-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D8EjN91mgD/CQmVrLEWwjy10VopDnOXJDmmCumvh5HNnSsxBqvujpvDfAaRmmZPh HTHBH2IWiJezx0AtGCO9OA== 0001047469-97-004933.txt : 19971117 0001047469-97-004933.hdr.sgml : 19971117 ACCESSION NUMBER: 0001047469-97-004933 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLETHORPE POWER CORP CENTRAL INDEX KEY: 0000788816 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 581211925 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-07591 FILM NUMBER: 97720738 BUSINESS ADDRESS: STREET 1: 2100 EAST EXCHANGE PL STREET 2: P O BOX 1349 CITY: TUCKER STATE: GA ZIP: 30085-1349 BUSINESS PHONE: 4042707600 10-Q 1 FORM 10-Q - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File No. 33-7591 ------------------- Oglethorpe Power Corporation (An Electric Membership Corporation) (Exact name of registrant as specified in its charter) Georgia 58-1211925 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Post Office Box 1349 2100 East Exchange Place Tucker, Georgia 30085-1349 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770) 270-7600 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. The Registrant is a membership corporation and has no authorized or outstanding equity securities. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- OGLETHORPE POWER CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997 PAGE NO. -------- PART I--FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets as of September 30, 1997 (Unaudited) and December 31, 1996........................................ 3 Condensed Statements of Revenues and Expenses (Unaudited) for the Three Months and Nine Months Ended September 30, 1997 and 1996.................................. 5 Condensed Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 1997 and 1996............ 6 Notes to the Condensed Financial Statements.................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............... 8 PART II--OTHER INFORMATION Item 1. Legal Proceedings........................................... 17 Item 6. Exhibits and Reports on Form 8-K............................ 17 SIGNATURES............................................................ 18 2 PART I--FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Oglethorpe Power Corporation Condensed Balance Sheets September 30, 1997 and December 31, 1996 - -------------------------------------------------------------------------------
(dollars in thousands) 1997 1996 ASSETS (UNAUDITED) - -------------------------------------------------------------------------------------- ------------ ------------ Electric plant, at original cost: In service.......................................................................... $ 4,906,315 $ 5,742,597 Less:Accumulated provision for depreciation......................................... (1,382,063) (1,488,272) ------------ ------------ 3,524,252 4,254,325 Nuclear fuel, at amortized cost..................................................... 86,980 86,722 Plant acquisition adjustments, at amortized cost.................................... -- 4,153 Construction work in progress....................................................... 13,059 31,181 ------------ ------------ 3,624,291 4,376,381 ------------ ------------ Investments and funds: Bond, reserve and construction funds, at market..................................... 32,328 53,955 Decommissioning fund, at market..................................................... 101,821 86,269 Investment in associated organizations, at cost..................................... 15,407 15,379 Deposit on Rocky Mountain transactions, at cost..................................... 51,325 41,685 ------------ ------------ 200,881 197,288 ------------ ------------ Current assets: Cash and temporary cash investments, at cost........................................ 59,981 132,783 Other short-term investments, at market............................................. 96,145 91,499 Receivables......................................................................... 117,580 113,289 Inventories, at average cost........................................................ 70,872 89,825 Prepayments and other current assets................................................ 22,371 14,625 ------------ ------------ 366,949 442,021 ------------ ------------ Deferred charges: Premium and loss on reacquired debt, being amortized................................ 189,692 201,007 Deferred amortization of Scherer leasehold.......................................... 94,832 90,717 Deferred debt expense, being amortized.............................................. 13,641 21,703 Other............................................................................... 36,994 33,058 ------------ ------------ 335,159 346,485 ------------ ------------ $ 4,527,280 $ 5,362,175 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these condensed statements. 3 Oglethorpe Power Corporation Condensed Balance Sheets September 30, 1997 and December 31, 1996 - -------------------------------------------------------------------------------
(dollars in thousands) 1997 1996 EQUITY AND LIABILITIES (UNAUDITED) - -------------------------------------------------------------------------------------- ------------ ------------ CAPITALIZATION: Patronage capital and membership fees (including unrealized loss of ($515) at September 30, 1997 and($844) at December 31, 1996 on available-for-sale securities).................................................... $ 321,771 $ 356,229 Long-term debt...................................................................... 3,263,731 4,052,470 Obligations under capital leases.................................................... 289,825 293,682 Obligation under Rocky Mountain transactions........................................ 51,325 41,685 ------------ ------------ 3,926,652 4,744,066 ------------ ------------ Current liabilities: Long-term debt and capital leases due within one year............................... 87,847 159,622 Accounts payable.................................................................... 53,641 42,891 Accrued interest.................................................................... 13,560 15,931 Accrued and withheld taxes.......................................................... 19,800 4,940 Other current liabilities........................................................... 4,891 9,540 ------------ ------------ 179,739 232,924 ------------ ------------ Deferred credits and other liabilities: Gain on sale of plant, being amortized.............................................. 61,375 58,527 Net benefit of sale of income tax benefits, being amortized......................... 36,042 42,049 Net benefit of Rocky Mountain transactions, being amortized......................... 93,171 70,701 Accumulated deferred income taxes................................................... 60,325 61,985 Decommissioning reserve............................................................. 141,399 124,468 Other............................................................................... 28,577 27,455 ------------ ------------ 420,889 385,185 ------------ ------------ $ 4,527,280 $ 5,362,175 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these condensed statements. 4 Oglethorpe Power Corporation Condensed Statements of Revenues and Expenses (Unaudited) For the Three and Nine Months ended September 30, 1997 and 1996 - -------------------------------------------------------------------------------
