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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to_________
Commission file number 1-3672
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Illinois 37-0211380
-------------- -------------------
(State of (I.R.S. Employer
Incorporation) Identification No.)
607 EAST ADAMS STREET
SPRINGFIELD, ILLINOIS 62739
--------------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (217) 523-3600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Cumulative Preferred Stock (par value $100 per share)
_________________________
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value at February 1, 1994 of the voting stock held by
non-affiliates of the Registrant - $22,396,800 - Cumulative Preferred Stock
(par value $100 per share) [Note: Excludes value of 400,000 shares of
Cumulative Preferred Stock for which the Registrant has been unable to
determine market value.]
Number of shares outstanding of each of the Registrant's classes of
common stock at February 1, 1994: 25,452,373 shares of Common Stock, without
par value (owned by the parent - CIPSCO Incorporated).
Documents Incorporated By Reference:
A portion of the Company's Proxy Statement relating to its 1994 Annual
Meeting of Shareholders is incorporated by reference in Part III hereof.
=============================================================================
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
1993 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
PAGE
Item 1. Business
General . . . . . . . . . . . . . . . . . . . . . . . 4
Holding Company Structure . . . . . . . . . . . . . . 4
Revenues. . . . . . . . . . . . . . . . . . . . . . . 4
Competition -- Electric Business . . . . . . . . . . 6
Competition -- Gas Business . . . . . . . . . . . . . 7
Utility Industry. . . . . . . . . . . . . . . . . . . 7
Construction Program and Financing. . . . . . . . . . 7
Rate Matters. . . . . . . . . . . . . . . . . . . . . 9
Electric Operations . . . . . . . . . . . . . . . . . 10
Electric Power Sales/Participation Agreements . . . . 12
Gas Operations. . . . . . . . . . . . . . . . . . . . 13
Fuel. . . . . . . . . . . . . . . . . . . . . . . . . 15
Regulation. . . . . . . . . . . . . . . . . . . . . . 16
Environmental Matters . . . . . . . . . . . . . . . . 17
Employees . . . . . . . . . . . . . . . . . . . . . . 18
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 19
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 20
Item 4. Submission of Matters to a Vote of Security Holders. . . 21
Executive Officers of the Registrant . . . . . . . . . . 21
Directors of Registrant . . . . . . . . . . . . . . . . 22
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . 25
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . 26
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 27
Item 8. Financial Statements and Supplementary Data. . . . . . . 33
Report of Independent Public Accountants . . . . . . . . 59
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . 60
PART III
Item 10. Directors and Executive Officers of the Registrant . . . 60
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 60
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . 60
Item 13. Certain Relationships and Related Transactions . . . . . 60
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . . . . 61
Schedules. . . . . . . . . . . . . . . . . . . . . . . . 66
Signature. . . . . . . . . . . . . . . . . . . . . . . . 74
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . 75
PART I
Item 1. Business
GENERAL. Central Illinois Public Service Company (CIPS or the Company),
an Illinois corporation, was organized in 1902. CIPS is a public utility
operating company engaged in the sale of electricity and natural gas in
portions of central and southern Illinois. CIPS generates, transmits and
distributes electricity and, through interchange agreements with other utility
systems, purchases and sells power on a firm basis, in emergency situations or
when economical to do so. CIPS sells and distributes natural gas which it
purchases from natural gas producers and other suppliers and transports
natural gas purchased by end-users directly from suppliers. The principal
executive offices of CIPS are located in Springfield, Illinois.
CIPS furnishes electric service to about 316,000 retail customers in 557
incorporated and unincorporated communities and adjacent suburban and rural
areas. See Business - Electric Operations and - Electric Power
Sales/Participation Agreements regarding certain electric power arrangements
with other utility systems.
CIPS also furnishes natural gas service to about 164,000 retail customers
in 267 incorporated and unincorporated communities and adjacent suburban and
rural areas and provides gas transportation service to about 340 end-users.
CIPS furnishes both electric and natural gas service in 236 of the communities
served by it.
The territory served by CIPS, located in 66 counties in Illinois, has an
estimated population of 820,000 and is devoted principally to agriculture and
diversified industrial operations. Key industries include petroleum and
petrochemical industries, food processing, metal fabrication and coal mining.
HOLDING COMPANY STRUCTURE. Effective October 1, 1990, CIPSCO
Incorporated (CIPSCO) became the parent holding company of CIPS. CIPSCO owns
100% of the outstanding common stock of CIPS, representing in excess of 97% of
the voting securities of CIPS.
The electric and gas utility business of CIPS is expected to provide the
major portion of CIPSCO's assets and earnings for the foreseeable future.
REVENUES. The total operating revenues of CIPS for the year 1993 were
$834,556,000 of which about 83% was derived from the sale of electricity and
about 17% from the sale of natural gas. The retail electric revenues were
derived approximately as follows (percentage of total electric operating
revenue): 32% from residential customers, 26% from commercial customers, 16%
from industrial customers and 2% from public authorities and other. The
wholesale electric revenues were derived approximately as follows (percentage
of total electric operating revenue): 10% from interchange sales (firm), 11%
from interchange sales (economy/emergency) and 3% from cooperatives and
municipal customers. Sales of power to the petroleum and related
petrochemical industries and to the coal mining industry contributed about 6%
of total electric revenues. Sales to these three industries accounted for
approximately 37% of the 1993 electric revenue derived from the industrial
customer group. Revenues from the coal mining industry may decline in the
future as a result of declining consumption of Illinois coal, as many
industrial coal customers shift to lower sulfur coal or other fuels as a means
of complying with the Clean Air Act Amendments of 1990. The natural gas
revenues for the year 1993 were derived approximately as follows: 63% from
residential customers, 22% from commercial customers, 8% from industrial
customers and 7% from transportation service customers and miscellaneous.
The sources of the operating revenues of CIPS for the years indicated
were as follows:
Electric 1993 1992 1991
-------- ________ ________ ________
(in thousands)
Residential . . . . . . . . . . . . . . . . $219,510 $197,120 $205,734
Commercial. . . . . . . . . . . . . . . . . 176,154 169,460 159,110
Industrial. . . . . . . . . . . . . . . . . 112,382 109,648 113,414
Public authorities and other. . . . . . . . 15,144 12,970 13,332
________ ________ ________
Total retail revenues . . . . . . . . . 523,190 489,198 491,590
________ ________ ________
Interchange sales (firm). . . . . . . . . . 68,040 58,913 56,235
Interchange sales (economy/emergency) . . . 76,272 27,949 26,624
Cooperatives and municipals . . . . . . . . 21,347 19,582 18,220
________ ________ ________
Total wholesale revenues . . . . . . . . 165,659 106,444 101,079
________ ________ ________
Total electric revenues. . . . . . . . . $688,849 $595,642 $592,669
======== ======== ========
Natural Gas 1993 1992 1991
----------- ________ ________ ________
(in thousands)
Residential . . . . . . . . . . . . . . . . $ 92,213 $ 86,968 $ 78,070
Commercial. . . . . . . . . . . . . . . . . 32,023 31,036 26,751
Industrial. . . . . . . . . . . . . . . . . 12,139 6,445 3,200
Transportation service. . . . . . . . . . . 8,915 9,269 9,203
Miscellaneous . . . . . . . . . . . . . . . 417 42 312
-------- -------- --------
Total gas revenues. . . . . . . . . . . . $145,707 $133,760 $117,536
======== ======== ========
The portions of operating income of CIPS, before income taxes,
attributable to electric operations were approximately $154,779,000 (95%) in
1993, $123,228,000 (92%) in 1992 and $137,303,000 (95%) in 1991. The portions
of operating income, before income taxes, attributable to gas operations were
approximately $7,621,000 (5%) in 1993, $10,916,000 (8%) in 1992 and $7,161,000
(5%) in 1991.
Identifiable assets relating to electric and gas operations were as
follows:
1993 1992 1991
__________ __________ __________
(in thousands)
Electric operations . . . . . . . . . . $1,459,073 $1,443,578 $1,419,036
Gas operations. . . . . . . . . . . . . 177,857 188,321 157,757
Other . . . . . . . . . . . . . . . . . 31,532 13,160 115,050
---------- ---------- ----------
Total assets. . . . . . . . . . . . . $1,668,462 $1,645,059 $1,691,843
========== ========== ==========
COMPETITION -- ELECTRIC BUSINESS. Competition among suppliers of electric
energy is increasing. In particular, competition for interchange sales, which
is based primarily on price and availability of energy, has become much more
intense in recent years with the addition of electric generating capacity by
other utilities in the Midwest. However, such additional capacity has made
lower cost power available for purchase by CIPS which, in certain instances,
is at a cost lower than the variable cost of generating power from the
generating stations owned by CIPS.
CIPS is responding to overall increased competition in a number of ways
designed to lower its costs and increase sales. Since instituting an economic
development incentive rate in 1985, the CIPS economic development program has
been expanded to include new customer and community development initiatives.
An ongoing program in which senior management plays a critical role in
communicating CIPS' competitive advantages to our largest industrial customers
is continuing. Additional services to our customers have included energy
technology assistance and market development programs. CIPS works in
partnership with communities throughout the service area to implement projects
to respond to growth opportunities. This, in combination with the ongoing
business development initiatives including industrial site location
assistance, community profiles and technical development services, is designed
to maximize economic development throughout the CIPS territory. In addition
to a general program of controlling costs, in 1987 CIPS initiated a major
program of renegotiating long-term coal supply contracts. Savings from these
renegotiation efforts continued during 1993. Further renegotiation is
expected in 1994. The effect of this program has been and will be to help
CIPS control its fuel costs.
Passage of the National Energy Policy Act of 1992 ("NEPA") will require
electric utilities, such as CIPS, to compete with nonutility power producers
who can generate power. Under NEPA these producers may gain access to utility
transmission lines. (See Management's Discussion and Analysis of Financial
Condition and Results of Operations.) This enhances competition over time and
will give customers and CIPS opportunities to take advantage of competitive
markets. Furthermore, large retail customers may decide to install
cogeneration or other facilities and supply their own electricity.
Over the next several years, excluding the 1994 summer season, CIPS
expects to have uncommitted generating capacity available to market
principally because certain existing capacity sales agreements with other
utility systems are scheduled to expire on various dates during that period.
Such capacity sales during 1993 represented 532 megawatts, or 20% of CIPS'
capacity. To compete successfully in the capacity sales market, as well as
the interchange sales market, it will be important for CIPS to be a low-cost
supplier. (See Business - Electric Power Sales/Participation Agreements.)
COMPETITION -- GAS BUSINESS. Competition in the natural gas industry is
increasing. For a number of years, CIPS customers have had the ability to
purchase natural gas from producers or other suppliers and transport that gas
through the interstate pipelines and the CIPS system. CIPS collects a rate
for such transportation. New policies of the Federal Energy Regulatory
Commission ("FERC") such as Order 636 (see "Gas Operations" below) have
increased the competitive nature of the gas business. Customers have the
ability to receive supply from pipelines that do not serve the CIPS system.
In this case, CIPS would no longer necessarily serve the customer with either
gas supply or transportation service. CIPS has negotiated or is currently
negotiating with a number of its larger industrial gas customers regarding
flexible rates to address the more competitive environment in which CIPS is
operating.
UTILITY INDUSTRY. CIPS is experiencing some of the problems common to
electric and gas utility companies, namely, increased competition for
customers, increased construction costs, delays and uncertainties in the
regulatory process and costs of compliance with environmental and other laws
and regulations.
CONSTRUCTION PROGRAM AND FINANCING. Total construction expenditures for
CIPS for 1994 through 1998 are estimated at $431 million. For 1994,
anticipated construction expenditures are $87 million for replacements and
improvements and consist of about $28 million for electric production
facilities, $14 million for electric transmission facilities, $35 million for
electric distribution and general facilities, and $10 million for gas utility
facilities. Total capital costs through the year 2000 (including costs
incurred through 1993) related to compliance with the Clean Air Act Amendments
of 1990 including Phase I (effective in 1995) and Phase II (effective in 2000)
are estimated to be less than $50 million. (See Business - Fuel.)
CIPS continuously reviews its construction program, which may be affected
by numerous factors, including the rate of load growth, escalation of
construction costs, fuel shortages, changes in governmental and environmental
regulations, customers' patterns of consumption and conservation of energy,
the adequacy of rate relief and the ability of CIPS to raise necessary
capital. Load growth projections are subject to a number of uncertainties due
to influences on customer consumption, economic conditions and the effect of
rates on consumption and peak load demand.
CIPS has no electric generating units under construction. On May 11,
1993, the Illinois Commerce Commission (the "Illinois commission") approved
CIPS' "least cost" plan which includes the 20-year generating plan of the
utility. As demonstrated by the Plan, CIPS will not require additional
generating capacity or demand-side resources during the 1993-2013 planning
period. Pursuant to the Plan, CIPS will engage in several demand-side
management activities intended to enhance its capability to deliver demand-
side management resources in the future.
For a discussion of the funds requirements for the period 1994-1998 and
the assumptions as to the sources of funds to meet those requirements, see
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Capital Requirements and - Financing Requirements.
See Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financing Requirements for information regarding
securities issuances and redemptions during 1993.
The issuance by CIPS of first mortgage bonds, common stock, preferred
stock and certain unsecured debt securities is subject to the receipt of
necessary regulatory approvals. (See Business - Regulation.)
The Mortgage Indenture of CIPS, as presently operative, permits the
issuance of additional first mortgage bonds up to 60% of available net
expenditures for bondable property, provided the "net earnings" of CIPS
(determined after deducting income taxes and otherwise as provided in the
Mortgage Indenture) for a recent 12-month period equal at least twice the
annual interest requirements on all first mortgage bonds outstanding (and on
all equally secured and prior lien indebtedness) and on the bonds then to be
issued. At December 31, 1993, the more restrictive of these requirements was
the "net earnings" test. The "net earnings" of CIPS for the year ended
December 31, 1993, so computed, were equal to 5.70 times the interest for one
year on the aggregate amount of bonds outstanding under the Mortgage Indenture
at December 31, 1993. Based on the "net earnings" of CIPS (so computed) for
the year ended December 31, 1993, and the bonds outstanding under the Mortgage
Indenture at December 31, 1993, CIPS could have issued about $532 million of
additional first mortgage bonds under the foregoing interest coverage
provision (assuming an annual interest rate of 7.25% on such bonds).
The Articles of Incorporation of CIPS provide, in effect, that so long as
any CIPS preferred stock is outstanding, CIPS shall not, without the requisite
vote of the holders of preferred stock, unless the retirement of such stock is
provided for, (a) issue any preferred or equal ranking stock (except to retire
or in exchange for an equal amount thereof) unless the "gross income available
for interest" of CIPS for a recent 12-month period is at least one and one-
half (1-1/2) times the sum of (i) one year's interest on all funded debt and
notes maturing more than 12 months after the date of issuance of such shares
and (ii) one year's dividend requirement on all preferred stock to be
outstanding after such issue, or (b) issue or assume any unsecured debt
securities maturing less than two years from the date of issuance or
assumption (except for certain refunding or retirement purposes) if
immediately after such issuance or assumption the total amount of all such
unsecured debt securities would exceed 20% of the sum of all secured debt
securities and the capital and surplus of CIPS. For the year ended December
31, 1993, the "gross income available for interest" of CIPS equalled 3.24
times the sum of the annual interest charges and dividend requirements on all
such funded debt, notes and preferred stock outstanding at December 31, 1993.
Such "gross income available for interest" was sufficient under the test to
support the issuance of additional preferred stock (assuming an annual
dividend rate on such preferred stock of 6.75%) in an amount in excess of the
maximum amount ($185 million) of authorized and unissued preferred stock under
the Articles.
RATE MATTERS. The most recent CIPS retail rate case before the Illinois
commission resulted in electric and natural gas rate increases which became
effective March 20, 1992. In its decision, the Illinois commission allowed a
return on net original cost rate base of 9.77% (electric) and 9.88% (natural
gas) and a return on common equity of 12.28% (electric) and 12.50% (natural
gas). The Illinois commission order was designed to increase annual electric
and natural gas revenues of CIPS by $11.6 million.
On March 6, 1991, the Illinois commission commenced a generic proceeding
(Docket No. 91-0081 for CIPS) to consider whether costs related to the cleanup
and restoration of former manufactured gas plant sites (environmental
remediation sites) should be recoverable from ratepayers by Illinois utilities
(including CIPS) and, if recoverable, what recovery mechanism should be
utilized. See Note 2 of Notes to Financial Statements included under Item 8
of this report for a discussion of the regulatory and legal proceedings
related to the recovery of remediation and related costs. On March 26, 1993,
the Illinois commission entered an order accepting the proposed riders filed
by CIPS designed to recover environmental cleanup costs and associated legal
expenses relating to its environmental remediation sites (including costs
previously incurred and deferred). The riders were filed in response to the
Illinois commission's generic order described in Note 2 to the Financial
Statements. CIPS began recovering amounts under the riders in April, 1993.
On May 13, 1992, the Illinois commission entered an Order which approved a
settlement agreement resolving all issues in the "show cause" proceeding which
had been initiated by the Illinois commission in December 1986 for purposes of
determining the effects on CIPS of the passage of the Tax Reform Act of 1986.
See Note 11 of Notes to Financial Statements included under Item 8 of this
report for a discussion of the impact of the settlement.
The Illinois commission conducts annual proceedings to determine whether
the electric fuel and purchased gas charges collected by CIPS in each year
pursuant to the applicable fuel adjustment and purchased gas adjustment
clauses reflect the actual costs of electric fuel and natural gas prudently
purchased in that year and to reconcile revenues collected under the clauses
during the year with actual costs incurred. The Illinois commission can order
refunds to customers if it determines that actual costs of fuel or purchased
gas were less than the amounts charged to customers pursuant to the clauses or
if it finds that CIPS was imprudent in its purchases of fuel or gas. The
Illinois commission has completed its review of fuel adjustment and purchased
gas adjustment charges for all years prior to 1992. No significant refunds or
adjustments were required for those years. Fuel reconciliation proceedings
for the year 1992 commenced in October 1993. (See Business - Fuel.)
The most recent general rate increase of CIPS approved by the FERC became
effective in 1984. There are currently no rate proceedings pending at the
FERC, and CIPS has no plans for any such rate increase filings. All of CIPS'
requirements sales to cooperatives and municipals for resale are through
negotiated service agreements.
As a result of the retail rate increase granted to CIPS in 1992 referred
to above, a corresponding rate adjustment was granted by the FERC for certain
customers who purchase power from CIPS for resale. This rate adjustment was
provided for in the service agreements between CIPS and these customers.
