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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 33-46795
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OLD DOMINION ELECTRIC COOPERATIVE
(Exact name of Registrant as specified in its charter)
VIRGINIA 23-7048405
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4201 Dominion Boulevard, Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip code)
(804) 747-0592
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
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
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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
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant. NONE
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practicable date. The Registrant is a membership
corporation and has no authorized or outstanding equity securities.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
OLD DOMINION ELECTRIC COOPERATIVE
1996 ANNUAL REPORT ON FORM 10-K
Item Page
Number Number
- - ------ ------
PART I
1. Business....................................................................... 1
2. Properties..................................................................... 11
3. Legal Proceedings.............................................................. 11
4. Submission of Matters to a Vote of Security Holders............................ 11
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters.......... 11
6. Selected Financial Data........................................................ 12
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................. 14
8. Financial Statements and Supplementary Data.................................... 22
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.................................................................. 45
PART III
10. Directors and Executive Officers of the Registrant............................. 45
11. Executive Compensation......................................................... 49
12. Security Ownership of Certain Beneficial Owners and Management................. 51
13. Certain Relationships and Related Transactions................................. 51
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............... 52
Signatures..................................................................... 59
Exhibit Index.................................................................. 62
PART I
ITEM 1. BUSINESS.
OLD DOMINION ELECTRIC COOPERATIVE
GENERAL
Old Dominion Electric Cooperative ("Old Dominion"), which was
incorporated under the laws of the Commonwealth of Virginia in 1948, is a
not-for-profit wholesale power supply cooperative engaged in the business of
providing wholesale electric service to its 12 member distribution cooperatives
(the "Members") which, in turn, are engaged in the retail sale of power to
Member consumers located in 70 counties throughout Virginia, Delaware, Maryland
and parts of West Virginia. As of December 31, 1996, Old Dominion and its
Members served more than 385,000 retail electric consumers (meters) within Old
Dominion's and the Members' service territory, representing a total population
of approximately 1.1 million people. Old Dominion's principal executive offices
are located at Innsbrook Corporate Center, 4201 Dominion Boulevard, Glen Allen,
Virginia 23060 (telephone 804-747-0592).
Old Dominion is owned entirely by the Members which are the purchasers of
the power sold by Old Dominion. The Members, in turn, are local consumer-owned
distribution cooperatives providing electric service on a retail basis. The
membership of each distribution cooperative consists of residential, commercial
and industrial consumers within an exclusive certificated service territory
granted by the respective state's public utility commission. See "The Members --
Territorial Integrity." The Members purchase substantially all of their power
from Old Dominion pursuant to long-term wholesale power contracts with Old
Dominion (the "Wholesale Power Contracts"). See "Wholesale Power Contracts." Old
Dominion has no legal interest in, or obligation with respect to, any of the
assets, liabilities, equity, revenues or margins of such Members, other than its
rights under such contracts to receive payment for power supplied.
The service territory of Old Dominion and its Members is primarily
suburban, rural and recreational areas; does not have any significant
concentration of power purchases by any single employer or industry; and
predominantly reflects a residential load both in terms of power sales and
number of consumers.
Old Dominion was organized for the purpose of securing adequate sources
of power for the Members at the lowest possible cost. Prior to December 1983,
Old Dominion acted solely as a central negotiating agent for the power purchased
by the Members. In December 1983, Old Dominion purchased from Virginia Electric
and Power Company ("Virginia Power") an 11.6% undivided ownership interest in
the North Anna Power Station, a two-unit 1,790 megawatt ("MW") (net capacity
rating) nuclear power facility located in Louisa County, Virginia, approximately
60 miles northwest of Richmond, Virginia ("North Anna"). With the North Anna
purchase, Old Dominion became an operating utility. See "System Assets--Power
Supply--North Anna."
Old Dominion also holds a 50% undivided interest in a two-unit 882 MW
(net capacity rating) coal-fired electric generating facility near Clover,
Virginia, approximately 100 miles southwest of Richmond, Virginia ("Clover").
Clover Unit 1 went into commercial operation on October 7, 1995, and Unit 2 went
into commercial operation on March 28, 1996. See "System Assets--Power
Supply--Clover."
Old Dominion also purchases power under agreements with Virginia Power,
Delmarva Power & Light Company ("Delmarva Power"), Public Service Electric &
Gas Company ("PSE&G"), American Electric Power-Virginia ("American
Electric Power"), formerly Appalachian Power Company and Allegheny Power
System ("Allegheny Power"), formerly Potomac Edison Company. See "System
Assets--Purchased Power."
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As a not-for-profit electric cooperative, Old Dominion is currently
exempt from Federal income taxation under Section 501(c)(12) of the Internal
Revenue Code of 1986, as amended.
Old Dominion is not a party to any collective bargaining agreement.
Old Dominion had 59 employees as of March 1, 1997, and believes that its
relations with its employees are good.
WHOLESALE POWER CONTRACTS
Old Dominion has entered into a long-term Wholesale Power Contract with
each of its Members. Each such contract provides that Old Dominion shall sell
and deliver to the Member, and the Member shall purchase and receive from Old
Dominion, all power that the Member requires for the operation of the Member's
system to the extent that Old Dominion has the power and facilities available.
The obligations of certain Members are subject to their right to purchase power
allocated to them from the Southeastern Power Administration ("SEPA"). See "The
Members--Contracts with SEPA." Each Wholesale Power Contract provides that if a
Member is required by law to purchase electric power from cogeneration
facilities or other qualifying facilities ("QF"), Old Dominion may at its
option, purchase such power from the Member at a rate not to exceed Old
Dominion's avoided cost. See "The Members--Power Purchases under PURPA."
Revenues from the following Members equaled or exceeded 10% of Old
Dominion's total revenues in 1996:
Percentage of
Old Dominion's
Members Revenues Total Revenues
- - ------- ------------- --------------
(in millions)
Northern Virginia Electric Cooperative...... $98.4 26.8%
Rappahannock Electric Cooperative........... 78.4 21.4
Delaware Electric Cooperative............... 38.2 10.4
REGULATION
GENERAL
Old Dominion is subject to regulation by the Federal Energy Regulatory
Commission ("FERC"). Certain of Old Dominion's operations are also subject to
regulation by the Department of Environmental Quality (the "DEQ"), the
Department of Energy (the "DOE"), the Nuclear Regulatory Commission (the "NRC")
and other federal, state and local authorities. Compliance with future laws or
regulations may increase Old Dominion's operating and capital costs by
requiring, among other things, changes in the design and operation of its
generation facilities.
The rates and charges made, demanded or received by Old Dominion for the
transmission and wholesale sale of power in interstate commerce, are regulated
by FERC. Old Dominion's rates and charges for power furnished to its Members are
established by Old Dominion pursuant to a comprehensive rate formula filed with
FERC. The formula provides for periodic adjustments of rates to recover actual
costs without further application to FERC. FERC may also review Old Dominion's
rates upon its own initiative or upon complaints and may order a reduction of
any rates determined to be unjust, unreasonable or otherwise unlawful and may
order a refund for amounts collected during such proceedings in excess of the
just, reasonable and lawful rates.
In addition to its jurisdiction over rates, FERC regulates the issuance
of securities and assumption of liabilities by Old Dominion, as well as the
acquisition of securities of other utilities and disposition of property other
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than generating facilities. Under FERC regulations, Old Dominion is also
prohibited from selling, leasing or otherwise disposing of the whole of its
facilities (other than generating facilities), or any part of such facilities
having a value in excess of $50,000, without FERC approval. Mergers,
consolidations and the acquisition of the securities of any other public utility
by Old Dominion also are subject to FERC approval.
Since Old Dominion is regulated by FERC, the Virginia State Corporation
Commission (the "VSCC") does not have jurisdiction over Old Dominion's rates and
services. The VSCC does, however, have oversight over the siting of Old
Dominion's utility facilities.
On behalf of its Members, Old Dominion has developed and published a
Competitive Bidding Program for use in purchasing electric capacity and energy
from other power suppliers. This program represents a system-wide election to
use a centrally administered competitive bidding process for all Members to
satisfy the requirements of the Public Utility Regulatory Policies Act ("PURPA")
and the rules of the respective state commissions having regulatory authority
over the Members.
ENVIRONMENTAL
Old Dominion is currently subject to regulation by the Environmental
Protection Agency ("EPA") and other federal, state and local authorities with
respect to the emission, discharge or release of certain materials into the
environment. As with all electric utilities, the operation of Old Dominion's
generating units could be affected by any environmental regulations promulgated
in the future. Capital expenditures and increased operating costs required to
comply with any such future regulations could be significant. Expenditures
necessary to ensure compliance with environmental standards or deadlines will
continue to be reflected in Old Dominion's capital and operating costs.
Old Dominion is subject to certain requirements of the Clean Air Act (the
"CAA") which provides for environmental air quality standards. The CAA requires
utilities owning fossil fuel fired power stations to, among other things, limit
emissions of sulfur dioxide or obtain allowances for such emissions, or both,
and limit emissions of oxides of nitrogen. Clover is designed and licensed to
operate at full capacity below the permitted sulfur dioxide emissions levels and
utilizes equipment which operates at a level which is at or below the
limitations for emission of oxides of nitrogen.
On December 19, 1996, the EPA published its final rule for the Acid
Rain/Nitrogen Oxide Emission Reduction Program. In accordance with the new
standard, Clover's two tangentially fired boilers must meet an emission rate of
.40 lbs/MMBTU. However, through its construction and operating permit, Clover is
required to meet a nitrogen oxide emission rate of .32 lbs/MMBTU on a 30-day
rolling average. Clover Units 1 and 2 currently operate in compliance with the
EPA regulation.
Old Dominion is also subject to permit limitations for surface water
discharges and for the operation of a combustion waste landfill. Surface water
discharges are covered under the Virginia Pollutant Discharge Elimination System
permit which contains limits required by the Clean Water Act and the State Water
Quality Standards. The Solid Waste Permit for the combustion waste landfill
contains operational and monitoring standards required by the Resource
Conservation and Recovery Act and the state's Solid Waste Management
Regulations. Clover is designed and licensed to operate within these permit
limitations.
In connection with Clover, Old Dominion's direct capital expenditures for
environmental control facilities, excluding capitalized interest, were
approximately $1.0 million in 1996. Direct capital expenditures for
environmental control facilities at North Anna, excluding capitalized interest,
were approximately $.2 million in 1996. Based on information provided by
Virginia Power, Old Dominion's portion of direct capital expenditures for
environmental control facilities planned for North Anna and Clover in the next
five years is estimated to be approximately $.7 million and $6.2 million,
respectively. These expenditures are included in Old Dominion's estimated
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capital expenditures. See Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
for Old Dominion's estimates of total capital expenditures for the years 1997
through 2001.
The scientific community, regulatory agencies and the electric utility
industry are examining the issues of global warming, acidic deposition,
visibility and regional haze, and the possible health effects of electric and
magnetic fields. While no definitive scientific conclusions have been reached
regarding these issues, it is possible that new regulations pertaining to these
matters could further increase the capital and operating costs of electric
utilities.
Old Dominion and its Members have entered into an agreement with the DOE
to participate in the voluntary Climate Challenge Program under the United
States Climate Challenge Action Plan. This voluntary program tracks reductions
in carbon dioxide emissions from efficiency programs. A report was submitted to
the DOE on December 14, 1996, summarizing various carbon dioxide reductions as a
result of efficiency programs and distribution system upgrades.
NUCLEAR
North Anna is subject to regulation by the NRC. Operating licenses issued
by the NRC are subject to revocation, suspension or modification, and the
operation of a nuclear unit may be suspended if the NRC determines that the
public interest, health or safety so requires. From time to time, new NRC
regulations require changes in the design, operation and maintenance of existing
nuclear reactors. Virginia Power has advised Old Dominion that it intends to
work with industry groups on license renewal programs, and apply for renewal of
the current 40-year licenses for Units 1 and 2, which expire in 2018 and 2020,
respectively. See Notes 1 and 12 to the Consolidated Financial Statements for a
discussion of other laws and regulations affecting Old Dominion as a result of
its ownership interest in North Anna.
Under the Nuclear Waste Policy Act (the "NWPA"), the DOE is to provide
for the permanent disposal of spent nuclear fuel produced by North Anna;
however, it is uncertain when these services will begin. Virginia Power
estimates that an interim spent nuclear fuel storage facility will be required
at North Anna in the late 1990's and submitted a license application to the NRC
in May 1995, for such a facility at North Anna. The VSCC began an investigation
of certain spent fuel storage and disposal issues on July 18, 1995. The VSCC
directed its staff to file a report setting forth its findings, recommendations
and proposed policy statements regarding spent nuclear fuel disposal. On
February 27, 1996, the staff issued its report suggesting a definitive policy be
delayed until (1) a ruling is forthcoming on pending litigation which seeks to
impose on the federal government the obligation to begin acceptance of spent
nuclear fuel no later than January 31, 1998, (2) the outcome of proposed
legislation which would amend the nuclear waste policy act to require the
development of a centralized interim storage facility has been determined, and
(3) a vision of the electric utility industry restructuring efforts has been
more fully conceptualized. The staff also suggested a definitive policy be
delayed until the restructuring of the utility industry is more fully
conceptualized.
On January 31, 1997, Virginia Power joined 33 other utilities in filing a
lawsuit against the DOE in the U.S. Court of Appeals for the District of
Columbia, asking the court to authorize suspension of payments to the Nuclear
Waste Fund and to authorize payment of those fees into escrow until the DOE
begins accepting used fuel.
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COMPETITION
The electric utility industry is becoming increasingly competitive as a
result of deregulation, competing energy suppliers, new technology and other
factors. The Energy Policy Act amended the Federal Power Act and the Public
Utilities Holding Company Act to allow for increased competition among wholesale
electricity suppliers and increased access to transmission services by such
suppliers. A number of other significant factors have affected the operations of
electric utilities including the availability and cost of fuel for the
generation of electric energy; the use of alternative fuel sources for space and
water heating and household appliances; fluctuating rates of load growth;
compliance with environmental and other governmental regulations; licensing and
other delays affecting the construction, operation and cost of new and existing
facilities; and the effects of conservation, energy management and other
governmental regulations on the use of electric energy. All these factors
present an increasing challenge to companies in the electric utility industry,
including Old Dominion and its Members, to reduce costs, to increase efficiency
and innovation, and to improve management of resources.
In an effort to achieve an orderly transition of the industry to a
competitive wholesale power market, FERC issued its final rules providing for
comparable transmission service for all users of the transmission system. Such
rules, which were issued on April 24, 1996, (Orders 888 and 889) are intended to
promote wholesale competition through open access, non-discriminatory
transmission service and will become the catalyst for moving the industry into a
competitive marketplace.
The 1997 Session of the Virginia General Assembly passed a resolution
continuing its study of the effects on the Commonwealth of the electric utility
industry restructuring and the need for legislative changes in order to promote
the public interest. The VSCC, in response to the study resolution, established
five working groups to examine several issues surrounding restructuring: System
Reliability, Environment, Cost/Benefit of Restructuring, Stranded Costs and
Models in a Restructured Environment. Representatives from the member systems,
Old Dominion and the Virginia, Maryland and Delaware Association of Electric
Cooperatives ("VMDA") are serving in these five working groups. In addition, the
VSCC issued a series of orders requiring utilities to file sample unbundled
rates by March 31, 1997, and to report on restructuring contracts with
independent power producers by June 1, 1997. The staff of the VSCC is also
required to submit a report on retail wheeling in other states by September 1,
1997. Both the Virginia General Assembly study (particularly the Models in a
Restructured Environment report) and the VSCC report will be used to craft
restructuring legislation to be considered in the 1998 Session of the Virginia
General Assembly.
The Maryland Public Service Commission (the "Maryland Commission") has,
via PSC Order No. 72938, reopened its study of electric utility restructuring
and retail competition. In an earlier study, reported in a final order dated
August 18, 1995, in Case No. 8678, the Maryland Commission adopted a "go slow"
approach with a commitment to allow the savings available in a mature wholesale
market to be explored. Following up on their acknowledgment of the potential
benefits of retail wheeling noted in Case No. 8678, the Maryland Commission is
examining changes that will be needed to move the state toward utility
restructuring and retail wheeling.
During 1996, the Delaware Public Service Commission (the "Delaware
Commission") convened a docket in mid-year in which the issues surrounding a
restructuring of Delmarva Power and deregulation could be discussed by all
interested parties. In late December 1996, a report of those meetings was
presented to the Delaware Commission by an administrative law judge. Many issues
have not been settled and negotiations continue with the various parties. It is
expected that a compromise will be negotiated and a proposal made to the
Delaware Commission for approval.
5
CONSERVATION AND LOAD MANAGEMENT
ENERGY SERVICES
Old Dominion seeks to encourage and promote, through its Members and
their consumers, effective load reduction and energy efficiency programs. Load
management programs, combined with interruptible customers, provide Old Dominion
the peak load reduction capability of approximately 200 MW. Other programs
encourage the construction of efficient and affordable housing, the use of
energy efficient lighting and the purchase of energy efficient heating,
ventilation and air conditioning equipment. Member cooperatives also support
energy conservation efforts by providing home energy audits and educational
materials.
SEASONAL VARIATIONS
Old Dominion's system is geographically divided into two separate and
distinctive power supply area systems -- the mainland Virginia area system and
the Delmarva peninsula system. The two systems have similar customer usage
characteristics and distribution of sales by consumer classification.
Historically, the mainland Virginia area system's peak electric demand is in the
winter months, while the Delmarva peninsula system's peak electric demand is in
the summer months. While there is little variance between its summer and winter
peak electric demands, Old Dominion, representing both areas, typically has
experienced a slightly higher peak demand for power in the winter months. This
peak is due to the winter heating load which reflects the large residential
component of Old Dominion's total load. The mainland Virginia area represented
80.6% of Old Dominion's 1996 peak demand.
THE MEMBERS
TERRITORIAL INTEGRITY
The service territory of Old Dominion's Members range from the suburban
Washington D.C. area in Northern Virginia to the Atlantic shore of Delaware, the
Appalachian Mountains and the North Carolina border. Pursuant to statutes in
Virginia and Delaware and an order of the public service commission in Maryland,
each of the Members operating in those states has been granted an exclusive
service territory, certificated by its respective state commission. Generally, a
Member's certificated service territory cannot be changed, nor can customers in
such territories change electric suppliers, unless the applicable state
commission determines that the service provided by the certificated Member is
inadequate.
Subject to statutory limitations, a municipality operating an electric
system can expand into a Member's service territory by annexing a portion
thereof. The small number of municipally-owned electric systems in close
proximity to the Members' service territories and the statutory limitations on
annexation limit the threat to Old Dominion's Members. Moreover, Old Dominion's
Members would be entitled to compensation in the event their territory is
annexed. Virginia currently has a statutory moratorium on non-consensual
annexation by a city which is scheduled to expire on July 1, 1997.
CONTRACTS WITH SEPA
In addition to power received from Old Dominion under the Wholesale Power
Contracts, certain Members receive a power allocation from SEPA. The SEPA
allocation to such Members is 76 MW plus associated energy, representing
approximately 4.4% of total Member peak demand and approximately 4.2% of total
Member energy requirements in 1996. Such Members' contracts with SEPA were
renewed during 1996 and will expire in 1998. Old Dominion anticipates that it
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will have adequate sources of energy in the event the SEPA contracts are not
renewed in 1998. Each Member which purchases power from SEPA receives its
allotment directly from SEPA and pays SEPA directly for such power.
POWER PURCHASES UNDER PURPA
In addition to purchases from Old Dominion and SEPA, the Members are also
required to purchase power from QFs under PURPA. Purchases of power generated by
QFs constituted less than 1.0% of Old Dominion's energy requirements in 1996.
Pursuant to FERC regulations, purchases from QFs must be made at avoided costs.
Although the Members are required to purchase power from QFs, such power is
currently being resold to Old Dominion, at a rate not to exceed Old Dominion's
avoided costs. The costs are blended into Old Dominion's overall rates charged
to all Members. Under the Wholesale Power Contracts, Old Dominion may, at its
option, but is not obligated to, purchase this power. No determination has been
made as to whether the current arrangement will apply to power that Members may
be required to purchase from QFs in the future.
COOPERATIVE STRUCTURE
Old Dominion is a membership corporation, and the Members are not
subsidiaries of Old Dominion. The Members operate their independent systems on a
not-for-profit basis. Accumulated margins remaining after payment of expenses
and provision for depreciation constitute patronage capital of the Members'
consumers. Refunds of accumulated patronage capital to the individual consumers
are made from time to time on a patronage basis subject to Member policies and
in conformity with limitations contained in the Members' Rural Utilities
Services mortgages.
SYSTEM ASSETS
POWER SUPPLY
NORTH ANNA. Old Dominion has an 11.6% undivided ownership interest in
North Anna, including nuclear fuel and common facilities at the power station,
and a portion of spare parts inventory and other support facilities. This
undivided ownership interest was acquired in 1983 more than five years after the
commencement of commercial operation of Unit 1 (June 1978) and more than three
years after the commencement of commercial operation of Unit 2 (December 1980).