(dollars in thousands) THREE MONTHS NINE MONTHS ---------------------- ---------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Operating revenues: Sales to Members............................................... $ 280,503 $ 268,939 $ 767,714 $ 771,378 Sales to non-Members........................................... 6,076 17,709 33,226 61,187 ---------- ---------- ---------- ---------- Total operating revenues......................................... 286,579 286,648 800,940 832,565 ---------- ---------- ---------- ---------- Operating expenses: Fuel........................................................... 61,206 54,807 152,799 158,465 Production..................................................... 34,216 31,296 103,760 93,293 Purchased power................................................ 95,038 67,217 215,350 189,443 Power delivery................................................. (10) 4,110 3,969 11,974 Depreciation and amortization.................................. 30,154 36,684 96,534 109,774 Taxes other than income taxes.................................. 5,593 7,035 18,808 21,761 Other operating expenses....................................... 3,629 10,490 13,728 26,764 ---------- ---------- ---------- ---------- Total operating expenses......................................... 229,826 211,639 604,948 611,474 ---------- ---------- ---------- ---------- Operating margin................................................. 56,753 75,009 195,992 221,091 ---------- ---------- ---------- ---------- Other income (expense): Interest income................................................ 7,247 8,698 21,002 17,438 Amortization of net benefit of sale of income tax benefits..... 2,799 2,008 8,396 6,023 Amortization of deferred margins............................... -- 6,966 -- 24,120 Allowance for equity funds used during construction............ 32 47 81 137 Other.......................................................... 457 761 4,025 1,782 ---------- ---------- ---------- ---------- Total other income............................................... 10,535 18,480 33,504 49,500 ---------- ---------- ---------- ---------- Interest charges: Interest on long-term debt and other obligations............... 68,488 81,488 216,294 245,848 Allowance for debt funds used during construction.............. (328) (507) (873) (1,485) ---------- ---------- ---------- ---------- Net interest charges............................................. 68,160 80,981 215,421 244,363 ---------- ---------- ---------- ---------- Net margin....................................................... ($ 872) $ 12,508 $ 14,075 $ 26,228 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these condensed statements. 5 Oglethorpe Power Corporation Condensed Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 1997 and 1996 - -------------------------------------------------------------------------------
(dollars in thousands) 1997 1996 ---------- ---------- Cash flows from operating activities: Net margin.............................................................................. $ 14,075 $ 26,228 Adjustments to reconcile net margin to net cash provided by operating activities: Depreciation and amortization......................................................... 139,190 132,565 Net benefit of Rocky Mountain transactions............................................ 22,470 -- Deferred gain from Corporate Restructuring............................................ 4,670 -- Allowance for equity funds used during construction................................... (81) (137) Amortization of deferred margins...................................................... -- (24,120) Amortization of net benefit of sale of income tax benefits............................ (8,396) (6,023) Other................................................................................. 1,445 3,025 Change in net current assets, excluding long-term debt due within one year and deferred margins to be refunded within one year: Receivables........................................................................... (4,290) (8,013) Inventories........................................................................... 9,972 (9,858) Prepayments and other current assets.................................................. (8,176) 37 Accounts payable...................................................................... 11,403 (4,897) Accrued interest...................................................................... (2,251) (70,290) Accrued and withheld taxes............................................................ 14,860 20,701 Other current liabilities............................................................. 1,683 (6,299) ---------- ---------- Total adjustments................................................................... 182,499 26,691 ---------- ---------- Net cash provided by operating activities............................................. 196,574 52,919 ---------- ---------- Cash flows from investing activities: Property additions.................................................................... (49,942) (69,211) Net proceeds from bond, reserve and construction funds................................ 21,616 3,060 (Decrease) Increase in investment in associated organizations......................... (28) 429 Increase in other short-term investments.............................................. (4,306) (14,629) Increase in decommissioning fund...................................................... (7,709) (4,970) Net assets sold in Corporate Restructuring............................................ 717,907 -- Net liabilities extinguished in Corporate Restructuring............................... (694,412) -- ---------- ---------- Net cash used in investing activities............................................... (16,874) (85,321) ---------- ---------- Cash flows from financing activities: Debt proceeds, net.................................................................... 100,404 3,092 Debt payments......................................................................... (302,617) (75,809) Retirement of patronage capital....................................................... (48,863) -- Other................................................................................. (1,426) (168) ---------- ---------- Net cash used in financing activities............................................... (252,502) (72,885) ---------- ---------- Net decrease in cash and temporary cash investments..................................... (72,802) (105,287) Cash and temporary cash investments at beginning of period.............................. 132,783 201,151 ---------- ---------- Cash and temporary cash investments at end of period.................................... $ 59,981 $ 95,864 ---------- ---------- ---------- ---------- Cash paid for: Interest (net of amounts capitalized)................................................. $ 202,400 $ 301,675 Income taxes.......................................................................... $ 830 $ --
The accompanying notes are an integral part of these condensed statements. 6 Oglethorpe Power Corporation Notes to Condensed Financial Statements September 30, 1997 and 1996 (A) The condensed financial statements included herein have been prepared by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the information furnished herein reflects all adjustments (which include only normal recurring adjustments) necessary to present fairly, in all material respects, the results for the periods ended September 30, 1997 and 1996. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in Oglethorpe's latest Annual Report on Form 10-K, as filed with the SEC. Certain amounts for 1996 have been reclassified to conform with the current period presentation. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Corporate Restructuring As reported in its Annual Report on Form 10-K for the fiscal year ended December 31, 1996, Oglethorpe and its 39 retail electric distribution cooperative members (the Members) completed a corporate restructuring (the Corporate Restructuring) on March 11, 1997, in which Oglethorpe was divided into three specialized operating companies to respond to increasing competition and regulatory changes in the electric industry. As part of the Corporate Restructuring, Oglethorpe's transmission business was sold to and is now owned and operated by Georgia Transmission Corporation (An Electric Membership Corporation) (GTC), a recently formed Georgia electric membership corporation. Oglethorpe's system operations business was sold to and is now owned and operated by Georgia System Operations Corporation (GSOC), a recently formed Georgia nonprofit corporation. Oglethorpe continues to operate its power supply business. Oglethorpe retained all of its owned and leased generation assets. Oglethorpe also continues to administer its power purchase contracts and provide marketing support functions to the Members. Immediately after the Corporate Restructuring, Oglethorpe's corporate name was changed from "Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation)" to "Oglethorpe Power Corporation (An Electric Membership Corporation)". Power Marketer Arrangements Oglethorpe utilizes long-term power marketer arrangements to reduce the cost of power to the Members. Oglethorpe has entered into power marketer agreements with LG&E Energy Marketing Inc. (LEM) effective January 1, 1997, for approximately 50% of the load requirements of the Members and with Morgan Stanley Capital Group Inc. (Morgan Stanley) effective May 1, 1997, with respect to 50% of the forecasted load requirements of the Members. The LEM agreements are based on the actual requirements of the Members during the contract term, whereas the Morgan Stanley agreement represents a fixed supply obligation. Under these power marketer agreements, Oglethorpe purchases energy at fixed prices covering a portion of the costs of energy to its Members. LEM and Morgan Stanley, in turn, have certain rights to market excess energy from the Oglethorpe system. All of Oglethorpe's existing generating facilities and power purchase arrangements are available for use by LEM and Morgan Stanley for the term of the respective agreements. Oglethorpe continues to be responsible for all the costs of its system resources but receives revenue from LEM and Morgan Stanley for the use of the resources. 