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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 Commission file number 1-5663
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 72-0244480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 DONAHUE FERRY ROAD, PINEVILLE, LOUISIANA 71360-5226
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 318/484-7400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, $2.00 Par Value New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)OF THE ACT:
TITLE OF EACH CLASS
-------------------
Cumulative Preferred Stock, $100 Par Value
4.50%
4.50%, Series of 1955
4.65%, Series of 1964
4.75%, Series of 1965
Convertible, Series of 1991
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X , No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ ]
As of February 25, 1997, the aggregate value of the Registrant's voting stock
held by non-affiliates was $597,051,868. The Registrant's Cumulative Preferred
Stock is not listed on any exchange, nor are prices for the Cumulative
Preferred Stock quoted on NASDAQ; therefore, its market value is not readily
determinable and is not included in the foregoing amount.
As of March 14, 1997, there were 22,458,556 shares outstanding of the
Registrant's Common Stock, par value $2.00 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
December 31, 1996 (1996 Annual Report to Shareholders), furnished to the
Securities and Exchange Commission pursuant to Rule 14a - 3(b) under the
Securities Exchange Act of 1934, are filed as Exhibit 13 to this report and
incorporated by reference into Part II herein. Portions of the Registrant's
definitive Proxy Statement dated March 12, 1997, for the Annual Meeting of
Shareholders to be held on April 25, 1997, are incorporated by reference into
Part III herein.
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TABLE OF CONTENTS
-----------------
Page
----
Disclosure Regarding Forward-Looking Statements.................................................. 1
PART I
Item 1. Business
General............................................................................... 3
Electric Operations................................................................... 3
Regulatory and Environmental Matters.................................................. 8
Item 2. Properties............................................................................ 15
Item 3. Legal Proceedings..................................................................... 16
Item 4. Submission of Matters to a Vote
of Security Holders............................................................ 16
Executive Officers of the Registrant.................................................. 17
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters................................................ 19
Item 6. Selected Financial Data............................................................... 19
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................................................... 20
Item 8. Financial Statements and
Supplementary Data............................................................. 20
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure........................................................... 20
PART III
Item 10. Directors and Executive Officers
of the Registrant.............................................................. 21
Item 11. Executive Compensation................................................................ 21
Item 12. Security Ownership of Certain Beneficial
Owners and Management.......................................................... 21
Item 13. Certain Relationships and Related
Transactions................................................................... 21
PART IV
Item 14. Exhibits, Financial Statement
Schedule, and Reports on Form 8-K.............................................. 22
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this report, including, without
limitation, the statements under "Business -- Electric Operations -- Sales,"
"-- Regulatory and Environmental Matters -- Industry Developments/Customer
Choice," "-- Regulatory and Environmental Matters -- Environmental Quality,"
"Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Industry Developments/Customer Choice," "--Results of Operations,"
"-- Financial Condition -- Liquidity and Capital Resources," "-- Financial
Condition -- Regulatory Matters" and Note K to the Consolidated Financial
Statements contain forward-looking statements. Located elsewhere in this report
are forward-looking statements regarding sales growth, capital expenditures,
the Company's proposed Teche acquisition, the settlement of the Company's
earnings review approved by the Louisiana Public Service Commission (LPSC) in
October 1996, the Company's shelf registration statement, the effect of certain
recent Federal Energy Regulatory Commission (FERC) regulations, future
legislative and regulatory changes affecting electric utilities and other
matters. Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, such forward-looking statements are
based on numerous assumptions (some of which may prove to be incorrect) and are
subject to risks and uncertainties which could cause the actual results to
differ materially from the Company's expectations. Forward-looking statements
have been and will be made in written documents and oral presentations of the
Company. Such statements are based on management's beliefs as well as
assumptions made by and information currently available to management. When
used in the Company's documents or oral presentations, the words "anticipate,"
"estimate," "expect," "objective," "projection," "forecast," "goal" and similar
expressions are intended to identify forward-looking statements. In addition to
any assumptions and other factors referred to specifically in connection with
such forward-looking statements, factors that could cause the Company's actual
results to differ materially from those contemplated in any forward-looking
statements include, among others, the following:
Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; unscheduled
generation outages; unusual maintenance or repairs; unanticipated
changes to fuel costs, gas supply costs, or availability constraints
due to higher demand, shortages, transportation problems or other
developments; environmental incidents; or electric transmission or gas
pipeline system constraints;
Increased competition in the electric power market including effects
of: industry restructuring; transmission system operation or
administration; retail wheeling; or cogeneration;
Regulatory factors such as unanticipated changes in rate-setting
policies or procedures; recovery of investments made under traditional
regulation; and the frequency and timing of rate increases;
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Financial or regulatory accounting principles or policies imposed by
the Financial Accounting Standards Board, the Securities and Exchange
Commission, the FERC, the LPSC or similar entities with regulatory
oversight;
Economic conditions including inflation rates and monetary
fluctuations;
Changing market conditions and a variety of other factors associated
with physical energy and financial trading activities including, but
not limited to, price, basis, credit, liquidity, volatility, capacity,
transmission, interest rate and warranty risks;
Availability or cost of capital, resulting from changes in: the
Company, interest rates, and securities ratings or market perceptions
of the electric utility industry and energy-related industries;
Employee workforce factors including changes in key executives;
Legal and regulatory delays and other obstacles associated with
mergers, acquisitions, or investments in joint ventures;
Cost and other effects of legal and administrative proceedings,
settlements, investigations, claims and other matters; and
Changes in federal, state or local legislature requirements such as
changes in tax laws or rates, or environmental laws and regulations.
The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of changes in actual results,
changes in assumptions or other factors affecting such statements.
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PART I
ITEM 1. BUSINESS
GENERAL
Central Louisiana Electric Company, Inc. (the Company) was incorporated in
1934 under the laws of the State of Louisiana and is engaged principally in the
generation, transmission, distribution and sale of electric energy to
approximately 225,000 customers in 63 communities and contiguous rural areas in
a 14,000 square-mile region in the State of Louisiana. At December 31, 1996,
the Company employed 1,215 persons. The Company's mailing address is P. O. Box
5000, Pineville, Louisiana 71361-5000, and its telephone number is (318)
484-7400.
ELECTRIC OPERATIONS
CERTAIN FACTORS AFFECTING THE COMPANY'S ELECTRIC OPERATIONS
As an electric utility, the Company has been affected, to varying degrees,
by a number of factors affecting the electric utility industry in general.
These factors include increasingly competitive business conditions, the cost of
compliance with environmental regulations and changes in the federal regulation
of the generation and transmission of electricity. For a discussion of various
regulatory changes and competitive forces affecting the Company and other
electric utilities, see "Regulatory and Environmental Matters -- Industry
Developments/Customer Choice" below.
POWER GENERATION
The Company operates and either owns or has an ownership interest in four
steam electric generating stations and a gas turbine. The Company is the sole
owner of Coughlin Power Station, Teche Power Station and Rodemacher Power
Station Unit 1. The Company owns a 50% interest in Dolet Hills Power Station
Unit 1 (Dolet Hills Unit 1), and a 30% interest in Rodemacher Power Station
Unit 2 (Rodemacher Unit 2). At December 31, 1996, the Company's aggregate
electric generating capacity was 1,693,000 kilowatts (excluding the Company's
20,000 kilowatts of firm purchases from the Sabine River Authority). The
following table sets forth certain information with respect to the Company's
generating facilities.
