-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WlmWOcXJF3w7BVYujKKGjFDuhC7NyYWlLXe1KlxLZpGZjxjmOVAZKtztAuC1/chx +KrfqFH7Dqcn8wESIL2sCw== 0000017797-94-000027.txt : 19941111 0000017797-94-000027.hdr.sgml : 19941111 ACCESSION NUMBER: 0000017797-94-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAROLINA POWER & LIGHT CO CENTRAL INDEX KEY: 0000017797 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 560165465 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03382 FILM NUMBER: 94558742 BUSINESS ADDRESS: STREET 1: 411 FAYETTEVILLE ST CITY: RALEIGH STATE: NC ZIP: 27601 BUSINESS PHONE: 9195466111 10-Q 1 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 September 30, 1994 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 number 1-3382 CAROLINA POWER & LIGHT COMPANY _______________________________________________________ (Exact name of registrant as specified in its charter) North Carolina 56-0165465 ________________________________________________________________ (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 411 Fayetteville Street, Raleigh, North Carolina 27601-1748 _____________________________________________________________ (Address of principal executive offices) (Zip Code) 919-546-6111 ____________ (Registrant's telephone number, including area code) _________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) 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 . APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock (Without Par Value) shares outstanding at October 31, 1994: 156,535,522 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ______ ____________________ Reference is made to the attached Appendix containing the Interim Financial Statements for the periods ended September 30, 1994. The amounts are unaudited but, in the opinion of management, reflect all transactions necessary to fairly present the Company's financial position and results of operations for the interim periods. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ______ _________________________________________________ Results of Operations For the Three, Nine and Twelve Months Ended September 30, 1994, As Compared With the Corresponding Periods One Year Earlier ___________________________________________ Operating Revenues and Expenses: Revenues decreased for the three months ended September 30, 1994, primarily due to weather that was cooler than normal. In addition, as of July 1994, the Company has completed recovery of the portion of abandoned plant costs addressed under a special rider resulting from the 1990 North Carolina Utilities Commission Remand Order. This reduction in revenue was approximately $17 million for the three months ended September 30, 1994, and did not significantly impact net income due to a corresponding decrease in amortization expense. Fuel for generation decreased for the three, nine and twelve months ended September 30, 1994, due to a change in the generation mix. Nuclear generation increased and higher-cost fossil generation decreased due to greater availability of the Company's nuclear generating facilities. In the third quarter of 1994, the Company reached settlement agreements with regulators and agreed to forgo $8 million of deferred fuel cost. In the third quarter of 1993, the Company reached settlement agreements with regulators and agreed to forgo recovery of $41.1 million of deferred fuel cost related to the Brunswick Plant outage. The net effect of these settlement agreements resulted in a decrease of $33.1 million in deferred fuel cost for the three, nine and twelve months ended September 30, 1994, as compared to the same periods ended September 30, 1993. Excluding the effect of these settlements, deferred fuel cost increased for the three, nine and twelve month periods ended September 30, 1994, as a result of lower fuel costs associated with increased nuclear generation and as a result of the recovery of prior fuel costs as allowed by the North Carolina fuel adjustment statute. Purchased power increased for the nine and twelve months ended September 30, 1994, primarily due to increased purchases from Duke Power Company (Duke) and North Carolina Eastern Municipal Power Agency (Power Agency). The increased purchases from Duke of $29.9 million and $46.2 million for the nine and twelve months ended September 30, 1994, respectively, are primarily due to an agreement under which the Company began purchasing 400 megawatts of generating capacity in July 1993. The increased purchases from Power Agency of $8.1 million and $12.1 million for the nine and twelve months ended September 30, 1994, respectively, are primarily due to the increased buyback provisions of the Company's April 1993 agreement with Power Agency. Other operation expense increased for the twelve months ended September 30, 1994, in part due to adjustments made in the fourth quarter of 1992 that decreased expenses for the prior twelve month period. These adjustments were made to certain accrual and asset balances as a result of more current information at that time. The remainder of the increase for the twelve months and the increase for the nine months ended September 30, 1994, is made up of a number of items, none of which are individually significant. Maintenance expense decreased for the nine and twelve months ended September 30, 1994, primarily due to a decrease in costs associated with the Brunswick Plant. In the prior periods, significant costs were incurred at the Brunswick Plant as a result of the Plant's extended outage. The increase in Harris Plant deferred costs for the twelve months ended September 30, 1994, includes adjustments related to the 1993 settlement between the Company and North Carolina Electric Membership Corporation (NCEMC). Other Income (Expense): The Harris Plant disallowance - Power Agency line item reflects a write-off recorded as a result of the 1993 settlement with Power Agency. The write-off represents a portion of the Company's Harris Plant costs that will not be recoverable through sales of supplemental power to Power Agency. As of January 1994, the Company is no longer recording interest income related to the qualified employee stock ownership plan (ESOP) loan (see New Accounting Standard below). This reduction in interest income is reflected in the three, nine and twelve months ended September 30, 1994. Interest income also decreased in these current periods as compared to the prior periods due to the Company's September 1993 settlement agreement with Westinghouse Electric Corporation, which increased interest income in the prior periods. Partially offsetting these decreases in the nine and twelve month periods was an increase for interest income recorded in June 1994 that related to certain IRS audit issues. Interest Charges: Interest charges on long-term debt decreased for all periods primarily due to long-term debt refinancings that allowed the Company to take advantage of lower interest rates. Material Changes in Capital Resources and Liquidity From December 31, 1993, to September 30, 1994 and From September 30, 1993, to September 30, 1994 _______________________________________________ During the nine and twelve months ended September 30, 1994, the Company issued long-term debt totaling $272.6 million and $364.9 million, respectively. These issuances of debt, debt issued in the third quarter of 1993 and internally generated funds financed the retirement or redemption of long-term debt totaling $267.6 million and $532.7 million, respectively. The Company uses short-term financing in the form of commercial paper backed by revolving credit agreements to provide flexibility in the timing and amounts of long-term financing. At September 30, 1994, the Company had revolving credit facilities amounting to $207.9 million and $15 million in commercial paper outstanding. The Company's First Mortgage Bonds are currently rated "A2" by Moody's Investors Service, "A" by Standard & Poors and "A+" by Duff & Phelps. Standard & Poors and Moody's Investors Service have rated the Company's commercial paper "A-1" and "P-1", respectively. The Company's capital