In January 1985, CIPS received approval from the Illinois commission for
an economic development rate which is designed to encourage industrial
expansion and stimulate job creation in the service territory of CIPS. Under
the economic development rate, each qualifying electric customer receives
discounted rates for a maximum period of five years. In June 1986, CIPS
received further approval which grants flexibility to negotiate agreements to
fit the specific needs of certain industrial prospects. In August 1989, the
Illinois commission granted CIPS further approval to offer customers the
economic development rate through December 31, 1994. Since the rate was
instituted, 117 new or existing business expansions have led to the creation
of over 8,000 new jobs in the CIPS service territory.
ELECTRIC OPERATIONS. Since late 1977 CIPS has been a net off-system
seller of electricity and during 1993 it generated 120% of its system
requirements.
The maximum gross system load to date on the CIPS electrical system, on a
one-hour integrated basis, occurred on August 27, 1993, and was 2,157,000
kilowatts. Gross system load includes sales to electric cooperative and
municipal customers (but excludes emergency and interchange sales). The 1993
maximum gross system load of 2,157,000 kilowatts was 2.3% greater than the
historical maximum gross system load of 2,108,000 which occurred in 1988.
CIPS, Illinois Power Company and Union Electric Company are parties to an
Interconnection Agreement providing for the coordination and interconnected
operation of their respective electric systems and the interchange of power
and energy at rates and under conditions set forth therein, including the
maintenance by the parties of minimum reserve capacity positions. The
Agreement provides that CIPS will maintain a minimum 15% system reserve
capacity. CIPS, Illinois Power and Union Electric are parties to an
Interconnection Agreement with Tennessee Valley Authority (TVA) providing for
the interconnection of the TVA system with the systems of the three companies
to exchange economy and emergency power and for other working arrangements.
In addition, CIPS has interconnection agreements with various other
neighboring utilities, including Central Illinois Light Company, Commonwealth
Edison Company, Indiana Michigan Power Company, Public Service Company of
Indiana, Inc., Iowa Electric Light and Power Company and Northern Indiana
Public Service Company. These agreements provide for various interchanges,
emergency services and other working arrangements.
CIPS owns 20% (and three other utilities own the remaining 80%) of the
common stock of Electric Energy, Inc., and is entitled to receive from it
varying amounts of power. Electric Energy, Inc. owns and operates a 1,015,000
kilowatt coal-fired power station located in Joppa, Illinois.
CIPS is one of 15 members of the Mid-America Interconnected Network
reliability council, which has as its purpose the promotion of maximum
coordination of planning, construction and utilization of generation and
transmission facilities on a regional basis in order to assure the reliability
of electric bulk power supply in the area served.
One municipal agency, two municipal electric systems, one cooperative
agency and one cooperative are engaged in the generation of electricity
within, or in close proximity to, portions of the territory served by CIPS.
In 1993 CIPS began the process of analyzing the economic value of each of
its generating units, which will consider the cost effectiveness of continued
operation, retirement or repowering of each unit and other options as well.
The Electric Power Research Institute ("EPRI") is participating in this
analysis with CIPS. The study is expected to be completed in mid-1994.
Electric and magnetic fields (sometimes referred to as EMF) surround
electric wires or conductors of electricity such as electrical tools,
household wiring and appliances and electric transmission and distribution
lines such as those owned by CIPS. A number of statistical and laboratory
studies have investigated whether EMF pose human health risks. The United
States Environmental Protection Agency (USEPA) stated in its December 1992
brochure "Questions and Answers about Electric and Magnetic Fields" that "Some
epidemiological evidence is suggestive of an association between surrogate
measurements of magnetic field exposure and certain cancer outcomes. Though
the body of evidence cannot be dismissed, it is not complete enough at this
time to draw meaningful conclusions." The nation's electric utilities,
including CIPS, have participated in the sponsorship of millions of dollars of
EMF research. CIPS has also agreed to participate in the National EMF
Research and Public Information Dissemination Program, a 5-year $65 million
effort headed by the United States Department of Energy aimed at furthering
EMF research. Through its participation with EPRI, CIPS will continue its
investigation and research with regard to the possible health effects posed by
exposure to EMF.
ELECTRIC POWER SALES/PARTICIPATION AGREEMENTS. As shown in the table
below, CIPS currently has contracts with Norris Electric Cooperative, City of
Newton, Village of Greenup and Mt. Carmel Public Utility Company for the sale
of electric power. These contracts provide for firm full requirements service
which obligates CIPS to maintain adequate system reserves to support the
contracts, or to supply the requirements with off-system purchases.
Peak Contract
Demand Expiration
Contract (Megawatts) Date
- -------- ___________ __________
Norris Electric Cooperative. . . . . . . . . 49 MW 2007
City of Newton . . . . . . . . . . . . . . . 5 MW 1999
Village of Greenup . . . . . . . . . . . . . 2 MW 1999
Mt. Carmel Public Utility Co. . . . . . . . 40 MW 2001
CIPS has entered into an agreement with Central Illinois Light Company
("CILCO") to sell CILCO limited term power through May, 1998. The agreement
calls for a minimum contract delivery rate of 50 megawatts in 1993 rising to
90 megawatts by the end of the contract period. At CILCO's request, and
provided the capacity is available, purchases can be increased to 100
megawatts at any time during the contract period with prior written notice.
In November 1992, CIPS entered into an agreement with CILCO to sell CILCO
limited term power for the period of June, 1998 through May, 2002. The
agreement calls for a minimum contract delivery rate of 100 megawatts for the
entire period. At CILCO`s request, and provided the capacity is available,
purchases can be increased to 150 megawatts with prior written notice.
In addition, CIPS sells electric power to three power pooling agencies
through negotiated capacity participation agreements identified in the
following table. These agencies include Soyland Power Cooperative (Soyland),
Illinois Municipal Electric Agency (IMEA) and Wabash Valley Power Association
(WVPA).
Maximum
Capability
Entitlement Contract
(Megawatts) Expiration
Contract (for years indicated) Date
- -------- _____________________ __________
Soyland . . . . . . . . . 217MW 1993-1994 1999
103MW 1995-1999
IMEA. . . . . . . . . . . 116MW 1994-2014 2014
WVPA. . . . . . . . . . . 60 MW 1994 2011
65 MW 1995-2011
GAS OPERATIONS. CIPS distributes and sells natural gas to 267
incorporated and unincorporated communities located in 41 counties of Central
and Southern Illinois. The CIPS service territory is predominantly made up of
small towns and rural areas. Of the communities served, only 5 have
populations greater than 15,000. CIPS operates 4,520 miles of transmission
and distribution mains, and its customer density is approximately 36 customers
per mile of main.
Six interstate pipelines pass through various portions of the CIPS service
area: Panhandle Eastern Pipe Line Company, Texas Eastern Transmission
Corporation, Natural Gas Pipeline Company, Texas Gas Transmission Company,
Midwestern Gas Transmission Company and Trunkline Gas Company. CIPS has
multiple interconnections with each of these pipelines, with the total of all
such interconnections being 45. Most of the CIPS system is integrated by
virtue of Company-owned pipelines, or by transportation agreements with
interstate pipelines.
CIPS owns and operates four underground storage fields which provide a
total peak day capacity of 36,500 mcf/day (thousand cubic feet per day). CIPS
also operates one propane-air peak shaving facility which has a peak day
capacity rating of 10,000 mcf/day.
The peak day firm demand recorded by CIPS in 1993 was 254,870 mcf which
was reached on February 17, 1993. This demand level is 20% less than the all-
time peak demand of 319,033 mcf which occurred on December 24, 1983. During
calendar year 1993, the CIPS throughput (total of sales and transportation)
was 36 billion cubic feet (bcf) compared to 36.5 bcf experienced in 1972, the
year of highest historical throughput. In 1993, CIPS transported 10.8 bcf of
customer-owned gas which represented 30% of the total system throughput.
Volumes of customer-owned gas transported in 1992 and 1991 were 11.8 bcf and
12.0 bcf, respectively. The average cost per mcf of natural gas purchased
from all suppliers was about $3.66 in 1993, $3.66 in 1992 and $3.39 in 1991.
The rate schedules of CIPS applicable to all of its gas sales include a
uniform purchased gas adjustment clause, which permits CIPS to adjust its
rates to its customers to reflect substantially all changes in the cost of
purchased gas. (See Note 1 of Notes to Financial Statements included under
Item 8 of this report. See Business - Rate Matters.)
In 1992, the FERC issued orders (together called Order 636) which address
pipeline service restructuring. Order 636 required interstate pipelines to
"unbundle" their sales service, and offer separately the components of that
service (i.e., gas supply, transportation and storage). Order 636
essentially precludes interstate pipelines from selling natural gas. However,
many pipelines have established separate unregulated marketing affiliates
which function as gas merchants in competition with producers and other
sellers of gas.
Each of the six pipelines providing service to CIPS have made restructured
services filings at FERC to comply with Order 636. The last such filing was
effective December 1, 1993.
See Note 2 of Notes to Financial Statements included under Item 8 of this
report for a discussion of the transition costs to be paid by CIPS and the
Illinois commission order initiated to investigate the appropriate ratemaking
treatment of Order 636 transition costs.
Full implementation of Order 636 has resulted in several changes in CIPS'
gas supply portfolio. Pipeline sales service contracts have been replaced by
additional direct purchase gas supply contracts coupled with gas
transportation contracts with various pipelines and storage contracts with
pipelines or other independent storage service providers. In some cases CIPS
has also contracted for so-called "no-notice" services with interstate
pipelines. Under such contracts, the pipeline essentially combines and
manages a number of independent supply, transportation and storage contracts
in order to provide flexibility in the amount of gas actually delivered to
CIPS on any day. Such flexibility, which was formerly provided by the
pipeline sales service, is needed for CIPS to economically meet the highly
weather sensitive needs of its firm service customers.
In addition to its diversified portfolio of gas supply, transportation,
leased storage and no-notice service contracts, CIPS' company-owned storage
and propane-air facilities provide additional reliability and flexibility to
meet peak day and peak season requirements. In recent years CIPS has made
investments to construct additional pipeline interconnections, increase
company owned storage capacity, improve reliability of existing storage
facilities, modernize propane-air facilities and improve data acquisition
capabilities. At the same time CIPS has reorganized and enhanced its gas
supply planning and procurement functions.
FUEL. Over 99% of the net kilowatthour generation of CIPS in 1993 was
provided by coal-fired generating units and the remainder by an oil-fired
unit.
The average costs of fuel consumed by CIPS, per ton and per million Btu,
for the periods shown were as follows:
1993 1992 1991
----- ----- -----
Per ton ($) . . . . . . . . . . . . 36.62 36.46 36.68
Per million Btu ($) . . . . . . . . 1.67 1.67 1.67
In 1993, approximately 21.9% of the coal purchased for electric generation
was purchased on a spot basis at average delivered costs of $31.35 per ton and
$1.37 per million Btu.
The retail fuel adjustment clause (FAC) of CIPS is consistent with the
uniform FAC mandated by the Illinois commission for all electric utilities as
applicable to retail electric sales in Illinois. The FAC provides for the
recovery of changes in electric fuel costs, including certain transportation
costs of coal, in billings to retail customers. CIPS adjusts fuel expense to
recognize over- or under-recoveries of allowable fuel costs. The cumulative
effect is deferred on the Balance Sheet as a Current Asset or Current
Liability, pending automatic reflection in future billings to customers. In
1992, CIPS received Illinois commission approval to include certain coal
transportation costs in the FAC in accordance with the August 1991
modifications to the Illinois Public Utilities Act.
CIPS also has contractual arrangements with certain other utility system
customers which contain a fuel adjustment clause which permits CIPS to adjust
its rates to such customers to reflect substantially all changes in the cost
of fuel (including all transportation costs) used to supply those customers.
The amount of coal supplies on hand at the generating stations of CIPS
varies from time to time. CIPS generally attempts to maintain a 65-day
supply. High usage resulting from increased generation to meet interchange
sales opportunities and increased native load requirements in 1993 led to
somewhat lower than normal coal supplies in early 1994. More than 85% of the
annual coal requirements of the generating facilities of CIPS are being met by
long-term coal contracts expiring at various dates from 1995 to 2010. As
contracts approach their expiration, or when appropriate, CIPS evaluates
alternative supply arrangements based on then current and expected market
conditions for coal. CIPS believes there are adequate reserves reasonably
available to supply its existing generating units with the quantity and
quality of coal required for the foreseeable future.
Compliance with the sulfur dioxide emission requirements of Phase I
(effective in 1995) and Phase II (effective in 2000) of the Clean Air Act
Amendments of 1990 is expected to be accomplished through switching to lower
sulfur coal for several generating units in combination with increased
scrubbing with the existing scrubber at Newton Unit 1. In January 1991, CIPS
entered into a long-term contract for the purchase of lower sulfur Illinois
coal at its Coffeen Power Station to meet the requirements under the Clean Air
Act Amendments. This new contract replaced an existing contract and, in
addition to providing the source of coal for clean air compliance, resulted in
lower fuel costs. The new contract provides for certain termination charges
as described in Note 2 of Notes to Financial Statements included under item 8
of this report. CIPS estimates that capital costs to be incurred through the
year 2000 for various equipment and coal handling facility modifications at
all five of its generating stations in order to comply with the Clean Air Act
Amendments will be less than $50 million. Such costs could result in electric
base rate increases of approximately one to two percent by the year 2000.
CIPS does not anticipate that operating costs will change materially as a
result of compliance with the Clean Air Act Amendments.
Under the Clean Air Act Amendments each utility must have, beginning in
1995, sufficient emission allowances, which are granted by the USEPA, to cover
the amount of sulfur dioxide to be emitted each year from its generating
stations. Any emission allowances in excess of a utility's needs for a year
can be retained by it for future use or sold. Based upon CIPS' current
compliance program, CIPS expects to have available allowances (after
consideration of allowances sold) in excess of its requirements.
REGULATION. CIPS is subject to regulation by the Illinois commission as
to rates, accounting practices, issuance of certain securities and in other
respects as provided by Illinois law. The Electric Supplier Act of Illinois
permits utilities and electric cooperatives to delineate their respective
service areas, subject to the approval of the Illinois commission, and gives
the Illinois commission power to determine, pursuant to guidelines provided in
the Act, whether a prospective electric customer will be furnished service by
a public utility or by a cooperative. (See Item 3. Legal Proceedings.)
The FERC has jurisdiction under the Federal Power Act over certain of the
electric utility facilities and operations, accounting practices, issuance or
acquisition of certain securities and electric rates of CIPS for resale and
interchange customers. CIPS has been classified as a "public utility" within
the meaning of that Act. CIPS has been declared exempt from the federal
Natural Gas Act.
CIPS is presently exempt from all the provisions of the Public Utility
Holding Company Act of 1935, except provisions thereof relating to the
acquisition of securities of other public utility companies, until further
action by the Securities and Exchange Commission, by virtue of an annual
exemption statement filed by CIPS with the Commission pursuant to Rule 2 under
the Act.
ENVIRONMENTAL MATTERS. CIPS is subject to regulation with respect to air
and water quality standards, standards relating to the discharge and disposal
of solid and hazardous wastes and other environmental matters by various
federal, state and local authorities. The Illinois Pollution Control Board
(the "Board") has jurisdiction over all phases of environmental control by the
State of Illinois and has authority to grant variances from environmental
requirements. The Illinois Environmental Protection Agency (the "Agency") has
authority to issue permits, investigate violations and recommend enforcement
cases. The Illinois Attorney General has the authority to prosecute
enforcement cases. The USEPA has jurisdiction to promulgate and enforce air
and water quality standards in addition to those standards which relate to the
discharge and disposal of solid and hazardous wastes.
Air pollution control regulations promulgated by the Board impose
restrictions on emissions of particulate, sulfur dioxide, nitrogen oxides and
other air pollutants and require that CIPS obtain permits from the Agency for
the construction and operation of its generating facilities in compliance with
these regulations. CIPS has secured all necessary operating permits for all
of its existing generating facilities and is in substantial compliance with
the provisions contained therein. Future construction projects may require
additional construction permits.
Water pollution control regulations promulgated by the Board impose
restrictions on effluent discharges, set water quality standards and require
CIPS to obtain construction permits for certain facilities and National
Pollutant Discharge Elimination system ("NPDES") permits for discharges into
public waters. CIPS has secured all necessary NPDES permits for all of its
generating units and is in substantial compliance with the currently effective
provisions contained therein. However, it would be difficult to comply with
certain conditions in the recently renewed permits for the Coffeen and Newton
Power Stations, scheduled to take effect in 1997. CIPS has appealed these
permit conditions to the Illinois Pollution Control Board. If these appeals
are unsuccessful, CIPS will seek regulatory relief under applicable rules to
alter the requirements for these two stations.
Pollution control regulations promulgated by the Board impose restrictions
on the discharge and disposal of solid and hazardous waste, and determine
design standards to prevent contamination of groundwater. CIPS has secured
all necessary permits and authorizations for disposal and is in substantial
compliance with the provisions contained therein. Future construction
projects may require additional authorizations or permits.
Beginning in 1986 and ending in October 1993, CIPS operated Units 1 and 2
at the Coffeen Power Station at a reduced load to meet applicable emission
limitations. A new coal supply has allowed the operation of Coffeen Units 1
and 2 at their maximum capability of 325,000 KW and 550,000 KW, respectively,
since October 1993. Total capability of the generating units was previously
restricted to 750,000 KW when both units were in full operation. Removal of
the operating restrictions increased total electric system capability to
2,852,000 KW.
On May 21, 1993, the USEPA issued a Finding of Violation (FOV) to CIPS
regarding Units 1 and 2 at the Newton Power Station. The FOV alleges that
both generating units at the Newton Power Station were operated at various
times from January 1991 through August 1992 in violation of applicable
emission regulations, including opacity and sulfur dioxide limitations,
regarding New Source Performance Standards established under the Clean Air Act
for fossil fuel fired steam generating units. On January 3, 1994, CIPS
entered into a consent agreement with the Illinois Environmental Protection
Agency and the Illinois Attorney General resolving the issues presented in the
FOV. Under terms of the consent agreement, CIPS will pay a fine of $40,000.
CIPS also agreed to install a continuous emissions stack monitor on Newton
Unit 2. This monitor has already been installed as part of the Company's
Clean Air Act Compliance Plan. CIPS also entered into a consent agreement
with the USEPA concerning these same issues. This latter agreement did not
require any further action on the part of CIPS.
See the subcaption "Environmental Remediation Costs" under Note 2 of the
Notes to Financial Statements, included under Item 8 of this report, for
information relating to costs incurred and to be incurred in connection with
the remediation of certain sites where gas had been manufactured from coal and
which contain potentially harmful materials.