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YEAR CAPACITY TYPE OF
OF AT FUEL
GENERATING INITIAL 12/31/96 USED FOR
GENERATING STATION UNIT # OPERATION (KILOWATTS) GENERATION (1)
- -------------------------- ----------- --------- ----------- --------------
Franklin Gas Turbine 1973 7,000 gas
Coughlin Power Station 6 1961 110,000 gas/oil(standby)
7 1966 224,000 gas/oil(standby)
Teche Power Station 1 1953 23,000 gas
2 1956 48,000 gas
3 1971 359,000 gas/oil(standby)
Rodemacher Power Station 1 1975 440,000 gas/oil
2 1982 157,000(2) coal/gas
Dolet Hills Power Station 1 1986 325,000(3) lignite
----------
Total Generating Capability 1,693,000
==========
(1) Where oil is used on a standby basis, capacity may be reduced.
(2) Represents the Company's 30% interest in the capacity of Rodemacher Unit 2,
a 523,000-kilowatt generating unit.
(3) Represents the Company's 50% interest in the capacity of Dolet Hills
Unit 1, a 650,000-kilowatt generating unit.
FUEL AND PURCHASED POWER
Change in fuel and purchased power expenses reflect fluctuations in
generation fuel mix costs, availability of economy power and deferral of
expenses for recovery from customers through fuel adjustment clauses in
subsequent months.
The following table sets forth, for the periods indicated, the percentages
of power generated from various fuels at the Company's electric generating
plants, the cost of fuel used per kilowatt hour (kWh) attributable to each such
fuel and the weighted average fuel cost per kWh.
LIGNITE COAL GAS FUEL OIL WEIGHTED
-------------------- ------------------- -------------------- --------------------- AVERGE
COST COST COST COST COST
PER PERCENT PER PERCENT PER PERCENT PER PERCENT PER
KWh OF KWh OF KWh OF KWh OF KWh
YEAR (MILLS) GENERATION (MILLS) GENERATION (MILLS) GENERATION (MILLS) GENERATION (MILLS)
- ---- ------- ---------- ------- ---------- ------- ---------- ------- ---------- -------
1996 15.45 38.1 16.67 21.3 30.06 39.8 26.09 0.8 21.61
1995 14.86 35.9 18.88 14.3 19.48 49.8 24.77 0.0 17.74
1994 15.09 36.5 19.53 16.0 22.28 47.4 21.00 0.1 19.22
1993 15.50 32.7 20.28 19.5 25.11 47.8 - - 21.02
1992 14.96 37.0 20.07 16.7 21.48 46.3 - - 18.83
POWER PURCHASES
The Company purchases electric energy from neighboring utilities when the
price of the energy purchased is less than the cost to the Company of
generating such energy from its own facilities. Additionally, the Company has a
long-term contract under which it purchases a small percentage of its total
energy requirements from a hydroelectric generating plant.
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In 1996, the Company purchased substantially more power on the wholesale
market, as a result of increased availability of low-cost, solid fuel
generation. The cost of purchased power was less than the Company's generation
cost due primarily to the substantial increases in natural gas prices. The
following table sets forth the amount of power purchased by the Company on the
wholesale market for the years indicated.
% OF TOTAL
MILLION ENERGY
KWh REQUIREMENTS
--- ------------
1996 2,529 33%
1995 1,430 19%
1994 818 11%
1993 1,321 18%
1992 512 8%
For information with respect to the Company's ability to currently pass through
changes in costs of fuel to its customers, see "Regulatory and Environmental
Matters -- Rates" below.
Natural Gas Supply
During 1996, the Company purchased a total of 23,277 billion British
thermal units (MMMBtu) of natural gas for the generation of electricity. The
annual and average per-day quantities of gas purchased by the Company from each
supplier are shown in the table below.
AVERAGE
AMOUNT
1996 PURCHASED PERCENT
PURCHASES PER DAY OF TOTAL
NATURAL GAS SUPPLIER (MMMBTU) (MMMBTU) GAS USED
- -------------------- -------- -------- --------
NorAm Energy Services, Inc. (NES) 12,642 34.6 54.3
Louisiana Intrastate Gas Corporation (LIG) 7,702* 21.0 33.1
Louisiana Land and Exploration Company (LL&E) 1,830 5.0 7.9
Other 1,103 3.0 4.7
------ ----- -----
23,277 63.6 100.0
====== ===== =====
- -------------------------
*Of the 1996 purchases from LIG, 160 MMMBtu were for deliveries in 1997.
The Company terminated several gas supply and transportation contracts in
1996 in order to take advantage of a more competitive natural gas market.
The Company accessed this competitive gas supply and transportation market
with the construction of Company-owned pipeline laterals into three of
its power plants. A contract for base supply with NES, a subsidiary of NorAm
Energy Corp. was terminated October 31, 1996 under price reopener provisions
which were initiated by the Company in early 1996. During 1996, the Company
also terminated a contract with LL&E for the purchase and transportation of
5 MMMBtu of gas per day. Effective November 1, 1996 the Company entered into a
one-year contract with LIG which obligates the Company to a purchase commitment
of 13.8 billion cubic feet of gas, about one-third of its total natural gas
requirements.
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The remaining two-thirds of the Company's natural gas requirements are
purchased on the spot market through arrangements made month to month, week to
week and day to day. Arrangements made throughout the month allow the Company
to take advantage of opportunities in the energy market and in the gas market,
as prices tend to vary considerably throughout the month.
The newly constructed Company-owned pipelines give the Company access to
several markets not previously available when the Company was connected only to
the LIG pipeline system. These direct sources include market supplies on the
gas pipeline systems of Trunkline, Columbia Gas and ANR.
Natural gas has been relatively plentiful in recent years; however, future
supplies to the Company are vulnerable to disruption due to weather conditions,
transportation disruption, price changes and other events. Large boiler fuel
users of natural gas, including electric utilities, generally have the lowest
priority among gas users in the event pipeline suppliers are forced to curtail
deliveries due to inadequate supplies. As a result, supplies of natural gas may
become unavailable from time to time, or prices may increase rapidly in
response to temporary supply disruptions. Such events may require the Company
to shift its gas-fired generation to alternative fuel sources, such as fuel
oil, to the extent it has the capability to burn those alternative fuels.
Currently, the Company anticipates that its alternative fuel capability,
combined with its solid-fuel generating resources, is adequate to meet fuel
needs during any temporary interruption of gas supplies.
Coal and Lignite Supply
Substantially all of the coal for Rodemacher Unit 2 is purchased under a
long-term contract expiring in 2007 with Kerr-McGee Coal Corporation from a
mine in Wyoming. The contract may be terminated earlier under a price reopener
provision which may be initiated by either party beginning in early 1997; and
the Company has recently exercised its option to renegotiate the price. If the
parties do not come to an agreement regarding price, the contract terminates
effective mid-1999. The price of coal under the contract is a base price per
ton plus a "total escalation charge" to reflect changes in certain indices
specified in the contract. After purchasing a given annual quantity of base
coal (516,000 tons in 1996), the Company has the right to purchase coal from
third parties in the spot market, and Kerr-McGee has the right to meet the
terms of the proposed purchase if it chooses to do so. The coal is transported
to the Rodemacher Unit 2 site under terms of a long-term rail transportation
contract in unit trains which are leased by the Company pursuant to various
long-term leases.
Substantially all of the lignite used to fuel Dolet Hills Unit 1 is
obtained under two long-term agreements. The Company and Southwestern Electric
Power Company (SWEPCO), each a 50% owner of Dolet Hills Unit 1, have entered
into agreements pursuant to which each acquired an undivided 50% interest in
the other's leased and owned lignite reserves in northwestern Louisiana. The
Company and SWEPCO have also entered into a long-term agreement expiring
in 2011 with the Dolet Hills Mining Venture for the mining and delivery of such
lignite reserves, which reserves are expected to provide a substantial portion
of the fuel requirements for the projected operating life of Dolet Hills Unit
1. The Company's minimum annual purchase requirement is 1,187,500 tons. The
price of lignite delivered pursuant to the agreement is a base price per ton,
subject to escalation based on certain inflation indices, plus specified
"pass-through" costs. Additional spot lignite may be obtained through
competitive bidding.