structure at September 30, 1994, was 49.8% common stock equity, 47.5% long-term debt and 2.7% preferred stock. In July 1994, the Board of Directors of the Company (Board) authorized the Executive Committee of the Board to repurchase up to 10 million shares of the Company's common stock on the open market. The Board indicated that at current stock price levels it was in the best interests of the Company's stockholders for management to have the flexibility to repurchase shares. In accordance with the stock repurchase program, the Company had purchased approximately 4.2 million shares through October 31, 1994. With regard to compliance with Phase II of the 1990 amendments to the Clean Air Act (Act), in order to reduce sulfur dioxide emissions, the Company will modify equipment to allow certain of the Company's plants to burn lower-sulfur coal, and the Company is planning for the installation of scrubbers. Installation of additional equipment will also be necessary to reduce nitrogen oxides emissions. The Company anticipates that it will be able to delay the installation and operation of scrubbers until 2005 by using sulfur dioxide emission allowances. The Company purchased emission allowances under the Environmental Protection Agency's emission allowance trading program in 1993 and 1994. The Company estimates that the total capital cost to comply with Phase II of the Act will approximate $278 million during the period 1994 through 1999 and an additional $370 million during the period 2000 through 2005. These estimates, for installation or modification of equipment, are in nominal dollars (undiscounted future amounts expected to be expended). The required modifications and additions are expected to increase operating and maintenance costs by a total of $20 million for the period 1994 through 1999, $53 million for the period 2000 through 2004 and by $40 million beginning in 2005. Additionally, fuel costs are expected to increase by a total of approximately $160 million for the period 2000 through 2004 and by approximately $55 million beginning in 2005. The Company expects these increased fuel costs to be recoverable through applicable fuel adjustment statutes. Actual plans for compliance with the Act's requirements have not been finalized and the amount required for capital expenditures and for increased operating, maintenance and fuel expenditures cannot be determined with certainty at this time. The financial impact of additional expenditures will be dependent on future ratemaking treatment. The North Carolina Utilities Commission and the South Carolina Public Service Commission are currently allowing the Company to accrue carrying charges on its investment in emission allowances. New Accounting Standard _______________________ In January 1994, the Company implemented Statement of Position (SOP) 93-6, "Employers' Accounting for Stock Ownership Plans," on a prospective basis. This SOP requires the following changes in accounting for the Company's leveraged employee stock ownership plan: 1) ESOP shares that have not been committed to be released to participants' accounts are no longer considered outstanding for the determination of earnings per common share; 2) dividends on unallocated ESOP shares are no longer recognized for financial statement purposes; 3) all tax benefits of ESOP dividends are now recorded directly to non-operating income tax expense, whereas previously a portion of the tax benefits was recorded directly to retained earnings; 4) interest income related to the qualified ESOP loan is no longer recognized; and 5) the difference between the acquisition and allocation prices of ESOP shares, which was previously recorded as other income, net, is now recorded directly to common stock. In addition, ESOP loan transactions between the Company and the Stock Purchase-Savings Plan Trustee are no longer reflected in the Statements of Cash Flows. The implementation of SOP 93-6 resulted in an increase in earnings per common share of approximately $.03 for the three and twelve months ended September 30, 1994, and $.04 for the nine months ended September 30, 1994. Legal Matters _____________ In September 1994, NCEMC withdrew the Complaint it had filed with the Federal Energy Regulatory Commission, which had alleged that the wholesale rates the Company charges NCEMC are excessive. Environmental Matters _____________________ With regard to manufactured gas plant (MGP) sites in North Carolina, the Company has recently been approached by another North Carolina public utility concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, remediation of four MGP sites. The Company is currently engaged in discussions with the other utility regarding this matter. Based on current cost estimates provided by that utility, the Company does not believe its portion of costs associated with the investigation and remediation of these sites, if any, would be material to the financial position or results of operations of the Company. In addition, a current owner of property that was the site of one MGP owned by Tidewater Power Company (Tidewater Power), which merged into the Company in 1952, has been party to a separate administrative proceeding regarding that site. That owner and the Company have entered into an agreement to share the cost of investigation and remediation of this site. The Company has also been approached by a North Carolina municipality that is the current owner of another MGP site that was formerly owned by Tidewater Power. The Company is engaged in discussions with that municipality concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, the remediation of that site. Due to the uncertainty concerning potential environmental harm and the full extent to which remedial action will be required at the two sites formerly owned by Tidewater Power, the total cost of investigating and remediating these sites is not determinable at this time. The Company cannot predict the outcome of these matters. The Company is continuing its investigation regarding the identities of parties connected to individual MGP sites, the relative relationships of the Company and other parties to those sites, and the degree, if any, to which the Company should undertake shared voluntary efforts with others at individual sites. Except as noted above, due to the lack of information with respect to the operation of MGP sites and the uncertainty concerning questions of liability and potential environmental harm, the extent and cost of required remedial action, if any, and the extent to which liability may be asserted against the Company or against others are not currently determinable. The Company cannot predict the outcome of these matters or the extent to which other former MGP sites may become the subject of inquiry. PART II. OTHER INFORMATION Item 1. Legal Proceedings _______ _________________ Legal aspects of certain matters are set forth in Item 5 below. Item 2. Changes in Securities ) _______ _____________________ ) ) Item 3. Defaults upon Senior Securities ) Not applicable _______ _______________________________ ) for the quarter ) ended September ) 30, 1994. Item 4. Submission of Matters to a Vote ) of Security Holders ) _______ _______________________________ ) ) Item 5. Other Information _______ _________________ 1. (Reference is made to the Company's 1993 Form 10-K, Competition and Franchises, paragraph 1.b., page 7. Reference is also made to the Company's Form 10-Q for the quarter ended June 30, 1994, Item 5, paragraph 3.) With regard to the application the Company filed with the North Carolina Utilities Commission (NCUC) on June 20, 1994 requesting permission to change the rate it was charging AlliedSignal Inc. (Allied) for approximately 16 MW of electricity provided to Allied's Moncure, North Carolina facility, on September 13, 1994, the Company amended its application to revise the proposed rate and reduce the term of its availability. The proposed rate provides value that is consistent with the value Allied would realize if it opted to obtain service by self-generating 11 MW of the electricity required at this facility. By order issued October 3, 1994, the NCUC approved the amended application. As a result, the Company will serve all of Allied's electrical requirements at the new rate for five years. Thereafter, the new rate will terminate; however, the Company will continue to serve all of Allied's electrical requirements unless one of the parties terminates the existing electrical service agreement between them. 2. (Reference is made to the Company's 1993 Form 10-K, Competition and Franchises, paragraph 1.b., page 7.) By order issued September 30, 1994, the South Carolina Public Service Commission (SCPSC) established a docket for a generic proceeding to consider the effect of electric and natural gas demand side management programs on competition between the two types of utilities. The order states that the outcome of such a proceeding will not apply to the 1995 integrated resource plans that electric utilities file with the SCPSC. The Company cannot predict the outcome of this matter. 