Old Dominion is responsible for 11.6% of all post-acquisition date additions and
operating costs associated with North Anna, as well as a pro-rata portion of
Virginia Power's administrative and general expenses directly attributable to
North Anna, and must provide its own financing for these items. In addition, Old
Dominion separately provides for its portion of the decommissioning costs of
North Anna; see Note 1 to the Consolidated Financial Statements.
Like other nuclear plants, North Anna is subject to unanticipated or
extended outages for repairs, replacements or modifications of equipment or to
comply with regulatory requirements. Such outages may involve significant
expenditures not previously budgeted, including replacement energy costs. Stress
corrosion cracking has occurred in steam generators of a certain design,
including those at North Anna Units 1 and 2. The steam generators on Unit 1 were
replaced in 1993 and the steam generators on Unit 2 were replaced in 1995.
During the year ended December 31, 1996, unscheduled maintenance outages for
Units 1 and 2 were three days and 45 days, respectively.
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During 1996, North Anna provided approximately 19.8% of the energy
requirements of Old Dominion. For statistics regarding North Anna's
performance for the three year period ended December 31, 1996, see Item
7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Operating Expenses."
CLOVER. In 1992, construction began on the Clover Power Station, a joint
project between Old Dominion and Virginia Power in which each owned a 50%
undivided interest. Old Dominion has entered into a sale and lease-back of its
undivided interest in certain pollution control assets at Clover and separate
leases and lease-backs of its undivided interest in each unit and related common
facilities, including the pollution control assets. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources". Old Dominion is responsible for 50% of all post-construction
additions and operating costs associated with Clover, as well as a pro-rata
portion of Virginia Power's administrative and general expenses for Clover, and
must provide its own financing for these items. The net capacity rating of each
Clover unit is 441 MW.
During 1996, Clover provided approximately 29.3% of the energy
requirements of Old Dominion. For statistics regarding Clover's performance
for the year ended December 31, 1996, see Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Operating Expenses."
PURCHASED POWER
In 1996, Old Dominion purchased approximately 50.9% of its total energy
requirements pursuant to agreements with five suppliers: Virginia Power,
Delmarva Power, PSE&G, American Electric Power and Allegheny Power. These
purchases are system purchases that do not depend on the performance of any
single unit in a seller's system. Generally, under these arrangements, Old
Dominion's purchases expand and contract to fill the incremental requirements of
the Members over that provided by Old Dominion's owned generation, thereby
minimizing any risk of excess generating resources.
VIRGINIA POWER. Under the terms of the Interconnection and Operating
Agreement with Virginia Power (the "I&O Agreement"), Old Dominion agreed to
purchase from Virginia Power reserve power for North Anna and its entire monthly
requirements for supplemental power to meet the needs of its Virginia Members
(except A&N Electric Cooperative) not met from Old Dominion's portion of North
Anna and Clover generation. Old Dominion's obligations to purchase supplemental
power may be reduced by any amount with nine years notice or through the
construction of jointly owned facilities, or by 4% each year if notice is given
three months prior to year end. Amendment No. 1 to the I&O Agreement (the
"Amendment") allows Old Dominion to accumulate its 4% per year reduction for the
life of the Agreement. Under the terms of the Amendment, for the first four
years Old Dominion will purchase the 4% per year reduction from Virginia Power.
The Amendment has an effective date coincident with commercial operation of
Clover Unit 2 and expires in eight years. The I&O Agreement expires on the
earlier of the date on which all facilities at North Anna have been retired or
decommissioned and the date upon which Old Dominion's interest in North Anna is
reduced to zero.
In 1996, Old Dominion entered into discussions with Virginia Power to
develop a new relationship reflective of the competitive marketplace. To date,
the parties have entered into a Principles of Agreement which is expected to
result in a final contract replacing the I&O Agreement effective January 1,
1998.
Virginia Power supplied approximately 27.9% of Old Dominion's total
energy requirements in 1996.
DELMARVA POWER. Old Dominion has a partial requirements agreement with
Delmarva Power which obligates Delmarva Power to provide the balance of Old
Dominion's power requirements for A&N Electric Cooperative, Choptank Electric
Cooperative and Delaware Electric Cooperative in excess of the 150 MW purchased
from PSE&G or, within certain limits, any other capacity secured by Old Dominion
with proper notice to Delmarva Power. For the first five years charges for
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service are based on a rate formula. The agreement continues through 2004 with
automatic extensions for one year periods unless either party gives five years
notice, or Old Dominion exercises it option to reduce its load by up to 30% with
two years notice or 30% or more with five years notice.
In August 1996, Old Dominion exercised its option under the partial
requirements agreement with Delmarva Power to reduce its power purchases by 30%
beginning in 1998. The notice was given based on a review of the wholesale power
bids that Old Dominion received in response to its request for proposals for
power purchase contracts. Contracts to cover power purchases with a new supplier
beginning in 1998 are currently being finalized, subject to regulatory approval.
In addition to its notice to reduce power purchases by 30%, Old Dominion has
given Delmarva Power the required five years notice to terminate all purchases
under the partial requirements agreement by 2001.
Delmarva Power supplied approximately 6.9% of Old Dominion's total energy
requirements in 1996.
PSE&G. Old Dominion has an agreement with PSE&G (the "PSE&G Agreement")
to purchase 150 MW of capacity, consisting of 75 MW intermediate and/or peaking
capacity and 75 MW base load capacity, and associated energy, through 2005. The
PSE&G Agreement contains fixed capacity charges for the base, intermediate and
peaking capacity to be provided under the agreement. However, either party can
(within certain limits) apply to FERC to recover changes in certain costs of
providing services. In the event of a change in rate the PSE&G Agreement may be
terminated, with one year notice, by the party adversely affected. Old Dominion
may purchase the energy associated with the PSE&G capacity from PSE&G or other
power suppliers. If purchased from PSE&G, the energy cost is based on PSE&G's
incremental cost above its native load, taking into account the Pennsylvania-New
Jersey-Maryland Interconnection economy energy transactions. If purchased from
other power suppliers, Old Dominion would pay the negotiated energy rate. Old
Dominion purchases a large part of the energy at a fixed price from a third
party. Additionally, Old Dominion has entered into agreements with several power
suppliers and, to date, has elected to purchase a portion of the energy through
annual energy contracts with the remainder supplied through economy energy
decisions made on a daily basis.
Approximately 13.9% of Old Dominion's total energy requirements in 1996
was supplied under the PSE&G Agreement.
ALLEGHENY POWER. Under a contract that renews annually, Old Dominion
purchases power from Allegheny Power to serve consumers in the far western
portion of its service area, extending into West Virginia. Charges for service
under this contract are based on Allegheny Power's wholesale rate tariff filed
with FERC. The contract allows for purchases of up to 19.8 MW a year.
Old Dominion has entered into negotiation for a new agreement with
Allegheny Power to supply service to its existing delivery points on the Potomac
Edison system. On December 19, 1996, the parties executed a Principles of
Agreement which is expected to result in a new five year power purchase
agreement in 1997.
Allegheny Power supplied approximately .8% of Old Dominion's total
energy requirements in 1996.
AMERICAN ELECTRIC POWER. Old Dominion purchases power from American
Electric Power pursuant to two agreements, which expire in 2001. Combined, the
agreements allow for purchases of up to 100 MW a year. A third agreement, which
became effective April 1, 1996, provides for an additional eight MW. Charges for
power are assessed according to American Electric Power's wholesale rate tariff
filed with FERC.
American Electric Power supplied approximately 1.4% of Old Dominion's
total energy requirements in 1996.
9
TRANSMISSION
VIRGINIA POWER SYSTEM. Under the operating agreements for both North Anna
and Clover, Virginia Power has agreed to make available to Old Dominion its
transmission and distribution systems, as needed, to transmit Old Dominion's
power from North Anna and Clover, as well as power purchased from other
suppliers, to the Members' delivery points. The rates charged by Virginia Power
for transmission services are set according to the principles outlined in the
I&O Agreement and are approved by FERC. Under the I&O Agreement, Old Dominion
consults with Virginia Power and exchanges information concerning the parties'
respective needs for additional transmission facilities. The I&O Agreement also
establishes a planning committee to, among other things ensure future
interconnection points are established in accordance with prudent utility
practices. In establishing future interconnection points, Old Dominion's Members
bear the cost of facilities necessary to effect interconnection at a point where
Virginia Power's facilities exist, and Virginia Power bears the cost of those
facilities on the supply side of the interconnection point, including the
necessary switching and protective equipment.
In December 1996, FERC approved a Virginia Power filed Rate Schedule
TFC-1, entitled Clover Transmission Interconnection Facilities Charges. The Rate
Schedule sets forth the terms and conditions under which Old Dominion will
compensate Virginia Power for 50% of the cost of the transmission facilities
required to interconnect Clover and the Virginia Power electric system. Those
facilities include two new 230 kV transmission lines, a new 500 kV transmission
line between Clover and the Carson substation, and related facilities.
DELMARVA POWER SYSTEM. The power purchase contract with Delmarva Power
provides that Delmarva Power will transmit power to delivery points in the
service territories of A&N Electric Cooperative, Choptank Electric Cooperative
and Delaware Electric Cooperative. Delmarva Power and Old Dominion currently
have a tariff and a settlement agreement filed with FERC concerning power
transmission. The power delivered under the contract with PSE&G is transmitted
by Delmarva Power under the terms of a transmission service agreement dated
October 31, 1994.
OTHER TRANSMISSION SYSTEMS. Allegheny Power, in its power sales contract
with Old Dominion, has agreed to transmit power to one delivery point in the
service territory of BARC Electric Cooperative, two delivery points in the
service territory of Rappahannock Electric Cooperative and three delivery points
in the service territory of Shenandoah Valley Electric Cooperative. In addition,
the power purchase contracts between American Electric Power and Old Dominion
require American Electric Power to transmit power to three delivery points in
the service territory of Southside Electric Cooperative.
FUEL SUPPLY
NUCLEAR FUEL. Under the Purchase, Construction and Ownership Agreement,
the I&O Agreement and the Nuclear Fuel Agreement, between Old Dominion and
Virginia Power, each dated as of December 28, 1982, amended and restated October
17, 1983, Virginia Power has the authority and responsibility to procure nuclear
fuel for North Anna. Virginia Power employs both spot purchases and long-term
contracts to satisfy nuclear fuel requirements. The nuclear fuel supply and
related services are expected to be adequate to satisfy current and future
nuclear generation requirements. Virginia Power reports that current agreements,
inventories and market conditions will support planned fuel cycles throughout
the remainder of the 1990's.
COAL SUPPLY. Under the Clover Operating Agreement between Old Dominion
and Virginia Power, dated as of May 31, 1990, Virginia Power has the authority
and responsibility to procure coal for Clover. As with nuclear fuel Virginia
Power employs both spot purchases and long-term contracts to support its needs
for coal. Virginia Power anticipates that sufficient coal supplies at reasonable
prices will be available for the remainder of the 1990's.
10
ITEM 2. PROPERTIES.
Information with respect to Old Dominion's properties is set forth under
the caption "System Assets" included in Item 1 and is incorporated herein by
reference.
ITEM 3. LEGAL PROCEEDINGS.
Other than certain legal proceedings arising out of the ordinary course
of business, which management believes will not have a material adverse impact
on the results of operations or financial condition of Old Dominion, there is no
other litigation pending or threatened against Old Dominion. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" for a discussion of certain
disputes relating to Old Dominion's investment in Seacoast and the assertion by
the staff of the VSCC that gross receipts tax is payable in connection with
certain lease-leaseback transactions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Not Applicable
11
ITEM 6. SELECTED FINANCIAL DATA.
The following table presents selected historical information relating to the
financial condition and results of operations of Old Dominion over the past five
years:
Year Ended December 31,
------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- ---------
(in thousands, except ratios)
Statement of Operations Data:
Operating Revenues.................... $366,909 $357,322 $ 336,541 $332,827 $ 306,746
-------- -------- --------- -------- ---------
Operating Expenses:
Operation:
Purchased power................. 180,338 234,295 233,916 238,532 223,230
Fuel and other.................. 62,274 29,175 12,165 11,740 11,993
-------- -------- --------- -------- ---------
242,612 263,470 246,081 250,272 235,223
Maintenance........................ 8,949 5,907 6,523 8,386 7,487
Administrative and general......... 15,421 15,159 13,628 12,061 11,913
Depreciation and amortization...... 26,724 11,989 8,868 8,937 7,791
Amortization of lease gains........ (1,596) - - - -
Decommissioning cost............... 681 681 681 681 681
Taxes other than income taxes...... 6,338 4,106 3,943 3,562 4,624
-------- -------- --------- -------- ---------
Total Operating Expenses.............. 299,129 301,312 279,724 283,899 267,719
-------- -------- --------- -------- ---------
Operating Margin...................... 67,780 56,010 56,817 48,928 39,027
-------- -------- --------- -------- ---------
Other Expense, net.................... (4,848) - - - -
--------
Investment Income..................... 6,475 8,330 4,724 2,211 2,735
-------- --------- --------- -------- ---------
Interest Charges:
Interest on long-term debt......... 60,865 64,748 64,601 57,569 37,543
Other ............................. 328 221 230 321 282
Allowance for borrowed funds used
during construction............. (4,026) (34,657) (40,984) (35,967) (17,521)
-------- --------- --------- -------- ---------
Net Interest Charges............... 57,167 30,312 23,847 21,923 20,304
-------- --------- --------- -------- ---------
Net Margin............................ $ 12,240 $ 34,028 $ 37,694 $ 29,216 $ 21,458
======== ========= ========= ======== =========
Margins for Interest Ratio(1)......... 1.20 1.53 1.59 1.51 1.58
==== ==== ==== ==== ====
- - -------------------
(1) Under the Indenture (as hereinafter defined), Old Dominion is required,
subject to regulatory approval, to establish and collect rates reasonably
expected to yield Margins for Interest ("MFI") for the 12-month period
commencing with the effective date of such rates equal to at least 1.20
times total interest charges during such 12-month period on all
indebtedness secured under the Indenture or by a lien equal or prior to
the lien of the Indenture (the "MFI Ratio"). The MFI Ratio is determined
by dividing Old Dominion's MFI by its Interest Charges (as hereinafter
defined) where: MFI is defined as the sum of (i) net margins for the
period plus (ii) Interest Charges and accruals for Federal and other
taxes imposed on income, minus (iii) the amount, if any, by which certain
non-operating margins otherwise includable in net margins exceed 60% of
such net margins. Interest Charges are defined as the total interest
charges (whether capitalized or expensed) of Old Dominion on all
indebtedness secured under the Indenture or by a lien equal or prior to
the lien of the Indenture, including amortization of debt discount and
expense or premium. The MFI Ratio decreased from 1995 to 1996 primarily
due to the discontinuance of the Equity Development Plan (as hereinafter
defined) as of December 31, 1995.
12
December 31,
--------------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(in thousands, except ratios)
Balance Sheet Data:
Electric Plant:
In service, net................ $ 824,455 $ 552,784 $ 206,202 $ 210,393 $ 198,123
Construction work in progress 11,106 269,554 551,042 438,283 326,795
---------- ---------- ---------- ---------- ---------
Net Electric Plant............. 835,561 822,338 757,244 648,676 524,918
Other Assets...................... 320,785 256,608 316,657 422,122 277,704
---------- ---------- ---------- ---------- ---------
Total Assets...................... $1,156,346 $1,078,946 $1,073,901 $1,070,798 $ 802,622
========== ========== ========== ========== =========
Capitalization:
Patronage capital (1).......... $ 184,753 $ 172,513 $ 138,485 $ 100,791 $ 71,575
Long-term debt................. 664,490 738,974 793,070 861,702 614,886
---------- ---------- ---------- ---------- ---------
Total capitalization........... $ 849,243 $ 911,487 $ 931,555 $ 962,493 $ 686,461
========== ========== ========== ========== =========
Property Additions................ $ 34,655 $ 84,397 $ 177,245 $ 136,332 $ 159,666
========== ========== ========== ========== =========
Equity Ratio(2)................... 21.8% 18.9% 14.9% 10.5% 10.4%
====== ==== ==== ==== ====
- - -------------------
(1) Since its incorporation, Old Dominion has not distributed patronage
capital to its Members.
(2) Equity ratio equals patronage capital divided by total capitalization. The
equity ratio increased from 1995 to 1996 due to the purchase of $83.1
million of debt, $18.4 million of debt service payments and the addition
of $12.2 million of equity. The equity ratio increased from 1994 to 1995
due to the purchase and retirement of $6.5 million of debt, the additional
purchase of $30.0 million of debt, $18.5 million of debt service payments
and the addition of $34.0 million of equity.
13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
Old Dominion operates on a not-for-profit basis and, accordingly, seeks
only to generate revenues sufficient to recover Old Dominion's cost of service
and to generate margins sufficient to establish reasonable reserves and meet
financial coverage requirements. Revenues in excess of expenses in any year are
designated as net margins in Old Dominion's Consolidated Statements of Revenues,
Expenses and Patronage Capital. Retained net margins are designated in Old
Dominion's Consolidated Statements of Revenues, Expenses and Patronage Capital
and Consolidated Balance Sheets as patronage capital, which is assigned to each
Member on the basis of patronage. Patronage capital currently constitutes all of
Old Dominion's equity. Since its incorporation, Old Dominion has not distributed
patronage capital to its Members. Any distributions in the future are subject to
the discretion of the Board of Directors of Old Dominion and to certain
restrictions contained in the Indenture of Mortgage and Deed of Trust, dated as
of May 1, 1992, between Old Dominion and Crestar Bank, as trustee, (as
supplemented by five supplemental indentures thereto, is hereinafter
collectively referred to as the "Indenture").
Prior to June 1992, Old Dominion was required by the terms of its
mortgage then in effect with the RUS (the "RUS Mortgage") to design its rates to
maintain certain ratios. As a result of the prepayment of its RUS-guaranteed
indebtedness in June 1992, Old Dominion is not subject to the requirements of
the RUS Mortgage.
Under a rate formula accepted for filing by FERC in 1992, the rates
charged by Old Dominion are developed using a rate methodology under which all
categories of costs are specifically separated as components of the formula to
determine Old Dominion's revenue requirements. The rate methodology uses
traditional techniques to allocate costs to capacity and energy in establishing
rates to the Members. The formula is intended to permit collection of revenues
which, together with revenues from all other sources, are equal to all costs and
expenses recorded on Old Dominion's books, plus an additional 20% of total
interest charges plus additional equity contributions as approved by Old
Dominion's Board of Directors. It also provides for the periodic adjustment of
rates to recover actual prudently incurred costs, whether they increase or
decrease, without further application to and acceptance by FERC.
In order to minimize the power costs to Members and to provide for
uncertainties connected with the establishment of prospective rates, in 1984 Old
Dominion's Board of Directors established a plan (the "Margin Stabilization
Plan") which allows Old Dominion to review actual cost of service and power
sales as of year end and to adjust revenues from the Members to take into
account actual results and financial coverages. Old Dominion's FERC rate formula
allows Old Dominion to recover and refund amounts under the Margin Stabilization
Plan. All adjustments, whether increases or decreases, are recorded in the year
affected and allocated to Members based on power sales during that year. Such
increases or decreases are collected from Members, or offset against amounts
owed by the Members, in the succeeding year.
Under the Indenture, Old Dominion is required, subject to regulatory
approval, to establish and collect rates which are reasonably expected to yield
Margins for Interest ("MFI") for the 12-month period commencing with the
effective date of such rates equal to at least 1.20 times total interest charges
during such 12-month period on all indebtedness secured under the Indenture or
by a lien equal or prior to the lien of the Indenture (the "MFI Ratio"). The
Indenture limits the amount of certain non-operating margins that may be taken
into account in calculating MFI to 60% of net margins. Since 1984, Old
Dominion's first full year as an operating utility, Old Dominion's non-operating
margins have not equaled or exceeded 60% of net margins. The management of Old
Dominion does not anticipate that non-operating margins will equal or exceed 60%
of net margins in the foreseeable future. The management of Old Dominion also
believes that the rate formula described above and the rates and charges
established under the Wholesale Power Contracts will enable Old Dominion to
achieve such MFI.
14
Old Dominion achieved an MFI Ratio of 1.20 in 1996, 1.53 in 1995 and 1.59
in 1994. The MFI Ratio decreased from 1995 to 1996 due to the discontinuance of
the Equity Development Plan (as hereinafter defined) as of December 31, 1995.
The MFI Ratio decreased from 1994 to 1995 because the margins generated under
the Equity Development Plan increased at a lesser rate than the rate at which
the margin requirement on interest charges increased due to the decrease in
interest income on bond proceeds.
Under the Margin Stabilization Plan, Old Dominion reduced revenues and
related receivables from Members for 1996, 1995 and 1994 power sales in the
amount of $3.5 million, $3.5 million and $3.0 million, respectively.
RESULTS OF OPERATIONS
OPERATING REVENUES. Old Dominion's operating revenues are derived from
power sales to its Members and to non-members. Revenues from sales to Members
are a function of the requirement for power by the Members' consumers and Old
Dominion's cost of service in meeting that requirement. The major factors
affecting the Members' consumers' demand for power are the growth in the number
of consumers and seasonal weather fluctuations.
