Item 1 BUSINESS ------ -------- GENERAL -------
Potomac Electric Power Company (Company), which was incorporated in the District of Columbia in 1896 and in the Commonwealth of Virginia in 1949, is engaged in the generation, transmission, distribution and sale of electric energy in the Washington, D.C. metropolitan area. The Company's retail service territory includes the District of Columbia and major portions of Montgomery and Prince George's counties in suburban Maryland. The area served at retail covers approximately 640 square miles and had a population of approximately 1.9 million at the end of 1994 and 1993. The Company also sells electricity, at wholesale, to Southern Maryland Electric Cooperative, Inc. (SMECO), which distributes electricity in Calvert, Charles, Prince George's and St. Mary's counties in southern Maryland. During 1994, approximately 59% of the Company's revenue were derived from Maryland sales (including wholesale) and 41% from sales in the District of Columbia. About 30% of the Company's revenue were derived from residential customers, 64% from sales to commercial and government customers and 6% from sales at wholesale. Approximately 14% and 3% of 1994 revenue were derived from sales to the U.S. and D.C. governments, respectively.
The Company holds valid franchises, permits and other rights adequate for its business in the territory it serves, and such franchises, permits and other rights contain no unduly burdensome restrictions.
The Company is a member of the Pennsylvania-New Jersey-Maryland Interconnection Association (PJM) pursuant to an agreement under which its generating and transmission facilities are operated on an integrated basis with those of the other PJM member utilities in Pennsylvania, New Jersey, Maryland, Delaware and a small portion of Virginia. The purpose of PJM is to improve the operating economy and reliability of the systems in the group and to provide capital economies by permitting lower reserve requirements than would be required on a system basis. The Company also has direct high voltage connections with the Potomac Edison Company and Virginia Power, neither of which is a member of PJM.
SALES -----
The following data presents the Company's sales and revenue by class of service and by customer type, including data as to sales to the United States and District of Columbia governments.
1994 1993 1992 ---------- ---------- ---------- Electric Energy Sales (Thousands of Kilowatt-hours) --------------------- Kilowatt-hours Sold - Total 25,546,210 25,693,999 24,484,444 ========== ========== ========== By Class of Service - Residential service 6,586,970 6,739,987 6,155,793 General service 15,345,484 15,388,525 14,969,669 Large power service (a) 683,762 704,292 705,113 Street lighting 162,439 163,827 163,739 Rapid transit 404,634 370,428 360,432 Wholesale 2,362,921 2,326,940 2,129,698
By Type of Customer - Residential 6,574,199 6,726,520 6,142,414 Commercial 11,685,351 11,750,542 11,391,337 U.S. Government 4,009,810 3,986,149 3,947,611 D.C. Government 913,929 903,848 873,384 Wholesale 2,362,921 2,326,940 2,129,698
Electric Revenue (Thousands of Dollars) ---------------- Sales of Electricity - Total (b) $1,783,064 $1,696,435 $1,556,098 ========== ========== ========== By Class of Service - Residential service $ 525,660 $ 506,096 $ 433,648 General service 1,066,710 1,010,552 958,369 Large power service (a) 35,701 33,913 33,454 Street lighting 13,783 13,605 12,363 Rapid transit 27,892 24,107 22,914 Wholesale 113,318 108,162 95,350
By Type of Customer - Residential $ 524,738 $ 505,173 $ 432,797 Commercial 834,323 791,357 748,550 U.S. Government 254,030 238,192 229,586 D.C. Government 56,655 53,551 49,815 Wholesale 113,318 108,162 95,350
(a) Large power service customers are served at high voltage of 66KV or higher. (b) Exclusive of Other Electric Revenue (000s omitted) of $7,536 in 1994, $6,007 in 1993 and $6,069 in 1992.
The Company's sales of electric energy are seasonal, and, accordingly, rates have been designed to closely reflect the daily and seasonal variations in the cost of producing electricity, in part by raising summer rates and lowering winter rates. Mild weather during the summer billing months of June through October, when base rates are high to encourage customer conservation and peak load shifting, has an adverse effect on revenue and, conversely, hot weather during these months has a favorable effect.
The Company includes in revenue the amounts received for sales to other utilities related to pooling and interconnection agreements. Amounts received for such interchange deliveries are a component of the Company's fuel rates.
CAPACITY PLANNING ----------------- General -------
During the period 1995 through 2004 the Company estimates that its peak demand will grow at a compound annual rate of approximately 1%. Based upon average weather conditions, the Company expects its compound annual growth in kilowatt-hour sales to range between 1% and 2% over the next decade. The Company's ongoing strategies to meet the increasing energy needs of its customers include conservation and energy use management programs which are designed to curb growth in peak demand. The need for new capacity has been further reduced by programs to maintain older generating units to ensure their continued efficiency over an extended life and the cost-effective purchase of capacity and energy.