EMPLOYEES. Composition of the work force of CIPS at the payroll period
nearest year-end 1993 and 1992 was as follows:
Number of Employees
-------------------
Employee Group 1993 1992
- -------------- ----- -----
Salaried. . . . . . . . . . . . . . . . . 1,218 1,182
IBEW - 702. . . . . . . . . . . . . . . . 922 965
IUOE - 148. . . . . . . . . . . . . . . . 479 489
----- -----
Total . . . . . . . . . . . . . . . . . . 2,619 2,636
===== =====
See Management's Discussion and Analysis of Financial Condition and
Results of Operations--Union Negotiations for a discussion of the status of
labor contracts, unfair labor practice charges and related matters involving
those employees represented by labor unions. As part of the agreement leading
to new labor contracts, International Brotherhood of Electrical Workers Local
702 ("IBEW 702") has dropped the class action suit filed by it against CIPS
and others seeking treble damages for lost wages and benefits and other
damages. The settlement is subject to court approval.
Item 2. Properties.
The electric generating facilities of CIPS consist of the following:
Estimated
1994 Summer
Year Capability
Station and Unit Fuel Installed (KW)
- ---------------- ---- --------- -----------
Newton
Unit 1 . . . . . . . . . . . . . . Coal 1977 555,000
Unit 2 . . . . . . . . . . . . . . Coal 1982 560,000
Coffeen
Unit 1 . . . . . . . . . . . . . . Coal 1965 325,000
Unit 2 . . . . . . . . . . . . . . Coal 1972 550,000
Grand Tower
Unit 3 . . . . . . . . . . . . . . Coal 1951 82,000
Unit 4 . . . . . . . . . . . . . . Coal 1958 104,000
Hutsonville
Unit 3 . . . . . . . . . . . . . . Coal 1953 76,000
Unit 4 . . . . . . . . . . . . . . Coal 1954 77,000
Diesel Unit. . . . . . . . . . . . Oil 1968 3,000
Meredosia
Unit 1 . . . . . . . . . . . . . . Coal 1948 62,000
Unit 2 . . . . . . . . . . . . . . Coal 1949 62,000
Unit 3 . . . . . . . . . . . . . . Coal 1960 220,000
Unit 4 . . . . . . . . . . . . . . Oil 1975 176,000
_________
Total . . . . . . . . . . . . . 2,852,000
==========
All of the generating stations are located in Illinois on land owned
in fee by CIPS.
At December 31, 1993, CIPS owned 12,922 pole miles of overhead electric
lines and 843 miles of underground electric lines. At that date, CIPS also
owned 4,520 miles of natural gas transmission and distribution mains, four
underground gas storage fields and one propane-air gas plant used to
supplement the available pipeline supply of natural gas during periods of
abnormally high demands.
Substantially all of the permanent fixed utility property of CIPS is
subject to the lien of the Mortgage Indenture securing the first mortgage
bonds.
Item 3. Legal Proceedings.
Actions have been brought against CIPS by Southwestern Electric
Cooperative, Inc. ("Southwestern") on October 30, 1991 in the Macon County,
Illinois Circuit Court and by Wayne-White Counties Electric Cooperative
("Wayne-White" and together with Southwestern, the "Distribution
Cooperatives") on August 15, 1991 in the White County, Illinois Circuit Court.
Soyland Power Cooperative ("Soyland"), a generating and transmission
cooperative that supplies power to the Distribution Cooperatives, is also a
plaintiff in the actions. In various prior cases brought before the Illinois
commission and finally determined on appeal, the Distribution Cooperatives
prevailed in disputes between each of them and the Company as to which of them
was entitled to serve certain electric customers under the Illinois Electric
Supplier Act ("ESA") and certain service area agreements entered into pursuant
to the ESA. Based on the results of the prior proceedings, the pending suits,
in general, seek actual damages for breach of the service area agreements and
punitive damages based on various grounds, such as tortious interference with
contractual relationships and business expectancies and violation of the
Illinois Public Utilities Act.
A CIPS motion to dismiss the Southwestern/Soyland case was successful
only as to certain counts. In the remaining counts, Southwestern seeks
$182,000 in alleged actual damages for breach of the service area agreement
and an additional $5 million in punitive damages for both interference with a
contractual relationship and a business expectancy (it is not clear whether
these claims are intended as separate bases for the recovery of $5 million in
punitive damages or are cumulative). In addition, Soyland seeks $323,000 in
alleged actual damages and $5 million in punitive damages for interference
with a business expectancy. In the Wayne-White/Soyland action, Wayne-White
seeks unspecified alleged actual damages for breach of the service area
agreement and additional unspecified punitive damages for violation of the
Public Utilities Act and interference with a business expectancy. In
addition, Soyland claims $819,000 in alleged actual damages based on breach of
the service area agreement and an additional $5 million in punitive damages
based on interference with both a contractual relationship and a business
expectancy and based on violation of the Public Utilities Act (again, it is
not clear whether these claims are intended as separate bases for the recovery
of $5 million in punitive damages or are cumulative). On March 11, 1993,
Soyland was dismissed from the Wayne-White action on statue of limitations
grounds and the claims by Wayne-White under the Illinois Public Utilities Act
were dismissed. Soyland has filed an appeal of its dismissal. This action is
continuing with regard to Wayne-White's other claims.
While CIPS cannot predict the outcome of any of these matters, it intends
to vigorously defend against all such claims.
See Item 1. Business - Rate Matters, Business - Gas Operations and
Business - Environmental Matters with respect to certain matters involving
CIPS. See also Note 2 of Notes to Financial Statements included under Item 8
of this report.
Item 4. Submission of matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during the
three months ended December 31, 1993.
Executive Officers of the Registrant (ages at December 31, 1993).
Name Age Positions Held
_____ ___ ______________
C. L. Greenwalt 60 President*
R. W. Jackson 63 Senior Vice President Finance and Secretary*
L. A. Dodd 55 Senior Vice President Operations
J. G. Bachman 45 Vice President Corporate Planning
W. A. Koertner 44 Vice President Corporate Services
G. W. Moorman 50 Vice President Power Supply
W. R. Morgan 57 Vice President Division Operations
W. R. Voisin 58 Vice President Public Relations
J. C. Fiaush 63 Controller (Principal Accounting Officer)*
C. D. Nelson 40 Treasurer and Assistant Secretary*
______________________
* Messrs. Greenwalt and Jackson are directors of CIPS and are also officers of
CIPSCO. Mr. Fiaush and Mr. Nelson are also officers of CIPSCO.
The present term of office of the above executive officers extends to the
first meeting of the Board of Directors of CIPS after the next annual election
of Directors, scheduled to be held on April 27, 1994. There is no family
relationship between any executive officer and any other executive officer or
any director.
All of the officers named above have been employed by CIPS in their
present positions for more than the past five years except as indicated below:
Mr. Greenwalt served as Senior Vice President Operations from August 4,
1980 to August 1, 1989, when he was named President.
Mr. Dodd served as Vice President Corporate Planning from July 1, 1985 to
August 1, 1989 and as Vice President Division Operations from August 1, 1989
to July 1, 1990 when he was named Senior Vice President Operations.
Mr. Bachman served as Manager of Rates and Research from February 1, 1980
to August 1, 1989, when he was named Vice President Corporate Planning.
Mr. Koertner served as Treasurer and Assistant Secretary from February 1,
1982 to August 1, 1989 and as Vice President Financial Services from August 1,
1989 to April 1, 1993, when he was named Vice President Corporate Services.
Mr. Moorman served as Manager of System Operation from April 1, 1976 to
June 1, 1988, when he was named Vice President Power Supply.
Mr. Morgan served as Vice President Corporate Services from August 5,
1980 to July 1, 1990, when he became Vice President Division Operations.
Mr. Voisin served as Superintendent of the Quincy Area from January 1,
1985 to July 1, 1989, when he was named Vice President Public Relations.
Mr. Nelson served as Assistant Treasurer from January 1, 1985 to August
1, 1989 when he was named Treasurer and Assistant Secretary.
Directors of the Registrant.
Name, Age, Principal Occupation, and other Directorships Director Since
________________________________________________________ ______________
WILLIAM J. ALLEY, age 64. Chairman of the Board and Chief 1974
Executive Officer of American Brands, Inc. (diversified
manufacturing and other businesses), Old Greenwich,
Connecticut; director of American Brands, Inc., Moorman
Manufacturing Company and Rayonier, Inc.
ROBERT S. ECKLEY, age 72. President Emeritus of Illinois 1973
Wesleyan University, Bloomington, Illinois; director of
State Farm Mutual Automobile Insurance Co.
CLIFFORD L. GREENWALT, age 60. President and Chief 1986
Executive Officer of CIPS, CIPSCO and Chairman of the
Board of CIPSCO Investment Company, and served as Senior
Vice President - Operations of CIPS from 1980 to August
1989 when he became President; director of First of
America Bank Corporation, Kalamazoo, Michigan and a
director of its wholly owned subsidiary, First of America
Bank - Springfield, N.A.
Name, Age, Principal Occupation, and other Directorships Director Since
________________________________________________________ ______________
JOHN L. HEATH, age 58. Retired Chairman and President 1977
of the Heath Candy Company, Robinson, Illinois; served
as Chairman of L.S. Heath & Sons, Inc. from 1971 until
1988 and also as President and Chief Executive Officer
from 1971 until 1982 and is a director of the Biltmore
Bank Corp. and of its wholly owned subsidiary, The
Biltmore investors Bank of Phoenix, Arizona; and is a
director of Sun Street Food Corporation of Phoenix,
Arizona.
ROBERT W. JACKSON, age 63. Senior Vice President - 1986
Finance and Secretary of CIPS, Senior Vice President and
Chief Financial Officer and Secretary of CISPCO and
President and Chief Executive Officer of CIPSCO
Investment Company, and served as Senior Vice President
- - Finance and Secretary of CIPS since 1980; director of
Firstbank of Illinois Co. and each of its wholly owned
subsidiary banks, including the First National Bank of
Springfield.
GORDON R. LOHMAN, age 59. President and Chief Executive 1989
Officer of AMSTED Industries Incorporated (diversified
manufacturer of industrial products), Chicago, Illinois
in 1988 and 1990, respectively; Executive Vice President
of that firm in 1988 and Vice President from 1978 through
1987; and is a director of American Brands, Inc.
HANNE M. MERRIMAN, age 52. Principal in Hanne Merriman 1990
Associates (retail business consultants), Washington,
D.C.; President of Nan Duskin, Inc., from 1991 to 1992;
retail business consultant since January 1990; President
and Chief Executive Officer of Honeybee, Inc. a division
of Spiegel, Inc. from January 1988 through December 1989;
President of Garfinckels, a division of Allied Stores
Corporation, from 1981 through 1987 and is a director of
USAir Group, Inc., State Farm Mutual Automobile Insurance
Co., The Rouse Company and AnnTaylor Stores Corporation.
DONALD G. RAYMER, age 69. Retired President and Chief 1972
Executive Officer of CIPS; director of Bank One Springfield
and served as President and Chief Executive Officer of CIPS
from 1980 to August 1989.
Name, Age, Principal Occupation, and other Directorships Director Since
________________________________________________________ ______________
THOMAS L. SHADE, age 63. Retired Chairman of the Board and 1991
Chief Executive Officer of Moorman Manufacturing Company
(livestock feed products), Quincy, Illinois, having served
in those capacities during 1992 and 1993 and was President
and Chief Executive Officer of that firm from 1984 to 1992
and is a director of that firm and Quincy Soybean Company
of Quincy, Illinois.
JAMES W. WOGSLAND, age 62. Vice Chairman of Caterpillar 1992
Inc. (heavy equipment and engine manufacturer), Peoria,
Illinois, since 1990 and was Executive Vice President of
that firm from 1987 until 1990 and is a director of that
firm and First of America Bank Corporation, Kalamazoo,
Michigan and its wholly owned subsidiary First of America
Bank-Illinois, N.A., Peoria, Illinois and is also a director
of Protection Mutual Insurance Company.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
matters.
All the common stock of CIPS is owned by CIPSCO, its corporate parent,
and is not publicly traded. The following table sets forth the cash
distributions on common stock paid to CIPSCO by CIPS, which, in some cases,
were used to repurchase common shares of CIPS for the periods indicated:
1993 1992
____ ____
First Quarter . . . . . . . . . . $16,500,000* $16,400,000*
Second Quarter . . . . . . . . . . $16,750,000* $16,700,000*
Third Quarter . . . . . . . . . . $16,750,000 $16,500,000*
Fourth Quarter . . . . . . . . . . $16,750,000 $16,500,000*
* Reflects the repurchase of common shares of CIPS.
CIPS is subject to restrictions on the use of retained earnings for cash
dividends on common stock as described in Note 6 of Notes to Financial
Statements included under Item 8 of this report.
Item 6. Selected Financial Data.
For the Years Ended
December 31,
1993 1992 1991 1990 1989
__________ __________ __________ __________ __________
(in thousands)
Operating Revenues $ 834,556 $ 729,402 $ 710,205 $ 685,226 $ 683,859
Operating Income 113,651 97,372 104,039 97,135 109,433
Net Income 84,011 72,601 75,683 71,562 71,222
Preferred Dividends 3,718 4,549 5,396 5,617 5,856
Earnings for Common
Stock 80,293 68,052 70,287 65,945 65,366
As of December 31,
Total Assets $1,668,462 $1,645,059 $1,691,843 $1,665,614 $1,714,544
Long-Term Debt 494,323 503,700 496,420 496,319 496,301
Preferred Stock
subject to mandatory
redemption - - 18,245 21,245 24,000
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS
____________________________________
Central Illinois Public Service Company (CIPS or the Utility) is a
subsidiary of CIPSCO Incorporated (the Parent company), a holding company
incorporated under the laws of the State of Illinois.
FINANCIAL CONDITION. Central Illinois Public Service Company's financial
position remained fundamentally strong during 1993.
A strong capital structure and strong cash flows have minimized the need
to access capital markets, other than for refinancings, in recent years.
Neither CIPSCO nor CIPS has raised additional capital through the sale of
common stock to the general public since 1980. Common stock was issued and
sold to existing shareholders by CIPS through a dividend reinvestment plan
until 1984.
The long-range financial objectives for the capital structure of CIPS are:
a debt ratio of no more than 45 percent, a common equity ratio of no less than
45 percent, and a preferred equity ratio of no more than 10 percent. At
December 31, 1993, capitalization consisted of 43 percent long-term debt, 50
percent common equity and 7 percent preferred stock.
At year end, 25,452,373 shares of CIPS common stock were outstanding, all
of which were held by CIPSCO Incorporated. During 1993, 884,345 shares of
common stock were repurchased by CIPS from CIPSCO as a means of conveying
funds to the parent company for dividend payments and other corporate
purposes.
CAPITAL REQUIREMENTS. Construction expenditures were $88 million in 1993.
Of that amount, $77 million and $11 million related to improvements and
replacements to the electric and natural gas systems, respectively.
In 1994 construction expenditures are expected to be about $87 million.
Of that amount, $77 million is scheduled for electric facilities while gas
system expenditures are estimated at $10 million.
Construction expenditures are estimated at $431 million for the five-year
period 1994-1998. This is $31 million, or seven percent, less than was spent
in the preceding five years.
In addition to construction funds, projected capital requirements for the
1994-1998 period include $93 million for scheduled debt retirements.
FINANCING REQUIREMENTS. Capital requirements for the 1994-1998 period are
expected to be met primarily through internally generated funds. External
financing to fund scheduled debt retirements will be required. If external
financing were needed to fund the construction program such financing could
consist of funds from the parent, the issuance of short-term debt, long-term
debt or preferred stock, or any combination of the four. Refinancings to
lower the costs of capital may also occur, depending on market conditions.
On April 6, 1993, CIPS issued $65 million of first mortgage bonds to
refinance higher-cost debt issues. On May 4, 1993, and October 13, 1993, CIPS
issued $30 million and $12.5 million of preferred stock, respectively. The
new issues were used to redeem the utility's outstanding 7.48% Series and
8.08% Series of preferred stock, and to raise $15 million of additional
capital.
During the year, CIPS refinanced $130 million of pollution control loan
obligations to achieve lower rates of interest.
Financing requirements may be affected by such factors as availability and
cost of capital, load growth, changes in construction expenditures, regulatory
developments, changes in environmental regulations and other governmental
activities.
FINANCING FLEXIBILITY AND LIQUIDITY. The utility's ability to finance the
construction program at reasonable cost and to provide for other capital needs
is dependent upon its ability to earn a fair return on capital. Financing
flexibility is enhanced by providing a high percentage of total capital
requirements from internal sources and having the ability, if necessary, to
issue long-term securities and to obtain short-term credit. Flexibility also
is provided by the parent corporation which is capable of providing additional
capital if circumstances warrant.
The CIPS mortgage indenture limits the amount of first mortgage bonds
which may be issued. At December 31, 1993, CIPS could have issued about $532
million of additional first mortgage bonds under the indenture, assuming an
annual interest rate of 7.25 percent.
CIPS' articles of incorporation limit amounts of preferred stock which may
be issued. Assuming a preferred dividend rate of 6.75 percent, CIPS could
have issued all $185 million of authorized, but unissued preferred stock
remaining as of year end.
At year-end 1993, CIPS had $2.7 million of temporary investments. There
were no short-term borrowings.
RESULTS OF OPERATIONS
---------------------
(1991-1993)
EARNINGS. Earnings for common stock increased 18 percent in 1993 to $80.3
million. The increases in electric and gas revenues were the result of
increased sales due to the occurrence of more-normal weather conditions.
Weather-related factors and a coal miners' strike which hampered coal
deliveries to some utilities, resulted in increased sales of power by CIPS to
other utility systems. The interchange sales in 1993 resulted from
exceptional opportunities which are unlikely to be matched in future years.
Earnings for common stock decreased three percent in 1992 to $68.1 million.
Increases in gas and electric revenues resulting from the retail rate increase
effective in March, and a favorable earnings adjustment of $3.3 million due to
settlement of the revenues subject to refund proceeding, were offset by
weather-related decreases in electric revenues.
ELECTRIC OPERATIONS. Electric revenues increased $93.2 million in 1993.
Cooling degree days for 1993 were 37 percent higher than in 1992. Electric
kilowatthour sales, including interchange sales, were 39 percent higher than a
year ago. Revenues from electric interchange sales to other utility systems
for economy and emergency purposes were $76.3 million, or $48.3 million higher
than a year ago, reflecting much greater sales opportunities. The greater
opportunities for sales resulted from hot weather, flooding conditions which
limited availablity of generating capacity at some neighboring utilities, and
coal miners' strikes which hampered deliveries of coal at other utilities.
These factors contributed to a significantly increased level of interchange
economy and emergency sales which is unlikely to be matched in 1994.
