-----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, SStkLLsXzT1oEUd1V73tNliJM5yUnXjXKmXlYTOBhu6aGF/7rE1vQLB3zefRskpI QISl/RTkiU88XNzY9e7GcQ== 0000020290-94-000006.txt : 19940825 0000020290-94-000006.hdr.sgml : 19940825 ACCESSION NUMBER: 0000020290-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINCINNATI GAS & ELECTRIC CO CENTRAL INDEX KEY: 0000020290 STANDARD INDUSTRIAL CLASSIFICATION: 4931 IRS NUMBER: 310240030 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1935 Act SEC FILE NUMBER: 001-01232 FILM NUMBER: 94513537 BUSINESS ADDRESS: STREET 1: 139 E FOURTH ST, ROOM 362-ANNEX CITY: CINCINNATI STATE: OH ZIP: 45202 BUSINESS PHONE: 5132873852 U-3A-2 1 FORM U-3A-2 FOR THE PERIOD ENDED DECEMBER 31, 1993 Commission File No. 69-70 ================================================================= FORM U-3A-2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. Statement by Holding Company Claiming Exemption Under Rule U-3A-2 from the Provisions of the Public Utility Holding Company Act of 1935 For the Fiscal Year Ended December 31, 1993 To Be Filed Annually Prior to March 1 THE CINCINNATI GAS & ELECTRIC COMPANY (Name of Company) Name, title, and address of officer to whom notices and correspondence concerning this statement should be addressed: William L. Sheafer, Treasurer 139 East Fourth Street, Cincinnati, Ohio 45202 513-381-2000 (Telephone Number) Commission File No. 69-70 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM U-3A-2 STATEMENT BY HOLDING COMPANY CLAIMING EXEMPTION UNDER RULE U-3A-2 FROM THE PROVISIONS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 To be filed annually prior to March 1 THE CINCINNATI GAS & ELECTRIC COMPANY ------------------------------------- (Name of Company) hereby files with the Securities and Exchange Commission, pursuant to Rule 2, its statement claiming exemption as a holding company from the provisions of the Public Utility Holding Company Act of 1935, and submits the following information: 1. Name, State of organization, location and nature of business of claimant and every subsidiary thereof, other than any exempt wholesale generator (EWG) or foreign utility company in which claimant directly or indirectly holds an interest. State of Nature of Name of Company Organization Location Business --------------- ------------ -------- -------- The Cincinnati Gas & Ohio Cincinnati, Electric and Electric Company Ohio Gas Utility (Claimant) CGE Corp. Delaware Cincinnati, Non-Utility (Subsidiary of Claimant) Ohio Operations (CGE Corp.) The Union Light, Heat Kentucky Covington, Electric and and Power Company Kentucky Gas Utility (Union) Enertech Associates Ohio Cincinnati, Non-Utility International, Inc. Ohio Operations (Subsidiary of Union) (Enertech) The West Harrison Gas Indiana Lawrenceburg, Electric and Electric Company Indiana Utility (West Harrison) Miami Power Indiana Lawrenceburg, Electric Corporation Indiana Utility (Miami) Lawrenceburg Gas Indiana Lawrenceburg, Gas Utility Company Indiana (Lawrenceburg Gas) Tri-State Improvement Ohio Cincinnati, Real Estate Company Ohio Development (Tri-State) 2. A brief description of the properties of claimant and each of its subsidiary public utility companies used for the generation, transmission, and distribution of electric energy for sale, or for the production, transmission, and distribution of natural or manufactured gas, indicating the location of principal generating plants, transmission lines, producing fields, gas manufacturing plants, and electric and gas distribution facilities, including all such properties which are outside the State in which claimant and its subsidiaries are organized and all transmission or pipelines which deliver or receive electric energy or gas at the borders of such State. (a) Claimant -------- Claimant wholly owns two of four conventional steam electric generating units and six combustion turbine units, with a combined net capability of 450,000 KW at the Miami Fort Station, located in Ohio. This station is on the Ohio River and is about 20 miles west of the center of Cincinnati. Claimant has undivided interests in two commonly-owned units at this station with the Claimant's share of combined net capability being 640,000 KW. Claimant wholly owns five of six conventional steam electric generating units and four combustion turbine units, with a combined net capability of 948,800 KW at the Walter C. Beckjord Station, located in Ohio. This station is on the Ohio River and is about 20 miles southeast of the center of Cincinnati. Claimant has an undivided interest in the sixth unit, a commonly-owned unit, at this station with the Claimant's share of net capability being 157,500 KW. Claimant has undivided interests in four commonly-owned steam electric generating units at the J.M. Stuart Station, located in Ohio, with the Claimant's share of combined net capability being 912,600 KW. This station is on the Ohio River near Aberdeen, Ohio and is about 65 miles southeast of the center of Cincinnati. Claimant has an undivided interest in a commonly-owned steam electric generating unit at the Conesville Station, located in Ohio, with the Claimant's share of net capability being 312,000 KW. This station is located on the Muskingum River and is about 60 miles east of Columbus, Ohio. Claimant has an undivided interest in a commonly-owned steam electric generating unit at the East Bend Station, located in Kentucky, with the Claimant's share of net capability being 414,000 KW. This station is located on the Ohio River and is about 40 miles southwest of the center of Cincinnati. Claimant has an undivided interest in a commonly-owned steam electric generating unit at the Killen Station, located in Ohio, with the Claimant's share of net capability being 198,000 KW. This station is located on the Ohio River and is about 80 miles southeast of the center of Cincinnati. Claimant has an undivided interest in a commonly-owned steam electric generating unit at the Wm. H. Zimmer Generating Station, located in Ohio, with the Claimant's share of net capability being 604,500 KW. This station is located on the Ohio River near Moscow, Ohio and is about 25 miles southeast of the center of Cincinnati. Claimant wholly owns a combustion turbine electric generating station, Dicks Creek Station, with a net capability of 172,300 KW. This station is located in the City of Middletown, Ohio. Claimant wholly owns six combustion turbine electric generating units with a combined net capability of 564,000 KW at Woodsdale Generating Station, located in Ohio. This station is in Butler County and is about 24 miles north of the center of Cincinnati. Total net generating capability available to Claimant as of December 31, 1993 was 5,373,700 KW. Claimant owns an overhead and underground electric transmission and distribution system in Cincinnati, and other incorporated communities and adjacent rural territory within all or parts of the Counties of Hamilton, Butler, Warren, Clermont, Preble, Montgomery, Clinton, Highland, Adams and Brown, in southwestern Ohio. Claimant also owns electric transmission lines within the Counties of Boone, Kenton, Pendleton and Campbell, in northern Kentucky. Claimant owns a 7,000,000 gallon capacity underground cavern located in the Village of Monroe, Ohio, for the storage of liquid propane and a related vaporization and mixing plant, located in Middletown, Ohio, and an 8,000,000 gallon capacity underground cavern for the storage of liquid propane and a related vaporization and mixing plant located in the City of Cincinnati, which are used primarily to augment Claimant's supply of natural gas during periods of peak demand and emergencies. Claimant has gas distribution systems in Cincinnati, Middletown, and other incorporated communities and in contiguous rural territory within all or parts of the Counties of Hamilton, Butler, Warren, Clermont, Clinton, Montgomery, Brown and Adams, in southwestern Ohio. Claimant's electric transmission system is connected at the Kentucky- Indiana state line and the Indiana-Ohio state line with the transmission system of Indiana Michigan Power Company and PSI Energy, respectively, both non-affiliates. (See Note 12 for information regarding the proposed merger of Claimant and PSI Resources, Inc. parent of PSI Energy, Inc.) The electric lines of Claimant are also connected at the Ohio-Indiana state line with the distribution system of West Harrison, and at the Ohio-Kentucky state line with the distribution system of Union; the latter companies purchase their requirements of electric energy from Claimant. The electric transmission lines of Claimant within Kentucky are connected with the Union distribution system and with the transmission systems of the East Kentucky Power Cooperative, Inc., and the Ohio Valley Electric Corporation, both non- affiliates, through various substations in Kentucky. The electric transmission system of Claimant is connected at the Ohio- Kentucky state line with the transmission system of Miami, which company transmits electric energy in interchange between Claimant and Louisville Gas and Electric Company, a non-affiliate. Within the State of Ohio, the electric transmission lines of Claimant are connected with the lines of Columbus Southern Power Company, the City of Hamilton, Ohio, the City of Lebanon, Ohio, The Dayton Power and Light Company, and Ohio Power Company, all non- affiliates, and Ohio Valley Electric Corporation, an affiliate. The gas lines of Claimant are connected at the Ohio-Kentucky state line with the lines of Union, which transport natural gas to Claimant for the account of Columbia Gas Transmission Corporation, a subsidiary of the Columbia Gas System, Inc., a non-affiliate, and with the lines of said Columbia Gas Transmission Corporation, from which Claimant purchases a part of its natural gas requirements. Its gas feeder system is connected within Ohio with the transmission systems of Texas Eastern Transmission Corporation, Texas Gas Transmission Corporation, and ANR Pipeline Company, all of which are non- affiliates. All of the property owned by Claimant is located within the State of Ohio, except for the East Bend Station and certain electric transmission lines located in Northern Kentucky and certain communications equipment located in southeastern Indiana and northern Kentucky. (b) Union ----- Union owns an electric transmission system and an electric distribution system in Covington, Newport and other smaller communities and in adjacent rural territory within all or parts of the Counties of Kenton, Campbell, Boone, Grant and Pendleton, in Kentucky. Union owns a gas distribution system in Covington, Newport and other smaller communities and in adjacent rural territory within all or parts of the Counties of Kenton, Campbell, Boone, Grant, Gallatin and Pendleton, in Kentucky. Union owns a 7,000,000 gallon capacity underground cavern for the storage of liquid propane and a related vaporization and mixing plant and feeder lines, located in Kenton County, Kentucky near the Kentucky-Ohio line and adjacent to one of the gas lines that transport natural gas to Claimant. The cavern and vaporization and mixing plant are used primarily to augment Claimant's and Union's supply of natural gas during periods of peak demand and emergencies. Union's electric distribution lines are connected at the Ohio-Kentucky state line with the electric distribution system of Claimant. Union's electric distribution system is also connected to Claimant's electric transmission lines in Kentucky at various substations located within Kentucky. Within the Commonwealth of Kentucky, the electric transmission lines of Union are connected with the lines of Claimant and the East Kentucky Power Cooperative, Inc. Union's gas distribution system is connected within Kentucky with the transmission lines of Columbia Gas Transmission Corporation, a non-affiliate, and with the gas distribution system of Claimant at the Ohio- Kentucky state line. All of the property of Union is located wholly within the Commonwealth of Kentucky. (c) West Harrison ------------- West Harrison owns an electric distribution system in West Harrison, Indiana and adjacent rural territory which connects at the Indiana-Ohio state line with the electric distribution system of Claimant. All of the property of West Harrison is located wholly within the State of Indiana. (d) Miami ----- Miami owns an overhead electric transmission system which connects with the transmission system of Claimant at the Ohio-Kentucky state line and extends through Kentucky and Indiana to a point near Madison, Indiana, where it connects with the transmission lines of Louisville Gas and Electric Company, a non-affiliated company. (e) Lawrenceburg Gas ---------------- Lawrenceburg Gas owns a gas distribution system in and around Lawrenceburg, Greendale, Brookville, Rising Sun, Cedar Grove, and West Harrison, Indiana. Lawrenceburg Gas is connected with and sells gas at wholesale to the City of Aurora, Indiana, and also is connected within Indiana with the lines of Texas Gas Transmission Corporation and Texas Eastern Transmission Corporation, both non-affiliates. All of the property of Lawrenceburg Gas is located wholly within the State of Indiana. 