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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File No. 33-7591
Oglethorpe Power Corporation
(An Electric Membership Corporation)
(Exact name of registrant as specified in its charter)
Georgia 58-1211925
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Post Office Box 1349
2100 East Exchange Place
Tucker, Georgia 30085-1349
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 270-7600
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. The Registrant is a
membership corporation and has no authorized or outstanding equity securities.
OGLETHORPE POWER CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
Page No.
-------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of June 30, 2000
(Unaudited) and December 31, 1999 3
Condensed Statements of Revenues and Expenses and
Comprehensive Margin (Unaudited) for the Three Months
and Six Months ended June 30, 2000 and 1999 5
Condensed Statements of Cash Flows (Unaudited)
for the Six Months Ended June 30, 2000 and 1999 6
Notes to the Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Oglethorpe Power Corporation
Condensed Balance Sheets
June 30, 2000 and December 31, 1999
- --------------------------------------------------------------------------------------------------------
(dollars in thousands)
2000 1999
Assets (Unaudited)
-----------------------------------
Electric plant, at original cost:
In service $4,862,550 $4,854,037
Less: Accumulated provision for depreciation (1,689,412) (1,625,933)
-------------- --------------
3,173,138 3,228,104
Nuclear fuel, at amortized cost 81,090 84,565
Construction work in progress 45,923 18,299
-------------- --------------
3,300,151 3,330,968
-------------- --------------
Investments and funds:
Decommissioning fund, at market 141,732 135,703
Deposit on Rocky Mountain transactions, at cost 61,588 59,579
Bond, reserve and construction funds, at market 28,187 31,158
Investment in associated organizations, at cost 17,782 17,919
Other, at cost 2,094 2,535
-------------- --------------
251,383 246,894
-------------- --------------
Current assets:
Cash and temporary cash investments, at cost 186,906 222,814
Other short-term investments, at market 77,850 75,482
Customer receivables 128,172 109,705
Notes receivable 150,873 94,070
Inventories, at average cost 81,793 89,766
Prepayments and other current assets 16,192 19,293
-------------- --------------
641,786 611,130
-------------- --------------
Deferred charges:
Premium and loss on reacquired debt, being amortized 186,184 196,289
Deferred amortization of Scherer leasehold 102,007 101,404
Discontinued projects, being amortized 23,928 28,020
Deferred debt expense, being amortized 16,998 17,070
Other 27,660 32,847
-------------- --------------
356,777 375,630
-------------- --------------
$4,550,097 $4,564,622
============== ==============
The accompanying notes are an integral part of these condensed financial
statements.
3
Oglethorpe Power Corporation
Condensed Balance Sheets
June 30, 2000 and December 31, 1999
- --------------------------------------------------------------------------------------------------------
(dollars in thousands)
2000 1999
Equity and Liabilities (Unaudited)
-----------------------------------
Capitalization:
Patronage capital and membership fees (including unrealized
loss of ($1,192) at June 30, 2000 and ($1,609) at
December 31, 1999 on available-for-sale securities) $389,253 $370,025
Long-term debt 3,040,934 3,103,590
Obligation under capital leases 271,336 275,224
Obligation under Rocky Mountain transactions 61,588 59,579
-------------- --------------
3,763,111 3,808,418
-------------- --------------
Current liabilities:
Long-term debt and capital leases due within one year 111,411 129,419
Accounts payable 53,380 69,555
Notes payable 170,476 88,479
Accrued interest 25,537 50,201
Accrued and withheld taxes 13,406 26
Other current liabilities 3,891 9,318
-------------- --------------
378,101 346,998
-------------- --------------
Deferred credits and other liabilities:
Gain on sale of plant, being amortized 54,570 55,807
Net benefit of sale of income tax benefits, being amortized 14,016 18,021
Net benefit of Rocky Mountain transactions, being amortized 84,411 86,004
Accumulated deferred income taxes 63,485 63,203
Decommissioning reserve 169,008 164,510
Other 23,395 21,661
-------------- --------------
408,885 409,206
-------------- --------------
$4,550,097 $4,564,622
============== ==============
The accompanying notes are an integral part of these condensed financial
statements.
