ML022830059

Annual Financial Reports for South Texas Project Electric Generating Station, Exhibit F-4, Page 137 - City Public Service of San Antonio, 2001-02 Annual Report

ML022830059
Person / Time
Site:	South Texas
Issue date:	10/01/2002
From:	George Wilson South Texas
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
31497337, G20, NOC-AE-02001413
Download: ML022830059 (131)

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INTERNAL SERVICE FUNDS COMBINING BALANCE SHEET September 30, 2001 With comparative totals for September 30, 2000 Fleet Maintenance Support Services Information Employee Systems Benefits ASSETS Current assets: Cash Pooled investments and cash Cash held by trustee Accounts receivable Less allowance for doubtful accounts Net accounts receivable Inventories, at cost Prepaid expenses Total current assets Restricted assets: Construction account Total restricted assets Fixed assets, at cost: Property, plant and equipment Less accumulated depredation Net property, plant and equipment in service Construction in progress Net property, plant and equipment Deferred costs and expenses, net of amortization Total assets LIABILITIES AND FUND EQUITY Current liabilities: Accounts payable Accrued payroll Accrued compensated absences Claims payable Due to other funds Interest payable on other debt Deferred revenue General obligation bonds payable and other tax supported debt Other liabilities Total current liabilities Long-term liabilities: Accrued compensated absences Claims payable Advances from other funds General obligation bonds payable and other tax supported debt, net of discount and inclusive of premium Total long-term liabilities Total liabilities Fund equity Contributions from municipality Retained earnings - unreserved Total fund equity Total liabilities and fund equity 2,600 15,750 375 6,568,675 7,893,450 3,936,709 10,377,426 292.073 236,005 5,848 (221,726) 14,279 5,848 1,513,281 166.878 10,222 8,098,835 8,081,926 3,947,306 10,669,499 414,434 1,470,980 414,434 1,470,980 49,505,166 8,227,569 15,640,419 (17,398.778) (3,999,195) (4,274,367) 32,106,388 4,228,374 11,366,052 1,504,683 32,106,388 4,228,374 12,870,735 3,898 1.441 3,065 40,623,555 12,311,741 18,292,086 10,669,499 924,326 971,044 709.786 1,690,281 192.979 812,019 318,342 268,037 1,984,047 679,799 4,470,237 26,872 8,047 7,941 54,911 132,167 128,207 797,920 71,700 292,073 1,525,556 3,974,958 2,587,630 6,452,591 371,718 1,299,168 386,350 241,850 1,775,195 938,274 2,204,316 2.146,913 2,237,442 2,832,516 3,672,469 6,212,400 5.420,146 6,452,591 31,199,954 941,164 9,208,801 9,244,036 5,751,132 5,158,177 3,663,139 (5,027,128) 36,951,086 6,099,341 12,871,940 4,216,908 40,623,555 12,311,741 18,292,086 10,669,499 138

CITY OF AUSTINTEXAS Exhibit G-1 Uability Workers' Radio Reserve Compensation Communication 11,632,759 11,632,759 8,155,013 -8,155,013 500 866,966 62,963 62,963 155,037 1.085,466 Support Projects Services - Management 2,750 603,390 10,716 10,716 46,936 663.792 Totals 2001 2000 900 22.875 22,925 3,273,804 53,308,192 45.362,999 292,073 198,423 227,535 543,067 504,591 (221,726) -(221,726)' 227,535 321,341 282,865. 1,668,318 2,079,330 71,787 295,823 252,462 3.574.026 55,908,622 48,199,004 S..... 1,885,414 '2,375,955' 1,885,414 2,375,955 342,685 (75,248) 267,437 267,437 1.352.903 77,744 26,944 67,110 620,611 1,584,855 '(800,043) 784,812 784,812 1,448,604 97,838 98,866 199,458 968,235 76,268,929 64,526,652 (149,384) (26.697.015) (25.049,003) 818,851 49,571,914 39,477,649 1.504,683 6,549.474 818,851 51,076.597 46,027,123 8,404 9,647 4,392,877 108,879,037 96,611,729 234,912 5,015,021 7,049,410 285,913 1,735,063 1,324,457 857,402 4,055,853 4,018,526 14,101.232 13,747,986 26,872 353,599 70,899 90,448 16,067 636,678 49,916 1.058,294 1,205,875 363,773 258,307 7,554,789 2,385,296 792,409 396,162 1,394.294 27,063,685 28,098.524 32,284 98,764 278,474 2,466,758 2,266,348 5,164,734 4,251,700 9,416,434 8,378,102 241,850 268,722 4,917,785 5,972,732 5,164.734 4251,700 32,284 98,764 278,474 17,042,827 16,885.904 12,719,523 6,636,996 824,693 494,926 1,672,768 44,106,512 44,984,428 2,443.283 56,255 343,005 28,300 53,464,798 46,479,675 (1,086,764) (925,266) 471,955 610,673 2,691,809 11,307,727 5,147,626 (1,086,764) 1.518,017 528,210 953,678 2,720.109 64,772,525 51,627,301 11,632.759 8,155,013 1,352,903 1,448,604 4,392.877 108,879.037 96.611,729 139 Infrastructure Capital 11,632,759 19,094 7,535,695 8.155.013 289.996 2,095,300

INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS Year ended September 30, 2001 With comparative totals for"year ended September 30, 2000 REVENUES Billings to departments Employee contnbutions Other revenues Operating revenues Fleet Support Information Employee Maintenance Services Systems Benefits 19,210,951 50,208.114 22,545,939 39,444,283 20,350,742 312,500 131,621 19,523,451 50,208.114 22,677.560 59,795,025 EXPENSES Operating expenses before depreciation 18,282,555 47,957.657 22,623.530 57,248,052 Depreciation 1,690.172 551,298 1,174,480 Total operating expenses - 19,972,727 48,508.955 23,798,010 57,248,052 Operating Income (loss) before nonoperating revenues (expenses) and operating transfers (449,276) 1,699.159 (1,120,450) 2,546,973 NONOPERATING REVENUES (EXPENSES) Interest and other revenues Interest on other debt Amortization of bond issue cost Other nonoperating expense Total nonoperating revenues (expenses) Income (loss) before operating transfers Operating transfers: Operating transfers in Net Income (loss) Retained eamings at beginning of year Retained earnings at end of year 793,110 (108,767) (3,186) 408,185 (59,985) (2,356) 121,796 (144,014) (681) (22,398) (175,632) (468) 658,759 170,212 (23.367) 209,483 1,869,371 (1,143,817) 2,546,973 1,000,000 209,483 1,869,371 (143,817) 2,546,973 5,541,649 3,288,806 3,806.956 (7,574,101) 5,751,132 5,158,177 3,663,139 (5,027,128) 140

CITY OF AUSTIN, TEXAS Exhibit G-2 Infrastructure Capital Liability Workers-Radio Support Projects Totals Reserve Compensation Communication Services Management 2001 2000 4,000,000 9,125,023 4,000,000 9,125,023 4,508,710 7,674,701 4.508.710 r 7,674,701 fRNfl 71 A 1 4503322 1,843,300 8,416,713 14,618,900 " 169,413,223 142,895,966 20,350,742 18,389,105 -300,368 3,597,009 4,341,498 3,036,285' 2.143.668 . 8,416,713 18,215,909 -194,105,463. 164,321,356 1,985,537 8,857,197 17,207,967 186,345,906 161,563,025 22,392 95,345-57,656 3,591,343 2,713,911 2,007,929 -8,952,542 17,265,623 - 189,937,249"" 164,276,936 135.739 18,41 18,41 154,2: (508,710) 1,450,322 (508,710) 1,450,322 (578,054) - (2,375,588) (1,086,764) (925,266) 154,223 471,.955 (535.829*i 950.286 4,168,214' 44,420' B4 58,255 110,622 1,510,452 1,653,330 (312,766) '- (375,059) (6,223) '(3,859) (1,078) (199,576)' (236,102) 84 57,177 110,622 991,887 1,038,310 23 (478,652) 1,060,908 5,160,101 1,082,730 ".1,000,000 t 1,260,000 (478,652) 1,060,908 6,160,101 -2,342,730 1,089,325 1,630,901 5,147,626 2,804,896 610,673 2,691,809 11,307,727 5,147,626 '141 15087101 1450322 (535,829)

INTERNALSERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS Year ended September 30, 2001 With comparative totals for year ended September 30, 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash payments to suppliers for goods and services Cash payments to employees for services Cash payments to claimants/beneficiaries Net cash provided (used) by operating activities Fleet Support Information Employee Maintenance Services Systems Benefits 19,527,018 50,202,266 22,677,560 59,795,025 (9,034,520) (10,228,438) (7.560.141) (25,323.274) (8,959,692) (37,644,297) (14.567,838) (30.772,793) 1,532,806 2,329,531 549,581 3,698,958 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating transfers in Contnbutions from municipality Net cash provided by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Pnncipal paid on long-term debt Proceeds from the sale of equipment Interest paid on other debt Acquisition and construction of capital assets Contrbutions from municipality Bond discounts and issuance costs Bond premiumns Bonds issued for advanced refundings of debt Cash paid for bond refunding escrow Net cash used by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Interest on investments Reverse repurchase agreement income Reverse repurchase agreement expense Net cash provided by Investing activities Net Increase (decrease) in cash and cash equivalents Cash and cash equivalents, October 1 (including $2,375,955 in restricted accounts) Cash and cash equivalents, September 30 (including $1,885,414 in restricted accounts) 1,000,000 3,253,421 4,253,421 (137,622) (86.470) (994,654) 17,000 (110,108) (59,835) (162,372) (8,596,534) (649,370) (1.650.848) 3,731,702 (2,352) (1,759) 16,126 12,060-337,928 252,728 (345,730) (257,762) (5,089,590) (790,408) (2,807,874) 793,110 408,185 121,796 793,110 408,185 121,796 (2,763,674) 1,947,308 2,116,924 3,698,958 9,749,383 5,961,892 3,291,140 6,970,541 6,985,709 7,909,200 5,408,064 10,669.499 142

CITY OF AUSTIN.TEXAS Exhibit G-3 Infrastructure Liability- -' Workers' Radio Reserve' - Compensation Communication 4,000,000 (789,032)' (3.234.3751 9,125,023 (3,088,331) t4.392.584* 2,777,085 (560,372) (1,331,786) Capital Support Projects Services 8,459,181 (4,992,314) (4,121,809) SManaaement 18,143,775 (5,206,344) (12,085,138) Totals 2001 2000 194,706,933 6',14,498,572 (66,782,766) (53,913,417) (78,710,560) (72,370,584) (38,399,752) (36,369.463) (23,407) 1,644,108 884,927 (654,942) 852,293 10,813,855 1,845,108 1,000,000 1,260,000 3,253,421 r - S....- 4,253,421 1,260,000 230) (207,100) (1,218,746) (1,521,533) 17,000 I (332,315)

• , (401,516)

(11,238,356) (12,350,422) 3,731.702 6,775,999 (4,111) 28,186' 590,656 (603,492) (83,274) (51,230) (207,100) (9,029,476)- - (7,497,472) 18,484 58,255 110,622 1,510,452 1,442,919 210,408 ,VUl 18,484 58,255 110.622 1,510,452 1,453,534 (23,407) 1,644,108 820,137 (647,917) 755,815 7,548,252 (2,938,830) 11,656,166 6,510,905 47,329 1,254,057 2,518,889 47,960,302 50,899,132 11,632,759 8,155,013 867,466 606,140 3,274,704 55,508,554 47,960,302 (continued) 143 (83,274) (51, Services Management

INTERNAL SERVICE FUNDS. COMBINING STATEMENT OF CASH FLOWS Year ended September 30, 2001 With comparative totals for year ended September 30, 2000 Fleet Maintenance RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Depredation Change in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in inventory Increase in prepaid expenses Decrease in deferred expenses Increase (decrease) in accounts payable Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deferred revenue Increase in claims payable Decrease in due to other funds Decrease in advance from other funds Increase (decrease) in other liabilities Total adjustments Net cash provided (used) by operating activities NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Decrease in deferred assets/expenses Amortization of bond discounts, premiums, and issue costs Amortization of deferred loss on refundings Loss on disposal of assets Support Information Employee Services Systems Benefits (449,276) 1,699,159 (1,120,450) 2,546,973 1.690,172 551,298 1,174,480 3,567 (5,848) 387,487 (13,807) (183,407) (359,506) 84,263 1,982,082 1.532.806 (1,100) (3,186) (22,398) 446,419 11,816 630,372 2.329.531 1,412 (3,768) (175,632) (10,222) 490,735 343,307 (301.397) (26,872) 1,670,031 549.581 (681) (468) 144 325,098 733,237 93,650 1,151,985 3.698,958

CITY OF AUSTIN, TEXAS Exhibit G-3 (Continued) Infrastructure Liability Workers' Radio Support Reserve Compensation Communication Services

Capital,

--Projects Ma'naqgement 2001 Totals 2000 (508,710) 1.450,322 135,739 22,392 193,786 193,786 1.644.108 12,806 23,525 63,754 6,100 620,611 749,188 884,927 (535,829) 95,345 42,468 (46,936) (22,341) (187,649) (119,113) (654,942) 950,286 4,168,214 57,656. 3,591,343 (38,285) -14,708 411,012 (25,580) (96,545) -(13,838) (44,097) (33,849) (97,993) -852,293 321,243 648,343 586,762 1,391,578 (301,397), (26,872) 105,466 6,645,641 10,813,855 (1,100) (2,455) (3,768) (199,576)'- (173,038) 658,341 485,303 (23,407) 44,420 2,713,911 ,-298,947 (259,982) (250,751) 21,222 .(429,263) (2,189,958) (121,731) 2,453,761 S(45,988) -(328,269) (61,211) 1,800,688 1.845,108 (1,078) (12) ,(489) (3,370) (36,308) 145 1644108.

INTERNAL SERVICE FUNDS COMBINING SCHEDULE OF CHANGES IN FIXED ASSETS AND ACCUMULATED DEPRECIATION Year ended September 30, 2001 CITY OF AUSTIN, TEXAS Exhibit G-4 Assets Accumulated Depreciation Transfers Transfers Balance from from (to) Balance Balance Balance September 30, Construction Other September 30, September 30, Current September 30, 2000 Additions Retirements In Progress Funds 2001 2000 Depreciation Retirements 2001 Property, plant and equipment In service: Fleet Maintenance Support Services Information Systems Radio Communication Infrastructure Support Services Capital Projects Management Construction in progress: Information Systems Total $ 43,764,501 6,215,571 (474,906) 8,344,028 649,370 (765,829) 9,837,869 676,909 (893,089) 6,018,730 259,411 83,274 1,559,708 51,230 (26,083) 761,135 207,100 64,526.652 7.883.454 (2.159.907) 6.018.730 6,549,474 973,939 (6,018,730) $ 71,076,126 8,857,393 (2,159,907) 49,505,166 16,144,114 1,690,172 (435,508) 17,398,778 8,227,569 4,038,094 551,298 (590,197) 3,999,195 15,640,419 3,992,508 1,174,480 (892,621) 4,274,367 342,685 52,856 22,392, 7 75,248 1,584,855 729,703 95,345 (25,005) 800,043 968,235 91,728 57,656 149,384 76.268.929 25,049.003 3,591,343 (1,943,331) 26,697,015 1,504,683 77,773,612 25,049,003 3,591,343 (1,943,331) 26,697,015 Property, plant and equipment: Land Buildings Furniture and equipment Vehicles Completed construction unclassified Less accumulated depreciation Net property, plant and equipment Construction in progress Total property, plant and equipment Infrastructure Capital Fleet Support Information Radio Support Projects Maintenance Services Systems Communication Services Management Fund Fund Fund Fund Fund Fund Total 485,463 485,463 3,528,426 1,500 3,529,926 4,538,724 3,768.107 2,154.737 27,872' 853,014 170,625 11,513,079 5,788,351 715,090 27,419 49,073 6,579,933 35,649,665 3,257,409 13,458,263 265,740 731,841 797,610 54,160,528 49,505,166 8,227,569 15,640,419 342,685 1,584,855 968,235 76,268,929 (17,398,778) (3,999,195) (4.274,367) (75.248) (800,043) (149,384) (26,697,015) 32,106,388 4,228,374 11,366,052 267,437 784,812 818,851 49,571,914 1,504,683 1,504,683 $ 32,106,388 4,228,374 12,870,735 267,437 784,812 818,851 51,076,597 0)

FIDUCIARY FUNDS Fiduciary funds-account for assets held by the City in a trustee capacity or as an agent for other agencies, individuals, private organizations, or governmental units. Included in the fiduciary' funds" are exb6ndable and nonexpendable trust funds and agency funds. The expendable trust funds include a variety of activities, as descnbed on the following page. , I The nonexpendable trust fund includes contributions for various governmental purposes, including purchase of library books and cemetery and preserve maintenance_ The agency funds include the Municipal Utility. Districts Fund and various others. See next page for descriptions of the iridividual funds.

Expendable Trust Funds Penta Development Fund Donation for the Penta Development Nature Conservancy. Police Benefit Fund - Donations for the benefit and improvement of the Police Department Fairway Ridge Fund - Accounts for deposits for Fairway Ridge Subdivision. Miscellaneous Fund - Various donations and revenues to be used for specified purposes. Brackenridge Imaging Fund - Accounts for participation in and support of programs which will provide health care services. Adaptive Programs Fund - Accounts for programs and activities sponsored by the Parks and Recreation Department. Austin Creeks and Trails Fund - Donations to be used for the upkeep of Austin's creeks and trails. Austin History Center Fund - Donations to be used for the Austin History Center. Ellis Library Trust Fund - Revenues to be used for the purchase of books on mental health. First Step - A Community Project - Accounts for programs and activities to improve community relations. Housing Trust Social Equity Fund - Accounts for revenues to be used for the SMART Housing initiative. PARD Miscellaneous Fund - Various donations and revenues to be used for specified purposes for Parks and Recreation Department activities. Perpetual Care Interest Fund - Revenues to be used for maintenance and care of cemeteries. Planting for the Future Fund - Donations to be used for plantings in the City of Austin. Special Library Fund - Donations received to purchase books or special equipment in memory of an individual. Summer Musical Fund - Donations and revenues to be used for the annual summer musical production that is administered by PARD. Teen Activity Fund - Donations and revenues to be used for teen activities sponsored by the Parks and Recreation Department. Town Lake Beautification Fund - Donations to be used for the beautification of Town Lake. Nonexpendable Trust Funds Interest income from contributions may be used for specified purposes, such as purchase of library books or maintenance of cemeteries and preserves. Agency Funds Municipal Utility Districts Funds - Receives revenues from municipal utility districts which are used to make debt service payments for the districts. Neighborhood Rewtalization Funds - Accounts for various loans related to revitalization programs. Municipal Courts Fund - Holds fees collected by the City to be remitted to the State. BCCP Permit Fund - Receives permit fees to support City of Austin and Travis County preserve administration for the Balcones Canyonlands Conservation Plan. I

147

TRUST AND AGENCY FUNDS COMBINING BALANCE SHEET September 30, 2001 With comparative totals for September 30, 2000 CITY OF AUSTIN, TEXAS Exhibit H-1 Nonexpendable Trust Funds Agency Funds Totals 2001 2000 ASSETS Pooled investments and cash Receivables from other governments Total assets UABIUTIES AND FUND EQUITY Liabilities Accounts payable Due to other governments Due to other funds Escrow and other deposits Other liabilities Total liabgities Fund balances Reserved for nonexpendable trust Unreserved: Designated for purposes of trust Total fund balances Total liabilities and fund balances 2,960,870 1,040,217 4,111,630 8,112,717 9,421,637 128,894 128,894 60,444 2,960,870 1,040,217 4,240,524 8,241,611 9,482,081 12,478 29,699 42,177 109,328 1,587,256 1,587,256 1,310,591 3,660 3,660 3,885 2,619,909 2,619,909 2,537.102 578,913 578,913 256,498 591,391 4,240,524 4,831,915 4,217,404 1,040,217 1,040,217 1,040,217 2,369,479 2,369,479 4,224.460 2,369,479 1,040,217 3,409,696 5,264,677 2,960,870 1,040,217 4,240,524 8,241,611 9,482,081 148 Expendable Trust Funds

CITY OF AUSTIN, TEXAS Exhibit H-2 TRUST AND AGENCY FUNDS EXPENDABLE TRUST FUNDS COMBINING BALANCE SHEET September 30, 2001 With comparative totals for September 30, 2000 Assets Pooled Liabilities Investments Total Accounts Other Total =nrI P. A*_e~t~ Pavab~le Liabilities Liabilities Urban growth management Penta Development Total urban growth management Public safety Police Benefit Total public safety Public services and utilities Fairway Ridge Miscellaneous Total public services and utilities Public health Brackenddige Imaging. Total public health Public recreation and culture Adaptive Programs Austin Creeks and Trails Austin History Center Ellis Ubrary Trust First Step - A Community Project Housing Trust Social Equity PARD Miscellaneous Perpetual Care Interest Planting for the Future Special Ubrary Summer Musical Teen Activity:, Town Lake Beautification Total public recreation and culture 2001 Total 2000 Total Unreserved Total Fund Balances Liabilities Designated and Fund for Trust Balances 22,131 22,131 22,131 22,131 22,131 22,131 22.131 22.131 375,413 375,413 6,310 328,913 335,223 40,190 375,413 375,413 375,413 6,310 328,913 335,223 40,190 375,413 15,616 15,616 15,616 15,616 16,132 16,132 16,132 16,132 146,960 146,960 .146,960 146,960 12,566 12,566 12,566. 12,566 431.920 431,920 431,920 - 431,920 571.795 571,795 250,000 250,000 321,795 571,795 605,530 605,530 605,530 .605,530 251,013 251.013 1,192 1,192 249,821 -251.013 48,455 48,455 -48,455- - 48,455 85,356 85,356 2.719 2,719 82,637 - 85,356 105,161 105.161 2,033 2,033 -103,128 105,161 30,505 30,505 30,505 ,30,505 242,317 242,317 224 224 242,093 242,317 2.563,326. 2.563,326 6,168 250,000 256.168 2,307,158 2,563.326 "2,960,870 2,960.870 12.478-578,913 591,391 . 2,369.479 2,960.870 4,520,750 4,520,750 39,792 256,498 296,290 4,224,460 4,520,750 149 v $

TRUST AND AGENCY FUNDS EXPENDABLE TRUST FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Year ended September 30, 2001 With comparative totals for year ended September 30, 2000 Revenues Interest and Urban growth management Penta Development Total urban growth management Public safety Police Benefit Total public safety Public services and utilities Fairway Ridge Miscellaneous Total public services and utilities Public health Brackenridge Imaging Total public health Public recreation and culture Adaptive Programs Austin Creeks and Trails Austin History Center Ellis Library Trust First Step - A Community Project Housing Trust Social Equity PARD Miscellaneous Perpetual Care Interest Planting for the Future Special Library Summer Musical Teen Activity Town Lake Beautification Total public recreation and culture 2001 Total 2000 Total Total Expenditures Excess (Deficiency) of Revenues Over Contributions Other Revenues (1) Expenditures 19,748 19,748 20,676 (928) 19,748 19,748 20,676 (928) 6,820 11,241 18,061 11,773 6,288 6,820 11,241 18,061 11,773 6,288 3,273 3,273 3,273 5,857 5,857 8,976 (3,119) 1,058 1,058 1,058 28,785 28,785 242,909 (214,124) 71,795 71,795 1,750,000 (1.678,205) 309,678 11,475 321.153 94,819 226,334 34,097 66,063 100.160 110,450 (10,290) 110,490 110.490 37,007 73.483 21,025 21,025 110,253 (89,228) 25,810 25,810 13,403 12,407 4,440 4,440 6,080 (1,640) 177,977 177,977 147,484 30,493 693,705 178,118 871,823 2,521,381 (1,649,558) 720,273 189,359 909,632 2,553,830 (1,644,198) 337,735 180,748 518,483 284,530 233,953 (1) Expenditures include capital outlay of $213,506. 150

CITY OF AUSTIN, TEXAS Exhibit H-3 Excess Other Financing Sources (Uses) (Deficiency) of Revenues and Other Operating Operating Sources Over Transfers Transfers Expenditures In .Out and Other Uses Fund Balances September 30, 2000

Residual, Equity ITansfersO In (Out).

