-----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,
IhJSfLP6FwNEl59g/cVh4FliBojs8ilEr4dm3EpQ1EneJUozZfIsz/eq9TO1PrAO
L21IK2RiJvLb1XHrriAWag==
WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) For Quarter Ended March 31, 2001 Commission File Number 1-1072 Potomac Electric Power Company District of Columbia and Virginia 53-0127880 1900 Pennsylvania Avenue, N.W., Washington, D.C. 20068 202-872-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common Class Outstanding at March 31, 2001 Common Stock, $1 par value 108,899,176 TABLE OF CONTENTS PART I - Financial Information Page Item 1. - Consolidated Financial Statements 2 3 4 5 5 9 10 10 Report of Independent Accountants on Review of Interim Financial Information 12 Item 2. - Management's Discussion and Analysis of Consolidated Results of 13 14 17 Item 3. - Quantitative and Qualitative Disclosures About Market Risk 17 PART II - Other Information 17 18 20 21 22 23 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Competitive Segment Pepco Energy Total Total Utility PCI Services PHI Pepco Three Months Ended: (Unaudited, In Millions of Dollars) March 31, 2001 Operating Revenue $ 446.9(A) $ 28.9 $ 135.2 $ 164.1 $ 611.0(A) Operating Expenses Fuel and Purchased Energy 188.8 - 102.9 102.9 291.7 Other Operation and Depreciation and Amortization 34.4 6.1 1.5 7.6 42.0 Other Taxes 53.2 - - - 53.2 Total Operating Expenses 327.2 20.5 130.5 151.0 478.2 Operating Income 119.7 8.4 4.7 13.1 132.8 Other Income (Expenses) Interest and Dividend Income 23.4 4.5(C) - 4.5 27.9 Interest Expense (34.7) (11.2) (.2) (11.4) (46.1) (Loss) Income from Equity Other Income 5.2 .3 - .3 5.5 Total Other Expenses (6.1) (13.0) .1 (12.9) (19.0) Distributions on Preferred Securities of Subsidiary Trust Income Tax Expense (Benefit) 47.5 (3.1) 2.2 (.9) 46.6 Net Income (Loss) $ 63.8(B) $ (1.5) $ 2.6 $ 1.1 $ 64.9(B) (A) Competitive Segment Pepco Energy Total Total Utility PCI Services PHI Pepco Three Months Ended: (Unaudited, In Millions of Dollars) March 31, 2000 Operating Revenue $440.1 $ 41.3(A) $ 43.7 $ 85.0 $525.1(A) Operating Expenses Fuel and Purchased Energy 212.0 - 36.7 36.7 248.7 Other Operation and Depreciation and Amortization 61.8 5.1 .4 5.5 67.3 Other Taxes 45.7 - - - 45.7 Total Operating Expenses 396.8 13.2 47.0 60.2 457.0 Operating Income (Loss) 43.3 28.1 (3.3) 24.8 68.1 Other Income (Expenses) Interest and Dividend Income - 3.2(C) - 3.2 3.2 Interest Expense (36.8) (14.3) (.6) (14.9) (51.7) (Loss) Income from Equity Other Income 1.0 (.1) - (.1) .9 Total Other Expenses (35.8) (15.3) (.4) (15.7) (51.5) Distributions on Preferred Securities Income Tax Expense (Benefit) 1.9 4.0 (1.3) 2.7 4.6 Net Income (Loss) $ 3.3 $ 8.8(B) $ (2.4) $ 6.4 $ 9.7(B) (A)
SECURITIES AND EXCHANGE COMMISSION
of the Securities Exchange Act of 1934
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
(Address of principal executive office)
(Zip Code)
(Registrant's telephone number, including area code)
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months and (2) has been subject to such filing requirements for the past 90 days.
stock, as of the latest practicable date.
Operations and Financial Condition
For additional information, other than the information discussed in the Notes to
Consolidated Financial Statements section herein, refer to Item 8. Financial Statements
and Supplementary Data of the Company's 2000 Form 10-K.
