-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F7e4zDyVNfe6hnCZZocc3GvuJwIAV2VHJgh/E5Nx6k2QCTwd5uKdBupKmk/ZNI0Q lfOUPrDcC8eufYdg+Qta1g== 0000919607-02-000182.txt : 20020515 0000919607-02-000182.hdr.sgml : 20020515 20020515111254 ACCESSION NUMBER: 0000919607-02-000182 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLETHORPE POWER CORP CENTRAL INDEX KEY: 0000788816 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 581211925 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-07591 FILM NUMBER: 02649093 BUSINESS ADDRESS: STREET 1: 2100 EAST EXCHANGE PL STREET 2: P O BOX 1349 CITY: TUCKER STATE: GA ZIP: 30085-1349 BUSINESS PHONE: 4042707600 10-Q 1 ogle10q.txt INITIAL FILING ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission File No. 33-7591 ------------------ Oglethorpe Power Corporation (An Electric Membership Corporation) (Exact name of registrant as specified in its charter) Georgia 58-1211925 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Post Office Box 1349 2100 East Exchange Place Tucker, Georgia 30085-1349 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770) 270-7600 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. The Registrant is a membership corporation and has no authorized or outstanding equity securities. ================================================================================ OGLETHORPE POWER CORPORATION INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2002 Page No. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets as of March 31, 2002 (Unaudited) and December 31, 2001 3 Condensed Statements of Revenues and Expenses (Unaudited) for the Three Months ended March 31, 2002 and 2001 5 Condensed Statements of Patronage Capital and Membership Fees and Accumulated Other Comprehensive Margin (Unaudited) for the Three Months ended March 31, 2002 and 2001 6 Condensed Statements of Cash Flows (Unaudited) for the Three Months ended March 31, 2002 and 2001 7 Notes to Condensed Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings 16 Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Oglethorpe Power Corporation Condensed Balance Sheets March 31, 2002 and December 31, 2001 - -------------------------------------------------------------------------------------------------------- (dollars in thousands) 2002 2001 Assets (Unaudited) ----------------------------------- Electric plant, at original cost: In service $5,035,711 $5,029,192 Less: Accumulated provision for depreciation (1,914,725) (1,881,918) -------------- -------------- 3,120,986 3,147,274 Nuclear fuel, at amortized cost 78,257 77,360 Construction work in progress 53,000 38,564 -------------- -------------- 3,252,243 3,263,198 -------------- -------------- Investments and funds: Decommissioning fund, at market 153,488 150,668 Deposit on Rocky Mountain transactions, at cost 69,179 68,032 Bond, reserve and construction funds, at market 26,849 28,691 Investment in associated organizations, at cost 22,227 22,187 Other, at cost 731 731 -------------- -------------- 272,474 270,309 -------------- -------------- Current assets: Cash and temporary cash investments, at cost 249,453 275,786 Other short-term investments, at market 88,938 88,589 Receivables 86,855 73,039 Notes receivable 350,042 340,396 Inventories, at average cost 86,456 81,768 Prepayments and other current assets 22,947 16,182 -------------- -------------- 884,691 875,760 -------------- -------------- Deferred charges: Premium and loss on reacquired debt, being amortized 160,559 162,690 Deferred amortization of capital leases 107,825 107,254 Discontinued projects, being amortized 5,705 6,463 Deferred debt expense, being amortized 16,191 16,475 Other 26,127 22,518 -------------- -------------- 316,407 315,400 -------------- -------------- $4,725,815 $4,724,667 ============== ==============
The accompanying notes are an integral part of these condensed financial statements. 3 Oglethorpe Power Corporation Condensed Balance Sheets March 31, 2002 and December 31, 2001 - -------------------------------------------------------------------------------------------------------- (dollars in thousands) 2002 2001 Equity and Liabilities (Unaudited) ----------------------------------- Capitalization: Patronage capital and membership fees and accumulated other comprehensive margin $382,275 $367,668 Long-term debt 2,787,121 2,929,316 Obligation under capital leases 370,307 373,837 Obligation under Rocky Mountain transactions 69,179 68,032 -------------- -------------- 3,608,882 3,738,853 -------------- -------------- Current liabilities: Long-term debt and capital leases due within one year 249,376 127,621 Accounts payable 60,952 79,859 Notes payable 337,793 353,680 Power marketer payable 48,538 36,000 Accrued interest 46,689 7,793 Accrued and withheld taxes 7,024 678 Other current liabilities 7,889 15,783 -------------- -------------- 758,261 621,414 -------------- -------------- Deferred credits and other liabilities: Gain on sale of plant, being amortized 50,239 50,858 Net benefit of sale of income tax benefits, being amortized - 2,002 Net benefit of Rocky Mountain transactions, being amortized 78,837 79,633 Decommissioning reserve 177,211 174,506 Interest rate swap arrangements 33,161 36,859 Other 19,224 20,542 -------------- -------------- 358,672 364,400 -------------- -------------- $4,725,815 $4,724,667 ============== ==============
The accompanying notes are an integral part of these condensed financial statements. 4 Oglethorpe Power Corporation Condensed Statements of Revenues and Expenses (Unaudited) For the Three Months Ended March 31, 2002 and 2001 - ------------------------------------------------------------------------------------------------------------------ (dollars in thousands) Three Months -------------------------------------------- 2002 2001 -------------------------------------------- Operating revenues: Sales to Members $280,872 $296,506 Sales to non-Members 7,006 10,101 ------------- ------------ Total operating revenues 287,878 306,607 ------------- ------------ Operating expenses: Fuel 44,807 45,544 Production 60,329 54,584 Purchased power 94,752 106,364 Depreciation and amortization 32,384 33,350 ------------- ------------ Total operating expenses 232,272 239,842 ------------- ------------ Operating margin 55,606 66,765 ------------- ------------ Other income (expense): Investment income 8,811 10,249 Amortization of deferred gains 619 619 Amortization of net benefit of sale of income tax benefits 2,799 2,799 Allowance for equity funds used during construction 111 24 Other 779 682 ------------- ------------ Total other income 13,119 14,373 ------------- ------------ Interest charges: Interest on long-term-debt and capital leases 51,497 56,068 Other interest 5,202 4,743 Allowance for debt funds used during construction (831) (351) Amortization of debt discount and expense 3,588 5,395 ------------- ------------ Net interest charges 59,456 65,855 ------------- ------------ Net margin $9,269 $15,283 ============= ============
