 707 (1 262) 2 177 (1 807) 2 578 (1 048)
Cash and temporary cash investments at
beginning of period 1 541 1 932 1 071 2 477 670 1 718
Cash and temporary cash investments at
end of period $ 3 248 $ 670 $ 3 248 $ 670 $ 3 248 $ 670
<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
THE UNION LIGHT, HEAT AND POWER COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales increased for the quarter ended June 30, 1995, as a result of
increased sales to commercial and industrial customers. The increase in
commercial sales partly resulted from an increase in the average number of
customers. The increased industrial sales reflect growth in the primary
metals and paper and allied products sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995
increased 9.3% as compared to the second quarter of 1994, reflecting higher
sales to domestic customers attributable to an increase in the average number
of customers. In addition, the continuing trend of industrial customers
electing to purchase directly from suppliers created an increase in demand for
transportation services. The increased transportation volumes were primarily
due to growth in the primary metals, paper and allied products, and food
products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $4.1 million (9.3%) for the quarter
ended June 30, 1995, over the comparable period of 1994. This increase
primarily reflects the previously discussed increases in kwh sales.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest operating expense, increased
$4.4 million (13.5%) for the quarter as compared to the same period last year.
An analysis of these costs is shown below:
Quarter
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $32 552
Increase (Decrease) due to change in:
Price of electricity (2 944)
Kwh purchased 7 328
Electricity purchased expense - June 30, 1995 $36 936
Gas Purchased
Gas purchased for the quarter decreased $.6 million (13.4%) when compared to
the same period last year. This decrease was attributable to a 16.1% decline
in the average cost per Mcf purchased which was partially offset by an
increase of 3.2% in volumes purchased.
Other Operation
Other operation expense decreased $.5 million (6.0%) for the quarter ended
June 30, 1995, as compared to the same period last year due to several
factors, including reductions in administrative and general expenses and
decreased gas and electric distribution expenses.
Maintenance
The decrease in maintenance expense of $.5 million (33.9%) for the second
quarter of 1995 as compared to the same period last year was primarily due to
lower maintenance costs on gas and electric distribution facilities.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the six months ended June 30, 1995, increased 1.5% over the same
period of 1994, primarily as a result of increased commercial and industrial
sales volumes. A decline in domestic sales volumes due to milder weather
partially offset the increase. The higher commercial sales resulted from an
increase in the average number of customers. The increased industrial sales
reflect continued growth in the primary metals sector.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30,
1995, decreased 2.6% as compared to the same period of 1994, as a result of
decreased sales volumes to domestic, commercial and industrial customers.
Milder weather contributed to the decrease in domestic and commercial sales.
A decrease in industrial sales was attributable to the trend of industrial
customers electing to purchase directly from suppliers, creating additional
demand for transportation services provided by ULH&P. The significant increase
in transportation volumes more than offset the decline in industrial sales,
and was primarily attributable to growth in the paper and allied products and
primary metals sectors.
Revenues
Electric Operating Revenues
Electric operating revenues decreased $1.5 million (1.7%) for the six months
ended June 30, 1995, over the comparable period of 1994. This decrease was
due to the operation of fuel adjustment clauses reflecting a lower average
cost of electricity purchased.
Gas Operating Revenues
Gas operating revenues declined $6.5 million (14.0%) in the first six months
of 1995 when compared to the same period last year. This decrease was the
result of the previously discussed decline in total volumes sold and the
operation of fuel adjustment clauses reflecting a decline in the average cost
of gas purchased. An increase in the relative volume of gas transported to
gas sold, also contributed to the decrease. Providing transportation services
does not necessitate the recovery of gas purchased costs. Consequently, the
revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest expense, decreased $1.1 million
(1.7%) for the first six months of 1995 as compared to last year.