8 RESULTS OF OPERATIONS Corporate Restructuring Oglethorpe and the Members completed the Corporate Restructuring on March 11, 1997. However, the Boards of Directors of Oglethorpe, GTC and GSOC determined that for ratemaking purposes all revenues and expenses related to operations of GTC and GSOC would remain with Oglethorpe until April 1, 1997. Pursuant to this approach, all transmission-related and systems operations-related revenues were assigned to Oglethorpe, and all transmission-related and systems operations-related costs were paid or reimbursed by Oglethorpe during the period March 11, 1997 through March 31, 1997. As a result, the Condensed Statements of Revenues and Expenses for the nine months ended September 30, 1997 reflect operations as a combined power supply, transmission and system operations company through March 31, 1997, and operations solely as a power supply company thereafter. Therefore, decreases in operating revenues, power delivery expenses, depreciation and amortization, taxes other than income taxes, operating margin and net interest charges from 1996 to 1997 are primarily attributable to the Corporate Restructuring. See Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 for a pro forma presentation of the Statement of Revenues and Expenses reflecting the exclusion of the transmission and system operations businesses, as though the Corporate Restructuring had occurred at the beginning of 1996, for the year ended December 31, 1996 (Note 11 of Notes to Financial Statements). For the Three Months and Nine Months Ended September 30, 1997 and 1996 Oglethorpe's net margin (loss) for the three months and nine months ended September 30, 1997 was ($0.9) million and $14.1 million, respectively, compared to $12.5 million and $26.2 million for the same periods of 1996. In August 1997, due to achieving a year-to-date net margin higher than required by its Indenture, the Oglethorpe Board of Directors adjusted the 1997 budget thereby lowering the revenue requirement by a total of $4.0 million. Such reduction in revenues was implemented by reducing the capacity charges for August 1997. Year-to-date net margin for 1997, after this adjustment, is sufficient to meet margin requirements. The higher net margin in 1996 resulted primarily from unbudgeted savings in interest and decommissioning costs and from higher than expected interest income. Operating Revenues Revenues from sales to Members for the three months and nine months ended September 30, 1997 were 4.3% higher for the three months and 0.5% lower year-to-date compared to the same periods of 1996. While revenues from Members have been reduced due to the removal of capacity revenues relating to the transmission business, this decrease has been offset by an increase in energy revenues from sales to Members. Such energy revenues were 65.1% higher for the three months ended September 30, 1997 compared to the same period of 1996 and 33.7% higher for the nine-month period compared to 1996. Megawatt-hour (MWh) sales to the Members were 11.4% and 2.2% higher in the current three-month and nine-month periods compared to the same periods of 1996. Consequently, Oglethorpe's average energy revenue per MWh from sales to Members for the three-month and nine-month periods were 48.3% and 30.8% higher in 1997 compared to 1996, respectively. This increase was primarily due to the expiration of the short-term power marketer arrangements with Duke/Louis Dreyfus (DLD) and Enron Power Marketing Inc. (EPMI) that had 9 allowed Oglethorpe to passthrough significant savings in the first nine months of 1996. During the first nine months of 1996, Oglethorpe had power marketer arrangements with DLD and EPMI to supply 100% of the load requirements of the Members. As noted under "GeneralPower Marketer Arrangements" above, Oglethorpe has entered into power marketer arrangements with LEM effective January 1, 1997 for approximately 50% of the load requirements of the Members and with Morgan Stanley effective May 1, 1997 with respect to 50% of the forecasted load requirements of the Members. Sales to non-Members were primarily made pursuant to contractual arrangements with Georgia Power Company (GPC) and from energy sales to other utilities and power marketers. The following table summarizes the amounts of non-Member revenues from these sources for the three months and nine months ended September 30, 1997 and 1996:
THREE MONTHS NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, -------------------- -------------------- 1997 1996 1997 1996 --------- --------- --------- --------- (DOLLARS IN THOUSANDS) GPC- Power supply arrangements......................................... $ 283 $ 2,947 $ 12,847 $ 10,872 Sales to other utilities............................................... 5,021 11,795 14,691 34,595 Sales to power marketers............................................... 772 1,150 3,508 8,846 ITS transmission agreements............................................ -- 1,817 2,180 6,874 --------- --------- --------- --------- Total.............................................................. $ 6,076 $ 17,709 $ 33,226 $ 61,187 --------- --------- --------- --------- --------- --------- --------- ---------
The revenues from power supply arrangements with GPC were primarily derived from energy sales arising from dispatch situations whereby GPC caused Plant Wansley to be operated when Oglethorpe's system did not require all of its contractual entitlement to the generation. These revenues compensated Oglethorpe for its costs because, under the operating agreement (before it was recently amended), Oglethorpe was responsible for its share of fuel costs any time a unit operated. Such sales to GPC were higher in the first nine months of 1997 compared to the same periods of 1996. With the commencement of the separate dispatch of Plant Wansley as of May 1, 1997, this type of sale to GPC has ended. Sales to other non-Member utilities in 1997 represent sales made directly by Oglethorpe. Oglethorpe sells for its own account any energy available from the portion of its resources dedicated to Morgan Stanley that is not scheduled by Morgan Stanley pursuant to its power marketer arrangement. Such sales during the first nine months of 1996 were initiated by DLD and EPMI. Where DLD or EPMI did not have a contractual relationship with the purchaser and Oglethorpe did, Oglethorpe recorded the sale and credited the revenues to DLD or EPMI in its monthly billing. Under the current LEM and Morgan Stanley power marketer arrangements, and previously, under the DLD and EPMI power marketer arrangements, sales to the power marketers represented the net energy transmitted on behalf of LEM, Morgan Stanley, DLD and EPMI off-system on a daily basis 10 from Oglethorpe's total resources. Such energy was sold to LEM, Morgan Stanley, DLD and EPMI at Oglethorpe's cost, subject to certain limitations. The volume of sales to power marketers depends primarily on the power marketers' decisions for servicing their load requirements. Another source of non-Member revenues was payments received from GPC for use of the Integrated Transmission System (ITS) and related transmission interfaces. GPC compensated Oglethorpe to the extent that Oglethorpe's percentage of investment in the ITS exceeded its percentage use of the system. In such case, Oglethorpe was entitled to income as compensation for the use of its investment by the other ITS participants. As a result of the Corporate Restructuring, all of the revenues in this category have accrued to GTC since April 1, 1997. Operating Expenses Operating expenses were 8.6% higher in the current quarter and 1.1% lower for the nine months ended September 30, 1997 compared to the same periods of 1996. Since April 1, 1997, certain operating expenses have been reduced due to the elimination of expenses relating to the transmission business assumed by GTC in connection with the Corporate Restructuring. However, the changes in fuel expense and the increases in production operations and maintenance costs were unaffected by the Corporate Restructuring. Fuel costs increased 11.7% in the third quarter and decreased 3.6% for the nine months ended September 30, 1997 from the same periods of the prior year, respectively. Total megawatt-hours (MWhs) of generation increased 7.4% in the current quarter and decreased 1.0% year-to-date. For