The accompanying notes are an integral part of these condensed financial statements. 5 Oglethorpe Power Corporation Condensed Statements of Patronage Capital and Membership Fees and Accumulated Other Comprehensive Margin (Unaudited) For the Three Months Ended March 31, 2002 and 2001 - ------------------------------------------------------------------------------------------------------------------ (dollars in thousands) Patronage Accumulated Capital and Other Membership Comprehensive Fees Margin (Loss) Total -------------------------------------------- Balance at December 31, 2000 $391,611 $1,071 $392,682 Components of comprehensive margin: Net margin 15,283 15,283 Cumulative effect of accounting change to record unrealized loss on interest rate swap arrangements as of January 1, 2001 (33,515) (33,515) Unrealized loss on interest rate swap arrangements (3,928) (3,928) Unrealized gain on available-for-sale securities 1,146 1,146 ----------------- Total comprehensive margin (loss) (21,014) ----------------- - ------------------------------------------------------------------------------------------------------------------ Balance at March 31, 2001 $406,894 ($35,226) $371,668 - ------------------------------------------------------------------------------------------------------------------ Balance at December 31, 2001 $410,029 ($42,361) $367,668 Components of comprehensive margin: Net margin 9,269 9,269 Unrealized gain on interest rate swap arrangements 3,698 3,698 Unrealized gain on financial gas hedges 3,076 3,076 Unrealized loss on available-for-sale securities (1,436) (1,436) ----------------- Total comprehensive margin 14,607 ----------------- - ------------------------------------------------------------------------------------------------------------------ Balance at March 31, 2002 $419,298 ($37,023) $382,275 - ------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed financial statements. 6 Condensed Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2002 and 2001 - --------------------------------------------------------------------------------------------------------------- (dollars in thousands) 2002 2001 -------------------------------------- Cash flows from operating activities: Net margin $9,269 $15,283 ------------- ------------- Adjustments to reconcile net margin to net cash provided by operating activities: Depreciation and amortization 35,374 47,130 Allowance for equity funds used during construction (111) (24) Amortization of deferred gains (619) (619) Amortization of net benefit of sale of income tax benefits (2,799) (2,799) Other 907 (857) Change in net current assets, excluding long-term debt and capital leases due within one year and notes payable: Receivables (13,816) 40,402 Notes receivable 139 121 Inventories (4,687) (8,802) Prepayments and other current assets (6,765) (2,804) Accounts payable (18,907) (57,331) Accrued interest 38,896 (18,082) Accrued and withheld taxes 6,347 5,975 Power marketer reserve 12,538 - Other current liabilities (4,817) (16,937) ------------- ------------- Total adjustments 41,680 (14,627) ------------- ------------- Net cash provided by operating activities 50,949 656 ------------- ------------- Cash flows from investing activities: Property additions (29,129) (11,075) Net proceeds from bond, reserve and construction funds 1,621 399 Increase in investment in associated organizations (39) 203 Increase in other short-term investments (1,564) (1,613) Increase in decommissioning fund (2,300) (3,100) Other-generation equipment deposits - (4,784) ------------- ------------- Net cash used in investing activities (31,411) (19,970) ------------- ------------- Cash flows from financing activities: Long-term debt proceeds, net 322 325 Long-term debt payments (20,521) (40,233) (Decrease) Increase in notes payable (15,887) 51,835 Increase in notes receivable under interim financing agreement (9,785) (48,951) ------------- ------------- Net cash used in financing activities (45,871) (37,024) ------------- ------------- Net decrease in cash and temporary cash investments (26,333) (56,338) Cash and temporary cash investments at beginning of period 275,786 330,622 ------------- ------------- Cash and temporary cash investments at end of period $249,453 $274,284 ============= ============= Cash paid for: Interest (net of amounts capitalized) $14,557 $76,008 Income taxes - -
The accompanying notes are an integral part of these condensed financial statements. 7 Oglethorpe Power Corporation Notes to Condensed Financial Statements March 31, 2002 and 2001 (A) The condensed financial statements included in this report have been prepared by Oglethorpe Power Corporation (Oglethorpe), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the information furnished in this report reflects all adjustments (which include only normal recurring adjustments) and estimates necessary to present fairly, in all material respects, the results for the periods ended March 31, 2002 and 2001. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to SEC rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in Oglethorpe's latest Annual Report on Form 10-K, as filed with the SEC. Certain amounts for 2001 have been reclassified to conform with the current period presentation. The results of operations for the three-month period ended March 31, 2002 are not necessarily indicative of results to be expected for the full year. (B) In June of 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations." The statement provides accounting and reporting standards for recognizing obligations related to costs associated with the retirement of long-lived assets. SFAS No. 143 requires obligations associated with the retirement of long-lived assets to be recognized at their fair value in the period in which they are incurred if a reasonable estimate of fair value can be made. The fair value of the asset retirement costs is capitalized as part of the carrying amount of the long-lived asset and subsequently allocated to expense using a systematic and rational method over the asset's useful life. Any subsequent changes to the fair value of the liability due to passage of time or changes in the amount or timing of estimated cash flows is recognized as an accretion expense. Adoption of SFAS No. 143 would require Oglethorpe to recognize the fair value of its decommissioning liability. Under SFAS No. 71, Oglethorpe may record an offsetting regulatory asset or liability to reflect the difference in timing of recognition of the costs of decommissioning for financial statement purposes and for ratemaking purposes. Oglethorpe will be required to adopt this statement no later than January 1, 2003. Oglethorpe's management is currently assessing the impact of this statement on its results of operations and financial condition. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations For the Three Months Ended March 31, 2002 and 2001 - -------------------------------------------------- Net Margin Oglethorpe's net margin for the three months ended March 31, 2002 was $9.3 million compared to $15.3 million and for the same period of 2001. Net margin for the first quarter of 2001 was higher primarily due to lower than budgeted production expenses. Operating Revenues Oglethorpe's operating revenues fluctuate from period to period based on factors including weather and other seasonal factors, growth in the service territories of Oglethorpe's 39 retail electric distribution cooperative members (the Members), operating costs, availability of resources, and Oglethorpe's decisions of whether to dispatch its owned or purchased resources or Member-owned resources over which it has dispatch rights. Oglethorpe's operating revenues are also affected by Members' decisions of whether to purchase a portion of their growth requirements from Oglethorpe or from other suppliers and whether to schedule separately their resources. A large number of Members have now elected to schedule separately their percentage capacity responsibilities in Oglethorpe resources to serve their members and nonmembers, although approximately half of the elections will not be effective until June 1, 2002. (See "OGLETHORPE POWER CORPORATION--Wholesale Power Contracts" in Item 1 of Oglethorpe's 2001 Annual Report on Form 10-K.) As additional Members have made this election, the scheduling choices of these Members are having an increasingly larger effect on Oglethorpe's sales to Members. Revenues from sales to the Members for the three months ended March 31, 2002 were 5.3% less than such revenues for the same period of 2001. Megawatt-hour (MWh) sales to Members decreased 2.4% in the current three-month period compared to the same period of 2001. The decrease in MWh sales to Members was primarily due to a decrease in sales to Members who schedule separately their percentage capacity responsibilities and have purchased increasing portions of their requirements from other suppliers. The average revenue per MWh from sales to Members decreased 2.9% from the same period of 2001. 