An analysis of these costs is shown below:
Six Months
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $68 107
Increase (Decrease) due to change in:
Price of electricity (5 561)
Kwh purchased 4 429
Electricity purchased expense - June 30, 1995 $66 975
Gas Purchased
Gas purchased expense for the first six months decreased $5.5 million (20.2%)
when compared to the same period last year. The decrease was attributable to
a 7.9% decline in volumes purchased and a 13.3% decrease in the average cost
per Mcf of gas purchased.
Maintenance
The decrease in maintenance expense of $.6 million (22.1%) for the six months
ended June 30, 1995, as compared the same period last year was due primarily
to lower maintenance costs on gas and electric distribution facilities.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, remained relatively
constant when compared to the same period of 1994, increasing only .9%. A
decline in domestic sales volumes due to milder weather was offset by
increases in commercial and industrial sales. The higher commercial sales
resulted from an increase in the average number of customers. The increased
industrial sales reflect growth in the primary metals and paper and allied
products sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30,
1995, decreased 6.8% when compared to the same period of 1994, as a result of
lower domestic, commercial, and industrial sales. Milder weather contributed
to the decrease in domestic and commercial sales, while industrial sales
decreased as customers elected to purchase directly from suppliers, creating
additional demand for transportation services provided by ULH&P. The increase
in transportation volumes more than offset the lower industrial sales, and was
primarily attributable to growth in the primary metals, paper and allied
products, and food products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues decreased $5.0 million (2.8%) for the twelve
months ended June 30, 1995, over the comparable period of 1994. This decrease
was attributable to the operation of adjustment clauses reflecting a decline
in the average cost of electricity purchased.
Gas Operating Revenues
Gas operating revenues declined $13.5 million (17.1%) for the twelve months
ended June 30, 1995, when compared to the same period last year. This
decrease was the result of the aforementioned decline in volumes sold and
transported and the operation of fuel adjustment clauses reflecting a lower
average cost of gas purchased. An increase in the relative volume of gas
transported to gas sold, also contributed to the decrease. Providing
transportation services does not necessitate the recovery of gas purchased
costs. Consequently, the revenue per Mcf transported is below the revenue per
Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest expense, decreased $4.6 million
(3.3%) for the twelve months ended June 30, 1995, as compared to last year.
An analysis of these costs is shown below:
Twelve Months
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $138,310
Increase (Decrease) due to change in:
Price of electricity (9,333)
Kwh purchased 4,778
Electricity purchased expense - June 30, 1995 $133,755
Gas Purchased
Gas purchased expense for the twelve months ended June 30, 1995, decreased
$10.0 million (22.2%) when compared to the same period last year. This
decrease was attributable to an 11.3% decline in volumes purchased and a 12.3%
decrease in the average cost per Mcf of gas purchased.
Other Operation
Other operation expenses increased $.6 million (2.1%) for the twelve months
ended June 30, 1995, as compared to the same period last year, primarily due
to recognition of nonrecurring charges for merger-related costs and other
costs ULH&P does not expect to recover from customers, and increased electric
and gas distribution expenses.
Maintenance
The decrease in maintenance expense of $1.4 million (22.3%) for the twelve
months ended June 30, 1995, as compared the same period last year was due
primarily to lower maintenance costs on gas and electric distribution
facilities.
NOTES TO FINANCIAL STATEMENTS
Cinergy, CG&E, PSI, and ULH&P
1. These Financial Statements reflect all adjustments (which include only
normal, recurring adjustments) necessary in the opinion of these companies for
a fair presentation of the interim results. These statements should be read
in conjunction with the financial statements and the notes thereto included in
each registrant`s Annual Report on Form 10-K for the year ended December 31,
1994. Certain amounts in the 1994 Financial Statements have been reclassified
to conform to the 1995 presentation.