3. The following information for the last calendar year with respect to claimant and each of its subsidiary public utility companies: Twelve Months Ended December 31, 1993 ------------------------------------- (a) Number of Kwh of electric energy sold (at retail or wholesale), and Mcf of natural or manufactured gas distributed at retail. Claimant Electric Energy Kwh of electric energy sold......................... 22,539,094,589 (including amounts delivered in interchange) Gas Mcf of gas distributed at retail.................... 56,617,858 (including natural and manufactured gas) Union Electric Energy Kwh of electric energy sold......................... 3,016,848,434 Gas Mcf of gas distributed at retail.................... 10,534,069 West Harrison Electric Energy Kwh of electric energy sold......................... 6,101,199 Gas Mcf of gas distributed at retail.................... Not Applicable Miami Electric Energy Kwh of electric energy sold......................... Not Applicable Gas Mcf of gas distributed at retail.................... Not Applicable Twelve Months Ended December 31, 1993 ------------------------------------- Lawrenceburg Gas Electric Energy Kwh of electric energy sold......................... Not Applicable Gas Mcf of gas distributed at retail.................... 727,593 (b) Number of Kwh of electric energy and Mcf of natural or manufactured gas distributed at retail outside the State in which each such company is organized. All companies............................................ None (c) Number of Kwh of electric energy and Mcf of natural or manufactured gas sold at wholesale outside the State in which each such company is organized or at the State line. Claimant Electric Energy Kwh of electric energy sold to Union within the state of Kentucky and at Ohio-Kentucky state line........................... 3,121,382,869 Kwh of electric energy sold to West Harrison at Indiana-Ohio state line......................... 6,595,891 Kwh of electric energy delivered to PSI Energy at Indiana-Ohio state line pursuant to purchase and interchange agreements................ 39,197,000 Kwh of electric energy delivered at Ohio-Kentucky state line for transmission to Louisville Gas and Electric Company pursuant to interchange agreement (delivered through transmission system of Miami and including energy interchanged with Tennessee Valley Authority)...... 45,922,000 Kwh of electric energy delivered to East Kentucky Power Cooperative, Inc. within the state of Kentucky pursuant to interconnection agreements...................... 483,594,000 Twelve Months Ended December 31, 1993 ------------------------------------- Gas Mcf of natural gas sold............................. None Union Electric Energy Kwh of electric energy sold......................... None Gas Mcf of natural gas sold to Claimant at Ohio-Kentucky state line............ 172,114 West Harrison Electric Energy Kwh of electric energy sold......................... None Gas Mcf of natural gas sold............................. Not Applicable Miami Electric Energy Kwh of electric energy sold......................... Not Applicable Gas Mcf of natural gas sold............................. Not Applicable Lawrenceburg Gas Electric Energy Kwh of electric energy sold......................... Not Applicable Gas Mcf of natural gas sold............................. None Twelve Months Ended December 31, 1993 ------------------------------------- (d) Number of Kwh of electric energy and Mcf of natural or manufactured gas purchased outside the State in which each such company is organized or at the State line. Claimant Electric Energy Kwh of electric energy received from PSI Energy at Indiana-Ohio state line pursuant to purchase and interchange agreements................ 544,522,000 Kwh of electric energy received from Louisville Gas and Electric Company at Ohio-Kentucky state line pursuant to purchase and interchange agreements (delivered through transmission system of Miami and including energy received for account of Tennessee Valley Authority)......... 144,892,000 Kwh of electric energy received from East Kentucky Power Cooperative, Inc. within the state of Kentucky pursuant to interconnection agreements......................... 270,622,000 Gas Mcf of natural gas purchased from Union Pacific Fuels outside the state of Ohio and stored......... 1,408,768 Mcf of natural gas purchased from Natural Gas Clearinghouse outside the state of Ohio and stored.................................... 2,022,011 Mcf of natural gas purchased from Tenneco Gas Marketing outside the state of Ohio and stored..... 275,838 Mcf of natural gas purchased from Texaco Gas Marketing outside the state of Ohio and stored..... 1,894,053 Mcf of natural gas purchased from Chevron U.S.A. outside the state of Ohio and stored............... 369,252 Mcf of natural gas purchased from Columbia Gas Transmission outside the state of Ohio and stored.. 3,210,111 Twelve Months Ended December 31, 1993 ------------------------------------- Mcf of natural gas purchased from Vastar Gas Marketing outside the state of Ohio and stored..... 189,987 Mcf of natural gas purchased from various non- affiliates outside the state of Ohio and stored.... 5,981 Mcf of natural gas purchased from Union at Ohio-Kentucky state line........................... 172,114 Mcf of natural gas purchased from Columbia Gas Transmission Corporation at Ohio-Kentucky state line......................................... 7,037,959 Mcf of natural gas purchased from Tenneco Gas Marketing outside the state of Ohio................ 7,395,132 Mcf of natural gas purchased from Entrade outside the state of Ohio.......................... 110,279 Mcf of natural gas purchased from Fina Natural Gas outside the state of Ohio...................... 598,890 Mcf of natural gas purchased from Unocal Exploration Partners outside the state of Ohio................. 463,581 Mcf of natural gas purchased from Chevron U.S.A. outside the state of Ohio.......................... 1,605,617 Mcf of natural gas purchased from Natural Gas Clearinghouse outside the state of Ohio............ 9,319,942 Mcf of natural gas purchased from Coastal Gas Marketing outside the state of Ohio................ 479,050 Mcf of natural gas purchased from Columbia Gas Development outside the state of Ohio.............. 196,246 Mcf of natural gas purchased from TXG Gas Marketing outside the state of Ohio................ 512,305 Mcf of natural gas purchased from Kerr McGee outside the state of Ohio.......................... 423,457 Twelve Months Ended December 31, 1993 ------------------------------------- Mcf of natural gas purchased from Arco Oil & Gas outside the state of Ohio.................... 136,133 Mcf of natural gas purchased from Mobil Oil outside the state of Ohio...................... 390,572 Mcf of natural gas purchased from Aquila Energy outside the state of Ohio.......................... 972,424 Mcf of natural gas purchased from O & R Energy outside the state of Ohio.......................... 1,944,775 Mcf of natural gas purchased from American Central Gas Marketing outside the state of Ohio............................................ 167,841 Mcf of natural gas purchased from Texaco Gas Marketing outside the state of Ohio................ 4,734,758 Mcf of natural gas purchased from Enron Gas Marketing outside the state of Ohio................ 275,691 Mcf of natural gas purchased from Polaris outside the state of Ohio.......................... 411,950 Mcf of natural gas purchased from Seagull Marketing Service outside the state of Ohio........ 989,310 Mcf of natural gas purchased from Santa Fe Minerals outside the state of Ohio................. 174,138 Mcf of natural gas purchased from Union Pacific Fuels outside the state of Ohio............ 3,659,958 Mcf of natural gas purchased from Transco Energy Marketing outside the state of Ohio................ 424,974 Mcf of natural gas purchased from Tejas Power outside the state of Ohio.......................... 141,955 Mcf of natural gas purchased from Tennessee Gas Pipeline outside the state of Ohio............. 199,551 Twelve Months Ended December 31, 1993 ------------------------------------- Mcf of natural gas purchased from CMS Gas Marketing outside the state of Ohio................ 219,971 Mcf of natural gas purchased from Women's Energy outside the state of Ohio................... 273,029 Mcf of natural gas purchased from Anadarko Trading outside the state of Ohio.................. 301,338 Mcf of natural gas purchased from Conoco outside the state of Ohio.......................... 550,386 Mcf of natural gas purchased from Valero Industrial Gas outside the state of Ohio........... 397,233 Mcf of natural gas purchased from Appalachian Gas Sales outside the state of Ohio................ 345,254 Mcf of natural gas purchased from Vastar Gas Marketing outside the state of Ohio............ 2,916,622 Mcf of natural gas purchased from Transco Gas Marketing outside the state of Ohio............ 1,961,576 Mcf of natural gas purchased through exchange from Texas Gas Transmission outside the state of Ohio... 1,403,258 Mcf of natural gas purchased from various non-affiliates outside the state of Ohio........... 330,776 Union Electric Energy Kwh of electric energy purchased from Claimant within the state of Kentucky and at Ohio-Kentucky state line (none purchased outside the state of Kentucky).......................................... 3,121,382,869 Gas Mcf of natural gas purchased from Natural Gas Clearinghouse outside the state of Kentucky and stored......................................... 343,627 Twelve Months Ended December 31, 1993 ------------------------------------- Mcf of natural gas purchased from Tenneco Gas Marketing outside the state of Kentucky and stored. 358,013 Mcf of natural gas purchased from Texaco Gas Marketing outside the state of Kentucky and stored. 332,475 Mcf of natural gas purchased from Columbia Gas Transmission outside the state of Kentucky and stored......................................... 529,838 Mcf of natural gas purchased from various non-affiliates outside the state of Kentucky and stored......................................... 27,029 Mcf of natural gas purchased from Texas Gas Transmission at Ohio-Kentucky state line........... 126,587 Mcf of natural gas purchased from Arco Oil & Gas outside the state of Kentucky.................. 115,649 Mcf of natural gas purchased from Texaco Gas Marketing outside the state of Kentucky............ 746,925 Mcf of natural gas purchased from Entrade outside the state of Kentucky...................... 105,593 Mcf of natural gas purchased from Enron Gas Marketing outside the state of Kentucky............ 132,899 Mcf of natural gas purchased from Seagull Marketing Service outside the state of Kentucky.... 270,165 Mcf of natural gas purchased from TXG Gas Marketing outside the state of Kentucky............ 237,574 Mcf of natural gas purchased from Union Pacific Fuels outside the state of Kentucky................ 491,088 Mcf of natural gas purchased from Natural Gas Clearinghouse outside the state of Kentucky........ 1,812,644 Mcf of natural gas purchased from Tenneco Gas Marketing outside the state of Kentucky............ 1,386,498 Twelve Months Ended December 31, 1993 ------------------------------------- Mcf of natural gas purchased from Aquila Energy outside the state of Kentucky...................... 592,488 Mcf of natural gas purchased from Tennessee Gas Pipeline outside the state of Kentucky......... 126,872 Mcf of natural gas purchased from O & R Energy outside the state of Kentucky...................... 122,453 Mcf of natural gas purchased from Vastar Gas Marketing outside the state of Kentucky............ 614,254 Mcf of natural gas purchased from Transco Gas Marketing outside the state of Kentucky........ 344,859 Mcf of natural gas purchased from Valero Industrial Gas outside the state of Kentucky....... 85,298 Mcf of natural gas purchased from Chevron U.S.A. outside the state of Kentucky...................... 98,853 Mcf of natural gas purchased from Unocal Exploration Partners outside the state of Kentucky............. 95,534 Mcf of natural gas purchased through exchange from Texas Gas Transmission outside the state of Kentucky........................................... 222,297 Mcf of natural gas purchased from various non-affiliates outside the state of Kentucky....... 591,427 West Harrison Electric Energy Kwh of electric energy purchased from Claimant at Indiana-Ohio state line......................... 6,595,891 Gas Mcf of natural gas purchased........................ Not Applicable Twelve Months Ended December 31, 1993 ------------------------------------- Miami Electric Energy Kwh of electric energy purchased.................... Not Applicable Gas Mcf of natural gas purchased........................ Not Applicable Lawrenceburg Gas Electric Energy Kwh of electric energy purchased.................... Not Applicable Gas Mcf of natural gas purchased from CNG Producing outside the state of Indiana....................... 111,026 Mcf of natural gas purchased from Natural Gas Clearinghouse outside the state of Indiana......... 255,456 Mcf of natural gas purchased from Texas Gas Marketing outside the state of Indiana............. 114,963 Mcf of natural gas purchased from Woodward Marketing outside the state of Indiana............. 220,762 Mcf of natural gas purchased from Valero Industrial Gas outside the state of Indiana................... 125,933 Mcf of natural gas purchased from Anadarko Trading outside the state of Indiana............... 80,007 Mcf of natural gas purchased from Seagull Marketing Service outside the state of Indiana..... 56,322 Mcf of natural gas purchased from Unocal Exploration Partners outside the state of Indiana.............. 48,934 Mcf of natural gas purchased from various non-affiliates outside the state of Indiana........ 183,723 4. The following information for the reporting period with respect to claimant and each interest it holds directly or indirectly in an EWG or a foreign utility company, stating monetary amounts in United States dollars: (a) Name, location, business address and description of the facilities used by the EWG or foreign utility company for the generation, transmission and distribution of electric energy for sale or for the distribution at retail of natural or manufactured gas. All companies..................................... None (b) Name of each system company that holds an interest in such EWG or foreign utility company; and description of the interest held. All companies..................................... None (c) Type and amount of capital invested, directly or indirectly, by the holding company claiming exemption; any direct or indirect guarantee of the security of the EWG or foreign utility company by the holding company claiming exemption; and any debt or other financial obligation for which there is recourse, directly or indirectly, to the holding company claiming exemption or another system company, other than the EWG or foreign utility company. All companies..................................... None (d) Capitalization and earnings of the EWG or foreign utility company during the reporting period. All companies..................................... None (e) Identify any service, sales or construction contract(s) between the EWG or foreign utility company and a system company, and describe the services to be rendered or goods sold and fees or revenues under such agreement(s). All companies..................................... None Attached hereto as Exhibits A-1, A-2, and A-3, respectively, are a consolidating balance sheet of Claimant, Union, Miami, West Harrison, Lawrenceburg Gas, Tri-State and Enertech as of December 31, 1993 and consolidating income and retained earnings statements of Claimant, Union, Miami, West Harrison, Lawrenceburg Gas, Tri-State and Enertech for the twelve months ended December 31, 1993 (see Note 1 to Consolidating Financial Statements). The above-named Claimant has caused this statement to be duly executed on its behalf by its authorized officer on this 25th day of February, 1994. THE CINCINNATI GAS & ELECTRIC COMPANY ------------------------------------- (CORPORATE SEAL) (Name of Claimant) By William L. Sheafer ---------------------------------- (Title) (Treasurer) Attest: James R. Mosley - - ------------------------ (Assistant Treasurer and Assistant Secretary) Name, title, and address of officer to whom notices and correspondence concerning this statement should be addressed: William L. Sheafer, Treasurer - - ---------------------------------------------- (Name) (Title) 139 East Fourth Street, Cincinnati, Ohio 45202 - - ---------------------------------------------- (Address)
EXHIBIT A-1 SHEET 1 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Balance Sheet - Assets December 31, 1993 ------------------------------------------------------ West Lawrenceburg Claimant Union Miami Harrison Gas ------------- ----------- ------- -------- ------------ $ $ $ $ $ Property, Plant and Equipment at original cost (Notes 7, 9 and 12) In Service 4,855,545,489 319,603,467 563,551 511,000 12,378,026 Less - Accumulated provisions for depreciation 1,372,461,162 96,164,955 550,682 144,447 2,991,664 ------------- ----------- ------- ------- ----------- 3,483,084,327 223,438,512 12,869 366,553 9,386,362 Construction work in progress 64,163,394 5,060,043 - - 127,944 ------------- ----------- ------- ------- ----------- 3,547,247,721 228,498,555 12,869 366,553 9,514,306 ------------- ----------- ------- ------- ----------- Other Property and Investments Non-utility property - net 2,407,750 2,206 - - - Investment in Ohio Valley Electric Corporation, at cost (Note 12) 900,000 - - - - Investments in subsidiaries, equity basis Capital stock 28,666,352 - - - - Unappropriated undistributed subsidiary earnings 72,771,013 - - - - Advances to subsidiary companies 13,133,699 - - - - Other investments and property 604,068 1,500 - - - ------------- ----------- ------- ------- ----------- 118,482,882 3,706 - - - ------------- ----------- ------- ------- ----------- Current Assets Cash (Note 6) 2,014,501 2,477,343 31,069 5,592 35,324 Accounts receivable 191,822,258 27,173,365 - 59,114 1,058,749 Accumulated provisions for doubtful accounts (13,266,883) (1,609,144) - - (29,647) Accounts receivable from affiliated companies 20,474,717 (21,979) 3,142 18 (5,661) Accrued unbilled revenues 89,604,212 17,128,720 - 15,304 603,135 Materials, supplies and fuel, at average cost - Fuel for use in electric production 54,358,039 - - - - Other 89,480,277 8,664,381 - - 14,257 Taxes applicable to subsequent year 107,410,164 - - - - Prepayments 28,230,147 703,243 - 204 119,590 Other 132,972 - - - - ------------- ----------- ------- ------- ----------- 570,260,404 54,515,929 34,211 80,232 1,795,747 ------------- ----------- ------- ------- ----------- Other Assets Post-in-service carrying costs and deferred operating expenses (Note 1) 154,635,963 - - - - Phase-in deferred return and depreciation (Note 1) 83,430,482 - - - - Amounts due from customers - income taxes 387,733,942 - - 14,053 - Other 104,235,118 3,004,520 - 1 29,122 ------------- ----------- ------- ------- ----------- 730,035,505 3,004,520 - 14,054 29,122 ------------- ----------- ------- ------- ----------- 4,966,026,512 286,022,710 47,080 460,839 11,339,175 ============= =========== ======= ======= =========== The accompanying notes are an integral part of the above statement.
EXHIBIT A-1 SHEET 1 (Continued) THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Balance Sheet - Assets December 31, 1993 (Continued) ------------------------------------------------------------------ Combined Consolidated Tri-State Enertech Totals Adjustments Totals --------- -------- ------------- ----------- ------------ $ $ $ $ $ Property, Plant and Equipment at original cost (Notes 7, 9 and 12) In Service - - 5,188,601,533 - 5,188,601,533 Less - Accumulated provisions for depreciation - - 1,472,312,910 - 1,472,312,910 ---------- ------- ------------- ------------- ------------- - - 3,716,288,623 - 3,716,288,623 Construction work in progress - - 69,351,381 - 69,351,381 ---------- ------- ------------- ------------- ------------- - - 3,785,640,004 - 3,785,640,004 ---------- ------- ------------- ------------- ------------- Other Property and Investments Non-utility property - net 14,643,014 - 17,052,970 - 17,052,970 Investment in Ohio Valley Electric Corporation, at cost (Note 12) - - 900,000 - 900,000 Investments in subsidiaries, equity basis Capital stock - - 28,666,352 (28,666,352) - Unappropriated undistributed subsidiary earnings - - 72,771,013 (72,771,013) - Advances to subsidiary companies - - 13,133,699 (13,133,699) - Other investments and property - - 605,568 - 605,568 ---------- ------- ------------- ------------- ------------- 14,643,014 - 133,129,602 (114,571,064) 18,558,538 ---------- ------- ------------- ------------- ------------- Current Assets Cash (Note 6) 3,709 2,399 4,569,937 - 4,569,937 Accounts receivable 183,372 142,279 220,439,137 676,476 221,115,613 Accumulated provisions for doubtful accounts - - (14,905,674) - (14,905,674) Accounts receivable from affiliated companies (3,285) - 20,446,952 (20,446,952) - Accrued unbilled revenues - - 107,351,371 (1,396,031) 105,955,340 Materials, supplies and fuel, at average cost - Fuel for use in electric production - - 54,358,039 - 54,358,039 Other - - 98,158,915 - 98,158,915 Taxes applicable to subsequent year - - 107,410,164 - 107,410,164 Prepayments - - 29,053,184 - 29,053,184 Other - - 132,972 - 132,972 ---------- ------- ------------- ------------- ------------- 183,796 144,678 627,014,997 (21,166,507) 605,848,490 ---------- ------- ------------- ------------- ------------- Other Assets Post-in-service carrying costs and deferred operating expenses (Note 1) - - 154,635,963 - 154,635,963 Phase-in deferred return and depreciation (Note 1) - - 83,430,482 - 83,430,482 Amounts due from customers - income taxes - - 387,747,995 - 387,747,995 Other - - 107,268,761 393,114 107,661,875 ---------- ------- ------------- ------------- ------------- - - 733,083,201 393,114 733,476,315 ---------- ------- ------------- ------------- ------------- 14,826,810 144,678 5,278,867,804 (135,344,457) 5,143,523,347 ========== ======= ============= ============= ============= The accompanying notes are an integral part of the above statement.
EXHIBIT A-1 SHEET 2 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Balance Sheet - Liabilities December 31, 1993 ----------------------------------------------------------- West Lawrenceburg Claimant Union Miami Harrison Gas ------------- ----------- ------- -------- ------------ $ $ $ $ $ Capitalization Common shareholders' equity Common shares, par value $8.50 per share (Note 3) Authorized-120,000,000 shares Outstanding-88,062,083 748,527,706 - - - - Additional paid-in capital (Note 3) 314,218,044 - - - - Capital shares of subsidiary companies - 27,618,941 1,000 20,000 538,400 Retained earnings 456,511,275 69,327,355 34,628 234,393 4,136,818 ------------- ----------- -------- ------- ----------- Total common shareholders' equity 1,519,257,025 96,946,296 35,628 254,393 4,675,218 ------------- ----------- -------- ------- ----------- Cumulative preferred shares, par value $100 per share (Notes 4 and 5) Outstanding- Not subject to mandatory redemption- 4 % series - 270,000 shares 27,000,000 - - - - 4-3/4 % series - 130,000 shares 13,000,000 - - - - 7.44 % series - 400,000 shares 40,000,000 - - - - 9.28 % series - 400,000 shares 40,000,000 - - - - ------------- ----------- -------- ------- ----------- 120,000,000 - - - - ------------- ----------- -------- ------- ----------- Subject to mandatory redemption- 9.15 % series - 500,000 shares 50,000,000 - - - - 7-7/8 % series - 800,000 shares 80,000,000 - - - - 7-3/8 % series - 800,000 shares 80,000,000 - - - - ------------- ----------- -------- ------- ----------- 210,000,000 - - - - ------------- ----------- -------- ------- ----------- Long-term debt (Note 7) 1,738,414,278 89,171,831 - - 1,200,000 ------------- ----------- -------- ------- ----------- Total capitalization 3,587,671,303 186,118,127 35,628 254,393 5,875,218 ------------- ----------- -------- ------- ----------- Current Liabilities Advances from parent company - - - - - Notes payable - (Note 6) Bank 6,000,000 25,000,000 - - - Other 12,500 - - - - Accounts payable 114,917,924 6,914,373 - 2 783,006 Accounts payable to affiliated companies (34,998) 17,096,029 1,321 109,386 2,664,747 Dividends payable on preferred shares 6,290,125 - - - - Accrued taxes 223,189,900 (434,538) 5,178 (1,499) 59,795 Accrued interest on debt 26,965,316 2,126,283 - 796 30,644 Other current and accrued liabilities 25,752,323 3,632,084 - 5,183 106,715 ------------- ----------- -------- ------- ----------- 403,093,090 54,334,231 6,499 113,868 3,644,907 ------------- ----------- -------- ------- ----------- Deferred Credits and Other Deferred income taxes-(Note 1) 709,797,159 20,486,616 (32,408) 66,046 997,574 Investment tax credits 135,594,342 5,651,190 472 15,228 259,389 Other liabilities and deferred credits 129,870,618 19,432,546 36,889 11,304 562,087 ------------- ----------- -------- ------- ----------- 975,262,119 45,570,352 4,953 92,578 1,819,050 ------------- ----------- -------- ------- ----------- 4,966,026,512 286,022,710 47,080 460,839 11,339,175 ============= =========== ======== ======= =========== The accompanying notes are an integral part of the above statement.