(1) Organization and Segment Information
Organization
Potomac Electric Power Company (Pepco or the Company) is engaged in three
principal lines of business. These business lines consist of (1) the provision of regulated
electric utility transmission and distribution services, (2) the supply of
telecommunications services including local and long distance telephone, high speed
Internet and cable television, and (3) the supply of energy products and services in
competitive retail markets. The Company's regulated electric utility activities are referred
to herein as the "Utility" or "Utility Operations," and its telecommunications services and
competitive energy activities are referred to herein as "Competitive Operations."
Competitive Operations are derived from Pepco Holdings, Inc. (PHI), a wholly owned
subsidiary of the Company, and PHI's wholly owned subsidiaries, Potomac Capital
Investment Corporation (PCI) and Pepco Energy Services, Inc. (Pepco Energy Services).
The Company also has a wholly owned Delaware statutory business trust, Potomac
Electric Power Company Trust I (Trust) and a wholly owned Delaware Investment
Holding Company, Edison Capital Reserves Corporation (Edison).
On May 19, 2000, the Company reached an agreement with PPL Global, Inc., and
Allegheny Energy Supply Company, LLC, to sell its 9.72 percent interest in the
Conemaugh Generating Station (Conemaugh) for approximately $156 million.
Conemaugh is located near Johnstown, Pennsylvania, and consists of two baseload units
totaling approximately 1,700 megawatts of capacity. The Conemaugh sale closed on
January 8, 2001, and resulted in the recognition of a pre-tax gain of $50.2 million ($22.4
million after-tax) during the first quarter of 2001.
Additionally, as discussed in Item 7. Management's Discussion and Analysis of
Consolidated Results of Operations and Financial Condition of the Company's 2000
Form 10-K, on February 12, 2001, the Company and Conectiv announced that each
company's board of directors approved an agreement for a strategic transaction whereby
the Company will effectively acquire Conectiv for a combination of cash and stock
valued at approximately $2.2 billion. Both companies will become subsidiaries of a new
holding company to be named at a later date. The combination will be accounted for as a
purchase and is expected to be completed in approximately 12 months. Completion of
the acquisition is subject to customary closing conditions, including shareholder approval
by both companies, receipt of all regulatory approvals, and making all necessary
governmental filings.
Segment Information
The Company has identified the Utility's operations including the Trust (Utility
Segment) and PHI's operations (Competitive Segment) as its two reportable segments.
The following tables present condensed financial information for the three months ended
March 31, 2001 and 2000, respectively.
Maintenance
50.8
14.4
26.1
40.5
91.3
Investments, Principally a
Telecommunication Entity
-
(6.6)
.3
(6.3)
(6.3)
2.3
-
-
-
2.3
Station.
(B) Includes an after-tax gain of $22.4 million from the sale of the Conemaugh Generating
Station.
(C) Includes dividend income from PCI's ongoing preferred stock investment portfolio.
Maintenance
77.3
8.1
9.9
18.0
95.3
Investments, Principally a Telecommunication Entity
-
(4.1)
.2
(3.9)
(3.9)
of Subsidiary Trust
2.3
-
-
-
2.3
(B) Includes after-tax gain of $11.8 million from the sale of Cove Point.
(C) Includes dividend income from PCI's ongoing preferred stock investment portfolio.
(2) Summary of Significant Accounting Policies
Basis of Presentation
The information furnished in the accompanying consolidated financial statements
reflects all adjustments (which consist only of normal recurring accruals) which are, in
the opinion of management, necessary for a fair presentation of the Company's results of
operations for the interim periods presented. The accompanying consolidated financial
statements and notes thereto should be read in conjunction with the Company's 2000
Form 10-K. Certain prior period amounts have been reclassified in order to conform to
the current period presentation.