Cinergy and PSI
2. As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI
filed a petition with the IURC for a retail rate increase. On May 15, 1995,
PSI filed testimony with the IURC supporting a 12.8% ($127.9 million) rate
increase request. Major components of the increase include, among other
things, the costs of the Clean Coal Project and a scrubber at Gibson. An
order is anticipated in the second quarter of 1996. PSI cannot predict what
action the IURC may take with respect to this proposed rate increase.
Cinergy and CG&E
3. On July 17, 1995, CG&E filed a request with the PUCO to begin settlement
discussions on a gas rate increase with intervenors who have participated in
previous rate applications and represent the various classes of gas customers
served by CG&E. The proposed increase, estimated to be $25 million, is
expected to increase annual revenues approximately 7%. The proposed increase,
to be effective in late 1996, is requested, in part, to recover capital
investment made since the last gas rate increase in 1993. Also, the request
includes a proposal to initiate a pilot program that would allow residential
customers to choose their gas supplier and have CG&E transport the gas for
them. A full rate application is expected to be filed with the PUCO on
December 1, 1995. CG&E cannot predict the outcome of these settlement
discussions nor what actions the PUCO may take with respect to the proposed
rate increase.
Cinergy, CG&E, PSI, and ULH&P
4. In March 1995, the FASB issued SFAS 121 which will be effective for
Cinergy in January 1996. The new accounting standard requires impairment
losses on long-lived assets be recognized when an asset`s book value exceeds
its expected future cash flows. Based on the regulatory environment in which
Cinergy currently operates, SFAS 121 is not expected to have an adverse impact
on financial condition or results of operations upon adoption. However, this
conclusion may change in the future as deregulation, competitive factors, and
potential restructuring influence the electric utility industry.
Cinergy and CG&E
5. All outstanding shares of CG&E`s Cumulative Preferred Stock, 7.44%
Series and 9.15% Series, totaling $90 million, were redeemed at a per share
price of $101 and $106.10, respectively, on July 1, 1995.
Cinergy and CG&E
6. (a) As previously discussed in CG&E`s 1994 Form 10-K, CG&E redeemed $59
million principal amount of its 9.70% first mortgage bonds (due June 15, 2019)
on April 30, 1995, and $55 million principal amount of its 10 1/8% first
mortgage bonds (due May 1, 2020) on May 1, 1995. Additionally, $41 million
principal amount of the 9.70% first mortgage bonds and $45 million principal
amount of the 10 1/8% first mortgage bonds were retired on March 31, 1995.
Cinergy, CG&E, and ULH&P
(b) ULH&P redeemed $5 million principal amount of its 10.25% first
mortgage bonds (due June 1, 2020) at par with cash deposited in the
Maintenance and Replacement Fund, and the remaining amount of such bonds at
the redemption price of 107.34% on June 1, 1995.
On September 1, 1995, ULH&P will redeem all of its 9.70% Series first mortgage
bonds due 2019 at a redemption price of 106.51%.
Cinergy and CG&E
7. (a) CG&E received authority from the SEC in May 1995, for a shelf
registration statement which permits CG&E to sell up to $500 million of
unsecured debt securities. The PUCO has authorized CG&E, through March 31,
1996, to issue $500 million of first mortgage bonds, secured medium-term
notes, unsecured debt, or any combination thereof. CG&E issued $150 million
of 6.90% debentures due June 1, 2025 on June 14, 1995. Additionally, on July
6, 1995, CG&E issued $100 million in junior subordinated deferrable interest
debentures, due June 30, 2025, which carry an interest rate of 8.28%. CG&E
also has PUCO authority through July 19, 1996, to borrow from the Ohio Air
Quality Development Authority up to $84 million from the issuance of pollution
control revenue refunding bonds.
Cinergy, CG&E, and ULH&P
(b) The SEC authorized ULH&P`s shelf registration statement, permitting it
to sell up to $55 million of unsecured debt securities. The KPSC authorized
ULH&P to issue up to $55 million of first mortgage bonds, unsecured debt, or a
combination of both through March 31, 1997. ULH&P issued $15 million of 7.65%
debentures, due July 15, 2025 on July 25, 1995.