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Additionally, the Company and SWEPCO have entered into a long-term
agreement expiring in 2011 with Red River Mining Co., a joint venture of the
North American Coal Corporation and Phillips Coal Company, which provides for
base contract purchases and spot purchases of lignite. The Company's minimum
annual purchase requirement is 275,000 tons. The base lignite price under the
contract is a base price per MMMBtu, subject to escalation, plus certain
pass-through costs, while the spot lignite price is determined through
competitive bidding.
The continuous supply of coal and lignite from the mining sources may be
subject to interruption due to adverse weather conditions or other factors
which may disrupt mining operations or transportation. At December 31, 1996,
the Company's coal inventory at Rodemacher Unit 2 was approximately 106,000
tons (about a 49-day supply), and the Company's lignite inventory at Dolet
Hills Unit 1 was approximately 204,000 tons (about a 36-day supply).
Oil Supply
The Company stores fuel oil as an alternative fuel source. Rodemacher
Power Station has storage capacity for an approximate 75-day supply and other
generating stations have storage capacity totaling about a 20-day supply.
However, in accordance with the Company's current fuel oil inventory practices,
at December 31, 1996, the Company had between 5 to 10 days supply of fuel oil
stored at its generating stations. During 1996, 82,451 barrels of fuel oil were
burned. The increase in 1996 was due to an unusually cold winter in early 1996
which resulted in a decrease in gas availability. The Company has been able to
obtain fuel oil by spot purchases as needed.
SALES
The Company is a "public utility" engaged principally in the generation,
transmission, distribution and sale of electricity within Louisiana. For
further information regarding the Company's generating stations and its
transmission and distribution facilities, see "Power Generation" above and
"Properties" in Item 2 of this report. The following table sets forth
information concerning sales by the Company to various classes of customers for
each of the last three years.
SALES (MILLION KWh)
-----------------------
1996 1995 1994
------ ------ ------
Residential 2,723 2,763 2,532
Commercial 1,338 1,265 1,180
Industrial 2,369 2,227 2,030
Other retail 526 502 487
Sales for resale 291 360 210
----- ----- -----
Total sales to regular customers 7,247 7,117 6,439
Short-term sales to other utilities 330 68 174
----- ----- -----
Total kilowatt-hour sales 7,577 7,185 6,613
===== ===== =====
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The Company's 1996 system peak demand occurred in July and was 1,500,000
kilowatts. Sales and peak demand are affected by seasonal demand influenced by
weather and are generally highest during the summer air-conditioning and winter
heating seasons. For information concerning the financial effects of seasonal
demand on the Company's quarterly operating results, see Note L to the
Consolidated Financial Statements on pages 28 and 29 of the 1996 Annual Report
to Shareholders, which is filed as Exhibit 13 to this report and incorporated
herein by reference.
The Company expects the peak demand on the system to grow at a compound
annual rate of approximately 3.5% over the next five years. The Company's
capacity reserve margin for 1996 was 12.4%. The Company believes it can
economically meet the anticipated growth in customer demand by such measures as
refurbishing an existing gas-fired unit retired in place in 1984 or by
purchasing the needed capacity on the wholesale market.
No customer accounted for 10% or more of the Company's revenues in 1996.
Additional information regarding the Company's sales and revenues is set forth
in "Results of Operations" in "Management's Discussion and Analysis of Results
of Operations and Financial Condition" on pages 4 through 6 of the 1996 Annual
Report to Shareholders, which is filed as Exhibit 13 to this report and
incorporated herein by reference.
CONSTRUCTION AND FINANCING
For information on the Company's construction program, financing and
related matters, see "Financial Condition" in "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on pages 8 through
11 of the 1996 Annual Report to Shareholders, which is filed as Exhibit 13 to
this report and incorporated herein by reference.
REGULATORY AND ENVIRONMENTAL MATTERS
RATES
Retail electric operations of the Company are subject to the jurisdiction
of the Louisiana Public Service Commission (LPSC) with respect to rates,
standards of service, accounting and other matters. The LPSC establishes base
rates based upon nonfuel costs, including the cost of capital and sales. The
Company is also subject to the jurisdiction of the Federal Energy Regulatory
Commission (FERC) with respect to certain aspects of its electric business,
including rates for wholesale service and interconnections with, and the
transmission of power for, other utilities. Periodically, the Company has
sought and received increases in base rates from both the LPSC and the FERC to
cover increases in operating costs and costs associated with additions to
generation, transmission and distribution facilities.
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The Company's electric rates include a fuel and purchased power cost
adjustment clause which enables the Company to reflect monthly fluctuations in
the cost of fuel and short-term purchased power. Additionally, pretax income
from certain off-system sales to other utilities is passed on to customers
through the fuel cost adjustment clause. Fuel costs and fuel adjustment billing
factors are approved by the LPSC and the FERC. These cost adjustments are based
on costs from earlier periods which result in over- or under-recovery for the
period in which the adjustment is made. Any over- or under-recovery is
corrected by an adjustment in later periods. As of December 31, 1996, the net
accumulated balance of over-recovery on sales subject to the LPSC's
jurisdiction was approximately $2.2 million.
The Company's 1996 earnings review settlement with the LPSC provided for a
$3 million reduction in annual base rates effective November 1, 1996, and a $2
million reduction to annual base rates effective January 1, 1998. For
additional information concerning the settlement of the Company's earnings
review, see "Retail Rates" in "Management's Discussion and Analysis of Results
of Operations and Financial Condition" on page 10 of the 1996 Annual Report to
Shareholders, which is filed as Exhibit 13 to this report and incorporated
herein by reference.
FRANCHISES
The Company operates under nonexclusive franchise rights granted by
governmental units and enforced by state regulation. These franchises are for
fixed terms, which vary from ten years to 50 years. In the past, the Company
has been successful in the timely renewal of franchises as each reaches the end
of its term and expires.
INDUSTRY DEVELOPMENTS/CUSTOMER CHOICE
There is currently a movement toward increased competition in the electric
utility industry. Forces driving the movement involve numerous and complex
economic, political and technological factors. These factors have resulted in
the introduction of federal and state legislation and regulatory initiatives
that are likely to result in even greater competition at both the wholesale and
retail levels in the future. In 1995 the LPSC opened a docket to consider the
request of a large customer of another electric utility to wheel power, and
this issue was expanded in 1996 into a generic docket to investigate customer
choice for all electric power suppliers. In 1996 legislation was proposed but
not enacted at both the federal and Louisiana levels that would have led to
various degrees of retail customer "choice" of electric supplier. The Company
has taken the position that all customers, large or small, should have a choice
in electric supplier. The Company recognizes the need to work out issues to
create a level playing field for all energy suppliers. The increasingly
competitive environment presents opportunities to compete for new customers, as
well as the risk of loss of existing customers. The Company believes that it is
a reliable, low-cost provider of electricity and, as such, is currently
positioned to compete effectively in the changing marketplace.
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Wholesale Electric Competition
The Energy Policy Act, adopted in October 1992, significantly changed U.S.
energy policy, including that governing the electric utility industry. The
Energy Policy Act allows the FERC, on a case-by-case basis and with certain
restrictions, to order wholesale transmission access and to order electric
utilities to enlarge their transmission systems. The Energy Policy Act does,
however, prohibit FERC-ordered retail wheeling (i.e., opening up the electric
utility systems to allow customer choice of energy suppliers at the retail
level), including "sham" wholesale transactions. Further, under the Energy
Policy Act, a FERC transmission order requiring a transmitting utility to
provide wholesale transmission services must include provisions generally
permitting the utility to recover from the FERC applicant all of the costs
incurred in connection with the transmission services, any enlargement of the
transmission system and associated services.