3. (Reference is made to the Company's 1993 Form 10-K, Retail Rate Matters, paragraph 5, page 12. Reference is also made to the Company's Form 10-Q for the quarter ended June 30, 1994, Item 5, paragraph 5.) With regard to the North Carolina retail jurisdiction, the stipulations agreed to by the parties to the Company's 1994 North Carolina fuel case were approved by the NCUC by order dated September 6, 1994. The stipulations resolved all issues between the parties to the proceeding. Pursuant to the stipulations, the parties agreed that a net fuel factor of 1.309 cents/kWh will be in effect for the Company for the period September 15, 1994 through September 14, 1995. As part of the stipulations, the Company agreed to forgo recovering $5.8 million of the underrecovered fuel expense for the test year ended March 31, 1994. Of this amount, $3.5 million is associated with certain outage time experienced by the Company's Robinson Nuclear Plant, and the remaining $2.3 million relates to the recovery of certain cogeneration fuel costs. With regard to the South Carolina retail jurisdiction, the Company's fall 1994 South Carolina fuel case hearing was scheduled to commence on September 19, 1994; however, on September 15, 1994, the SCPSC approved a settlement agreement that resolved all issues between all parties to the proceeding. Pursuant to the settlement, the Company agreed to a $2.2 million reduction of its fuel cost underrecovery account in return for a fuel factor of 1.400 cents/kWh for the six month period October 1, 1994 through March 31, 1995, and for Nucor Steel (Nucor) agreeing to dismiss its September 8, 1993, appeal of the SCPSC's decision to reaffirm its earlier orders to exclude certain testimony offered by Nucor in the Company's fall 1990 South Carolina fuel case. 4. (Reference is made to the Company's 1993 Form 10-K, Wholesale Rate Matters, paragraph 2.a., page 14. Reference is also made to the Company's Form 10-Q for the quarter ended June 30, 1994, Item 5, paragraph 7.) With regard to the proceeding initiated by North Carolina Electric Membership Corporation (NCEMC) and one of its members before the Federal Energy Regulatory Commission (FERC) on April 12, 1991, Docket No. EL91-28-000, alleging that the Company's wholesale rates and fuel clause billings were excessive and requesting that the Company provide its real-time load signal to NCEMC, on October 24, 1994, the FERC approved the settlement agreement between the Company and the City of Fayetteville's Public Works Commission (Fayetteville PWC), an intervenor in the NCEMC case, which resolves, as between them, all wholesale fuel clause billings issues through December 31, 1993. Amounts associated with the settlement do not have a material impact on the results of operations of the Company. Also on October 24, 1994, the FERC approved the settlement agreement between the Company and the intervenor that remained a party to the NCEMC-initiated proceeding. Amounts associated with the settlement do not have a material impact on the results of operations of the Company. The FERC's approval of these settlement agreements concludes this proceeding. With regard to the Complaint NCEMC filed with the FERC, Docket No. EL94-84-000, under Section 206 of the Federal Power Act on August 1, 1994, alleging that the wholesale rates the Company charges NCEMC are excessive, and seeking a rate reduction of approximately $38.6 million per year, on September 23, 1994, NCEMC withdrew the Complaint. 5. (Reference is made to the Company's 1993 Form 10-K, Wholesale Rate Matters, paragraph 3, page 15. Reference is also made to the Company's Form 10-Q for the quarter ended June 30, 1994, Item 5, paragraph 12.) With regard to the new power supply agreement the Company and the Town of Waynesville entered into on July 26, 1994, the FERC approved the agreement on September 13, 1994, with an effective date of October 2, 1994. 6. (Reference is made to the Company's 1993 Form 10-K, Wholesale Rate Matters, paragraph 3.c., page 16. Reference is also made to the Company's Form 10-Q for the quarter ended June 30, 1994, Item 5, paragraph 11.) With regard to the change the FERC required to the new power supply and coordination agreement the Company and the Fayetteville PWC entered into on March 10, 1994, the compliance filing the Company and the Fayetteville PWC made to effectuate the change was accepted by the FERC on August 12, 1994. On October 24, 1994, the FERC approved the settlement agreement between the Fayetteville PWC and the Company which resolves all wholesale fuel clause billing issues between them through December 31, 1993. See Item 5, paragraph 4 for a discussion of the settlement agreement. 7. (Reference is made to the Company's 1993 Form 10-K, Environmental Matters, paragraph 2, page 16.) With regard to the Company's plans for compliance with the Clean Air Act's (Act) Phase II requirements, in order to reduce sulfur dioxide emissions, the Company will modify equipment to allow certain of the Company's plants to burn lower-sulfur coal, and the Company is planning for the installation of scrubbers. Installation of additional equipment will also be necessary to reduce nitrogen oxides emissions. The Company anticipates that it will be able to delay the installation and operation of scrubbers until 2005 by using sulfur dioxide emission allowances. The Company purchased emission allowances under the Environmental Protection Agency's emission allowance trading program in 1993 and 1994. The Company now estimates that the total capital cost to comply with Phase II of the Act will approximate $278 million during the period 1994 through 1999 and an additional $370 million during the period 2000 through 2005. These estimates are in nominal dollars (undiscounted future amounts expected to be expended.) The required modifications and additions are expected to increase operating and maintenance costs by a total of $20 million for the period 1994 through 1999, $53 million for the period 2000 through 2004 and by $40 million beginning in 2005. Additionally, fuel costs are expected to increase by a total of approximately $160 million for the period 2000 through 2004, and by approximately $55 million beginning in 2005. The Company expects these increased fuel costs to be recoverable through applicable fuel adjustment statutes. Actual plans for compliance with the Act's requirements have not been finalized and the amount required for capital expenditures and for increased operating, maintenance and fuel expenditures cannot be determined with certainty at this time. The financial impact of additional expenditures will be dependent on future ratemaking treatment. The NCUC and the SCPSC are currently allowing the Company to accrue carrying charges on its investment in emission allowances. The Company cannot predict the outcome of this matter. 