Derivative Instruments and Hedging Activities
On January 1, 2001, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133). Although the Utility is not directly impacted by SFAS 133, the
competitive subsidiaries have entered into several agreements that are subject to the
provisions of SFAS 133. Specifically, PCI has entered into two interest rate swap
agreements for the purposes of hedging certain variable interest rate debt obligations for
fixed interest rate debt that were issued under its Medium Term Note (MTN) program;
and, Pepco Energy Services has entered into two fuel oil price swap agreements for the
purpose of hedging the variability of fuel oil costs for electric power generation. In
accordance with the terms of the swap agreements, both PCI and Pepco Energy Services
receive or pay the net difference between variable interest payments/market prices and
the fixed rates/prices due from its swap counterparties, thereby fixing its interest expense
and fuel cost, respectively.
On the date of adoption, PCI formally designated its swap agreements as cash flow
hedge instruments which, for accounting purposes, are measured at fair market value and
recorded as liabilities in the Company's consolidated balance sheet. As cash flow hedges,
the effective portion of the change in the fair value of the interest rate and oil price swaps
are reported as a component of Accumulated Other Comprehensive Income (AOCI). As a
yield adjustment is realized, the related amount reflected in AOCI is subsequently
reclassified into interest expense or fuel and purchased energy.
The Company's management assesses interest rate and fuel oil price risks by
continually identifying and monitoring changes in the marketplace that may adversely
impact expected future cash flows and by evaluating hedging opportunities.
On January 1, 2001, PCI recorded an after-tax adjustment of $33 thousand to
AOCI for the purposes of recognizing the fair value of interest rate swaps designated as
cash flow hedges. A similar adjustment was not required for the oil price swaps as they
did not exist at that date. AOCI is adjusted monthly for changes in the fair value of the
interest rate and fuel oil swaps. During the three months ended March 31, 2001, PCI
recorded $53 thousand in income as a result of the change in the fair value of the swap
agreements. As of March 31, 2001, PCI recorded $668 thousand as an interest rate swap
liability classified in other liabilities and Pepco Energy Services recorded $511 thousand
as purchase commitments included in accounts payable and other liabilities, respectively.
PCI's interest rate swaps expire on March 24, 2004 and August 22, 2005,
respectively, which coincides with the maturity date of these MTNs, to which the swaps
relate for hedging purposes. Pepco Energy Services' fuel oil swaps expire in August
2001, which coincides with the planned fuel requirements for electric power generation.
Through the year ended December 31, 2002, approximately $519 thousand of
losses in AOCI related to the oil price and interest rate swaps are expected to be
reclassified into income as a yield adjustment of the hedged items.
Comprehensive Income
The Company's components of comprehensive income are net income, unrealized
losses on marketable securities, and unrealized losses on derivative instruments.
Comprehensive income was $63.7 million and $5 million for the three months ended
March 31, 2001 and 2000, respectively.
(3) Treasury Stock Transactions
On February 12, 2001, the Company announced its plan to repurchase up to $450
million of its common stock in the open market or in privately negotiated transactions
over the next twelve months. The actual amount of stock to be repurchased will be
determined by management depending on market conditions. As of March 31, 2001, the
Company has acquired 1,852,800 shares in connection with this repurchase plan at a cost
of approximately $41.5 million, which is reflected as a reduction to shareholders' equity
on the accompanying consolidated balance sheets. At December 31, 2000, Pepco had
7,792,907 shares held in treasury at a cost of approximately $200 million in connection
with a previous stock repurchase plan.
(4) Commitments and Contingencies
Investments
As of March 31, 2001, the carrying value of PCI's marketable securities, which
consisted primarily of preferred stocks with mandatory redemption features, was $217.7
million. This total included preferred stock from Southern California Edison and Pacific
Gas & Electric (PG&E) with carrying values at March 31, 2001, of $6.3 million and $9.5
million (including net unrealized losses of $4.3 million and $8.3 million). On April 6,
2001, PG&E filed for Chapter 11 bankruptcy protection. Due to the numerous political
and economic factors influencing the California utility market, the full extent of PG&E's
filing and subsequent potential impact on PCI's investment, if any, is uncertain.
Regulatory Contingencies
On April 26, 2001, the Company filed an application with the Maryland Public
Service Commission to approve the Company's plan to distribute $188.6 million to
Maryland customers as their portion of divestiture gain sharing. The Company has
requested expedited consideration of its application and a final determination is expected
by June 30, 2001.