In addition, the Energy Policy Act revised the Public Utility Holding
Company Act of 1935 (the Holding Company Act) to permit utilities, including
registered holding companies, and non-utilities to form "exempt wholesale
generators" without the principal restrictions of the Holding Company Act.
Under prior law, independent power producers were generally required to adopt
inefficient and complex ownership structures to avoid pervasive regulation
under the Holding Company Act. Management believes that the Energy Policy Act
has made wholesale markets more competitive.
On April 24, 1996, the FERC issued Order No. 888, a final rule requiring
open access transmission by all public utilities that own, operate or control
transmission lines. Each such utility was required to have on file, by July 9,
1996, a nondiscriminatory open access tariff that offers transmission customers
the same transmission services such utilities provide themselves, under
comparable terms and conditions. The Company filed its open access tariff and
proposed rate schedule with the FERC on July 8, 1996. The FERC accepted the
Company's tariff and allowed its proposed rates to go into effect, subject to
refund, on July 9, 1996, but has set all rates for hearing under its standard
review procedures. Utilities must take transmission service for their own
wholesale transactions under the terms and conditions of their open access
tariffs: after July 9, 1996 for any new transactions, and after January 1, 1997
for all short-term inter-utility transactions under bilateral contracts entered
into prior to July 9, 1996. Order No. 888 provides for the full recovery from a
utility's departing customers of wholesale stranded costs to the extent such
costs were prudently incurred to serve wholesale customers and would go
unrecovered if those customers use open access transmission service to move to
another supplier. The Order also allows customers under existing wholesale
contracts to seek FERC approval to modify their contracts on a case-by-case
basis.
The Company has three firm-sales wholesale customers, which represented
0.9% of its sales to regular customers for the twelve months ended December 31,
1996. Management cannot predict what, if any, effects Order No. 888 may have on
wholesale prices in the Company's service area.
Wholesale energy markets, including the market for wholesale electric
power, have been competitive and are becoming even more so as the number of
competitors in these markets increases as a result of enactment of the Energy
Policy Act. The Company competes with other public
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utilities, cogenerators and qualified facilities in other forms for sales of
electric power at wholesale. This environment has encouraged the formation of
power marketing companies, which own no transmission or generation facilities,
but which compete in the wholesale market by buying electricity from utilities
and other generators and reselling the electricity at market-based rates. Many
such power marketers now transact business in all regions of the country.
Under the Energy Policy Act, any participant in the wholesale market can obtain
an order requiring transmission services be provided by the Company under
certain conditions.
In recent years, the Company has been successful in competing for
wholesale sales within its service territory, including sales to the city of
Alexandria and a full requirements sale to the city of St. Martinville. Sales
under the St. Martinville agreement, which is subject to the jurisdiction of
the FERC, began in May 1995 and represent an approximate 13 MW load. Sales to
St. Martinville provide additional base revenues, net of facility payments, of
about $4 million over the term of the agreement, which extends through December
2000. This contract was challenged in 1993 by the previous supplier, Louisiana
Energy and Power Authority (LEPA), as well as the city of Lafayette and the
American Public Power Association, with assertions of preferential,
discriminatory and predatory pricing. An initial decision of the FERC's
presiding administrative law judge (ALJ) in February 1995 rejected LEPA's
arguments. Under FERC procedures, LEPA has filed a brief requesting the FERC to
revise the initial decision ,and this matter is still pending before the FERC.
The Company has opposed LEPA's brief. Management believes that the ALJ's
initial decision will be upheld.
Retail Electric Competition
Currently the LPSC does not provide exclusive service territories for
electric utilities under its jurisdiction. Instead, retail service is obtained
through the aforementioned long-term, nonexclusive franchises. Also, the LPSC
has used a "300 foot rule" for determining the supplier for new customers. The
application of this rule has led to competition with neighboring utilities for
retail customers at the borders of the Company's service areas. The Company
also competes in its service area with suppliers of alternative forms of
energy, some of which may be less costly for certain applications than
electricity. The Company could experience some competition for electric sales
to industrial customers in the form of cogeneration or from independent power
producers. However, the Company believes that its rates, and the quality and
reliability of its service, place it in a favorable competitive position in
current retail markets.
In October 1996, the LPSC requested comments on various electric industry
restructuring issues in a docket opened in 1995 to consider aspects of
competition in the provision of retail electric service. Specifically, the LPSC
requested input from interested parties on its policy statement on the
"principles to guide the investigation into whether electric industry
restructuring and retail competition are in the public interest." The Company
filed comments on this matter in November 1996. The LPSC has not taken further
action in this matter at this time. The Company expects that legislation
regarding the restructuring of the Louisiana electric utility industry will be
introduced in upcoming sessions of the Louisiana legislature. The Company
cannot predict whether any such legislation will be enacted and, if enacted,
what form such legislation would take.
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Regulatory Changes and Matters
Various federal and state legislative and regulatory bodies are
considering a number of issues in addition to those discussed above that will
shape the future of the electric utility industry. Such issues include
deregulation of retail electricity sales; the ability of electric utilities to
recover stranded costs; the repeal or modification of the Holding Company Act;
the unbundling of vertically integrated electric utility companies into
separate business segments or companies (i.e., generation, transmission,
distribution and retail energy services); the role of electric utilities,
independent power producers and competitive bidding in the construction and
operation of new generating capacity; and the pricing of transmission service
on an electric utility's transmission system. The Company is unable to predict
the outcome of such issues or their effect on the Company's financial position,
results of operations or cash flows at this time.
For information on certain regulatory matters and regulatory accounting
affecting the Company, see "Regulatory Matters" in "Management's Discussion and
Analysis of Results of Operations and Financial Condition" on page 11 of the
1996 Annual Report to Shareholders, which is filed as Exhibit 13 to this report
and incorporated herein by reference.
ENVIRONMENTAL QUALITY
The Company is subject to numerous laws and regulations administered by
federal, state and local authorities to protect the environment. These
statutory and regulatory provisions impose various substantive requirements,
the violation of which may result in substantial fines and penalties.
Environmental requirements continue to increase as a result of new legislation,
administrative actions and judicial interpretations. Therefore, the precise
future effects of existing and potential requirements are difficult to
determine. During 1996, the Company's capital expenditures related to
environmental compliance were about $1.9 million, and such expenditures are
estimated to total about $0.5 million in 1997, due largely to the completion,
in 1996, of two water treatment projects.
Air Quality
The State of Louisiana regulates emissions from each of the Company's
generating units through regulations issued by the Air Quality Division (AQD)
of the Louisiana Department of Environmental Quality (LDEQ). In addition, the
AQD implements certain programs initially established by the federal
Environmental Protection Agency (EPA). The AQD establishes standards of
performance or requires permits for certain generating units in Louisiana. The
Company's three generating units which are subject to these requirements are
Rodemacher Units 1 and 2 and Dolet Hills Unit 1.