Cinergy, CG&E, PSI, and ULH&P
8. The operating subsidiary companies of Cinergy have the following short-
term debt authorizations and lines of credits:
Committed Unused
Authorized Lines Lines
Cinergy & Subsidiaries $783 $343 $186
CG&E & Subsidiaries 435 112 98
PSI 338 230 86
ULH&P 35 30 17
Additionally, Cinergy has a $100 million credit facility, which expires
September 27, 1997, of which $79 million remained unused at June 30, 1995.
Cinergy and PSI
9. (a) Coal tar residues and other substances associated with MGP sites have
been found at former MGP sites in Indiana, including, but not limited to,
several sites previously owned by PSI. PSI has identified at least 21 MGP
sites which it previously owned, including 19 it sold in 1945 to Indiana Gas
and Water Company, Inc. (now IGC). IGC has informed PSI of the basis for its
position that PSI, as a PRP under the CERCLA, should contribute to IGC`s
response costs related to investigating and remediating contamination at MGP
sites which PSI sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP
under the CERCLA with respect to contamination associated with MGP sites
previously owned and/or operated by both PSI and NIPSCO (or their
predecessors). The notification included seven sites, five of which PSI
acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims.
On May 3, 1995, the IURC denied IGC`s request for recovery of costs incurred
in complying with Federal, state, and local environmental regulations related
to MGP sites in which IGC has an interest, including sites acquired from PSI.
IGC has announced it will appeal this decision, which IGC contends is contrary
to decisions made by other state utility commissions with respect to this
issue. In light of this decision, PSI is evaluating its options with respect
to rate recovery of any MGP site-related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of, or
PSI`s responsibility for, any future environmental investigations and
remediations which may be required at MGP sites owned or previously owned by
PSI; however, any costs that ultimately are incurred may be material.
Cinergy and CG&E
(b) Lawrenceburg also has an MGP site which is under investigation to
determine a remediation strategy. Lawrenceburg had applied to have the site
included in the IDEM`s voluntary cleanup program. On May 22, 1995,
Lawrenceburg and the IDEM reached an agreement to include the Lawrenceburg MGP
site in such voluntary cleanup program. A proposed remediation plan will be
submitted in the near future.
Cinergy and CG&E
10. On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC
under the PUHCA seeking authorization to solicit proxies from the holders of
preferred stock and from Cinergy as the holder of all outstanding shares of
common stock for a special meeting of shareholders to be held in the fall of
1995 for the purpose of proposing to amend CG&E`s Articles. The proposed
amendment would, if adopted, eliminate a restriction on the amount of
unsecured debt that CG&E can issue, or, in the alternative, if such proposal
is not adopted, proposing to amend such Articles by suspending, for a ten year
period, the restriction on the amount of unsecured debt CG&E can issue. CG&E
is also requesting that the SEC authorize such amendment to CG&E`s Articles.
MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Senior Security Ratings
Cinergy, CG&E, PSI, and ULH&P
In July 1995, S&P Ratings Group raised its ratings of Cinergy`s operating
units` senior secured debt to A- from BBB+, removing the companies from the
financial agency`s credit watch. The companies had been on watch since
October 31, 1994. S&P also raised the ratings of the senior unsecured debt
and preferred stock from BBB to BBB+. The ratings group indicated these
actions are a result of lower combined power production costs, reduced
operation and maintenance expenses, and deferral of capital expenditures
brought about as a result of the merger.
In addition, in August 1995, DCR raised Cinergy`s operating units` credit
ratings. The ratings of CG&E`s first mortgage bonds and collateralized
pollution control revenue bonds were raised to A- from BBB+ while the ratings
of CG&E`s debentures were raised to BBB+ from BBB. PSI`s first mortgage bonds
and medium term notes were upgraded to A- from BBB+. The preferred stock
ratings of both companies were reaffirmed at BBB. ULH&P`s first mortgage
bonds were assigned a new rating of A-. DCR stated the merger will result in
lower new capacity needs and electric production costs and enhanced
transmission capabilities.
