ITEM 1. BUSINESS
THE COMPANY:
Long Island Lighting Company (the "Company") was incorporated in 1910 under the Transportation Corporations Law of the State of New York and supplies electric and gas service in Nassau and Suffolk Counties and to the Rockaway Peninsula in Queens County, all on Long Island, New York. The mailing address of the Company is 175 East Old Country Road, Hicksville, New York 11801 and its general telephone number is (516) 755-6650.
TERRITORY:
The Company's service territory covers an area of approximately 1,230 square miles. The population of the service area, according to the Company's 1993 estimate, is about 2.7 million persons, including approximately 98,000 persons who reside in Queens County within the City of New York. The 1993 population estimate reflects a .14% increase since the 1990 census.
Approximately 80% of all workers residing in Nassau and Suffolk Counties are employed within the two counties. In 1993, total non-agricultural employment in Nassau and Suffolk Counties increased by approximately 5,200 employees, an employment increase of 0.5%.
The area served is predominantly residential, but the Company receives approximately one-half of its electric revenues from commercial and industrial customers. Although electronics and aerospace are the largest manufacturing industries in the area, about 88% of total employment is non-manufacturing. Industrialization is gradually increasing in Suffolk County which, with three times the land area, has only one-third the population density of Nassau County.
SEGMENTS OF BUSINESS:
The percentages of total revenues and operating income before income taxes derived from electric and gas operations for each of the last three years are shown in the following table:
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* Before income taxes.
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For additional information respecting the Company's electric and gas financial results and operations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations for the Year Ended December 31, 1993" and "Selected Financial Data" and Notes 2, 3, and 11 of Notes to Financial Statements for the Year Ended December 31, 1993.
EMPLOYEES:
The Company has approximately 6,300 full-time employees, of which approximately 2,500 belong to Local 1049 and approximately 1,500 belong to Local 1381 of the International Brotherhood of Electrical Workers ("A.F.L.-C.I.O."). On February 6, 1992, the Company and the unions agreed upon contracts which will expire on February 13, 1996.
REGULATION AND ACCOUNTING CONTROLS:
The Company is subject to regulation by the Public Service Commission of the State of New York (the "PSC") with respect to rates, issuance and sale of securities, adequacy and continuance of service, safety and siting of certain facilities, accounting, conservation of energy, management effectiveness and other matters. To ensure that its accounting controls and procedures are consistently maintained, the Company has created a program which is monitoring those controls and procedures. The Audit Committee of the Company's Board of Directors, as part of its responsibilities, periodically reviews this monitoring program.
New York law requires that all utilities be periodically audited to identify those aspects of their operations, if any, which are in need of improvement. A comprehensive management audit report was issued by the PSC in March 1993. The audit report favorably recognized many of the initiatives the Company is taking, including its efforts to improve customer service and control costs while changing the basic culture and orientation of employees. The report also contains constructive recommendations for improving the effectiveness of the Company's overall management. During 1993, the PSC also completed an audit of the Company Customer Service Incentives Program and of the practices for provision and management of legal services.
The Company is also subject, in certain of its activities, including accounting, to the jurisdiction of the United States Department of Energy ("DOE") and the Federal Energy Regulatory Commission ("FERC"). In addition to its accounting jurisdiction, FERC has jurisdiction over the rates the Company may charge for the sale of electric energy for resale in interstate commerce, including the rates the Company charges for electricity sold to
municipal electric systems within the Company's territory, and for the transmission, through the Company's system, of electric energy to other utilities or to industrial customers. FERC also has some jurisdiction over a portion of the Company's gas supplies and substantial jurisdiction over transportation to the Company of its gas supplies.
Operation of Nine Mile Point Nuclear Power Station, Unit 2 ("Nine Mile Point 2"), a nuclear facility in which the Company has an 18% interest, is subject to regulation by the Nuclear Regulatory Commission ("NRC").
ELECTRIC OPERATIONS:
General
The Company's system energy requirements are supplied from sources located both on and off Long Island. Company-owned generating facilities with an aggregate summer generating capability of approximately 4,251,000 kilowatts ("kW") include five steam electric generating stations and a number of internal combustion and diesel supplemental generating units, all located on Long Island, and the Company's 18% share of Nine Mile Point 2, a nuclear generating station located in upstate New York. Generating facilities owned by others, such as independent power producers and cogenerators located on Long Island and investor-owned and public electric systems located off Long Island, provide the balance of the Company's energy supplies.
In the years between 1982 and 1991, the Company purchased between 13% to 25% of its power requirements from others. In 1992, purchased power increased to 38%. In 1993, the amount of power purchased from others amounted to 41%. In 1992 and 1993, cogenerators and independent power producers provided 9.4% of the Company's system requirements for each of those years. During 1995, after the 136 MW Holtsville facility owned by the New York Power Authority ("NYPA") is completed in early 1994 and the new 40 MW cogeneration facility at the Stony Brook campus of the State University of New York ("Stony Brook")is completed in early 1995, independent power producers and cogenerators will provide an estimated 13.7% of the Company's system energy requirements. For information about a 300 MW cogeneration facility that is the subject of litigation, see the discussion about Mayflower Energy Partners, L.P. ("Mayflower") under the heading "Energy Sources -- Independent Power Producers and Cogenerators."
The Company does not expect any new major independent power producers to be built on Long Island in the foreseeable future for several reasons. Under federal law, the Company is required to buy energy from qualified producers at the Company's avoided costs. Current long-range avoided cost estimates for the Company have significantly reduced the economic advantage to entrepreneurs seeking to compete with the Company and with existing independent power producers. Also, with the Company's load being 45% residential, 52% commercial and industrial and 3% other sales, and with approximately 200 MW of net capacity from independent power producers and cogenerators already installed on Long Island, the market for additional large electric projects to provide power to the Company's remaining commercial and industrial customers is small.
The following table indicates the 1993 summer capacity of the Company's major generating stations and internal combustion units as reported to the New York Power Pool ("NYPP") in December 1993:
The maximum demand on the Company's system to date was 3,967,000 kW on July 9, 1993, representing 83% of its total available capacity of 4,799,000 kW on that day, which included 548,000 kW of firm capacity purchased from other sources. By agreement with the NYPP, the Company is required to maintain, on a monthly basis, an installed and contracted firm power reserve generating capacity equal to at least 18% of its actual peak load. The Company is currently meeting this NYPP requirement.
System Requirements and Reliability
The Company's current electric load forecasts indicate that, with continued implementation of its conservation and load management programs and with the availability of electricity provided by the Company's existing generating facilities, by its portion of nuclear energy generated at NMP2 and by power purchased from other electric systems and from certain non- Company-owned facilities, located within the Company's service territory, Long Island has adequate generating sources to meet its energy demands through the end of the century.
System kWh energy requirements in 1993 were 2.6% higher than in 1992 and .5% higher than in 1988. The compound annual growth rate for the five-year period ended December 31, 1993 was .1%.
As a result of the implementation of conservation programs and the availability to customers of energy supplies from cogeneration sources discussed below under the heading "Independent Power Producers and Cogenerators," the Company forecasts a 0.7% and 1.7% decrease, relative to the year 1993, in system energy requirements for the years 1994 and 1995, respectively. However, for the period 1993-2003, the Company forecasts an average annual growth rate in system energy requirements of .6%.
The Company's system electric requirements for the last three years were provided as follows:
Percentage of System Requirements
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* Generated on the Company's own system. Oil consumption for the Company's system electric energy requirements in 1993 was 9.7 million barrels compared to 10.7 million barrels in 1992. Certain units may be fired with natural gas when it is available on an economic or as-required basis. Gas consumption for the Company's system electric energy requirements in 1993 was 36.3 million dekatherms compared to 34.5 million dekatherms in 1992.
** Generated at Nine Mile Point 2.
*** Generated at (i) more economical nuclear, coal, oil and hydroelectric units owned by other electric systems and transmitted to the Company over its interconnections and (ii) cogenerators and independent power producers located within the Company's service territory.
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Energy Sources
Oil: Oil is the principal fuel burned in the Company's electric generating stations. In recent years, the Company has been able to reduce its oil requirements by burning natural gas, by using nuclear energy generated at Nine Mile Point 2 and by purchasing power from other systems, cogenerators and independent power producers. The availability and cost of oil used by the Company are affected by factors beyond its control such as the international oil market, environmental regulations, conservation measures and the availability of alternative fuels. However, any changes in oil costs are reflected in rates charged to the Company's customers. The Company's fuel oil is supplied principally by five suppliers, no one of which normally provides more than one-half of the total requirements.
For information concerning federal and other regulatory environmental limitations on fuel oil burned by the Company, see "Environment -- Air." For additional information concerning the recovery of fuel oil costs, see Note 1 to Notes to Financial Statements for the Year Ended December 31, 1993.
Gas: In addition to burning oil, several of the Company's generating stations have the capability of burning natural gas. These dual-fired units enable the Company to burn the most cost efficient fuel and to reduce its dependency on oil.
Nuclear: The Company holds an 18% interest in Nine Mile Point 2, a 1,047 megawatt ("MW") nuclear generating unit near Oswego, New York. The cotenants of Nine Mile Point 2, in addition to the Company, are Niagara Mohawk Power Corporation ("Niagara Mohawk"), New York State Electric & Gas Corporation ("NYSEG"), Rochester Gas and Electric Corporation ("RG&E") and Central Hudson Gas & Electric Corporation.
For additional information on Nine Mile Point 2 and nuclear plant insurance, see Notes 5 and 9, respectively, of Notes to Financial Statements for the Year Ended December 31, 1993.
Independent Power Producers and Cogenerators: Independent power producers and cogenerators located within the Company's service territory provided approximately 200 MW of power to the Company, the equivalent of approximately 9.4% of the Company's energy requirements in 1993. Capacity from these sources is expected to reach 340 MW by the summer of 1994.
The Company has also entered into contracts for approximately 50 MW of power from various projects under construction on an energy-only basis, including the Stony Brook project. The Company has also signed contracts for energy-only purchases totaling over 400 MW from several projects that are not expected to be built prior to the expiration date of these contracts, December 31, 1994. In addition, the Company was ordered by the PSC to enter into a contract, which it executed under protest, with Mayflower to purchase, on an energy-only
basis, power for 15 years from a 300 MW facility scheduled to begin commercial operation in 1995. On December 30, 1993, the Appellate Division, Third Department, of the New York Supreme Court, affirmed the Supreme Court of the State of New York Special Term's decision that had annulled the PSC order requiring the Company to enter into the agreement with Mayflower (Long Island Lighting Company v. Public Service Commission of the State of New York and Mayflower Energy Partners, L.P.). In the Special Term decision, the court held that the PSC had violated the federal Public Utility Regulatory Policies Act ("PURPA") and the New York Public Service Law, and had acted arbitrarily when it ordered the Company to sign a power purchase contract with Mayflower incorporating the PSC's 1989 Long Run Avoided Cost estimates. The Third Judicial Department affirmed the Special Term's decision, finding that the PSC-determined rates were not just and reasonable as required under PURPA and the New York Public Service Law.
Interconnections: Five interconnections allow for the transfer of electricity between the Company and members of the NYPP and the New England Power Pool. Energy from these sources is transmitted pursuant to transmission agreements with Niagara Mohawk, NYPA and Consolidated Edison Company of New York, Inc. ("Con Edison") and displaces energy which would otherwise be generated on the Company's system with higher cost fuel oil. The capacity of these interconnections is utilized for (i) the requirements of Con Edison, a co-owner with the Company of three of these interconnections, (ii) the requirements on Long Island of NYPA, the owner of one of these interconnections, (iii) the transmission of the Company's share of power from Nine Mile Point 2 and (iv) the Company's purchases from NYPA and other utilities.
Conservation Services: The Company's 1993 Electric Conservation and Load Management Plan called for a cumulative 194 MW reduction in coincident peak demand by December 31, 1993 and a cumulative annualized energy savings of 578 gigawatthours ("GWh"). The Company has met these targets with an expenditure of $33.5 million. These reductions were achieved through several different program types including customer education/information rebate, audit and direct installation which targeted a number of energy efficient technologies.
In the fourth quarter of 1993, the Company filed a Modified Demand Side Management ("DSM") Plan with the PSC to support the objectives of the Company's December 31, 1993 electric filing. For additional information, see the discussion under the heading, "1989 Settlement and Electric Rates--Electric Rates." Under this modified plan, which includes a substantially lower budget than the one approved for 1994, a greater emphasis will be placed on the educational aspect of the Company's conservation efforts in lieu of the conventional reliance on rebates. This will help to shift the responsibility for adopting and implementing energy efficient practices away from the utility and to the customer. In addition, to control DSM costs further, the Company will promote financing programs and look to foster cost sharing relationships with manufacturers of energy efficient appliances.
1989 Settlement and Electric Rates
General: On February 28, 1989, the Company and the State of New York (by its Governor) entered into an agreement (the "1989 Settlement") settling certain issues relating to the Company and providing for, among other matters, the transfer of the Shoreham Nuclear Power Station ("Shoreham") to the Long Island Power Authority ("LIPA"), Shoreham's subsequent decommissioning and the return of the Company to financial health.
For additional information respecting the 1989 Settlement, see the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations for the Year Ended December 31, 1993" and Note 2 of Notes to Financial Statements for the Year Ended December 31, 1993.
The Rate Moderation Agreement: The Rate Moderation Agreement ("RMA"), a constituent document of the 1989 Settlement approved by the PSC, created an asset known as the Financial Resource Asset (the "FRA") and provides for its full recovery. The FRA has two components, the Base Financial Component (the "BFC") and the Rate Moderation Component (the "RMC").
The RMA, by its terms, specifies that the FRA was created to provide the Company with adequate financial indicia to restore the Company's debt securities to investment grade levels as determined by independent rating agencies.
The BFC, as initially established, represented the present value of the future net-after-tax cash flows which the RMA provided the Company for its financial recovery. The BFC was granted rate base treatment under the terms of the RMA, similar to other plant investments, and is included in the Company's electric rates through an amortization over 40 years on a straight-line basis. At December 31, 1993, the BFC amounted to $3.6 billion.
The RMC reflects the difference between the Company's revenue requirements under conventional ratemaking and the revenues resulting from the implementation of the rate moderation plan provided for in the RMA. This revenue difference, together with a carrying charge equal to the allowed rate of return on rate base, has been deferred. The RMC has provided the Company with a substantial amount of non-cash earnings since the effective date of the 1989 Settlement through December 31, 1992, because the revenues provided under the RMA were less than the revenues required under conventional ratemaking. The RMC balance was $652 million at December 31, 1992. During 1993, however, as revenues provided under the RMA began to exceed the revenues that would have been provided under conventional ratemaking, the RMC balance began to decline. Thus, at December 31, 1993, the RMC balance was $610 million.
The Company has no reason to believe that the PSC will fail to continue to honor its commitments, contained in the RMA, respecting the recovery of the FRA and other 1989 Settlement-deferred charges. This belief is based, in part, upon the PSC's actions granting the Company six of the 11 electric rate increases contemplated by the RMA, discussed below, and, in part, upon the PSC's publicly confirmed commitment to the effectuation of the 1989 Settlement. Those actions have been consistent with provisions of the RMA regarding the establishment and recovery from ratepayers of the FRA and other 1989 Settlement-deferred charges provided by the RMA.
For additional information respecting the RMA, the BFC and the RMC, see Notes 1, 2 and 3 of Notes to Financial Statements for the Year Ended December 31, 1993.
Electric Rates: The RMA contemplated, among other objectives, a series of rate increases designed to restore the Company to financial health. Pursuant to the RMA, the Company received electric rate increases of 5.4% effective February 18, 1989 and 5.0% for each of the rate years that began on December 1, 1989 and December 1, 1990. In 1991, the PSC approved annual electric rate increases of 4.15%, 4.1% and 4.0% to be effective on December 1 of 1991, 1992 and 1993, respectively.
On December 31, 1993, the Company filed a three-year electric rate plan with the PSC for the period beginning December 1, 1994, that minimizes future electric rate increases while retaining consistency with the RMA's objective of continuing the restoration of the Company's financial health. The filing proposes no base electric rate increases in years one and two of the plan and an overall increase of 4.3% in the third year. The Company's electric rate plan filing is subject to PSC approval.
Although base electric rates would be frozen during the first two years of the plan, annual rate increases of 1% in the first year and 2% in the second year are expected to result in these years from the operation of the Company's fuel cost adjustment clause ("FCA"). The FCA captures, among other amounts, any increases in the cost of fuel above the level recovered in base rates and, under the rate mechanisms that have been in effect since 1991, a portion of (i) earned incentives and (ii) variances in actual versus forecasted electric revenues and certain cost components occurring in prior periods.
The Company's proposed electric rate plan provides for lower annual electric rate increases than were originally anticipated under the 1989 Settlement. However, as a result of changes in certain assumptions upon which the RMA was based, their impact on the RMC and the Company's plans to reduce DSM, operations,
maintenance and capital expenditures, the Company has determined that the overall objectives of the RMA can be met under the proposed multi-year plan described in the preceding paragraph. Because of lower inflation rates, interest costs, property taxes, fuel costs and return on common equity allowed by the PSC, the RMC, which originally had been anticipated to peak at $1.2 billion in 1994, has already peaked at $652 million in 1992. With the exception of an increase in 1995-1996, which is not now projected to cause the RMC to increase above its $652 million peak, the RMC is expected to decline until it is fully amortized. The actual length of the period over which the RMC is to be amortized will depend on the extent to which the assumptions underlying the rate plan materialize. While the proposed electric rate plan may extend the recovery period for the RMC by one but not more than three years, the Company's current projections indicate that the RMC will be recovered in a period of approximately 11 years that began on July 1, 1989.
On November 2, 1993, the New York State Consumer Protection Board and the Long Island Power Authority ("CPB/LIPA") filed a Petition with the PSC asking the PSC to hold a proceeding on freezing or possibly reducing the Company's electric rates for the period December 1994 to November 1997. In written comments filed on January 12, 1994 in response to the CPB/LIPA Petition, LILCO urged the PSC to reject the Petition and consider the CPB/LIPA's issues in the proceeding that has been established regarding the Company's three-year rate application. Staff of the Department of Public Service filed a response urging the PSC to reject the Petition and consider these issues in the Company's current electric rate proceeding. The Attorney General for New York State also filed comments that urge the PSC to conduct a full investigation of the Company's rates in the course of the current proceeding concerning its proposed electric rate plan.
For additional information respecting electric rate increases, see Note 3 of Notes to Financial Statements for the Year Ended December 31, 1993.
GAS OPERATIONS:
General
In 1993, recognizing the growing importance of its gas operations and the dynamic changes then anticipated as a result of proceedings before FERC to deregulate the transportation of natural gas, the Company established its gas operations as a separate corporate business unit. During 1993, the Company's gas business unit focused on two areas: one, continuing its marketing efforts on Long Island and two, seeking opportunities in the newly de-regulated national natural gas market.
Gas System Requirements
At year-end 1993, the Company had a total of 445,830 firm gas customers, compared to 441,580 at year-end 1992, and 436,352 at year-end 1991. Of the 1993 year-end total, 269,994 were space heating customers. Total sales in 1993 were 59,182,674 dekatherms ("Dth"), compared to 56,292,131 Dth in 1992. The maximum daily firm demand experience on the Company's gas system in 1993 was 485,896 Dth on December 26, 1993; the prior maximum daily firm demand of 466,517 Dth was on February 1, 1993. Accompanied by unusually cold weather, seven new maximum daily firm demand records came in early 1994 -- the highest being 585,227 Dth on January 19, 1994.
The forecasted maximum daily firm gas demand for the 1993-94 winter season (November 1 - March 31) was 577,900 Dth, representing 85% of the Company's maximum daily firm operating supply capability of 682,284 Dth for this period. This forecast was exceeded in January 1994. Based on the forecasted maximum daily firm gas demand, the Company should have a peak day surplus of 77,057 Dth of firm supply including peak shaving capability for the 1993-94 winter season. The Company recovers the costs of its gas supply from both its firm and interruptible customers through provisions in the Company's rate schedules.
Continuing its recent efforts to expand the base of customers across which its fixed costs can be absorbed, the Company is emphasizing residential and commercial gas marketing. In particular, new market segments and new uses for natural gas are being sought. The technology for natural gas vehicles ("NGVs") is becoming commercially viable, and the Company is working internally and with customers to put NGVs on the road. For example, the Metropolitan Suburban Bus Authority ("MSBA"), a subsidiary corporation of the Metropolitan Transportation Authority principally serving Nassau County, has installed a natural gas compression station and is operating ten dedicated NGVs. MSBA anticipates purchasing more than 200 buses fueled by compressed natural gas over the next five years.
Gas Transportation and Supply
The proceedings before FERC, developing out of its Order No. 636, have resulted in a regulatory "unbundling" of the gas supply, transportation and storage services that for decades had been provided by the nation's natural gas pipelines. In the past, local distribution companies ("LDCs") have purchased their gas supplies at the citygate from those pipelines serving their territories. The citygate is generally the location where the interstate pipeline meets the local distribution company's system. The Company shares common citygate facilities, known as the New York Facilities, with Con Ed and the Brooklyn Union Gas Company. The Company's principal pipelines have been Transcontinental Gas Pipe Line Corporation ("Transcontinental"), Texas Eastern Transmission Corporation ("Texas Eastern"), CNG Transmission Corporation ("CNG"), Tennessee Gas Pipeline Company ("Tennessee") and, beginning in early 1992, the Iroquois Gas Transmission System ("Iroquois"). Through two wholly-owned subsidiaries, the Company is a general partner in Iroquois, with an equity share of 1%, and in the Liberty Pipeline Company ("Liberty"), with an equity share of 3-1/3%. With respect to Liberty, proceedings for authority to construct and operate are now pending before FERC.
Under FERC Order No. 636, pipelines, for the most part, no longer act as sales agents to bundle the mix of services from the producers and other interstate pipelines. LDCs must now make arrangements for gas supplies and gas storage directly with producers, marketers and the owners of storage facilities. In addition, each LDC must now also make separate transportation arrangements with each pipeline in the path between the supplier and the LDC's citygate and not merely with the nearest pipeline connecting to the LDC's system. This fundamental change in the way LDCs conduct their activities has affected the reliability, pricing and diversification of their natural gas supplies.
Gas Transportation: The Company's gas transportation capacity for meeting its 1993-94 winter season requirements is provided from a portfolio of year-round, winter seasonal and storage services summarized below:
Year-Round Pipeline Firm Transportation: The Company has 303,692 Dth per day of year- round pipeline firm transportation capacity from four interstate pipeline companies: Transcontinental, Texas Eastern, Tennessee and Iroquois. For the winter 1993-1994 season, options on 60,000 Dth per day of capacity have been granted to off-system markets leaving a total of 243,692 Dth available to meet system peak-day requirements.
Winter Seasonal Pipeline Firm Transportation: The Company has winter seasonal pipeline firm transportation capacity on Transcontinental amounting to 2,726 Dth per day. This incremental capacity is available through March 31, 1994.
Storage: The Company also has long-term firm storage services to meet higher winter demand which provide a total operating supply of approximately 287,839 Dth per day with a total capacity of 22,692,363 Dth for the winter period. Of these totals, 277,589 Dth per day, or a total capacity of 21,455,363 Dth, is provided by a gas storage field at Leidy, Pennsylvania, and 10,250 Dth per day, or a total capacity of 1,237,000 Dth for the winter period is provided by a gas storage field in upstate New York operated by Honeoye Storage Corporation, in which the Company has a 23-1/3% equity interest. In addition, the Company has the right to request 812,500 Dth in the winter period from a cogeneration facility with the obligation to return quantities in kind during the following summer period.
The Company also contracts for storage capacity in a facility in the Gulf Coast near sources of supply and pipeline transportation. Up to 50,687 Dth per day can be withdrawn with a total of 4,459,220 Dth of storage capacity in the Washington storage facility in Louisiana. While this facility provides the Company with greater security of supply and enhanced operational flexibility in meeting peak-day requirements, the Company has no related firm pipeline transportation agreement for these supplies. Therefore, to take gas from this storage, the Company must curtail the transportation of some of its firm contract supply.
Gas Supply: The Company's gas supplies for the 1993-94 winter season are provided from a portfolio of year-round, winter seasonal, storage and peak shaving supplies summarized below.
Year-Round Firm Supply: Of the 213,469 Dth of firm supplies, 83,575 Dth are Canadian and 129,894 Dth are domestic. The Company is a 2.7% equity owner of Boundary Gas, Inc., ("Boundary"), a corporation formed with 15 other gas utility companies to act as a purchasing agent for the importation of natural gas from Canada. The Company obtains 2,470 Dth per day of its long-term firm Canadian supply from this source. Gas supplies to use 90,223 Dth per day of the remaining year-round pipeline firm transportation capacity are purchased by the Company in both the seasonal and monthly spot markets.
Winter Seasonal Firm Supply: The Company also contracts for firm seasonal supply of 90,223 Dth delivered during the five winter months each year from a number of winter seasonal suppliers.
Peak Shaving: The Company has its own peak shaving supplies to meet its requirements on excessively cold winter days. This includes a liquefied natural gas plant with a storage capacity of approximately 620,000 Dth of gas and vaporization facilities which provide 103,300 Dth per day to the peak-day capability of the Company's system. In addition, the Company has propane facilities that produce 17,400 Dth per day of peak shaving with a storage capacity of approximately 100,000 Dth.
Gas Rates
In December 1993, the PSC approved a three-year gas rate settlement between the Company and the Staff of the PSC. The gas rate settlement provides that the Company receives, for each of the rate years beginning December 1, 1993, 1994 and 1995, annual gas rate increases of 4.7%, 3.8% and 2.8%, respectively. In the determination of the revenue requirements for the first year of the gas rate settlement, an allowed rate of return on equity of 10.1% was used. The gas rate decision also provides for earnings in excess of a 10.6% return on equity in any of the three rate years covered by the settlement, to be shared equally between the Company's firm gas customers and its shareowners.
In November 1992, the PSC approved a gas rate increase of 7.1%, or $35.7 million annually, effective December 1, 1992, with an allowed return on common equity from gas operations of 11.0%. In November 1991, the Company received a gas rate increase of 4.1% effective December 1, 1991.
Non-Regulated Activities
The unbundling of gas transportation activities and the need for local distribution companies to negotiate directly with producers and other suppliers and with pipelines has provided the Company with new business opportunities. These new opportunities include providing gas to non- traditional markets including LDCs and end-users from Mississippi to Connecticut. In addition, the Company has formed a wholly-owned subsidiary, Northeast Gas Marketers, Inc. ("NGMI"), to broker natural gas in the unregulated market. The Company is presently awaiting PSC authorization to fund up to $20 million of NGMI's unregulated gas brokering activities.
Recovery of Transition Costs
Transition costs are the costs associated with unbundling the pipelines' merchant services in compliance with FERC Order No. 636. They include pipelines' unrecovered gas costs and the costs that pipelines incur as a result of reforming or terminating their gas supply contracts. In order to recover transition costs, pipelines must demonstrate to FERC (i) that such costs were attributable to FERC Order No. 636 and (ii) that they were prudently incurred. While the Company is challenging, on both eligibility and prudence grounds, its pipelines' efforts to recover their claimed transition costs, the Company presently estimates that it could be charged as much as $14 million in transition costs by several of its pipelines. The Company will seek permission from the PSC to recover these costs from its gas customers.
ENVIRONMENT:
General
The Company is subject to federal, state and local laws and regulations dealing with air and water quality and other environmental matters. It is not possible to ascertain with certainty if or when the various required governmental approvals for which applications have been made will be issued, whether, except as noted below, additional facilities or modifications of existing or planned facilities will be required or, generally, what effect existing or future controls may have upon Company operations. Except as set forth herein below, no material proceedings have been commenced or, to the knowledge of the Company, are contemplated by any federal, state or local agency against the Company, nor is the Company a defendant in any material litigation with respect to any matter relating to the protection of the environment.
In 1994 and 1995, the Company anticipates expenditures of $12.5 million and $4.1 million, respectively, for environmental projects including projects described below for emission monitoring requirements and nitrogen oxide ("NOx") reduction requirements.
Air
Federal, state and local regulations affecting new and existing electric generating plants govern, among other emissions, sulfur dioxide and NOx and, in the future, hazardous air pollutants.
The laws governing the sulfur content, by weight, of the fuel oil being burned by the Company in compliance with the United States Environmental Protection Agency ("EPA")-approved Air Quality State Implementation Plan ("SIP") are administered by the New York State Department of Environmental Conservation ("DEC"). The Company does not expect to incur any costs to satisfy amendments to the Clean Air Act with respect to the reduction of sulfur dioxide emissions, since the Company already uses fuel with acceptable low levels of sulfur.
The Company expects that it will have to expend $4.3 million in 1994 to meet continuous emission monitoring requirements and $3.5 million in 1994 and $2.0 million in 1995 to meet Phase I NOx reduction requirements. In addition, subject to requirements that are expected to appear in regulations that have not yet been issued, the Company estimates that it may be required to expend as much as $125 million by May 1999 to meet Phase II NOx reduction requirements and approximately $50 million by 2000 to meet requirements for the control of hazardous air pollutants from power plants.
Water
Under the federal Clean Water Act and the New York State Environmental Conservation Law, the Company is required to obtain a State Pollutant Discharge Elimination System permit to make any discharge into the waters of the United States or New York State. The DEC has the jurisdiction to issue those permits and their renewals and has issued permits for the Company's existing generating units. The permits allow the continued use of the existing circulating water systems which have been determined to be in compliance with State Water Quality Standards. The permits also allow for the continued use of the existing chemical treatment systems.
Land
The Company is the owner of six pieces of property on which the Company or certain of its predecessor companies produced manufactured gas. The Company has investigated two of these sites for possible environmental contamination caused by these prior operations and plans to submit the findings to the appropriate regulatory agencies in 1994. The Company's clean-up costs, if any, cannot be determined until the remediation alternatives have been reviewed by the regulatory agencies and negotiations with them have been completed. The Company will conduct similar investigations of the remaining four sites over the next several years. The Company
cannot determine the costs of remediation for these four sites until the investigations have been completed and the results reviewed by the appropriate regulatory agencies. The costs for the remediation of these sites are not expected to have a material impact on the Company's financial condition.
The Company and nine other potentially responsible parties ("PRPs") have entered into an Administrative Order by Consent ("Consent Order") with the EPA to complete a Remedial Investigation and Feasibility Study ("RI/FS") for a site in Philadelphia, Pennsylvania, operated by a company known as Metal Bank of America, to which the EPA alleges that the Company shipped scrap transformers, possibly containing polychlorinated biphenyls. The RI/FS, which will be completed in 1994, will assess the nature and extent of site contamination and will suggest cleanup alternatives. The amount of the Company's liability, if any, which may be joint and several if imposed, cannot be ascertained until the EPA has selected a remedy from among the cleanup alternatives. The Company has notified the appropriate insurers but no lawsuit has been commenced.
The EPA has conducted a thorough, unannounced inspection of the Company's hazardous waste Treatment Storage and Disposal Facility ("TSDF"). The inspection focused on compliance with hazardous waste management regulations. The EPA subsequently issued a Complaint and Compliance Order which noted several deficiencies, primarily related to permit modifications and minor operational issues, and proposed a $29,000 civil penalty. The Company has protested the amount of the penalty. The EPA also issued a letter requesting additional information on the Company's TSDF operations to which the Company has responded.
Nuclear Waste
Niagara Mohawk, on behalf of the NMP2 cotenants, entered into a contract with the Department of Energy ("DOE") for the permanent storage of NMP2 spent nuclear fuel. Under that contract, the NMP2 cotenants are currently paying DOE a user-fee of one-mil per kilowatthour of net nuclear generation. The Company is collecting its portion of the user-fee from the Company's ratepayers.
Under the federal Low Level Radioactive Waste Policy Amendment Act of 1985, New York was required, by January 1, 1993, to have arranged for the disposal of all low level, radioactive waste generated within the state or, in the alternative, contracted for the disposal of waste at an operating facility outside the state. Failure to do so would require New York to either (1) take title to and possession of, and assume all liability for, all waste generated in the state or (2) forfeit to the generators of waste in the state the rebate of a portion of the surcharges paid by such generators for the disposal of waste at operating facilities outside the state.
New York has entered into a contract with the State of South Carolina for the disposal of all low level radioactive waste (except mixed wastes) through June 1994. The Company can provide no assurance as to what disposal arrangements, if any, New York will have in place after that date if New York fails to make other waste
disposal arrangements. The Company may incur additional costs for temporary storage of NMP2-generated waste at the NMP2 site.
The Company expects that its costs to dispose of low level radioactive waste, including any surcharges or penalties, in an amount yet undetermined, will be recovered in electric rates. Moreover, under the Amended and Restated Asset Transfer Agreement, discussed below, LIPA is responsible for the disposal of waste associated with the decommissioning of Shoreham, although such costs will be paid by the Company and recovered through electric rates.
THE COMPANY'S SECURITIES:
General
The Company's securities are rated by Moody's Investors Service, Inc. ("Moody's"), Standard and Poor's Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch") and Duff and Phelps, Inc. ("D&P"). The Company's securities are rated as follows:
* - Secured by Letters of Credit.