the current quarter, fossil generation was 11.6% higher compared to the same period of 1996 due to a maintenance outage at Scherer Unit No. 1 in July 1996 and due to higher utilization of Plant Wansley in 1997. The higher fossil generation in the third quarter resulted in higher average fuel costs. For the nine months ended September 30, 1997 the mix of generation was more nuclear and less fossil generation than in 1996 resulting in lower average fuel costs. The decrease in fossil generation resulted primarily from a maintenance outage during February and March 1997 at Plant Scherer Unit No. 1. Also, the higher nuclear generation during 1997 compared to 1996 was achieved as a result of having three refueling outages in the first nine months of 1996 compared to two in 1997. Conversely, the increase in production operations and maintenance costs was partly attributable to the 1997 maintenance outage at Plant Scherer Unit No. 1. In addition, effective January 1, 1996, the costs of nuclear refueling outages are deferred and amortized over the 18-month period following the outage. Such change in accounting resulted in a $12.9 million deferral of maintenance costs in the first nine months of 1996. Purchased power cost for the three months and nine months ended September 30, 1997 were 41.4% and 13.7% higher compared to the same periods of 1996, respectively. A total of 11.6% more MWhs were purchased in the third quarter of 1997 compared to 1996. Year-to-date, 4.9% fewer MWhs were purchased than the same period of the prior year. Consequently, the average cost of purchased power per MWh has increased by 26.7% and 19.5%, respectively. As noted under "Operating Revenues" above, significant energy cost savings were derived in the first nine months of 1996 from the DLD and EPMI power supply arrangements. The decrease in other operating expenses for 1997 compared to the same periods of the prior year was due primarily to transfer of administrative and general expenses relating to the transmission and system operations businesses in connection with the Corporate Restructuring. 11 Other Income Other income for the three months and nine months ended September 30, 1997 decreased compared to the same periods of 1996 primarily as a result of Oglethorpe utilizing, as planned, all remaining amounts available under its deferred margin rate mechanism during 1996. (For a discussion of deferred margins, see Note 1 of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996.) Interest income was higher for the nine months ended September 30, 1997 compared to the same period of 1996 partly due to higher earnings from the decommissioning fund and partly due to income from the deposits from the Rocky Mountain transactions. The deposits were made in December 1996 and January 1997. FINANCIAL CONDITION Corporate Restructuring As of March 11, 1997, Oglethorpe sold its transmission business and assets to GTC. Thereafter, the assets, liabilities and equity of GTC were no longer a part of Oglethorpe. The purchase price for the transmission business was based on an appraisal of the fair market value of such business, as determined by an independent appraiser, and was approximately $709 million. The purchase price was paid primarily by GTC's assumption of a portion (approximately 16.86%) of Oglethorpe's long-term secured debt in an amount equal to approximately $686 million. Approximately $541 million of this debt (payable to RUS, Federal Financing Bank (FFB) and CoBank, ACB (CoBank)) became the sole obligation of GTC, and Oglethorpe was released from all liability with regard to this indebtedness. The remaining debt assumed by GTC in connection with the Corporate Restructuring, approximately $145 million, relates to Oglethorpe's pollution control revenue bonds (PCBs). While GTC assumed and agreed to pay this $145 million of debt, Oglethorpe is not legally released from its liability for this debt. The remainder of the purchase price was paid by GTC from cash obtained through a borrowing from National Rural Utilities Cooperative Finance Corporation (CFC) and the assumption of approximately $2 million of other Oglethorpe liabilities. Oglethorpe also made a special patronage capital distribution of approximately $49 million to the Members which was used by the Members to establish equity in and to provide initial working capital to GTC. On October 1, 1996, Oglethorpe sold to GSOC its system operations assets, consisting of its system control center and related energy control and revenue metering systems equipment. The purchase price of these assets totaled approximately $9.4 million and was funded by GSOC's assumption of Oglethorpe's obligations under an existing note held by the Rural Utilities Service (RUS), by delivery of a purchase money note payable to Oglethorpe and by the assumption of certain other liabilities of Oglethorpe. From October 1, 1996 to March 11, 1997, Oglethorpe was the sole member of GSOC; therefore, the assets sold to GSOC remained in the consolidated balance sheet of Oglethorpe. The Members and GTC became members of GSOC on March 11, 1997; and thereafter the assets, liabilities and equity of GSOC were no longer a part of Oglethorpe. Most of the remaining comparisons of the balance sheets as of September 30, 1997 and December 31, 1996 are in addition to the effects of the Corporate Restructuring described above. See 12 Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 for a pro forma presentation of the Balance Sheet of the post-restructuring Oglethorpe as of December 31, 1996 (Note 11 of Notes to Financial Statements). Total assets and total equity plus liabilities as of September 30, 1997 were $4.5 billion which, after adjustment for the Corporate Restructuring, was $102 million less than the comparable total at December 31, 1996 due to depreciation of plant and due to the decrease in cash and temporary cash investments. Assets Property additions for the nine months ended September 30, 1997 totaled $49.9 million and included additions, replacements and improvements to transmission and distribution facilities (subsequently sold to GTC) for the first three months of 1997 and existing generation facilities. All plant acquisition adjustments were related to transmission plant. As a result of the Corporate Restructuring discussed above, Oglethorpe no longer has any plant acquisition adjustments. The decrease in construction work in progress resulted from the projects sold to GTC and GSOC in the Corporate Restructuring. The decrease in the bond, reserve and construction funds was attributable to the utilization of available excess debt service reserve funds for debt service payments. The increase in the decommissioning investment fund and the decommissioning reserve resulted from earnings of the fund. An amount equal to the earnings of the fund was accrued as an increase to the decommissioning reserve. The increase in the deposit on, the obligation under and net benefit of the Rocky Mountain transactions resulted from the completion of the lease transactions for the remainder of Oglethorpe's interest in Rocky Mountain in January 1997. For a discussion of the Rocky Mountain transactions, see Notes 1 and 2 of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. The decrease in cash and temporary cash investments was partly due to the payment of the $49 million special patronage capital distribution made in connection with the Corporate Restructuring discussed above and partly due to a prepayment in 1997 of Federal Financing Bank (FFB) debt made from the proceeds of the December 1996 and January 1997 Rocky Mountain transactions. Inventories decreased primarily due to lower coal inventories at Plant Scherer resulting from problems associated with rail transportation in the current quarter and due to the seasonal demands of summer. The rail transportation providers expect operations to return to normal by the beginning of next year. Prepayments and other current assets increased due to a $9.9 million increase in the estimated payment made to GPC for Plant Hatch operations and maintenance costs for October 1997 13 compared to the estimate paid for January 1997. The increase in the estimate paid related to planned refueling outage and uprate costs at Plant Hatch Unit No. 2. The change in premium and loss on reacquired debt resulted partly from premiums paid in connection with FFB debt prepayment and the Pollution Control Bond (PCB) refunding, excluding the effect of the portion of these costs assumed by GTC in the Corporate Restructuring. The decrease in deferred debt expense resulted partly from unamortized issuance cost related to the PCB refunding being converted to premium and loss on reacquired debt and partly from the portion of these costs assumed