Fund Balances September 30, 2001 111,600 (111,000) 111,000 (111,000) (928) 23,059 22,131 (928) 23,059 22,131 197,978 (197,978) 6,288 33,902 40,190 6,288 231,880 (197,978) 40,190 839,225 (839,225) 839,225 (839.225) 15,616 15,616 3,273 12,859 16,132 (3,119) 150,079 146,960 1,058 11,508 12,566 (214,124) 646,044 431,920 1,000,000 (678,205) 1,000,000 321,795 226,334 379,196 605,530 (10,290) 260,111 249,821 (173,580) (100,097) 148,552 48,455 (89,228) 171,865 82.637 12,407 90,721 103,128 (1,640) 32,145 30,505 30,493 100.600 111,000 242,093 1,000,000 (173,580) (823,138) 3,019.296 111.000 2,307,158 1,000,000 (173,580) (817,778) 4.224,460 (1,037,203) 2,369,479 1,300,000 1,533.953 2,690,507 4,224,460 151

TRUST AND AGENCY FUNDJS AGENCY FUNDS COMBINING BALANCE SHEET September 30, 2001 With comparative totals for September 30, 2000 CITY OF AUSTIN, TEXAS Exhibit H-4 BCCP Totals Permit Fund 2001 2000 ASSETS Pooled investments and cash Receivables from other governments Total assets LIABIUTIES Accounts payable Due to other governments Due to other funds Escrow and other deposits Total liabilities 1,934,314 227,961 1,942,034 7,321 4,111,630 3,860,670 128.894 128,894 60,444 2,063,208 227.961 1,942.034 7.321 4,240,524 3,921.114 29,699 29,699 69,536 1,583,595 3,661 1,587,256 1,310.591 3,660 3,660 3,885 2,063,208 227,961 328,740 2,619,909 2,537.102 2,063,208 227,961 1.942,034 7.321 4,240,524 3.921,114 152 Municipal Utility Districts Neighborhood Revitalization Municipal Courts

TRUST AND AGENCY FUNDS AGENCY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Year ended September 30, 2001 CITY OF AUSTIN, TEXAS Exhibit H-5 Municipal Utility Districts Pooled investments and cash Receivables from other governments Total Neighborhood Revitalization Pooled investments and cash Total Municipal Courts Pooled investments and cash Total BCCP Permit Fund Pooled investments and cash Total Combined totals - all agency funds Pooled investments and cash Receivables from other governments Total Assets Balance Balance September30, September 30, 2000 Debits Credits 2001 t 1,864,722 405,274 335,682 1,934.314 60,444 128,894 60,444 128,894 1,925.166 534,168 396.126 2,063,208 163,096 1,184,042 1,119,177 227.961 163,096 1,184,042 1,119,177 227.961 1,825,081 7,394,446 7,277,493 1.942.034 1,825,081 7,394,446 7,277,493 1,942,034 7,771 2,400,243 2,400,693 7,321 7,771-2,400,243 2,400,693 7,321 3,860,670 60,444, $

• 3,921,114 11,384,005 128,894

"-11,512,899 11,133,045 60,444 11,193,489 4,111,630 128,894 4.240.524 (continued) -153 (continued)

TRUST AND AGENCY FUNDS AGENCY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES Year ended September 30, 2001 CITY OF AUSTIN, TEXAS Exhibit H-5 (Continued) Municipal Utility Districts Due to other governments Escrow and other deposits Total Neighborhood Revitalization Escrow and other deposits Total Municipal Courts Accounts payable Due to other governments Escrow and other deposits Total BCCP Permit Fund Due to other governments Due to other funds Total Combined totals - all agency funds Accounts payable Due to other governments Due to other funds Escrow and other deposits Total Liabilities Balance Balance September 30, September 30, 2000 Debits Credits 2001 293,637 293,637 1.925,166 102,488 240,530 2,063,208 1.925.166 396,125 534.167 2,063,208 163,096 1,160,215 1,225.080 227,961 163,096 1,160,215 1,225,080 227,961 69,536 727.139 687,302 29,699 1.306,705 8.035,522 8,312.412 1,583,595 448,840 634,242 514.142 328,740 1,825.081 9,396,903 9,513,856 1,942,034 3,886 3,886 3,661 3,661 3,885 3,885 3,660 3,660 7,771 7,771 7,321 7,321 69,536 727,139 687,302 29,699 1,310,591 8,333,045 8,609,710 1,587,256 3,885 3,885 3,660 3,660 2,537,102 1,896,945 1.979,752 2,619,909 $ 3,921.114 10.961,014 11,280,424 4,240,524 154

ACCOUNT GROUPS Account groups are self-balancing sets of accounts established to provide accounting control over certain fixed assets and long-term debt. The General Fixed Asset Account Group is used to account for all fixed assets of the City other than those accounted for In the proprietary funds. The General Long-Term Debt Account Group is used to account for all long-term debt of the City except for that accounted for in the proprietary funds.

GENERAL FIXED ASSETS SCHEDULE OF CHANGES IN GENERAL FIXED ASSETS Year ended September 30, 2001 CITY OF AUSTIN, TEXAS Exhibit I-1 Balance September 30, Property, plant and equipment In service: Land and buildings: Land and easements Buicdings Improvements other than buildings: Grounds Parks Library book stock Other Machinery and equipment Machinery Park equipment Furniture and fixtures Barges Communication equipment Computer equipment Total property, plant and equipment in service Construction in progress Totals (1) Transfers from (to) other funds: Enterprise funds: Electric Transportation Total transfers Completed Transfers from (to)

Other Balance September 30, S2000 Additions Retirements Construction Funds (1) 2001

$ 174,543,252 (2,811,509) 18,647,173 190,378,916 176,908,215 176,908,215 351,451,467 (2,811,509) 18,647,173 367,287,131 6,231,736 6,231,736 30,601,529 30,601,529 1,165,225 1,165,225 4,188,742 4.188,742 42,187,232 42,187,232 43,480,297 (5,460,310) 217,813 (36,866') 38,260,934 1,121,479 1,121,479 2,049,371 (160,315) 107,924 1,996,980 47,822 47,822 9,920,212 (258,175) 85,259 9,747,296 11,222,944 (891,697) 1,011,798 11,343,045 67,842,125 (6,770,497) 1,422,794 (36,866) 62,457,556 461,480,824 (9,582,006) -20,069,967 (36,866) 471,931,919 208,488,755 77,099,502 (3,253,421) (20,069,967) (5,301) - 262,259,568 $ 669,969,579 77,099,502 (12,835,427) (42,167) 734,191,487 General Fixed Assets (5,301) (36,866) (42,167) 155

GENERAL LONG-TERM DEBT SCHEDULE OF CHANGES IN GENERAL LONG-TERM DEBT Year ended September 30, 2001 CITY OF AUSTIN, TEXAS Exhibit 1-2 Increase (Decrease) In Other Debt Long-Term Issued Liabilities During Year Increase (Decrease) In Long-Term Long-Term Debt Service Balance Debt Due to Debt Retired Fund September 30, Refinancing During Year Activity 2001 AMOUNT AVAILABLE AND TO BE PROVIDED Amount available In debt service funds Amount to be provided for accrued compensated absences Amount to be provided for retirement of long-term debt Total available and to be provided 01 0) GENERAL LONG-TERM DEBT PAYABLE Accrued compensated absences Advances from other funds Loans payable General obligation bonds and other tax supported debt Other liabilities Total general long-term debt payable 9,756,704 6,710,426 16,467,130 47,885,622 1,526,675 49,412,297 553,810,692 7,174,106 58,990,000 (2,281,000) (44,872,640) (6,710,426) 566,110,732 611,453,018 8,700,781 58,990,000 (2,281,000) (44,872,640) 631,990,159 47,885,622 1,526,675 49,412,297 4,318,000 4,318,000 9,210,660 2,800,000 (802,534) 11,208,126 550,038,736 58,990,000 f (2,281,000) (44,070,106) 562,677,630 4,374,106 4,374,106 $ 611,453,018 8,700,781 58,990,000 (2,281,000) (44,872,640) 631,990,159 Balance September 30, 2000

SiE SUPPLEMENTAL SCHEDULES

SCHEDULE OF GENERAL OBLIGATION BONDS AUTHORIZED AND UNISSUED CITY OF AUSTIN, TEXAS Exhibit J-1 Year ended September 30, 2001 Unissued Date Original Previously Issued During September30, Authorized Purpose Authorized Issued (1) CurrentYear 2001 Brackenridge 2000 Drainage and flood control Parks improvements Cultural arts Asbestos abatement, ADA compliance & East Austin health clinic Erosion & flood control ' Communication equipment -Walnut Creek watershed Traffic rignals Parks and recreation facilities Public safety facilities Cultural arts and land acquisition Street improvements Land acquisition 50,000,000 48,535,000 9,975,000 20,285,000 18,800,000 21,570,000 38,000,000 10,000,000 152,000,000 75,925,000 54,675,000 46,390,000 150,000,000 13,400,000 $ 709,555,000 40,785,000 46,544,000 9,648,000 14,890,000 15,730,000 19,643,000 38,000,000 (2) 4,590,000 5,230,000 11,735,000 8,925,000 "5,750,000

• ' 1_470.lOO 1,000,00 26,345,OC 6,910,00 12,930,OC 5,745,00

,52.930.0( 9.215,000 1,991,000 327,000) 5,395,000 o 2,070,000 1,927,000 5,410,000 10 120,425,000 )0 57,280,000 00 32,820,000 )0 34,895,000 150,000,000 13,400,000 00 435.155,000 Source: Bond Sale Official Statements (1) This schedule displays only those previously issued bonds that relate to bond authonzations included herein. It does not display all debt previously issued and still outstanding or refunding bonds. It includes general obligation bonds reported in the General Long-Term Debt Account Group and In proprietary funds. (2) The City issued $24,420,000 of this total in Contractual Obligations and therefore applied the-amount toward the authorized general obligation bonds total 157 10-22-83 09-08-84 _09-08-84 01-19-85 08-10-92 '08-10-92 05-03-97 05-02-98 11-03:98 11-03-98 11-03-98 11-03-98 11-07-00 11-07-00 221470000...r**w.

SCHEDULE OF REVENUE BONDS AUTHORIZED, DEAUTHORIZED AND UNISSUED Year ended September 30, 2001 CITY OF AUSTIN, TEXAS Exhibit J-2 Unissued Date Original Previously Issued During September 30, Authorized Purpose Authorized Deauthorized Issued (1) Current Year 2001 ELECTRIC UTILITY 10-22-83 Hydrogeneration power plant and electric system 03-01-84 Electric system. South Texas Nuclear Project 09-08-84 Electric improvements (gas turbines) 09-08-84 Electric improvements (western coal plant) 09-08-84 Electric transmission and reliability improvements 12-14-85 Transmission lines and substations 12-14-85 Overhead and underground distribution 12-14-85 Miscellaneous 08-10-92 Electrical distribution and street lighting WATER UTILITY 09-11-82 Green water treatment plant, water lines and reservoir 09-11-82 Ullrich water treatment plant, water lines and reservoir 09-11-82 Davis water treatment plant, water lines and reservoir 09-11-82 Waterworks system rehabilitation and improvements 09-08-84 Waterworks north central, northeast, and east service area 09-08-84 Waterworks northwest service area 09-08-84 Water improvements in north central and northwest service area 09-08-84 Waterworks system improvements 09-08-84 Ullrich water treatment plant improvements to South Austin 09-08-84 Water lines, reservoir improvements to south corridor area 09-08-84 Water lines. pump station improvements to North Austin area 09-08-84 Waterworks system rehabilitation and improvements 12-14-85 Northeast area improvements 12-14-85 South/southeast area improvements 12-14-85 Improvements/extensions 08-10-92 Improvements to meet EPA safe drinking water act 08-10-92 Improvements and replacement of deteriorated water system facilities 08-10-92 General utility relocation 05-03-97 Improvements/extensions to City's waterworks and wastewater system 05-06-98 Improvements/extensions to City's waterworks and wastewater system 11-03-98 Water improvements, upgrade, replace 11-03-98 Water expansion and improvement 11-03-98 Water improvements and extensions 39,000,000 605,000,000 32,775,000 47,725,000 39,945.000 175,130,000 76,055,000 25,891,000 82,500,000 1,124,021,000 40,300,000 49,100,000 40,800,000 12,800,000 39,385,000 14,970.000 14,470,000 141,110,000 47,870,000 12.570,000 7.945,000 26,500,000 37,950,000 42,090,000 9,775,000 23,000,000 5,000,000 2,000,000 35.000,000 65,000,000 64,900,000 49,940,000 19,800,000 802.275,000 10,620.000 315,232,000 31,237,000 31.199,000 20,040,000 96,017,000 46,845,000 10,443,000 561,633,000 17,000,0( 10,000,0( 14.000,0( 41,000.01 28,885,000 42,210,000 32,274,000 9,164,000 00 3,990,000 11,430,000 2,745,000 36,513,000 23,245.000 6,585,000 7,765,000 3,665,000 00 7,493,000 00 6,035,000 3,689,000 00 225,688,000 (1) This schedule displays only those previously issued bonds which relate to bond authorizations included herein. debt previously issued and still outstanding, refunding bonds, or commercial paper. 28,380,000 289.768,000 1,538,000 16.526,000 19,905,000 79,113,000 29.210,000 15,448,000 82,500,000 562,388,000 11,415,000 6,890,000 8,526,000 3,636,000 18,395,000 3,540,000 11.725,000 104,597,000 24,625,000 5,985,000 180.000 22,835.000 20.457.000 22,055,000 6,086,000 23,000,000 5,000,000 2,000,000 35,000,000 65,000,000 64,900,000 49,940,000 19,800,000 535,587.000 (continued) It does not display all 158

SCHEDULE OF REVENUE BONDS AUTHORIZED, DEAUTHORIZED AND UNISSUED Year ended September 30, 2001 CITY OF AUSTIN, TEXAS Exhibit J-2 (Continued) Unissued Date Original Previously issued During September30, Authorized Purpose Authorized Deauthorized Issued (1) Current Year 2001 WASTEWATER UTILITY 11-20-76 Sewer system Improvements 09-11-82 Govalle sewage treatment plant, sewer lines and improvements to Canterbury lift station 09-11-82 Onion Creek sewage treatment plant and sewer lines 09-11-82 Sewer lines for north central and northwest Austin 09-11-82 Walnut Creek sewage treatment plant additions 09-11-82 Sewer system rehabilitation and improvements 09-08-84 Sewer system rehabilitation and Improvements 09-08-84 Onion Creek and Walnut Creek sewage treatment plant Improvements 09-08-84 Sewer system rehabilitation and improvements 05-06-85 Sewer system improvements 12-14-85 Advanced wastewater treatment 12-14-85 Northeast area improvements 12-14-85 Southeast area improvements 12-14-85 Improvements/extensions 12-14-85 Walnut Creek WWTP expansion 12-14-85 Bear Creek interceptor 08-10-92 Improvement to Homsby Bend beneficial re-use program 08-10-92 Replacement and rehabilitation of deteriorated wastewater facilities 11-03-98 Wastewater improvements, upgrades and replacements 11-03-98 Wastewater improvements and expansion Total Utility AIRPORT 11-03-87 Relocation/construction of new airport 05-01-93 Construction of new municipal airport at Bergstrom AFB site Total Airport CONVENTION CENTER 07-29-89 New convention center Total Convention Center Total revenue bonds 46,920,000 28,300,000 57,000,000 20,700,000 20,400,000 4,800,000 43,515,000 44,795,000 46,230,000 54,000,000 34,500,000 47,035,000 9,200,000 24,725,000 46,000,000 1,840,000 11,000,000 3,000,000 77,000,000 121.000,000 741.960,000 38,920,000 24,658,000 49,345,000 17,975,000 17,971,000 3,930,000 36,950,000 42,284,000 32,300,000 4,200,000 1,511,340 38,011,340 14,925,000 33,106,000 1,857,000 757,000 12,621,000 13,717,000 265,000 309,281,000 8,000,000 3,642,000 7,655,000 2,725,000 2,429,000 870,000 6,565,000 2,511,000 31,305.000 20,894,000 34,500,000 12,878,000 4,243,000 12,104,000 32,283,000 63,660 11,000,000 3,000,000 77,000,000 121,000,000 394,667.660 2,668,256,000 79,011,340 1,096,602,000 1,492,642,660 728,000,000 30.000,000 698,000,000 400,000,000 362,205,000 37,795.000 1,128,000,000 392,205,000 735,795,000 69,000,000 68,240,000 760,000 69,000,000 68,240,000 760,000 $ 3,865,256,000 79,011,340 1.557,047,000 2.229.197,660 Source: Bond sale official statements 159

160

STATISTICAL SECTION Financial presentations included in the Statistical Section provide data on the financial, physical and economic characteristics of the City. These tables cover multiple fiscal years and provide userswith a broader and more complete understanding of the City and its financial affairs.

161

GENERAL GOVERNMENT TOTAL EXPENDITURES AND EXPENDITURES PER CAPITA 1992-2001 In nominal and constant 1992 dollars CITY OF AUSTIN, TEXAS Exhibit I Population 475,000 478,000 507,000 523,000 542,000 561,000 608,000 619,000 629,000 662,000 (1) Certain expenditures shown in the General Fund prior to 1993 are now reported in internal service funds but are included in this exhibit for comparative purposes only. See Table I for more information.