NPDES Permits
Subsequent to the sale of its generation assets on December 19, 2000, the Company
has one remaining facility, the Benning Station, operating under a National Pollutant
Discharge Elimination System (NPDES) permit. The Benning Station consists of a
generating facility and a service center. An NPDES permit renewal application for the
facility was submitted in July 1993. The Environmental Protection Agency issued a final
permit in November 2000. The Company has appealed certain provisions of the new
permit. During the interim, the previously existing permit remains in effect.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
This Quarterly Report on Form 10-Q, including the report of
PricewaterhouseCoopers LLP on review of unaudited interim financial information dated
May 2, 2001 will automatically be incorporated by reference in the Prospectuses
constituting parts of the Company's Registration Statements on Form S-3 (Number 33-
58810) and Forms S-8 (Numbers 33-36798, 33-53685, 33-54197, 333-56683 and 333-
57221), and under New RC, Inc.'s Registration Statement on Form S-4 (Number 333-
57042), filed under the Securities Act of 1933. Such report of PricewaterhouseCoopers
LLP, however, is not a "report" or "part of the Registration Statement" within the
meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of
Section 11(a) of such Act do not apply.
Report of Independent Accountants
To the Board of Directors
and Shareholders of
Potomac Electric Power Company
We have reviewed the accompanying consolidated balance sheets of Potomac Electric
Power Company and its consolidated subsidiaries (the Company) as of March 31, 2001
and 2000, and the related consolidated statements of earnings and retained income and
the consolidated statements of cash flows for the three month period then ended. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial information
consists principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made
to the accompanying consolidated interim financial information for it to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 2000, and the related consolidated
statements of earnings and retained income and the consolidated statement of cash flows
for the year then ended (not presented herein); and in our report dated January 19, 2001,
we expressed an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance sheet as of
December 31, 2000, is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
May 2, 2001
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
For additional information, other than the information disclosed in the
Management's Discussion and Analysis of Consolidated Results of Operations and
Financial Condition section herein, refer to Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Company's 2000 Form
10-K.
Safe Harbor Statements
In connection with the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 (Reform Act), the Company is hereby filing cautionary statements
identifying important factors that could cause actual results to differ materially from
those projected in forward-looking statements (as such term is defined in the Reform Act)
made in this report on Form 10-Q. Any statements that express, or involve discussions as
to expectations, beliefs, plans, objectives, assumptions or future events or performance
are not statements of historical facts and may be forward-looking.
Forward-looking statements involve estimates, assumptions and uncertainties and
are qualified in their entirety by reference to, and are accompanied by, the following
important factors, which are difficult to predict, contain uncertainties, are beyond the
control of the Company and may cause actual results to differ materially from those
contained in forward-looking statements:
- |
prevailing governmental policies and regulatory actions, including those of the |
- |
changes in and compliance with environmental and safety laws and policies; |
- |
weather conditions; |
- |
population growth rates and demographic patterns; |
- |
competition for retail and wholesale customers; |
- |
growth in demand, sales and capacity to fulfill demand; |
- |
changes in tax rates or policies or in rates of inflation; |
- |
changes in projects costs; |
- |
unanticipated changes in operating expenses and capital expenditures; |
- |
capital market conditions; |
- |
competition for new energy development opportunities and other opportunities; |
- |
Legal and administrative proceedings (whether civil or criminal) and settlements |
- |
pace of entry into new markets; |
- |
Time and expense required for building out the planned Starpower network; |
- |
Success in marketing services; |
- |
possible development of alternative technologies; |
- |
The ability to secure electric and gas supply to fulfil sales commitments at favorable prices, and |
- |
The cost of fuel. |
Any forward-looking statements speak only as of May 2, 2001, and the Company
undertakes no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the occurrence
of unanticipated events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of any such factor
on the business or the extent to which any factor, or combination of factors, may cause
results to differ materially from those contained in any forward-looking statement.