Electric revenues increased $3 million in 1992 as compared to 1991. The
effects of a favorable settlement in the revenues subject to refund
proceeding, and a rate increase of approximately one percent in March 1992,
were offset by a one percent decrease in kilowatthour sales. The sales
decrease was primarily caused by cooler summer weather in 1992. Cooling
degree days for 1992 were 33 percent lower than in 1991.
Fuel for electric generation increased eight percent, or $14.4 million, in
1993 primarily due to higher electric generation caused by increased
kilowatthour sales. Kilowatthours generated increased 16 percent in 1993.
Average fuel cost remained the same at $1.67 per million Btu in 1993, 1992 and
1991. Purchased power expense increased 185 percent, or $39.1 million in 1993
reflecting additional purchases principally used for economy and emergency
interchange sales.
Purchased power and fuel cost for electric generatin increased three
percent, or $5.7 million, in 1992 as compared to 1991. Kilowatthours
generated decreased two percent in 1992.
GAS OPERATIONS. Gas revenues increased nine percent to $145.7 million in
1993 as compared to 1992 due to increases in therm sales and a full heating
season of the increased rates effective March 1992. Therm sales increased 21
percent primarily due to more industrial customers purchasing gas from the
utility's system rather than from other gas suppliers. Residential therm
sales inreased 14 percent reflecting colder temperatures in 1993. Heating
degree days were 13 percent higher in 1993 as compared to 1992.
Gas revenues increased 14 percent to $133.8 million in 1992 due to
increased rates effective in March 1992, and adjustments for higher purchased
gas costs. Therm sales increased five percent in 1992 compared to 1991
primarily due to industrial customers purchasing gas from the utility's system
rather than from other gas suppliers.
The utility transported approximately 108 million therms of customer owned
gas in 1993 compared with 118 million and 120 million therms in 1992 and 1991,
respectively.
Purchased gas costs increased $7.5 million, or nine percent, in 1993 due
to higher therm sales, while the average price paid for purchased gas from
suppliers remained unchanged. In 1992, purchased gas costs increased $9.4
million, or 13 percent, due to an average three-cent-per-therm price increase
charged by gas suppliers.
OPERATING EXPENSES. Other operation expense increased $11.4 million, or
nine percent in 1993, and $15.5 million, or 13 percent in 1992 due
principally, in each case, to postretirement medical expense which CIPS began
accruing in April 1992 consistent with the related treatment afforded such
costs for ratemaking. (See Note 4 to Financial Statements.)
Depreciation expense increased $3.9 million and $4.7 million in 1993 and
1992, respectively, due to property additions.
Taxes other than income taxes increased in 1993 because utility taxes,
which are based upon receipts from sales, increased as sales increased. Other
taxes decreased in 1992 because the rate refund reduced amounts collected from
customers which in turn reduced utility taxes.
Interest on long-term debt and preferred dividend requirements decreased
$2.8 million, or seven percent, in 1993, due to refinancing of long-term debt
and preferred stock at lower interest and dividend rates.
Interest on provision for revenue refunds was not applicable in 1993 and
decreased in 1992 due to settlement of the revenue subject to refund
proceeding in 1992. (See Note 11 to Financial Statements.)
Miscellaneous, net, for 1993 decreased $4.5 million, or 59 percent because
Miscellaneous, net, for 1992 includes $3 million resulting from a Federal
Energy Regulatory Commission (FERC) order issued February 12, 1992. That
order reversed a 1989 order which required CIPS to refund to cooperative
customers a portion of amounts paid to CIPS in a litigation settlement with a
former coal supplier. Miscellaneous, net, increased in 1992 due to inclusion
of the $3 million resulting from the FERC order.
Income tax expense reflects the changes in pre-tax income in both 1993 and
1992. In addition, the federal tax rate changed from 34 percent to 35 percent
effective January 1, 1993.
OTHER MATTERS. Customer usage of electricity and natural gas varies with
weather conditions, general business conditions, the state of the economy and
the cost of energy services. The level of sales also is impacted by
conditions in the interchange market. Further, certain large gas customers
can purchase gas from alternative suppliers or bypass the utility's system by
switching to other fuels or by connecting directly to pipelines. Forecasts
indicate that retail sales growth will remain at the historical levels of the
past decade.
Rates for retail electric and gas service are regulated by the Illinois
Commerce Commission. Non-retail electric rates are regulated by FERC. The
utility's rates are designed to recover operating costs including depreciation
on utility plant investment. Inflation continues to be a factor affecting its
operations, earnings, shareholders' equity and financial performance. Changes
in the cost of fuel for electric generation and purchased gas generally are
reflected in billings to customers on a timely basis through fuel and
purchased gas adjustment clauses.
The Financial Accounting Standards Board's (FASB) Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" was adopted as of January 1, 1993. SFAS No. 106
requires that the expected cost of posretirement benefits be accrued during
the employees' years of service. (See Note 4 to Financial Statements.)
On January 1, 1993 the Company adopted SFAS No. 109, "Accounting for
Income Taxes" which requires the use of the liability method for recording
deferred income taxes on temporary differences using the rate at which the
differences are expected to reverse. (See Notes 1 and 9 to Financial
Statements.)
In 1993, The Company adopted, SFAS No. 112 "Employers' Accounting for
Postemployment Benefits". The new statement requires the accrual of certain
postemployment benefits to former and inactive employees. (See Note 4 to
Financial Statements.)
ENVIRONMENTAL REMEDIATION COSTS. The utility has identified 13 former
manufactured gas plant sites (environmental remediation sites) which contain
potentially harmful materials. In 1990, one site was added to the United
States Environmental Protection Agency (USEPA) Superfund list. The utility
has a long-term remedial plan for the site. Costs and associated legal
expenses related to investigation have been incurred at other sites.
Commencing in 1987, the estimated incurred costs related to studies and
remediation at these 13 sites and associated legal expenses and certain
carrying charges are being accrued and deferred rather than expensed
currently, pending recovery either from rates, from insurance carriers or from
other parties.
Management believes that costs incurred in connection with the sites that
are not recovered from insurance carriers or other parties will be recovered
through utility rates. Accordingly, management believes that costs incurred
in connection with these sites will not have a material adverse effect on
financial position or results of operations. (See Note 2 to Financial
Statements.)
CLEAN AIR ACT. CIPS' compliance strategy for Phases I and II of the Clean
Air Act Amendments of 1990 is to switch to lower sulfur coal at some
generating units along with increased scrubbing at Newton Unit 1. The utility
estimates capital costs, including costs incurred to date, for various
equipment modifications at its generating stations related to compliance will
aggregate less than $50 million. These costs may result in electric base rate
increases totaling about one to two percent by the year 2000. The utility
does not anticipate that operating costs will change materially as a result of
compliance with these amendments. (See Note 2 to Financial Statements.)
FERC ORDER 636. During 1992, the FERC issued Order No. 636. This and
successor orders have resulted in substantial restructuring of the service
obligations of interstate pipeline suppliers. (See Note 2 to Financial
Statements.)
ENERGY POLICY ACT. The National Energy Policy Act of 1992 (NEPA)
contains, among other provisions, legislation designed to promote competition
in the development of wholesale power generation in the electric utility
industry. NEPA exempts a new class of independent power producers from
traditional utility regulation. This new class of producers can build
generating plants and sell electricity in wholesale markets without the same
constraints of regulated utilities. NEPA also allows FERC to order wholesale
"wheeling" by public utilities to provide utility and non-utility generators
access to public utility transmission facilities. Public utilities, not
voluntarily providing access to their transportation system at agreed upon
rates, may be ordered to deliver power at rates to be established by FERC.
Although the final impact of the provisions of NEPA cannot be predicted,
management believes that the increased competition in the area of generation
and transmission may affect the traditional marketing and pricing strategies
of the utility business.
LABOR DISPUTES. Labor agreements ending June 1995 have been reached with
the two unions representing 1,400 hourly employees of CIPS. The contracts
with both unions have been signed. Before the agreements were reached, the
memberships of both unions authorized a strike and institued an overtime
boycott and work slowdown beginning in April 1993. CIPS initiated a lockout
of union employees over a period of approximately 14 weeks beginning in May
1993. Subsequent to this date, both unions filed unfair labor practice
charges with the National Labor Relations Board (NLRB) claiming back pay and
other benefits during the lockout period. The Peoria Regional Office of the
NLRB has issued a complaint against CIPS concerning the lockout of employees
represented by one union. However, the Peoria Regional Office did not find
merit to a similar charge filed by the other union and it has been dismissed.
CIPS estimates the amount of back pay and other benefits for both unions to be
less than $12 million. The NLRB decisions on the complaint and the charges
will be subject to various appeals by the parties. Management believes that
the lockout was both lawful and reasonable and that these matters will be
ultimately resolved in favor of CIPS. (See Note 2 to Financial Statements.)
Item 8. Financial Statements and Supplementary Data.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENTS OF INCOME
Years Ended December 31,
__________________________________
1993 1992 1991
__________ __________ __________
(in thousands)
Operating Revenues:
Electric $ 688,849 $ 593,996 $ 604,565
Provision for revenue refunds - 1,646 (11,896)
_________ _________ _________
688,849 595,642 592,669
Gas 145,707 133,760 117,536
_________ _________ _________
Total operating revenues 834,556 729,402 710,205
_________ _________ _________
Operating Expenses:
Fuel for electric generation 186,938 172,544 165,806
Purchased power 60,181 21,094 22,109
Gas purchased 90,097 82,553 73,189
Other operation 141,310 129,715 114,434
Maintenance 61,216 64,092 66,784
Depreciation and amortization 77,647 74,154 69,483
Taxes other than income taxes 54,767 51,106 53,936
Income taxes 48,749 36,772 40,425
_________ _________ _________
Total operating expenses 720,905 632,030 606,166
_________ _________ _________
Operating Income 113,651 97,372 104,039
_________ _________ _________
Other Income and Deductions:
Allowance for equity funds used during
construction 1,459 2,162 2,054
Nonoperating income taxes (631) (2,989) (2,413)
Miscellaneous, net 3,632 10,978 13,472
_________ _________ _________
Total other income and deductions 4,460 10,151 13,113
_________ _________ _________
Income Before Interest Charges 118,111 107,523 117,152
_________ _________ _________
Interest Charges:
Interest on long-term debt 34,421 36,397 36,990
Interest on provision for revenue
refunds - (803) 4,261
Other interest charges 479 392 1,231
Allowance for borrowed funds used
during construction (800) (1,064) (1,013)
_________ _________ _________
Total interest charges 34,100 34,922 41,469
_________ _________ _________
Net Income 84,011 72,601 75,683
Preferred stock dividends 3,718 4,549 5,396
_________ _________ _________
Earnings for Common Stock $ 80,293 $ 68,052 $ 70,287
========== ========== ==========
The accompanying notes to financial statements are an integral part of these
statements.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
BALANCE SHEETS
December 31,
___________________________
1993 1992
_____________ ____________
(in thousands)
ASSETS
Utility Plant, at original cost:
Electric $2,172,259 $2,116,322
Gas 208,208 195,709
__________ __________
2,380,467 2,312,031
Less--Accumulated depreciation 1,020,097 961,419
__________ __________
1,360,370 1,350,612
Construction work in progress 61,104 45,219
__________ __________
1,421,474 1,395,831
__________ __________
Current Assets:
Cash 4,038 480
Temporary investments, at cost which
approximates market 2,734 2,578
Accounts receivable, net 61,591 48,415
Accrued unbilled revenues 38,774 36,680
Materials and supplies, at average
cost 40,824 38,529
Fuel for electric generation, at
average cost 26,046 34,382
Gas stored underground, at average
cost 14,335 12,180
Prepayments 9,847 13,152
__________ __________
198,189 186,396
__________ __________
Other Assets 48,799 62,832
__________ __________
$1,668,462 $1,645,059
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholder's equity:
Common stock, no par value,
authorized 45,000,000 shares;
outstanding 25,452,373 and
26,336,718 shares respectively $ 121,282 $ 154,532
Retained earnings 443,741 398,235
__________ __________
565,023 552,767
Preferred stock 80,000 65,000
Long-term debt 474,323 493,700
__________ __________
1,119,346 1,111,467
__________ __________
Current Liabilities:
Long-term debt due within one year 20,000 10,000
Commercial paper - 17,393
Accounts payable 55,931 56,786
Accrued wages 12,720 11,417
Accrued taxes 13,391 11,117
Accrued interest 9,204 6,564
Other 34,895 27,934
__________ __________
146,141 141,211
__________ __________
Deferred Credits:
Accumulated deferred income taxes 274,425 330,053
Investment tax credits 58,962 62,328
Regulatory liabilities, net 69,588 -
__________ __________
402,975 392,381
__________ __________
$1,668,462 $1,645,059
========== ==========
The accompanying notes to financial statements are an integral part of these
statements.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENTS OF CASH FLOW
Years Ended December 31,
__________________________________
1993 1992 1991
__________ __________ __________
(in thousands)
OPERATING ACTIVITIES:
Net income $ 84,011 $ 72,601 $ 75,683
Adjustments to reconcile net income
to net cash provided:
Depreciation and amortization 77,647 74,154 69,483
Allowance for equity funds used during
construction (AFUDC) (1,459) (2,162) (2,054)
Deferred income taxes, net 7 16,407 10,822
Investment tax credit amortization (3,366) (3,336) (3,464)
Cash flows impacted by changes in assets
and liabilities:
Accounts receivable, net and accrued
unbilled revenues (15,270) 4,542 (9)
Fuel for electric generation 8,336 2,872 664
Other inventories (4,450) (667) (893)
Prepayments 3,305 23,585 (4,050)
Other assets 14,033 (20,210) (12,958)
Accounts payable and other 6,106 17,641 2,871
Accrued wages, taxes and interest 6,217 (5,197) (152)
Accumulated provision for revenue
refunds - (75,449) 16,157
Other 4,815 (5,991) (2,992)
__________ __________ _________
Net cash provided by operating
activities 179,932 98,790 149,108
__________ __________ _________
INVESTING ACTIVITIES:
Construction expenditures, excluding
AFUDC (85,453) (117,198) (110,815)
Allowance for borrowed funds used during
construction (800) (1,064) (1,013)
Changes in temporary investments (156) 92,175 36,728
__________ __________ _________
Net cash used in investing activities. (86,409) (26,087) (75,100)
__________ __________ _________
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 195,000 199,000 -
Repayment of long-term debt (205,000) (190,500) -
Proceeds from issuance of preferred stock 42,500 - -
Redemption of preferred stock (27,500) (18,245) (3,000)
Retirement of common stock (33,250) (66,100) (66,950)
Proceeds from (repayment of) commercial
paper (17,393) 17,393 -
Dividends paid:
Preferred stock (3,718) (4,549) (5,396)
Common stock (33,500) - -
Issuance expense, discount and premium (7,104) (11,718) -
_________ _________ _________
Net cash used in financing activities. (89,965) (74,719) (75,346)
_________ _________ _________
Net increase (decrease) in cash 3,558 (2,016) (1,338)
Cash at beginning of period 480 2,496 3,834
_________ _________ _________
Cash at end of period $ 4,038 $ 480 $ 2,496
========= ========= =========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, net of amount capitalized $ 30,909 $ 38,382 $ 36,867
Income taxes 48,367 12,150 $ 42,731
The accompanying notes to financial statements are an integral part of these
statements.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
STATEMENTS OF RETAINED EARNINGS
Years Ended December 31,
__________________________________
1993 1992 1991
__________ __________ __________
(in thousands)
Balance, beginning of year $ 398,235 $ 330,518 $ 260,304
Add (deduct);
Net income 84,011 72,601 75,683
Dividends:
Preferred stock (3,718) (4,549) (5,396)
Common stock (33,500) - -
Other (1,287) (335) (73)
_________ _________ _________
Balance, end of year $ 443,741 $ 398,235 $ 330,518
========= ========= =========
The accompanying notes to financial statements are an integral part of these
statements.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General. Central Illinois Public Service Company (CIPS or the Utility), a
subsidiary of CIPSCO Incorporated (CIPSCO), provides certain services to
CIPSCO and other affiliates for which all costs incurred are reimbursed to
CIPS. In 1993, 1992 and 1991 these amounts were immaterial. Certain items
previously reported for years prior to 1993 have been reclassified to conform
with the current-year presentation.
Regulation. CIPS is a public utility subject to regulation by the Illinois
Commerce Commission (Illinois commission) and the Federal Energy Regulatory
Commission (FERC). With respect to accounting matters, the utility maintains
its accounts in accordance with the Uniform System of Accounts as defined by
these agencies. Its accounting policies conform to generally accepted
accounting principles applicable to rate regulated enterprises and reflect the
effects of the ratemaking process.
Operating Revenues. CIPS accrues an estimate of electric and gas revenues for
service rendered but unbilled at the end of each accounting period.
Utility Plant. Utility plant in service is stated at original cost.
Substantially all of the utility plant of CIPS is subject to the lien of its
first mortgage bond indenture. Additions to utility plant include the cost of
contracted services, material, labor, overheads and an allowance for funds
used during construction. Maintenance and repair of property and replacement
of minor items of property are charged to operating expenses. Property
retired is removed from utility plant accounts and charged to accumulated
depreciation.
Allowance for Funds Used During Construction (AFUDC). AFUDC is included in
Construction Work in Progress (CWIP) and represents the cost of financing that
construction. AFUDC does not represent a current source of cash funds. The
inclusion of AFUDC in CWIP affords the opportunity to earn a return on the
cost of construction capital after the related asset is placed in service and
included in the rate base.
The AFUDC rate, based on a formula prescribed by the FERC, on a before-
tax basis, was 9% in 1993 and 10% in 1992 and 1991.
Depreciation. Depreciation expense is based on remaining life straight-line
rates (composite, approximately 3.4% in 1993 and 3.3% in 1992 and 1991)
applied to the various classes of depreciable property.
Concentration of Credit Risk. CIPS provides electric service to about 316,000
customers in 557 communities and natural gas service to approximately 164,000
customers in 267 communities throughout a 20,000-square-mile area in central
and southern Illinois. Credit risk is spread over a diversified base of
residential, commercial and industrial customers.
Fuel and Purchased Gas Costs. CIPS adjusts fuel expense to recognize over- or
under-recoveries from customers of allowable fuel costs through the uniform
fuel adjustment clause (FAC). The FAC provides for the current recovery of
changes in the cost of fuel for electric generation in billings to customers.
Monthly, the difference between revenues recorded through application of the
FAC and recoverable fuel costs is recorded as a current asset or liability,
pending reflection in future billings to customers, with a corresponding
decrease or increase in cost of fuel for electric generation.
