-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, sRsiQiWDHR4WbaLaCc7zR/wmLK2O0CVp0Nnc4sJtmCRltHCrBeb3oYSVSHEfG9wK XbzV01gI+OX5yx4gIH7GXg== 0000007323-95-000004.txt : 19950415 0000007323-95-000004.hdr.sgml : 19950414 ACCESSION NUMBER: 0000007323-95-000004 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19950413 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARKANSAS POWER & LIGHT CO CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 710005900 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 1935 Act SEC FILE NUMBER: 070-08001 FILM NUMBER: 95528475 BUSINESS ADDRESS: STREET 1: PO BOX 551 STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72203 BUSINESS PHONE: 5013774000 MAIL ADDRESS: STREET 1: P O BOX 551 CITY: LITTLE ROCK STATE: AR ZIP: 72203 POS AMC 1 File No. 70-8001 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 ______________________________________ POST-EFFECTIVE AMENDMENT NO. 2 TO APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ______________________________________ Arkansas Power & Light Company Louisiana Power & Light Company 425 West Capitol Avenue 639 Loyola Avenue Little Rock, Arkansas 72201 New Orleans, Louisiana 70113 Mississippi Power & Light Company New Orleans Public Service Inc. 308 East Pearl Street 639 Loyola Avenue Jackson, Mississippi 39201 New Orleans, Louisiana 70113 System Fuels, Inc. 639 Loyola Avenue New Orleans, Louisiana 70113 (Names of companies filing this statement and addresses of principal executive offices) ______________________________________ Entergy Corporation (Name of top registered holding company parent of each applicant or declarant) ______________________________________ Gerald D. McInvale Senior Vice President and Chief Financial Officer Arkansas Power & Light Company 425 West Capitol Avenue Little Rock, Arkansas 72201 (Names and addresses of agents for service) _____________________________________________ The Commission is also requested to send copies of any communications in connection with this matter to: Laurence M. Hamric, Esq. Thomas J. Igoe, Jr., Esq. Denise C. Redmann, Esq Reid & Priest LLP Entergy Services, Inc. 40 West 57th Street 639 Loyola Avenue New York, New York 10019 New Orleans, Louisiana 70113 Item 1. Description of Proposed Transactions. Item 1 of the Application-Declaration, as heretofore amended, is hereby supplemented to include the following at the end of such Item: "Arkansas Power & Light Company ("AP&L") is proposing to replace its existing steel railcar fleet with aluminum railcars. The steel railcars are currently being used by AP&L to transport coal from Wyoming to the two-unit White Bluff Steam Electric Station located near Redfield, Arkansas ("White Bluff") and the two-unit Independence Steam Electric Station located near Newark, Arkansas ("ISES"). By replacing the steel railcars with aluminum railcars, AP&L and its wholesale formula rate and retail customers, as well as the other co-owners of the stations, will realize substantial reductions in fuel costs. As more fully discussed below, the cost savings would be significantly greater if AP&L were permitted to (a) sublease its existing steel railcars for up to the remainder of their respective lease terms, and (b) sublease the new aluminum railcars during periods when they are not needed to service the coal transportation requirements of White Bluff and ISES. AP&L is seeking authority herein to enter into such subleasing transactions. Background. By orders dated November 1, 1979, August 25, 1980, June 15, 1982 and May 15, 1984 (HCAR Nos. 21277, 21689, 22556 and 23309), the Commission authorized System Fuels, Inc. ("System Fuels"), the fuel- supply subsidiary of the Entergy System, to acquire by leveraged lease, in four separate transactions, 2,250 100-ton rotary dump steel railcars. Pursuant to the Commission's orders dated July 7, 1992 (HCAR No. 35-25576) and September 3, 1992 (HCAR No. 35-25618) in this File, AP&L, a principal owner and the contractual operator of White Bluff and ISES, assumed System Fuels' rights and obligations as lessee under the leases, effective April 30, 1993. In addition to authorizing the assumption by AP&L of the leases, the Commission's July 7 and September 3, 1992 orders placed various restrictions on AP&L's ability to sublease the steel railcars to third-parties. Among those restrictions were the requirement that (a) no sublease be longer than the lesser of one year or the period during which the railcars are not needed for the transportation of coal to White Bluff and ISES, and (b) no more than 50% of the railcars be subleased at any one time. Transportation of coal from Wyoming to White Bluff and ISES is provided by Union Pacific Railroad and Western Railroad Properties, Inc. (the "Railroads"). Pursuant to a rail transportation agreement with the Railroads, AP&L provides the Railroads with the railcars needed to transport the coal and pays the Railroads freight charges for the coal which is transported. As a result of recent negotiations, the Railroads have agreed to significantly reduce their freight charges provided that AP&L replace its existing fleet of steel railcars with aluminum railcars. _______________________________ During the past 14 years, 25 of the original steel railcars were destroyed in derailments leaving 2,225 railcars currently in service. AP&L's ownership interest consists of 57 percent of White Bluff and 31.5 percent of ISES Unit 1. The use of aluminum railcars has become standard in the industry. By using aluminum railcars, the number of trips needed to deliver the same quantity of coal can be reduced because an aluminum railcar can carry approximately 120 tons of coal while the maximum load for a steel railcar is 106 tons. By reducing the number of train trips, the Railroads are able to significantly reduce their variable costs by making extra crew shifts and power available for new business. A portion of these savings would be passed on to AP&L through reduced freight rates. In order to evaluate the economic attractiveness of replacing the steel railcars with aluminum railcars, AP&L developed a Base Case and an Aluminum Case. The Base Case represents the costs associated with the continued use of the existing steel railcars until the expiration of their respective lease terms. In order to meet the projected combined coal requirements for White Bluff and ISES, the Base Case assumes the acquisition of an additional 345 aluminum railcars in 1996 and, because of the greater hauling capacity of aluminum railcars, the acquisition of 1,944 aluminum railcars to replace the 2,225 steel railcars upon expiration of the existing leases. The Aluminum Case represents the costs associated with the full replacement in 1995 of the steel railcar fleet with aluminum railcars. As the aluminum railcars are delivered, the Aluminum Case assumes that the existing steel railcars are either parked, subleased or sold. Both the Base Case and the Aluminum Case are based on forecasted annual deliveries of 13.5 million tons of coal and both include the costs associated with lease payments, maintenance requirements and freight charges for the steel and/or the aluminum railcars. If AP&L were to park the entire steel railcar fleet and continue to make rental payments in connection therewith, the cost savings associated with the full replacement of steel railcars with aluminum railcars in 1995 are projected to be, on a net present value basis, $44.0 million for the initial ten years of the project (1995- 2004), and $95.1 million for the period 1995 through 2035, the year in which the last coal unit is expected to be retired. The portion of these savings attributable to AP&L retail customers is estimated to be $5 million for the initial ten years of the project and a total of $22.0 million over the project life. The results of an economic evaluation and analysis documenting these savings projections are included in a report entitled "The Economic Analysis of Replacing the Steel Gondola Fleet with Aluminum Prior to Lease Termination" annexed to the direct testimony of Jeffrey G. Herndon before the Arkansas Public Service Commission ("APSC") (see Exhibit D-3 hereto). _______________________________ The Economic Analysis contains information which is subject to a confidentiality provision in AP&L's rail transportation agreement with the Railroads. In order to comply with the confidentiality provision, a redacted version of the Economic Analysis was filed with the APSC and is filed herewith. An unredacted version of the Economic Analysis was filed with the APSC Secretary's office, subject to a protective order. Subleasing of Existing Steel Railcars. As discussed above, the replacement of steel railcars with aluminum railcars in 1995 is projected to result in substantial cost savings even if AP&L were to park the entire steel railcar fleet and continue to make rental payments in connection therewith. The cost savings would be significantly greater, however, if AP&L were able to offset a portion of the parking charges and rental costs by subleasing the railcars for the remainder of their lease terms or terminating the railcar leases and realizing any benefits from the sale of the railcars by the lessors. On February 22, 1995, the APSC issued an order permitting AP&L to recover both the costs associated with the proposed aluminum railcar lease as well as the costs associated with the existing steel railcar leases (offset by the proceeds of any sublease or termination and sale). The APSC order provides that such costs are properly accounted for in the Uniform System of Accounts as fuel costs in Account 151 - Fuel Stock for all purposes under AP&L's retail fuel adjustment clause. Thus, any revenue received by AP&L from the sublease or sale of the steel railcars would reduce the fuel costs which are passed through to AP&L's retail customers on a current basis pursuant to the fuel adjustment clause. A copy of AP&L's application to the APSC, as well as the APSC order approving the application, are filed as Exhibits D-1 through D-5 hereto. _______________________________ Parking charges for the entire steel railcar fleet are projected to be $1,015,156 per year. Lease payments under the steel railcar leases total approximately $8.6 million per year. The base terms of the existing steel railcar leases will expire over the next three to seven years (July 1, 1998, January 1, 1999, September 1, 2000 and September 1, 2002). In addition, AP&L intends to file an application with the Federal Energy Regulatory Commission ("FERC") requesting confirmation that both the costs associated with the proposed aluminum railcar lease as well as the existing steel railcar leases are properly accounted for as fuel costs in Account 151 - Fuel Stock for purposes of AP&L's wholesale fuel adjustment clause. Therefore, upon FERC confirmation of such accounting treatment, any revenue received from the sublease or termination and sale of the steel railcars would also reduce the fuel costs which are passed through to AP&L's wholesale customers. Due to the current strength of the steel railcar leasing market, AP&L believes that subleasing of the steel railcars would result in greater revenues and therefore increased cost savings than would termination of the leases. Moreover, termination of the leases could trigger significant payment obligations to the lessors in 1995 if the proceeds received from the sale of the steel railcars were less than the termination values provided for in the leases. If, on the other hand, AP&L were to sublease the steel railcars, any sublease revenue received by AP&L would directly offset AP&L's total lease obligations. AP&L believes that subleasing of the steel railcars would provide a stream of income which would significantly offset the ongoing lease costs. If AP&L received sufficient sublease income to offset 50 percent of the steel railcar lease payments, the net present value of project savings would increase to $61.0 million in the first ten years and $112.1 million for the total project life, measured in 1995 dollars for all ownership interests. If sublease income is sufficient to offset 100 percent of the steel railcar lease payments, the net present value savings increase to $74.5 million in the first ten years and $125.6 million for the project life for all ownership interests. See Exhibit D-3 hereto. In order to lock-in the favorable freight rates offered by the Railroads, AP&L has negotiated a priority in the waiting line for the manufacture of the aluminum railcars. Any delay in placing a final order with the manufacturer could jeopardize the ability of AP&L and its ratepayers to realize the projected cost savings. Additionally, although the market for subleasing of steel railcars is currently very strong, if AP&L does not move expeditiously in arranging for the sublease of its existing steel railcars, sublease rates may decline substantially as other utilities convert to the use of aluminum railcars and flood the sublease market with their existing steel railcars. AP&L's steel railcar leases generally provide that AP&L may not, without the prior written consent of the transaction participants, sublease the railcars for a term that exceeds one year or extends beyond certain specified dates. AP&L is currently seeking from the lessors, and expects to receive shortly, the necessary consents to sublease the steel railcars for their remaining lease terms. Because the existing steel railcars will become economically obsolete upon acquisition of the new aluminum railcars, and in view of the significant fuel cost reductions that would result from subleasing, AP&L hereby requests authority to sublease all of its existing steel railcars for up to the remainder of their respective lease terms so long as the following conditions are met: A. Each subleasing transaction shall be reported by a quarterly Rule 24 Certificate. B. Any revenue realized from the sublease of the railcars shall be credited against AP&L's costs as lessee of the railcars. The benefit from such lower cost of leasing the railcars shall accrue to the owners of White Bluff and ISES on a pass- through basis. Such revenues shall be reflected accordingly in AP&L's ratemaking provisions, except to the extent the regulatory authority having jurisdiction over the matters authorizes a different treatment. Such revenues will be credited to "Fuel stock" (Account No. 151 under FERC's Uniform System of Accounts). In the event AP&L changes its method of accounting for subleasing it will provide 30 days advance notice of the proposed change to the SEC. Subleasing of Newly Acquired Aluminum Railcars. In order to satisfy the combined annual coal requirements for White Bluff and ISES, AP&L will need to place in service 2,289 aluminum railcars. The size of the aluminum railcar fleet has been determined based upon the average cycle time to deliver volume requirements to White Bluff and ISES, taking into account five percent spare railcars and one maintenance train. See Exhibit D-3 hereto. During peak hauling periods the entire aluminum railcar fleet will be fully utilized. However, due to changes in coal burning forecasts, fuel prices, adjustments to the Entergy System's economic dispatch, emergency plant outages, coal supply or railroad delivery force majeure and other causes, there may be times when fewer than 2,289 railcars will be required to service White Bluff and ISES. During these periods, subleasing of the aluminum railcars would provide a stream of income which would offset AP&L's rental payment obligations under the proposed aluminum railcar leases. In accordance with the accounting treatment described above, any reduction in AP&L's rental obligations would benefit AP&L and its wholesale and retail customers through reduced fuel expenses. The imposition of artificial restrictions as to the number of railcars which may be subleased or the maximum term of any sublease would only serve to thwart AP&L's efforts to minimize fuel costs which are passed through to its wholesale and retail customers. Moreover, the imposition of such restrictions would be inconsistent with the Commission's recent decisions in The Southern Company and Eastern Utilities Associates. _______________________________ HCAR No. 35-26211 (December 30, 1994) (Memorandum Opinion and Order Authorizing Acquisition of Nonutility Subsidiary and Related Transactions; Reservation of Jurisdiction; and Denying Request for Hearing). HCAR No. 35-26232 (February 15, 1995) (Memorandum Opinion and Order Amending Prior Orders to Remove 50% Limitation Upon Activities of Energy Management Subsidiary). In The Southern Company, the Commission permitted Southern Communications Services, Inc., a newly-formed subsidiary of The Southern Company ("Southern Communications"), to provide up to 80% of the capacity of its proposed wireless digital communication system to nonassociate companies. Because the system would at all times remain available for use by The Southern Company's operating subsidiaries, the Commission determined that the use of the system by nonassociate companies would not interfere with the use of such system by the operating companies. The Commission further determined that by providing such services to nonassociate companies, Southern Communications could recover the cost of the system, in part, from nonassociate companies, thereby reducing the costs borne by associate companies. In Eastern Utilities Associates, the Commission removed the 50% limitation it had previously imposed on EUA Cogenex Corporation ("Cogenex"), a wholly-owned subsidiary of Eastern Utilities Associates ("EUA"). In approving the acquisition of Cogenex in 1986, the Commission had permitted Cogenex to provide energy management services outside of New England provided that the revenues attributable to customers outside of New England would remain less than revenues attributable to customers within New England. The Commission removed the 50% limitation after determining that the provision of energy management services was closely related to EUA's core utility business and that the expansion of such services would not divert management time and attention from EUA's core utility operations. The Commission also noted that the services provided by Cogenex have resulted in significant benefits to EUA system consumers. The rationale in The Southern Company and Eastern Utilities Associates is equally compelling in the present case. The aluminum railcar fleet will at all times be principally dedicated to the needs of White Bluff and ISES. By subleasing the railcars only during periods of non-utilization by AP&L, the sublease transactions will in no way interfere with the transportation requirements of White Bluff and ISES. Moreover, AP&L's wholesale and retail customers will directly benefit from the sublease transactions through reduced fuel costs. Further support for AP&L's proposed subleasing arrangements may be found in a number of the Commission's "excess capacity" cases in which utilities have been permitted to sell their excess capacity from nonutility businesses to non-affiliates without regard to any artificial restrictions as to the amount or nature of such sales. _______________________________ See Jersey Central Power & Light Co., 37 S.E.C. Docket 1243 (March 18, 1987) (licensing of computer programs); Indiana and Michigan Electric Co., et. al., 35 S.E.C. Docket 252 (March 4, 1986) (provision of river transportation services); Consolidated Gas Transmission Corp., et. al., 34 S.E.C. Docket 990 (November 20, 1985) (leasing of microwave radio facilities); National Fuel Gas Co., 29 S.E.C. Docket 448 (November 29, 1983) (sale of natural gas production); Ohio Power Co., 28 S.E.C. Docket 242 (June 17, 1983) (provision of coal transloading services); New England Electric System, 24 S.E.C. Docket 229 (December 9, 1981) (subchartering of coal collier). In view of the foregoing, AP&L hereby requests authority to sublease its aluminum railcars to third parties subject to the following restrictions: A. No sublease will be longer than the period during which the railcars are not needed for the transportation of coal to White Bluff and ISES. B. Each subleasing transaction shall be reported by a quarterly Rule 24 Certificate. C. Any revenue realized from the sublease of the railcars shall be credited against AP&L's costs as lessee of the railcars. The benefit from such lower cost of leasing the railcars shall accrue to the owners of White Bluff and ISES on a pass- through basis. Such revenues shall be reflected accordingly in AP&L's ratemaking provisions, except to the extent the regulatory authority having jurisdiction over the matters authorizes a different treatment. Such revenues will be credited to "Fuel stock" (Account No. 151 under FERC's Uniform System of Accounts). In the event AP&L changes its method of accounting for subleasing it will provide 30 days advance notice of the proposed change to the SEC." Item 2. Fees, Commissions and Expenses. Item 2 of the Application-Declaration, as heretofore amended, is hereby supplemented to include the following at the end of such Item: "Expenses to be incurred by AP&L in connection with the subleasing transactions proposed herein are estimated not to exceed $97,000, including $30,000 estimated for legal fees, $65,000 estimated for the fees of Entergy Services, Inc. and the $2,000 filing fee payable to the Commission with respect to this Post-Effective Amendment No. 2 to the Application-Declaration." Item 3. Applicable Statutory Provisions. Item 3 of the Application-Declaration, as heretofore amended, is hereby supplemented to include the following at the end of such Item: "AP&L believes that the proposed sublease of the steel and aluminum railcars to third parties as described herein may be subject to Sections 9(a) and 10 of Act." Item 4. Regulatory Approval. Item 4 of the Application-Declaration, as heretofore amended, is hereby supplemented to include the following at the end of such Item: "No state regulatory body or agency and no federal commission or agency other than this Commission has jurisdiction over the sublease transactions proposed herein. As discussed above, by order dated February 22, 1995 the APSC has permitted AP&L to recover both the costs associated with the proposed aluminum railcar lease as well as the costs associated with the existing steel railcar leases (offset by the proceeds of any sublease or sale). The APSC order provides that such costs are properly accounted for in the Uniform System of Accounts as fuel costs in Account 151-Fuel Stock for all purposes under AP&L's retail fuel adjustment clause. In addition, AP&L intends to file an application with the FERC requesting confirmation that the costs associated with both the proposed aluminum railcar lease as well as the existing steel railcar leases are properly accounted for as fuel costs in Account 151 - Fuel Stock for purposes of AP&L's wholesale fuel adjustment clause." Item 5. Procedure. Item 5 of the Application-Declaration, as heretofore amended, is hereby supplemented to include the following at the end of such Item: "AP&L respectfully requests that the Commission enter a supplemental order authorizing the subleasing transactions proposed herein as soon as practicable, but in no event later than May 15, 1995. AP&L hereby waives a recommended decision by a hearing officer or any other responsible officer of the Commission, agrees that the Staff of the Division of Investment Management may assist in the preparation of the Commission's supplemental order, and requests that there be no waiting period between the issuance of the Commission's supplemental order and the date it is to become effective." Item 6. Exhibits and Financial Statements. a. Exhibits D-1 Application to the APSC (Docket No. 94-439-U) D-2 Direct testimony of Roy A. Giangrosso before the APSC D-3 Direct testimony of Jeffrey G. Herndon (including Economic Analysis) before the APSC D-4 Direct testimony of J. David Wright before the APSC D-5 Order of the APSC *F Opinion(s) of Counsel G Financial Data Schedule H Suggested form of notice of proposed transactions for publication in the Federal Register b. Financial Statements: - Financial Statements of AP&L and Entergy Corporation and subsidiaries, consolidated, each as of December 31, 1994. - Notes to financial statements of AP&L and Entergy Corporation and subsidiaries, consolidated, included in the Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (filed in File Nos. 1-10764 and 1- 11299, respectively, and incorporated herein by reference). Except as reflected in the financial statements (including the notes thereto) there have been no material changes, not in the ordinary course of business, with respect to AP&L or Entergy Corporation that have taken place since December 31, 1994. _________________________________________ * To be supplied by amendment. Item 7. Information as to Environmental Effects. a. As more fully described in Item 1, the proposed transactions subject to the jurisdiction of the Commission involve the subleasing of railcars and, as such, do not involve a major Federal action having a significant impact on the human environment. b. Not applicable. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned companies have duly caused this statement to be signed on their behalf by the undersigned thereunto duly authorized. ARKANSAS POWER & LIGHT COMPANY LOUISIANA POWER & LIGHT COMPANY MISSISSIPPI POWER & LIGHT COMPANY NEW ORLEANS PUBLIC SERVICE INC. SYSTEM FUELS, INC. By: /s/ Gerald D. McInvale Gerald D. McInvale Senior Vice President and Chief Financial Officer Dated: April 12, 1995 EX-99 2 Exhibit D-1 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE ) APPLICATION OF ARKANSAS ) POWER & LIGHT COMPANY FOR ) DOCKET NO. 94-_____-U APPROVAL OF ACCOUNTING ) PROCEDURES FOR COAL COSTS ) APPLICATION OF ARKANSAS POWER & LIGHT COMPANY COMES Arkansas Power & Light Company ("AP&L" or the "Company"), and for its Application states: 1. This Application is filed pursuant to Rule 4.04 of the Arkansas Public Service Commission Rules of Practice and Procedure and the Commission order dated April 10, 1979, in Docket No. U-2989 in which the Arkansas Public Service Commission ("APSC" or the "Commission") adopted the uniform system of accounts and regulations governing the preservation of records promulgated by the Federal Energy Regulatory Commission ("FERC"), the National Association of Regulatory Utility Commissioners and the Federal Communications Commission relative to electric, gas, water and telephone utilities. 2. AP&L is a corporation organized under the laws of the State of Arkansas. A copy of the Company's Articles of Incorporation is on file with the Commission and is incorporated herein by reference. 3. The subject matter of this Application is the accounting treatment, for purposes of the Fuel Adjustment Clause Rate Rider Schedule M27 ("Fuel Adjustment Clause"), associated with a proposed lease of aluminum railcars, or gondolas, to replace the existing fleet of leased steel gondolas that are used to transport coal for use as fuel in the White Bluff Steam Electric Station ("White Bluff") and Independence Steam Electric Station ("ISES"). 4. These two generating stations, each of which consists of two nominally rated 800 MW coal-fired generating stations, are operated by AP&L. The Company has partial ownership in White Bluff Units 1 and 2 and ISES Unit 1. As more fully described in the direct testimony of Mr. Roy Giangrosso, coal for White Bluff and ISES is supplied under contractual arrangements with Kerr McGee Coal Corporation and North Antelope Coal Company, respectively, from mines located in the Powder River Basin in Wyoming and, in small quantities, from spot purchases on the open market. 5. Transportation of the coal from the mines in Wyoming to the generating stations in Arkansas currently is provided pursuant to contractual arrangements with Union Pacific System and Western Railroad Properties, Inc. (the "Railroads"). As a result of negotiations with the Railroads, AP&L has the opportunity to enter into an amended rail transportation agreement that provides significant reductions in coal transportation rates. The amendment, however, is dependent upon AP&L obtaining aluminum railcars, which are significantly lighter than the existing steel railcars and can carry more coal per railcar. The terms and conditions of this proposed amendment are more fully described in the direct testimony of Mr. Giangrosso. 6. The proposed lease of aluminum gondolas and the resulting decrease in transportation rates negotiated with the Railroads is projected to save $95.1 million on a net present value basis for the period 1995 through 2035, the year in which the last coal unit retires. The portion of these savings attributable to AP&L retail customers is estimated to be $22.0 million. The results of an economic evaluation and analysis documenting these savings projections are included, in redacted form, in the direct testimony of Mr. Jeffrey G. Herndon. A Motion for Protective Order accompanies this Application seeking Commission authorization to file this study under seal so as to comply with confidentiality provisions in an agreement between AP&L and the Railroads. 7. The projected savings represent the net of costs associated with the existing lease of steel railcars at the existing contractual transportation rate as compared to the proposed lease of aluminum railcars at the new transportation rate negotiated with the Railroads. These savings assume that all the costs of the existing steel railcars leases will continue to be treated as fuel expense for the life of these leases. These savings could be enhanced by sub-lease of the existing steel railcars to others or net benefit of lease termination after sale of the steel railcars to others by the lessor. As described in the testimony of Mr. J. David Wright, the Company believes that the costs associated with the aluminum railcar lease, the existing steel railcar lease and any offset thereto due to disposition of the existing steel railcars, are properly accounted for in the Uniform System of Accounts as fuel expenses in Account 501 - Fuel for all purposes under the Company's Fuel Adjustment Clause. AP&L seeks a ruling from the Commission confirming the Company's interpretation before it enters into the aluminum railcar lease and related obligations or, in the alternative, a waiver of, and permission to deviate from, such accounting requirements. 8. Approval of the Company's Application is in the public interest because it would significantly reduce coal costs which are passed through to AP&L's customers on a current basis through the Fuel Adjustment Clause. Absent the accounting treatment described above, the project will not be economically feasible. 