Old Dominion's energy sales to its members, operating revenues and
average power cost for the past three years were as follows:
Total Average
Operating Power
Year Ended December 31, Sales Revenues Cost
----------------------- --------- ------------- -------
(MWh) (in millions) ($/MWh)
1996................................. 7,482,482 $366.5 $48.98
1995................................. 7,258,301 357.3 49.23
1994................................. 6,899,602 336.5 48.78
The average power cost to Members is based on the blended cost of power
from all Old Dominion resources. Old Dominion's average cost per MWh fluctuates
inversely with the level of generation from North Anna and Clover, as measured
by their respective capacity factors. Accordingly, in years in which North Anna
and Clover perform at a high capacity factor, Old Dominion's average cost per
MWh decreases because the cost of energy generated from North Anna and Clover is
less than replacement supplemental energy purchased under the I&O Agreement.
Changes (increase/(decrease)) in operating revenues by component for the
past three years were as follows:
Year Ended December 31,
----------------------------------
1996 1995 1994
--------- --------- -------
(in thousands)
Sales to Members:
Power sales volume...................... $ 21,378 $ 25,897 $ 2,346
Blended rates........................... (1,982) (2,898) 1,859
Fuel adjustment revenues................ (10,175) (1,768) 964
Margin Stabilization Plan adjustments... (15) (463) (1,455)
--------- --------- -------
9,206 20,768 3,714
Sales to Non-members....................... 381 13 -
--------- --------- -------
$ 9,587 $ 20,781 $ 3,714
========= ========= =======
15
Operating revenues increased from 1995 to 1996 primarily due to a 7.4%
increase in demand sales and a 3.1% increase in energy sales. The increases in
demand and energy sales were caused by an increase in the Members' consumers and
extremely cold temperatures in February and extremely hot temperatures in May
combined with colder than normal temperatures in March and April. Operating
revenues increased from 1994 to 1995 primarily due to a 9.0% increase in demand
sales and a 5.2% increase energy sales caused by the extreme temperatures in the
second and third quarters of 1995 and an increase in Members' consumers.
Based on projected purchased power costs and other operating expenses
for 1997, Old Dominion plans no increase in base rates for the 1997 rate year.
The Board of Directors approved a 1.0% reduction in the base demand rate to the
members effective April 1, 1997.
OPERATING EXPENSES. Prior to October 7, 1995, North Anna was the only
completed generating plant in which Old Dominion had an ownership interest.
While nuclear power plants, such as North Anna, generally have relatively high
fixed costs, such facilities operate with relatively low variable costs due to
lower fuel costs and technological efficiencies. Owners of nuclear power plants,
including Old Dominion, incur the embedded fixed costs of these nuclear
facilities whether or not the units operate.
Old Dominion also holds a 50% undivided interest in Clover. Unit 1
went into commercial operation on October 7, 1995, and Unit 2 went into
commercial operation on March 28, 1996.
When either North Anna or Clover is off-line, Old Dominion must purchase
replacement power under the I&O Agreement that is more costly. Any change in the
amount of Old Dominion's energy output from North Anna or Clover displaces or is
replaced by higher cost supplemental energy purchases from Virginia Power. As a
result, Old Dominion's operating expenses, and therefore its rates to the
Members, are significantly impacted by the operation of North Anna and Clover.
North Anna and Clover capacity factors for the past three years were as
follows:
North Anna Clover
------------------------ -----------------------
Year Ended December 31, Year Ended December 31,
------------------------ -----------------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Unit 1........ 88.5% 99.8% 86.2% 57.1% - -
Unit 2........ 77.7 76.3 94.1 70.9 - -
Combined...... 83.1 88.0 90.2 64.0 - -
North Anna Unit 1 was off-line 32 days in 1996, one day in 1995 and 31
days in 1994 and Unit 2 was off-line 79 days in 1996, 69 days in 1995 and 10
days in 1994. During 1996, Unit 1 was off-line 29 days for scheduled maintenance
and refueling and three days for unscheduled maintenance. Unit 2 was off-line 34
days for scheduled refueling and 45 days for equipment failure caused by foreign
material blocking the cooling flow. The 1995 Unit 2 outage was the result of the
Unit 2 steam generator replacement and refueling project, which began on March
25, 1995 and was completed in 69 days, 15 days ahead of schedule and 28 days
better than the 1993 Unit 1 replacement project. The 1994 Unit 1 outage was due
to scheduled maintenance and refueling and the Unit 2 outage was due to
unscheduled maintenance.
During the year ended December 31, 1996, Clover Unit 1 capacity factors
were lower than anticipated due to unscheduled maintenance, primarily due to
chronic failure of the titanium chimney liner system.
In February 1997, it was determined that the chimney liners on both
Clover Units 1 and 2 would be replaced by the Clover Consortium at no cost to
the joint owners except in lost generation and minimal overhead costs. See Item
16
1. "Business--System Assets" in Old Dominion's 1995 Form 10-K for a discussion
of the Clover Consortium. The chimney liner replacement on Unit 1 is scheduled
to begin on September 1, 1997, and the chimney liner replacement on Unit 2 is
scheduled to begin March 1, 1998. It is estimated that it will take
approximately 90 to 110 days to complete the replacement on each unit.
Old Dominion's energy supply for the past three years was as follows:
Year Ended December 31,
-------------------------------------
1996 1995 1994
--------- --------- ---------
(MWh)
North Anna .............................. 1,515,777 1,608,983 1,657,172
Clover (1) .............................. 2,246,920 318,504 -
Purchased power:
Virginia Power.................... 2,137,318 3,862,619 3,824,450
Delmarva Power.................... 528,368 605,691 1,434,139
PSE&G............................. 1,066,678 954,690 -
Other............................. 173,806 118,518 113,020
--------- --------- ---------
Subtotal...................... 3,906,170 5,541,518 5,371,609
--------- --------- ---------
Total Available Energy.... 7,668,867 7,469,005 7,028,781
========= ========= =========
- - -------------------------------------------
(1) Clover Unit 1 went into commercial operation on October 7, 1995; Unit 2
went into commercial operation on March 28, 1996.
Purchased power costs decreased in 1996 as compared to 1995 primarily as
a result of Clover operations, since Unit 1 was in service for the whole year
and Unit 2 came on-line in March 1996. Purchased power costs decreased in 1995
as compared to 1994 due to the lower cost PSE&G contract which became effective
January 1, 1995. Additionally, Clover Unit 1 came on-line in October 1995.
Actual 1994 purchased power costs were $239.1 million which was off-set by a
$5.2 million adjustment ($2.4 million relating to 1994 and $2.8 million relating
to 1993) to the Virginia Power 300 MW power purchase contract.
Fuel costs increased in 1995 and again in 1996 as a result of Clover
operations.
Maintenance costs in 1996 were greater than in 1995 due to Clover
operations in 1996. Maintenance costs decreased in 1995 as compared to 1994
due to changes in estimates of the annual maintenance expense at North Anna.
Administrative and general expenses increased in 1995 as compared to 1994
primarily due to an increase in legal and consulting fees and Clover Unit 1
beginning commercial operation in October 1995.
Depreciation and amortization increased in 1996 as a result of Clover
operations. Depreciation and amortization increased in 1995 due to a change in
estimate of the lives of certain nuclear facilities. The increase is also
attributable to Clover Unit 1 coming on-line in October 1995.
Amortization of lease gains represents the recognition of the portion of
the gains attributable to 1996 on the two long-term lease transactions completed
in 1996. The gains are being amortized ratably into income over the operating
lease terms of 22 years and 23.4 years for Clover Units 1 and 2, respectively.
17
Periodically, a site-specific study is performed to determine the
decommissioning cost estimate for North Anna. Decommissioning costs were $.7
million in 1996. Virginia Power's 1994 Decommissioning Cost Study for the North
Anna Power Station supports the amount currently being accrued and recovered
through rates.
Taxes other than income taxes increased in 1996 due to an increase in
property taxes on Clover and an increase in gross receipts taxes resulting from
increased revenues and decreased power purchases.
Other expenses (net) increased in 1996 as compared to 1995 due to the
recording of a reserve against Old Dominion's interest in Seacoast, Inc. The
increase was off-set by an additional billing to Virginia Power for direct
overhead costs related to Clover for the period 1990 through 1995 and also by
the recognition of the gain on the cross-border lease transaction.
Investment income decreased in 1996 as compared to 1995 primarily due to
lower interest rates and the decrease in the Equity Development Fund balance.
Investment income was greater in 1995 than in 1994 primarily due to higher
interest rates and higher investment balances during the year.
Interest on long-term debt (net) decreased in 1996 as compared to
1995 due to the purchase of $83.1 million of debt and $18.4 million of debt
service payments in 1996.
Allowance for borrowed funds used during construction decreased in 1996
and 1995 because interest capitalization on the Clover construction project
ceased as the units went into commercial operation.
EQUITY DEVELOPMENT PLAN. In the years 1988 through 1995, Old Dominion
charged its Members rates based on the cost of purchased power that would have
been incurred had Old Dominion not entered into a lower-cost, 300 MW, five-year
power purchase contract with Allegheny Power (1988 through 1992) and
subsequently with Virginia Power (1993 through 1995). This rate treatment was
designed and approved by Old Dominion's Board of Directors as an equity
development plan (the "Equity Development Plan") to provide capital resources
for Clover by allowing Members rates to remain at the level that would have
existed in the absence of the lower-cost power purchase contract. As a result of
this rate treatment, net margins for the years 1995 and 1994 were $19.0 million
and $24.7 million higher, respectively, than they would have been absent the
Equity Development Plan. Old Dominion discontinued the Equity Development Plan
effective December 31, 1995.
EQUITY CONTRIBUTION. Old Dominion continues to increase equity through
the collection of margins sufficient to meet a 1.20 MFI Ratio and through equity
development programs as approved by the Board of Directors from time to time. In
1995, the Board of Directors of Old Dominion approved the retention of $2.0
million of additional margins in excess of the 1.20 MFI Ratio and the Equity
Development Plan. There were no additional margins retained in 1996.
LIQUIDITY AND CAPITAL RESOURCES
Old Dominion's cash flows from operating activities are affected
principally by the level of Old Dominion's net margins. The lower margins in
1996 resulted from the discontinuance of the Equity Development Plan effective
December 31, 1995, and a decrease in the margin requirement associated with the
purchase of $83.1 million of debt. Cash flows from operating activities also
were affected by the increase in depreciation expense resulting from the
completion of Clover Unit 2 and by the deferred gains on the two Clover
long-term lease transactions. The higher level of net margins in 1995 and 1994
resulted primarily from additional margins retained under the Equity Development
Plan and the additional margin requirements associated with the incurrence of
additional indebtedness principally related to Clover.
18
In 1995, Old Dominion and 10 of its 12 member distribution systems
established an affiliate, CSC Services, Inc. ("CSC"), to explore alternative
business opportunities on behalf of the cooperatives. During 1996, CSC invested
in an approximate one-half interest in Seacoast Power LLC, whose wholly-owned
subsidiary, Seacoast, Inc. ("Seacoast"), executed a six-month power sales
contract with INECEL, the state-owned electric utility in Ecuador. CSC and the
other participants in Seacoast Power LLC also formed Power Ventures LLC ("Power
Ventures"). Through loans of approximately $17.5 million to Seacoast, Old
Dominion and CSC funded approximately one-half the cost to construct and operate
the generating assets necessary to fulfill the power sales contract with INECEL.
Because of contract disputes, INECEL did not pay invoices rendered by
Seacoast for energy made available under the terms of the power sales contract.
Accordingly, in July 1996, Seacoast filed a $26.0 million lawsuit in Ecuador
against INECEL seeking to recover approximately $16.3 million in amounts owed
under the power sales contract, plus damages and fees. Management of Seacoast
plans to vigorously pursue this matter; however, a trial date has not been set.
During the third quarter of 1996, Old Dominion's Board of Directors
decided to explore divestiture of the interest held by Old Dominion and its
affiliates in Seacoast. Based on negotiations with several potential buyers,
management provided a reserve of approximately $11.5 million against Old
Dominion's interest in Seacoast.
In December 1996, Old Dominion obtained from Seacoast an interest in
approximately one-half of the remaining accounts receivable due from INECEL in
exchange for approximately $4.4 million of principal owed by Seacoast pursuant
to a note payable to Old Dominion. The transaction transferred to Old Dominion
an approximate one-half interest in the claim Seacoast has in litigation against
INECEL.
Additionally, in December 1996, Seacoast transferred the generating
assets and the corresponding debt to Power Services Ecuador Ecuapower Cia. Ltda.
("Ecuapower"), an Ecuadorian entity wholly-owned by Power Ventures.
Concurrently, Old Dominion transferred its remaining notes receivable from
Seacoast to CSC in exchange for a note receivable from CSC of $8.5 million,
which was outstanding at December 31, 1996.
On January 27, 1997, Power Ventures sold its interest in Ecuapower to an
unaffiliated party for approximately $17.1 million. Old Dominion was entitled to
approximately $7.0 million after expenses paid at closing. One-half of the sales
price, or $8.6 million, of which Old Dominion received $3.2 million after
expenses, was paid in cash at closing. The other half of the sales price was
evidenced by a note, which was paid on March 6, 1997, of which Old Dominion
received $3.8 million.
On May 24, 1996, a default judgment of approximately $27.0 million was
rendered against Seacoast pursuant to a claim filed in the District Court of
Travis County, Texas, by an entity seeking damages for breach of an oral
contract by the former owners of Seacoast. Seacoast's registered agent in Texas
failed to notify the current owners of Seacoast of the claim in a timely manner.
On appeal, the judgment was remanded back to the District Court in December
1996; however, in January 1997, the appellate court reversed its decision and
agreed to hear the appeal. No rehearing date has been scheduled. Management of
Seacoast expects to prevail in having the judgment overturned.
In December 1994, Old Dominion entered into a cross-border tax benefit
lease with Esbelto BV ("Esbelto"), a Netherlands limited liability company and
an affiliate of Internationale Nederlanden Group ("ING"). Under the terms of the
transaction, Old Dominion transferred nominal title to certain qualifying
pollution control equipment (the "Qualifying Equipment") located at Clover to
Esbelto for a cash payment of $104.8 million, and concurrently entered into an
agreement to lease the Qualifying Equipment back from Esbelto. The lease
agreement has an 18-year term, requires Old Dominion to provide for all repair
and maintenance costs (including insurance and taxes), and provides Old Dominion
with a repurchase option exercisable at the end of the 10th year of the term and
other purchase options in specified circumstances. The Qualifying Equipment was
19
transferred subject to the lien of the Indenture, and title will revert to Old
Dominion upon exercise of any repurchase option. To fully defease its basic
obligations under the lease, including the 10th year repurchase option, Old
Dominion irrevocably deposited $99.0 million of the proceeds with another ING
affiliate. In return, Esbelto released Old Dominion from its direct obligations
under the lease agreement. The lease agreement required Old Dominion to ensure
that Clover Units 1 and 2 were placed into service; accordingly, Old Dominion
had included the gain in other liabilities at December 31, 1995. Old Dominion
recognized the gain of $5.8 million in March 1996, after Clover Unit 2 was
placed into commercial operation and Old Dominion's obligations in connection
with the lease were fulfilled. Accordingly, Old Dominion has recorded the
equipment as an asset on its consolidated financial statements. However, since
Old Dominion's basic obligations under the lease agreement are fully defeased,
the lease obligations are not reflected on the consolidated financial
statements.
On March 1, 1996, Old Dominion finalized a long-term lease transaction
with an owner trust for the benefit of an equity investor. Under the terms of
the transaction, Old Dominion entered into a 49-year lease of its interest in
Clover Unit 1 (valued at $315.0 million) to such owner trustee, and
simultaneously entered into a 22-year lease of the interest back from such owner
trustee. As a result of the transaction, Old Dominion recorded a deferred gain
of $23.6 million, which is being amortized into income ratably over the 22-year
operating lease term. A portion of the proceeds from the transaction, $23.9
million, was used to retire a portion of Old Dominion's 8.76% First Mortgage
Bonds, Series 1992 A. Concurrent with the retirement of its Series 1992 A Bonds,
Old Dominion issued a like amount of zero coupon First Mortgage Bonds, Series
1996 A, with an effective interest rate of 7.06%. The lease transaction
increased other non-current liabilities and restricted investments and funds by
$51.5 million and $50.5 million, respectively.
On July 31, 1996, Old Dominion finalized a long-term lease transaction
with a business trust created for the benefit of another equity investor. Under
the terms of the transaction, Old Dominion entered into a 53.4-year lease of its
interest in Clover Unit 2 (valued at $320.0 million) to such business trust, and
simultaneously entered into a 23.4-year lease of the interest back from such
business trust. As a result of the transaction, Old Dominion recorded a deferred
gain of $39.3 million, which is being amortized into income ratably over the
23.4-year operating lease term. The lease transaction increased other
non-current liabilities and restricted investments and funds by $56.1 million
and $53.9 million, respectively.
After the above mentioned transactions closed, the VSCC staff asserted
that a 2.1% gross receipts tax is applicable to the approximately $635.0 million
base value of the lease-back transaction. Proceedings have not yet begun to
enforce the tax. Old Dominion estimates that an adverse determination on the
gross receipts tax issue would result in a maximum tax liability of $13.3
million. Old Dominion is vigorously contesting the anticipated assessment.
During 1996, Old Dominion purchased approximately $83.1 million of its
First Mortgage Bonds, Series 1992 A and 1993 A. The transactions resulted in a
net loss of approximately $2.2 million, including a write-off of original
issuance costs, which has been deferred.
In December 1995, Old Dominion purchased $30.0 million of its First
Mortgage Bonds, Series 1992 A. The transaction resulted in a loss of $4.9
million, including a write-off of original issuance costs, which has been
deferred. The bonds were retired on March 1, 1996.
In April 1995, Old Dominion purchased and retired $6.5 million of its
First Mortgage Bonds, Series 1992 A, due to a reduced estimate of capital
requirements for future generating facilities. The transaction resulted in a net
loss of approximately $.1 million, including a write-off of original issuance
costs, which has been deferred.
Gains and losses on the purchase of long-term debt are deferred and
amortized over the life of the remaining bonds.
20
Old Dominion's capital improvement requirements are projected based on
long-range plans and supporting studies. The following projections are a product
of Old Dominion's most recently updated plans, and are subject to continuing
review and periodic revision. The table below summarizes Old Dominion's
historical and projected capital expenditures for 1994 through 2001 (in
millions):
Historical Projected
----------------------- -------------------------------------
1994 1995 1996 1997 1998 1999 2000 2001
------ ----- ----- ---- ---- ---- ---- ----
Clover....... $107.9 $70.6 $20.7 $4.2 $2.7 $2.0 $1.9 $ .9
North Anna... 69.1 13.3 12.8 2.4 1.8 1.4 1.0 1.1
Other........ .2 .5 1.2 .5 .3 .3 .3 .3
------ ----- ----- ---- ---- ---- ---- ----
Total... $177.2 $84.4 $34.7 $7.1 $4.8 $3.7 $3.2 $2.3
====== ===== ===== ==== ==== ==== ==== ====
Old Dominion's share of the costs to construct Clover is expected to be
approximately $634.6 million, including capitalized interest.
Virginia Power replaced the steam generators at North Anna Unit 2 during
the second quarter of 1995. Old Dominion's portion of the Unit 2 steam generator
replacement cost, including capitalized interest, was approximately $13.8
million.
Old Dominion expects to satisfy the approximately $21.1 million of
capital expenditure requirements through 2001 with internally generated funds.
Old Dominion has established unsecured short-term lines of credit to
provide additional sources of financing. Old Dominion has a $30.0 million
committed line of credit with NationsBank which expires on September 30, 1997,
and is expected to be renewed. Additionally, Old Dominion has a $20.0 million
committed line of credit with National Rural Utilities Cooperative Finance
Corporation, a $20.0 million committed line of credit with CoBank, ACB and a
$15.0 million committed line of credit with First Union National Bank of North
Carolina, all of which expire on December 31, 1997, and are expected to be
renewed. Old Dominion also has arranged a number of uncommitted short-term
borrowing arrangements aggregating $60.0 million. Due to limitations contained
in certain of these uncommitted facilities, no more than $105.0 million in total
can be outstanding at any time under Old Dominion's committed and uncommitted
short-term borrowing arrangements. At December 31, 1996, Old Dominion had no
short-term borrowing outstanding under any of these arrangements. At December
31, 1995, $8.7 million was outstanding under these borrowing arrangements.
ACCOUNTING STANDARDS. Old Dominion has determined that the impact of
recently issued accounting pronouncements is not material to its consolidated
results of operations and financial position.