The federal Clean Air Act Amendments of 1990 (the Act) established a
regulatory program to address the effects of acid rain and imposed restrictions
on sulfur dioxide (SO2) emissions from certain utility units. The Act
essentially requires that utilities, like the Company, must hold a regulatory
"allowance" for each ton of SO2 emitted beginning in the year 2000. The EPA is
required to allocate a set number of allowances to each affected unit based on
its historic emissions. After
12
15
the initial allocation was made by the EPA, the Company requested an adjustment
to the allowance allocation for Rodemacher Unit 2 because of an extended outage
of the unit during one of the years used in the EPA's calculation. Because the
final allowance allocation did not reflect the requested adjustment, the Company
filed a petition for judicial review of the EPA's action on May 21, 1993 in the
United States Court of Appeals for the District of Columbia Circuit. In October
1995, the EPA entered into a settlement agreement with the Company in which it
agreed to give Rodemacher Unit 2 the additional allowances requested. In
December 1996, the EPA published proposed changes to the Acid Rain Program in
the Federal Register. The proposed changes included the additional allowances
requested for Rodemacher Unit 2. While the EPA has agreed to provide the
additional allowances to Rodemacher Unit 2, the allowances will not be allocated
until June 1998.
The Act also requires the EPA to revise nitrogen oxides (NOx) emission
limits for existing coal-fired boilers. In November 1996, the EPA finalized
rules lowering the NOx emission rate for certain boilers, including Rodemacher
Unit 2 and Dolet Hills Unit 1. Under this rule Rodemacher Unit 2 and Dolet
Hills Unit 1 would have to meet this new emission rate by January 1, 2000. The
rule also allows an option to "early elect," that is, achieve compliance with a
less restrictive Nox limit beginning January 1, 1997. Early election would
protect the Company from any further reductions in the NOx permitted emission
rate until 2008. Significant reductions in NOx emission limits may require
modification of burners or other capital improvements at either or both of the
units. In December 1996, the Company exercised the "early election" option.
Water Quality
The Company has received from the EPA all National Pollutant Discharge
Elimination System (NPDES) permits required under the Clean Water Act for
discharges from its four generating stations. NPDES permits have fixed dates of
expiration, and the Company has applied for renewal of these permits within the
applicable time periods. The Office of Water Resources of the LDEQ requires
facilities which discharge wastewater into Louisiana waters to be permitted
under the Louisiana Water Discharge Permit System (LWDPS). The Company has
applied for and received LWDPS permits for its four generating stations.
In 1996, the LDEQ was granted authority to administer the federal NPDES
program in Louisiana. The NPDES permit is substantially similar to the LWDPS
permit, and eventually LDEQ intends to merge the two into a single LWDPS
permit. Until then, all data required by the NPDES permit and the LWDPS permit
are reported to the LDEQ.
The most recently issued NPDES permit for Dolet Hills Unit 1 contained an
Administrative Order requiring biomonitoring of the discharge from the
impoundment associated with the fly ash/scrubber sludge landfill. Because the
discharge from this impoundment failed all or part of the biomonitoring test at
various times during the testing schedule specified in the permit, the Company
has had discussions with the EPA regarding the results. The Company does not
expect administrative action on the part of the EPA until the NPDES permit is
renewed in 1997. At that time, the EPA may set a biomonitoring limit in the
NPDES permit. Violation of that limit may then
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16
require submittal to the EPA of a plan describing options for reducing certain
constituents in the discharge. None of the options, if implemented, would
affect the operation of the unit, or involve a significant increase in the
Company's five-year construction plan.
Solid Waste Disposal
The Solid Waste Division (SWD) of the LDEQ has adopted regulations and a
permitting system for the management and disposal of solid waste generated by
electric utilities. The Company has received all required permits from the SWD
for the on-site disposal of solid waste generated at its generating stations
and is in the process of repermitting its solid waste disposal facilities under
recently revised rules.
The Company has requested approval of an alternate liner system for the
Dolet Hills landfill facility and has received conditional approval from the
LDEQ. The Company is in the process of obtaining additional information to
submit to the LDEQ, which will make the approval permanent. The alternate
system, if approved, is expected to save $360,000 to $900,000 per year in
operating costs at the landfill.
Hazardous Waste Generation
The Company produces certain wastes at its four generating stations and at
other locations which are classified as hazardous. The Hazardous Waste Division
of the LDEQ regulates these wastes and has issued identification numbers to the
sites where such wastes are produced. The Company does not treat, store or
dispose of these wastes on-site; therefore, no permits are required. All
hazardous wastes produced by the Company are disposed of at federally permitted
hazardous waste disposal sites.
ELECTRIC AND MAGNETIC FIELDS
The possibility that exposure to electric and magnetic fields (EMF)
emanating from power lines, household appliances and other electric devices may
result in adverse health effects or damage to the environment has been a
subject of current public attention. The Company funds research on electric and
magnetic fields through various organizations. The scientific research
conducted to date concerning the effects of EMFs has not led to any definitive
results; however, such research is continuing. Lawsuits have arisen in several
states against electric utilities and others alleging that the presence or use
of electric power transmission and distribution lines has an adverse effect on
health and/or property values.
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17
OTHER EVENTS
Co-op Developments
In February 1994, the Company approached the management of Teche Electric
Cooperative, Inc. (Teche) about the possibility of purchasing Teche. Teche
serves about 8,600 customers, and its service area, which comprises parts of
Iberia, St. Martin and St. Mary parishes, is adjacent to the Company's service
area. The acquisition of Teche would result in an increase in the Company's
kilowatt-hour sales to regular customers of about 2.4%.
In February 1995, Teche and the Company executed a purchase and sale
agreement (Agreement)for a purchase price, including the Company's assumption
or other discharge of Teche's liabilities, of approximately $22.4 million. The
members of Teche overwhelmingly approved the sale at their annual meeting in
March 1995. On March 31, 1996, the board of directors of Teche voted to extend
the Agreement with the Company for an additional twelve months until March 31,
1997. On March 24, 1997, the board of directors of Teche voted to extend the
Agreement with the Company for an additional twelve months until March 31,
1998, to allow for the Teche wholesale power contract with Cajun Electric Power
Cooperative, Inc. (Cajun) to be resolved through Cajun's bankruptcy process.
Consummation of the acquisition is subject to a number of conditions, including
approval by the LPSC, the Rural Utilities Service and other governmental
agencies, the successful resolution of Teche's wholesale power supply contract
with Cajun and certain other conditions. Each plan of reorganization currently
filed with the bankruptcy court in the Cajun bankruptcy includes a provision
for the assignment or substitution of Teche's supply contract to or with the
Company. This provision is subject to a number of approvals, including
confirmation by the bankruptcy court.
ITEM 2. PROPERTIES
All of the Company's electric generating stations and all other operating
properties are located in the State of Louisiana. The Company considers all of
its properties to be well maintained, in good operating condition and suitable
for their intended purposes.
ELECTRIC GENERATING STATIONS
As of December 31, 1996, the Company either owned or had an ownership
interest in four steam electric generating stations and a gas turbine with a
combined electric generating capacity of 1,693,000 kilowatts. For additional
information regarding the Company's generating facilities, see "Electric
Operations -- Power Generation" in Item 1 of this report.
SUBSTATIONS
As of December 31, 1996, the Company owned 80 transmission substations and
320 distribution substations.
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18
ELECTRIC LINES
As of December 31, 1996, the Company's transmission system consisted of
approximately 67 circuit miles of 500 kilovolt (kV) lines; 454 circuit miles of
230 kV lines; 648 circuit miles of 138 kV lines; and 21 circuit miles of 69 kV
lines. The Company's distribution system consisted of approximately 2,096
circuit miles of 34.5 kV lines and 10,745 circuit miles of other lines.
GENERAL PROPERTIES
The Company owns various properties, which include a seven-story
headquarters office building, regional offices, a central warehouse, service
centers, telecommunications equipment and other facilities owned for general
purposes.
TITLE
The Company's electric generating plants and certain other principal
properties are owned in fee. Electric transmission and distribution lines are
located either on private rights-of-way or along streets or highways by public
consent.