The uniform purchased gas adjustment clause (PGA) provides a matching of
gas costs with revenues. Monthly, the difference between revenues recorded
through application of the PGA and recoverable gas costs is recorded as a
current asset or liability with a corresponding decrease or increase in the
cost of gas purchased. The cumulative difference for the calendar year is
collected from, or refunded to, customers over a one-year period beginning in
the following April.
The Illinois commission conducts annual reconciliation proceedings with
respect to each year's FAC and PGA revenues and has completed its review for
all years prior to 1992. Reconciliation proceedings for 1992 commenced in
October 1993. No reconciliation proceeding has yet commenced for the year
1993.
Income Taxes and Investment Tax Credits. Deferred income taxes are recorded
which result from the use of accelerated depreciation methods, rapid
amortization, repair allowance and certain other timing differences in
recognition of income and expense for tax and financial statement purposes.
CIPS is included as part of CIPSCO's consolidated federal income tax return.
Income taxes are allocated to the individual companies, based on their
respective taxable income or loss.
Investment tax credits are being amortized over the estimated average
useful lives of the related properties.
The Company adopted, effective January 1, 1993, the liability method of
accounting for deferred income taxes required by Statement of Financial
Accounting Standards (SFAS) No. 109. This statement requires the
establishment of deferred tax liabilities and assets for all temporary
differences between the tax basis of assets and liabilities and the amounts
reported in the financial statements. (See Note 9 to Financial Statements.)
Cash and Temporary Investments. Temporary investments consist of deposits and
U.S. Treasury obligations. For purposes of Statements of Cash Flows,
temporary investments are not considered cash equivalents.
2. COMMITMENTS AND CONTINGENCIES
Environmental Remediation Costs. The utility and certain of its predecessors
and other affiliates operated facilities in the past for manufacturing gas
from coal. In connection with manufacturing gas, various by-products were
produced, some of which remain on sites where the facilities were located.
The utility has identified 13 of these former manufactured gas plant sites
(environmental remediation sites) which contain potentially harmful materials.
Under directives from the Illinois Environmental Protection Agency (IEPA),
CIPS has incurred costs and associated legal expenses related to the
investigation and remediation of the sites.
One site was added to the United States Environmental Protection Agency
(USEPA) Superfund list on August 30, 1990. On September 30, 1992 the IEPA, in
consultation with the USEPA, decided that the long-term remedial plan for this
site should consist of a ground water pump-and-treat program. The IEPA and
CIPS entered into an agreement, subject to court approval, for CIPS to carry
out the remedial action with the IEPA providing oversight. It is not known at
this time what specific remedial action will be required at the other 12
sites.
In 1987, CIPS filed a lawsuit against a number of insurance carriers
seeking full indemnification for all costs in connection with certain
environmental sites. As of December 31, 1993 all but five insurance carriers
have settled.
The estimated incurred costs relating to studies and remediation at these
13 sites and associated legal expenses are being accrued and deferred rather
than expensed currently, pending recovery through rates, from insurance
carriers or from other parties. The total amount deferred represents costs
incurred and estimates for costs of completing studies at various sites and an
estimate of remediation costs at the Superfund site. At December 31, 1993,
the amounts recovered have exceeded the aggregate amount deferred.
In 1992, the Illinois commission issued an Order (the Generic Order) in
its consolidated generic proceeding regarding appropriate ratemaking treatment
of cleanup costs incurred by Illinois utilities with respect to environmental
remediation sites. The Generic Order indicates that allowed cleanup costs may
include prudently incurred cost of investigation, assessment and cleanup of
environmental remediation sites, as well as litigation costs, including those
involved in insurance recovery claims. The Generic Order authorizes utilities,
including CIPS, to propose a mechanism to recover cleanup costs which is
consistent with the provisions of the order. Such a mechanism must, among
other things, provide for (1) recovery of cleanup costs over a five-year
period, excluding carrying costs associated with the unrecovered balance of
cleanup costs from the time that the recovery mechanism becomes effective; (2)
a return to ratepayers over a five-year amortization period of any
reimbursement of cleanup costs received from insurance carriers or other
parties; and (3) a prudence review of each utility's expenditures. The
Generic Order was upheld on appeal by the Third District Illinois Appellate
Court. That decision held that a rate rider mechanism is an appropriate
means for utilities to recover cleanup costs. An intervenor has filed a
petition for leave to appeal the decision to the Illinois Supreme Court. The
intervenor has maintained that no recovery of cleanup costs should be allowed.
The Illinois Supreme Court has discretion to accept or deny the appeal.
On March 26, 1993, the Illinois commission approved CIPS' proposed
environmental cost-recovery rate riders, effective with April 1993 billings to
customers. Known as the electric environmental adjustment clause and the gas
environmental adjustment clause, the riders are designed to enable CIPS to
recover from its customers costs associated with cleanup of the environmental
remediation sites, along with associated legal expenses, over a five-year
period on terms consistent with the Generic Order. The environmental
adjustment clause riders provide for an annual review of amounts recovered
through the riders. Amounts found to have been incorrectly included would be
subject to refund. Through December 31, 1993, CIPS has collected $2.6 million
from its customers pursuant to the riders.
The total costs to be incurred for the cleanup of these sites or the
possible recovery from insurance carriers and other parties cannot be
estimated. Management believes that costs incurred in connection with the
sites that are not recovered from insurance carriers or other parties will be
recovered through utility rates. Accordingly, management believes that costs
incurred in connection with these sites will not have a material adverse
effect on financial position or results of operations.
FERC Order 636. During 1992, FERC issued a series of orders that require
substantial restructuring of the service obligations of interstate pipeline
suppliers. These orders (together called Order 636) required mandatory
unbundling of existing pipeline gas sales services. Mandatory unbundling
requires pipelines to sell separately the various components previously
included with gas sales services. Order 636 provides a mechanism for
pipelines to recover four categories of transition costs associated with
restructuring their gas sales services.
Based on currently available information contained in the various
interstate pipeline Order 636 compliance filings, CIPS estimates that the
total amount of transition costs to be incurred by CIPS is approximately $10
million. At December 31, 1993 CIPS had recorded a liability and a related
deferred gas cost for that portion of the transition costs that will be billed
to CIPS regardless of future pipeline services.
On September 15, 1993, the Illinois commission initiated an investigation
into the appropriate ratemaking treatment of Order 636 transition costs. In
January 1994, the hearing examiner released a draft order which would allow
full recovery through rates by CIPS of transition costs. A final order from
the Illinois commission is expected in the first quarter 1994. Management
believes that all transition costs will be recoverable from customers.
Clean Air Act. CIPS' compliance strategy to meet the sulfur dioxide emission
reduction requirements of the Clean Air Act Amendments of 1990 (Amendments)
includes complying with Phase I of the Amendments by switching to a lower
sulfur coal at some of its units. Phase II compliance will be accomplished by
additional fuel switching at various units and by increased scrubbing with its
existing scrubber at Newton Unit 1. Phase I and Phase II emission provisions
of the Amendments become effective in 1995 and 2000, respectively.
The utility estimates that total capital costs, primarily for
modifications to boilers, precipitators, coal handling facilities, and
continuous monitoring equipment for implementation of this compliance
strategy, will be less than $50 million in total including amounts spent to
date. Operating costs are not expected to change materially. Compliance
costs could result in electric base rate increases of approximately one to two
percent by the year 2000.
In 1991, in accordance with the plan to switch some units to lower sulfur
coal, the utility signed a long-term coal contract with a current supplier for
lower sulfur Illinois coal. Due to the magnitude of the supplier's capital
investment, the contract includes a graduated termination charge. In 1994
CIPS can terminate the contract under certain conditions, and CIPS would be
required to pay up to $41 million (plus an inflation adjustment) in
termination charges. Each year subsequent to 1994 the termination charge is
reduced according to a formula using tons of coal purchased. The termination
charge would not be effective if CIPS terminated the contract due to the
failure of the coal to meet quality specifications provided for in the
contract.
Labor Disputes. The International Union of Operating Engineers Local 148 and
the International Brotherhood of Electric Workers Local 702 have both filed
unfair labor practice charges with the National Labor Relations Board (NLRB)
relating to the legality of the lockout by CIPS of both unions during 1993.
The Peoria Regional Office of the NLRB has issued a complaint against CIPS
concerning its lockout of IBEW-702 represented employees. However, the Peoria
Regional Office did not find merit to a similar charge filed by IUOE 148 and
it has been dismissed, subject to appeal rights. Both unions seek, among
other things, back pay and other benefits for the period of the lockout. CIPS
estimates the amount of back pay and other benefits for both unions to be less
than $12 million. Management believes the lockout was both lawful and
reasonable and that the final resolution of the disputes will not have a
material adverse effect on financial position or results of operations.
Other Issues. The utility is involved in other legal and administrative
proceedings before various courts and agencies with respect to rates, taxes,
gas and electric fuel cost reconciliations, service area disputes,
environmental and other matters. Although unable to predict the outcome of
these matters, management believes that appropriate liabilities have been
established and that final disposition of these actions will have no material
adverse effect on the results of operations or the financial position of CIPS.
3. PREFERRED STOCK
The preferred stock is generally redeemable at the option of CIPS on 30 days
notice at the redemption prices shown below.
At December 31, 1993, 1992 and 1991 the preferred stock outstanding was:
Preferred Stock Outstanding
1993 1992 1991
Current Amount Amount Amount
Shares Par Redemption Shares (in (in (in
Authorized Value Series Price(a) Issued thousands) thousands) thousands)
__________ _____ ______ __________ _______ __________ __________ __________
Cumulative 2,000,000(b) $100 4.00% $101.00 150,000 $ 15,000 $ 15,000 $ 15,000
100 4.25% 102.00 50,000 5,000 5,000 5,000
100 4.90% 102.00 75,000 7,500 7,500 7,500
100 4.92% 103.50 50,000 5,000 5,000 5,000
100 5.16% 102.00 50,000 5,000 5,000 5,000
100 7.48% 101.08 - - 15,000 15,000
100 8.08% 101.00 - - 12,500 12,500
100 1993 Auction(c) 100.00 300,000 30,000 - -
100 6.625% 100.00(d) 125,000 12,500 - -
_______ _______ _______ _______
800,000 80,000 65,000 65,000
No par(e) 2,600,000(b) - - - - - - -
_______ _______ _______ _______
800,000 $ 80,000 $ 65,000$ 65,000
======= ======= ======= =======
_________________________
(a) Accrued dividends, if any, would be added to the current redemption price.
(b) The Board of Directors has the authority to fix and determine the relative rights and preferences of the authorized and
unissued shares.
(c) Dividend rate for each dividend period (currently quarterly) is set at a then current market rate according to an auction
procedure. The rate at December 31, 1993 was 2.67%
(d) Not redeemable prior to October 1, 1998.
(e) Aggregate stated value cannot exceed $65,000,000.
4. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
CIPS sponsors a defined benefit pension plan covering substantially all of its
employees. The benefits are based on years of service and employees' final
average pay. Pension costs are accrued and funded on a current basis based
upon actuarial determinations and in compliance with income tax regulations
and federal funding requirements. CIPS uses a September 30 measurement date
for its valuation of pension plan assets and liabilities. The utility also
provides certain employees with pension benefits which exceed the qualified
plan limits imposed by federal tax law.
Funded Status of Pension Plan
(in thousands)
1993 1992 1991
_________ _________ ____________
Fair value of plan assets* $177,824 $150,729 $127,075
_______ _______ _______
Accumulated benefit obligations:**
Vested benefits 125,641 98,770 78,515
Nonvested benefits 559 284 212
Effect of projected future
compensation levels (based on 4.3%
annual increases in 1993, 4.5% in
1992 and 5% in 1991) 41,214 37,025 36,791
_______ _______ _______
Total projected benefit obligation 167,414 136,079 115,518
_______ _______ _______
Plan assets in excess of projected
benefit obligation $ 10,410 $ 14,650 $ 11,557
======= ======= =======
________________________
* Plan assets are invested in common and preferred stocks, bonds, money
market instruments, guaranteed income contracts and real estate.
** The assumed weighted average discount rate was 6.50% for 1993, 7.25% for
1992 and 7.75% for 1991.
Pension Plan Assets in Excess of Projected Benefit Obligation
(in thousands)
1993 1992 1991
_________ _________ ____________
Plan assets in excess of projected
benefit obligation $ 10,410 $ 14,650 $ 11,557
Unrecognized transition asset (being
amortized over 18.2 years) (4,862) (5,325) (5,772)
Unrecognized net (gain) loss (5,188) (13,617) (14,756)
Unrecognized prior service cost 760 1,590 1,703
_______ _______ _______
Prepaid (Accrued) pension costs at
September 30 1,120 (2,702) (7,268)
Expense, net of funding October to
December 1,944 91 (1,347)
_______ _______ _______
Prepaid (Accrued) pension costs at
December 31 $ 3,064 $ (2,611) $ (8,615)
======= ======= =======
Components of Net Pension Expense
(in thousands)
1993 1992 1991
_________ _________ ____________
Service cost (present value of benefits
earned during the year) $ 6,398 $ 5,721 $ 6,467
Interest cost on projected benefit
obligation 10,193 9,302 8,583
Actual return on plan assets (expected
long-term rate of return was 8%) (21,101) (13,755) (19,490)
Deferred investment gains 10,071 4,834 11,167
Amortization of the unrecognized prior
service cost 118 118 118
Amortization of the transition amount (463) (463) (463)
_______ _______ _______
Net pension expense $ 5,216 $ 5,757 $ 6,382
======= ======= =======
Effective January 1, 1993, CIPS adopted SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions". The standard requires
companies to recognize the cost of providing postretirement medical and life
insurance benefits over the employees' service period. CIPS is funding the
medical benefits under two Voluntary Employee Beneficiary Association trusts
(VEBA), and a 401(h) account established within the Company's retirement
income trust.
The Company sponsors postretirement plans providing medical and life
benefits for certain of its retirees and their eligible dependents. The
medical plan pays percentages of eligible medical expenses incurred by covered
retirees after a deductible has been met, and after taking into account
payment by Medicare or other providers. Currently, participants become
eligible for coverage if they retire from CIPS after meeting age and years of
service eligiblity requirements. The life insurance plan continues for all
retirees who have been in the plan as employees for ten years or more. CIPS
uses a September 30 measurement date for its valuation of postretirement
assets and liabilities.
Funded Status of Postretirement Benefit Plans
(in thousands)
1993
_________
Fair value of plan assets* $ 13,302
________
Accumulated benefit obligations:
Retirees 39,599
Fully eligible active employees 17,026
Other active employees 80,532
________
Total accumulated benefit obligation 137,157
________
Accumulated benefit obligations in excess of plan assets (123,855)
Unrecognized transition obligation (being amortized over
20 years) 110,511
Unrecognized net loss (including changes in assumptions) 1,959
________
Accrued postretirement benefit cost at September 30 (11,385)
Expense, net of funding, October to December 9,643
________
Accrued postretirement benefit cost at December 31 $ (1,742)
========
* Plan assets are invested in common and preferred stocks, bonds, money market
instruments, guaranteed income contracts and real estate.
Components of Postretirement Benefit Cost
(in thousands)
1993
_________
Service costs on benefits earned $ 4,215
Interest costs on accumulated benefit obligations 9,948
Actual return on plan assets (1,038)
Deferred investment gains 397
Amortization of the transition amount 5,816
_______
Postretirement benefit cost $ 19,338
=======
For purposes of calculating the postretirement benefit obligation it is
assumed that health-care costs will increase by 12.75% in 1994, and that the
rate of increase thereafter (the health-care cost trend rate) will decline to
4.25% in 2007 and subsequent years. The health-care cost trend rate has a
significant effect on the amounts reported for costs each year as well as on
the accumulated postretirement benefit obligation. To illustrate, increasing
the assumed health-care cost trend rate by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of
September 30, 1993 by $20.2 million and the aggregate of the service and
interest cost components of the net periodic postretirement benefit cost $2.7
million annually.
The weighted-average discount rate used to determine the accumulated
postretirement benefit obligation was 7 percent. The expected long-term rate
of return on plan assets is 8 percent.
In March 1992, CIPS was granted rates by the Illinois commission which
included its estimated postretirement costs determined on an accrual basis of
accounting. CIPS' financial reporting for postretirement costs is consistent
with the related rate treatment. Therefore, adoption of SFAS No. 106 did not
have a material effect on financial position or results of operations.
The Company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," in 1993. The new statement required the accrual of
certain postemployment benefits to former or inactive employees. The adoption
of SFAS No. 112 did not have a material effect on financial position or
results of operations.
5. LONG-TERM DEBT
Maturities and sinking fund requirements of CIPS' long-term debt through 1998
are as follows:
Sinking Fund
Maturities Requirements Total
__________ ____________ _______
(in thousands)
1994 $20,000 $300 $20,300
1995 15,000 150 15,150
1996 - 150 150
1997 58,000 - 58,000
1998 - - -
In 1993 and 1992 the sinking fund requirements were satisfied by the
application of net expenditures for bondable property in an amount equal to
166-2/3 percent of the annual requirement. The utility expects to meet the
1994 requirement in the same manner.
Long-term debt outstanding at December 31, excluding maturities due within one
year, was:
1993 1992
Amount Amount
______ ______
(in thousands)
First mortgage bonds (principal amount):
Series J, 4 1/2% due 5/1/1994 $ - $20,000
Series K, 4 5/8% due 6/1/1995 15,000 15,000
Series L, 5 7/8% due 5/1/1997 15,000 15,000
Series N, 7 1/2% due 4/1/2001 - 35,000
Series P, 7 1/2% due 5/1/2002 - 30,000
Series 6 5/8% due 8/1/2009
(for Newton pollution control) 1,000 1,000
Series W, 7 1/8% due 5/15/1999 50,000 50,000
Series W, 8 1/2% due 5/15/2022 33,000 33,000
Series X, 6 1/8% due 7/1/1997 43,000 43,000
Series X, 7 1/2% due 7/1/2007 50,000 50,000
Series Y, 6 3/4% due 9/15/2002 23,000 23,000
Series Z, 6% due 4/1/2000 25,000 -
Series Z, 6 3/8% due 4/1/2003 40,000 -
_______ _______
295,000 315,000
_______ _______
1993 1992
Amount Amount
______ ______
(in thousands)
Pollution control loan obligations:
Series A, 5.85% due 10/1/2007 - 60,000
Series B, 6.80% due 4/1/2005 - 17,500
Series B, 6 7/8% due 4/1/2009 - 17,500
Series C, 6 5/8% due 8/1/2004 - 20,000
Series C, 6 3/4% due 8/1/2009 - 15,000
1990 Series A, 7.60% due 3/1/2014 20,000 20,000
1990 Series B, 7.60% due 9/1/2013 32,000 32,000
1993 Series A, 6 3/8% due 1/1/2028 35,000 -
1993 Series B-1, 4 3/8% due 6/1/2028 17,500 -
1993 Series B-2, 5.90% due 6/1/2028 17,500 -
1993 Series C-1, 4.20% due 8/15/2026 35,000 -
1993 Series C-2, 5.70% due 8/15/2026 25,000 -
_______ _______
182,000 182,000
_______ _______
Unamortized net debt premium and discount (2,677) (3,300)
_______ _______
$474,323 $493,700
======= =======
Interest rates on the 1993 Series B-1 and 1993 Series C-1 bonds will be
adjusted to a then current market rate on June 1, 1998 and August 15, 1998,
respectively. Interest rates on the 1993 Series B-2 and 1993 Series C-2 bonds
are subject to redetermination at the option of the utility commencing June 1,
2003 and August 15, 2003, respectively.