21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED FINANCIAL STATEMENTS
INDEX
Page
Number
------
Report of Independent Accountants..................................... 23
Consolidated Balance Sheets........................................... 24
Consolidated Statements of Revenues, Expenses and Patronage Capital... 25
Consolidated Statements of Cash Flows................................. 26
Notes to Consolidated Financial Statements............................ 27
22
REPORT OF INDEPENDENT ACCOUNTANTS
To The Board of Directors
Old Dominion Electric Cooperative
We have audited the accompanying consolidated balance sheets of Old Dominion
Electric Cooperative and its subsidiary (the "Cooperative") as of December 31,
1996 and 1995, and the related consolidated statements of revenues, expenses and
patronage capital and cash flows for each of the three years ended December 31,
1996. These financial statements are the responsibility of the Cooperative's
management. Our responsibility is to express an opinion on these financial
statements 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 consolidated financial position of Old Dominion
Electric Cooperative and its subsidiary as of December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years ended December 31, 1996 in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
Richmond, Virginia
February 26, 1997, except for Note 16,
for which the date is March 6, 1997
23
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
(IN THOUSANDS) 1996 1995
- - -----------------------------------------------------------------------------------------------
ASSETS
- - ---------------------------------------------------------------
Electric Plant:
In service $ 882,879 $ 588,636
Less accumulated depreciation (91,525) (68,738)
------------- --------------
791,354 519,898
Nuclear fuel, at amortized cost 8,311 6,026
Plant acquisition adjustment, at amortized cost 24,790 26,860
Construction work in progress 11,106 269,554
------------- --------------
Net Electric Plant 835,561 822,338
------------- --------------
Decommissioning Fund 39,298 36,118
Other Investments and Funds, Available for Sale 35,112 58,809
Restricted Investments and Funds 109,019 -
Current Assets:
Cash and cash equivalents 46,217 63,670
Note receivable, net of allowance of $1.6 million in 1996 6,992 13,793
Receivables, net of allowance of $5.1 million in 1996 36,084 35,255
Fuel stock 3,052 3,189
Materials and supplies, at average cost 5,186 4,971
Prepayments 1,187 1,069
Deferred energy - 463
------------- --------------
Total Current Assets 98,718 122,410
------------- --------------
Deferred Charges 27,412 29,575
Other Assets 11,226 9,696
------------- --------------
Total Assets $ 1,156,346 $ 1,078,946
============= ==============
CAPITALIZATION AND LIABILITIES
- - ---------------------------------------------------------------
Capitalization:
Patronage capital $ 184,753 $ 172,513
Long-term debt 664,490 738,974
------------- --------------
Total Capitalization 849,243 911,487
------------- --------------
Current Liabilities:
Long-term debt due within one year 17,928 18,385
Notes payable - 8,700
Accounts payable 45,717 62,954
Construction contract payable 15,283 22,541
Deferred energy 1,771 -
Accrued interest 4,445 5,020
Accrued taxes 497 113
Other 4,342 3,856
------------- --------------
Total Current Liabilities 89,983 121,569
------------- --------------
Decommissioning Reserve 39,298 36,118
Deferred Credits 64,868 3,804
Obligations Under Long-Term Leases 112,202 -
Other Liabilities 752 5,968
Commitments and Contingencies (Notes 1, 2, 3, 11, 12 and 15)
------------- --------------
Total Capitalization and Liabilities $ 1,156,346 $ 1,078,946
============= ==============
- - -----------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
24
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED STATEMENTS OF REVENUES,
EXPENSES AND PATRONAGE CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS) 1996 1995 1994
- - --------------------------------------------------------------------------------------------------------------
Operating Revenues
Sales to Members $ 366,515 $ 357,309 $ 336,541
Sales to non-member 394 13 -
------------ ------------- ---------------
366,909 357,322 336,541
------------ ------------- ---------------
Operating Expenses:
Operation:
Fuel 38,093 11,559 6,970
Purchased power 180,338 234,295 233,916
Other 24,181 17,616 5,195
------------ ------------- ---------------
242,612 263,470 246,081
Maintenance 8,949 5,907 6,523
Administrative and general 15,421 15,159 13,628
Depreciation and amortization 26,724 11,989 8,868
Amortization of Lease Gains (1,596) - -
Decommissioning cost 681 681 681
Taxes other than income taxes 6,338 4,106 3,943
------------ ------------- ---------------
Total Operating Expenses 299,129 301,312 279,724
------------ ------------- ---------------
Operating Margin 67,780 56,010 56,817
------------ ------------- ---------------
Other Expense, net (4,848) - -
------------ ------------- ---------------
Investment Income:
Interest 5,082 8,018 4,437
Other 1,393 312 287
------------ ------------- ---------------
Total Investment Income 6,475 8,330 4,724
------------ ------------- ---------------
Interest Charges:
Interest on long-term debt, net 60,865 64,748 64,601
Other 328 221 230
Allowance for borrowed funds used during construction (4,026) (34,657) (40,984)
------------ ------------- ---------------
Net Interest Charges 57,167 30,312 23,847
------------ ------------- ---------------
Net Margin 12,240 34,028 37,694
Patronage Capital-beginning of year 172,513 138,485 100,791
------------ ------------- ---------------
Patronage Capital-end of year $ 184,753 $ 172,513 $ 138,485
============ ============= ===============
- - --------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
25
OLD DOMINION ELECTRIC COOPERATIVE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS) 1996 1995 1994
- - --------------------------------------------------------------------------------------------------------------
Cash Provided By Operating Activities:
Net margin $ 12,240 $ 34,028 $ 37,694
Adjustments to reconcile net margin to net cash provided
by operating activities:
Depreciation 24,534 9,812 6,719
Amortization of plant acquisition adjustment 2,070 2,070 2,067
Amortization of nuclear fuel (59) 4,638 5,309
Decommissioning cost 681 681 681
Amortization of debt discount 1,817 434 419
Amortization of other debt costs 1,235 1,249 1,243
Amortization of deferred charges and other assets 339 395 713
Amortization of lease obligations 4,636 - -
Reserve for interest in Seacoast 11,512 - -
Provision for contingent liability 630 - -
Gain from lease transactions (7,361) - -
Changes in Current Assets and Current Liabilities:
Change in current assets (6,113) 731 2,445
Change in current liabilities (15,970) 16,810 2,423
Decrease in deferred charges 807 424 257
Increase in other assets (1,756) (4,890) (821)
Increase (decrease) in deferred credits 61,064 - (613)
Increase(Decrease) in other liabilities 2,464 (556) 577
------------- ----------- -------------
Net Cash Provided By Operating Activities 92,770 65,826 59,113
------------- ----------- -------------
Cash Provided By (Used For) By Financing Activities:
Additions to long-term debt 23,884 - -
Obligations under long-term lease 112,201 - -
Borrowings under lines of credit (8,700) 8,700 -
Reductions of long-term debt (105,277) (54,381) (52,201)
Proceeds from tax lease transaction - - 5,765
------------- ----------- -------------
Net Cash Provided By (Used For) Financing Activities 22,108 (45,681) (46,436)
------------- ----------- -------------
Cash (Used For) Provided By Investing Activities:
Additions to electric plant (47,049) (87,970) (118,573)
Decommissioning fund deposits (681) (681) (681)
Reduction of other investments and funds, net 23,697 87,699 120,584
(Additions to) restricted investments and funds (109,019) - -
Note Receivable 698 (13,793) -
Retirement work in progress 23 580 (167)
------------- ----------- -------------
Net Cash (Used For) Provided By Investing Activities (132,331) (14,165) 1,163
------------- ----------- -------------
Net (Decrease)Increase in Cash and Cash Equivalents (17,453) 5,980 13,840
Beginning of Year Cash and Cash Equivalents 63,670 61,181 45,124
------------- ----------- -------------
End of Year Cash and Cash Equivalents $ 46,217 $ 67,161 $ 58,964
============= =========== =============
- - --------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
26
OLD DOMINION ELECTRIC COOPERATIVE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL:
Old Dominion Electric Cooperative ("Old Dominion") is a not-for-profit wholesale
power supply cooperative incorporated under the laws of the Commonwealth of
Virginia in 1948. It provides wholesale electric service to 12 member
distribution cooperatives (the "Members") engaged in the retail sale of power to
member consumers located in Virginia, Delaware, Maryland and parts of West
Virginia. Old Dominion's Board of Directors is composed of two representatives
from each of the Members. Old Dominion's rates are not regulated by the
respective states' public service commissions, but are set periodically by a
formula that was accepted for filing by the Federal Energy Regulatory Commission
("FERC") on May 18, 1992.
Old Dominion complies with the Uniform System of Accounts prescribed by FERC. In
conformity with generally accepted accounting principles ("GAAP"), the
accounting policies and practices applied by Old Dominion in the determination
of rates are also employed for financial reporting purposes.
The preparation of the consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the amounts
reported therein. Actual results could differ from those estimates.
The accompanying financial statements reflect the consolidated accounts of Old
Dominion and Dominion Power Control, Ltd. ("DPC"), a wholly-owned subsidiary of
Old Dominion which provides financing for a load management system used by Old
Dominion and its Members. All intercompany balances and transactions have been
eliminated in consolidation. Old Dominion's 50% ownership interest in Regional
Headquarters, Inc. ("RHI") (Note 13) is recorded under the equity method of
accounting.
ELECTRIC PLANT:
Electric plant is stated at original cost when first placed in service. Such
cost includes contract work, direct labor and material, allocable overhead and
an allowance for funds used during construction. Upon the partial sale or
retirement of plant assets, the original asset cost and current disposal costs
less sale proceeds, if any, are charged or credited to accumulated depreciation.
In accordance with industry practice, no profit or loss is recognized in
connection with normal sales and retirements of property units. The plant
acquisition adjustment represents the excess of the cost of the plant to Old
Dominion over the original cost less accumulated depreciation at the time of
acquisition.
Maintenance and repair costs are expensed as incurred. Replacements and renewals
of items considered to be units of property are capitalized to the property
accounts.
DEPRECIATION, AMORTIZATION AND DECOMMISSIONING:
Depreciation is based on the straight-line method at rates which are designed to
amortize the original cost of properties over their service lives. Depreciation
rates for jointly-owned depreciable plant balances at the North Anna Nuclear
Power Station ("North Anna") were approximately 2.9% in 1996, 2.9% in 1995 and
2.6% in 1994. The depreciation rate for jointly-owned depreciable plant balances
at the Clover Power Station ("Clover") was approximately 2.5% in 1996 and 1995.
The North Anna plant acquisition adjustment is being amortized for rate-making
27
and accounting purposes over a 40-year period using the straight-line method. In
1996, approximately $2.5 million of accelerated depreciation was recorded on the
assets of DPC to adjust the balances to the net realizable value.
Old Dominion accrues decommissioning cost over the expected service life of
North Anna and makes periodic deposits in a trust fund, such that the fund
balance will equal Old Dominion's estimated cost at the time of decommissioning.
The present value of the future decommissioning cost is credited to the
decommissioning reserve; increases are charged to Members through their rates.
The estimated cost to decommission North Anna is based on Virginia Power's 1994
Decommissioning Cost Study for the North Anna Power Station. The cost estimate
is based on the DECON alternative in which the equipment, structure, and
portions of the facility and site containing radioactive contaminants are
removed or decontaminated to a level that permits the property to be released
for unrestricted use shortly after cessation of operations. Virginia Power
updates the decommissioning study approximately every four years. Old Dominion's
portion of the estimated cost of decommissioning North Anna is expected to be
approximately $58.1 million in 1994 dollars. The decommissioning of North Anna
is expected to begin at the expiration date of each unit's operating license,
which is 2018 and 2020 for North Anna Units 1 and 2, respectively. In the event
the assumed return on the trust fund is not earned, the management of Old
Dominion believes that any additional cost incurred will be recoverable through
rates.
Amounts held in the decommissioning trust fund, which equals the decommissioning
reserve, at December 31, 1996 and 1995, were $39.3 million and $36.1 million,
respectively. Annual decommissioning expense, net of earnings on funds was $.7
million in 1996, 1995 and 1994.
NUCLEAR FUEL:
Owned nuclear fuel is amortized on a unit-of-production basis sufficient to
fully amortize, over the estimated service life, the cost of fuel plus future
storage and disposal costs.
Under the Nuclear Waste Policy Act of 1982 ("NWPA"), the Federal government has
the responsibility for the permanent disposal of spent nuclear fuel. In
accordance with the provisions of the NWPA, contracts with the Department of
Energy ("DOE") have been executed to provide for the permanent disposal of spent
nuclear fuel produced by North Anna, however, it is uncertain when these
services will begin. Virginia Power estimates that an interim spent nuclear fuel
storage facility will be required at North Anna in the late 1990's and submitted
a license application to the Nuclear Regulatory Commission ("NRC") in May 1995,
for such a facility at North Anna. Old Dominion is making quarterly payments
based on net electricity generated and sold by each reactor as its share of the
disposal costs. These costs are recovered in current rates.
Under the Energy Policy Act of 1992, all domestic utilities which purchased
enriched uranium from the DOE during the years 1969 through 1991 are required to
make payments to the DOE in the aggregate, a maximum of $150.0 million (adjusted
annually for inflation) each year for a new uranium enrichment decontamination
and decommissioning fund. Such payments, which commenced in 1993, are required
to continue for a period of 15 years. At December 31, 1996 and 1995, the total
accrued liability was $3.8 million and $4.1 million, respectively, which
represents Old Dominion's pro-rata share. This amount has been recorded as a
deferred charge and will be amortized and recovered by Old Dominion through
rates over the 15-year funding period.
ALLOWANCE FOR BORROWED FUNDS USED DURING CONSTRUCTION:
Old Dominion capitalizes interest on borrowings for significant construction
projects. Income earned on trusteed construction funds is netted against the
amount of interest charges capitalized. Interest capitalized in 1996, 1995 and
1994 was $4.0 million, $34.7 million and $41.0 million, respectively.
28
INCOME TAXES:
As a not-for-profit electric cooperative, Old Dominion is currently exempt from
Federal income taxation under Section 501(c)(12) of the Internal Revenue Code of
1986, as amended. Accordingly, provisions for income taxes have not been
reflected in the accompanying consolidated financial statements.
OPERATING REVENUES:
Sales to Members consist of power sales pursuant to long-term wholesale power
contracts ("Wholesale Power Contracts") which Old Dominion maintains with each
of its Members. These Wholesale Power Contracts obligate each Member to pay Old
Dominion for power furnished in accordance with rates established by Old
Dominion. Power furnished is determined based on month-end meter readings.
Sales to non-members consist of sales of excess energy from Clover to Virginia
Power, a related party, under the terms of the contracts between Old Dominion
and Virginia Power relating to the construction and operation of Clover ("Clover
Agreements").
DEFERRED CHARGES AND OTHER ASSETS:
Certain costs have been deferred based on rate action by Old Dominion's Board of
Directors and approval by FERC. These costs will be recognized as expense
concurrent with their recovery through rates.
Other Assets include costs associated with the issuance of debt. These costs are
being amortized using the effective interest method over the life of the
respective debt issues.
DEFERRED ENERGY:
A deferral method of accounting is used to recognize differences between Old
Dominion's actual energy and fuel expenses and the energy and fuel revenues
collected from its Members. The deferred credit at December 31, 1996, of $1.8
million will be returned to the Members during 1997 in accordance with the
tariffs then in effect. The deferred debit at December 31, 1995, of $.5 million
was collected from the Members during 1996 in accordance with the tariffs then
in effect.
INVESTMENTS:
Financial instruments included in the decommissioning fund and other investments
and funds are classified as available-for-sale, and accordingly, are carried at
fair value. Unrealized gains and losses on investments held in the
decommissioning fund are deferred as an adjustment to the decommissioning
reserve until realized. Unrealized gains or losses on other investments, if
material, are reflected as a component of capitalization. Substantially all debt
securities presently held mature in less than one year.
RESTRICTED INVESTMENTS:
Restricted investments include amounts received from two long-term lease
transactions which are restricted for payment of lease obligations.
NON-CASH ACTIVITY:
Unrealized deferred gains on the decommissioning fund of $.5 million and
$1.7 million in 1996 and 1995, respectively, have been credited to the
decommissioning reserve.
29
PATRONAGE CAPITAL:
Old Dominion is organized and operates as a cooperative. Patronage capital is
the retained net margins of Old Dominion which have been allocated to its
Members based upon their respective power purchases in accordance with Old
Dominion's bylaws. Since its incorporation, Old Dominion has not distributed
patronage capital to its Members. Any distributions in the future are subject to
the discretion of the Board of Directors of Old Dominion and the restrictions
contained in the Indenture of Mortgage and Deed of Trust, dated as of May 1,
1992, between Old Dominion and Crestar Bank, as trustee (as supplemented by five
supplemental indentures thereto, is hereinafter referred to as the "Indenture").
OUTAGE PROVISION:
The normal maintenance and refueling cycle for each of the North Anna nuclear
units is 18 months. During outage periods, approximately 35 days per unit, Old
Dominion incurs higher operation and maintenance costs and supplemental energy
purchases. Although the supplemental energy purchases are deferred and collected
in accordance with the deferred energy policy, the other outage costs are
charged to expense as incurred and have a direct impact on net margins. Old
Dominion has a policy of accruing a portion of incremental outage expenses that
are scheduled for the succeeding year. Operating expenses in 1996, 1995 and 1994
include $1.2 million, $1.3 million and $2.0 million, respectively, accrued under
this policy.
CONCENTRATIONS OF CREDIT RISK:
Financial instruments which potentially subject Old Dominion to concentrations
of credit risk consist of cash equivalents, investments, and receivables arising
from energy sales to Members and from Virginia Power related to Clover and other
transactions. Old Dominion places its temporary cash investments with high
credit quality financial institutions and invests in debt securities with high
credit standards as required by the Indenture and the Board of Directors. Cash
and cash investment balances may exceed FDIC insurance limits. Concentrations of
credit risk with respect to receivables arising from energy sales to Members are
limited due to the large member consumer base that represents Old Dominion's
cooperative Members' accounts receivable.
IMPAIRMENT OF LONG-LIVED ASSETS:
During 1996, Old Dominion adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("FASB 121"). FASB 121 requires that long-lived assets
and certain identifiable intangibles held and used by Old Dominion be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Old Dominion reviews all
required assets for potential impairment on an ongoing basis.
CASH EQUIVALENTS:
For purposes of the Consolidated Statements of Cash Flows, Old Dominion
considers all unrestricted highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
RECLASSIFICATIONS:
Certain reclassifications have been made to the accompanying prior years'
consolidated financial statements to conform with the current year presentation.
30
NOTE 2 - JOINTLY OWNED PLANT
On December 21, 1983, Old Dominion purchased from Virginia Power an 11.6%
undivided ownership interest in North Anna, a two-unit, 1,790 MW (net capacity
rating) nuclear generating facility, as well as nuclear fuel and common
facilities at the power station, and a portion of spare parts, inventory and
other support facilities. Old Dominion is responsible for 11.6% of all
post-acquisition date additions and operating costs associated with the plant,
as well as a pro-rata portion of Virginia Power's administrative and general
expenses for North Anna, and must provide its own financing for these items. Old
Dominion's portion of assets, liabilities and operating expenses associated with
North Anna are included in the consolidated financial statements. As of December
31, 1996 and 1995, Old Dominion had outstanding accounts receivable balances of
$.1 million and $.7 million, respectively, due from Virginia Power for
operation, maintenance and capital investment at the facility.
In 1992, construction began on Clover, an 882 MW (net capacity rating)
coal-fired generating facility. Clover is a joint project between Old Dominion
and Virginia Power in which each holds a 50% undivided interest. Unit 1
commenced commercial operation on October 7, 1995, and Unit 2 commenced
commercial operation on March 28, 1996. Old Dominion is responsible for 50% of
all post-construction additions and operating costs associated with Clover, as
well as a pro-rata portion of Virginia Power's administrative and general
expenses for Clover, and must provide its own financing for these items. Old
Dominion's portion of assets, liabilities and operating expense associated with
Clover are included in the consolidated financial statements. Old Dominion's
share of the costs to construct Clover is expected to be approximately $634.6
million, including capitalized interest. In connection with its duties as
construction agent for Clover, Old Dominion had an outstanding accounts
receivable balance of $.1 million and $2.3 million, respectively, at December
31, 1996 and 1995.
Old Dominion's investment in jointly-owned plants at December 31, 1996, was as
follows:
North Anna Clover
---------- ------
(in millions, except percentages)
Ownership interest 11.6% 50.0%
Electric plant $349.3 $632.5
Accumulated depreciation
and amortization 141.9 16.9
Construction work in progress 10.6 .5
Projected capital expenditures for North Anna for 1997 through 2001 are $2.4
million, $1.8 million, $1.4 million, $1.0 million and $1.1 million,
respectively. Projected capital expenditures for Clover for 1997 through 2001
are $4.2 million, $2.7 million, $2.0 million, $1.9 million and $.9 million,
respectively.