8. (Reference is made to the Company's 1993 Form 10-K, Environmental Matters, paragraph 3.e., page 18.) With regard to the Seaboard Chemical Corporation (Seaboard) hazardous waste disposal site in Jamestown, North Carolina, the North Carolina Department of Environment, Health and Natural Resources (DEHNR) has indicated that it is seeking to have further remedial activities performed at the Seaboard site. The Company recently joined the Seaboard Group II (a group of potentially responsible parties formed to conduct additional work at the Seaboard site). Cost estimates for the additional work are not available. The Company cannot predict the outcome of this matter. 9. (Reference is made to the Company's 1993 Form 10-K, Environmental Matters, paragraph 4, page 19.) With regard to manufactured gas plant (MGP) sites in North Carolina, the Company has recently been approached by another North Carolina public utility concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, remediation of four MGP sites. The Company is currently engaged in discussions with the other utility regarding this matter. Based on current cost estimates provided by that utility, the Company does not believe its portion of costs associated with the investigation and remediation of these sites, if any, would be material to the financial position or results of operations of the Company. In addition, a current owner of property that was the site of one MGP owned by Tidewater Power Company (Tidewater Power), which merged into the Company in 1952, has been party to a separate administrative proceeding regarding that site. That owner and the Company have entered into an agreement to share the cost of investigation and remediation of this site. The Company has also been approached by a North Carolina municipality that is the current owner of another MGP site that was formerly owned by Tidewater Power. The Company is engaged in discussions with that municipality concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, the remediation of that site. Due to the uncertainty concerning potential environmental harm and the full extent to which remedial action will be required at the two sites formerly owned by Tidewater Power, the total cost of investigating and remediating these sites is not determinable at this time. The Company cannot predict the outcome of these matters. The Company is continuing its investigation regarding the identities of parties connected to individual MGP sites, the relative relationships of the Company and other parties to those sites, and the degree, if any, to which the Company should undertake shared voluntary efforts with others at individual sites. Except as noted above, due to the lack of information with respect to the operation of MGP sites and the uncertainty concerning questions of liability and potential environmental harm, the extent and cost of required remedial action, if any, and the extent to which liability may be asserted against the Company or against others are not currently determinable. The Company cannot predict the outcome of these matters or the extent to which other former MGP sites may become the subject of inquiry. 10. (Reference is made to the Company's 1993 Form 10-K, Nuclear Matters, paragraph 7.e., page 24. Reference is also made to the Company's Form 10-Q for the quarter ended March 31, 1994, Item 5, paragraph 8 and to the Company's Form 10-Q for the quarter ended June 30, 1994, Item 5, paragraph 16.) By letter dated August 30, 1994, the Nuclear Regulatory Commission (NRC) issued a Notice of Violation and Imposition of Civil Penalty in the amount of $75,000 involving the Company's testing of certain ventilation equipment at its H.B. Robinson Plant. The Notice also indicated that activities related to the adequacy of corrective action on issues identified by a contractor and the adequacy of corrective actions on a design concern involving an isolation valve constituted violations of NRC requirements; however, no civil penalty was assessed in connection with those violations. By letter dated September 29, 1994, the Company responded to the Notice of Violation and paid the assessed penalty. 11. (Reference is made to the Company's 1993 Form 10-K, Other Matters, page 27.) On November 4, 1994, the Company filed a complaint against SMC Mining Company, Wolf Creek Collieries Company and Kermit Coal Company (the Sellers) in the United States District Court for the Eastern District of North Carolina (Civil Action No. 5:94-CV-846-BO(2)). The Sellers are all companies owned by Zeigler Coal Holding Company. Under the terms of a 1971 contract, as amended, the Sellers are to supply the Company with coal having certain qualities and characteristics from the Wolf Creek mine (Wolf Creek) in Kentucky. The contract provides that the Company has the right to refuse to accept further deliveries from the Sellers if the coal they ship fails to meet the specification for sulfur content for two consecutive months. During the months of August and September 1994, the Sellers shipped to the Company Wolf Creek coal which did not meet the sulfur specifications provided in the contract. As a result of the Sellers' shipment of non-complying coal, on November 4, 1994, the Company exercised its right to suspend future shipments of coal from Wolf Creek until the Sellers can give the Company reasonable assurance that future shipments will meet the contract's specifications. The Complaint asks the court to determine whether the dispute is subject to arbitration and that the Company's suspension of future shipments from the Sellers was legal. On November 4, 1994, the Sellers filed a Complaint against the Company in the Circuit Court of Martin County, Kentucky (Civil Action No. 94-CZ-00212), asking the court to restrain the Company from refusing to accept future shipments of coal under the 1971 contract. On November 4, 1994, the court issued an ex parte temporary restraining order (TRO) which prevents the Company, for the time being, from refusing contract coal deliveries from Wolf Creek. The Company has removed the Kentucky state court action to the United States District Court for the Eastern District of Kentucky. On November 9, 1994, the Company filed in the Kentucky federal court a response to the state court's TRO. The response seeks to dissolve the TRO, which would allow the Company to refuse coal shipments from Wolf Creek until the dispute is settled. In its response, the Company also moved for transfer of the case to the United States District Court for the Eastern District of North Carolina. A hearing on these motions is scheduled for November 14, 1994 in Pikeville, Kentucky. Whatever the outcome of this dispute, the Company anticipates no problems in ensuring sufficient coal supplies for its plants. The Company cannot predict the outcome of this matter. Item 6. Exhibits and Reports on Form 8-K _______ ________________________________ (a) Exhibits None. (b) Reports on Form 8-K filed during or with respect to the quarter None. SIGNATURES Pursuant to 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. CAROLINA POWER & LIGHT COMPANY (Registrant) By: Charles D. Barham, Jr. Executive Vice President By: Paul S. Bradshaw Vice President and Controller (and Principal Accounting Officer) Date: November 9, 1994 EX-99 2 APPENDIX Carolina Power & Light Company (ORGANIZED UNDER THE LAWS OF NORTH CAROLINA) INTERIM FINANCIAL STATEMENTS (NOT AUDITED BY INDEPENDENT AUDITORS) SEPTEMBER 30, 1994