Regulatory Matters
Cinergy, CG&E, PSI, and ULH&P
PUHCA Reform
On June 20, 1995, after a year-long review of its continuing regulation of
public utility holding companies under the PUHCA, the SEC endorsed
recommendations for reform of the PUHCA. The recommendations call for repeal
and, pending repeal, significant administrative reform of the 60 year old
statute. While the report offers three alternative approaches to repeal and
legislative reform, the report`s preferred option is repeal coupled with a
transition period of one year or longer and a transfer of certain consumer-
protection provisions of PUHCA to the FERC. The report further recommends
that, pending consideration of legislative options, the SEC take prompt
administrative action, by rulemaking and on a case-by-case basis, to modernize
and simplify regulation under PUHCA, with particular reference to financing
transactions, diversification into nonutility businesses, utility mergers and
acquisitions and PUHCA`s `integration` standards. In the latter regard, the
report recommends a changed interpretation of PUHCA to permit registered
holding companies to own combination electric and gas utility companies
provided the affected states agree. Subsequent to the report`s issuance, the
SEC adopted rule changes exempting various types of financing transactions by
utility and nonutility subsidiaries of registered holding companies. The SEC
also proposed a rule that would exempt investments by registered systems in
specified `energy-related companies` subject to certain conditions.
Cinergy and PSI
PSI`s July 1994 Retail Rate Petition
As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI filed a
petition with the IURC for a retail rate increase. On May 15, 1995, PSI filed
testimony with the IURC supporting a 12.8% ($127.9 million) rate increase
request. Major components of the increase include, among other things, the
costs of the Clean Coal Project and a scrubber at Gibson. An order is
anticipated in the second quarter of 1996. Assuming this petition is
satisfactorily addressed by the IURC, Cinergy`s objective is to manage costs
in order to delay the need for additional rate relief by PSI. PSI cannot
predict what action the IURC may take with respect to this proposed rate
increase.
Cinergy and CG&E
CG&E Rate Matters
On July 17, 1995, CG&E filed a request with the PUCO to begin settlement
discussions on a gas rate increase involving intervenors who have participated
in previous rate applications and represent the various classes of gas
customers served by CG&E. The proposed increase, estimated to be $25 million,
is expected to increase annual revenues approximately 7%. The proposed
increase, anticipated to be effective in late 1996, is requested, in part, to
recover capital investment made since the last gas rate increase in 1993.
Also, the request includes a proposal to initiate a pilot program that would
allow residential customers to choose their gas supplier and have CG&E
transport the gas for them. A full rate application is expected to be filed
with the PUCO on December 1, 1995. CG&E cannot predict the outcome of these
settlement discussions nor what actions the PUCO may take with respect to the
proposed rate increase.
Cinergy, CG&E, PSI, and ULH&P
MEGA-NOPR
On March 29, 1995, the FERC issued a MEGA-NOPR on Open Access, which is
another step in the transition towards potentially full-scale competition in
the electric utility industry. The MEGA-NOPR is essentially the electric
industry`s equivalent of the FERC`s Order 636 applicable to the natural gas
industry. The MEGA-NOPR as proposed would, among other things, provide for
mandatory filing of open access/comparability transmission tariffs, provide
for functional unbundling of all services, require utilities to use the
tariffs for their own bulk power transactions, establish an electronic
bulletin board, and establish a contract-based approach to stranded costs.
Cinergy filed comments on June 6, 1995, in response to the FERC`s MEGA-NOPR on
Open Access. In the filing, Cinergy reaffirmed support for FERC`s authority
to order utilities owning transmission systems to provide open access at rates
and terms comparable to their own. On August 7, 1995, Cinergy filed
additional comments concerning the transmission pricing aspects of the MEGA-
NOPR. A final order could be issued by the end of 1995.