9. AP&L requests that the service list in this proceeding include: James P. Herden Director, Regulatory Affairs Arkansas Power & Light Company P.O. Box 551 Little Rock, AR 72203 (501) 377-4475 Edward B. Dillon, Jr. Mitchell, Williams, Selig, Gates & Woodyard 320 West Capitol Avenue, Suite 1000 Little Rock, AR 72201 (501) 688-8800 WHEREFORE, AP&L respectfully requests the Commission to issue an order approving the accounting treatment for the proposed aluminum gondola lease described herein or, in the alternative, a waiver of, and permission to deviate from, such accounting requirements, and for all other appropriate relief. Respectfully submitted, ARKANSAS POWER & LIGHT COMPANY By: Steven K. Strickland Coordinator, Regulatory Affairs c: Mr. Louis H. Fish Vice President Power Supply & Delivery Arkansas Electric Cooperative Corp. P.O. Box 194208 Little Rock, AR 72219-4208 Mr. William Hegeman General Manager Conway Corporation P.O. Box 99 Conway, AR 72032 Mr. James Reed, Manager City Water & Light Plant 400 East Monroe Jonesboro, AR 72401 Mayor Charles R. Kennemore City of Osceola P.O. Box 443 Osceola, AR 72370 Mr. William H. Johnson General Manager West Memphis Utility Commission P.O. Box 1868 West Memphis, AR 72301 Mr. Max Sherman Manager, EPI Business Development 900 South Shackleford, Suite 210 Little Rock, AR 72211 CERTIFICATE OF SERVICE I, Steven K. Strickland, do hereby certify that a copy of the foregoing has been served upon all parties of record this 13th day of December 1994. __________________________ Steven K. Strickland EX-99 3 Exhibit D-2 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE ) APPLICATION OF ARKANSAS ) POWER & LIGHT COMPANY FOR ) DOCKET NO. 94-_____-U APPROVAL OF ACCOUNTING ) PROCEDURES FOR COAL COSTS ) DIRECT TESTIMONY OF ROY A. GIANGROSSO DIRECTOR, COAL SUPPLY ENTERGY SERVICES, INC. ON BEHALF OF ARKANSAS POWER & LIGHT COMPANY DECEMBER 13, 1994 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. A. Roy A. Giangrosso. My business address Entergy Services, Inc., P. O. Box 2951, Beaumont, Texas 77704. Q PLEASE DESCRIBE YOUR WORK AND EDUCATIONAL EXPERIENCE. A. I hold a Bachelor of Science degree in Electrical Engineering from University of Southwestern Louisiana, a Master of Engineering degree from Tulane University and have completed further post graduate studies in business and finance. I am a Registered Professional Engineer in civil and electrical engineering in the state of Louisiana and a Registered Professional Engineer in the state of Mississippi. I joined the Entergy System as Assistant Engineer in the NOPSI Engineering Department in 1965. In 1972, I became an Engineer in NOPSI's Electric System Planning Division. In 1978, I became a Senior Engineer in the newly formed Energy Procurement Department of NOPSI. In 1980, I was named manager of the Energy Procurement Department. This department had the responsibility of planning, acquiring, and managing NOPSI's fuel supplies. Upon functional consolidation of NOPSI and LP&L, the name of the department was changed to Fossil Fuel Supply. I was named Director, Fossil Fuel Supply in 1985. Effective January 1, 1991, all System fuel matters were consolidated at Entergy Services, Inc., ("ESI") in the newly created Fuels Management Department. At that time I was named Director of Gas Supply. On April 1, 1992, I became Director of Coal Supply in a managerial rotation within the fuels management organization of ESI, and effective October 1, 1993, I reassumed the position of Director of Gas Supply. On January 1, 1994, I assumed responsibility for coal acquisition activities in the newly created Fuels and System Operations Department of ESI. Q. WHAT ARE YOUR RESPONSIBILITIES IN THIS POSITION? A. In my current position, I am responsible for directing the activities of coal acquisition and supply for Entergy System operating companies that have coal operations or ownership in coal plants -- Arkansas Power & Light Company ("AP&L" or the "Company"), Gulf States Utilities, and Mississippi Power & Light Company. Q. ON WHOSE BEHALF ARE YOU SUBMITTING THIS TESTIMONY? A. I am submitting this testimony on behalf of AP&L. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? A. I will provide an overview of AP&L's proposal to enter into a lease arrangement with Johnstown America Corp. for aluminum rail cars that would be utilized to transport coal from mines currently under contract to provide coal for fuel to the White Bluff Steam Electric Station ("White Bluff") and Independence Steam Electric Station ("ISES"). In addition, Mr. Jeff Herndon, ESI Senior Fuels Planning Engineer, will provide testimony describing his analysis and evaluation demonstrating the economic advantages to AP&L, its customers and co- owners of leasing aluminum railcars. Finally, Mr. David Wright, ESI Manager of Regulatory Accounting, will describe the proposed accounting treatment of these costs. Q. PLEASE DESCRIBE AP&L'S CURRENT USE OF COAL AND THE EXISTING COAL TRANSPORTATION ARRANGEMENTS. A. White Bluff and ISES each has two nominal 800 MW generating units fueled primarily by Powder River Basin coal from Wyoming. AP&L operates these plants on its own behalf and on behalf of its co-owners in the plants. AP&L's ownership interest consists of 57 percent of White Bluff and 31.5 percent of ISES Unit 1. Current fuel forecasts estimate the combined coal requirements for both plants to be approximately 13.5 million tons annually. Two long- term coal supply contracts for coal from the Powder River Basin region form the basis of supply. The Kerr McGee Jacobs Ranch Mine Coal Supply Agreement was executed as the primary supply for White Bluff's requirements. The North Antelope Coal Company North Antelope Mine Coal Supply Agreement was executed to be the primary supply for ISES' coal requirements. Together, these two contracts will supply between 10 to 11 million tons annually. Additional coal supplies to meet the anticipated 13.5 million ton annual requirement will be purchased on the spot market from sources having acceptable quality coal. Coal transportation from the Powder River Basin to White Bluff and ISES is provided in unit-train service by Western Railroad Properties, Inc., and Union Pacific Railroad (collectively, the "Railroads"). A coal unit-train is approximately 115 railcars or gondolas loaded with coal having the same destination. A fleet of 2,225 steel gondolas, supplemented by additional lease gondolas as required, is provided by AP&L to the Railroads for unit-train makeup. Approximately 20 unit-train sets with spares and maintenance gondolas are required to move 13.5 million tons per year. Q. WHAT IS THE ADVANTAGE OF USING ALUMINUM RAIL CARS FOR TRANSPORTATION OF COAL? A. The advantage to AP&L and its customers is reduced freight costs. The use of aluminum gondolas in this same service would reduce the total number of train trips needed to deliver the same amount of coal. Aluminum gondolas carry approximately 120 tons of coal in each gondola while the maximum load for the current steel gondolas is 106 tons. The Railroads save the variable cost on the unit-trains not moved. In addition, the Railroads free up power and crews to move new business at minimal cost. Because of the savings realized by the Railroads, they are willing to share some of the savings with AP&L through reduced freight rates. Q. YOU STATED EARLIER THAT THE LEASE AGREEMENTS ON THE EXISTING STEEL RAIL CAR FLEET DO NOT EXPIRE UNTIL VARIOUS DATES IN 1999 TO 2002. WHAT WILL BECOME OF AP&L'S OBLIGATIONS UNDER THESE LEASES? A. Unless these leases are terminated, the obligations under the leases will continue in effect until expiration. We will diligently pursue a sublease or sale of the steel railcars or other avenues that will either provide a stream of income or a cash payment to fully or partially offset the continuing payment obligation or the lease termination payments. The worst-case scenario would be that no income could be generated from sublease of the steel railcars and the lease payments would continue until lease expiration. Even in this worst case, the economic analysis, which will be discussed in greater detail in Mr. Herndon's testimony, still shows a positive net present value with positive estimated annual cash flows in each year. Q. HOW WILL AP&L'S CUSTOMERS BENEFIT BY THE COMPANY ENTERING INTO LEASE AGREEMENTS FOR ALUMINUM RAIL CARS WHILE CONTINUING TO BE OBLIGATED UNDER THE LEASE AGREEMENTS FOR THE EXISTING STEEL CAR FLEET? A. The total cost associated with the transportation of coal in unit-train service includes (1) lease payment costs for gondolas, (2) maintenance costs on the gondolas, and (3) freight cost paid to move the product. These three cost components are calculated for a Base Case, wherein the steel gondolas are used until lease expiration and then replaced with aluminum gondolas for the remaining life of the project, and an Aluminum Gondola Case, wherein new aluminum gondolas are purchased in 1995 and used to transport coal for the remaining project life. A freight cost reduction is applied to the freight cost of the Aluminum Gondola Case as provided by the Railroads. The difference in total cost between the Base Case and the Aluminum Gondola Case represents the savings associated with using aluminum gondolas. For an assumed annual movement of 13.5 million tons and no subleasing income, the net present value of this project for the first ten years is $44.0 million or a total of $95.1 million over the project life, all in 1995 dollars, for all ownership interests. If one assumes sufficient income to offset 50 percent of the steel gondola lease payments, the net present value increases to $61.0 million in the first ten years and $112.1 million for the total project life, again measured in 1995 dollars for all ownership interests. If sufficient income is assumed to offset 100% of the steel gondola lease payments, the net present value increases to $74.5 million in the first ten years and $125.6 million for project life total for all ownership interests. Even with the extreme assumption of no subleasing income, all annual cash flow differences between the Base Case and the Aluminum Gondola Case are positive. AP&L would share in these total savings according to its energy usage and ownership interest in the coal plants. Specifically, the Company's retail customers would realize in 1995 dollars a projected net present value for the first ten years of $5.0 million or a total of $22.0 million over the project life, assuming no income to offset the existing steel railcar lease costs. A more detailed description of the economic advantages and derivation of these projected savings in AP&L's proposal is contained in the testimony of Mr. Herndon. Q. WHAT ARE THE RISKS ASSOCIATED WITH AP&L'S ENTERING INTO THE LEASING ARRANGEMENTS FOR THE ALUMINUM RAIL CARS? A. The freight rate reduction provided by the Railroads for aluminum gondola use is applied in a tier pricing arrangement weighted heavily to high annual deliveries. If the requirements at White Bluff and ISES were to become less than the estimated 13.5 million tons annually, then the amount of savings available to this project would be reduced. In addition, sublease or sale income for the existing steel railcars is limited to what the market will bear. Currently, the sub-leasing market is quite attractive. However, the marketing of 2,225 gondolas is expected to have some downward bias impact on this market, resulting in driving down the potential income. Q. WHY SHOULD THE COSTS OF THIS SECOND LEASE BE FLOWED THROUGH THE FUEL ADJUSTMENT CLAUSE AS A FUEL EXPENSE? A. As is described in the testimony of Mr. Wright, the costs associated with the lease of the aluminum railcars would be classified as a fuel related expense. Because of this and because the combined net effect is a lower fuel expense, it is appropriate to flow these costs through AP&L's Fuel Adjustment Clause Rider M27 ("Fuel Adjustment Clause") in AP&L's electric rates. In addition, by using the Fuel Adjustment Clause, the savings from the lease of aluminum rail cars will automatically flow through to AP&L's customers. Further, the project is not economically feasible to AP&L unless it can continue to recover the existing lease cost of the steel railcars, offset by any income from disposition of these steel railcars, in addition to recovering the lease cost of the new aluminum railcars. Without Commission approval of the requested accounting treatment of these lease costs, AP&L would not have sufficient assurance that its costs would be recovered to allow it to enter into the agreements that would result in these significant savings for its customers. Q. IS TIMING A CONSIDERATION IN YOUR ABILITY TO REALIZE THESE SAVINGS? A. Yes. The AP&L and Entergy boards of directors have approved this project subject to our securing regulatory concurrence of the proposed accounting treatment with the APSC. We have negotiated a priority in the waiting line with the manufacturer of the aluminum railcars that is dependent upon approval of this Application. If we do not proceed with a final order of the aluminum railcars in a timely fashion, then we will lose our place in line which would endanger our ability to provide aluminum railcars by August 1, 1995, in compliance with our agreement for lower freight rates from the Railroads. In addition, any delay may have a significant effect upon the lease rates of the aluminum cars and other cost variables, especially the market for sub-lease of our existing steel railcars. We know that other utilities are examining conversion to aluminum railcars and that many steel railcars are about to come into the secondary lease market. The market now is very strong, but if we do not act soon, the market price for sub-lease of our existing steel railcars will decline substantially. For this reason, we have asked for expedited treatment of this Application. Q. DOES THIS CONCLUDE YOUR TESTIMONY AT THIS TIME? A. Yes. EX-99 4 Exhibit D-3 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE ) APPLICATION OF ARKANSAS ) POWER & LIGHT COMPANY FOR ) DOCKET NO. 94-_____-U APPROVAL OF ACCOUNTING ) PROCEDURES FOR COAL COSTS ) DIRECT TESTIMONY OF JEFFREY G. HERNDON SENIOR FUELS PLANNING ENGINEER ENTERGY SERVICES, INC. ON BEHALF OF ARKANSAS POWER & LIGHT COMPANY DECEMBER 13, 1994 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. A. Jeffrey G. Herndon. My business address is Entergy Services, Inc., P.O. Box 2951, Beaumont, TX 77704. Q PLEASE DESCRIBE YOUR WORK AND EDUCATIONAL EXPERIENCE. A. I hold a Bachelor of Science Degree from the University of Missouri - Rolla Campus. I am a Registered Professional Engineer in civil engineering in the states of Illinois and Louisiana. I joined Peabody Coal Company in 1976. As Field Engineer, I provided support engineering services to operating coal mines in southern Illinois. In 1978, I joined System Fuels, Inc. ("SFI"), the fuels subsidiary of the Operating Companies of Entergy Corp., then Middle South Utilities. My duties at SFI included performance of financial analyses for proposed projects, contract negotiation support for fuel contract negotiations and mine engineering support for the North Antelope Coal Supply Agreement administration. In 1986, SFI elected to release its employees to other Entergy subsidiaries. As a result, I reported to the Engineering Department at Middle South Services, Inc. (now Entergy Services, Inc. or "ESI"). My duties as technical and analytical support of coal acquisition and transportation operations continued. I assumed my current position as Senior Fuels Planning Engineer on August 1, 1988. In this position, I develop strategic fuel utilization plans, perform project analysis, develop fuel inventory strategies and analyze alternative fuel opportunities for the Entergy System. Q. ON WHOSE BEHALF ARE YOU PRESENTING THIS TESTIMONY? A. I am presenting this testimony on behalf of Arkansas Power & Light Company ("AP&L" or the "Company"). Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? A. I will describe the results of my economic evaluation of AP&L's entering into a lease of 120-ton aluminum railcars for transportation of coal to replace existing 106-ton steel railcars in the Company's capacity as operator of the White Bluff Steam Electric Station ("White Bluff") and the Independence Steam Electric Station ("ISES"). These results are presented in the report entitled The Economic Analysis of Replacing the Steel Gondola Fleet with Aluminum Prior to Lease Termination (the "Study"). The Study contains information which is subject to a confidentiality provision in the Interim Rail Transportation Agreement between AP&L and the Railroads dated October 1, 1991. In order to comply with these confidentiality provisions, AP&L has filed a Motion for Protective Order with its Application in this Docket seeking to file the Study under seal. A redacted version of the Study accompanies my testimony as AP&L Exhibit JGH-1. Q. PLEASE DESCRIBE YOUR ECONOMIC EVALUATION OF THE PROPOSED LEASE OF ALUMINUM RAILCARS. A. In order to evaluate the economic attractiveness of providing aluminum gondolas, costs for a Base Case and an Aluminum Gondola Case were developed. The Base Case represents what would happen if AP&L continued to lease and use the existing steel railcars until the present leases expire. To meet projections of increased coal capacity needs, an additional fleet of 544 steel gondolas was leased for a two-year period. The Base Case also assumes that 345 additional aluminum gondolas will be acquired in 1996 to satisfy this increased capacity need for the long term. The use of these aluminum gondolas is assumed to result in some freight rate reduction, but not nearly as much as the reduction that is available for wholesale fleet change-out of the existing steel railcars for aluminum railcars. The Base Case also assumes that as the existing steel gondola leases expire, replacement aluminum gondola leases are acquired. Fewer aluminum gondolas are needed to replace the steel gondolas because of the greater hauling capacity of the aluminum gondolas. Between the years 1998 and 2004, 1,944 aluminum gondolas replace 2,225 steel gondolas as the existing steel railcar leases expire. With the previously acquired 345 aluminum gondolas, the transportation capacity is sufficient to haul 13.5 million tons per year. While there is no guarantee that there would be any future freight rate reduction, it is assumed that the freight rate reduction for aluminum gondolas in the Base Case is 60% of the freight rate reduction available for the Aluminum Gondola Case because the Base Case is not burdened with the cost of existing gondola lease payments. The Aluminum Gondola Case assumes new aluminum gondola leases will be acquired in the year 1995 to move White Bluff and ISES coal requirements. To move the anticipated tonnage requirement, 2,289 aluminum gondolas are leased. The existing steel gondola leases are allowed to continue until lease expiration. The existing steel fleet plus the 544 steel gondola addition are parked until their respective leases expire. A parking charge is included at $1.25 per gondola per day for the steel gondolas A freight rate reduction has been obtained for coal movement in aluminum gondolas. The freight cost for the Aluminum Gondola Case is completely based on the reduced aluminum freight rates beginning in 1996. Because there are both aluminum and steel gondolas in use in 1995, the freight cost in 1995 is based on proration of steel and aluminum freight rates for the first 10 million tons and only aluminum freight rates above 10 million tons. Q. WHAT TYPES OF COSTS ARE INCLUDED IN YOUR EVALUATION FOR THE BASE CASE AND THE ALUMINUM GONDOLA CASE? A. The cost to transport coal from the coal field in Wyoming to the power plants in Arkansas for either case can be divided into three categories. The first category includes all costs associated with lease payments for all existing AP&L steel and/or aluminum railcars or gondolas. The second category includes all costs to maintain and operate these steel and/or aluminum gondolas. The last category includes all freight costs paid to the railroads. The sum of these three category costs represents the total cost for the respective case. The lease costs for the Aluminum Gondola Case are substantially greater than the lease costs contained in the Base Case because the Aluminum Gondola Case includes the cost for both the existing steel gondola and the new aluminum gondola fleets. Maintenance costs for this second case include maintenance costs for aluminum gondolas, which are equal to the maintenance costs for steel gondolas, except for the lower maintenace costs for new aluminum gondolas in the maintenance build-up period. However, freight rates for aluminum gondolas are significantly less than steel gondola freight rates. These rate reductions are applied in accordance with the schedule of aluminum cars being placed into service. Q. PLEASE DESCRIBE THE DEVELOPMENT OF THE LEASE COSTS THAT WENT INTO YOUR EVALUATION. A. Lease payments are developed from lease capital estimates and lease rental factors. Lease capital estimates are based on $51,000 per railcar. We have received quotations for new aluminum gondolas from three manufacturers at approximately that cost. Refer to Schedule 1 of the Study for pricing and production scheduling for new aluminum gondolas. We have also received a Letter of Intent from Johnstown America Corp. (previously Bethlehem Steel Freight Car Division) for delivery of new aluminum gondolas for under $50,000 per railcar. The lease rental factor was provided by the ESI Corporate Finance Department as representative of 20-year lease terms in the current capital lease market. Q. PLEASE DESCRIBE THE WAY IN WHICH YOU MODELED MAINTENANCE COSTS IN YOUR STUDY. A. Maintenance costs are assumed to be the same for aluminum and steel gondolas loaded greater than 100 tons. On the basis of 1993 maintenance cost and increased by 30 percent for heavier loading, $2,920 per year (1993 dollars) per gondola is assumed. New gondolas, however, have a six-year break-in period where the maintenance cost is less than the typical cost of an older gondola. In the Base Case, maintenance costs for the steel gondolas continue through lease expiration. The 345 aluminum gondolas that would be acquired in 1996 would start a six-year maintenance build-up period beginning in 1996. The 1,944 replacement aluminum gondolas acquired as the steel gondola leases expire start a six-year maintenance build up period beginning the year of acquisition. By the year 2008, all maintenance build- up periods have past. Q. WHAT IS THE BASIS FOR YOUR ESTIMATES OF FREIGHT RATES IN YOUR EVALUATION? A. For the Base Case, steel gondola and aluminum gondola freight rates are used in proportion to the percentage of total gondolas in a given year. For example, in 1996 the Base Case assumes a fleet of 345 aluminum gondolas and 2,339 steel gondolas. Therefore, the freight cost is based on 12.854% aluminum gondola rates and 87.146% steel gondola rates. This proportional pricing is used through the year 2002 when the last steel gondola is in use. For all years beyond 2002, the freight cost is based on 100% aluminum gondola rates. As stated earlier, the aluminum gondola freight rates in the Base Case are assumed to be greater than the Aluminum Gondola Case freight rates. The freight rates for the Aluminum Gondola Case have been agreed to in negotiations with our current transportation suppliers. Q. WHO CURRENTLY PROVIDES TRANSPORTATION FOR THE COAL RAILCARS? A. The Western Railroad Properties, Inc. and the Union Pacific Railroad (the "Railroads") transport coal for AP&L. Q. WHY HAVE THEY OFFERED REDUCED FREIGHT RATES TO AP&L? A. The Railroads have offered a freight rate reduction to AP&L if the coal movement would be made in aluminum gondolas. The Railroads benefit from the use of aluminum gondolas because fewer trains move to deliver the same quantity of coal. This is a benefit to the Railroads because extra crew shifts and extra power are made available for new business. This benefit only becomes available to the railroads through the use of aluminum gondolas. Because AP&L is responsible for providing gondolas to the Railroads for this movement, the Railroads need to provide some incentive to AP&L to make the replacement attractive. Q. WHAT IS THE RESULT OF YOUR EVALUATION OF THE BASE CASE? A. Detailed annual cash flow projections for the Base Case are found in Schedule 7 to the Study. This Schedule shows the total cost estimated for lease, maintenance and freight costs for the Base Case. Total lease costs include 1) lease payments for the existing steel gondolas, 2) rental payments for the 544 additional steel gondolas currently in AP&L's control, 3) lease payments for the 345 aluminum gondolas needed for capacity expansion that replace the 544 steel gondolas in 1996, and 4) lease payments for the 1,944 aluminum gondolas purchased when the steel railcar leases expire. The total maintenance costs include 1) estimated maintenance cost for the existing steel gondolas through lease expiration, 2) maintenance payment requirements on the 544 additional steel gondolas, 3) maintenance cost estimates for the 345 new aluminum gondolas purchased in 1996, and 4) maintenance cost estimates for the new aluminum gondolas purchased as the steel gondola leases expire. Q. PLEASE DESCRIBE THE RESULTS OF THE ALUMINUM GONDOLA CASE EVALUATION? A. Cash flows for the Aluminum Gondola Case are treated similarly to the Base Case cash flows. Detailed annual cash flow projections for the Aluminum Gondola Case are found in Schedule 8 to the Study. This Schedule contains the total cost estimates for lease, maintenance and freight costs for the Aluminum Gondola Case. Total lease costs include 1) lease payments for the existing steel gondolas, 2) rental payments for the 544 additional steel gondolas currently in AP&L's control, and 3) lease payments for 2,289 aluminum gondolas purchased during the year 1995, and 4) parking costs for the steel gondolas. Total maintenance costs include 1) estimated maintenance cost for the existing steel gondolas through lease expiration, 2) maintenance payment requirements on the 544 additional steel gondolas, 3) estimated maintenance cost for the 345 new aluminum gondolas purchased in 1996, and 4) estimated maintenance cost for the new aluminum gondolas purchased as the steel gondola leases expire. Q. HOW DO YOU MODEL THE COSTS ASSOCIATED WITH THE EXISTING STEEL RAILCAR LEASES IN THE ALUMINUM GONDOLA CASE? A. The Aluminum Gondola Case assumes complete replacement of the existing steel gondola fleet during 1995. As a conservative assumption, the Aluminum Gondola Case assumes no income from any disposition of the existing steel gondolas. Therefore, the cash flows contained in Schedule 8 are based on the assumption that no subleasing, sales or other source of income would be available to offset some or all of the steel gondola lease payments. Parking costs for the steel gondolas, which are no longer used, are included in the Aluminum Gondola Case. Under the worst case situation, the steel gondola fleet would be parked until lease termination. Q. WHICH CASE RESULTS IN THE MOST ECONOMIC COAL TRANSPORTATION COSTS? A. Even under the worst-case assumption, the Aluminum Gondola Case results in less overall coal transportation costs as compared to the Base Case of $44.0 million on a net present value ("NPV") basis for the initial ten years of the project, 1995-2004. The total savings to be realized until the last coal unit retires in 2035 are estimated at $95.1 million. This level of savings is shown in Schedule 9-A, which presents the difference in estimated total cash flows between the Base Case (Schedule 7) and the Aluminum Gondola Case (Schedule 8). Significantly, Schedule 9- A projects that in each year the net cash flow for the Aluminum Gondola Case is greater than the net cash flow for the Base Case. Q. YOU STATED EARLIER THAT THE ALUMINUM GONDOLA CASE WAS CONSERVATIVE IN ASSUMING THAT NO OFFSET TO THE EXISTING STEEL RAILCAR LEASES COULD BE REALIZED? TO WHAT EXTENT WOULD THESE SAVINGS IMPROVE IF SOME DISPOSITION OF THE EXISTING STEEL RAILCARS COULD BE MADE? A. Significantly. The used steel gondola leasing market is currently very strong. Recent used gondola leases have gone for as much as $475/gondola/month plus maintenance costs. It is believed that this used gondola market would provide some income for the steel gondolas to offset the ongoing lease costs, if certain restictions by the Securities and Exchange Commission and the owners were relaxed. I have prepared two alternate summary cash flows for the Aluminum Gondola Case on the assumptions that 1) the steel gondola lease payments could be offset by 50 percent and 2) that these payments could be wholly offset. These alternative summary cash flow estimates for the Aluminum Gondola Case are presented as Schedules 9-B and 9-C, respectively, to the Study. As one would expect, the net cash flow difference between the Base Case and the alternative cash flow estimates for the Aluminum Gondola Case increases substantially. For the 50 percent offset, Schedule 9-B of the Study shows that the savings on a NPV basis for the first 10 years of the project life are estimated at $61.0 million dollars and $112.1 million for the life of project NPV savings. Further, if we are able to completely offset the cost of the existing steel railcar leases, Schedule 9-C shows that the NPV savings, for the Aluminum Gondola Case as compared to the Base Case, are projected at $74.5 million for the first ten years, and $125.6 million for the life of the project. Q. HAVE YOU DETERMINED WHAT PORTION OF THESE TOTAL COAL TRANSPORTATION SAVINGS WOULD ACCRUE TO AP&L'S RETAIL CUSTOMERS? A. Yes. I have estimated the AP&L retail customers' portion of the total savings described above by using the PROMOD results LC 215-216 which is the production cost modeling run used by Entergy to develop its Least Cost Integrated Resource Plan filed with this Commission on December 1, 1992. For each year, 1995 - 2012, the annual coal energy estimates (MWh) retained to satisfy AP&L's Net Area Requirement is divided by the total coal energy estimates (MWh). This ratio is then multiplied by the annual total coal consumed to determine the amount of coal consumed on behalf of AP&L's retail customers. The effective annual increase in tons consumed on behalf of AP&L's retail customers from 2008 through 2012 (2.586%) also is used to determine the tons consumed on behalf of AP&L's customers from 2013 through 2030. For the years 2013- 2030, the effective annual growth between the years 2008-2012 in tons consumed on behalf of AP&L's retail customers (2.586%) is used to project tons consumed by multiplying the previous year consumption by 1.02586. For the years 2031-2033, the percent of AP&L ownership in ISES is used to determine appropriate savings to AP&L's customers in the years 2031 through 2038. The PROMOD results LC 215-216 present estimated energy requirements for AP&L prior to the merger of Entergy with Gulf States Utilities. Coal energy forecasted includes only White Bluff and ISES energy. It is also assumed that the tons needed to satisfy AP&L's Net Area Requirements under PROMOD results LC 215-216 would be representative of the coal energy that would be forecasted to be retained in AP&L's Net Area Requirements. As shown in Schedule 10 to the Study, the net present value of the savings that would accrue to AP&L's retail customers is $5.0 million between 1995 and 2004. Over the project life, the net present value savings to AP&L retail customers will grow to $22.0 million. Q, HAVE YOU CONDUCTED ANY SENSITIVITY ANALYSES TO DETERMINE WHICH VARIABLES IN YOUR ANALYSIS ARE MOST SENSITIVE TO THE OUTCOME? A. Yes, I have. My sensitivity analysis was designed to determine which variables were most sensitive in determining the outcome of the savings associated with the Aluminum Gondola Case. The variables I included in this analysis were 1) the aluminum gondola freight rates effective in 1995, 2) the aluminum gondola freight rates that would be effective upon steel lease termination, 3) annual tons shipped, 4) leasing rent factors effective 1995, 5) leasing rent factors effective upon steel lease termination, 6) steel gondola income sub-leasing or other sources to offset lease payments, 7) steel gondola maintenance, 8) aluminum gondola maintenance, and 9) aluminum gondola price. Schedule 11 is a graphic depiction of the results of the sensitivity analysis. This graphic depiction is known as a "tornado chart" for its funnel- like depiction of the results. The sensitivity analysis takes a nominal savings case and varies the resulting savings by substituting the low value and then the high value of each variable while maintaining the nominal value for all other variables. The variables are then sorted in descending order by the resulting difference in the high and the low results. As shown on Schedule 11, the first variable, aluminum gondola freight rates effective in 1995, was the most sensitive variable. This variable swings the NPV results by approximately $308 million. However, as I stated earlier, the aluminum gondola freight rate is among the most certain of variables in the Study because we have already negotiated a rate with the Railroads subject to our supplying aluminum railcars. This variable is three times more sensitive than the second most sensitive variable, the aluminum gondola rates effective upon steel lease termination, and six times more sensitive than the third most sensitive variable, the annual tons shipped. The values of the variables assumed in the sensitivity analysis are shown in the Study. Q. PLEASE SUMMARIZE YOUR TESTIMONY. A. AP&L has an opportunity to acquire, through lease, aluminum railcars that would allow AP&L to take advantage of significant transportation rate reductions negotiated with the Railroads that currently transport coal from mines in Wyoming to the AP&L coal plants in Arkansas. These coal transportation cost reductions would provide significant energy savings to AP&L's retail customers and its co-owners in White Bluff and ISES. My evaluation and analysis indicates that, even if AP&L could not offset any of the cost of the existing steel railcar leases, total coal transportation savings on a NPV basis would be $44.0 million for the years 1995 through 