4
Oglethorpe Power Corporation
Condensed Statements of Revenues and Expenses and Comprehensive Margin (Unaudited)
For the Three and Six Months Ended June 30, 2000 and 1999
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2000 1999 2000 1999
---------------------------- ----------------------------
Operating revenues:
Sales to Members $271,384 $262,540 $536,090 $507,583
Sales to non-Members 13,642 11,377 23,820 17,099
----------- ----------- ----------- -----------
Total operating revenues 285,026 273,917 559,910 524,682
----------- ----------- ----------- -----------
Operating expenses:
Fuel 55,597 46,606 104,709 88,141
Production 51,994 52,559 111,096 102,847
Purchased power 83,555 82,729 156,069 145,735
Depreciation and amortization 32,894 33,681 65,631 67,300
----------- ----------- ----------- -----------
Total operating expenses 224,040 215,575 437,505 404,023
----------- ----------- ----------- -----------
Operating margin 60,986 58,342 122,405 120,659
----------- ----------- ----------- -----------
Other income (expense):
Investment income 11,614 10,610 20,563 18,064
Amortization of net benefit of sale of income tax benefits 2,799 2,799 5,597 5,597
Allowance for equity funds used during construction 16 19 28 46
Other 1,107 1,017 2,093 1,804
----------- ----------- ----------- -----------
Total other income 15,536 14,445 28,281 25,511
----------- ----------- ----------- -----------
Interest charges:
Interest on long-term debt and other obligations 67,026 68,242 132,102 133,987
Allowance for debt funds used during construction (128) 62 (227) (398)
----------- ----------- ----------- -----------
Net interest charges 66,898 68,304 131,875 133,589
----------- ----------- ----------- -----------
Net margin 9,624 4,483 18,811 12,581
Net change in unrealized gain (loss) on available-for sale securities 243 (894) 417 (1,668)
----------- ----------- ----------- -----------
Comprehensive margin $9,867 $3,589 $19,228 $10,913
=========== =========== =========== ===========
The accompanying notes are an intregal part of these condensed financial
statements.
5
Oglethorpe Power Corporation
Condensed Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2000 and 1999
- ---------------------------------------------------------------------------------------------------------------
(dollars in thousands)
2000 1999
--------------------------------------
Cash flows from operating activities:
Net margin $ 18,811 $ 12,581
------------- -------------
Adjustments to reconcile net margin to net cash
provided by operating activities:
Depreciation and amortization 100,992 84,167
Allowance for equity funds used during construction (28) (46)
Amortization of deferred gains (1,237) (1,237)
Amortization of net benefit of sale of income tax benefits (5,597) (5,597)
Deferred income taxes 283 -
Other 5,541 8,624
Change in net current assets, excluding long-term debt and capital leases due
within one year and notes payable:
Notes receivable (13) 415
Receivables (18,467) (14,914)
Inventories 7,973 (15,636)
Prepayments and other current assets 3,101 2,413
Accounts payable (16,175) 14,700
Accrued interest (24,665) 5,535
Accrued and withheld taxes 13,380 12,740
Other current liabilities (5,427) (9,630)
------------- -------------
Total adjustments 59,661 81,534
------------- ------------
Net cash provided by operating activities 78,472 94,115
------------- -------------
Cash flows from investing activities:
Property additions (53,607) (32,454)
Net proceeds from bond, reserve and construction funds 2,964 92
Decrease in investment in associated organizations 137 138
Increase in other short-term investments (1,944) (1,832)
Increase in decommissioning fund (6,673) (10,868)
------------- -------------
Net cash used in investing activities (59,123) (44,924)
------------- -------------
Cash flows from financing activities:
Long-term debt proceeds, net (1,710) (4,667)
Long-term debt payments (81,014) (52,938)
Increase in notes payable 81,997 58,356
Increase in notes receivable under interim financing agreement (56,790) (70,435)
Other 2,260 964
------------- -------------
Net cash used in financing activities (55,257) (68,720)
------------- -------------
Net decrease in cash and temporary cash investments (35,908) (19,529)
Cash and temporary cash investments at beginning of period 222,814 106,235
------------- -------------
Cash and temporary cash investments at end of period $186,906 $ 86,706
============= =============
Cash paid for:
Interest (net of amounts capitalized) $140,325 $ 108,936
Income taxes - -
The accompanying notes are an integral part of these condensed financial
statements.