NR - Not rated. - ---------------
The G&R Mortgage
The Company's General and Refunding Indenture dated June 1, 1975 (the "G&R Indenture" or "G&R Mortgage") is a lien upon substantially all of the Company's properties. The lien of the G&R Mortgage, which is currently subordinate to the lien of the Company's Indenture of Mortgage and Deed of Trust dated September 1, 1951 (the "Indenture of Mortgage" or "First Mortgage"), will become the Company's most senior mortgage in 1997, the year in which the last of the currently outstanding non- pledged First Mortgage Bonds matures. Outstanding at December 31, 1993 were approximately $1.7 billion of General and Refunding Bonds (the "G&R Bonds") and $125 million of First Mortgage Bonds, excluding $1.0 billion of First Mortgage Bonds (the "Pledged Bonds") which are pledged with the G&R Trustee as additional security for the G&R Bonds. Additional information concerning the Company's G&R Mortgage and the First Mortgage is discussed below and in Note 7 of Notes to Financial Statements for the Year Ended December 31, 1993.
Under the G&R Mortgage, the Company may issue G&R Bonds on the basis of either matured or
redeemed G&R Bonds and First Mortgage Bonds (other than Pledged Bonds) or on the basis of the Bondable Value of Property Additions ("BVPA"). Generally, when issuing G&R Bonds, the Company must satisfy a mortgage interest coverage requirement (the "G&R Mortgage Interest Coverage"). The G&R Mortgage Interest Coverage requires that the Net Earnings available for interest for any 12 consecutive calendar months within the 15 consecutive calendar months preceding the issuance of the G&R Bonds must be equal to at least two times the stated annual interest payable on outstanding G&R Bonds and Prior Lien Bonds (other than Pledged Bonds), including any new G&R Bonds. Under the G&R Mortgage Interest Coverage, the Company would currently be able to issue approximately $4.3 billion of additional G&R Bonds based upon: (i) earnings for the 12 months ended December 31, 1993 and (ii) an assumed interest rate of 9% for such additional G&R Bonds. A change of 1/8 of 1% in the assumed interest rate of such G&R Bonds would result in a change of approximately $58.6 million in the amount of such G&R Bonds that the Company could issue. Currently, the Company is able to issue G&R Bonds only on the basis of matured or redeemed G&R Bonds and First Mortgage Bonds (other than Pledged Bonds). The maximum amount of additional G&R Bonds which the Company is able to issue on this basis is approximately $683 million.
The Company is currently unable to issue G&R Bonds on the basis of the BVPA because it is required to recognize, for purposes of the G&R Mortgage, a "deficit" in the BVPA of approximately $202 million as of December 31, 1993. As the Company continues to make capital improvements to its system (i.e., add Property Additions), this deficit will be reduced at an estimated rate of approximately $250 million each year. The existence of the deficit in the BVPA does not require that any outstanding G&R Bonds be retired or that the deficit be eliminated by deposits of cash or retired G&R Bonds or First Mortgage Bonds. The Company expects this deficit to be eliminated prior to 1995. G&R Bonds are, however, subject to retirement through the normal operation of the G&R Sinking and Maintenance Funds or through maturities.
The Company believes that, based upon currently scheduled redemptions and maturities, it will have sufficient retired G&R Bonds and First Mortgage Bonds for the foreseeable future to satisfy the requirements of the G&R Sinking Fund or to withdraw with retired G&R Bonds and First Mortgage Bonds any cash that may be deposited to satisfy the Sinking Fund requirements. The Sinking Fund requires the Company to pay $24 million or to certify a like amount of retired G&R Bonds and First Mortgage Bonds on or before June 30, 1994. The Company is planning to satisfy this requirement in 1994 with retired G&R Bonds. In addition, subsequent to 1994, when the Company expects that Property Additions will again become available for the various purposes contemplated by the G&R Mortgage, the Company may elect to use such Property Additions either to issue G&R Bonds or to satisfy the G&R Sinking Fund requirements.
The Maintenance Fund covenant under the G&R Mortgage requires that the aggregate amount of Property Additions added subsequent to December 31, 1974 must be, as of the end of each calendar year subsequent to 1974, at least equal to the cumulative Provision for Depreciation (as defined in the G&R Mortgage) from December 31, 1974. The G&R Mortgage requires cash (or retired G&R Bonds or retired First Mortgage Bonds) to be deposited to satisfy the Maintenance Fund requirements only when such cumulative Provision for Depreciation exceeds such aggregate amount of Property Additions. As of December 31, 1993, the amount of such cumulative Property Additions calculated pursuant to the G&R Mortgage was approximately $9.4 billion, including approximately $5.5 billion of Property Additions attributable to Shoreham. Also, as of December 31, 1993, the amount of the cumulative Provision for Depreciation, similarly calculated, was approximately $1.4 billion. The Company anticipates that the aggregate amount of Property Additions will continue to exceed the cumulative Provision for Depreciation.
The First Mortgage
Under the provisions of the G&R Mortgage, the Company may not issue any additional bonds under the Company's First Mortgage other than Pledged Bonds which are required, concurrently with the issuance of each new series of G&R Bonds, to be deposited with the G&R Trustee. The issuance of any such Pledged Bonds does not create additional indebtedness. The coverage requirements of the First Mortgage and the Company's ability to issue additional Pledged Bonds do not restrict the Company's ability to issue additional G&R Bonds. Of the approximately $1.2 billion of First Mortgage Bonds outstanding at December 31, 1993, $1.0 billion, or 89%, were Pledged Bonds. After satisfying the 1993 Depreciation Fund and Sinking Fund requirements discussed below, the Company expects that it will issue additional Pledged Bonds when it next issues additional G&R Bonds.
The First Mortgage requires the Company to pay the First Mortgage Trustee by June 30 of each year cash equal to 1% of all previously issued First Mortgage Bonds (excluding bonds issued on the basis of retired bonds). Currently, the annual First Mortgage Sinking Fund requirement is approximately $18 million. The Company expects to satisfy this requirement prior to June 30, 1994, with retired First Mortgage Bonds. The annual Sinking Fund requirement is not expected to change, because of restrictions in the G&R Mortgage, until and unless the Company issues additional G&R Bonds. The Company expects to be able to satisfy the Sinking Fund requirement in each year through 1996, the last year in which this requirement must be met, with cash, available Property Additions or retired First Mortgage Bonds which become available through scheduled maturities.
The Depreciation Fund covenant of the First Mortgage requires that the Company pay to the First Mortgage Trustee by June 30 of each year cash (which may be withdrawn up to the amount of Gross Bondable Additions and First Mortgage Bonds made the basis for such withdrawal) equal to the greater of (a) the amount actually charged on the Company's books as a utility operating revenue deduction for the preceding calendar year for depreciation, depletion, obsolescence, retirements and amortization of the Company's Utility Plant ("Book Depreciation") or (b) an amount equal to (i) 15% of gross operating revenues (less the cost of electricity and gas purchased for resale) from Utility Plant for such year less (ii) the amount actually expended for maintenance of Utility Plant during such year ("Revenue Depreciation"). Since the oil crisis of the 1970s, Revenue Depreciation in each year has been greater than Book Depreciation for such year. The Revenue Depreciation requirement for 1993 was approximately $216 million. Instead of paying cash to satisfy this Depreciation Fund requirement, the First Mortgage permits the Company to deliver First Mortgage Bonds or certify Property Additions. The Company expects to satisfy the 1993 requirement by June 30, 1994, using a combination of First Mortgage Bonds and Property Additions. The Company presently plans, assuming that its expenditures for capital improvements are approximately $250 million annually and notwithstanding that G&R Bonds may be issued which would require, in turn, the issuance of First Mortgage Bonds to be pledged, that it will have adequate Property Additions to satisfy the Depreciation Fund requirements in 1995 and 1996, the last year in which this requirement must be met. The Company also expects that retired First Mortgage Bonds, including Pledged Bonds, will be available to satisfy the Depreciation Fund requirement in 1995 and 1996, if such retired First Mortgage Bonds are not applied to other purposes.
Unsecured Debt
The Company's First Mortgage, its G&R Mortgage and its Restated Certificate of Incorporation do not contain any limitations upon the issuance of debt secured by liens which are subordinate to the above mortgages or upon the issuance of unsecured debt.
The Company's Debenture Indenture, dated as of November 1, 1986, as supplemented, and the Debenture Indenture, dated as of November 1, 1992, as supplemented, (together, the "Debenture Indentures") each provide for the issuance of an unlimited amount of Debentures to be issued in amounts that may be authorized from time to time in one or more series. The Debentures are unsecured and rank pari passu with all other unsecured indebtedness of the Company subordinate to the obligations secured by the Company's two mortgages. Currently, there are approximately $2.9 billion of Debentures outstanding.
As of December 31, 1993, the Company had outstanding approximately $817 million principal amount of promissory notes, securing $215 million of tax-exempt Pollution Control Revenue Bonds (the "PCRBs"), $2 million of tax-exempt Industrial Development Revenue Bonds and $600 million of tax-exempt Electric Facilities Revenue Bonds ("EFRBs"). Of these amounts, $17 million issued in 1982, $150 million issued in 1985 (the "1985 PCRBs") and $100 million issued in 1993 (the "1993 EFRBs") are subject to periodic tenders by the holders of the tax-exempt bonds. The 1985 PCRBs and 1993 EFRBs are supported by letters of credit pursuant to which the letter of credit banks have agreed to pay the principal, interest and premium, if applicable, on any tendered 1985 PCRBs or 1993 EFRBs, in the aggregate, up to approximately $163 million and $109 million, respectively, in the event of default. These letters of credit expire on March 16, 1996 and November 17, 1996, respectively. The obligations of the Company to reimburse the letter of credit banks supporting the 1985 PCRBs and the 1993 EFRBs are unsecured. Each of the PCRBs, the Industrial Development Revenue Bonds and the EFRBs have been issued by the New York State Energy Research and Development Authority ("NYSERDA").
See Note 7 of Notes to Financial Statements for the Year Ended December 31, 1993 for additional information respecting the Company's Notes securing tax-exempt bonds and the Company's other outstanding unsecured debt.
Equity Securities
The Company's Restated Certificate of Incorporation provides that the Company may not issue additional Preferred Stock unless the net earnings of the Company available for payment of interest on its debt after depreciation and all taxes for any 12 consecutive calendar months within the 15 calendar months preceding the month of issuance are at least 1.50 times the aggregate of the annual interest charges and dividend requirements on the debt and Preferred Stock to be outstanding immediately after the issuance of such Preferred Stock (the "Earnings Ratio"). Currently, the Company cannot satisfy the Earnings Ratio and therefore cannot issue Preferred Stock except, under certain circumstances, to redeem outstanding Preferred Stock. When the proceeds from the sale of the Preferred Stock to be issued are used to redeem outstanding Preferred Stock, the requirement to satisfy the Earnings Ratio is not applicable if the dividend requirement and the requirements for redemption in a voluntary liquidation of the Preferred Stock to be issued do not exceed the respective amounts for the Preferred Stock which is to be retired. Additional Preferred Stock may also be issued beyond amounts permitted under the Earnings Ratio with the approval of at least two-thirds of the votes entitled to be cast by the holders of the total number of shares of outstanding Preferred Stock.
Default in the payment of dividends on any shares of Preferred Stock in an amount equivalent to or exceeding four full quarterly dividends for any series of Preferred Stock entitles all holders of shares of Preferred Stock, voting separately as a class and regardless of series, to elect a majority of the Board of Directors of the Company. The remaining Directors are elected by the holders of Common Stock. The right of holders of shares of Preferred Stock to elect a majority of the Board of Directors ceases when and if the Company ceases to be in default in the payment of its Preferred Stock dividends. At that time, the terms of office of the Directors of the Company elected by the holders of Preferred Stock terminates and the resulting vacancies are to be filled by the vote of the remaining Common Stock Directors.
Issuance of Preference Stock, which is subordinate to the Company's Preferred Stock, but senior to its Common Stock, with respect to declaration and payment of dividends and the right to receive amounts payable on any dissolution, does not require satisfaction of a net earnings test or any other coverage requirement, unless established by the Board of Directors for one or more series of Preference Stock, prior to the issuance of such series. No Preference Stock has been issued by the Company nor does the Company currently plan to issue any Preference Stock.
Before paying any dividends, the Company's Board of Directors considers, among other factors, the Company's financial condition, its ability to comply with provisions of the Company's Restated and Amended Certificate of Incorporation and the availability of retained earnings, future earnings and cash.
SHOREHAM DECOMMISSIONING:
As contemplated by the 1989 Settlement, the Company transferred Shoreham and the Company's possession-only license for Shoreham to LIPA on February 29, 1992, following a decision by the NRC that approved the transfer. The NRC decision requires that the Company maintain adequate capability to take over the possession-only license in the event LIPA ceases to exist or is otherwise found to be unqualified to hold the license.
On June 11, 1992, the NRC issued an order authorizing the decommissioning of Shoreham by LIPA. The order requires that additional NRC approvals be obtained if certain conditions regarding fuel and solid radioactive waste are not met.
The Company is required under an agreement with LIPA (the "Amended and Restated Asset Transfer Agreement") to reimburse LIPA for any of its costs associated with the decommissioning of Shoreham and recover these reimbursed amounts from its ratepayers. The Site Cooperation and Reimbursement Agreement (the "Site Agreement") entered into by the Company and LIPA describes the payment by the Company of LIPA's and NYPA's expenses attributable to the transfer, ownership, possession, maintenance and decommissioning of Shoreham, including certain taxes and payments in-lieu-of-taxes with respect to the Shoreham site, and governs, among other things, the conduct of the parties and of NYPA, and their access to facilities and properties at the Shoreham site.
The NRC has granted the Company an exemption from decommissioning funding requirements which generally require utilities to maintain separate funds or obtain letters of credit dedicated to and sufficient to cover all expected decommissioning costs. Instead, the NRC has approved the dedication of a portion of the funds available to the Company under the 1989 Revolving Credit Agreement (the "1989 RCA") to support the Company's obligation to provide funding for the decommissioning of Shoreham. For additional information respecting the 1989 RCA, see Notes 2 and 7 of Notes to Financial Statements for the Year Ended December 31, 1993. The NRC also required that the Company establish an external fund of $10 million to cover emergency decommissioning costs.
The RMA assumed that post settlement costs would total approximately $670 million, including $330 million for property taxes and payments-in-lieu-of-taxes ("PILOTS"). The remaining $340 million was estimated for decommissioning costs, fuel disposal costs and all other costs incurred at Shoreham after June 30, 1989. These post settlement costs are being capitalized and amortized over a 40-year period on a straight line remaining life basis. The RMA also contemplated that Shoreham would be transferred to LIPA on July 1, 1989. Certain of the assumptions in the RMA have changed. For example, the Company experienced delays in obtaining approval to transfer the plant, resulting in the payment of additional property taxes. In addition, PILOTS have been greater than had been assumed in the RMA. As a result, at December 31, 1993, Shoreham post settlement costs totalled approximately $777 million (net of accumulated amortization of $34 million). The $777 million includes $363 million of property taxes and PILOTS and $448 million of decommissioning costs, fuel disposal costs and all other costs incurred at Shoreham after June 30, 1989. The Company currently estimates that post settlement costs (other than property taxes and PILOTS) will total approximately $550 million. The precise amount of taxes and PILOTS that must be paid is the subject of the litigation described in Item 3, "Legal Proceedings -- Shoreham."
Although the Company can give no assurance that the cost to decommission Shoreham will approximate its current estimate, the amount which is assumed in the LIPA decommissioning plan or the RMA, or that the decommissioning process will be completed within the period stated above, the PSC has determined that all costs associated with Shoreham which are prudently incurred by the Company subsequent to the effectiveness of the 1989 Settlement are decommissioning costs, and has confirmed that the RMA provides for the recovery of such
expenses through electric rates. It is the Company's position that, should the decommissioning costs be greater and the duration of decommissioning be longer than the amount and the time, respectively, assumed in the RMA, the additional prudently incurred costs relating to decommissioning, including maintenance of Shoreham during such longer period, will be recovered from the Company's ratepayers through electric rates over the balance of a 40-year period ending 2029.
Pursuant to the 1989 Settlement, the Company reflects the costs of the nuclear fuel related to Shoreham as a deferred charge under the heading "Regulatory Assets." The RMA contemplates that the Company will recover from its ratepayers the costs of its Shoreham nuclear fuel. The Company is required under the Amended and Restated Asset Transfer Agreement to reimburse LIPA for any of its costs associated with the storage and disposal of Shoreham's fuel and recover these reimbursed amounts from its ratepayers as well.
For additional information respecting the 1989 Settlement, see Note 2 of Notes to Financial Statements for the Year Ended December 31, 1993.
EXECUTIVE OFFICERS OF THE COMPANY:
Current information regarding the Company's Executive Officers, all of whom serve at the will of the Board of Directors, follows:
William J. Catacosinos: Dr. Catacosinos has served as Chairman of the Board of Directors and Chief Executive Officer of the Company since January 1984, and as a Director since December 1978. Dr. Catacosinos is currently serving as President on an interim basis and previously served in that capacity from March 1984 to January 1987. Dr. Catacosinos, 63, a resident of Mill Neck, Long Island, earned a bachelor of science degree, a masters degree in business administration and a doctoral degree in economics from New York University. He is the former chairman and chief executive officer of Applied Digital Data Systems, Inc., Hauppauge, New York, a manufacturer of computer and related products. Previously, Dr. Catacosinos served as chairman of the board and treasurer of Corometric Systems, Inc. of Wallingford, Connecticut and was Assistant Director at Brookhaven National Laboratory. Dr. Catacosinos currently chairs the Executive Committee of the Company's Board of Directors and he is a member of the board of Utilities Mutual Insurance Co. and Ketema, Inc., a diversified manufacturer of, among other things, electrical and aerospace equipment. In compliance with Section 305(b) of the Federal Power Act, Dr. Catacosinos has authorization from FERC to hold the position of an officer or director of a public utility and at the same time the position of an officer or director of a firm that supplies electrical equipment to such public utility.
Theodore A. Babcock: Mr. Babcock was named Treasurer of the Company on February 4, 1994. As Treasurer, he will be responsible for Treasury Operations, Debt Management, Trust Asset Management, Risk Management and Remittance Processing. Mr. Babcock, 39, joined the Company in July 1992 as Assistant Treasurer. He previously spent five years in the AMBASE Corporation as an Assistant Vice President and was promoted in 1988 to Vice President and Treasurer. Prior to AMBASE, Mr. Babcock spent 11 years with the Associated Dry Goods Corporation where he was promoted to Assistant Treasurer and Director of Corporate Treasury Operations in 1984. Mr. Babcock received a bachelor of science degree in accounting from Manhattan College and a masters degree in finance from Iona College.
William N. Dimoulas: Vice President of Information Systems and Technology since May 1990, Mr. Dimoulas, 50, joined the Company in 1988. He received a bachelor of science degree and a masters of business administration degree from Long Island University. Previously, Mr. Dimoulas was a vice president at Chemical Bank concentrating in Corporate Banking and Information Technology.
James T. Flynn: Mr. Flynn was named Chief Operating Officer of the Company on March 1, 1994 and will continue in his position of Executive Vice President which he assumed in April 1992. Mr. Flynn joined the Company in October 1986 as Vice President of Fossil Production and later assumed the position of Group Vice President, Engineering and Operations. Before joining the Company, Mr. Flynn, 60, was general manager-Eastern Service Department for General Electric. His career began as a member of General Electric's Technical Marketing Program in 1957. He holds a bachelor of science degree in mechanical engineering from Bucknell University and is a Licensed Professional Engineer in the State of Pennsylvania.
Robert J. Grey: Mr. Grey joined the Company in September 1992 as General Counsel. Before joining the Company, Mr. Grey, 43, was senior utility partner and managing partner of the Portland office with the northwest law firm of Preston, Thorgrimson, Shidler, Gates & Ellis. Previously, Mr. Grey was staff counsel for the New York State Public Service Commission and an attorney for the United States Environmental Protection Agency. Mr. Grey has a bachelors degree from Columbia University, a juris doctorate from Emory University and an LL.M in Taxation from George Washington University.
Robert X. Kelleher: Vice President of Human Resources since July 1986, Mr. Kelleher, 57, joined the Company in 1959 and has held various managerial positions in the Finance, Accounting, Purchasing, Stores and Employee Relations organizations. He was Industrial Relations Manager from 1975 to 1979, Manager of the Employee Relations Department from 1979 to 1985 and Assistant Vice President of the Employee Relations Department from 1985 to 1986. Mr. Kelleher is a graduate of St. Francis College and the Human Resources Management and Executive Management Programs of Pennsylvania State University. Mr. Kelleher is a member of the American Compensation Association, Personnel Directors Council, Industrial Relations Research Institute, Edison Electric Institute's Labor Relations Committee and is on the advisory council of New York Institute of Technology's Center for Labor Relations.
John D. Leonard, Jr.: Mr. Leonard joined the Company in 1984, initially serving as Vice President of Nuclear Operations. In July 1989, he assumed additional duties as Vice President of Corporate Services. Mr. Leonard, 61, was the vice president and assistant chief engineer for design and analysis at the New York Power Authority, from 1980 to 1984. Prior to this position, he served as a resident manager of the Fitzpatrick Nuclear Power Plant for approximately five years. Before accepting a position at the New York Power Authority, Mr. Leonard served as corporate supervisor of operational quality assurance of the Virginia Electric Power Company from 1974 to 1976. In 1974, Mr. Leonard retired with the rank of Commander from the United States Navy, having commanded two nuclear powered submarines in a career that spanned 20 years. He holds a bachelor of science degree from Duke University and a master of science degree from the Naval Post Graduate School. He is a registered professional engineer in the State of New York.
Adam M. Madsen: Vice President of Corporate Planning since 1984, Mr. Madsen, 57, holds a bachelors degree in electrical engineering from Manhattan College and a master of science degree in nuclear engineering from Long Island University. He has been with the Company since 1961, serving in various engineering positions including Manager of Engineering from 1978 to 1984. Prior to that time, he held the position of Manager of the Planning Department. Since 1978, Mr. Madsen has been the Company's representative to the Planning Committee of the New York Power Pool. He is a member of the Northeast Power Coordinating Council's Joint Coordinating Committee and an alternate to the Council's Executive Committee. He also serves on the Board of Directors of the Empire State Electric Energy Research Company. Mr. Madsen is a registered professional engineer in the State of New York.
Kathleen A. Marion: Corporate Secretary since April 1992, Ms. Marion served as Assistant Corporate Secretary from April 1990 to 1992. Ms. Marion also continues to serve as Assistant to the Chairman, a position she has held since April 1987. Ms. Marion, 39, has a bachelor of science degree in business and finance from the State University of New York at Old Westbury.
Arthur C. Marquardt: Senior Vice President of Gas Business Unit since March 1992, Mr. Marquardt, 47, joined the Company in January 1991. He held the position of Vice President of Strategic Business Planning from January 1991 through March 1992. He is chairman of the New York Facilities executive committee and a director of the Huntington Chamber of Commerce and the Huntington Chamber Foundation. Mr. Marquardt has had extensive and varied business experience at Combustion Engineering Inc., General Electric Company, Quadrex Corporation, and at Pacific Nuclear Systems, Inc. where he was president and chief operating officer. He received a bachelor of science degree in mechanical engineering from Tufts University.
Brian R. McCaffrey: Vice President of Administration since March 1987, Mr. McCaffrey, 48, joined the Company in 1973. Mr. McCaffrey holds a bachelor of science degree in aerospace engineering from the University of Notre Dame. He also received a master of science degree in aerospace engineering from Pennsylvania State University and a master of science degree in nuclear engineering from Polytechnic University. He is a licensed professional engineer in New York. Prior to this assignment as Vice President, Mr. McCaffrey served in many positions in the nuclear organizations of the Company and positions in engineering capacities associated with gas turbine and fossil power station projects. Mr. McCaffrey is a member of the executive board of the Suffolk County Council Boy Scouts of America.
Joseph W. McDonnell: Vice President of External Affairs since July 1992, Dr. McDonnell, 42, joined the Company in 1984. Dr. McDonnell was Assistant to the Chairman from 1984 through 1988 when he was named Vice President of Communications. Prior to joining the Company, Dr. McDonnell was the director of strategic planning and business administration for Applied Digital Data Systems, Inc. and associate director of the University Hospital at the State University of New York at Stony Brook. He holds bachelor of arts and master of arts degrees in philosophy and a master of arts degree in theology from the State University of New York at Stony Brook and a Ph.D in communications from the University of Southern California.
Anthony Nozzolillo: Mr. Nozzolillo was named Senior Vice President of Finance and Chief Financial Officer of the Company on February 4, 1994. His reporting responsibilities will include the offices of Controller, Treasurer, Tax & Benefits Planning, Investor Relations and Financial Planning. Prior to this appointment he had been the Company's Treasurer since July 1992. He has been with the Company since 1972 serving in various positions including Manager of Financial Planning and Manager of Systems Planning. Mr. Nozzolillo is a director of Utilities Mutual Insurance Company and Nuclear Mutual Ltd. Mr. Nozzolillo, 45, holds a bachelor of science degree in electrical engineering from the Polytechnic Institute of Brooklyn and a master of business administration degree from Long Island University C.W. Post Campus.
William G. Schiffmacher: Vice President of Electric Operations since July 1990, Mr. Schiffmacher, 50, joined the Company in 1965 after receiving a bachelor of electrical engineering degree from Manhattan College. Mr. Schiffmacher also holds a master of science degree in management engineering from Long Island University. He has held a variety of positions in the Company, including Manager of Electric System Operation, Manager of Electrical Engineering and Vice President of Engineering and Construction.
Robert B. Steger: Vice President of Fossil Production since February 1990, Mr. Steger, 57, joined the Company in 1963 and has since held progressive operating and engineering positions including Manager of Electric Production-Fossil from 1985 through 1989. He holds a bachelor of mechanical engineering degree from Pratt Institute and is a registered professional engineer in the State of New York.
William E. Steiger, Jr.: Vice President of Engineering and Construction since July 1990, Mr. Steiger, 50, has been with the Company since 1968. During his career with the Company, Mr. Steiger has served, among other positions, as Lead Nuclear Engineer for Shoreham, Chief Operations Engineer for Shoreham, Plant Manager for Shoreham as well as Assistant Vice President of Nuclear Operations. He received a bachelor of science degree in marine engineering from the United States Merchant Marine Academy and a master of science degree in nuclear engineering from Long Island University.
Thomas J. Vallely, III: Controller and Chief Accounting Officer of the Company since February 1991, Mr. Vallely, 47, holds a bachelor of science degree in accounting from St. John's University and a masters degree in corporate financial management from Pace University. He is the former controller and chief accounting officer of the New York City Transit Authority, an agency of the Metropolitan Transportation Authority.
Walter F. Wilm, Jr.: Vice President of Corporate Reorganization since March 1992, Mr. Wilm, 57, joined the Company in 1962. During his career with the Company, Mr. Wilm has served, among other positions, as Assistant Manager of Gas Construction and Maintenance, Manager of Meter and Test, Vice President of Administration, Vice President of Customer Relations and Vice President of Gas Operations. Mr. Wilm holds a bachelor of science degree in electrical engineering from Indiana Institute of Technology and is a licensed professional engineer.
Edward J. Youngling: Vice President of Customer Relations and Conservation since March 1993, Mr. Youngling, 49, holds a bachelor of science degree in mechanical engineering from Lehigh University. He joined the Company in 1968 as an Assistant Engineer in the Electric Production Department and has held various positions in the offices of fossil production, engineering and nuclear operations including service as Department Manager of Nuclear Engineering. In 1988, Mr. Youngling was named Vice President of Conservation and Load Management. In 1990, Mr. Youngling became Vice President of Customer Relations. The Office of Customer Relations and the Office of Conservation were merged in March 1993.
CAPITAL REQUIREMENTS, LIQUIDITY AND CAPITAL PROVIDED:
Information as to Capital Requirements, Liquidity and Capital Provided appears in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations for the Year Ended December 31, 1993."
ITEM 2.
ITEM 2. PROPERTIES
The location and general character of the principal properties of the Company are described in Item 1, "Business" under the headings "Electric Operations" and "Gas Operations."
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Shoreham
The Company's Shoreham-related litigation includes a lawsuit against certain contractors and suppliers regarding the construction of Shoreham, a breach of contract suit against Suffolk County and a tax certiorari proceeding seeking review of certain tax assessments of Shoreham.
On December 13, 1993, the United States District Court for the Eastern District of New York issued an opinion in Long Island Lighting Company v. Stone & Webster Engineering Corp. granting a motion by Stone & Webster Engineering Corp. ("SWEC") to dismiss the Company's complaint in this action and dismissing SWEC's counter-claim. The Company's complaint had sought to recover damages against SWEC for breach of contract, negligence, professional malpractice and gross negligence in connection with SWEC's work as architect-engineer and construction manager for Shoreham. The parties entered into a settlement in which both parties agreed not to pursue an appeal.
On February 11, 1988, the Company began a lawsuit in Suffolk County Supreme Court against Suffolk County, seeking the recovery of approximately $54 million in damages for Suffolk County's breach of a contract to prepare an offsite emergency response plan for Shoreham (Long Island Lighting Company v. County of Suffolk). In addition, the complaint alleges that, because of the delays that have resulted, the Company has been
damaged in an additional amount of $706 million. On October 30, 1992, the court granted, in part, and denied, in part, Suffolk County's motion to amend its answer to assert additional defenses and counterclaims. Two proposed counterclaims were allowed seeking approximately $16 million in damages as well as $700 million in alleged punitive damages. The outcome of these counterclaims, if adverse, could have a material effect on the financial condition of the Company. The Company maintains that there is no basis for punitive damages and intends to vigorously prosecute its claims against Suffolk County and to defend against Suffolk County's counterclaims.
Pursuant to the Long Island Power Authority Act ("LIPA Act"), LIPA is required to make PILOTS to the municipalities that impose real property taxes on Shoreham. Under the 1989 Settlement Agreement with New York State which resolved disputes over the Shoreham plant, the Company agreed to fund LIPA's PILOTS obligation. The timing and duration of PILOTS under the LIPA Act are the subject of the litigation entitled LIPA, et al. v. Shoreham-Wading River Central School District, et al. LIPA brought this action in Nassau County Supreme Court against, among others, Suffolk County, Town of Brookhaven and the Shoreham-Wading River Central School District. The Company was permitted to intervene in the lawsuit. On January 10, 1994, the Appellate Division, Second Department, affirmed a lower court's March 29, 1993 decision holding, in major part, that the Company is not obligated for any real property taxes that accrued after February 28, 1992, attributable to property that it conveyed to LIPA, that PILOTS commence on March 1, 1992, that PILOTS are subject to refunds and that the LIPA Act does not provide for the termination of PILOTS. The effects of this affirmance cannot yet be quantified. Furthermore, all of the parties have filed motions with the Second Department seeking leave to appeal to the New York Court of Appeals. Generally, these holdings are favorable to the Company. The proper amount of PILOTS is to be determined in pending litigation described in the next paragraph.
The costs of Shoreham included real property taxes imposed by the Town of Brookhaven on Shoreham and capitalized by the Company during construction. The Company has sought judicial review in Suffolk County Supreme Court (Long Island Lighting Company v. The Assessor of the Town of Brookhaven, et al.) of the assessments upon which those taxes were based for the years 1976 through 1992 (excluding 1979). The Court has consolidated the review of the tax years at issue into two phases: 1976 through 1983, excluding 1979 (Phase 1); and 1984 through 1992 (Phase 2). On October 26, 1992, the court ruled that Shoreham had been overvalued for property tax purposes for Phase 1. Although the Court did not award a refund because of a need to make further factual findings, the Company estimates that it is entitled to a refund of approximately $34 million plus interest. In Phase 2, the Company is seeking to recover over $500 million, excluding interest, in property taxes paid on Shoreham during this period. A trial date of April 14, 1994 has been set by the Suffolk County Supreme Court. The amount of the Company's recovery, if any, in the 1984-1992 proceeding and the timing of all refunds cannot yet be determined. The Company has indicated to the PSC that all refunds, less litigation costs, will be used to reduce future electric costs. LIPA has been permitted to intervene for limited purposes in this pending litigation.
Nine Mile Point 2
In 1988, the Company and the other cotenants of Nine Mile Point 2 commenced a lawsuit entitled Niagara Mohawk Power Corporation, et al. v. Stone & Webster Engineering Corp., ITT Fluid Products Corp. and ITT Fluid Technology Corporation in the United States District Court for the Northern District of New York, alleging damages arising from breach of contract, negligence, professional malpractice and gross negligence in connection with certain work performed at Nine Mile Point 2. SWEC furnished architect-engineering and construction management services, while ITT fabricated and erected piping for the Nine Mile Point 2 unit. The case against SWEC was settled in 1991. The case against the ITT defendants was not settled and went to trial before a jury in June 1992. The jury returned a verdict for the ITT defendants on all causes of action. The parties entered into a settlement in which the cotenants agreed not to pursue an appeal. ITT agreed to withdraw its claim for costs and to pay the cotenants $25,000.
Environmental
On February 18, 1994, a lawsuit was filed in the United States District Court for the Eastern District of New York by the Town of Oyster Bay (the "Town"), New York, against the Company and 19 other potentially responsible parties ("PRPs"). The Town is seeking indemnification for remediation and investigation costs that have been or will be incurred for a federal Superfund site in Syosset, New York, which served as a Town-owned and operated landfill between 1954 and 1975. In a Record of Decision issued on or about September 27, 1990, the EPA set forth a remedial design plan, the cost of which was estimated at $27 million and is reflected in the Town's lawsuit. In an Administrative Consent Decree entered into between the EPA and the Town on December 6, 1990, the Town agreed to undertake remediation at the site. The Company has agreed to participate in a joint PRP defense effort with several other defendants. Liability, if imposed, would be joint and several. While the outcome of this matter is not certain, based upon the Company's past experience in similar matters and the number and financial condition of the corporate defendants named in the litigation, the Company does not believe that this proceeding will have a material impact on its financial condition.