Conservation ------------
Cost-effective conservation programs have been a major component of the Company's success in limiting the need for new construction during the past decade.
The Company's conservation and energy use management programs are designed to curb growth in demand in order to defer the need for construction of additional generating capacity and to cost-effectively increase the efficiency of energy use. During 1994, the Company reevaluated its conservation programs, including additional review and consideration of the current and prospective effect of these programs on customer rates and bills. As a result of this reevaluation, the Company phased out several conservation programs and reduced rebate levels for others. In addition, in November 1994 the Company temporarily suspended approval of additional applications for its Custom Rebate Program. By narrowing its conservation offerings, the Company expects to be able to continue to encourage its customers to use energy efficiently without significantly increasing electricity prices. The Company expects approximately 80% of the previously estimated benefits from conservation for approximately 45% of estimated cost.
For residential customers the Company continues to offer rebates for high efficiency heating and air conditioning equipment. These rebates are paid directly to customers when customers buy equipment which significantly exceeds the efficiency of average available equipment.
In 1995, the Company expects to resume operation of its highly successful Custom Rebate Program for commercial customers. This program pays rebates to customers who install energy efficient lighting, motors, heating and cooling systems and other measures. The Company also continues to operate the New Building Design Program, which offers cash incentives as well as technical assistance to developers and designers who incorporate energy efficient designs and equipment in new commercial construction.
During 1994, the Company invested approximately $90 million in energy conservation programs. The Company recovers the costs of its conservation programs in its Maryland jurisdiction through a rate surcharge which amortizes costs over a five year period and permits the Company to earn a return on its conservation investment while receiving compensation for lost revenue. In addition, when the Company's performance exceeds its annual goals, the Company earns a performance bonus. The Company was awarded a bonus of approximately $5 million in 1994 based on its 1993 performance. At the end of 1994 the conservation surcharge in Maryland was $.00338 per kilowatt-hour. In the District of Columbia, conservation costs are amortized over 10 years with an accrued return on unamortized costs. To date, costs have been considered in base rate cases.
In 1994, approximately 151,000 customers participated in continuing energy use management programs which cycle air conditioners and water heaters during peak periods. In addition, the Company operates a commercial load program which provides incentives to customers for reducing energy use during peak periods. Time-of-use rates have been in effect since the early 1980s and currently approximately 60% of the Company's revenue is based on time-of-use rates.
It is estimated that peak load reductions of approximately 525 megawatts have been achieved to date from conservation and energy use management programs and that additional peak load reductions of approximately 380 megawatts will be achieved in the next five years. The Company also estimates that in 1994 energy savings of more than 760 million kilowatt-hours have been realized through operation of its conservation and energy use management programs. During the next five years, the Company plans to expend an estimated $370 million ($86 million in 1995) to encourage the efficient use of electric energy and to reduce the need to build new generating facilities.
Although the Company is continuing its conservation and energy use management efforts, new sources of supply will be needed to assure the future reliability of electric service to the Washington area. These new sources of supply will be provided through the Company's plans for purchases of capacity and energy and through its ongoing construction program.
Purchase of Capacity and Energy -------------------------------
Pursuant to the Company's 1987 long-term capacity purchase agreements with Ohio Edison and Allegheny Power System, the Company is purchasing 450 megawatts of capacity and associated energy through the year 2005. In addition, effective June 1, 1994 through May 31, 1995, the Company is purchasing 147 megawatts of capacity from Pennsylvania Power and Light Company. The Company also has a purchase agreement with SMECO, through 2015, for 84 megawatts of capacity supplied by a combustion turbine installed and owned by SMECO at the Company's Chalk Point Generating Station. The Company is responsible for all costs associated with operating and maintaining the facility.
The Company has been exploring other cost-effective sources of energy and has entered into contracts for two nonutility generation projects which total 270 megawatts of capacity. A 40-megawatt resource recovery facility with which the Company has a contract is now under construction in Montgomery County, Maryland. In addition, the Company has an agreement with Panda Energy Corporation for a 230-megawatt gas-fueled combined-cycle cogeneration project in Prince George's County, Maryland. This project has received a certificate of convenience and necessity from the Maryland Public Service Commission. These nonutility generation projects are expected to begin operating in 1995 and 1996, respectively.
CONSTRUCTION PROGRAM --------------------
The Company carries on a continuous construction program, the nature and extent of which is determined by the Company's strategic planning process which integrates supply-side and demand-side resource options.
From January 1, 1992 to December 31, 1994, the Company made property additions, net of an Allowance for Funds Used During Construction (AFUDC), of $926 million (of which $298 million were made in 1994) and had property retirements of $122 million (of which $44 million were made in 1994).