Environmental Issues
Cinergy, CG&E, and PSI
Manufactured Gas Plants
Coal tar residues and other substances associated with MGP sites have been
found at former MGP sites in Indiana, including, but not limited to, several
sites previously owned by PSI. PSI has identified at least 21 MGP sites which
it previously owned, including 19 it sold in 1945 to Indiana Gas and Water
Company, Inc. (now IGC). IGC has informed PSI of the basis for its position
that PSI, as a PRP under the CERCLA, should contribute to IGC`s response costs
related to investigating and remediating contamination at MGP sites which PSI
sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP
under the CERCLA with respect to contamination associated with MGP sites
previously owned and/or operated by both PSI and NIPSCO (or their
predecessors). The notification included seven sites, five of which PSI
acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims.
On May 3, 1995, the IURC denied IGC`s request for recovery of costs incurred
in complying with Federal, state, and local environmental regulations related
to MGP sites in which IGC has an interest, including sites acquired from PSI.
IGC has announced it will appeal this decision, which IGC contends is contrary
to decisions made by other state utility commissions with respect to this
issue. In light of this decision, PSI is evaluating its options with respect
to rate recovery of any MGP site-related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of, or
PSI`s responsibility for, any future environmental investigations and
remediations which may be required at MGP sites owned or previously owned by
PSI; however, any costs that ultimately are incurred may be material.
Lawrenceburg also has an MGP site which is under investigation to determine a
remediation strategy. Lawrenceburg had applied to have the site included in
the IDEM`s voluntary cleanup program. On May 22, 1995, Lawrenceburg and the
IDEM reached an agreement to include the Lawrenceburg MGP site in such
voluntary cleanup program. A proposed remediation plan will be submitted in
the near future.
Accounting Issues
Cinergy, CG&E, PSI, and ULH&P
New Accounting Standard
In March 1995, the FASB issued SFAS 121 which will be effective for Cinergy in
January 1996. The new accounting standard requires impairment losses on long-
lived assets be recognized when an asset`s book value exceeds its expected
future cash flows. Based on the regulatory environment in which Cinergy
currently operates, SFAS 121 is not expected to have an adverse impact on
financial condition or results of operations upon adoption. However, this
conclusion may change in the future as deregulation, competitive factors, and
potential restructuring influence the electric utility industry.
CAPITAL REQUIREMENTS
Cinergy and CG&E
On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC under the
PUHCA, seeking authorization to solicit proxies form the holders of preferred
stock and from Cinergy as the holder of all outstanding shares of common stock
for a special meeting of shareholders to be held in the fall of 1995 for the
purpose of proposing to amend CG&E`s Articles. The proposed amendment would,
if adopted, eliminate a restriction on the amount of unsecured debt that CG&E
can issue, or, in the alternative, if such proposal is not adopted, proposing
to amend such articles by suspending, for a ten year period, the restriction
on the amount of unsecured debt CG&E can issue. CG&E is also requesting that
the SEC authorize such amendment to CG&E`s Articles.
Cinergy, CG&E, and ULH&P
During May and July 1995, CG&E and ULH&P, issued $265 million of debt (see
Note 7 of the `Notes to Financial Statements`).
CAPITAL RESOURCES
Cinergy, CG&E, and ULH&P
Long-term Debt
See Note 7 of the `Notes to Financial Statements`.
Cinergy, CG&E, PSI, and ULH&P
Short-term Debt
See Note 8 of the `Notes to Financial Statements`.