EXHIBIT A-1 SHEET 2 (Continued) THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Balance Sheet - Liabilities December 31, 1993 (Continued) ----------------------------------------------------------------------- Combined Consolidated Tri-State Enertech Totals Adjustments Totals --------- -------- ------------- ----------- ------------ $ $ $ $ $ Capitalization Common shareholders' equity Common shares, par value $8.50 per share (Note 3) Authorized-120,000,000 shares Outstanding-88,062,083 - - 748,527,706 - 748,527,706 Additional paid-in capital (Note 3) - - 314,218,044 - 314,218,044 Capital shares of subsidiary companies 25,000 50,000 28,253,341 (28,253,341) - Retained earnings (197,449) (443,114) 529,603,906 (73,092,630) 456,511,276 ---------- --------- ------------- ------------- ------------- Total common shareholders' equity (172,449) (393,114) 1,620,602,997 (101,345,971) 1,519,257,026 ---------- --------- ------------- ------------- ------------- Cumulative preferred shares, par value $100 per share (Notes 4 and 5) Outstanding- Not subject to mandatory redemption- 4 % series - 270,000 shares - - 27,000,000 - 27,000,000 4-3/4 % series - 130,000 shares - - 13,000,000 - 13,000,000 7.44 % series - 400,000 shares - - 40,000,000 - 40,000,000 9.28 % series - 400,000 shares - - 40,000,000 - 40,000,000 ---------- --------- ------------- ------------- ------------- - - 120,000,000 - 120,000,000 ---------- --------- ------------- ------------- ------------- Subject to mandatory redemption- 9.15 % series - 500,000 shares - - 50,000,000 - 50,000,000 7-7/8 % series - 800,000 shares - - 80,000,000 - 80,000,000 7-3/8 % series - 800,000 shares - - 80,000,000 - 80,000,000 ---------- --------- ------------- ------------- ------------- - - 210,000,000 - 210,000,000 ---------- --------- ------------- ------------- ------------- Long-term debt (Note 7) 275,000 - 1,829,061,109 - 1,829,061,109 ---------- --------- ------------- ------------- ------------- Total capitalization 102,551 (393,114) 3,779,664,106 (101,345,971) 3,678,318,135 ---------- --------- ------------- ------------- ------------- Current Liabilities Advances from parent company 13,133,699 - 13,133,699 (13,133,699) - Notes payable - (Note 6) Bank - - 31,000,000 - 31,000,000 Other - - 12,500 - 12,500 Accounts payable 788 4,078 122,620,171 - 122,620,171 Accounts payable to affiliated companies 65,912 544,555 20,446,952 (20,446,952) - Dividends payable on preferred shares - - 6,290,125 - 6,290,125 Accrued taxes (298,583) (10,840) 222,509,413 (290,431) 222,218,982 Accrued interest on debt - (1) 29,123,038 - 29,123,038 Other current and accrued liabilities - - 29,496,305 - 29,496,305 ---------- --------- ------------- ------------- ------------- 12,901,816 537,792 474,632,203 (33,871,082) 440,761,121 ---------- --------- ------------- ------------- ------------- Deferred Credits and Other Deferred income taxes-(Note 1) 1,822,443 - 733,137,430 86,226 733,223,656 Investment tax credits - - 141,520,621 - 141,520,621 Other liabilities and deferred credits - - 149,913,444 (213,630) 149,699,814 ---------- --------- ------------- ------------- ------------- 1,822,443 - 1,024,571,495 (127,404) 1,024,444,091 ---------- --------- ------------- ------------- ------------- 14,826,810 144,678 5,278,867,804 (135,344,457) 5,143,523,347 ========== ========= ============= ============= ============= The accompanying notes are an integral part of the above statement.
EXHIBIT A-1 SHEET 3 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES --------------------------------------- Consolidating Balance Sheet Adjustments December 31, 1993 --------------------------------------- ADJUSTMENT NO. 1 $ $ ---------------- ---------- ---------- Capital shares of subsidiary companies 28,253,341 Retained earnings 73,184,024 Investment in subsidiaries--capital stock 28,666,352 Unappropriated undistributed subsidiary earnings 72,771,013
To eliminate investments in subsidiary companies as set forth below:
$ ----------- Capital stock The Union Light, Heat and Power Company 27,397,284 Miami Power Corporation 40,980 The West Harrison Gas and Electric Company 25,986 Lawrenceburg Gas Company 1,177,102 Tri-State Improvement Company 25,000 ----------- 28,666,352 ----------- Unappropriated undistributed subsidiary earnings: The Union Light, Heat and Power Company 69,247,292 Miami Power Corporation (5,352) The West Harrison Gas and Electric Company 228,407 Lawrenceburg Gas Company 3,498,115 Tri-State Improvement Company (197,449) ----------- 72,771,013 ----------- Total investment 101,437,365 Elimination of capital shares 28,253,341 ----------- Net debit to "Retained earnings" 73,184,024 ===========
EXHIBIT A-1 SHEET 4 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES --------------------------------------- Consolidating Balance Sheet Adjustments December 31, 1993 --------------------------------------- ADJUSTMENT NO. 2 $ $ ---------------- ---------- ---------- Advances from parent company 13,133,699 Advances to subsidiary companies 13,133,699
To eliminate advances to Tri-State Improvement Company from The Cincinnati Gas & Electric Company.
ADJUSTMENT NO. 3 ---------------- Accounts payable to affiliated companies 20,446,952 Accounts receivable from affiliated companies 20,446,952
To eliminate inter-company accounts receivable and payable at December 31, 1993, as set forth below:
Receivables Payables ----------- -------- The Cincinnati Gas & Electric Company 20,474,717 (34,998) The Union Light, Heat and Power Company (21,979) 17,096,029 Miami Power Corporation 3,142 1,321 The West Harrison Gas and Electric Company 18 109,386 Lawrenceburg Gas Company (5,661) 2,664,747 Tri-State Improvement Company (3,285) 65,912 Enertech Associates International -- 544,555 ---------- ---------- 20,446,952 20,446,952 ========== ==========
ADJUSTMENT NO. 4 ---------------- Accounts receivable 676,476 Other assets - other 393,114 Accrued taxes 290,431 Other liabilities and deferred credits 213,630 Accrued unbilled revenues 1,396,031 Retained earnings 91,394 Deferred income taxes 86,226
To eliminate miscellaneous adjustments of The Union Light, Heat and Power Company for consolidation.
EXHIBIT A-2 SHEET 1 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Statement of Income - Year Ended December 31, 1993 ---------------------------------------------------------------- West Lawrenceburg Claimant Union Miami Harrison Gas ------------- ----------- ------- -------- ------------ $ $ $ $ $ Operating Revenues Electric 1,242,658,815 175,712,173 33,519 457,074 - Gas 387,673,125 75,744,165 - - 7,571,005 ------------- ----------- ------- ------- ----------- Total operating revenues 1,630,331,940 251,456,338 33,519 457,074 7,571,005 ------------- ----------- ------- ------- ----------- Operating Expenses Gas purchased 233,479,468 43,380,287 - - 4,271,867 Fuel used in electric production 333,331,900 160,218 - 52 - Electricity purchased from parent company for resale - 134,129,849 - 335,114 - Other operation 250,725,409 30,395,427 21,904 70,765 1,281,926 Maintenance 102,490,945 6,267,181 2,328 13,440 83,270 Provision for depreciation 141,886,282 9,812,929 1,356 16,377 343,909 Post-in-service deferred operating expenses-net (Note 1) (6,471,389) - - - - Phase-in deferred depreciation (Note 1) (8,523,784) - - - - Taxes other than income taxes (Note 13) 179,442,677 3,623,331 4,870 12,945 283,483 Income taxes (Note 2) 64,194,962 4,749,667 2,545 (287) 352,243 Deferred income taxes - net (Note 2) 38,813,095 1,001,573 (1,453) 2,146 59,270 ------------- ----------- ------- ------- ----------- Total operating expenses 1,329,369,565 233,520,462 31,550 450,552 6,675,968 ------------- ----------- ------- ------- ----------- Operating Income 300,962,375 17,935,876 1,969 6,522 895,037 ------------- ----------- ------- ------- ----------- Other Income and Deductions Allowance for other funds used during construction 2,856,897 296,639 - - - Post-in-service carrying costs (Note 1) 12,100,043 - - - - Phase-in deferred return (Note 1) 35,333,880 - - - - Write-off of a portion of Zimmer Station (Note 8) (234,844,433) - - - - Income taxes - credit (Notes 1 and 2) Related to write-off of a portion of Zimmer Station (Note 8) 12,084,977 - - - - Other 9,136,119 45,775 - 745 2,131 Other - net 1,777,468 (579,695) - 9 (5,707) ------------- ----------- ------- ------- ----------- Total other income and deductions (161,555,049) (237,281) - 754 (3,576) ------------- ----------- ------- ------- ----------- Income (Loss) Before Interest Charges 139,407,326 17,698,595 1,969 7,276 891,461 ------------- ----------- ------- ------- ----------- Interest Charges Interest on long-term debt 145,368,195 8,207,155 - - 117,000 Other interest 2,112,800 331,499 - 4,759 62,153 Amortization of debt discount, premium and other 3,255,129 89,592 - - 6,156 Allowance for borrowed funds used during construction-credit (2,605,190) (268,226) - - (892) ------------- ----------- ------- ------- ----------- Net interest charges 148,130,934 8,360,020 - 4,759 184,417 ------------- ----------- ------- ------- ----------- Net Income (Loss) (8,723,608) 9,338,575 1,969 2,517 707,044 ============= =========== ======= ======= =========== The accompanying notes are an integral part of the above statement.
EXHIBIT A-2 SHEET 1 (Continued) THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Statement of Income - Year Ended December 31, 1993 (Continued) ---------------------------------------------------------------------------- Combined Consolidated Tri-State Enertech Totals Adjustments Totals --------- -------- ------------- ----------- ------------ $ $ $ $ $ Operating Revenues Electric - - 1,418,861,581 (136,416,501) 1,282,445,080 Gas - - 470,988,295 (1,692,488) 469,295,807 --------- --------- ------------- ------------- ------------- Total operating revenues - - 1,889,849,876 (138,108,989) 1,751,740,887 --------- --------- ------------- ------------- ------------- Operating Expenses Gas purchased - - 281,131,622 (295,217) 280,836,405 Fuel used in electric production - - 333,492,170 (213,630) 333,278,540 Electricity purchased from parent company for resale - - 134,464,963 (134,464,963) - Other operation - - 282,495,431 (2,629,254) 279,866,177 Maintenance - - 108,857,164 - 108,857,164 Provision for depreciation - - 152,060,853 - 152,060,853 Post-in-service deferred operating expenses-net (Note 1) - - (6,471,389) - (6,471,389) Phase-in deferred depreciation (Note 1) - - (8,523,784) - (8,523,784) Taxes other than income taxes (Note 13) - - 183,367,306 - 183,367,306 Income taxes (Note 2) - - 69,299,130 (290,431) 69,008,699 Deferred income taxes - net (Note 2) - - 39,874,631 86,226 39,960,857 --------- --------- ------------- ------------- ------------- Total operating expenses - - 1,570,048,097 (137,807,269) 1,432,240,828 --------- --------- ------------- ------------- ------------- Operating Income - - 319,801,779 (301,720) 319,500,059 --------- --------- ------------- ------------- ------------- Other Income and Deductions Allowance for other funds used during construction - - 3,153,536 - 3,153,536 Post-in-service carrying costs (Note 1) - - 12,100,043 - 12,100,043 Phase-in deferred return (Note 1) - - 35,333,880 - 35,333,880 Write-off of a portion of Zimmer Station (Note 8) - - (234,844,433) - (234,844,433) Income taxes - credit (Notes 1 and 2) Related to write-off of a portion of Zimmer Station (Note 8) - - 12,084,977 - 12,084,977 Other (18,564) 238,600 9,404,806 - 9,404,806 Other - net - (664,484) 527,591 (10,077,870) (9,550,279) --------- --------- ------------- ------------- ------------- Total other income and deductions (18,564) (425,884) (162,239,600) (10,077,870) (172,317,470) --------- --------- ------------- ------------- ------------- Income (Loss) Before Interest Charges (18,564) (425,884) 157,562,179 (10,379,590) 147,182,589 --------- --------- ------------- ------------- ------------- Interest Charges Interest on long-term debt - - 153,692,350 - 153,692,350 Other interest 712,060 17,230 3,240,501 (791,163) 2,449,338 Amortization of debt discount, premium and other - - 3,350,877 - 3,350,877 Allowance for borrowed funds used during construction-credit (712,060) - (3,586,368) - (3,586,368) --------- --------- ------------- ------------- ------------- Net interest charges - 17,230 156,697,360 (791,163) 155,906,197 --------- --------- ------------- ------------- ------------- Net Income (Loss) (18,564) (443,114) 864,819 (9,588,427) (8,723,608) ========= ========= ============= ============= ============= The accompanying notes are an integral part of the above statement.