The Company's current construction program calls for estimated expenditures, excluding AFUDC, of $215 million in 1995, $170 million in 1996, $210 million in 1997, $240 million in 1998 and $250 million in 1999, an aggregate of $1.1 billion for the five-year period. AFUDC is estimated to be $7 million in 1995, $7 million in 1996, $7 million in 1997, $9 million in 1998 and $10 million in 1999. The 1995-1999 construction program includes approximately $544 million for generating facilities (including $165 million for Clean Air Act compliance), $35 million for transmission facilities, $497 million for distribution, service and other facilities, and $9 million associated with the Company's energy use management programs. Making use of the flexibilities in its long-term construction plan, the Company in 1994 reduced projected expenditures for the five years 1995 through 1999 by $190 million from amounts previously planned. This reduction followed a $365 million reduction in 1993. The construction reductions and deferrals are
associated with lower rates of projected growth in usage of electricity resulting in large part from implementing economical conservation programs. The Company plans to finance its construction program primarily through funds provided by operations.
The construction program includes amounts for the construction of facilities that will not be completed until after 1999. Although the program includes provision for escalation of construction costs, generally at an annual rate of 4%, the aggregate budget for long lead time projects will increase or decrease depending upon the actual rates of inflation in construction costs. The program is reviewed continuously and revised as appropriate to reflect changes in projections of demand, consumption patterns and economic trends.
The Clean Air Act Amendments of 1990 (CAA) requires utilities to reduce emissions of sulfur dioxide and nitrogen oxides in two phases, January 1995 (Phase I) and January 2000 (Phase II). The Company has developed plans for complying with the CAA to achieve prescribed standards in Phases I and II. The Company anticipates capital expenditures totaling $165 million over the next five years pursuant to these plans. The plans call for replacement of boiler burner equipment for nitrogen oxides emissions control, the use of lower-sulfur fuel and cofiring with natural gas at selected baseload plants. The CAA allows companies to achieve required emission levels by using a market-based emission allowance trading system. If economical, emission allowances may be purchased in lieu of burning lower-sulfur fuel.
Installation of scrubbers is not contemplated for the Company's wholly owned plants. Both the District of Columbia and Maryland commissions have approved the Company's plans for meeting Phase I requirements including cost recovery of investment and inclusion of emission allowance expenses in the Company's fuel adjustment clause.
The Company owns a 9.72% undivided interest in the Conemaugh Generating Station located in western Pennsylvania. As a result of installing flue gas scrubbing equipment to meet Phase I requirements of the CAA, this station will receive additional allowances. The Company's share of these "bonus" allowances may be used to reduce the need for lower-sulfur fuel at its other plants. The Company's share of the construction costs is approximately $38 million.
In addition, the final segment of a 500,000 volt transmission line which provides links in the transmission systems of the Company, Baltimore Gas and Electric Company and Virginia Power was placed in service prior to June 1, 1994.
FUEL ----
For customer billing purposes, all of the Company's kilowatt-hour sales are covered by separately stated fuel rates (see Item 8 - Note 2 of "Notes to Consolidated Financial Statements").
The Company's generating units burn only fossil fuels. The principal fuel is coal. The Company owns no nuclear generation facilities and none are planned. The following table sets forth the quantities of each type of fuel used by the Company in the years 1994, 1993 and 1992 and the contribution, on the basis of Btus, of each fuel to energy generated.
1994 1993 1992 -------------- -------------- -------------- % of % of % of Quantity Btu Quantity Btu Quantity Btu -------- ----- -------- ----- -------- -----
Coal (000s net tons) 5,788 76.1 6,010 79.4 5,926 82.9 Residual oil (000s barrels) 4,868 15.7 4,835 15.9 3,294 11.4 Natural gas (000s dekatherms) 10,780 5.5 6,090 3.2 8,200 4.5 No. 2 fuel oil (000s barrels) 919 2.7 480 1.5 376 1.2
The following table sets forth the average cost of each type of fuel burned, for the years shown.
1994 1993 1992 ------ ------ ------
Coal: per ton $44.39 $43.69 $43.66 per million Btu 1.73 1.72 1.72 Residual oil: per barrel 15.31 15.09 14.35 per million Btu 2.44 2.39 2.28 Natural gas: per dekatherm 2.49 2.88 2.32 per million Btu 2.49 2.88 2.32 No. 2 fuel oil: per barrel 24.34 24.98 26.70 per million Btu 4.17 4.30 4.60
The average cost of fuel burned per million Btu was $1.95 in 1994, compared with $1.90 in 1993 and $1.85 in 1992. The increase of approximately 3% in each of the past two years in the system average unit fuel cost resulted from increased use of major cycling and peaking generation units which burn higher cost fuels. The Company's major cycling and certain peaking units can burn natural gas or oil, adding flexibility in selecting the most cost- effective fuel mix. The increase in the actual percent of gas contribution in 1994 to the fuel mix reflects the decreased price of gas and the increased price of oil. The decrease in the actual percent of coal contribution to the fuel mix in 1994 primarily reflects major outages for construction related to Clean Air Act additions on baseload coal-fired generation units.