NOTE 3 - POWER PURCHASE AGREEMENTS
In 1996 and 1995, North Anna and Clover furnished approximately 49.1% and 25.8%,
respectively, of the energy requirements of Old Dominion. In 1994, North Anna
furnished approximately 24.0% of the energy requirements of Old Dominion. The
remaining needs were satisfied through purchases of supplemental power from
Virginia Power and other power companies. Under the terms of the Interconnection
and Operating Agreement with Virginia Power ("I&O Agreement"), executed in
connection with Old Dominion's purchase of its 11.6% interest in North Anna, Old
Dominion agreed to purchase from Virginia Power reserve power for North Anna and
its entire monthly requirements for supplemental power to meet the needs of its
Virginia Members (except A&N Electric Cooperative) not met from Old Dominion's
portion of North Anna and Clover generation. The I&O Agreement provides that Old
31
Dominion may reduce its obligations to purchase supplemental power by any amount
with nine years advance notice or through the construction of jointly-owned
facilities, or by up to 4% each year, if notice is given at least three months
prior to calendar year end. Amendment No. 1 to the I&O Agreement ("Amendment")
allows Old Dominion to accumulate its 4% per year reduction for the life of the
I&O Agreement. Under the terms of the Amendment, for the first four years Old
Dominion will purchase the 4% per year reduction from Virginia Power. The
Amendment has an effective date coincident with commercial operation of Clover
Unit 2 and expires in eight years. The I&O Agreement expires on the earlier of
the date on which all facilities at North Anna have been retired or
decommissioned and the date upon which Old Dominion's interest in North Anna is
reduced to zero.
In 1996, Old Dominion entered into discussions with Virginia Power to develop a
new relationship reflective of the competitive marketplace. To date, the parties
have entered into a Principles of Agreement which is expected to result in a
final contract replacing the I&O Agreement effective January 1, 1998.
Beginning January 1, 1995, Old Dominion's partial requirements agreement with
Delmarva Power & Light Company ("Delmarva Power") became effective obligating
Delmarva Power to provide Old Dominion's power requirements for its three
Members east of the Chesapeake Bay in excess of the 150 MW purchased from Public
Service Electric & Gas ("PSE&G") or, within certain limits, any other capacity
secured by Old Dominion with proper notice to Delmarva Power. For the first five
years charges for service are based on a rate formula. The agreement continues
through 2004 with automatic extensions for one year periods unless either party
gives five years notice, or Old Dominion exercises its option to reduce its load
by up to 30% with two years notice or 30% or more with five years notice.
In August 1996, Old Dominion exercised its option under the partial requirements
agreement with Delmarva Power to reduce its power purchases by 30% beginning in
1998. The notice was given based on a review of the wholesale power bids that
Old Dominion received in response to its request for proposals for power
purchase contracts. Contracts to cover power purchases with a new supplier
beginning in 1998 are currently being finalized, subject to regulatory approval.
In addition to its notice to reduce power purchases by 30%, Old Dominion has
given Delmarva Power the required five years notice to terminate all purchases
under the partial requirements agreement by 2001.
Old Dominion's purchased power costs for the past three years were as follow:
Year Ended December 31,
--------------------------
1996 1995 1994
---- ---- ----
(in millions)
Virginia Power $100.7 $159.6 $155.2
Delmarva Power 34.1 32.8 71.6
PSE&G 37.6 36.9 -
Other 7.9 5.0 7.1
------ ------ ------
$180.3 $234.3 $233.9
====== ====== ======
32
Old Dominion's power purchase agreements contain certain firm capacity and
minimum energy requirements. As of December 31, 1996, Old Dominion's minimum
purchase commitments under the various agreements, without regard to capacity
reductions or cost adjustments, were as follows:
Firm Minimum
Capacity Energy
Year Ending December 31, Requirements Requirements Total
------------------------ ------------ ------------ -----
(in millions)
1997 $15.3 $15.3 $30.6
1998 14.4 - 14.4
1999 16.4 - 16.4
2000 16.4 - 16.4
2001 16.4 - 16.4
Thereafter 45.1 45.1
------ ----- ------
$124.0 $15.3 $139.3
====== ===== ======
NOTE 4 - WHOLESALE POWER CONTRACTS
Old Dominion has Wholesale Power Contracts with all of its Members whereby each
Member is obligated to purchase substantially all of its power requirements from
Old Dominion through the year 2028. Each such contract provides that Old
Dominion shall sell and deliver to the Member, and the Member shall purchase and
receive from Old Dominion, all power that the Member requires for the operation
of the Member's system to the extent that Old Dominion has the power and
facilities available. Each Member is required to pay Old Dominion monthly for
power furnished under its Wholesale Power Contract in accordance with rates and
charges established by Old Dominion pursuant to a rate formula filed with FERC.
Under the accepted rate formula, the rates charged by Old Dominion are developed
using a rate methodology under which all categories of costs are specifically
separated as components of the formula to determine Old Dominion's revenue
requirements. The rate formula method uses traditional techniques to allocate
costs to capacity and energy in establishing rates to the Members. The formula
is intended to permit collection of revenues, which, together with revenues from
all other sources, are equal to all costs and expenses recorded on Old
Dominion's books, plus an additional 20% of total interest charges plus
additional equity contributions as approved by Old Dominion's Board of
Directors. It also provides for the periodic adjustment of rates to recover
actual prudently incurred costs, whether they increase or decrease, without
further application to and acceptance by FERC. Old Dominion's rate formula
allows Old Dominion to recover and refund amounts under the Margin Stabilization
Plan (as hereinafter defined).
In order to ensure that only actual cost of power service plus necessary margins
are billed to the Members each year and to provide for uncertainties connected
with the establishment of prospective rates, in 1984 Old Dominion's Board of
Directors established a plan (the "Margin Stabilization Plan") which allows Old
Dominion to review actual cost of service and power sales as of year end and to
adjust revenues from the Members to take into account actual results and
financial coverages. All adjustments, whether increases or decreases, are
recorded in the year affected and allocated to Members based on power sales
during that year. Such increases or decreases are either collected from Members,
or off-set against amounts owed by the Members, in the succeeding year. Under
the Margin Stabilization Plan, Old Dominion reduced revenues and related
receivables from Members for 1996, 1995 and 1994 power sales in the amount of
$3.5 million, $3.5 million and $3.0 million, respectively.
In 1994 and 1995, Old Dominion charged its Members rates based on the cost of
purchased power that would have been incurred had Old Dominion not entered into
the lower-cost, 300 MW power purchase contract with Virginia Power. This rate
treatment was designed and approved by Old Dominion's Board of Directors as an
equity development plan (the "Equity Development Plan") to provide capital
resources for Clover by allowing Member rates to remain at the level that would
have existed in the absence of the lower-cost power purchase contract with
33
Virginia Power. As a result of this rate treatment, net margins for the years
1995 and 1994 were $19.0 million and $24.7 million higher, respectively, than
they would have been absent the Equity Development Plan. Old Dominion
discontinued the Equity Development Plan effective December 31, 1995; however,
Old Dominion will continue to increase equity through the collection of margins
sufficient to meet the 1.20 margins for interest requirement of the Indenture
and through equity development programs as approved by the Board of Directors
from time to time. The cash equivalent of the cumulative additional net margins
earned under the Equity Development Plan is $15.0 million and $46.0 million at
December 31, 1996 and 1995, respectively, and has been set aside in a separate
fund and such amounts are included in other investments and funds in the
accompanying consolidated financial statements.
Revenues from the following Members equaled or exceeded 10% of Old Dominion's
total revenues for the past three years:
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----
(in millions)
Northern Virginia Electric Cooperative $98.4 $95.1 $92.6
Rappahannock Electric Cooperative 78.4 77.0 73.3
Delaware Electric Cooperative 38.2 37.6 34.3
NOTE 5 - NOTE RECEIVABLE
In 1995, Old Dominion and 10 of its 12 member distribution systems established
an affiliate, CSC Services, Inc. ("CSC"), to explore alternative business
opportunities on behalf of the cooperatives. During 1996, CSC invested in an
approximate one-half interest in Seacoast Power LLC, whose wholly-owned
subsidiary, Seacoast, Inc. ("Seacoast"), executed a six-month power sales
contract with INECEL, the state-owned electric utility in Ecuador. CSC and the
other participants in Seacoast Power LLC also formed Power Ventures LLC ("Power
Ventures"). Through loans of approximately $17.5 million to Seacoast, Old
Dominion and CSC funded approximately one-half the cost to construct and operate
the generating assets necessary to fulfill the power sales contract with INECEL.
During the third quarter of 1996, Old Dominion's Board of Directors decided to
explore divestiture of the interest held by Old Dominion and its affiliates in
Seacoast. Based on negotiations with several potential buyers, management
provided a reserve of approximately $11.5 million against Old Dominion's
interest in Seacoast.
In December 1996, Old Dominion obtained from Seacoast an interest in
approximately one-half of the remaining accounts receivable due from INECEL in
exchange for approximately $4.4 million of principal owed by Seacoast pursuant
to a note payable to Old Dominion. The transaction transferred to Old Dominion
an approximate one-half interest in the claim Seacoast has in litigation against
INECEL.
Additionally, in December 1996, Seacoast transferred the generating assets and
the corresponding debt to Power Services Ecuador Ecuapower Cia. Ltda.
("Ecuapower"), an Ecuadorian entity wholly-owned by Power Ventures.
Concurrently, Old Dominion transferred its remaining notes receivable from
Seacoast to CSC in exchange for a note receivable from CSC of $8.5 million,
which was outstanding at December 31, 1996.
34
NOTE 6 - LONG-TERM LEASE TRANSACTIONS
On March 1, 1996, Old Dominion finalized a long-term lease transaction with an
owner trust for the benefit of an equity investor. Under the terms of the
transaction, Old Dominion entered into a 49-year lease of its interest in Clover
Unit 1 (valued at $315.0 million) to such owner trustee, and simultaneously
entered into a 22-year lease of the interest back from such owner trustee. As a
result of the transaction, Old Dominion recorded a deferred gain of $23.6
million, which is being amortized into income ratably over the 22-year operating
lease term. A portion of the proceeds from the transaction, $23.9 million, was
used to retire a portion of Old Dominion's 8.76% First Mortgage Bonds, Series
1992 A. Concurrent with the retirement of its Series 1992 A bonds, Old Dominion
issued a like amount of zero coupon First Mortgage Bonds, Series 1996 A with an
effective interest rate of 7.06%. The lease transaction increased other
non-current liabilities and restricted investments and funds by $51.5 million
and $50.5 million, respectively.
On July 31, 1996, Old Dominion finalized a long-term lease transaction with a
business trust created for the benefit of another equity investor. Under the
terms of the transaction, Old Dominion entered into a 53.4-year lease of its
interest in Clover Unit 2 (valued at $320.0 million) to such business trust and
simultaneously entered into a 23.4-year lease of the interest back from such
business trust. As a result of the transaction, Old Dominion recorded a deferred
gain of $39.3 million, which is being amortized into income ratably over the
23.4-year operating lease term. The lease transaction increased other
non-current liabilities and restricted investments and funds by $56.1 million
and $53.9 million, respectively.
35
NOTE 7 - INVESTMENTS AND FUNDS-RESTRICTED AND UNRESTRICTED
Investments and funds consist of the following (at fair market value):
December 31,
----------------------
1996 1995
-------- --------
(in thousands)
Decommissioning Fund (trusteed) $ 39,298 $ 36,118
-------- --------
Other Investments and Funds:
Patronage Capital and Capital Term Certificates of CFC 914 923
Regional Headquarters, Inc.
Common stock (Note 13) 455 455
CSC Services, Inc. (Note 5)
Common stock 65 -
Preferred stock 196 -
Equity Development Plan Fund (Note 4) 15,001 46,045
Equity Reinvestment Fund 14,926 -
Other 3,555 11,386
-------- --------
Subtotal 35,112 58,809
-------- --------
Restricted cash and investments:
Lease Deposits 109,019 -
-------- --------
Total Investments and Funds $183,429 $ 94,927
======== ========
36
The preceding amounts were invested as follows:
December 31,
--------------------------
1996 1995
---- ----
(in thousands)
U.S. Government securities $ 53,619 $ 5,109
Corporate obligations 27,335 68
Corporate common stock 10,331 7,821
Corporate preferred stock 196 -
Corporate commercial paper 27,931 37,044
Money market mutual funds - 11,239
Cash and cash equivalents 62,721 31,979
Other 1,296 1,667
-------- --------
Total Investments and Funds $183,429 $94, 927
======== ========
There was no patronage capital allocation from CFC in 1996 or 1995.
At December 31, 1996 and 1995, the aggregate market value, based on quoted
market prices and prices obtained from independent sources, of the above
investments approximated cost.
37
NOTE 8 - LONG-TERM DEBT
Long-term debt consists of the following:
December 31,
---------------------
1996 1995
---- ----
(in thousands)
$25,565,962 principal amount of First Mortgage Bonds,
1996 Series A, due 1997 at an effective rate of 7.06% $ 25,566 -
$130,000,000 principal amount of First Mortgage Bonds,
1993 Series A, due 2013 at an interest rate of 7.48% 128,300 $129,000
$120,000,000 principal amount of First Mortgage Bonds,
1993 Series A, due 2023 at an interest rate of 7.78% 66,500 120,000
$350,000,000 principal amount of First Mortgage Bonds,
1992 Series A, due 2022 at an interest rate of 8.76% 243,665 271,200
$150,000,000 principal amount of First Mortgage Bonds,
1992 Series A, due 2002 at an interest rate of 7.97% 140,800 142,000
$50,000,000 principal amount of First Mortgage Bonds,
1992 Series A, due 1997 at an interest rate of 7.27% 16,603 33,334
$11,930,335 non-interest bearing First Mortgage Bonds,
1992 Series B, discounted at 10.84%, due quarterly
through December 15, 1996 - 1,570
$60,210,000 principal amount of First Mortgage Bonds,
1992 Series C, due 1997 through 2022 at interest rates
ranging from 4.9% to 6.5% 60,210 60,210
Louisa County Pollution Control Revenue Bonds (North Anna),
due December 1, 2008, with variable interest rates
(averaging 4.23% in 1996 and 4.03% in 1995) 6,750 6,750
Non-recourse debt of DPC due in monthly installments
through 2001, with variable interest rates (averaging
4.97% in 1996 and 4.52% in 1995) 2,322 2,572
-------- --------
690,716 766,636
Less unamortized discounts (8,298) (9,277)
Less current maturities (17,928) (18,385)
-------- --------
Total Long-Term Debt $664,490 $738,974
======== ========
Substantially all assets of Old Dominion are pledged as collateral under the
Indenture.
The non-recourse debt of DPC is collateralized by a $2.6 million letter of
credit.
Gains and losses on the purchase of long-term debt are deferred and amortized
over the life of the remaining bonds.
38
On October 4, 1994, Old Dominion's Board of Directors approved the purchase and
retirement of $50.3 million of the 1992 Series A Bonds and $1.0 million of the
1993 Series A Bonds. The bonds were purchased in October 1994 for approximately
$51.2 million and were retired. The transaction resulted in a net loss of $.6
million, which included the write-off of original issuance costs. Management's
decision to retire the bonds was based on a reduced estimate of capital
requirements for future generating facilities through 1997.
In April 1995, Old Dominion purchased and retired $6.5 million of its First
Mortgage Bonds, Series 1992 A. Based on a reduced estimate of capital
requirements for future generating facilities, the transaction resulted in a net
loss of approximately $.1 million, including the write-off of original issuance
costs.
On December 8, 1995, Old Dominion purchased $30.0 million of its First Mortgage
Bonds, Series 1992 A. The transaction resulted in a loss of $4.9 million,
including a write-off of original issuance costs. The bonds were retired March
1, 1996.
During 1996, Old Dominion purchased approximately $83.1 million of its First
Mortgage Bonds, Series 1992 A and 1993 A. The transaction resulted in a net
loss of approximately $2.2 million, including the write-off of original issuance
costs.
On February 13, 1997, Old Dominion refinanced its First Mortgage Bonds, 1996
Series A. The refinanced bonds have an effective interest rate of 7.06% and are
due in 2018, except for approximately $.6 million which is due January 1998.
Estimated maturities of long-term debt for the next five years are as follows:
Years Ending December 31, (in thousands)
------------------------- --------------
1997 $17,928
1998 29,535
1999 29,590
2000 29,700
2001 30,487
The aggregate fair value of long-term debt was $734.3 million and $859.2 million
at December 31, 1996 and 1995, respectively, based on current market prices. For
debt issues that are not quoted on an exchange, interest rates currently
available to Old Dominion for issuance of debt with similar terms and remaining
maturities are used to estimate fair value. Old Dominion believes that the
carrying amount of debt issues with variable rates that are refinanced at
current market rates is a reasonable estimate of their fair value.
NOTE 9 - SHORT-TERM BORROWING ARRANGEMENTS
Old Dominion has unsecured short-term lines of credit to provide additional
sources of financing. Old Dominion has a $30.0 million committed line of credit
with NationsBank which expires on September 30, 1997, and is expected to be
renewed. Additionally, Old Dominion has a $20.0 million committed line of credit
with National Rural Utilities Cooperative Finance Corporation, a $20.0 million
committed line of credit with CoBank, ACB and a $15.0 million committed line of
credit with First Union National Bank of North Carolina, all of which expire on
December 31, 1997 and are expected to be renewed. In addition, Old Dominion also
has arranged a number of uncommitted short-term borrowing arrangements
aggregating $60.0 million. Due to limitations contained in certain of these
uncommitted facilities, no more than $105.0 million in total can be outstanding
at any time under Old Dominion's committed and uncommitted short-term borrowing
arrangements. At December 31, 1996, Old Dominion had no short-term borrowing
outstanding under any of these arrangements. At December 31, 1995, $8.7 million
was outstanding under these borrowing arrangements and is reflected as notes
payable in the accompanying consolidated financial statements.
39
Old Dominion maintains a policy which allows Members to pay power bills before
their final due date. Under this policy, Old Dominion will pay interest on early
payment balances at its weighted-average investment rate, if in a net investor
position, or at a blended investment and outside short-term borrowing rate, if
in a net borrower position. The policy has no effect on Old Dominion's net
margins. Amounts advanced by Members are included in accounts payable and
totaled $19.2 million and $20.8 million at December 31, 1996 and 1995,
respectively.
NOTE 10 - CROSS-BORDER TAX BENEFIT LEASE
In December 1994, Old Dominion entered into a cross-border tax benefit lease
with Esbelto BV ("Esbelto"), a Netherlands limited liability company and an
affiliate of Internationale Nederlanden Group ("ING"). Under the terms of the
transaction, Old Dominion transferred nominal title to certain qualifying
pollution control equipment (the "Qualifying Equipment") located at Clover to
Esbelto for a cash payment of $104.8 million, and concurrently entered into an
agreement to lease the Qualifying Equipment back from Esbelto. The lease
agreement has an 18-year term, requires Old Dominion to provide for all repair
and maintenance costs (including insurance and taxes), and provides Old Dominion
with a repurchase option exercisable at the end of the 10th year of the term and
other purchase options in specified circumstances. The Qualifying Equipment was
transferred subject to the lien of the Indenture, and title will revert to Old
Dominion upon exercise of any repurchase option. To fully defease its basic
obligations under the lease, including the 10th year repurchase option, Old
Dominion irrevocably deposited $99.0 million of the proceeds with another ING
affiliate. In return, Esbelto released Old Dominion from its direct obligations
under the lease agreement. The lease agreement required Old Dominion to ensure
that Clover Units 1 and 2 were placed into service; accordingly, Old Dominion
had included the gain in other liabilities at December 31, 1995. Old Dominion
recognized the gain of $5.8 million in March 1996, after Clover Unit 2 was
placed into commercial operation and Old Dominion's obligations in connection
with the lease were fulfilled. Accordingly, Old Dominion has recorded the
equipment as an asset on its consolidated financial statements. However, since
Old Dominion's basic obligations under the lease agreement are fully defeased,
the lease obligations are not reflected on the consolidated financial
statements.
NOTE 11 - EMPLOYEE BENEFITS
Substantially all Old Dominion employees participate in the National Rural
Electric Cooperative Association ("NRECA") Retirement and Security Program, a
noncontributory, defined benefit multi-employer master pension plan. The cost of
the plan is funded annually by payments to NRECA to ensure that annuities in
amounts established by the plan will be available to individual participants
upon their retirement. Accumulated benefits and plan assets are not determined
or allocated separately by individual employer. Pension expense for 1996, 1995
and 1994 was $104,000, $150,000 and $67,000, respectively.
Old Dominion has also elected to participate in the SelectRe Pension Plan, a
defined contribution multi-employer retirement plan administered by the NRECA.
Under the plan, employees may elect to have up to 16% of their salary withheld
on a pre-tax basis, subject to Internal Revenue Service limitations, and
invested on their behalf. As an additional incentive, Old Dominion matches up to
the first 2% of each employee's contribution to the plan. Old Dominion's
matching contributions were $62,000, $63,000 and $65,000 in 1996, 1995 and 1994,
respectively.
Certain executive officers of Old Dominion also participate in an unfunded
salary continuation plan. The plan provides for post employment compensation for
these officers and Old Dominion is accruing the expected present values of the
future benefits over the estimated remaining working lives of these individuals.
Old Dominion's expense under this plan was $11,000 in 1996, $18,000 in 1995 and
$17,000 in 1994.
40
Old Dominion and the Virginia, Maryland and Delaware Association of Electric
Cooperatives (the "VMDA") entered into an agreement with the President and Chief
Executive Officer of the organizations to jointly fund a supplemental retirement
package on his behalf with an annual fixed contribution of $60,000. Old
Dominion's expense under this agreement was $60,000 and $45,000 in 1996 and
1995, respectively.