CONSOLIDATED RESULTS OF OPERATIONS
OPERATING REVENUE
Utility
The decrease in Utility operating revenue during the 2001 quarter, compared to
the corresponding quarter in the prior year, primarily resulted from the termination of the
previously existing contract to provide full-requirements energy to SMECO on December
31, 2000 (a new full-requirements agreement commenced between Pepco Energy
Services and SMECO on January 1, 2001).
Competitive Operations
Competitive operating revenue is derived from the operations of PCI and Pepco
Energy Services. PCI classifies its revenue as "financial investments" and "utility
industry services" and Pepco Energy Services classifies its revenue as "energy services."
Competitive operating revenue increased during the quarter ended March 31,
2001 due to an increase in energy services revenue over the period which primarily
resulted from the continued growth of Pepco Energy Services' businesses. This increased
growth includes the commencement in January 2001 of the four-year contract to provide
full-requirements energy to SMECO. The increase in operating revenue was partially
offset by a decrease in utility industry services revenue over the prior quarter due to the
fact that 2000 revenue included a one-time pre-tax gain of approximately $20 million
from the sale of PCI's 50% interest in the Cove Point liquefied natural gas storage facility
and pipeline.
Gain on Divestiture of Generation Assets
This amount represents the pre-tax gain that was recorded as a result of the sale of
the Company's interest in Conemaugh. For additional information, refer to Note (1)
Organization and Segment Information, herein.
OPERATING EXPENSES
Consolidated operating expenses increased during the first quarter of 2001
primarily due to an increase in Pepco Energy Services' fuel and purchased energy as a
result of the growth in its gas and electric businesses. This increase was partially offset
by a reduction in Utility depreciation expense which resulted from the divestiture of its
generation assets in December 2000.
OTHER INCOME (EXPENSES)
Interest and Dividend Income
The increase in interest and dividend income during the first quarter of 2001
resulted primarily from the interest earned on the proceeds received from the divestiture
of the Company's generation assets in December 2000.
(Loss) Income from Equity Investments, Principally a Telecommunication Entity
These amounts represent the Company's share of the pre-tax income or loss from
entities in which it has a 20% to 50% equity investment. The Company's most significant
equity investment is the joint venture known as Starpower Communications, LLC
(Starpower) that was formed in 1997 between wholly owned subsidiaries of PCI and
RCN Corporation. Additionally, this line item includes income from Pepco Energy
Services' 50% share of the operations from Viron/Pepco Services, Inc., which was
created in 1999 to provide energy-savings performance contracting services to the
Military District of Washington.
Starpower, which is discussed in detail in Item 8. Financial Statements and
Supplementary Data in the Company's 2000 Form 10-K, is the only regional company
providing a competitively priced bundled package for residential customers, over an
advanced fiber-optic network for cable television, local and long distance telephone, and
dial-up and high-speed Internet services. The customer subscriber services base is
composed of customers served on Starpower's advanced fiber-optic network (On-
network) and off of other networks ahead of Starpower's build-out (Off-network). The
On-network customer subscriber services are principally composed of cable, local and
long distance telephone and high-speed Internet customer services and totaled in excess
of 43,000 as of March 31, 2001, compared to approximately 25,000 at March 31, 2000.
The Off-network customer subscriber services are principally composed of dial-up
Internet and resale local and long distance telephone customers and totaled in excess of
224,000 as of March 31, 2001, compared to approximately 260,000 at March 31, 2000.
Total customer subscriber services including cable, telephone and Internet subscribers
were in excess of 267,000 as of March 31, 2001, compared to approximately 285,000 as
of March 31, 2000. The decline in total customer subscriber services over the past year is
principally due to the loss of dial-up Internet customers due to competition from free dial-
up Internet service providers.
Through March 31, 2001, Starpower has built sufficient advanced fiber-optic
network to cumulatively reach approximately 180,000 On-network households as
compared to approximately 90,000 such households at March 31, 2000. As of March 31,
2001, PCI has cumulatively invested $184 million in Starpower.