2004 and $95.1 for the life of the project through 2035. The portion of these NPV savings that would accrue to AP&L's retail customers based on its projected need for coal energy to supply the Company's Net Area Requirements and its ownership of the coal plants is $5.0 million for the initial ten years and $22.0 million for the life of the project. The total savings and AP&L's retail customer portion would increase if a portion or all of the existing steel railcar leases could be offset through sub-lease, sale or other disposition. Q. DOES THIS CONCLUDE YOUR TESTIMONY AT THIS TIME? A. Yes. BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE ) APPLICATION OF ARKANSAS ) POWER & LIGHT COMPANY FOR ) DOCKET NO. 94-_____-U APPROVAL OF ACCOUNTING ) PROCEDURES FOR COAL COSTS ) AP&L EXHIBIT JHG 1 THE ECONOMIC ANALYSIS OF REPLACING THE STEEL GONDOLA FLEET WITH ALUMINUM PRIOR TO LEASE EXPIRATION REDACTED VERSION THE ECONOMIC ANALYSIS OF REPLACING THE STEEL GONDOLA FLEET WITH ALUMINUM PRIOR TO LEASE EXPIRATION Prepared by: ESI Fuel Planning & Analysis December, 1994 Background Arkansas Power & Light Company (AP&L) is operator and part owner of two coal fired generating stations, White Bluff and Independence Steam Electric Stations. Each station has two units, nominally rated at 800 MW. On behalf of AP&L, System Fuels, Inc. (SFI) leased 2,250 steel rotary dump gondolas to carry coal from Wyoming mines to Arkansas power plants when they began operation in the early 1980's. These steel gondolas were sized to haul a nominal 100 tons under a gross rail weight restriction of 263,000 pounds. The average tare weight of the steel sided gondola is 58,900 pounds. These gondolas were originally acquired in four groups each with its own lease. The first group was built in the latter part of 1979 and early 1980. Initially, there were 600 gondolas in this group. The second group was built in mid 1980, and consisted of 750 gondolas. The third group was built in late 1982 and had 580 gondolas. The last group of gondolas was built in late 1984 and was made up of 320 gondolas. All four groups were built by Bethlehem Steel Corp., Freight Car Division at the Johnstown, Pennsylvania facility. Bethlehem Steel Corp. sold this facility in the late 1980's and it is now called Johnstown America Corp. In the past 14 years of service, 25 of the original gondolas were destroyed in derailments. The total number of active gondolas remaining in all four leases is 2,225. In 1992, SFI assigned the four leases to AP&L. Today, the use of aluminum gondolas is standard in the industry. No new steel gondola intended for coal service has been manufactured since 1992. The lighter tare weight of aluminum gondolas allows for greater coal hauls without increasing train weights. The Union Pacific and Chicago & Northwestern Railroads (Railroads) have increased the gross rail weight limitation from 263,000 pounds to 286,000 pounds, enabling aluminum gondolas to haul 120 tons of coal. Recently, the Railroads have indicated that they would be willing to negotiate aluminum gondola freight rates that would provide substantial savings when compared to freight rates that would be applicable to steel gondolas. Purpose This report is intended to evaluate and determine the economic viability of two alternative methods of delivering coal requirements to White Bluff and Independence Steam Electric Stations. The expected future coal requirement is 13.5 million tons per year. The current steel fleet of 2,225 gondolas have a capacity of 11.5 million tons per year. Three additional trainsets of gondolas are required to increase the fleet capacity from 11.5 million tons per year to 13.5 million tons per year. Alternatively, a new fleet of 2,289 aluminum gondolas will have a delivery capacity of 13.5 million tons per year. In addition, the freight rates for coal in the aluminum gondolas will be considerably less than the freight rates for coal in steel gondolas. Methodology This report presents the costs of a Base Case and an Aluminum Gondola Case and compares the cost difference between the two. Base Case The Base Case assumes continued steel gondola use, supplemented by the purchase of an additional 345 gondolas for capacity expansion, through the expiration of the current leases. This would increase annual transportation capacity from 11.5 to 13.5 million, the current estimated annual fuel requirement for White Bluff and Independence Steam Electric Stations. Since three trainsets of either steel or aluminum gondolas are required for fleet expansion and a freight rate reduction is assumed available for the higher cost of aluminum gondolas, aluminum gondola additions are assumed. Because the fleet expansion capability is not burdened with existing lease payments, the amount of reduction to freight rates does not have to be as great as the reduction needed to justify higher aluminum gondola costs and existing lease payments. For this reason it was assumed that the Base Case freight rates would be based on "REDACTED INFORMATION" of the Aluminum Gondola Case freight rate savings quoted by the Railroads for complete fleet changeout in 1995. During freight rate discussions with the Railroads, the Railroads indicated that it has been their experience that "REDACTED INFORMATION" per ton reduction in freight rates was sufficient to entice use of aluminum gondolas. The assumption of "REDACTED INFORMATION" approaches this level of freight rate reduction. Aluminum Gondola Case The Aluminum Gondola Case assumes that 2,289 aluminum railcars will be acquired in 1995. As these new gondolas are delivered, the steel gondolas are removed from service and either parked, subleased or sold. The cost to park the entire 2,225 steel gondola fleet at the industry's standard rate of $1.25 per car per day would be $1,015,156/year. A parking cost for steel gondolas is included in this study as part of total lease costs. No further maintenance cost for the steel gondolas is assumed. Freight rate reduction is applied as aluminum trainsets are placed in service. Maintenance cost for aluminum gondolas is calculated in accordance with the assumptions for maintenance cost build-up. Costs to operate any fleet of gondolas include an ownership or lease cost, a maintenance cost and a freight cost. All three categories will change with the use of aluminum gondolas when compared to the same cost categories associated with steel gondolas. A new aluminum gondola lease at market conditions has been developed. Future maintenance costs for both steel and aluminum gondolas have been developed. A maintenance cost build-up period of six years for new aluminum gondolas has been included. The reduction in the total freight cost proposed by the Railroads for the use of aluminum gondolas has also been included. Other options, such as rebodying of the existing steel gondola with aluminum and modifying the existing steel gondola with sideboards, were considered but rejected for the following reasons: The cost to rebody the existing steel gondola with aluminum was greater than the purchase price of a new aluminum gondola. The sideboard extension modification to the steel gondola would carry only 110 tons of coal at the maximum gross rail loading of 286,000 pounds. Because the capacity of this modified gondola is less than the capacity of a 120 ton aluminum gondola, the Railroads' proposed freight rates were substantially less attractive than the rates proposed for a 120 ton aluminum gondola. The existing steel gondola already has experienced some center sill cracking with loading to 108 tons. Both the aluminum rebody and the sideboard modification options would subject the existing center sill to even greater loading. The integrity of the existing steel gondola's center sill becomes an even greater concern under the aluminum rebody and sideboard modification options. The net difference in the total cost for the Base Case and Aluminum Gondola Case was greater than other options considered. This net difference defines the savings associated with the Aluminum Gondola Case. Assumptions The following major assumptions were used in the development of costs contained in this report. The average annual volume to be delivered is assumed to be 13.5 million tons per year. While this delivery is representative of the average of projected tonnage to be delivered over this time horizon, projected annual tonnage requirements fluctuate from year to year. Time horizon for this project is through year 2035. This date is based on current retirement date for the last coal unit in Arkansas. Volumes have been adjusted for individual unit retirements. Cash flows are based on total coal requirements for White Bluff and ISES. Portions of the savings attributed to AP&L's retail customers is estimated based on previous PROMOD modeling. The aluminum gondola fleet size is based on contractual services standard time for one round trip from the mines to the plants and back plus loading and unloading time, 115 car trains, 5% spare cars and one maintenance train. At 13.5 million tons delivered, the aluminum gondola freight rate discount equals "REDACTED INFORMATION" per ton through 1999 and "REDACTED INFORMATION" per ton thereafter. Discounts are in August 1994 dollars and escalated in the same manner as the freight rates are escalated. The discounts are volume related and are guaranteed. The discount would be less for lower annual tonnage. These price reductions are verified in a letter agreement dated October 28, 1994, between Entergy Services, Inc. (ESI) and the Railroads. New aluminum gondola purchase price is assumed to be $51,000/car verified by price quotations from three manufacturers. Price and production schedules for each bidder are found in Schedule 1. ESI, on behalf of AP&L, has executed a Letter of Intent with the lowest bidder subject to favorable ruling by APSC. Financing for the new aluminum gondolas is assumed to be leases at annual lease payment factors equal to 9.4% of original purchase price for acquisition in 1995. The payment factors increase to 9.6% for acquisition at end of steel leases. These rates were provided by ESI Corporate Finance Department as representative leasing rates for a nominal 20 year lease. It is also assumed that gondolas can be provided at this cost throughout the remaining operating life of each coal unit by the acquisition at end of their leases at no greater value than that which would equate to the same annual payment cost. The existing steel gondola lease payment for all four leases is approximately $8.6 million per year. No revenues are assumed from subleasing, sales, or exchanges, to offset continuing steel gondola lease payments. This is a conservative approach because it is believed that there is reasonable likelihood of subleasing or selling at least a portion of the steel gondola fleet. Delivery of all 2,289 aluminum gondolas will be completed during the year 1995 (refer to Schedule 1 for price and production scheduling information regarding new aluminum gondolas) . It is assumed that new gondolas will have a six-year period in which maintenance costs will increase from minimal costs to the typical level of annual maintenance cost. With the exception of the six-year maintenance cost build-up for new gondolas, steel gondola and aluminum gondola maintenance cost is assumed to be equal. Higher loaded steel gondolas and 120 ton aluminum gondolas are subject to greater stress of component parts particularly truck parts. Gondola truck parts include wheels, axles, roller bearings, and the steel castings to hold the wheels, axles and gondola body together. Maintenance costs on trucks represent 60% of the total maintenance cost. According to the white paper titled A Preliminary Assessment of the Effects on Freight Cars of Loading to a Gross Rail Load of 286,000 Pounds published by the Association of American Railroads revised February 10, 1992, truck maintenance costs could increase as much as 50% for gondolas loaded to a gross rail load of 286,000 pounds instead of 263,000 pounds. Applying a 50% increase in costs on 60% of the maintenance cost equates to a 30% maintenance increase over gondolas loaded to a gross rail load of 263,000 pounds. Maintenance cost for higher loaded gondolas are based, therefore, on 1.3 times the 1992 actual maintenance cost incurred (approximately $5 million). These and other cost estimates contained in this report are found in Schedule 2. Escalation Price adjustments are based on nationally recognized indices as forecasted by the WEFA Group Spring 1993 forecast. Private shop labor is adjusted by 50% of the change in Implicit Price Deflator, Gross Domestic Product (PDIGOP) and 50% of the change in Average Hourly Earnings - Transportation (WRHP37) - refer to Schedule 3. Railroad labor is adjusted by the change in Average Hourly Earnings - Railroads (WRHP4011-U) - refer to Schedule 4. Material cost supplied either by contract shop or railroad is adjusted by changes in Producer Price Index, Metals and Metal Products (PPIMMP) - refer to Schedule 5. Total maintenance costs are split between contract labor, railroad labor and material cost based on 1992 actual billing. Lease rates do not escalate. The rent factor is set at time of closing and is applied to the equipment cost at time of purchase. Financial Services provided two rent factors. One rent factor is represented as near term market rates. The other rent factor is represented as projected market rates when the steel gondola leases expire. Freight rates are escalated in accordance with contractual obligations contained in the transportation agreements between the Railroads and AP&L. The agreements contain a confidentiality clause that restricts disclosure of contractual terms. The price of gondolas is escalated from the 1994 base price by the change in the Producer Price Index - Railroad Equipment index (P144) (refer to Schedule 6) until year of purchase. The analysis includes three periods when aluminum gondolas are purchased. The Aluminum Gondola Case assumes the purchase of 2,289 gondolas in the year 1995. The Base Case assumes the purchase of 345 aluminum gondolas in the year 1996 and 1,944 additional gondolas as the steel gondola leases expire. Results The results of this report are found in Schedules 7-9. Schedule 7 is the annual cash flow estimate for the Base Case. This cash flow projection includes estimates of total lease payments, maintenance costs and freight costs for the base Case. Schedule 8 is the annual cash flow estimate for the Aluminum Gondola Case. This cash flow projection also includes estimates of total lease payments, maintenance costs and freight costs for the Aluminum Gondola Case. The estimated cash flow presented in Schedule 8 assumes no subleasing or sales income to offset a portion of the steel gondola lease payments. Included in the estimates for total lease payments is an estimated expense for parking the steel gondolas. Schedule 9 contains three summary cash flows for comparison of the Base Case to the Aluminum Gondola Case. The change is found only in Lease Payments (line 19), Total (line 24), Cost Difference (line 26), and NPV of Cost Difference (line 28). This change is also found in the NPV Tables under Lease Payments (line 37) and Total (line 40). These three summary cash flows are defined as follows: Schedule 9-A - Aluminum Gondola Case assumes no subleasing, sales or exchanges. Schedule 9-B - Aluminum Gondola Case assumes income from subleasing, sales or exchanges to offset 50% of the steel lease payments. Schedule 9-C - Aluminum Gondola Case assumes income from subleasing, sales or exchanges to affect 100% of the steel lease payments. Schedule 7, Base Cash Flow Schedule 7, lines 5 through 8 show lease payments for the steel gondola leases. Line 9 sums these payments to $8.6 million when all four leases are active. The first lease expires on July 1, 1998 with the last payment date. The second lease expires on January 1, 1999 with its last payment date. The third lease expires on September 1, 2000 with its last payment date. The final lease expires on September 1, 2002 with its last payment date. Line 12 shows total rent payment for temporary leased gondolas. These temporary gondolas are leased to increase the fleet transportation capacity to the anticipated annual delivery. A two-year lease was signed with Herzog for 180 gondolas priced at $425/month per gondola plus actual wheel maintenance costs. A second two-year lease was signed with GE Leasing for $475/month plus 1.5 cents per mile maintenance charge. A third lease for three years was signed with D. J. Joseph for $299/ month plus actual maintenance costs. Line 13 shows aluminum gondolas purchased in 1996 to replace the steel 544 steel gondolas. New aluminum gondolas are leased to replace steel gondolas whose lease has expired. The total number of aluminum gondolas needed to deliver 13.5 million tons per year is 2,289. 345 aluminum gondolas are leased in 1996 in the Base Case so that only 1,944 aluminum gondolas are required as steel gondola leases expire. Lease payments for these aluminum gondolas are show in Schedule 7 line 18,19 and 20. The total lease payments included in the Base Case are in Schedule 7 line 24. Similar to lease payment treatment, maintenance cost estimates are separate for each group of gondolas. Maintenance cost estimates for the existing steel gondolas are shown in lines 35, 36, 37 and 38 with a sum of total maintenance of the existing steel gondolas in line 39 of Schedule 7. Maintenance costs resulting from fleet expansion are shown in lines 42, 43, 44 and 45. Line 42 is the maintenance cost estimate for the Herzog lease, line 43 is the maintenance estimate for the D. J. Joseph lease, line 44 is the maintenance estimate for the GE lease and line 45 is the maintenance estimate for the new aluminum gondolas acquired in 1996. Line 46 of Schedule 7 is the sum of maintenance costs resulting from fleet expansion. The maintenance cost estimates for three lots of new aluminum gondolas acquired at the termination of steel leases are shown in lines 49, 50 and 51. Line 53 is the sum of maintenance cost estimates for the replacement aluminum gondolas. Total maintenance cost estimates included in the Base Case are shown in line 55. Annual volume of coal moved by rail is in Schedule 7 line 59. When the annual volume moved is multiplied by the appropriate per ton rate, the total freight cost is determined. The freight rate for the first "REDACTED INFORMATION" million tons in steel gondolas is shown in line 60. The freight rate applicable to annual tons above "REDACTED INFORMATION" million moved in steel gondolas is shown in line 61. Lines 62, 63 and 64 are freight rates for annual tons moved in aluminum gondolas. Line 62 is the freight rate for annual tons moves less than "REDACTED INFORMATION" million tons. The freight rate in line 63 applies to annual tons less than "REDACTED INFORMATION" million, but greater than "REDACTED INFORMATION" million tons. The freight rate in line 64 applies to all tons moved above "REDACTED INFORMATION" million per year. The total freight cost is estimated in line 65 and is based on a ratio of steel and aluminum freight rates equal to the percentage of steel or aluminum gondolas in use for a particular year. The total cost for the Base Case is estimated in line 66 and is the sum of lines 24, 55 and 65. Line 66 accounts for total delivered cost of coal less the actual cost paid for the coal commodity for the Base Case. Schedule 8 - Aluminum Gondola Case Cash Flow Schedule 8 is developed similar to Schedule 7. Lines 4, 5, 6 and 7 show lease payments for the steel gondola leases. Line 8 sums these payments to $8.6 million. These lease payment lines change when different assumptions of subleasing, sales or exchange income is made. For no offsetting income assumptions, the payments are as shown. For the 50% offsetting income assumption, the lease payments are reduced by 50% beginning in 1996. For the 100% offsetting income assumptions, the lease payments are reduced by 100% beginning in 1996. Line 11 contains the total rent payment for temporary leased gondolas. Line 12 shows a storage or parking costs for all steel gondolas under AP&L's control. This cost is calculated based on $1.25 per gondola per day parked. In 1995, the existing 2,225 steel fleet plus 544 temporary expansion fleet is parked for one half year. In 1996, the existing 2,225 steel fleet plus 114 temporary expansion fleet is parked for 1 year. After 1996, only those steel gondolas still under lease are parked for the year. The cost estimates for parking contained in line 12 change when different assumptions of subleasing, sales or exchange income are made. For the no offsetting income assumption, the costs are as shown. For both the 50% and 100% offsetting income assumption, the parking cost is zero (all gondolas subleased at 50% or 100% lease payment rates). Line 14 sums the fleet expansion rent payments and parking costs. Line 17 and 18 show lease payment estimates for the new aluminum gondola fleet. Line 19 shows the total estimate lease payment for the aluminum gondola fleet. Line 21 shows the total cost of lease payments for the Aluminum Gondola Case and is the sum of lines 8, 14 and 19. Maintenance cost estimates for the existing steel fleet are shown in lines 32, 33, 34 and 35. Line 36 shows the sum of maintenance cost estimates for the existing steel fleet. Maintenance costs for only 1995 are shown because the gondolas are assumed parked or subleased beginning in 1996. Maintenance cost estimates for the temporary fleet expansion gondolas are shown in lines 39, 40 and 41. The maintenance cost estimate for total temporary fleet expansion is shown in line 43. Maintenance costs for only 1995 are shown because these gondolas are either returned after lease expiration or parked. Lines 46 and 47 show the estimated cost of maintenance for the aluminum gondolas acquired in 1995. Line 48 shows the total maintenance cost estimate for the aluminum gondolas. Line 50 shows the total maintenance cost estimate for the Aluminum Gondola Case and is the sum of lines 36, 43 and 48. Annual volume of coal moved by rail is shown in line 53. When the annual volume moved is multiplied by the appropriate per ton rate, the total freight cost is determined. The freight rate for the first annual "REDACTED INFORMATION" million tons moved in steel gondolas is shown in line 54. The freight rate applicable to annual tons above "REDACTED INFORMATION" million moved in steel gondolas is shown in line 55. Lines 56, 57 and 58 are freight rates for annual tons moved in aluminum gondolas. Line 56 shows the freight rate for annual tons moved less than "REDACTED INFORMATION" million tons. Line 57 shows the freight rate which applies to tons moved in aluminum gondolas above an annual "REDACTED INFORMATION" but less than "REDACTED INFORMATION" million tons. Line 58 shows the freight rate which applies to tons moved in aluminum gondolas above an annual "REDACTED INFORMATION" million tons. The total freight cost is estimated in line 59 and is based on 100% of aluminum gondola rates after 1995. A ratio of steel and aluminum freight rates equal to the percentage of steel or aluminum gondolas in use in 1995 is used for total freight costs in 1995. The total cost for the Aluminum Gondola Case is estimated in line 60 and is the sum of lines 21, 50 and 59. Line 62 shows the annual cash flow difference from the Base Case line 66 minus the Aluminum Gondola Case line 60. Positive annual differences in line 62 means that the Aluminum Gondola Case total cost for that particular year is less than the Base Case total cost. Schedules 9-A, 9-B and 9-C - Summary Cash Flows Schedules 9-A, 9-B and 9-C present summary cash flows for lease payments, maintenance and freight cost estimates for the Base Case and Aluminum Gondola Case. Schedule 9-A is the cash flow summary under the assumption that no subleasing, sales or exchange income is available to offset the steel gondola lease payments. Schedules 9-B and 9-C assume subleasing, sales or exchange income is available to offset 50% and 100% of the steel gondola lease payments, respectively. As a result, the values in lines 19, 24, 26, 28, 37 and 40 change per the changes stated in Schedule 8 discussions above. With this exception, line definition and content remain the same for Schedules 9-A, 9-B and 9-C. Line 6 shows the net lease payments for the Base Case from line 24 of Schedule 7. Line 8 shows the net maintenance cost estimate for the Base Case from line 55 of Schedule 7. Line 10 shows the net freight costs for the Base Case from line 65 of Schedule 7. Line 11 is the sum of lines 6, 8 and 10. Line 11 represents the total cost for the Base Case. Line 19 shows the net lease payments for the Aluminum Gondola Case from line 21 of Schedule 8. Line 21 shows the net maintenance cost estimates for the Aluminum Gondola Case from line 50 of Schedule 8. Line 23 shows the net freight costs for the Aluminum Gondola Case for line 59 of Schedule 8. Line 24 is the sum of lines 19, 21 and 23. Line 24 represents the total cost for the Aluminum Gondola Case. Line 26 is the annual difference in total costs for the Base Case minus the Aluminum Gondola Case. It is significant to note that all values as seen in line 26 are positive differences. Therefore, each and every year there is an estimated savings associated with fleet change-out to aluminum gondolas in 1995. Line 28 is the net present value (1995 dollars) for each annual difference in total costs (line 26). Line 30 is the discount rate used in this report for all net present value calculations. This discount factor is the weighted average embedded cost of capital for AP&L. Lines 37, 38, 39 and 40 contain net present value tables for 10 year horizon and project-life horizon. Line 37 on page 1 presents the net present value of lease payments for the Base Case (line 6), the Aluminum Gondola Case (line 19), and the difference between the Base Case and Aluminum Gondola Case for the initial ten years and for the project life. Line 38 on page 1 presents the net present value of maintenance for the Base Case (line 8), the Aluminum Gondola Case (line 21), and the difference between the Base Case and Aluminum Gondola Case for the initial ten years and for the project life. Line 39 on page 1 present the net present value of the freight cost for the Base Case (line 10), the Aluminum Gondola Case (line 23), and the difference between the Base Case and the Aluminum Gondola Case for the initial ten years and for the project life. Line 40 on page 1 is the net sum of lines 37, 38 and 39. Schedule 10 - Savings attributed to AP&L's retail customers For lines 1-40, Schedule 10 is identical to Schedule 9-A. Line descriptions contained in Schedule 9 discussions above are applicable to Schedule 10 lines 1-40. Line 43 represents the amount of coal consumed on behalf of AP&L's Net Area Requirements. These annual tons are estimated by the following method. For the years 1995-2012, annual coal energy estimates (MWh) retained to satisfy AP&L's Net Area Requirements is divided by total coal energy estimates (MWh) from White Bluff and ISES. This ratio is then multiplied by the annual total coal consumed to determine the amount of coal consumed on behalf of AP&L's retail customers. The source for energy and coal projections used above is PROMOD results LC 215-216. This PROMOD result is the PROMOD results used in the Least Cost Resource Plan filed with this Commission on December 1, 1992. For the years 2013-2030, the effective annual growth between the years 2008-2012 in tons consumed on behalf of AP&L's retail customers (2.586%) is used to project tons consumed by multiplying the previous year consumption by 1.02586. For the years 2031- 2033, the percent of AP&L ownership in ISES is multiplied by the total tons projected to be consumed in line 59 of Schedule 7. Line 45 of Page 1 is AP&L's retail customer ratio equal to 88.59%. Line 47 is the tons consumed on behalf of AP&L's retail customers and is equal to the tons consumed on behalf of AP&L's Net Area Requirements (Line 43) times AP&L's retail customer ratio (Line 45 of Page 1). Line 49 is the percentage that results from dividing line 47 by Line 59 of Schedule 7. This percentage is assumed to represent the proportional percentage of total savings that are attributed to AP&L's retail customers. The annual savings attributed to AP&L's retail customers as shown on Line 52 is equal to the percent of total coal consumed for retail customers (Line 49) multiplied by Line 26. Line 54 on Page 1 presents the first 10 years net present value of Line 52. Line 56 on Page 1 presents the net present value of all savings contained in line 52. Schedule 11 - Sensitivity Analysis Schedule 11 is a graphic depiction of the results from a sensitivity analysis performed on this study. The X axis is net present value difference. The Y axis is the variables whose sensitivity is measured. The $0 net present value difference is representative of the life-of- project net present value of $95.1 million assuming no sublease income. The range in net present values for each variable is determined by substituting the low value then the high value of that variable while keeping all other variables at their nominal value and determining the change in life-of-project net present value. The following is a listing of the variables and their value range used in this sensitivity analysis. Variable Low High 1995 Aluminum Discount Freight Rate "REDACTED" "REDACTED" Post 1997 Alum. Discount Freight Rate "REDACTED" "REDACTED" Tons shipped 11.5 million 14.3 million 1995 lease payment rates 7.5% 12.0% Post 1997 lease payment rates 7.5% 12.0% Offsetting steel lease payments None 100% offset Steel maintenance estimate $2,500/year $3,300/year Aluminum maintenance estimate $2,500/year $3,300/year Aluminum gondola price $45,000/year $55,000/year As shown in Schedule 11, the most sensitive variable is the 1995 aluminum discount freight rate. This variable swings the net present value results by a total of approximately $308 million. The post 1997 aluminum discount freight rate variable swings the net present value results by a total of approximately $97 million. Tons shipped variable swings the net present value results by a total of approximately $93 million. 1995 lease payment rate variable swings the net present value results by a total of $54 million. Post 1997 lease payment rates variable swings the net present value results by a total of $36 million. Offsetting steel lease payment variable swings the net present value results by a total of $30 million. Steel gondola maintenance cost per year variable swings the net present value results by a total of $8 million. Aluminum gondola maintenance cost per year variable swings the net present value results by a total of $7 million. The final variable, aluminum gondola price, swings the net present value results by a total of $5 million. It is significant to note that no single variable swings the net present value below zero. The lowest value of net present value results is from the 1995 discount freight rate variable. This variable, despite its sensitivity, is now one of the most certain variables due to negotiated freight rates with the Railroads. The low value of the next most sensitive variable still provides approximately $48 million in net present value savings. Conclusion In summary, the net present value of the savings associated with the Aluminum Gondola Case for the period 1995-2004 is $44.0 million (Refer to line 40 of Schedule 9-A). The net present value of the savings for the project life is $95.1 million (Refer to line 40 of Schedule 9-A). In addition to the positive net present value savings, there is no annual cash flow difference that is negative. This study indicates that very significant coal transportation savings can be realized if aluminum gondolas are acquired to replace the existing steel gondolas in 1995. Subleasing any portion of the steel gondola fleet will only increase these savings. If income from subleasing or sales is realized to the extent of offsetting 50% of the steel gondola lease payments, the net present value of the savings increases to $61.0 million (refer to line 40 of Schedule 9-B) in the first ten years and $112.1 million (refer to line 40 of Schedule 9-B) over life of the project. At 100% recovery of the steel gondola lease payment, the net present value of the savings would be $74.5 million (refer to line 40 of Schedule 9-C) in the first ten years and $125.6 million (refer to line 40 of Schedule 9-C) over the life of the project.