Old Dominion provides no other significant postretirement benefits to its
employees. However, in conjunction with the I&O Agreement, Old Dominion is
required to pay 11.6% of the operating costs associated with North Anna and 50%
of the operating costs associated with Clover including postretirement benefits.
These postretirement benefits other than pensions resulted in an increase in
expense to Old Dominion of approximately $812,000 in 1996, $483,000 in 1995 and
$453,000 in 1994. Old Dominion is recovering the increased expense as it is
billed by Virginia Power.
NOTE 12 - INSURANCE
As a joint owner of North Anna, Old Dominion is a party to the insurance
policies which Virginia Power procures to limit the risk of loss associated with
a possible nuclear incident at the station, as well as policies regarding
general liability and property coverage. All policies are administered by
Virginia Power, which charges Old Dominion for its proportionate share of the
costs.
The Price-Anderson Act limits the public liability of an owner of a nuclear
power plant to $8.9 billion for a single nuclear incident. The Price-Anderson
Amendments Act of 1988 allows for an inflationary provision adjustment every
five years. Virginia Power has purchased $200 million of coverage from the
commercial insurance pools with the remainder provided through a mandatory
industry risk sharing program. In the event of a nuclear incident at any
licensed nuclear reactor in the United States, Virginia Power and Old Dominion,
jointly, could be assessed up to $81.7 million (including a 3% insurance premium
tax for Virginia) for each licensed reactor not to exceed $10.3 million
(including a 3% insurance premium tax for Virginia) per year per reactor. There
is no limit to the number of incidents for which this retrospective premium can
be assessed.
Nuclear liability coverage for claims made by nuclear workers first hired on or
after January 1, 1988, except those arising out of an extraordinary nuclear
occurrence, is provided under the Master Worker insurance program. (Those first
hired into the nuclear industry prior to January 1, 1988, are covered by the
policy discussed above.) The aggregate limit of coverage for the industry is
$400 million ($200 million policy limit with automatic reinstatements of an
additional $200 million). Virginia Power and Old Dominion, jointly, are
contingently liable for a maximum retrospective assessment of approximately
$12.5 million (including a 3% insurance premium tax for Virginia).
Virginia Power's current level of property insurance coverage, $2.55 billion for
North Anna, exceeds the NRC's minimum requirement for nuclear power plant
licensees of $1.06 billion per reactor site and includes coverage for premature
decommissioning and functional total loss. The NRC requires that the proceeds
from this insurance be used first to return the reactor to and maintain it in a
safe and stable condition and second, to decontaminate the reactor and station
site in accordance with a plan approved by the NRC. The property insurance
coverage provided to Virginia Power and Old Dominion, jointly, is provided by
Nuclear Mutual Limited ("NML") and Nuclear Electric Insurance Limited ("NEIL"),
two mutual insurance companies, and is subject to retrospective premium
assessments, in any policy year in which losses exceed the funds available to
these insurance companies. The maximum assessment for the current policy period
is $44.8 million. Based on the severity of the incident, the Boards of Directors
of the nuclear insurers have the discretion to lower the maximum retrospective
premium assessment or eliminate either or both completely. Virginia Power and
Old Dominion, jointly, have the financial responsibility for any losses that
exceed the limits or for which insurance proceeds are not available, because
they must first be used for stabilization and decontamination.
41
Virginia Power purchases insurance from NEIL to cover the cost of replacement
power during a prolonged outage of a nuclear unit due to direct physical damage
of the unit. Under this program, Virginia Power and Old Dominion, jointly, are
subject to a retrospective premium assessment for any policy year in which
losses exceed funds available to NEIL. The current policy period's maximum
assessment is $9.0 million.
Old Dominion's share of the contingent liability for the coverage assessments
described above is a maximum of $26.6 million at December 31, 1996.
NOTE 13 - REGIONAL HEADQUARTERS, INC.
Old Dominion and the VMDA are equal joint owners of RHI. Old Dominion's Members
are represented on both the VMDA's and Old Dominion's Boards of Directors. RHI
holds title to the office building that is being leased to Old Dominion, the
VMDA and third party lessees. As a 50% owner, Old Dominion is obligated to make
lease payments equal to one-half of RHI's annual operating expenses, net of
rental income from third party lessees, through the year 2016. Old Dominion is
presently paying approximately 74.2% of the net costs based on its relative
occupancy. During 1996, 1995 and 1994, Old Dominion paid $248,000, $293,000 and
$276,000, respectively, to RHI for rent. At December 31, 1996, Old Dominion had
outstanding accounts receivable of $41,000 due from RHI. At December 31, 1995,
Old Dominion had accounts payable of $1,000 due to RHI.
Estimated future lease payments, without regard to changes in square footage,
third party occupancy rates, operating costs and inflation are as follows:
Year Ending December 31, (in thousands)
------------------------ --------------
1997 $293
1998 293
1999 293
2000 293
2001 293
2002 and thereafter 4,395
-----
$5,860
The assets and liabilities of RHI at December 31, 1996, were $5.7 million
(primarily the book value of the office building) and $4.7 million (primarily an
industrial development bond payable), respectively. Old Dominion records its
investment in RHI under the equity method.
NOTE 14 - SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid for interest, net of allowance for funds used during construction,
in 1996, 1995 and 1994 was $57.7 million, $30.8 million and $24.2 million,
respectively.
Changes in construction work in progress in 1995 and 1994 included a non-cash
(decrease) increase in construction contract payable and retainage of
approximately ($8.3) million and $3.9 million, respectively.
42
NOTE 15 - COMMITMENTS AND CONTINGENCIES
LEGAL - Old Dominion is subject to legal proceedings and claims which arise from
the ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to the actions will not materially affect the
consolidated financial position of Old Dominion.
Because of contract disputes associated with the Seacoast project, INECEL did
not pay invoices rendered by Seacoast for energy made available under the terms
of the power sales contract. Accordingly, in July 1996, Seacoast filed a $26.0
million lawsuit in Ecuador against INECEL seeking to recover approximately $16.3
million in amounts owed under the power sales contract, plus damages and fees.
Management of Seacoast plans to vigorously pursue this matter; however, a trial
date has not been set.
On May 24, 1996, a default judgment of approximately $27.0 million was rendered
against Seacoast pursuant to a claim filed in the District Court of Travis
County, Texas, by an entity seeking damages for breach of an oral contract by
the former owners of Seacoast. Seacoast's registered agent in Texas failed to
notify the current owners of Seacoast of the claim in a timely manner. On
appeal, the judgment was remanded back to the District Court in December 1996;
however, in January 1997, the appellate court reversed its decision and agreed
to hear the appeal. No rehearing date has been scheduled. Management of Seacoast
expects to prevail in having the judgment overturned.
In 1996, Old Dominion entered into two long-term lease and lease-back
transactions. The net benefit to Old Dominion of these transactions was
approximately $63.0 million. After the transactions closed, the VSCC staff
asserted that a 2.1% gross receipts tax is applicable to the approximately
$635.0 million base value of the lease-back transaction. Proceedings have not
yet begun to enforce the tax. Old Dominion estimates that an adverse
determination on the gross receipts tax issue would result in a maximum tax
liability of $13.3 million. Old Dominion is vigorously contesting the
anticipated assessment.
On February 27, 1997, Southside Electric Cooperative ("Southside"), one of two
member distribution systems that did not participate in forming CSC, raised a
dispute as to whether the loss, with respect to Old Dominion's interest in
Seacoast, should be borne totally by Old Dominion, thus resulting in a greater
financial burden on Southside. Southside asserts that their share of the loss
should be limited to the amount of Old Dominion's 30% participation in CSC,
which may be less than their proportionate share as an Old Dominion member.
Management believes that this dispute will be resolved.
ENVIRONMENTAL - Old Dominion is currently subject to regulation by the
Environmental Protection Agency ("EPA") and other federal, state and local
authorities with respect to the emission, discharge or release of certain
materials into the environment. As with all electric utilities, the operation of
Old Dominion's generating units could be affected by any environmental
regulations promulgated in the future. Capital expenditures and increased
operating costs required to comply with any such future regulations could be
significant. Expenditures necessary to ensure compliance with environmental
standards or deadlines will continue to be reflected in Old Dominion's capital
and operating costs.
Old Dominion is subject to certain requirements of the Clean Air Act (the "CAA")
which provides for environmental air quality standards. The CAA requires
utilities owning fossil fuel fired power stations to, among other things, limit
emissions of sulfur dioxide or obtain allowances for such emissions, or both,
and limit emissions of oxides of nitrogen. Clover is designed and licensed to
operate at full capacity within its allocated allowances for sulfur dioxide and
utilizes equipment which operates at a level significantly below the limitations
for emission of oxides of nitrogen.
On December 19, 1996, the EPA published its final rule for the Acid
Rain/Nitrogen Oxide Emission Reduction Program. In accordance with the new
standard, Clover's two tangentially fired boilers must meet an emission rate of
.40 lbs/MMBTU. However, through its construction and operating permit Clover is
required to meet a nitrogen oxide emission rate of .32 lbs/MMBTU. Clover Units 1
and 2 currently operate in compliance with the EPA regulation.
43
Old Dominion is also subject to permit limitations for surface water discharge
and for the operation of a combustion waste landfill. Surface water discharge is
covered under the Virginia Pollutant Discharge Elimination System permit which
contains limits required by the Clean Water Act and the State Water Quality
Standards. The Solid Waste Permit for the combustion waste landfill contains
operational and monitoring standards required by the Resource Conservation and
Recovery Act and the state's Solid Waste Management Regulations. Clover is
designed and licensed to operate within these permit limitations.
NOTE 16 - SUBSEQUENT EVENTS
On January 27, 1997, Power Ventures sold its interest in Ecuapower to an
unaffiliated party for approximately $17.1 million. Old Dominion was entitled to
approximately $7.0 million after expenses paid at closing. One-half of the sales
price, or $8.6 million, of which Old Dominion received $3.2 million after
expenses, was paid in cash at closing. The other half of the sales price was
evidenced by a note, which was paid on March 6, 1997, of which Old Dominion
received $3.8 million.
In February 1997, it was determined that the chimney liners on both Clover Units
1 and 2 would be replaced by the Clover Consortium (Westinghouse Electric
Corporation, Combustion Engineering, Inc., Black and Veatch Engineers-Architects
and H.B. Zachry Company) at no cost to the joint owners except in lost
generation and minimal overhead costs. The chimney liner replacement on Unit 1
is scheduled to begin on September 1, 1997 and the chimney liner replacement on
Unit 2 is scheduled to begin on in March 1, 1998. It is estimated that it will
take approximately 90 to 110 days to complete the replacement on each unit.
44
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Old Dominion is governed by a Board of 24 Directors, consisting of two
representatives from each Member. Each of the 12 Members nominates two Directors
who must be either a Director or an employee of the Member in good standing. The
candidates for Director are then elected to Old Dominion's Board of Directors by
voting delegates from each Member elected by each Member's local Board of
Directors and authorized to represent such Member at the annual meeting. Old
Dominion's Board of Directors sets policy and provides direction to Old
Dominion's President. The Board of Directors generally meets monthly. The
Members do not have a right to vote on any matters other than the election of
Directors.
The day-to-day business and affairs of Old Dominion are administered by
Old Dominion's President. The following table sets forth certain information
with respect to the executive officers of Old Dominion.
Executive Officers of Old Dominion
The executive officers of Old Dominion, as of March 1, 1997, their
respective ages and their respective positions with Old Dominion are listed
below. Each executive officer of Old Dominion serves at the discretion of the
Board of Directors.
Name Age Positions Held
---- --- --------------
Ronald W. Watkins 55 President and Chief Executive Officer
Daniel M. Walker 51 Vice President of Accounting and Finance
Konstantinos N. Kappatos 54 Vice President of Engineering and Operations
RONALD W. WATKINS has served as President and Chief Executive Officer of
Old Dominion since April 1, 1995; President of the VMDA (an electric cooperative
association which provides services to the Members and certain other electric
cooperatives) since April 1, 1995; a Director and President of CSC since June
1996; and President and Chief Executive Officer of the Nebraska Public Power
District from May 1989 until March 1995.
DANIEL M. WALKER has been Vice President of Accounting and Finance of
Old Dominion since January 1984; Assistant Treasurer of Dominion Power Control,
Ltd. ("DPC") since December 1986; Assistant Treasurer of RHI since December
1986; and was Director of Accounting and Finance for the Utility Division of the
VSCC from June 1981 until December 1983.
KONSTANTINOS N. KAPPATOS has been Vice President of Engineering and
Operations of Old Dominion since January 1984.
45
DIRECTORS OF OLD DOMINION
The directors of Old Dominion, as of March 1, 1997, their respective
ages, their respective positions with Old Dominion, if any, their respective
principal occupations and employment during the past five years and other
directorships held by each director are listed below.
WILLIAM M. ALPHIN (Age 66) has been a Director of Old Dominion since
September 1980; a Director of CSC since June 1996; Treasurer of RHI since May
1987; a Director of DPC since July 1988; a Director of Rappahannock Electric
Cooperative since January 1980; a Director of the VMDA since July 1987; and an
insurance advisor with Virginia Farm Bureau Insurance Company since October
1975.
JOHN C. ANDERSON (Age 59) has been a Director of Old Dominion since
October 1982; President and Chief Executive Officer of Southside Electric
Cooperative since September 1982; and a Director of CFC from February 1991 until
March 1996.
E. PAUL BIENVENUE (Age 57) has been Chairman of Old Dominion's Board of
Directors since July 1995; President of DPC since July 1995; Vice Chairman of
Old Dominion's Board of Directors from January 1984 until July 1995; a
Director of Old Dominion since September 1981; Vice President of DPC from
December 1990 until July 1995; General Manager of Delaware Electric
Cooperative since September 1981; a Director of Seaford Golf and Country Club
since January 1996: a Director of United Utility Supply Cooperative
Corporation since June 1985; and Executive Vice President and General
Manager of Rural Electric TV, Inc. since May 1989; and a Director of Nanticoke
Health Services, Inc. Since November 1995.
FRANK W. BLAKE (Age 78) has been a Director of Old Dominion since July
1977; a Director of A&N Electric Cooperative since September 1963; a Director of
the VMDA since July 1987; a self-employed buyer and seller of real estate since
October 1943; a Methodist Minister; and was co-owner of Maxine's Jewelry & Gifts
from August 1962 until December 1993.
JOHN E. BONFADINI (Age 58) has been a Director of Old Dominion since
July 1977; a Director of DPC since July 1994; a Director of Northern Virginia
Electric Cooperative since September 1975; a Director of National Cooperative
Services Corporation, a private cooperative providing lease financing, since
February 1988; and a professor at George Mason University since July 1980.
M. JOHN BOWMAN (Age 51) has been a Director of Old Dominion since July
1974; a Director of CSC since June 1996; Executive Vice President and General
Manager of Mecklenburg Electric Cooperative since January 1980; and a Director
of NRECA since February 1993.
DICK D. BOWMAN (Age 68) has been a Director of Old Dominion since July
1993; a Director of DPC since October 1996; a Director of Shenandoah Valley
Electric Cooperative since November 1970: President of Bowman Brothers, Inc., a
farm equipment retailer, since November 1976; a Director of Rockingham Mutual
Insurance Co. since December 1977; a Director of Shenandoah Telecommunication
Co. since December 1980; Vice President of Shenandoah Valley Electric
Cooperative from June 1989 until June 1991 and from June 1993 until June 1994;
and President of Shenandoah Valley Electric Cooperative from June 1991 until
June 1993.
M. DALE BRADSHAW (Age 43) has been a Director of Old Dominion since
January 1995; Manager of Prince George Electric Cooperative since January 1995;
and District Manager of Davidson Electric Membership Corporation from September
1988 until December 1994.
46
VERNON N. BRINKLEY (Age 50) has been Secretary/Treasurer of Old
Dominion's Board of Directors since July 1992; a Director of Old Dominion since
October 1982; a Director of CSC since June 1996; Secretary/Treasurer of DPC
since July 1992; a Director of Central Area Data Processing since May 1991;
President and General Manager of A&N Electric Cooperative since October 1995;
and Executive Vice President and General Manager of A&N Electric Cooperative
from September 1982 until October 1995.
CALVIN P. CARTER (Age 72) has been a Director of Old Dominion since May
1991; a Director of Southside Electric Cooperative since June 1972; self
employed as the owner of Carter's Store, a retail store, since April 1960; the
owner of Carter Stone Co., a stone quarry, since June 1965; and a member of the
Campbell County Board of Supervisors since November 1979.
GLENN F. CHAPPELL (Age 53) has been a Director of Old Dominion since
December 1995; a Director of Prince George Electric Cooperative since February
1985; a Director of the VMDA since December 1995; and a self-employed farmer
since 1962.
STANLEY C. FEUERBERG (Age 45) has been a Director of Old Dominion since
July 1992; a Director of CSC since June 1996; President and Chief Executive
Officer of Northern Virginia Electric Cooperative since January 1992; and was
Vice President and Chief Operating Officer of Vermont Electric Power Company,
Inc. from July 1985 until January 1992.
HUNTER R. GREENLAW, JR. (Age 51) has been a Director of Old Dominion
since November 1991; a Director of CSC since June 1996; a Director of Northern
Neck Electric Cooperative since May 1979; and the President of Greenlaw
Properties, Ltd., a real estate development and general contracting company,
since August 1974.
BRUCE A. HENRY (Age 51) has been a Director of Old Dominion since
November 1993; a Director of Delaware Electric Cooperative since August 1978;
and the owner and Secretary/Treasurer of Delmarva Builders, Inc. since January
1981.
FREDERICK L. HUBBARD (Age 56) has been a Director of Old Dominion since
November 1991; Executive Vice President and General Manager of Choptank Electric
Cooperative since May 1991; a Director of Peoples Bank of Maryland since June
1996; and was Manager of Electric Operations for Choptank Electric Cooperative
from June 1982 until May 1991.
DAVID J. JONES (Age 48) has been a Director of Old Dominion since July
1986; a Director of Mecklenburg Electric Cooperative since June 1982; a Director
of DPC since August 1990; Vice President of Exchange Warehouse, Inc. since April
1996; the owner and operator of Big Fork Farms since April 1970; and was a
member of the Virginia Polytechnic Institute Extension Advisory Board, a
farmers' advisory board, from January 1985 until October 1992.
HUGH M. LANDES (Age 59) has been a Director of Old Dominion since
January 1978; General Manager of BARC Electric Cooperative since March 1978; and
a Director of United Utility Supply Cooperative Corporation since June 1981.
WILLIAM M. LEECH, JR. (Age 69) has been a Director of Old Dominion since
August 1977; a Director of DPC since July 1995; a Director of BARC Electric
Cooperative since October 1970; a Director of CSC since June 1996; and was
engaged in farming from September 1955 until December 1988 at which point he
retired.
47
JAMES M. REYNOLDS (Age 49) was Chairman of Old Dominion's Board of
Directors from July 1992 until July 1995; a Director of Old Dominion since May
1977; President of DPC from July 1992 until July 1995; General Manager of
Community Electric Cooperative since April 1977; was Secretary/Treasurer of Old
Dominion's Board of Directors from March 1981 until July 1992; was Secretary of
DPC from December 1986 until July 1988; was Secretary/Treasurer of DPC from July
1988 until July 1992; and was a Director of CFC from February 1983 until
February 1989.
CHARLES R. RICE, JR. (Age 55) has been a Director of Old Dominion
since August 1986; and General Manager of Northern Neck Electric Cooperative
since August 1986.
CECIL E. VIVERETTE, JR. (Age 55) has been a Director of Old Dominion
since March 1988; President of RHI since July 1990; President of Rappahannock
Electric Cooperative since March 1988; and was Assistant Manager of Rappahannock
Electric Cooperative from October 1978 until March 1988.
GWALTNEY W. WHITE, JR. (Age 69) has been a Director of Old Dominion
since June 1989; Vice President of RHI since July 1990; a Director of Community
Electric Cooperative since March 1983; Chairman of the Board of Directors of CSC
since June 1996; a Director of Prescription Fertilizer and Chemical Company,
Inc. since January 1968; was a farmer and peanut buyer from January 1948 until
January 1990; and was the Vice President of Prescription Fertilizer and Chemical
Company, Inc. from January 1968 until January 1994.
CARL R. WIDDOWSON (Age 58) has been a Director of Old Dominion since
February 1987; a Director of Choptank Electric Cooperative since February 1980;
a Director of DPC since July 1988; and a farmer since December 1956.
C. DOUGLAS WINE (Age 54) has been a Director of Old Dominion since April
1991; President and Chief Executive Officer of Shenandoah Valley Electric
Cooperative since July 1995; Secretary of RHI since April 1991; Executive Vice
President of Shenandoah Valley Electric Cooperative from April 1991 until July
1995; a Director of an advisory board to the Board of Directors of First
Virginia Bank - Blue Ridge since April 1991; Manager of North River Telephone
Cooperative since January 1994; and was the Operations Manager of Shenandoah
Valley Electric Cooperative from January 1984 until March 1991.