Ten of the Company's sixteen steam-electric generating units can burn only coal; two can burn only residual oil; two can burn either coal or residual oil or a combination of both and two units can burn either residual oil or natural gas. Those units capable of burning either coal or residual oil normally burn coal as their primary fuel. The Company also has combustion turbines, some of which can burn only No. 2 fuel oil, and others which can burn natural gas or No. 2 fuel oil. The following table provides details of the Company's generating capability from the standpoint of plant configuration as well as actual energy generation (see Item 2
Item 3 LEGAL PROCEEDINGS ------ -----------------
For information regarding pending environmental legal proceedings, see "Environmental Matters" under Item 1 - Business.
The Company was a defendant in employment discrimination litigation which was pending in the United States District Court for the District of Columbia. In February 1993, the parties to the case reached tentative settlement of the claims and, in April 1993, the Company paid $38.26 million into a trust fund pursuant to the terms of the Agreement. The funds will be disbursed from the trust fund to certain covered classes of current and former employees and applicants for employment and to cover the plaintiffs' legal and expert fees and costs. The Court approved the settlement agreement, effective in July 1993. The Company received insurance payments of $13.5 million in October 1993 and $24 million in January 1994, bringing the total recovered from insurance companies to $37.5 million. At December 31, 1993, approximately $.8 million was charged to non-operating expense. Subsequently, in November 1994, the Company received an additional insurance recovery of $.8 million which was treated as a credit to amounts previously charged to non- operating expense.
Item 4
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ------ ---------------------------------------------------
None.
Part II ------- Item 5
Item 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER ------ ----------------------------------------------------------------- MATTERS -------
The following table presents the dividends per share of Common Stock and the high and low of the daily Common Stock transaction prices as reported in The Wall Street Journal during each period. The New York Stock Exchange is the principal market on which the Company's Common Stock is traded.
Dividends Price Range Period Per Share High Low --------------------- --------------- -------- ---------
1994: First Quarter...... $.415 $26-5/8 $21-3/4 Second Quarter..... .415 23-1/2 18-1/2 Third Quarter...... .415 21-1/2 18-3/8 Fourth Quarter..... .415 $1.66 19-3/4 18-1/4
1993: First Quarter...... $.41 $26-1/2 $23-7/8 Second Quarter..... .41 27-3/8 25-5/8 Third Quarter...... .41 28-7/8 27-1/8 Fourth Quarter..... .41 $1.64 28-3/4 24-5/8
The number of holders of Common Stock was 104,047 at March 7, 1995 and 96,638 at December 31, 1994.
There were 118,248,594 and 118,248,103 shares of the Company's $1 par value Common Stock outstanding at March 7, 1995, and December 31, 1994, respectively. A total of 200 million shares is authorized.
At its January 1995 meeting, the Company's Board of Directors declared a quarterly dividend on Common Stock of 41-1/2 cents per share continuing the $1.66 annual dividend rate set in January 1994. The dividend is payable March 31, 1995, to shareholders of record on February 27, 1995.
Item 6
Item 6 SELECTED FINANCIAL DATA ------ -----------------------
The information required by Item 6 is incorporated herein by reference to "Selected Consolidated Financial Data" in the Financial Information of the Company's 1994 Annual Report to shareholders.
Item 7
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ------ --------------------------------------------------------------- RESULTS OF OPERATIONS ---------------------
The information required by Item 7 is incorporated herein by reference to the "Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition" in the Financial Information section of the Company's 1994 Annual Report to shareholders.
See "Nonutility Subsidiary" under Item 1 - Business for an update to the discussion of the Company's nonutility subsidiary, including developments relating to the subsidiary's aircraft leasing portfolio.
See "Rates" under Item 1 - Business for an update to the discussion of the Company's base rate proceeding in the District of Columbia.
Item 8
Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------ -------------------------------------------
The consolidated financial statements, together with the report thereon of Price Waterhouse LLP dated January 26, 1995, and supplementary data from the Company's 1994 Annual Report to shareholders are incorporated herein by reference. With the exception of the aforementioned information and the information incorporated in Items 5, 6, 7, 8 and 9, the 1994 Annual Report to shareholders is not deemed filed as part of this Form 10-K Annual Report.
Item 9
Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND ------ --------------------------------------------------------------- FINANCIAL DISCLOSURE --------------------
None.
Part III -------- Item 10
Item 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ------- --------------------------------------------------
The information required by Item 10 with regard to Directors of the registrant is incorporated herein by reference to the Company's Notice of Annual Meeting of Shareholders and Proxy Statement dated March 17, 1995.