GENERAL OBLIGATION NET DEBT AND NET DEBT PER CAPITA 1992-2001 In nominal and constant 1992 dollars CITY OF AUSTIN, TEXAS Exhibit 2 550,000,000 500,000,000 450,000,000 400.000,000 T 0 t 350,000,000 a 300,000,000 D V 0 250,000,000 a 200,000.000 CA) r n SS I FOl 000 000 100,000,000 50,000,000 0 1992,

1993 1994 1995 1996 1997 1998 1999 2000 2001 662,000 Population 475,000 478,000 507,000 523,000 542,000 561,000 608,000 619,000 629,000 SGeneral obligation net bonded debt In nominal dollarsr General obligation net bonded debt In constant dollari S Debt per capita In nominal dollars Debt per capita In constant dollars

-1

1 1 -1" 'ý 11

CITY OF AUSTIN EMPLOYEES PER CAPITA 1992-2001 CITY OF AUSTIN, TEXAS Exhibit 3 14.000 12,000 T 10,000 0 t a - 8,000 E m P I 6.000 0 y e s 4,000 2,000 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 SCity of Austin Employees (1) 1 General Government Employees (2) -- G-- City of Austin Employees Per Capita --D-General Government Employees Per Cap,' Population 475,000, 478,000 507,000 523,000 542,000 561,000 608,000 619,000 629,000 662,000 (1) Includes part-time employees (2) Includes grant-funded employees and part-time employees 0.0250 0.0200 P a r C a 0.0150 P t a E m 0.0100 p I 0 y e a 0.0050 s 00000

RATIO OF GENERAL FUND UNRESERVED ENDING BALANCE CITY OF AUSTIN, TEXAS TO GENERAL GOVERNMENT ANNUAL EXPENDITURES Exhibit 4 1992-2001 1992 1993 (1) 1994 1995 1996 1997 1998 -' 1999 2000 2001 Unreserved fund balance $ 16.505,238 18,952,547 27,902,916 23,928,888 23,082,628 25,500,778 40,502,255 34,028,637 33,242,574 24,456,791 Annual expenditures $ 220,426,372 248,704,122 267,435,219 286.526,640 298,415,663 299,845,025 319,903,209 352,697,335 373,260,179 417,494,206 0.1400 0.1200-0.1000 -. 0.0600--...... 0 0400 ** 0.0000 I I 1 II, S1992 1993(1)

1994, 1995 1996,

°1997 "1998 1999 2000 200*1 (1) Certain expenditures showan In the General Fund prior to 1993 are now reported in internal service funds but are included. in this exhibit for comparative., purposes, only. See .Table 1 for more Information

GENERAL GOVERNMENT EXPENDITURES BY FUNCTION 1992-2001 CITY OF AUSTIN, TEXAS Table I EXPENDITURES BY FUNCTION Fiscal Year Ended Total Sept 30 (1) Adr 1992 220,426,372 1993 248,704,122 (5) 1994 267.435,219 1995 .286,526,640 1996 298.415,663 1997 299.645.025 1998 319,903,209 1999 352,697.335 2000 373,260,179 2001 417,494,206 Public Services Public Recreation Social Urban Fiscal Public and Public and Culture Services Supportive Growth ninistration Management Safety Utilities Health Parks Libraries Management Services Management 7.159,457 7,381,795 106,094,779 16,639.362 34,492,079 (2) 17,117,196 7,870,136 5,707,872 8,992,090 (3) 8,079.538 9,102,518 10,496,320 111,994,491 13,888,153 40,539,969 17,569,271 8,615,651 6,825.339 18,812.906 9,246,220 10,013,499 13,117,145 122,433,078 14,087,484. 39.454,664 (4) 18,796.265 9,974,592 7,152,881 21.944,081 10,860,524 9.186,152 12,499.259 131.742.620 15.550,020 40,431,597 19.257,877 10.616.810 7,334,861 20.450,561 11,401,778 10,530,309 15,419.557 141,140,763 11,903,772 43,647,282 19,411,112 10.681,059 7,285,563 21,356,793 10.567.446 10.660,570 16,250,379 144,288,202 9,675,512 43,189,920 21.283,492 11,481,048 6.738,940 22,512,873 7,501,086 10,923,336 16,566.639 162,733,100 10,128,139 37,060.371 23,066,337 12,795,286 8,204.845 24.304,142 8,380,122 13,044,612 19,628,467 173,962,836 11,098,958 40,677,762 26.027,564 14,901,499 8,627,050 29,992,967 9,129,217 15,555,492 21,174,884 191,591,408 6,098,371 41,032,031 27,994,231 16,211,110 9,387,107 30,117,212 10,188.934 18,151,607' 20,778,934 210,280,836 9,519,936 41,437,116 30,368,897 17,090,742 8,071,026 41,076,152 11,569,463 (1) Total does not Include transfers to other funds. (2) Emergency Medical Services was combined under Public Safety In fiscal year 1991-92. (3) Communications was combined under Administration in fiscal year 1991-92. (4) In 1994, the Federally Qualified Health Center was created and certain expenditures shown previously in Public Health are now reported In a special revenue fund. (5) Beginning In 1993, certain expenditures for support services are reported In Internal service funds but have been included in this table for comparative purposes only. (The reader should also note that support service amounts shown pnor to 1993 are net of expense refunds). C Reconciliation of Internal Service Fund expenses and General Fund expenditures 0) Internal Service Fund expenditures Mayor/Councd Management Services City Clerk Public Information Office Office of the City Auditor Finandal Services Information Systems Human Resources Small and Minority Business Resources City Attorney Bonding and Technical Assistance Total Support Services Fund General Government total expenses by function Plus budget-basis adjustment for operating transfers (see Schedule B-5) Less Internal Service Fund expenditures Total General Fund expenditures (see Schedule B-2,' Fiscal Supportive Administration Management Services Total 1,046,712 1,046,712 3.547,848 3,547,848 2,332,127 2,332,127 1,799.414 1,799,414 1,868.837 1,868,837 18,910,097 18,910,097 22,623,530 22.623.530 6,873,766 6,873,766 3,096,771 3,096,771 7,054,926 7,054,926 1.427,159 1,427.159 8,726,101 20.778,934 41,076,152 70.581.187 417,494,206 48,707,764 (70,581.187) $ 395.620.783 Non Departmental 892,068 1,613,284 (398,994) 8,055,105 6,472,007 6,263,003 5,740,892 5,606,403 3,909,399 9,149,497 (continued)

GENERAL GOVERNMENT EXPENDITURES BY FUNCTION 1992-2001 CITY OF AUSTIN, TEXAS Table I (Continued) EXPENDITURES BY FUNCTION AS A PERCENT OF TOTAL EXPENDITURES Fiscal Year Ended Total Sept. 30 (1) 1992 10000 1993 10000 1994 10000 1995 10000 1996 10000 1997 10000 1998 100.00 1999 10000 2000 100.00 2001 10000 (5) Public Services Fiscal Public and Public Administration Management Safety Utilities Health 325 335 48.13 755 1565 (2 366 422 4503 559 1630 3.74 490 45.78 527 1475 (4 3.21 436 4598 543 1411 353 5.17 4730 399 1462 356 5.42 4811 323 1440 341 5.18 6088 317' 1158 370

557, 4932 315 11.52 4.17 567 51.34 163 1099 4.35 498 5037 228 993 Public Recreation Social and Culture Services Supportive Parks Llbrarles Management Services 7.76 357 259 408 (3) 707 346 2.74 756 704 373 267 821 672 370 2.56 7.14 650 358 244 7.16 7.10 383 225 7.51 721 4.00 256 7.60 738 4.23 245 850 750 434 251 807 727 409 1.93 984 Urban Growth Non Management Departmental 367 040 372 065 406

-0.15 398 281 354 217 250 209 262 1.79 259 1.59 273 1.05 277 2.19 (1) Total does not Include transfers to other funds. (2) Emergency Medical Services was combined under Public Safety In fiscal year 1991.92. (3) Communications was combined under Administration In fiscal year 1991-92 (4) In 1994, the Federally Qualified Health Center was created and certain expenditures shown previously in Public Health are now reported in another special revenue fund. O* (5) Beginning In 1993, certain expenditures for support services are reported in internal service funds but have been Included in this table for comparative purposes only. "-4,(The reader should also note that support service amounts shown prior to 1993 are net of expenses refunds) The table on the facing page shows by function Iniernal service funds expenses that are included above In 2001

GENERAL GOVERNMENT EXPENDITURES BY FUNCTION 1992-2001 In constant 1992 dollars CITY OF AUSTIN, TEXAS Table 2 1992 1993 (5) 1994 1995 1996 1997 1998 1999 2000 2001 Administration $ 7.159,457 8,837,396 9,428,907 8,482.135 9,495,319 9.442.489 9,565.093 11,177,902 12,834,564 14,662,041 Fiscal management 7,381.795 10,190,602 12,351,361 11,541.329 13,904,019 14,393,604 14,506.689 16,819,595 17,471,026 16,784,276 Public safety 106,094.779 108,732.516 115,285,384 121,646,002 127,268,497 127,801,773 142,498,336 149,068,411 158,078,719 169,855,279 Public services and utilities 16,639,362 13,483.644 13,265.051 14,358.283 10,733,789 8,569,984 8,868,773 9,510,675 5.031.659 7,689,771 Public health 34,492,079 39.359.193 (2) 37,151,284 37.332,961 (4) 39,357,333 38,255,022 32,452,164 34,856,694 33,854,811 33.471,015 Parks 17,117.196 17,057,545 17,698,931 17.781,973 17,503,257 18,851,632 20,198,194 22,302,968 23,097.550 24,530,611 Ubrades 7,870,136 8,364,710 9.392.271 9,803,149 9,631,252 10,169,219 11,204,278 12,769.065 13,375.503 13,805,123 Social services management 5,707,872 6,626,543 6,735,293 6,772,725 6,569,489 5,968,946 7,184,628 7,392.502 7,745,138 6,519,407 Support services 8.992,090 18,264,957 (3) 20,662.976 18,883.251 19,257,703 19,940.543 21.282,086 25,700.914 24,849,185 33,179,444 Urban growth management 8.079.538 8.976,913 10,226,482 10,527,958 9,528,806 6.644.009 7.338,110 7,822,808 8,406.711 9,345.285 Nondepartmental 892.068 1,566,295 (375,701) 7,437,770 5,835.894 5,547,390 5,027,051 4,804,116 3,225,577 7,390.547 Total (1) $220,426,372 241,460.314 251,822,239 264.567,536 269,085,358 265.584,611 280,125,402 302,225,650 307.970,443 337,232.799 (1) Total does not Include transfers to other funds. (2) Emergency Medical Services was combined under Public Safety in fiscal year 1991-92. (3) Communications was combined under Administration In fiscal year 1991-92. (4) In 1994, the Federally Qualified Health Center was created and certain expenditures shown previously in Public Health are now reported in a special revenue fund. (5) Beginning In 1993, certain expenditures for support services are reported In Internal service funds but have been Included In this table for comparative purposes only. (The reader should also note that support service amounts shown prior to 1993 are net of expenses refunds)

0)

Tc The table below shows by function internal service funds expenses that are Included above in 2001 Fiscal Supportive Administration Manaaement Services Total Department MayorlCouncil Management Services City Clerk Public Information Office Office of the City Auditor Financial Services Information Systems Human Resources Small and Minority Business Resources City Attorney Bonding and Technical Assistance Total Support Services Fund 845,486 2,865,792 1,883,786 1,453,485 1,509,561 15,274,715 845.486 2,865.792 1,883,786 1,453.485 1.509,561 15,274,715 18,274,257 18,274,257 5,552,315 5,552,315 2,501,431 2,501,431 5,698,648 5,698,648 1,152,794 1,152,794 $ 7,048,549 16,784,276 33,179,445 57,012,270 Note: Numbers are actual expenditures adjusted by a Consumer Price Index (CPI) based on the Texas CPI.

GENERAL FUND REVENUES AND OTHER FINANCING SOURCES BY SOURCE CITY OF AUSTIN, TEXAS I. Table 3 "1 */'LUU1I REVENUES AND OTHER FINANCING SOURCES Operating Transfers In Charges Fiscal Year Utility 1% City Mixed Franchise Fees Fines Licenses for Ended System Other Property Sales Drink and Gross and . and Services/ Interest Sept. 30 Total Funds Funds - Subtotal Tax Tax Tax Receipts Tax Forfeitures Permits Goods and Other 1992 232,688,738 73.237,718 2,147,248 157,303,772 55,243.842 58,255,348 1,636,097 11,008,628 7,469.760 7,891,542 8,045.410 7,753.145 1993 239.998,196 68,581,868 171,416,328 58,755.948 67,054,207 1,724,069 11,241,961 9,501.047 10,306,752 7,238,465 5,593,879 1994 256.510.874 67,914,376 25.000 188.571.498 63,567,361 75,780,061 1,809,240 12,187,668 9,764,462 12.850,578 6,518,502 6,093.626 1995 270,534,111 71,110,681 203,248 199,220,182 66,252,760 80,474,693 1,927,844 12,416,705 10,966.311 13,074,490 8,021,247 6,086,132 1996 288,329,168 73,582.839 342,401 214,403,928 74.441.453 83,681.314 2,041,643 13.578,705 12,159,358 14.311,481 8,174,721 6,015,253 1997 298.031,786 71,449,866 255,994 226,325.926 80,528,871 88,150,309 2,187,385 14,987,003 12,570,388 12,888,265 9,427,193 5,586,512 1998 333,902,489 72,721,264 261,181,225 90,774,546 97,581.417 2,353,980 17,100,782 14,492,863 15,540,712 10.260,908 13,076.017 1999 361,114,238 74,204,480 286,909,758 106,233,499 106,839,032 2,564,518 19,899,588 16,205,548 17,252.024 11.533,686 6,361.863 2000 398,096,159 78,351,603 319,744.556 115.327.969 122,157,210 2.972,251 23.905.319 16,039.732 18,173,885 11,757,818 9,410.372 2001 429,684,743 85,824.446 458,516 343,401,781 124,930,935 123,218,291 3,406,940 31,646,358 16,999,766 17,630,897 14,984,531 10.584.063 REVENUES AND OTHER FINANCING SOURCES AS A PERCENT OF TOTAL REVENUES AND SOURCES Operating Transfers In Charges Fiscal Year Utility 1% City Mixed Franchise Fees Fines Licenses for Ended System Other Property Sales Drink and Gross and and Services/ Interest Sept. 30 Total Funds Funds Subtotal Tax Tax

Tax, Receipts Tax Forfeitures Permits Goods and Other

/ 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 10000 3147 092 10000 28.58 10000 2648 001 10000 2629 008 100.00-2552 -012 10000 2398 009

10000, 21.78 100 00 2055 10000 1968 10000 1997 011 67.61 71 42 7351 7363 7436 7593 7822 7945 8032 7992 2374 2448 2478 24 49 2582 2702 27.19 2941 2897 2907 2504 0.70 27.94 072 2954 0.70 29.75 071 2902 071 2958 0.73 29.23 070 2959

. 072 3069 0.75 2868 079 4.73 321 339 468 396 429 4.75 381 501 459 405 483 471 422 496 503 422 432 512 434 465 551 449 4.78 600 403 457 737 396 410 3 46 302 254 2.96 283 316 307 3.19 295 349 334 2.33 2.38 2.25 209 1 87 392 1.76 236 246 C.O , I

ASSESSED VALUATION, ESTIMATED MARKET VALUE, TAX RATES, TAX LEVIES, AND TAX COLLECTIONS CITY OF AUSTIN, TEXAS Table 4 1992-2002 Fiscal Ratio of Tax Rate (per $100 Valuation) Year Valuation Assessed Percent of Debt Ended Date Value to Assessed Estimated Growth In General Service Sept. 30 (January 1) Market Value Valuation Market Value Market Value Fund Fund Total 1992 1991 100 16,926,074,265 16,926,074,265 (1.5) 0 3265 0.2762 0.6027 1993 1992 100 16,977,306,423 16,977,306,423 0.3 0.3460 0.2950 0 6410 1994 1993 100 18,237,532,094 18,237,532.094 7.4 0.3462 0.2763 0.6225 1995 1994 100 20,958,589,300 20,958,589,300 14.9 0.3132 0.2493 0.5625 1996 1995 100 23,303,015,047 23,303,015,047 11.2 0.3177 0.2269 0.5446 1997 1996 100 25,823,385,257 25,823,385,257 108 0.3117 0.2134 0.5251 1998 1997 100 27,493,058,735 27,493,058,735 6.5 0.3304 0.2097 0.5401 1999 1998 100 32,458,349,755 32,458,349,755 18.1 0.3265 0.1877 05142 2000 1999 100 35,602,840,326 35.602,840,326 9.7 0.3222 0.1812 0.5034 2001 2000 100 41,419,314,286 41,419.314,286 16.3 0.3011 0.1652 0.4663 2002 (1) 2001 100 47,927,019,655 47,927,019,655 15.7 0.3041 0.1556 04597 Fiscal Percent of Percent of Year Valuation Percent of Delinquent Total Tax Outstanding Delinquent Ended Date Total Tax Levy Current Tax Levy Tax Total Tax Collections Delinquent Taxes to Sept. 30 (January 1) (October 1) Collections Collected Collections Collections to Tax Levy Taxes Tax Levy 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 (1) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 102,013,450 108,824,534 113,528,637 117,892,065 126,908,220 135,598,596 148,490,010 166,900,834 179,224,698 193,138,262 220,320,509 99,780,652 106,677,219 112,118,783 116,714,522 125,670,964 134,188,550 146,707,221 165,044,814 177,574,166 191,173,307 97.81 98.03 98.76 9900 99.03 98.96 9880 98.89 9908 98.98 1,830,260 1,594,988 1,491,539 1,292,960 1,124,436 696,317 844.378 1,137,274 1,385,668 1,191,262 101,610,912 108,272,207 113,610,322 118,007,482 126,795,400 134,884,867 147,551,599 166,182,088 178,959,834 192,364,569 99.60 99.49 100.07 100.10 " 99.91 99.47 99.37 99.57 99.85 99.60 6,419,300 6,765,751 6,660,770 6,554,774 6,497,489 6,709.208 6,945,055 7,317,015 7,532,647 7,318,463 6.29 6.22 5.87 5.56 5.12 4.95 4.68 4.38 4.20 3.79 Information not yet available for tax year 2001 (1) Assessed valuation for tax year 2001 Is subject to change pending additional exemptions and appeals. Accordingly, the tax levy represents an estimate. -4 0

PRINCIPAL TAXPAYERS .*=fm~

• fl_ 2001 "CITY OF AUSTIN, TEXAS

'. I Table 5 ""Percent of January 1, Total Assessed 2000 Assessed Valuatiorn of Taxpayer Type of Property Valuation $41,419,314,286 Motorola, Inc. Applied Matenal Inc. Advanced Micro Devices, Inc. Solectron Texas Samsung Southwestern Bell Telephone Company IBM Corporation : Crescent Real Estate Equities Minnesota Mining & Manufactunng Blue Star Austin Investments Manufacturing Manufactunng Manufactunng Manufactunng Manufacturing Telephone Utility Manufacturing Commercial Manufactunng Commercial 1.055.495,494 605,727,899 579,717,695 369,192,946 366,983,973 332,933,573 311,692.951 180,836,215 179,417,067 154,271,800 2.55 1.46 1 40 0 89 0.89 081 075 044 0.43 "037 4,136,269,613 9.99 Source-Travis Central Appraisal District 171

RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE CITY OF AUSTIN, TEXAS AND NET BONDED DEBT PER CAPITA Table 6 1992-2001 Amount Fiscal Available Ratio of Net Year Gross In Debt Net Net Bonded Debt to Debt Ended Population Assessed Bonded Service Bonded Assessed Market Per Sept.30 Estimate Value Debt (1) Fund (2) Debt Value Value Capita 1992 474.715 16,926,074,265 391,025,600 5,996.676 385,028,924 2.27 227 811.07 1993 478,254 16,977,306,423 424,686,831 6,453,738 418,233,093 2.46 2.46 874.50 1994 507,468 18,237,532,094 429,260,808 6,522,820 422,737,988 2.32 232 83303 1995 523,352 20,958,589,300 445,802.719 8,934,818 436,867,901 208 208 834.75 1996 541.889 23,303,015,047 451,722.180 8,475.146 443,247,034 1.90 1 90 817.97 1997 560,939 25,823,385,257 483,676,552 7,529,385 476,147,167 1 84 1 84 848 84 1998 608,214 27,493,058,735 507,296.990 7,269,980 500,027,010 1 82 1 82 822.12 1999 619,038 32,458,349,755 517,628,853 7,869,714 509,759,139 1.57 1 57 823.47 2000 628,667 35,602,840,326 550,038,736 9,756,458 540,282,278 1.52 1 52 85941 2001 661,639 41,419,314,286 562,677.630 16,466,884 546,210,746 1 32 1 32 82554 (1) Excludes general obligation bonds, public property finance contractual obligations, and certificates of obligation issued for propnetary funds. Excludes revenue bonds and advances from other funds. (2) Excludes loan fund balances. $1,000 00 250% $90000 $80000 -- 200% $70000 $60000 1.50% $500 00 $40000 .. 1.00% $300.00 $200.00 0.50% $100.00 $000 +- +- 000% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Net Debt Per Capita - Ratio of Net Debt to Assessed Value 172

RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES CITY OF AUSTIN, TEXAS I -ý Table 7 Total Debt Fiscal Interest Service plus Year and Paying Total Total Total Ratio of Ended Agents' Debt General Fund General Fund Debt Service Sept. 30 Principal (2) (3) Commissions (2) (3) Service Expenditures (4) Expenditures to Total (1) C I 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 22,412,341 26,479,680 28,329,565 22,023,089 22,722,983 21,502,464 22,570,196 23,780,716 26,920,117 44,070,106 29,645,676 25,676,027 24,604,771 32,214,134 35,038,577 38,481.239 40,751,170 42,130,072 42,093,620 29,853,597 52,058,017 52,155,707 52,934,336 54,237,223 57,761,560 59,983,703 63,321,366 65,910,788 69,013,737 73,923,703 220,426,372 215,064,378 227,410,704 249,615,058 282,773,007 290,577,756 310,195,219 341,417,358 364,937,872 '395,620,783 272,484,389 267,220,085 280,345,040 303,852,281 340,534,567 350,561,459 373,516,585 407,328,146 433,951,609 469,544,486 19.10 19 52 18.88 17.85 1696 17.11 1695 1618 15.90 15.74 (1) Ratio of total debt service to total debt service plus total General Fund. (2) Excludes payments for enterprise fund general obligation debt. (3) In 1999 and 2000, eicludes loan principal and Interest (4) Amounts shown prior to 1993 Include certain expenditures now shown in internal service funds See Table 1 for more information. 173

COMPUTATION OF LEGAL DEBT MARGIN September 30, 2001 CITY OF AUSTIN, TEXAS, Table 8 Assessed value (100% of estimated market value) as of January 1, 2000 Debt limit Amount of debt applicable to debt limit: Total general obligation bonds, contractual obligations, and certificates of obligation excluding enterprise fund balances of $61,979,176 Less: Amount available in Debt Service Fund 41,419,314,286 5,794,919,832 $ 562,677,630 16,467,130 Debt applicable to debt limit, excluding loan fund balances and advances from other funds 546,210,500 Legal debt margin Note - Ad valorem tax limitations:' 5,248,709,332 The City Is permitted by Article II, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services, including payment of principal and Interest on general obligation long-term debt. However, under the City Charter, a limitation on taxes levied for general governmental services, exclusive of payments of principal and Interest on general obligation long-term debt, has been established at $1 00 per $100 of assessed valuation. A practical limitation on taxes levied for debt service of $1.50 per $100 of assessed valuation is established by referring to the State Statute and City Charter limitations. Assuming the maximum tax rate for debt service of $1.50 on January 1, 2000 and assessed valuation of $41,419,314,286 at 95% collection, tax revenues of $590,225,229 would be produced. This revenue could service the debt on $5,794,919,832 issued as 8% - 20 year serial bonds with level debt service payments. 174 -1

COMPUTATION OF DIRECT AND OVERLAPPING DEBT September 30, 2001 CITY OF AUSTIN, TEXAS Table 9 Net Debt Outstanding as of September 30, 2001 (in 000's) Name of Governmental Unit City of Austin Greater than 10% -Austin Community College Austin Independent School District Del Valle Independent School District North Austin MUD #1 Northwest Austin MUD #1 Northwest Travis County RD #3 Travis County Subtotal greater than 10% Less than 10% Anderson Mill MUD #1 Eanes Independent School District Leander Independent School District Manor Independent School District Pflugerville Independent School District Round Rock Independent School District Williamson County Subtotal less than 10% Total direct and oveirlapping debt 562,678 (1) 51,155 448,747 76,700 20,599 21,110 6,045 349,142 973,498 145 "87,734 286,968 35,782 150,546 447,797 234,165 1,243,137 2,779,313 Percent Applicable to City of Austin (2) 10000 80.10 8959 7800 10000 10000 10000 7400 0.90 4.27 1.49 2.10 3 60 5.00 2.64 Ratio of total direct and overlapping debt to assessed valuation (3) Per capita overlapping debt (4) (1) Excludes general obligation de6t reported in enterpnrse funds (2) Source: Taxing Jurisdictions "- (3).Based on assessed valuation of $41,419,314,286 (4) Based on 2001 estimated population of 661,639 -1 Amount Applicable to City of Austin (in 000's) 562,678 40,975 402,032 59,826 20,599 21,110 6,045 258,365 808,952 1 3,746 4,276 751 5,420 22,390 6,182 42,766 1,414,396 341 % $ 2,137.72