Human Resources
Pending before federal courts, the Federal Equal Employment Opportunity Commission and the New York State Division of Human Rights are charges by individuals alleging that the Company discriminated against them on various grounds.
The Civil Rights Bureau of the New York Attorney General's office has subpoenaed the Company for the production of documents to aid in its investigation as to whether the Company has engaged in discriminatory employment practices based upon age. No charges have been filed by the Attorney General.
The Company has estimated that any costs to the Company resulting from these matters will not have a material adverse effect on its financial condition.
Other Matters
On January 13, 1993, the New York State Department of Law ("DOL") informed the Company that the DOL's Antitrust Bureau opened an investigation into its Full Service Pilot Program and Contractor Advisory Council, two programs designed to increase the Company's residential natural gas sales. The DOL stated that the implementation of the Full Service Pilot Program and the practices of the Contractor Advisory Council may have anticompetitive effects in the gas-fired heating equipment installation and conversion business and that a preliminary investigation has raised questions of possible violations of the New York General Business Law and the Sherman Act. The Company expects that it can demonstrate that the programs identified by the DOL for investigation are very limited in scope and do not involve any violations. The outcome of the investigation by the DOL, if adverse, is not expected to have a material effect on the financial condition of the Company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At February 22, 1994, the Company had 95,084 registered holders of record of Common Stock.
The Common Stock of the Company is traded on the New York Stock Exchange and the Pacific Stock Exchange. Certain of the Company's Preferred Stock series are traded on the New York Stock Exchange.
Information respecting the high and low sales prices and the dividends paid on the Company's Common Stock during the past two years is set forth in the table below.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis addresses matters of significance with regard to the Company and its financial condition, liquidity, capital requirements and results of operations for the last three years.
OVERVIEW
Nearly five years have passed since the effective date of the 1989 Settlement, discussed in Note 2 of Notes to Financial Statements, which resolved the controversy surrounding the Shoreham Nuclear Power Station (Shoreham). Over this period of time, the Company has focused on managing costs and improving operating efficiencies. This, coupled with six electric rate increases, lower than anticipated fuel and financing costs and significantly lower production expenses has helped to improve the Company's financial health. This also enabled the Company to file with the Public Service Commission of the State of New York (PSC) on December 31, 1993 an electric rate plan requesting that base rates be frozen for a two-year period beginning December 1, 1994.
The Company's electric rate plan to freeze base rates is designed to moderate the rate increases that were originally contemplated in the 1989 Settlement. The two-year base rate freeze will help better position the Company to respond to the current environment in the utility industry and to assist in Long Island's economic recovery.
Other significant events during 1993 included:
o Approval, by the PSC, of the third annual electric rate increase of 4.0% effective December 1, 1993, under the three-year electric rate plan authorized in 1991.
o For the first time since the 1989 Settlement became effective, revenues provided under the Rate Moderation Agreement exceeded revenues that would have been provided under conventional ratemaking, resulting in the decline of the Rate Moderation Component balance and an improvement in the Company's cash flow position.
o An increase in the Company's common stock quarterly dividend from 43 1/2 cents per share to 44 1/2 cents per share, representing the fourth consecutive year of dividend increases.
Earnings for common stock in 1993 were $2.15 per common share compared to $2.14 per common share in 1992.
o The approval by the PSC of a three-year gas rate plan providing annual rate increases of 4.7%, 3.8% and 2.8%, for the rate years beginning December 1, 1993, 1994, and 1995, respectively. This follows an increase in
gas rates of 7.1% that was effective December 1, 1992.
o The addition of over 9,000 new gas space heating customers, resulting from the Company's gas expansion program.
o The refinancing of a significant amount of the Company's higher-cost securities as a result of very favorable long-term interest rates.
Refinancing of approximately $983 million of higher-cost securities significantly lowered the Company's cost of debt and preferred stock. These 1993 refinancings will result in more than $18 million in annual cash savings through lower interest expense and preferred stock dividends.
Since the 1989 Settlement became effective, the Company's aggressive refinancing program has resulted in annual cash savings of approximately $88 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH AND REVOLVING CREDIT
At December 31, 1993, the Company's cash and cash equivalents amounted to approximately $249 million, compared to $309 million at December 31, 1992. In addition, the Company has approximately $276 million available through October 1, 1994, provided by its 1989 Revolving Credit Agreement (1989 RCA). At December 31, 1993, no amounts were outstanding under the 1989 RCA. For a further discussion of the 1989 RCA, see Note 7 of Notes to Financial Statements.
CAPITAL REQUIREMENTS AND CAPITAL PROVIDED
During 1993, the Company continued its aggressive refinancing of higher-cost debt and preferred stock, taking advantage of declining interest rates. In 1993, the Company redeemed $568 million of higher-cost securities through the issuance of approximately $382 million of debentures and $204 million of preferred stock. The Company also issued $420 million of debentures to redeem $415 million of maturing debt.
In addition to these refinancings, the Company issued $200 million of debentures and $100 million of tax-exempt securities and used the proceeds to reimburse the Company's treasury for previously incurred capital expenditures. In November 1993, the Company satisfied the maturity of $175 million of debentures with cash on hand.
For a further discussion on the Company's capital stock and long-term debt, see Notes 6 and 7 of Notes to Financial Statements.
The Company expects that it will seek external financing of approximately $1.1 billion solely for the purpose of refunding maturing debt in the years 1994, 1995 and 1996 as follows:
The Company is planning, subject to market conditions, to fund a portion of these mandatory redemptions with the issuance of common equity in order to improve its debt-to-equity ratio.
Capital requirements and capital provided for 1993 and 1992 were as follows:
For further information, see the Statement of Cash Flows.
For 1994, total capital requirements (excluding common stock dividends) are estimated at $1.1 billion, of which mandatory redemptions are $600 million, construction requirements are $327 million, preferred stock sinking fund requirements are $5 million, preferred stock dividends are $53 million and Shoreham post settlement costs are $158 million.
During 1994, the Company expects to access the capital markets only for funds required to satisfy maturing securities or to refund outstanding securities to reduce financing costs. It is anticipated that the internal funds generated from operations will be sufficient to satisfy all other capital requirements, including both common and preferred stock dividends.
CAPITALIZATION
The Company's capitalization, including current maturities of long-term debt and current redemption requirements of preferred stock, at December 31, 1993, was approximately $8.4 billion, as compared to $8.2 billion at December 31, 1992. This increase in capitalization of approximately $185 million principally reflects an increase in long-term debt and preferred stock associated with the Company's financing activities in 1993 and an increase in common shareowners' equity comprising 1993 net income of approximately $296 million reduced by common and preferred stock dividends of approximately $253 million.
At December 31, 1993 and 1992, the components of the Company's capitalization ratios were as follows:
The Company's debt-to-equity ratio reflects two substantial charges to common shareowners' equity made in 1988 and 1989. In 1988, the Company was required to write-down net assets of approximately $1.3 billion, net of tax effects, relating to its investments in Shoreham and Nine Mile Point Nuclear Power Station, Unit 2 (NMP2). In 1989, the Company incurred a loss for common stock of approximately $175 million, reflecting the effects of the 1989 Settlement and the Class Settlement, discussed in Notes 2 and 4 of Notes to Financial Statements. The Company is committed to improving its debt-to-equity ratio through growth in retained earnings, debt reduction through improved cash flows, and the issuance of common equity.
RATE MATTERS
ELECTRIC
In conjunction with the 1989 Settlement, the PSC authorized the recognition of a regulatory asset known as the Financial Resource Asset (FRA). The FRA consists of two components, the Base Financial Component (BFC) and the Rate Moderation Component (RMC). The Rate Moderation Agreement (RMA), one of the constituent documents of the 1989 Settlement, provides for the full recovery of the FRA. The RMA, by its terms, specifies that the FRA was created to provide the Company adequate financial indicia for the period 1989 through 1999 and to restore the Company's debt securities to investment grade levels as determined by independent rating agencies.
The BFC, as initially established, represents the present value of the future net-after-tax cash flows which the RMA provided the Company for its financial recovery. The BFC was granted rate base treatment under the terms of the RMA and is included in the Company's revenue requirements through an amortization included in rates over forty years on a straight-line basis that began July 1, 1989.
The RMC reflects the difference between the Company's revenue requirements under conventional ratemaking and the revenues resulting from the implementation of the rate moderation plan provided for in the RMA. This revenue difference, together with a carrying charge equal to the allowed rate of return on rate base, has been deferred. The RMC has provided the Company with a substantial amount of non-cash earnings since the effective date of the 1989 Settlement through December 31, 1992, because the revenues provided under the RMA were less than the revenues required under conventional ratemaking. During 1993, however, as revenues provided under the RMA began to exceed the revenues that would have been provided under conventional ratemaking the RMC balance began to decline.
Pursuant to the 1989 Settlement, the Company has received six electric rate increases consistent with the objectives of the RMA. In response to the Company's rate filing in December 1990, the PSC approved the Long Island Lighting Company Ratemaking and Performance Plan (LRPP) in November 1991, which provided for annual electric rate increases of 4.15%, 4.1% and 4.0% effective December 1, 1991, 1992 and 1993, respectively. Effective December 1, 1993, the Company began receiving the third of these three annual electric rate increases. The LRPP provides for an allowed return on common equity from electric operations of 11.6% for each of the three rate years.
The LRPP was designed to be consistent with the RMA's long-term goals. One principal objective of the LRPP is to reassign risk so that the Company assumes the responsibility for risks within the control of management, whereas risks largely beyond the control of management would be assumed by the ratepayers. One of the major components of the LRPP provides for a revenue reconciliation mechanism that mitigates the impact on earnings of experiencing electric sales that are above or below the LRPP forecast by providing a fixed annual net margin level (defined as sales revenues, net of fuel and gross receipts taxes) that the Company will receive for each of the three rate years under the LRPP. Another component of the LRPP allows the Company to earn for each rate year up to 60 additional basis points, or forfeit up to 38 basis points, of the allowed return on common equity as a result of its performance within certain incentive and/or penalty programs. These programs consist of a customer service performance plan, a demand side management program, a time-of-use program, a partial pass through fuel cost incentive plan and effective December 1, 1993, an electric transmission and distribution reliability plan. For the rate years ended November 30, 1993 and 1992, the Company earned approximately $9.2 million and $4.3 million, net of tax effects, respectively, based upon its performance within these programs. The LRPP contains a mechanism whereby earnings in excess of the allowed rate of return on common equity (11.6%), excluding the impacts of the various incentive and/or penalty programs, are shared equally between ratepayers and shareowners. For the rate years ended November 30, 1993 and 1992, the Company earned approximately $8.9 million and $21.4 million, net of tax effects, respectively, in excess of its allowed rate of return on common equity which was shared equally between ratepayers and shareowners.
In December 1993, the Company filed a three-year electric rate plan with the PSC for the period beginning December 1, 1994 that minimizes future electric rate increases while retaining consistency with the RMA's objective of continuing the restoration of the Company's financial health. The filing provides for zero percentage base rate increases in years one and two of the plan and a rate increase of 4.3% in the third year. Although base electric rates would be frozen during the first two years of the plan, annual rate increases of approximately 1% to 2% are expected to result in these years from the operation of the Company's fuel cost adjustment (FCA) clause. The FCA captures, among other amounts, any increases in the cost of fuel above the level recovered in base rates and, under a continuation of the rate mechanisms provided by the LRPP, any amounts to be recovered or refunded to ratepayers in excess of $15 million which result from the reconciliation of revenue, certain expenses and earned performance incentive components. The electric rate plan requests an allowed rate of return on equity of 11.0%. The Company's rate filing reflects four underlying objectives: (i) to limit the balance of the RMC during the three-year period to no more than its 1992 peak balance of $652 million; (ii) to recover the RMC within no more than thirteen years of its 1989 inception; (iii) to minimize the final three rate increases that will follow the two-year rate freeze period; and (iv) to continue the Company's gradual return to financial health. The Company's electric rate plan is subject to approval by the PSC.
The Company's current electric rate plan provides for lower annual electric rate increases than originally anticipated under the 1989 Settlement. However, as a result of changes in certain assumptions upon which the RMA was based, their impact on the RMC, and the Company's plans to reduce demand side management (DSM), operations, maintenance and capital expenditures, the Company has determined that the overall objectives of the RMA can be met under the multi-year plan described above. As a result of
lower than originally anticipated inflation rates, interest costs, property taxes, fuel costs and the return on common equity allowed by the PSC, the RMC, which originally had been anticipated to peak at $1.2 billion in 1994, has already peaked at $652 million in 1992. With the exception of an increase in the 1995-1996 period, which is not now projected to cause the RMC to increase above its $652 million peak, the RMC is expected to decline until it is fully amortized.
Under this electric rate plan, the recovery of the RMC would be extended, if necessary, for an additional period of not more than three years beyond the approximate ten-year period envisioned in the RMA. The actual length of the RMC extension will depend on the extent to which the assumptions underlying the rate plan materialize. The Company's current projections indicate that the RMC will be recovered in eleven years.
For a further discussion of the 1989 Settlement and Rate Matters, see Notes 2 and 3 of Notes to Financial Statements.
GAS
In December 1993, the PSC approved a three-year gas rate settlement between the Company and the staff of the PSC. The gas rate settlement provides that the Company receive, for the rate years beginning December 1, 1993, 1994 and 1995, annual gas rate increases of 4.7%, 3.8% and 2.8%, respectively. In the determination of the revenue requirements for the first year of the gas rate settlement an allowed rate of return on equity of 10.1% was used. The gas rate decision also provides for earnings in excess of a 10.6% return on equity in any of the three rate years covered by the settlement be shared equally between the Company's firm gas customers and its shareowners. The allowed rate of return for the rate year that began December 1, 1992 was 11.0 %.
ELECTRIC COMPETITION
NON-UTILITY GENERATORS (NUGs) The development of the NUG industry has been encouraged by federal and state legislation. There are two ways that NUGs may negatively impact the Company: first, NUGs may locate on a customer's site, providing part or all of that customer's electric energy requirements. The Company estimates that in 1993 sales lost to such on-site NUGs totalled 234 gigawatt-hours (Gwh) in sales or approximately $20 million in revenues, net of fuel. This represents only 1.0% of the Company's 1993 net revenues. Second, in accordance with the Public Utility Regulatory Policy Act of 1978 (PURPA), the Company is required to purchase all the power offered by NUGs that are Qualified Facilities (QF). QFs have the choice of pricing these sales at either (i) PSC published estimates of the Company's long run avoided costs (LRAC) or (ii) the Company's tariff rates. Additionally, until repeal in 1992, New York State law set a minimum price of six cents per kilowatt-hour (Kwh) for certain categories of QFs, considerably above the Company's avoided cost. The six-cent minimum now only applies to contracts entered into before June 1992.
The Company believes that the repeal of the six-cent law, coupled
with the PSC's updates which resulted in lower LRAC estimates, has significantly reduced the economic advantage to entrepreneurs seeking to compete with the Company.
As of December 31, 1993, 39 QFs were on line and selling approximately 200 megawatts (MW) of power to the Company. The Company estimates that in 1993, the purchases federal and state law required it to make from QFs cost the Company $47 million more than it would have cost to generate this power itself.
With the exception of approximately 40 MW of power to be produced at the Stony Brook campus of the State University of New York beginning in early 1995, the Company does not expect any new major NUGs to be built on Long Island in the foreseeable future.
RETAIL COMPETITION For over a decade, the Company has voluntarily provided wheeling of New York Power Authority (NYPA) power for economic development. As a result, NYPA power has displaced approximately 400 Gwh of energy sales. The net revenue loss associated with this amount of sales is approximately $27 million or 1.3% of the Company's 1993 net revenues. The potential loss of additional load is limited by conditions in the Company's current transmission agreements with NYPA.
Competition for customer loads also comes from other electric utilities (including those in Connecticut, New York, and New Jersey) which seek to entice commercial and industrial customers to relocate within their service territories by offering reduced rates and other incentives.
In order to retain existing and attract new commercial and industrial customers, the Company offers an Economic Development Rate which provides rate abatement to new or existing customers that qualify under the program approved by the PSC.
Neither federal nor New York State law mandates retail wheeling. The Staff of the PSC has recently recommended that the PSC examine the issues attending retail wheeling.
CONSERVATION AND SUPPLY
The Company's 1993 Electric Conservation and Load Management Plan called for a cumulative 194 MW reduction in coincident peak demand by December 31, 1993 and a cumulative annualized energy savings of 578 Gwh, at a cost of $33.5 million. The Company has met these targets. These reductions were achieved through several different programs including customer education/information, rebate, audit and direct installation which targeted a number of energy efficient technologies.
In the fourth quarter of 1993, a modified DSM Plan was filed with the PSC to support the objectives of the Company's December 31, 1993 electric rate plan filing. Under this modified plan a greater emphasis will be placed on the educational aspect of the Company's conservation efforts in lieu of the conventional reliance on rebates. This will help to shift the responsibility for adopting and implementing energy efficient practices away from the utility and to the customer.
The Company's current electric load forecasts indicate that, with continued implementation of its conservation and load management programs and with the availability of electricity provided by QFs located within the Company's service territory, the Company's existing generating facilities, its portion of nuclear energy generated at NMP2 and power purchased from other electric systems are adequate to meet the energy demands on Long Island beyond the end of the century.
INVESTMENT RATING
The Company's securities are rated by Moody's Investors Service, Inc. (Moody's), Standard and Poor's Corporation (S&P), Fitch Investors Service, Inc. (Fitch) and Duff and Phelps (D&P).
During the period 1989 through 1992, the rating agencies significantly upgraded their ratings of the Company's securities. In 1993, both Moody's and Fitch reaffirmed their assigned ratings on the Company's securities. S&P however, lowered its ratings on the Company's First Mortgage Bonds and G&R Bonds one level to minimum investment grade and lowered its ratings on the Company's Debentures and Preferred Stock to one level below minimum investment grade. D&P lowered its ratings on the Company's debentures and preferred stock one level.
S&P's actions reflect its concerns regarding the utility industry's challenges relating to intensified competitive pressures, sluggish demand expectations, slow earnings growth prospects, high common dividend payouts, environmental cost pressures and nuclear operating and decommissioning costs.
CLEAN AIR ACT
In late 1990, significant amendments to the federal Clean Air Act were adopted. As a result, the Company expects that it will have to expend $4.3 million in 1994 to meet continuous emission monitoring requirements and $3.5 million in 1994 and $2.0 million in 1995 to meet Phase I nitrogen oxide (NOx) reduction requirements. In addition, subject to regulations that have not yet been issued, the Company estimates that it may be required to expend as much as $125 million by May 1999 to meet Phase II NOx reduction requirements and approximately $50 million by 2000 to meet requirements for the control of hazardous air pollutants from power plants. The Company believes that all such costs would be recoverable in rates.
RESULTS OF OPERATIONS
EARNINGS
Summary results of earnings for the years 1993, 1992 and 1991 were as follows:
For all periods, net income, earnings for common stock and earnings per common share include a non-cash allowance for funds used during construction (AFC) and the effects of the RMC.
Overall earnings remained stable in 1993 while the Company's improved cash flow continued, consistent with the 1989 Settlement. The earnings in the electric business were lower in 1993 when compared to 1992 due primarily to the expensing of previously deferred storm costs, lower interest rates associated with the short-term investments, and regulatory adjustments. The lower level of earnings in the electric business was offset by a significant increase in the gas business earnings. The Company saw continued expansion in the gas business in 1993.
REVENUES
Total revenues in 1993, including revenues from recovery of fuel costs, were $2.9 billion, representing an increase of $259 million or 9.9% over 1992 revenues. Total revenues for the Company's electric and gas operations for the years 1993, 1992 and 1991 were as follows:
ELECTRIC REVENUES In 1993, electric revenues increased $157 million when compared to 1992. Revenues in 1992 had decreased $2 million compared with 1991. The changes in the level of revenues when compared to the prior year resulted from the following factors:
RATE INCREASES The Company received electric rate increases of 4.0% effective December 1, 1993 and 4.1% effective December 1, 1992. These rate increases provided $75 million in additional revenues for 1993 when compared to 1992. A 4.15% rate increase effective December 1, 1991 provided $72 million in additional revenues for 1992 when compared to 1991.
SALES VOLUMES The increase in revenue from sales volumes was primarily attributable to warmer weather experienced in the summer of 1993 when compared to the same period in 1992. The decrease in revenues from sales volumes for 1992 when compared to 1991 is also attributable to weather. The Company's current electric rate structure, discussed above under the heading "Rate Matters," provides for a revenue reconciliation mechanism which mitigates the impact on earnings of experiencing electric sales that are above or below the levels reflected in rates. As a result of lower than adjudicated electric sales, the Company recorded non-cash income, which is included in "Other Regulatory Amortizations" of $43.5 million, $78.5 million and $0.4 million in 1993, 1992 and 1991, respectively. For a further discussion on the recoverability of these amounts see the discussion under the heading "Rate Matters."
Summary of electric kilowatt hour (Kwh) sales for the years 1993, 1992 and 1991 were as follows:
The increase in residential and commercial/industrial sales in 1993 was largely due to the warmer weather experienced during the summer months. Residential sales, representing 45% of system sales, were up by 4.9% when compared with 1992, while commercial/industrial sales, which accounted for 52% of system sales, increased by 0.9%. Power pool sales fluctuate with relative costs and power pool system availabilities.
The average number of electric customers served in 1993 and 1992 was approximately 1,013,000 and 1,009,000, respectively. The customer increase in 1993 is similar to the increase experienced in 1992 when compared to 1991.
FUEL COST RECOVERIES Total electric fuel cost recoveries for 1993 were up $22 million compared with 1992, primarily as a result of higher sales volumes, partially offset by a decrease in the average cost of fuel. In 1992, fuel cost recoveries decreased by $13 million compared with 1991, principally due to lower sales volumes, partially offset by an increase in the average cost of fuel.
GAS REVENUES In 1993, gas revenues increased by $102 million, or 23.8%, when compared to 1992. Revenues in 1992 increased by $76 million, or 21.7%, when compared to 1991. The changes in the level of revenues when compared to the prior year resulted from the following factors:
RATE INCREASES The Company received a gas rate increase of 4.7%, effective December 31, 1993, but was permitted by the PSC to recognize additional revenues of $4.6 million in 1993, as if the rate increase had been effective on December 1, 1993. The Company had also received rate increases of 7.1%, effective December 1, 1992, and 4.1%, effective December 1, 1991. The effects of these rate increases was to increase revenues by $35 million in 1993 when compared with 1992, and by $17 million in 1992 when compared with 1991.
SALES VOLUMES The increase in 1993 revenues due to sales volumes was primarily due to customer additions and conversions resulting from the Company's gas expansion program. The Company added over 9,000 new gas space heating customers to its system in 1993. In 1992, the Company added approximately 10,000 new gas space heating customers.
Summary of gas decatherm (dth) sales for the years 1993, 1992 and 1991 were as follows:
FUEL COST RECOVERIES Recoveries of gas fuel expenses in 1993 revenues increased by $33 million compared with 1992, primarily due to higher sales volumes. In 1992, fuel recovery revenues had increased by $9 million, primarily due to higher average gas prices.
FUELS AND PURCHASED POWER
Expenses for fuels and purchased power increased by $86 million in 1993 compared with 1992, and decreased by $27 million in 1992 compared with 1991.
Summary of fuel and purchased power expenses for the years 1993, 1992 and 1991 were as follows:
The Company has significantly reduced the amount of oil it would otherwise have used to generate electricity by burning gas, purchasing power and utilizing nuclear generation from NMP2.
Summary of electric fuel and purchased power mix for the years 1993, 1992 and 1991 were as follows:
OPERATIONS AND MAINTENANCE EXPENSES
Total operations and maintenance expenses, excluding fuel and purchased power, for 1993, 1992 and 1991 were $522 million, $498 million and $523 million, respectively. The $24 million, or 4.8%, increase in 1993 when compared to 1992 was primarily due to the recognition of previously deferred storm costs, the recording of higher accruals for uncollectible accounts and higher transmission and distribution costs for both the electric and gas businesses. The $25 million, or 4.8%, decrease in 1992 compared to 1991 was primarily attributable to lower electric operations expenses.
INTEREST EXPENSE
Interest expense for 1993, 1992 and 1991 was $534 million, $513 million and $524 million, respectively. The increase in 1993 when compared to 1992 was attributable to higher debt levels and the conversion in June 1992 of $400 million of tax-exempt securities from a weekly variable interest rate to a higher 30-year fixed rate. Also contributing to the increase, was the issuance in November 1992 of 30-year fixed rate debentures, the proceeds of which were used to eliminate variable rate bank debt. The conversion of the tax-exempt securities and refinancing of bank debt was done in order to take advantage of historically low interest rates. Partially offsetting this increase in interest expense were the effects of the Company's aggressive refinancing of higher-cost debt in 1993. The decrease in 1992 when compared to 1991 is due to significantly lower interest rates on the Company's outstanding debt, primarily resulting from the Company's aggressive refinancing efforts in the latter part of 1991 and during 1992.
RATE MODERATION COMPONENT
In 1993, the Company recorded non-cash charges to income of approximately $49 million reflecting the amortization of the RMC offset by related carrying charges. In 1992 and 1991, the Company recorded non-cash credits to income of approximately $73 million and $269 million, respectively, representing the accretion of the RMC and related carrying charges. For a discussion of the RMC and RMA, see Notes 2 and 3 of Notes to Financial Statements.
BASE FINANCIAL COMPONENT
For each of the years 1993, 1992 and 1991, the Company recorded non-cash charges to income of approximately $101 million, reflecting the continuing amortization of the BFC, which is afforded rate base treatment under the RMA. For a further discussion of the BFC and 1989 Settlement, see Notes 1 and 2 of Notes to Financial Statements.
ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1993 the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. SFAS No. 106 requires the Company to recognize the expected cost of providing postretirement benefits when employee services are rendered rather than on a pay-as-you-go method. The Company recorded an accumulated postretirement benefit obligation and corresponding regulatory asset of approximately $376 million which represents the transition obligation at January 1, 1993. As a result of adopting SFAS No. 106, the Company's annual postretirement benefit cost for 1993 increased by approximately $28 million above the amount that would have been recorded under the pay-as-you-go method. This additional non-cash
postretirement benefit cost has been accounted for as a regulatory asset. The PSC has permitted recovery of these regulatory assets through rates. The adoption of SFAS No. 106 had no impact on net income for the year ended December 31, 1993. For a further discussion of SFAS No. 106, see Note 8 of Notes to Financial Statements.
Effective January 1, 1993 the Company adopted SFAS No. 109, Accounting for Income Taxes. As permitted under SFAS No. 109, the Company has elected not to restate the financial statements of prior years. The adoption of SFAS No. 109 is in compliance with the PSC's Statement of Interim Policy on Accounting and Ratemaking issued in January 1993. This statement asserts that the adoption and ongoing implementation of SFAS No. 109 on an interim basis will be done in such a manner that all its provisions shall be complied with on a revenue neutral basis. As of January 1, 1993, the cumulative adjustment to the deferred tax liability and the corresponding regulatory asset is approximately $1.6 billion. The $800 million increase from the amount reported in interim financial statements results from the Company's further analysis of deferred taxes to recognize SFAS No. 109 requirements to present tax assets and liabilities gross. SFAS No. 109 requires, among other matters, recognition of the amount of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the financial statements and adjustment of deferred income taxes for an enacted change in tax laws. For regulated enterprises, SFAS No. 109 prohibits net of tax accounting and reporting and requires recognition of a deferred tax liability for the tax benefits which are flowed through to its customers. A regulatory asset or liability will be recognized relating to such items if it is probable that the future increase or decrease in taxes payable thereon shall be recovered from or returned to customers through future rates. For a further discussion of SFAS No. 109, see Notes 1 and 10 of Notes to Financial Statements.
SELECTED FINANCIAL DATA
Additional information respecting revenues, expenses, electric and gas operating income and operations data and balance sheet information for the last five years is provided in Tables 1 through 9 of Item 6, Selected Financial Data. Information with regard to the Company's business segments for the last three years is provided in Note 11 of Notes to Financial Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REGULATION
The Company's accounting policies conform to generally accepted accounting principles (GAAP) as they apply to a regulated enterprise. Its accounting records are maintained in accordance with the Uniform Systems of Accounts prescribed by the Public Service Commission of the State of New York (PSC) and the Federal Energy Regulatory Commission (FERC).
UTILITY PLANT
Additions to and replacements of utility plant are capitalized at original cost, which includes material, labor, overhead and an allowance for the cost of funds used during construction. The cost of renewals and betterments relating to units of property is added to utility plant. The cost of property replaced, retired or otherwise disposed of is deducted from utility plant and, generally, together with dismantling costs less any salvage, is charged to accumulated depreciation. The cost of repairs and minor renewals is charged to maintenance expense. Mass properties (such as poles, wire and meters) are accounted for on an average unit cost basis by year of installation.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
The Uniform Systems of Accounts defines the allowance for funds used during construction (AFC) as the net cost of borrowed funds for construction purposes and a reasonable rate of return upon the utility's equity when so used. AFC is not an item of current cash income. AFC is computed monthly using a rate permitted by FERC on a portion of construction work in progress. The average annual AFC rate, without giving effect to compounding, was 9.73%, 9.98% and 10.74% for the years 1993, 1992 and 1991, respectively.
DEPRECIATION
The provisions for depreciation result from the application of straight-line rates to the original cost, by groups, of depreciable properties in service. The rates are determined by age-life studies performed annually on depreciable properties. Depreciation for electric properties was equivalent to approximately 3.0%, 3.2% and 3.3% of respective average depreciable plant costs for the years 1993, 1992 and 1991. Depreciation for gas properties was equivalent to approximately 2.0%, 2.6% and 2.9% of respective average depreciable plant costs for the years 1993, 1992 and 1991.
FINANCIAL RESOURCE ASSET
GAAP authorizes recognition of the existence of a regulatory asset when it is probable that a regulator will permit full recovery of a previously incurred cost. Pursuant to the 1989 Settlement and in accordance with GAAP, the Company recorded a regulatory asset known as the Financial Resource Asset (FRA). The FRA is designed to provide the Company with sufficient cash flows to assure its financial recovery. The FRA has two components, the Base Financial Component (BFC) and the Rate Moderation
Component (RMC). The Rate Moderation Agreement (RMA), one of the constituent documents of the 1989 Settlement, provides for the full recovery of the FRA. For a further discussion of the 1989 Settlement and the FRA, see Note 2.
CASH AND CASH EQUIVALENTS
Cash equivalents are highly liquid investments with maturities of three months or less when purchased. The carrying amount approximates fair value because of the short maturity of these investments.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values for the Company's long-term debt and redeemable preferred stock are based on quoted market prices, where available. The fair values for all other long-term debt and redeemable preferred stock are estimated using a discounted cash flow analyses which is based upon the Company's current incremental borrowing rate for similar types of securities.
CAPITALIZATION-PREMIUMS, DISCOUNTS AND EXPENSES
Premiums or discounts and expenses related to the issuance of long-term debt are amortized over the life of each issue. Unamortized premiums or discounts and expenses related to issues of long-term debt that are refinanced are amortized and recovered through rates over the shorter life of either the redeemed or new issues. Capital stock expense and redemption costs related to certain issues of preferred stock that have been refinanced as well as the cost of issuance of the preferred stock issued are recorded as deferred charges. These amounts are being amortized and recovered through rates over the shorter life of the redeemed or new issues.
REVENUES
The Company accrues electric and gas revenues for services rendered to customers but not billed at month-end.
FUEL COST ADJUSTMENTS
The Company's electric and gas tariffs include fuel cost adjustment (FCA) clauses which provide for the disposition of the difference between actual fuel costs and the fuel costs allowed in the Company's base tariff rates (base fuel costs). The Company defers these differences to future periods in which they will be billed or credited to customers, except for base electric fuel costs in excess of actual electric fuel costs, which are currently credited to the RMC as incurred.
FEDERAL INCOME TAXES
Effective January 1, 1993, the Company adopted the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. As permitted under SFAS No. 109, the Company has elected not to restate the financial statements of prior years. The adoption of SFAS No. 109 is in compliance with the PSC's Statement of Interim Policy on Accounting and Ratemaking issued
January 15, 1993. This statement asserts that the adoption and ongoing implementation of SFAS No. 109 on an interim basis will be done in such a manner that all its provisions shall be complied with on a revenue neutral basis. As of January 1, 1993, the cumulative adjustment to the deferred tax liability and the corresponding regulatory asset is approximately $1.6 billion. The $800 million increase from the amount reported in interim financial statements results from the Company's further analysis of deferred taxes to recognize SFAS No. 109 requirements to present tax assets and liabilities gross. SFAS No. 109 requires, among other matters, recognition of the amount of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the financial statements and adjustment of deferred income taxes for an enacted change in tax laws. For regulated enterprises, SFAS No. 109 prohibits net of tax accounting and reporting and requires recognition of a deferred tax liability for the tax benefits which are flowed through to its customers. A regulatory asset or liability will be recognized relating to such items if it is probable that the future increase or decrease in taxes payable thereon shall be recovered from or returned to customers through future rates.
The tax effects of other differences between income for financial statement purposes and for federal income tax purposes are accounted for as current adjustments in federal income tax provisions.