Information with regard to the executive officers of the registrant as of March 7, 1995, is as follows:
Served in such position Name Position Age since -------------------- -------------------------------- --- -------------
Edward F. Mitchell Chairman of the Board and Chief Executive Officer 63 1992 (1)
John M. Derrick Jr. President and Chief Operating Officer and Director 54 1992 (2)
H. Lowell Davis Vice Chairman and Chief Financial Officer and Director 62 1983
Paul Dragoumis Executive Vice President 60 1989
William T. Torgerson Senior Vice President, General Counsel and Secretary 50 1994 (3)
Dennis R. Wraase Senior Vice President - Finance and Accounting 50 1992 (4)
Iraline G. Barnes Vice President - Corporate 47 1990 (5) Relations
Earl K. Chism Vice President and Comptroller 59 1994 (6)
Kirk J. Emge Vice President - Regulatory Law 45 1994 (7)
Susann D. Felton Vice President - Materials 46 1992 (8)
William R. Gee Jr. Vice President - System Engineering 54 1991 (9)
Robert C. Grantley Vice President - Customers and Community Relations 46 1989
Anthony J. Kamerick Vice President and Treasurer 47 1994 (10)
Served in such position Name Position Age since -------------------- -------------------------------- --- -------------
Anthony S. Macerollo Vice President - Corporate Administration and Services 53 1989
Eddie R. Mayberry Vice President - Market Planning and Policy 47 1993 (11)
John D. McCallum Vice President - Corporate Tax 45 1992 (12)
James S. Potts Vice President - Environment 49 1993 (13)
William J. Sim Vice President - Power Supply and Delivery 50 1991 (14)
Andrew W. Williams Vice President - Energy and Market Policy and Development 45 1989
None of the above persons has a "family relationship" with any other officer listed or with any director or nominee for director.
The term of office for each of the above persons is from April 27, 1994 to April 26, 1995.
(1) Mr. Mitchell was elected to the position of Chairman of the Board on December 21, 1992. He was elected Chief Executive Officer effective September 1, 1989.
(2) Mr. Derrick was elected to the position of President on December 21, 1992. He was elected Executive Vice President and Chief Operating Officer on July 27, 1989.
(3) Mr. Torgerson was elected Senior Vice Present and General Counsel on April 27, 1994. He was elected Secretary effective August 22, 1994. Prior to 1994 he held the position of Vice President and General Counsel.
(4) Mr. Wraase was elected to his present position on April 22, 1992. He was elected Senior Vice President and Comptroller on July 27, 1989.
(5) Mrs. Barnes was elected to her present position effective April 1, 1990. Prior to that time she served as Associate Judge of the Superior Court of the District of Columbia for ten years.
(6) Mr. Chism was elected to his present position on April 27, 1994. Prior to that time he held the position of Vice President and Treasurer since July 1989.
(7) Mr. Emge was elected to his present position on April 27, 1994. Prior to that time he held the position of Deputy General Counsel.
(8) Ms. Felton was elected to her present position on April 22, 1992. Prior to that time she held the position of Manager, Materials.
(9) Mr. Gee was elected to his present position on April 24, 1991. Prior to that time he held the position of Vice President - Generating Engineering and Construction, since 1989.
(10) Mr. Kamerick was elected to his present position on April 27, 1994. Prior to that time he held the position of Comptroller from 1992 to 1994. Prior to 1992 he held the position of Assistant Comptroller.
(11) Dr. Mayberry was elected to his present position on April 28, 1993. Prior to that time he held the position of Manager, Market Planning and Policy, since 1989.
(12) Mr. McCallum was elected to his present position on April 22, 1992. Prior to that time he held the position of Assistant Comptroller.
(13) Mr. Potts was elected to his present position on April 28, 1993. Prior to that time he held the position of Manager, Generating Strategic Support since 1991. Prior to 1991 he held the position of Manager, Production Performance.
(14) Mr. Sim was elected to his present position on April 24, 1991. Prior to that time he was President of the American Energy division of the Company's nonutility subsidiary, Potomac Capital Investment Corporation, since 1988.
Item 11
Item 11 EXECUTIVE COMPENSATION ------- ----------------------
The information required by Item 11 is incorporated herein by reference to the Company's Notice of Annual Meeting of Shareholders and Proxy Statement dated March 17, 1995.
Item 12
Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ------- --------------------------------------------------------------
The information required by Item 12 is incorporated herein by reference to the Company's Notice of Annual Meeting of Shareholders and Proxy Statement dated March 17, 1995.
Item 13
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ------- ----------------------------------------------
None.
Part IV ------- Item 14
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K ------- --------------------------------------------------------------
(a) Documents List --------------
1. Financial Statements
The following documents are filed as part of this report as incorporated herein by reference from the indicated pages of the Company's 1994 Annual Report.