PROPERTY TAX RATES AND TAX LEVIES FOR DIRECT AND OVERLAPPING GOVERNMENTS WITH APPLICABLE PERCENTAGES OVER 10% 1992-2001 CITY OF AUSTIN, TEXAS Table 10 Tax Rates (per $100 Assessed Value) for Fiscal Year Ended September 30 Government City of Austin 2001 0.4663 Austin Community College 0.0500 Austin Independent School District 1.5486 Del Valle Independent School Distnct 1.6004 North Austin MUD #1 0.5500 Northwest Austin MUD #1 0.3577 Northwest Travis County RD #3 0.1600 Travis County (1) 0.4670 2000 0.5034 0.0500 1.5486 1.6140 0.5803 0.3620 0.2248 0.4988 1999 1998 0.5142 0.5401 0.0500 00500 1.4319 1.4010 1.6140 1.6800 0.7100 0.7100 0.3620 0.4000 0.2500 0.2700 0.5143 0.4938 Tax Levies (In 000's) for Fiscal Year Ended September30 Government 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992

0)

Cityof Austin 193,138 179,225 166,901 148,490 135,599 126,908 117,892 113,529 108,825 102,013 Austin Community College Austin Independent School District Del Valle Independent School District North Austin MUD #1 Northwest Austin MUD #1 Northwest Travis County RD #3 Travis County (1) 20,571 19,209 15,255 13,971 13,900 11,951 9,458 8,641 7,824 8,510 525,477 455,559 385,064 348.753 321,567 277,255 272,094 251,813 239,317 225,212 31,193 27,524 27,620 25,674 20,454 14,546 11,836 10.083 9,267 9,057 2,855 2,375 2,372 2,372 2,390 1,046 136 659 645 125 509 434 323 198 157 590 670 607 539 576 428 388 343 742 739 231,415 209,688 196,160 168,089 157,852 149,801 143,659 135,027 121,694 108,443 Note: Initial tax levies were as follows: Austin Community College - 1988, Northwest Travis County RD#3 - 1990, and Northwest Austin MUD #1 - 1989. (1) Includes taxes and levies for Travis County and Farm to Market Roads. Source: Travis Central Appraisal District and taxing entity. 1997 05251 0.0500 1.3110 1.4750 0.7500 03926 0.3500 04950 1996 0.5446 0,0482 1.2832 1.4900 0.3926 0.3541 05186 1995 0.5625 0.0466 1.3450 1.4928 0.4000 0.4500 0.5552 1994 0.6225 0.0482 1.4623 1.4411 0.3800 0.7500 0.5966 1993 0.6410 00482 1.5508 1.3208 0.4000 1.7562 0.5762 1992 0.6027 0.0500 1.4696 1.2500 0.4300 2.0695 0.5132 Tax Rates (per $100 Assessed Value) for Fiscal Year Ended September 30 2000

CITY SALES TAX TAX LEVIED EFFECTIVE JANUARY 1, 1968 1968-2001 Fiscal Year 1st Ended Quarter Sept 30 Oct-Dec. 1968 (1) 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 875,858 973,702 1,128.941 1,308,930 1,569,320 1,730,025 1,961,267 2,241,741 1,797,941 3,022,385 3,815,525 3,792.600 3,792,138 4,483,423 5,170,854 6,331,036 7,916,721 8,378,407 7,668,943 7,317,701 8,038,526 12,381,190 12,762,277 9,303,794 10,868,639 11,896,613 13,198,475 5,643,150 5,570,840 8,334,970 14,684,293 10,388,741 11,324,551 CITY OF AUSTIN, TEXAS TABLE 11 Annual - Peicent of Percent Property Percent Increase Tax Base Year (Decrease) Levy 2nd Quarter Jan. - Mar. 906,029 1,088,570 1,245,226 1,464,787 1,715,523 1,946,199 1,972,355 2,318,177 3,173,023 3,500,951 3,908,796 4,269,264 5,652,320 6,283,622 7,089,595 8,823,690 11,289,037 11,393,785 10,352,615 10,596,174 9,426,849 13,276,731 10,538,818 14,712,861 17,392,838 19,225,170 21,627,680 22,055,837 23,258.686 23,187,979 20,636,819 30,780,534 30,977,538 3rd Quarter Apr. - Jun. 851,768 951,522 1,137,359 1,339,538 1,591,553 1,695,216 2,327,542 2,045,637 2,653,062 3,154,677 3,486,853 3,721,919 5,033,556 5,625,486 6,784,754 8,962,819 10,921,876 10,435,305 9,677,073 10,651,574 14,140,172 8,918,588 13,577,375 14,231,541 15,971,215 18,072,107 18,836,109 20,293,853 20,849,873 24.054,142 26,050,700 29,299,798 30,573,924 Equivalent Tax Rate (1) 1% City sales tax levied effective January 1, 1968. This tax is collected and remitted to the City by the State Comptroller. 177 4th Quarter Jul. - Sept 1,457,957 917,593 1,041,129 1,234,512 1,414,787 1,691,794 1,887,840 1,644,231 2,560,088 3,867,237 3,852,911 4,066,500 6,000,029 7,102,891 8,024,660 9,051,752 12,755,753 14,506,719 13,741,340 12,189,597 14,359,464 15,566,564 16,963,763 18,522,158 20,007,152 22,821,515 26,586,171 26,812,429 35,688,474 38,470,910 42,004,326 45,467,220 51,688.137 50,3i2,278 Total 1,457,957 3,551,248 4,054,923 4,746,038 5,528,042 6,568,190 7,259,286 7,905,395 9,165,643 11,491,263 13,530,924 15,277,674 17,783,812 21,580,905 24,417,191 28,096,955 36,873,298 44,634,353 43,948,837 39,888,228 42,924,913 47,172,111 51,540,272 55,400,628 58,255,348 67,054,207 75,780,061 80,474,693 83,681,314 88,150,309 97,581,417 106,839,032 122,157,210 123,218,291 100.00 24358 278.12 32553 379.16 450.51 497.91 54222 628.66 788.18 928.07 1047.88 1219.78 148022 1674.75 1927.15 2529 11 3061 43 3014A1 2735.90 2944.18 323549 3535.10 3799 88 3995 68 459919 5197.69 551969 5739.63 6046.15 6693.02 7328.00 8378 66 6451.44 0.00 143.58 14.18 17.04 16.48 1882 1052 8.90 1594 25.37 17.75 12.91 16.40 21.35 1314 1507 31.24 21.05 -1.54 --9.24 7.61 9.89 926 7.49 5.15 1510 1301 6.20 398 5.34 10.70 9A9 1434 0.87 14.58 34.07 "35.08 34.41 35.50 3837 3845 3605 3617 3592 40.00 45.75 49.42 5620 5386 5302 57.00 61.53 4924 35.23 37.92 46.43 50.46 5659 57.11 61.62 6675 6826 65.94 65.01 65.72 64.01 68.16 63.80 19.54 4396 4525 44.39 4580 48.73 48.82 42.89 4594 4562 4960 4392 47.44 3203 33.39 29.81 37.05 2898 2600 17.01 2016 2461 2901 32.23 3442 39.50 41.55 38.40 35.91 34.14 35.50 32.91 34.31 29.75

2,346 3.139 2,037 1,906 50 277 321 CITY OF AUSTIN, TEXAS Table 12 miles primary overhead distribution lines (12KV) miles secondary overhead distribution lines (12KV) miles primary underground distribution lines (12KV) miles secondary underground distribution lines (12KV) miles transmission lines (69KV) miles transmission lines (138KV) miles transmission lines (345KV) WATER AND WASTEWATER FUND Source of supply - 150 mile long network of lakes created along the Colorado River by six dams with a combined storage capacity in excess of 3,300,000 acre-feet of water. Water treatment plants Rated peak daily capacity Average daily consumption Average daily consumption per capita Water distribution Water connections Wastewater treatment plants Combined daily capacity Average daily volume Collection: Sanitary sewer mains Connections Lift stations 3 250.000,000 121.221,746 172 2,825 42 175.000 25,838 3 130,000.000 93,941,989 2,202 173,000 104 gallons gallons gallons (based on 2001 service area population) miles of mains booster pump stations metered services fire hydrants gallons gallons miles 178 ELECTRIC FUND AND WATER AND WASTEWATER FUND MISCELLANEOUS STATISTICS September 30, 2001 ELECTRIC FUND Distribution - L-

ELECTRIC FUND AND, WATER AND WASTEWATER FUND FIVE-YEAR COMPARATIVE OPERATING STATEMENT 1997-2001 CITY OF AUSTIN, TEXAS Table 13 Fiscal Year Ended September 30 2001 2000 1999 1998 1997 REVENUE Electric Service Area Sales Sales to other utilities (including capacity contract) Rent from electric property Customers' forfeited discounts and penalties Miscellaneous Total electric Water Urban Rural City utility departments City general government departments Sales to other water utilities Water connections Customers' forfeited discodnts and penalties Miscellaneous Total water Wastewater Urban Rural City utility departments City general government departments Sales to other sewer utilities Sewer connections Customers' forfeited discounts and penalties Miscellaneous Total wastewater Interest Total operating and Interest revenues 756,246,287 723,260,135 622,488,907 33,134,735 50,780,027 51,565.929 995,375 851,352 878,071 (36,129)' 1,557,559 3,964,346 15,970,414 6,280,055 3,190,335 806,310,682 782,729,128 682,087,588 98,746,345 109,962,989 91,861,270 6,438,710 7,413,123 5,581,758 309.925 (42,206) 1,086,946 7,238,838 7,940,351 6,386.790 237,280 207,742 232,980 (5,253) 263,506 605,178 2,016,478 4,443,174 3,556,202 114,672,398 130,188,679 109,621,049 92,293,455 97,895,552 91.671,869 2,810,219 .2,630,647 2,228,573 1,166 6,670 546,246 41,788 3,337,932 3,252,372 3,030,741 217,507 190,430 216,338 (3,312) 260,173 573,446 6,585,139 6,054,111 6,112.737 105.242.106 110.289,955 104,421,738 603,337,666 553,391,701 56.566.516 31,236,225 870,118 696,701 3,982,395 3,928,675 3,614,356 5,077.852 668.371.051 594.331.154 88,970,989 73,284,637 5,860,807 5,200,271 369,646 286,698 1,206,260 1,065,464 7,452,052 7,177,235 249,250 259,616 630,236 598,582 1,157,918 1,075,847 105.897,158 88,948,350 83,179,862 77,745,986 1,862,117 2,172,354 501,761 662,706 258,645 43,994 3,102,116 4,010,258 231,447 241,072 539,652 585,706 6,219,036 5,520,010 95.894,636 90,982,086 61,315,883 47,350,612 30,561,222 48,345,300 37,924,320 1.087,541,069 1,070,558,374 926,691,597 918,508,145 812,185,910 (continued) 179 Fiscal Year Ended September 30 2001 2000 1999 1998 1997

ELECTRIC FUND AND WATER AND WASTEWATER FUND FIVE-YEAR COMPARATIVE OPERATING STATEMENT 1997-2001 CITY OF AUSTIN, TEXAS Table 13 (Continued) Fiscal Year Ended September30 2001 2000 1999 1998 1997 EXPENSE Electric Water Punfication Distribution Customer accounting and collection Jobbing and contract work Design engineering Administrative and general Total water Wastewater Sewer lines Sewage treatment plant Customer accounting and collection Jobbing and contract work Design engineenng Administrative and general Total wastewater Total expenses (1) 458,685.525 420,074.862 342,914,020 332,985,598 308.089,979 15,302,623 14,225,476 12.649,706 14,457,475 12.077,872 20,196,995 18,246,648 15,575,024 13,601,407 15,189,496 5,202,484 5,456,698 3,908,047 3,194,097 3,009,229 51,692 14,214 (27,468) 16,855 17,431 425,250 1,921,976 1,251,519 1,203,702 629,797 12.405.831 12,938,784 10,764.449 10.866,801 9,314,654 53,584,875 52,803,796 44,121,277 43,340,337 40,238,479 6,175,380 7,591,689 8,562,780 8,588,828 6,203.528 19,171,921 17,115,187 17,633,822 16,041,275 15,730,827 4,374,495 4,406,215 2,482,971 2,235,435 2,143.126 86,683 68,505 55,906 43,233 11.769 6,846,189 1,998,054 2,312,461 1,991,976 3,018,212 12,172,179 12,382,295 11,842,412 8,711,831 7,685,425 48,826,847 43,561,945 42,890,352 37,612.578 34,792,887 561,097,247 516,440,603 429,925,649 413.938,513 383,121.345 Net revenue available for debt service 526,443,822 554.117,771 496,765,948 504,569,632 429,064.565 (1) Interest expense, depreciation, amortization and other nonoperating items are not included in total expense. 180 Total electric

CITY OF AUSTIN, TEXAS Table 14 ELECTRIC FUND AND WATER AND WASTEWATER FUND PLANT COST AND EQUITY IN UTILITY SYSTEMS 1997-2001. PLANT COST Utility systems Electric Water Wastewater Total cost Allowance for depreciation: Electric Water Wastewater Total depredation Cost after depreciation EQUITY IN UTILITY SYSTEMS Utility systems Plus* Inventories, materials and supplies (1) Net construction assets and unamortized bond issue cost (2) Less: Allowance for depreciation Construction contracts payable Utility systems, net Revenue bonds and other debt outstanding (3) Less: Bond retirement and reserve funds Net debt Equity in utility systems Fiscal Year Ended September 30 2001 2000 1999 1998 1997 ~ 3,067,649.886 2,842,927,082 2,693,237,524 2.625,217,308 2,572,557,667 1,169,574,534 1.090,911.586 1,003,650.278 893,668,714 821,502.655 1.080.758,935 1,032,885,331 976.681,032 921,580.649 867,001,907 5,317,983.355 4,966,723,999 4,673,568,834 4,440,466,671 4,261,062,229 1,131,860,735 1,048,947,313 972,367,880 895,154,272 818,396,311 264,352,217 242,395,336 220,477,506 202,674,479 182,053,656 328,639,983 304,151,983 280,008,297 -256,629,792 230.946,972 1,724,852,935 1,595,494,632 1,472,853,683 1,354,458,543 1,231,396,939 3,593,130,420 3,371,229,367 3,200,715,151 3,086,008,128 3,029,665,290 5,317,983,355 4,966,723,999 4,673,568,834 4,440,466,671 4,261,062,229 34,688,816 32,904,657 32,227,327 31,950,001 30,687,913 154,575,909 126,423,265 145,027,887 129,476,175 134,997.115 5,507,248,080 5,126,051,921 4,850,824,048 4,601,892,847 4,426,747,257 1,724,852,935 1,595,494,632 1,472,853,683 1,354,458,543 1,231,396,939 279,041 1,149,032 2,127,799 2,222.064 2,889,429 1,725,131,976 1,596,643,664 1,474,981,482 1,356,680,607 1,234,286,368 3,782,116,104 3,529,408,257 3,375,842,566 3,245,212,240, 3,192,460,889 2,988,903,922 2,932,066,283 2,865,320,460 2,818,680,622 2,780,846,233 170,699,819 _161,597,147 160.866,775 169.005,087 - 160,527,625 2,818,204,103 2,770,469,136 -2,704,453,685 2,649,675,535 2.620,318,608 963,912,001 758,939,121 671,388,881

595,536,705 572.142.281 Percentage of equity in ublity systems 25.49%

21.50% 19 89% 18.35% '(1) Does not Include fuel oil or coal Inventories of approxrimately $14,038,892 at September 30, 2001. -Consists primarily of spare parts Inventory at Fayette Plant and South Texas Project. "(2) Includes Investment in municipal ublity districts of $1,756,084. (3) Includes Revenue Bonds and T"x/Revenue Bonds of $2,640,797.440 (net of discounts and Inclusive of premiums). Contract Revenue Bonds of $76,463.104; Capital Lease Obligations of $18,923,134; Water District Bonds of $250.000, Commercial Paper of $228,468,720 (net of discounts); General Obligation Bonds of $15,823,992; and Contractual Obligation Bonds of $8,177,532. 181 17.92%

SCHEDULE OF COMBINED UTILITY SYSTEMS CITY OF AUSTIN, TEXAS ELECTRIC, WATER, AND WASTEWATER Table 15 REVENUE BOND COVERAGE 1992-2001 Net Revenue Available for Debt Service Debt Service Requirements (3) Fiscal Year Total Operating Net Revenue Total Revenue Bond Ended Revenue Expenses Available for Debt Coverage Sept. 30 (1) (2) Debt Service Principal Interest Service (4) 1992 610,003,346 '274,749.207 335,254,139 29,005,000 190,946,822 219,951,822 1.52 1993 670,277,492 '358,279,919 311,997,573 19,810,000 170,224,959 190,034,959 1 64 1994 684,559,883 372,994.681 311.565,202 14,885,000 145,844,823 160.729,823 1.94 1995 717,231,490 352,002,639 365,228,851 34,547,200 150,951,667 185.498,867 1.97 1996 831,370,626 380,407,102 450,963,524 75,520,330 154,727,958 230,248,288 1.96 1997 812,185,910 383,121,345 429.064,565 82.540,580 146.997,910 229,538,490 1.87 1998 918,508.145 413,938,513 504,569,632 93,922,453 140,541,178 234,463,631 2.15 1999 926,691,597 429,925,649 496,765,948 100,083,871 131,627,342 231,711,213 2.14 2000 1,070,558,374 516,440,603 554,117,771 96,790,312 140,126,373 236,916,685 2.34 2001 1,087,541,069 561,097,247 526,443,822 101,357,366 133,054,611 234,411,977 2.25 (1) Operating revenue and interest incomc (2) Operating expenses other than interest on debt, depreciation and amortizatic (3) Debt service calculations are done on a cash basis rather than the accrual basis used in preparation of t financial statements (4) Revenue bond coverage Is equal to net revenue available for debt service divided by total principal interest payments made during each fiscal year. Coverage includes prior, subordinate, and separate lien bonds o UTILITY REVENUE BOND COVERAGE 600,000 300 500.000 1 x 2.50 T h 400,000 2.00 o .R u -a s 300,000.-^" k* 1.50 t a n 0 / ,/ d 200,000 10 100,000 .0.50 S........... 0.00 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Net Revenue Total Debt ---- Revenue Bondi 182

TRANSFERS FROM ELECTRIC FUND AND CITY OF AUSTIN, TEXAS WATER AND WASTEWATER FUND Table 16 TO GENERAL FUND 1982-2001 Other Revenue 17,855,612 24,715,181 31,330,815 42,189.950 51,724,247 56,137,604 42,873,171 50,230,792 53,747,584 42,874,767 31,038,077 25,202,489 21,753,329 26,399,616 31,293,078 37,924,320 48,345,300 30,561,222 47,350,612 61.315.883 Total Transfers to Revenue General Fund 406,532.127 37,082,911 389,259,488 40,836,300 482,476,780 46,057,000 489.889.437 50,524.900 568.448,380 56.089,577 581,487,123 60.203,227 599.228,991 63,740.768 592,746,498 64,459,956 638,931,733 63,665,887 614,691,145 63,054,576 609.314.360 73,237.718 670,277,492 68,581,868 684,559.883 67,914.376 717,231,490 71,110,681 831,370,626 73.582,839 812,185,910 71,449,866 918,508,145 72,721,264 926,691,597 74,204,480 1.070,558,374 78,351.603 1,087.541,069 85,824,446 Percentage of Total Revenue 9.12 10.49 955 1031 987 1035 1064 10.87 996 1026 1202 1023 992 9.91 8 85 8 80 7.92 8.01 7.32 7.89 183 Fiscal Year 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Operating Revenue 388,676.515 -364,544.307 451,145,965 447,699,487 516,724,133 525,349,519 556,355,820 542,515,706 585,184,149 571,816,378 578,276,283 645,075.003 662,806,554 690,831,874 800,077,548 774,261,590 870,162,845 896,130,375 1,023,207,762 1,026,225,186

ELECTRIC FUND AND WATER AND WASTEWATER FUND STATISTICAL DATA Year ended September 30, 2001 With comparative totals for year ended September 30, 2000 CITY OF AUSTIN, TEXAS Table 17 Electric Sales (KWH) 2001 2000 Number of Metered Customers 2001 2000 Electric: Totals Water and Wastewater Thousands of gallons pumped Less: Sales to other utilities Thousand gallons to system Water sales: Urban Rural City departments Used by utility Loss and unaccounted for Thousand gallons to system 10,429,526.710 10,725,552,791 346,795 333,903 2001 2000 Average Thousand Average Thousand Customers Gallons Customers Gallons 50,184,839 (1) 3,639,468 46,545,371 165,536 11,700 177,236 392 177,628 Maximum daily use 37,653,186 2,219,216 39,872,402 588.880 40,461,282 1,531,430 4,552,659 46,545,371 161,243 11,242 172,485 392 172,877 240,285 127.522 Average daily consumption (1) Pumpage includes the Davenport WTP estimate provided by ST Environmental Services. 184 52,326,065 (1) 3,863,466 48,462,599 41,973,466 2,435,328 44,408,794 650,006 45,058,800 1,613,380 1,790,419 48,462,599 220,305 132,774