STATEMENTS OF INCOME (In thousands Three Months Ended Nine Months Ended Twelve Months Ended except per share amounts) ------------------ ----------------- ------------------- September 30 September 30 September 30 ------------ ------------ ------------ 1994 1993 1994 1993 1994 1993 ---- ---- ---- ---- ---- ---- Operating Revenues....................................$ 805,552 $ 854,750 $ 2,237,323 $ 2,236,826 $ 2,895,880 $ 2,899,850 --------- --------- ----------- ----------- ----------- ----------- Operating Expenses Operation - fuel for generation..................... 126,692 152,354 378,109 401,183 501,291 531,937 deferred fuel cost, net................. 28,626 36,984 20,411 33,810 13,965 24,707 purchased power......................... 102,483 112,241 319,838 272,315 415,615 352,196 other................................... 130,305 123,412 400,375 363,794 534,913 463,170 Maintenance......................................... 38,719 45,386 149,455 173,942 210,962 264,114 Depreciation and amortization....................... 97,025 99,849 311,227 306,981 417,892 404,086 Taxes other than on income.......................... 36,997 37,346 109,264 104,718 147,416 134,772 Income tax expense.................................. 82,433 81,332 163,743 168,716 184,345 199,767 Harris Plant deferred costs, net.................... 6,476 6,418 19,648 16,709 30,515 20,400 --------- --------- ----------- ----------- ----------- ----------- Total Operating Expenses...................... 649,756 695,322 1,872,070 1,842,168 2,456,914 2,395,149 --------- --------- ----------- ----------- ----------- ----------- Operating Income...................................... 155,796 159,428 365,253 394,658 438,966 504,701 --------- --------- ----------- ----------- ----------- ----------- Other Income (Expense) Allowance for equity funds used during construction. 1,660 2,520 5,761 6,431 8,330 9,087 Income tax credit (expense) (Note 2)................ 2,886 (2,723) 5,375 (3,592) 8,575 (4,102) Harris Plant carrying costs......................... 2,398 6,556 7,443 11,682 22,904 13,884 Harris Plant disallowance - Power Agency............ - (20,645) - (20,645) - (20,645) Interest income (Note 2)............................ 2,329 18,278 13,731 30,937 18,990 37,410 Other income, net (Note 2).......................... 5,586 9,056 19,601 29,948 32,115 39,187 --------- --------- ----------- ----------- ----------- ----------- Total Other Income............................ 14,859 13,042 51,911 54,761 90,914 74,821 --------- --------- ----------- ----------- ----------- ----------- Income Before Interest Charges........................ 170,655 172,470 417,164 449,419 529,880 579,522 --------- --------- ----------- ----------- ----------- ----------- Interest Charges Long-term debt...................................... 45,828 51,693 139,793 158,412 186,563 212,726 Other interest charges.............................. 5,655 3,867 13,392 12,647 17,163 18,477 Allowance for borrowed funds used during construction............................... (1,081) (1,732) (3,313) (4,264) (5,010) (5,154) --------- --------- ----------- ----------- ----------- ----------- Net Interest Charges......................... 50,402 53,828 149,872 166,795 198,716 226,049 --------- --------- ----------- ----------- ----------- ----------- Net Income............................................ 120,253 118,642 267,292 282,624 331,164 353,473 Preferred Stock Dividend Requirements................. (2,402) (2,402) (7,206) (7,206) (9,609) (7,548) Tax Benefit of ESOP Dividends......................... - - - - - 3,552 --------- --------- ----------- ----------- ----------- ----------- Earnings for Common Stock.............................$ 117,851 $ 116,240 $ 260,086 $ 275,418 $ 321,555 $ 349,477 ========= ========= =========== =========== =========== =========== Average Common Shares Outstanding (Notes 2 and 3)......................... 149,416 160,737 150,426 160,737 153,025 160,737 Earnings per Common Share (Notes 2 and 3).............$ 0.79 $ 0.72 $ 1.73 $ 1.71 $ 2.10 $ 2.17 Dividends Declared per Common Share...................$ 0.425 $ 0.410 $ 1.275 $ 1.230 $ 1.700 $ 1.640 - ------------------ See Supplemental Data and Notes to Financial Statements.
EX-99 3
Carolina Power & Light Company BALANCE SHEETS September 30 December 31 (In thousands) ------------ ----------- 1994 1993 1993 ---- ---- ---- ASSETS Electric Utility Plant Electric utility plant in service......................$ 9,076,667 $ 8,712,154 $ 8,789,518 Accumulated depreciation............................... (3,132,176) (2,833,044) (2,897,832) ------------ ------------ ------------ Electric utility plant in service, net.......... 5,944,491 5,879,110 5,891,686 Held for future use.................................... 13,222 13,284 13,300 Construction work in progress.......................... 193,286 282,252 309,713 Nuclear fuel, net of amortization...................... 181,399 209,291 217,488 ------------ ------------ ------------ Total Electric Utility Plant, Net............... 6,332,398 6,383,937 6,432,187 ------------ ------------ ------------ Current Assets Cash and cash equivalents.............................. 48,419 160,876 23,607 Accounts receivable.................................... 314,790 367,595 321,309 Fuel................................................... 71,439 74,207 62,029 Materials and supplies................................. 121,934 113,493 111,052 Prepayments............................................ 41,233 44,474 46,869 Other current assets................................... 26,896 18,787 18,591 ------------ ------------ ------------ Total Current Assets............................ 624,711 779,432 583,457 ------------ ------------ ------------ Deferred Debits and Other Assets Income taxes recoverable through future rates.................................. 381,981 372,170 385,515 Abandonment costs...................................... 75,237 153,698 125,361 Harris Plant deferred costs............................ 132,194 138,666 144,399 Unamortized debt expense............................... 64,567 61,672 63,898 Miscellaneous other property and investments........... 313,766 235,554 264,165 Other assets and deferred debits....................... 190,651 176,935 185,209 ------------ ------------ ------------ Total Deferred Debits and Other Assets.......... 1,158,396 1,138,695 1,168,547 ------------ ------------ ------------ Total Assets.................................$ 8,115,505 $ 8,302,064 $ 8,184,191 ============ ============ ============ CAPITALIZATION AND LIABILITIES Capitalization Common stock equity....................................$ 2,627,338 $ 2,632,999 $ 2,632,116 Preferred stock - redemption not required.............. 143,801 143,801 143,801 Long-term debt, net.................................... 2,502,893 2,505,043 2,584,903 ------------ ------------ ------------ Total Capitalization............................ 5,274,032 5,281,843 5,360,820 ------------ ------------ ------------ Current Liabilities Current portion of long-term debt...................... 252,050 427,630 162,630 Notes payable (principally commercial paper)........... 15,000 5,000 76,000 Accounts payable....................................... 133,691 190,077 293,093 Taxes accrued.......................................... 155,901 123,028 20,913 Interest accrued....................................... 50,969 58,380 54,770 Dividends declared (Note 2)............................ 70,207 70,706 74,111 Deferred fuel credit (cost)............................ 10,584 (3,381) (9,827) Other current liabilities.............................. 65,696 49,880 67,510 ------------ ------------ ------------ Total Current Liabilities....................... 754,098 921,320 739,200 ------------ ------------ ------------ Deferred Credits and Other Liabilities Accumulated deferred income taxes...................... 1,586,643 1,556,116 1,585,490 Accumulated deferred investment tax credits............ 254,935 266,546 263,588 Other liabilities and deferred credits................. 245,797 276,239 235,093 ------------ ------------ ------------ Total Deferred Credits and Other Liabilities.... 2,087,375 2,098,901 2,084,171 ------------ ------------ ------------ Commitments and Contingencies (Note 4) Total Capitalization and Liabilities.........$ 8,115,505 $ 8,302,064 $ 8,184,191 ============ ============ ============ SCHEDULES OF COMMON STOCK EQUITY (In thousands) Common stock...........................................$ 1,534,029 $ 1,622,277 $ 1,622,277 Unearned ESOP common stock............................. (206,654) (225,409) (220,725) Capital stock issuance expense......................... (790) (334) (790) Retained earnings...................................... 1,300,753 1,236,465 1,231,354 ------------ ------------ ------------ Total Common Stock Equity.......................$ 2,627,338 $ 2,632,999 $ 2,632,116 ============ ============ ============ --------------------- See Supplemental Data and Notes to Financial Statements.