Reference (Page) ---------------- Form 10-K Annual Report Annual Report to Shareholders Exhibit 13 --------------- -------------
Consolidated Statements of Earnings - for the years ended December 31, 1994, 1993 and 1992 15 28
Consolidated Balance Sheets - December 31, 1994 and 1993 16-17 29-30
Consolidated Statements of Cash Flows - for the years ended December 31, 1994, 1993 and 1992 18 31
Notes to Consolidated Financial Statements 19-30 32-69
Report of Independent Accountants 31 27
2. Financial Statement Schedule
Unaudited supplementary data entitled "Quarterly Financial Summary (Unaudited)" is incorporated herein by reference in Item 8 (included in "Notes to Consolidated Financial Statements" as Note 16).
Schedule VIII (Valuation and Qualifying Accounts) and the Report of Independent Accountants on Consolidated Financial Statement Schedule is submitted pursuant to Item 14(d).
All other schedules are omitted because they are not applicable, or the required information is presented in the financial statements.
3. Exhibits required by Securities and Exchange Commission Regulation S-K (summarized below).
Exhibit No. Description of Exhibit Reference* ------- ---------------------- ----------
3-A Charter of the Company.............. Filed herewith.
3-B By-Laws of the Company.............. Filed herewith.
4 Mortgage and Deed of Trust dated July 1, 1936, of the Company to The Riggs National Bank of Washington, D.C., as Trustee, securing First Mortgage Bonds of the Company, and Supplemental Indenture dated July 1, 1936........................ Exh. B-4 to First Amendment, 6/19/36, to Registration Statement No. 2-2232.
Supplemental Indentures, to the aforesaid Mortgage and Deed of Trust, dated - December 1, 1939 and December 10, 1939.......................... Exhs. A & B to Form 8-K, 1/3/40. August 1, 1940...................... Exh. A to Form 8-K, 9/25/40.
July 15, 1942 and August 10, 1942................................ Exh. B-1 to Amendment No. 2, 8/24/42, and B-3 to Post- Effective Amendment, 8/31/42, to Registration Statement No. 2-5032. August 1, 1942...................... Exh. B-4 to Form 8-A, 10/8/42. October 15, 1942.................... Exh. A to Form 8-K, 12/7/42.
October 15, 1947.................... Exh. A to Form 8-K, 12/8/47.
January 1, 1948..................... Exh.7-B to Post-Effective Amendment No. 2, 1/28/48, to Registration Statement No. 2-7349. December 31, 1948................... Exh. A-2 to Form 10-K, 4/13/49.
Exhibit No. Description of Exhibit Reference* ------- ---------------------- ----------
4 May 1, 1949......................... Exh. 7-B to Post-Effective (cont.) Amendment No. 1, 5/10/49, to Registration Statement No. 2-7948. December 31, 1949................... Exh. (a)-1 to Form 8-K, 2/8/50. May 1, 1950......................... Exh. 7-B to Amendment No. 2, 5/8/50, to Registration Statement No. 2-8430. February 15, 1951................... Exh. (a) to Form 8-K, 3/9/51.
March 1, 1952....................... Exh. 4-C to Post-Effective Amendment No. 1, 3/12/52, to Registration Statement No. 2-9435. February 16, 1953................... Exh. (a)-1 to Form 8-K, 3/5/53. May 15, 1953........................ Exh. 4-C to Post-Effective Amendment No. 1, 5/26/53, to Registration Statement No. 2-10246. March 15, 1954 and March 15, 1955................................ Exh. 4-B to Registration Statement No. 2-11627, 5/2/55. May 16, 1955........................ Exh. A to Form 8-K, 7/6/55.
March 15, 1956...................... Exh. C to Form 10-K, 4/4/56. June 1, 1956........................ Exh. A to Form 8-K, 7/2/56.
April 1, 1957....................... Exh. 4-B to Registration Statement No. 2-13884, 2/5/58. May 1, 1958......................... Exh. 2-B to Registration Statement No. 2-14518, 11/10/58. December 1, 1958.................... Exh. A to Form 8-K, 1/2/59. May 1, 1959......................... Exh. 4-B to Amendment No. 1, 5/13/59, to Registration Statement No. 2-15027. November 16, 1959................... Exh. A to Form 8-K, 1/4/60. May 2, 1960......................... Exh. 2-B to Registration Statement No. 2-17286, 11/9/60. December 1, 1960 and April 3, 1961................................ Exh. A-1 to Form 10-K, 4/24/61.