WATER AND WASTEWATER FUND CITY OF AUSTIN, TEXAS LARGE CUSTOMERS Table 18 FIVE-YEAR COMPARATIVE DATA (1997-2001) Fiscal Year Ended September 30 (dollars In thousands) 2001 .2000 1999 1998 1997 n M.1. in . 0nein G.allons Revenue Gallons Revenue Gallons Revenue S e$ LARGE WATER CUSTOMERS Motorola, Inc. (1) 1,931.463 4,886 1,814,060 4,031 1,781,016 3,855 1,904,313 3,927 1.894,6879 3,918 The University of Texas at Austin 1,135,801 4,094 1,029,359 2,341 908,424 2,056 824,213 1,784 824,049 1,767 Advanced Micro Devices 979,919 2,340 1,044,510 2,082 1,186,752 2,570 1,250,741 2,584 1,151,306 2,384 Water Distnct 10 848,672 1,666 901,248 1,831 699,180 1,416 737,810 1,509 579,175 999 Wells Branch MUD 587,057 1,076 646,054 1,328 544,046 1.107 559,016 1,013 463,043 851 Samsung 492,533 1,153 462,139 1,005 353,927 768 363,761 812 48,002 91 Anderson Mill MUD 486,185 851 546,213 936 510,713 872 542,058 899 467,978 799 North Austin MUD 364,580 712 406,345 850 297,789 622 323,138 658 276,784 557 Lost Creek 303,592 608 355,547 758 282,637 600 320,721 655 237,423 497 Shady Hollow MUD 247,103' 496 300,277 800 217,346 576 266,715 671 195,505 494 7,376,905 .17,882 7,505,752 15,962 6,781,830 14,442 7,092,486 14,512 6,138,144 12,357 (1) Totals for Motorola, Inc. Include the east Austin plant site and the west Austin plant sites

CITY OF AUSTIN SCHEDULE OF INSURANCE IN FORCE September 30. 2001 CITY OF AUSTIN, TEXAS Table 19 Department Annual Umits of and Policy Expires Premium Insurer Coverage Coverage Overview City-wide (Excluding Austin Energy (1)) "* All-risk property "* Boiler and machinery City-wide Commercial crime City-wide Selected capital improvement projects

• Hired and nonowned auto City-wide Selected capital improvement projects
• Commercial general liability City-wide Selected capital improvement projects
• Workers compensation and employers liability 1011/01

$788,394 Arkwright 10/20/01 $13,169 1111/01 Premium is for a 4 year term; $1,000 paid in 1997 1111/01 $2,812,770 Premium is for a 4 year term. Premium may vary based on experience. 11/1/01 Premium Included in Commercial general liability above and Is for a 4 year term. Premium may vary based on experience. Fidelity & Deposit Fidelity & Deposit St. Paul Insurance St. Paul Insurance St. Paul Insurance $1,000,000,000 $5,000,000 $1,000,000 $1,000,000 per occurrence $2,000,000 per occurrence; $2,000,000 general aggregate Workers' compensation: Statutory Employers' Uability: $1.000,000 each accident $1,000,000 policy limit $1.000,000 each employee Provides replacement cost coverage for loss or damage to City buildings, and contents due to fire, wind storm. hail, or other perils Subject to a $100,000 per occurrence deductible. Provides coverage for fine arts owned or on loan subject to $1,000 ' deductible per claim. Covers Cable "TV equipment with $1,000 deductible. Covers damages from boiler and fired pressure vehicle accidents with a $10,000 deductible. Covers loss of funds through public employee dishonesty. Subject to $5,000 deductible. Covers loss of funds through forgery or alteration of, on, or in any covered instrument. Subject to $5,000 deductible. Provides bodily injury and property damage coverage to the City and contractors signed up in the Rolling Owner Controller Insurance Program (ROCIP). Coverage is provided for nonowned and hired vehicles and is intended to be excess over primary auto coverage. Provides bodily injury, property damage, and completed operations coverage to the City and contractors signed up in the ROCIP program. Coverage is provided only at specified capital improvement project sites participating in the program. Provides wirkers' compenstlgon and employers' liability coverage to all contractors working on specified capital improvement project sites participating in the ROCIP program. (continued) (1) Austin Energy maintains appropriate levels of insurance coverage on all property and boilerlmachinery, as well as excess liability coverage. Coverage is in compliance with applicable regulations and bond covenants. 186

CITY OF AUSTIN SCHEDULE OF INSURANCE IN FORCE CITY OF AUSTIN, TEXAS Table 19 September 30, 2001 (Continued) Department Annual Limits of and Policy Expires Premium Insurer Coverage - Coverage Overview

4.

City-wide Selected capital improvement projects 9 Excess liability Aviation

• Airport liability Finance
• Fidelity bond Health and Human Services Department (HHSD) and Primary Care Department
• Medical malpractice Police
• 'Airplane liability Public Works
• Commercial general liability 11/1/01

$140,160 Premium Is for a 4 year term. 3/24102 $54,193 5/6/02 $850 St. Paul Insurance $8,000,000 Old Republic - $100,000,000 Westem Surety $100,000 5120/02 $115,664 Texas Medical $200,000 per Liability Trust occurrence; $600,000 aggregate 8/21/02 $850 5/12/02 $14,620 Signal Aviation Underwriters, Inc. Audubon Indemnity Company $100,000 per person, $1,000,000 per occurrence $1,000,000 per occurrence; $2,000,000 general aggregate Provides excess coverage over the primary auto, employers' liability, and general liability coverage. Self insured retention is $25,000. Provides liability protection for operations at the airport. $100,000,000 per occurrence. Personal injury limits of $25,000,000. Covers loss of funds through employee dishonesty for the Director of Finance and City Treasurer. No deductible applicable. Provides medical malpractice coverage for physicians. Coverage Is on a claims made basis and is offered as a benefit for physicians employed by the City for both HHSD and Primary Care. Aircraft physical damage; liability to others; medical expense. Provides bodily Injury and property damage coverage to the City Coverage is provided only for 505 Barton Springs Road, One Texas Center. Purchased for compliance with tenant lease agreements 187

HOTEL-MOTEL OCCUPANCY TAX TAX LEVIED EFFECTIVE JANUARY 1, 1971 CITY OF AUSTIN, TEXAS TABLE 20 1971-2001 Fiscal Year Annual Ended 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Percent Increase Sept. 30 Oct.-L Dec. Jan. - Mar. Apr. - Jun. Jul. - Sept. Total Base Year (Decrease) 1971 (1) 1972 1973 1974 1975 1976 1977 (2) 1978 1979 1980 1981 1982 1983 1984 (3) 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 (4) 1999 2000 2001 (5) 76.984 81.045 93.177 99,215 117,374 151.665 184.781 288.919 341,993 409.762 548,825 630,232 689,264 941,893 1,705,665 1,674,558 1,379,099 1,674,823 1,878,569 1,942,450 2,224,053 2,463,470 2.727,486 3.115,451 3,494,394 3,536,872 4,538,958 5,611,823 6,636,823 7,594,776 66,993 72,409 80,532 94,190 102,840 136,046 214,007 272.772 321,153 362,559 435,653 519,503 641,817 1,491,967 1,438,165 1,223,621 1,329,160 1,683,558 1,620,368 1,860,253 1,957,134 2,260.375 2,408,591 2,869,919 3,202,865 3,353,333 4,284,084 5,551,731 6,264,056 7.671.359 69,071 72,548 86,576 86,948 96,739 123,474 185,907 237,216 307,652 361,385 443,138 507,105 648,948 767,887 1,557,235 1,597,429 1,681,665 1,522,765 1,907,258 1,918,927 2,154,340 2,317,423 2,778,975 2,896,697 3,500,988 3.762,935 3,859,507 4,936,295 6,375,290 7,573,390 8,042,834 73,184 79,457 92,679 99,453 113,131 148,508 138,515 293,196 353,143 401,138 481,192 602,974 699,246 917.109 1,923,513 1,554,359 1,569,008 1,709,054 2,126,998 2,151,947 2,350,986 2,622,315 3,011.457 3,443,893 3,653,908 3,799,614 4,468,147 5,061,261 7,073,269 8,283,660 7,835,582 142,255 295,982 332,709 360,110 403,275 492,196 612,133 929,200 1,222,486 1,425,669 1,696,651 2,094,557 2,497,929 3,016,077 5,914,608 6,295,618 6,148,852 5,940,078 7,392.637 7,569,811 8,308,029 9,120,925 10,514,277 11,476,667 13.140,266 14,259,808 15,217,859 18,820,598 24,612,113 28,757,929 31,144,551 100.00 208.06 233 88 253.14 283.49 346.00 430 31 653.19 859.36 1,002.19 1.19268 1,472 40 1,75595 2,120.19 4,157.75 4,425 59 4,32242 4,17565 5,19675 5,321.30 5,840 24 6,41167 7,391.15 8,067.67 9,237.12 10,024.12 10,69759 13,230.18 17,301 40 20,21576 21,89347 10806 12.41 824 11.99 2205 2437 51 80 31.56 1662 1901 2345 1926 20.74 96.10 6.44 (2.33) (3.40) 24.45 2.40 9.75 9.78 15.28 9.15 14.50 8.52 6.72 2367 30.77 1684 8.30 (1) 3% tax levied effective January 1, 1971. Section 32-32(a) of Article V of Chapter 32 of the 1967 Code of the City of Austin. (2) Tax levy increased to 4% effective October 1, 1977. Ordinance No. 770901-1 amended Section 32-32(a) of Article V of Chapter 32 of the 1967 Code of the City of Austin. (3) Tax levy increased to 7% effective October 1, 1984. Ordinance No. 840712-U amended Section 5-3-2(a) of Chapter 5-3 of Title V of the 1981 Code of the City of Austin. (4) Tax levy increased to 9% effective August 1, 1998. Ordinance No. 980709-G amended Section 5-3-2(a) of Chapter 5-3 of Title V of the 1981 Code of the City of Austin. (5) Beginning in fiscal year 2001, the City implemented GASB Statement No. 33, which changes the method of reporting tax collections in the City's financial statements. This table will continue to be reported on a cash basis to provide a more meaningful comparison. 188

MISCELLANEOUS STATISTICAL DATA CITY OF AUSTIN, TEXAS Table 21 Date of Incorporation: Date first Charter adopted: Date present Charter adopted Form of Government: Number of Employees* Elections: Number of registered Voters, November 7, 2000 May 6,2000 November 7, 2000 December 27, 1839 December 27, 1839 January 31, 1953 Council - Manager 10,914 572,338 425,052 511,436 Number of votes cast In: Last general election, November 7, 2000 Last bond election, November 7, 2000 Last general municipal election, May 6, 2000 Last municipal election, November 7, 2000 Percentage of registered voters voting in* Last general election, November 7, 2000 Last bond election, November 7, 2000 Last general municipal election, May 6, 2000 Last municipal election, November 7, 2000 Fire protection: Number of stations Number of employees Number of alarms answered Number of employees per 1,000 population (1) Poilce protection: Number of employees Number of law offenses Number of arrests Vehicle patrol units Number of employees per 1,000 population (1) Travis County City of Austin City of Austin 302,812 228,615 36,485 228,615 52.91% 44.70% 858% 44.70% 40 1,059 59,307 1 6006 Library: Central and branch libraries Volumes in collection Materials circulated Registered borrowers Recreation: District parks Metropolitan parks Natural preserves Neighborhood parks Special parks (m;Jseums and miscellaneous) Greenbelts Golf courses Swimming pools Recreation centers Youth entertainment complex Senior activity sites Athletic fields Tennis courts Open fields Senior activity centers Veloway Hike and bike trails POPULATION ANALYSIS Austin (1) Percentage Year Population Change Travis County (1) Percentage Population , Change Texas (2) Percentage Population Change United States (2) Percentage Population Change 44.96 -31.78 39.30 41.98 2563 9.35 1.62 1.51 0.99 609 3.14 3.76 3.24 3.12 -2.64 0.61 11.71 6,414,824 7,711,194 9,579,677 11,198,655 14,228,383 16,370,000 16,986,510, 17,349,000 17,615,745 17,805,566 18,291,000 18,724,000 19,128,000 19,439,337 19,759,614 20,044,141 20,044,141 20,851,820 132,165,000 -2021 151,326,000 2423 179,323,000 16.90 203,302,000 27.05 222,110,000 1505 238,740,000 3.77 249,632,692 2.13 252,177,000 ,,1.54 255,020,000 1.08 257,592,000 2.73 261,212,000 2.37 262,755,000 2.16', 265,410,000 1.63 267,792,000 1.65,,- 271,685,044 1.44 ...272,690,813 0 00 272,690,813 4.03 281,421,906 14.50 1850 1337 925 7.49 4.56 1.02 1.13 1.01 1.41 059 1.01 0.90 1.45 0.37 0.00 3.20 (1) All years are estimates from the City's Department of Development and Review based on full purpose area as of December 31. Census years are modified to conform to U.S. Bureau of the Census data. Estimates for 1985 were revised in 1990 based on the 1990 census (2) U.S. Bureau of the Census official estimates as of July 31, except for census years; 2000 data available Apni 2001. 189 1,784 117,927 41,162 232 2.6963 21 1,416,044 3,164,580 410,102 11 10 14 80 23 25 6 47 16 1 20 87 106 88 3 3.1 miles 51 miles 1940 1950 1960 1970 1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 87,930 132.459 186,545 253,539 345,496 406,584 450.830 466,530 474,715 478,254 507,468 523,352 541,889 560,939 608214 619,038 628,667 661,639 5064 4083 35.91 3627 17.68 1088 348 1.75 0.75 6.11 3.13 3.54 3.52 8.43 1.78, 1.56 524 111,053 160,980 "212,136 295,516 419,573 527,120 576,407 585,731 594,560 600,427 636,991 656,979 681,654 703,717 725.669 744,857 749,426 837,206

MISCELLANEOUS STATISTICAL DATA ECONOMIC AND GROWTH INDICATORS 1992-2001 CITY OF AUSTIN, TEXAS Table 22 Effective Buying Income (EBI) (4) Area of Median Per Incorporation Utility Connection (2) Household Capita Year (Sq. Miles) Population (1) Electric (3) Water Gas EBI EBI 1992 190.12 474,715 286,413 141,210 139.529 28,679 15,475 1993 193.15 478,254 291,896 146,396 143.088 29,662 16,965 1994 192.16 507,468 298,662 148,148 142,373 32,062 17,487 1995 19668 523,352 306,670 149,867 147.023 33,981 18,490 1996 195.74 541,889 319,518 151,757 148,124 29,803 16,685 1997 23226 560,939 326,816 156,397 156,752 31,362 17,494 1998 25367 608,214 342,263 168,907 165,274 33,690 18,999 1999 252.30 619,038 348,721 173,038 173,150 36,532 18,973 2000 264.90 628,667 344,134 176,096 172,063 36,321 20,790 2001 26580 661,639 349,671 178,608 172,177 39,811 22,241 1992-2001 Change 39 81% 3938% 22.09% 2648% 23.40% 3882% 43.72% Building Permits Austin Area Home Sales (6)

Federal, State and Retail Sales Average Number of Year Municipal Taxable Total (Austin) (5)

Sale Price Homes Sold 5.162,800 70,976,449 19,643,501 11,087,831 89,945,847 2,574,539 46,722,845 54,399,189 34,334,286 71,189,116 1278.89% 435,053,697 607.717,144 840,043,119 870,446,315 1,246,232,619 1,023,114,762 1,434,660,615 1,501,435,229 1,797,039,075 1,625,508,854 273.63% 440,216,497 678,693,593 859,686,620 881,534,146 1,336,178.466 1,025,689,301 1,481,383,460 1,555,834,418 1,831.373,361 1,696,697,970 285 42% 5,644,034,689 6,253,828,689 6,784,452,526 7,286,274,112 7,932,937,305 8,513,655,224 10,842.488,373 11,279,844,061 13,577,833,634 12,542,967,960 122.23% 106,265 8,914 114,908 11,104 120,161 10,833 126,726 8,436 132,699 9,773 146,763 8,094 155,600 10,536 166,272 12,284 196,308 12,972 154,000 12,444 4492% 39 60% Note: All numbers are as of fiscal year ended September 30, except where noted. (1) Figures represent full purpose population as of December 31 for each year. (2) Figures are as of September 30. (3) Figures exclude nlghtwatchman billings. (4) Source: 2000 Survey of Buying Power, Sales and Marketing Management (5) Source: State of Texas Cdmptroller's Office. Amount is an estimate based on State of Texas Comptrollers Office data. (6) Source: Austin Board of Realtors. 190 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 1992-2001 Change

EMPLOYMENT I-ARA II ERIS I ICS EMPLOYMENT BY INDUSTRY IN THE AUSTIN METROPOLITAN STATISTICAL AREA (1) 2001 2000 1990 1980 % of % of % of % of Industrial Classification Number Total Number Total Number Total Number.- Total Manufacturing Government Trade Services and miscellaneous Finance, insurance and real estate Contract construction Transportation and utilities Mining Totals 86,500 12.6 140,700 205 154,600 22.5 207,900 30.3 33,000 48 39,700 5.8 22,400 3.3 1,600 0.2 686,400 100.0 84,662 12.9 137,171 20.9 150,231 22.9 190,048 28.9 32,031 4.9 39,134 60 21,540 3.3 1.353 02 49,300 12.9 31,014 12.8 110,400 28.8 78,263 32.3 78,400 20.4 51,852 21.4 97,200 25.3 44,826 18.5 23,400 6.1 14,296 5.9 12.000 3.1 14,053 58 12,100 3.2 - 7,269 3.0 700 02 727 0.3 656,170 1000 383,500 100.0 i 242,300 1000 Source: Texas Workforce Commission (TWC) (1) Austin MSA includes Travis, Bastrop, Caldwell, Hays, and Williamson Counties. Numbers for 2001 are an estimate based on TWC and the Bureau of Labor Statistics, and U S. Department of Labor data as of March 31st L TEN LARGEST EMPLOYERS September 30, 2001 Number of % of Employer Product or Service Employees Total (2) The University of Texas at Austin Dell Computer Corporation City of Austin Austin Independent School District Motorola, Inc. HEB Grocery Seton Healthcare Network IBM Corporation Internal Revenue Service Sulzer Orthopedics, Inc Education and research Computers City government Education Electronic components Grocerylpharmacy Hospital Office machines Federal agency Medical 20,211 2.9 17,100 2.5 10,914 1.6 9,417 1.4 8,900 1.3 7,000 1.0 6,715 1.0 5,988 0.9 5,800 0.8 5,479 0 8 97,524 142 Source: Austin Chamber of Commerce (2) Total refers to total work force of 686,400 as stated in the 'Employment by Industry' Table, above. 191 AVERAGE ANNUAL UNEMPLOYMENT RATE AVERAGE ANNUAL UNEMPLOYMENT RATE 88% Source: Texas Workforce Commission 7.7% 65% -UAustin MSA 54%- Texas 4.3%

• -tt UA 3.1%

2.0% 1992 1993 -1994 1995 1996 1997 1998 1999 2000 2001 MISCELLANEOUS STATISTICAL DATA CITY OF AUSTIN, TEXAS

ELEMENTS OF BUDGET FUND BALANCE FOR SELECTED OPERATING FUNDS CITY OF AUSTIN, TEXAS Table 24 Septemuer.U, 2UU-1 Inception-to-Date Reserve for Change In Encumbrances Fair Value General Fund Special Revenue Funds: Disproportionate Share Federally Qualified Health Center Fiscal Surety - Land Development Enterprise Funds:' Electric Water and Wastewater: Water 1 Wastewater Hospital Solid Waste Services Airport Convention Center Drainage Transportation Golf Parks and Recreation: Softball Recreation Centers Internal Service Funds: Fleet: Operating Designated for acquisition Support Services Information Systems Employee Benefits Liability Reserve Radio Communication Infrastructure Support Services Capital Projects Management Total $ 6,460,867 207,873 207,071 11,307.107 660.036 1.118.847 200,779 394.780 1.003,587 389.816 432,682 1,746,199 38,565 7,716 9,070 398,296 1,246,691 2,708,865 2,134,066 46,471 133,656 38,338 40,194 250,201 247,936 476,950 985,566 316,520 382,455 513.594 954,155 299,094 4,176,270 192

77 Rn no "ON, lkw. IA

TABLE OF CONTENTS Page Profile of San Antonio's Gas and Electric Utility..................... Page 1 Message from the Chairman and General Manager & CEO................ Page 2 Corporate Governance..................... Page 4 Governmental and Regulatory Relations........ Page 6 Environmental.......................... Page 8 Energy Supply Electric System........................ Page 12 Gas System........................... Page 16 Electric Transmission and Distribution Systems................... Page 18 Customer and Energy Services.............. Page 22 Finance and Administration................ Page 26 Five Year Reviews....................... Page 30 Financial and Operational Review............ Page 32 Report of Management.................... Page 34 Audited Financial Statements and Footnotes.... Page 34 The vision statement creates an image of our mission accomplished. The pathway to our vision is the ultimate journey through the challenges that we face now, and in the future. Therefore, the theme for this annual report is that journey. CPS Vision Statement: To be the BEST publicly-owned energy company in the U.S.A. About the cover: San Antonio downtown skyline shines brightly through the efforts qf City Public Service t Printed on Recycled Paper

Profile of San Antonio's ' Gas and Electric Utility " -" San Jose is one of five Spanish missions in San Antonio. s the second largest municipally owned utility in the nation, CPS serves more than 592,000 electric customers throughout its 1,566 square-mile service area, and about 307,000 natural gas customers in the urban San Antonio area. Purchased in 1942 by the City of San Antonio, CPS provides competitively priced energy products and services for San Antonio and the surrounding area. The utility is governed by a five-member Board of Trustees that includes the Mayor of San Antonio As of January 2002, CPS owns and operates 16 electric generating units capable of producing 4,327 megawatts (MW) of power from natural gas, oil and coal. CPS also owns 700 MW of nuclear generating capacity in the South Texas Project plus the rights to another 160 MW' of wind generation, which brings the total CPS capacity to 5,187 MW. For the fiscal year ending January 2002, CPS's generation was obtained from the following sources: coal, 48.9 percent; nuclear, 30.5 percent; and natural gas, 19.5 percent. Wind energy and purchased power accounted for 1.1 percent. A diversified fuels mix at economical prices, low production costs and sound financial manage ment have enabled CPS to keep its rates lower than any other major Texas city and most other large U.S. cities. The utility has consistently maintained favorable bond ratings to ensure the lowest interest rates when CPS requires financing for large projects. CPS returns a portion of its gross revenue to the City of San Antonio. This contribution helps support city services such as police, fire and health services, while also reducing property taxes. CPS also supports the community through customer education, and employee and community programs such as the United Way campaign. CPS is one of only a few local companies whose employees contribute over $500,000 annually to this drive. With the onset of deregulation, CPS has developed strategic initiatives to prepare for the new environment. CPS, consistently a leader in the utility business, stands ready to face the challenges of new industry, legal and regulatory changes.