9 The components of Member revenues for the three months ended March 31, 2002 and 2001 were as follows: Three Months Ended March 31, --------------- 2002 2001 ---- ---- (dollars in thousands) Capacity revenues $149,986 $158,478 Energy revenues 130,886 138,028 ------- ------- Total $280,872 $296,506 ======== ======== Capacity revenues from Members for the three months ended March 31, 2002 decreased 5.4% compared to the same period of 2001. The decrease in capacity revenues was primarily due to lower interest costs and lower net margin for the current period compared to the same period of 2001. Energy revenues were 5.2% lower for the current period of 2002 compared to the same period of 2001. The decrease in energy revenues in 2002 was primarily due to a decrease in the volume of purchased MWhs (see "Operating Expenses" below). Oglethorpe's average energy revenue per MWh from sales to Members was 2.8% lower in the current three-month period compared to the same period of 2001. Sales to non-Members were from energy sales to power companies and from energy sales to LG&E Energy Marketing Inc. (LEM) and Morgan Stanley Capital Group Inc. (Morgan Stanley) under their power marketer arrangements with Oglethorpe. The following table summarizes the sources of non-Member revenues for the three months ended March 31, 2002 and 2001: Three Months Ended March 31, --------------- 2002 2001 ---- ---- (dollars in thousands) Sales to power companies $6,979 $ 8,156 Sales to LEM and Morgan Stanley 27 1,945 ------ ------- Total $7,006 $10,101 ====== ======= Sales to power companies represent sales made directly by Oglethorpe. Oglethorpe sells for its own account any energy available from the portion of its resources dedicated to Morgan Stanley that is not scheduled by Morgan Stanley pursuant to the power marketer arrangement. Sales to LEM and Morgan Stanley represent the net energy transmitted on behalf of LEM and Morgan Stanley off-system on an hourly basis from Oglethorpe's total 10 resources under the LEM and Morgan Stanley power marketer arrangements. Oglethorpe sold this energy to LEM at Oglethorpe's cost, subject to certain limitations, and to Morgan Stanley at a contractually fixed price. The volume of sales to LEM and Morgan Stanley depends primarily on the power marketers' decisions for servicing their load requirements. Operating Expenses Operating expenses for the three-month period of 2002 were 3.2% lower compared to the same period of 2001. The decrease was primarily due to lower purchased power costs for the current three-month period compared to the same period of 2001, offset somewhat due to higher production costs. Purchased power costs decreased 10.9% in the current period of 2002 compared to the same period of 2001. This decrease in total purchased power costs resulted primarily from lower purchased MWhs in 2002 compared to 2001. Purchased MWhs decreased 17.8% in the current three-month period of 2002 compared to the same period of 2001. The average cost per MWh of total purchased power increased 8.4% in the current quarter of 2002 compared to the same period of 2001. Purchased power costs were as follows: Three Months Ended March 31, --------------- 2002 2001 ---- ---- (dollars in thousands) Capacity costs $20,298 $ 20,808 Energy costs 74,454 85,556 ------- -------- Total $94,752 $106,364 ======= ======== Purchased power energy costs for the three-month period of 2002 were 13.0% lower compared to the same period of 2001. This decrease resulted primarily from lower volume of purchased MWhs offset somewhat by an increase in the average energy cost per MWh. During the current period of 2002 the average cost of purchased power energy increased 5.9% compared to the same period of 2001, primarily as a result of an accrual of $12.5 million in the current period in connection with the settlement of the 2001 arbitration with LEM. The current period LEM arbitration damages accrual and the previously recorded accrual of $36 million remain unbilled as of March 31, 2002. Oglethorpe also agreed to pay LEM an additional amount with respect to energy deliveries for May through June of 2002 which Oglethorpe expects will be approximately $600,000. These amounts represent Oglethorpe's total monetary obligation with respect to the settlement of the LEM arbitration. See "Financial Condition" herein and "Legal Proceedings-2001 LEM Arbitrarion" in Item 1 of Part II of this Quarterly Report for further discussion of the LEM arbitration. Production costs increased 10.5% for the three-month period ended March 31, 2002 compared to the same period of 2001. The higher production costs in 2002 resulted primarily from higher O&M costs. The higher O&M costs resulted partly from a forced outage and diesel generator repairs at Plant Hatch, partly from increased security costs at Plants Vogtle and Hatch related to the events of 11 September 11, 2001 and partly from generally higher expenses at Plants Scherer and Wansley. Other Income Investment income decreased 14.0% in the current three-month period compared to the same period of 2001 primarily due to lower interest earnings from cash and temporary cash investments. Interest Charges Interest on long-term debt and capital leases decreased 8.2% in the current period compared to the same period of 2001 primarily as a result of cost savings from lower variable interest rates. Amortization of debt discount and expense decreased 33.5% primarily due to accelerated amortization of $7 million and $24 million in premiums paid to the Federal Financing Bank for refinancing $89 million and $424 million in 1999 and 1998, respectively. Such amortization ended in the third and fourth quarters of 2001, respectively. Financial Condition Capital Requirements and Liquidity and Sources of Capital - --------------------------------------------------------- To meet the load growth of certain of Oglethorpe's Members, two new generating facilities are currently under construction. Talbot EMC is constructing and owns, on behalf of 30 Members, a six-unit gas-fired combustion turbine facility with four units expected to be in-service in summer 2002 and two units expected to be in-service in summer 2003. Chattahoochee EMC is constructing and owns, on behalf of 28 Members, a gas-fired combined cycle facility expected to be in-service by spring 2003. Oglethorpe is currently providing loans to Talbot EMC and Chattahoochee EMC to fund, on an interim basis, approximately 50 percent of the cost of constructing these new generating facilities. Oglethorpe is funding these loans under its commercial paper program, which is backed 100% by committed lines of credit. The amount of commercial paper outstanding for this purpose at March 31, 2002 was $338 million. At April 30, 2002 the amount outstanding had declined to $301 million. Oglethorpe expects to have approximately $300 million of commercial paper outstanding into early 2003 in conjunction with the interim financing of these facilities. For information on additional construction financing and permanent financing for these new generating facilities, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Financial Condition--Capital Requirements" in Item 7 of Oglethorpe's 2001 Annual Report on Form 10-K. General - ------- Total assets and total equity plus liabilities as of March 31, 2002 were $4.7 billion, which was $1 million more than the total at December 31, 2001. The increase was due primarily to additions to plant in service and construction