6. COMMON SHAREHOLDER'S EQUITY
Common Stock. The authorized common stock, no par value, for CIPS was
45,000,000 shares as of December 31, 1993, 1992 and 1991. All outstanding
shares were exchanged with CIPS shareholders for CIPSCO Incorporated stock on
October 1, 1990. Since then, CIPSCO Incorporated which holds all CIPS common
shares, has been retiring CIPS shares as detailed in the table below:
Common Shares Outstanding
Number of Shares Outstanding Amounts
______________________________________ ____________________________
1993 1992 1991 1993 1992 1991
__________ __________ __________ ________ ________ ________
Balance, beginning of year 26,336,718 28,410,703 31,031,024 $154,532 $220,632 $287,607
Common stock retired (884,345) (2,073,985) (2,620,321) (33,250) (66,100) (66,950)
Other - - - - - (25)
__________ __________ __________ ________ ________ ________
Balance, end of year 25,452,373 26,336,718 28,410,703 $121,282 $154,532 $220,632
========== ========== ========== ======== ======== ========
Retained Earnings. CIPS is subject to restrictions on the use of retained
earnings for cash dividends on common stock applicable to all corporations
under the Illinois Business Corporation Act, as well as those contained in its
mortgage indenture and articles of incorporation. At December 31, 1993, 1992
and 1991, no amount of retained earnings was restricted.
7. LINES OF CREDIT AND SHORT-TERM BORROWINGS
CIPS has arrangements for bank lines of credit which totaled $77.9
million. CIPS compensates banks for lines of credit totaling $60 million.
The bank lines of credit are for corporate purposes including the support of
any commercial paper borrowings. At December 31, 1993 there were no short-
term borrowings at CIPS.
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value at
December 31, 1993 and 1992 of each class of financial instruments for which it
is practicable to make such estimates.
Cash and Temporary Investments - The carrying amounts approximate fair value
because of the short-term maturity of these instruments.
Short-Term Borrowings - The carrying amounts approximate fair value due to
their short-term maturities.
Preferred Stock - The fair value was estimated using market values provided by
independent pricing services.
Long-Term Debt - The fair value was estimated using market values provided by
independent pricing services.
The estimated fair value of the Company's financial instruments as of December
31, are shown below:
1993 1992
_________________ _________________
Carrying Fair Carrying Fair
Value Value Value Value
________ _____ ________ _____
(in thousands)
Preferred Stock $ 80,000 $ 68,403 $ 65,000 $ 50,519
Long-Term Debt 474,323 504,478 493,700 514,912
9. INCOME TAXES
The Company adopted the liability method of accounting for deferred income
taxes in compliance with Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" effective January 1, 1993.
Due to rate regulation, adoption of this statement had an immaterial
effect on net income. However, the adoption resulted in a balance sheet
reduction of $81.3 million of deferred income taxes along with corresponding
balance sheet increases of $95.3 million of regulatory liabilities, net, and
$14 million of plant assets. Income tax expense continues to include
provisions for deferred taxes to reflect the effect of temporary differences
between the time certain costs are recorded for financial reporting and when
they are deducted for income tax return purposes. As temporary differences
reverse, the related accumulated deferred income taxes and a portion of the
regulatory assets and liabilities are also reversed. Investment tax credits
have been deferred and will continue to be credited to income over the lives
of the related property.
The components of federal and state income tax provisions and investment
tax credits at December 31, were:
1993 1992 1991
________ ________ ________
(in thousands)
Current - - Federal $ 42,422 $ 6,859 $ 29,950
- - State 8,019 (749) 6,366
_______ _______ _______
50,441 6,110 36,316
_______ _______ _______
Deferred - - Federal 1,483 26,551 5,800
- - State 191 7,447 1,773
_______ _______ _______
1,674 33,998* 7,573*
_______ _______ _______
Amortization of deferred
investment tax credits (3,366) (3,336) (3,464)
_______ _______ _______
Total 48,749 36,772 40,425
_______ _______ _______
Nonoperating income taxes:
Current 1,119 2,411 1,629
Deferred (488) 578 784
_______ _______ _______
631 2,989 2,413
_______ _______ _______
Total income taxes $ 49,380 $ 39,761 $ 42,838
======= ======= =======
1992 1991
______ ______
(in thousands)
*Detail of Deferred Taxes:
Excess of tax depreciation and
amortization over book $ 5,566 $ 7,465
Unbilled revenues - -
Revenue refunds 29,526 (6,259)
Deferred fuel cost (2,921) 2,030
Deferred environmental site
cleanup costs 62 2,243
Alternative minimum tax credit
carryforward (4,449) -
Cost of removal 3,108 731
Unamortized loss on reacquired debt 3,561 (72)
Miscellaneous (455) 1,435
_______ _______
Total $ 33,998 $ 7,573
======= =======
Reconciliations with statutory federal income tax rates at December 31
were: 1993 1992 1991
---- ---- ----
Effective income tax rate 37.0% 35.4% 36.1%
Amortization of investment tax credits 2.5 3.0 2.9
Tax exempt interest and dividends .7 1.3 1.9
Out-of-period items (0.1) (0.6) (1.8)
State income tax rate, net of federal
income tax benefit (4.0) (4.2) (4.8)
Other, net (1.1) (0.9) (0.3)
____ ____ ____
Statutory federal income tax rate 35.0% 34.0% 34.0%
==== ==== ====
The components of deferred income taxes at December 31 and January 1,
1993 are:
December 31, 1993 January 1, 1993
_________________ _______________
(in thousands)
Accumulated deferred income tax
liabilities related to:
Depreciable propeprty $316,327 $298,089
Investment tax credits (23,500) (24,145)
Regulatory liabilities, net (27,423) (37,148)
Other 9,021 11,773
_______ _______
Accumulated deferred income taxes
per balance sheet $274,425 $248,569
======= =======
Deferred tax assets (included in
prepayments $ 5,977 $ 7,155
======= =======
10. SEGMENTS OF BUSINESS
CIPS is a public utility engaged in the sale of electricity which it
generates, transmits and distributes. CIPS also sells natural gas, which it
purchases from producers and suppliers and distributes through its system, and
transports customer-owned natural gas. The following is a summary of
operations:
Years Ended December 31,
_________________________________
1993 1992 1991
______ ______ ______
(in thousands)
OPERATING INFORMATION
Electric operations:
Operating revenues $ 688,849 $ 595,642 $ 592,669
Operating expenses, excluding
provision for income taxes 534,070 472,414 455,366
_________ _________ _________
Pretax operating income 154,779 123,228 137,303
_________ _________ _________
Gas operations:
Operating revenues 145,707 133,760 117,536
Operating expenses, excluding
provision for income taxes 138,086 122,844 110,375
_________ _________ _________
Pretax operating income 7,621 10,916 7,161
_________ _________ _________
Total 162,400 134,144 144,464
_________ _________ _________
Plus other income and deductions 4,460 10,151 13,113
Less interest charges 34,100 34,922 41,469
Less income taxes 48,749 36,772 40,425
Less preferred dividends 3,718 4,549 5,396
_________ ________ _________
Earnings for common stock $ 80,293 $ 68,052 $ 70,287
========= ========= =========
Depreciation expense:
Electric $ 71,876 $ 68,902 $ 64,880
Gas 5,771 5,252 4,603
_________ ________ _________
Total $ 77,647 $ 74,154 $ 69,483
========= ========= =========
INVESTMENT INFORMATION
Identifiable assets:
Electric $1,459,073 $1,443,578 $1,419,036
Gas 177,857 188,321 157,757
Temporary investments 2,734 2,578 94,753
Corporate 28,798 10,582 20,297
_________ ________ _________
Total $1,668,462 $1,645,059 $1,691,843
========= ========= =========
Construction expenditues:
Electric $ 76,956 $ 103,023 $ 99,004
Gas 10,756 17,401 14,878
_________ ________ _________
Total $ 87,712 $ 120,424 $ 113,882
========= ========= =========
11. REVENUES COLLECTED SUBJECT TO REFUND
In May 1992, the Illinois commission approved a March 18, 1992 settlement
agreement that resolved a proceeding regarding the impact on the utility of
the reduced federal corporate income tax rates established by the Tax Reform
Act of 1986. Under terms of the agreement, $73 million, including accrued
interest, was refunded to customers from July through December 1992 in
complete settlement of all issues related to the proceeding.
For the 61-month period, March 1987 through March 1992, a total of $78.4
million had been accrued for refunds. The total liability recorded by the
utility exceeded the settlement agreement amount by $5.4 million resulting in
a $3.3 million (net of taxes) favorable impact on earnings during 1992.
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The fluctuations in the quarterly results are due to the seasonal nature
of the electric and gas utility business.
Total Total Earnings
Operating Operating for Common
Revenues Income Stock
_________ _________ __________
(in thousands)
Quarters
1993
First $209,548 $ 24,726 $ 15,774
Second 187,385 20,093 11,610
Third 232,104 46,204 38,172
Fourth 205,519 22,628 14,737
1992
First 182,208 17,055 10,884
Second 165,104 21,859 15,634*
Third 187,154 38,129 29,441
Fourth 194,936 20,329 12,093
* Quarterly earnings reflect adjustment for settling Revenues Subject to
Refund proceeding. See Note 11 to Notes to Financial Statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Central Illinois Public
Service Company:
We have audited the accompanying balance sheets of CENTRAL ILLINOIS PUBLIC
SERVICE COMPANY (an Illinois corporation and a wholly owned subsidiary of
CIPSCO Incorporated) as of December 31, 1993 and 1992, and the related
statements of income, retained earnings and cash flows for each of the three
years in the period ended December 31, 1993. These financial statements and
schedules referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Central Illinois Public
Service Company as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Item 14(a)2
are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, fairly state, in all
material respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
January 28, 1994
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by Item 10 relating to each director who is a
nominee for election as director at the Company's 1994 Annual Meeting of
Shareholders is to be set forth in the Company's definitive proxy statement to
be filed with the Securities and Exchange Commission pursuant to Regulation
14A under the Securities Exchange Act of 1934 (the "proxy statement") in
connection with the Company's Annual Meeting of Shareholders. Such
information is incorporated herein by reference to the material appearing
under the caption "Election of Directors -- Director Information" in the proxy
statement. Information required by Item 10 relating to directors and
executive officers of the Company is set forth under a separate caption in
Part I hereof.
Item 11. Executive Compensation.
The information required by Item 11 is to be set forth in the proxy
statement. Such information is incorporated herein by reference to the
material appearing under the caption "Election of Directors -- Executive
Compensation" and -- "Directors' Compensation" appearing in the proxy
statement; provided, however, that no part of the information appearing under
the portion of the proxy statement entitled "Election of Directors --
Compensation Committee Report on Executive Compensation" or -- "Performance
Graph" is deemed to be filed as part of this Form 10-K Annual Report.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by Item 12 is to be set forth in the proxy
statement. Such information is incorporated herein by reference to the
material appearing under the captions "Voting Securities Beneficially Owned by
Principal Holders, Directors, Nominees and Executive Officers" and "Election
of Directors -- Director Information" appearing in the proxy statement.
Item 13. Certain Relationships and Related Transactions.
CIPS is a subsidiary of CIPSCO. At December 31, 1993, CIPSCO owned 100%
of the common stock of CIPS (representing 97% of the voting shares of CIPS).
There are situations where CIPS interacts with its affiliated companies
through the use of shared facilities, common employees and other business
relationships. In these situations, CIPS receives payment in accordance with
regulatory requirements for the services provided to affiliated companies.
Each individual who is a member of the Board of Directors of CIPSCO is
also a member of the Board of Directors of CIPS. Each of the officers of
CIPSCO is also an officer of CIPS.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Page of this
Report on
Form 10-K
____________
(a) 1. Financial statements (included in Item 8, Financial
Statements and Supplementary Data):
Statements of Income for the years ended
December 31, 1993, 1992 and 1991. . . . . . . . . . . 33-34
Balance Sheets - December 31, 1993 and 1992 . . . . . 35-36
Statements of Cash Flows for the years ended
December 31, 1993, 1992 and 1991. . . . . . . . . . . 37-38
Statements of Retained Earnings for the years
ended December 31, 1993, 1992 and 1991. . . . . . . . 39
Notes to Financial Statements . . . . . . . . . . . . 40-58
Report of Independent Public Accountants. . . . . . . 59
(a) 2. Schedules supporting financial statements (included herein):
Schedule V - Property, Plant and Equipment at Original
Cost for the years ended December 31,
1993, 1992 and 1991 . . . . . . . . . . . . 66-68
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equip-
ment for the years ended December 31,
1993, 1992 and 1991 . . . . . . . . . . . . 69-71
Schedule IX - Short-Term Borrowings for the years ended
December 31, 1993, 1992 and 1991. . . . . . 72
Schedule X - Supplementary Income Statement Information
for the years ended December 31, 1993,
1992 and 1991 . . . . . . . . . . . . . . . 73
All other schedules have been omitted as not applicable or not required
or because the information required to be shown therein is included in the
financial statements or notes thereto.
Page of this
Report on
Form 10-K
____________
(a) 3. Exhibits
3.01 Amended and Restated Articles of Incorporation,
as amended, of CIPS. (Exhibit 3.02 to
Form 8-K, dated October 8, 1993).
Incorporated by Reference. -
3.02 Bylaws of CIPS (Form 10-Q of the Company (1-3672),
June 1990, Exhibit 19) Incorporated by Reference. -
4 Indenture of Mortgage or Deed of Trust dated October 1,
1941, from CIPS to Continental Illinois National Bank and
Trust Company of Chicago and Edmond B. Stofft, as
Trustees. (Exhibit 2.01 in File No. 2-60232.)
Supplemental Indentures dated, respectively September 1,
1947, January 1, 1949, February 1, 1952, September 1,
1952, June 1, 1954, February 1, 1958, January 1, 1959,
May 1, 1963, May 1, 1964, June 1, 1965, May 1, 1967,
April 1, 1970, April 1, 1971, September 1, 1971, May 1,
1972, December 1, 1973, March 1, 1974, April 1, 1975,
October 1, 1976, November 1, 1976, October 1, 1978,
August 1, 1979, February 1, 1980, February 1, 1986, May
15, 1992, July 1, 1992, September 15, 1992 and April 1, 1993,
between CIPS and the Trustees under the Indenture of Mortgage
or Deed of Trust referred to above (Amended Exhibit 7(b) in
File No. 2-7341; Second Amended Exhibit 7.03 in File No.
2-7795; Second Amended Exhibit 4.07 in File No. 2-9353;
Amended Exhibit 4.05 in file No. 2-9802; Amended Exhibit
4.02 in File No. 2-10944; Amended Exhibit 2.02 in File
No. 2-13866; Amended Exhibit 2.02 in File No. 2-14656; Amended
Exhibit 2.02 in File No. 2-21345; Amended Exhibit 2.002 in
File No. 2-22326; Amended Exhibit 2.02 in File No. 2-23569;
Amended Exhibit 2.02 File No. 2-26284; Amended Exhibit 2.02
in File No. 2-36388; Amened Exhibit 2.02 in File No. 2-39587;
Amended Exhibit 2.02 in File No. 2-41468; Amended Exhibit
2.02 in File No. 2-43912; Exhibit 2.03 in File No. 2-60232;
Amended Exhibit 2.02 in File No. 2-50146; Amended Exhibit
2.02 in File No. 2-52886; Second Amended Exhibit 2.04 in
File No. 2-57141; Amended Exhibit 2.04 in File No. 2-57557;
Amended Exhibit 2.06 in File No. 2-62564; Exhibit 2.02(a)
in File No. 2-65914; Amended Exhibit 2.02(a) in File No.
2-66380; and Amended Exhibit 4.02 in File No. 33-3188;
Exhibit 4.02 to Form 8-K dated May 15, 1992; Exhibit 4.02
to Form 8-K dated July 1, 1992; Exhibit 4.02 to Form 8-K
dated September 15, 1992; Exhibit 4.02 to Form 8-K dated
March 30, 1993.) Incorporated by reference. -
Page of this
Report on
Form 10-K
____________
Exhibits (Continued)
10.01 Form of Deferred Compensation Agreement for Directors . . . -
(Exhibit 10.01 filed with 1990 Annual Report on Form
10-K) Incorporated by Reference.
10.02 Amended Form of Deferred Compensation Agreement for . . . . 75-81
Directors
10.03 Form of Special Executive Retirement Plan . . . . . . . . . -
(Exhibit 10.03 filed with 1990 Annual Report on Form
10-K) Incorporated by Reference.
10.04 Amendment to Form of Special Executive Retirement . . . . . 82
Plan
10.05 Form of Employment Agreement (change in control . . . . . . -
severance agreement)
(Exhibit 10.05 filed with 1990 Annual Report on Form
10-K) Incorporated by Reference.
10.06 Form of Director's Retirement Income Plan . . . . . . . . . -
(Exhibit 10.06 filed with 1990 Annual Report on Form
10-K) Incorporated by Reference.
10.07 Form of Excess Benefit Retirement Plan. . . . . . . . . . . -
(Exhibit 10.07 filed with 1990 Annual Report on Form
10-K) Incorporated by Reference.
10.08 Amendment to Form of Excess Benefit Retirement. . . . . . . 83
Plan
10.09 Form of Management Incentive Plan . . . . . . . . . . . . . -
(Exhibit 10.09 filed with 1990 Annual Report on Form
10-K) Incorporated by Reference.
12 Computation of Ratio of Earnings to Fixed Charges . . . . . 84
21 Subsidiaries of Registrant. . . . . . . . . . . . . . . . . 85
Page of this
Report on
Form 10-K
____________
Exhibits (Continued)
23 Consent of Independent Public Accountants . . . . . . . . . 86
24 Powers of Attorney. . . . . . . . . . . . . . . . . . . . . 87-94
99 Description of Capital Stock. . . . . . . . . . . . . . . . 95-96
Exhibits 10.01 through 10.09 are management contracts or compensatory
plans or arrangements required to be filed as exhibits pursuant to Item 14(c)
hereof.