RESULTS OF OPERATIONS
Cinergy, CG&E, PSI, and ULH&P
Reference is made to `PART I. Financial Information` - `ITEM 1. FINANCIAL
STATEMENTS.`
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cinergy and PSI
As discussed in Cinergy and PSI Forms 10-K, PSI has been arbitration for
several years with Cyprus Amax regarding various disputes, including
disputes related to price, tonnage, and coal quality arising out of a long-
term contract for the supply of 3.6 million tons of coal per year from the
Wabash Mine to Gibson. On August 9, 1995, PSI and Cyprus Amax executed a
Settlement Agreement, which fully resolves all outstanding disputes, and a
new coal supply agreement, which replaces the old contract. The new
contract requires a reduction in the price effective July 1, 1995, followed
by further price reductions through 1999. Beginning in the year 2000, the
price will be adjusted each year based upon market conditions. The new
contract also extends the term for deliveries from Wabash Mine.
Also, see Notes 2, 3, and 9 of the `Notes to Financial Statements` in `Part
I - Financial Information`.
ITEM 2. CHANGES IN SECURITIES
Cinergy and CG&E
On July 6, 1995, CG&E issued $100 million principal amount of 8.28% Junior
Subordinated Deferrable Interest Debentures due June 30, 2025. CG&E has
the right, under the applicable indenture, to extend the interest payment
period from time to time on the debentures to a period not exceeding 20
consecutive quarters and not extending beyond the maturity date. In the
event that this right is exercised, CG&E may not declare or pay dividends
on, or purchase, acquire, or make a liquidation payment with respect to,
any of its capital stock, or make any guarantee payments with respect to
the foregoing. It is believed that the extension of an interest payment
period on the debentures is unlikely.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Copies of the documents listed below which are identified with an
asterisk (*) have heretofore been filed with the SEC and are incorporated
herein by reference and made a part hereof. Exhibits not so identified are
filed herewith.
Exhibit
Designation Nature of Exhibit
PSI
3-a Amended Articles of Consolidation of PSI, as
amended to April 20, 1995.
ULH&P
3-b By-laws of ULH&P as amended, adopted by
shareholders June 16, 1995.
Cinergy
4-a *Original Indenture (Unsecured Debt Securities)
between CG&E and The Fifth Third Bank dated as
of May 15, 1995. (Exhibit to CG&E Form 8-A dated
July 24, 1995, file number 1-1232.)
Cinergy and CG&E
4-b First Supplemental Indenture between CG&E and
The Fifth Third Bank dated as of June 1, 1995.
Cinergy
4-c *Second Supplemental Indenture between CG&E and
The Fifth Third Bank dated as of June 30, 1995.
(Exhibit to CG&E Form 8-A dated July 24, 1995,
file number 1-1232.)
Cinergy, CG&E and ULH&P
4-d Original Indenture (Unsecured Debt Securities)
between ULH&P and The Fifth Third Bank dated as
of July 1, 1995.
4-e First Supplemental Indenture between ULH&P and
The Fifth Third Bank dated as of July 15, 1995.
Cinergy, CG&E, PSI, and ULH&P
27 Financial Data Schedules (included in
electronic submission only).
Cinergy, CG&E, PSI, and ULH&P
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1995.
SIGNATURES
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although Cinergy, CG&E, PSI, and ULH&P believe that the
disclosures are adequate to make the information presented not misleading. In
the opinion of Cinergy, CG&E, PSI, and ULH&P, these statements reflect all
adjustments (which include only normal, recurring adjustments) necessary to
reflect the results of operations for the respective periods. The unaudited
statements are subject to such adjustments as the annual audit by independent
public accountants may disclose to be necessary.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed by an
officer and the chief accounting officer on their behalf by the undersigned
thereunto duly authorized.
CINERGY CORP.
THE CINCINNATI GAS & ELECTRIC COMPANY
PSI ENERGY, INC.
THE UNION LIGHT, HEAT AND POWER COMPANY
Registrants
Date: August 10, 1995 /S/ J. Wayne Leonard
J. Wayne Leonard
Duly Authorized Officer
Date: August 10, 1995 /S/ Charles J. Winger
Charles J. Winger
Chief Accounting Officer