6
Oglethorpe Power Corporation
Notes to Condensed Financial Statements
June 30, 2000 and 1999
(A) The condensed financial statements included in this report have been
prepared by Oglethorpe Power Corporation (Oglethorpe), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). In the opinion of management, the information furnished
in this report reflects all adjustments (which include only normal
recurring adjustments) and estimates necessary to present fairly, in all
material respects, the results for the periods ended June 30, 2000 and
1999. 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 SEC rules
and regulations, although Oglethorpe believes that the disclosures are
adequate to make the information presented not misleading. These condensed
financial statements should be read in conjunction with the financial
statements and the notes thereto included in Oglethorpe's latest Annual
Report on Form 10-K, as filed with the SEC. Certain amounts for 1999 have
been reclassified to conform with the current period presentation. The
results of operations for the three and six month periods ended June 30,
2000 are not necessarily indicative of results to be expected for the full
year.
(B) In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." In June 2000, the Financial Accounting
Standards Board issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities," an amendment of SFAS No. 133.
These standards require that derivative instruments, with certain
exceptions, be recognized as assets or liabilities and be measured at fair
value. Oglethorpe is required to adopt SFAS No. 133 and SFAS No. 138 by
January 1, 2001. Oglethorpe is currently assessing the impact that adoption
of SFAS No. 133 and SFAS No. 138 will have on results of operations and
financial condition.
7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
For the Three Months and Six Months Ended June 30, 2000 and 1999
- ----------------------------------------------------------------
Operating Revenues
Revenues from sales to Oglethorpe's 39 retail electric distribution cooperative
members (the Members) for the three months and six months ended June 30, 2000
were 3.4% and 5.6% higher than the same periods of 1999. Megawatt-hour (MWh)
sales to Members were 11.5% and 10.5% higher in the current three-month and
six-month periods compared to the same periods of 1999. The increase in MWh
sales to Members in 2000 compared to 1999 was primarily due to continued sales
growth in the Members' service territories. The average revenue per MWh from
sales to Members was 7.3% and 4.4% less for the current periods compared to the
same periods of 1999.
The components of Member revenues for the three months and six months ended June
30, 2000 and 1999 were as follows:
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ ---------------------
2000 1999 2000 1999
---- ---- ---- ----
(dollars in thousands)
Capacity revenues $157,612 $155,210 $312,928 $310,424
Energy revenues 113,772 107,330 223,162 197,159
-------- -------- ------- --------
Total $271,384 $262,540 $536,090 $507,583
======== ======== ======== ========
While capacity revenues from Members for the three months and six months ended
June 30, 2000 compared to 1999 increased slightly, energy revenues were 6.0% and
13.2% higher for the current periods compared to the same periods of 1999. The
increase in energy revenues in 2000 was primarily due to higher MWh sales.
Oglethorpe's average energy revenue per MWh from sales to Members was 4.9% less
in the current three-month period of 2000 compared to 1999 and 2.4% higher for
the six-month period of 2000 compared to 1999. The lower average energy revenue
per MWh during the current quarter resulted primarily from lower average
purchased power energy costs (see "Operating Expenses" below).
8
Sales to non-Members were primarily from energy sales to other utilities and
power marketers. The following table summarizes the amounts of non-Member
revenues from these sources for the three months and six months ended June 30,
2000 and 1999:
Three Months Six Months
Ended June 30, Ended June 30,
----------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
(dollars in thousands)
Sales to other utilities $11,768 $8,878 $20,345 $12,705
Sales to power marketers 1,874 2,499 3,475 4,394
------- ------- ------- ------
Total $13,642 $11,377 $23,820 $17,099
======= ======= ======= =======
Sales to other utilities represent sales made directly by Oglethorpe. Oglethorpe
sells for its own account any energy available from the portion of its resources
dedicated to Morgan Stanley Capital Group Inc. (Morgan Stanley) that is not
scheduled by Morgan Stanley pursuant to its power marketer arrangement.