Prior to the adoption of SFAS No. 109 the Company provided deferred federal income taxes with respect to certain items of income and expense that were reported in different years in the financial statements and the tax return.
The Company defers the benefit of 60% of pre-1982 gas and pre-1983 electric and 100% of all other investment tax credits, with respect to regulated properties, when realized on its tax returns. Accumulated deferred investment tax credits are amortized ratably over the lives of the related properties.
For ratemaking purposes, the Company provides deferred federal income taxes with respect to certain differences between net income before income taxes and taxable income in certain instances when approved by the PSC, as disclosed in Note 10. Also certain accumulated deferred federal income taxes are deducted from rate base and amortized or otherwise applied as a reduction (increase) in federal income tax expense in future years.
RESERVES FOR CLAIMS AND DAMAGES
Losses arising from claims against the Company, including worker's compensation claims, property damage, extraordinary storm costs and general liability claims, are partially self-insured. Extraordinary storm losses incurred by the Company are partially insured by certain commercial insurance carriers. These insurance carriers provide partial insurance coverage for individual storm losses between $5 million and $50 million. Storm losses which are outside of the above-mentioned range are self-insured by the Company. Reserves for these losses are based on, among other things, experience, risk of loss and the ratemaking practices of the PSC.
RECLASSIFICATIONS To conform with an order of the FERC, dated March 31, 1993, the Company reclassified certain deferred items as regulatory assets and regulatory liabilities on its Balance Sheet. Regulatory assets and liabilities, as defined in this order, are assets and liabilities created through the ratemaking actions of regulatory agencies.
Certain other prior year amounts have been reclassified in the financial statements to be consistent with the current year's presentation.
NOTE 2. THE 1989 SETTLEMENT
On February 28, 1989, the Company and the State of New York (by its Governor) entered into the 1989 Settlement resolving certain issues relating to the Company and providing, among other matters, for the transfer of the Shoreham Nuclear Power Station (Shoreham) and its subsequent decommissioning. On February 29, 1992, the Company transferred ownership of Shoreham to the Long Island Power Authority (LIPA), an agency of the State of New York. Pursuant to the 1989 Settlement, LIPA is responsible for the decommissioning of Shoreham and has estimated that the decommissioning, in which Company employees are participating, will be completed in 1994. Based on the latest available information, LIPA has projected that the cost of decommissioning Shoreham will total approximately $164 million. This estimate excludes the costs associated with the disposal of Shoreham's fuel which is estimated to be $122 million. At December 31, 1993, the Company has funded approximately $140 million and $30 million of these costs, respectively. LIPA anticipates that the Nuclear Regulatory Commission (NRC) will terminate its license for Shoreham by the end of 1994.
Upon the effectiveness of the 1989 Settlement, in June of 1989, the Company simultaneously recorded on its Balance Sheet the retirement of its investment of approximately $4.2 billion principally in Shoreham and the establishment of the FRA, discussed in Note 1.
The BFC, a component of the FRA, as initially established, represents the present value of the future net-after-tax cash flows which the RMA provided the Company for its financial recovery. The BFC was granted rate base treatment under the terms of the RMA and is included in the Company's revenue requirements through an amortization included in rates over forty years on a straight-line basis that began July 1, 1989. At December 31, 1993 and 1992, the unamortized balance of the BFC was approximately $3.6 billion and $3.7 billion, respectively.
The RMC, a component of the FRA, reflects the difference between the Company's revenue requirements under conventional ratemaking and the revenues resulting from the implementation of the rate moderation plan provided for in the RMA. The RMC is currently adjusted, on a monthly basis, for the Company's share of certain Nine Mile Point Nuclear Power Station, Unit 2 (NMP2) operations and maintenance expenses, fuel credits resulting from the Company's electric fuel cost adjustment clause discussed in Note 1 and state gross receipts tax adjustments related to the FRA. The RMC has provided the Company with a substantial amount of non-cash earnings from the effective date of the 1989 Settlement through December 31, 1992.
At December 31, 1993 and 1992, the RMC balance was $610 million and $652 million, respectively. Prior to December 31, 1992 the RMC had increased as the difference between revenues resulting from the implementation of the rate moderation plan provided for in the RMA and revenue requirements under conventional ratemaking, together with a carrying charge equal to the allowed rate of return on rate base, had
been deferred. Subsequent to December 31, 1992, the RMC balance has been decreasing as revenues resulting from the implementation of the rate moderation plan are greater than revenue requirements under conventional ratemaking. For a further discussion of the impact on the amortization of the RMC under the Company's current electric rate structure and the Company's proposed electric rate plan for the three-year period beginning December 1, 1994, see Note 3.
Under the 1989 Settlement, certain tax benefits attributable to the Shoreham abandonment are to be shared between ratepayers and shareowners. A regulatory liability of approximately $794 million was recorded in June 1989 to preserve an amount equivalent to the ratepayer tax benefits attributable to the Shoreham abandonment. This amount is being amortized over a ten-year period on a straight-line basis from the effective date of the 1989 Settlement. The Company has reclassified the regulatory liability component which was previously reported as a reduction of the corresponding deferred tax asset arising from the abandonment loss deduction.
Shoreham post settlement costs (decommissioning, payments in lieu of property taxes and other costs as incurred) are being capitalized and amortized and recovered through rates over a forty-year period on a straight-line remaining life basis.
Upon the effectiveness of the 1989 Settlement, Shoreham nuclear fuel was reclassified to deferred charges included in the Regulatory Asset section of the Balance Sheet and is being amortized and recovered through rates over a forty-year period on a straight-line remaining life basis.
The 1989 Settlement credits on the Balance Sheet of approximately $155 million, net of amortization, reflect an adjustment of the book write- off to the negotiated 1989 Settlement amount. A portion of this amount is being amortized over a ten-year period. The remaining portion is not currently being recognized for ratemaking purposes under the 1989 Settlement.
NOTE 3. RATE MATTERS
ELECTRIC
Pursuant to the 1989 Settlement, discussed in Note 2, the Company received electric rate increases contemplated by the RMA for each of the three rate years in the period ended November 30, 1991. The RMA contemplates that the Company will apply to the PSC for targeted annual rate increases of 4.5% to 5.0% in each year for an eight-year period beginning December 1, 1991. In response to the Company's December 1990 rate filing, the PSC approved the Long Island Lighting Company Ratemaking and Performance Plan (LRPP) in November 1991, which provides that the Company receive, for each of the three rate years in the period beginning December 1, 1991, annual electric rate increases of 4.15%, 4.1% and 4.0%, respectively, with an allowed return on common equity from electric operations of 11.6% for each of the three rate years. After giving effect to the reductions required by the Class Settlement discussed in Note 4, the Company's annual electric rate increases were approximately 4.15%, 3.9% and 3.9%, with an allowed return on common equity from electric operations of 10.92%, 10.72% and 10.58%, for the rate years beginning December 1, 1991, 1992 and 1993, respectively.
The LRPP was designed to be consistent with the RMA's long-term goals. One principal objective of the LRPP is to reassign risk so that the Company assumes the responsibility for risks within the control of management, whereas risks largely beyond the control of management would be assumed by the ratepayers. The LRPP reflects an update of the long-range forecast of the Company's revenue requirements which was the basis of the RMA's initial three rate increases. The LRPP contains three major components--revenue reconciliation, expense attrition and reconciliation, and performance incentives.
Revenue reconciliation is provided through a mechanism that reduces the impact of experiencing electric sales that are above or below the LRPP forecast by providing a fixed annual net margin level (defined as sales revenues, net of fuel and gross receipts taxes) that the Company will receive over the three rate years under the LRPP. The differences between the actual electric net revenues and the annual net margin level are deferred on a monthly basis during the rate year.
The expense attrition and reconciliation component permits the Company to make adjustments for certain expenses recognizing that certain cost increases are unavoidable due to inflation and changes in the business. The LRPP includes the annual reconciliation of certain expenses for wage rates, property taxes, interest charges and demand side management (DSM) costs, the deferral and amortization of certain costs for enhanced reliability, production operations and maintenance expenses, and the application of an inflation index to other expenses for the rate years beginning December 1, 1992 and 1993.
Under the performance incentive component of the LRPP, the Company is allowed to earn for each rate year up to 60 additional basis points, or forfeit up to 38 basis points, of the allowed return on common equity as a result of its performance within certain incentive and/or penalty programs. These programs consist of a customer service program, a time-of-use program, a partial pass through fuel cost incentive plan and, effective December 1, 1993, an electric transmission and distribution reliability plan. The incentives and/or penalties related to the customer
service performance plan, the time-of-use program, the electric transmission and distribution reliability plan and the partial pass through fuel cost incentive plan are determined on a monthly basis during the rate year and deferred until final approval from the PSC. The incentives earned from the DSM program are collected in rates on a monthly basis through the FCA. Based upon the Company's performance within these programs, the Company earned a total of approximately 49 basis points or approximately $9.2 million, net of tax effects, and 23 basis points, or approximately $4.3 million, net of tax effects, for the rate years ended November 30, 1993 and 1992, respectively.
The deferred balances resulting from the net margin, property taxes, interest expense, wage rates, performance incentives and associated carrying charges, excluding DSM incentives, are netted at the end of each rate year. The LRPP established a band whereby the first $15 million of the total net deferrals are used to increase or decrease the RMC balance. The LRPP provides for the disposition of the total net deferrals in excess of the $15 million band. Upon approval by the PSC, the total net deferrals in excess of $15 million are refunded or recovered from the ratepayers through the FCA over a twelve-month period in the following rate year.
During 1993, the PSC authorized the Company recovery of $45.2 million of the total net deferrals for the rate year ended November 30, 1992. The first $15 million of the total net deferrals was recorded as an increase to the RMC, with the remaining $30.2 million being recovered from the ratepayers through the FCA through July 31, 1994. For the rate year ended November 30, 1993, the total net deferrals, to be recovered from the ratepayers, subject to PSC review, amounted to approximately $63 million of which $48 million will be recovered through the FCA, over a twelve-month period beginning December 1, 1994.
The Company earned $8.9 million and $21.4 million, net of tax effects, for the rate years ended November 30, 1993 and 1992, respectively, in excess of its allowed rate of return on common equity of 11.6% which, in accordance with the LRPP, was shared equally between ratepayers (by a reduction to the RMC) and shareowners. Prior to December 1, 1991, the RMA provided that earned returns on common equity in excess of targeted allowed rates of return, were to be applied to reduce the RMC or mitigate rates, as determined by the PSC, at the end of each rate year. For the rate year ended November 30, 1991, the Company earned $10.1 million, net of tax effects, in excess of its allowed rate of return, which was applied as a reduction to the RMC.
To assist in the recovery of the RMC balance under the rates provided by the LRPP, the Company, in accordance with the LRPP, has credited the RMC with several deferred ratepayer benefits. In December 1993 and 1992, the Company applied a total of approximately $10.1 million and $22.5 million of various deferred ratepayer benefits to the RMC including the ratepayers portion of the excess earnings for the rate years ended November 30, 1993 and 1992, respectively.
In December 1993, the Company filed a three-year electric rate plan with the PSC for the period beginning December 1, 1994 that minimizes future electric rate increases while retaining consistency with the RMA's objective of continuing the restoration of the Company's financial health. The electric rate plan provides for zero percentage base rate increases before giving effect to the reductions required by the Class Settlement,
discussed in Note 4, in years one and two of the plan and a base rate increase of 4.3% in the third year prior to giving effect to the reductions required by the Class Settlement. Although base electric rates would be frozen during the first two years of the plan, annual rate increases of approximately 1% to 2% are expected to result in these years from the operation of the Company's FCA. The FCA captures, among other amounts, any increases in the cost of fuel above the level recovered in base rates, and under the LRPP, any amounts to be recovered or refunded to ratepayers in excess of $15 million which result from the reconciliation of revenue, certain expenses and earned performance incentive components, discussed above. The electric rate plan requests an allowed rate of return on equity of 11.0%. The Company's two-year base rate freeze proposal reflects four underlying objectives: (i) to limit the balance of the RMC during the three-year period to no more than its 1992 peak balance of $652 million; (ii) to recover the RMC within no more than thirteen years of its 1989 inception; (iii) to minimize the final three rate increases that will follow the two-year rate freeze period; and (iv) to continue the Company's gradual return to financial health. The Company's electric rate plan is subject to approval by the PSC.
The Company's current electric rate plan provides for lower annual electric rate increases than originally anticipated under the 1989 Settlement. However, as a result of changes in certain assumptions upon which the RMA was based, their impact on the RMC and the Company's plans to reduce DSM, operations and maintenance and capital expenditures, the Company has determined that the overall objectives of the RMA can be met under the multi-year plan described above. As a result of lower than originally anticipated inflation rates, interest costs, property taxes, fuel costs and return on common equity allowed by the PSC, the RMC, which originally had been anticipated to peak at $1.2 billion in 1994, has already peaked at $652 million in 1992. With the exception of an increase in 1995-1996, which is not now projected to cause the RMC to increase above its $652 million peak, the RMC is expected to decline until it is fully amortized.
Under the electric rate plan, the recovery of the RMC would be extended, if necessary, for an additional period of not more than three years beyond the approximate ten-year period envisioned in the RMA. The actual length of the RMC extension will depend on the extent to which the assumptions underlying the rate plan materialize. The Company's current projections indicate that the RMC will be recovered in eleven years instead of ten years.
GAS
In December 1993, the PSC approved a three-year gas rate settlement between the Company and the Staff of the PSC. The gas rate settlement provides that the Company receive, for each of the rate years beginning December 1, 1993, 1994 and 1995, annual gas rate increases of 4.7%, 3.8% and 2.8%, respectively. In the determination of the revenue requirements for the first year of the gas rate settlement an allowed rate of return on equity of 10.1% was used. The gas rate decision also provides for earnings in excess of a 10.6% return on equity in any of the three rate years covered by the settlement be shared equally between the Company's firm gas customers and its shareowners. The allowed rate of return for the rate year that began December 1, 1992 was 11.0%.
NOTE 4. THE CLASS SETTLEMENT
The Class Settlement, which became effective on June 28, 1989, resolved a civil lawsuit against the Company brought under the federal Racketeer Influenced and Corrupt Organizations Act (RICO Act). The lawsuit which the Class Settlement resolved, had alleged that the Company made inadequate disclosures before the PSC concerning the construction and completion of nuclear generating facilities. The Class Settlement provides the Company's ratepayers with reductions, aggregating $390 million, that are to be reflected as adjustments to their monthly electric bills over a ten-year period which began on June 1, 1990.
The reductions in each of the remaining twelve-month periods are as follows:
Upon its effectiveness, the Company recorded its liability for the Class Settlement on a present value basis at $170 million and simultaneously recorded a charge to income (net of tax effects of $57 million) of approximately $113 million. Each month the Company records the changes in the present value of such liability that result from the passage of time and from monthly reductions. The Company expects the Class Settlement liability will be fully satisfied by May 31, 2000.
As a result of the Class Settlement, the Company's electric rate increases on average will be approximately .2% to .3% per year lower than they would otherwise have been during the Class Settlement period.
NOTE 5. NINE MILE POINT NUCLEAR POWER STATION, UNIT 2
The Company has an 18% undivided interest in NMP2 which is operated by Niagara Mohawk Power Corporation (NMPC) near Oswego, New York. Ownership of NMP2 is shared by five cotenants: the Company (18%), NMPC (41%), New York State Electric & Gas Corporation (18%), Rochester Gas and Electric Corporation (14%) and Central Hudson Gas & Electric Corporation (9%). At December 31, 1993, the Company's net utility plant investment in NMP2 was $759 million, net of accumulated depreciation of $119 million, which is included in the Company's rate base. Output of NMP2 is shared in the same proportions as the cotenants' respective ownership interests. The operating expenses of NMP2 are also allocated to the cotenants in the same proportions as their respective ownership interests. The Company's share of these expenses is included in the appropriate operating expenses on the Statement of Income. The Company is required to provide its respective share of financing for any capital additions to NMP2. Nuclear fuel costs associated with NMP2 are being amortized on the basis of the quantity of heat produced for the generation of electricity.
NMPC has contracted with the United States Department of Energy for the disposal of nuclear fuel. The Company reimburses NMPC for its 18% share of the cost under the contract at a rate of $1.00 per megawatt hour of net generation less a factor to account for transmission line losses.
Based upon a study performed by NMPC which reflects a change in the NRC minimum decommissioning funding requirement effective 1993, the Company's share of the decommissioning costs for NMP2 is estimated to be $80 million (in 1993 dollars) assuming that decommissioning will commence in 2027 (which will be $234 million in 2027 dollars). The Company's share of estimated decommissioning costs are being provided for in electric rates and are being charged to operations as depreciation expense. The amount of accumulated decommissioning costs collected from the Company's ratepayers through December 31, 1993 was $7.1 million. Amounts collected by the Company for the decommissioning of the contaminated portion of the NMP2 plant, which approximate 92% of total decommissioning costs, are held in an independent decommissioning trust fund. This fund complies with regulations issued by the NRC governing the funding of nuclear plant decommissioning costs. The Company's funding plan for its share of decommissioning costs will provide reasonable assurance that, at the time of termination of operation, adequate funds for the decommissioning of the Company's share of the contaminated portion of NMP2 plant will be available.
NOTE 6. CAPITAL STOCK
PREFERRED STOCK
The Company has 7,000,000 authorized shares, cumulative preferred stock, par value $100 and 30,000,000 authorized shares, cumulative preferred stock, par value $25. Dividends on preferred stock are paid in preference to dividends on common stock or any other stock ranking junior to preferred stock.
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
The aggregate fair value of redeemable preferred stock with mandatory redemptions at December 31, 1993 and 1992 amounted to $658,795,000 and $581,984,000, respectively, compared to their carrying amounts of $653,950,000 and $566,100,000, respectively.
At December 31, 1993, the Company had the option to redeem all outstanding preferred stock Series L, $100 par value, and Series R, $100 par value, at their optional redemption prices of $102.99 per share and $100.50 per share, respectively. No other preferred stock series subject to mandatory redemptions were redeemable at December 31, 1993.
The Company is required to redeem the following series of preferred stock through the operation of various sinking fund provisions: (i) on each July 31, 10,500 shares of the Series L at a price of $100 per share; (ii) on each December 15, 37,500 shares of the Series R at a price of $100 per share; (iii) on each March 1, commencing March 1, 1999, 77,700 shares of the Series NN at a price of $25 per share; and (iv) on each October 15, commencing October 15, 1999, 112,000 shares of the Series UU at a price of $25 per share. In addition, the Company will have the noncumulative option to double the number of shares to be redeemed pursuant to the sinking fund in any year for the preferred stock series mentioned above. The aggregate par value of preferred stock required to be redeemed by use of sinking funds in each of the years 1994 through 1996 is $4.8 million and in 1997 and 1998 is $1.1 million.
The Company is also required to redeem certain series of preferred stock which are not subject to sinking fund requirements. The scheduled mandatory redemption for these series are as follows: (i) Series CC on August 1, 2002; (ii) Series AA on June 1, 2000; (iii) Series GG on March 1, 1999; and (iv) Series QQ on May 1, 2001.
During 1992, the Company issued $363 million Preferred Stock, 7.95% Series AA and $57 million Preferred Stock, 7.66% Series CC, the proceeds of which were used to redeem $320 million Preferred Stock, $2.65 Series Y and $55 million Preferred Stock, 9.80% Series S, respectively, at their optional redemption prices.
PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
The Company has the option to redeem certain series of its preferred stock. For the series subject to optional redemption at December 31, 1993, the call prices were as follows:
PREFERENCE STOCK
None of the authorized 7,500,000 shares of nonparticipating preference stock, par value $1 per share, which ranks junior to preferred stock, are outstanding.
COMMON STOCK
Of the 150,000,000 shares of authorized common stock at December 31, 1993, 1,789,842 shares were reserved for sale through the Company's Employee Stock Purchase Plan, 5,946,929 shares were committed to the Automatic Dividend Reinvestment Plan (ADRP) and 118,812 shares were reserved for conversion of the Series I Convertible Preferred Stock at a rate of $17.15 per share. In June 1992, the Company reinstated the ADRP which had been suspended since February 1984. Common and preferred stock dividend limitations in the mortgage securing the Company's First Mortgage Bonds are not material. There are no dividend limitations contained in the Company's other debt instruments.
NOTE 7. LONG-TERM DEBT
Each of the Company's outstanding mortgages is a lien on substantially all of the Company's properties.
FIRST MORTGAGE
All of the bonds issued under the First Mortgage, including those issued after June 1, 1975 and pledged with the Trustee of the G&R Mortgage (G&R Trustee) as additional security for General & Refunding Bonds (G&R Bonds), are secured by the lien of the First Mortgage. First Mortgage Bonds pledged with the G&R Trustee do not represent outstanding indebtedness of the Company. Amounts of such pledged bonds outstanding were $1.03 billion at December 31, 1993 and 1992. The annual First Mortgage depreciation fund and sinking fund requirements for 1993, due not later than June 30, 1994, are estimated at $216 million and $18 million, respectively. The Company expects to meet these requirements with property additions and retired First Mortgage Bonds.
G&R MORTGAGE
The lien of the G&R Mortgage is subordinate to the lien of the First Mortgage. The annual G&R Mortgage sinking fund requirement for 1993, due not later than June 30, 1994, is estimated at $24 million. The Company expects to satisfy this requirement with retired G&R Bonds.
1989 REVOLVING CREDIT AGREEMENT
The Company has an estimated $276 million available to it through October 1, 1994, under its $300 million 1989 Revolving Credit Agreement (1989 RCA). This line of credit is secured by a first lien upon the Company's accounts receivable and fuel oil inventories.
The Company is currently, with the approval of the NRC, dedicating $24 million of the 1989 RCA to cover estimated, not yet incurred, costs attributable to the decommissioning of Shoreham, discussed in Note 2. The amount of credit available to the Company under the 1989 RCA will increase as decommissioning costs are funded by the Company.
At December 31, 1993, no amounts were outstanding under the 1989 RCA. The Company has the option, when amounts are outstanding, to commit to one of three interest rates including: (i) the Adjusted Certificate of Deposit Rate which is a rate based on the certificate of deposit rates of certain of the lending banks, (ii) the Base Rate which is generally a rate based on Citibank, N.A.'s prime rate and (iii) the Eurodollar Rate which is a rate based on the London Interbank Offering Rate (LIBOR). The Company has agreed to pay a fee of one quarter of one percent per annum on the unused portion. The termination date of the 1989 RCA may be extended for one-year periods upon the acceptance by the lending banks of the Company's request delivered to the lending banks prior to April 1 in each year.
AUTHORITY FINANCING NOTES
Authority Financing Notes are issued by the Company to the New York State Energy Research and Development Authority (NYSERDA) to secure certain tax-exempt Pollution Control Revenue Bonds (PCRBs), Electric Facilities Revenue Bonds (EFRBs) and Industrial Development Revenue Bonds issued by NYSERDA. Certain of these bonds are subject to periodic tender at which time their interest rates are subject to redetermination.
The 1993 EFRBs and the 1985 PCRBs are supported by letters of credit pursuant to which the letter of credit banks have agreed to pay the principal, interest and premium if applicable, in the aggregate, up to approximately $272 million in the event of default. The obligation of the Company to reimburse the letter of credit banks is unsecured. These letters of credit expire November 17, 1996 for the 1993 EFRBs and on March 16, 1996 for the 1985 PCRBs, at which time the Company is required to obtain either an extension of the letters of credit or substitute credit backup. If neither can be obtained, the 1993 EFRBs and the 1985 PCRBs must be redeemed unless the Company purchases them in lieu of redemption and subsequently remarkets them.
Tender requirements of Authority Financing Notes at December 31, 1993 are as follows:
FAIR VALUES OF LONG-TERM DEBT
The carrying amounts and fair values of the Company's long-term debt consisted of the following at December 31:
MATURITY SCHEDULE
Total long-term debt maturing in the next five years is $600 million (1994), $25 million (1995), $455 million (1996), $286 million (1997) and $1 million (1998).
NOTE 8. RETIREMENT BENEFIT PLANS
PENSION PLANS
The Company maintains a primary defined benefit pension plan (Primary Plan) which covers substantially all employees, a supplemental plan (Supplemental Plan) which covers officers and certain key executives and a retirement plan which covers the Board of Directors (Directors' Plan).
Primary Plan
The Company's funding policy is to contribute annually to the Primary Plan a minimum amount consistent with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) plus such additional amounts, if any, as the Company may determine to be appropriate from time to time.
Effective January 1, 1992, the Plan was amended to update the benefit calculation, whereby for service before January 1, 1992, pension benefits are determined based on the greater of the accrued benefit as of December 31, 1991, or by applying a moving five-year average of Plan compensation, not to exceed the January 1, 1992 salary, to a certain percentage, determined by years of service at December 31, 1991. For service after January 1, 1992, pension benefits are equal to 2% of Plan compensation through age 49 and 2 1/2% thereafter. Employees are vested in the pension plan after five years of service with the Company.
The Primary Plan's funded status reflects changes in assumptions used in accounting due to changes in market conditions. The 1993 projected benefit obligation increased by approximately $31 million due to changes in the discount rate used, partially offset by a lower rate of future compensation increases.
The Primary Plan's funded status and amounts recognized on the Balance Sheet at December 31, 1993 and 1992 were as follows:
Periodic pension cost for 1993, 1992 and 1991 for the Primary Plan included the following components:
Assumptions used in accounting for the Primary Plan were:
The Primary Plan assets at fair value primarily include cash, cash equivalents, group annuity contracts, bonds and listed equity securities.
In 1993, the PSC issued an order which addressed the accounting and ratemaking treatment of pension costs in accordance with SFAS No. 87, Employers' Accounting For Pensions. Under the PSC order, the Company is required to recognize any deferred net gains or losses over a ten- year period rather than using the corridor approach method. The Company believes that by adopting this method of accounting for financial reporting purposes, a better matching of revenues and the Company's pension cost will result from the implementation of the PSC order. For the year ended December 31, 1993, this change in the annual pension cost calculation reduced pension expense by approximately $4.6 million. The Company deferred a like amount of revenues to reflect the difference between pension expense in rates and pension expense under the PSC's order. In addition, the PSC authorized the Company to defer the difference between the pension rate allowance and annual pension contributions deposited into the pension fund. The Company is required to accrue, to the benefit of the ratepayer, a carrying charge on any such deferred balance.
Supplemental Plan
The Supplemental Plan, the cost of which is borne by the Company's shareowners, provides supplemental death and retirement benefits for officers and other key executives without contribution from such employees. The Supplemental Plan is a non-qualified plan under the Internal Revenue Code. Death benefits are currently provided by insurance. The provision for retirement benefits, which is unfunded, totaled approximately $2,800,000, $685,000 and $675,000 which was recognized as an expense in 1993, 1992 and 1991, respectively.
Directors' Plan
The Directors' Plan, adopted in February 1990, provides benefits to directors who are not officers of the Company. Directors who have
served in that capacity for more than five years qualify as participants under the plan. The Directors' Plan is a non-qualified plan under the Internal Revenue Code. The provision for retirement benefits, which is unfunded, totaled approximately $150,000, $133,000 and $101,000 which was recognized as expense in 1993, 1992 and 1991, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to providing pension benefits, the Company provides certain medical and life insurance benefits for retired employees. Substantially all of the Company's employees may become eligible for these benefits if they reach retirement age after working for the Company for a minimum of five years. These and similar benefits for active employees are provided by the Company or by insurance companies whose premiums are based on the benefits paid during the year. Effective January 1, 1993, the Company adopted the provisions of SFAS No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, which requires the Company to recognize the expected cost of providing postretirement benefits when employee services are rendered rather than on a pay-as-you-go method.
Effective January 1, 1993, the Company recorded an accumulated postretirement benefit obligation and a corresponding regulatory asset of approximately $376 million. Additionally, as a result of adopting SFAS No. 106, the Company's annual postretirement benefit cost for 1993 increased by approximately $28 million above the amount that would have been recorded under the pay-as-you-go method.
In 1993, the PSC issued a final order which required that the effects of implementing SFAS No. 106 be phased into rates. The order required the Company to defer as a regulatory asset the difference between postretirement benefit expense recorded for accounting purposes in accordance with SFAS No. 106 and the postretirement benefit expense reflected in rates. The ongoing annual postretirement benefit expense will be phased into and fully reflected in rates within a five-year period with the accumulated postretirement obligation being recovered in rates over a twenty-year period.
Accumulated postretirement benefits obligation other than pensions at December 31 were as follows:
Periodic postretirement benefit cost other than pensions for the years 1993 and 1992 were as follows:
Assumptions used in accounting for postretirement benefits other than pensions were as follows:
The assumed health care cost trend rates used in measuring the accumulated postretirement benefit obligation at December 31, 1993 and 1992 were 9.5% and 15.0%, respectively, gradually declining to 6.0% in 2001 and thereafter. A one-percentage point increase in the health care cost trend rate would increase the accumulated postretirement benefit obligation as of December 31, 1993 and 1992 by approximately $46 million and $58 million, respectively, and the sum of the service and interest costs in 1993 by $8 million.
POSTEMPLOYMENT BENEFITS
In November 1992, the FASB issued SFAS No. 112, Employers' Accounting for Postemployment Benefits, which establishes accounting standards for employers who provide benefits to former or inactive employees after employment but before retirement. The Company will be required to comply with the new rules beginning in 1994. The effect of adopting the new rules will not be material to the Company's financial position or results of operations. The Company believes it will be permitted to recover these costs through rates.
NOTE 9. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company has entered into substantial commitments for fossil fuel, gas supply, purchased power and transmission facilities. The costs associated with these commitments are normally recovered from ratepayers through provisions in the Company's rate schedules.
The Company expects that it will have to expend $4.3 million in 1994 to meet continuous emission monitoring requirements and $3.5 million in 1994 and $2.0 million in 1995 to meet Phase I nitrogen oxide (NOx) reduction requirements. In addition, subject to details that are expected to appear in regulations that have not yet been issued, the Company estimates that it may be required to expend as much as $125 million by May 1999 to meet Phase II NOx reduction requirements and approximately $50 million by 2000 to meet requirements for the control of hazardous air pollutants from power plants. The Company believes that such cost would be recoverable in rates.
CONTINGENCIES
Litigation
On February 11, 1988, the Company began a lawsuit in Suffolk County Supreme Court against Suffolk County, seeking the recovery of approximately $54 million in damages for Suffolk County's breach of a contract to prepare an off site emergency response plan for Shoreham (Long Island Lighting Company v. County of Suffolk). In addition, the complaint alleges that, because of the delays that have resulted, the Company has been damaged in an additional amount of $706 million. On October 30, 1992, the court granted in part and denied in part Suffolk County's motion to amend its answer to assert additional defenses and counterclaims. Two proposed counterclaims were allowed seeking approximately $16 million in damages as well as $700 million in alleged punitive damages. The outcome of these counterclaims, if adverse, could have a material effect on the financial condition of the Company. The Company has argued that there is no basis for punitive damages and intends to vigorously prosecute its claim against Suffolk County and to defend against these counterclaims.
Environmental
The Company is subject to environmental laws and regulations of the United States Environmental Protection Agency (EPA) and other regulatory agencies. The Company is monitoring its activities and to date, has not identified any material environmental contingencies. The Company believes that costs related to such contingencies, if any, would be recoverable in rates.
NUCLEAR PLANT INSURANCE
The Company has property damage insurance and third-party bodily injury and property liability insurance for its 18% share in NMP2 and for Shoreham. The premiums for this coverage are not material. The policies for this coverage provide for retroactive premium assessments under certain circumstances. Maximum retroactive premium assessments could be as much as approximately $4.7 million. For property damage at each nuclear generating site, the NRC requires a minimum of $1.06 billion of coverage. The NRC has provided the Company with a partial exemption from these requirements for Shoreham.
Under certain circumstances, the Company may be assessed additional amounts in the event of a nuclear incident. Under agreements established pursuant to the Price Anderson Act, the Company could be assessed up to approximately $79.3 million per nuclear incident in any one year at any nuclear unit, but not in excess of approximately $10 million in payments per year for each incident. The Price Anderson Act also limits liability for third-party bodily injury and third-party property damage arising out of a nuclear occurrence at each unit to $9.4 billion.
NOTE 10. FEDERAL INCOME TAXES
As of December 31, 1993, the significant components of the Company's deferred tax assets and liabilities calculated under the provisions of SFAS No. 109 were as follows:
The Company's net operating loss (NOL) carryforward for federal income tax purposes is estimated to be approximately $2 billion at December 31, 1993. The NOL will expire in the years 2003 through 2007. The amount of investment tax credit (ITC) carryforward is approximately $219 million. The ITC credits expire by the year 2002. In accordance with the Tax Reform Act of 1986 (TRA 86), ITC allowable as credits to tax returns for years after 1987 must be reduced by 35%. The amount of the reduction will not be allowed as a credit for any other taxable year. For financial reporting purposes, a valuation allowance was not required to offset the deferred tax assets related to these carryforwards.
On January 8, 1990 and October 10, 1992, the Company received Revenue Agents' Reports disallowing certain deductions claimed by the Company on its tax returns for the audit cycle years 1984-1987 and 1988-1989, respectively. The Revenue Agents' Reports reflects proposed adjustments to the Company's federal income tax returns for 1984 through 1989 which, if sustained, would give rise to tax deficiencies totaling approximately $220 million. The Revenue Agents have proposed ITC adjustments which, if sustained, would reduce the Company's carryforward by approximately $96 million. The Company is protesting some of the adjustments and seeks an administrative and, if necessary, a judicial review of the conclusions reached in the Revenue Agents' Reports. The Company cannot predict either
the timing or the manner in which these matters will be resolved. If however, the ultimate disposition of any or all matters raised in the Revenue Agents' Reports are adverse to the Company, the Company expects that any deficiencies that may arise will be substantially offset by the net operating loss carrybacks associated with the 1989 Shoreham abandonment loss deduction of $1.8 billion and thus any impact would not have a material effect on the Company's financial condition or cash flows.