EX-99 4
Carolina Power & Light Company STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended Nine Months Ended Twelve Months Ended ------------------ ----------------- ------------------- September 30 September 30 September 30 ------------ ------------ ------------ 1994 1993 1994 1993 1994 1993 ---- ---- ---- ---- ---- ---- Operating Activities Net income............................................... $ 120,253 $ 118,642 $ 267,292 $ 282,624 $ 331,164 $ 353,473 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization.......................... 126,173 106,355 378,577 335,542 503,129 439,648 Harris Plant deferred costs............................ 4,078 (138) 12,205 5,027 7,611 6,516 Harris Plant disallowance - Power Agency .............. - 20,645 - 20,645 - 20,645 Deferred income taxes.................................. (5,578) 19,611 (4,771) 33,590 32,993 78,060 Investment tax credit adjustments...................... (2,884) (4,061) (8,653) (9,848) (11,612) (12,258) Allowance for equity funds used during construction.... (1,660) (2,520) (5,761) (6,431) (8,330) (9,087) Deferred fuel cost .................................... 28,626 36,984 20,411 33,810 13,965 24,707 Net decrease (increase) in receivables, inventories and prepaid expenses................................. 19,246 (7,482) (50,068) (76,974) 19,103 (110,589) Net increase (decrease) in payables and accrued expenses............................................. 25,565 22,904 (1,234) (12,639) (50,608) (147) Miscellaneous.......................................... 2,983 (10,707) 15,512 27,831 (1,438) 530 ------- ------- ------- ------- ------- ------- Net Cash Provided by Operating Activities............. 316,802 300,233 623,510 633,177 835,977 791,498 ------- ------- ------- ------- ------- ------- Investing Activities Gross property additions................................. (63,935) (86,922) (191,876) (230,390) (302,609) (319,505) Nuclear fuel additions................................... (9,520) (2,546) (30,726) (28,489) (50,238) (32,466) Contributions to external decommissioning trust.......... (4,746) (3,780) (18,461) (11,086) (28,253) (15,285) Contributions to retiree benefit trusts.................. - (1,250) (16,000) (2,500) (17,250) (9,167) Loan transactions with SPSP Trustee, net (Note 2)........ - 6,884 - 12,009 9,125 21,160 Allowance for equity funds used during construction...... 1,660 2,520 5,761 6,431 8,330 9,087 ------- ------- ------- ------- ------- ------- Net Cash Used in Investing Activities................. (76,541) (85,094) (251,302) (254,025) (380,895) (346,176) ------- ------- ------- ------- ------- ------- Financing Activities Proceeds from issuance of long-term debt................. - 242,018 268,325 537,269 313,086 636,120 Net decrease in pollution control bond escrow............ - - - 2,127 - 2,693 Net increase (decrease) in short-term notes payable (maturity less than 90 days)................... (57,600) (25,900) (61,000) (41,800) 10,000 3,000 Retirement of long-term debt............................. (138) (234,723) (268,377) (521,783) (536,970) (622,075) Purchase of Company common stock (Note 3)................ (86,732) - (86,732) - (86,732) - Retirement of preferred stock............................ - - - - - (95,950) Dividends paid on common stock (Note 2).................. (64,226) (65,902) (192,398) (197,706) (257,441) (261,197) Dividends paid on preferred stock........................ (2,400) (2,402) (7,214) (7,206) (9,482) (11,669) ------- ------- ------- ------- ------- ------- Net Cash Used in Financing Activities................. (211,096) (86,909) (347,396) (229,099) (567,539) (349,078) ------- ------- ------- ------- ------- ------- Net Increase (Decrease) in Cash and Cash Equivalents....... 29,165 128,230 24,812 150,053 (112,457) 96,244 Cash and Cash Equivalents at Beginning of the Period....... 19,254 32,646 23,607 10,823 160,876 64,632 ------- ------- ------- ------- ------- ------- Cash and Cash Equivalents at End of the Period............. $ 48,419 $ 160,876 $ 48,419 $ 160,876 $ 48,419 $ 160,876 ======= ======= ======= ======= ======= ======= Supplemental Disclosures of Cash Flow Information Cash paid during the period - interest................... $ 52,719 $ 56,518 $ 148,349 $ 167,160 $ 199,990 $ 227,588 income taxes............... 22,736 40,393 75,461 70,645 118,339 105,402 - -------------------- See Supplemental Data and Notes to Financial Statements.