Message From the Chairman and Genera! Manager & CEO t City Public Service (CPS), we are on a journey - a journey to be the BEST publicly-owned energy company in the U.S.A.! Although we are not far from that goal, we realize that to fully achieve this vision, we must continuously act upon the well-defined (elements of our corporate strategic plan. In doing this, we have completed another successful year of operations marked by several significant events. New information systems were implemented; construction projects continued; and various customer and community efforts were enhanced. These were all aimed at fulfilling our mission "to produce and deliver competitive energy products and services to meet the changing expectations of our customers." Of utmost importance in striving to be the best utility services provider is the commitment to maintain our 'competitive edge. This has become even more crucial as retail electric competition began in Texas on January 1, 2002, for some utilities. Senate Bill 7 (SB 7), Texas' Electric Industry Restructuring Bill, passed in June 1999. As a municipally-owned utility, CPS was given the choice of opting-in to retail competition. In spring 2001, the City of San Antonio and CPS Board elected not to opt-in at the onset of deregulation. CPS and the City are continuing to closely monitor the deregulated market to determine if and when an opt-in decision would be beneficial to the citizens of San Antonio. Meanwhile, we have implemented many new initiatives to remain competitive and to prepare for the changing "environment. We began implementation of new Business Information Systems, which pr6vide the latest in advanced hardware and software technology for all facets of utility operations. This will ultimately contribute to improved customer service, better reporting by our evolving business units and greater competitiveness. We completed strategic financial transactions to reduce the debt component of energy costs and enhance our financial position. Through these and other ongoing cost-control efforts, we have worked hard to ensure that our

customers continue to receive low energy bills. In fact, for the twelve months ended December 2001, CPS achieved the second lowest average monthly residential combined gas and electric bill of the 20 largest cities in the U.S. and the lowest among the seven largest cities in Texas As a further indication of our competitive edge, CPS has not had a base rate increase in II years. We fully realize that customers are the essence of our business. We have carefully listened to our customers through formal research to be fully aware of their wants and needs, and we continue to utilize this data to develop programs that address their requirements. New facilities are being constructed to respond to customer growth patterns and to improve gas and electric system reliability in the service area. In January, we celebrated the groundbreaking for the new Northside Customer Service Center, which will provide all the necessary customer service functions, plus demonstrate new forms of renewable energy. Customers have indicated an increasing demand for renewable energy technologies and for their utility to maintain its environmental leadership. CPS has expanded its wind-ýnergy program to be the fourth largest in Texas. We are also in the process of developing a distributed generation program for customer-owned generation. By responding to these customer needs, we can continue to grow the utility while maintaining our commitment to environmental excellence. Our utility's successful operations would not be possible without its most important resource - dedicated employees. A workforce of about 4,200 highly skilled individuals is committed to CPS's excellence every day. Leadership and training programs have continued to be offered to bring out the best in our employees. We realize that to remain competitive, a highly-qualified and talented workforce is necessary. In May 2001, a new market-based compensation program was implemented, featuring a performance-driven merit structure to help attract and retain the best employees. CPS also offers additional incentive pay programs that are linked to its corporate objectives. We consistently update the benefits package, which is alteady among the best in the region. As we go forward, it is imperative that we ensure ongoing and effective communication with all stakeholders. The increasing role of regulatory agencies, in light of electric "Aderegulation, has requited a growing,, awareness. We have continued to actively monitor and participate in regulatory and legislative affairs that have an impact on CPS Our goal is to successfully manage any risk factors that may originate from these areas. We have continued to strengthen the relationship with our owner, the City of San Antonio Since the utility was purchased by the City in 1942, CPS has provided almost $2.9 billion in benefits and payments to the City. In fiscal year 2002, City payments totaled over $168 million. Representing a steady and increasing source of revenue for the City, this return helps keep property taxes low and enhances the funding of many city services offered to residents. We also intend to continue meeting our community's expectations. In addition to providing a financial return to the City, CPS returns value to the local economy through numerous supplier diversity programs. Other indicators of our commitment to the community included another record breaking United Way campaign and numerous hours of volunteer community service from CPS employees. By linking our corporate objectives and strategies to our key business plans, we will remain committed to achieving our vision. CPS already enjoys a well respected status as an industry leader and a financially-strong, value-driven, low-cost utility. The nation's principal bond rating agencies have consistently recognized CPS's successful track record. Thus, our journey to the top will be short! We embark upon this journey to be the BEST in the U.S.A. as we enter our 60th anniversary year of providing reliable, low-cost gas and electric service to a growing San Antonio. :XVe remain confident in our ability to succeed, and we stand well prepared to face any challenges on our path to be NUMBER ONE' Alvaro Sanchez, Jr. Chairman of the CPS Board of Trustees Milton B. Lee General Manager & CEO Finance and Administration V. Gary Schaub, BSA, MBA Secretary-Treasurer, Senior Vice President (Tenure 28 years) Energy Supply William C. "Bill" Gunst, BSME, MSMT, P E. Senior Vice President (Tenure 29 years) Customer and Energy Services Nadine Knaus, BAM, MAS, C.P.M, A.P.P. Senior Vice President (Tenure 23 years) Electric Transmission and Distribution Systems Fidel Marquez, BSEE, MSEE, MBA, P.E. Senior Vice President* (Tenure I year 18 years in the industry)

• Effective May I, 2002 M

___K FTIMITT,-Pi,`ý I ft

On a journey to be On a journey to bený ...the BESTpublicly-owned energy company in the U.S.A. Corpora te Governance Independence of the BoArd he complete management and eligibility for re-appointment for one, ] control of City Public Service is additional five-year term. T -vested in a Board of Trustees, The appoint6d members of the Board consisting of five citizens of the United qualify as "unrelated Directors." An-, States of America permanently residing unrelated Director is one who is in Bexar County, Texas, including the"*'<,' independent of i~anagement and is free Alvaro Sanchez,. J Mayor of San Pntono,,who serves as ani fro anyf interest or business or other" Chairman. - ex-6officio member c Board.' The.',rlatinship that'could, or reasonably be (Trustee sin~ce March, 1999)~ofhc"< lairhp aou Mayo is a: voting member 'of the Board. "'. pereeved to, materially interfere with Cou-_ -,.and res ef g the CityK' the Director's ability to act with an di* Cou spnc ibfIyadwed f ean orm 'ý ,unbiasd approach and act in the best any actions, deliberati*niisanddecisionsi interests Of the entity. Thus, the Board, "dof the Board and it onduct of the". '< can fiuncton independent of management. S',fmant Servie' 7 , The Board of Trustees elects one of *<< Board membership (xcludig the i-its m'embers as Chairman and one as,, - ',-.Mayor of the City) is representative ofý. Vice Chaimnan. All trustees have equal "" the fourgeographic quadrants',- vote and-authority, including the Mayor established by. the City Council of San of San Antonio, as an ex-officio member Antonio., Vacancies are filled by of the Board. The Chairmn*

• ad Vice'

-_majority vote of the remaining members Chairman'position8sar-rotated annually of the Board of Trustees. New Board,- commencing with the first Board.,,<.4-17 Clayton T.' Gay Jr.

'. memb'ers must be approved by the' meeting of each fiscal year, among the, VceChairman*

-majority vote of City Council.' The term appointed Board Members. (Trustee sice Febr_ 1998) (Trstee ce bru r 1998) -of office of each member appointed to the Board is five (5) years, with Stephen S. Hennigan-Cheryl Garcia* Ed-GarZa Trustee Trustee Mayor of San Antonio (Since June 2001) (Since June 2001) Ex-Officio Member -1 1 ',I  4 4 4 4 4, ,d '- < 2<" 1' 'A; 4<  t (Trustee since June 2001) 44

Responsibilities of the Board Committees of the Board Personnel Committee included Mr. Alvaro Sanchez, Committee Chairman, and Mrs. Cheryl Garcia, Member. The Board has full power and The Board ot Trustees has authority to make rules and regulations established two'c'ommittees: the Audit Citizens Advisory governing the fu'nishing of electricity Committee and the Personnel and gas service and full authority with Committee. Two Trustees, not to Committee reference to making extensions, include the ex-officio member, serve on improvements and additions to the gas each committee. Each year the Trustees A 15 member Citizens Advisory and electric systems, and to adopt new review the makeup of the committees Committee (CAC) was established in rules for the orderly handling of CPS's and may elect to rotate the membership; 1997 to enhance the relationship of City affairs. The Board is empowered to however, it is not necessary to do so. Public Service with the community and appoint and employ all officers, ý I t6'address the City Council's goals employees, and professional consultants Audit Committee regarding broader community which it may deem desirable, including The role of the Audit Committee is involvement. The primary goal of this without limitation, a Chief Executive to oversee all material aspects of. committee is to provide accessibility to Officer and General Manager of the gas CPS's reporting, control, and audit CPS and to provide input to CPS from and electric systems, attorneys, functions, including review and the community concerning the engineers, architects and other advisors. assessment of CPS's business ethics -operations of CPS, for use by the Board ,,.--The Board of Trusiees,'in exercising policy and management's efforts to and CPS staff. Representing the various the management powers granted, will ensure compliance With the policy,- sectors of San Antonio, the CAC ensure that policies adopted affecting -

• The authority of the Audit' encompasses a broad range of customer research, development, and corporate Committee is to repori to'and groups in order to identify their re er h1eelp e t n co p rt

ý

• ,r.....

identfy thei planiing, Wilibe coisistent,vith City recomme;nd action by the Board of concerns and articulate their issues to Council policy of San Antonio, and Trustees., The Audit Committee , ensure that community concerns ate policies adopted by the Board of.,., meets iegularly during the year. As ,communicated and represented in CPS Trustees'pertaining i6'sufch matte's will. f Janu'ary 31, 2062',the'Auditi --- , bLsirifs-op*eiations. The CAC meets bessubject to City Counci1 review..-. Committee included Mr. Clayton Gay, , monthly to be briefed about yarious -The B6ird is vested wth all ofthe -2 Committee Chaimnan, and Mr.' -pnding mattrs and-t-adise CPS powers of the Ci th respect to the Stephen 1-_en-gan,Member.: management and staff about,community marAgement and operation of the i;K

• issues and concerns with regard to the

--'systems and the xp6endittdrs and i,. Personnel Committee cic.;j electric lid jgs systems and other application of the revenues therefrom, The role of the Personnel Comrnmttee aspects of CPS's business. including all powvers necessary or js to ovdrsee the compefisatio'in"nd appropriate for the performance of all - inenttive levels for employees and covenants, undertakings, and ) executives of CPS, and act on',- . agreements of the City contained in'the' matters that may be driectedto the bond ordinances, except regarding rates, I Commlmiittee from time to tme by the issuance of debt and eminent domain 'iB6hid.ý'dThe 'authority and

• mattrs.':"

~.'-' res.ponsibilities of th Pcrniel During the-fiscal year ende Chinteiclde-iunderstanding January 31, 2002,,the Board of Trustees o nesotimpeaon and incentive levels in* met412 times Jim regular sessions. In

• s

,the industry, determining or advising addiiotn, 18 special meetings were held "regarding compensaton levels for,. during the year. execuive personnel,;'and reporting to, and recom m ending personnel -relate'd anpeqisites matters to te Board Comm ittee meets as needed during the year. As.ofan re3in c02, the' an'e anco m te4o h epe esre ,,il.l* 4'" i"' 4" '4" 4-4"'

On a journey to be ...the BEST publicly-owned energy company in the U.S.A. Governmental and Regula tory Rela tions iscal year 2001-02 was a year of significant change for the utility industry in Texas. On January 1, 2002, investor-owned utilities (IOUs) were required to open their retail markets to competition, as mandated by SB 7. Customers of those utilities now have the ability to choose their retail electric providers. As a municipally-owned utility, CPS was given the option of whether or not to opt-in to ietail competition. In April 2001, the CPS Board and the City Council of the City of San Antonio (COSA), announced that at the present time, CPS will not opt-in to retail competition because of CPS's favorable The Governmental and Regulatorv Relations Team includes Steve Bartle, Director of Regulatory Relations (standing at left) and Maryann Randall, Tice President of Governmnental Relationsg (stting at right) Also pictred is Milton B L.ee General Manager & CEO (center), and other General Manager s office dir ect reports. Helen Long, Director of Audt Services (sitting at left); and Richard Putnick, Chief of Staff (Senior vice presidents are pictured separately with their staffs) position of offering customers some of the lowest rates in the state. This, important decision will allow CPS the opportunity to carefully evaluate the deregulated market. The utility has implemented a number of strategic initiatives to prepare for competition' and will continue these initiatives to be ready in the event that an opt-in' decision is made in the future. Rate and cost unbundling efforts continued and were integrated into the new computer information systems, since this would be required if CPS elects to later participate in retail competition. At the same time, CPS and COSA' confirmed their position on utility ownership. CPS has been a valuable asset to the city, and to continue this relationship, municipal ownership is a requirement. CPS will continue to operate all sectors of its business as a complete municipally-owned utility. To keep customers informed about, deregulation issues that could affect them and their utility, CPS continued its campaign to educate the public on utility restructuring. With the onset of deregulation, CPS continued its strong participation in the Electric Reliability Council of Texas (ERCOT). Leading the way was the appointment or election of several CPS executives to key positions with ERCOT. Most recently, Milton B. Lee, General Manager & CEO of CPS, was elected vice chairman of the ERCOT Board of Directors. He was already serving a two-year term on the Board.

The role of ERCOT, which is also the state's independent systemn operator, or ISO, underwent dramatic changes this year, many of which affected GPS. ERGOT is responsible for overseeing the transactions that result from the restructuring of the utility industry, while maintaining the overall reliability of the state's electrical grid, which now includes retail as wvell as wholesale activity. The ERGOT pilot program for retail competition began July 2001 and provided a test window for limited swvitching of IOU customers. ERGOT also conducted summer market trials to simulate the wholesale market under increased, centralized operations. GPS was actively involved in the wholesale market trials because it is a key wholesale participant. Perhaps the most significant change in ERGOT occurred July 31,,2001,wNhen operations for the restructure~d market were consolidated into a single statewide control area. GPS was faced with some challenges as a result of this move, such as new statewide fees and assessments. The active representation of CPS within ERGOT will ensure that the best interests of GPS customers are protected into the future. CPS is also active at the Public Utility Gommission of Texas (PUG) The utility is regulated by the PUG with respect to statewide transmission pricing, and the PUG is responsible for oversight of the evolving wholesale and retail marketplace. In addition to regulatory issues, CPS faced other unique governmental and legislative challenges. During the 77th Texas Legislative Session, CPS staff closely tracked over 420 bills that were related to its operations. Through a careful review of the bills by CPS's inter-departmental legislative team, the session ended without any negative impact to GPS. The utility's governmental team in Austin continuously monitors legislation to preserve the wvelfare of GPS customers. CPS continues to be acclaimed for its ongoing successes. As an indication, the Texas Public Power Association awarded GPS its top honor, the 2001 System Achievement Award. This mark of distinction specifically recognized the utility's ongoing efficiency, customer service and outreach programs on deregulation. The proactive efforts of GPS's governmental and regulatory teamns will help to ensure GPS's continued success in the changing utility industry. CPS plans to stay actively involved with deregulation issues and will closely watch the competitive retail market to determine future strategies. CPS ý governmental and regulatorv staff in Austin~ continuously monitors ',' legislation to preserve the ~ -j welfare of CPS customiers. ... and remain committed to the people we serve. W Y M~ N-

On a journey to be ...the BESTpublicly-owned energy company in the USA. Environmental PS is committed to maintaining a "clean and healthy environment. Q 4The utility has historically ýoutpe&formed the environmental and i energy conservation requirements

• mT' ~daied by federal and state regulations. Given these high standards,

$P has continued to advance its

• enwiroimental programs and policies to ev*engreater level. Fiscal year 200 l'-02 was no exception, as vironmental efforts continued at an

,..xhilarating pace. I CPS made significant progress in the area of renewable energy. Certain f*ederal and state requirements, such as th*o* mandated by SB 7, have called for an Increase in renewable energy capacity 6 %.InTexas-. In addition, recent research shows there has been a steady rise in TI CS*' *'ustomer demand for renewable t *technologies. Customers are very c %on*erned about the environment, and .-,thieýyWnsider renewable energy to be a Sprooatie choice for the future. -With this in mind, CPS took steps to

• exp'and its wind-energy program.

Pirohugh a long-term wind-power "'" contract, CPS added 135 MW of wind 7.energy to its already existing 25 MW, bnngng the total wind-energy capacity to 160 MW. As a retail utility, CPS now k has a higher wind renewable ratio --just '6-eifdur percent -- relative to its peak demanid than any other utility in the R ERCOT region. CPS introduced its ,witnd-energy program (Windtricitym ) ilast year as a first step in offering ,renewable technologies to customers. 'CPS' proactive environmental efforts -'* contribute to the aesthetic beauty of ý Sah-Antomo Wind-generated electricity is only one of many other alternative energy technologies CPS is exploring. CPS is one of the founding members of the Metropolitan Partnership for Energy, a regional organization taking the lead for developing alternative energy sources and energy management techniques. CPS is currently researching other forms of renewable energy such as solar power and fuel-cell technology. Additionally, a new distributed generation program was developed and will be available soon to customers. This program allows CPS customers to install up to 25 kW of their own generating capacity at their home or business using naturally regenerating sources. Representing a monumental effort in support of alternative energy, the new Northside Customer Service Center will serve as a national model for "green energy" systems and will showcase various forms of renewable technologies to customers. The 72,000 square-foot building itself will be constructed using environmentally-friendly techniques and will feature alternative energy utilization. Groundbreaking was held in January 2002, and completion is set for August 2002. Using highly effective environmental control equipment to help preserve the environment is not new for CPS. At the CPS power plants, air emissions levels are continuously monitored to ensure that stringent state and federal guidelines are not only met, but also that emissions are far lower than tequired by regulations. In 1998, a public commitment and program was introduced to reduce IT

The environmental staff displavs some of CPS's recent awards Pictured (left to right) Kim Stoker, Supervisor of Waste & Hazardous Materials; Scott Smith, Director of Environmental Management, Cvndi Levesque, Supervisor of Permits; Joe Fulton, Director ofEm':ronmental and Research. nitrogen oxide (NOx) emissions from CPS power plants system-wide by 15 to 20 percent. The emission rates of NOx were reduced over 40 percent by the end of 2001, which exceeded the original goal. CPS is continuing the program to achieve an approximate 50 percent reduction in NOx emissions by 2005. CPS also engages water resource management efforts at its power plants. The Braunig and Calaveras lakes were built in the 1960s to provide cooling water for the power plants at those locations. Since then, CPS has used treated sewage effluent, preserving over 200 billion gallons of Edwards Aquifer water. In addition, the lakes also provide a variety of rect eational activities for area citizens such as fishing, boating, camping and picnicking., CPS continued its "Mow Down Smog" program of giving rebates to customers who replace gas-powered lawn equipment with electric lawn equipment, including mowers, blowers and trimmers. Electric lawn equipment is virtually pollution-free and produces far less noise. CPS also expanded its "Buy Recycled" program to further its award winning recycling program that includes the recovery of usable products, the reduction of waste through more efficient piocesses and the use of environmentally-preferable products. The new "Buy Recycled" program helps create markets for recovered materials and promotes the continued manufacture of recycled products CPS's proactive environmental efforts also include area beautification. CPS participated in various tree-planting. programs, and a comprehensive study also was initiated to determine how strategically planting trees and conserving existing trees can improve air quality and lower energy usage. State and national recognition paid tribute to CPS's environmental efforts. Eleven of CPS's facilities were among 130 recognized statewide by the Texas Natural Resource Conservation Commission as "Partners" in the Clean Texas Program. These facilities were honored for their significant levels of ) environmental performance, management and commitment to protect air, water and land. Also, the National Association of Environmental Professionals (NAEP) named CPS as recipient of the Environmental Excellence Award for conservation. The _ NAEP especially gave tribute to CPS for its recycling of wastewater to cool its power plants. SClearly, CPS's long-term strategy is to actively support renewable technologies, energy conservation efforts;!! and other environmental programs. CPS realizes the importance of maintaining a healthy environment for future generations and intends to work hard to achieve that goal. West Texas wind turbines give CPS the A* largest percentage of wind pover to elect ic peak dentand of any Texas utility, generating enough energy to meet the annual needs of an estimated 50,000 customers .. and remain committed to the people we serve.

Energy Supply The Energy Supply Team includes (left to right) Richard Pena, Vice President of Gas Systems; Jim Nesrsta, Director of Generation Planning & Alliance; AI lark W.-erner Director of Fuels; William "Bill " Gunst, Senior Vice President of Energy Supply System; Mike Hardt, Director of Nuclear; Jim Pruske, Vice President of Fossil Generation; Joe Fulton, Director ofEnvironmental and Research; John Ruckman, Business Manager for Energy Supply; and Mvfike Kotara, Director of Generation Control & Wholesale Marketing. Electric System C ontinuing a tradition of sound planning and well-managed implementation, CPS has created a successful electric energy supply strategy that iesults in some of the lowest costs in the nation. Diversity of fuel sources for electric generation continues to be a key factor in the pursuit of responsible, environmentally-. safe, low-cost energy. By having multiple sources, CPS is able to utilize the most cost-effective fuels at times of' less-than-maximum capacity requirements. Adding to nuclear, coal and gas energy capacity during the year was an increase in wind power. The total generating capacity for CPS for all fuel types is 5,187 MW as of January 2002. Beginning in December 2001, CPS gained the long-tenn rights to the, electricity produced by all 107 wind turbines at the newly constructed Desert Sky Wind Energy Project in West Texas. The 213 foot-tall wind turbines with their 115 foot blades are in line with CPS's commitment to provide reliable electric power to its customers in an environmentally-responsible manner. Under peak wind conditions, each turbine can produce 1.5 MW of electric energy for a total wind capacity of about, 160 MW. To keep energy prices down, CPS consistently examines the generation mix that will provide the optimal allocation of resources. Using relatively inexpensive, low-sulfur coal continues to be a major stabilizing factor. This past year, coal comprised 48.9 percent of electric generation. As the lowest cost fossil fuel, coal unit costs have remained steady for many years. 12] On a journey to be ...the BEST publicly-owned energy company in the U.S.A.