Substantially all of the Company's property, plant and equipment is
subject to a lien securing obligations of the Company under an Indenture of
Mortgage, which does not impair the use of such properties in the operation of
its business.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any legal proceeding to which it is a party
which would have a material adverse effect on its financial condition, results
of operations, cash flows or competitive position. For a discussion of certain
legal proceedings and regulatory matters involving the Company, see (i)
"Business -- Regulatory and Environmental Matters -- Industry
Developments/Customer Choice" and "--Environmental Quality" in Item 1 of this
report and (ii) "Results of Operations --Nonfuel Operating Expenses and Income
Taxes" in "Management's Discussion and Analysis of Results of Operations and
Financial Condition" on pages 7 and 8 of the 1996 Annual Report to
Shareholders, which information is filed as Exhibit 13 to this report, which
sections are herein incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders of the
Company during the fourth quarter of 1996.
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19
EXECUTIVE OFFICERS OF THE REGISTRANT
The names of the executive officers of the Company, their positions held,
five-year employment history, ages and years of service as of December 31, 1996
are presented below. Executive officers are appointed annually to serve for the
ensuing year or until their successors have been appointed.
POSITION AND FIVE-YEAR
NAME OF EXECUTIVE OFFICER EMPLOYMENT HISTORY
- ------------------------- ----------------------
Gregory L. Nesbitt...................... President and Chief Executive Officer since April 1993;
President and Chief Operating Officer from April 1992
to April 1993; Executive Vice President and Chief
Operating Officer from July 1991 to April 1992;
Executive Vice President from January 1988 to July
1991. (Age 58; 16 years of service)
David M. Eppler......................... Executive Vice President since January 1997; Vice
President-Power Supply and Energy Transmission
from July 1995 to January 1997; Vice President-
Finance from October 1993 to July 1995; Vice
President and Treasurer from July 1987 to October
1993. (Age 46; 15 years of service)
Robert L. Duncan........................ Vice President-Customer Operations since July 1984.
(Age 54; 31 years of service)
Catherine C. Powell..................... Vice President-Employee and Corporate Services since
(formerly Catherine C. Scheffler) July 1995; Vice President-Human Resources from
October 1993 to July 1995; General Manager-Human
Resources from August 1993 to October 1993;
Administrator-Compensation from May 1991 to August
1993; Vice President of Rapides Bank and Trust
Company from December 1987 to April 1991. (Age 41; 5
years of service)
John L. Baltes, Jr...................... Controller since April 1989. (Age 50; 15 years of
service)
Michael P. Prudhomme.................... Secretary-Treasurer since January 1994; Secretary from
October 1993 to January 1994; Vice President-
Customer Services from May 1985 to October 1993.
(Age 53; 27 years of service)
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POSITION AND FIVE-YEAR
NAME OF EXECUTIVE OFFICER EMPLOYMENT HISTORY
- ------------------------- ------------------
Judy P. Miller.......................... Assistant Corporate Secretary since April 1995; Acting
Assistant Corporate Secretary from February 1995 to
April 1995; Supervisor-Plant Accounting from October
1993 to February 1995; Supervisor-Income and Other
Taxes from June 1990 to October 1993. (Age 39; 12
years of service)
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21
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed for trading on the New York Stock
Exchange (NYSE) and the Pacific Stock Exchange. The following table sets forth
high and low sales prices for the Company's common stock as reported on the
NYSE Composite Tape and dividends paid per share during each calendar quarter
of 1996 and 1995.
1996 1995
------------------------------------ --------------------------------------
HIGH LOW DIVIDEND HIGH LOW DIVIDEND
---- --- -------- ---- --- --------
First Quarter $27-3/4 $25-3/8 $0.375 $24-1/2 $22 $0.365
Second Quarter $27-3/8 $25-1/8 $0.385 $24-1/2 $22-1/8 $0.375
Third Quarter $27-1/4 $25-3/8 $0.385 $25-5/8 $22-1/4 $0.375
Fourth Quarter $29-1/4 $26-1/8 $0.385 $28-1/8 $25-1/4 $0.375
Subject to the prior rights of the holders of the respective series of the
Company's preferred stock, such dividends as determined by the Board of
Directors of the Company may be declared and paid on the common stock from time
to time out of funds legally available therefor. The provisions of the
Company's charter applicable to preferred stock and certain provisions
contained in the debt instruments of the Company under certain circumstances
restrict the amount of retained earnings available for the payment of dividends
by the Company. The most restrictive covenant requires that common
shareholders' equity be not less than 30% of total capitalization, including
short-term debt. At December 31, 1996, approximately $144,300,000 of retained
earnings was not restricted. On January 24, 1997, the Board of Directors of the
Company declared a quarterly dividend of $0.385 per share, which dividend was
paid on February 15, 1997, to common shareholders of record on February 3,
1997.
As of March 14, 1997, there were 11,599 holders of record of the Company's
common stock, and the closing price of the Company's common stock as reported
on the NYSE Composite Tape was $27.125 per share.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth in "Selected Financial Data" on page 3 of the
1996 Annual Report to Shareholders is incorporated herein by reference; such
information is filed as Exhibit 13 to this report. This information should be
read in conjunction with the Consolidated Financial Statements and the related
Notes thereto set forth on pages 12 through 29 of the 1996 Annual Report to
Shareholders, which is filed as Exhibit 13 to this report and incorporated
herein by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth in "Management's Discussion and Analysis of
Results of Operations and Financial Condition" on pages 4 through 11 of the
1996 Annual Report to Shareholders is incorporated herein by reference; such
information is filed as Exhibit 13 to this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth on pages 12 through 29 of the 1996 Annual Report
to Shareholders is incorporated herein by reference; such information is filed
as Exhibit 13 to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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23
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth (i) under the subcaption "Directors" under the
caption "Election of Directors" on pages 2 and 3 of, and (ii) under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" on page 6 of the
Company's definitive Proxy Statement dated March 12, 1997, filed with the
Securities and Exchange Commission pursuant to Regulation 14A under the
Securities Exchange Act of 1934 (1997 Proxy Statement), is incorporated herein
by reference. See also "Executive Officers of the Registrant" on pages 17 and
18 of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the subcaption "Organization and
Compensation of the Board of Directors" under the caption "Election of
Directors" on pages 3 and 4 of, and under the caption "Executive Compensation"
on pages 6 through 15 of the 1997 Proxy Statement (excluding the information
required by paragraphs (k) and (l) of Item 402 of Regulation S-K) is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Security Ownership of
Directors and Management" on page 5 and under the caption "Security Ownership
of Certain Beneficial Owners" on pages 16 and 17 of the 1997 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
REFERENCE (PAGE)
-----------------------------------
1996 ANNUAL
FORM 10-K REPORT TO
ANNUAL REPORT SHAREHOLDERS
------------- ------------
14(a)(1) Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994 12
Consolidated Balance Sheets at December 31, 1996 and
1995 13
Consolidated Statements of Cash Flows for the years
ended December 31, 1996, 1995 and 1994 14
Consolidated Statements of Changes in Common
Shareholders' Equity for the years ended
December 31, 1996, 1995 and 1994 15
Notes to Consolidated Financial Statements 16
Report of Independent Accountants 30
14(a)(2) Financial Statement Schedules
Report of Independent Accountants 29
Schedule II - Valuation and Qualifying Accounts 30
Financial Statement Schedules other than those shown
in the above index are omitted because they are
either not required or are not applicable or the
required information is shown in the Consolidated
Financial Statements and Notes thereto.
14(a)(3) List of Exhibits
The Exhibits designated by an asterisk are filed herewith. The Exhibits not so
designated have been previously filed with the Securities and Exchange
Commission and are incorporated herein by reference. The Exhibits designated by
two asterisks are management contracts and compensatory plans and arrangements
required to be filed as Exhibits to this report.