The federal income tax amounts included in the Statement of Income differ from the amounts which result from applying the statutory federal income tax rate to net income before income taxes. The table below sets forth the reasons for such differences.
NOTE 11. SEGMENTS OF BUSINESS
The Company is a public utility engaged in the generation, distribution and sale of electric energy and the purchase, distribution and sale of natural gas to residential, commercial and industrial customers in Nassau and Suffolk Counties and the Rockaway Peninsula in Queens County, all on Long Island, New York. Identifiable assets by segment include net utility plant, regulatory assets, materials and supplies (excluding common), accrued unbilled revenues, gas in storage, fuel and deferred charges (excluding common). Assets utilized for overall Company operations consist of other property and investments, cash and cash equivalents, special deposits, accounts receivable, prepayments and other current assets, unamortized debt expense and other deferred charges.
NOTE 12. QUARTERLY FINANCIAL INFORMATION (Unaudited)
In the fourth quarter of 1993, the Company recorded income of approximately $6.5 million, net of tax effects, or $.06 per common share related to the settlement of certain litigation. In addition, during the fourth quarter of 1993, the Company recorded a charge to earnings of approximately $7.3 million, net of tax effects or $.07 per common share principally related to previously deferred storm costs and the reconciliation of certain ratemaking mechanisms recorded in connection with the conclusion of the Company's rate year.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Shareowners and Board of Directors of Long Island Lighting Company
We have audited the accompanying balance sheet of Long Island Lighting Company and the related statement of capitalization, as of December 31, 1993 and 1992, and the related statements of income, retained earnings, and cash flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the Index at Item 14 (a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing all accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Long Island Lighting Company at December 31, 1993 and 1992, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
As discussed in Notes 8 and 10 to the financial statements, effective January 1, 1993, the Company changed its methods of accounting for postretirement benefits other than pensions and income taxes.
/s/ ERNST & YOUNG
Melville, New York February 4, 1994
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 COMPANY
Information required by Item 10 as to the Company's Executive Officers is set forth in Item 1, "Business" under the heading "Executive Officers of the Company" above. Information required by Item 10 as to the Company's Directors may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) List of Financial Statements
Balance Sheet at December 31, 1993 and 1992.
Statement of Income for each of the three years in the period ended December 31, 1993.
Statement of Capitalization at December 31, 1993 and 1992.
Statement of Cash Flows for each of the three years in the period ended December 31, 1993.
Statement of Retained Earnings for each of the three years in the period ended December 31, 1993.
Notes to Financial Statements.
(2) List of Financial Statement Schedules
Property, Plant and Equipment (Schedule V)
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment (Schedule VI)
Valuation and Qualifying Accounts (Schedule VIII)
Supplementary Income Statement Information (Schedule X)
(3) List of Exhibits
*3(a) Restated Certificate of Incorporation of the Company dated November 11, 1993.
(b) By-laws of the Company as amended on May 28, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
4(a) General and Refunding Indenture dated as of June 1, 1975 and 21 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
G&R Indenture dated as of June 1, 1975.
First Supplemental Indenture to G&R Indenture dated as of June 1, 1975.
Second Supplemental Indenture to G&R Indenture dated as of September 1, 1975.
Third Supplemental Indenture to G&R Indenture dated as of June 1, 1976.
Fourth Supplemental Indenture to G&R Indenture dated as of December 1, 1976.
Fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1977.
Sixth Supplemental Indenture to G&R Indenture dated as of April 1, 1978.
- ------------------------ * Filed herewith.
Seventh Supplemental Indenture to G&R Indenture dated as of March 1, 1979.
Eighth Supplemental Indenture to G&R Indenture dated as of February 1, 1980.
Ninth Supplemental Indenture to G&R Indenture dated as of March 1, 1981.
Tenth Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Eleventh Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Twelfth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Thirteenth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Fourteenth Supplemental Indenture to G&R Indenture dated as of June 1, 1982.
Fifteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1982.
Sixteenth Supplemental Indenture to G&R Indenture dated as of April 1, 1983.
Seventeenth Supplemental Indenture to G&R Indenture dated as of May 1, 1983.
Eighteenth Supplemental Indenture to G&R Indenture dated as of September 1, 1984.
Nineteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1984.
Twentieth Supplemental Indenture to G&R Indenture dated as of June 1, 1985.
Twenty-first Supplemental Indenture to G&R Indenture dated as of April 1, 1986.
Twenty-second Supplemental Indenture to G&R Indenture dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Twenty-third Supplemental Indenture to G&R Indenture dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fourth Supplemental Indenture to G&R Indenture dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Twenty-sixth Supplemental Indenture to G&R Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
4(b) Indenture of Mortgage and Deed of Trust dated as of September 1, 1951 and 44 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
Indenture of Mortgage dated as of September 1, 1951.
First Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1951.
Second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1952.
Third Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1953.
Fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1954.
Fifth Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1955.
Sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1956.
Seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1958.
Eighth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1959.
Ninth Supplemental Indenture to the Indenture of Mortgage dated as of August 1, 1961.
Tenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1963.
Eleventh Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1964.
Twelfth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1965.
Thirteenth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1966.
Fourteenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1967.
Fifteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1969.
Sixteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1970.
Seventeenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1971.
Eighteenth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1971.
Nineteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1972.
Twentieth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1973.
Twenty-first Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1974.
Twenty-second Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1974.
Twenty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1975.
Twenty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1975.
Twenty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1976.
Twenty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1976.
Twenty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1977.
Twenty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1978.
Twenty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1979.
Thirtieth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1980.
Thirty-first Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1981.
Thirty-second Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-third Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1982.
Thirty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1982.
Thirty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1983.
Thirty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1983.
Fortieth Supplemental Indenture to the Indenture of Mortgage dated as of February 29, 1984.
Forty-first Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1984.
Forty-second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1984.
Forty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1985.
Forty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1986.
Forty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Forty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Forty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*4(c) Debenture Indenture dated as of November 1, 1986 from the Company to The Connecticut Bank and Trust Company, National Association, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
First Supplemental Indenture dated as of November 1, 1986 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
Second Supplemental Indenture dated as of April 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Third Supplemental Indenture dated as of July 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fifth Supplemental Indenture dated as of November 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*Sixth Supplemental Indenture dated as of June 1, 1993.
*Seventh Supplemental Indenture dated as of July 1, 1993.
4(d) Debenture Indenture dated as of November 1, 1992 from the Company to Chemical Bank, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
First Supplemental Indenture dated as of January 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- ------------------------ * Filed herewith.
Second Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Third Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(a) Sound Cable Project Facilities and Marketing Agreement dated as of August 26, 1987 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
10(b) Transmission Agreement by and between the Company and Consolidated Edison Company of New York, Inc. dated as of March 31, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(c) Contract for the sale of Firm Power and Energy by and between the Company and the State of New York dated as of April 26, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(d) Capacity Supply Agreement dated as of December 13, 1991 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
*10(e) Nine Mile Point Nuclear Station Unit 2 Operating Agreement dated as of January 1, 1993 by and between the Company, New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation and Central Hudson Gas and Electric Corporation.
10(f) Settlement Agreement on Issues Related to Nine Mile Two Nuclear Plant dated as of June 6, 1990 by and between the Company, the Staff of the Department of Public Service and others (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
- ------------------------ * Filed herewith.
10(g) Settlement Agreement -- LILCO Issues dated as of February 28, 1989 by and between the Company and the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(h) Amended and Restated Asset Transfer Agreement by and between the Company and the Long Island Power Authority dated as of June 16, 1988 as amended and restated on April 14, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(i) Memorandum of Understanding concerning proposed agreements on power supply for Long Island dated as of June 16, 1988 by and between the Company and New York Power Authority as amended May 24, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(j) Rate Moderation Agreement submitted by the staff of the New York State Public Service Commission on March 16, 1989 and supported by the Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(k) Site Cooperation and Reimbursement Agreement dated as of January 24, 1990 by and between the Company and Long Island Power Authority (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(l) Stipulation of settlement of federal Racketeer Influenced and Corrupt Organizations Act ("RICO") Class Action and False Claims Action dated as of February 27, 1989 among the attorneys for the Company, the ratepayer class, the United States of America and the individual defendants named therein (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(m) Revolving Credit Agreement dated as of June 27, 1989, between Long Island Lighting Company and the banks and co-agents listed therein, with the Exhibits thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and as amended by the First Amendment dated as of October 13, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) and as amended by the Second Amendment dated as of March 5, 1992 and as modified by a Waiver dated November 5, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(n) Indenture of Trust dated as of December 1, 1989 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Participation Agreement dated as of December 1, 1989 by and between the New York State Energy Research and Development Authority and the Company relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(o) Indenture of Trust dated as of May 1, 1990 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of May 1, 1990 by and between the New York State Energy Research and Development Authority and the Company relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(p) Indenture of Trust dated as of January 1, 1991 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of January 1, 1991 by and between the New York State Energy Research and Development Authority and the Company relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(q) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(r) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(s) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(t) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*10(u) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series A.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series A.
*10(v) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series B.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series B.
- ------------------------ * Filed herewith.
*10(w) Supplemental Death and Retirement Benefits Plan as amended and restated effective January 1, 1993 and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference.
*10(x) Executive Agreements and Management Contracts
*(1) Executive Employment Agreement dated as of January 30, 1984 by and between William J. Catacosinos and Long Island Lighting Company, as amended by amendments dated March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference), December 22, 1989 (filed as Exhibit 10(o) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and December 2, 1991 (filed as Exhibit 10(u) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference); an Employment Agreement dated as of March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by amendments dated November 30, 1989 (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference), an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference), an amendment dated December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference), and as amended by an amendment dated December 31, 1993.
*(2) Employment Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference.
(3) Employment Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
- ------------------------ * Filed herewith.
(4) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between James T. Flynn and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(5) Employment Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(6) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Robert X. Kelleher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(7) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between John D. Leonard, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(8) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Adam M. Madsen and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(9) Employment Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(10) Employment Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(11) Employment Agreement dated as of April 16, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Brian R. McCaffrey and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 incorporated herein by reference) and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(12) Employment Agreement dated as of March 18, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Joseph W. McDonnell and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(13) Employment Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company and related Trust Agreement and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(14) Employment Agreement dated as of July 29, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William G. Schiffmacher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(15) Employment Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(16) Employment Agreement dated as of March 9, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(17) Employment Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(18) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Walter F. Wilm, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(19) Employment Agreement dated as of November 4, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Edward J. Youngling and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(20) Retirement Agreement dated as of January 7, 1987 by and between George J. Sideris and Long Island Lighting Company, as amended March 20, 1987, and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
*(21) Indemnification Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company.
(22) Indemnification Agreement dated as of January 31, 1992 by and between A. James Barnes and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(23) Indemnification Agreement dated as of May 30, 1990 by and between George Bugliarello and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(24) Indemnification Agreement dated as of April 17, 1992 by and between Renso L. Caporali and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(25) Indemnification Agreement dated as of November 19, 1987 by and between William J. Catacosinos and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(26) Indemnification Agreement dated as of April 23, 1992 by and between Peter O. Crisp and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(27) Indemnification Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(28) Indemnification Agreement dated as of November 25, 1987 by and between James T. Flynn and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(29) Indemnification Agreement dated as of November 19, 1987 by and between Winfield E. Fromm and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- ----------------------- * Filed herewith.
*(30) Indemnification Agreement dated as of January 3, 1994 by and between Vicki L. Fuller and Long Island Lighting Company.
(31) Indemnification Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(32) Indemnification Agreement dated as of November 25, 1987 by and between Robert X. Kelleher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(33) Indemnification Agreement dated as of November 25, 1987 by and between John D. Leonard, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(34) Indemnification Agreement dated as of November 25, 1987 by and between Adam M. Madsen and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(35) Indemnification Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(36) Indemnification Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(37) Indemnification Agreement dated as of November 25, 1987 by and between Brian R. McCaffrey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(38) Indemnification Agreement dated as of March 18, 1988 by and between Joseph W. McDonnell and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(39) Indemnification Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- --------------------- * Filed herewith.
*(40) Indemnification Agreement dated as of April 20, 1993 by and between Katherine D. Ortega and Long Island Lighting Company.
(41) Indemnification Agreement dated as of November 19, 1987 by and between Basil A. Paterson and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(42) Indemnification Agreement dated as of November 25, 1987 by and between William Schiffmacher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(43) Indemnification Agreement dated as of February 8, 1992 by and between Richard L. Schmalensee and Long Island Lighting Company (filed as an Exhibit to the Company Form 10- K for the Year Ended December 31, 1991 and incorporated herein by reference).
(44) Indemnification Agreement dated as of November 30, 1987 by and between George J. Sideris and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(45) Indemnification Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
(46) Indemnification Agreement dated as of March 1, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(47) Indemnification Agreement dated as of November 19, 1987 by and between John H. Talmage and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(48) Indemnification Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(49) Indemnification Agreement dated as of November 19, 1987 by and between Phyllis A. Vineyard and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- --------------------- * Filed herewith.
(50) Indemnification Agreement dated as of November 25, 1987 by and between Walter F. Wilm, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(51) Indemnification Agreement dated as of November 4, 1988 by and between Edward J. Youngling and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(52) Long Island Lighting Company Officers' and Directors' Protective Trust dated as of April 18, 1988 by and between the Company and Clarence Goldberg, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(53) Long Island Lighting Company's Retirement Plan for Directors dated as of February 2, 1990 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
*(54) Agreement dated as of April 20, 1993 by and between the Company and Lionel M. Goldberg.
*(55) Agreement dated as of April 20, 1993 by and between the Company and Eben W. Pyne.
*23 Consent of Ernst & Young, Independent Auditors.
*24(a) Powers of Attorney executed by the Directors and Officers of the Company.
*24(b) Certificate as to Corporate Power of Attorney.
*24(c) Certified copy of Resolution of Board of Directors authorizing signature pursuant to Power of Attorney.
Financial Statements of subsidiary companies accounted for by the equity method have been omitted because such subsidiaries do not constitute significant subsidiaries.
- ---------------------- * Filed herewith.
(b) Reports on Form 8-K
In its Report on Form 8-K dated October 8, 1993, the Company stated that:
1. On September 22, 1993, the United States Court of Appeals for the Second Circuit issued its opinion affirming the United States District Court for the Southern District of New York's jury award of $18.4 million, in favor of the Company, for a breach of warranty cause of action against Transamerica Delaval, Inc., now IMO Industries, Inc. and the District Court's dismissal of the Company's claims as to all categories of damages other than the amount attributable to the breach of warranty action.
2. If the Company concludes that the overall objectives of the RMA can be met, it may submit to the PSC, for the rate period commencing December 1, 1994, a multi-year electric rate plan providing for annual percentage increases that are significantly lower than the targeted levels contemplated by the RMA.
3. Subsequent to the issuance of the ALJ's Recommended Decision on the Company's gas rate application, the Company negotiated a multi-year rate settlement with Staff of the PSC which is subject to review by the ALJ and approval by the PSC.
In its Report on Form 8-K dated December 3, 1993, the Company stated that:
1. On November 15, 1993, the PSC authorized the Company to increase its base electric rates by 4% effective December 1, 1993. This increase is the sixth in a series of 11 rate increases contemplated in the PSC-approved 1989 RMA.
2. The Company is in the process of preparing a three-year electric rate plan for the period beginning December 1, 1994 that provides for zero percentage base rate increases in years one and two of the plan and a base rate increase of approximately 4% in the third year, while retaining consistency with the RMA's objective of continuing the restoration of the Company's financial health.
No other Reports on Form 8-K were filed in the fourth quarter of 1993.
In its Report on Form 8-K dated January 21, 1994, the Company stated that:
1. The Company has announced the resignation of its President and Chief Operating Officer, Anthony F. Earley, Jr., effective March 1, 1994.
2. On December 31, 1993, the Company filed a three-year electric rate plan with the PSC for the period beginning December 1, 1994 that proposes no base electric rate increases in years one and two of the plan and an overall increase of 4.3% in the third year.
3. On January 12, 1994, the Company filed comments in response to the November 2, 1993 Petition filed by the CPB and LIPA with the PSC asking the PSC to hold a proceeding on freezing or possibly reducing the Company's electric rates for the period December 1994 to November 1997.
4. In December 1993, the PSC approved, with an effective date of December 31, 1993, the Company's negotiated three-year gas rate settlement with the Staff of the PSC which provided for a first year increase of $26.6 million and two subsequent increases of $23 million and $20 million to be effective on December 1, 1995 and 1996, respectively.
5. On December 30, 1993, the Appellate Division, Third Judicial Department, affirmed the Supreme Court of the State of New York Special Term's decision in LILCO v. PSC/Mayflower, which held that the PSC had violated PURPA and the New York Public Service Law and had acted arbitrarily when it ordered the Company to sign a power purchase contract with Mayflower Energy Partners, L.P. incorporating the PSC's 1989 Long Run Avoided Cost estimates.
6. On December 13, 1993, the United States District Court for the Eastern District of New York issued an opinion in LILCO v. Stone & Webster Engineering Corp. granting a motion by SWEC to dismiss the Company's complaint in this action which had sought to recover damages against SWEC for breach of contract, negligence, professional malpractice and gross negligence in connection with SWEC's work as architect-engineer and construction manager for Shoreham.
7. Pursuant to the LIPA Act, LIPA is required to make PILOTS to the municipalities that impose real property taxes on Shoreham. On January 10, 1994, the Appellate Division, Second Department, affirmed Nassau County Supreme Court's March 29, 1993 decision in LIPA, et al. v. Shoreham-Wading River Central School District, et al. holding, in major part, that the Company is not obligated for any real property taxes that accrued after February 28, 1992, attributable to property that it conveyed to LIPA, that PILOTS commence on March 1, 1992, that PILOTS are subject to refunds and that the LIPA Act does not provide for the termination of PILOTS.
In its Report on Form 8-K dated February 7, 1994, the Company reported earnings of $2.15 per common share on revenues of $2,880,995,000 for the year ended December 31, 1993.
LONG ISLAND LIGHTING COMPANY SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1993 (Thousands of Dollars)
(A) Adjustments between Plant Accounts.
LONG ISLAND LIGHTING COMPANY SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1992 (Thousands of Dollars)
(A) Adjustments between Plant Accounts.
LONG ISLAND LIGHTING COMPANY SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1991 (Thousands of Dollars)
(A) Adjustments between Plant Accounts.
LONG ISLAND LIGHTING COMPANY SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1993 (Thousands of Dollars)
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
LONG ISLAND LIGHTING COMPANY SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1992 (Thousands of Dollars)
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
LONG ISLAND LIGHTING COMPANY SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1991 (Thousands of Dollars)
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
LONG ISLAND LIGHTING COMPANY SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
(1) Uncollectible accounts written off, net of recoveries.
LONG ISLAND LIGHTING COMPANY SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Advertising expenses for the years 1993 - 1991 were not presented as such amounts represent less than 1% of total revenues.
SIGNATURES
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.
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.
LONG ISLAND LIGHTING COMPANY
Date: March 15, 1994 By: ANTHONY NOZZOLILLO ------------------------ Anthony Nozzolillo Chief Financial Officer
Original powers of attorney, authorizing Kathleen A. Marion, Anthony Nozzolillo and Robert J. Grey, and each of them, to sign this report and any amendments thereto, as attorney-in-fact for each of the Directors and Officers of the Company, and a certified copy of the resolution of the Board of Directors of the company authorizing said persons and each of them to sign this report and amendments thereto as attorney-in-fact for any Officers signing on behalf of the Company, have been, are being filed or will be filed with the Securities and Exchange Commission.
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Post-Effective Amendment No. 3 to Registration Statement (No 33-16238) on Form S-8 relating to Long Island Lighting Company's Employee Stock Purchase Plan, Post-Effective Amendment No. 1 to Registration Statement (No. 2-87427) on Form S-3 relating to Long Island Lighting Company's Automatic Dividend Reinvestment Plan and in the related Prospectus, Registration Statement (No. 2-88578) on Form S-3 relating to the issuance of Common Stock and in the related Prospectus and Registration Statement (No. 33-45834) on Form S-3 relating to the issuance of General and Refunding Bonds and in the related Prospectus and Registration Statement (No. 33-60744) on Form S-3 relating to the issuance of General and Refunding Bonds, Debentures, Preferred Stock or Common Stock and in the related Prospectus, of our report dated February 4, 1994, with respect to the financial statements and schedules of Long Island Lighting Company included in this Annual Report on Form 10-K for the year ended December 31, 1993.
ERNST & YOUNG
Melville, New York March 11, 1994
EXHIBIT INDEX
Exhibit No. Description - ------- -----------
*3(a) Restated Certificate of Incorporation of the Company dated November 11, 1993.
(b) By-laws of the Company as amended on May 28, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
4(a) General and Refunding Indenture dated as of June 1, 1975 and 21 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
G&R Indenture dated as of June 1, 1975.
First Supplemental Indenture to G&R Indenture dated as of June 1, 1975.
Second Supplemental Indenture to G&R Indenture dated as of September 1, 1975.
Third Supplemental Indenture to G&R Indenture dated as of June 1, 1976.
Fourth Supplemental Indenture to G&R Indenture dated as of December 1, 1976.
Fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1977.
Sixth Supplemental Indenture to G&R Indenture dated as of April 1, 1978.
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
Seventh Supplemental Indenture to G&R Indenture dated as of March 1, 1979.
Eighth Supplemental Indenture to G&R Indenture dated as of February 1, 1980.
Ninth Supplemental Indenture to G&R Indenture dated as of March 1, 1981.
Tenth Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Eleventh Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Twelfth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Thirteenth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Fourteenth Supplemental Indenture to G&R Indenture dated as of June 1, 1982.
Fifteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1982.
Sixteenth Supplemental Indenture to G&R Indenture dated as of April 1, 1983.
Seventeenth Supplemental Indenture to G&R Indenture dated as of May 1, 1983.
Eighteenth Supplemental Indenture to G&R Indenture dated as of September 1, 1984.
Nineteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1984.
Twentieth Supplemental Indenture to G&R Indenture dated as of June 1, 1985.
Twenty-first Supplemental Indenture to G&R Indenture dated as of April 1, 1986.
Twenty-second Supplemental Indenture to G&R Indenture dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
Twenty-third Supplemental Indenture to G&R Indenture dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fourth Supplemental Indenture to G&R Indenture dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Twenty-sixth Supplemental Indenture to G&R Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
4(b) Indenture of Mortgage and Deed of Trust dated as of September 1, 1951 and 44 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
Indenture of Mortgage dated as of September 1, 1951.
First Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1951.
Second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1952.
Third Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1953.
Fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1954.
Fifth Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1955.
Sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1956.
Seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1958.
Exhibit No. Description - ------- -----------
Eighth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1959.
Ninth Supplemental Indenture to the Indenture of Mortgage dated as of August 1, 1961.
Tenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1963.
Eleventh Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1964.
Twelfth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1965.
Thirteenth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1966.
Fourteenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1967.
Fifteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1969.
Sixteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1970.
Seventeenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1971.
Eighteenth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1971.
Nineteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1972.
Twentieth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1973.
Twenty-first Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1974.
Twenty-second Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1974.
Twenty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1975.
Exhibit No. Description - ------- -----------
Twenty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1975.
Twenty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1976.
Twenty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1976.
Twenty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1977.
Twenty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1978.
Twenty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1979.
Thirtieth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1980.
Thirty-first Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1981.
Thirty-second Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-third Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1982.
Thirty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1982.
Thirty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1983.
Thirty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1983.
Exhibit No. Description - ------- -----------
Fortieth Supplemental Indenture to the Indenture of Mortgage dated as of February 29, 1984.
Forty-first Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1984.
Forty-second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1984.
Forty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1985.
Forty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1986.
Forty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Forty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Forty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
*4(c) Debenture Indenture dated as of November 1, 1986 from the Company to The Connecticut Bank and Trust Company, National Association, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
First Supplemental Indenture dated as of November 1, 1986 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
Second Supplemental Indenture dated as of April 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Third Supplemental Indenture dated as of July 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fifth Supplemental Indenture dated as of November 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*Sixth Supplemental Indenture dated as of June 1, 1993.
*Seventh Supplemental Indenture dated as of July 1, 1993.
4(d) Debenture Indenture dated as of November 1, 1992 from the Company to Chemical Bank, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
First Supplemental Indenture dated as of January 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
Second Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Third Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(a) Sound Cable Project Facilities and Marketing Agreement dated as of August 26, 1987 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
10(b) Transmission Agreement by and between the Company and Consolidated Edison Company of New York, Inc. dated as of March 31, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(c) Contract for the sale of Firm Power and Energy by and between the Company and the State of New York dated as of April 26, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(d) Capacity Supply Agreement dated as of December 13, 1991 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
*10(e) Nine Mile Point Nuclear Station Unit 2 Operating Agreement dated as of January 1, 1993 by and between the Company, New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation and Central Hudson Gas and Electric Corporation.
10(f) Settlement Agreement on Issues Related to Nine Mile Two Nuclear Plant dated as of June 6, 1990 by and between the Company, the Staff of the Department of Public Service and others (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
10(g) Settlement Agreement -- LILCO Issues dated as of February 28, 1989 by and between the Company and the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(h) Amended and Restated Asset Transfer Agreement by and between the Company and the Long Island Power Authority dated as of June 16, 1988 as amended and restated on April 14, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(i) Memorandum of Understanding concerning proposed agreements on power supply for Long Island dated as of June 16, 1988 by and between the Company and New York Power Authority as amended May 24, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(j) Rate Moderation Agreement submitted by the staff of the New York State Public Service Commission on March 16, 1989 and supported by the Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(k) Site Cooperation and Reimbursement Agreement dated as of January 24, 1990 by and between the Company and Long Island Power Authority (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(l) Stipulation of settlement of federal Racketeer Influenced and Corrupt Organizations Act ("RICO") Class Action and False Claims Action dated as of February 27, 1989 among the attorneys for the Company, the ratepayer class, the United States of America and the individual defendants named therein (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(m) Revolving Credit Agreement dated as of June 27, 1989, between Long Island Lighting Company and the banks and co-agents listed therein, with the Exhibits thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and as amended by the First Amendment dated as of October 13, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) and as amended by the Second Amendment dated as of March 5, 1992 and as modified by a Waiver dated November 5, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(n) Indenture of Trust dated as of December 1, 1989 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
Participation Agreement dated as of December 1, 1989 by and between the New York State Energy Research and Development Authority and the Company relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(o) Indenture of Trust dated as of May 1, 1990 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of May 1, 1990 by and between the New York State Energy Research and Development Authority and the Company relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(p) Indenture of Trust dated as of January 1, 1991 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of January 1, 1991 by and between the New York State Energy Research and Development Authority and the Company relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(q) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(r) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(s) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(t) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*10(u) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series A.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series A.
*10(v) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series B.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series B.
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
*10(w) Supplemental Death and Retirement Benefits Plan as amended and restated effective January 1, 1993 and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference.
*10(x) Executive Agreements and Management Contracts
*(1) Executive Employment Agreement dated as of January 30, 1984 by and between William J. Catacosinos and Long Island Lighting Company, as amended by amendments dated March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference), December 22, 1989 (filed as Exhibit 10(o) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and December 2, 1991 (filed as Exhibit 10(u) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference); an Employment Agreement dated as of March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by amendments dated November 30, 1989 (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference), an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference), an amendment dated December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference), and as amended by an amendment dated December 31, 1993.
*(2) Employment Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference.
(3) Employment Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
(4) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between James T. Flynn and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(5) Employment Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(6) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Robert X. Kelleher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(7) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between John D. Leonard, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(8) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Adam M. Madsen and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(9) Employment Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(10) Employment Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(11) Employment Agreement dated as of April 16, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Brian R. McCaffrey and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 incorporated herein by reference) and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(12) Employment Agreement dated as of March 18, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Joseph W. McDonnell and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(13) Employment Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company and related Trust Agreement and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(14) Employment Agreement dated as of July 29, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William G. Schiffmacher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(15) Employment Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(16) Employment Agreement dated as of March 9, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(17) Employment Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(18) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Walter F. Wilm, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(19) Employment Agreement dated as of November 4, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Edward J. Youngling and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(20) Retirement Agreement dated as of January 7, 1987 by and between George J. Sideris and Long Island Lighting Company, as amended March 20, 1987, and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
*(21) Indemnification Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company.
(22) Indemnification Agreement dated as of January 31, 1992 by and between A. James Barnes and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(23) Indemnification Agreement dated as of May 30, 1990 by and between George Bugliarello and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(24) Indemnification Agreement dated as of April 17, 1992 by and between Renso L. Caporali and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(25) Indemnification Agreement dated as of November 19, 1987 by and between William J. Catacosinos and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(26) Indemnification Agreement dated as of April 23, 1992 by and between Peter O. Crisp and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(27) Indemnification Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(28) Indemnification Agreement dated as of November 25, 1987 by and between James T. Flynn and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(29) Indemnification Agreement dated as of November 19, 1987 by and between Winfield E. Fromm and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- ----------------------- * Filed herewith.
Exhibit No. Description - ------- -----------
*(30) Indemnification Agreement dated as of January 3, 1994 by and between Vicki L. Fuller and Long Island Lighting Company.
(31) Indemnification Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(32) Indemnification Agreement dated as of November 25, 1987 by and between Robert X. Kelleher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(33) Indemnification Agreement dated as of November 25, 1987 by and between John D. Leonard, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(34) Indemnification Agreement dated as of November 25, 1987 by and between Adam M. Madsen and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(35) Indemnification Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(36) Indemnification Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(37) Indemnification Agreement dated as of November 25, 1987 by and between Brian R. McCaffrey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(38) Indemnification Agreement dated as of March 18, 1988 by and between Joseph W. McDonnell and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(39) Indemnification Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- --------------------- * Filed herewith.
Exhibit No. Description - ------- -----------
*(40) Indemnification Agreement dated as of April 20, 1993 by and between Katherine D. Ortega and Long Island Lighting Company.
(41) Indemnification Agreement dated as of November 19, 1987 by and between Basil A. Paterson and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(42) Indemnification Agreement dated as of November 25, 1987 by and between William Schiffmacher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(43) Indemnification Agreement dated as of February 8, 1992 by and between Richard L. Schmalensee and Long Island Lighting Company (filed as an Exhibit to the Company Form 10- K for the Year Ended December 31, 1991 and incorporated herein by reference).
(44) Indemnification Agreement dated as of November 30, 1987 by and between George J. Sideris and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(45) Indemnification Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
(46) Indemnification Agreement dated as of March 1, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(47) Indemnification Agreement dated as of November 19, 1987 by and between John H. Talmage and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(48) Indemnification Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(49) Indemnification Agreement dated as of November 19, 1987 by and between Phyllis A. Vineyard and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- --------------------- * Filed herewith.
Exhibit No. Description - ------- -----------
(50) Indemnification Agreement dated as of November 25, 1987 by and between Walter F. Wilm, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(51) Indemnification Agreement dated as of November 4, 1988 by and between Edward J. Youngling and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(52) Long Island Lighting Company Officers' and Directors' Protective Trust dated as of April 18, 1988 by and between the Company and Clarence Goldberg, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(53) Long Island Lighting Company's Retirement Plan for Directors dated as of February 2, 1990 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
*(54) Agreement dated as of April 20, 1993 by and between the Company and Lionel M. Goldberg.
*(55) Agreement dated as of April 20, 1993 by and between the Company and Eben W. Pyne.
*23 Consent of Ernst & Young, Independent Auditors.
*24(a) Powers of Attorney executed by the Directors and Officers of the Company.
*24(b) Certificate as to Corporate Power of Attorney.
*24(c) Certified copy of Resolution of Board of Directors authorizing signature pursuant to Power of Attorney.
Financial Statements of subsidiary companies accounted for by the equity method have been omitted because such subsidiaries do not constitute significant subsidiaries.
- ---------------------- * Filed herewith.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis addresses matters of significance with regard to the Company and its financial condition, liquidity, capital requirements and results of operations for the last three years.
OVERVIEW
Nearly five years have passed since the effective date of the 1989 Settlement, discussed in Note 2 of Notes to Financial Statements, which resolved the controversy surrounding the Shoreham Nuclear Power Station (Shoreham). Over this period of time, the Company has focused on managing costs and improving operating efficiencies. This, coupled with six electric rate increases, lower than anticipated fuel and financing costs and significantly lower production expenses has helped to improve the Company's financial health. This also enabled the Company to file with the Public Service Commission of the State of New York (PSC) on December 31, 1993 an electric rate plan requesting that base rates be frozen for a two-year period beginning December 1, 1994.
The Company's electric rate plan to freeze base rates is designed to moderate the rate increases that were originally contemplated in the 1989 Settlement. The two-year base rate freeze will help better position the Company to respond to the current environment in the utility industry and to assist in Long Island's economic recovery.
Other significant events during 1993 included:
o Approval, by the PSC, of the third annual electric rate increase of 4.0% effective December 1, 1993, under the three-year electric rate plan authorized in 1991.
o For the first time since the 1989 Settlement became effective, revenues provided under the Rate Moderation Agreement exceeded revenues that would have been provided under conventional ratemaking, resulting in the decline of the Rate Moderation Component balance and an improvement in the Company's cash flow position.
o An increase in the Company's common stock quarterly dividend from 43 1/2 cents per share to 44 1/2 cents per share, representing the fourth consecutive year of dividend increases.