EXHIBIT A-2 SHEET 2 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES --------------------------------------- Consolidating Statement of Income Adjustments Year Ended December 31, 1993 --------------------------------------------- ADJUSTMENT NO. 1 $ $ ---------------- ---------- ---------- Electric revenues 135,696,946 Gas revenues 1,692,488 Electricity purchased from parent company for resale 134,464,963 Gas purchased 295,217 Other operation 2,629,254
To eliminate inter-company revenues and operation expenses as described below:
$ ---------- Electric -- Sale of electricity by The Cincinnati Gas & Electric Company to -- The Union Light, Heat and Power Company 134,129,849 The West Harrison Gas and Electric Company 335,114 ----------- 134,464,963 ----------- Transmission service rents charged by Miami Power Corporation to -- The Cincinnati Gas & Electric Company 33,519 ----------- Rent charged by The Cincinnati Gas & Electric Company to -- The Union Light, Heat and Power Company 1,139,916 Rent charged by The Union Light, Heat and Power Company to -- The Cincinnati Gas & Electric Company 58,548 ----------- 1,198,464 ----------- Total 135,696,946 =========== Gas -- Sale of gas by The Union Light, Heat and Power Company to -- The Cincinnati Gas & Electric Company 142,724 Transportation charges by The Cincinnati Gas & Electric Company to -- The Union Light, Heat and Power Company 152,493 ----------- 295,217 ----------- Transportation charges by The Cincinnati Gas & Electric Company to -- The Union Light, Heat and Power Company 47,268 ----------- Rent charged by The Cincinnati Gas & Electric Company to -- Lawrenceburg Gas Company 13,596 The Union Light, Heat and Power Company 874,164 Rent charged by The Union Light, Heat and Power Company to -- The Cincinnati Gas & Electric Company 462,243 ----------- 1,350,003 ----------- Total 1,692,488 ===========
EXHIBIT A-2 SHEET 3 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES --------------------------------------- Consolidating Statement of Income Adjustments Year Ended December 31, 1993 --------------------------------------------- ADJUSTMENT NO. 2 $ $ ---------------- ---------- ---------- Electric revenues 719,555 Deferred income taxes -- net 86,226 Fuel used in electric production 213,630 Income taxes 290,431 Other -- net 301,720
To eliminate miscellaneous adjustments of The Union Light, Heat and Power Company for consolidation.
ADJUSTMENT NO. 3 ---------------- Other -- net 10,379,590 Other interest 791,163 Net income (memo) 9,588,427
To eliminate other income and deductions as described below:
$ ----------- Interest on advance by The Cincinnati Gas & Electric Company to Tri-State Improvement Company 712,060 ----------- Interest on accounts payable due The Cincinnati Gas & Electric Company from -- The West Harrison Gas and Electric Company 4,481 Lawrenceburg Gas Company 60,964 Enertech Associates International 13,658 ----------- 79,103 ----------- 791,163 ----------- The Cincinnati Gas & Electric Company's equity in the current year earnings of its subsidiaries for the year 1993 -- The Union Light, Heat and Power Company 9,338,575 Miami Power Corporation 1,969 The West Harrison Gas and Electric Company 2,517 Lawrenceburg Gas Company 707,044 Tri-State Improvement Company (18,564) Enertech Associates International (443,114) ----------- 9,588,427 ----------- Total 10,379,590 ===========
EXHIBIT A-3 SHEET 1 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Statement of Retained Earnings - Year Ended December 31, 1993 --------------------------------------------------------------------------- West Lawrenceburg Claimant Union Miami Harrison Gas ----------- ---------- ------- -------- ------------ $ $ $ $ $ Balance - December 31, 1992 636,336,691 62,915,445 35,659 231,876 3,429,774 Add - Net income (loss) (8,723,608) 9,338,575 1,969 2,517 707,044 ----------- ---------- ------- ------- ----------- 627,613,083 72,254,020 37,628 234,393 4,136,818 ----------- ---------- ------- ------- ----------- Deduct- Cash dividends declared on capital shares: Cumulative preferred - 4 % 1,080,000 - - - - Cumulative preferred - 4-3/4 % 617,504 - - - - Cumulative preferred - 7.44 % 2,976,000 - - - - Cumulative preferred - 9.28 % 3,712,000 - - - - Cumulative preferred - 9.15 % 4,575,000 - - - - Cumulative preferred - 7-7/8 % 6,300,000 - - - - Cumulative preferred - 7-3/8 % 5,900,000 - - - - Common shares 145,941,304 2,926,665 3,000 - - ----------- ---------- ------- ------- ----------- 171,101,808 2,926,665 3,000 - - ----------- ---------- ------- ------- ----------- Balance - December 31, 1993 456,511,275 69,327,355 34,628 234,393 4,136,818 =========== ========== ======= ======= =========== The accompanying notes are an integral part of the above statement.
EXHIBIT A-3 SHEET 1 (Continued) THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES -------------------------------------------------------------- Consolidating Statement of Retained Earnings - Year Ended December 31, 1993 (Continued) --------------------------------------------------------------------------------------- Combined Consolidated Tri-State Enertech Totals Adjustments Totals --------- -------- ----------- ----------- ------------ $ $ $ $ $ Balance - December 31, 1992 (178,885) - 702,770,560 (66,433,868) 636,336,692 Add - Net income (loss) (18,564) (443,114) 864,819 (9,588,427) (8,723,608) --------- --------- ----------- ------------ ----------- (197,449) (443,114) 703,635,379 (76,022,295) 627,613,084 --------- --------- ----------- ------------ ----------- Deduct- Cash dividends declared on capital shares: Cumulative preferred - 4 % - - 1,080,000 - 1,080,000 Cumulative preferred - 4-3/4 % - - 617,504 - 617,504 Cumulative preferred - 7.44 % - - 2,976,000 - 2,976,000 Cumulative preferred - 9.28 % - - 3,712,000 - 3,712,000 Cumulative preferred - 9.15 % - - 4,575,000 - 4,575,000 Cumulative preferred - 7-7/8 % - - 6,300,000 - 6,300,000 Cumulative preferred - 7-3/8 % - - 5,900,000 - 5,900,000 Common shares - - 148,870,969 (2,929,665) 145,941,304 --------- --------- ----------- ------------ ----------- - - 174,031,473 (2,929,665) 171,101,808 --------- --------- ----------- ------------ ----------- Balance - December 31, 1993 (197,449) (443,114) 529,603,906 (73,092,630) 456,511,276 ========= ========= =========== ============ =========== The accompanying notes are an integral part of the above statement.
EXHIBIT A-3 SHEET 2 THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES --------------------------------------- Consolidating Retained Earnings Adjustments Year Ended December 31, 1993 ------------------------------------------- ADJUSTMENT NO. 1 $ ---------------- ----------- To eliminate The Cincinnati Gas & Electric Company's equity in earnings of its subsidiaries for the year 1993: The Union Light, Heat and Power Company 9,338,575 Miami Power Corporation 1,969 The West Harrison Gas and Electric Company 2,517 Lawrenceburg Gas Company 707,044 Tri-State Improvement Company (18,564) Enertech Associates International (443,114) ----------- 9,588,427 ===========
ADJUSTMENT NO. 2 ---------------- To eliminate dividends received by The Cincinnati Gas & Electric Company from its subsidiaries: The Union Light, Heat and Power Company 2,926,665 Miami Power Corporation 3,000 ----------- 2,929,665 ===========
THE CINCINNATI GAS & ELECTRIC COMPANY AND SUBSIDIARY COMPANIES ------------------------------------- NOTES TO CONSOLIDATING FINANCIAL STATEMENTS ------------------------------------------- December 31, 1993 ----------------- (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Cincinnati Gas & Electric Company (CG&E) and its subsidiaries follow the Uniform Systems of Accounts prescribed by the Federal Energy Regulatory Commission (FERC), and are subject to the provisions of Statement of Financial Accounting Standards No. 71, "Accounting for the Effects of Certain Types of Regulation". The more significant accounting policies are summarized below: PRINCIPLES OF CONSOLIDATION. All subsidiaries of CG&E are included in the consolidating statements. Intercompany items and transactions have been eliminated. UTILITY PLANT. Property, plant and equipment is stated at the original cost of construction, which includes payroll and related costs such as taxes, pensions and other fringe benefits, general and administrative costs, and an allowance for funds used during construction. REVENUES AND FUEL. CG&E and its subsidiaries recognize revenues for gas and electric service rendered during the month, which includes revenue for sales unbilled at the end of each month. CG&E and The Union Light, Heat and Power Company (Union) expense the costs of gas and electricity purchased and the cost of fuel used in electric production as recovered through revenues and defer the portion of these costs recoverable or refundable in future periods. DEPRECIATION AND MAINTENANCE. The Companies determine their provision for depreciation using the straight-line method and by the application of rates to various classes of property, plant and equipment. The rates are based on periodic studies of the estimated service lives and net cost of removal of the properties. The percentages of the annual provisions for depreciation to the weighted average of depreciable property for the year 1993 were equivalent to 2.9% of electric plant, 2.7% of gas plant and 4.0% of common plant. Expenditures for maintenance and repairs of units of property, including renewals of minor items, are charged to the appropriate maintenance expense accounts. A betterment or replacement of a unit of property is accounted for as an addition and retirement of property, plant and equipment. At the time of such a retirement, the accumulated provision for depreciation is charged with the original cost of the property retired and also for the net cost of removal. INCOME TAXES. For income tax purposes, CG&E and its subsidiaries use liberalized depreciation methods and deduct removal costs as incurred. Consistent with regulatory treatment, CG&E and its subsidiaries currently provide for deferred taxes arising from the use of liberalized depreciation for operations regulated by state utility commissions, and for income tax deferrals on all timing differences for operations regulated by FERC. Although CG&E does not provide for deferred taxes resulting from the use of liberalized depreciation for property additions subject to The Public Utilities Commission of Ohio (PUCO) jurisdiction made prior to October 1978, CG&E is allowed to collect through rates the income taxes payable in the future as a result of using liberalized depreciation for such property. CG&E and its subsidiaries adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109), in 1993. SFAS No. 109 requires deferred tax recognition for all temporary differences in accordance with the liability method, requires that deferred tax liabilities and assets be adjusted for enacted changes in tax laws or rates and prohibits net-of-tax accounting and reporting. The Company believes it is probable that the net future increases in income taxes payable will be recovered from customers through future rates and, accordingly, has recorded a net regulatory asset at December 31, 1993. Adoption of SFAS No. 109 had no impact on results of operations. The following are the tax effects of temporary differences resulting in deferred tax assets and liabilities:
December 31, January 1, 1993 1993 ------------ ---------- Deferred tax liabilities Depreciation and other plant related items--net..... $ 631,601,519 $ 641,596,798 Income taxes due from customers--net................ 106,111,134 113,382,716 Deferred expenses and carrying costs................ 70,568,481 57,064,537 Other liabilities................................... 38,407,331 49,693,552 ------------- ------------- 846,688,465 861,737,603 ------------- ------------- Deferred tax assets Investment tax credits.............................. 49,867,377 50,537,471 Other assets........................................ 63,597,428 55,705,229 ------------- ------------- 113,464,805 106,242,700 ------------- ------------- Net deferred tax liability................... $ 733,223,660 $ 755,494,903 ============= =============
The following table reconciles the change in the net deferred tax liability to the deferred income tax expense included in the accompanying Consolidating Statement of Income for the year ended December 31, 1993: Net change in deferred tax liability per above table.......... $(22,271,243) Change in amounts due from customers - income taxes........... 52,049,023 ------------ Deferred income tax expense for the year ended December 31, 1993.................................. $ 29,777,780 ============
In August 1993, President Clinton signed into law the Omnibus Budget Reconciliation Act of 1993. Among the Act's provisions is an increase in the corporate Federal income tax rate from 34% to 35%, retroactive to January 1, 1993. Under SFAS No. 109, the increase in the tax rate has resulted in an increase in the net deferred tax liability and in income tax related regulatory assets. In the above table, this increase in regulatory assets has been included in "Change in amounts due from customers - income taxes". The increase in the Federal income tax rate has not had a material impact on the Company's results of operations. RETIREMENT INCOME PLANS. CG&E and its subsidiaries have trusteed non-contributory retirement income plans covering substantially all regular employees. The benefits are based on the employee's compensation, years of service, and age at retirement. The Companies' funding policy is to contribute annually to the plans an amount which is not less than the minimum amount required by the Employee Retirement Income Security Act of 1974 and not more than the maximum amount deductible for income tax purposes. The plans' funded status and amounts recognized on the Consolidating Balance Sheet for the year 1993 are presented below:
December 31, 1993 -------- Actuarial present value of benefit obligation: Vested benefit obligation....................................... $328,075,134 Nonvested benefit obligation.................................... 32,285,927 ------------ Total accumulated benefit obligation................................ 360,361,061 Projected future compensation increases............................. 110,332,287 ------------ Projected benefit obligation for service rendered................... 470,693,348 Plans' assets at fair value, primarily stocks and bonds............. 423,052,596 ------------ Plans' assets in excess of (less than) projected benefit obligation. (47,640,752) Unrecognized net gain............................................... (15,969,932) Unrecognized prior service cost..................................... 29,149,311 Unrecognized net transition asset................................... (7,364,481) ------------ Accrued pension cost........................................ $(41,825,854) ============
For the year 1993, the discount rate and assumed rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.50% and 5.00%, respectively. The expected long-term rate of return on plans' assets was 9.50%. Net pension cost for the year 1993 included the following components:
Service cost -- benefits earned..................................... $ 9,173,557 Interest cost on projected benefit obligation....................... 34,475,106 Reduction in pension costs from actual return on assets............. (31,370,545) Net amortization and deferral....................................... (4,665,977) ------------ Net periodic pension cost..................................... $ 7,612,141 ============
EARLY RETIREMENT PROGRAM AND WORKFORCE REDUCTIONS. As a result of unfavorable rate orders received in 1992, CG&E and its subsidiaries eliminated approximately 900 regular, temporary and contract positions. The workforce reduction was accomplished through a voluntary early retirement program and involuntary separations. At December 31, 1992, the accrued liability associated with the workforce reduction was $30.4 million (including $28.4 million of additional pension benefits). In accordance with a stipulation approved by the PUCO in August 1993, CG&E is recovering the majority of these costs through rates over a period of three years. The balance of unrecovered costs at December 31, 1993, totaled $27.2 million, and is reflected in "Other Assets--Other" on the Consolidating Balance Sheet. POSTRETIREMENT BENEFITS. Effective January 1, 1993, CG&E and its subsidiaries adopted Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions" (SFAS No. 106). SFAS No. 106 requires the accrual of the expected cost of providing postretirement benefits other than pensions to an employee and the employee s covered dependents during the employee's active working career. SFAS No. 106 also requires the recognition of the actuarially determined total postretirement benefit obligation earned by existing retirees. CG&E offers health care and life insurance benefits which are subject to SFAS No. 106. Life insurance benefits are fully paid by the Company for qualified employees. Eligibility to receive postretirement coverage is limited to those employees who had participated in the plans and earned the right to postretirement benefits prior to January 1, 1991. In 1988, CG&E and its subsidiaries recognized the actuarially determined accumulated benefit obligation for postretirement life insurance benefits earned by retirees. The accumulated benefit obligation for active employees is being amortized over 15 years, the employees' estimated remaining service lives. The accounting for postretirement life insurance benefits is not impacted by the adoption of SFAS No. 106. Postretirement health care benefits are subject to deductibles, copayment provisions and other limitations. Retirees can participate in health care plans by paying 100% of the group coverage premium. Prior to the adoption of SFAS No. 106, the cost of postretirement health care benefits was expensed by the Companies as paid. Beginning in 1993, the Companies began recognizing the accumulated postretirement benefit obligation over 20 years in accordance with SFAS No. 106. The PUCO, under whose jurisdiction the majority of SFAS No. 106 costs fall, authorized CG&E to begin recovering these costs in September 1993. The adoption of SFAS No. 106 did not have a material effect on results of operations. The net periodic postretirement cost for the Companies' postretirement benefit plans for 1993 are presented below:
Health Life Care Insurance Total ------ --------- ------- (Thousands) Service cost................................ $ 995 $ 116 $ 1,111 Interest cost............................... 4,269 1,924 6,193 Amortization of the unrecognized transition obligation..................... 2,584 415 2,999 ------ ------ ------- Postretirement benefit cost............ $7,848 $2,455 $10,303 ====== ====== =======
The Companies' accumulated postretirement benefit obligation and accrued postretirement benefit cost under the plans at December 31, 1993 are as follows:
Health Life Care Insurance Total ------ --------- ------- (Thousands) Retirees..................................... $ 22,753 $22,271 $45,024 Active employees eligible to retire.......... 2,363 1,494 3,857 Other active employees who are plan participants.......................... 27,501 2,912 30,413 -------- ------- ------- Accumulated postretirement benefit obligation................................. 52,617 26,677 79,294 Unrecognized net gain (loss)................. 3,822 (249) 3,573 Unrecognized transition obligation........... (49,104) (3,733) (52,837) -------- ------- ------- Accrued postretirement benefit cost...... $ 7,335 $22,695 $30,030 ======== ======= =======
The following assumptions were used to determine the accumulated postretirement benefit obligation:
December 31, January 1, 1993 1993 ------------ ---------- Discount rate................................... 7.50% 8.25% Health care cost trend rate, gradually declining 10.00% to 12.00% to to 5% in 2002 and 2003, respectively.......... 13.00% 15.00%
Increasing the assumed medical care cost trend rates by one percentage point in each year would increase the estimated accumulated postretirement benefit obligation as of December 31, 1993 by $10.5 million and the net periodic postretirement cost by $1.2 million. No funding has been established by the Companies for postretirement benefits. POSTEMPLOYMENT BENEFITS. In 1993, CG&E and its subsidiaries adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS No. 112). SFAS No. 112 requires the accrual of the cost of certain postemployment benefits provided to former or inactive employees. The adoption of SFAS No. 112 did not have a material effect on results of operations. ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION. The applicable regulatory uniform systems of accounts define "allowance for funds used during construction" (AFC) as including "the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used." This amount of AFC constitutes an actual cost of construction and, under established regulatory rate practices, a return on and recovery of such costs heretofore has been permitted in determining the rates charged for utility services. For 1993, AFC was accrued at an average pre-tax rate of 8.33%, compounded semi-annually. AFC represents non-cash earnings and, as a result, does not affect current cash flow. PHASE-IN DEFERRED DEPRECIATION AND DEFERRED RETURN. In a 1992 rate order, the PUCO authorized CG&E an annual increase in electric revenues of approximately $116.4 million, to be phased in over a three-year period under a plan that met the requirements of Statement of Financial Accounting Standards No. 92, "Regulated Enterprises - Accounting for Phase-in Plans". The phase-in plan was designed so that the three rate increases will provide revenues sufficient to recover all operating expenses and provide a fair rate of return on plant investment. In the first three years of the phase-in plan ordered by the PUCO, rates charged to customers do not fully recover depreciation expense and return on shareholders' investment. This deficiency is being capitalized on the Consolidating Balance Sheet and will be recovered over a 10-year period. Beginning in the fourth year, the revenue levels authorized pursuant to the phase-in plan are designed to be sufficient to recover that period's operating expenses, a fair return on the unrecovered investment, and amortization of deferred depreciation and deferred return recorded during the first three years of the plan. Under the rate order, the amount of deferred depreciation and deferred return, including carrying costs on the deferrals, estimated to be recorded in 1994 totaled approximately $15 million, net of tax, in addition to the $70 million already deferred. In August 1992, CG&E filed an appeal with the Supreme Court of Ohio to overturn the PUCO's 1992 rate order. In the appeal, CG&E asserted, among other things, that the PUCO did not have authority to order a phased-in rate increase. On November 3, 1993, the Supreme Court of Ohio issued its decision on CG&E's appeal. The Court ruled that the PUCO did not have the authority to order a phase-in of amounts granted in a rate proceeding and remanded the case to the PUCO to set rates that provide the gross annual revenues determined in accordance with Ohio statutes. The Court also said the PUCO must provide a mechanism by which CG&E may recover costs deferred under the phase-in plan through the date of the order on remand. For information on the write-off of a portion of Zimmer Station, see Note 8. POST-IN-SERVICE DEFERRED OPERATING EXPENSES AND CARRYING COSTS. In accordance with an order of the PUCO, CG&E capitalized carrying costs for Zimmer Station from the time it was placed in service in March 1991 until the effective date of new rates authorized by the PUCO's 1992 rate order which reflected Zimmer Station. CG&E began recovering these carrying costs over the useful life of Zimmer Station in accordance with a stipulation approved by the PUCO in August 1993 (see Note 8 herein). At December 31, 1993, the unamortized amount of post-in-service carrying costs associated with Zimmer Station was $102.7 million and is reflected in "Other Assets--Post-in-service carrying costs and deferred operating expenses" on the Consolidating Balance Sheet. Effective in January 1992, the PUCO, at CG&E's request, authorized the Company to defer Zimmer Station depreciation, operation and maintenance expenses (exclusive of fuel costs) and property taxes, which were not being recovered in rates charged to customers. The PUCO also authorized CG&E to accrue carrying costs on the deferred expenses. In its 1992 rate order, the PUCO authorized CG&E to begin recovering these deferred expenses and associated carrying costs over a 10-year period. At December 31, 1993, the unamortized amount of post-in-service deferred operating expenses associated with Zimmer Station was $18.7 million and is reflected in "Other Assets-- Post-in-service carrying costs and deferred operating expenses" on the Consolidating Balance Sheet. In May 1992, the first three units at the Woodsdale Generating Station began commercial operation and, in July 1992, two additional units were declared operational. In accordance with an order issued by the PUCO, CG&E capitalized carrying costs on the first five units at Woodsdale Station and deferred depreciation, operation and maintenance expenses (exclusive of fuel costs) and property taxes from the time these units were placed in service until the effective date of new rates approved by the PUCO in August 1993 which reflected the Woodsdale units. CG&E began recovering a portion of carrying costs over the useful life of Woodsdale Station and the deferred expenses over a 10-year period in accordance with the stipulation approved by the PUCO in August 1993 (see Note 8 herein). At December 31, 1993, unamortized carrying costs and deferred expenses associated with Woodsdale Station were $19.2 million and $14.0 million, respectively, and are reflected in "Other Assets--Post-in-service carrying costs and deferred operating expenses" on the Consolidating Balance Sheet. (2) INCOME TAXES: The provision for income taxes included in the accompanying Consolidating Statement of Income consists of the following components: Included in operating expenses - Currently payable........................................... $ 69,008,699 Deferred - net Liberalized depreciation.................................. 42,786,389 Gas costs................................................. 805,997 Post-in-service deferred operating expenses............... 2,405,831 Alternative minimum tax credit carryforward............... 6,597,626 Property taxes............................................ (11,415,788) Systems costs capitalized................................. (45,859) Other..................................................... 3,856,351 Investment tax credits - net................................ (5,029,690) ------------- Total................................................ 108,969,556 ------------- Included in other income and deductions (Note 1) - Currently payable........................................... (5,164,053) Deferred - net Alternative minimum tax credit carryforward............... (2,758,717) Write-off of a portion of Zimmer Station.................. (10,972,014) Other..................................................... (1,482,036) Investment tax credits related to write-off of a portion of Zimmer Station....................................... (1,112,963) ------------- Total................................................ (21,489,783) ------------- Total provision...................................... $ 87,479,773 ============= Analysis of provision - Federal income taxes........................................ $ 84,884,809 State income taxes.......................................... 2,594,964 ------------- $ 87,479,773 =============
The provision for income taxes summarized above is different than the amount which would be computed by applying the statutory Federal income tax rate to pre-tax income; the principal reasons for this difference are as follows: Pre-tax income................................................ $ 76,161,201 ============= Tax at statutory Federal income tax rate applied to pre-tax income........................................... $ 26,656,420 Changes in Federal income taxes resulting from - Allowance for funds used during construction which does not constitute taxable income.................. (8,265,706) Excess of book depreciation over tax depreciation........... 8,528,752 Cost of removal for property retired........................ (1,625,221) Amortization of investment tax credits...................... (5,833,332) Write-off of a portion of Zimmer Station.................... 69,364,738 Other-net................................................... (3,940,842) ------------- Federal income tax provision......................... $ 84,884,809 =============