Under the LG&E Energy Marketing Inc. (LEM) and Morgan Stanley power marketer
arrangements, sales to the power marketers represent the net energy transmitted
on behalf of LEM and Morgan Stanley off-system on a daily basis from
Oglethorpe's total resources. Oglethorpe sold this energy to LEM at Oglethorpe's
cost, subject to certain limitations, and to Morgan Stanley at a contractually
fixed price. The volume of sales to power marketers depends primarily on the
power marketers' decisions for servicing their load requirements.
Operating Expenses
Operating expenses for the three months and six months ended June 30, 2000 were
3.9% and 8.3% higher compared to the same periods of 1999. These increases were
primarily due to higher fuel costs for the current three-month and six-month
periods compared to the same periods of 1999 and due to an increase in
production and purchased power costs for the current six-month period compared
to the same period of 1999.
Fuel costs increased 19.3% and 18.8% for the current three-month and six-month
periods compared to the same periods of 1999 primarily as a result of increases
of 17.1% and 16.1%, respectively, in MWhs of generation. For the current
three-month and six-month periods, nuclear generation was 13.8% and 14.7% higher
and fossil generation was 19.5% and 15.8% higher as compared to the same periods
of 1999. The higher fossil generation resulted in a 1.9% and 2.3% increase in
average fuel costs.
The 8.0% increase in production costs for the six-month period ended June 30,
2000 was due to higher operations and maintenance (O&M) expenses for Plant
Scherer and Plant Hatch and higher expenses incurred for special strategic
projects. The higher O&M expenses for Plant Scherer resulted from a $1.6 million
true up for sharing of O&M expenses between the owners of Units No. 1 and 2
(which include Oglethorpe) and the owners of Units No. 3 and 4 related to the
burning of western coal. The higher O&M expenses for Plant Hatch resulted from
increased amortization of nuclear
9
refueling outage costs in 2000 compared to the same period of 1999.
Purchased power costs increased 1.0% and 7.1% for the three months and six
months ended June 30, 2000 compared to the same periods of 1999. This was due to
a 33.9% and 29.2% increase in purchased MWhs, offset by 24.6% and 17.1% lower
average cost per MWh of total purchased power in 2000 compared to the comparable
periods of 1999. Purchased power costs were as follows:
Three Months Six Months
Ended June 30, Ended June 30,
---------------------- ------------------------
2000 1999 2000 1999
---- ---- ---- ----
(dollars in thousands)
Capacity costs $24,446 $26,941 $46,057 $52,349
Energy costs 59,109 55,788 110,012 93,386
------- ------- ------- ------
Total $83,555 $82,729 $156,069 $145,735
======= ======= ======== ========
Purchased power capacity costs for the three months and six months ended June
30, 2000 were approximately 9.3% and 12.0% lower than the same periods of 1999.
These savings were primarily a result of a new power purchase agreement
Oglethorpe entered into with Georgia Power Company (GPC) effective April 1, 1999
which replaced the Block Power Sale Agreement. Purchased power energy costs for
the three-month and six-month periods of 2000 were 6.0% and 17.8% higher
compared to the same periods of 1999 primarily as a result of higher volume of
purchased MWhs during the first quarter of 2000 compared to the first quarter of
1999. Lower prices in the wholesale electricity markets during the current
quarter, however, resulted in a 20.9% and 8.8% decrease in the average cost of
purchased power energy per MWh for the three-month and six-month periods of 2000
compared to 1999.
Other Income
Investment income was higher in the three-months and six-month periods of 2000
compared to the same periods of 1999 partly due to interest earnings on the
notes receivable from Smarr EMC relating to the Sewell Creek Energy Facility and
partly due to higher cash and temporary cash investment balances and higher
interest earnings on those investments. See "Financial Condition" for a further
discussion of the Sewell Creek Energy Facility.
Net Margin and Comprehensive Margin
Oglethorpe's net margin for the three-month and six-month ended June 30, 2000
was $9.6 million and $18.8 million, respectively, compared to $4.5 million and
$12.6 million for the same periods of 1999. The higher net margin resulted
primarily from lower than budgeted fixed operations and maintenance (O&M)
expenses. Comprehensive margin for Oglethorpe is net margin adjusted for the net
change in unrealized gains and losses on investments in available-for-sale
securities.