by GTC in the Corporate Restructuring. Equity and Liabilities The decrease in patronage capital and membership fees is the result of the $49 million special patronage capital distribution made in connection with the Corporate Restructuring, discussed above. The decrease in long-term debt due within one year resulted primarily from the prepayment of FFB debt, discussed above. In addition, the balance reflects the impact of the Corporate Restructuring. Accounts payable increased due to normal variations in the timing of payables activity. Accrued and withheld taxes increased as a result of the normal monthly accruals of property taxes, which are generally paid in the fourth quarter of the year. Other current liabilities decreased partly due to the year-end accrual for employee incentive pay (subsequently paid in March 1997) and partly due to the Corporate Restructuring. COMPETITION The electric utility industry in the United States is undergoing fundamental change and is becoming increasingly competitive. See "BUSINESS OF OGLETHORPE--Certain Factors Affecting the Utility Industry in General" In Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. Several states are in the process of implementing varying forms of retail wheeling and most others are in the various stages of considering retail competition. Proposed federal legislation could mandate retail wheeling in every state. No legislation related to retail wheeling has yet been enacted in Georgia, and, currently, no bill is pending in the Georgia legislature which would amend the Georgia Territorial Electric Service Act (Territorial Act) or otherwise affect the exclusive right of the Members to supply power to their current service territories. In 1997, the staff of the Georgia Public Service Commission (GPSC) 14 conducted a series of workshops to solicit views from the various parties impacted by electric industry restructuring and to discuss potential resolutions of these issues. The GPSC staff anticipates presenting a report to the GPSC that will identify electric industry restructuring issues, potential resolutions and the views of the parties who participated in the workshop. The GPSC does not have the authority under Georgia law to order retail wheeling or amend the Territorial Act. Oglethorpe and the Members participated in the GPSC staff workshops and are actively monitoring and studying legislative initiatives in Congress and in other states to take advantage of the experiences of cooperatives and other utilities in other states to protect their interests in future legislative activities in Georgia. Under current Georgia law, the Members have the exclusive right to provide retail electric service in their respective territories. Since 1973, however, Georgia has permitted limited competition among electric utilities located in Georgia for sales of electricity to certain large commercial or industrial customers. Pursuant to the Territorial Act, the owner of any new facility may receive electric service from the power supplier of its choice if the facility is located outside of municipal limits and has a connected demand upon initial full operation of 900 kilowatts or more. See "THE MEMBERS--Service Area and Competition" in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. The Members, with Oglethorpe's support, are actively engaged in competition with other retail electric suppliers for these new commercial and industrial loads. While the competition for 900 kilowatt loans represents only limited competition in Georgia, this competition has given Oglethorpe and the Members the opportunity to develop resources and strategies to operate in an increasingly competitive market. In 1996, sales by the Members to commercial and industrial customers, including both customers who had a choice of suppliers and those who did not, accounted for 26% of Members' total sales. Over the past years, Oglethorpe has taken several steps to prepare for and adapt to the fundamental changes which have occurred or are likely to occur in the electric utility industry and to reduce the possibility of incurring stranded costs. Most importantly, Oglethorpe completed the Corporate Restructuring and divided itself into generation, transmission and system operations companies in order to better serve its Members in a deregulated and competitive environment. See "General--Corporate Restructuring" herein. Since 1992, Oglethorpe also has pursued an interest cost reduction program. As a result of this program, Oglethorpe has prepaid $222 million of FFB debt and refinanced $1.1 billion of PCB debt and $1.2 billion of FFB debt. These steps have reduced Oglethorpe's interest costs significantly. See "Financial Condition--Refinancing Transactions" in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. Oglethorpe and the Members also amended the Wholesale Power Contracts in connection with the Corporate Restructuring. The Wholesale Power Contracts provide that the Members are jointly and severally responsible for all costs and expenses of all of the generation and purchased power resources of Oglethorpe existing on March 11, 1997, as well as certain future power resources. See "BUSINESS OF OGLETHORPE--New Wholesale Power Contracts" in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. Each Wholesale Power Contract specifically provides that the Member must make payments whether or not power has been delivered and whether or not a plant has been sold or is otherwise unavailable. The formulary rate 15 established by Oglethorpe in the rate schedule to the Wholesale Power Contracts employs a rate methodology under which all categories of costs are specifically separated as components of a formula to determine Oglethorpe's revenue requirements. The rate schedule also allocated to the Members the responsibility for all of Oglethorpe's fixed costs. Oglethorpe's charges under the Wholesale Power Contracts may be adjusted by the Board of Directors. With respect to Oglethorpe, the RUS has retained certain approval rights over the changes to the Wholesale Power Contracts, including the rate schedule. See "BUSINESS OF OGLETHORPE--Electric Rates" in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. As a result of these contractual agreements, the Members ultimately are liable for the existing power resources of Oglethorpe. Oglethorpe has also entered into arrangements with power marketers to obtain the value that can be brought by power marketers and to provide for future load requirements without taking all the risk associated with traditional suppliers. See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements--POWER MARKETER ARRANGEMENTS" in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and "General--POWER SUPPLY SWAP ARRANGEMENTS" in Item 2 in Oglethorpe's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. Oglethorpe and the Members continue to consider and evaluate a wide array of other potential actions to reduce costs and to maintain their competitiveness in anticipation of future competition. These activities on the part of Oglethorpe and the Members are in various stages of study or preliminary consideration. Many Members are now providing or considering proposals to provide non-traditional products and services such as telecommunications and other services. Depending on the nature of future competition in Georgia, there could be reasons for the Members to separate their physical distribution business from their energy business, or otherwise restructure their current businesses to operate effectively under retail competition. Oglethorpe continues to seek to identify and evaluate opportunities to reduce the cost of wholesale power to the Members. Oglethorpe currently defers certain costs of providing services to the Members pursuant to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation." Note 1 of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, sets forth the regulatory assets and liabilities reflected on Oglethorpe's balance sheet as of December 31, 1996. Regulatory assets represent probable future revenues to Oglethorpe associated with certain costs which will be recovered from Members through the rate-making process. Regulatory liabilities represent probably future reduction in revenues associated with amounts that are to be credited to Members through the rate-making process. In the event that Oglethorpe is no longer subject to the provisions of SFAS No. 71, Oglethorpe would be required to write off regulatory assets and liabilities. In addition, Oglethorpe would be required to determine any impairment to other assets, including plant, and write down the assets, if impaired, to their fair value. Year 2000 Issue Many information systems have been designed to function based on years that begin with "19". Oglethorpe expects that by the year 2000 it will have adapted its systems, to the extent it considers necessary, to process years that begin with "20", and does not expect that the year 2000 issue will have a material adverse effect on its financial condition or results of operations. 