Exhibit No. Description of Exhibit Reference* ------- ---------------------- ----------
4 May 1, 1962......................... Exh. 2-B to Registration (cont.) Statement No. 2-21037, 1/25/63. February 15, 1963................... Exh. A to Form 8-K, 3/4/63. May 1, 1963......................... Exh. 4-B to Registration Statement No. 2-21961, 12/19/63. April 23, 1964...................... Exh. 2-B to Registration Statement No. 2-22344, 4/24/64. May 15, 1964........................ Exh. A to Form 8-K, 6/2/64.
May 3, 1965......................... Exh. 2-B to Registration Statement No. 2-24655, 3/16/66. April 1, 1966....................... Exh. A to Form 10-K, 4/21/66. June 1, 1966........................ Exh. 1 to Form 10-K, 4/11/67. April 28, 1967...................... Exh. 2-B to Post-Effective Amendment No. 1 to Registration Statement No. 2-26356, 5/3/67. May 1, 1967......................... Exh. A to Form 8-K, 6/1/67. July 3, 1967........................ Exh. 2-B to Registration Statement No. 2-28080, 1/25/68. February 15, 1968................... Exh. II-I to Form 8-K, 3/7/68. May 1, 1968......................... Exh. 2-B to Registration Statement No. 2-31896, 2/28/69. March 15, 1969...................... Exh. A-2 to Form 8-K, 4/8/69. June 16, 1969....................... Exh. 2-B to Registration Statement No. 2-36094, 1/27/70. February 15, 1970................... Exh. A-2 to Form 8-K, 3/9/70. May 15, 1970........................ Exh. 2-B to Registration Statement No. 2-38038, 7/27/70. August 15, 1970..................... Exh. 2-D to Registration Statement No. 2-38038, 7/27/70. September 1, 1971................... Exh. 2-C to Registration Statement No. 2-45591, 9/1/72. September 15, 1972.................. Exh. 2-E to Registration Statement No. 2-45591, 9/1/72. April 1, 1973....................... Exh. A to Form 8-K, 5/9/73. January 2, 1974..................... Exh. 2-D to Registration Statement No. 2-49803, 12/5/73.
Exhibit No. Description of Exhibit Reference* ------- ---------------------- ----------
4 August 15, 1974..................... Exhs. 2-G and 2-H to (cont.) Amendment No. 1 to Registration Statement No. 2-51698, 8/14/74. June 15, 1977....................... Exh. 4-A to Form 10-K, 3/19/81. July 1, 1979........................ Exh. 4-B to Form 10-K, 3/19/81. June 16, 1981....................... Exh. 4-A to Form 10-K, 3/19/82. June 17, 1981....................... Exh. 2 to Amendment No. 1, 6/18/81, to Form 8-A. December 1, 1981.................... Exh. 4-C to Form 10-K, 3/19/82. August 1, 1982...................... Exh. 4-C to Amendment No. 1 to Registration Statement No. 2-78731, 8/17/82. October 1, 1982..................... Exh. 4 to Form 8-K, 11/8/82.
April 15, 1983...................... Exh. 4 to Form 10-K, 3/23/84.
November 1, 1985.................... Exh. 2-B to Form 8-A, 11/1/85.
March 1, 1986....................... Exh. 4 to Form 10-K, 3/28/86. November 1, 1986.................... Exh. 2-B to Form 8-A, 11/5/86.
March 1, 1987....................... Exh. 2-B to Form 8-A, 3/2/87. September 16, 1987.................. Exh. 4-B to Registration Statement No. 33-18229, 10/30/87. May 1, 1989......................... Exh. 4-C to Registration Statement No. 33-29382, 6/16/89. August 1, 1989...................... Exh. 4 to Form 10-K, 3/23/90.
April 5, 1990....................... Exh. 4 to Form 10-K, 3/29/91.
May 21, 1991........................ Exh. 4 to Form 10-K, 3/27/92.
May 7, 1992......................... Exh. 4 to Form 10-K, 3/26/93. September 1, 1992................... Exh. 4 to Form 10-K, 3/26/93. November 1, 1992.................... Exh. 4 to Form 10-K, 3/26/93. March 1, 1993....................... Exh. 4 to Form 10-K, 3/26/93. March 2, 1993....................... Exh. 4 to Form 10-K, 3/26/93. July 1, 1993........................ Exh. 4.4 to Registration Statement No. 33-49973, 8/11/93.
Exhibit No. Description of Exhibit Reference* ------- ---------------------- ----------
4 August 20, 1993..................... Exh. 4.4 to Registration (cont.) Statement No. 33-50377, 9/23/93. September 29, 1993.................. Exh. 4 to Form 10-K, 3/25/94. September 30, 1993.................. Exh. 4 to Form 10-K, 3/25/94. October 1, 1993..................... Exh. 4 to Form 10-K, 3/25/94. February 10, 1994................... Exh. 4 to Form 10-K, 3/25/94. February 11, 1994................... Exh. 4 to Form 10-K, 3/25/94.