Earnings for common stock in 1993 were $2.15 per common share compared to $2.14 per common share in 1992.
o The approval by the PSC of a three-year gas rate plan providing annual rate increases of 4.7%, 3.8% and 2.8%, for the rate years beginning December 1, 1993, 1994, and 1995, respectively. This follows an increase in
gas rates of 7.1% that was effective December 1, 1992.
o The addition of over 9,000 new gas space heating customers, resulting from the Company's gas expansion program.
o The refinancing of a significant amount of the Company's higher-cost securities as a result of very favorable long-term interest rates.
Refinancing of approximately $983 million of higher-cost securities significantly lowered the Company's cost of debt and preferred stock. These 1993 refinancings will result in more than $18 million in annual cash savings through lower interest expense and preferred stock dividends.
Since the 1989 Settlement became effective, the Company's aggressive refinancing program has resulted in annual cash savings of approximately $88 million.
LIQUIDITY AND CAPITAL RESOURCES
CASH AND REVOLVING CREDIT
At December 31, 1993, the Company's cash and cash equivalents amounted to approximately $249 million, compared to $309 million at December 31, 1992. In addition, the Company has approximately $276 million available through October 1, 1994, provided by its 1989 Revolving Credit Agreement (1989 RCA). At December 31, 1993, no amounts were outstanding under the 1989 RCA. For a further discussion of the 1989 RCA, see Note 7 of Notes to Financial Statements.
CAPITAL REQUIREMENTS AND CAPITAL PROVIDED
During 1993, the Company continued its aggressive refinancing of higher-cost debt and preferred stock, taking advantage of declining interest rates. In 1993, the Company redeemed $568 million of higher-cost securities through the issuance of approximately $382 million of debentures and $204 million of preferred stock. The Company also issued $420 million of debentures to redeem $415 million of maturing debt.
In addition to these refinancings, the Company issued $200 million of debentures and $100 million of tax-exempt securities and used the proceeds to reimburse the Company's treasury for previously incurred capital expenditures. In November 1993, the Company satisfied the maturity of $175 million of debentures with cash on hand.
For a further discussion on the Company's capital stock and long-term debt, see Notes 6 and 7 of Notes to Financial Statements.
The Company expects that it will seek external financing of approximately $1.1 billion solely for the purpose of refunding maturing debt in the years 1994, 1995 and 1996 as follows:
The Company is planning, subject to market conditions, to fund a portion of these mandatory redemptions with the issuance of common equity in order to improve its debt-to-equity ratio.
Capital requirements and capital provided for 1993 and 1992 were as follows:
For further information, see the Statement of Cash Flows.
For 1994, total capital requirements (excluding common stock dividends) are estimated at $1.1 billion, of which mandatory redemptions are $600 million, construction requirements are $327 million, preferred stock sinking fund requirements are $5 million, preferred stock dividends are $53 million and Shoreham post settlement costs are $158 million.
During 1994, the Company expects to access the capital markets only for funds required to satisfy maturing securities or to refund outstanding securities to reduce financing costs. It is anticipated that the internal funds generated from operations will be sufficient to satisfy all other capital requirements, including both common and preferred stock dividends.
CAPITALIZATION
The Company's capitalization, including current maturities of long-term debt and current redemption requirements of preferred stock, at December 31, 1993, was approximately $8.4 billion, as compared to $8.2 billion at December 31, 1992. This increase in capitalization of approximately $185 million principally reflects an increase in long-term debt and preferred stock associated with the Company's financing activities in 1993 and an increase in common shareowners' equity comprising 1993 net income of approximately $296 million reduced by common and preferred stock dividends of approximately $253 million.
At December 31, 1993 and 1992, the components of the Company's capitalization ratios were as follows:
The Company's debt-to-equity ratio reflects two substantial charges to common shareowners' equity made in 1988 and 1989. In 1988, the Company was required to write-down net assets of approximately $1.3 billion, net of tax effects, relating to its investments in Shoreham and Nine Mile Point Nuclear Power Station, Unit 2 (NMP2). In 1989, the Company incurred a loss for common stock of approximately $175 million, reflecting the effects of the 1989 Settlement and the Class Settlement, discussed in Notes 2 and 4 of Notes to Financial Statements. The Company is committed to improving its debt-to-equity ratio through growth in retained earnings, debt reduction through improved cash flows, and the issuance of common equity.
RATE MATTERS
ELECTRIC
In conjunction with the 1989 Settlement, the PSC authorized the recognition of a regulatory asset known as the Financial Resource Asset (FRA). The FRA consists of two components, the Base Financial Component (BFC) and the Rate Moderation Component (RMC). The Rate Moderation Agreement (RMA), one of the constituent documents of the 1989 Settlement, provides for the full recovery of the FRA. The RMA, by its terms, specifies that the FRA was created to provide the Company adequate financial indicia for the period 1989 through 1999 and to restore the Company's debt securities to investment grade levels as determined by independent rating agencies.
The BFC, as initially established, represents the present value of the future net-after-tax cash flows which the RMA provided the Company for its financial recovery. The BFC was granted rate base treatment under the terms of the RMA and is included in the Company's revenue requirements through an amortization included in rates over forty years on a straight-line basis that began July 1, 1989.
The RMC reflects the difference between the Company's revenue requirements under conventional ratemaking and the revenues resulting from the implementation of the rate moderation plan provided for in the RMA. This revenue difference, together with a carrying charge equal to the allowed rate of return on rate base, has been deferred. The RMC has provided the Company with a substantial amount of non-cash earnings since the effective date of the 1989 Settlement through December 31, 1992, because the revenues provided under the RMA were less than the revenues required under conventional ratemaking. During 1993, however, as revenues provided under the RMA began to exceed the revenues that would have been provided under conventional ratemaking the RMC balance began to decline.
Pursuant to the 1989 Settlement, the Company has received six electric rate increases consistent with the objectives of the RMA. In response to the Company's rate filing in December 1990, the PSC approved the Long Island Lighting Company Ratemaking and Performance Plan (LRPP) in November 1991, which provided for annual electric rate increases of 4.15%, 4.1% and 4.0% effective December 1, 1991, 1992 and 1993, respectively. Effective December 1, 1993, the Company began receiving the third of these three annual electric rate increases. The LRPP provides for an allowed return on common equity from electric operations of 11.6% for each of the three rate years.
The LRPP was designed to be consistent with the RMA's long-term goals. One principal objective of the LRPP is to reassign risk so that the Company assumes the responsibility for risks within the control of management, whereas risks largely beyond the control of management would be assumed by the ratepayers. One of the major components of the LRPP provides for a revenue reconciliation mechanism that mitigates the impact on earnings of experiencing electric sales that are above or below the LRPP forecast by providing a fixed annual net margin level (defined as sales revenues, net of fuel and gross receipts taxes) that the Company will receive for each of the three rate years under the LRPP. Another component of the LRPP allows the Company to earn for each rate year up to 60 additional basis points, or forfeit up to 38 basis points, of the allowed return on common equity as a result of its performance within certain incentive and/or penalty programs. These programs consist of a customer service performance plan, a demand side management program, a time-of-use program, a partial pass through fuel cost incentive plan and effective December 1, 1993, an electric transmission and distribution reliability plan. For the rate years ended November 30, 1993 and 1992, the Company earned approximately $9.2 million and $4.3 million, net of tax effects, respectively, based upon its performance within these programs. The LRPP contains a mechanism whereby earnings in excess of the allowed rate of return on common equity (11.6%), excluding the impacts of the various incentive and/or penalty programs, are shared equally between ratepayers and shareowners. For the rate years ended November 30, 1993 and 1992, the Company earned approximately $8.9 million and $21.4 million, net of tax effects, respectively, in excess of its allowed rate of return on common equity which was shared equally between ratepayers and shareowners.
In December 1993, the Company filed a three-year electric rate plan with the PSC for the period beginning December 1, 1994 that minimizes future electric rate increases while retaining consistency with the RMA's objective of continuing the restoration of the Company's financial health. The filing provides for zero percentage base rate increases in years one and two of the plan and a rate increase of 4.3% in the third year. Although base electric rates would be frozen during the first two years of the plan, annual rate increases of approximately 1% to 2% are expected to result in these years from the operation of the Company's fuel cost adjustment (FCA) clause. The FCA captures, among other amounts, any increases in the cost of fuel above the level recovered in base rates and, under a continuation of the rate mechanisms provided by the LRPP, any amounts to be recovered or refunded to ratepayers in excess of $15 million which result from the reconciliation of revenue, certain expenses and earned performance incentive components. The electric rate plan requests an allowed rate of return on equity of 11.0%. The Company's rate filing reflects four underlying objectives: (i) to limit the balance of the RMC during the three-year period to no more than its 1992 peak balance of $652 million; (ii) to recover the RMC within no more than thirteen years of its 1989 inception; (iii) to minimize the final three rate increases that will follow the two-year rate freeze period; and (iv) to continue the Company's gradual return to financial health. The Company's electric rate plan is subject to approval by the PSC.
The Company's current electric rate plan provides for lower annual electric rate increases than originally anticipated under the 1989 Settlement. However, as a result of changes in certain assumptions upon which the RMA was based, their impact on the RMC, and the Company's plans to reduce demand side management (DSM), operations, maintenance and capital expenditures, the Company has determined that the overall objectives of the RMA can be met under the multi-year plan described above. As a result of
lower than originally anticipated inflation rates, interest costs, property taxes, fuel costs and the return on common equity allowed by the PSC, the RMC, which originally had been anticipated to peak at $1.2 billion in 1994, has already peaked at $652 million in 1992. With the exception of an increase in the 1995-1996 period, which is not now projected to cause the RMC to increase above its $652 million peak, the RMC is expected to decline until it is fully amortized.
Under this electric rate plan, the recovery of the RMC would be extended, if necessary, for an additional period of not more than three years beyond the approximate ten-year period envisioned in the RMA. The actual length of the RMC extension will depend on the extent to which the assumptions underlying the rate plan materialize. The Company's current projections indicate that the RMC will be recovered in eleven years.
For a further discussion of the 1989 Settlement and Rate Matters, see Notes 2 and 3 of Notes to Financial Statements.
GAS
In December 1993, the PSC approved a three-year gas rate settlement between the Company and the staff of the PSC. The gas rate settlement provides that the Company receive, for the rate years beginning December 1, 1993, 1994 and 1995, annual gas rate increases of 4.7%, 3.8% and 2.8%, respectively. In the determination of the revenue requirements for the first year of the gas rate settlement an allowed rate of return on equity of 10.1% was used. The gas rate decision also provides for earnings in excess of a 10.6% return on equity in any of the three rate years covered by the settlement be shared equally between the Company's firm gas customers and its shareowners. The allowed rate of return for the rate year that began December 1, 1992 was 11.0 %.
ELECTRIC COMPETITION
NON-UTILITY GENERATORS (NUGs) The development of the NUG industry has been encouraged by federal and state legislation. There are two ways that NUGs may negatively impact the Company: first, NUGs may locate on a customer's site, providing part or all of that customer's electric energy requirements. The Company estimates that in 1993 sales lost to such on-site NUGs totalled 234 gigawatt-hours (Gwh) in sales or approximately $20 million in revenues, net of fuel. This represents only 1.0% of the Company's 1993 net revenues. Second, in accordance with the Public Utility Regulatory Policy Act of 1978 (PURPA), the Company is required to purchase all the power offered by NUGs that are Qualified Facilities (QF). QFs have the choice of pricing these sales at either (i) PSC published estimates of the Company's long run avoided costs (LRAC) or (ii) the Company's tariff rates. Additionally, until repeal in 1992, New York State law set a minimum price of six cents per kilowatt-hour (Kwh) for certain categories of QFs, considerably above the Company's avoided cost. The six-cent minimum now only applies to contracts entered into before June 1992.
The Company believes that the repeal of the six-cent law, coupled
with the PSC's updates which resulted in lower LRAC estimates, has significantly reduced the economic advantage to entrepreneurs seeking to compete with the Company.
As of December 31, 1993, 39 QFs were on line and selling approximately 200 megawatts (MW) of power to the Company. The Company estimates that in 1993, the purchases federal and state law required it to make from QFs cost the Company $47 million more than it would have cost to generate this power itself.
With the exception of approximately 40 MW of power to be produced at the Stony Brook campus of the State University of New York beginning in early 1995, the Company does not expect any new major NUGs to be built on Long Island in the foreseeable future.
RETAIL COMPETITION For over a decade, the Company has voluntarily provided wheeling of New York Power Authority (NYPA) power for economic development. As a result, NYPA power has displaced approximately 400 Gwh of energy sales. The net revenue loss associated with this amount of sales is approximately $27 million or 1.3% of the Company's 1993 net revenues. The potential loss of additional load is limited by conditions in the Company's current transmission agreements with NYPA.
Competition for customer loads also comes from other electric utilities (including those in Connecticut, New York, and New Jersey) which seek to entice commercial and industrial customers to relocate within their service territories by offering reduced rates and other incentives.
In order to retain existing and attract new commercial and industrial customers, the Company offers an Economic Development Rate which provides rate abatement to new or existing customers that qualify under the program approved by the PSC.
Neither federal nor New York State law mandates retail wheeling. The Staff of the PSC has recently recommended that the PSC examine the issues attending retail wheeling.
CONSERVATION AND SUPPLY
The Company's 1993 Electric Conservation and Load Management Plan called for a cumulative 194 MW reduction in coincident peak demand by December 31, 1993 and a cumulative annualized energy savings of 578 Gwh, at a cost of $33.5 million. The Company has met these targets. These reductions were achieved through several different programs including customer education/information, rebate, audit and direct installation which targeted a number of energy efficient technologies.
In the fourth quarter of 1993, a modified DSM Plan was filed with the PSC to support the objectives of the Company's December 31, 1993 electric rate plan filing. Under this modified plan a greater emphasis will be placed on the educational aspect of the Company's conservation efforts in lieu of the conventional reliance on rebates. This will help to shift the responsibility for adopting and implementing energy efficient practices away from the utility and to the customer.
The Company's current electric load forecasts indicate that, with continued implementation of its conservation and load management programs and with the availability of electricity provided by QFs located within the Company's service territory, the Company's existing generating facilities, its portion of nuclear energy generated at NMP2 and power purchased from other electric systems are adequate to meet the energy demands on Long Island beyond the end of the century.
INVESTMENT RATING
The Company's securities are rated by Moody's Investors Service, Inc. (Moody's), Standard and Poor's Corporation (S&P), Fitch Investors Service, Inc. (Fitch) and Duff and Phelps (D&P).
During the period 1989 through 1992, the rating agencies significantly upgraded their ratings of the Company's securities. In 1993, both Moody's and Fitch reaffirmed their assigned ratings on the Company's securities. S&P however, lowered its ratings on the Company's First Mortgage Bonds and G&R Bonds one level to minimum investment grade and lowered its ratings on the Company's Debentures and Preferred Stock to one level below minimum investment grade. D&P lowered its ratings on the Company's debentures and preferred stock one level.
S&P's actions reflect its concerns regarding the utility industry's challenges relating to intensified competitive pressures, sluggish demand expectations, slow earnings growth prospects, high common dividend payouts, environmental cost pressures and nuclear operating and decommissioning costs.
CLEAN AIR ACT
In late 1990, significant amendments to the federal Clean Air Act were adopted. As a result, the Company expects that it will have to expend $4.3 million in 1994 to meet continuous emission monitoring requirements and $3.5 million in 1994 and $2.0 million in 1995 to meet Phase I nitrogen oxide (NOx) reduction requirements. In addition, subject to regulations that have not yet been issued, the Company estimates that it may be required to expend as much as $125 million by May 1999 to meet Phase II NOx reduction requirements and approximately $50 million by 2000 to meet requirements for the control of hazardous air pollutants from power plants. The Company believes that all such costs would be recoverable in rates.
RESULTS OF OPERATIONS
EARNINGS
Summary results of earnings for the years 1993, 1992 and 1991 were as follows:
For all periods, net income, earnings for common stock and earnings per common share include a non-cash allowance for funds used during construction (AFC) and the effects of the RMC.
Overall earnings remained stable in 1993 while the Company's improved cash flow continued, consistent with the 1989 Settlement. The earnings in the electric business were lower in 1993 when compared to 1992 due primarily to the expensing of previously deferred storm costs, lower interest rates associated with the short-term investments, and regulatory adjustments. The lower level of earnings in the electric business was offset by a significant increase in the gas business earnings. The Company saw continued expansion in the gas business in 1993.
REVENUES
Total revenues in 1993, including revenues from recovery of fuel costs, were $2.9 billion, representing an increase of $259 million or 9.9% over 1992 revenues. Total revenues for the Company's electric and gas operations for the years 1993, 1992 and 1991 were as follows:
ELECTRIC REVENUES In 1993, electric revenues increased $157 million when compared to 1992. Revenues in 1992 had decreased $2 million compared with 1991. The changes in the level of revenues when compared to the prior year resulted from the following factors:
RATE INCREASES The Company received electric rate increases of 4.0% effective December 1, 1993 and 4.1% effective December 1, 1992. These rate increases provided $75 million in additional revenues for 1993 when compared to 1992. A 4.15% rate increase effective December 1, 1991 provided $72 million in additional revenues for 1992 when compared to 1991.
SALES VOLUMES The increase in revenue from sales volumes was primarily attributable to warmer weather experienced in the summer of 1993 when compared to the same period in 1992. The decrease in revenues from sales volumes for 1992 when compared to 1991 is also attributable to weather. The Company's current electric rate structure, discussed above under the heading "Rate Matters," provides for a revenue reconciliation mechanism which mitigates the impact on earnings of experiencing electric sales that are above or below the levels reflected in rates. As a result of lower than adjudicated electric sales, the Company recorded non-cash income, which is included in "Other Regulatory Amortizations" of $43.5 million, $78.5 million and $0.4 million in 1993, 1992 and 1991, respectively. For a further discussion on the recoverability of these amounts see the discussion under the heading "Rate Matters."
Summary of electric kilowatt hour (Kwh) sales for the years 1993, 1992 and 1991 were as follows:
The increase in residential and commercial/industrial sales in 1993 was largely due to the warmer weather experienced during the summer months. Residential sales, representing 45% of system sales, were up by 4.9% when compared with 1992, while commercial/industrial sales, which accounted for 52% of system sales, increased by 0.9%. Power pool sales fluctuate with relative costs and power pool system availabilities.
The average number of electric customers served in 1993 and 1992 was approximately 1,013,000 and 1,009,000, respectively. The customer increase in 1993 is similar to the increase experienced in 1992 when compared to 1991.
FUEL COST RECOVERIES Total electric fuel cost recoveries for 1993 were up $22 million compared with 1992, primarily as a result of higher sales volumes, partially offset by a decrease in the average cost of fuel. In 1992, fuel cost recoveries decreased by $13 million compared with 1991, principally due to lower sales volumes, partially offset by an increase in the average cost of fuel.
GAS REVENUES In 1993, gas revenues increased by $102 million, or 23.8%, when compared to 1992. Revenues in 1992 increased by $76 million, or 21.7%, when compared to 1991. The changes in the level of revenues when compared to the prior year resulted from the following factors:
RATE INCREASES The Company received a gas rate increase of 4.7%, effective December 31, 1993, but was permitted by the PSC to recognize additional revenues of $4.6 million in 1993, as if the rate increase had been effective on December 1, 1993. The Company had also received rate increases of 7.1%, effective December 1, 1992, and 4.1%, effective December 1, 1991. The effects of these rate increases was to increase revenues by $35 million in 1993 when compared with 1992, and by $17 million in 1992 when compared with 1991.
SALES VOLUMES The increase in 1993 revenues due to sales volumes was primarily due to customer additions and conversions resulting from the Company's gas expansion program. The Company added over 9,000 new gas space heating customers to its system in 1993. In 1992, the Company added approximately 10,000 new gas space heating customers.
Summary of gas decatherm (dth) sales for the years 1993, 1992 and 1991 were as follows:
FUEL COST RECOVERIES Recoveries of gas fuel expenses in 1993 revenues increased by $33 million compared with 1992, primarily due to higher sales volumes. In 1992, fuel recovery revenues had increased by $9 million, primarily due to higher average gas prices.
FUELS AND PURCHASED POWER
Expenses for fuels and purchased power increased by $86 million in 1993 compared with 1992, and decreased by $27 million in 1992 compared with 1991.
Summary of fuel and purchased power expenses for the years 1993, 1992 and 1991 were as follows:
The Company has significantly reduced the amount of oil it would otherwise have used to generate electricity by burning gas, purchasing power and utilizing nuclear generation from NMP2.
Summary of electric fuel and purchased power mix for the years 1993, 1992 and 1991 were as follows:
OPERATIONS AND MAINTENANCE EXPENSES
Total operations and maintenance expenses, excluding fuel and purchased power, for 1993, 1992 and 1991 were $522 million, $498 million and $523 million, respectively. The $24 million, or 4.8%, increase in 1993 when compared to 1992 was primarily due to the recognition of previously deferred storm costs, the recording of higher accruals for uncollectible accounts and higher transmission and distribution costs for both the electric and gas businesses. The $25 million, or 4.8%, decrease in 1992 compared to 1991 was primarily attributable to lower electric operations expenses.
INTEREST EXPENSE
Interest expense for 1993, 1992 and 1991 was $534 million, $513 million and $524 million, respectively. The increase in 1993 when compared to 1992 was attributable to higher debt levels and the conversion in June 1992 of $400 million of tax-exempt securities from a weekly variable interest rate to a higher 30-year fixed rate. Also contributing to the increase, was the issuance in November 1992 of 30-year fixed rate debentures, the proceeds of which were used to eliminate variable rate bank debt. The conversion of the tax-exempt securities and refinancing of bank debt was done in order to take advantage of historically low interest rates. Partially offsetting this increase in interest expense were the effects of the Company's aggressive refinancing of higher-cost debt in 1993. The decrease in 1992 when compared to 1991 is due to significantly lower interest rates on the Company's outstanding debt, primarily resulting from the Company's aggressive refinancing efforts in the latter part of 1991 and during 1992.
RATE MODERATION COMPONENT
In 1993, the Company recorded non-cash charges to income of approximately $49 million reflecting the amortization of the RMC offset by related carrying charges. In 1992 and 1991, the Company recorded non-cash credits to income of approximately $73 million and $269 million, respectively, representing the accretion of the RMC and related carrying charges. For a discussion of the RMC and RMA, see Notes 2 and 3 of Notes to Financial Statements.
BASE FINANCIAL COMPONENT
For each of the years 1993, 1992 and 1991, the Company recorded non-cash charges to income of approximately $101 million, reflecting the continuing amortization of the BFC, which is afforded rate base treatment under the RMA. For a further discussion of the BFC and 1989 Settlement, see Notes 1 and 2 of Notes to Financial Statements.
ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1993 the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions. SFAS No. 106 requires the Company to recognize the expected cost of providing postretirement benefits when employee services are rendered rather than on a pay-as-you-go method. The Company recorded an accumulated postretirement benefit obligation and corresponding regulatory asset of approximately $376 million which represents the transition obligation at January 1, 1993. As a result of adopting SFAS No. 106, the Company's annual postretirement benefit cost for 1993 increased by approximately $28 million above the amount that would have been recorded under the pay-as-you-go method. This additional non-cash
postretirement benefit cost has been accounted for as a regulatory asset. The PSC has permitted recovery of these regulatory assets through rates. The adoption of SFAS No. 106 had no impact on net income for the year ended December 31, 1993. For a further discussion of SFAS No. 106, see Note 8 of Notes to Financial Statements.
Effective January 1, 1993 the Company adopted SFAS No. 109, Accounting for Income Taxes. As permitted under SFAS No. 109, the Company has elected not to restate the financial statements of prior years. The adoption of SFAS No. 109 is in compliance with the PSC's Statement of Interim Policy on Accounting and Ratemaking issued in January 1993. This statement asserts that the adoption and ongoing implementation of SFAS No. 109 on an interim basis will be done in such a manner that all its provisions shall be complied with on a revenue neutral basis. As of January 1, 1993, the cumulative adjustment to the deferred tax liability and the corresponding regulatory asset is approximately $1.6 billion. The $800 million increase from the amount reported in interim financial statements results from the Company's further analysis of deferred taxes to recognize SFAS No. 109 requirements to present tax assets and liabilities gross. SFAS No. 109 requires, among other matters, recognition of the amount of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the financial statements and adjustment of deferred income taxes for an enacted change in tax laws. For regulated enterprises, SFAS No. 109 prohibits net of tax accounting and reporting and requires recognition of a deferred tax liability for the tax benefits which are flowed through to its customers. A regulatory asset or liability will be recognized relating to such items if it is probable that the future increase or decrease in taxes payable thereon shall be recovered from or returned to customers through future rates. For a further discussion of SFAS No. 109, see Notes 1 and 10 of Notes to Financial Statements.
SELECTED FINANCIAL DATA
Additional information respecting revenues, expenses, electric and gas operating income and operations data and balance sheet information for the last five years is provided in Tables 1 through 9 of Item 6, Selected Financial Data. Information with regard to the Company's business segments for the last three years is provided in Note 11 of Notes to Financial Statements.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
See Notes to Financial Statements.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REGULATION
The Company's accounting policies conform to generally accepted accounting principles (GAAP) as they apply to a regulated enterprise. Its accounting records are maintained in accordance with the Uniform Systems of Accounts prescribed by the Public Service Commission of the State of New York (PSC) and the Federal Energy Regulatory Commission (FERC).
UTILITY PLANT
Additions to and replacements of utility plant are capitalized at original cost, which includes material, labor, overhead and an allowance for the cost of funds used during construction. The cost of renewals and betterments relating to units of property is added to utility plant. The cost of property replaced, retired or otherwise disposed of is deducted from utility plant and, generally, together with dismantling costs less any salvage, is charged to accumulated depreciation. The cost of repairs and minor renewals is charged to maintenance expense. Mass properties (such as poles, wire and meters) are accounted for on an average unit cost basis by year of installation.
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION
The Uniform Systems of Accounts defines the allowance for funds used during construction (AFC) as the net cost of borrowed funds for construction purposes and a reasonable rate of return upon the utility's equity when so used. AFC is not an item of current cash income. AFC is computed monthly using a rate permitted by FERC on a portion of construction work in progress. The average annual AFC rate, without giving effect to compounding, was 9.73%, 9.98% and 10.74% for the years 1993, 1992 and 1991, respectively.
DEPRECIATION
The provisions for depreciation result from the application of straight-line rates to the original cost, by groups, of depreciable properties in service. The rates are determined by age-life studies performed annually on depreciable properties. Depreciation for electric properties was equivalent to approximately 3.0%, 3.2% and 3.3% of respective average depreciable plant costs for the years 1993, 1992 and 1991. Depreciation for gas properties was equivalent to approximately 2.0%, 2.6% and 2.9% of respective average depreciable plant costs for the years 1993, 1992 and 1991.
FINANCIAL RESOURCE ASSET
GAAP authorizes recognition of the existence of a regulatory asset when it is probable that a regulator will permit full recovery of a previously incurred cost. Pursuant to the 1989 Settlement and in accordance with GAAP, the Company recorded a regulatory asset known as the Financial Resource Asset (FRA). The FRA is designed to provide the Company with sufficient cash flows to assure its financial recovery. The FRA has two components, the Base Financial Component (BFC) and the Rate Moderation
Component (RMC). The Rate Moderation Agreement (RMA), one of the constituent documents of the 1989 Settlement, provides for the full recovery of the FRA. For a further discussion of the 1989 Settlement and the FRA, see Note 2.
CASH AND CASH EQUIVALENTS
Cash equivalents are highly liquid investments with maturities of three months or less when purchased. The carrying amount approximates fair value because of the short maturity of these investments.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values for the Company's long-term debt and redeemable preferred stock are based on quoted market prices, where available. The fair values for all other long-term debt and redeemable preferred stock are estimated using a discounted cash flow analyses which is based upon the Company's current incremental borrowing rate for similar types of securities.
CAPITALIZATION-PREMIUMS, DISCOUNTS AND EXPENSES
Premiums or discounts and expenses related to the issuance of long-term debt are amortized over the life of each issue. Unamortized premiums or discounts and expenses related to issues of long-term debt that are refinanced are amortized and recovered through rates over the shorter life of either the redeemed or new issues. Capital stock expense and redemption costs related to certain issues of preferred stock that have been refinanced as well as the cost of issuance of the preferred stock issued are recorded as deferred charges. These amounts are being amortized and recovered through rates over the shorter life of the redeemed or new issues.
REVENUES
The Company accrues electric and gas revenues for services rendered to customers but not billed at month-end.
FUEL COST ADJUSTMENTS
The Company's electric and gas tariffs include fuel cost adjustment (FCA) clauses which provide for the disposition of the difference between actual fuel costs and the fuel costs allowed in the Company's base tariff rates (base fuel costs). The Company defers these differences to future periods in which they will be billed or credited to customers, except for base electric fuel costs in excess of actual electric fuel costs, which are currently credited to the RMC as incurred.
FEDERAL INCOME TAXES
Effective January 1, 1993, the Company adopted the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. As permitted under SFAS No. 109, the Company has elected not to restate the financial statements of prior years. The adoption of SFAS No. 109 is in compliance with the PSC's Statement of Interim Policy on Accounting and Ratemaking issued
January 15, 1993. This statement asserts that the adoption and ongoing implementation of SFAS No. 109 on an interim basis will be done in such a manner that all its provisions shall be complied with on a revenue neutral basis. As of January 1, 1993, the cumulative adjustment to the deferred tax liability and the corresponding regulatory asset is approximately $1.6 billion. The $800 million increase from the amount reported in interim financial statements results from the Company's further analysis of deferred taxes to recognize SFAS No. 109 requirements to present tax assets and liabilities gross. SFAS No. 109 requires, among other matters, recognition of the amount of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the financial statements and adjustment of deferred income taxes for an enacted change in tax laws. For regulated enterprises, SFAS No. 109 prohibits net of tax accounting and reporting and requires recognition of a deferred tax liability for the tax benefits which are flowed through to its customers. A regulatory asset or liability will be recognized relating to such items if it is probable that the future increase or decrease in taxes payable thereon shall be recovered from or returned to customers through future rates.
The tax effects of other differences between income for financial statement purposes and for federal income tax purposes are accounted for as current adjustments in federal income tax provisions.
Prior to the adoption of SFAS No. 109 the Company provided deferred federal income taxes with respect to certain items of income and expense that were reported in different years in the financial statements and the tax return.
The Company defers the benefit of 60% of pre-1982 gas and pre-1983 electric and 100% of all other investment tax credits, with respect to regulated properties, when realized on its tax returns. Accumulated deferred investment tax credits are amortized ratably over the lives of the related properties.
For ratemaking purposes, the Company provides deferred federal income taxes with respect to certain differences between net income before income taxes and taxable income in certain instances when approved by the PSC, as disclosed in Note 10. Also certain accumulated deferred federal income taxes are deducted from rate base and amortized or otherwise applied as a reduction (increase) in federal income tax expense in future years.
RESERVES FOR CLAIMS AND DAMAGES
Losses arising from claims against the Company, including worker's compensation claims, property damage, extraordinary storm costs and general liability claims, are partially self-insured. Extraordinary storm losses incurred by the Company are partially insured by certain commercial insurance carriers. These insurance carriers provide partial insurance coverage for individual storm losses between $5 million and $50 million. Storm losses which are outside of the above-mentioned range are self-insured by the Company. Reserves for these losses are based on, among other things, experience, risk of loss and the ratemaking practices of the PSC.
RECLASSIFICATIONS To conform with an order of the FERC, dated March 31, 1993, the Company reclassified certain deferred items as regulatory assets and regulatory liabilities on its Balance Sheet. Regulatory assets and liabilities, as defined in this order, are assets and liabilities created through the ratemaking actions of regulatory agencies.
Certain other prior year amounts have been reclassified in the financial statements to be consistent with the current year's presentation.
NOTE 2. THE 1989 SETTLEMENT
On February 28, 1989, the Company and the State of New York (by its Governor) entered into the 1989 Settlement resolving certain issues relating to the Company and providing, among other matters, for the transfer of the Shoreham Nuclear Power Station (Shoreham) and its subsequent decommissioning. On February 29, 1992, the Company transferred ownership of Shoreham to the Long Island Power Authority (LIPA), an agency of the State of New York. Pursuant to the 1989 Settlement, LIPA is responsible for the decommissioning of Shoreham and has estimated that the decommissioning, in which Company employees are participating, will be completed in 1994. Based on the latest available information, LIPA has projected that the cost of decommissioning Shoreham will total approximately $164 million. This estimate excludes the costs associated with the disposal of Shoreham's fuel which is estimated to be $122 million. At December 31, 1993, the Company has funded approximately $140 million and $30 million of these costs, respectively. LIPA anticipates that the Nuclear Regulatory Commission (NRC) will terminate its license for Shoreham by the end of 1994.
Upon the effectiveness of the 1989 Settlement, in June of 1989, the Company simultaneously recorded on its Balance Sheet the retirement of its investment of approximately $4.2 billion principally in Shoreham and the establishment of the FRA, discussed in Note 1.