The coal is transported in CPS owned railcars from the Powder River Basin of Wyoming. The coal supply should continue to offer stability as CPS has long-term supply and transportation agreements. Transporting coal to San Antonio will be more cost effective as CPS converts from steel cars to new aluminum railears that haul about 18 percent more coal. Approximately 300 aluminum railcars were delivered in November and December of 2001, with another 560 scheduled for delivery during the spring and summer months of 2002. Nuclear generation continues to be a major payoff for CPS and its customers. The South Texas Project (STP) nuclear plant met 30.5 percent of the electric generation requirement in fiscal year 2001-02. 'This reliable fuel source has been the largest contributor to keeping CPS's electric fuel costs low and is the cleanest for emissions per unit of power By utilizing nuclear generation instead of more costly fuels, CPS customers saved approximately $192 million in fuel costs last year. Units I and 2 performed well, producing at 94.8 percent and 87.0 percent of capacity, respectively, for the fiscal year. These high factois were achieved despite scheduled refueling outages for both units. In addition, STP Unit 1 led the country in production in calendar year 2001, generating more electricity than. any other nuclear reactor in the U.S. STP earned top industry honors including a Top Industry Practice (TIP) *-$ award for its innovative, cost-effective Boraflex Removal Project. The STP team devised a new multi-million-dollar, cost-saving procedure to remove deteriorating Boraflex from spent fuel storage pools. Of the top nine TIP award winners, STP won the "Best of the Best" trophy, sponsored by the Nuclear Energy Institute: STP officials-" accepted the award at the Nuclear Energy Assembly in May 2001, the industry's annual executive conference in Washington, D.C. STP was also recognized as having the lowest average fuel cost of any nuclear power provider in the U.S., according to federal reports STP's low 4 cost of 0.3997 cents per kWh set a new benchmark for nuclear-energy producers, and was 17 percent below the industry average in calendar year 2000. The low cost resulted from strategically purchasing uranium during market price lows and by reclaiming spent fuels for reuse. For fiscal year 2001-02, nuclear fuel unit costs were even lower, demonstrating the nuclear plant's ongoing commitment to cost effectiveness for its owners. "*J~~ CPS s coal yard rotary razkca? dumping facility keep's production costs to a minimum by providingfor the efficient movement of coal to the stockpile (right) Coal accounted for 48 9 percent of CPSs electric generation in fiscal year 2001-02. and remain committed to the people we serve. r 2' . I-, ý', I* I

On a journey to be ...the BEST publicly-owned energy company in the U.S.A. Energy Supply (Contin ued) Natural gas, which produced abtut 4 19.5 percent of electrical generation, is the most cost-volatile of the fuel 4 sources, as demonstrated by the record high prices nationally for the 2000-01' winter season. Gas prices across the country did eventually return to more-P historical levels during the spring andL summer of 2001. However, to mitigate I, the volatility in gas prices and assure a A competitive price, CPS secur~dcgas. price collar agreements during the yea r, - - W which sets fixed prices between predetermined upper and lower limits,

• and is developing fuels hedging policiesV for future years.

Gas-fueled efficiency was increased as a result of the first full year of generation from the combined-cycle- !,j Arthur von Rosenberg Power Plant, which is approximately 30 percent more efficient than other traditional gas-fueled plants. To provide even greater fuel flexibility, five of CPS's gas powered electric generating plants are capable of using oil, especially if natural, gas prices exceed those of oil, as they did in the winter of 2000-01. Overall, electric bills declined as a result of a lower market unit fuel cost for gas and lower customer usage, botlh due primarily to milder weather,' As a, result of more moderate temperatuiresc both in the summer and winter "C'. was able to utilize its most economitca fuels - coal and nuclear -- to gee i power, and thereby offer its c'usstb ers' the lowest costs possible. I w Steamt gen1eratlrs hike these produce'e n stof,the elctric r reqnzrements of San Antonio In fiscal year 2001-02, generation and purchased power totaled 18 1 billion kilowatt-hours

An additional factor that helps reduce generating costs lies within the ° joint operations agreement CPS has with Reliant Energy of Houston. This A agreement provides that the two utilities jointly dispatch their generating plants, other than STP, to take advantage of the most efficient plants and favorable fuel prices of each utility. The agreement stipulates that CPS receive at least $10 million in cumulative benefits per year and $150 million savings over the ten-year agreement, or Reliant Energy will compensate'CPS for the'difference. Results from this agreement have provided cost-savings benefits to CPS that have been significantly above expectations. The cumulative minimum savings of $150 million was achieved in ,April 200 1, approximately five years 'ahead of schedule. CPS will continue to 41-, t benefit from the arrangement for several 4 more years through a new agreement T_" "ihat was finalized this year. CPS will V continue to receive 90 percent of the savings until the cumulative savings total reaches $200 million. At that time,,.,, Sthe savings will be shared equally by o each utility. Pursuant to the agreement, CPS supplied 2.4 billion kWh of -electricity to Reliant Energy during the fiscal year for a cumulative total of 17.7 billion kWh to date. CPS recognized $46.3 million in benefits this year for a savings of $190.3 million since the inception of the agreement. CPS-owned railcars haul 'coal to SanAntonio in . support of a divesified fuels pnLX This helps nzunimizi CPS 's electric pmduction "costs and helps keep uilhi v p ates lower than any othe " major Texas city ... and remain committed to the people we serve.

On a journey to be ...the BESTpublicly-owned energy company in the US.A. Energy Supply (Continued) In expanding the gas system into sttbuy ban areas, CPS crews often must rely on rock saws Gas System to trench thrmg h limestone: CPS is dedicated to delivering -I natural gas to its customers safelyfi' reliably with extraordinary service art value. That commitment was againm reflected in the fact that, for the ele& consecutive year, CPS did not implement a base rate increase. CP base rates include a pass-througho f costs, which accounts for seasonal variations in customer bills. During the early months of the fiscal year, CPS was challenged with the national natural gas crisis that continued from the 2000-01 winter. Due to colder weather and nationwide supplier shortages, gas prices reached an all-time-high last year across the country. CPS' immediately responded by offening numerous customer relief programs.- 4 These efforts continued into the early, months of this fiscal year and included customer rebates, settlement refunds extended payment terms, longer customer service center hours and a service cutoff moratorium. The gas crisis faded as mild j temperatures in the spring eased demand, while supply increased. By 2,-, June 2001, gas prices had declined to-- levels below June 2000 and remained I Nte closer to normal levels for the remainder ' of the year. To manage the volatility W# gas prices, especially during the winter months, CPS has negotiated agreemenirtsj W', A for price collars to keep its price from ('*f rising excessively. With added access to suppliers W F616

provided by the Southgate Gas Supply Line that was completed in 2000, there is a greater opportunity for more competitive purchasing of natural gas for both the electric and gas systems. CPS's current single-supplier agreement for gas will end in June 2002. As a result, the utility has taken a much more active role in procuring natural gas Extensive study and negotiations have resulted in competitive agreements for long-distance transportation lines, storage facilities, and more gas suppliers that will take effect with the termination of the present gas supply agreement. In addition, the development of hedging policies and related procurement strategies began to help guard against excessive gas price volatility in the future. All these initiatives reflect CPS's commmiimerit offer the best value to its customerls. Meanwhile, the gas system

• continued to experience modest groIl For the fiscal year, gas operations,,

accounted for about 14 percent of CN total revenue. Due to milder temperatures, gas system sales were slightly below those of the prevuios year. However, the customer baselyas increased and strategies are in place Ic drive gas customer growth and sales t, higher level. By creatively and 1 carefully managing the financial and physical resources of the natural gasf system, CPS will sharpen the competitiveness of the system ind be assured of healthy gas operation's for years to come. Gas System emp voik on a gas cutoff A valve at a CPS giate station. New pipelines have enabled CPS to secure gas at competitnve prices f*oni a varieO, of supplirs ... and remain committed to the people we serve. 1T7

On a journey to be ...the BEST publicly-owned energy company in the U.S.A. Electric Transmission and Distribution Systems Transmission System he CPS transmission system provides the network through which energy flows from the power plants to the substations. To ' transport high-voltage power in a safe and effective manner, CPS has constructed and maintained a reliable infrastructure of transmission lines along with the supporting structures and equipment. Currently, the utility has approximately 1,300 circuit-miles of transmission lines as well as 14 power switching stations. These facilities move large blocks of power across the CPS service area and among neighboring utilities within the ERCOT grid. Transporting bulk electrical power through the power grids has become more complicated due to SB 7's restructuring of the electric power industry. The role of ERCOT, designated by the PUC as the state's independent system operator, changed greatly during the year. In July 2001, ERCOT became a single control area, balancing electrical energy and load demand for the entire grid. In the same month, a pilot project initiated a limited opening of retail competition for IOUs. Full retail competition began January 1, 2002, for IOUs, giving ERCOT responsibility for overseeing all transactions at the wholesale and retail levels, while maintaining overall reliability of the state's electrical grid. Previously, ERCOT had overseen wholesale transactions only. The Electric Transmission and Distribution Syvtems Team includes (lefi to right) Ralph Alonzo, Vice President of Project Management & Process Improvement, Mike Vorndam. Mce President oJ Distribution, Richard Castrejana, Director oJ Transmiv*ion & Distribution Planning; Fidel Marquez, Senior Vice Plesident of Electric Transmission and Distribution Systemr, and Fred James, Director of Sy*tem Operations P18 I

Due to these electric-restructuring developments, CPS was faced with new operating regulations, procedures and assessments. These added fees, initiated in July 2001, began to be recovered from customers in January 2002. CPS, however, was able to benefit from the settlement of its wholesale transmission cost of service case at the PUC, filed in May 2000 and approved in January 2001. CPS's net cost of participating in the interconnected transmission grid was substantially reduced from the prior fiscal year as a direct result of CPS's efforts to update its own annual costs of building. operating, and maintaining its transmission system, as recovered through PUC-approved charges to other utility users of its transmission system. The significant increase in these revenues more fully offset CPS's share of aggregate transmission costs of other transmission owners in the ERCOT grid, causing CPS's overall cost of participating in the interconnected grid to be considerably lower than in the prior year., Meanwhile, CPS has continued its efforts to unbundle costs and revenues into separate functions. IOUs were required by law to separate their' transmission and distribution systems from generation and retail segments of the business as a prerequisite to full retail competition. CPS was not required to separate these functions because it is municipally-owned and has not opted into retail competition. However, CPS has ftunctionally' separated revenues and expenses to track costs better and to prepare for a possible future opt-in decision. While transmission regulatory issues are being addressed, CPS is also focusing on the expansion of its transmission system. The needs of customers in the growing north centrail -Z', Bexar County service area prompted construction of the new Stone Gate Substation and transmission line, which : began in July 2001. CPS is committed to providing reliable service to all customers, and this new construction highlights CPS's ongoing efforts to constantly monitor electric demand 'in expaaidhng areaý and increase capacity as needed With every expansion of conunercial or residential sites, CPS goes throug"h a strict set of procedures to ensure environmental compatibility with the people and their residences in the community. CPS's policy and guidelines for the construction of new substations and transmission lines ensure that open meetings are conducted to obtain citizens' comments. Even with the significant regulatory A and new construction activity, CPS took the opportunity to advance the qualifications of its transmission employees 'In August 2001, CPS transmission linemen became the first .u employees certified to "barehand" 138 and 345-kV lines from a bucket truck.'. Barehanding allows employees to work directly on energized transmission lines as opposed to using the conventional hot stick or having the line de-energized. Ž*i> With this capability, linemen can work' on energized lines so the customer's service is not interrupted. Those certified had to meet rigorous requirements. CPS is now one of only two companies in Texas to be certified! in this procedure and assert this clain,, g CPS hec*y construction : creu1s install transmission lines to bring power to a," growing number of customners in CPSM 1,566 square-mile area and remain committed to the people we serve.

On a journey to be ...the BESTpublicly-owned energy company in the U.S.A. Electric Transmission and Distribution Systems (continued) A-

2.

2W 2.> .   I V.   '-' ' 21 I '  221  A 1k2' t.22 1'  2,'2' I'2 I I, % I* I Distribution System The distribution system transports power from transmission substations to CPS customers through its 65 distribution substations using several thousand miles of overhead and underground lines. Additions to the system are carefully planned to keep up "with the population growth of the service area. -7 To improve the aesthetics and safety of downtown San Antonio, CPS continued to convert overhead distribution lines to underground, an ongoing downtown beautification project that began in 1998. This effort .is financed through the Overhead Conversion Fund, which CPS ustabiished in 1995. Monies from this iUhd are also used for other beautification efforts around the City of San Antonio and within surrounding gove+:rnmental jurisdictions. The fund is miade up of one percent of each city's Pretail electric sales revenue which is set aside and designated for future overhead line conversion projects in that city. ,The purchase of the Kelly Air Force "Base electric and gas distribution systems to CPS ownership two years ago repiesents the first of many strategic CTPS linemen maintain ,electrical equipment on more thal 264, 000 poles in CPS's ,dstribution system.

efforts to acquire area military base electric and gas facilities. Since the purchase of these systems, CPS has played a key role in converting the new KelIyUSA into a-modem, commercial business park, which has brought many jobs and opportunities to the community. CPS continued to upgrade the KelIyUSA systems to CPS standards, and finalize contracts with new tenants of the business park. To date, CPS has signed contracts for utility service with 21 commercial, industrial and governmental enterprises. The 579 electric meters and 325 gas meters installed at KellyUSA are serving new customers such as Boeing, Pratt & Whitney, General Electric and Lockheed Martin. The Underground Residential Distribution System is continuing to improve service reliability thanks to upgrades ind replacements of direct buried cable, plus treatijient of existing cable. CPS uses the CableCureTu 'technology that offers a cost-effective maintenance alterniative for the cable replac*ment programr. Since its' inception in 1992, the CableCureTm process, which involves injecting a 'coating of silicohe-based fluid into the cable, has extended the life of another 22 miles of cable this year at a cost of about $1.7 millibn.' In another effort to have the latest and most technologically advanced facilities, the'CPS Board approved plans to construct a new primary energy control center. This facility will fully control operations of the utility's electric and gas distribution systems. Factors considered i6i this strategic decision included the changes brought about by deregulation-and the condition of the current, older control center. The new center will include a training facility with classrooms and an auditorium that will provide for an academic partnership between CPS, local school and college districts, and the surrounding'community. Construction of the new center is scheduled to begin during early 2003. CPS compares favorably to the industry average in terms of reliability, which is measured by the System, ' Average lihteriuptioh Duration Index (SAIDI) and the System Average Interruption Frequency Index (SAIFI). However, CPS's goal is to improve its reliability standards even more. SAIDI, which measures the average duration of power outage in minutes, improved over the prior year by decreasing from 67 to "39, while SAIFI, which records the average number of power outages per / customer, also improved, declining from 1.5 to 1.0. To maintainrits coimpetitive -2'* edge, CPS is pursuing new long-termn -4 ) initiatives to further advance reliability, improvements, so that the expectations of customers will be satisfied. CPS is committed to building and "' maintaining a dependable and efficierit-, transmission and distribution infrastructure. Related ongoing initiatives will focus on CPS's commitment to diligently monitor and work with governmental and regulatory issues, to involve the community in site ' selection procedures, and to deliver the, ? energy customers expect in a reliable and environmentally safe mannei. Electric Distribution Subsia'tib Maintenance crevvs inspect a, trans/ormer as part of ongoing efforts to envure the reliihle flow, of energy to customers via 65 substations. ... and remain committed to the people we serve.

On a journey to be On a journey to be ...the BESTpublicly-owned energy company in the U.S.A. Customer and Energy Services The Customer and Eneigy Services Team includes (left to right) Sandra Higginbotham, rice President of Customer Services, Paula Miles, Vice President of Retail Gas & Electric Services, Bob McCullough, Director of Corporate Communications; Nadine Knaus, Senior Vice President of Customer and Energy Services, and Anthony Eduards, rice President of Community Programs. R ecognizing that customers are the essence of the business, CPS has continued to serve its customers and the community in the best possible way. Major customer relief programs, ongoing development of new products and services, a record year of community involvement, and increased attention to customer awareness helped characterize another year of truly being "Committed to the People We Serve." The fiscal year began with CPS customers benefiting from several major relief programs that the Board approved in response to the winter/spring 2000-01 national natural gas crisis. While natural gas prices eventually stabilized during the year, CPS took extra efforts to aid customers early in the year when prices were high. Enhanced weatherization and energy efficiency programs were activated. CPS extended its customer service office hours and increased call center staffing. Seivice disconnections were temporarily deferred, and some reconnection and late fees were waived. About $4.9 million in savings resulting from negotiations involving coal transportation and delivery shortages were refunded to customers. In addition to CPS's efforts, another major directive from the City of San Antonio resulted in an additional $8.3 million rebate for San Antonio gas customers. As warmer weather approached, CPS continued to aid customers through its Project Summer Wise program. Bill assistance efforts, energy-saving information and pay arrangements continued. About 800 fans were donated by CPS employees to needy customers as part of the "Heat Relief 2001" fan drive. Perhaps the most significant summer effort was the "Cool Volunteer" program, %Nhere over 450 CPS employees volunteered to weatherize 475 homes of the elderly, handicapped and less-fortunate. To continue this effort, CPS is partnering with Bexar County and the Alamo Area Council of Governments to support additional local weatherization programs. F22

jPit CPS staff and honored guests held a groundbreaking ceremony at the site qf the future Northside Customer Service Center on January 8, 2002. CPS continued its mission to offer the most competitive energy products and services to its customers. Through the utility's well-managed fuel supply and other cost-control initiatives, CPS customers received some of the lowest ,bills in the nation throughout the year. The electronic and budget payment .plans continued to be offered for -convenience in paying bills and

flexibility to balance payments year round. As a measure of national support for those customers serving in the military overseas and to aid their families, CPS implemented "Project:

Support Enduring Freedom." This program helps qualified military reservists in satisfying their utility bills through a variety of pay agreements and extensions while deployed overseas on active duty. SMoreover, CPS made extra efforts to respond to increasing customer demand as a result of insights gained through research.. A branding campaign was unveiled to further enhance customer understanding of CPS, which is already a well-respected, value-driven utility. Customers have indicated an increasing demand for renewable technologies, so CPS has significantly expanded its wind-generation program. Plans to construct a solar facility have been finalized for the coming year, and new policies, rates and procedures have been developed for a distributed generation program that will soon be offered to customers. Perhaps the greatest response to customer interest and CPS's progressive

• attitude toward renewable energy services is found in the new Northside Customer Service Center (NSCSC),

which is presently under construction. This state-of-the-art facility will be onei of the most technologically-advanced buildings in the country, and will feature cutting-edge "green energy" systems to educate customers. By integrating solar, photovoltaic, natural gas and water reclamation systems into the design andL function of the NSCSC, a showcase of, energy-saving alternatives will be created for CPS and its customers. The ' facility also will provide the usual array-K* of customer service functions. With th6 completion of this center, scheduled f6r

• August 2002, CPS will have customei" service centers located within all geographic quadrants of the city, as'welli

-as downtown, offering the best in customer convenience. '-0~ The Energy Education Center provides interesting and informative exhibits to help customers learn about CPS s electric and gas operations ... and remain committed to the people we serve. 23

On a journey to be On a journey to be ....the BESTpublicly-owned energy company in the US.A. Customer and Energy Services (continued) 4'v+/-4-k44-4 4 4 4

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44.4.444* 4 A new bill design to be "introduced in 2002 will cohi graphs and other informatio to help customers better manage their energy usage. 10 further enhance the relationships with customers and the community, CPS "4' has developed new customer service initiatives to be certain that it is fully "opt-in ready" for retail competition should that decision be made in the future. Efforts to improve communication with large commercial tam and industrial customers continued with 'n the Key Accounts Representatives group. CPS also began work on a comprehensive business retention and expansion plan. , '444 4444.4. 4.4444

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 4>44 In response to customer requests, a new bill design has been developed and will be introduced in conjunction with the rollout of the new Customer Information System. The innovative bill will be a standard business size, contain graphs to help track energy usage, and allow for more flexibility so that other billing information may be added in the future. Progress on the final implementation of the Customer Information System continued this year with a "go-live" date scheduled for, summer 2002. This technologically advanced system will provide a wealth of customer information in the ongoing effort to improve service. Organizationally, a separate area was formed to focus exclusively on community programs. CPS already can point to a tradition of community service. °

CPS employees share a moment of silence topay tp families who experienced tragedy on September 11 For years, CPS employees have been generously supporting the United Way campaign For the third consecutive year, CPS took a leadership role as a "Pacesetter" organization. Employees responded by donating a record $716,000. ThroUgh the Volunteers in Public Service program, CPS employees and retirees contributed about 20,700 community service hours to assist with various charitable efforts including weatherization projects, Christmas gift giving and youth sporting events, among other programs. In addition, the CPS Speakers Bureau delivered timely, information-packced 'presentations to organizations throughout the community. "CPS planners play an integral role in making sure new construction, projects have, adequate gas and' electric service facilities' ribute to the victims and those ,2001 These'efforts reflect CPS's strateg ý to enhance, expand and facilitite a customer-centered focus. The goal is to exceed customers' and the community's expectations en route to being the bes4 ý energy-services provider. CPS will. continue to emphasize exceptional service, while developing and marketing energy and related products and services. CPS sei ves the u orld-fanic Alamo in downtown San Antonio as w+ell as large, hotels and the Tower of the Americas and remain committed to the people we serve. 7-FJ