work in progress, receivables and notes receivable, offset in part by 12 depreciation of plant and a decrease in cash and temporary cash investments. Assets Property additions for the three months ended March 31, 2002 totaled $29.1 million, primarily for purchases of nuclear fuel and for additions, replacements, and improvements to existing generation facilities. The increase in receivables was primarily due to the accrual of an additional $12.5 million in connection with the settlement of the arbitration with LEM. Receivables now include a total of $48.5 million associated with the settlement of the LEM arbitration that have not yet been billed to the Members but have been recorded as unbilled energy revenues. Prepayments and other current assets increased primarily due to payments to Georgia Power Company for estimated Plant Hatch operations and maintenance (O&M), nuclear and construction costs for April 2002, which were $9.6 million higher compared to the estimates for January 2002. The increase in estimated Plant Hatch O&M charges was related to a planned outage at Plant Hatch. Nuclear and construction charges were higher due to the planned purchases of nuclear fuel. These increases were offset somewhat by a decrease in prepaid insurance. The increase in other deferred charges was primarily due to the deferral of nuclear outage costs associated with an outage at Plant Vogtle Unit No. 1, and to a lesser extent, an outage at Plant Hatch Unit No. 1. Both outages began during the first quarter of 2002. Nuclear outage costs are amortized over an 18-month operating cycle for the Plant Vogtle units and a 24-month operating cycle for the Plant Hatch units. Equity and Liabilities Long-term debt and capital leases due within one year increased largely as a result of the reclassification of CoBank and CFC notes totaling $92.1 million which are due March 31, 2003. Oglethorpe management intends to refinance these obligations with long-term debt by issuing tax-exempt bonds later in 2002, but Oglethorpe has not yet entered into a firm financing agreement to do so. The remaining increase was primarily attributable to the timing of the payment made for FFB debt at December 31, 2001 rather than January 2, 2002. The decrease in accounts payable was primarily attributable to payment of amounts due to Georgia Transmission Corporation (GTC) for amounts billed to the Members on its behalf and collected by Oglethorpe, and amounts accrued at year-end for progress payments associated with the construction of the Talbot EMC facility. As of January 2002, the Members now remit amounts billed on GTC's behalf directly to GTC. The increase in the power marketer payable is the result of an accrual of an additional $12.5 million in connection with the settlement of the arbitration with LEM. Oglethorpe will pay the entire $48.5 million to LEM on May 24, 2002 in accordance with the arbitration settlement. 13 The increase in accrued interest was largely driven by accruals associated with the long-term FFB mortgage notes, and to a lesser extent, the lease of Plant Scherer Unit No. 2. At March 31, 2002 three months of interest expense was accrued for these debt instruments whereas no interest was accrued at December 31, 2001. Accrued and withheld taxes increased as a result of the normal monthly accruals for property taxes, which are generally paid in the fourth quarter of the year. The decrease in other current liabilities resulted primarily from payment of year-end accruals and performance based pay, and a decrease in the liability associated with natural gas cash flow hedges due to changing market value. Oglethorpe has recorded an unrealized loss related to the interest rate swap arrangements of $33.2 million, which represents the estimated payment Oglethorpe would make if the swap arrangements were terminated. New Accounting Pronouncements In June of 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." The statement provides accounting and reporting standards for recognizing obligations related to costs associated with the retirement of long-lived assets. SFAS No 143 requires obligations associated with the retirement of long-lived assets to be recognized at their fair value in the period in which they are incurred if a reasonable estimate of fair value can be made. The fair value of the asset retirement costs is capitalized as part of the carrying amount of the long-lived asset and subsequently allocated to expense using a systematic and rational method over the assets' useful life. Any subsequent changes to the fair value of the liability due to passage of time or changes in the amount or timing of estimated cash flows is recognized as an accretion expense. Adoption of SFAS No. 143 would require Oglethorpe to recognize the fair value of its decommissioning liability. Under SFAS No. 71, Oglethorpe may record an offsetting regulatory asset or liability to reflect the difference in timing of recognition of the costs of decommissioning for financial statement purposes and for ratemaking purposes. Oglethorpe will be required to adopt this statement no later than January 1, 2003. Oglethorpe's management is currently assessing the impact of this statement on its results of operations and financial condition. Forward-Looking Statements and Associated Risks This Quarterly Report on Form 10-Q contains forward-looking statements, including statements regarding, among other items, (i) anticipated trends in Oglethorpe's business and (ii) Oglethorpe's future capital requirements and sources of capital. These forward-looking statements are based largely on Oglethorpe's current expectations and are subject to a number of risks and uncertainties, some of which are beyond Oglethorpe's control. For factors that could cause actual results to differ materially from those anticipated by these forward-looking statements, see "FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 14 RESULTS OF OPERATIONS--Miscellaneous--Competition" in Items 1 and 7 of Oglethorpe's 2001 Annual Report on Form 10-K. In light of these risks and uncertainties, there can be no assurance that events anticipated by the forward-looking statements contained in this Quarterly Report will in fact transpire. Item 3. Quantitative and Qualitative Disclosures About Market Risk Oglethorpe's market risks have not changed materially from the market risks reported in Oglethorpe's 2001 Annual Report on Form 10-K. 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings. 2001 LEM Arbitration In February 2001, LG&E Energy Marketing Inc. ("LEM") and its affiliates, LG&E Energy Corp. and LG&E Power, Inc. (collectively, the "LG&E Parties") initiated a binding arbitration process to resolve certain issues relating to the interpretation and administration of a power marketing agreement among LEM, LG&E Energy Corp. and Oglethorpe (the "LEM Agreement") and a similar agreement among LEM, LG&E Power, Inc. and Oglethorpe that expired by its terms in 1999. In April 2002, Oglethorpe and the LG&E Parties settled this arbitration. As part of the settlement, Oglethorpe agreed to pay to LEM approximately $48.5 million. Oglethorpe had previously recorded a reserve of $36 million for estimated damages payable to LEM. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Results of Operations--For the Three Months Ended March 31, 2002 and 2001--Operating Expenses" and "--Financial Condition--General--Assets" in Item 2 of Part I of this Quarterly Report. 1999 LEM Arbitration As previously reported, in September 2001, the LG&E Parties filed motions in the United States District Court for the Northern District of Georgia seeking to vacate the court's confirmation of a 1999 arbitration award in Oglethorpe's favor affirming the validity of the LEM Agreement, to vacate the underlying award, and to take certain discovery, all based on alleged non-disclosure of information that LEM claims would have been pertinent to the arbitration. Oglethorpe has filed responses opposing LEM's motions and will continue to defend itself vigorously. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.29 - Oglethorpe Power Corporation Executive Supplemental Retirement Plan. 10.30 - Participation Agreement for the Oglethorpe Power Corporation Executive Supplemental Retirement Plan, dated as of March 15, 2002, between Oglethorpe and Thomas A. Smith. (b) Reports on Form 8-K No reports on Form 8-K were filed by Oglethorpe for the quarter ended March 31, 2002. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Oglethorpe Power Corporation (An Electric Membership Corporation) Date: May 15, 2002 By: /s/ Thomas A. Smith ------------------------------------ Thomas A. Smith President and Chief Executive Officer (Principal Executive Officer) Date: May 15, 2002 /s/ Mac F. Oglesby ------------------------------------ Mac F. Oglesby Treasurer (Principal Financial Officer) Date: May 15, 2002 /s/ W. Clayton Robbins ------------------------------------ W. Clayton Robbins Senior Vice President, Finance and Administration (Principal Financial Officer) Date: May 15, 2002 /s/ Mark Chesla ------------------------------------ Mark Chesla Controller (Chief Accounting Officer) 17 EX-10 3 exh1029.txt OPC'S EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN EXHIBIT 10.29 OGLETHORPE POWER CORPORATION EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN This is the OGLETHORPE POWER CORPORATION EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN, executed by Oglethorpe Power Corporation, a Georgia corporation (hereinafter the "Corporation"), this 15th day of March, 2002. W I T N E S S E T H: WHEREAS, the Corporation desires to provide incentives to one or more of its key executives to encourage them to remain in the employ of the Corporation; and WHEREAS, one of the means selected by the Corporation to offer such incentives is through the adoption of an unfunded nonqualified deferred compensation plan to provide supplemental retirement and other benefits to only a select group of management or highly compensated personnel; NOW, THEREFORE, the Corporation hereby adopts the following as the Oglethorpe Power Corporation Executive Supplemental Retirement Plan (the "Plan"), effective as of March 15, 2002: ARTICLE I DEFINITIONS 1.1 Definitions. As used in this instrument, the following terms shall have the meaning hereinafter set forth: (a) "Beneficiary" shall mean a person entitled to benefits hereunder as beneficiary of a deceased Participant or as beneficiary of a deceased Beneficiary. (b) "Board" shall mean the Board of Directors of the Corporation. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. (d) "Committee" shall mean the duly appointed Compensation Committee of the Board of Directors. (e) "Disability" shall have the same meaning as set forth in the Corporation's long-term disability group insurance program, as in effect from time to time. (f) "Distribution Event" shall mean the Participant's retirement, death, disability, termination of employment or other event giving rise to the Participant's right to a distribution of all or a portion of his or her accrued benefits under this Plan, as more fully described in the Participation Agreement. (g) "Executive" shall mean any person employed by the Corporation who is identified by the Corporation as being a member of a select group of the Corporation's management. (h) "Normal Retirement Age" shall mean age sixty-five (65). (i) "Participant" shall mean any Executive who is designated by the Corporation as eligible to participate in the Plan and who actually participates in the Plan. (j) "Participation Agreement" shall mean the agreement executed by the Corporation and the Participant, under which the Participant agrees to participate in the Plan and setting forth the terms of such participation, including, without limitation, the amount of deferred compensation to be contributed to the Plan, the applicable Distribution Events, the vesting and forfeiture provisions and the term of such participation. Unless the Board of Directors shall otherwise direct, a Participation Agreement may be executed on behalf of the Corporation by the Chairman of the Board, the President and Chief Executive Officer or the Chief Operating Officer. (k) "Plan" shall mean the Oglethorpe Power Corporation Executive Supplemental Retirement Plan set forth herein. 1.2 Rules of Interpretation. (a) Where necessary or appropriate to the meaning hereof, the singular shall be deemed to include the plural, the plural to include the singular, the masculine to include the feminine and neuter, the feminine to include the masculine and neuter, and the neuter to include the masculine and feminine. (b) This Plan has been executed for the benefit of the Participants and their Beneficiaries, subject to the claims of the Corporation's creditors and other limitations set forth hereinabove. So far as possible, this Plan shall be interpreted and administered in a manner consistent with this intent and with the intention of the Corporation that this Plan shall at all times fully comply with the requirements of the law. The Corporation's reasonable determination of the interpretation of the provisions of this Plan shall be binding upon the Corporation, the Participants and Beneficiaries hereunder and all other persons. ARTICLE II ELIGIBILITY AND PARTICIPATION 2.1 Eligibility. No employee of the Corporation shall be eligible to participate in this Plan unless he or she is an Executive selected by the Board of Directors. 2.2 Participation. Each Executive selected to participate in the Plan shall enter the Plan immediately upon being designated and executing a Participation Agreement in such form as is required by the Corporation. 2 ARTICLE III DEFERRED COMPENSATION, INVESTMENTS AND FORFEITURES 3.1 Participant Accounts. (a) The Corporation shall cause an account to be kept in the name of each Participant which shall reflect the value of the deferred payments, designating what portion is vested and nonvested from time to time. Until and except to the extent that deferred compensation hereunder is distributed to or vested in a Participant (or Beneficiary) from time to time in accordance with the Participation Agreement and orders of the Corporation, the interest of each Participant and Beneficiary therein shall be contingent only. The account of a Participant, even if vested, shall be subject to forfeiture as provided in the Participation Agreement. (b) Title to and beneficial ownership of any assets, whether cash or investments, which the Corporation may set aside or earmark to meets its deferred compensation obligations hereunder, shall at all times remain in the Corporation; and no Participant or Beneficiary shall under any circumstances acquire any property interest in any specific assets of the Corporation. To the extent that any person acquires a right to receive a distribution from the Corporation under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Corporation. Hence the right of a Participant or Beneficiary to receive a distribution from the Plan shall be an unsecured claim against the general assets of the Corporation, and neither the Participant nor Beneficiary shall have any rights in or against any specific assets of the Corporation. All amounts credited to a Participant's account hereunder shall constitute general assets of the Corporation and may be disposed of by the Corporation at such times and for such purposes as it may deem appropriate. 