10
Financial Condition
Capital Requirements and Sources of Capital
- -------------------------------------------
As previously reported, Oglethorpe continues to plan for the Members' power
requirements above owned and leased generating units and long-term power
purchase contracts. The requirements for the Members have exceeded existing
resources, and Oglethorpe expects the Members' requirements will continue to
exceed existing resources over the next several years. Some of these
requirements are now being met by combustion turbine facilities owned by Smarr
EMC, a cooperative owned by 37 of Oglethorpe's 39 Members. Smarr EMC's 217 MW
Smarr Energy Facility began operating in June 1999. Three of the four units of
Smarr EMC's 492 MW Sewell Creek Energy Facility were declared in commercial
operation in June and July 2000. The fourth unit is scheduled for commercial
operation in the fall of 2000. Oglethorpe is providing the interim financing for
the Sewell Creek Energy Facility, and as of June 30, 2000, $145.5 million of
commercial paper was outstanding for this purpose. Smarr EMC has arranged
permanent financing for the Sewell Creek Energy Facility on a non-recourse basis
to Oglethorpe. Oglethorpe expects that Smarr EMC will repay Oglethorpe for the
interim financing in the fall of 2000. See "THE MEMBERS--Smarr EMC" and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--Financial Condition--Liquidity and Sources of Capital" in Items 1
and 7 of Oglethorpe's 1999 Annual Report on Form 10-K for a further discussion
of Smarr EMC.
In addition, Oglethorpe has entered into agreements to construct six new
combustion turbine units totaling 660 MW of capacity and has an option to
construct a 520 MW combined cycle facility. Four of the combustion turbines are
targeted for completion in 2002, with the other two to be completed in 2003. The
combined cycle facility is targeted for completion in 2003. Oglethorpe estimates
capital expenditures for these facilities, excluding interest during
construction, will be approximately $88 million in 2000, $277 million in 2001,
$129 million in 2002 and $22 million in 2003. The Members are considering
participation in these facilities, through a subsidiary of Oglethorpe, Smarr EMC
or a similar entity. Oglethorpe is providing some of the interim financing for
these facilities and expects to arrange for construction and permanent financing
either from the Rural Utilities Service or another lender. Oglethorpe is also
evaluating options for constructing or contracting for additional capacity
anticipated to be needed in 2004 and beyond. See "OGLETHORPE POWER
CORPORATION--Relationship with RUS" in Item 1 of Oglethorpe's 1999 Annual Report
on Form 10-K.
General
- -------
Total assets and total equity plus liabilities as of June 30, 2000 were $4.6
billion, which was $14.5 million less than the total at December 31, 1999. The
decrease was due primarily to depreciation of plant and the decrease in cash and
temporary cash investments, offset somewhat by an increase in the notes
receivable for construction of Sewell Creek Energy Facility.
Assets
Property additions for the six months ended June 30, 2000 totaled $53.6 million.
These additions
11
primarily consisted of costs related to the six combustion turbine units
discussed above, purchases of nuclear fuel and additions, replacements and
improvements to existing generation facilities. The $27.6 million increase in
construction work in progress was due primarily to the construction of the six
combustion turbine units.
The decrease in cash and temporary cash investments is a result of cash used in
financing and investing activities, including property additions noted above and
debt principal repayments, exceeding cash provided from operations.
The increase in receivables resulted from significantly higher energy costs
billed to Members at June 30, 2000 compared to the energy costs billed to
Members at December 31, 1999.
The increase in notes receivable resulted primarily from use of funds for
interim financing activities related to the construction of the Sewell Creek
Energy Facility.
Prepayments and other current assets decreased primarily due to the estimated
prepayments for construction and nuclear fuel costs for July 2000 being $3.9
million lower compared to the estimate for January 2000.
The decrease in other deferred charges is primarily due to the 1999 refueling
outage costs for Hatch Unit No. 1 being significantly higher than the refueling
outage costs incurred for Hatch Unit No. 2 in spring 2000. Such costs are
amortized to expense over the 18-month operating cycle of the unit.
Equity and Liabilities
Accounts payable decreased due to normal variations in the timing of payables
activity.