Substituted tabular data for graphic Schedule 1 Manufacturer's Production Schedule Description Cumulative Production of Aluminum Railcars Month Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95 Johnstown Base Bid Production 480 960 1440 1740 2200 2289 Johnstown Alternate Bid Production 480 1440 2289 Trinity Base Bid Production 120 440 760 1080 1400 1720 2040 2289 Trinity Alternate Bid Production 120 440 760 1080 1145 Thrall Base Bid Production 160 320 480 640
Substituted tabular data for graphic Schedule 1 Manufacturer's Bid Price Escalated per Proposal Description Cost Per Railcar During Month Of Construction Month Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95 Johnstown Base Bid Production $50,186 $50,186 $50,186 $50,186 $50,186 $50,186 Johnstown Alternate Bid Production $49,968 $49,968 $49,968 Trinity Base Bid Production $53,092 $53,092 $53,092 $53,092 $53,092 $53,092 $53,092 $53,092 Trinity Alternate Bid Production $53,392 $53,392 $53,392 $53,392 $53,392 Thrall Base Bid Production $51,387 $51,387 $51,387 $51,387
Schedule 2 Page 1 of 1 1 Aluminum Gondola Analysis Assumptions 2 1993 railcar rebody cost $40,000 3 1993 aluminum railcar price $51,000 4 1993 steel railcar modification cost $10,000 5 Steel railcar annual lease cost 6 Lot 1 per Railcar $3,153 7 Lot 2 per Railcar $4,296 8 Lot 3 per Railcar $4,479 9 Lot 4 per Railcar $3,121 10 Steel Railcar Purchase Price 11 Lot 1 Remaining cost $22,478,090 12 Lot 2 Remaining cost $32,517,221 13 Lot 3 Remaining cost $20,537,554 14 Lot 4 Remaining cost $9,799,112 15 Steel Railcar Lease Lot size 16 Lot 1 Remaining 592 600 Originally purchased 17 Lot 2 Remaining 744 750 Originally purchased 18 Lot 3 Remaining 574 580 Originally purchased 19 Lot 4 Remaining 315 320 Originally purchased 20 No. of steel railcars required for 13.5 million 2530 2250 Total number 21 No. of modified railcars required for 13.5 million 2409 22 No. of aluminum railcars required for 13.5 million 2289 23 0 24 steel railcar maintenance per railcar $2,246 25 Modified steel railcar maintenance $2,920 26 First year aluminum car maintenance $204 27 Second year aluminum car maintenance $407 28 Third year aluminum car maintenance $815 29 Fourth year aluminum car maintenance $2,037 30 Fifth year aluminum car maintenance $2,037 31 Sixth year aluminum car maintenance $2,377 32 After six years aluminum car maintenance $2,920 33 34 % maintenance private labor 77.61% 35 % maintenance private material 6.12% 36 % maintenance railroad labor 5.15% 37 % maintenance railroad material 11.13% 38 Steel Railcar Rate 8.5 MM "REDACTED" 39 Steel Railcar incentive rate "REDACTED" 40 Aluminum Rate 8.5 MM tons after leases expire "REDACTED" "REDACTED" 41 Aluminum Rate 8.5-10.0 MM tons after leases expire "REDACTED" "REDACTED" "REDACTED INFORMATION" 42 Aluminum Rate above 10.0 MM tons after leases expire "REDACTED" "REDACTED" "REDACTED INFORMATION" 43 Aluminum Rate 8.5 MM tons effective 1995 "REDACTED" "REDACTED" "REDACTED INFORMATION" 44 Aluminum Rate 8.5-10.0 MM tons effective 1995 "REDACTED" "REDACTED" 45 Aluminum Rate above 10.0 MM tons effective 1995 "REDACTED" "REDACTED" 46 Heavy loaded Rate "REDACTED" 47 Heavy Loaded Incentive rate "REDACTED" 48 New Equipment Lease Rental Rates now 9.40% 49 New Equipment Lease Rental Rates Later 9.60% 50 Used Equipment Lease Rental Rates now 10.80%
Schedule 3 Page 1 of 1 1 Creation of Escalator - (Trend) Watco 2 YEAR PCH(PDIGDP) PCH(WRHP37) WEIGHTED 3 50% 50% ESCALATOR 4 1991 4.042% 4.653% 1.044 5 1992 2.632% 2.880% 1.028 6 1993 2.730% 3.562% 1.032 7 1994 3.216% 4.104% 1.037 8 1995 3.336% 4.467% 1.040 9 1996 3.499% 4.341% 1.040 10 1997 3.338% 4.167% 1.038 11 1998 3.127% 4.244% 1.038 12 1999 3.249% 4.376% 1.039 13 2000 3.322% 4.443% 1.040 14 2001 3.304% 4.459% 1.040 15 2002 3.352% 4.582% 1.041 16 2003 3.461% 4.681% 1.042 17 2004 3.412% 4.828% 1.042 18 2005 3.395% 4.961% 1.043 19 2006 3.463% 5.066% 1.044 20 2007 3.588% 5.088% 1.045 21 2008 3.691% 5.094% 1.045 22 2009 3.787% 5.127% 1.046 23 2010 3.841% 5.155% 1.046 24 2011 3.812% 5.179% 1.046 25 2012 3.784% 5.194% 1.046 26 2013 3.774% 5.208% 1.046 27 2014 3.797% 5.218% 1.046 28 2015 3.830% 5.206% 1.046 29 2016 3.835% 5.237% 1.046 30 2017 3.804% 5.213% 1.046 31 2018 3.804% 5.213% 1.046 32 2019 3.804% 5.213% 1.046 33 2020 3.804% 5.213% 1.046 34 2021 3.804% 5.213% 1.046 35 2022 3.804% 5.213% 1.046 36 2023 3.804% 5.213% 1.046 37 2024 3.804% 5.213% 1.046 38 2025 3.804% 5.213% 1.046 39 2026 3.804% 5.213% 1.046 40 2027 3.804% 5.213% 1.046 41 2028 3.804% 5.213% 1.046 42 2029 3.804% 5.213% 1.046 43 2030 3.804% 5.213% 1.046 44 2031 3.804% 5.213% 1.046 45 2032 3.804% 5.213% 1.046 46 2033 3.804% 5.213% 1.046 47 2034 3.804% 5.213% 1.046 48 2035 3.804% 5.213% 1.046 49 2036 3.804% 5.213% 1.046 50 2037 3.804% 5.213% 1.046 51 2038 3.804% 5.213% 1.046 52 Source: WEFA's Spring 1993 Trend Forecast Schedule 4 Page 1 of 1 1 Wage Rate Escalator - Railroad (wwrhp4011_u) 2 YEAR ESCALATOR (TREND) HIGH LOW 3 1991 0.9753 0.09753 0.0975 4 1992 1.0626 1.0626 1.0626 5 1993 1.0305 1.0305 1.0305 6 1994 1.0259 1.0259 1.0259 7 1995 1.0232 1.0232 1.0234 8 1996 1.0421 1.0421 1.0423 9 1997 1.0397 1.0396 1.0396 10 1998 1.0389 1.0386 1.0389 11 1999 1.0392 1.0390 1.0391 12 2000 1.0392 1.0389 1.0393 13 2001 1.0393 1.0390 1.0395 14 2002 1.0385 1.0382 1.0381 15 2003 1.0382 1.0379 1.0380 16 2004 1.0387 1.0384 1.0388 17 2005 1.0384 1.0382 1.0385 18 2006 1.0384 1.0382 1.0384 19 2007 1.0385 1.0383 1.0385 20 2008 1.0385 1.0384 1.0385 21 2009 1.0385 1.0385 1.0385 22 2010 1.0385 1.0384 1.0386 23 2011 1.0385 1.0384 1.0385 24 2012 1.0385 1.0385 1.0386 25 2013 1.0385 1.0386 1.0386 26 2014 1.0385 1.0386 1.0384 27 2015 1.0385 1.0386 1.0384 28 2016 1.0385 1.0386 1.0385 29 2017 1.0385 1.0386 1.0385 30 2018 1.0385 1.0386 1.0385 31 2019 1.0385 1.0386 1.0385 32 2020 1.0385 1.0386 1.0385 33 2021 1.0385 1.0386 1.0385 34 2022 1.0385 1.0386 1.0385 35 2023 1.0385 1.0386 1.0385 36 2024 1.0385 1.0386 1.0385 37 2025 1.0385 1.0386 1.0385 38 2026 1.0385 1.0386 1.0385 39 2027 1.0385 1.0386 1.0385 40 2028 1.0385 1.0386 1.0385 41 2029 1.0385 1.0386 1.0385 42 2030 1.0385 1.0386 1.0385 43 2031 1.0385 1.0386 1.0385 44 2032 1.0385 1.0386 1.0385 45 2033 1.0385 1.0386 1.0385 46 2034 1.0385 1.0386 1.0385 47 2035 1.0385 1.0386 1.0385 48 2036 1.0385 1.0386 1.0385 49 2037 1.0385 1.0386 1.0385 50 2038 1.0385 1.0386 1.0385 51 Bands were formulated From the bands for WRHPTPU 52 Where: WRHPTPU = Avg Hourly Earning, Transportation & Public Schedule 5 Page 1 of 1
1 Comparison of Selected Indices to determine the proper escalator for materials 2 PCH PCH PCH PCH PCH PCH 3 YEAR PPIMMP (PPIMMP) P10 (P10) P101 (P101) P101507 (P101507) P1017 (P1017) P1081 (P1081) 4 1980 94.958 94.967 90.017 86.592 91.283 5 1981 99.575 4.862% 99.592 4.870% 98.467 9.387% 96.592 11.548% 97.225 6.509% 6 1982 99.969 0.396% 99.992 0.402% 100.000 1.557% 100.000 100.000 3.528% 100.017 2.872% 7 1983 101.833 1.865% 101.850 1.858% 101.300 1.300% 100.317 0.317% 100.925 0.925% 99.283 -0.734% 8 1984 104.780 2.894% 104.792 2.889% 105.275 3.924% 103.350 3.023% 104.717 3.757% 102.083 2.820% 9 1985 104.386 -0.376% 104.392 -0.382% 104.800 -0.451% 103.175 -0.169% 104.742 0.024% 102.858 0.759% 10 1986 103.178 -1.157% 103.167 -1.173% 101.158 -3.475% 102.925 -0.242% 99.750 -4.766% 102.525 -0.324% 11 1987 107.099 3.800% 107.125 3.836% 104.567 3.370% 103.208 0.275% 102.317 2.573% 103.225 0.683% 12 1988 118.684 10.81% 118.683 10.789% 115.675 10.623% 104.967 1.704% 110.708 8.201% 106.533 3.205% 13 1989 124.093 4.557% 124.075 4.543% 119.075 2.939% 109.833 4.636% 114.517 3.441% 112.150 5.273% 14 1990 122.944 -0.926% 122.925 -0.927% 117.217 -1.560% 112.917 2.808% 112.142 -2.074% 116.250 3.656% 15 1991 120.251 -2.190% 120.233 -2.190% 114.075 -2.680% 117.133 3.734% 109.475 -2.378% 118.358 1.813% 16 1992 119.227 -0.852% 119.208 -0.853% 111.450 -2.301% 118.350 1.039% 106.375 -2.832% 118.725 0.310% 17 1993 118.760 -0.392% 119.163 -0.038% 114.315 2.571% 124.025 4.795% 107.967 1.497% 120.211 1.252% 18 1994 120.315 1.309% 121.642 2.080% 118.162 3.365% 128.187 3.356% 112.050 3.782% 124.780 3.801% 19 1995 123.302 2.483% 124.988 2.751% 121.854 3.125% 132.418 3.301% 115.860 3.400% 129.521 3.799% 20 1996 127.590 3.478% 128.375 2.710% 125.260 2.795% 136.125 2.799% 119.104 2.800% 133.381 2.980% 21 1997 132.619 3.942% 132.075 2.882% 128.861 2.875% 139.937 2.800% 122.558 2.900% 136.976 2.695% 22 1998 137.492 3.674% 135.959 2.941% 132.732 3.004% 144.275 3.100% 126.234 2.999% 141.080 2.996% 23 1999 142.449 3.605% 140.011 2.980% 136.746 3.024% 148.892 3.200% 130.022 3.001% 145.379 3.047% 24 2000 147.556 3.585% 144.228 3.012% 140.978 3.095% 153.656 3.200% 134.052 3.099% 149.954 3.147% 25 2001 152.754 3.523% 148.575 3.014% 145.345 3.098% 158.573 3.200% 138.342 3.200% 154.657 3.136% 26 2002 158.132 3.521% 152.984 2.968% 149.722 3.011% 163.568 3.150% 142.630 3.100% 159.373 3.049% 27 2003 163.657 3.494% 28 2004 169.510 3.576% 1.192175 1.1145 1.1835 1.06375 1.187048 29 2005 175.608 3.597% 1.283337 1.343401 1.38207 1.340823 1.342371 30 2006 181.948 3.610% 31 2007 188.584 3.647% 32 2008 195.443 3.637% 33 2009 202.590 3.657% 34 2010 210.058 3.686% 35 2011 217.757 3.665% 36 2012 225.672 3.635% 37 2013 233.802 3.603% 38 2014 242.191 3.588% 39 2015 250.915 3.602% 40 2016 259.933 3.594%
Schedule 6 Page 1 of 1
1 Comparison of Selected Indices to determine proper escalattion for railcars 2 YEAR PPITEQ PCH(PPITEQ) P14 PCH(P14) P144 PCH(P144) PDIGDP PCH(PDIGDP) 3 1980 82.891 82.892 90.358 71.725 4 1981 94.292 13.754% 94.292 13.753% 97.025 7.378% 78.875 9.969% 5 1982 99.990 6.043% 99.992 6.045% 99.975 3.040% 83.750 6.181% 6 1983 102.826 2.836% 102.825 2.833% 101.083 1.108% 87.125 4.030% 7 1984 105.188 2.297% 105.183 2.293% 102.633 1.533% 91.025 4.476% 8 1985 107.929 2.603% 107.925 2.607% 104.867 2.177% 94.350 3.653% 9 1986 110.553 2.434% 110.542 2.425% 105.425 0.532% 96.925 2.729% 10 1987 112.481 1.744% 112.508 1.779% 104.742 -0.648% 99.950 3.121% 11 1988 114.251 1.574% 114.250 1.548% 107.542 2.673% 103.825 3.877% 12 1989 117.712 3.029% 117.692 3.013% 114.008 6.013% 108.550 4.551% 13 1990 121.505 3.222% 121.483 3.221% 118.633 4.057% 113.200 4.284% 14 1991 126.455 4.074% 126.433 4.075% 122.233 3.035% 117.775 4.042% 15 1992 130.464 3.170% 130.425 3.157% 123.658 1.166% 120.875 2.632% 16 1993 133.294 2.169% 133.207 2.133% 124.923 1.023% 124.175 2.730% 17 1994 136.605 2.484% 136.040 2.127% 127.888 2.373% 128.168 3.216% 18 1995 140.739 3.026% 139.849 2.800% 131.341 2.700% 132.444 3.336% 19 1996 145.805 3.600% 144.254 3.150% 135.610 3.250% 137.078 3.499% 20 1997 151.219 3.713% 148.882 3.208% 139.611 2.950% 141.654 3.338% 21 1998 156.797 3.689% 153.734 3.259% 143.582 2.844% 146.084 3.127% 22 1999 162.630 3.720% 158.708 3.235% 147.569 2.777% 150.830 3.249% 23 2000 168.708 3.737% 163.881 3.259% 151.939 2.961% 155.841 3.322% 24 2001 174.900 3.670% 169.200 3.246% 156.409 2.942% 160.990 3.304% 25 2002 181.308 3.664% 174.491 3.127% 161.008 2.940% 166.386 3.352% 26 27 1.30477 1.304354 1.236889 1.4432836 28 1.389717 1.337865 1.302043 1.3765129 29 Where: 30 PPITEQ = PPI, Transportation Equipment 31 P14 = PPI, Transportation Equipment 32 P144 = PPI, Railroad Equipment 33 PDIGDP = Implicit Price Deflator, Gross Domestic Product 34 35 Ppiteq, pdigdp is obtained from Spring 1993 Trend (uacls06) 36 P14 & P144 is from the Spring 1993 Cost Bank (IPLT)
Schedule 7 BASE CASE CASH FLOW (1995-2035) Lease Payment Estimation
Lease # 1 Lease # 2 Lease # 3 Lease # 4 Railcars are Railcars are Railcars are Railcars are Total Lease returned returned returned third returned third Lease Payment mid 1998 mid 1999 quarter 2000 quarter 2002 Payment 7/1/93 9/1/93 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/94 9/1/94 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/95 9/1/95 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/96 9/1/96 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/97 9/1/97 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/98 9/1/98 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/99 9/1/99 $0 $1,598,293 $2,570,738 $982,992 $5,152,023 7/1/00 9/1/00 $0 $0 $2,570,738 $982,992 $3,553,730 7/1/01 9/1/01 $0 $0 $0 $982,992 $982,992 7/1/02 9/1/02 $0 $0 $0 $982,992 $982,992 7/1/03 9/1/03 $0 $0 $0 $0 $0 7/1/04 9/1/04 $0 $0 $0 $0 $0 7/1/05 9/1/05 $0 $0 $0 $0 $0 7/1/06 9/1/06 $0 $0 $0 $0 $0 7/1/07 9/1/07 $0 $0 $0 $0 $0 7/1/08 9/1/08 $0 $0 $0 $0 $0 7/1/09 9/1/09 $0 $0 $0 $0 $0 7/1/10 9/1/10 $0 $0 $0 $0 $0 7/1/11 9/1/11 $0 $0 $0 $0 $0 7/1/12 9/1/12 $0 $0 $0 $0 $0 7/1/13 9/1/13 $0 $0 $0 $0 $0 7/1/14 9/1/14 $0 $0 $0 $0 $0 7/1/15 9/1/15 $0 $0 $0 $0 $0 7/1/16 9/1/16 $0 $0 $0 $0 $0 7/1/17 9/1/17 $0 $0 $0 $0 $0 7/1/18 9/1/18 $0 $0 $0 $0 $0 7/1/19 9/1/19 $0 $0 $0 $0 $0 7/1/20 9/1/20 $0 $0 $0 $0 $0 7/1/21 9/1/21 $0 $0 $0 $0 $0 7/1/22 9/1/22 $0 $0 $0 $0 $0 7/1/23 9/1/23 $0 $0 $0 $0 $0 7/1/24 9/1/24 $0 $0 $0 $0 $0 7/1/25 9/1/25 $0 $0 $0 $0 $0 7/1/26 9/1/26 $0 $0 $0 $0 $0 7/1/27 9/1/27 $0 $0 $0 $0 $0 7/1/28 9/1/28 $0 $0 $0 $0 $0 7/1/29 9/1/29 $0 $0 $0 $0 $0 7/1/30 9/1/30 $0 $0 $0 $0 $0 7/1/31 9/1/31 $0 $0 $0 $0 $0 7/1/32 9/1/32 $0 $0 $0 $0 $0 7/1/33 9/1/33 $0 $0 $0 $0 $0 7/1/34 9/1/34 $0 $0 $0 $0 $0 7/1/35 9/1/35 $0 $0 $0 $0 $0
Additional equipment needs Lease Trains- Three Total 180@425, trainsets additional 114@299, of Aluminum equipment and 250@475 Railcars needs 345 7/1/93 9/1/93 $2,752,032 $2,752,032 7/1/94 9/1/94 $2,752,032 $1,753,790 $2,752,032 7/1/95 9/1/95 $409,032 $1,753,790 $2,162,822 7/1/96 9/1/96 $1,753,790 $1,753,790 7/1/97 9/1/97 $1,753,790 $1,753,790 7/1/98 9/1/98 $1,753,790 $1,753,790 7/1/99 9/1/99 $1,753,790 $1,753,790 7/1/00 9/1/00 $1,753,790 $1,753,790 7/1/01 9/1/01 $1,753,790 $1,753,790 7/1/02 9/1/02 $1,753,790 $1,753,790 7/1/03 9/1/03 $1,753,790 $1,753,790 7/1/04 9/1/04 $1,753,790 $1,753,790 7/1/05 9/1/05 $1,753,790 $1,753,790 7/1/06 9/1/06 $1,753,790 $1,753,790 7/1/07 9/1/07 $1,753,790 $1,753,790 7/1/08 9/1/08 $1,753,790 $1,753,790 7/1/09 9/1/09 $1,753,790 $1,753,790 7/1/10 9/1/10 $1,753,790 $1,753,790 7/1/11 9/1/11 $1,753,790 $1,753,790 7/1/12 9/1/12 $1,753,790 $1,753,790 7/1/13 9/1/13 $1,753,790 $1,753,790 7/1/14 9/1/14 $1,753,790 $1,753,790 7/1/15 9/1/15 $1,753,790 $1,753,790 7/1/16 9/1/16 $1,753,790 $1,753,790 7/1/17 9/1/17 $1,753,790 $1,753,790 7/1/18 9/1/18 $1,753,790 $1,753,790 7/1/19 9/1/19 $1,753,790 $1,753,790 7/1/20 9/1/20 $1,753,790 $1,753,790 7/1/21 9/1/21 $1,753,790 $1,753,790 7/1/22 9/1/22 $1,753,790 $1,753,790 7/1/23 9/1/23 $1,753,790 $1,753,790 7/1/24 9/1/24 $1,753,790 $1,753,790 7/1/25 9/1/25 $1,753,790 $1,753,790 7/1/26 9/1/26 $1,753,790 $1,753,790 7/1/27 9/1/27 $1,753,790 $1,753,790 7/1/28 9/1/28 $1,753,790 $1,753,790 7/1/29 9/1/29 $0 $1,753,790 7/1/30 9/1/30 $0 $0 7/1/31 9/1/31 $0 7/1/32 9/1/32 $0 7/1/33 9/1/33 $0 7/1/34 9/1/34 $0 7/1/35 9/1/35 Aluminum Railcar Lease Payments
Total Higher Aluminum Capacity/ Railcar Aluminum Lease Lot 1 Lot 2 Lot 3 Lot 4 Lease Lease Payment replacement replacement replacement replacement Payments Payments 609 765 570 0 1944 7/1/93 9/1/93 $0 $0 $0 $0 $0 $8,616,734 7/1/94 9/1/94 $0 $0 $0 $0 $0 $11,368,766 7/1/95 9/1/95 $0 $0 $0 $0 $0 $11,368,766 7/1/96 9/1/96 $0 $0 $0 $0 $0 $10,779,556 7/1/97 9/1/97 $0 $0 $0 $0 $0 $10,370,524 7/1/98 9/1/98 $0 $0 $0 $0 $0 $10,370,524 7/1/99 9/1/99 $3,440,491 $0 $0 $0 $3,440,491 $10,346,304 7/1/00 9/1/00 $3,440,491 $4,449,768 $0 $0 $7,890,259 $13,197,779 7/1/01 9/1/01 $3,440,491 $4,449,768 $0 $0 $7,890,259 $10,627,041 7/1/02 9/1/02 $3,440,491 $4,449,768 $0 $0 $7,890,259 $10,627,041 7/1/03 9/1/03 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/04 9/1/04 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/05 9/1/05 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/06 9/1/06 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/07 9/1/07 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/08 9/1/08 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/09 9/1/09 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/10 9/1/10 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/11 9/1/11 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/12 9/1/12 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/13 9/1/13 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/14 9/1/14 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/15 9/1/15 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/16 9/1/16 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/17 9/1/17 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/18 9/1/18 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/19 9/1/19 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/20 9/1/20 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/21 9/1/21 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/22 9/1/22 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/23 9/1/23 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/24 9/1/24 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/25 9/1/25 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/26 9/1/26 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/27 9/1/27 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/28 9/1/28 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/29 9/1/29 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/30 9/1/30 $3,440,491 $4,449,768 $3,618,339 $0 $11,508,598 $13,262,388 7/1/31 9/1/31 $0 $4,449,768 $3,618,339 $0 $8,068,106 $8,068,106 7/1/32 9/1/32 $0 $4,449,768 $3,618,339 $0 $8,068,106 $8,068,106 7/1/33 9/1/33 $0 $4,449,768 $3,618,339 $0 $8,068,106 $8,068,106 7/1/34 9/1/34 $0 $4,449,768 $3,618,339 $0 $8,068,106 $8,068,106 7/1/35 9/1/35 $0 $4,449,768 $3,618,339 $0 $8,068,106 $8,068,106
Maintenance on Higher Loaded Steel Lot 1 Lot 2 Lot 3 Lot 4 592 744 574 315 2225 7/1/93 9/1/93 $0 $0 $0 $0 $0 7/1/94 9/1/94 $1,784,902 $2,243,187 $1,730,631 $949,737 $6,708,457 7/1/95 9/1/95 $1,850,074 $2,325,093 $1,793,822 $984,414 $6,953,402 7/1/96 9/1/96 $1,922,474 $2,416,083 $1,864,021 $1,022,938 $7,225,516 7/1/97 9/1/97 $1,996,428 $2,509,024 $1,935,726 $1,062,288 $7,503,466 7/1/98 9/1/98 $2,071,569 $2,603,458 $2,008,582 $1,102,271 $7,785,880 7/1/99 9/1/99 $0 $2,703,804 $2,085,999 $1,144,756 $5,934,559 7/1/00 9/1/00 $0 $0 $2,167,462 $1,189,461 $3,356,922 7/1/01 9/1/01 $0 $0 $0 $1,235,811 $1,235,811 7/1/02 9/1/02 $0 $0 $0 $1,284,802 $1,284,802 7/1/03 9/1/03 $0 $0 $0 $0 $0 7/1/04 9/1/04 $0 $0 $0 $0 $0 7/1/05 9/1/05 $0 $0 $0 $0 $0 7/1/06 9/1/06 $0 $0 $0 $0 $0 7/1/07 9/1/07 $0 $0 $0 $0 $0 7/1/08 9/1/08 $0 $0 $0 $0 $0 7/1/09 9/1/09 $0 $0 $0 $0 $0 7/1/10 9/1/10 $0 $0 $0 $0 $0 7/1/11 9/1/11 $0 $0 $0 $0 $0 7/1/12 9/1/12 $0 $0 $0 $0 $0 7/1/13 9/1/13 $0 $0 $0 $0 $0 7/1/14 9/1/14 $0 $0 $0 $0 $0 7/1/15 9/1/15 $0 $0 $0 $0 $0 7/1/16 9/1/16 $0 $0 $0 $0 $0 7/1/17 9/1/17 $0 $0 $0 $0 $0 7/1/18 9/1/18 $0 $0 $0 $0 $0 7/1/19 9/1/19 $0 $0 $0 $0 $0 7/1/20 9/1/20 $0 $0 $0 $0 $0 7/1/21 9/1/21 $0 $0 $0 $0 $0 7/1/22 9/1/22 $0 $0 $0 $0 $0 7/1/23 9/1/23 $0 $0 $0 $0 $0 7/1/24 9/1/24 $0 $0 $0 $0 $0 7/1/25 9/1/25 $0 $0 $0 $0 $0 7/1/26 9/1/26 $0 $0 $0 $0 $0 7/1/27 9/1/27 $0 $0 $0 $0 $0 7/1/28 9/1/28 $0 $0 $0 $0 $0 7/1/29 9/1/29 $0 $0 $0 $0 $0 7/1/30 9/1/30 $0 $0 $0 $0 $0 7/1/31 9/1/31 $0 $0 $0 $0 $0 7/1/32 9/1/32 $0 $0 $0 $0 $0 7/1/33 9/1/33 $0 $0 $0 $0 $0 7/1/34 9/1/34 $0 $0 $0 $0 $0 7/1/35 9/1/35 $0 $0 $0 $0 $0 Maintenance on Higher Loaded Steel Lot 1 Lot 2 Lot 3 Lot 4 592 744 574 315 2225 7/1/93 9/1/93 $0 $0 $0 $0 $0 7/1/94 9/1/94 $1,784,902 $2,243,187 $1,730,631 $949,737 $6,708,457 7/1/95 9/1/95 $1,850,074 $2,325,093 $1,793,822 $984,414 $6,953,402 7/1/96 9/1/96 $1,922,474 $2,416,083 $1,864,021 $1,022,938 $7,225,516 7/1/97 9/1/97 $1,996,428 $2,509,024 $1,935,726 $1,062,288 $7,503,466 7/1/98 9/1/98 $2,071,569 $2,603,458 $2,008,582 $1,102,271 $7,785,880 7/1/99 9/1/99 $0 $2,703,804 $2,085,999 $1,144,756 $5,934,559 7/1/00 9/1/00 $0 $0 $2,167,462 $1,189,461 $3,356,922 7/1/01 9/1/01 $0 $0 $0 $1,235,811 $1,235,811 7/1/02 9/1/02 $0 $0 $0 $1,284,802 $1,284,802 7/1/03 9/1/03 $0 $0 $0 $0 $0 7/1/04 9/1/04 $0 $0 $0 $0 $0 7/1/05 9/1/05 $0 $0 $0 $0 $0 7/1/06 9/1/06 $0 $0 $0 $0 $0 7/1/07 9/1/07 $0 $0 $0 $0 $0 7/1/08 9/1/08 $0 $0 $0 $0 $0 7/1/09 9/1/09 $0 $0 $0 $0 $0 7/1/10 9/1/10 $0 $0 $0 $0 $0 7/1/11 9/1/11 $0 $0 $0 $0 $0 7/1/12 9/1/12 $0 $0 $0 $0 $0 7/1/13 9/1/13 $0 $0 $0 $0 $0 7/1/14 9/1/14 $0 $0 $0 $0 $0 7/1/15 9/1/15 $0 $0 $0 $0 $0 7/1/16 9/1/16 $0 $0 $0 $0 $0 7/1/17 9/1/17 $0 $0 $0 $0 $0 7/1/18 9/1/18 $0 $0 $0 $0 $0 7/1/19 9/1/19 $0 $0 $0 $0 $0 7/1/20 9/1/20 $0 $0 $0 $0 $0 7/1/21 9/1/21 $0 $0 $0 $0 $0 7/1/22 9/1/22 $0 $0 $0 $0 $0 7/1/23 9/1/23 $0 $0 $0 $0 $0 7/1/24 9/1/24 $0 $0 $0 $0 $0 7/1/25 9/1/25 $0 $0 $0 $0 $0 7/1/26 9/1/26 $0 $0 $0 $0 $0 7/1/27 9/1/27 $0 $0 $0 $0 $0 7/1/28 9/1/28 $0 $0 $0 $0 $0 7/1/29 9/1/29 $0 $0 $0 $0 $0 7/1/30 9/1/30 $0 $0 $0 $0 $0 7/1/31 9/1/31 $0 $0 $0 $0 $0 7/1/32 9/1/32 $0 $0 $0 $0 $0 7/1/33 9/1/33 $0 $0 $0 $0 $0 7/1/34 9/1/34 $0 $0 $0 $0 $0 7/1/35 9/1/35 $0 $0 $0 $0 $0