48
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information concerning compensation
awarded to, earned by or paid to any person serving as Old Dominion's President
and Chief Executive Officer or acting in a similar capacity during the last
completed fiscal year and Old Dominion's two executive officers (collectively
the "Named Executives") for services rendered to Old Dominion in all capacities
during each of the last three fiscal years. The table also identifies the
principal capacity in which each of the Named Executives served Old Dominion at
the end of fiscal year 1996.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Other
Annual All Other
Compen- Compen-
Name and Salary Bonus sation sation
Principal Position Year (2)(3) (4) (5)
- - --------------------------------------------------------------------------------
Ronald W. Watkins(1) 1996 $362,081 - $ 1,181 $12,559
President and Chief 1995 190,137 - 37,613 945
Executive Officer
Daniel M. Walker 1996 139,323 - - 15,693
Vice President of Accounting 1995 133,952 - - 16,287
and Finance 1994 128,074 - - 12,570
Konstantinos N. Kappatos 1996 139,323 - - 17,297
Vice President of Engineering 1995 133,952 - - 17,827
and Operations 1994 128,544 - - 14,104
- - -------------------
(1) In 1991, Old Dominion and the VMDA entered into an agreement pursuant to
which the VMDA agreed to contribute to the President and Chief Executive
Officer's annual compensation. In 1996, VMDA contributed $50,000 toward
Mr. Watkins' compensation. In 1995, VMDA contributed $30,000 to Mr.
Watkins' annual compensation.
(2) Includes amounts deferred by the Named Executives under the provisions of
the SelectRe Pension Plan (the "401(k) Plan") a multi-employer tax
qualified retirement plan administered by the National Rural Electric
Cooperative Association. All employees of Old Dominion are eligible to
become participants on the first day of the month following completion of
one year of eligible service.
(3) In March 1995, Old Dominion and the VMDA entered into an agreement with
Mr. Watkins pursuant to which Old Dominion and the VMDA agreed to fund a
supplemental retirement package for Mr. Watkins with an annual fixed
contribution of $60,000. The amount paid in 1996 by Old Dominion was
$108,300 for 1996 and 1995.
(4) Perquisites and other personal benefits paid to Mr. Watkins in 1996
included expenses for a company automobile. Perquisites and other
personal benefits paid to Mr. Watkins in 1995 included $36,926 of moving
and temporary living expenses. Neither Mr. Walker nor Mr. Kappatos
received any perquisites or other personal benefits in any of the fiscal
years covered by the table.
(5) The amount reflected in this column for 1996 is composed of contributions
made by Old Dominion under the Retirement and Security Plan, the 401(k)
Plan, payments made by Old Dominion for life insurance coverage and
amounts accrued by Old Dominion under the Salary Continuation Plan .
Specifically these amounts for fiscal year 1996 were $7,369, $3,750,
$1,440 and $0 for Mr. Watkins; $3,988, $2,760, $783 and $8,162 for Mr.
Walker; and $3,988, $2,760, $783 and $9,766 for Mr. Kappatos,
respectively.
Effective August 1, 1994, Old Dominion pays the 12 Directors who are not
employees of its Members an $800 per month retainer plus $200 for any specially
called meetings and reimburses all Directors for out-of-pocket expenses incurred
in attending meetings.
49
CONTRACT WITH EXECUTIVE OFFICER
On March 9, 1995, Old Dominion and the VMDA entered into an agreement
with Ronald W. Watkins in which the companies agreed to pay Mr. Watkins $250,000
per year when carrying out the responsibilities as President and Chief Executive
Officer. The agreement also provides for an automobile and all benefits
available to other employees. Additionally, Old Dominion and the VMDA entered
into an agreement effective April 1, 1995, to jointly fund a supplemental
retirement package for Mr. Watkins with an annual fixed contribution of $60,000.
DEFINED BENEFIT PLAN
Old Dominion has elected to participate in the NRECA Retirement and
Security Program (the "Plan"), a noncontributory, defined benefit multi-employer
master pension plan maintained and administered by the NRECA for the benefit of
its member systems and their employees. The Plan is a qualified pension plan
under Section 401(a) of the Internal Revenue Code of 1986. The following table
lists the estimated current annual pension benefit payable at "normal retirement
age," age 65, for participants in the specified final average salary and years
of benefit service categories for the given current multiplier of 1.7%. Benefits
which accrue under the Plan are based upon the base annual salary as of November
of the previous year. As a result of changes in Internal Revenue Service
regulations, the base annual salary used in determining benefits is limited to
$150,000 effective January 1, 1994.
Years of Benefit Service
-----------------------------------------------------
Final Average Salary 15 20 25 30 35
-------------------- ------- ------- ------- -------- --------
$ 75,000 $19,125 $25,500 $31,875 $ 38,250 $ 44,625
100,000 25,500 34,000 42,500 51,000 59,500
125,000 31,875 42,500 53,125 63,750 74,375
150,000 38,250 51,000 63,750 76,500 89,250
The pension benefits indicated above are the estimated annual straight
life as well as the joint and surviving spouse life annuity amounts payable by
the Plan, and they are not subject to any deduction for Social Security or other
offset amounts. The participant's annual pension at his normal retirement date
is equal to the product of his years of benefit service times final average
salary times the multiplier in effect during years of benefit service. The
multiplier was 1.7% commencing January 1, 1992.
As of December 31, 1996, years of credited service under the Plan at
"normal retirement age" for each of the Named Executives was: Mr. Watkins,
1.75 years; Mr. Walker, 11.92 years; and Mr. Kappatos, 11.92 years.
SALARY CONTINUATION PLAN
Certain executive officers of Old Dominion also participate in a salary
continuation plan. Pursuant to this plan, Old Dominion has entered into
agreements with each of the Named Executives, providing in part, that if the
Named Executive has attained the age of 50 or older on the date his employment
is terminated for any reason whatsoever, absent malfeasance in office, Old
Dominion will pay certain compensation for a period of 15 years, beginning at
age 65. The amount of such compensation increases under a formula which
considers the Named Executive's age and years of service on the date of
termination of employment, with a maximum compensation of $35,000 per year
payable if the Named Executive's employment is terminated at age 65 or older.
Each agreement provides for payment of similar benefits to the Named Executive's
beneficiaries in the event of his death or permanent disability. Old Dominion
50
maintains life insurance coverage on each of the Named Executives to recover
from the insurance proceeds a sum approximately sufficient to offset the
aggregate benefits payable under each agreement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Not Applicable
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not Applicable
51
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Form 10-K.
1. Financial Statements
See Index on page 22.
2. Financial Statement Schedules
None to be included.
3. Exhibits
*3(i) Articles of Incorporation of Old Dominion Electric
Cooperative (filed as exhibit 3.1 to the Registrant's
Form S-1 Registration Statement, File No. 33-46795, filed
on March 27, 1992).
*3(ii) Bylaws of Old Dominion Electric Cooperative, as amended and
restated, October 6, 1992 (filed as exhibit 3.2 to the
Registrant's Form 10-K for the year ended December 31, 1992,
File No. 33-46795, filed on March 30, 1993).
*4.1 Indenture of Mortgage and Deed of Trust, dated as of May 1,
1992, between Old Dominion Electric Cooperative and Crestar
Bank, as Trustee (filed as exhibit 4.1 to the Registrant's
Form 10-K for the year ended December 31, 1992, File No.
33-46795, filed on March 30, 1993).
*4.2 First Supplemental Indenture, dated as of August 1, 1992, to
the Indenture of Mortgage and Deed of Trust, dated as of May
1, 1992, between Old Dominion Electric Cooperative and
Crestar Bank, as Trustee (filed as exhibit 4.22 to the
Registrant's Form 10-K for the year ended December 31, 1992,
File No. 33-46795, filed on March 30, 1993).
*4.3 Second Supplemental Indenture, dated as of December 1, 1992,
to the Indenture of Mortgage and Deed of Trust, dated as of
May 1, 1992, between Old Dominion Electric Cooperative and
Crestar Bank, as Trustee (filed as exhibit 4.24 to the
Registrant's Form 10-K for the year ended December 31, 1992,
File No. 33-46795, filed on March 30, 1993).
*4.4 Third Supplemental Indenture, dated as of May 1, 1993, to
the Indenture of Mortgage and Deed of Trust, dated as of May
1, 1992, between Old Dominion Electric Cooperative and
Crestar Bank, as Trustee (filed as exhibit 4.1 to the
Registrant's Form 10-Q for the quarter ended June 30, 1993,
File No. 33-46795, filed on August 10, 1993).
4.5 Fourth Supplemental Indenture, dated as of December 15,
1994, to the Indenture of Mortgage and Deed of Trust dated
as of May 1, 1992, between Old Dominion Electric Cooperative
and Crestar Bank, as Trustee.
4.6 Fifth Supplemental Indenture, dated as of February 29,
1996, to the Indenture of Mortgage and Deed of Trust dated
as of May 1, 1992, between Old Dominion Electric Cooperative
and Crestar Bank, as Trustee.
52
*4.7 Form of Bonds, 1992 Series A (filed as exhibit 4.2 to
Amendment No. 1 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on May 6, 1992).
*4.8 Form of Bonds, 1992 Series C (filed as exhibit 4.23 to the
Registrant's Form 10-K for the year ended December 31,
1992, File No. 33-46795, filed on March 30, 1993).
*4.9 Form of Bonds, 1993 Series A (filed as exhibit 4.2 to the
Registrant's Form S-1 Registration Statement, File No.
33-61326, filed on April 19, 1993).
*10.1 Nuclear Fuel Agreement between Virginia Electric and Power
Company and Old Dominion Electric Cooperative, dated as of
December 28, 1982, amended and restated October 17, 1983
(filed as exhibit 10.1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.2 Purchase, Construction and Ownership Agreement between
Virginia Electric and Power Company and Old Dominion
Electric Cooperative, dated as of December 28, 1982, amended
and restated October 17, 1983 (filed as exhibit 10.2 to the
Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.3 Interconnection and Operating Agreement between Virginia
Electric and Power Company and Old Dominion Electric
Cooperative, dated as of December 28, 1982, amended and
restated October 17, 1983 (filed as exhibit 10.3 to the
Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.4 Amendment No. 1 to the Interconnection and Operating
Agreement between Virginia Electric and Power Company and
Old Dominion Electric Cooperative, effective on the date of
commercial operation for Clover Unit 2 or December 31, 1996,
whichever occurs first (filed as exhibit 10.4 to the
Registrant's Form 10-K for the year ended December 31, 1994,
File No. 33-46795, filed on March 15, 1995).
*10.5 Clover Purchase, Construction and Ownership Agreement
between Old Dominion Electric Cooperative and Virginia
Electric and Power Company, dated as of May 31, 1990 (filed
as exhibit 10.4 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.6 Amendment No. 1 to the Clover Purchase, Construction and
Ownership Agreement between Old Dominion Electric
Cooperative and Virginia Electric and Power Company,
effective March 12, 1993 (filed as exhibit 10.34 to the
Registrant's Form S-1 Registration Statement, File No.
33-61326, filed on April 19, 1993).
*10.7 Clover Operating Agreement between Virginia Electric and
Power Company and Old Dominion Electric Cooperative, dated
as of May 31, 1990 (filed as exhibit 10.6 to the
Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.8 Amendment to the Clover Operating Agreement between Virginia
Electric and Power Company and Old Dominion Electric
Cooperative, effective January 17, 1995 (filed as exhibit
10.8 to the Registrant's Form 10-K for the year ended
December 31, 1994, File No. 33-46795, on March 15, 1995).
53
*10.9 Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6,
1989, and the Unit 2 Amendment (Volume 1), dated May 31,
1990, between Virginia Electric and Power Company and Old
Dominion Electric Cooperative, Westinghouse Electric
Corporation, Black & Veatch Engineers-Architects, Combustion
Engineering, Inc. and H.B. Zachry Company (Volumes 2 - 11
contain technical specifications only) (filed as exhibit
10.7 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on March 27, 1992).
*10.10 Electric Service Agreement between Old Dominion Electric
Cooperative and Appalachian Power Company, dated July 2,
1990 (filed as exhibit 10.8 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.11 Electric Service Agreement between Old Dominion Electric
Cooperative and Appalachian Power Company, dated March 6,
1991 (filed as exhibit 10.9 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.12 Electric Service Agreement between The Potomac Edison
Company and Old Dominion Electric Cooperative, dated October
4, 1991 (filed as exhibit 10.11 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.13 Amendment to Electric Service Agreement between The Potomac
Edison Company and Old Dominion Electric Cooperative, dated
October 4, 1991 (filed as exhibit 10.36 to Amendment No. 2
to the Registrant's Form S-1 Registration Statement,
File No. 33-61326, filed on May 26, 1993).
*10.14 Lease Agreement between Old Dominion Electric Cooperative
and Regional Headquarters, Inc., dated July 29, 1986
(filed as exhibit 10.27 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.15 Credit Agreement between Virginia Electric and Power Company
and Old Dominion Electric Cooperative, dated as of December
1, 1985 (filed as exhibit 10.28 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.16 Nuclear Decommissioning Trust Agreement between Old Dominion
Electric Cooperative and Bankers Trust Company, dated March
1, 1991 (filed as exhibit 10.29 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.17 Form of Salary Continuation Plan (filed as exhibit 10.31 to
the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.18 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and A&N Electric
Cooperative, dated April 24, 1992 (filed as exhibit 10.34
to Amendment No. 2 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May
27, 1992).
*10.19 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and BARC Electric
Cooperative, dated April 22, 1992 (filed as exhibit 10.35
to Amendment No. 1 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on May 6, 1992).
*10.20 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Choptank Electric
Cooperative, dated April 20, 1992 (filed as exhibit 10.36
to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May
6, 1992).
54
*10.21 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Community Electric
Cooperative, dated April 28, 1992 (filed as exhibit 10.37
to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May
6, 1992).
*10.22 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Delaware Electric
Cooperative, dated April 22, 1992 (filed as exhibit 10.38
to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May
6, 1992).
*10.23 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Mecklenburg Electric
Cooperative, dated April 15, 1992 (filed as exhibit 10.39
to Amendment No. 1 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on May 6, 1992).
*10.24 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Northern Neck Electric
Cooperative, dated April 21, 1992 (filed as exhibit 10.40
to Amendment No. 1 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on May 6, 1992).
*10.25 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Northern Virginia
Electric Cooperative, dated April 17, 1992 (filed as
exhibit 10.41 to Amendment No. 1 to the Registrant's Form
S-1 Registration Statement, File No. 33-46795, filed on May
6, 1992).
*10.26 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Prince George Electric
Cooperative, dated May 6, 1992 (filed as exhibit 10.42 to
Amendment No. 2 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on May 27, 1992).
*10.27 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Rappahannock Electric
Cooperative, dated April 17, 1992 (filed as exhibit 10.43
to Amendment No. 1 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on May 6, 1992).
*10.28 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Shenandoah Valley
Electric Cooperative, dated April 23, 1992 (filed as
exhibit 10.44 to Amendment No. 1 to the Registrant's Form
S-1 Registration Statement, File No. 33-46795, filed on May
6, 1992).
*10.29 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Southside Electric
Cooperative, dated April 22, 1992 (filed as exhibit 10.45
to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May
6, 1992).
*10.30 Capacity and Energy Sales Agreement between Old Dominion
Electric Cooperative and Public Service Electric and Gas,
dated December 17, 1992, effective January 1, 1995 (filed as
exhibit 10.30 to the Registrant's Form 10-K for the year
ended December 31, 1992, File No. 33-46795, filed on March
30, 1993).
*10.31 First Supplement to Capacity and Energy Sales Agreement
between Old Dominion Electric Cooperative and Public Service
Electric & Gas, dated March 26, 1993 (filed as exhibit 10.32
to the Registrant's Form S-1 Registration Statement, File
No. 33-61326, filed on April 19, 1993).
*10.32 Letter Agreement between Old Dominion Electric Cooperative
and Delmarva Power & Light Company, dated March 2, 1993
(filed as exhibit 10.35 to the Registrant's Form S-1
Registration Statement, File No. 33-61326, filed on April
19, 1993).
55
*10.33 Wholesale Partial Requirements Service Agreement between
Delmarva Power & Light Company and Old Dominion Electric
Cooperative, effective January 1, 1995 (filed as exhibit
10.38 to Registrant's Form 10-K for the year ended December
31, 1994, File No. 33-46795, on March 15, 1995).
*10.34 Transmission Service Agreement between Delmarva Power &
Light Company and Old Dominion Electric Cooperative,
effective January 1, 1995 (filed as exhibit 10.39 to
Registrant's Form 10-K for the year ended December 31, 1994,
File No. 33-46795, on March 15, 1995).
10.35 Participation Agreement, dated as of February 29, 1996,
among Old Dominion Electric Cooperative, State Street Bank
and Trust Company, the Owner Participant named therein and
Utrecht-America Finance Co.
10.36 Clover Unit 1 Equipment Interest Lease Agreement, dated as
of February 29, 1996, between Old Dominion Electric
Cooperative, as Equipment Head Lessor, and State Street Bank
and Trust Company, as Equipment Head Lessee.
** 10.37 Equipment Operating Lease Agreement, dated as of February
29, 1996, between State Street Bank and Trust Company, as
Lessor, and Old Dominion Electric Cooperative, as Lessee.
** 10.38 Corrected Option Agreement to Lease, dated as of February
29, 1996, among Old Dominion Electric Cooperative and
State Street Bank and Trust Company.
10.39 Clover Agreements Assignment and Assumption Agreement, dated
as of February 29, 1996, between Old Dominion Electric
Cooperative, as Assignor, and State Street Bank and Trust
Company, as Assignee.
10.40 Deposit Agreement, dated as of February 29, 1996, between
Old Dominion Electric Cooperative, as Depositor, and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch, as Issuer.
10.41 Deposit Pledge Agreement, dated as of February 29, 1996,
between Old Dominion Electric Cooperative, as Pledgor, and
State Street Bank and Trust Company, as Pledgee.
10.42 Payment Undertaking Agreement, dated as of February 29,
1996, between Old Dominion Electric Cooperative and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch.
10.43 Payment Undertaking Pledge Agreement, dated as of February
29, 1996, between Old Dominion Electric Cooperative, as
Payment Undertaking Pledgor, and State Street Bank and Trust
Company, as Payment Undertaking Pledgee.
10.44 Pledge Agreement, dated as of February 29, 1996, between Old
Dominion Electric Cooperative, as Pledgor, and State Street
Bank and Trust Company, as Pledgee.
10.45 Tax Indemnity Agreement, dated as of February 29, 1996,
among Old Dominion Electric Cooperative, State Street Bank
and Trust Company, the Owner Participant named therein and
Utrecht-America Finance Co.
56
10.46 Participation Agreement, dated as of July 1, 1996, among
Old Dominion Electric Cooperative, Clover Unit 2 Generating
Trust, Wilmington Trust Company, the Owner Participant named
therein and Utrecht-America Finance Co.
** 10.47 Clover Unit 2 Equipment Interest Agreement, dated as of
July 1, 1996, between Old Dominion Electric Cooperative
and Clover Unit 2 Generating Trust.
** 10.48 Operating Equipment Agreement, dated as of July 1, 1996,
between Clover Unit 2 Generating Trust and Old Dominion
Electric Cooperative.
10.49 Clover Agreements Assignment and Assumption Agreement, dated
as of July 1, 1996, between Old Dominion Electric
Cooperative, as Assignor, and Clover Unit 2 Generating
Trust, as Assignee.
10.50 Deed of Ground Lease and Sublease Agreement, dated as of
July 1, 1996, between Old Dominion Electric Cooperative, as
Ground Lessor, and Clover Unit 2 Generating Trust, as Ground
Lessee.
10.51 Guaranty Agreement, dated as of July 1, 1996, between Old
Dominion Electric Cooperative and AMBAC Indemnity
Corporation.
10.52 Investment Agreement, dated as of July 31, 1996, among
AMBAC Capital Funding, Inc., Old Dominion Electric
Cooperative and AMBAC Indemnity Corporation.
10.53 Investment Agreement Pledge Agreement, dated as of July 1,
1996, among Old Dominion Electric Cooperative, as Investment
Agreement Pledgor, AMBAC Indemnity Corporation, the Owner
Participant named therein and Clover Unit 2 Generating
Trust.
10.54 Equity Security Pledge Agreement, dated as of July 1, 1996,
between Old Dominion Electric Cooperative, as Pledgor, and
Wilmington Trust Company, as Collateral Agent.
10.55 Payment Undertaking Agreement, dated as of July 1, 1996,
between Old Dominion Electric Cooperative and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", New York Branch.
10.56 Payment Undertaking Pledge Agreement, dated as of July 1,
1996, between Old Dominion Electric Cooperative, as Payment
Undertaking Pledgor, and Clover Unit 2 Generating Trust, as
Payment Undertaking Pledgee.
10.57 Subordinated Deed of Trust and Security Agreement, dated
as of July 1, 1996, among Old Dominion Electric
Cooperative, Richard W. Gregory, Trustee, and Michael P.
Drzal, Trustee.
10.58 Subordinated Security Agreement, dated as of July 1, 1996,
among Old Dominion Electric Cooperative, the Owner
Participant named therein, AMBAC Indemnity Corporation and
Clover Unit 2 Generating Trust.