3.2 Setting Aside of Assets to Meet the Corporation's Plan Obligations. In order to meet its deferred obligations hereunder, the Corporation shall each year set aside or earmark funds in an amount equal to the total amounts allocated and deferred for such year under this Article III. 3.3 Investment of Funds. (a) Funds set aside or earmarked to meet the Corporation's deferred obligation hereunder may be kept in cash, or invested and reinvested, in the discretion of the Corporation. The Corporation may permit the Participant to determine the investment of such funds, but ownership of the funds shall remain with the Corporation, and the investment authority given to a Participant shall not constitute an incident of ownership with respect to such investments. The degree of authority over investment decisions shall be set forth in the Participation Agreement. (b) Except as provided in paragraphs (a) and (d) of this Section 3.3, and as otherwise permitted in the Participation Agreement, the investment of funds set aside or earmarked to meet the Corporation's obligations hereunder 3 shall generally be made in stocks, bonds, insurance policies or other assets selected by the Committee in its sole discretion; provided, however, that no portion of such funds shall be invested in any securities of the Corporation or any of its affiliates. In the exercise of the foregoing discretionary investment powers, the Committee may engage investment counsel, and, if it so desires, may delegate to such counsel full or limited authority to select the securities in which the funds are to be invested. The cost of any such service shall be charged as an expense of administering the Plan and paid from the invested funds unless otherwise provided in the Participation Agreement. (c) The income and gains and losses, both realized and unrealized, from investments made pursuant to paragraph (b), net of any expenses properly chargeable thereto, shall be determined at least annually at the close of the year by the Corporation. An amount equal to the net income or loss as so determined shall be allocated among the accounts of the Participants concerned in proportion to the values of their accounts at the beginning of the year or as may otherwise be appropriate. Amounts so allocated shall increase or decrease, as the case may be, the future benefits receivable by such Participants or their Beneficiaries. (d) In the event a Distribution Event occurs and the deferred benefits are to be paid in installments rather than in a lump sum, the Corporation shall set aside funds in an amount equal to the unpaid balance of such obligation. Funds to set aside may be kept in cash, or invested and reinvested in the discretion of the Corporation, except that the Corporation may permit the Participant to indicate how such funds are to be invested (including investment in money market or savings accounts or bonds). The total amount payable to the Participant shall be appropriately adjusted by an amount equal to the net income or loss on such funds, determined in accordance with the principles of paragraphs (b) and (c) above. 3.4 Distribution Events. The Corporation shall determine and set forth, in a Participant's Participation Agreement, the Distribution Event or Events applicable to such Participant. Upon the occurrence of a Distribution Event, the Corporation shall determine the benefits payable to the Participant or his or her Beneficiary, using the last available value of each of such assets. The last available value shall be determined by reference to the regularity and frequency of valuation of particular assets, such as daily valuation of marketable securities or periodic valuations of real estate. The amount of benefits so determined shall then be paid to the Participant or Beneficiary in cash or other property according to the terms of the Participation Agreement. 3.5 Beneficiaries. Each Participant shall have the right to designate beneficiaries who are to succeed to his or her contingent right to receive future payments hereunder in the event of his or her death, pursuant to the provisions set forth in Article V of this Plan. A beneficiary may also designate beneficiaries with respect to his or her interest in any benefits to be paid hereunder. In the event that the Corporation elects to invest in insurance policies or products on the life of a Participant, the Corporation shall honor the beneficiary designation of the Participant with respect to the proceeds of any such policy and shall take appropriate steps to communicate such matters with the insurance company or companies. 4 3.6 Forfeitures. The right of a Participant or Beneficiary to receive a payment of deferred benefits under this Plan, even if such right is otherwise fully vested, shall be forfeited upon the occurrence of any of the events of forfeiture set forth in the Participation Agreement. 3.7 No Fiduciary Relationship. Nothing contained herein shall be deemed to create a trust of any kind or create any fiduciary relationship. Funds invested hereunder shall continue for all purposes to be a part of the general funds of the Corporation, and no person other than the Corporation shall by virtue of the provisions of this Plan have any interest in such funds. ARTICLE IV ADMINISTRATION 4.1 Plan Administrator. The Corporation is the plan administrator and has the authority to control and manage the operation and administration of the Plan. The Corporation shall make such rules, regulations, interpretations, and shall take such other actions to administer the Plan as the Corporation may deem appropriate. In administering the Plan, the Corporation shall act in a nondiscriminatory manner with respect to Participants and Beneficiaries. 4.2 Delegation of Authority. The Board of Directors may delegate any administrative duties of the Corporation hereunder to its designee. Unless the Board of Directors shall determine otherwise, all actions that could otherwise be taken by the Board of Directors hereunder may be and shall be taken by the Committee. Whenever action is required by the Corporation hereunder, the same may be taken by any individual designated by the Committee as agent for the purpose. Should it become necessary to perform some act hereunder and there is no direction in this Plan, the Corporation shall exercise its discretion in a manner that is consistent with the purpose of this Plan; and in so acting the Corporation and its agents shall be fully protected and shall be absolved from all liability except from fraud or bad faith. With respect to the initial administration of the Plan, the Board of Directors delegates to Jami Reusch and Homerzelle Gentry all duties with respect to the daily administration of the Plan and its installation. The signature of both of them shall be sufficient to bind the Corporation in connection with the administration of the Plan, including the establishment of any and all corporate accounts with Salomon Smith Barney or any other entity for the holding and investment of any assets earmarked pursuant to this Plan, including the execution of client agreements and any and all other documents, and the taking of any and all actions, that they deem necessary or appropriate to ensure the efficient administration of this Plan. 4.3 Records and Expenses. The books and records to be maintained for the purpose of the Plan shall be maintained by the officers and employees of the Corporation at its expense and subject to the supervision and control of the Board of Directors. All the expenses of administering the Plan, shall be paid by the Corporation either from funds set aside or earmarked under the Plan or from other funds 4.4 Absence of Liability. No member of the Board or of the Committee and no officer or employee of the Company shall be liable to any person for any action taken or omitted in connection with the administration of this Plan unless attributable to his or her own fraud or willful misconduct; nor shall the 5 Corporation be liable to any person for any such action unless attributable to fraud or willful misconduct on the part of a director, officer or employee of the Corporation. ARTICLE V DISTRIBUTIONS 5.1 Distribution of Accounts. In the event of the occurrence of a Distribution Event, as set forth in the Participation Agreement (with Distribution Events typically including the termination of a Participant's employment, whether such termination shall occur by reason of death, Disability, retirement or other separation from service), then the amount standing to such person's account in the Plan shall be distributed to or on behalf of such Participant at such time or times and in the manner provided under the terms of the Participation Agreement. 