Maintenance on additional equipment Aluminum Herzog lease Other lease GE lease Railcars 180 114 250 345 7/1/93 9/1/93 $189,000 $319,200 $525,000 $0 7/1/94 9/1/94 $189,000 $319,200 $525,000 $1,033,200 7/1/95 9/1/95 $319,200 $78,166 $1,033,200 7/1/96 9/1/96 $162,345 $397,366 7/1/97 9/1/97 $336,911 $162,345 7/1/98 9/1/98 $874,741 $336,911 7/1/99 9/1/99 $908,901 $874,741 7/1/00 9/1/00 $1,101,705 $908,901 7/1/01 9/1/01 $1,407,182 $1,101,705 7/1/02 9/1/02 $1,464,034 $1,407,182 7/1/03 9/1/03 $1,524,164 $1,464,034 7/1/04 9/1/04 $1,587,648 $1,524,164 7/1/05 9/1/05 $1,654,942 $1,587,648 7/1/06 9/1/06 $1,726,056 $1,654,942 7/1/07 9/1/07 $1,800,849 $1,726,056 7/1/08 9/1/08 $1,879,807 $1,800,849 7/1/09 9/1/09 $1,962,917 $1,879,807 7/1/10 9/1/10 $2,049,689 $1,962,917 7/1/11 9/1/11 $2,140,173 $2,049,689 7/1/12 9/1/12 $2,234,643 $2,140,173 7/1/13 9/1/13 $2,333,539 $2,234,643 7/1/14 9/1/14 $2,437,025 $2,333,539 7/1/15 9/1/15 $2,545,498 $2,437,025 7/1/16 9/1/16 $2,658,321 $2,545,498 7/1/17 9/1/17 $2,776,166 $2,658,321 7/1/18 9/1/18 $2,899,275 $2,776,166 7/1/19 9/1/19 $3,027,883 $2,899,275 7/1/20 9/1/20 $3,162,239 $3,027,883 7/1/21 9/1/21 $3,302,600 $3,162,239 7/1/22 9/1/22 $3,449,237 $3,302,600 7/1/23 9/1/23 $3,602,432 $3,449,237 7/1/24 9/1/24 $3,762,480 $3,602,432 7/1/25 9/1/25 $3,929,690 $3,762,480 7/1/26 9/1/26 $4,104,384 $3,929,690 7/1/27 9/1/27 $4,286,898 $4,104,384 7/1/28 9/1/28 $4,477,586 $4,286,898 7/1/29 9/1/29 $4,676,815 $4,477,586 7/1/30 9/1/30 $0 $4,676,815 7/1/31 9/1/31 $0 $0 7/1/32 9/1/32 $0 $0 7/1/33 9/1/33 $0 $0 7/1/34 9/1/34 $0 $0 7/1/35 9/1/35 $0
Maintenance on Aluminum Railcars
Lot 1 Lot 2 Lot 3 Lot 4 Higher Capacity 609 765 570 0 1944 Maintenance Cost 7/1/93 9/1/93 $0 $0 $0 $0 $0 $4,997,754 7/1/94 9/1/94 $0 $0 $0 $0 $0 $7,741,657 7/1/95 9/1/95 $0 $0 $0 $0 $0 $7,986,602 7/1/96 9/1/96 $0 $0 $0 $0 $0 $7,622,882 7/1/97 9/1/97 $0 $0 $0 $0 $0 $7,665,811 7/1/98 9/1/98 $0 $0 $0 $0 $0 $8,122,790 7/1/99 9/1/99 $154,411 $0 $0 $0 $154,411 $6,963,710 7/1/00 9/1/00 $320,882 $201,539 $0 $0 $522,421 $4,788,244 7/1/01 9/1/01 $666,771 $418,785 $0 $0 $1,085,556 $3,423,072 7/1/02 9/1/02 $1,733,011 $870,774 $0 $0 $2,603,784 $5,295,769 7/1/03 9/1/03 $1,803,026 $2,264,885 $168,756 $0 $4,236,668 $5,700,701 7/1/04 9/1/04 $2,189,926 $2,357,907 $351,374 $0 $4,899,207 $6,423,371 7/1/05 9/1/05 $2,802,543 $2,865,471 $732,020 $0 $6,400,034 $7,987,681 7/1/06 9/1/06 $2,921,332 $3,669,654 $1,811,887 $0 $8,402,873 $10,057,815 7/1/07 9/1/07 $3,046,865 $3,827,343 $1,989,590 $0 $8,863,797 $10,589,854 7/1/08 9/1/08 $3,178,890 $3,993,187 $2,421,768 $0 $9,593,845 $11,394,694 7/1/09 9/1/09 $3,318,268 $4,168,268 $3,105,768 $0 $10,592,305 $12,472,112 7/1/10 9/1/10 $3,464,975 $4,352,554 $3,243,080 $0 $11,060,609 $13,023,525 7/1/11 9/1/11 $3,618,147 $4,544,963 $3,386,443 $0 $11,549,554 $13,599,243 7/1/12 9/1/12 $3,777,870 $4,745,601 $3,535,938 $0 $12,059,409 $14,199,582 7/1/13 9/1/13 $3,944,631 $4,955,078 $3,692,019 $0 $12,591,728 $14,826,371 7/1/14 9/1/14 $4,119,204 $5,174,369 $3,855,412 $0 $13,148,985 $15,482,524 7/1/15 9/1/15 $4,301,878 $5,403,837 $4,026,389 $0 $13,732,104 $16,169,129 7/1/16 9/1/16 $4,493,357 $5,644,365 $4,205,605 $0 $14,343,327 $16,888,825 7/1/17 9/1/17 $4,692,515 $5,894,539 $4,392,009 $0 $14,979,063 $17,637,384 7/1/18 9/1/18 $4,900,537 $6,155,847 $4,586,710 $0 $15,643,095 $18,419,261 7/1/19 9/1/19 $5,117,851 $6,428,827 $4,790,107 $0 $16,336,784 $19,236,059 7/1/20 9/1/20 $5,344,872 $6,714,002 $5,002,590 $0 $17,061,465 $20,089,348 7/1/21 9/1/21 $5,582,039 $7,011,921 $5,224,569 $0 $17,818,530 $20,980,769 7/1/22 9/1/22 $5,829,807 $7,323,157 $5,456,470 $0 $18,609,435 $21,912,035 7/1/23 9/1/23 $6,088,654 $7,648,309 $5,698,740 $0 $19,435,702 $22,884,939 7/1/24 9/1/24 $6,359,076 $7,988,002 $5,951,845 $0 $20,298,922 $23,901,355 7/1/25 9/1/25 $6,641,596 $8,342,891 $6,216,272 $0 $21,200,759 $24,963,239 7/1/26 9/1/26 $6,936,757 $8,713,660 $6,492,531 $0 $22,142,949 $26,072,639 7/1/27 9/1/27 $7,245,129 $9,101,024 $6,781,155 $0 $23,127,309 $27,231,693 7/1/28 9/1/28 $7,567,307 $9,505,731 $7,082,701 $0 $24,155,739 $28,442,637 7/1/29 9/1/29 $7,903,912 $9,928,560 $7,397,750 $0 $25,230,222 $29,707,808 7/1/30 9/1/30 $8,255,594 $10,370,328 $7,726,911 $0 $26,352,834 $31,029,648 7/1/31 9/1/31 $0 $10,831,889 $8,070,819 $0 $18,902,708 $18,902,708 7/1/32 9/1/32 $0 $11,314,135 $8,430,140 $0 $19,744,274 $19,744,274 7/1/33 9/1/33 $0 $11,817,997 $8,805,566 $0 $20,623,563 $20,623,563 7/1/34 9/1/34 $0 $12,344,451 $9,197,826 $0 $21,542,277 $21,542,277 7/1/35 9/1/35 $0 $12,894,515 $9,607,678 $0 $22,502,192 $22,502,192
Tonnage Moved REACTED INFORMATION Steel railcar Base Freight Rate REACTED INFORMATION Steel railcar Incentive Freight Rate REACTED INFORMATION Aluminum Freight Rate 8.5 MM tons 2000 REACTED INFORMATION Aluminum Freight Rate 8.5 to 10.0 MM tons 2000 REACTED INFORMATION Aluminum Freight Rate ABOVE 10.0 MM tons 2000 REACTED INFORMATION Total Freight Bill REACTED INFORMATION Total Base Case REACTED INFORMATION Schedule 8 Base Case minus Aluminum ALUMINUM GONDOLA CASE CASH FLOW (1995-2035)
Lease # 1 Lease # 2 Lease # 3 Lease # 4 Railcars are Railcars are Railcars are Railcars are Total Lease returned returned returned third returned third Lease Payment mid 1998 mid 1999 quarter 2000 quarter 2002 Payment 7/1/93 9/1/93 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/94 9/1/94 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/95 9/1/95 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/96 9/1/96 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/97 9/1/97 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/98 9/1/98 $1,866,418 $3,196,586 $2,570,738 $982,992 $8,616,734 7/1/99 9/1/99 0 $1,598,293 $2,570,738 $982,992 $5,152,023 7/1/00 9/1/00 $2,570,738 $982,992 $3,553,730 7/1/01 9/1/01 $0 $982,992 $982,992 7/1/02 9/1/02 $0 $982,992 $982,992 7/1/03 9/1/03 7/1/04 9/1/04 7/1/05 9/1/05 7/1/06 9/1/06 7/1/07 9/1/07 7/1/08 9/1/08 7/1/09 9/1/09 7/1/10 9/1/10 7/1/11 9/1/11 7/1/12 9/1/12 7/1/13 9/1/13 7/1/14 9/1/14 7/1/15 9/1/15 7/1/16 9/1/16 7/1/17 9/1/17 7/1/18 9/1/18 7/1/19 9/1/19 7/1/20 9/1/20 7/1/21 9/1/21 7/1/22 9/1/22 7/1/23 9/1/23 7/1/24 9/1/24 7/1/25 9/1/25 7/1/26 9/1/26 7/1/27 9/1/27 7/1/28 9/1/28 7/1/29 9/1/29 7/1/30 9/1/30 7/1/31 9/1/31 7/1/32 9/1/32 7/1/33 9/1/33 7/1/34 9/1/34 7/1/35 9/1/35
Additional equipment needs Lease trains- Total 180@425, Parking cost of additional 114@299, steel gondolas equipment and 250@475 ($1.25/day/gondola) needs 7/1/93 9/1/93 $0 7/1/94 9/1/94 $2,752,032 $2,752,032 7/1/95 9/1/95 $2,752,032 $631,678 $3,383,710 7/1/96 9/1/96 $409,032 $1,067,169 $1,476,201 7/1/97 9/1/97 $1,015,156 $1,015,156 7/1/98 9/1/98 $880,106 $880,106 7/1/99 9/1/99 $405,606 $405,606 7/1/00 9/1/00 $405,606 $405,606 7/1/01 9/1/01 $143,719 $143,719 7/1/02 9/1/02 $179,648 $179,648 7/1/03 9/1/03 $0 7/1/04 9/1/04 $0 7/1/05 9/1/05 $0 7/1/06 9/1/06 $0 7/1/07 9/1/07 $0 7/1/08 9/1/08 $0 7/1/09 9/1/09 $0 7/1/10 9/1/10 $0 7/1/11 9/1/11 $0 7/1/12 9/1/12 $0 7/1/13 9/1/13 $0 7/1/14 9/1/14 $0 7/1/15 9/1/15 $0 7/1/16 9/1/16 $0 7/1/17 9/1/17 $0 7/1/18 9/1/18 $0 7/1/19 9/1/19 $0 7/1/20 9/1/20 $0 7/1/21 9/1/21 $0 7/1/22 9/1/22 $0 7/1/23 9/1/23 $0 7/1/24 9/1/24 $0 7/1/25 9/1/25 $0 7/1/26 9/1/26 $0 7/1/27 9/1/27 $0 7/1/28 9/1/28 $0 7/1/29 9/1/29 $0 7/1/30 9/1/30 $0 7/1/31 9/1/31 $0 7/1/32 9/1/32 $0 7/1/33 9/1/33 $0 7/1/34 9/1/34 $0 7/1/35 9/1/35 $0 Purchase new Aluminum railcars Total lease Aluminum cost for Railcars Lot 1 of Lot 2 of Aluminum Net Lease new railcars new railcars Railcars Payments 1,150 1,139 2,289 7/1/93 9/1/93 $0 $0 $0 $8,616,734 7/1/94 9/1/94 $0 $0 $11,368,766 7/1/95 9/1/95 $2,830,977 $2,870,434 $5,701,411 $17,701,855 7/1/96 9/1/96 $5,661,954 $5,740,869 $11,402,823 $21,495,757 7/1/97 9/1/97 $5,661,954 $5,740,869 $11,402,823 $21,034,713 7/1/98 9/1/98 $5,661,954 $5,740,869 $11,402,823 $20,899,663 7/1/99 9/1/99 $5,661,954 $5,740,869 $11,402,823 $16,960,452 7/1/00 9/1/00 $5,661,954 $5,740,869 $11,402,823 $15,362,159 7/1/01 9/1/01 $5,661,954 $5,740,869 $11,402,823 $12,529,533 7/1/02 9/1/02 $5,661,954 $5,740,869 $11,402,823 $12,565,463 7/1/03 9/1/03 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/04 9/1/04 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/05 9/1/05 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/06 9/1/06 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/07 9/1/07 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/08 9/1/08 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/09 9/1/09 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/10 9/1/10 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/11 9/1/11 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/12 9/1/12 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/13 9/1/13 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/14 9/1/14 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/15 9/1/15 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/16 9/1/16 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/17 9/1/17 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/18 9/1/18 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/19 9/1/19 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/20 9/1/20 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/21 9/1/21 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/22 9/1/22 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/23 9/1/23 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/24 9/1/24 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/25 9/1/25 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/26 9/1/26 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/27 9/1/27 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/28 9/1/28 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/29 9/1/29 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/30 9/1/30 $5,661,954 $5,740,869 $11,402,823 $11,402,823 7/1/31 9/1/31 $0 $5,740,869 $5,740,869 $5,740,869 7/1/32 9/1/32 $0 $5,740,869 $5,740,869 $5,740,869 7/1/33 9/1/33 $0 $5,740,869 $5,740,869 $5,740,869 7/1/34 9/1/34 $0 $5,740,869 $5,740,869 $5,740,869 7/1/35 9/1/35 $0 $5,740,869 $5,740,869 $5,740,869 Maintenance Cost Estimation Maintenance on Steel Railcars Lot 1 Lot 2 Lot 3 Lot 4 592 744 574 315 2225 7/1/93 9/1/93 $1,329,739 $1,671,159 $1,289,308 $707,547 $4,997,754 7/1/94 9/1/94 7/1/95 9/1/95 7/1/96 9/1/96 7/1/97 9/1/97 7/1/98 9/1/98 7/1/99 9/1/99 7/1/00 9/1/00 7/1/01 9/1/01 7/1/02 9/1/02 7/1/03 9/1/03 7/1/04 9/1/04 7/1/05 9/1/05 7/1/06 9/1/06 7/1/07 9/1/07 7/1/08 9/1/08 7/1/09 9/1/09 7/1/10 9/1/10 7/1/11 9/1/11 7/1/12 9/1/12 7/1/13 9/1/13 7/1/14 9/1/14 7/1/15 9/1/15 7/1/16 9/1/16 7/1/17 9/1/17 7/1/18 9/1/18 7/1/19 9/1/19 7/1/20 9/1/20 7/1/21 9/1/21 7/1/22 9/1/22 7/1/23 9/1/23 7/1/24 9/1/24 7/1/25 9/1/25 7/1/26 9/1/26 7/1/27 9/1/27 7/1/28 9/1/28 7/1/29 9/1/29 7/1/30 9/1/30 7/1/31 9/1/31 7/1/32 9/1/32 7/1/33 9/1/33 7/1/34 9/1/34 7/1/35 9/1/35 Maintenance on Higher Loaded Steel Lot 1 Lot 2 Lot 3 Lot 4 592 744 574 315 2225 7/1/93 9/1/93 $0 $0 $0 $0 $0 7/1/94 9/1/94 $1,784,902 $2,243,187 $1,730,631 $949,737 $6,708,457 7/1/95 9/1/95 $925,037 $1,162,546 $896,911 $492,207 $3,476,701 7/1/96 9/1/96 $0 $0 $0 $0 $0 7/1/97 9/1/97 $0 $0 $0 $0 $0 7/1/98 9/1/98 $0 $0 $0 $0 $0 7/1/99 9/1/99 $0 $0 $0 $0 $0 7/1/00 9/1/00 $0 $0 $0 $0 $0 7/1/01 9/1/01 $0 $0 $0 $0 $0 7/1/02 9/1/02 $0 $0 $0 $0 $0 7/1/03 9/1/03 $0 $0 $0 $0 $0 7/1/04 9/1/04 $0 $0 $0 $0 $0 7/1/05 9/1/05 $0 $0 $0 $0 $0 7/1/06 9/1/06 $0 $0 $0 $0 $0 7/1/07 9/1/07 $0 $0 $0 $0 $0 7/1/08 9/1/08 $0 $0 $0 $0 $0 7/1/09 9/1/09 $0 $0 $0 $0 $0 7/1/10 9/1/10 $0 $0 $0 $0 $0 7/1/11 9/1/11 $0 $0 $0 $0 $0 7/1/12 9/1/12 $0 $0 $0 $0 $0 7/1/13 9/1/13 $0 $0 $0 $0 $0 7/1/14 9/1/14 $0 $0 $0 $0 $0 7/1/15 9/1/15 $0 $0 $0 $0 $0 7/1/16 9/1/16 $0 $0 $0 $0 $0 7/1/17 9/1/17 $0 $0 $0 $0 $0 7/1/18 9/1/18 $0 $0 $0 $0 $0 7/1/19 9/1/19 $0 $0 $0 $0 $0 7/1/20 9/1/20 $0 $0 $0 $0 $0 7/1/21 9/1/21 $0 $0 $0 $0 $0 7/1/22 9/1/22 $0 $0 $0 $0 $0 7/1/23 9/1/23 $0 $0 $0 $0 $0 7/1/24 9/1/24 $0 $0 $0 $0 $0 7/1/25 9/1/25 $0 $0 $0 $0 $0 7/1/26 9/1/26 $0 $0 $0 $0 $0 7/1/27 9/1/27 $0 $0 $0 $0 $0 7/1/28 9/1/28 $0 $0 $0 $0 $0 7/1/29 9/1/29 $0 $0 $0 $0 $0 7/1/30 9/1/30 $0 $0 $0 $0 $0 7/1/31 9/1/31 $0 $0 $0 $0 $0 7/1/32 9/1/32 $0 $0 $0 $0 $0 7/1/33 9/1/33 $0 $0 $0 $0 $0 7/1/34 9/1/34 $0 $0 $0 $0 $0 7/1/35 9/1/35 $0 $0 $0 $0 $0 Maintenance on additional equipment Aluminum Herzog lease Other lease GE lease Railcars 180 114 250 0 7/1/93 9/1/93 $0 7/1/94 9/1/94 $189,000 $319,200 $525,000 $1,033,200 7/1/95 9/1/95 $94,500 $159,600 $262,500 $516,600 7/1/96 9/1/96 $0 $0 $0 $0 $0 7/1/97 9/1/97 0 0 0 0 $0 7/1/98 9/1/98 0 0 0 0 $0 7/1/99 9/1/99 0 0 0 0 $0 7/1/00 9/1/00 0 0 0 0 $0 7/1/01 9/1/01 0 0 0 0 $0 7/1/02 9/1/02 0 0 0 0 $0 7/1/03 9/1/03 0 0 0 0 $0 7/1/04 9/1/04 0 0 0 0 $0 7/1/05 9/1/05 0 0 0 0 $0 7/1/06 9/1/06 0 0 0 0 $0 7/1/07 9/1/07 0 0 0 0 $0 7/1/08 9/1/08 0 0 0 0 $0 7/1/09 9/1/09 0 0 0 0 $0 7/1/10 9/1/10 0 0 0 0 $0 7/1/11 9/1/11 0 0 0 0 $0 7/1/12 9/1/12 0 0 0 0 $0 7/1/13 9/1/13 0 0 0 0 $0 7/1/14 9/1/14 0 0 0 0 $0 7/1/15 9/1/15 0 0 0 0 $0 7/1/16 9/1/16 0 0 0 0 $0 7/1/17 9/1/17 0 0 0 0 $0 7/1/18 9/1/18 0 0 0 0 $0 7/1/19 9/1/19 0 0 0 0 $0 7/1/20 9/1/20 0 0 0 0 $0 7/1/21 9/1/21 0 0 0 0 $0 7/1/22 9/1/22 0 0 0 0 $0 7/1/23 9/1/23 0 0 0 0 $0 7/1/24 9/1/24 0 0 0 0 $0 7/1/25 9/1/25 0 0 0 0 $0 7/1/26 9/1/26 0 0 0 0 $0 7/1/27 9/1/27 0 0 0 0 $0 7/1/28 9/1/28 0 0 0 0 $0 7/1/29 9/1/29 0 0 0 0 $0 7/1/30 9/1/30 0 0 0 0 $0 7/1/31 9/1/31 0 0 0 0 $0 7/1/32 9/1/32 0 0 0 0 $0 7/1/33 9/1/33 0 0 0 0 $0 7/1/34 9/1/34 0 0 0 0 $0 7/1/35 9/1/35 0 0 0 0 $0 Maintenance on Aluminum Railcars Total Lease Lot 1 of new Lot 2 of new cost for Aluminum Railcars railcars railcars Aluminum Railcars Maintenance 1,150 1,139 7/1/93 9/1/93 $0 $0 $0 $4,997,754 7/1/94 9/1/94 $0 $0 $0 $7,741,657 7/1/95 9/1/95 $250,740 $248,341 $499,081 $4,492,382 7/1/96 9/1/96 $521,105 $516,120 $1,037,225 $1,037,225 7/1/97 9/1/97 $1,082,301 $1,071,948 $2,154,249 $2,154,249 7/1/98 9/1/98 $2,807,590 $2,780,735 $5,588,324 $5,588,324 7/1/99 9/1/99 $2,915,803 $2,887,913 $5,803,716 $5,803,716 7/1/00 9/1/00 $3,534,616 $3,500,807 $7,035,423 $7,035,423 7/1/01 9/1/01 $4,511,746 $4,468,590 $8,980,336 $8,980,336 7/1/02 9/1/02 $4,690,606 $4,645,740 $9,336,346 $9,336,346 7/1/03 9/1/03 $4,880,112 $4,833,433 $9,713,545 $9,713,545 7/1/04 9/1/04 $5,080,545 $5,031,949 $10,112,494 $10,112,494 7/1/05 9/1/05 $5,292,159 $5,241,538 $10,533,697 $10,533,697 7/1/06 9/1/06 $5,516,473 $5,463,706 $10,980,179 $10,980,179 7/1/07 9/1/07 $5,753,522 $5,698,488 $11,452,009 $11,452,009 7/1/08 9/1/08 $6,002,830 $5,945,411 $11,948,241 $11,948,241 7/1/09 9/1/09 $6,266,024 $6,206,088 $12,472,112 $12,472,112 7/1/10 9/1/10 $6,543,056 $6,480,470 $13,023,525 $13,023,525 7/1/11 9/1/11 $6,832,298 $6,766,945 $13,599,243 $13,599,243 7/1/12 9/1/12 $7,133,910 $7,065,672 $14,199,582 $14,199,582 7/1/13 9/1/13 $7,448,810 $7,377,561 $14,826,371 $14,826,371 7/1/14 9/1/14 $7,778,463 $7,704,061 $15,482,524 $15,482,524 7/1/15 9/1/15 $8,123,415 $8,045,713 $16,169,129 $16,169,129 7/1/16 9/1/16 $8,484,993 $8,403,832 $16,888,825 $16,888,825 7/1/17 9/1/17 $8,861,071 $8,776,313 $17,637,384 $17,637,384 7/1/18 9/1/18 $9,253,888 $9,165,373 $18,419,261 $18,419,261 7/1/19 9/1/19 $9,664,250 $9,571,809 $19,236,059 $19,236,059 7/1/20 9/1/20 $10,092,945 $9,996,404 $20,089,348 $20,089,348 7/1/21 9/1/21 $10,540,797 $10,439,972 $20,980,769 $20,980,769 7/1/22 9/1/22 $11,008,668 $10,903,367 $21,912,035 $21,912,035 7/1/23 9/1/23 $11,497,457 $11,387,482 $22,884,939 $22,884,939 7/1/24 9/1/24 $12,008,107 $11,893,247 $23,901,355 $23,901,355 7/1/25 9/1/25 $12,541,601 $12,421,638 $24,963,239 $24,963,239 7/1/26 9/1/26 $13,098,967 $12,973,672 $26,072,639 $26,072,639 7/1/27 9/1/27 $13,681,279 $13,550,414 $27,231,693 $27,231,693 7/1/28 9/1/28 $14,289,660 $14,152,977 $28,442,637 $28,442,637 7/1/29 9/1/29 $14,925,286 $14,782,522 $29,707,808 $29,707,808 7/1/30 9/1/30 $15,589,382 $15,440,266 $31,029,648 $31,029,648 7/1/31 9/1/31 $0 $16,127,479 $16,127,479 $16,127,479 7/1/32 9/1/32 $0 $16,845,489 $16,845,489 $16,845,489 7/1/33 9/1/33 $0 $17,595,684 $17,595,684 $17,595,684 7/1/34 9/1/34 $0 $18,379,516 $18,379,516 $18,379,516 7/1/35 9/1/35 $0 $19,198,500 $19,198,500 $19,198,500 Tonnage Moved REACTED INFORMATION Steel railcar Base Freight Rate REACTED INFORMATION Steel railcar Incentive Freight Rate REACTED INFORMATION Aluminum Freight Rate 8.5 mm TONS REACTED INFORMATION Aluminum Freight Rate 8.5 TO 10.0 mm TONS REACTED INFORMATION Aluminum Freight Rate above 10.0 mm TONS REACTED INFORMATION Total Freight Bill REACTED INFORMATION Total Aluminum Gondola Option Cash Flow REACTED INFORMATION
Schedule 9-A High Capacity Rail Cars Value to Customers under Current Regulation Base on xxx million tons & Freight Incentive Rate of xxxx/Ton through 1999, then xxx/ton thereafter (1995 dollars) assumes no no sublease income offset Base Case (1995-2035) - Replace Existing Steel Rail Cars with Aluminum After Steel Rail Car Leases Expire. Coal Transportation Costs Lease Payments Maintenance Freight Total 1995 $11,368,766 $7,986,602 REACTED INFORMATION REACTED INFORMATION 1996 $10,779,556 $7,622,882 REACTED INFORMATION REACTED INFORMATION 1997 $10,370,524 $7,665,811 REACTED INFORMATION REACTED INFORMATION 1998 $10,370,524 $8,122,790 REACTED INFORMATION REACTED INFORMATION 1999 $10,346,304 $6,963,710 REACTED INFORMATION REACTED INFORMATION 2000 $13,197,779 $4,788,244 REACTED INFORMATION REACTED INFORMATION 2001 $10,627,041 $3,423,072 REACTED INFORMATION REACTED INFORMATION 2002 $10,627,041 $5,295,769 REACTED INFORMATION REACTED INFORMATION 2003 $13,262,388 $5,700,701 REACTED INFORMATION REACTED INFORMATION 2004 $13,262,388 $6,423,371 REACTED INFORMATION REACTED INFORMATION 2005 $13,262,388 $7,987,681 REACTED INFORMATION REACTED INFORMATION 2006 $13,262,388 $10,057,815 REACTED INFORMATION REACTED INFORMATION 2007 $13,262,388 $10,589,854 REACTED INFORMATION REACTED INFORMATION 2008 $13,262,388 $11,394,694 REACTED INFORMATION REACTED INFORMATION 2009 $13,262,388 $12,472,112 REACTED INFORMATION REACTED INFORMATION 2010 $13,262,388 $13,023,525 REACTED INFORMATION REACTED INFORMATION 2011 $13,262,388 $13,599,243 REACTED INFORMATION REACTED INFORMATION 2012 $13,262,388 $14,199,582 REACTED INFORMATION REACTED INFORMATION 2013 $13,262,388 $14,826,371 REACTED INFORMATION REACTED INFORMATION 2014 $13,262,388 $15,482,524 REACTED INFORMATION REACTED INFORMATION 2015 $13,262,388 $16,169,129 REACTED INFORMATION REACTED INFORMATION 2016 $13,262,388 $16,888,825 REACTED INFORMATION REACTED INFORMATION 2017 $13,262,388 $17,637,384 REACTED INFORMATION REACTED INFORMATION 2018 $13,262,388 $18,419,261 REACTED INFORMATION REACTED INFORMATION 2019 $13,262,388 $19,236,059 REACTED INFORMATION REACTED INFORMATION 2020 $13,262,388 $20,089,348 REACTED INFORMATION REACTED INFORMATION 2021 $13,262,388 $20,980,769 REACTED INFORMATION REACTED INFORMATION 2022 $13,262,388 $21,912,035 REACTED INFORMATION REACTED INFORMATION 2023 $13,262,388 $22,884,939 REACTED INFORMATION REACTED INFORMATION 2024 $13,262,388 $23,901,355 REACTED INFORMATION REACTED INFORMATION 2025 $13,262,388 $24,963,239 REACTED INFORMATION REACTED INFORMATION 2026 $13,262,388 $26,072,639 REACTED INFORMATION REACTED INFORMATION 2027 $13,262,388 $27,231,693 REACTED INFORMATION REACTED INFORMATION 2028 $13,262,388 $28,442,637 REACTED INFORMATION REACTED INFORMATION 2029 $13,262,388 $29,707,808 REACTED INFORMATION REACTED INFORMATION 2030 $13,262,388 $31,029,648 REACTED INFORMATION REACTED INFORMATION 2031 $8,068,106 $18,902,708 REACTED INFORMATION REACTED INFORMATION 2032 $8,068,106 $19,744,274 REACTED INFORMATION REACTED INFORMATION 2033 $8,068,106 $20,623,563 REACTED INFORMATION REACTED INFORMATION 2034 $8,068,106 $21,542,277 REACTED INFORMATION REACTED INFORMATION 2035 $8,068,106 $22,502,192 REACTED INFORMATION REACTED INFORMATION