The Loss from Equity Investments, Principally a Telecommunication Entity,
increased for the three months ended March 31, 2001, compared to the corresponding
period in 2000, primarily due to expenses incurred in connection with the expansion of
the Starpower network. PCI anticipates that Starpower will continue to incur losses in
2001 as it further develops and expands its network and customer base.
INCOME TAX EXPENSE
The increase in income tax expense during the first quarter of 2001 primarily
results from taxes incurred in connection with the sale of Conemaugh. Taxes also
increased over this period as a result of interest income earned on the proceeds from the
divestiture in December 2000.
CAPITAL RESOURCES AND LIQUIDITY
Dividends on Common Stock
The Company's annual dividend rate on its common stock is determined by its
Board of Directors on a quarterly basis and takes into consideration, among other factors,
current and possible future developments which may affect the Company's income and
cash flows. On February 12, 2001, the Company announced that it will reduce the annual
dividend on its common stock to $1.00 per share from $1.66 per share, effective with the
June 2001 dividend.
Construction and Generating Capacity
Construction expenditures, excluding the Allowance for Funds Used During
Construction and Capital Cost Recovery Factor, totaled $45.6 million for the three
months ended March 31, 2001 and are projected to total $190.5 million for the year 2001.
For the five-year period 2001-2005, construction expenditures are projected to total $761
million.
Preferred Stock Repurchases
During February 2001, the Company repurchased the following Preferred Stock:
35,400 shares of $2.44 series of 1957 at $43.50 per share; 40,030 shares of $2.46 series
of 1958 at $43.60 per share; 35,801 shares of $2.28 series of 1965 at $40.50 per share.
The repurchases totaled approximately $5.5 million.
Mortgage Bond Repurchases
On April 30, 2001, the Company announced that on June 1, 2001, it will redeem at
103.61% of principal amount, plus accrued interest to the redemption date, the entire
$100 million outstanding principal amount of its 9 % First Mortgage Bonds due June 1,
2021. These bonds were issued in 1991.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk of
the Company's 2000 Form 10-K.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Refer to Item 3. Legal Proceedings of the Company's 2000 Form 10-K.
Item 5. OTHER INFORMATION
Annual Meeting of Common Shareholders and Special Meeting of Preferred
Shareholders
The Company's joint Annual Meeting of Common Shareholders and Special
Meeting of Preferred Shareholders will be held at 10:00 a.m., local time, on July 18,
2001, at The Inn and Conference Center, University of Maryland University College,
3501 University Boulevard East, Adelphi, Maryland. The record date has been set for
Tuesday, May 29, 2001.
Statistical Data |
||||||
Three Months Ended |
||||||
Operating Revenue |
(Millions of Dollars) |
|||||
Electric Revenue |
$390.8 |
$435.6 |
(10.3) |
|||
Other |
5.9 |
4.5 |
31.1 |
|||
Total Utility Operating Revenue |
396.7 |
440.1 |
(9.9) |
|||