Notes payable represents commercial paper issued by Oglethorpe as interim
financing primarily for costs incurred in the construction of Sewell Creek
Energy Facility. Oglethorpe expects to be reimbursed for costs relating to the
construction of Sewell Creek Energy Facility shortly after the last of the four
units is placed into commercial operation, which Oglethorpe anticipates will
occur in the fall of 2000. The balance of the outstanding commercial paper was
issued as interim financing for the future generation facilities discussed
above.
The decrease in accrued interest resulted from the fourth quarter Federal
Financing Bank interest payment being paid on January 3, 2000, whereas, the
second quarter Federal Financing Bank interest payment was paid on June 30.
Accrued and withheld taxes increased as a result of the normal monthly accruals
for property taxes, which are generally paid in the fourth quarter of the year.
The decrease in other current liabilities primarily resulted from year-end
accruals for professional and legal services.
12
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-Q contains forward-looking statements,
including statements regarding, among other items, (i) anticipated trends in
Oglethorpe's business and (ii) Oglethorpe's future capital requirements and
sources of capital. These forward-looking statements are based largely on
Oglethorpe's current expectations and are subject to a number of risks and
uncertainties, certain of which are beyond Oglethorpe's control. For certain
factors that could cause actual results to differ materially from those
anticipated by these forward-looking statements, see "CERTAIN FACTORS AFFECTING
THE ELECTRIC UTILITY INDUSTRY" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Miscellaneous--Competition" in
Items 1 and 7 of Oglethorpe's 1999 Annual Report on Form 10-K. In light of these
risks and uncertainties, there can be no assurance that events anticipated by
the forward-looking statements contained in this Quarterly Report will in fact
transpire.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Commodity Price Risk
Oglethorpe is exposed to electricity price risk relating to managing the supply
of energy to the Members. Oglethorpe supplies substantially all of the Members'
requirements from a combination of owned and leased generating plants and power
purchased under long-term contracts with other power suppliers and power
marketers. Therefore, only a small percentage of Oglethorpe's requirements is
purchased in the short-term market, and further only a small portion of these
requirements is covered by derivative commodity instruments. Oglethorpe's market
price risk exposure on these instruments is not material.
Oglethorpe utilizes a Risk Management Committee (RMC) to manage its risks
including those related to energy trading. The RMC consists of senior executive
officers including the Chief Executive Officer. The RMC has implemented risk
management policies, which include trading authority limits and counterparty
credit requirements for energy trading. The RMC plans to implement a
comprehensive risk management policy in the third quarter of 2000. The RMC
regularly reviews risk management reports and reports results to the Audit
Committee of the Board of Directors.
Oglethorpe has also entered into a service agreement with ACES Power Marketing
(APM) under which APM acts as Oglethorpe's agent in the purchase and sale of
short-term wholesale power. APM also provides related risk management services.
APM is subject to Oglethorpe's risk management policies, including trading
authority limits. APM is an organization owned by several generation and
transmission cooperatives that provides energy trading services to rural
electric cooperatives.
Changes in Risk Exposure
Oglethorpe's market risks have not changed materially from the market risks
reported in Oglethorpe's 1999 Annual Report on Form 10-K.
13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
10.27 Employment Agreement, effective August 1, 2000, between Oglethorpe
and Michael Price.
10.28 Employment Agreement, effective August 1, 2000, between Oglethorpe
and William Clayton Robbins.
10.29 Employment Agreement, effective August 1, 2000, between Oglethorpe
and Elizabeth Bush Higgins.
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Oglethorpe for the quarter ended June
30, 2000.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Oglethorpe Power Corporation
(An Electric Membership Corporation)
Date: August 11, 2000 By: /s/ Thomas A. Smith
-------------------
Thomas A. Smith
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 11, 2000 /s/ Mac F. Oglesby
------------------
Mac F. Oglesby
Treasurer
(Principal Financial Officer)
Date: August 11, 2000 /s/ W. Clayton Robbins
----------------------
W. Clayton Robbins
Senior Vice President, Finance and
Administration
(Principal Financial Officer)
Date: August 11, 2000 /s/ Willie B. Collins
---------------------
Willie B. Collins
Controller and Chief Risk Officer
(Chief Accounting Officer)
15