EX-99 5
Carolina Power & Light Company SUPPLEMENTAL DATA Three Months Ended Nine Months Ended Twelve Months Ended ------------------ ----------------- ------------------- September 30 September 30 September 30 ------------ ------------ ------------ 1994 1993 1994 1993 1994 1993 ---- ---- ---- ---- ---- ---- Operating Revenues (in thousands) Residential............................. $ 263,677 $ 292,377 $ 716,067 $ 732,404 $ 927,361 $ 938,218 Commercial.............................. 165,008 170,233 458,325 453,053 598,245 585,423 Industrial.............................. 197,282 197,708 556,828 556,678 744,165 735,232 Government and municipal................ 20,815 21,355 59,913 59,716 78,813 77,668 Wholesale - standard rate schedules..... 99,660 113,970 282,323 282,161 354,083 366,158 Power Agency contract requirements...... 33,565 43,903 101,330 114,168 121,421 148,062 Other utilities......................... 14,121 4,285 29,762 8,807 32,186 9,513 Miscellaneous revenue................... 11,424 10,919 32,775 29,839 39,606 39,576 --------- ---------- ---------- ---------- ---------- ----------- Total Operating Revenues.......... $ 805,552 $ 854,750 $2,237,323 $2,236,826 $2,895,880 $2,899,850 ========= ========== ========== ========== ========== =========== Energy Sales (millions of kWh) Residential............................. 3,029 3,327 8,675 8,822 11,251 11,349 Commercial.............................. 2,453 2,485 6,671 6,548 8,672 8,466 Industrial.............................. 3,585 3,633 10,378 10,063 13,872 13,413 Government and municipal................ 359 356 969 954 1,263 1,230 Wholesale - standard rate schedules..... 1,972 2,118 5,299 5,291 6,930 6,800 Power Agency contract requirements...... 664 986 2,115 2,843 2,777 3,796 Other utilities......................... 465 91 799 246 879 270 --------- ---------- ---------- ---------- ---------- ----------- Total Energy Sales................ 12,527 12,996 34,906 34,767 45,644 45,324 ========= ========== ========== ========== ========== =========== Energy Supply (millions of kWh) Generated - coal........................ 5,492 7,212 17,341 19,537 23,611 26,551 nuclear..................... 5,730 4,027 12,782 10,775 15,698 12,778 hydro....................... 192 80 728 666 846 933 combustion turbines......... 2 54 68 85 66 93 Purchased............................... 1,764 2,184 5,580 5,232 7,459 6,895 --------- ---------- ---------- ---------- ---------- ----------- Total Energy Supply (Company Share)................. 13,180 13,557 36,499 36,295 47,680 47,250 ========= ========== ========== ========== ========== =========== Detail of Income Taxes (in thousands) Included in Operating Expenses Income tax expense - current............ $ 96,224 $ 71,271 $ 185,305 $ 154,355 $ 169,572 $ 146,649 Income tax expense - deferred........... (10,907) 14,122 (12,909) 24,209 25,191 65,376 Income tax expense - investment tax credit adjustments................ (2,884) (4,061) (8,653) (9,848) (10,418) (12,258) --------- ---------- ---------- ---------- ---------- ----------- Subtotal.......................... 82,433 81,332 163,743 168,716 184,345 199,767 --------- ---------- ---------- ---------- ---------- ----------- Harris Plant deferred costs - deferred... - - - - - (414) Harris Plant deferred costs - investment tax credit adjustments...... (74) 63 (223) (26) 21 (92) --------- ---------- ---------- ---------- ---------- ----------- Subtotal.......................... (74) 63 (223) (26) 21 (506) --------- ---------- ---------- ---------- ---------- ----------- Total Included in Operating Expenses.... 82,359 81,395 163,520 168,690 184,366 199,261 --------- ---------- ---------- ---------- ---------- ----------- Included in Other Income Income tax expense (credit) - current... (8,215) (2,766) (13,513) (5,789) (15,183) (8,582) Income tax expense - deferred........... 5,329 5,489 8,138 9,381 7,802 12,684 Income tax expense - investment tax credit adjustments................ - - - - (1,194) - --------- ---------- ---------- ---------- ---------- ----------- Subtotal.......................... (2,886) 2,723 (5,375) 3,592 (8,575) 4,102 Harris Plant carrying costs - deferred.. - - - - - 403 Other income, net - deferred............ - - - - - 10 --------- ----------------------- ---------- ---------- ----------- Total Included in Other Income.... (2,886) 2,723 (5,375) 3,592 (8,575) 4,515 --------- ----------------------- ---------- ---------- ----------- Included in Interest Charges Allowance for borrowed funds used during construction - deferred....... - - - - - 565 --------- ---------- ---------- ---------- ---------- ----------- Total Income Tax Expense...... $ 79,473 $ 84,118 $ 158,145 $ 172,282 $ 175,791 $ 204,341 ========= ========== ========== ========== ========== =========== FINANCIAL STATISTICS September 30, 1994 September 30, 1993 ------------------ ------------------ Actual Pro Forma Actual Pro Forma ------ --------- ------ --------- (Note 2) (Note 2) Ratio of earnings to fixed charges........ 3.29 3.46 3.23 3.40 Return on average common stock equity..... 12.07% 11.13% 13.54% 12.42% Book value per common share (Note 2)...... $ 17.77 N/A $ 17.78 N/A Capitalization ratios Common stock equity................... 49.82% 53.75% 49.85% 54.12% Preferred stock - redemption 2.72 2.73 2.72 2.72 not required......................... 47.46 43.52 47.43 43.16 Long-term debt, net................... ------------ ---------- ---------- --------- 100.00% 100.00% 100.00% 100.00% Total......................... ============ ========== ========== ========= - ---------------------------- See Notes to Financial Statements.
