Chesapeake & Potomac Telephone Companies DESCRIPTION: Four companies wholly owned by American Telephone & Telegraph Co., serving D.C., Maryland, Virginia and West Virginia from central corporate headquarters in Washington (AT&T traded on NYSE, P, M, Phila.). FOUNDED: 1893. TOP EXECUTIVE: Robert E. Allen, president and CEO.
Perhaps more than any other company in the Washington area, the future of the C&P companies promises to be dramatically different from its past 89 years. As a result of the Justice Department's historic antitrust settlement with C&P's parent, American Telephone & Telegraph Co., AT&T must divest itself of its local operating companies such as C&P. Under a plan drawn up by AT&T, C&P will be grouped into a new telephone company--one that will be able to offer only local telephone service--with three other Bell System subsidiaries: Diamond State Telephone of Delaware, Bell of Pennsylvania and New Jersey Bell.
The future does not daunt C&P officials, who say that the changes will only mean being able to concentrate on what the company already does the best: providing quality local telephone service to area residents.
For 1981, inflation, high interest rates and the recession hurt C&P's earnings, with profits declining from the previous year by less than one percent. Net income for 1981 was $318.9 million, down from 1980's level of $319.2 million. The slight decline came despite a 13 percent increase in revenues and a 7.7 percent increase in assets, which totaled $6.9 billion by year's end.
Business volume grew at a smaller pace than C&P had expected, climbing by less than one percent above 1980 to the level where C&P served 8.8 million phones in 1981 (compared with 8.7 million served a year earlier). This was the smallest increase in telephones in more than a decade. Long-distance calls originated in the region were up 7.3 percent to 793 million.
Total construction was $928.6 million, an increase of only 0.7 percent from 1980. The bulk of the money went to replacing older, less efficient electromechanical switchers with electronic switching systems that permit faster calls and offer customers a variety of new services, including call forwarding, call waiting and three-way calling.
Additionally, C&P began building a new office facility near Silver Spring, which, when completed, will provide 750,000 square feet of space and house about 2,400 headquarters employes who are now scattered among several buildings in suburban Maryland.
Potomac Electric Power Co. DESCRIPTION: Washington based electric utility serving about 500,000 customers in a 643-square mile area that includes D.C., a portion of Arlington County in Virginia (including Rosslyn and the largest customer, the Pentagon), the populous Maryland suburbs and, through sales to a cooperative, Southern Maryland (NYSE, Phila., M). FOUNDED: 1893. TOP EXECUTIVE: W. Reid Thompson, president.
Pepco improved its earnings slightly over record earnings in 1980. Earnings for common stock were $93.3 million in 1981, up 5.1 percent from $88.8 million in 1980. Per share earnings rose 1.9 percent from $2.10 to $2.14.
Peak demand is expected to continue to grow slowly at 1 to 2 percent annually. Pepco plans capital expenditures in 1982 of $195 million. Much of Pepco's future construction will be for transmission, distribution and service facilities.
In late 1981, Pepco put its first new generating unit since 1975 into service, starting up a 600-megawatt unit at its Chalk Point generating station. The unit is expected to be the last generator to be put into service in the next decade. In the long-range future, Pepco is looking at new types of generation, including possibly underground pumped hydroelectric power.
In 1981 Pepco's financings include the sale in June of $50 million in 10-year, 14.5 percent mortgage bonds; the sale in June of $30 million in floating-rate First Mortgage Pollution Control Bonds in cooperation with Prince George's County; the initiation in August of a $27 million tax-exempt municipal commercial paper program in cooperation with P.G. County to fund pollution control, and the private placement in October of $50 million of 20-year adjustable rate First Mortgage Bonds maturing in 2001.
Pepco also sold $15.1 million in new common equity through its shareholder dividend reinvestment and stock purchase plan and $2.6 million in new common equity through Pepco's employe stock ownership plan.
In March, Pepco filed a rate increase request in D.C. for $81.1 million--17.8 percent. It also has pending in Maryland a request for a rate hike of $95.5 million (18.9 percent) and in Virginia a request for an increase of $3.2 million (14.6 percent).
Washington Gas Light Co. DESCRIPTION: A distributor of natural gas in metropolitan Washington, including the District of Columbia and adjoining areas of Maryland and Virginia. Its wholly owned subsidiaries, Shenandoah Gas Co. and Frederick Gas Co., provide gas service in the Shenandoah Valley area of Virginia and West Virginia and in Frederick County, Md. Two other wholly owned subsidiaries, Crab Run Gas Co. and Hampshire Gas Co., are involved in exploring for gas and oil and in gas storage. Another subsidiary, Davenport Insulation Inc., manufactures and installs conservation products. FOUNDED: 1848. TOP EXECUTIVE: Paul E. Reichardt, chairman; Donald J. Heim, president and chief executive officer.
The gas company continued an active program of drilling for oil and gas in 1981, but what that activity will produce in the long run remains unclear. At the end of 1981, the company had 10 wells producing from the Deep Anadarko Basin in Oklahoma. "The drilling efforts still seem to have substantial potential, but to date that potential has not been fully realized nor assessed," according to Heim.
The drilling companies are just one part of WGL's diversification into nonutility business. Another subsidiary, Davenport Insulation Inc., showed major improvement in 1981, although it continued to lose money. The company, which manufactures and installs conservation products, lost 7 cents a share in 1981 compared with a loss of 43 cents a share in 1980.
Gas sales in 1981 totaled 1.1 billion therms, an increase of 4 percent over 1980. Growth in sales continued to be restricted by the slowdown in the construction industry, but enough customers converted to gas heat from other heating systems to produce a net increase in customers.
During the year, the company postponed a debt offering because of continuing poor market conditions. It is negotiating terms on a $50 million bank credit arrangement and intended further financing later this year.
Virginia allowed the company a $3 million increase effective Dec. 31, 1981. In early 1982, Maryland provided rate relief of $9.4 million and D.C. granted an $8.1 million increase. The company will seek additional rate increases in all three jurisdictions this year.
The unprecedented cold in January produced two days when the company sold more gas than on any other day in its history. Although the system was taxed, it was able to keep up with the heavy demand, WGL officials have said.
At the company's annual meeting in April, shareholders voted to increase the authorized common stock without par value from 7.5 million shares to 10 million shares.
The company's 1982 capital budget totals $67.3 million, with new business accounting for 44 percent of the total. The capital budget also includes plans for an expansion of the company's major operating center in Springfield.