22
25
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ ----------- -------
3(a) Restated Articles of Incorporation of the 1-5663 10-Q(3/92) 3
Company dated as of July 24, 1989,
as amended through April 24, 1992
3(b) Amended and Restated Bylaws of the 1-5663 10-Q(6/96) 3
Company, as amended to July 19, 1996
4(a)(1) Indenture of Mortgage dated as of July 1, 2-27284 S-1(10/17/67) 4(b)(1)
1950, between the Company and First
National Bank of New Orleans, as Trustee
4(a)(2) First Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(2)
of October 1, 1951, to Exhibit 4(a)(1)
4(a)(3) Second Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(3)
of June 1, 1952, to Exhibit 4(a)(1)
4(a)(4) Third Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(4)
of January 1, 1954, to Exhibit 4(a)(1)
4(a)(5) Fourth Supplemental Indenture dated as 2-27284 S-1(10/17/67) 4(b)(5)
of November 1, 1954, to Exhibit 4(a)(1)
4(a)(6) Tenth Supplemental Indenture dated as 1-5663 10-K(1986) 4(a)(11)
of September 1, 1965, to Exhibit 4(a)(1)
4(a)(7) Eleventh Supplemental Indenture dated 2-32069 S-9(4/7/69) 2(m)
as of April 1, 1969, to Exhibit 4(a)(1)
4(a)(8) Eighteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(8)
of December 1, 1982, to Exhibit 4(a)(1)
4(a)(9) Nineteenth Supplemental Indenture dated as 1-5663 10-K(1993) 4(a)(9)
of January 1, 1983, to Exhibit 4(a)(1)
4(a)(10)Twenty-Sixth Supplemental Indenture dated as 1-5663 8-K(3/90) 4(a)(27)
of March 15, 1990, to Exhibit 4(a)(1)
4(b) Indenture between the Company and Bankers 33-24896 S-3(10/11/88) 4(b)
Trust Company, as Trustee, dated as of
October 1, 1988
4(b)(1) Agreement Appointing Successor Trustee dated 333-02895 S-3(4/26/96) 4(a)(2)
as of April 1, 1996 by and among Central
Louisiana Electric Company, Inc., Bankers
Trust Company and The Bank of New York
4(c) Trust Indenture (The Industrial Development 1-5663 10-K(1991) 4(i)
Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991)
dated as of May 1, 1991, between The Industrial
Development Board of the Parish of Rapides,
Inc. and First National Bank of Commerce
23
26
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
4(c)(1) First Supplemental Trust Indenture (The Industrial 1-5663 10-K(1994) 4(e)(1)
Development Board of the Parish of Rapides, Inc.
(Louisiana) Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991) dated as of May 1, 1993,
between The Industrial Development Board of the Parish of
Rapides, Inc. and First National Bank of Commerce, relating to
Exhibit 4(c)
4(d) Refunding Agreement (The Industrial 1-5663 10-Q(6/91) 10(a)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of May 1, 1991, between the
Company and The Industrial Development
Board of the Parish of Rapides, Inc.
4(e) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(k)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated
as of May 1, 1991, between Parish of DeSoto,
State of Louisiana and First National Bank of Commerce
4(e)(1) First Supplemental Trust Indenture (Parish 1-5663 10-K(1994) 4(g)(l)
of DeSoto, State of Louisiana
Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as of May 1, 1993,
between the Parish of DeSoto, State of Louisiana and First
National Bank of Commerce, relating to Exhibit 4(e)
4(f) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
4(g) Trust Indenture (Parish of DeSoto, State of 1-5663 10-K(1991) 4(m)
Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series 1991B)
dated as of May 1, 1991, between Parish of
DeSoto, State of Louisiana and First National
Bank of Commerce
4(g)(1) First Supplemental Trust Indenture (Parish of DeSoto 1-5663 10-K(1994) 4(i)(1)
State of Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991B) dated as of May 1, 1993,
between the Parish of DeSoto, State of Louisiana and First
National Bank of Commerce, relating to Exhibit 4(g)
24
27
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ ----------- --------
4(h) Refunding Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 10(c)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991B) dated as of May 1, 1991, between
the Parish of DeSoto, State of Louisiana
and the Company
4(i) $100,000,000 Credit Agreement 1-5663 10-Q(6/95) 4
dated as of June 15, 1995, among the
Company, certain Banks parties thereto,
and The Bank of New York, as Agent
**10(a) 1990 Long-Term Incentive Compensation Plan 1-5663 1990 Proxy A
Statement (4/90)
**10(b) 1981 Incentive Stock Option Plan 1-5663 10-K(1992) 10(i)
**10(c) Participation Agreement, Annual Incentive
Compensation Plan
**10(d) Deferred Compensation Plan for Directors 1-5663 10-K(1992) 10(n)
**10(e)(1) Supplemental Executive Retirement Plan 1-5663 10-K(1992) 10(o)(1)
**10(e)(2) Form of Supplemental Executive Retirement 1-5663 10-K(1992) 10(o)(2)
Plan Participation Agreement between the
Company and the following officers:
Gregory L. Nesbitt, David M. Eppler,
Robert L. Duncan, Catherine C. Powell, and
Michael P. Prudhomme
**10(f) Form of Executive Severance Agreement between 1-5663 10-K(1995) 10(f)
the Company and the following officers:
Gregory L. Nesbitt, David M. Eppler,
Robert L. Duncan, Catherine C. Powell, and
Michael P. Prudhomme
10(g)(1) Receivables Purchase Agreement, dated 1-5663 10-K(1994) 10(n)(l)
as of April 9, 1990, as Amended and
Restated as of March 1, 1995, among the
Company, Corporate Asset Funding Company,
Inc. and Citicorp North America, Inc.
10(g)(2) Receivables Purchase Agreement, dated 1-5663 10-K(1994) 10(n)(2)
as of April 9, 1990, as Amended and Restated
as of March 1, 1995, among the Company, Citicorp,
N.A. and Citicorp North America, Inc.