10.59 Tax Indemnity Agreement, dated as of July 1 1996, between
Old Dominion Electric Cooperative and the Owner Participant
named therein.
57
21 Subsidiaries of Old Dominion Electric Cooperative (not
included because Old Dominion Electric Cooperative's
subsidiaries, considered in the aggregate as a single
subsidiary, would not constitute a "significant subsidiary"
under Rule 1-02(w) of Regulation S-X).
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1996.
- - ----------------------
* Incorporated herein by reference.
** These leases relate to Old Dominion Electric Cooperative's interest in all
of Clover Unit 1 and Clover Unit 2, as applicable, other than the
foundations. At the time these leases were executed, Old Dominion had
entered into identical leases with respect to the foundations as part of
the same transactions. Old Dominion Electric Cooperative agrees to furnish
to the Commission, upon request, a copy of the leases of its interest in
the foundations for Clover Unit 1 and Clover Unit 2, as applicable.
58
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.
OLD DOMINION ELECTRIC COOPERATIVE
Registrant
Date: March 21, 1997 By: /s/ RONALD W. WATKINS
-----------------------------------
Ronald W. Watkins
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the following capacities on March 21, 1997.
Signature Title
----------- -------
/s/ RONALD W. WATKINS President (principal executive officer)
- - ------------------------------
Ronald W. Watkins
/s/ DANIEL M. WALKER Vice President of Accounting & Finance
- - ------------------------------ (principal financial officer)
Daniel M. Walker
/s/ ROBERT L. KEES Controller (principal accounting officer)
- - ------------------------------
Robert L. Kees
/s/ WILLIAM M. ALPHIN Director
- - ------------------------------
William M. Alphin
/s/ JOHN C. ANDERSON Director
- - ------------------------------
John C. Anderson
/s/ E. PAUL BIENVENUE Director
- - ------------------------------
E. Paul Bienvenue
/s/ FRANK W. BLAKE Director
- - ------------------------------
Frank W. Blake
/s/ JOHN E. BONFADINI Director
- - ------------------------------
John E. Bonfadini
59
Signature Title
----------- -------
/s/ M. JOHN BOWMAN Director
- - --------------------------------
M. John Bowman
/s/ DICK D. BOWMAN Director
- - --------------------------------
Dick D. Bowman
/s/ M. DALE BRADSHAW Director
- - --------------------------------
M. Dale Bradshaw
/s/ VERNON N. BRINKLEY Director
- - --------------------------------
Vernon N. Brinkley
/s/ CALVIN P. CARTER Director
- - --------------------------------
Calvin P. Carter
/s/ GLENN F. CHAPPELL Director
- - --------------------------------
Glenn F. Chappell
/s/ STANLEY C. FEUERBERG Director
- - --------------------------------
Stanley C. Feuerberg
/s/ HUNTER R. GREENLAW, JR. Director
- - --------------------------------
Hunter R. Greenlaw, Jr.
/s/ BRUCE A. HENRY Director
- - --------------------------------
Bruce A. Henry
/s/ FREDERICK L. HUBBARD Director
- - --------------------------------
Frederick L. Hubbard
/s/ DAVID J. JONES Director
- - --------------------------------
David J. Jones
/s/ HUGH M. LANDES Director
- - --------------------------------
Hugh M. Landes
/s/ WILLIAM M. LEECH, JR. Director
- - --------------------------------
William M. Leech, Jr.
/s/ JAMES M. REYNOLDS Director
- - --------------------------------
James M. Reynolds
/s/ CHARLES R. RICE, JR. Director
- - --------------------------------
Charles R. Rice, Jr.
60
Signature Title
----------- -------
/s/ CECIL E. VIVERETTE, JR. Director
- - --------------------------------
Cecil E. Viverette, Jr.
/s/ GWALTNEY W. WHITE, JR. Director
- - --------------------------------
Gwaltney W. White, Jr.
/s/ CARL R. WIDDOWSON Director
- - --------------------------------
Carl R. Widdowson
/s/ C. DOUGLAS WINE Director
- - --------------------------------
C. Douglas Wine
- - ----------------------
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
As of the date this annual report on Form 10-K was filed with the
Securities and Exchange Commission, Old Dominion had not yet furnished to its
security holders copies of its annual report for fiscal year 1996. Old Dominion
undertakes that it will file four copies of such annual report with the
Securities and Exchange Commission when such report is sent to security holders.
61
EXHIBIT INDEX
Exhibit Page
Number Description of Exhibit Number
*3(i) Articles of Incorporation of Old Dominion Electric
Cooperative (filed as exhibit 3.1 to the Registrant's Form
S-1 Registration Statement, File No. 33-46795, filed on
March 27, 1992).
*3(ii) Bylaws of Old Dominion Electric Cooperative, as amended and
restated, October 6, 1992 (filed as exhibit 3.2 to the
Registrant's Form 10-K for the fiscal year ended December
31, 1992, File No. 33-46795, filed on March 30, 1993).
*4.1 Indenture of Mortgage and Deed of Trust, dated as of May 1,
1992, between Old Dominion Electric Cooperative and Crestar
Bank, as Trustee (filed as exhibit 4.1 to the Registrant's
Form 10-K for the fiscal year ended December 31, 1992, File
No. 33-46795, filed on March 30, 1993).
*4.2 First Supplemental Indenture, dated as of August 1, 1992, to
the Indenture of Mortgage and Deed of Trust, dated as of May
1, 1992, between Old Dominion Electric Cooperative and
Crestar Bank, as Trustee (filed as exhibit 4.22 to the
Registrant's Form 10-K for the fiscal year ended December
31, 1992, File No. 33-46795, filed on March 30, 1993).
*4.3 Second Supplemental Indenture, dated as of December 1, 1992,
to the Indenture of Mortgage and Deed of Trust, dated as of
May 1, 1992, between Old Dominion Electric Cooperative and
Crestar Bank, as Trustee (filed as exhibit 4.24 to the
Registrant's Form 10-K for the fiscal year ended December
31, 1992, File No. 33-46795, filed on March 30, 1993).
*4.4 Third Supplemental Indenture, dated as of May 1, 1993, to
the Indenture of Mortgage and Deed of Trust, dated as of May
1, 1992, between Old Dominion Electric Cooperative and
Crestar Bank, as Trustee (filed as exhibit 4.1 to the
Registrant's Form 10-Q for the fiscal quarter ended June 30,
1993, File No. 33-46795, filed on August 10, 1993).
4.5 Fourth Supplemental Indenture, dated as of December 15,
1994, to the Indenture of Mortgage and Deed of Trust dated
as of May 1, 1992, between Old Dominion Electric Cooperative
and Crestar Bank, as Trustee.
4.6 Fifth Supplemental Indenture, dated as of February 29,
1996, to the Indenture of Mortgage and Deed of Trust dated
as of May 1, 1992, between Old Dominion Electric Cooperative
and Crestar Bank, as Trustee.
*4.7 Form of Bonds, 1992 Series A (filed as exhibit 4.2 to
Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
62
Exhibit Page
Number Description of Exhibit Number
*4.8 Form of Bonds, 1992 Series C (filed as exhibit 4.23 to the
Registrant's Form 10-K for the fiscal year ended December
31, 1992, File No. 33-46795, filed on March 30, 1993).
*4.9 Form of Bonds, 1993 Series A (filed as exhibit 4.2 to the
Registrant's Form S-1 Registration Statement, File No.
33-61326, filed on April 19, 1993).
*10.1 Nuclear Fuel Agreement between Virginia Electric and Power
Company and Old Dominion Electric Cooperative, dated as of
December 28, 1982, amended and restated October 17, 1983
(filed as exhibit 10.1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.2 Purchase, Construction and Ownership Agreement between
Virginia Electric and Power Company and Old Dominion
Electric Cooperative, dated as of December 28, 1982, amended
and restated October 17, 1983 (filed as exhibit 10.2 to the
Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.3 Interconnection and Operating Agreement between Virginia
Electric and Power Company and Old Dominion Electric
Cooperative, dated as of December 28, 1982, amended and
restated October 17, 1983 (filed as exhibit 10.3 to the
Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.4 Amendment No. 1 to the Interconnection and Operating
Agreement between Virginia Electric and Power Company and
Old Dominion Electric Cooperative, effective on the date of
commercial operation for Clover Unit 2 or December 31, 1996,
whichever occurs first (filed as exhibit 10.4 to the
Registrant's Form 10-K for the year ended December 31, 1994,
File No. 33-46795, filed on March 15, 1995).
*10.5 Clover Purchase, Construction and Ownership Agreement
between Old Dominion Electric Cooperative and Virginia
Electric and Power Company, dated as of May 31, 1990 (filed
as exhibit 10.4 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.6 Amendment No. 1 to the Clover Purchase, Construction
and Ownership Agreement between Old Dominion Electric
Cooperative and Virginia Electric and Power Company,
effective March 12, 1993 (filed as exhibit 10.34 to the
Registrant's Form S-1 Registration Statement, File No.
33-61326, filed on April 19, 1993).
*10.7 Clover Operating Agreement between Virginia Electric and
Power Company and Old Dominion Electric Cooperative, dated
as of May 31, 1990 (filed as exhibit 10.6 to the
Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
*10.8 Amendment to the Clover Operating Agreement between Virginia
Electric and Power Company and Old Dominion Electric
Cooperative, effective January 17, 1995 (filed as exhibit
10.8 to the Registrant's Form 10-K for the year ended
December 31, 1994, File No. 33-46795, on March 15, 1995).
Exhibit Page Number Description of Exhibit Number
63
Exhibit Page
Number Description of Exhibit Number
*10.9 Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6,
1989, and the Unit 2 Amendment (Volume 1), dated May 31,
1990, between Virginia Electric and Power Company and Old
Dominion Electric Cooperative, Westinghouse Electric
Corporation, Black & Veatch Engineers-Architects, Combustion
Engineering, Inc. and H.B. Zachry Company (Volumes 2 - 11
contain technical specifications only) (filed as exhibit
10.7 to the Registrant's Form S-1 Registration Statement,
File No. 33-46795, filed on March 27, 1992).
*10.10 Electric Service Agreement between Old Dominion Electric
Cooperative and Appalachian Power Company, dated July 2,
1990 (filed as exhibit 10.8 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.11 Electric Service Agreement between Old Dominion Electric
Cooperative and Appalachian Power Company, dated March 6,
1991 (filed as exhibit 10.9 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.12 Electric Service Agreement between The Potomac Edison
Company and Old Dominion Electric Cooperative, dated October
4, 1991 (filed as exhibit 10.11 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.13 Amendment to Electric Service Agreement between The
Potomac Edison Company and Old Dominion Electric
Cooperative, dated October 4, 1991 (filed as exhibit
10.36 to Amendment No. 2 to the Registrant's Form S-1
Registration Statement, File No. 33-61326, filed on May 26,
1993).
*10.14 Lease Agreement between Old Dominion Electric Cooperative
and Regional Headquarters, Inc., dated July 29, 1986 (filed
as exhibit 10.27 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on March 27, 1992).
*10.15 Credit Agreement between Virginia Electric and Power Company
and Old Dominion Electric Cooperative, dated as of December
1, 1985 (filed as exhibit 10.28 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.16 Nuclear Decommissioning Trust Agreement between Old Dominion
Electric Cooperative and Bankers Trust Company, dated March
1, 1991 (filed as exhibit 10.29 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on March
27, 1992).
*10.17 Form of Salary Continuation Plan (filed as exhibit 10.31 to
the Registrant's Form S-1 Registration Statement, File No.
33-46795, filed on March 27, 1992).
64
Exhibit Page
Number Description of Exhibit Number
*10.18 Amended and Restated Wholesale Power Contract between
Old Dominion Electric Cooperative and A&N Electric
Cooperative, dated April 24, 1992 (filed as exhibit
10.34 to Amendment No. 2 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 27,
1992).
*10.19 Amended and Restated Wholesale Power Contract between
Old Dominion Electric Cooperative and BARC Electric
Cooperative, dated April 22, 1992 (filed as exhibit
10.35 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.20 Amended and Restated Wholesale Power Contract between
Old Dominion Electric Cooperative and Choptank Electric
Cooperative, dated April 20, 1992 (filed as exhibit
10.36 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.21 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Community Electric
Cooperative, dated April 28, 1992 (filed as exhibit
10.37 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.22 Amended and Restated Wholesale Power Contract between
Old Dominion Electric Cooperative and Delaware Electric
Cooperative, dated April 22, 1992 (filed as exhibit
10.38 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.23 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Mecklenburg Electric
Cooperative, dated April 15, 1992 (filed as exhibit
10.39 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.24 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Northern Neck Electric
Cooperative, dated April 21, 1992 (filed as exhibit
10.40 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.25 Amended and Restated Wholesale Power Contract between
Old Dominion Electric Cooperative and Northern Virginia
Electric Cooperative, dated April 17, 1992 (filed as
exhibit 10.41 to Amendment No. 1 to the Registrant's Form
S-1 Registration Statement, File No. 33-46795, filed on May
6, 1992).
*10.26 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Prince George Electric
Cooperative, dated May 6, 1992 (filed as exhibit 10.42 to
Amendment No. 2 to the Registrant's Form S-1 Registration
Statement, File No. 33-46795, filed on May 27, 1992).
65
Exhibit Page
Number Description of Exhibit Number
*10.27 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Rappahannock Electric
Cooperative, dated April 17, 1992 (filed as exhibit
10.43 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.28 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Shenandoah Valley
Electric Cooperative, dated April 23, 1992 (filed as
exhibit 10.44 to Amendment No. 1 to the Registrant's Form
S-1 Registration Statement, File No. 33-46795, filed on May
6, 1992).
*10.29 Amended and Restated Wholesale Power Contract between Old
Dominion Electric Cooperative and Southside Electric
Cooperative, dated April 22, 1992 (filed as exhibit
10.45 to Amendment No. 1 to the Registrant's Form S-1
Registration Statement, File No. 33-46795, filed on May 6,
1992).
*10.30 Capacity and Energy Sales Agreement between Old Dominion
Electric Cooperative and Public Service Electric and Gas,
dated December 17, 1992, effective January 1, 1995 (filed as
exhibit 10.30 to the Registrant's Form 10-K for the fiscal
year ended December 31, 1992, File No. 33-46795, filed on
March 30, 1993).
*10.31 First Supplement to Capacity and Energy Sales Agreement
between Old Dominion Electric Cooperative and Public Service
Electric & Gas, dated March 26, 1993 (filed as exhibit 10.32
to the Registrant's Form S-1 Registration Statement, File
No. 33-61326, filed on April 19, 1993).
*10.32 Letter Agreement between Old Dominion Electric Cooperative
and Delmarva Power & Light Company, dated March 2, 1993
(filed as exhibit 10.35 to the Registrant's Form S-1
Registration Statement, File No. 33-61326, filed on April
19, 1993).
*10.33 Wholesale Partial Requirements Service Agreement between
Delmarva Power & Light Company and Old Dominion Electric
Cooperative, effective January 1, 1995 (filed as exhibit
10.38 to the Registrant's Form 10-K for the year ended
December 31, 1994, File No. 33-46795, on March 15, 1995).
*10.34 Transmission Service Agreement between Delmarva Power &
Light Company and Old Dominion Electric Cooperative,
effective January 1, 1995 (filed as exhibit 10.39 to the
Registrant's Form 10-K for the year ended December 31, 1994,
File No. 33-46795, on March 15, 1995).
10.35 Participation Agreement, dated as of February 29, 1996,
among Old Dominion Electric Cooperative, State Street Bank
and Trust Company, the Owner Participant named therein and
Utrecht-America Finance Co.
10.36 Clover Unit 1 Equipment Interest Lease Agreement, dated as
of February 29, 1996, between Old Dominion Electric
Cooperative, as Equipment Head Lessor, and State Street Bank
and Trust Company, as Equipment Head Lessee.
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Exhibit Page
Number Description of Exhibit Number
**10.37 Equipment Operating Lease Agreement, dated as of February
29, 1996, between State Street Bank and Trust Company, as
Lessor, and Old Dominion Electric Cooperative, as Lessee.
**10.38 Corrected Option Agreement to Lease, dated as of February
29, 1996, among Old Dominion Electric Cooperative and
State Street Bank and Trust Company.
10.39 Clover Agreements Assignment and Assumption Agreement,
dated as of February 29, 1996, between Old Dominion Electric
Cooperative, as Assignor, and State Street Bank and Trust
Company, as Assignee.
10.40 Deposit Agreement, dated as of February 29, 1996, between
Old Dominion Electric Cooperative, as Depositor, and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland," New York Branch, as Issuer.
10.41 Deposit Pledge Agreement, dated as of February 29, 1996,
between Old Dominion Electric Cooperative, as Pledgor, and
State Street Bank and Trust Company, as Pledgee.
10.42 Payment Undertaking Agreement, dated as of February 29,
1996, between Old Dominion Electric Cooperative and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland," New York Branch.
10.43 Payment Undertaking Pledge Agreement, dated as of February
29, 1996, between Old Dominion Electric Cooperative, as
Payment Undertaking Pledgor, and State Street Bank and Trust
Company, as Payment Undertaking Pledgee.
10.44 Pledge Agreement, dated as of February 29, 1996, between
Old Dominion Electric Cooperative, as Pledgor, and State
Street Bank and Trust Company, as Pledgee.
10.45 Tax Indemnity Agreement, dated as of February 29, 1996,
among Old Dominion Electric Cooperative, State Street Bank
and Trust Company, the Owner Participant named therein and
Utrecht-America Finance Co.
10.46 Participation Agreement, dated as of July 1, 1996, among Old
Dominion Electric Cooperative, Clover Unit 2 Generating
Trust, Wilmington Trust Company, the Owner Participant named
therein and Utrecht-America Finance Co.
**10.47 Clover Unit Equipment Interest Agreement, dated as of July
1, 1996, between Old Dominion Electric Cooperative and
Clover Unit 2 Generating Trust.
**10.48 Operating Equipment Agreement, dated as of July 1, 1996,
between Clover Unit 2 Generating Trust and Old Dominion
Electric Cooperative.
10.49 Clover Agreements Assignment and Assumption Agreement,
dated as of July 1, 1996, between Old Dominion Electric
Cooperative, as Assignor, and Clover Unit 2 Generating
Trust, as Assignee.
67
Exhibit Page
Number Description of Exhibit Number
10.50 Deed of Ground Lease and Sublease Agreement, dated as of
July 1, 1996, between Old Dominion Electric Cooperative, as
Ground Lessor, and Clover Unit 2 Generating Trust, as Ground
Lessee.
10.51 Guaranty Agreement, dated as of July 1, 1996, between
Old Dominion Electric Cooperative and AMBAC Indemnity
Corporation.
10.52 Investment Agreement, dated as of July 1, 1996, among AMBAC
Capital Funding, Inc., Old Dominion Electric Cooperative and
AMBAC Indemnity Corporation.
10.53 Investment Agreement Pledge Agreement, dated as of July
1, 1996, among Old Dominion Electric Cooperative, as
Investment Agreement Pledgor, AMBAC Indemnity
Corporation, the Owner Participant named therein and Clover
Unit 2 Generating Trust.
10.54 Equity Security Pledge Agreement, dated as of July 1, 1996,
between Old Dominion Electric Cooperative, as Pledgor, and
Wilmington Trust Company, as Collateral Agent.
10.55 Payment Undertaking Agreement, dated as of July 1, 1996,
between Old Dominion Electric Cooperative and Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland," New York Branch.
10.56 Payment Undertaking Pledge Agreement, dated as of July
1, 1996, between Old Dominion Electric Cooperative, as
Payment Undertaking Pledgor, and Clover Unit 2 Generating
Trust, as Payment Undertaking Pledgee.
10.57 Subordinated Deed of Trust and Security Agreement,
dated as of July 1, 1996, among Old Dominion Electric
Cooperative, Richard W. Gregory, Trustee, and Michael P.
Drzal, Trustee.
10.58 Subordinated Security Agreement, dated as of July 1,
1996, among Old Dominion Electric Cooperative, the
Owner Participant named therein, AMBAC Indemnity Corporation
and Clover Unit 2 Generating Trust.
10.59 Tax Indemnity Agreement, dated as of July 1, 1996,
between Old Dominion Electric Cooperative and the
Owner Participant named therein.
68
Exhibit Page
Number Description of Exhibit Number
21 Subsidiaries of Old Dominion Electric Cooperative (not
included because Old Dominion Electric Cooperative's
subsidiaries, considered in the aggregate as a single
subsidiary, would not constitute a "significant
subsidiary" under Rule 1-02(W) of Regulation S-X).
27 Financial Data Schedule.
- - -----------------------------------
* Incorporated herein by reference.
** These leases relate to Old Dominion Electric Cooperative's interest in all
of Clover Unit 1 and Clover Unit 2, as applicable, other than the
foundations. At the time these leases were executed, Old Dominion had
entered into identical leases with respect to the foundations as part of
the same transactions. Old Dominion Electric Cooperative agrees to furnish
the Commission, upon request, a copy of the leases of its interest in the
foundations for Clover Unit 1 and Clover Unit 2, as applicable.
69