Competitive Operating Revenue |
164.1 |
85.0 |
93.1 |
|||
Gain on Divestiture of Generating Assets |
50.2 |
- |
100.0+ |
|||
Total Operating Revenue |
$611.0 |
$525.1 |
||||
Distribution and Transmission by Class of Service |
||||||
Residential |
$ 65.9 |
$61.9 |
6.5 |
|||
General Service |
103.4 |
98.4 |
5.1 |
|||
Large Power Service * |
1.3 |
1.7 |
(23.5) |
|||
Street Lighting |
2.4 |
2.3 |
4.3 |
|||
Metro |
2.3 |
2.5 |
(8.0) |
|||
Network Transmission Services |
26.7 |
37.9 |
(29.6) |
|||
Wholesale |
0.1 |
3.7 |
(97.3) |
|||
Total Revenue |
202.1 |
208.4 |
(3.0) |
|||
Network Transmission Expenses |
(21.3) |
(27.7) |
23.1 |
|||
System |
$180.8 |
$180.7 |
0.1 |
|||
Generation Services (SOS) by Class of Service |
||||||
Residential |
$ 68.6 |
$ 60.0 |
14.3 |
|||
General Service |
111.2 |
118.6 |
(6.2) |
|||
Large Power Service * |
1.9 |
5.3 |
(64.2) |
|||
Street Lighting |
1.1 |
1.3 |
(15.4) |
|||
Metro |
2.6 |
4.6 |
(43.5) |
|||
Wholesale |
- |
29.3 |
- |
|||
Subtotal |
185.4 |
219.1 |
(15.4) |
|||
EUM Capacity/Energy |
3.3 |
8.0 |
(58.8) |
|||
System |
$188.7 |
$227.1 |
(16.9) |
|||
Distribution and Transmission Sales |
||||||
Residential |
2,157 |
1,823 |
18.3 |
|||
General Service |
3,803 |
3,801 |
0.1 |
|||
Large Power Service * |
134 |
170 |
(21.2) |
|||
Street Lighting |
49 |
47 |
4.3 |
|||
Metro |
99 |
108 |
(8.3) |
|||
Wholesale |
1 |
756 |
(99.9) |
|||
System |
6,243 |
6,705 |
(6.9) |
|||
Generation Services (SOS) Sales |
||||||
Residential |
2,119 |
1,823 |
16.2 |
|||
General Service |
3,699 |
3,801 |
(2.7) |
|||
Large Power Service * |
65 |
170 |
(61.8) |
|||
Street Lighting |
40 |
47 |
(14.9) |
|||
Metro |
62 |
108 |
(42.6) |
|||
Wholesale |
1 |
756 |
(99.9) |
|||
System |
5,986 |
6,705 |
(10.7) |
|||
Average System Revenue |
||||||
Delivered |
2.90 |
Cts . |
2.70 |
Cts. |
7.4 |
|
Generation Services (SOS) |
3.10 |
Cts. |
3.27 |
Cts. |
(5.2) |
|
Weather Data |
||||||
Heating Degree Days |
2,238 |
1,953 |
||||
20 Year Average |
2,168 |
2,183 |
||||
Cooling Degree Hours |
- |
12 |
||||
20 Year Average |
10 |
12 |
||||
Heating Degree Days - The daily difference in degrees by which the mean temperature is below 65 degrees Fahrenheit (dry bulb). |
||||||
Cooling Degree Hours - The daily sum of the differences, by hours, by which the temperature (effective temperature) for each hour exceeds 71 degrees Fahrenheit (effective temperature). |
||||||
* Large Power Service customers are served at high voltage of 66KV or higher. |
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) |
Exhibits |
||
Exhibit 12 |
- |
Computation of ratios - filed herewith. |
|
Exhibit 15 |
- |
Letter re: unaudited interim financial information - filed herewith. |
|
(b) |
Reports on Form 8-K |
||
A Current Report on Form 8-K was filed by the Company on January 8, |
|||
A Current Report on Form 8-K was filed by the Company on January 25, |
|||
A Current Report on Form 8-K was filed by the Company on February 12, |
|||
A Current Report on Form 8-K was filed by the Company on February 13, |
|||
A Current Report on Form 8-K was filed by the Company on March 27, |
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.