Aluminum Gondola Option assumes no sublease income - Replacement before Steel Gondola leases Expire Coal Transportation Costs Lease Payments Maintenance Freight Total Cost Difference 1995 $17,701,855 $4,492,382 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1996 $21,495,757 $1,037,225 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1997 $21,034,713 $2,154,249 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1998 $20,899,663 $5,588,324 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1999 $16,960,452 $5,803,716 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2000 $15,362,159 $7,035,423 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2001 $12,529,533 $8,980,336 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2002 $12,565,463 $9,336,346 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2003 $11,402,823 $9,713,545 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2004 $11,402,823 $10,112,494 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2005 $11,402,823 $10,533,697 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2006 $11,402,823 $10,980,179 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2007 $11,402,823 $11,452,009 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2008 $11,402,823 $11,948,241 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2009 $11,402,823 $12,472,112 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2010 $11,402,823 $13,023,525 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2011 $11,402,823 $13,599,243 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2012 $11,402,823 $14,199,582 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2013 $11,402,823 $14,826,371 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2014 $11,402,823 $15,482,524 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2015 $11,402,823 $16,169,129 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2016 $11,402,823 $16,888,825 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2017 $11,402,823 $17,637,384 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2018 $11,402,823 $18,419,261 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2019 $11,402,823 $19,236,059 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2020 $11,402,823 $20,089,348 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2021 $11,402,823 $20,980,769 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2022 $11,402,823 $21,912,035 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2023 $11,402,823 $22,884,939 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2024 $11,402,823 $23,901,355 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2025 $11,402,823 $24,963,239 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2026 $11,402,823 $26,072,639 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2027 $11,402,823 $27,231,693 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2028 $11,402,823 $28,442,637 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2029 $11,402,823 $29,707,808 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2030 $11,402,823 $31,029,648 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2031 $5,740,869 $16,127,479 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2032 $5,740,869 $16,845,489 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2033 $5,740,869 $17,595,684 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2034 $5,740,869 $18,379,516 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2035 $5,740,869 $19,198,500 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION
Discount Rate 8.53% Ten Year NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total Project Life NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total
Schedule 9-B Entergy Corporation High Capacity Rail Cars Value to Customers Under Current Regulation Base on xxx million tons & Freight Incentive Rate of xxxx/Ton through 1999, then xxx/ton thereafter (1995 dollars) assumes no no sublease income offset Base Case (1995-2035) - Replace Existing Steel Rail Cars with Aluminum After Steel Rail Car Leases Expire. Coal Transportation Costs Lease Payments Maintenance Freight Total 1995 $11,368,766 $7,986,602 REACTED INFORMATION REACTED INFORMATION 1996 $10,779,556 $7,622,882 REACTED INFORMATION REACTED INFORMATION 1997 $10,370,524 $7,665,811 REACTED INFORMATION REACTED INFORMATION 1998 $10,370,524 $8,122,790 REACTED INFORMATION REACTED INFORMATION 1999 $10,346,304 $6,963,710 REACTED INFORMATION REACTED INFORMATION 2000 $13,197,779 $4,788,244 REACTED INFORMATION REACTED INFORMATION 2001 $10,627,041 $3,423,072 REACTED INFORMATION REACTED INFORMATION 2002 $10,627,041 $5,295,769 REACTED INFORMATION REACTED INFORMATION 2003 $13,262,388 $5,700,701 REACTED INFORMATION REACTED INFORMATION 2004 $13,262,388 $6,423,371 REACTED INFORMATION REACTED INFORMATION 2005 $13,262,388 $7,987,681 REACTED INFORMATION REACTED INFORMATION 2006 $13,262,388 $10,057,815 REACTED INFORMATION REACTED INFORMATION 2007 $13,262,388 $10,589,854 REACTED INFORMATION REACTED INFORMATION 2008 $13,262,388 $11,394,694 REACTED INFORMATION REACTED INFORMATION 2009 $13,262,388 $12,472,112 REACTED INFORMATION REACTED INFORMATION 2010 $13,262,388 $13,023,525 REACTED INFORMATION REACTED INFORMATION 2011 $13,262,388 $13,599,243 REACTED INFORMATION REACTED INFORMATION 2012 $13,262,388 $14,199,582 REACTED INFORMATION REACTED INFORMATION 2013 $13,262,388 $14,826,371 REACTED INFORMATION REACTED INFORMATION 2014 $13,262,388 $15,482,524 REACTED INFORMATION REACTED INFORMATION 2015 $13,262,388 $16,169,129 REACTED INFORMATION REACTED INFORMATION 2016 $13,262,388 $16,888,825 REACTED INFORMATION REACTED INFORMATION 2017 $13,262,388 $17,637,384 REACTED INFORMATION REACTED INFORMATION 2018 $13,262,388 $18,419,261 REACTED INFORMATION REACTED INFORMATION 2019 $13,262,388 $19,236,059 REACTED INFORMATION REACTED INFORMATION 2020 $13,262,388 $20,089,348 REACTED INFORMATION REACTED INFORMATION 2021 $13,262,388 $20,980,769 REACTED INFORMATION REACTED INFORMATION 2022 $13,262,388 $21,912,035 REACTED INFORMATION REACTED INFORMATION 2023 $13,262,388 $22,884,939 REACTED INFORMATION REACTED INFORMATION 2024 $13,262,388 $23,901,355 REACTED INFORMATION REACTED INFORMATION 2025 $13,262,388 $24,963,239 REACTED INFORMATION REACTED INFORMATION 2026 $13,262,388 $26,072,639 REACTED INFORMATION REACTED INFORMATION 2027 $13,262,388 $27,231,693 REACTED INFORMATION REACTED INFORMATION 2028 $13,262,388 $28,442,637 REACTED INFORMATION REACTED INFORMATION 2029 $13,262,388 $29,707,808 REACTED INFORMATION REACTED INFORMATION 2030 $13,262,388 $31,029,648 REACTED INFORMATION REACTED INFORMATION 2031 $8,068,106 $18,902,708 REACTED INFORMATION REACTED INFORMATION 2032 $8,068,106 $19,744,274 REACTED INFORMATION REACTED INFORMATION 2033 $8,068,106 $20,623,563 REACTED INFORMATION REACTED INFORMATION 2034 $8,068,106 $21,542,277 REACTED INFORMATION REACTED INFORMATION 2035 $8,068,106 $22,502,192 REACTED INFORMATION REACTED INFORMATION
Aluminum Gondola Option assumes sublease income to offset 50% lease payment - Replacement before Steel Gondola leases Expire Coal Transportation Costs Lease Payments Maintenance Freight Total Cost Difference NPV of Cost Difference 1995 $17,070,177 $4,492,382 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1996 $16,120,222 $1,037,225 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1997 $15,711,190 $2,154,249 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1998 $15,711,190 $5,588,324 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1999 $13,978,834 $5,803,716 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2000 $13,179,688 $7,035,423 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2001 $11,894,319 $8,980,336 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2002 $11,894,319 $9,336,346 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2003 $11,402,823 $9,713,545 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2004 $11,402,823 $10,112,494 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2005 $11,402,823 $10,533,697 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2006 $11,402,823 $10,980,179 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2007 $11,402,823 $11,452,009 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2008 $11,402,823 $11,948,241 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2009 $11,402,823 $12,472,112 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2010 $11,402,823 $13,023,525 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2011 $11,402,823 $13,599,243 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2012 $11,402,823 $14,199,582 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2013 $11,402,823 $14,826,371 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2014 $11,402,823 $15,482,524 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2015 $11,402,823 $16,169,129 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2016 $11,402,823 $16,888,825 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2017 $11,402,823 $17,637,384 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2018 $11,402,823 $18,419,261 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2019 $11,402,823 $19,236,059 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2020 $11,402,823 $20,089,348 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2021 $11,402,823 $20,980,769 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2022 $11,402,823 $21,912,035 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2023 $11,402,823 $22,884,939 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2024 $11,402,823 $23,901,355 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2025 $11,402,823 $24,963,239 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2026 $11,402,823 $26,072,639 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2027 $11,402,823 $27,231,693 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2028 $11,402,823 $28,442,637 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2029 $11,402,823 $29,707,808 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2030 $11,402,823 $31,029,648 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2031 $5,740,869 $16,127,479 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2032 $5,740,869 $16,845,489 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2033 $5,740,869 $17,595,684 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2034 $5,740,869 $18,379,516 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2035 $5,740,869 $19,198,500 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION
Discount Rate - 8.53% Ten Year NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total Project Life NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total Schedule 9-C Entergy Corporation High Capacity Rail Cars Value to Customers Under Current Regulation Base on xxx million tons & Freight Incentive Rate of xxxx/Ton through 1999, then xxx/ton thereafter (1995 dollars) assumes no no sublease income offset Base Case (1995-2035) - Replace Existing Steel Rail Cars with Aluminum After Steel Rail Car Leases Expire. Coal Transportation Costs Lease Payments Maintenance Freight Total 1995 $11,368,766 $7,986,602 REACTED INFORMATION REACTED INFORMATION 1996 $10,779,556 $7,622,882 REACTED INFORMATION REACTED INFORMATION 1997 $10,370,524 $7,665,811 REACTED INFORMATION REACTED INFORMATION 1998 $10,370,524 $8,122,790 REACTED INFORMATION REACTED INFORMATION 1999 $10,346,304 $6,963,710 REACTED INFORMATION REACTED INFORMATION 2000 $13,197,779 $4,788,244 REACTED INFORMATION REACTED INFORMATION 2001 $10,627,041 $3,423,072 REACTED INFORMATION REACTED INFORMATION 2002 $10,627,041 $5,295,769 REACTED INFORMATION REACTED INFORMATION 2003 $13,262,388 $5,700,701 REACTED INFORMATION REACTED INFORMATION 2004 $13,262,388 $6,423,371 REACTED INFORMATION REACTED INFORMATION 2005 $13,262,388 $7,987,681 REACTED INFORMATION REACTED INFORMATION 2006 $13,262,388 $10,057,815 REACTED INFORMATION REACTED INFORMATION 2007 $13,262,388 $10,589,854 REACTED INFORMATION REACTED INFORMATION 2008 $13,262,388 $11,394,694 REACTED INFORMATION REACTED INFORMATION 2009 $13,262,388 $12,472,112 REACTED INFORMATION REACTED INFORMATION 2010 $13,262,388 $13,023,525 REACTED INFORMATION REACTED INFORMATION 2011 $13,262,388 $13,599,243 REACTED INFORMATION REACTED INFORMATION 2012 $13,262,388 $14,199,582 REACTED INFORMATION REACTED INFORMATION 2013 $13,262,388 $14,826,371 REACTED INFORMATION REACTED INFORMATION 2014 $13,262,388 $15,482,524 REACTED INFORMATION REACTED INFORMATION 2015 $13,262,388 $16,169,129 REACTED INFORMATION REACTED INFORMATION 2016 $13,262,388 $16,888,825 REACTED INFORMATION REACTED INFORMATION 2017 $13,262,388 $17,637,384 REACTED INFORMATION REACTED INFORMATION 2018 $13,262,388 $18,419,261 REACTED INFORMATION REACTED INFORMATION 2019 $13,262,388 $19,236,059 REACTED INFORMATION REACTED INFORMATION 2020 $13,262,388 $20,089,348 REACTED INFORMATION REACTED INFORMATION 2021 $13,262,388 $20,980,769 REACTED INFORMATION REACTED INFORMATION 2022 $13,262,388 $21,912,035 REACTED INFORMATION REACTED INFORMATION 2023 $13,262,388 $22,884,939 REACTED INFORMATION REACTED INFORMATION 2024 $13,262,388 $23,901,355 REACTED INFORMATION REACTED INFORMATION 2025 $13,262,388 $24,963,239 REACTED INFORMATION REACTED INFORMATION 2026 $13,262,388 $26,072,639 REACTED INFORMATION REACTED INFORMATION 2027 $13,262,388 $27,231,693 REACTED INFORMATION REACTED INFORMATION 2028 $13,262,388 $28,442,637 REACTED INFORMATION REACTED INFORMATION 2029 $13,262,388 $29,707,808 REACTED INFORMATION REACTED INFORMATION 2030 $13,262,388 $31,029,648 REACTED INFORMATION REACTED INFORMATION 2031 $8,068,106 $18,902,708 REACTED INFORMATION REACTED INFORMATION 2032 $8,068,106 $19,744,274 REACTED INFORMATION REACTED INFORMATION 2033 $8,068,106 $20,623,563 REACTED INFORMATION REACTED INFORMATION 2034 $8,068,106 $21,542,277 REACTED INFORMATION REACTED INFORMATION 2035 $8,068,106 $22,502,192 REACTED INFORMATION REACTED INFORMATION
Aluminum Gondola Option assumes sublease income to offset 100% lease payment - Replacement before Steel Gondola leases Expire Coal Transportation Costs Lease Payments Maintenance FREIGHT Total Cost Difference NPV of Cost Difference 1995 $17,070,177 $4,492,382 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1996 $11,811,855 $1,037,225 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1997 $11,402,823 $2,154,249 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1998 $11,402,823 $5,588,324 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1999 $11,402,823 $5,803,716 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2000 $11,402,823 $7,035,423 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2001 $11,402,823 $8,980,336 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2002 $11,402,823 $9,336,346 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2003 $11,402,823 $9,713,545 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2004 $11,402,823 $10,112,494 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2005 $11,402,823 $10,533,697 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2006 $11,402,823 $10,980,179 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2007 $11,402,823 $11,452,009 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2008 $11,402,823 $11,948,241 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2009 $11,402,823 $12,472,112 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2010 $11,402,823 $13,023,525 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2011 $11,402,823 $13,599,243 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2012 $11,402,823 $14,199,582 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2013 $11,402,823 $14,826,371 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2014 $11,402,823 $15,482,524 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2015 $11,402,823 $16,169,129 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2016 $11,402,823 $16,888,825 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2017 $11,402,823 $17,637,384 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2018 $11,402,823 $18,419,261 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2019 $11,402,823 $19,236,059 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2020 $11,402,823 $20,089,348 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2021 $11,402,823 $20,980,769 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2022 $11,402,823 $21,912,035 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2023 $11,402,823 $22,884,939 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2024 $11,402,823 $23,901,355 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2025 $11,402,823 $24,963,239 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2026 $11,402,823 $26,072,639 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2027 $11,402,823 $27,231,693 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2028 $11,402,823 $28,442,637 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2029 $11,402,823 $29,707,808 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2030 $11,402,823 $31,029,648 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2031 $5,740,869 $16,127,479 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2032 $5,740,869 $16,845,489 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2033 $5,740,869 $17,595,684 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2034 $5,740,869 $18,379,516 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2035 $5,740,869 $19,198,500 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION
Discount Rate - 8.53% Ten Year NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total Project Life NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total
Schedule 10 Entergy Corporation High Capacity Rail Cars Value to Customers Under Current Regulation Base on xxx million tons & Freight Incentive Rate of xxx/Ton through 1999, then xxx/ton thereafter (1995 dollars) assumes no no sublease income offset Base Case (1995-2035) - Replace Existing Steel Rail Cars with Aluminum After Steel Rail Car Leases Expire. Coal Transportation Costs Lease Payments Maintenance Freight Total 1995 $11,368,766 $7,986,602 REACTED INFORMATION REACTED INFORMATION 1996 $10,779,556 $7,622,882 REACTED INFORMATION REACTED INFORMATION 1997 $10,370,524 $7,665,811 REACTED INFORMATION REACTED INFORMATION 1998 $10,370,524 $8,122,790 REACTED INFORMATION REACTED INFORMATION 1999 $10,346,304 $6,963,710 REACTED INFORMATION REACTED INFORMATION 2000 $13,197,779 $4,788,244 REACTED INFORMATION REACTED INFORMATION 2001 $10,627,041 $3,423,072 REACTED INFORMATION REACTED INFORMATION 2002 $10,627,041 $5,295,769 REACTED INFORMATION REACTED INFORMATION 2003 $13,262,388 $5,700,701 REACTED INFORMATION REACTED INFORMATION 2004 $13,262,388 $6,423,371 REACTED INFORMATION REACTED INFORMATION 2005 $13,262,388 $7,987,681 REACTED INFORMATION REACTED INFORMATION 2006 $13,262,388 $10,057,815 REACTED INFORMATION REACTED INFORMATION 2007 $13,262,388 $10,589,854 REACTED INFORMATION REACTED INFORMATION 2008 $13,262,388 $11,394,694 REACTED INFORMATION REACTED INFORMATION 2009 $13,262,388 $12,472,112 REACTED INFORMATION REACTED INFORMATION 2010 $13,262,388 $13,023,525 REACTED INFORMATION REACTED INFORMATION 2011 $13,262,388 $13,599,243 REACTED INFORMATION REACTED INFORMATION 2012 $13,262,388 $14,199,582 REACTED INFORMATION REACTED INFORMATION 2013 $13,262,388 $14,826,371 REACTED INFORMATION REACTED INFORMATION 2014 $13,262,388 $15,482,524 REACTED INFORMATION REACTED INFORMATION 2015 $13,262,388 $16,169,129 REACTED INFORMATION REACTED INFORMATION 2016 $13,262,388 $16,888,825 REACTED INFORMATION REACTED INFORMATION 2017 $13,262,388 $17,637,384 REACTED INFORMATION REACTED INFORMATION 2018 $13,262,388 $18,419,261 REACTED INFORMATION REACTED INFORMATION 2019 $13,262,388 $19,236,059 REACTED INFORMATION REACTED INFORMATION 2020 $13,262,388 $20,089,348 REACTED INFORMATION REACTED INFORMATION 2021 $13,262,388 $20,980,769 REACTED INFORMATION REACTED INFORMATION 2022 $13,262,388 $21,912,035 REACTED INFORMATION REACTED INFORMATION 2023 $13,262,388 $22,884,939 REACTED INFORMATION REACTED INFORMATION 2024 $13,262,388 $23,901,355 REACTED INFORMATION REACTED INFORMATION 2025 $13,262,388 $24,963,239 REACTED INFORMATION REACTED INFORMATION 2026 $13,262,388 $26,072,639 REACTED INFORMATION REACTED INFORMATION 2027 $13,262,388 $27,231,693 REACTED INFORMATION REACTED INFORMATION 2028 $13,262,388 $28,442,637 REACTED INFORMATION REACTED INFORMATION 2029 $13,262,388 $29,707,808 REACTED INFORMATION REACTED INFORMATION 2030 $13,262,388 $31,029,648 REACTED INFORMATION REACTED INFORMATION 2031 $8,068,106 $18,902,708 REACTED INFORMATION REACTED INFORMATION 2032 $8,068,106 $19,744,274 REACTED INFORMATION REACTED INFORMATION 2033 $8,068,106 $20,623,563 REACTED INFORMATION REACTED INFORMATION 2034 $8,068,106 $21,542,277 REACTED INFORMATION REACTED INFORMATION 2035 $8,068,106 $22,502,192 REACTED INFORMATION REACTED INFORMATION