The following instruments defining the rights of holders of certain
unregistered long-term debt of CIPS have not been filed with the Securities
and Exchange Commission but will be furnished upon request.
1. Loan Agreement dated as of March 1, 1990, between CIPS and the
Illinois Development Finance Authority (IDFA) in connection with the
IDFA's $20,000,000 Pollution Control Revenue Refunding Bonds, 1990
Series A due March 1, 2014 and $32,000,000 Pollution Control Revenue
Refunding Bonds, 1990 Series B due September 1, 2013.
2. Loan Agreement dated January 1, 1993, between CIPS and IDFA in
connection with IDFA's $35,000,000, 6-3/8% Pollution Control Revenue
Refunding Bonds (Central Illinois Public Service Company Project) 1993
Series A, due January 1, 2028.
3. Loan Agreement dated June 1, 1993, between CIPS and IDFA in
connection with IDFA's $17,500,000 Pollution Control Revenue Refunding
Bonds, 1993 Series B-1 due June 1, 2028 and $17,500,000 Pollution
Control Revenue Refunding Bonds, 1993 Series B-2 due June 1, 2028.
4. Loan Agreement dated August 15, 1993, between CIPS and IDFA in
connection with IDFA's $35,000,000 Pollution Control Revenue Refunding
Bonds, 1993 Series C-1 due August 15, 2026 and $25,000,000 Pollution
Control Revenue Refunding Bonds, 1993 Series C-2 due August 15, 2026.
5. CIPS Credit Agreement dated October 1, 1992 with various banks
providing unsecured lines of credit in an aggregate amount of
$60,000,000.
(b) Reports on Form 8-K (filed during the reporting period):
Date of Report Item Reported
______________ _____________
October 8, 1993 Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits.
Contains certain exhibits filed in
connection with the Registration Statements
of CIPS (Registration Nos. 33-59674 and
33-50349) which became effective March 29,
1993 and September 30, 1993, respectively.
(c) Reports on Form 8-K (filed subsequent to the reporting period):
None.
Schedule V
SCHEDULE V
(1 of 3)
CENTRAL ILLINOIS PUBLIC COMPANY
PROPERTY, PLANT AND EQUIPMENT AT ORIGINAL COST (a)
YEAR ENDED DECEMBER 31, 1993
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B Column C Collumn D Column E Column F
Transfers and
Retirements Amortization
Balance Additions or Sales at of Balance
Classification of Property Dec. 31, 1992 at Cost Cost(b) Franchises(c) Dec. 31, 1993
__________________________ _____________ ___________ ___________ _____________ _____________
ELECTRIC UTILITY PLANT:
Electric utility plant in service--
Intangible. . . . . . . . . . . . . . . . $ 51 $ - $ - $ - $ 51
Production. . . . . . . . . . . . . . . . 1,146,088 27,619 9,771 8,400 1,172,336
Transmission. . . . . . . . . . . . . . . 291,519 26,147 962 2,790 319,494
Distribution. . . . . . . . . . . . . . . 423,998 36,813 3,698 1,800 458,913
General . . . . . . . . . . . . . . . . . 87,450 9,825 2,139 (289) 94,847
Electric plant held for future use. . . . . 1,217 - - - 1,217
Construction work in progress . . . . . . . 41,638 17,150 - - 58,788
Completed construction not classified . . . 165,999 (40,598) - - 125,401
_________ _________ __________ ________ _________
Total electric utility plant . . . . . . 2,157,960 76,956 16,570 12,701 2,231,047
_________ _________ __________ ________ _________
GAS UTILITY PLANT:
Gas utility plant in service--
Intangible. . . . . . . . . . . . . . . . 40 - - - 40
Production. . . . . . . . . . . . . . . . 1,153 20 3 - 1,170
Storage . . . . . . . . . . . . . . . . . 19,338 12 1 -
19,349
Transmission. . . . . . . . . . . . . . . 33,685 3,099 4 105 36,885
Distribution. . . . . . . . . . . . . . . 113,273 15,074 454 1,180 129,073
General . . . . . . . . . . . . . . . . . 8,765 991 384 39 9,411
Gas plant held for future use . . . . . . . 37 - - - 37
Construction work in progress . . . . . . . 3,581 (1,265) - - 2,316
Completed construction not classified . . . 19,418 (7,175) - - 12,243
_________ _________ __________ ________ _________
Total gas utility plant. . . . . . . . . 199,290 10,756 846 1,324 210,524
_________ _________ __________ ________ _________
Total utility plant. . . . . . . . . . . $2,357,250 $ 87,712 $ 17,416 $ 14,025 $2,441,571
========= ========= ========== ======== =========
_________________________
(a) Reference is made to Note 1 to Financial Statements.
(b) Represents retirements charged to accumulated depreciation (Schedule VI).
(c) Represents land and buildings transferred to other physical property, amortization of franchises, plant acquisition
adjustments and the effect of adjustment as a result of adopting SFAS No. 109, "Accounting for Income Taxes". (See Notes 1
and 9 to Financial Statements.)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
SCHEDULE V
(2 of 3)
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
PROPERTY, PLANT AND EQUIPMENT AT ORIGINAL COST (a)
YEAR ENDED DECEMBER 31, 1992
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B Column C Collumn D Column E Column F
Transfers and
Retirements Amortization
Balance Additions or Sales at of Balance
Classification of Property Dec. 31, 1991 at Cost Cost(b) Franchises(c) Dec. 31, 1992
__________________________ _____________ ___________ ___________ _____________ _____________
ELECTRIC UTILITY PLANT:
Electric utility plant in service--
Intangible. . . . . . . . . . . . . . . . $ 52 $ - $ - $ (1) $ 51
Production. . . . . . . . . . . . . . . . 1,141,535 7,275 2,722 - 1,146,088
Transmission. . . . . . . . . . . . . . . 288,202 4,782 1,556 91 291,519
Distribution. . . . . . . . . . . . . . . 395,394 33,849 5,110 (135) 423,998
General . . . . . . . . . . . . . . . . . 83,833 7,699 4,071 (11) 87,450
Electric plant held for future use. . . . . 1,217 - - - 1,217
Construction work in progress . . . . . . . 56,708 (15,070) - - 41,638
Completed construction not classified . . . 87,928 78,071 - - 165,999
_________ _________ __________ ________ _________
Total electric utility plant . . . . . . 2,054,869 116,606 13,459 (56) 2,157,960
_________ _________ __________ ________ _________
GAS UTILITY PLANT:
Gas utility plant in service--
Intangible. . . . . . . . . . . . . . . . 40 - - - 40
Production. . . . . . . . . . . . . . . . 1,216 - 63 - 1,153
Storage . . . . . . . . . . . . . . . . . 15,163 4,177 2 - 19,338
Transmission. . . . . . . . . . . . . . . 33,001 711 26 (1) 33,685
Distribution. . . . . . . . . . . . . . . 106,664 7,280 671 - 113,273
General . . . . . . . . . . . . . . . . . 7,880 1,561 686 10 8,765
Gas plant held for future use . . . . . . . 37 - - - 37
Construction work in progress . . . . . . . 1,774 1,807 - - 3,581
Completed construction not classified . . . 13,390 6,028 - - 19,418
_________ _________ __________ ________ _________
Total gas utility plant. . . . . . . . . 179,165 21,564 1,448 9 199,290
_________ _________ __________ ________ _________
Total utility plant. . . . . . . . . . . $2,234,034 $ 138,170 $ 14,907 $ (47) $2,357,250
========= ========= ========== ======== =========
_________________________
(a) Reference is made to Note 1 to Financial Statements.
(b) Represents retirements charged to accumulated depreciation (Schedule VI).
(c) Represents land and buildings transferred to other physical property, amortization of franchises and plant acquisition
adjustments.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
SCHEDULE V
(3 of 3)
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
PROPERTY, PLANT AND EQUIPMENT AT ORIGINAL COST (a)
YEAR ENDED DECEMBER 31, 1991
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B Column C Collumn D Column E Column F
Transfers and
Retirements Amortization
Balance Additions or Sales at of Balance
Classification of Property Dec. 31, 1990 at Cost Cost(b) Franchises(c) Dec. 31, 1991
__________________________ _____________ ___________ ___________ _____________ _____________
ELECTRIC UTILITY PLANT:
Electric utility plant in service--
Intangible. . . . . . . . . . . . . . . . $ 52 $ - $ - $ - $ 52
Production. . . . . . . . . . . . . . . . 1,138,222 6,794 3,483 2 1,141,535
Transmission. . . . . . . . . . . . . . . 258,482 3,437 766 49 288,202
Distribution. . . . . . . . . . . . . . . 380,381 18,449 3,430 (6) 395,394
General . . . . . . . . . . . . . . . . . 77,718 8,474 2,313 (46) 83,833
Electric plant held for future use. . . . . 1,294 231 - (308) 1,217
Construction work in progress . . . . . . . 34,752 21,956 - - 56,708
Completed construction not classified . . . 48,266 39,662 - - 87,928
_________ _________ __________ ________ _________
Total electric utility plant . . . . . . 1,966,167 99,003 9,992 (309) 2,054,869
_________ _________ __________ ________ _________
GAS UTILITY PLANT:
Gas utility plant in service--
Intangible. . . . . . . . . . . . . . . . 40 - - - 40
Production. . . . . . . . . . . . . . . . 1,217 - - (1) 1,216
Storage . . . . . . . . . . . . . . . . . 15,126 40 3 - 15,163
Transmission. . . . . . . . . . . . . . . 32,929 134 62 - 33,001
Distribution. . . . . . . . . . . . . . . 102,236 5,253 830 - 106,664
General . . . . . . . . . . . . . . . . . 7,468 1,167 731 5 7,880
Gas plant held for future use . . . . . . . 41 - - (24) 37
Construction work in progress . . . . . . . 2,439 (665) - (4) 1,774
Completed construction not classified . . . 4,440 8,950 - - 13,390
_________ _________ __________ ________ _________
Total gas utility plant. . . . . . . . . 165,936 14,879 1,626 (24) 179,165
_________ _________ __________ ________ _________
Total utility plant. . . . . . . . . . . $2,132,103 $ 113,882 $ 11,618 $ (333) $2,234,034
========= ========= ========== ======== =========
_________________________
(a) Reference is made to Note 1 to Financial Statements.
(b) Represents retirements charged to accumulated depreciation (Schedule VI).
(c) Represents land and buildings transferred to other physical property, amortization of franchises and plant acquisition
adjustments.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
SCHEDULE VI
(1 of 3)
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1993
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B Column C Column D Column E
Additions(a) Deduction(a)
_____________________________ ______________________
Balance Charged Charged Retirements Cost of Balance
Description Dec. 31, 1992 to Income(b) Other Accounts at Cost Removal Dec. 31, 1993
___________ _____________ ____________ ______________ ___________ ________ _____________
Electric . . . . . . . . . . $882,353 $ 69,229 $ 7,328 $ 16,570 $ 5,998 $ 936,342
Gas. . . . . . . . . . . . . 79,066 5,273 783 846 521 83,755
_______ _______ _______ _______ _______ _________
Total . . . . . . . . . $961,419 $ 74,502 $ 8,111(c) $ 17,416 $ 6,519 $1,020,097
======= ======= ======= ======= ======= =========
_________________________
(a) Reference is made to Note 1 to Financial Statements.
Electric Gas Total
_________ ________ _______
(b) Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . $ 71,876 $ 5,771 $ 77,647
Amortization of major systems development, roads and rights-of-way . . (2,647) (498) (3,145)
_______ _______ _______
$ 69,229 $ 5,273 $ 74,502
======= ======= =======
(c) Depreciation charged to clearing and other accounts. . . . . . . . . . . . $ 3,672
Salvage and miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 4,439
_______
$ 8,111
=======
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
SCHEDULE VI
(2 of 3)
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1992
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B Column C Column D Column E
Additions(a) Deduction(a)
_____________________________ ______________________
Balance Charged Charged Retirements Cost of Balance
Description Dec. 31, 1991 to Income(b) Other Accounts at Cost Removal Dec. 31, 1992
___________ _____________ ____________ ______________ ___________ ________ _____________
Electric . . . . . . . . . . $825,452 $ 66,345 $ 9,713 $ 13,459 $ 5,698 $882,353
Gas. . . . . . . . . . . . . 75,175 4,791 580 1,448 32 79,066
_______ _______ _______ _______ _______ _______
Total . . . . . . . . . $900,627 $ 71,136 $ 10,293(c) $ 14,907 $ 5,730 $961,419
======= ======= ======= ======= ======= =======
_________________________
(a) Reference is made to Note 1 to Financial Statements.
Electric Gas Total
________ _______ _______
(b) Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,902 $ 5,252 $ 74,154
Amortizatin of major systems development, roads and rights-of-way. . . . . (2,557) (461) (3,018)
_______ _______ _______
$ 66,345 $ 4,791 $ 71,136
======= ======= =======
(c) Depreciation charged to clearing and other accounts. . . . . . . . . . . . $ 3,198
Salvage and miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 7,095
_______
$ 10,293
=======
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
SCHEDULE VI
(3 of 3)
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1991
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B Column C Column D Column E
Additions(a) Deduction(a)
_____________________________ ______________________
Balance Charged Charged Retirements Cost of Balance
Description Dec. 31, 1990 to Income(b) Other Accounts at Cost Removal Dec. 31, 1991
___________ _____________ ____________ ______________ ___________ ________ _____________
Electric . . . . . . . . . . $774,242 $ 63,310 $ 4,912 $ 9,992 $ 7,020 $825,452
Gas. . . . . . . . . . . . . 71,948 4,475 680 1,626 302 75,175
_______ _______ _______ _______ _______ _______
Total . . . . . . . . . $846,190 $ 67,785 $ 5,592(c) $ 11,618 $ 7,322 $900,627
======= ======= ======= ======= ======= =======
_________________________
(a) Reference is made to Note 1 to Financial Statements.
Electric Gas Total
________ _______ _______
(b) Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 64,880 $ 4,603 $ 69,483
Amortizatin of major systems development, roads and rights-of-way. . . . . (1,570) (128) (1,698)
_______ _______ _______
$ 63,310 $ 4,475 $ 67,785
======= ======= =======
(c) Depreciation charged to clearing and other accounts. . . . . . . . . . . . $ 2,872
Salvage and miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . 2,720
_______
$ 5,592
=======
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
SCHEDULE IX
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B Column C Column D Column E Column F
Weighted Average Amount Weighted
Average Interest Maximum Amount Outstanding Average Interest
Balance at Rate at Outstanding at During the Rate During
Catetory End of Year End of Year Any Month-End Year(a) the Year(a)
________ ___________ _________________ ______________ ______________ ________________
1993:
_____
Commercial Paper . . . - - $10,397 $1,992 3.38%
1992:
_____
Commercial Paper . . . $17,393 3.45% $17,393 $ 59 3.46%
1991:
_____
None
__________________________
(a) Computed on a daily weighted average basis.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
SCHEDULE X
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Column A Column B
Charged to Costs and Expenses
_____________________________
1993 1992 1991
____ ____ ____
Taxes other than income taxes:
Real estate . . . . . . . . . . . . . . $ 7,517 $ 7,055 $ 7,301
Invested capital. . . . . . . . . . . . 8,876 8,888 8,989
Gross receipts and public utility . . . 30,961 27,207 30,150
Payroll . . . . . . . . . . . . . . . . 6,980 7,617 6,960
Other . . . . . . . . . . . . . . . . . 433 339 536
_______ _______ _______
$ 54,767 $ 51,106 $ 53,936
======= ======= =======
The amounts charged to the respective accounts for royalties,
advertising, and depreciation and amortization of intangible assets,
preoperating costs and similar deferrals each aggregated less than one percent
of total revenues.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
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.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
(Registrant)
By C. L. GREENWALT
_____________________________________
C. L. Greenwalt
President and Chief Executive Officer
Date: March 10, 1994
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 in the capacities and on the date indicated.
Signature Title
Principal Executive Officer:
C. L. GREENWALT President and Chief Executive Officer
and Director
Principal Financial Officer:
R. W. JACKSON Senior Vice President and Secretary, Director
and as Attorney-in-Fact*
Principal Accounting Officer:
J. C. FIAUSH Controller
WILLIAM J. ALLEY* Director
ROBERT S. ECKLEY* Director
JOHN L. HEATH* Director
GORDON R. LOHMAN* Director
HANNE M. MERRIMAN* Director
DONALD G. RAYMER* Director
THOMAS L. SHADE* Director
JAMES W. WOGSLAND* Director
Date: March 10, 1994
EXHIBIT 10.02
A G R E E M E N T
This AGREEMENT made this_______ day of _____________, 19__, by and
between CENTRAL ILLINOIS PUBLIC SERVICE COMPANY, an Illinois corporation
(hereinafter called the "Company"), and ____________________________
(hereinafter called the "Director").
WITNESSETH:
WHEREAS, the Director is a member of the Board of Directors of
the Company; and
WHEREAS, the Company and the Director desire to enter into
this Agreement with respect to compensation to accrue to the Director as
a member of the Board of Directors commencing __________, 19__ (the
"Effective Date");
NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth it is agreed:
1. The Director shall serve diligently and honestly in the
administration of the affairs of the Company during his or her service
as a director.
2. As compensation for the services to be rendered by the
Director to the Company, the Company shall set up on its books an
account in the name of the Director to which shall be accrued,
commencing with the Effective Date and continuing for the period that
compensation is to be accrued hereunder, the amounts provided in
subparagraphs (a) and (b) hereof.
(a) There shall be accrued to the account amounts equivalent to
such amounts as the Director would have received as a director
of the Company as compensation for the services rendered by
the Director but for this Agreement, such accruals to commence
as of the respective dates payment of such amounts would have
been made by the Company.
(b) There shall be accrued an additional amount equivalent to such
amounts as would have been available if the amount accrued to
the account were invested in CIPSCO Incorporated Common Stock
at the closing price as reported in the listing of the New
York Stock Exchange - Composite Transactions for the trading
day coincident with or next following the date payment would
have been made to the Director but for this Agreement,
including subsequent cash dividends on the shares of Common
Stock treated as credited to the Director's account. Such
cash dividends shall be treated as automatically reinvested in
CIPSCO Incorporated Common Stock at the closing price as
reported in the listing of the New York Stock Exchange -
Composite Transactions for the trading day concident with or
next following the applicable dividend payment date.
Adjustments of the value of the account for appreciation or
depreciation in the market value of shares of Common Stock
deemed to be so held will be made on any applicable valuation
date using the closing price as reported in the listing of the
New York Stock Exchange - Composite Transactions.