5.2 Form of Payment. Distribution of benefits shall be made in a lump sum except as otherwise provided in the Participation Agreement or in the following sentence. Unless the Participation Agreement provides otherwise, in the event a Participant terminates employment (a) after attainment of the Normal Retirement Age, or (b) as a result of a Disability, he or she shall be paid the value of his or her account in five (5) annual installments commencing within sixty (60) days after the Distribution Event. 5.3 Death Benefits; Beneficiary Designation; Distribution of Death Benefits. (a) If a Participant or Beneficiary dies prior to receiving all of his or her account balance hereunder, then unless the Participation Agreement provides otherwise, the Participant's or Beneficiary's remaining account balance shall be paid to the Participant's or Beneficiary's designated Beneficiary in five (5) equal, annual installments commencing ninety (90) days after the Participant's or Beneficiary's death, as the case may be. Notwithstanding the foregoing, each annual installment payable to a Beneficiary shall be no less than Five Thousand Dollars ($5,000) (or the Participant's remaining account balance, if it is less than $5,000). (b) At any time and from time to time, each Participant and each Beneficiary who is receiving payments hereunder shall have the unrestricted right to designate the person who, as his or her beneficiary, shall receive the amount payable hereunder after his or her death, and the right to revoke any such designations. Each such designation shall be evidenced by a written instrument filed with the Corporation, signed by the Participant or Beneficiary who is making the designation. No designation of beneficiaries shall be valid unless in writing signed by the Participant, dated, and filed with the Committee. Beneficiaries may be changed without the consent of any prior beneficiaries. In the event a Participant dies without having filed a beneficiary designation form with the Corporation, his or her deferred benefits payable hereunder shall be paid in the following order: (a) to the Participant's spouse; (b) if there is no surviving spouse, then to the Participant's children, in equal shares (with adopted children being treated as children for purposes of this Plan); and (c) if there are no surviving children, then to the Participant's estate. 6 ARTICLE VI SPENDTHRIFT PROVISIONS AND OTHER PARTICIPANT RIGHTS 6.1 Spendthrift Clause. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings. A distribution by the estate of a deceased Participant or Beneficiary to an heir or legatee of a right to receive payments hereunder shall not be deemed an alienation, assignment or anticipation for purposes of this Section 6.1. 6.2 No Guarantee of Benefits. Nothing contained in the Plan shall constitute a guarantee by the Corporation or any other person or entity that the assets of the Corporation will be sufficient to pay any benefits hereunder. 6.3 No Guarantee of Employment. Participating in this Plan shall not give any Participant any right to be retained in the service of the Corporation or any right or claim to any benefits hereunder unless such benefits have accrued under the terms and provisions of this Plan. 6.4 Unclaimed Benefit. Each Participant shall keep the Corporation informed of his or her current address and the current address of each Beneficiary. The Corporation shall not be obligated to search for the whereabouts of any person, except as set forth in the following sentence. In the event that all, or any portion, of the distribution payable to a Participant or a Beneficiary hereunder shall, at the expiration of seven (7) years after it shall become payable, remain unpaid solely by reason of the inability of the Corporation, after sending a registered letter, return receipt requested, to the last known address, and after further diligent effort, to ascertain the whereabouts of such Participant or Beneficiary, the amount so distributable shall be forfeited. ARTICLE VII AMENDMENT AND TERMINATION 7.1 Right to Amend. The Corporation reserves the right by action of its Board of Directors to amend this Plan at any time or times. Any amendment which is necessary to bring this Plan into conformity with applicable government laws or regulations may be made retroactively. 7.2 Termination. The Corporation has established this Plan with the bona fide intention and expectation that it will be continuing and permanent. However, the Corporation reserves the right to terminate the Plan when, in the 7 sole opinion of the Company, such termination is advisable. 7.3 Effect of Amendment or Termination. No amendment or termination shall directly or indirectly reduce the balance of any account held hereunder as of the effective date of such amendment or termination. Upon termination of the Plan, there shall be paid to each Participant and each Beneficiary the amount of his or her account in the Plan, in accordance with the further terms of this Plan. ARTICLE VIII GENERAL PROVISIONS 8.1 Claims Procedure. The Corporation shall make a determination as to the right of any person to a benefit, and shall afford any person dissatisfied with such determination the right to a hearing thereon. Any denial by the Corporation of the claim for benefits under the Plan by a Participant or Beneficiary shall be stated in writing by the Corporation and delivered or mailed to the Participant or Beneficiary, and such notice shall set forth the specific reasons for the denial, written to the best of the Corporation's ability in a manner that may be understood without legal or actuarial counsel. In addition, the Corporation shall afford a reasonable opportunity to any Participant whose claim for benefits has been denied for a full and fair review of the decision denying the claim. 8.2 Adoption of Plan by Successor. In the event of the merger or consolidation of the Corporation, or the transfer of the assets of the Corporation to another corporation, association, partnership, sole proprietorship, or business organization, the Plan may be adopted by the surviving corporation, association, partnership, sole proprietorship, or other business organization which employs a substantial number of the Participants of the Plan. Such adoption of the Plan shall be expressed in an agreement between such surviving or other corporation, association, partnership, sole proprietorship, or business organization and the Committee under which such other corporation, association, partnership, sole proprietorship, or business organization adopts the Plan with respect to the Participants employed by it. If, pursuant to the terms hereof, the Plan is adopted by any other corporation, association, partnership, sole proprietorship, or business organization, such other corporation, association, partnership, sole proprietorship or business organization shall be deemed to succeed to the position of the Corporation under the Plan. If the Plan is not so adopted, then it shall be deemed terminated. The failure of any Participant hereunder to become an employee of such other corporation, association, partnership, sole proprietorship, or business organization shall constitute a Distribution Event. Nothing in this Agreement shall be construed to prevent a Participant and the Corporation from agreeing to use a rabbi trust for the purpose of handling investments and segregating assets to be used to fund benefits under the Plan, even though any such assets, until distributed to the Participant, shall always be subject to the claims of the Corporation's creditors. 