Aluminum Gondola Option assumes no sublease income - Replacement before Steel Gondola leases Expire Coal Transportation Costs Lease Payments Maintenance Freight Total Cost Difference NPV of Cost Difference 1995 $17,701,855 $4,492,382 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1996 $21,495,757 $1,037,225 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1997 $21,034,713 $2,154,249 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1998 $20,899,663 $5,588,324 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1999 $16,960,452 $5,803,716 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2000 $15,362,159 $7,035,423 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2001 $12,529,533 $8,980,336 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2002 $12,565,463 $9,336,346 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2003 $11,402,823 $9,713,545 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2004 $11,402,823 $10,112,494 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2005 $11,402,823 $10,533,697 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2006 $11,402,823 $10,980,179 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2007 $11,402,823 $11,452,009 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2008 $11,402,823 $11,948,241 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2009 $11,402,823 $12,472,112 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2010 $11,402,823 $13,023,525 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2011 $11,402,823 $13,599,243 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2012 $11,402,823 $14,199,582 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2013 $11,402,823 $14,826,371 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2014 $11,402,823 $15,482,524 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2015 $11,402,823 $16,169,129 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2016 $11,402,823 $16,888,825 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2017 $11,402,823 $17,637,384 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2018 $11,402,823 $18,419,261 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2019 $11,402,823 $19,236,059 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2020 $11,402,823 $20,089,348 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2021 $11,402,823 $20,980,769 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2022 $11,402,823 $21,912,035 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2023 $11,402,823 $22,884,939 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2024 $11,402,823 $23,901,355 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2025 $11,402,823 $24,963,239 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2026 $11,402,823 $26,072,639 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2027 $11,402,823 $27,231,693 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2028 $11,402,823 $28,442,637 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2029 $11,402,823 $29,707,808 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2030 $11,402,823 $31,029,648 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2031 $5,740,869 $16,127,479 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2032 $5,740,869 $16,845,489 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2033 $5,740,869 $17,595,684 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2034 $5,740,869 $18,379,516 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 2035 $5,740,869 $19,198,500 REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION
Discount Rate - 8.53% Ten Year NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total Project Life NPV Coal Transportation Costs Base Case Aluminum Difference Lease Payments Maintenance REACTED INFORMATION Freight Total Tons consumed on behalf of AP&L's Net Area Requirements 1995 $1,297,700 1996 $1,325,900 1997 $1,439,150 1998 $2,090,220 1999 $2,103,210 2000 $1,997,380 2001 $2,511,260 2002 $2,161,080 2003 $2,214,530 2004 $3,033,930 2005 $3,537,780 2006 $3,571,770 2007 $4,008,530 2008 $4,281,170 2009 $4,157,150 2010 $4,853,860 2011 $4,685,570 2012 $4,864,080 2013 $4,989,865 2014 $5,118,903 2015 $5,251,278 2016 $5,387,076 2017 $5,526,386 2018 $5,669,298 2019 $5,815,906 2020 $5,966,305 2021 $6,120,594 2022 $6,278,873 2023 $6,441,244 2024 $6,607,815 2025 $6,778,693 2026 $6,953,990 2027 $7,133,820 2028 $7,318,301 2029 $7,507,552 2030 $7,701,697 2031 $1,063,125 2032 $1,063,125 2033 $1,063,125 2034 $0 2035 $0 AP&L's Retail Customer Ratio - 88.59%
Amount of Tons consumed Percent of annual savings on behalf of total coal attributed to NPV AP&L NPV AP&L AP&L's retail for retail AP&L's retail customers customers customers customers customers 1995-2005 1995-2033 1995 $1,149,632 8.52% REACTED INFORMATION REACTED INFORMATION REACTED INFORMATION 1996 $1,174,615 8.70% REACTED INFORMATION 1997 $1,274,943 9.44% REACTED INFORMATION 1998 $1,851,726 13.72% REACTED INFORMATION 1999 $1,863,234 13.80% REACTED INFORMATION 2000 $1,769,479 13.11% REACTED INFORMATION 2001 $2,224,725 16.48% REACTED INFORMATION 2002 $1,914,501 14.18% REACTED INFORMATION 2003 $1,961,852 14.53% REACTED INFORMATION 2004 $2,687,759 19.91% REACTED INFORMATION 2005 $3,134,119 23.22% REACTED INFORMATION 2006 $3,164,231 23.44% REACTED INFORMATION 2007 $3,551,157 26.30% REACTED INFORMATION 2008 $3,792,689 28.09% REACTED INFORMATION 2009 $3,682,819 27.28% REACTED INFORMATION 2010 $4,300,035 31.85% REACTED INFORMATION 2011 $4,150,946 30.75% REACTED INFORMATION 2012 $4,309,088 31.92% REACTED INFORMATION 2013 $4,420,521 32.74% REACTED INFORMATION 2014 $4,534,836 33.59% REACTED INFORMATION 2015 $4,652,107 34.46% REACTED INFORMATION 2016 $4,772,411 35.35% REACTED INFORMATION 2017 $4,895,825 36.27% REACTED INFORMATION 2018 $5,022,431 37.20% REACTED INFORMATION 2019 $5,152,311 38.17% REACTED INFORMATION 2020 $5,285,550 39.15% REACTED INFORMATION 2021 $5,422,234 40.16% REACTED INFORMATION 2022 $5,562,453 41.20% REACTED INFORMATION 2023 $5,706,298 42.27% REACTED INFORMATION 2024 $5,853,863 43.36% REACTED INFORMATION 2025 $6,005,244 44.48% REACTED INFORMATION 2026 $6,160,540 45.63% REACTED INFORMATION 2027 $6,319,851 46.81% REACTED INFORMATION 2028 $6,483,283 48.02% REACTED INFORMATION 2029 $6,650,940 49.27% REACTED INFORMATION 2030 $6,822,934 50.54% REACTED INFORMATION 2031 $941,822 15.75% REACTED INFORMATION 2032 $941,822 15.75% REACTED INFORMATION 2033 $941,822 15.75% REACTED INFORMATION 2034 $0 0.00% REACTED INFORMATION 2035 $0 0.00% REACTED INFORMATION
Substituted tabular data for graghic Schedule 11 Sinsitivity Analysis For Aluminum Gondola Study Description Low Nominal High Of Uncertainty 1995 Rates ($87,691,435) $0 $220,809,978 Rates after leases ($55,929,977) $0 $40,827,800 Tons shipped ($38,247,007) $0 $15,298,803 1995 lease rates ($28,509,247) $0 $20,833,681 Lease rates later ($17,186,413) $0 $19,641,615 Steel leases offset $0 $0 $30,382,964 Steel maint. ($4,033,420) $0 $3,649,285 Aluminum maint. ($3,175,159) $0 $3,509,386 Al. gon price ($1,921,995) $0 $2,882,992 EX-99 5 Exhibit D-4 BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF THE ) APPLICATION OF ARKANSAS ) POWER & LIGHT COMPANY FOR ) DOCKET NO. 94-_____-U APPROVAL OF ACCOUNTING ) PROCEDURES FOR COAL COSTS ) DIRECT TESTIMONY OF J. DAVID WRIGHT MANAGER, REGULATORY ACCOUNTING ENTERGY SERVICES, INC. ON BEHALF OF ARKANSAS POWER & LIGHT COMPANY DECEMBER 13, 1994 Q. PLEASE STATE YOUR NAME, EMPLOYER, BUSINESS ADDRESS AND JOB TITLE. A. My name is J. David Wright. I am employed by Entergy Services, Inc. as Manager, Regulatory Accounting. My business address is 2500 TCBY Building, 425 West Capitol, Little Rock, Arkansas 72203. Q. PLEASE DESCRIBE YOUR EDUCATIONAL AND PROFESSIONAL BACKGROUND. A. I am a certified public accountant. I received a Bachelor of Business Administration degree with a major in accounting from the University of Central Arkansas in 1976. After graduation, I worked in public accounting until May of 1980 when I was employed by Arkansas Power & Light Company ("AP&L" or the "Company") in the Taxes and Special Studies Section as an accountant. I was promoted to Manager of Regulatory Accounting and Tax for AP&L in November 1986 and served in that position until I assumed my current position on January 1, 1993. Q. ON WHOSE BEHALF ARE YOU SUBMITTING THIS TESTIMONY? A. I am submitting this testimony on behalf of AP&L. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING? A. The purpose of my testimony is to support AP&L's Application requesting Arkansas Public Service Commission ("APSC" or the "Commission") approval to implement a plan to reduce coal costs to AP&L's customers through acquisition by lease of a fleet of aluminum railcars and negotiation of a coal transportation rate less than that currently realized by the Company. Specifically, my testimony will describe the proposed accounting treatment for the transactions involved. Q. PLEASE DESCRIBE AP&L'S CURRENT ACCOUNTING FOR COAL COSTS. A. AP&L accounts for its coal costs by charging cost as paid or accrued to Account 151 - Fuel Stock or Account 152 - Fuel Stock Expenses Undistributed, and as the coal is burned the appropriate amount of costs are transferred from the coal inventory accounts to the fuel expense accounts, Account 501 - Fuel. These accounts are subdivided by coal plant - - White Bluff Steam Electric Station or Independence Steam Electric Station -- and by the different classes of fuel stock costs -- for example, Coal Cost-Invoice, Freight, Rail Car Leases. Q. CAN YOU BE MORE SPECIFIC AS TO HOW AP&L ACCOUNTS FOR ITS SEMIANNUAL RAIL CAR LEASE PAYMENTS. A. Monthly one-sixth of the semi-annual rental payment for each lease is allocated proportionately to the appropriate Account 151 plant sub account on the basis of how the railcar fleet was utilized for each plant. The Coal Supply Department provides a ratio of the number of trains shipped to and unloaded at each plant. This ratio is then applied to the total monthly lease payment accrual to allocate a proportionate share of the payment to each coal plant's fuel stock account for rail car lease cost. Q. WHAT IS THE COMPANY'S PROPOSED TREATMENT FOR COSTS ASSOCIATED WITH THE LEASE OF THE ALUMINUM COAL CARS? A. The Company's treatment of cost associated with the lease of the aluminum coal cars would be the same as the Company's treatment of cost associated with its steel coal cars. Q. WILL THIS AFFECT THE CURRENT ACCOUNTING TREATMENT OF THE EXISTING LEASE FOR THE STEEL COAL CARS? A. This would not materially affect the accounting treatment of the existing lease for the steel coal cars. The Company would set up additional sub accounts to account separately for the steel and aluminum rail car lease costs and would use the ratio provided by Fuel Supply for the new aluminum railcars also to allocate the steel rail car lease costs to the appropriate sub-accounts. Any and all revenues received as a result of subleasing, sales or exchanges of the steel rail cars would be used to reduce lease costs associated with the steel railcar lease prior to allocation to the sub-accounts. These revenues would be shown in Account 151 - Fuel Stock. Q. PLEASE STATE YOUR OPINION AS TO WHETHER THE PROPOSED TRANSACTION ACCOUNTING TREATMENT COMPLIES WITH THE UNIFORM SYSTEM OF ACCOUNTS. A. In my opinion, it does. However, because of the unusual nature and the dollar magnitude of the transaction, the Company believed that confirmation of that opinion by the Commission would be prudent. Q. MR. WRIGHT, DOES THIS CONCLUDE YOUR TESTIMONY? A. Yes, it does. EX-99 6 Exhibit D-5 Arkansas Public Service Commission IN THE MATTER OF THE ) APPLICATION OF ARKANSAS ) POWER & LIGHT COMPANY FOR ) DOCKET NO. 94-439-U APPROVAL OF ACCOUNTING ) ORDER NO. 2 PROCEDURES FOR COAL COSTS ) ORDER On December 13, 1994, Arkansas Power & Light Company ("AP&L") filed an Application requesting Commission approval of AP&L's proposed accounting treatment of the costs associated with the planned lease by AP&L of certain aluminum gondola railcars to replace the existing fleet of leased steel gondolas. The railcars are used to transport coal from Wyoming for use as fuel in AP&L's White Bluff Steam Electric Station and the Independence Steam Electric Station. Transportation of the coal from mines in Wyoming to the generating stations in Arkansas currently in provided pursuant to contractual arrangements with Union Pacific System and Western Railroad Properties, Inc. (the "Railroads"). As a result of negotiations with the Railroads, AP&L has the opportunity to enter into an amended rail transportation agreement that provides significant reductions in coal transportation rates. The amendment, however, is dependent upon AP&L obtaining aluminum railcars, which are significantly lighter that the existing steel railcars and can carry more coal per railcar. The proposed lease of aluminum gondolas and the resulting decrease in transportation rates negotiated with the Railroads is projected to save $95.1 million on a net present value basis for the period 1995 through 2035, the year in which the last coal fueled electric generation unit retires. The portion of these savings attributable to AP&L retail customers is estimated to be $22.0 million. The projected savings represent the net of costs associated with the existing lease of steel railcars at the existing contractual transportation rate as compared to the proposed lease of aluminum railcars at the new transportation rate negotiated with the Railroads. These savings assume that all the costs of the existing steel railcar leases will continue to be treated as fuel expense for the life of these leases. These savings could be enhanced by a sub-lease of the existing steel railcars to others or net benefit of lease termination after sale of the steel railcars to others by the lessor. AP&L believes that the costs associated with the aluminum railcar lease, the existing steel railcar leases and any offset thereto due to disposition of the existing steel railcars, are properly accounted for in the Uniform System of Accounts as fuel expenses in Account 501-Fuel for all purposes under AP&L's Fuel Adjustment Clause Rate Rider Schedule M27 ("Rate Rider M27"). AP&L seeks a ruling from the Commission confirming its interpretation before it enters into the aluminum railcar lease and related obligations or, in the alternative, a waiver of, and permission to deviate from, such accounting requirements. Direct Testimony was filed on December 13, 1995, by Mr. Roy Giangrosso, Mr. J. David Wright and Mr. Jeffrey Herndon on behalf of AP&L. Ms. Marie James filed prepared testimony on behalf of the General Staff of the Arkansas Public Service Commission ("Staff") on February 1, 1995. Based upon the filed testimony, the Commission finds that AP&L's proposed railcar lease transaction and the proposed accounting treatment o fthe costs associated with the transaction are in the public interest. Accordingly, the Commission orders as follows: (1) AP&L's December 13, 1994, Application is hereby approved. (2) The costs associated with the aluminum railcars should be recorded in the applicable Fuel Inventory Account Nos. 151 or 152 and transferred to Account No. 501-Fuel Expense as the coal is used for generating electricity, and should be recovered on a current basis through Rate Rider M27. (3) The costs associated with the "idled" steel railcars should be accounted for separately and recorded in the applicable Fuel Inventory Account Nos. 151 or 152 and transferred to Account No. 501-Fuel Expense as the coal is used for generating electricity, and should be recovered on a current basis through Rate Rider M27 as well. (4) AP&L shall filed an annual report in Docket No. 86- 033-A, referencing Docket No. 94-439-U, which includes all the relevant information with regard to the railcar lease costs, all revenues realized from any disposition of the steel railcars, and the net savings realized from the conversion to the aluminum railcar fleet to enable Staff to monitor the benefits accruing to the ratepayers from the project. (5) The proposed transaction shall otherwise be accomplished in accordance with the procedures and recommendations contained in the above-described testimony. BY ORDER OF THE COMMISSION. This 22nd day of February, 1995. /s/ Sam I Bratton, Jr. Sam I Bratton, Jr., Chairman /s/ Patricia S. Qualls Patricia S. Qualls, Commissioner /s/ Julius D. Kearney Julius D. Kearney, Commissioner /s/ Glenna Hooks (acting) Jan Sanders Secretary of the Commission EX-99 7 EXHIBIT H [Suggested Form of Notice of Proposed Transactions] SECURITIES AND EXCHANGE COMMISSION (Release No. 35- ; 70- ) Arkansas Power & Light Company, et al. Notice of Proposal For Arkansas Power & Light Company to Sublease Existing Steel Railcars As Well As New Aluminum Railcars Which It Is Proposing To Acquire Arkansas Power & Light Company ("AP&L"), 425 West Capitol Avenue, Little Rock, Arkansas 72201, Louisiana Power & Light Company, 639 Loyola Avenue, New Orleans, Louisiana 70113, Mississippi Power & Light Company, 308 East Pearl Street, Jackson, Mississippi 39201, New Orleans Public Service Inc., 639 Loyola Avenue, New Orleans, Louisiana 70113 and System Fuels, Inc., 639 Loyola Avenue, New Orleans, Louisiana 70113, subsidiaries of Entergy Corporation, a registered holding company, have filed a Post-Effective Amendment to their joint Application-Declaration in File No. 70-8001 with this Commission under Sections 9(a) and 10 of the Public Utility Holding Company Act of 1935 ("Act"). AP&L is proposing to replace its existing steel railcar fleet with aluminum railcars. The steel railcars are currently being used by AP&L to transport coal from Wyoming to the two-unit White Bluff Steam Electric Station located near Redfield, Arkansas ("White Bluff") and the two-unit Independence Steam Electric Station located near Newark, Arkansas ("ISES"). By replacing the steel railcars with aluminum railcars, AP&L and its wholesale formula rate and retail customers, as well as the other co-owners of the stations, will realize substantial reductions in fuel costs. AP&L has indicated that the cost savings would be significantly greater if AP&L were permitted to (a) sublease its existing steel railcars for up to the remainder of their respective lease terms, and (b) sublease the new aluminum railcars during periods when they are not needed to service the coal transportation requirements of White Bluff and ISES. AP&L is seeking authority to enter into such subleasing transactions. Transportation of coal from Wyoming to White Bluff and ISES is provided by Union Pacific Railroad and Western Railroad Properties, Inc. (the "Railroads"). Pursuant to a rail transportation agreement with the Railroads, AP&L provides the Railroads with the railcars needed to transport the coal and pays the Railroads freight charges for the coal which is transported. As a result of recent negotiations, the Railroads have agreed to significantly reduce their freight charges provided that AP&L replace its existing fleet of steel railcars with aluminum railcars. The use of aluminum railcars has become standard in the industry. By using aluminum railcars, the number of trips needed to deliver the same quantity of coal can be reduced because an aluminum railcar can carry approximately 120 tons of coal while the maximum load for a steel railcar is 106 tons. By reducing the number of train trips, the Railroads are able to significantly reduce their variable costs by making extra crew shifts and power available for new business. A portion of these savings would be passed on to AP&L through reduced freight rates. In order to evaluate the economic attractiveness of replacing the steel railcars with aluminum railcars, AP&L developed a Base Case and an Aluminum Case. The Base Case represents the costs associated with the continued use of the existing steel railcars until the expiration of their respective lease terms. The Aluminum Case represents the costs associated with the full replacement in 1995 of the steel railcar fleet with aluminum railcars. As the aluminum railcars are delivered, the Aluminum Case assumes that the existing steel railcars are either parked, subleased or sold. If AP&L were to park the entire steel railcar fleet and continue to make rental payments in connection therewith, the cost savings associated with the full replacement of steel railcars with aluminum railcars in 1995 are projected to be, on a net present value basis, $44.0 million for the initial ten years of the project (1995-2004), and $95.1 million for the period 1995 through 2035, the year in which the last coal unit is expected to be retired. The portion of these savings attributable to AP&L retail customers is estimated to be $5 million for the initial ten years of the project and a total of $22.0 million over the project life. These cost savings would be significantly greater if AP&L were able to offset a portion of the parking charges and rental costs by subleasing the railcars for the remainder of their lease terms or terminating the railcar leases and realizing any benefits from the sale of the railcars by the lessors. Due to the current strength of the steel railcar leasing market, AP&L believes that subleasing of the steel railcars would result in greater revenues and therefore increased cost savings