3. The amount accrued to the Director's account shall be paid
over in accordance with the provisions of this paragraph 3.
(a) Commencing with the last day of the calendar quarter in which
the Director shall have retired as a director of the Company
and its affiliates, the Company shall pay, or commence to pay,
to the Director in cash the amount accrued to his or her
account as of such date.
The manner of payment shall be in accordance with Payment
Method 1 below or Payment Method 2 below, whichever the
Director designates at the end of this Agreement as the method
of payment; provided, however, that the Director may elect
from time to time to change as of any January 1 his or her
payment designation by filing an appropriate written direction
with the Company prior to the January 1st as which the change
is to be effective. A change in payment designation, however,
shall only be effective with respect to amounts to be accrued
to the Director's account attributable to years of service
commencing on or after the effective date of such change for
which compensation is accrued under Paragraph 2(a) of this
Agreement. A payment designation shall be irrevocable with
respect to amounts accrued to the Director's account that are
attributable to years of service commencing prior to such
January 1st during which the payment designation was in
effect.
Payment Method 1 --
The portion of the Director's account covered by this
Payment Method 1 shall be paid over in equal quarterly
installments, the number of which shall be the lesser of
(i) 20 or (ii) the number of calendar quarters during
which compensation was accrued under this Agreement and
under any similar agreement with the Company or an
affiliate of the Company (but not counting any such
calendar quarter more than once). In addition, the
Company shall pay to the Director quarterly an amount
equivalent to interest on the balance of such portion of
his or her account from time to time unpaid, at a rate,
in respect of each quarterly payment, equal to the rate
of interest obtained at the auction of six month United
States Treasury Bills taking place nearest to the first
day of the calendar quarter for which the payment is
made.
Payment Method 2 --
The portion of the Director's account covered by this
Payment Method 2 shall be paid over in one of the
following methods as the Company, in its sole
discretion, shall determine prior to the Director's
retirement after consultation with the Director:
(i) By payment in a lump sum, or
(ii) By payment in equal quarterly installments, the number
of which shall be the lesser of (i) 20 or (ii) the
number of calendar quarters during which compensation
was accrued under this Agreement and under any similar
agreement with the Company or an affiliate of the
Company (but not counting any such calendar quarter more
than once). In addition, the Company shall pay to the
Director quarterly an amount equivalent to interest on
the balance of such portion of his or her account from
time to time unpaid at a rate, in respect of each
quarterly payment, equal to the rate of interest
obtained at the auction of six month United States
Treasury Bills taking place nearest to the first day of
the calendar quarter for which the payment is made.
(b) Upon the death of the Director prior to complete
distribution of the amount accrued to his or her
account, any undistributed amount shall be paid in cash
in a lump sum to such beneficiaries and in such
proportions among them as the Director shall have
designated in the latest instrument in writing filed by
the Director with the Company. If there shall be no
beneficiary designated or in existence at the Director's
death, any undistributed amount shall be paid to the
executor or administrator of the Director's estate. If
the death of the Director occurs prior to retirement,
the amount to be distributed shall be based on the value
of his or her account as of the last day of the calendar
quarter in which death occurs.
4. The Director, by filing an appropriate written direction with
the Company prior to January 1 of any calendar year, may have the
amounts payable for service referred to in paragraph 2 subsequent to
such January 1 paid in cash. Any such direction shall be effective with
respect to all future calendar years until revoked by the Director
filing an appropriate written direction with the Company prior to
January 1 of any calendar year to the have the amounts payable for such
services subsequent to January 1 accrued hereunder.
5. The Director shall have no power to commute, encumber, sell or
otherwise dispose of the rights provided herein and such rights shall be
non-assignable and non-transferable.
6. This Agreement shall be binding upon and inure to the benefit
of the Director, his heirs, executors and administrators, and the
Company, its successors and assigns.
7. All amounts payable under this Agreement shall be paid by the
Company from its general assets. No trust fund or other fund shall be
created or held for the financing of such amounts.
8. Attached hereto and incorporated herein are the Elections of
Director, dated the date hereof, made under this Agreement. Such
elections are hereby acknowledged by the Company.
IN WITNESS WHEREOF, the parties have signed this Agreement on
the day and year first above written.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
By______________________________
ATTEST:
________________________
Secretary
_____________________________________
Director
ELECTIONS
INSTRUCTION: CHECK APPROPRIATE BOXES AND FILL IN BLANKS.
1. Payment Method Under Paragraph 3:
Subject to my right to change my payment designation to the
extent provided in Paragraph 3 of the Agreement, I designate
the following method for payment of amounts accrued to my
account under the Agreement:
/ / Payment Method 1
/ / Payment Method 2
2. Beneficiary:
My beneficiary(ies) are as indicated on the attached
"Designation of Beneficiary."
Name of
Director ________________________
Date _________________________*
* Date as of date Agreement is signed, same date as in caption on
page 1.
_______________________________ _____________________________
Name of Director Account No.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
DEFERRED COMPENSATION AGREEMENT
_______________________
DESIGNATION OF BENEFICIARY
1. Pursuant to the provisions of the Deferred Compensation
Agreement ("Agreement") between Central Illinois Public Service Company
and me, dated _______________, 19___, I hereby designate the following
as the beneficiary(ies) to whom the entire undistributed amount accrued
to my account under the Agreement shall be paid in the event of my
death:
Address
(Street, City, Birth Perct. of
Full Name State & Zip Code) Relationship Date Distribution
______________ _________________ ____________ ____ ____________
______________ _________________ ____________ ____ ____________
______________ _________________ ____________ ____ ____________
______________ _________________ ____________ ____ ____________
I have designated above more than one beneficiary, payment of such
undistributed amount shall be made to the beneficiary(ies) surviving me
in the percentage indicated; provided, however, if any beneficiary shall
not survive me, such beneficiary's share shall be paid to the
beneficiaries(ies) who do survive me
pro-rata based on the percentages indicated.
2.If no beneficiary designated above survives me, I hereby
designate the following contingent beneficiary(ies) to whom the entire
undistributed amount accrued to my account under the Agreement shall be
paid in the event of my death:
Address
(Street, City, Birth Perct. of
Full Name State & Zip Code) Relationship Date Distribution
____________ _________________ _____________ ______ ____________
____________ _________________ _____________ ______ ____________
____________ _________________ _____________ ______ ____________
____________ _________________ _____________ ______ ____________
If I have designated above more than one contingent beneficiary,
payment of such undistributed amount shall be made to the contingent
beneficiary(ies) surviving me in the percentage indicated; provided,
however, if any beneficiary shall not survive me, such beneficiary's
share shall be paid to the beneficiary(ies) who do survive me pro-rata
based on the percentages indicated.
3. I hereby revoke any previous beneficiary designations made by
me with respect to the Agreement.
IN WITNESS WHEREOF, I have signed this designation in duplicate
this ______________ day of ____________, 19____.
____________________________________
Signature of Director
The foregoing is in accordance with our records.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
By _______________________________
EXHIBIT 10.04
AMENDMENT NO. 3 TO
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
SPECIAL EXECUTIVE RETIREMENT PLAN
The Central Illinois Public Service Company Special Executive
Retirement Plan, as heretofore amended (the "Plan"), is hereby further
amended, effective as of December 1, 1993, in the following respect:
1. By adding to Article III of the Plan a new paragraph L.
after paragraph K. as follows:
"L. VESTED BENEFIT - Each employee of an Employer
on December 31, 1993 who is eligible to take normal
or early retirement under the Retirement Income Plan
and who on such retirement would be an eligible
participant as defined in Article I shall be fully
vested in his Accrued Benefit under the Plan as of
December 31, 1993 subject to the terms and
conditions of the Plan. For this purpose, "Accrued
Benefit" means the amount of monthly benefit to
which such employee would be entitled under Article
II of the Plan if he terminated his employment with
the Company and its affiliates as of December 31,
1993. Such employee's Accrued Benefit shall also
include the amount of monthly benefit to which the
employee's Eligible Spouse would be entitled
following his death."
IN WITNESS WHEREOF, Central Illinois Public Service Company
has executed this instrument this _7th_ day of December, 1993.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
By: _______/s/Clifford L. Greenwalt_____
President
[CORPORATE SEAL]
ATTEST:
_/s/Craig D. Nelson___
Assistant Secretary
EXHIBIT 10.08
AMENDMENT NO. 1 TO
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
EXCESS BENEFIT PLAN
(As Amended And Restated Effective As Of October 1, 1990)
The Central Illinois Public Service Company Excess Benefit
Plan (As Amended And Restated Effective As Of October 1, 1993), (the
"Plan"), is hereby further amended, effective as of December 1, 1993, in
the following respect:
1. By adding to Article II of the Plan a new paragraph L.
after paragraph K. as follows:
"L. VESTED BENEFIT - Each participant in the Basic Plan
who is an employee of the Company on December 31, 1993 shall
be fully vested in his Accrued Benefit under the Excess
Benefit Plan as of December 31, 1993 subject to the terms and
conditions of the Excess Benefit Plan. For this purpose,
"Accrued Benefit" means the amount of monthly benefit to which
a participant in the Basic Plan would be entitled under
Article I of the Excess Benefit Plan if he terminated his
employment with the Company and its affiliates as of December
31, 1993. A participant's Accrued Benefit shall also include
the amount of monthly benefit to which the participant's
Eligible Spouse would be entitled following his death."
IN WITNESS WHEREOF, Central Illinois Public Service Company
has executed this instrument this _7TH_ day of December, 1993.
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
By: _____/s/Clifford L. Greenwalt______
President
[CORPORATE SEAL]
ATTEST:
___/s/Craig D. Nelson____
Assistant Secretary
Exhibit 12
Exhibit 12
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993
(in thousands)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
1993 1992 1191 1990 1989
___________ ___________ ___________ ___________ ___________
Net income. . . . . . . . . . . . . . . . . . . $ 84,011 $ 72,601(c) $ 75,683(c) $ 71,562(c) $ 71,222(c)
Add--Federal and state income taxes:
Current (a) . . . . . . . . . . . . . . . . . 50,441 6,110 36,316 39,380 45,464
Deferred (net). . . . . . . . . . . . . . . . 1,674 33,998 7,573 (2,964) (2,774)
Investment tax credit amortization. . . . . . (3,366) (3,336) (3,464) (3,306) (3,288)
Income tax applicable to nonoperating
activities. . . . . . . . . . . . . . . . . 631 2,989 2,413 2,986 3,246
Income tax applicable to provision
for prior period revenue refunds. . . . . . - - - - (7,465)
_______ _______ _______ _______ _______
49,380 39,761 42,838 36,096 35,183
_______ _______ _______ _______ _______
Net income before income taxes. . . . . . . . . 133,391 112,362 118,521 107,658 106,405
_______ _______ _______ _______ _______
Add--Fixed charges
Interest on long-term debt (b). . . . . . . . 32,823 35,534 36,652 36,589 36,604
Interest on provision for revenue refunds . . - (803) 4,261 3,396 3,432
Other interest. . . . . . . . . . . . . . . . 479 392 1,231 1,070 1,052
Amortization of net debt premium and
discount (b). . . . . . . . . . . . . . 1,598 863 338 326 290
_______ _______ _______ _______ _______
34,900 35,986 42,482 41,381 41,378
_______ _______ _______ _______ _______
Earnings as defined . . . . . . . . . . . . . $168,291 $148,348 $161,003 $149,039 $147,783
======= ======= ======= ======= =======
Ratio of earnings to fixed charges. . . . . . 4.82 4.12 3.79 3.60 3.57
Earnings required for preferred dividends:
Preferred stock dividends . . . . . . . . . . $ 3,718 4,549 5,396 5,617 5,856
Adjustment to pre-tax basis . . . . . . . . . 2,185 2,491 3,054 2,833 2,893
_______ _______ _______ _______ _______
$ 5,903 7,040 8,450 8,450 8,749
_______ _______ _______ _______ _______
Fixed charges plus preferred stock
dividend requirements . . . . . . . . . . . $ 40,803 43,026 50,932 49,831 50,127
======= ======= ======= ======= =======
Ratio of Earnings to fixed charges plus
preferred stock dividend requirements . . . 4.12 3.45 3.16 2.99 2.95
_________________________
(a) Federal portion and state portion are shown separately in Notes to Financial Statements.
(b) Combined as interest charges on long-term debt on Statements of Income.
(c) Includes revenues collected subject to refund as discussed in Note 11 to Financial Statements.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
Exhibit 21
Central Illinois Public Service Company
Subsidiaries of Registrant
State or Jurisdiction
Subsidiary of Incorporation
__________ _____________________
Illinois Steam Inc. Illinois
CIPS Energy Inc. Illinois
Electric Energy, Inc.* Illinois
*Central Illinois Public Service
Company owns 20% of the common
stock of EEI.
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
_________________________________________
As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into Central Illinois Public Service
Company's previously filed Registration Statements File Nos. 33-29384, 33-
31475, 33-59674, and 33-50349 and CIPSCO Incorporated's previously filed
Registration Statement File No. 33-32936.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
March 10, 1994
Exhibit 24
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/William J. Alley
_______________________________ (SEAL)
William J. Alley
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/Robert S. Eckley
_______________________________ (SEAL)
Robert S. Eckley
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/John L. Heath
_______________________________ (SEAL)
John L. Heath
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/Gordon R. Lohman
_______________________________ (SEAL)
Gordon R. Lohman
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/Hanne M. Merriman
_______________________________ (SEAL)
Hanne M. Merriman
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/Donald G. Raymer
_______________________________ (SEAL)
Donald G. Raymer
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/Thomas L. Shade
_______________________________ (SEAL)
Thomas L. Shade
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
POWER OF ATTORNEY
_________________
The undersigned, as a director of Central Illinois Public Service
Company, does hereby constitute and appoint C. L. Greenwalt and R. W. Jackson,
and each of them, his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to execute in
the name and on behalf of the undersigned, in his or her capacity, the Central
Illinois Public Service Company Annual Report on Form 10-K for 1993, and any
amendments thereto, to be filed under the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of this Power of Attorney.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 7th day of
December, 1993.
/s/James W. Wogsland
_______________________________ (SEAL)
James W. Wogsland
Subscribed and sworn to
before me this 7th day
of December, 1993.
/s/Janet K. Cooper
_________________________
Notary Public
My commission expires:
March 27, 1995
Exhibit 99
DESCRIPTION OF CAPITAL STOCK
General. The authorized capital stock of Central Illinois Public Service
Company (the "Company") consists of 2,000,000 shares of Cumulative Preferred
Stock, par value $100 per share, issuable in series, of which 800,000 shares
are outstanding; 2,600,000 shares of Cumulative Preferred Stock without par
value, issuable in series, of which no shares are outstanding (both such
classes of preferred stock being hereinafter collectively referred to as the
"Preferred Stock"); and 45,000,000 shares of Common Stock without par value of
which 25,452,373 shares were outstanding (all of which were held by CIPSCO) at
December 31, 1993.
The following statements, unless the context otherwise indicates, are
brief summaries of the substance or general effect of certain provisions of
the Company's Restated and Amended Articles of Incorporation, as amended, and
the reslutions establishing series of Preferred Stock (collectively, the
"Articles"), and of its Mortgage Indenture securing its outstanding First
Mortgage bonds. Such statements make use of defined terms and are not
complete; they are subject to all the provisions of the Articles or the
Mortgage Indenture, as the case may be.
Dividend Rights. Whenever dividends on all outstanding shares of the
Preferred Stock of all series for all previous quarter-yearly dividend periods
and the current quarter-yearly dividend period shall have been paid or
declared and set apart for payment, and whenever all amounts required to be
set aside for any sinking fund for the redemption or purchase of shares of the
Preferred Stock for all previous periods or dates shall have been paid or set
aside, and subject to the limitations summarized below, the Board of Directors
may declare dividends on the Common Stock out of any surplus or net profits of
the Company legally available for the purpose. Currently, none of the series
of the Preferred Stock have a sinking fund for the redemption or purchase of
shares of such series. The Mortgage Indenture provides, in effect, that the
Company will not declare or pay any dividends (other than in stock) on Common
Stock, or make any other distribution on or purchase any Common Stock, unless
the total amount charged or provided for maintenance, repairs and depreciation
of the mortgaged properties subsequent to December 31, 1940, plus the surplus
earned during the period and remaining after any such dividend, distribution
or purchase, shall equal at least 15% of the Company's total utility operating
revenues for the period, after deducting from such revenues the cost of
electricity and gas purchased for resale. The Articles provide in effect
that, so long as any Preferred Stock is outstanding, the total amount of all
dividends or other distributions on Common Stock (other than in stock) that
may be paid, and purchases of Common Stock that may be made, during any 12-
month period shall not exceed (a) 75% of the Company's net income (as defined)
for the 12-month period next preceding each such dividend, distribution or
purchase, if the ratio of "common stock equity" to "total capital" (as
defined) is 20% to 25%, or (b) 50% of such net income if such ratio is less
than 20%. If such ratio is in excess of 25%, no such dividends may be paid or
distributions or purchases made that would reduce such ratio to less than 25%
except to the extent permitted by clauses (a) and (b). At December 31, 1993,
no amount of retained earnings was restricted as to the payment of dividends
on Common Stock under the foregoing provisions of the Mortgage Indenture or
the Articles.
Voting Rights. Under Illinois law, each share of common stock of the
Company, common and preferred, is entitled to one vote on each matter voted on
at all meetings of shareholders, with the right of cumulative voting in the
election of directors and the right to vote as a class on certain questions.
The Articles give to holders of Preferred Stock certain special voting rights
designed to protect their interests with respect to specified corporate
action, including certain amendments to the Articles, the issuance of
Preferred Stock or parity stock, the issuance or assumption of certain
unsecured indebtedness, and mergers, consolidations or sales or leases of
substantially all of the Company's assets.
Preemptive Rights. Holders of Common Stock have no preemptive
subscription rights.
Liquidation Rights. In the event of any liquidation or dissolution of
the Company, holders of Common Stock are entitled to share ratably in the net
assets and profits of the Company remaining after the payment in full to the
holders of the Preferred Stock of the aggregate preferential amount payable in
respect of the Preferred Stock in any such event.
Miscellaneous. The Transfer Agents for the Common Stock are Illinois
Stock Transfer Company, Chicago, Illinois, and Harris Trust and Savings Bank,
Chicago, Illinois; and the Registrar is Harris Trust and Savings Bank,
Chicago, Illinois.
The Company reserves the right to increase, decrease or reclassify its
authorized capitial stock or any class or series thereof, and to amend or
repeal any provisions in the Articles; and all rights conferred on
shareholders in the Articles are subject to this reservation.