The BFC, a component of the FRA, as initially established, represents the present value of the future net-after-tax cash flows which the RMA provided the Company for its financial recovery. The BFC was granted rate base treatment under the terms of the RMA and is included in the Company's revenue requirements through an amortization included in rates over forty years on a straight-line basis that began July 1, 1989. At December 31, 1993 and 1992, the unamortized balance of the BFC was approximately $3.6 billion and $3.7 billion, respectively.
The RMC, a component of the FRA, reflects the difference between the Company's revenue requirements under conventional ratemaking and the revenues resulting from the implementation of the rate moderation plan provided for in the RMA. The RMC is currently adjusted, on a monthly basis, for the Company's share of certain Nine Mile Point Nuclear Power Station, Unit 2 (NMP2) operations and maintenance expenses, fuel credits resulting from the Company's electric fuel cost adjustment clause discussed in Note 1 and state gross receipts tax adjustments related to the FRA. The RMC has provided the Company with a substantial amount of non-cash earnings from the effective date of the 1989 Settlement through December 31, 1992.
At December 31, 1993 and 1992, the RMC balance was $610 million and $652 million, respectively. Prior to December 31, 1992 the RMC had increased as the difference between revenues resulting from the implementation of the rate moderation plan provided for in the RMA and revenue requirements under conventional ratemaking, together with a carrying charge equal to the allowed rate of return on rate base, had
been deferred. Subsequent to December 31, 1992, the RMC balance has been decreasing as revenues resulting from the implementation of the rate moderation plan are greater than revenue requirements under conventional ratemaking. For a further discussion of the impact on the amortization of the RMC under the Company's current electric rate structure and the Company's proposed electric rate plan for the three-year period beginning December 1, 1994, see Note 3.
Under the 1989 Settlement, certain tax benefits attributable to the Shoreham abandonment are to be shared between ratepayers and shareowners. A regulatory liability of approximately $794 million was recorded in June 1989 to preserve an amount equivalent to the ratepayer tax benefits attributable to the Shoreham abandonment. This amount is being amortized over a ten-year period on a straight-line basis from the effective date of the 1989 Settlement. The Company has reclassified the regulatory liability component which was previously reported as a reduction of the corresponding deferred tax asset arising from the abandonment loss deduction.
Shoreham post settlement costs (decommissioning, payments in lieu of property taxes and other costs as incurred) are being capitalized and amortized and recovered through rates over a forty-year period on a straight-line remaining life basis.
Upon the effectiveness of the 1989 Settlement, Shoreham nuclear fuel was reclassified to deferred charges included in the Regulatory Asset section of the Balance Sheet and is being amortized and recovered through rates over a forty-year period on a straight-line remaining life basis.
The 1989 Settlement credits on the Balance Sheet of approximately $155 million, net of amortization, reflect an adjustment of the book write- off to the negotiated 1989 Settlement amount. A portion of this amount is being amortized over a ten-year period. The remaining portion is not currently being recognized for ratemaking purposes under the 1989 Settlement.
NOTE 3. RATE MATTERS
ELECTRIC
Pursuant to the 1989 Settlement, discussed in Note 2, the Company received electric rate increases contemplated by the RMA for each of the three rate years in the period ended November 30, 1991. The RMA contemplates that the Company will apply to the PSC for targeted annual rate increases of 4.5% to 5.0% in each year for an eight-year period beginning December 1, 1991. In response to the Company's December 1990 rate filing, the PSC approved the Long Island Lighting Company Ratemaking and Performance Plan (LRPP) in November 1991, which provides that the Company receive, for each of the three rate years in the period beginning December 1, 1991, annual electric rate increases of 4.15%, 4.1% and 4.0%, respectively, with an allowed return on common equity from electric operations of 11.6% for each of the three rate years. After giving effect to the reductions required by the Class Settlement discussed in Note 4, the Company's annual electric rate increases were approximately 4.15%, 3.9% and 3.9%, with an allowed return on common equity from electric operations of 10.92%, 10.72% and 10.58%, for the rate years beginning December 1, 1991, 1992 and 1993, respectively.
The LRPP was designed to be consistent with the RMA's long-term goals. One principal objective of the LRPP is to reassign risk so that the Company assumes the responsibility for risks within the control of management, whereas risks largely beyond the control of management would be assumed by the ratepayers. The LRPP reflects an update of the long-range forecast of the Company's revenue requirements which was the basis of the RMA's initial three rate increases. The LRPP contains three major components--revenue reconciliation, expense attrition and reconciliation, and performance incentives.
Revenue reconciliation is provided through a mechanism that reduces the impact of experiencing electric sales that are above or below the LRPP forecast by providing a fixed annual net margin level (defined as sales revenues, net of fuel and gross receipts taxes) that the Company will receive over the three rate years under the LRPP. The differences between the actual electric net revenues and the annual net margin level are deferred on a monthly basis during the rate year.
The expense attrition and reconciliation component permits the Company to make adjustments for certain expenses recognizing that certain cost increases are unavoidable due to inflation and changes in the business. The LRPP includes the annual reconciliation of certain expenses for wage rates, property taxes, interest charges and demand side management (DSM) costs, the deferral and amortization of certain costs for enhanced reliability, production operations and maintenance expenses, and the application of an inflation index to other expenses for the rate years beginning December 1, 1992 and 1993.
Under the performance incentive component of the LRPP, the Company is allowed to earn for each rate year up to 60 additional basis points, or forfeit up to 38 basis points, of the allowed return on common equity as a result of its performance within certain incentive and/or penalty programs. These programs consist of a customer service program, a time-of-use program, a partial pass through fuel cost incentive plan and, effective December 1, 1993, an electric transmission and distribution reliability plan. The incentives and/or penalties related to the customer
service performance plan, the time-of-use program, the electric transmission and distribution reliability plan and the partial pass through fuel cost incentive plan are determined on a monthly basis during the rate year and deferred until final approval from the PSC. The incentives earned from the DSM program are collected in rates on a monthly basis through the FCA. Based upon the Company's performance within these programs, the Company earned a total of approximately 49 basis points or approximately $9.2 million, net of tax effects, and 23 basis points, or approximately $4.3 million, net of tax effects, for the rate years ended November 30, 1993 and 1992, respectively.
The deferred balances resulting from the net margin, property taxes, interest expense, wage rates, performance incentives and associated carrying charges, excluding DSM incentives, are netted at the end of each rate year. The LRPP established a band whereby the first $15 million of the total net deferrals are used to increase or decrease the RMC balance. The LRPP provides for the disposition of the total net deferrals in excess of the $15 million band. Upon approval by the PSC, the total net deferrals in excess of $15 million are refunded or recovered from the ratepayers through the FCA over a twelve-month period in the following rate year.
During 1993, the PSC authorized the Company recovery of $45.2 million of the total net deferrals for the rate year ended November 30, 1992. The first $15 million of the total net deferrals was recorded as an increase to the RMC, with the remaining $30.2 million being recovered from the ratepayers through the FCA through July 31, 1994. For the rate year ended November 30, 1993, the total net deferrals, to be recovered from the ratepayers, subject to PSC review, amounted to approximately $63 million of which $48 million will be recovered through the FCA, over a twelve-month period beginning December 1, 1994.
The Company earned $8.9 million and $21.4 million, net of tax effects, for the rate years ended November 30, 1993 and 1992, respectively, in excess of its allowed rate of return on common equity of 11.6% which, in accordance with the LRPP, was shared equally between ratepayers (by a reduction to the RMC) and shareowners. Prior to December 1, 1991, the RMA provided that earned returns on common equity in excess of targeted allowed rates of return, were to be applied to reduce the RMC or mitigate rates, as determined by the PSC, at the end of each rate year. For the rate year ended November 30, 1991, the Company earned $10.1 million, net of tax effects, in excess of its allowed rate of return, which was applied as a reduction to the RMC.
To assist in the recovery of the RMC balance under the rates provided by the LRPP, the Company, in accordance with the LRPP, has credited the RMC with several deferred ratepayer benefits. In December 1993 and 1992, the Company applied a total of approximately $10.1 million and $22.5 million of various deferred ratepayer benefits to the RMC including the ratepayers portion of the excess earnings for the rate years ended November 30, 1993 and 1992, respectively.
In December 1993, the Company filed a three-year electric rate plan with the PSC for the period beginning December 1, 1994 that minimizes future electric rate increases while retaining consistency with the RMA's objective of continuing the restoration of the Company's financial health. The electric rate plan provides for zero percentage base rate increases before giving effect to the reductions required by the Class Settlement,
discussed in Note 4, in years one and two of the plan and a base rate increase of 4.3% in the third year prior to giving effect to the reductions required by the Class Settlement. Although base electric rates would be frozen during the first two years of the plan, annual rate increases of approximately 1% to 2% are expected to result in these years from the operation of the Company's FCA. The FCA captures, among other amounts, any increases in the cost of fuel above the level recovered in base rates, and under the LRPP, any amounts to be recovered or refunded to ratepayers in excess of $15 million which result from the reconciliation of revenue, certain expenses and earned performance incentive components, discussed above. The electric rate plan requests an allowed rate of return on equity of 11.0%. The Company's two-year base rate freeze proposal reflects four underlying objectives: (i) to limit the balance of the RMC during the three-year period to no more than its 1992 peak balance of $652 million; (ii) to recover the RMC within no more than thirteen years of its 1989 inception; (iii) to minimize the final three rate increases that will follow the two-year rate freeze period; and (iv) to continue the Company's gradual return to financial health. The Company's electric rate plan is subject to approval by the PSC.
The Company's current electric rate plan provides for lower annual electric rate increases than originally anticipated under the 1989 Settlement. However, as a result of changes in certain assumptions upon which the RMA was based, their impact on the RMC and the Company's plans to reduce DSM, operations and maintenance and capital expenditures, the Company has determined that the overall objectives of the RMA can be met under the multi-year plan described above. As a result of lower than originally anticipated inflation rates, interest costs, property taxes, fuel costs and return on common equity allowed by the PSC, the RMC, which originally had been anticipated to peak at $1.2 billion in 1994, has already peaked at $652 million in 1992. With the exception of an increase in 1995-1996, which is not now projected to cause the RMC to increase above its $652 million peak, the RMC is expected to decline until it is fully amortized.
Under the electric rate plan, the recovery of the RMC would be extended, if necessary, for an additional period of not more than three years beyond the approximate ten-year period envisioned in the RMA. The actual length of the RMC extension will depend on the extent to which the assumptions underlying the rate plan materialize. The Company's current projections indicate that the RMC will be recovered in eleven years instead of ten years.
GAS
In December 1993, the PSC approved a three-year gas rate settlement between the Company and the Staff of the PSC. The gas rate settlement provides that the Company receive, for each of the rate years beginning December 1, 1993, 1994 and 1995, annual gas rate increases of 4.7%, 3.8% and 2.8%, respectively. In the determination of the revenue requirements for the first year of the gas rate settlement an allowed rate of return on equity of 10.1% was used. The gas rate decision also provides for earnings in excess of a 10.6% return on equity in any of the three rate years covered by the settlement be shared equally between the Company's firm gas customers and its shareowners. The allowed rate of return for the rate year that began December 1, 1992 was 11.0%.
NOTE 4. THE CLASS SETTLEMENT
The Class Settlement, which became effective on June 28, 1989, resolved a civil lawsuit against the Company brought under the federal Racketeer Influenced and Corrupt Organizations Act (RICO Act). The lawsuit which the Class Settlement resolved, had alleged that the Company made inadequate disclosures before the PSC concerning the construction and completion of nuclear generating facilities. The Class Settlement provides the Company's ratepayers with reductions, aggregating $390 million, that are to be reflected as adjustments to their monthly electric bills over a ten-year period which began on June 1, 1990.
The reductions in each of the remaining twelve-month periods are as follows:
Upon its effectiveness, the Company recorded its liability for the Class Settlement on a present value basis at $170 million and simultaneously recorded a charge to income (net of tax effects of $57 million) of approximately $113 million. Each month the Company records the changes in the present value of such liability that result from the passage of time and from monthly reductions. The Company expects the Class Settlement liability will be fully satisfied by May 31, 2000.
As a result of the Class Settlement, the Company's electric rate increases on average will be approximately .2% to .3% per year lower than they would otherwise have been during the Class Settlement period.
NOTE 5. NINE MILE POINT NUCLEAR POWER STATION, UNIT 2
The Company has an 18% undivided interest in NMP2 which is operated by Niagara Mohawk Power Corporation (NMPC) near Oswego, New York. Ownership of NMP2 is shared by five cotenants: the Company (18%), NMPC (41%), New York State Electric & Gas Corporation (18%), Rochester Gas and Electric Corporation (14%) and Central Hudson Gas & Electric Corporation (9%). At December 31, 1993, the Company's net utility plant investment in NMP2 was $759 million, net of accumulated depreciation of $119 million, which is included in the Company's rate base. Output of NMP2 is shared in the same proportions as the cotenants' respective ownership interests. The operating expenses of NMP2 are also allocated to the cotenants in the same proportions as their respective ownership interests. The Company's share of these expenses is included in the appropriate operating expenses on the Statement of Income. The Company is required to provide its respective share of financing for any capital additions to NMP2. Nuclear fuel costs associated with NMP2 are being amortized on the basis of the quantity of heat produced for the generation of electricity.
NMPC has contracted with the United States Department of Energy for the disposal of nuclear fuel. The Company reimburses NMPC for its 18% share of the cost under the contract at a rate of $1.00 per megawatt hour of net generation less a factor to account for transmission line losses.
Based upon a study performed by NMPC which reflects a change in the NRC minimum decommissioning funding requirement effective 1993, the Company's share of the decommissioning costs for NMP2 is estimated to be $80 million (in 1993 dollars) assuming that decommissioning will commence in 2027 (which will be $234 million in 2027 dollars). The Company's share of estimated decommissioning costs are being provided for in electric rates and are being charged to operations as depreciation expense. The amount of accumulated decommissioning costs collected from the Company's ratepayers through December 31, 1993 was $7.1 million. Amounts collected by the Company for the decommissioning of the contaminated portion of the NMP2 plant, which approximate 92% of total decommissioning costs, are held in an independent decommissioning trust fund. This fund complies with regulations issued by the NRC governing the funding of nuclear plant decommissioning costs. The Company's funding plan for its share of decommissioning costs will provide reasonable assurance that, at the time of termination of operation, adequate funds for the decommissioning of the Company's share of the contaminated portion of NMP2 plant will be available.
NOTE 6. CAPITAL STOCK
PREFERRED STOCK
The Company has 7,000,000 authorized shares, cumulative preferred stock, par value $100 and 30,000,000 authorized shares, cumulative preferred stock, par value $25. Dividends on preferred stock are paid in preference to dividends on common stock or any other stock ranking junior to preferred stock.
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
The aggregate fair value of redeemable preferred stock with mandatory redemptions at December 31, 1993 and 1992 amounted to $658,795,000 and $581,984,000, respectively, compared to their carrying amounts of $653,950,000 and $566,100,000, respectively.
At December 31, 1993, the Company had the option to redeem all outstanding preferred stock Series L, $100 par value, and Series R, $100 par value, at their optional redemption prices of $102.99 per share and $100.50 per share, respectively. No other preferred stock series subject to mandatory redemptions were redeemable at December 31, 1993.
The Company is required to redeem the following series of preferred stock through the operation of various sinking fund provisions: (i) on each July 31, 10,500 shares of the Series L at a price of $100 per share; (ii) on each December 15, 37,500 shares of the Series R at a price of $100 per share; (iii) on each March 1, commencing March 1, 1999, 77,700 shares of the Series NN at a price of $25 per share; and (iv) on each October 15, commencing October 15, 1999, 112,000 shares of the Series UU at a price of $25 per share. In addition, the Company will have the noncumulative option to double the number of shares to be redeemed pursuant to the sinking fund in any year for the preferred stock series mentioned above. The aggregate par value of preferred stock required to be redeemed by use of sinking funds in each of the years 1994 through 1996 is $4.8 million and in 1997 and 1998 is $1.1 million.
The Company is also required to redeem certain series of preferred stock which are not subject to sinking fund requirements. The scheduled mandatory redemption for these series are as follows: (i) Series CC on August 1, 2002; (ii) Series AA on June 1, 2000; (iii) Series GG on March 1, 1999; and (iv) Series QQ on May 1, 2001.
During 1992, the Company issued $363 million Preferred Stock, 7.95% Series AA and $57 million Preferred Stock, 7.66% Series CC, the proceeds of which were used to redeem $320 million Preferred Stock, $2.65 Series Y and $55 million Preferred Stock, 9.80% Series S, respectively, at their optional redemption prices.
PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
The Company has the option to redeem certain series of its preferred stock. For the series subject to optional redemption at December 31, 1993, the call prices were as follows:
PREFERENCE STOCK
None of the authorized 7,500,000 shares of nonparticipating preference stock, par value $1 per share, which ranks junior to preferred stock, are outstanding.
COMMON STOCK
Of the 150,000,000 shares of authorized common stock at December 31, 1993, 1,789,842 shares were reserved for sale through the Company's Employee Stock Purchase Plan, 5,946,929 shares were committed to the Automatic Dividend Reinvestment Plan (ADRP) and 118,812 shares were reserved for conversion of the Series I Convertible Preferred Stock at a rate of $17.15 per share. In June 1992, the Company reinstated the ADRP which had been suspended since February 1984. Common and preferred stock dividend limitations in the mortgage securing the Company's First Mortgage Bonds are not material. There are no dividend limitations contained in the Company's other debt instruments.
NOTE 7. LONG-TERM DEBT
Each of the Company's outstanding mortgages is a lien on substantially all of the Company's properties.
FIRST MORTGAGE
All of the bonds issued under the First Mortgage, including those issued after June 1, 1975 and pledged with the Trustee of the G&R Mortgage (G&R Trustee) as additional security for General & Refunding Bonds (G&R Bonds), are secured by the lien of the First Mortgage. First Mortgage Bonds pledged with the G&R Trustee do not represent outstanding indebtedness of the Company. Amounts of such pledged bonds outstanding were $1.03 billion at December 31, 1993 and 1992. The annual First Mortgage depreciation fund and sinking fund requirements for 1993, due not later than June 30, 1994, are estimated at $216 million and $18 million, respectively. The Company expects to meet these requirements with property additions and retired First Mortgage Bonds.
G&R MORTGAGE
The lien of the G&R Mortgage is subordinate to the lien of the First Mortgage. The annual G&R Mortgage sinking fund requirement for 1993, due not later than June 30, 1994, is estimated at $24 million. The Company expects to satisfy this requirement with retired G&R Bonds.
1989 REVOLVING CREDIT AGREEMENT
The Company has an estimated $276 million available to it through October 1, 1994, under its $300 million 1989 Revolving Credit Agreement (1989 RCA). This line of credit is secured by a first lien upon the Company's accounts receivable and fuel oil inventories.
The Company is currently, with the approval of the NRC, dedicating $24 million of the 1989 RCA to cover estimated, not yet incurred, costs attributable to the decommissioning of Shoreham, discussed in Note 2. The amount of credit available to the Company under the 1989 RCA will increase as decommissioning costs are funded by the Company.
At December 31, 1993, no amounts were outstanding under the 1989 RCA. The Company has the option, when amounts are outstanding, to commit to one of three interest rates including: (i) the Adjusted Certificate of Deposit Rate which is a rate based on the certificate of deposit rates of certain of the lending banks, (ii) the Base Rate which is generally a rate based on Citibank, N.A.'s prime rate and (iii) the Eurodollar Rate which is a rate based on the London Interbank Offering Rate (LIBOR). The Company has agreed to pay a fee of one quarter of one percent per annum on the unused portion. The termination date of the 1989 RCA may be extended for one-year periods upon the acceptance by the lending banks of the Company's request delivered to the lending banks prior to April 1 in each year.
AUTHORITY FINANCING NOTES
Authority Financing Notes are issued by the Company to the New York State Energy Research and Development Authority (NYSERDA) to secure certain tax-exempt Pollution Control Revenue Bonds (PCRBs), Electric Facilities Revenue Bonds (EFRBs) and Industrial Development Revenue Bonds issued by NYSERDA. Certain of these bonds are subject to periodic tender at which time their interest rates are subject to redetermination.
The 1993 EFRBs and the 1985 PCRBs are supported by letters of credit pursuant to which the letter of credit banks have agreed to pay the principal, interest and premium if applicable, in the aggregate, up to approximately $272 million in the event of default. The obligation of the Company to reimburse the letter of credit banks is unsecured. These letters of credit expire November 17, 1996 for the 1993 EFRBs and on March 16, 1996 for the 1985 PCRBs, at which time the Company is required to obtain either an extension of the letters of credit or substitute credit backup. If neither can be obtained, the 1993 EFRBs and the 1985 PCRBs must be redeemed unless the Company purchases them in lieu of redemption and subsequently remarkets them.
Tender requirements of Authority Financing Notes at December 31, 1993 are as follows:
FAIR VALUES OF LONG-TERM DEBT
The carrying amounts and fair values of the Company's long-term debt consisted of the following at December 31:
MATURITY SCHEDULE
Total long-term debt maturing in the next five years is $600 million (1994), $25 million (1995), $455 million (1996), $286 million (1997) and $1 million (1998).
NOTE 8. RETIREMENT BENEFIT PLANS
PENSION PLANS
The Company maintains a primary defined benefit pension plan (Primary Plan) which covers substantially all employees, a supplemental plan (Supplemental Plan) which covers officers and certain key executives and a retirement plan which covers the Board of Directors (Directors' Plan).
Primary Plan
The Company's funding policy is to contribute annually to the Primary Plan a minimum amount consistent with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) plus such additional amounts, if any, as the Company may determine to be appropriate from time to time.
Effective January 1, 1992, the Plan was amended to update the benefit calculation, whereby for service before January 1, 1992, pension benefits are determined based on the greater of the accrued benefit as of December 31, 1991, or by applying a moving five-year average of Plan compensation, not to exceed the January 1, 1992 salary, to a certain percentage, determined by years of service at December 31, 1991. For service after January 1, 1992, pension benefits are equal to 2% of Plan compensation through age 49 and 2 1/2% thereafter. Employees are vested in the pension plan after five years of service with the Company.
The Primary Plan's funded status reflects changes in assumptions used in accounting due to changes in market conditions. The 1993 projected benefit obligation increased by approximately $31 million due to changes in the discount rate used, partially offset by a lower rate of future compensation increases.
The Primary Plan's funded status and amounts recognized on the Balance Sheet at December 31, 1993 and 1992 were as follows:
Periodic pension cost for 1993, 1992 and 1991 for the Primary Plan included the following components:
Assumptions used in accounting for the Primary Plan were:
The Primary Plan assets at fair value primarily include cash, cash equivalents, group annuity contracts, bonds and listed equity securities.
In 1993, the PSC issued an order which addressed the accounting and ratemaking treatment of pension costs in accordance with SFAS No. 87, Employers' Accounting For Pensions. Under the PSC order, the Company is required to recognize any deferred net gains or losses over a ten- year period rather than using the corridor approach method. The Company believes that by adopting this method of accounting for financial reporting purposes, a better matching of revenues and the Company's pension cost will result from the implementation of the PSC order. For the year ended December 31, 1993, this change in the annual pension cost calculation reduced pension expense by approximately $4.6 million. The Company deferred a like amount of revenues to reflect the difference between pension expense in rates and pension expense under the PSC's order. In addition, the PSC authorized the Company to defer the difference between the pension rate allowance and annual pension contributions deposited into the pension fund. The Company is required to accrue, to the benefit of the ratepayer, a carrying charge on any such deferred balance.
Supplemental Plan
The Supplemental Plan, the cost of which is borne by the Company's shareowners, provides supplemental death and retirement benefits for officers and other key executives without contribution from such employees. The Supplemental Plan is a non-qualified plan under the Internal Revenue Code. Death benefits are currently provided by insurance. The provision for retirement benefits, which is unfunded, totaled approximately $2,800,000, $685,000 and $675,000 which was recognized as an expense in 1993, 1992 and 1991, respectively.
Directors' Plan
The Directors' Plan, adopted in February 1990, provides benefits to directors who are not officers of the Company. Directors who have
served in that capacity for more than five years qualify as participants under the plan. The Directors' Plan is a non-qualified plan under the Internal Revenue Code. The provision for retirement benefits, which is unfunded, totaled approximately $150,000, $133,000 and $101,000 which was recognized as expense in 1993, 1992 and 1991, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to providing pension benefits, the Company provides certain medical and life insurance benefits for retired employees. Substantially all of the Company's employees may become eligible for these benefits if they reach retirement age after working for the Company for a minimum of five years. These and similar benefits for active employees are provided by the Company or by insurance companies whose premiums are based on the benefits paid during the year. Effective January 1, 1993, the Company adopted the provisions of SFAS No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, which requires the Company to recognize the expected cost of providing postretirement benefits when employee services are rendered rather than on a pay-as-you-go method.
Effective January 1, 1993, the Company recorded an accumulated postretirement benefit obligation and a corresponding regulatory asset of approximately $376 million. Additionally, as a result of adopting SFAS No. 106, the Company's annual postretirement benefit cost for 1993 increased by approximately $28 million above the amount that would have been recorded under the pay-as-you-go method.
In 1993, the PSC issued a final order which required that the effects of implementing SFAS No. 106 be phased into rates. The order required the Company to defer as a regulatory asset the difference between postretirement benefit expense recorded for accounting purposes in accordance with SFAS No. 106 and the postretirement benefit expense reflected in rates. The ongoing annual postretirement benefit expense will be phased into and fully reflected in rates within a five-year period with the accumulated postretirement obligation being recovered in rates over a twenty-year period.
Accumulated postretirement benefits obligation other than pensions at December 31 were as follows:
Periodic postretirement benefit cost other than pensions for the years 1993 and 1992 were as follows:
Assumptions used in accounting for postretirement benefits other than pensions were as follows:
The assumed health care cost trend rates used in measuring the accumulated postretirement benefit obligation at December 31, 1993 and 1992 were 9.5% and 15.0%, respectively, gradually declining to 6.0% in 2001 and thereafter. A one-percentage point increase in the health care cost trend rate would increase the accumulated postretirement benefit obligation as of December 31, 1993 and 1992 by approximately $46 million and $58 million, respectively, and the sum of the service and interest costs in 1993 by $8 million.
POSTEMPLOYMENT BENEFITS
In November 1992, the FASB issued SFAS No. 112, Employers' Accounting for Postemployment Benefits, which establishes accounting standards for employers who provide benefits to former or inactive employees after employment but before retirement. The Company will be required to comply with the new rules beginning in 1994. The effect of adopting the new rules will not be material to the Company's financial position or results of operations. The Company believes it will be permitted to recover these costs through rates.
NOTE 9. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company has entered into substantial commitments for fossil fuel, gas supply, purchased power and transmission facilities. The costs associated with these commitments are normally recovered from ratepayers through provisions in the Company's rate schedules.
The Company expects that it will have to expend $4.3 million in 1994 to meet continuous emission monitoring requirements and $3.5 million in 1994 and $2.0 million in 1995 to meet Phase I nitrogen oxide (NOx) reduction requirements. In addition, subject to details that are expected to appear in regulations that have not yet been issued, the Company estimates that it may be required to expend as much as $125 million by May 1999 to meet Phase II NOx reduction requirements and approximately $50 million by 2000 to meet requirements for the control of hazardous air pollutants from power plants. The Company believes that such cost would be recoverable in rates.
CONTINGENCIES
Litigation
On February 11, 1988, the Company began a lawsuit in Suffolk County Supreme Court against Suffolk County, seeking the recovery of approximately $54 million in damages for Suffolk County's breach of a contract to prepare an off site emergency response plan for Shoreham (Long Island Lighting Company v. County of Suffolk). In addition, the complaint alleges that, because of the delays that have resulted, the Company has been damaged in an additional amount of $706 million. On October 30, 1992, the court granted in part and denied in part Suffolk County's motion to amend its answer to assert additional defenses and counterclaims. Two proposed counterclaims were allowed seeking approximately $16 million in damages as well as $700 million in alleged punitive damages. The outcome of these counterclaims, if adverse, could have a material effect on the financial condition of the Company. The Company has argued that there is no basis for punitive damages and intends to vigorously prosecute its claim against Suffolk County and to defend against these counterclaims.
Environmental
The Company is subject to environmental laws and regulations of the United States Environmental Protection Agency (EPA) and other regulatory agencies. The Company is monitoring its activities and to date, has not identified any material environmental contingencies. The Company believes that costs related to such contingencies, if any, would be recoverable in rates.
NUCLEAR PLANT INSURANCE
The Company has property damage insurance and third-party bodily injury and property liability insurance for its 18% share in NMP2 and for Shoreham. The premiums for this coverage are not material. The policies for this coverage provide for retroactive premium assessments under certain circumstances. Maximum retroactive premium assessments could be as much as approximately $4.7 million. For property damage at each nuclear generating site, the NRC requires a minimum of $1.06 billion of coverage. The NRC has provided the Company with a partial exemption from these requirements for Shoreham.
Under certain circumstances, the Company may be assessed additional amounts in the event of a nuclear incident. Under agreements established pursuant to the Price Anderson Act, the Company could be assessed up to approximately $79.3 million per nuclear incident in any one year at any nuclear unit, but not in excess of approximately $10 million in payments per year for each incident. The Price Anderson Act also limits liability for third-party bodily injury and third-party property damage arising out of a nuclear occurrence at each unit to $9.4 billion.
NOTE 10. FEDERAL INCOME TAXES
As of December 31, 1993, the significant components of the Company's deferred tax assets and liabilities calculated under the provisions of SFAS No. 109 were as follows:
The Company's net operating loss (NOL) carryforward for federal income tax purposes is estimated to be approximately $2 billion at December 31, 1993. The NOL will expire in the years 2003 through 2007. The amount of investment tax credit (ITC) carryforward is approximately $219 million. The ITC credits expire by the year 2002. In accordance with the Tax Reform Act of 1986 (TRA 86), ITC allowable as credits to tax returns for years after 1987 must be reduced by 35%. The amount of the reduction will not be allowed as a credit for any other taxable year. For financial reporting purposes, a valuation allowance was not required to offset the deferred tax assets related to these carryforwards.
On January 8, 1990 and October 10, 1992, the Company received Revenue Agents' Reports disallowing certain deductions claimed by the Company on its tax returns for the audit cycle years 1984-1987 and 1988-1989, respectively. The Revenue Agents' Reports reflects proposed adjustments to the Company's federal income tax returns for 1984 through 1989 which, if sustained, would give rise to tax deficiencies totaling approximately $220 million. The Revenue Agents have proposed ITC adjustments which, if sustained, would reduce the Company's carryforward by approximately $96 million. The Company is protesting some of the adjustments and seeks an administrative and, if necessary, a judicial review of the conclusions reached in the Revenue Agents' Reports. The Company cannot predict either
the timing or the manner in which these matters will be resolved. If however, the ultimate disposition of any or all matters raised in the Revenue Agents' Reports are adverse to the Company, the Company expects that any deficiencies that may arise will be substantially offset by the net operating loss carrybacks associated with the 1989 Shoreham abandonment loss deduction of $1.8 billion and thus any impact would not have a material effect on the Company's financial condition or cash flows.
The federal income tax amounts included in the Statement of Income differ from the amounts which result from applying the statutory federal income tax rate to net income before income taxes. The table below sets forth the reasons for such differences.
NOTE 11. SEGMENTS OF BUSINESS
The Company is a public utility engaged in the generation, distribution and sale of electric energy and the purchase, distribution and sale of natural gas to residential, commercial and industrial customers in Nassau and Suffolk Counties and the Rockaway Peninsula in Queens County, all on Long Island, New York. Identifiable assets by segment include net utility plant, regulatory assets, materials and supplies (excluding common), accrued unbilled revenues, gas in storage, fuel and deferred charges (excluding common). Assets utilized for overall Company operations consist of other property and investments, cash and cash equivalents, special deposits, accounts receivable, prepayments and other current assets, unamortized debt expense and other deferred charges.
NOTE 12. QUARTERLY FINANCIAL INFORMATION (Unaudited)
In the fourth quarter of 1993, the Company recorded income of approximately $6.5 million, net of tax effects, or $.06 per common share related to the settlement of certain litigation. In addition, during the fourth quarter of 1993, the Company recorded a charge to earnings of approximately $7.3 million, net of tax effects or $.07 per common share principally related to previously deferred storm costs and the reconciliation of certain ratemaking mechanisms recorded in connection with the conclusion of the Company's rate year.
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
To the Shareowners and Board of Directors of Long Island Lighting Company
We have audited the accompanying balance sheet of Long Island Lighting Company and the related statement of capitalization, as of December 31, 1993 and 1992, and the related statements of income, retained earnings, and cash flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the Index at Item 14 (a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing all accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Long Island Lighting Company at December 31, 1993 and 1992, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
As discussed in Notes 8 and 10 to the financial statements, effective January 1, 1993, the Company changed its methods of accounting for postretirement benefits other than pensions and income taxes.
/s/ ERNST & YOUNG
Melville, New York February 4, 1994
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information required by Item 10 as to the Company's Executive Officers is set forth in Item 1, "Business" under the heading "Executive Officers of the Company" above. Information required by Item 10 as to the Company's Directors may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information required by Item 11 may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by Item 12 may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by Item 13 may be found in the Company's proxy statement for its Annual Meeting to be held on April 12, 1994. Such proxy statement is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) List of Financial Statements
Balance Sheet at December 31, 1993 and 1992.
Statement of Income for each of the three years in the period ended December 31, 1993.
Statement of Capitalization at December 31, 1993 and 1992.
Statement of Cash Flows for each of the three years in the period ended December 31, 1993.