16 PART II--OTHER INFORMATION Item 1. Legal Proceedings Oglethorpe's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 reported on an action by PECO Energy CompanyPower Team filed on June 17, 1997 with the Federal Energy Regulatory Commission relating to Oglethorpe and GTC. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS NUMBER DESCRIPTION - --------- ----------- 4.8.1(b) First Supplemental Indenture, dated as of October 1, 1997, made by Oglethorpe to SunTrust Bank, Atlanta, as trustee, relating to the Series 1997B (Burke) Note 27.1 Financial Data Schedule (for SEC use only). (B) REPORTS ON FORM 8-K No reports on Form 8-K were filed by Oglethorpe for the quarter ended September 30, 1997. 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Oglethorpe Power Corporation (An Electric Membership Corporation) Date: November 14, 1997 By: /s/ T. D. Kilgore --------------------------------- T. D. Kilgore President and Chief Executive Officer (Principal Executive Officer) Date: November 14, 1997 /s/ Mac F. Oglesby --------------------------------- Mac F. Oglesby Treasurer and Director (Principal Financial Officer) Date: November 14, 1997 /s/ Robert D. Steele --------------------------------- Robert D. Steele Controller (Chief Accounting Officer) 18 EX-4.8-1(B) 2 EX-4.8.1(B) EXHIBIT 4.8.1(b) Upon recording, return to: Ms. Shawne M. Keenan Sutherland, Asbill & Brennan LLP 999 Peachtree Street, N.E. Atlanta, Georgia 30309-3996 PURSUANT TO Section 44-14-35.1 OF OFFICIAL CODE OF GEORGIA ANNOTATED, THIS INSTRUMENT EMBRACES, COVERS AND CONVEYS SECURITY TITLE TO AFTER-ACQUIRED PROPERTY OF THE GRANTOR ================================================================================ ================================================================================ OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION), GRANTOR, to SUNTRUST BANK, ATLANTA, TRUSTEE FIRST SUPPLEMENTAL INDENTURE Relating to the Series 1997B (Burke) Note Dated as of October 1, 1997 FIRST MORTGAGE OBLIGATIONS ================================================================================ ================================================================================ THIS FIRST SUPPLEMENTAL INDENTURE, dated as of October 1, 1997, is between OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION), an electric membership corporation organized and existing under the laws of the State of Georgia, as Grantor (hereinafter called the "Company"), and SUNTRUST BANK, ATLANTA, a banking corporation organized and existing under the laws of the State of Georgia, as Trustee (in such capacity, the "Trustee"). WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of March 1, 1997 (hereinafter called the "Original Indenture") for the purpose of securing its Existing Obligations and providing for the authentication and delivery of Additional Obligations by the Trustee from time to time under the Original Indenture (capitalized terms used herein shall have the meanings ascribed to them in the Original Indenture as provided in Section 2.1 hereof); WHEREAS, the Development Authority of Burke County (the "Burke Authority") issued $216,925,000 in aggregate principal amount of Development Authority of Burke County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1997A (the "Series 1997A Bonds"), which mature on December 1, 1997; WHEREAS, the Burke Authority loaned the proceeds from the sale of the Series 1997A Bonds to the Company, with such loan being evidenced by that certain Series 1997A Note, dated as of March 1, 1997 (the "Series 1997A Note"), from the Company to SunTrust Bank, Atlanta, as trustee (in such capacity, the "Series 1997A Trustee"), as assignee and pledgee of the Burke Authority pursuant to the Trust Indenture, dated as of April 1, 1992, as supplemented by the First Supplemental Indenture, dated as of March 1, 1997 (the "Series 1997A Indenture), between the Burke Authority and the Series 1997A Trustee; WHEREAS, the Burke Authority intends to issue $216,925,000 in aggregate principal amount of Development Burke Authority of Burke County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1997B (the "Series 1997B Bonds"), the proceeds from the sale of which will be loaned to the Company to refund the Series 1997A Bonds and pay the Series 1997A Note; WHEREAS, the Company's obligation to repay the loan of the proceeds of the Series 1997B Bonds will be evidenced by that certain Series 1997B (Burke) Note, dated as of October 1, 1997 (the "Series 1997B (Burke) Note"), from the Company to SunTrust Bank, Atlanta, as trustee (in such capacity, the "Series 1997B Trustee"), as assignee and pledgee of the Burke Authority pursuant to the Trust Indenture, dated as of October 1, 1997 (the "Series 1997B Indenture"), between the Burke Authority and the Series 1997B Trustee; WHEREAS, the Company desires to execute and deliver this First Supplemental Indenture, in accordance with the provisions of the Original Indenture, for the purpose of providing for the creation and designation of the Series 1997B (Burke) Note as an Additional Obligation and specifying the form and provisions of the Series 1997B (Burke) Note (the Original Indenture, as hereby supplemented and modified, being herein sometimes called the "Indenture"); WHEREAS, Section 12.1 of the Original Indenture provides that, without the consent of the Holders of any of the Obligations at the time Outstanding, the Company, when authorized by a Board Resolution, and the Trustee, may enter into supplemental indentures for the purposes and subject to the conditions set forth in said Section 12.1; and WHEREAS, all acts and proceedings required by law and by the Articles of Incorporation and Bylaws of the Company necessary to secure the payment of the principal of (and premium, if any) and interest on the Series 1997B (Burke) Note, to make the Series 1997B (Burke) Note to be issued hereunder, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligation of the Company, and to constitute the Indenture a valid and binding lien for the security of the Series 1997B (Burke) Note, in accordance with its terms, have been done and taken; and the execution and delivery of this First Supplemental Indenture has been in all respects duly authorized; NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSES, that, to secure the payment of the principal of (and premium, if any) and interest on the Outstanding Secured Obligations, including, when issued, the Series 1997B (Burke) Note, to confirm the lien of the Indenture upon the Trust Estate, including property purchased, constructed or otherwise acquired by the Company since the date of execution of the Original Indenture, to secure performance of the covenants therein and herein contained, to declare the terms and conditions on which the Series 1997B (Burke) Note is secured, and in consideration of the premises thereof and hereof, the Company by these presents does grant, bargain, sell, alienate, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to the Trustee, in trust, all property, rights, privileges and franchises (other than Excepted Property or Excludable Property) of the Company of the character described in the Granting Clauses of the Original Indenture, including all such property, rights, privileges and franchises acquired since the date of execution of the Original Indenture, including, without limitation, all property described in EXHIBIT A attached hereto, subject to all exceptions, reservations and matters of the character therein referred to, and subject in all cases to Sections 5.2 and 11.2 B of the Original Indenture and to the rights of the Company under the Original Indenture, including the rights set forth in Article V thereof; but expressly excepting and excluding from the lien and operation of the Indenture all properties of the character specifically excepted as "Excepted Property" or "Excludable Property" in the Original Indenture to the extent contemplated thereby. PROVIDED, HOWEVER, that if, upon the occurrence of an Event of Default under the Original Indenture, the Trustee, or any separate trustee or co-trustee appointed under Section 9.14 of the Original Indenture or any receiver appointed pursuant to statutory provision or order of court, shall have entered into possession of all or substantially all of the Trust Estate, all the Excepted Property described or referred to in Paragraphs A through H, inclusive, of "Excepted Property" in the Original Indenture