10(h)(1) Term Loan Agreement dated as of April 2, 1991, 1-5663 10-Q(3/91) 4(b)
among the 401(k) Savings and Investment Plan
ESOP Trust, the Company, as Guarantor, the
Banks listed therein and The Bank of New York,
as Agent, relating to Exhibit 10(m)
25
28
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
10(h)(2)Assignment and Assumption Agreement, effective 1-5663 10-Q(3/91) 4(c)
as of May 6, 1991, between The Bank of New York and the
Canadian Imperial Bank of Commerce, relating to Exhibit 10(h)(1)
10(h)(3)Assignment and Assumption Agreement dated as of 1-5663 10-K(1991) 10(y)(3)
July 3, 1991, between The Bank of New York
and Rapides Bank and Trust Company in
Alexandria, relating to Exhibit 10(h)(1)
10(h)(4)Assignment and Assumption Agreement dated as of 1-5663 10-K(1992) 10(bb)(4)
July 6, 1992, among The Bank of New York,
CIBC, Inc. and Rapides Bank and Trust Company
in Alexandria, as Assignors, the 401(k)
Savings and Investment Plan ESOP Trust, as
Borrower, and the Company, as Guarantor, relating
to Exhibit 10(h)(1)
10(i) Reimbursement Agreement (The Industrial 1-5663 10-Q(6/91) 4(a)
Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991) dated as of May 29, 1991, among the
Company, various financial institutions,
Swiss Bank Corporation and The First
National Bank of Chicago
10(i)(1)Remarketing Agreement (The Industrial Development 1-5663 10-Q(9/94) 10(a)
Board of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of
July 19,1994, between the Company and PaineWebber
Incorporated
10(i)(2)Tender Agreement (The Industrial Development Board 1-5663 10-K(1991) 10(z)(2)
of the Parish of Rapides, Inc. (Louisiana)
Adjustable Tender Pollution Control Revenue
Refunding Bonds, Series 1991) dated as of
May 1, 1991, among First National Bank of Commerce,
as Trustee, the Company, The First National
Bank of Chicago, as Tender Agent and Registrar,
Smith Barney, Harris Upham & Co. Incorporated,
as Remarketing Agent, and Swiss Bank Corporation,
as Bank
10(i)(3)Amendment No. 1 to Reimbursement Agreements (The 1-5663 10-K(1994) 10(p)(3)
Industrial Development Board of the Parish of Rapides,
Inc. (Louisiana) Adjustable Tender Pollution Control
26
29
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
Revenue Refunding Bonds, Series 1991, 1991A and 1991B) dated as
of December 9, 1994, among the Company, various financial
institutions, Swiss Bank Corporation, New York Branch, as Issuer
of the Letters of Credit, and Swiss Bank Corporation, New York
Branch, as Agent, relating to Exhibits 10(i), 10(j) and 10(k)
10(j) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(b)
State of Louisiana Adjustable Tender Pollution
Control Revenue Refunding Bonds, Series
1991A) dated as of May 29, 1991, among the
Company, various financial institutions,
Swiss Bank Corporation and The First
National Bank of Chicago
10(j)(1)Remarketing Agreement (Parish of DeSoto, State of 1-5663 10-Q(9/94) 10(b)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of July 19, 1994, between the Company and
PaineWebber Incorporated
10(j)(2)Tender Agreement (Parish of DeSoto, State of 1-5663 10-K(1991) 10(aa)(2)
Louisiana Adjustable Tender Pollution Control
Revenue Refunding Bonds, Series 1991A) dated as
of May 1, 1991, among First National Bank of
Commerce, as Trustee, the Company, The
First National Bank of Chicago, as Tender Agent
and Registrar, Smith Barney, Harris Upham &
Co. Incorporated, as Remarketing Agent, and
Swiss Bank Corporation, as Bank
10(k) Reimbursement Agreement (Parish of DeSoto, 1-5663 10-Q(6/91) 4(c)
State of Louisiana Adjustable Tender
Pollution Control Revenue Refunding Bonds, Series 1991B) dated as
of May 29, 1991, among the Company, various financial
institutions, Swiss Bank Corporation and The First National Bank
of Chicago
10(k)(1)Remarketing Agreement (Parish of DeSoto, State of Louisiana 1-5663 10-Q(9/94) 10(c)
Adjustable Tender Pollution Control Revenue Refunding Bonds,
Series 1991B) dated as of July 19, 1994, between the Company and
PaineWebber Incorporated
10(k)(2)Tender Agreement (Parish of DeSoto, State of Louisiana Adjustable 1-5663 10-K(1991) 10(bb)(2)
Tender Pollution Control Revenue Refunding Bonds, Series 1991B)
dated as of May 1, 1991, among First National Bank of Commerce,
27
30
SEC FILE OR REGISTRATION
REGISTRATION STATEMENT EXHIBIT
EXHIBITS NUMBER OR REPORT NUMBER
-------- ------ --------- ------
as Trustee, the Company, The First National Bank of
Chicago, as Tender Agent and Registrar, Smith Barney,
Harris Upham & Co. Incorporated, as Remarketing Agent,
and Swiss Bank Corporation, as Bank
10(l) Selling Agency Agreement between the Company 333-02895 S-3(12/10/96) 1
and Salomon Brothers Inc, Merrill Lynch & Co.,
Smith Barney Inc. and First Chicago Capital Markets, Inc.
dated as of December 12, 1996
10(m) 401(k) Savings and Investment Plan ESOP 1-5663 10-Q(3/91) 4(a)
Trust Agreement dated as of April 2, 1991,
between State Street Bank and Trust
Company and the Company
10(m)(1)First Amendment to 401(k) Savings and Investment 1-5663 10-K(1995)
Plan ESOP Trust Agreement dated as of July 30, 1993, between
State Street Bank and Trust Company and the Company
* 11 Computation of Net Income Per Common Share
* 12 Computation of Earnings to Fixed Charges and Earnings
to Combined Fixed Charges and Preferred Stock Dividends
* 13 Management's Discussion and Analysis of Financial
Condition and Results of Operations, Consolidated
Financial Statements and Notes and Report of
Independent Accountants
* 23 Consent of Independent Accountants
* 24 Power of Attorney from each Director of the Company
whose signature is affixed to this Form 10-K
for the year ended December 31, 1996
* 27 Financial Data Schedule UT
14(b) Reports on Form 8-K
During the three-month period ended December 31, 1996, the Company filed
no Current Reports on Form 8-K.
28
31
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Central Louisiana Electric Company, Inc.:
Our report on the consolidated financial statements of Central Louisiana
Electric Company, Inc. has been incorporated by reference in this Form 10-K
from page 30 of the 1996 Annual Report to Shareholders of Central Louisiana
Electric Company, Inc. In connection with our audits of such financial
statements, we have also audited the related financial statement schedule
listed in Item 14(a)(2) on page 22 of this Form 10-K. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based upon our
audit.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
January 29, 1997
29
32
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1996, 1995 and 1994
(In thousands)
- -------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -------------------------------------------------------------------------------------------------------------
ADDITIONS UNCOLLECTIBLE
BALANCE AT CHARGED TO ACCOUNTS BALANCE AT
BEGINNING COSTS AND WRITE-OFFS, END
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS OF PERIOD EXPENSES LESS RECOVERIES OF PERIOD (1)
- --------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996 $538 $887 $744 $681
Year Ended December 31, 1995 $444 $817 $723 $538
Year Ended December 31, 1994 $537 $442 $535 $444
- --------------------------------------------------------------------------------------------------------------
- -----------------------
(1) Deducted in the balance sheet.
30
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTRAL LOUISIANA ELECTRIC COMPANY, INC.
(REGISTRANT)
BY: GREGORY L. NESBITT
(Gregory L. Nesbitt, President
and Chief Executive Officer)
Date: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
GREGORY L. NESBITT President, Chief Executive Officer and Director
(Gregory L. Nesbitt) (Principal Executive Officer and March 27, 1997
Principal Financial Officer)
JOHN L. BALTES, JR. Controller
(John L. Baltes, Jr.) (Principal Accounting Officer) March 27, 1997
SHERIAN G. CADORIA )
)
J. PATRICK GARRETT )
)
F. BEN JAMES, JR. )
)
HUGH J. KELLY )
)
A. DELOACH MARTIN, JR. )
)---- DIRECTORS*
ROBERT T. RATCLIFF )
)
EDWARD D. SIMMONS )
)
WILLIAM H. WALKER, JR. )
)
ERNEST L. WILLIAMSON )
*BY: GREGORY L. NESBITT
(Gregory L. Nesbitt, as March 27, 1997
Attorney-in-Fact)
31
34
INDEX TO EXHBITS
----------------
EXHIBIT
NUMBER DESCRIPTION
- ------ ------------
11 Computation of Net Income Per Common Share
12 Computation of Earnings to Fixed Charges and Earnings
to Combined Fixed Charges and Preferred Stock Dividends
13 Management's Discussion and Analysis of Financial
Condition and Results of Operations, Consolidated
Financial Statements and Notes and Report of
Independent Accountants
23 Consent of Independent Accountants
24 Power of Attorney from each Director of the Company
whose signature is affixed to this Form 10-K
for the year ended December 31, 1996
27 Financial Data Schedule UT