4-A Indenture, dated as of January 15, 1988, between the Company and Centerre Trust Company of St. Louis (now known as Boatmen's Trust Company), Trustee for the Company's $75,000,000 issue of 7% Convertible Debentures due 2018 ................ Exh. 4-A to Form 10-K, 3/25/88. 4-B Indenture, dated as of July 28, 1989, between the Company and The Bank of New York, Trustee, with respect to the Company's Medium-Term Note Program............ Exh. 4 to Form 8-K, 6/21/90.
4C Indenture, dated as of August 15, 1992, between the Company and the Bank of New York, Trustee, for the Company's $115,000,000 issue of 5% Convertible Debentures due 2002..... Exh. 4-C to Form 10-K, 3/26/93.
10 Agreement, effective July 23, 1993, between the Company and the International Brotherhood of Electrical Workers (Local Union #1900).............................. Exh. 10 to Form 10-Q, 7/30/93.
Exhibit No. Description of Exhibit Reference* ------- ---------------------- ----------
**11 Computation of Earnings Per Common Share...................... Filed herewith.
**12 Computation of Ratios............... Filed herewith.
13 Financial Information Section of Annual Report .................... Filed herewith.
**21 Subsidiaries of the Registrant...... Filed herewith.
**23 Consent of Independent Accountants.. Filed herewith.
*The exhibits referred to in this column by specific designations and date have heretofore been filed with the Securities and Exchange Commission under such designations and are hereby incorporated herein by reference. The Forms 8-A, 8-K and 10-K referred to were filed by the Company under the Commission's File No. 1-1072 and the Registration Statements referred to are registration statements of the Company.
**These exhibits are submitted pursuant to Item 14(c).
(b) Reports on Form 8-K -------------------
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Washington, District of Columbia, on the 24th day of March, 1995.
POTOMAC ELECTRIC POWER COMPANY (Registrant)
By /s/ E. F. Mitchell -------------------------- (Edward F. Mitchell, Chairman of the Board and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature Title Date --------- ----- ----
(i) Principal Executive Officers
/s/ E. F. Mitchell --------------------------- Chairman of the Board and (Edward F. Mitchell) Chief Executive Officer
/s/ John M. Derrick Jr. --------------------------- President and Director (John M. Derrick Jr.)
(ii) Principal Financial Officer
/s/ H. L. Davis --------------------------- Vice Chairman and Chief (H. Lowell Davis) Financial Officer and Director
(iii) Principal Accounting Officer
/s/ D. R. Wraase --------------------------- Senior Vice President (Dennis R. Wraase) Finance and Accounting
March 24, 1995
Signature Title Date --------- ----- ----
(iv) Directors:
/s/ Roger R. Blunt ------------------------- Director (Roger R. Blunt Sr.)
/s/ A. J. Clark ------------------------- Director (A. James Clark)
/s/ Richard E. Marriott ------------------------- Director (Richard E. Marriott)
/s/ David O. Maxwell ------------------------ Director (David O. Maxwell)
/s/ Floretta D. McKenzie ------------------------- Director (Floretta D. McKenzie)
/s/ Ann D. McLaughlin ------------------------- Director (Ann D. McLaughlin)
/s/ Peter F. O'Malley ------------------------- Director (Peter F. O'Malley)
/s/ Louis A. Simpson ------------------------- Director (Louis A. Simpson)
/s/ W. Reid Thompson ------------------------- Director (W. Reid Thompson)
March 24, 1995
Exhibit 21 Subsidiaries of the Registrant ---------- ------------------------------
The Company has two wholly owned nonutility investment subsidiary companies, Potomac Capital Investment Corporation and PEPCO Enterprises, Inc., (PEI) both of which were incorporated in Delaware in 1983. Subsidiaries of PEI and Columbia Gas System, Inc. have formed the Cove Point joint venture partnership discussed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Exhibit 23 Consent of Independent Accountants ---------- ----------------------------------
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Numbers 33-36798, 33-53685 and 33-54197) and to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Forms S-3 (Numbers 33-58810 and 33-50377) of Potomac Electric Power Company of our report dated January 26, 1995 appearing in the Annual Report to shareholders which is also incorporated by reference in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Consolidated Financial Statement Schedule, which appears under Item 14(a) of this Form 10-K.
/s/ Price Waterhouse LLP Washington, D.C. March 24, 1995
Report of Independent Accountants on Consolidated ------------------------------------------------- Financial Statement Schedule ----------------------------
January 26, 1995
To the Board of Directors of Potomac Electric Power Company
Our audits of the consolidated financial statements referred to in our report dated January 26, 1995 appearing in the 1994 Annual Report to shareholders of Potomac Electric Power Company (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the consolidated financial statement schedule listed in Item 14(a) of this Form 10-K. In our opinion, this consolidated financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP Washington, D.C.