(3) COMMON STOCK: CG&E issued authorized but previously unissued shares of Common Stock as follows:
Shares Reserved Shares Issued for Issuance at During 1993 December 31, 1993 -------------- ------------------ Dividend Reinvestment and Stock Purchase Plan... 829,706 724,641 Employee Stock Purchase Plans................... 843,352 2,476,419 --------- --------- 1,673,058 3,201,060 ========= =========
Pursuant to a Shareholders' Rights Plan adopted by CG&E in 1992, one right is presently attached to and trading with each share of outstanding CG&E common stock. The rights will be exercisable, if not otherwise approved by the Board of Directors, only if a person or group becomes the beneficial owner of 20% or more of CG&E's common stock, commences a tender or exchange offer for 25% or more of the common stock, or is declared an Adverse Person by the Board of Directors. (4) CUMULATIVE PREFERRED STOCK - SUBJECT TO MANDATORY REDEMPTION: The Cumulative Preferred Stock, 9.15% Series is subject to mandatory redemption each July 1, beginning in 1996, in an amount sufficient to retire 25,000 shares, and the 7-3/8% Series is subject to mandatory redemption each August 1, beginning in 1998, in an amount sufficient to retire 40,000 shares, each at $100 per share, plus accrued dividends. For both series, CG&E has the noncumulative option to redeem up to a like amount of additional shares in each year. CG&E has the option to satisfy the mandatory redemption requirements in whole or in part by crediting shares acquired by CG&E. To the extent CG&E does not satisfy its mandatory sinking fund obligation in any year, such obligation must be satisfied in the succeeding year or years. If CG&E is in arrears in the redemption pursuant to the mandatory sinking fund requirement, CG&E shall not purchase or otherwise acquire for value, or pay dividends on, Common Stock. The Cumulative Preferred Stock, 7-7/8% Series is subject to mandatory redemption on January 1, 2004, at $100 per share plus accrued dividends to the redemption date. (5) PREFERRED STOCK: Under CG&E's Articles of Incorporation, the Company presently is authorized to issue a maximum of 6,000,000 shares of preferred stock at a par value of $100 per share. The Cumulative Preferred Stock, 4% Series, may be redeemed by CG&E, upon call, at $108.00 per share plus accrued dividends. The Cumulative Preferred Stock, 4-3/4% Series, may be redeemed by CG&E, upon call, at $101.00 per share plus accrued dividends. The Cumulative Preferred Stock, 7.44% Series, may be redeemed by CG&E, upon call, at $101.00 per share plus accrued dividends. The Cumulative Preferred Stock, 9.28% Series, may be redeemed by CG&E, upon call, at $101.00 per share plus accrued dividends. The Cumulative Preferred Stock, 9.15% Series, may be redeemed by CG&E, upon call, at $107.32 per share prior to July 1, 1994; and declining amounts thereafter to $100.00 per share at July 1, 2005 and thereafter, all plus accrued dividends; provided, however, that prior to July 1, 1995, none of the shares may be redeemed through certain refunding operations. The Cumulative Preferred Stock, 7-7/8% Series, is subject to mandatory redemption by CG&E, on January 1, 2004 at $100.00 per share; not redeemable prior to that date. The Cumulative Preferred Stock, 7-3/8% Series, may be redeemed by CG&E, upon call, after August 1, 2002 at $100.00 per share plus accrued dividends. On February 16, 1994, CG&E gave notice to the holders of the Cumulative Preferred Stock, 9.28% Series of its intention to redeem the remaining shares at $101 per share on April 1, 1994. (6) BANK LINES OF CREDIT AND REVOLVING CREDIT AGREEMENT: At December 31, 1993, CG&E and its subsidiaries had lines of credit totaling $123.4 million, which were maintained by compensating balances and/or fees. Unused lines of credit at December 31, 1993, totaled $102.4 million (generally subject to withdrawal by the banks). Substantially all of the cash balances of CG&E and its subsidiaries are maintained to compensate the respective banks for banking services and to obtain lines of credit; however, CG&E and its subsidiaries have the right of withdrawal of such funds. The maximum amount of outstanding short-term notes payable, including commercial paper, authorized by the PUCO to be incurred by CG&E at any time through June 30, 1994 is $200 million and, in addition, FERC authorized Union to issue a maximum of $35 million of short-term notes payable through December 31, 1994. CG&E has a bank revolving credit agreement providing for borrowings of up to $200 million through September 1, 1996. At the option of CG&E, interest rates on borrowings under the agreement may be based upon the prevailing prime rate or certain other interest measurements. CG&E must pay a commitment fee of 3/16% on the total amount of the credit agreement. CG&E has not made any borrowings under this agreement. (7) LONG-TERM DEBT: Under the terms of the respective mortgage indentures securing first mortgage bonds issued by CG&E and its subsidiaries, substantially all property is subject to a direct first mortgage lien.
December 31, 1993 -------------- The Cincinnati Gas & Electric Company First mortgage bonds - 5 7/8 % series due 1997.............................. $ 30,000,000 6 1/4 % series due 1997.............................. 100,000,000 7 3/8 % series due 1999.............................. 50,000,000 8 5/8 % series due 2000.............................. 60,000,000 7 3/8 % series due 2001.............................. 60,000,000 7 1/4 % series due 2002.............................. 100,000,000 8 1/8 % series due 2003.............................. 60,000,000 8.55 % series due 2006.............................. 75,000,000 9 1/8 % series due 2008.............................. 75,000,000 9 5/8 % series A and B due 2013...................... 31,700,000 10 1/8% series due 2015.............................. 84,000,000 9.70 % series due 2019.............................. 100,000,000 10 1/8% series due 2020.............................. 100,000,000 10.20 % series due 2020.............................. 150,000,000 8.95 % series due 2021.............................. 100,000,000 8 1/2 % series due 2022.............................. 100,000,000 7.20 % series due 2023.............................. 300,000,000 -------------- 1,575,700,000 -------------- Other long-term debt - 6.50% through 8 1/2% due 1993 through 2022........... 75,733,163 Variable rate due 2013 and 2015...................... 100,000,000 -------------- 175,733,163 -------------- 1,751,433,163 -------------- The Union Light, Heat and Power Company First mortgage bonds - 6 1/2 % series due 1999.............................. 20,000,000 8 % series due 2003.............................. 10,000,000 9 1/2 % series due 2008.............................. 10,000,000 9.70 % series due 2019.............................. 20,000,000 10 1/4% series due 2020.............................. 30,000,000 -------------- 90,000,000 -------------- Other Subsidiary Companies' Debt.......................... 1,475,000 Less current maturities................................... 12,500 Unamortized premium (discount) - net...................... (13,834,554) -------------- Total long-term debt............................ $1,829,061,109 ==============
Improvement and sinking fund provisions contained in the indentures applicable to the First Mortgage Bonds of CG&E issued prior to 1980, and of Union issued prior to 1981, require deposits with the Trustee, on or before April 30 of each year, of amounts in cash and/or principal amount of bonds equal to 1% ($4,300,000) of the principal amount of bonds of the applicable series originally outstanding less certain designated retirements. In lieu of such cash deposits or delivery of bonds and as permitted under the terms of the indentures, historically the companies have followed the practice of pledging unfunded property additions to the extent of 166 2/3% of the annual sinking fund requirements. Over the next five years, long-term debt of CG&E and its subsidiaries will mature or be subject to mandatory redemption as follows: $.3 million in 1994 and $130.0 million in 1997. In November 1993, CG&E redeemed $280 million principal amount of First Mortgage Bonds, consisting of the 8 3/4% Series due 1996, 9.15% Series due 2004 and 9 1/4% Series due 2016. Reacquisition expenses associated with the extinguishment of these First Mortgage Bonds are reflected in "Other Assets - Other" on the Consolidating Balance Sheet ($9.5 million as of December 31, 1993) and, consistent with past regulatory treatment, are being amortized over a period of 12 years. The total balance of reacquisition expenses associated with early retirements of long-term debt reflected in "Other Assets - Other" on the Consolidating Balance Sheet at December 31, 1993, is $27.4 million. In January 1994, the Company issued $94.7 million principal amount of pollution control revenue refunding bonds at interest rates of 5.45% and 5 1/2%, the proceeds from which were used to refund six different series of pollution control revenue bonds with interest rates ranging from 6.70% to 9 5/8%. In February 1994, the Company sold $220 million principal amount of first mortgage bonds with interest rates of 5.80% and 6.45%. The net proceeds from the sales will be used to refund $210 million principal amount of first mortgage bonds with interest rates ranging from 8.55% to 9 1/8%, on March 17, 1994. (8) RATES: In April 1991, CG&E filed a request with the PUCO to increase electric rates by approximately $200 million annually. The primary reason for the request was recovery of costs associated with Zimmer Station. In a 1992 rate decision, the PUCO authorized CG&E to increase electric revenues by $116.4 million to be phased in over a three-year period through annual increases of $37.8 million, $38.8 million and $39.8 million in the first, second and third years, respectively. The PUCO also disallowed from rate base approximately $230 million, representing costs related to Zimmer Station for nuclear fuel, nuclear wind-down activities during the conversion to a coal-fired facility and a portion of the AFC accrued by CG&E on Zimmer. In August 1992, CG&E filed an appeal with the Supreme Court of Ohio to overturn the rate order issued by the PUCO including the rate base disallowances. In the appeal, CG&E stated that the PUCO did not have authority to order a phased-in rate increase and erroneously determined the amount of CG&E's required cash working capital. On November 3, 1993, the Supreme Court of Ohio issued its decision on CG&E's appeal. The Court ruled that the PUCO does not have the authority to order a phase-in of amounts granted in a rate proceeding and remanded the case to the PUCO to set rates that provide the gross annual revenues determined in accordance with Ohio statutes. The Court also said the PUCO must provide a mechanism by which CG&E may recover costs already deferred under the phase-in plan through the date of the order on remand. At December 31, 1993, CG&E had deferred $70 million of costs, net of taxes, related to the phase-in plan. On the other issues, the Court ruled in favor of the PUCO, stating the PUCO properly determined CG&E's cash working capital allowance and properly excluded costs related to nuclear fuel, nuclear wind-down activities, and AFC from rate base. As a result of the Supreme Court decision, CG&E wrote off Zimmer Station costs of approximately $223 million, net of taxes, in November 1993. In September 1992, CG&E filed applications with the PUCO requesting increases in annual electric and gas revenues of approximately $86 million and $35 million, respectively. In August 1993, the PUCO approved a stipulation providing for annual increases of approximately $41 million (5%) in electric revenues and $19 million (6%) in gas revenues effective immediately. As part of the stipulation, CG&E agreed, among other things, not to increase electric or gas base rates prior to June 1, 1995. This would not include rate filings made under certain circumstances, such as to address financial emergencies or to reflect any savings associated with the prospective merger with PSI Resources, Inc. (see Note 12). In September 1992, Union filed a request with the Kentucky Public Service Commission (KPSC) to increase annual gas revenues by approximately $9 million. Orders issued in mid-1993 by the KPSC authorized Union to increase annual gas revenues by $4.2 million. (9) COMMON OWNERSHIP OF ELECTRIC UTILITY PLANT: CG&E, Columbus Southern Power Company, and The Dayton Power and Light Company have constructed electric generating units and related transmission facilities on varying common ownership bases as follows:
CG&E's share at December 31, 1993 ----------------------------------------------- Percent Property, Plant Accumulated Construction Owned by and Equipment Provisions for Work In CG&E In Service (a) Depreciation Progress (b) --------- -------------- --------------- ------------ Production Miami Fort Station (Units 7 and 8). 64 $ 197,865,173 $ 94,653,021 $ 825,391 W.C. Beckjord Station (Unit 6)..... 37.5 $ 37,741,024 $ 21,042,079 $ 251,101 J.M. Stuart Station................ 39 $ 251,541,656 $ 99,028,605 $ 10,376,953 Conesville Station (Unit 4)........ 40 $ 69,355,293 $ 29,218,166 $ 2,511,195 Wm. H. Zimmer Station.............. 46.5 $ 1,209,632,166 $ 97,763,022 $ 2,047,513 East Bend Station.................. 69 $ 324,165,056 $ 131,983,643 $ 1,567,519 Killen Station..................... 33 $ 186,054,596 $ 65,990,079 $ 270,942 Transmission......................... various $ 62,139,055 $ 26,345,850 $ 3,828 (a) The Consolidating Statement of Income reflects CG&E's portion of all operating costs associated with the commonly owned facilities. (b) Each participant must provide funds for its share of the construction project.