then owned or thereafter acquired by the Company, shall immediately, and, 3 in the case of any Excepted Property described or referred to in Paragraphs I, J, L, N and P of "Excepted Property" in the Original Indenture (excluding the property described in Section 2 of EXHIBIT B in the Original Indenture), upon demand of the Trustee or such other trustee or receiver, become subject to the lien of the Indenture to the extent permitted by law, and the Trustee or such other trustee or receiver may, to the extent permitted by law, at the same time likewise take possession thereof, and whenever all Events of Default shall have been cured and the possession of all or substantially all of the Trust Estate shall have been restored to the Company, such Excepted Property shall again be excepted and excluded from the lien of the Indenture to the extent and otherwise as hereinabove set forth and as set forth in the Original Indenture. The Company may, however, pursuant to the Third Granting Clause of the Original Indenture, subject to the lien of the Indenture any Excepted Property or Excludable Property, whereupon the same shall cease to be Excepted Property or Excludable Property. TO HAVE AND TO HOLD all such property, rights, privileges and franchises hereby and hereafter (by Supplemental Indenture or otherwise) granted, bargained, sold, alienated, remised, released, conveyed, assigned, transferred, mortgaged, hypothecated, pledged, set over or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the tenements, hereditaments and appurtenances thereto appertaining (said properties, rights, privileges and franchises, including any cash and securities hereafter deposited or required to be deposited with the Trustee (other than any such cash which is specifically stated in the Original Indenture not to be deemed part of the Trust Estate) being part of the Trust Estate), unto the Trustee, and its successors and assigns in the trust herein created, forever. SUBJECT, HOWEVER, to (i) Permitted Exceptions (as defined in Section 1.1 of the Original Indenture) and (ii) to the extent permitted by Section 13.6 of the Original Indenture as to property hereafter acquired (a) any duly recorded or perfected prior mortgage or other lien that may exist thereon at the date of the acquisition thereof by the Company and (b) purchase money mortgages, other purchase money liens, chattel mortgages, conditional sales agreements or other title retention agreements created by the Company at the time of acquisition thereof. BUT IN TRUST, NEVERTHELESS, with power of sale, for the equal and proportionate benefit and security of the Holders from time to time of all the Outstanding Secured Obligations without any priority of any such Obligation over any other such Obligation and for the enforcement of the payment of such Obligations in accordance with their terms. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article V of the Original Indenture, and not in limitation of the rights elsewhere provided in the Original Indenture, including the rights set forth in Article V of the Original Indenture, the Company shall be permitted to (i) possess and use the Trust Estate, except cash, securities, Designated Qualifying Securities and other personal property deposited, or required to be deposited, with the Trustee, (ii) explore for, mine, extract, separate and dispose of coal, ore, gas, oil and other 4 minerals, and harvest standing timber, and (iii) receive and use the rents, issues, profits, revenues and other income, products and proceeds of the Trust Estate. THE ORIGINAL INDENTURE, AS SUPPLEMENTED BY THIS FIRST SUPPLEMENTAL INDENTURE, is intended to operate and is to be construed as a deed passing title to the Trust Estate and is made under the provisions of the existing laws of the State of Georgia relating to deeds to secure debt, and not as a mortgage or deed of trust, and is given to secure the Outstanding Secured Obligations. Should the indebtedness secured by the Indenture be paid according to the tenor and effect thereof when the same shall become due and payable and should the Company perform all covenants herein contained in a timely manner, then the Indenture shall be canceled and surrendered. AND IT IS HEREBY COVENANTED AND DECLARED that the Series 1997B (Burke) Note is to be authenticated and delivered and the Trust Estate is to be held and applied by the Trustee, subject to the covenants, conditions and trusts set forth herein and in the Original Indenture, and the Company does hereby covenant and agree to and with the Trustee, for the equal and proportionate benefit of all Holders of the Outstanding Secured Obligations, as follows: ARTICLE I THE SERIES 1997B (BURKE) NOTE AND CERTAIN PROVISIONS RELATING THERETO SECTION 1.1 AUTHORIZATION AND TERMS OF THE SERIES 1997B (BURKE) NOTE. There shall be established an Additional Obligation in the form of a promissory note known as and entitled the "Series 1997B (Burke) Note" (hereinafter referred to as the "Series 1997B (Burke) Note"), the form, terms and conditions of which shall be substantially as set forth in this Section and Section 1.2. The aggregate principal face amount of the Series 1997B (Burke) Note which shall be authenticated and delivered and Outstanding at any one time is limited to $216,925,000. The Series 1997B (Burke) Note shall be dated as of October 1, 1997. The Series 1997B (Burke) Note shall bear interest at a rate of 3.80% from the date of its authentication to the date of its maturity, payable on or before the business day next preceding May 28, 1998 and shall mature on May 28, 1998. The Series 1997B (Burke) Note shall be authenticated and delivered to, and made payable to, SunTrust Bank, Atlanta, as trustee (in such capacity, the "Series 1997B Trustee"), as assignee and pledgee of the Development Authority of Burke County (the "Burke Authority") pursuant to the Series 1997B Indenture. 5 All payments made on the Series 1997B (Burke) Note shall be made to the Series 1997B Trustee at its principal office in Atlanta, Georgia in lawful money of the United States of America which will be immediately available on the date payment is due. SECTION 1.2 FORM OF THE SERIES 1997B (BURKE) NOTE. The Series 1997B (Burke) Note and the Series 1997B Trustee's authentication certificate to be executed on the Series 1997B (Burke) Note shall be substantially in the form of Exhibit B attached hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted in the Original Indenture. SECTION 1.3 USE OF PROCEEDS. The Company shall use the proceeds of the loan evidenced by the Series 1997B (Burke) Note to pay the Series 1997A Note. ARTICLE II MISCELLANEOUS SECTION 2.1 The First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture, and shall form a part thereof, and the Original Indenture, as heretofore supplemented and as hereby supplemented and modified, is hereby confirmed. Except to the extent inconsistent with the express terms hereof, all of the provisions, terms, covenants and conditions of the Original Indenture shall be applicable to the Series 1997B (Burke) Note to the same extent as if specifically set forth herein. All capitalized terms used in this First Supplemental Indenture shall have the same meanings ascribed to them in the Original Indenture, except in cases where the context clearly indicates otherwise. SECTION 2.2 All recitals in this First Supplemental Indenture are made by the Company only and not by the Trustee; and all of the provisions contained in the Original Indenture, in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect hereof as fully and with like effect as if set forth herein in full. SECTION 2.3 Whenever in this First Supplemental Indenture any of the parties hereto is named or referred to, this shall, subject to the provisions of Articles IX and XI of the Original Indenture, be deemed to include the successors and assigns of such party, and all the covenants and agreements in this First Supplemental Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not. 6 SECTION 2.4 Nothing in this First Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the Holders of the Outstanding Secured Obligations, any right, remedy or claim under or by reason of this First Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this First Supplemental Indenture contained by or on behalf of the Company shall be for the sole and exclusive benefit of the parties hereto, and of the Holders of Outstanding Secured Obligations. SECTION 2.5 This First Supplemental Indenture may be executed in several counterparts, each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts, or as many of them as the Company and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. SECTION 2.6 To the extent permitted by applicable law, this