|
Potomac Electric Power Company |
May 2, 2001
Date
Statements Re. Computation of Ratios | ||||||
The computations of the coverage of fixed charges before income taxes, and the coverage of combined fixed charges and preferred dividends for the twelve months ended March 31, 2001, and each of the years 2000 through 1996, on the basis of Utility operations only, are as follows: |
||||||
Twelve |
|
|||||
(Dollar Amounts in Millions) |
||||||
Net income |
$409.5 |
$348.9 |
$228.0 |
$211.2 |
$164.7 |
$220.1 |
Taxes based on income |
398.4 |
352.9 |
142.6 |
131.0 |
97.5 |
135.0 |
Income before taxes |
807.9 |
701.8 |
370.6 |
342.2 |
262.2 |
355.1 |
Fixed charges: |
||||||
Interest charges |
167.9 |
170.1 |
156.1 |
151.8 |
146.7 |
146.9 |
Interest factor in rentals |
22.2 |
23.2 |
23.4 |
23.8 |
23.6 |
23.6 |
Total fixed charges |
190.1 |
193.3 |
179.5 |
175.6 |
170.3 |
170.5 |
Income before income taxes and fixed charges |
$998.0 |
$895.1 |
$550.1 |
$517.8 |
$432.5 |
$525.6 |
Coverage of fixed charges |
5.25 |
4.63 |
3.06 |
2.95 |
2.54 |
3.08 |
Preferred dividend requirements |
$5.3 |
$5.5 |
$8.9 |
$18.0 |
$16.5 |
$16.6 |
Ratio of pre-tax income to net income |
1.97 |
2.01 |
1.63 |
1.62 |
1.59 |
1.61 |
Preferred dividend factor |
$10.5 |
$11.1 |
$14.5 |
$29.2 |
$26.2 |
$26.7 |
Total fixed charges and preferred dividends |
$200.6 |
$204.4 |
$194.0 |
$204.8 |
$196.5 |
$197.2 |
Coverage of combined fixed charges and preferred dividends |
|
|
|
|
|
|
|
||||||
The computations of the coverage of fixed charges before income taxes, and the coverage of combined fixed charges and preferred dividends for the twelve months ended March 31, 2001, and for each of the years 2000 through 1996, on a consolidated basis, are as follows. |
||||||
Twelve |
|
|||||
(Dollar Amounts in Millions) |
||||||
Net income |
$426.7 |
$369.1 |
$256.7 |
$234.8 |
$179.8 |
$234.3 |
Taxes based on income |
383.1 |
341.2 |
114.5 |
122.3 |
65.6 |
80.4 |
Income before taxes |
809.8 |
710.3 |
371.2 |
357.1 |
245.4 |
314.7 |
Fixed charges: |
||||||
Interest charges |
227.2 |
230.7 |
208.7 |
208.6 |
216.1 |
231.1 |
Interest factor in rentals |
22.6 |
23.6 |
23.8 |
24.0 |
23.7 |
23.9 |
Total fixed charges |
249.8 |
254.3 |
232.5 |
232.6 |
239.8 |
255.0 |
Competitive subsidiary capitalized interest |
(4.5) |
(3.9) |
(1.8) |
(0.6) |
(0.5) |
(0.7) |
Income before income taxes and fixed charges |
$1,055.1 |
$960.7 |
$601.9 |
$589.1 |
$484.7 |
$569.0 |
Coverage of fixed charges |
4.22 |
3.78 |
2.59 |
2.53 |
2.02 |
2.23 |
Preferred dividend requirements |
$5.3 |
$5.5 |
$8.9 |
$18.0 |
$16.5 |
$16.6 |
Ratio of pre-tax income to net income |
1.90 |
1.92 |
1.45 |
1.52 |
1.36 |
1.34 |
|
||||||
Preferred dividend factor |
$10.1 |
$10.5 |
$12.8 |
$27.4 |
$22.4 |
$22.2 |
Total fixed charges and preferred dividends |
$259.9 |
$264.8 |
$245.3 |
$260.0 |
$262.2 |
$277.2 |
Coverage of combined fixed charges and preferred dividends |
|
|
|
|
|
|
Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that our report dated May 2, 2001 on our review of interim financial
information of Potomac Electric Power Company for the period ended March 31, 2001
and included in the Company's quarterly report on Form 10-Q for the quarter then ended
is incorporated by reference in the Prospectuses constituting parts of the Registration
Statements on Forms S-8 (Numbers 33-36798, 33-53685, 33-54197, 333-56683 and 333-
57221) filed on September 12, 1990, May 18, 1994, June 17, 1994, June 12, 1998 and
June 19, 1998, respectively, on Form S-3 (Number 33-58810) filed on February 26, 1993
of Potomac Electric Power Company and on Form S-4 (Number 333-57042) of New RC,
Inc. filed on March 14, 2001.
Very truly yours,
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
May 2, 2001