Statement of Retained Earnings for each of the three years in the period ended December 31, 1993.
Notes to Financial Statements.
(2) List of Financial Statement Schedules
Property, Plant and Equipment (Schedule V)
Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment (Schedule VI)
Valuation and Qualifying Accounts (Schedule VIII)
Supplementary Income Statement Information (Schedule X)
(3) List of Exhibits
*3(a) Restated Certificate of Incorporation of the Company dated November 11, 1993.
(b) By-laws of the Company as amended on May 28, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
4(a) General and Refunding Indenture dated as of June 1, 1975 and 21 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
G&R Indenture dated as of June 1, 1975.
First Supplemental Indenture to G&R Indenture dated as of June 1, 1975.
Second Supplemental Indenture to G&R Indenture dated as of September 1, 1975.
Third Supplemental Indenture to G&R Indenture dated as of June 1, 1976.
Fourth Supplemental Indenture to G&R Indenture dated as of December 1, 1976.
Fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1977.
Sixth Supplemental Indenture to G&R Indenture dated as of April 1, 1978.
- ------------------------ * Filed herewith.
Seventh Supplemental Indenture to G&R Indenture dated as of March 1, 1979.
Eighth Supplemental Indenture to G&R Indenture dated as of February 1, 1980.
Ninth Supplemental Indenture to G&R Indenture dated as of March 1, 1981.
Tenth Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Eleventh Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Twelfth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Thirteenth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Fourteenth Supplemental Indenture to G&R Indenture dated as of June 1, 1982.
Fifteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1982.
Sixteenth Supplemental Indenture to G&R Indenture dated as of April 1, 1983.
Seventeenth Supplemental Indenture to G&R Indenture dated as of May 1, 1983.
Eighteenth Supplemental Indenture to G&R Indenture dated as of September 1, 1984.
Nineteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1984.
Twentieth Supplemental Indenture to G&R Indenture dated as of June 1, 1985.
Twenty-first Supplemental Indenture to G&R Indenture dated as of April 1, 1986.
Twenty-second Supplemental Indenture to G&R Indenture dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Twenty-third Supplemental Indenture to G&R Indenture dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fourth Supplemental Indenture to G&R Indenture dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Twenty-sixth Supplemental Indenture to G&R Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
4(b) Indenture of Mortgage and Deed of Trust dated as of September 1, 1951 and 44 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
Indenture of Mortgage dated as of September 1, 1951.
First Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1951.
Second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1952.
Third Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1953.
Fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1954.
Fifth Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1955.
Sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1956.
Seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1958.
Eighth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1959.
Ninth Supplemental Indenture to the Indenture of Mortgage dated as of August 1, 1961.
Tenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1963.
Eleventh Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1964.
Twelfth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1965.
Thirteenth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1966.
Fourteenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1967.
Fifteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1969.
Sixteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1970.
Seventeenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1971.
Eighteenth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1971.
Nineteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1972.
Twentieth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1973.
Twenty-first Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1974.
Twenty-second Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1974.
Twenty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1975.
Twenty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1975.
Twenty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1976.
Twenty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1976.
Twenty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1977.
Twenty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1978.
Twenty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1979.
Thirtieth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1980.
Thirty-first Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1981.
Thirty-second Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-third Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1982.
Thirty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1982.
Thirty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1983.
Thirty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1983.
Fortieth Supplemental Indenture to the Indenture of Mortgage dated as of February 29, 1984.
Forty-first Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1984.
Forty-second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1984.
Forty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1985.
Forty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1986.
Forty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Forty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Forty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*4(c) Debenture Indenture dated as of November 1, 1986 from the Company to The Connecticut Bank and Trust Company, National Association, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
First Supplemental Indenture dated as of November 1, 1986 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
Second Supplemental Indenture dated as of April 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Third Supplemental Indenture dated as of July 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fifth Supplemental Indenture dated as of November 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*Sixth Supplemental Indenture dated as of June 1, 1993.
*Seventh Supplemental Indenture dated as of July 1, 1993.
4(d) Debenture Indenture dated as of November 1, 1992 from the Company to Chemical Bank, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
First Supplemental Indenture dated as of January 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- ------------------------ * Filed herewith.
Second Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Third Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(a) Sound Cable Project Facilities and Marketing Agreement dated as of August 26, 1987 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
10(b) Transmission Agreement by and between the Company and Consolidated Edison Company of New York, Inc. dated as of March 31, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(c) Contract for the sale of Firm Power and Energy by and between the Company and the State of New York dated as of April 26, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(d) Capacity Supply Agreement dated as of December 13, 1991 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
*10(e) Nine Mile Point Nuclear Station Unit 2 Operating Agreement dated as of January 1, 1993 by and between the Company, New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation and Central Hudson Gas and Electric Corporation.
10(f) Settlement Agreement on Issues Related to Nine Mile Two Nuclear Plant dated as of June 6, 1990 by and between the Company, the Staff of the Department of Public Service and others (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
- ------------------------ * Filed herewith.
10(g) Settlement Agreement -- LILCO Issues dated as of February 28, 1989 by and between the Company and the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(h) Amended and Restated Asset Transfer Agreement by and between the Company and the Long Island Power Authority dated as of June 16, 1988 as amended and restated on April 14, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(i) Memorandum of Understanding concerning proposed agreements on power supply for Long Island dated as of June 16, 1988 by and between the Company and New York Power Authority as amended May 24, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(j) Rate Moderation Agreement submitted by the staff of the New York State Public Service Commission on March 16, 1989 and supported by the Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(k) Site Cooperation and Reimbursement Agreement dated as of January 24, 1990 by and between the Company and Long Island Power Authority (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(l) Stipulation of settlement of federal Racketeer Influenced and Corrupt Organizations Act ("RICO") Class Action and False Claims Action dated as of February 27, 1989 among the attorneys for the Company, the ratepayer class, the United States of America and the individual defendants named therein (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(m) Revolving Credit Agreement dated as of June 27, 1989, between Long Island Lighting Company and the banks and co-agents listed therein, with the Exhibits thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and as amended by the First Amendment dated as of October 13, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) and as amended by the Second Amendment dated as of March 5, 1992 and as modified by a Waiver dated November 5, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(n) Indenture of Trust dated as of December 1, 1989 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Participation Agreement dated as of December 1, 1989 by and between the New York State Energy Research and Development Authority and the Company relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(o) Indenture of Trust dated as of May 1, 1990 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of May 1, 1990 by and between the New York State Energy Research and Development Authority and the Company relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(p) Indenture of Trust dated as of January 1, 1991 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of January 1, 1991 by and between the New York State Energy Research and Development Authority and the Company relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(q) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(r) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(s) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(t) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*10(u) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series A.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series A.
*10(v) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series B.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series B.
- ------------------------ * Filed herewith.
*10(w) Supplemental Death and Retirement Benefits Plan as amended and restated effective January 1, 1993 and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference.
*10(x) Executive Agreements and Management Contracts
*(1) Executive Employment Agreement dated as of January 30, 1984 by and between William J. Catacosinos and Long Island Lighting Company, as amended by amendments dated March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference), December 22, 1989 (filed as Exhibit 10(o) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and December 2, 1991 (filed as Exhibit 10(u) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference); an Employment Agreement dated as of March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by amendments dated November 30, 1989 (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference), an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference), an amendment dated December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference), and as amended by an amendment dated December 31, 1993.
*(2) Employment Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference.
(3) Employment Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
- ------------------------ * Filed herewith.
(4) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between James T. Flynn and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(5) Employment Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(6) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Robert X. Kelleher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(7) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between John D. Leonard, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(8) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Adam M. Madsen and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(9) Employment Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(10) Employment Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(11) Employment Agreement dated as of April 16, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Brian R. McCaffrey and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 incorporated herein by reference) and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(12) Employment Agreement dated as of March 18, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Joseph W. McDonnell and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(13) Employment Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company and related Trust Agreement and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(14) Employment Agreement dated as of July 29, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William G. Schiffmacher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(15) Employment Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(16) Employment Agreement dated as of March 9, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(17) Employment Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(18) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Walter F. Wilm, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(19) Employment Agreement dated as of November 4, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Edward J. Youngling and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(20) Retirement Agreement dated as of January 7, 1987 by and between George J. Sideris and Long Island Lighting Company, as amended March 20, 1987, and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
*(21) Indemnification Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company.
(22) Indemnification Agreement dated as of January 31, 1992 by and between A. James Barnes and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(23) Indemnification Agreement dated as of May 30, 1990 by and between George Bugliarello and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(24) Indemnification Agreement dated as of April 17, 1992 by and between Renso L. Caporali and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(25) Indemnification Agreement dated as of November 19, 1987 by and between William J. Catacosinos and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(26) Indemnification Agreement dated as of April 23, 1992 by and between Peter O. Crisp and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(27) Indemnification Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(28) Indemnification Agreement dated as of November 25, 1987 by and between James T. Flynn and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(29) Indemnification Agreement dated as of November 19, 1987 by and between Winfield E. Fromm and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- ----------------------- * Filed herewith.
*(30) Indemnification Agreement dated as of January 3, 1994 by and between Vicki L. Fuller and Long Island Lighting Company.
(31) Indemnification Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(32) Indemnification Agreement dated as of November 25, 1987 by and between Robert X. Kelleher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(33) Indemnification Agreement dated as of November 25, 1987 by and between John D. Leonard, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(34) Indemnification Agreement dated as of November 25, 1987 by and between Adam M. Madsen and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(35) Indemnification Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(36) Indemnification Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(37) Indemnification Agreement dated as of November 25, 1987 by and between Brian R. McCaffrey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(38) Indemnification Agreement dated as of March 18, 1988 by and between Joseph W. McDonnell and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(39) Indemnification Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- --------------------- * Filed herewith.
*(40) Indemnification Agreement dated as of April 20, 1993 by and between Katherine D. Ortega and Long Island Lighting Company.
(41) Indemnification Agreement dated as of November 19, 1987 by and between Basil A. Paterson and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(42) Indemnification Agreement dated as of November 25, 1987 by and between William Schiffmacher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(43) Indemnification Agreement dated as of February 8, 1992 by and between Richard L. Schmalensee and Long Island Lighting Company (filed as an Exhibit to the Company Form 10- K for the Year Ended December 31, 1991 and incorporated herein by reference).
(44) Indemnification Agreement dated as of November 30, 1987 by and between George J. Sideris and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(45) Indemnification Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
(46) Indemnification Agreement dated as of March 1, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(47) Indemnification Agreement dated as of November 19, 1987 by and between John H. Talmage and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(48) Indemnification Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(49) Indemnification Agreement dated as of November 19, 1987 by and between Phyllis A. Vineyard and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- --------------------- * Filed herewith.
(50) Indemnification Agreement dated as of November 25, 1987 by and between Walter F. Wilm, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(51) Indemnification Agreement dated as of November 4, 1988 by and between Edward J. Youngling and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(52) Long Island Lighting Company Officers' and Directors' Protective Trust dated as of April 18, 1988 by and between the Company and Clarence Goldberg, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(53) Long Island Lighting Company's Retirement Plan for Directors dated as of February 2, 1990 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
*(54) Agreement dated as of April 20, 1993 by and between the Company and Lionel M. Goldberg.
*(55) Agreement dated as of April 20, 1993 by and between the Company and Eben W. Pyne.
*23 Consent of Ernst & Young, Independent Auditors.
*24(a) Powers of Attorney executed by the Directors and Officers of the Company.
*24(b) Certificate as to Corporate Power of Attorney.
*24(c) Certified copy of Resolution of Board of Directors authorizing signature pursuant to Power of Attorney.
Financial Statements of subsidiary companies accounted for by the equity method have been omitted because such subsidiaries do not constitute significant subsidiaries.
- ---------------------- * Filed herewith.
(b) Reports on Form 8-K
In its Report on Form 8-K dated October 8, 1993, the Company stated that:
1. On September 22, 1993, the United States Court of Appeals for the Second Circuit issued its opinion affirming the United States District Court for the Southern District of New York's jury award of $18.4 million, in favor of the Company, for a breach of warranty cause of action against Transamerica Delaval, Inc., now IMO Industries, Inc. and the District Court's dismissal of the Company's claims as to all categories of damages other than the amount attributable to the breach of warranty action.
2. If the Company concludes that the overall objectives of the RMA can be met, it may submit to the PSC, for the rate period commencing December 1, 1994, a multi-year electric rate plan providing for annual percentage increases that are significantly lower than the targeted levels contemplated by the RMA.
3. Subsequent to the issuance of the ALJ's Recommended Decision on the Company's gas rate application, the Company negotiated a multi-year rate settlement with Staff of the PSC which is subject to review by the ALJ and approval by the PSC.
In its Report on Form 8-K dated December 3, 1993, the Company stated that:
1. On November 15, 1993, the PSC authorized the Company to increase its base electric rates by 4% effective December 1, 1993. This increase is the sixth in a series of 11 rate increases contemplated in the PSC-approved 1989 RMA.
2. The Company is in the process of preparing a three-year electric rate plan for the period beginning December 1, 1994 that provides for zero percentage base rate increases in years one and two of the plan and a base rate increase of approximately 4% in the third year, while retaining consistency with the RMA's objective of continuing the restoration of the Company's financial health.
No other Reports on Form 8-K were filed in the fourth quarter of 1993.
In its Report on Form 8-K dated January 21, 1994, the Company stated that:
1. The Company has announced the resignation of its President and Chief Operating Officer, Anthony F. Earley, Jr., effective March 1, 1994.
2. On December 31, 1993, the Company filed a three-year electric rate plan with the PSC for the period beginning December 1, 1994 that proposes no base electric rate increases in years one and two of the plan and an overall increase of 4.3% in the third year.
3. On January 12, 1994, the Company filed comments in response to the November 2, 1993 Petition filed by the CPB and LIPA with the PSC asking the PSC to hold a proceeding on freezing or possibly reducing the Company's electric rates for the period December 1994 to November 1997.
4. In December 1993, the PSC approved, with an effective date of December 31, 1993, the Company's negotiated three-year gas rate settlement with the Staff of the PSC which provided for a first year increase of $26.6 million and two subsequent increases of $23 million and $20 million to be effective on December 1, 1995 and 1996, respectively.
5. On December 30, 1993, the Appellate Division, Third Judicial Department, affirmed the Supreme Court of the State of New York Special Term's decision in LILCO v. PSC/Mayflower, which held that the PSC had violated PURPA and the New York Public Service Law and had acted arbitrarily when it ordered the Company to sign a power purchase contract with Mayflower Energy Partners, L.P. incorporating the PSC's 1989 Long Run Avoided Cost estimates.
6. On December 13, 1993, the United States District Court for the Eastern District of New York issued an opinion in LILCO v. Stone & Webster Engineering Corp. granting a motion by SWEC to dismiss the Company's complaint in this action which had sought to recover damages against SWEC for breach of contract, negligence, professional malpractice and gross negligence in connection with SWEC's work as architect-engineer and construction manager for Shoreham.
7. Pursuant to the LIPA Act, LIPA is required to make PILOTS to the municipalities that impose real property taxes on Shoreham. On January 10, 1994, the Appellate Division, Second Department, affirmed Nassau County Supreme Court's March 29, 1993 decision in LIPA, et al. v. Shoreham-Wading River Central School District, et al. holding, in major part, that the Company is not obligated for any real property taxes that accrued after February 28, 1992, attributable to property that it conveyed to LIPA, that PILOTS commence on March 1, 1992, that PILOTS are subject to refunds and that the LIPA Act does not provide for the termination of PILOTS.
In its Report on Form 8-K dated February 7, 1994, the Company reported earnings of $2.15 per common share on revenues of $2,880,995,000 for the year ended December 31, 1993.
LONG ISLAND LIGHTING COMPANY SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1993 (Thousands of Dollars)
(A) Adjustments between Plant Accounts.
LONG ISLAND LIGHTING COMPANY SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1992 (Thousands of Dollars)
(A) Adjustments between Plant Accounts.
LONG ISLAND LIGHTING COMPANY SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1991 (Thousands of Dollars)
(A) Adjustments between Plant Accounts.
LONG ISLAND LIGHTING COMPANY SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1993 (Thousands of Dollars)
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
LONG ISLAND LIGHTING COMPANY SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1992 (Thousands of Dollars)
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
LONG ISLAND LIGHTING COMPANY SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
For The Year Ended December 31, 1991 (Thousands of Dollars)
Note:
(A) Includes transfers between reserves, costs of removal and salvage.
LONG ISLAND LIGHTING COMPANY SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
(1) Uncollectible accounts written off, net of recoveries.
LONG ISLAND LIGHTING COMPANY SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Advertising expenses for the years 1993 - 1991 were not presented as such amounts represent less than 1% of total revenues.
SIGNATURES
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.
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.
LONG ISLAND LIGHTING COMPANY
Date: March 15, 1994 By: ANTHONY NOZZOLILLO ------------------------ Anthony Nozzolillo Chief Financial Officer
Original powers of attorney, authorizing Kathleen A. Marion, Anthony Nozzolillo and Robert J. Grey, and each of them, to sign this report and any amendments thereto, as attorney-in-fact for each of the Directors and Officers of the Company, and a certified copy of the resolution of the Board of Directors of the company authorizing said persons and each of them to sign this report and amendments thereto as attorney-in-fact for any Officers signing on behalf of the Company, have been, are being filed or will be filed with the Securities and Exchange Commission.
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Post-Effective Amendment No. 3 to Registration Statement (No 33-16238) on Form S-8 relating to Long Island Lighting Company's Employee Stock Purchase Plan, Post-Effective Amendment No. 1 to Registration Statement (No. 2-87427) on Form S-3 relating to Long Island Lighting Company's Automatic Dividend Reinvestment Plan and in the related Prospectus, Registration Statement (No. 2-88578) on Form S-3 relating to the issuance of Common Stock and in the related Prospectus and Registration Statement (No. 33-45834) on Form S-3 relating to the issuance of General and Refunding Bonds and in the related Prospectus and Registration Statement (No. 33-60744) on Form S-3 relating to the issuance of General and Refunding Bonds, Debentures, Preferred Stock or Common Stock and in the related Prospectus, of our report dated February 4, 1994, with respect to the financial statements and schedules of Long Island Lighting Company included in this Annual Report on Form 10-K for the year ended December 31, 1993.
ERNST & YOUNG
Melville, New York March 11, 1994
EXHIBIT INDEX
Exhibit No. Description - ------- -----------
*3(a) Restated Certificate of Incorporation of the Company dated November 11, 1993.
(b) By-laws of the Company as amended on May 28, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
4(a) General and Refunding Indenture dated as of June 1, 1975 and 21 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
G&R Indenture dated as of June 1, 1975.
First Supplemental Indenture to G&R Indenture dated as of June 1, 1975.
Second Supplemental Indenture to G&R Indenture dated as of September 1, 1975.
Third Supplemental Indenture to G&R Indenture dated as of June 1, 1976.
Fourth Supplemental Indenture to G&R Indenture dated as of December 1, 1976.
Fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1977.
Sixth Supplemental Indenture to G&R Indenture dated as of April 1, 1978.
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
Seventh Supplemental Indenture to G&R Indenture dated as of March 1, 1979.
Eighth Supplemental Indenture to G&R Indenture dated as of February 1, 1980.
Ninth Supplemental Indenture to G&R Indenture dated as of March 1, 1981.
Tenth Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Eleventh Supplemental Indenture to G&R Indenture dated as of July 1, 1981.
Twelfth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Thirteenth Supplemental Indenture to G&R Indenture dated as of December 1, 1981.
Fourteenth Supplemental Indenture to G&R Indenture dated as of June 1, 1982.
Fifteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1982.
Sixteenth Supplemental Indenture to G&R Indenture dated as of April 1, 1983.
Seventeenth Supplemental Indenture to G&R Indenture dated as of May 1, 1983.
Eighteenth Supplemental Indenture to G&R Indenture dated as of September 1, 1984.
Nineteenth Supplemental Indenture to G&R Indenture dated as of October 1, 1984.
Twentieth Supplemental Indenture to G&R Indenture dated as of June 1, 1985.
Twenty-first Supplemental Indenture to G&R Indenture dated as of April 1, 1986.
Twenty-second Supplemental Indenture to G&R Indenture dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
Twenty-third Supplemental Indenture to G&R Indenture dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fourth Supplemental Indenture to G&R Indenture dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Twenty-fifth Supplemental Indenture to G&R Indenture dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Twenty-sixth Supplemental Indenture to G&R Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
4(b) Indenture of Mortgage and Deed of Trust dated as of September 1, 1951 and 44 supplements thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as follows:
Indenture of Mortgage dated as of September 1, 1951.
First Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1951.
Second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1952.
Third Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1953.
Fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1954.
Fifth Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1955.
Sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1956.
Seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1958.
Exhibit No. Description - ------- -----------
Eighth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1959.
Ninth Supplemental Indenture to the Indenture of Mortgage dated as of August 1, 1961.
Tenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1963.
Eleventh Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1964.
Twelfth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1965.
Thirteenth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1966.
Fourteenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1967.
Fifteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1969.
Sixteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1970.
Seventeenth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1971.
Eighteenth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1971.
Nineteenth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1972.
Twentieth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1973.
Twenty-first Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1974.
Twenty-second Supplemental Indenture to the Indenture of Mortgage dated as of November 1, 1974.
Twenty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1975.
Exhibit No. Description - ------- -----------
Twenty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1975.
Twenty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1976.
Twenty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1976.
Twenty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1977.
Twenty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1978.
Twenty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1979.
Thirtieth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1980.
Thirty-first Supplemental Indenture to the Indenture of Mortgage dated as of March 1, 1981.
Thirty-second Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-third Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1981.
Thirty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of December 1, 1981.
Thirty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1982.
Thirty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1982.
Thirty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1983.
Thirty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1983.
Exhibit No. Description - ------- -----------
Fortieth Supplemental Indenture to the Indenture of Mortgage dated as of February 29, 1984.
Forty-first Supplemental Indenture to the Indenture of Mortgage dated as of September 1, 1984.
Forty-second Supplemental Indenture to the Indenture of Mortgage dated as of October 1, 1984.
Forty-third Supplemental Indenture to the Indenture of Mortgage dated as of June 1, 1985.
Forty-fourth Supplemental Indenture to the Indenture of Mortgage dated as of April 1, 1986.
Forty-fifth Supplemental Indenture to the Indenture of Mortgage dated as of February 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Forty-sixth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-seventh Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1991 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Forty-eighth Supplemental Indenture to the Indenture of Mortgage dated as of May 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Forty-ninth Supplemental Indenture to the Indenture of Mortgage dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
*4(c) Debenture Indenture dated as of November 1, 1986 from the Company to The Connecticut Bank and Trust Company, National Association, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
First Supplemental Indenture dated as of November 1, 1986 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
Second Supplemental Indenture dated as of April 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Third Supplemental Indenture dated as of July 1, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of July 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fifth Supplemental Indenture dated as of November 1, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*Sixth Supplemental Indenture dated as of June 1, 1993.
*Seventh Supplemental Indenture dated as of July 1, 1993.
4(d) Debenture Indenture dated as of November 1, 1992 from the Company to Chemical Bank, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
First Supplemental Indenture dated as of January 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
Second Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Third Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Fourth Supplemental Indenture dated as of March 1, 1993 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(a) Sound Cable Project Facilities and Marketing Agreement dated as of August 26, 1987 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
10(b) Transmission Agreement by and between the Company and Consolidated Edison Company of New York, Inc. dated as of March 31, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(c) Contract for the sale of Firm Power and Energy by and between the Company and the State of New York dated as of April 26, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(d) Capacity Supply Agreement dated as of December 13, 1991 between the Company and the Power Authority of the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
*10(e) Nine Mile Point Nuclear Station Unit 2 Operating Agreement dated as of January 1, 1993 by and between the Company, New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation and Central Hudson Gas and Electric Corporation.
10(f) Settlement Agreement on Issues Related to Nine Mile Two Nuclear Plant dated as of June 6, 1990 by and between the Company, the Staff of the Department of Public Service and others (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
10(g) Settlement Agreement -- LILCO Issues dated as of February 28, 1989 by and between the Company and the State of New York (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(h) Amended and Restated Asset Transfer Agreement by and between the Company and the Long Island Power Authority dated as of June 16, 1988 as amended and restated on April 14, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(i) Memorandum of Understanding concerning proposed agreements on power supply for Long Island dated as of June 16, 1988 by and between the Company and New York Power Authority as amended May 24, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(j) Rate Moderation Agreement submitted by the staff of the New York State Public Service Commission on March 16, 1989 and supported by the Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(k) Site Cooperation and Reimbursement Agreement dated as of January 24, 1990 by and between the Company and Long Island Power Authority (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(l) Stipulation of settlement of federal Racketeer Influenced and Corrupt Organizations Act ("RICO") Class Action and False Claims Action dated as of February 27, 1989 among the attorneys for the Company, the ratepayer class, the United States of America and the individual defendants named therein (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
10(m) Revolving Credit Agreement dated as of June 27, 1989, between Long Island Lighting Company and the banks and co-agents listed therein, with the Exhibits thereto (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and as amended by the First Amendment dated as of October 13, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) and as amended by the Second Amendment dated as of March 5, 1992 and as modified by a Waiver dated November 5, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(n) Indenture of Trust dated as of December 1, 1989 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
Participation Agreement dated as of December 1, 1989 by and between the New York State Energy Research and Development Authority and the Company relating to the 1989 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
10(o) Indenture of Trust dated as of May 1, 1990 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of May 1, 1990 by and between the New York State Energy Research and Development Authority and the Company relating to the 1990 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(p) Indenture of Trust dated as of January 1, 1991 by and between New York State Energy Research and Development Authority and The Connecticut National Bank, as Trustee, relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
Participation Agreement dated as of January 1, 1991 by and between the New York State Energy Research and Development Authority and the Company relating to the 1991 Electric Facilities Revenue Bonds (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
10(q) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series A (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(r) Indenture of Trust dated as of February 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
Exhibit No. Description - ------- -----------
Participation Agreement dated as of February 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series B (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
10(s) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series C (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
10(t) Indenture of Trust dated as of August 1, 1992 by and between New York State Energy Research and Development Authority and IBJ Schroder Bank and Trust Company, as Trustee, relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
Participation Agreement dated as of August 1, 1992 by and between the New York State Energy Research and Development Authority and the Company relating to the 1992 Electric Facilities Revenue Bonds, Series D (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
*10(u) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series A.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series A.
*10(v) Indenture of Trust dated as of November 1, 1993 by and between New York State Energy Research and Development Authority and Chemical Bank, as Trustee, relating to the 1993 Electric Facilities Revenue Bonds, Series B.
Participation Agreement dated as of November 1, 1993 by and between the New York State Energy Research and Development Authority and the Company relating to the 1993 Electric Facilities Revenue Bonds, Series B.
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
*10(w) Supplemental Death and Retirement Benefits Plan as amended and restated effective January 1, 1993 and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference.
*10(x) Executive Agreements and Management Contracts
*(1) Executive Employment Agreement dated as of January 30, 1984 by and between William J. Catacosinos and Long Island Lighting Company, as amended by amendments dated March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference), December 22, 1989 (filed as Exhibit 10(o) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) and December 2, 1991 (filed as Exhibit 10(u) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference); an Employment Agreement dated as of March 20, 1987 (filed as Exhibit 10(e) to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by amendments dated November 30, 1989 (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference), an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference), an amendment dated December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference), and as amended by an amendment dated December 31, 1993.
*(2) Employment Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company and related Trust Agreement, which Trust Agreement was filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference.
(3) Employment Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
- ------------------------ * Filed herewith.
Exhibit No. Description - ------- -----------
(4) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between James T. Flynn and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(5) Employment Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(6) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Robert X. Kelleher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(7) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between John D. Leonard, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(8) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Adam M. Madsen and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(9) Employment Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(10) Employment Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(11) Employment Agreement dated as of April 16, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Brian R. McCaffrey and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 incorporated herein by reference) and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(12) Employment Agreement dated as of March 18, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Joseph W. McDonnell and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(13) Employment Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company and related Trust Agreement and as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(14) Employment Agreement dated as of July 29, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William G. Schiffmacher and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(15) Employment Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(16) Employment Agreement dated as of March 9, 1989 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(17) Employment Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company and related Trust Agreement as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(18) Employment Agreement dated as of March 20, 1987 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Walter F. Wilm, Jr. and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
(19) Employment Agreement dated as of November 4, 1988 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference) as amended by an amendment dated November 30, 1989 by and between Edward J. Youngling and Long Island Lighting Company and related Trust Agreement (filed as Exhibit 10(q) to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference) as amended by an amendment dated December 2, 1991 (filed as Exhibit 10(w) to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference) as amended by an amendment dated as of December 31, 1992 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference) and as amended by an amendment dated December 31, 1993 which amendment is identical to that filed with Exhibit 10(x)(1).
Exhibit No. Description - ------- -----------
(20) Retirement Agreement dated as of January 7, 1987 by and between George J. Sideris and Long Island Lighting Company, as amended March 20, 1987, and related Trust Agreement (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1986 and incorporated herein by reference).
*(21) Indemnification Agreement dated as of February 23, 1994 by and between Theodore A. Babcock and Long Island Lighting Company.
(22) Indemnification Agreement dated as of January 31, 1992 by and between A. James Barnes and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(23) Indemnification Agreement dated as of May 30, 1990 by and between George Bugliarello and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(24) Indemnification Agreement dated as of April 17, 1992 by and between Renso L. Caporali and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(25) Indemnification Agreement dated as of November 19, 1987 by and between William J. Catacosinos and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(26) Indemnification Agreement dated as of April 23, 1992 by and between Peter O. Crisp and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(27) Indemnification Agreement dated as of May 14, 1990 by and between William N. Dimoulas and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(28) Indemnification Agreement dated as of November 25, 1987 by and between James T. Flynn and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(29) Indemnification Agreement dated as of November 19, 1987 by and between Winfield E. Fromm and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- ----------------------- * Filed herewith.
Exhibit No. Description - ------- -----------
*(30) Indemnification Agreement dated as of January 3, 1994 by and between Vicki L. Fuller and Long Island Lighting Company.
(31) Indemnification Agreement dated as of September 11, 1992 by and between Robert J. Grey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
(32) Indemnification Agreement dated as of November 25, 1987 by and between Robert X. Kelleher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(33) Indemnification Agreement dated as of November 25, 1987 by and between John D. Leonard, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(34) Indemnification Agreement dated as of November 25, 1987 by and between Adam M. Madsen and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(35) Indemnification Agreement dated as of May 30, 1990 by and between Kathleen A. Marion and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(36) Indemnification Agreement dated as of January 21, 1991 by and between Arthur C. Marquardt and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(37) Indemnification Agreement dated as of November 25, 1987 by and between Brian R. McCaffrey and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(38) Indemnification Agreement dated as of March 18, 1988 by and between Joseph W. McDonnell and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(39) Indemnification Agreement dated as of July 29, 1992 by and between Anthony Nozzolillo and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1992 and incorporated herein by reference).
- --------------------- * Filed herewith.
Exhibit No. Description - ------- -----------
*(40) Indemnification Agreement dated as of April 20, 1993 by and between Katherine D. Ortega and Long Island Lighting Company.
(41) Indemnification Agreement dated as of November 19, 1987 by and between Basil A. Paterson and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(42) Indemnification Agreement dated as of November 25, 1987 by and between William Schiffmacher and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(43) Indemnification Agreement dated as of February 8, 1992 by and between Richard L. Schmalensee and Long Island Lighting Company (filed as an Exhibit to the Company Form 10- K for the Year Ended December 31, 1991 and incorporated herein by reference).
(44) Indemnification Agreement dated as of November 30, 1987 by and between George J. Sideris and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(45) Indemnification Agreement dated as of February 20, 1990 by and between Robert B. Steger and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
(46) Indemnification Agreement dated as of March 1, 1989 by and between William E. Steiger, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1990 and incorporated herein by reference).
(47) Indemnification Agreement dated as of November 19, 1987 by and between John H. Talmage and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(48) Indemnification Agreement dated as of April 17, 1991 by and between Thomas J. Vallely, III and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1991 and incorporated herein by reference).
(49) Indemnification Agreement dated as of November 19, 1987 by and between Phyllis A. Vineyard and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
- --------------------- * Filed herewith.
Exhibit No. Description - ------- -----------
(50) Indemnification Agreement dated as of November 25, 1987 by and between Walter F. Wilm, Jr. and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1987 and incorporated herein by reference).
(51) Indemnification Agreement dated as of November 4, 1988 by and between Edward J. Youngling and Long Island Lighting Company (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(52) Long Island Lighting Company Officers' and Directors' Protective Trust dated as of April 18, 1988 by and between the Company and Clarence Goldberg, as Trustee (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1988 and incorporated herein by reference).
(53) Long Island Lighting Company's Retirement Plan for Directors dated as of February 2, 1990 (filed as an Exhibit to the Company's Form 10-K for the Year Ended December 31, 1989 and incorporated herein by reference).
*(54) Agreement dated as of April 20, 1993 by and between the Company and Lionel M. Goldberg.
*(55) Agreement dated as of April 20, 1993 by and between the Company and Eben W. Pyne.
*23 Consent of Ernst & Young, Independent Auditors.
*24(a) Powers of Attorney executed by the Directors and Officers of the Company.
*24(b) Certificate as to Corporate Power of Attorney.
*24(c) Certified copy of Resolution of Board of Directors authorizing signature pursuant to Power of Attorney.
Financial Statements of subsidiary companies accounted for by the equity method have been omitted because such subsidiaries do not constitute significant subsidiaries.
- ---------------------- * Filed herewith.