EX-99 6 Carolina Power & Light Company NOTES TO FINANCIAL STATEMENTS 1. Except as described in Note 2 below, these interim financial statements are prepared in conformity with the accounting principles reflected in the financial statements included in the Company's 1993 Annual Report to Shareholders and the 1993 Annual Report on Form 10-K. These are interim financial statements, and because of temperature variations between seasons of the year and the timing of outages of electric generating units, especially nuclear-fueled units, the amounts reported in the Statements of Income for periods of less than twelve months are not necessarily indicative of amounts expected for the year. Certain amounts for 1993 have been reclassified to conform to the 1994 presentation. 2. In January 1994, the Company implemented Statement of Position (SOP) 93-6, "Employers' Accounting for Employee Stock Ownership Plans," on a prospective basis. This SOP requires the following changes in accounting for the Company's leveraged employee stock ownership plan (ESOP): 1) ESOP shares that have not been committed to be released to participants' accounts are no longer considered outstanding for the determination of earnings per common share; 2) dividends on unallocated ESOP shares are no longer recognized for financial statement purposes; 3) all tax benefits of ESOP dividends are now recorded to non-operating income tax expense, whereas previously a portion of the tax benefits was recorded directly to retained earnings; 4) interest income related to the qualified ESOP loan is no longer recognized; and 5) the difference between the acquisition and allocation prices of ESOP shares, which was previously recorded as other income, net, is now recorded directly to common stock. In addition, ESOP loan transactions between the Company and the Stock Purchase-Savings Plan (SPSP) Trustee are no longer reflected in the Statements of Cash Flows. The implementation of SOP 93-6 resulted in an increase in earnings per common share of approximately $.03 and $.04 for the three and nine months ended September 30, 1994, respectively. Selected pro forma statistics, which eliminate the significant capital structure-related impacts of the ESOP feature of the SPSP, are included in Financial Statistics. 3. In July 1994, the Board of Directors of the Company authorized the Executive Committee of the Board to repurchase up to 10 million shares of the Company's common stock on the open market. In accordance with the stock repurchase program, the Company has purchased approximately 3.5 million shares through September 30, 1994. The decrease in average common shares outstanding resulted in an increase in earnings per common share of approximately $.01 in each of the three, nine and twelve month periods ended September 30, 1994. 4. Contingencies existing as of the date of these statements are described below. No significant changes have occurred since December 31, 1993, with respect to the commitments discussed in Note 9 of the financial statements included in the Company's 1993 Annual Report to Shareholders. a) In the Company's retail jurisdictions, provisions for nuclear decommissioning costs are approved by the North Carolina Utilities Commission and the South Carolina Public Service Commission and are based on site-specific estimates that included the costs for removal of all radioactive and other structures at the site. In the wholesale jurisdiction, the provisions for nuclear decommissioning costs are based on amounts agreed upon in applicable rate settlements. Accumulated decommissioning cost provisions, which are included in accumulated depreciation, were $249.5 million at September 30, 1994, and $209.5 million at September 30, 1993, and include amounts funded internally and amounts funded in an external decommissioning trust. Based on the site-specific estimates discussed below, and using an assumed after-tax earnings rate of 8.5% and an assumed cost escalation rate of 4%, current levels of rate recovery for nuclear decommissioning costs are currently adequate to provide for decommissioning of the Company's nuclear facilities. The Company's most recent site-specific estimates of decommissioning costs were developed in 1993, using 1993 cost factors, and are based on prompt dismantlement decommissioning, which reflects the cost of removal of all radioactive and other structures currently at the site. These estimates, in 1993 dollars, are $257.7 million for Robinson Unit No. 2, $284.3 million for the Harris Plant, $235.4 million for Brunswick Unit No. 1 and $221.4 million for Brunswick Unit No. 2. These estimates are subject to change based on a variety of factors including, but not limited to, cost escalation, changes in technology applicable to nuclear decommissioning, and changes in federal, state or local regulations. The cost estimates exclude the portion attributable to North Carolina Eastern Municipal Power Agency, which holds an undivided ownership interest in certain of the Company's generating facilities. b) Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under various federal and state laws, and a contingent liability may exist for their remediation. There are several manufactured gas plant (MGP) sites to which the Company and certain entities that were later merged into the Company may have had some connection. In this regard, the Company is participating in the North Carolina MGP Group (Group), which is a group of entities alleged to be former owners or operators of MGP sites in North Carolina. The Group was formed in response to an initiative launched by the North Carolina Department of Environment, Health and Natural Resources, Division of Solid Waste Management (DSWM), to encourage the voluntary assessment and, where necessary, the remediation of MGP sites. The Group and DSWM have entered into a Memorandum of Understanding relative to the establishment of a uniform program and framework for addressing MGP sites for which DSWM has contended that members of the Group have potential responsibility. It is anticipated that the investigation and remediation of specific MGP sites will be addressed pursuant to one or more Administrative Orders on Consent between DSWM and individual potentially responsible parties. To date, the Company has not entered into any such orders. The Company has recently been approached by another North Carolina public utility concerning a possible cost-sharing arrangement with respect to the investigation and, if necessary, remediation of four MGP sites. The Company is currently engaged in discussions with the other utility regarding this matter. Based on current cost estimates provided by that utility, the Company does not believe its portion of costs associated with the investigation and remediation of these sites, if any, would be material to the financial position or results of operations of the Company. In addition, a current owner of property that was the site of one MGP owned by Tidewater Power Company (Tidewater Power), which merged into the Company in 1952, has been party to a separate administrative proceeding regarding that site. That owner and the Company have entered into an agreement to share the cost of investigation and remediation of this site. The Company has also been approached by a North Carolina municipality that is the current owner of another MGP site that was formerly owned by Tidewater Power. The Company is engaged in discussions with that municipality concerning a possible cost-sharing arrangement with respect to the investigation, and if necessary, the remediation of that site. Due to the uncertainty concerning potential environmental harm and the full extent to which remedial action will be required at the two sites formerly owned by Tidewater Power, the total cost of investigating and remediating these sites is not determinable at this time. The Company cannot predict the outcome of these matters. The Company is continuing its investigation regarding the identities of parties connected to individual MGP sites, the relative relationships of the Company and other parties to those sites, and the degree, if any, to which the Company should undertake shared voluntary efforts with others at individual sites. Except as noted above, due to the lack of information with respect to the operation of MGP sites and the uncertainty concerning questions of liability and potential environmental harm, the extent and cost of required remedial action, if any, and the extent to which liability may be asserted against the Company or against others are not currently determinable. The Company cannot predict the outcome of these matters or the extent to which other former MGP sites may become the subject of inquiry. EX-27 7
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000017797 CAROLINA POWER & LIGHT COMPANY QTR-3 DEC-31-1994 SEP-30-1994 PER-BOOK $6,332,398 $313,766 $624,711 $653,979 $190,651 $8,115,505 $1,327,375 ($790) $1,300,753 $2,627,338 $0 $143,801 $2,502,893 $0 $0 $15,000 $252,050 $0 $0 $0 $2,574,423 $8,115,505 $2,237,323 $163,743 $1,708,327 $1,872,070 $365,253 $51,911 $417,164 $149,872 $267,292 $7,206 $260,086 $192,765 $0 $623,510 $1.73 $1.73
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