than would termination of the leases. Moreover, termination of the leases could trigger significant payment obligations to the lessors in 1995 if the proceeds received from the sale of the steel railcars were less than the termination values provided for in the leases. If, on the other hand, AP&L were to sublease the steel railcars, any sublease revenue received by AP&L would directly offset AP&L's total lease obligations. AP&L believes that subleasing of the steel railcars would provide a stream of income which would significantly offset the ongoing lease costs. If AP&L received sufficient sublease income to offset 50 percent of the steel railcar lease payments, the net present value of project savings would increase to $61.0 million in the first ten years and $112.1 million for the total project life, measured in 1995 dollars for all ownership interests. If sublease income is sufficient to offset 100 percent of the steel railcar lease payments, the net present value savings increase to $74.5 million in the first ten years and $125.6 million for the project life for all ownership interests. Because the existing steel railcars will become economically obsolete upon acquisition of the new aluminum railcars, and in view of the significant fuel cost reductions that would result from subleasing, AP&L is requesting authority to sublease all of its existing steel railcars for up to the remainder of their respective lease terms so long as the following conditions are met: A. Each subleasing transaction shall be reported by a quarterly Rule 24 Certificate. B. Any revenue realized from the sublease of the railcars shall be credited against AP&L's costs as lessee of the railcars. The benefit from such lower cost of leasing the railcars shall accrue to the owners of White Bluff and ISES on a pass-through basis. Such revenues shall be reflected accordingly in AP&L's ratemaking provisions, except to the extent the regulatory authority having jurisdiction over the matters authorizes a different treatment. Such revenues will be credited to "Fuel stock" (Account No. 151 under FERC's Uniform System of Accounts). In the event AP&L changes its method of accounting for subleasing it will provide 30 days advance notice of the proposed change to the SEC. In order to satisfy the combined annual coal requirements for White Bluff and ISES, AP&L will need to place in service 2,289 aluminum railcars. The size of the aluminum railcar fleet has been determined based upon the specific delivery requirements of White Bluff and ISES. During peak hauling periods the entire aluminum railcar fleet will be fully utilized. However, there may be times when fewer than 2,289 railcars will be required to service White Bluff and ISES. During these periods, subleasing of the aluminum railcars would provide a stream of income which would offset AP&L's rental payment obligations under the proposed aluminum railcar leases. Any reduction in AP&L's rental obligations would benefit AP&L and its ratepayers through reduced fuel expenses. In view of the foregoing, AP&L is requesting authority to sublease its aluminum railcars to third parties subject to the following restrictions: A. No sublease will be longer than the period during which the railcars are not needed for the transportation of coal to White Bluff and ISES. B. Each subleasing transaction shall be reported by a quarterly Rule 24 Certificate. C. Any revenue realized from the sublease of the railcars shall be credited against AP&L's costs as lessee of the railcars. The benefit from such lower cost of leasing the railcars shall accrue to the owners of White Bluff and ISES on a pass-through basis. Such revenues shall be reflected accordingly in AP&L's ratemaking provisions, except to the extent the regulatory authority having jurisdiction over the matters authorizes a different treatment. Such revenues will be credited to "Fuel stock" (Account No. 151 under FERC's Uniform System of Accounts). In the event AP&L changes its method of accounting for subleasing it will provide 30 days advance notice of the proposed change to the SEC. The Post-Effective Amendment to the Application- Declaration and any further amendments thereto are available for public inspection through the Commission's Office of Public Reference. Interested persons wishing to comment or request a hearing should submit their views in writing by , 1995, to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on the applicants and declarants at the address specified above. Proof of service (by affidavit or, in case of an attorney at law, by certificate) should be filed with the request. Any request for a hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in this matter. After said date, the Application- Declaration as so amended, may be granted and/or permitted to become effective. For the Commission, by the Division of Investment Management, pursuant to delegated authority. ____________________ Secretary EX-27 8 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 1,000 12-MOS 12-MOS DEC-31-1994 DEC-31-1994 DEC-31-1994 DEC-31-1994 PER-BOOK PRO-FORMA 2,870,345 2,870,345 142,979 142,979 518,445 518,445 760,446 760,446 0 0 4,292,215 4,292,215 470 470 590,844 590,844 491,799 491,799 1,083,113 1,083,113 58,527 58,527 176,350 176,350 1,293,879 1,293,879 34,667 34,667 0 0 0 0 28,175 28,175 0 0 150,688 150,688 0 0 1,466,816 1,466,816 4,292,215 4,292,215 1,590,742 1,586,434 9,938 9,938 1,364,171 1,359,863 1,374,109 1,369,801 216,633 216,633 32,768 32,768 249,401 249,401 107,138 107,138 142,263 142,263 19,275 19,275 122,988 122,988 0 0 0 0 0 0 0 0 0 0
EX-27 9 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 1,000 12-MOS 12-MOS DEC-31-1994 DEC-31-1994 DEC-31-1994 DEC-31-1994 PER-BOOK PRO-FORMA 15,917,018 15,917,018 448,140 448,140 2,212,432 2,212,432 4,035,901 4,035,901 0 0 22,613,491 22,613,491 2,300 2,300 4,202,134 4,202,134 2,223,739 2,223,739 6,350,795 6,350,795 299,946 299,946 550,955 550,955 7,093,473 7,093,473 171,867 171,867 0 0 0 0 151,904 151,904 0 0 425,851 425,851 0 0 7,568,088 7,568,088 22,613,491 22,613,491 5,963,290 5,958,982 131,965 131,965 4,762,584 4,758,276 4,894,549 4,890,241 1,068,741 1,068,741 32,775 32,775 1,101,516 1,101,516 759,675 759,675 341,841 341,841 0 0 341,841 341,841 411,806 411,806 0 0 0 0 0 0 0 0
EX-99 10 FINANCIAL STATEMENTS _________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM U-1 ARKANSAS POWER & LIGHT COMPANY ___________________________________________ AS OF DECEMBER 31, 1994 (Unaudited) _____________________________________________ Pages 1 through 5 ARKANSAS POWER & LIGHT COMPANY JOURNAL ENTRIES (in Thousands) Entry to give effect to the sub leasing of 50% of the rail car fleet resulting in a reduction to fuel revenues. Entry No. 1 Revenue................................ $4,308,000 Operation & maintenance.................... $4,308,000 To record the sub lease of 50% of the current rail car fleet. NOTE: The above transaction is for the sub leasing of the current steel rail car fleet and does not reflect the leasing of replacement rail cars.
ARKANSAS POWER & LIGHT COMPANY PRO FORMA BALANCE SHEET December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After ASSETS Transaction Filing Transaction (In thousands) Utility Plant: Electric $4,293,097 $4,293,097 Property under capital leases 56,135 56,135 Construction work in progress 136,701 136,701 Nuclear fuel under capital lease 94,628 94,628 ---------- -- ---------- Total 4,580,561 0 4,580,561 Less - accumulated depreciation and amortization 1,710,216 1,710,216 ---------- -- ---------- Utility plant - net 2,870,345 0 2,870,345 ---------- -- ---------- Other Property and Investments: Investment in subsidiary companies - at equity 11,215 11,215 Decommissioning trust fund 127,136 127,136 Other - at cost (less accumulated depreciation) 4,628 4,628 ---------- -- ---------- Total 142,979 0 142,979 ---------- -- ---------- Current Assets: Cash and cash equivalents: Cash 3,737 3,737 Temporary cash investments - at cost, which approximates market: Associated companies 4,713 4,713 Other 72,306 72,306 ---------- -- ---------- Total cash and cash equivalents 80,756 0 80,756 Accounts receivable: Customer (less allowance for doubtful accounts of $2.0 million in 1994 and $2.1 million in 1993) 53,781 53,781 Associated companies 28,506 28,506 Other 11,181 11,181 Accrued unbilled revenues 83,863 83,863 Fuel inventory - at average cost 34,561 34,561 Materials and supplies - at average cost 79,886 79,886 Rate deferrals 113,630 113,630 Deferred excess capacity 8,414 8,414 Prepayments and other 23,867 23,867 ---------- -- ---------- Total 518,445 0 518,445 ---------- -- ---------- Deferred Debits and Other Assets: Regulatory Assets: Rate deferrals 360,496 360,496 Deferred excess capacity 20,060 20,060 SFAS 109 regulatory asset - net 227,068 227,068 Unamortized loss on reacquired debt 57,344 57,344 Other regulatory assets 68,813 68,813 Other 26,665 26,665 ---------- -- ---------- Total 760,446 0 760,446 ---------- -- ---------- TOTAL $4,292,215 $0 $4,292,215 ========== == ========== See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY PRO FORMA BALANCE SHEET December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After CAPITALIZATION AND LIABILITIES Transactions Filing Transactions (In thousands) Capitalization: Common stock, $0.01 par value, authorized 325,000,000 shares; issued and outstanding 46,980,196 shares in 1994 and 1993 $470 $470 Paid-in capital 590,844 590,844 Retained earnings 491,799 491,799 ---------- -- ---------- Total common shareholder's equity 1,083,113 0 1,083,113 Preferred stock: Without sinking fund 176,350 176,350 With sinking fund 58,527 58,527 Long-term debt 1,293,879 1,293,879 ---------- -- ---------- Total 2,611,869 0 2,611,869 ---------- -- ---------- Other Noncurrent Liabilities: Obligations under capital leases 94,534 94,534 Other 68,235 68,235 ---------- -- ---------- Total 162,769 0 162,769 ---------- -- ---------- Current Liabilities: Currently maturing long-term debt 28,175 28,175 Notes payable: Associated companies - - Other 34,667 34,667 Accounts payable: Associated companies 17,345 17,345 Other 89,329 89,329 Customer deposits 17,113 17,113 Taxes accrued 45,239 45,239 Accumulated deferred income taxes 25,043 25,043 Interest accrued 31,064 31,064 Dividends declared 4,727 4,727 Co-owner advances 20,639 20,639 Deferred fuel cost 20,254 20,254 Nuclear refueling reserve 37,954 37,954 Obligations under capital leases 56,154 56,154 Other 45,632 45,632 ---------- -- ---------- Total 473,335 0 473,335 ---------- -- ---------- Deferred Credits: Accumulated deferred income taxes 859,558 859,558 Accumulated deferred investment tax credits 118,548 118,548 Other 66,136 66,136 ---------- -- ---------- Total 1,044,242 0 1,044,242 ---------- -- ---------- Commitments and Contingencies TOTAL $4,292,215 $0 $4,292,215 ========== == ========== See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY PRO FORMA STATEMENT OF INCOME For the Twelve Months Ended December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After Transactions Filing Transactions (In thousands) Operating Revenues $1,590,742 ($4,308) $1,586,434 ---------- ------- ---------- Operating Expenses: Operation and maintenance: Fuel and fuel-related expenses 261,932 261,932 Purchased power 328,379 328,379 Nuclear refueling outage expenses 33,107 33,107 Other operation and maintenance 390,472 (4,308) 386,164 Depreciation and decommissioning 149,878 149,878 Taxes other than income taxes 33,610 33,610 Income taxes 9,938 9,938 Amortization of rate deferrals 166,793 166,793 ---------- ------- ---------- Total 1,374,109 (4,308) 1,369,801 ---------- ------- ---------- Operating Income 216,633 0 216,633 ---------- ------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 4,001 4,001 Miscellaneous - net 48,049 48,049 Income taxes (19,282) (19,282) ---------- ------- ---------- Total 32,768 0 32,768 ---------- ------- ---------- Interest Charges: Interest on long-term debt 106,001 106,001 Other interest - net 4,811 4,811 Allowance for borrowed funds used during construction (3,674) (3,674) ---------- ------- ---------- Total 107,138 0 107,138 ---------- ------- ---------- Net Income 142,263 0 142,263 ---------- ------- ---------- Preferred Stock Dividend Requirements and Other 19,275 0 19,275 ---------- ------- ---------- Earnings Applicable to Common Stock $122,988 $0 $122,988 ========== ======= ========== See Notes to Financial Statements.
ARKANSAS POWER & LIGHT COMPANY PRO FORMA STATEMENT OF RETAINED EARNINGS For the Twelve Months Ended December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After Transactions Filing Transactions (In thousands) Retained Earnings, January 1 $448,811 $448,811 Add: Net income 142,263 142,263 -------- -- -------- Total 591,074 0 591,074 -------- -- -------- Deduct: Dividends declared: Preferred stock 19,275 19,275 Common stock 80,000 80,000 -------- -- -------- Total 99,275 0 99,275 -------- -- -------- Retained Earnings, December 31 $491,799 $0 $491,799 ======== == ======== See Notes to Financial Statements.
EX-99 11 FINANCIAL STATEMENTS _________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM U-1 ENTERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED ___________________________________________ AS OF DECEMBER 31, 1994 (Unaudited) _____________________________________________ Pages 1 through 4
ENTERGY CORPORATION AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEETS December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After ASSETS Transaction Filing Transaction (In thousands) Utility Plant: Electric $21,184,013 $21,184,013 Plant acquisition adjustment - GSU 487,955 487,955 Electric plant under leases 668,846 668,846 Property under capital leases - electric 161,950 161,950 Natural gas 164,013 164,013 Steam products 77,307 77,307 Construction work in progress 476,816 476,816 Nuclear fuel under capital leases 265,520 265,520 Nuclear fuel 70,147 70,147 ----------- -- ----------- Total 23,556,567 0 23,556,567 Less - accumulated depreciation and amortization 7,639,549 7,639,549 ----------- -- ----------- Utility plant - net 15,917,018 0 15,917,018 ----------- -- ----------- Other Property and Investments: Decommissioning trust funds 207,395 207,395 Other 240,745 240,745 ----------- -- ----------- Total 448,140 0 448,140 ----------- -- ----------- Current Assets: Cash and cash equivalents: Cash 87,700 87,700 Temporary cash investments - at cost, which approximates market 526,207 526,207 ----------- -- ----------- Total cash and cash equivalents 613,907 0 613,907 Special deposits 8,074 8,074 Notes receivable 19,190 19,190 Accounts receivable: 0 Customer (less allowance for doubtful accounts of $6.7 million in 1994 and $8.8 million in 1993) 325,410 325,410 Other 66,651 66,651 Accrued unbilled revenues 240,610 240,610 Fuel inventory 93,211 93,211 Materials and supplies - at average cost 365,956 365,956 Rate deferrals 380,612 380,612 Prepayments and other 98,811 98,811 ----------- -- ----------- Total 2,212,432 0 2,212,432 ----------- -- ----------- Deferred Debits and Other Assets: Regulatory Assets: Rate deferrals 1,451,926 1,451,926 SFAS 109 regulatory asset - net 1,417,646 1,417,646 Unamortized loss on reacquired debt 232,420 232,420 Other regulatory assets 316,878 316,878 Long-term receivables 277,830 277,830 Other 339,201 339,201 ----------- -- ----------- Total 4,035,901 0 4,035,901 ----------- -- ----------- TOTAL $22,613,491 $0 $22,613,491 =========== == =========== See Notes to Consolidated Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEETS December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After CAPITALIZATION AND LIABILITIES Transactions Filing Transactions (In thousands) Capitalization: Common stock, $0.01 par value, authorized 500,000,000 shares; issued 230,017,485 shares in 1994 and 231,219,737 shares in 1993 $2,300 $2,300 Paid-in capital 4,202,134 4,202,134 Retained earnings 2,223,739 2,223,739 Less - treasury stock (2,608,908 shares in 1994) 77,378 77,378 ----------- -- ----------- Total common shareholders' equity 6,350,795 0 6,350,795 Subsidiaries' preference stock 150,000 150,000 Subsidiaries' preferred stock: Without sinking fund 550,955 550,955 With sinking fund 299,946 299,946 Long-term debt 7,093,473 7,093,473 ----------- -- ----------- Total 14,445,169 0 14,445,169 ----------- -- ----------- Other Noncurrent Liabilities: Obligations under capital leases 273,947 273,947 Other 310,977 310,977 ----------- -- ----------- Total 584,924 0 584,924 ----------- -- ----------- Current Liabilities: Currently maturing long-term debt 349,085 349,085 Notes payable 171,867 171,867 Accounts payable 471,120 471,120 Customer deposits 134,478 134,478 Taxes accrued 92,578 92,578 Accumulated deferred income taxes 40,313 40,313 Interest accrued 195,639 195,639 Dividends declared 13,599 13,599 Deferred revenue - gas supplier judgment proceeds - - Deferred fuel cost 27,066 27,066 Obligations under capital leases 151,904 151,904 Reserve for rate fefund 56,972 56,972 Other 327,330 327,330 ----------- -- ----------- Total 2,031,951 0 2,031,951 ----------- -- ----------- Deferred Credits: Accumulated deferred income taxes 3,915,138 3,915,138 Accumulated deferred investment tax credits 649,898 649,898 Other 986,411 986,411 ----------- -- ----------- Total 5,551,447 0 5,551,447 ----------- -- ----------- Commitments and Contingencies TOTAL $22,613,491 $0 $22,613,491 =========== == =========== See Notes to Consolidated Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES PRO FORMA STATEMENT OF CONSOLIDATED INCOME For the Twelve Months Ended December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After Transactions Filing Transactions (In thousands) Operating Revenues: Electric $5,797,769 $(4,308) $5,793,461 Natural gas 118,962 118,962 Steam products 46,559 46,559 ---------- ------- ---------- Total 5,963,290 (4,308) 5,958,982 ---------- ------- ---------- Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 1,446,397 1,446,397 Purchased power 350,903 350,903 Nuclear refueling outage expenses 63,979 63,979 Other operation and maintenance 1,568,810 (4,308) 1,564,502 Depreciation and decommissioning 656,896 656,896 Taxes other than income taxes 284,234 284,234 Income taxes 131,965 131,965 Rate deferrals: Rate deferrals - - Amortization of rate deferrals 391,365 391,365 ---------- ------- ---------- Total 4,894,549 (4,308) 4,890,241 ---------- ------- ---------- Operating Income 1,068,741 0 1,068,741 ---------- ------- ---------- Other Income (Deductions): Allowance for equity funds used during construction 11,903 11,903 Miscellaneous - net 20,631 20,631 Income taxes 241 241 ---------- ------- ---------- Total 32,775 0 32,775 ---------- ------- ---------- Interest Charges: Interest on long-term debt 665,541 665,541 Other interest - net 22,354 22,354 Allowance for borrowed funds used during construction (9,938) (9,938) Preferred dividend requirements of subsidiaries and other 81,718 81,718 ---------- ------- ---------- Total 759,675 0 759,675 ---------- ------- ---------- Net Income $341,841 $0 $341,841 ========== ======= ========== See Notes to Consolidated Financial Statements.
ENTERGY CORPORATION AND SUBSIDIARIES PRO FORMA STATEMENTS OF CONSOLIDATED RETAINED EARNINGS AND PAID-IN CAPITAL For the Twelve Months Ended December 31, 1994 (Unaudited) Adjustments to Reflect Transactions Proposed Before In Present After Transactions Filing Transactions (In thousands) Retained Earnings, January 1 $2,310,082 $2,310,082 Add: Net income 341,841 341,841 ---------- ---------- Total 2,651,923 0 2,651,923 ---------- ---------- Deduct: Dividends declared on common stock 411,806 411,806 Common stock retirements 13,940 13,940 Capital stock and other expenses 2,438 2,438 ---------- ---------- Total 428,184 0 428,184 ---------- ---------- Retained Earnings, December 31 $2,223,739 $2,223,739 ========== ========== Paid-in Capital, January 1 $4,223,682 $4,223,682 Add: Loss on reacquisition of subsidiaries' preferred stock (23) (23) Issuance of 56,695,724 shares of common stock in the merger with GSU - - Issuance of 174,552,011 shares of common stock at $.01 par value net of the retirement of 174,552,011 shares of common stock at $5.00 par value - - ---------- ---------- Total 4,223,659 4,223,659 ---------- ---------- Deduct: Common stock retirements 22,468 22,468 Capital stock discounts and other expenses (943) (943) ---------- ---------- Total 21,525 21,525 ---------- ---------- Paid-in Capital, December 31 $4,202,134 $4,202,134 ========== ========== See Notes to Consolidated Financial Statements
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