(10) LEASES: CG&E and its subsidiaries have entered into operating leases covering various facilities and properties, including office space, and computer, communications and miscellaneous equipment. Rental payments for operating leases are primarily charged to operating expenses. Total rental payments for all operating leases were $21,755,675 for 1993. Future minimum lease payments required by CG&E and its subsidiaries under such operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 1993 were as follows:
Year Ended December 31, ---------------------------------------------------- 1994............................. $ 16,343,794 1995............................. 14,731,302 1996............................. 9,213,489 1997............................. 6,505,904 1998............................. 3,323,215 Future Years..................... 14,470,132 ------------- Total Minimum Lease Commitments.. $ 64,587,836 =============
(11) FAIR VALUE OF FINANCIAL INSTRUMENTS: The Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments" (SFAS No. 107), requires disclosure of the estimated fair value of certain financial instruments of the Company. This information does not purport to be a valuation of the Company as a whole. The following methods and assumptions were used to estimate the fair value of each major class of financial instrument of CG&E and its subsidiaries as required by SFAS No. 107: CASH, NOTES PAYABLE, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. The carrying amount as reflected on the Consolidating Balance Sheet approximates the fair value of these instruments due to the short period to maturity. LONG-TERM DEBT. The aggregate fair values for the first mortgage bonds and other long-term debt of CG&E and its subsidiaries are based on the present value of future cash flows. The discount rates used approximate the incremental borrowing costs for similar instruments. Certain notes payable have been excluded due to immateriality. CUMULATIVE PREFERRED STOCK. The aggregate fair value for CG&E's preferred stock is based on the latest closing prices quoted on the New York Stock Exchange for each series. The estimated fair values of long-term debt and preferred stock at December 31, 1993 are as follows:
1993 --------------- Long-term Debt: First mortgage bonds................ $ 1,847,149,882 Other long-term debt................ $ 192,953,479 Preferred Stock: Not subject to mandatory redemption. $ 105,235,000 Subject to mandatory redemption..... $ 230,362,500
(12) COMMITMENTS AND CONTINGENCIES: In December 1992, CG&E, PSI Resources, Inc. (PSI) and PSI Energy, Inc., PSI's principal subsidiary, an Indiana electric utility (PSI Energy), entered into an agreement which, as subsequently amended (the Merger Agreement) provides for the merger of PSI into a newly formed corporation named CINergy Corp. (CINergy) and the merger of a newly formed subsidiary of CINergy into CG&E. For 1993, PSI had operating revenues of $1.1 billion and earnings on common shares of $96.4 million. As a result of the merger, holders of CG&E Common Stock and PSI Common Stock will become the holders of CINergy Common Stock. CINergy will become a holding company required to be registered under the Public Utility Holding Company Act of 1935 (PUHCA) with two operating subsidiaries, CG&E and PSI Energy. Union will remain a subsidiary of CG&E. Under the Merger Agreement, each share of CG&E Common Stock will be converted into the right to receive one share of CINergy Common Stock. Each share of PSI Common Stock will be converted into the right to receive that number of shares of CINergy Common Stock obtained by dividing $30.69 by the average closing price of CG&E Common Stock for the 15 consecutive trading days preceding the fifth trading day prior to the merger; provided that, if the actual quotient obtained thereby is less than .909, the quotient shall be .909, and if the actual quotient obtained thereby is more than 1.023, the quotient shall be 1.023. The merger will be accounted for as a "pooling of interests", and it is anticipated that the transaction will be completed in the third quarter of 1994. The merger is subject to approval by the Securities and Exchange Commission (SEC) and FERC. Shareholders of both companies approved the merger in November 1993. It is the belief of CG&E and PSI that no state utility commissions have jurisdiction over approval of the proposed merger. However, an application will be filed with the KPSC to comply with the Staff of the KPSC's position that the KPSC's authorization is required for the indirect change in control of Union to CINergy. FERC issued conditional approval of the CINergy merger in August, but several intervenors filed for rehearing of that order. On January 12, 1994, FERC withdrew its conditional approval of the merger and ordered the setting of FERC-sponsored settlement procedures to be held on the merger. If the settlement conference ordered by FERC is not successful by mid-March, FERC said it would issue a further order setting appropriate issues for hearing. If a hearing is held by FERC, consummation of the merger would likely be extended beyond the third quarter of 1994. PUHCA imposes restrictions on the operations of registered holding company systems. Among these are requirements that securities issuances, sales and acquisitions of utility assets or of securities of utility companies and acquisitions of interests in any other business be approved by the SEC. PUHCA also limits the ability of registered holding companies to engage in non-utility ventures and regulates holding company system service companies and the rendering of services by holding company affiliates to the system s utilities. The SEC has interpreted the PUHCA to preclude registered holding companies, with some exceptions, from owning both electric and gas utility systems. The SEC may require that CG&E divest its gas properties within a reasonable time after the merger in order to approve the merger as it has done in many cases involving the acquisition by a holding company of a combination gas and electric company. In some cases, the SEC has allowed the retention of the gas properties or deferred the question of divestiture for a substantial period of time. In those cases in which divestiture has taken place, the SEC usually has allowed companies sufficient time to accomplish the divestiture in a manner that protects shareholder value. CG&E believes good arguments exist to allow retention of the gas assets, and CG&E will request that it be allowed to do so. Construction expenditures for CG&E and its subsidiaries are estimated to be $192 million for 1994 and $1,343 million over the next five years (1994- 1998), including AFC of $5 million and $54 million, respectively. These estimates are under continuing review and subject to adjustment. CG&E and its subsidiaries are subject to regulation by various Federal, state and local authorities relative to air and water quality, solid and hazardous waste disposal, and other environmental matters. Compliance programs necessary to meet existing and future environmental laws and regulations will increase the cost of utility service. CG&E presently estimates that capital expenditures needed to comply with the Clean Air Act Amendments of 1990 (Air Act) will be between $125 million and $150 million through the year 2000. Capital expenditures related to environmental compliance are included in the Companies' estimated construction programs including expenditures of $73 million over the next five years. Compliance with the Air Act also will increase operating costs. CG&E expects that its cost of compliance with the Air Act will be recoverable through rates. In April 1992, FERC issued Order 636 which restructures the relationships between interstate gas pipelines and their customers for gas sales and transportation services. Order 636 will result in changes in the way CG&E and Union purchase gas supplies and contract for transportation and storage services, and will result in increased risks in managing the ability to meet demand. Order 636 also allows pipelines to recover transition costs they incur in complying with the Order from customers, including CG&E and Union. An agreement between CG&E and residential and industrial customer groups regarding recovery of these transition costs has been submitted to the PUCO for approval. Order 636 transition costs are not expected to significantly impact the Company. The United States Environmental Protection Agency (U.S. EPA) alleges that CG&E is a Potentially Responsible Party (PRP) under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) liable for cleanup of the United Scrap Lead site in Troy, Ohio. CG&E was one of approximately 200 companies so named. CG&E believes it is not a PRP and should not be responsible for cleanup of the site. Under CERCLA, CG&E could be jointly and severally liable for costs incurred in cleaning the site, estimated by the U.S. EPA to be $27 million. CG&E owns 9% of the common stock of Ohio Valley Electric Corporation (OVEC) which has a long-term contract to supply power to the Department of Energy (DOE). The proceeds from the sales of power by OVEC are to be sufficient to meet all of its costs. CG&E and other sponsoring utilities are entitled to receive, and are obligated to pay for the right to receive, any available power from OVEC's facilities not required by DOE; CG&E's portion of available OVEC capacity is 9%. The coal and oil required by CG&E is primarily obtained through purchases under long-term contracts. (13) SUPPLEMENTARY INCOME INFORMATION: Taxes other than income taxes, as set forth in the Consolidating Statement of Income are as follows: Property........................................ $104,978,770 Public Utility Gross Receipts................... 61,765,200 Payroll......................................... 12,202,627 Other........................................... 4,420,709 ------------ $183,367,306 ============
(14) QUARTERLY FINANCIAL DATA (THOUSANDS):
- - ------------------------------------------------------------------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter Total - - ------------------------------------------------------------------------------------------------------------ 1993 Total Operating Revenues......... $ 493,476 $ 367,470 $ 408,638 $ 482,157 $ 1,751,741 Operating Income................. $ 89,683 $ 63,652 $ 85,356 $ 80,809 $ 319,500 Net Income (Loss)................ $ 68,401 $ 39,928 $ 59,519 $(176,572)(a) $ (8,724)(a) Earnings (Loss) on Common Shares. $ 62,111 $ 33,638 $ 53,228 $(182,861)(a) $ (33,884)(a) Average Number of Common Shares Outstanding............ 86,722 87,143 87,539 87,937 Earnings (Loss) per Common Share. $ .71 $ .38 $ .61 $ (2.08)(a) (b) (a) Reflects the write-off of a portion of Zimmer Station of approximately $223 million, net of taxes. (b) Total does not equal annual earnings per share due to change in shares outstanding.
(15) FINANCIAL INFORMATION BY BUSINESS SEGMENTS:
- - ------------------------------------------------------------------------------------------------------------ Operating Operating Income Provision for Construction Revenues Income Taxes Depreciation Expenditures(a) - - ------------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1993 Electric................ $1,282,445,080 $286,609,257 $102,033,318 $134,121,467 $ 157,193,477 Gas..................... 469,295,807 32,890,802 6,936,238 17,939,386 44,720,045 -------------- ------------ ------------ ------------ ------------- Total............... $1,751,740,887 $319,500,059 $108,969,556 $152,060,853 $ 201,913,522 ============== ============ ============ ============ ============= (a) Excludes construction expenditures for non-utility plant of $(50,410) in 1993.
December 31, 1993 ------------ Property, Plant and Equipment, net-- Electric....................... $3,281,619,724 Gas............................ 504,020,280 -------------- 3,785,640,004 Other Corporate Assets.............. 1,357,883,343 -------------- Total Assets.............. $5,143,523,347 ==============
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