8.3 Governing Laws. This Plan shall be construed and enforced under the laws of the State of Georgia, and all provisions hereof shall be administered in accordance with the provisions of the laws of the State of Georgia, provided that in case of conflict between Georgia law and any applicable and binding 8 provision of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the provisions of ERISA shall control. 8.4 Alternative Acts. In the event it becomes impossible for the Corporation to perform any act required by this Plan, then the Corporation may perform such alternative act which most nearly carries out the intent and purpose of this Plan. 8.5 Title Headings. The headings in this Plan are solely for the convenience of reference and shall not affect its interpretation. IN WITNESS WHEREOF, this Executive Supplemental Retirement Plan is signed by the Corporation through its duly authorized officer on the day and year first above written. OGLETHORPE POWER CORPORATION By: /s/ J. Calvin Earwood ---------------------------------------- J. Calvin Earwood, Chairman of the Board Attest: /s/Patricia N. Nash ------------------------------------- Patricia N. Nash, Secretary (CORPORATE SEAL) 9 EX-10 4 exh1030.txt PARTICIPATION AGREEMENT FOR OPC EXHIBIT 10.30 PARTICIPATION AGREEMENT FOR THE OGLETHORPE POWER CORPORATION EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN This Participation Agreement for the Oglethorpe Power Corporation Executive Supplemental Retirement Plan (the "Plan") is executed this 15th day of March, 2002, by and between Oglethorpe Power Corporation, a Georgia corporation (the "Corporation"), and Thomas A. Smith (the "Participant"). W I T N E S S E T H: WHEREAS, the Corporation desires to provide incentives to the Participant as one its key executives to encourage the Participant to remain in the employ of the Corporation; and WHEREAS, the Corporation has invited the Participant to participate in the Plan, the Participant is willing to participate in the Plan, and the parties hereto desire to set forth the terms of the deferred compensation benefits to be made available to the Participant under the Plan; NOW, THEREFORE, the parties hereto, in consideration of the mutual premises and promises set forth herein and the opportunity for the Participant to receive deferred compensation under the Plan, do hereby agree as follows: 1. Participation in the Plan. The Participant shall become a Participant in the Plan as of March 15, 2002. As such, the Participant agrees to be bound by the terms of this Participation Agreement and the Plan. 2. Amount and Timing of Deferred Compensation. The amount, source and timing of the deferred compensation to be paid to the Participant under the Plan are as follows, provided, however, that with respect to each contribution described below, the Participant must be employed by the Corporation on the date the amounts described are to be deferred: (a) Upon the execution of this Participation Agreement by the Participant on or before March 31, 2002, the Corporation shall defer and earmark the sum of $150,000, representing $75,000 awarded currently and to be set aside with respect to 2001 and $75,000 awarded currently and to be set aside with respect to 2002. (b) On or before March 31, 2003, the Corporation shall defer and earmark the sum of $75,000; and (c) On or before March 31, 2004, the Corporation shall defer and earmark the sum of $75,000. 3. Vesting of Benefits. The Participant shall become vested in the deferred compensation benefits to be provided under the Plan according to the following schedule: (a) As to the $150,000 to be deferred on or before March 31, 2002: 100% full and immediate vesting as of March 31, 2002. (b) As to the $75,000 to be deferred on or before March 31, 2003: 100% full and immediate vesting as of March 31, 2003. (c) As to the $75,000 to be deferred on or before March 31, 2004: 100% full and immediate vesting as of March 31, 2004. 4. Distribution Events. Each of the following shall constitute a Distribution Event under the terms of the Plan for deferred compensation covered by this Participation Agreement: the Participant's death, Disability or termination of employment with the Corporation for any reason. Distribution shall commence upon the first to occur of the foregoing Distribution Events. 5. Investment Direction. The Participant acknowledges that while the Corporation has agreed to set aside funds to assist in meeting its obligations under the Plan, the Plan is in fact unfunded, and the Participant shall have no right, title or interest in and to any specific assets of the Corporation. Nevertheless, the Corporation is willing to permit the Participant to determine the investment of funds that are earmarked to assist in the Corporation's payment of its obligations under the Plan. The Corporation and the Participant agree that the Corporation will establish an account with a broker to hold assets to be earmarked for payment to the Participant under the Plan (acknowledging that such funds are still subject to the claims of the Corporation's creditors), and the Participant may direct any broker as to his preferences with respect to the investment of such assets. In addition, the parties agree that the Corporation may appoint an investment manager satisfactory to the Participant to determine the Participant's perspective on investments and invest the funds accordingly. In addition, the parties may agree to establish a rabbi trust for the purpose of handling the funds and their investment. The initial value of such earmarked assets and the gains or losses attributable thereto shall be reflected in the Participant's account established under the Plan, and amounts to be paid to the Participant shall be governed according to such gains and losses. The parties agree that investments may be made in insurance policies and products in addition to stocks, bonds, mutual funds and other types of investments. In no event shall the Participant's direction of the investment of earmarked assets be construed or interpreted as entitling the Participant to any interest in any specific assets of the Corporation. The Corporation agrees that the cost of administering the Plan shall not be charged against benefits that accrue or become payable to the Participant. 6. Reliance on Plan. The parties acknowledge that the terms of the Plan govern except as specifically provided herein. Any undefined capitalized terms herein shall have the meaning set forth in the Plan. By executing this Participation Agreement, the Participant acknowledges and agrees that his entitlement to payments under the Plan shall be made in accordance with, and subject to, the terms of the Plan and this Participation Agreement. 2 7. Form of Payment. The Participant and the Corporation agree that distributions under the Plan may be in cash or in kind. IN WITNESS WHEREOF, the Corporation, acting through its duly authorized officer, and the Participant have executed this Participation Agreement on the day and year first above written. PARTICIPANT: /s/Thomas A. Smith ---------------------------------------------- Signature of Participant OGLETHORPE POWER CORPORATION By: /s/ J. Calvin Earwood ------------------------------------------ J. Calvin Earwood Chairman of the Board of Directors Attest: /s/Patricia N. Nash -------------------------------------- Patricia N. Nash, Secretary (CORPORATE SEAL) 3 -----END PRIVACY-ENHANCED MESSAGE-----