First Supplemental Indenture shall be deemed to be a Security Agreement and Financing Statement whereby the Company grants to the Trustee a security interest in all of the Trust Estate that is personal property or fixtures under the Uniform Commercial Code, as adopted or hereafter adopted in one or more of the states in which any part of the properties of the Company are situated. The mailing address of the Company, as debtor is: 2100 East Exchange Place P. O. Box 1349 Tucker, Georgia 30085-1349, and the mailing address of the Trustees, as secured party is: SunTrust Bank, Atlanta, 58 Edgewood Avenue, Room 400A Atlanta, Georgia 30303 [Signatures on Next Page.] 7 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed under seal as of the day and year first above written. COMPANY: OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION), an electric membership corporation organized under the laws of the State of Georgia 2100 East Exchange Place P. O. Box 1349 Tucker, Georgia 30085-1349 By: /s/ T. D. Kilgore ------------------------------------------ T. D. Kilgore President and Chief Executive Officer Signed, sealed and delivered Attest: /s/ Patricia N. Nash by the Company in the presence -------------------------------------- of: Patricia N. Nash Secretary /s/ T. A. Smith - ---------------------------------- Witness /s/ Thomas J. Brendiar - ---------------------------------- Notary Public [CORPORATE SEAL] (Notarial Seal) My commission expires: Nov. 14, 2000 ---------------------- [Signatures Continued on Next Page.] [Signatures Continued from Previous Page.] TRUSTEE: SUNTRUST BANK, ATLANTA a banking corporation organized and existing under the laws of the State of Georgia By: /s/ Philip D. DeMouey ------------------------------------------ Signed, sealed and delivered Name: Philip D. DeMouey by the Trustee in the Title: Assistant Vice President presence of: By: /s/ Antonio I. Portundo ----------------------------------------- /s/ David McMahon Name: Antonio I. Portundo - -------------------------------- Title: Vice President Witness /s/ Teresa R. Turner - -------------------------------- Notary Public [BANK SEAL] (Notarial Seal) My commission expires: April 3, 2001 ---------------------- EXHIBIT A All property of the Company in the Counties of Appling, Ben Hill, Burke, Carroll, Clarke, Cobb, DeKalb, Floyd, Fulton, Heard, Jackson, Monroe, and Toombs, State of Georgia, including, without limitation, the properties more specifically described below: No additional properties to be specifically described. A-1 EXHIBIT B [Form of Series 1997B (Burke) Note] THIS NOTE IS NON-TRANSFERABLE EXCEPT AS MAY BE REQUIRED TO EFFECT ANY TRANSFER TO ANY SUCCESSOR TRUSTEE UNDER THE TRUST INDENTURE, DATED AS OF OCTOBER 1, 1997, AS SUPPLEMENTED, BETWEEN THE DEVELOPMENT AUTHORITY OF BURKE COUNTY AND SUNTRUST BANK, ATLANTA, AS TRUSTEE. OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) SERIES 1997B (BURKE) NOTE (VOGTLE PROJECT) OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) ("Oglethorpe"), an electric membership corporation organized and existing under the laws of the State of Georgia, for value received and in consideration of the agreement of the Development Authority of Burke County (the "Burke Authority") to issue $216,925,000 in aggregate principal amount of Development Authority of Burke County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1997B (the "Series 1997B Bonds"), hereby promises to pay to SunTrust Bank, Atlanta (the "Series 1997B Trustee"), as assignee and pledgee of the Burke Authority, acting pursuant to the Trust Indenture, dated as of October 1, 1997, from the Burke Authority to the Series 1997B Trustee (the "Series 1997B Indenture"), or its successor in trust, the principal sum of $216,925,000, together with interest thereon as follows: (1) on or before the business day next preceding May 28, 1998, a sum which will equal the interest on the Series 1997B Bonds which will become due on May 28, 1998; and (2) on or before the business day next preceding May 28, 1998, a sum which will equal the principal amount of the Series 1997B Bonds due on May 28, 1998. This Note is issued to evidence the Loan (as defined in the Agreement hereinafter referred to) of the Burke Authority to Oglethorpe and the obligation to repay the same and shall be governed by and shall be payable in accordance with the terms, conditions and provisions of the Loan Agreement, dated as of October 1, 1997 (the "Agreement"), between the Burke Authority and Oglethorpe, pursuant to which the Burke Authority has agreed to loan to Oglethorpe the proceeds from the sale of the Series 1997B Bonds. B-1 This Note is a duly authorized obligation of Oglethorpe issued under and equally and ratably secured by the Indenture, dated as of March 1, 1997 (the "Original Mortgage Indenture"), between Oglethorpe, as grantor, and SunTrust Bank, Atlanta, as trustee (in such capacity, the "Mortgage Indenture Trustee"), as supplemented by the First Supplemental Indenture, dated as of October 1, 1997 (the "First Supplemental Indenture"), between Oglethorpe and the Mortgage Indenture Trustee (the Original Mortgage Indenture, as supplemented, the "Mortgage Indenture"). Reference is hereby made to the Mortgage Indenture for a statement of the description of the properties thereby mortgaged, pledged and assigned, the nature and extent of the security and the respective rights, limitations of rights, duties and immunities thereunder of Oglethorpe, the Mortgage Indenture Trustee and the holder of this Note and of the terms upon which this Note is authenticated and delivered. This Note is created by the First Supplemental Indenture and designated as the "Series 1997B (Burke) Note". All payments hereon are to be made to the Series 1997B Trustee at its principal office in Atlanta, Georgia, in lawful money of the United States of America which will be immediately available on the day payment is due. As set forth in Section 4.6 of the Agreement, the obligation of Oglethorpe to make the payments required hereunder shall be absolute and unconditional. Oglethorpe shall be entitled to certain credits against payments required to be made hereunder as provided in Section 4.3 of the Agreement. This Note may be prepaid upon the terms and conditions set forth in Article VIII of the Agreement. If the Series 1997B Trustee shall accelerate payment of the Series 1997B Bonds, all payments on this Note shall be declared due and payable in the manner and with the effect provided in the Agreement. The Agreement provides that, under certain conditions, such declaration shall be rescinded by the Series 1997B Trustee. No recourse shall be had for the payments required hereby or for any claim based herein or in the Agreement or in the Mortgage Indenture against any officer, director or member, past, present or future, of Oglethorpe as such, either directly or through Oglethorpe, or under any constitution provision, statute or rule of law or by the enforcement of any assessment or by any legal or equitable proceedings or otherwise. This Note shall not be entitled to any benefit under the Mortgage Indenture and shall not become valid or obligatory for any purposes until the Mortgage Indenture Trustee shall have signed the form of authentication certificate endorsed hereon. B-2 IN WITNESS WHEREOF, Oglethorpe has caused this Note to be executed in its corporate name by its President and Chief Executive Officer and attested by its Secretary and its corporate seal to be hereunto affixed, all of the 1st day of October, 1997. OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) By:_____________________________________ T. D. Kilgore President and Chief Executive Officer (SEAL) Attest: _______________________________ Patricia N. Nash Secretary *** TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Obligations of the series designated therein referred to in the within mentioned Indenture. SUNTRUST BANK, ATLANTA, as Trustee By:_____________________________________ Authorized Signatory B-3 EX-27.1 3 EXHIBIT 27 FDS
UT This schedule contains summary financial information extracted from Oglethorpe Power Corporation's condensed balance sheet as of September 30, 1997 and related statements of revenues and expenses and cash flows for the period ended September 30, 1997 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 PER-BOOK 3,624,291 200,881 366,949 335,159 0 4,527,280 0 0 321,771 0 0 0 3,263,731 0 0 0 81,999 0 289,825 5,848 564,106 4,527,280 800,940 0 604,948 604,948 195,992 33,504 229,496 215,421 14,075 0 0 0 41,538 196,574 0 0 $321,771 represents total retained patronage captial. The registrant is a membership corporation and has no authorized or outstanding equity securities.
-----END PRIVACY-ENHANCED MESSAGE-----