On a journey to be On a journey to be ...the BEST publicly-owned energy company in the U.S.A. Finance and A dministra tion C PS has experienced strong financial growth over the years. -The dtility has strategically planned and completed financial transactions that have improved its economic position and resulted in savings for its customers. Fiscal year 2001-02 operations continued to reflect this healthy financial performance. At year-end, the fund net assets of the utility exceeded $2.6 billion. A significant part of the financial planning process is focused on effectively managing the debt component of energy costs. This includes taking advantage of favorable market opportunities to lower debt costs and improve cash flow. In October, CPS successfully sold $115.3 million of revenue refunding bonds at an average interest cost of 3.84 percent. Proceeds from these bonds refunded existing higher-cost debt issued in 1992. This transaction will result in savings of about "$14.2 million to CPS and its customers. CPS maintained its excellent bond ratings frori three of the nation's principal financial rating agencies. These ratings are the highest for a municipal electric utility in the United States. The rating agencies recognized CPS's consistently strong financial performance, its very competitive rates that are among the lowest in the nation and management's expertise to lead the utility into the deregulated environment. A major financial reporting change for CPS occurred with the implementation of the Government The Finance and Administration Team includes (seated, left to right) Jeffrey Tuttle, Vice President of Human Resources; V Gary Schaub, Secretary-Treasurer, Senior P'ice Pre-Tident of Finance and Administration; Porter Dillard, Director of Facilitiev, Security & Fleet Operations, (vtanding) Stan Torvik, Vice President of Information & Communication Services, Richard illliamson, Assistant SecretaFy-Treasurer, Vice President of Financial Services, Tracy, cCuan, Director of Business Information Systems; Patricia Major, Assistant Secretary-Treasurer. Controller, and Nelson Clare, Vice President of Legal Services Accounting Standards Board Statement Number 34, x*hich became effective February 1, 20q1. Extensive research by the Controller Division identified the necessary accounting and reporting changes to be in full compliance with this new pronouncement. Other initiatives helped prepare CPS for industry change. A major milestone, Phase One of the Business Information Systems (BIS) Project, achieved "go-live" status on December 4, 2001. The Financial Information, Work Management and Materials Management Systems all migrated successfully fiom the systems they replaced without significant problems. Extensive staff training on the new systems occurred in the fall prior to the "go-live" date. This training iepresented a major company-wide coordinated effort among the BIS team and all end-users. The new systems, which replaced 1970's technology, represent the latest in softwaie and contain a fully integrated host of business applications to assist CPS with daily operations. I hey will allow for improved internal reporting capabilities in line with the changing utility environment and will ultimately improve customer service and CPS's competitive posture. Phase Two of the Project, which includes the Customer Information and the Generation Maintenance Systems, is scheduled to "go-live" during the summer of 2002. 2T6 - I

Members from the BIS Project team work with Controller Division staff as part of the new Financial Information System s implementation efforts In addition to the BIS Project, CPS continued to upgrade or expand other information and communication systems. Upgrading continued on the Supervisory Control and Data Acquisition system (SCADA), which is the main computer control and monitoring structure of the CPS electric system. Hardware that uses the SCADA system has been installed in company vehicles used by customer contact representatives to improve service to customers. Programs to enhance purchasing capabilities were initiated. CPS, which has already modified its procurement processes to be more efficient, will be implementing additional processes to carry out competitive initiatives authorized by SB 7. CPS continued its Supplier Diversity Program to support the local economy through procurements from San Antonio area vendors. This year, local vendors were given the opportunity to bid on approximately $255 mnillion worth of procurements, of which they were awarded $167.6 million The Small Business Mentoring and Prot6gd Program that was introduced four years ago also continued in full force. It offers small, minority, woman, service-disabled veteran and Historically Underutili7ed Business Zones businesses an opportunity to have CPS mentor them to develop the tools and practices needed for business success. CPS recognizes that all its accomplishments would not be possible without the dedicated efforts of its employees, who drive the utility to success each and every day. To help attract and retain the best-qualified staff, CPS implemented a market-based compensation program in May 2001. This key strategic initiative rewards high-performing employees through a performance-driven merit structure. Bond rating agencies ha'e consistently recognized CPS' success A fall 2001 revenue refunding bond issue elicited the comnients at F ight

e 3i MoodVsý'Aaf" Týhls high gradii-riting is'based J, on: the utility's, very competitive power cost structure and debt

-position; adequategeneration resources, stron financ-V '_'X:, management and growin service area.1i 'J ... and remain committed to the people we serve. IE+-++ *++

• +++*

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eptember 2001: i c + t h-AA "The ratings reflect CPSs strong financial perfbrmancew low cost generating resources.` ý1 and very competitive:ietail rates, which are among the lowest in the're4ion."Ar.-ý-ý.ý',,ý'ýý'...", c,'04V Poor s _ýA W's "'The D ubiýý-ý"ý'Wrating on the,ýt.Kl -bondsr -effects: -Ma I nagemenrsiý!a4ý', active and successful A,. preparation to.compete in deregulated electric ma.e sufficient generation to me native load produced by favorable resource mix... consistently strong rinancialperfortmnance."-".,.-.,",".,,,.

On a journey to be ...the BEST publicly-owned energy company in the U.S.A. Finance and A dministra don (continued) The Employee Incentive Pay plan, now in its fourth year of operation for all salaried employees, continued its concentration on rewarding employees for company achievements that meet or exceed predetermined goals. Performance measures include specific targets for sales, expense contiol, customer satisfaction and safety, among others. More aggressive recruitment strategies focused on attracting the best talent to the company. In addition, CPS expanded its "Workforce Ideas Needed for Success" program to reward employees for offering job-related, money-saving suggestions and ideas CPS's fleet includes several low-emtssion, alternative-fueled vehicles such as h),b that are implemented. electric/gasoline-powered cars and electric-and propane-powered forkhifts. CPS to incorporate other alternative fiels to protect the environment. 77ie Compenvation Team completed an extensive project that led to a new market based compensation plan CPS also has taken steps to ensure it exceeds the latest standards in Fleet Operations. Several light-duty, alternative-fueled vehicles were added to CPS's fleet to make certain CPS complies with provisions of the State and Alternative Fuel Transportation Program implemented by the U.S Department of Energy in 1999. This mandatory program requires that 90 percent of all new light-duty vehicles CPS purchases must be equipped with alternative-fueled engines and that alternative fuels must be used in these vehicles 75 percent of the time To do more research into alternative fuels, CPS's Fleet Operations recently acquired two hybrid compact cars that run off electricity as well as gasoline. These vehicles are extremely fuel efficient and offer adequate performance, comfort and very low emissions. CPS continues to enhance its alternative fuels program by' acquiring other alternative-fueled vehicles and equipment powered by compressed natural gas, electricity, BioDiesel, propane or ethanol. 28f rid will continue

The Lithographics stafffacilitates the transmission of information through printed communications These printers generate millions of documents during the year. The CPS Lithographics team CPS's Safety Section car represents an integral part of monitors, among other thing communicating information both rates and lost hours per emp internally and externally. A large ensures CPS's compliance m ,amount of information is printed in-and company safety measuri 'house and includes customer bills, set specific safety targets to customer information, employee part of its corporate goals ar publications, financial reports,'and other plan. For fiscal year 200 1-0 S special projects. An award-winning incident rates and lost hours graphics design staff helps to assure that employee corporate-wide wi CPS publications lortray the best visual better than the target perforr appeal to the reader, levels. efully s, incident loyee and rith industr es. CPS has achieve as id strategic 2, safety per .j7$ ere both-i "nance Finally, CPS does not forget that the safety of its workforce is imperative to,, the utility's ongoing operational success As a result of the events of, September 11, 2001, CPS took immediate steps to heighten security measures at all locations to protect employees and the reliability of the i4 electric and gas systems. CPS attorneys ensure that legal implications are carefully examined for all major initiatives and contingencies "CPS" Main Office comple in downtown San Antonio includes the Navarro Building and the Customel Service Center ... and remain committed to the people we serve.,

FIVE-YEAR HIGHLIGHTS - UNAUDITED (Dollars In Thousands) For Year Ended January 31, FINANCIAL

SUMMARY

Total revenue.......... Operating & maintenance expenses......... Available for debt service................... Payments to City of San Antonio (per financial statements)............... CAPITAL ASSETS Capital assets, net (per Balance Sheet).... Depreciation & depletion expense........... New construction, net removal costs, & nuclear fuel purchases............... FUNDING FOR NEW CONSTRUCTION, NET REMOVAL COSTS, & NUCLEAR FUEL PURCHASES Bond proceeds (............. Commercial paper proceeds................ Repair & Replacement Account ( Overhead Conversion Fund........ Contributions in aid of construction......... OTHER FINANCIAL DATA STP nuclear decommissioning master trust total assets................ Repair and Replacement Account....... Total assets................... Fund net assets................. DEBT Outstanding Bonds........................ Commercial paper.............. Weighted-Average Interest Rate Bonds....................... Commercial paper.................. Debt Service Bonds *).................. Commercial paper................ Debt Service Coverage - Bonds........... Ratings - Bonds/Commercial Paper Fitch, Inc.................... Moody's Investors Service, Inc. Standard & Poor's Rating Services..... RELIABILITY INDICES System Average Interruption Duration Index (SAIDI) (in hours) System Average Interruption Frequency Index (SAIFI)............. 200211 $ 1,252,771 696,119 556,652 168,135 20011" 2000 1999 1998 $ 1,405,501 769,002 636,499 185,006 4,454,164 4,365,709 189,065 217,191 $ 1,079,969 $ 1,081,404 $ 1,032,202 520,915 500,083 491,813 559,054 581,321 540,389 145,474 144,555 138,543 4,134,207 165,249 3,929,705 3,900,755 167,686 153,407 287,653 260,748 431,563 292,450 204,201 5,557 123,600 76,070 8,938 73,488 145,878 548,303 6,521,346 2,664,571 66,808 78,000 11,819 8,891 95,230 119,840 465,206 6,255,245 2,416,100 208,968 6,500 162,952 7,420 45,723 95,493 330,984 5,005,769 2,048,534 192,029 0 26,312 5,051 69,058 89,465 424,494 4,920,277 1,961,174 152,754 4,500 37,966 1,589 7,392 72,783 291,748 5,105,373 1,898,367 2,589,860 2,668,820 2,730,575 2,794,295 2,582,638 350,000 252,800 134,800 128,300 450,000 5.32% 1.36% 212,274 8,191 2.62x AA+/F-I+ Aal/P-1 AA/A-1+ 0.650 1.005 5 33% 3 95% 208,567 8,182 3.05x AA+IF-1 + Aal/P-1 AA/A-1+ 1.124 1.527 5 24% 3 69% 208,925 4,709 2.68x AA+/F-I+ Aal/P-1 AA/A-1+ 0.728 1.162 5 23% 3 09% 185,044 15,474 3.14x AA+/F-1 + Aal/P-1 AA/A-1 + 0 886 0.919 5.53% 369% 193,626 15,841 2.79x AA+/F-1 + Aal/P-1 AAIA-I + 0 842 1.130 (1) 2002 and 2001 reflect reclassifications and restatements due to accounting changes for implementation of GASB 33 and 34 and Employee Health and Welfare Plans (2) 2001 and 2000 reflect the allocation of the New Senes 2000 bond proceeds to reimburse the Repair and Replacement Account for pnor construction funding (3) Excludes cash defeasance in 2001 and 1999 306 n1 4

FIVE-YEAR OPERATIONS REVIEW-UNAUDITED For Year Ended January 31, OPERATING REVENUE (In thousands) Electnc: Residential......... Commercial and industrial................ Street lighting......... Public authorities................ Sales for resale..................... Off-system sales....................... Miscellaneous......................... Total "Gas: Residential........................... Commercial and industrial............... Public authorities............. Miscellaneous........................ Total......................... SALES (In thousands) Electric kWh: Residential.......................... Commercial and industrial... Street lighting.............. Public authorities.............. " Sales for resale........................ Off-system sales............... o Total................. Gas MCF: Residential........................ Commercial and industrial................ Public authorities............... Total....... ELECTRIC GENERATION Total kWh "I (In thousands)................... Capacity, kW (Gas)..................... Capacity, kW (Coal)..................... Capacity, kW (Nuclear)......... Capacity, kW (Wind)......... ENERGY PURCHASES (In thousands) Electric kWh.......................... Distnbutioh Gas MCF...................... ELECTRIC PEAK DEMAND kW............. NUMBER OF CUSTOMERS Electric............................ G as RESIDENTIAL AVERAGES Electnc Revenue per customer.................. kWh per customer.................. Revenue per kWh... Gas. Revenue per customer......... MCF per customer..................... Revenue per MCF.......... NUMBER OF EMPLOYEES......... 2002 2001 2000 1999 1998 479,471 398,563 12,703 94,586 14,539 19,368 9,029 $1,028,259 94,443 64,341 12,271 1,532 172,587 7,053,649 7,454,710 102,668 1,954,333 352,521 326,559 17,244,440 11,540 10,184 S2,033 23,757 17,916,991 2,942,000 1,385,000 700,000 160,000 203,032 23,559 3,860,000 516,203 411,773 12,786 105,815 15,548 54,677 7,612 $1,124,414 122,385 75,888 14,704 1,*579 214,556 7,180,459 7,284,582 103,428 2,083,527 -348,717 844,436 17,845,149 12,777 10,574 2,065 25,416 18,214,197 2,942,000 1,385,000 700,000 25,000 480,894, 25,905 4,091,000 592,195 578,296 306,668 305,811 930.36 13,687 6.80¢ 330.97 40.4 8.18 4,195 1,026.56 14,280 7.20¢

43049, 44 9 9.58 3,994 428,450 353,055 11,977 94,475 12,581 26,499 6,592 933,629 59,748 39,425 6,694 1,153 107,020

$ 428,482 344,064 11,655 90,182 11,818 17,147 6,291 909,639 392,889 329,241 11,404 87,198 11,731 6,667 5,718 844,848 66,142 79,791 39,756 47,547 7,391 9,197 948 1,058 114,237 137,593 6,492,199 - 6,571,130 ý 5,990,225 6,928,944 100,534 2,108,671 327,277 470,335 16,427,960 10,027 9,485 1,762 21,274 17,457,003 2,430,000 1,385,000 700,000 14,835 21,664 3,729,000 563,127 303,871 874.10 13,245 6.60¢ 211.34 35 5 596 3,810 6,850,843 99,919 2,059,882 S320,986 454,114 16,356,874 11,925 10,196 2,074 24,195 17,373,503 2,430,000 1,385,000, 700,000 0 23,998 3,684,000 6,467,755 97,775 1,972,320 287,996 351,745 15,167,816 13,607 10,875 -2,293 26,775 15,738,497 2,430,000 1,385,000 700,000 26,308 "3,448,000 550,956 539,400 302,719 301,181 892.38 13,685 6.52 235 00 42.4 5.55 3,639 833.89 12,714 6.56¢ 28493 486 586 3,475 (I) Excludes joint operating systems generation 31 1/2

$0 J -OPERATING REVENUE, QELECTRIC SALES, FiclYa nding Jaiwary 3l -riscai ear riding qur l In Bl~iis o Dolars Ini Billion klh 20 $12201 ,20 i' 9 17.2 31 $1.339 ý 2001 9 7.8 A-,' 1.. t, ~i999 I $1 0 4 1999 ~9Y3 .' -16.4 16Elctric. E 'Ga K Residential' []Other*'AU Off-Systemn_ OPERATING & MAINTENANCE EXPENSES. A AE Fiscal'Fica Yeaar Endin'anu Jauiy3 GS AE 'FMlj~o Dlas~ iscalIYearEnding January

3NfF, IlionllhIn Ilion

_-,0 L Lj$66, 2002i r3. 2001 $76 2001

2.

2000 ~ .$521 2003 1999 55 -W,0177 $500 19 8 e7 26.8 1998 $492 0- Fu'ei&o r>' <0, ke' 1E Rsdntial b the~r, 8,StP.OthW~erat & antriince" DAll Oitkei Operating & Maintenance,' 'APPLICATION OF. REVENUE PER BOND ORDINANCE ELECTRIC GENERATION & PURCHASED POWER'. > Fiscal Year Ending Jan'u"aýry3*1 Fiscal Year Ending Jinuary 31 odfia`ns of IBillon kfJh 200222 1.5 2002 r-

9.

~ 18.A '6016 $1.404 2001 MA-.',,' 1999 289ý $147%`' 1999 1981998 KVý1. Opraig MlteaneN Nuclear 0l Coal NUprtn aneac Gas/Oil E ucae oe Oeb Puchse Itower SetR~equilremirents & ArItiet

• City Payment'.

C3 Repail and Repla'cem6 ent Account* 'FY 2001 r*nLdfes cash defeasance of debt, Applicabon of Revenue for FY 2002 & 2001 excludes falrvalue adjustment for ivestmenls. It A 32

'N' .NN N N N NNN'N.N SERVICE-AREA- ~ ~ ~ ~ ,NV4 N * ~ ?CPS serves 592,-195 'electri~c customers in ~'. a 1,566 sq.itmilear~ea. 'CPS's 306,6ý68 g csustornrs aresituated N NjnB~xaixand Cotma]'l S Counties' "A NN'Electric service area 4 N. 'includes-all ofýBexar County J and smial I Portionis ofd' ,~ N, .Ž A'~ .~ adjacnt countiegýýAtascosa_ N' ,Eeti Bandera Comal,GiiadauPeC, Gas Medina, Wil~n~ind Kendall. NNN~NNN '4 'OSRCINNE REMOVAL'COSTS &NUCLEAR N--FUELýPURCHASES EXPENDITURES

SUMMARY

COMPARISON OF'RESIDENTIAL'GAS ANDI Fiscal Year Ending Jaiuary 31 'NELECTRIC'BILLSFOR TE2ON ARGEST U.S. CITIES.

N' )N r onthly Ai'e'agf'r 12 months Ending December2001 -- ;N2002 N NNtNN~$288 N' Basd o 1000 kWh and 5 MCF N~ N,201N~NN~ .ZJernphisJN 7$104.11 ' 2000 $432roi2z $123.290 J. NIflNian~poi~sjR 77 $1 24'.11-, AN998 $204'N,N xn Fue $1 N.N' dE eneiration adNuclear Fuel $320 NNQEIE~itrlc Transmnission & Distributio'n 4' N "N N - ~1/4~IumbuaOK$132.06 ) .N N N all N $132.70

• 'NN,.N'N N

oN. N'.EL__ _7 $135.00 N 'CONSTRUCTION," NET!REMOVAL COSTS & NUCLEAR - _tj FUEL' PURCHASES FUNDING

SUMMARY

'o~gis~ 164 Fscal Year Ending January 31 tiston NN NN NN)X N) $153.61 in Milin j Dollars 2002 $288' 11.' ~ ~ h~g L NNN $156.36 N NNNNN ~ ~ ~ ~ ~ =7 77'N7 =7b1a'C NNNN .N $174.10 N ~ ~ ~ ~ 7 ',~'NNN san Francisco, CA77N.77 = 11~ $174.10 N 1000' -z ,N N170 1$432 N nfig..A ~ 207 $292.,, tfl~ ,N ~ N NN $206.39 '1998idepha _ $208.51 UDebt Proceeds [3 Operations NL _YoK Ný N i ~l Other Sore Compiled by City Public Service N NN N N NN N N N. 'N N N N N N N N' N N N N N N N N N N'N N N N N< N N N N" N N N N NN F33 'N N 7 N N~n~ "3. I,

REPORT OF MANAGEMENT The Board of Trustees is responsible for the audited financial statements but has delegated responsibility for the preparation to Management. The audited financial statements included in this report were prepared by Management in conformity with generally accepted accounting principles and the statements are presented fairly in all material respects. Management has also prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with information in the audited financial statements. City Public Service maintains internal accounting and administrative controls designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that assets are appropriately accounted for and adequately safeguarded. As part of this process, Management has an internal audit function which assists in evaluating the adequacy and effectiveness of the control structure. The Board of Trustees is responsible for reviewing and approving the audited financial statements and Management's Discussion & Analysis and, primarily through its Audit Committee, ensures that Management fulfills its responsibilities for financial reporting. The Audit Committee meets regularly with Management, and with the internal and external auditors, to discuss internal control and reporting issues and to satisfy itself that each party is properly discharging its responsibilities. The Audit Committee reviews the audited financial statements and the external auditors' report and considers, for review and approval by the Board, the engagement or reappointment of the external auditors. CPS's external auditors, KPMG LLP, Leal & Carter, P.C., and Robert J. Williams, CPA, have audited the financial statements in accordance with generally accepted auditing standards. They considered the company's control structure and performed such tests and other procedures, as they deemed necessaiy to express an opinion on the fairness of the audited financial statements. The external auditors were given full and free access to the accounting records through CPS's Management. Milton B. Lee V. Gary Schaub General Manager & CEO Secretary-Treasurer Senior Vice President Finance & Administration April 29, 2002 Audted Financial. Statemuents and.:Fo~otnotes 44~~t -44It 4 SManagement's' Discussion & Analysis*' -41.= -. *: ;.Yi;;.'-*;Pi*; V; .;,;*<"'%*3 Ba a c S e t .ý %. 44745 4 t' gleients of R ~~uesEý'nc and Changes in Fund Nlet Assetsi.L

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a eve .xpen..s......."... 46 Notes Financial Statement s ' .d Foofnit 4 City anPubl 31' "44 200 and 2001 48-64444 g' 4 ~*4

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MýNANAGEMEN'S DISCUSS!ON&ANAkLYSIS >.'"~~ ~City Public'Service (Cacalfrtsad' "f' highlights.ý',Most dramatic were various accoutn an rporting changes that occurred this sear in ~ Conjunction w'ith thie implementiation of o~e'mme'ntaýA'c~c~-n~tin,-, Stadards Board fiýns A1) "'No. 33,A co.uniig and Fitnancial.RjotgfrNdn&6hangF.Tritnsaciions and N3,iai'Fi'ancial ýStatcnehts n ~daae~n' ic~~4and u -lsis ý'f -,'State Iý'4a oai Go~ver~nrentr hi M'" vaflagemens Discussion and' na ysis'ýM&A ireird byt~n'wr rtig changes lin GASB 34., ~ ~The MD& A is tned o bea eidrst~fdable and clear exp anation and analysis of sigriificant fiancial' event andij 44n p onCP' ~.. '~and op~'ratiing aciiisand vns~?~ hi lpc$ fii~a'ca~l reports.'~&W~ 7~: ~' The audited RIMi'icial sitamei ets preented this yea Inle te oloing 'Ž "The Balance Sheets present CPS's asse:ts and liabilities' -r~tercnt and por ya.Ast r'rpre 4' ."2~~as currentadn no irr nt based upon fquiidity.- on.urrcent assets ic cash equivalentsy'i ~,~'4' '4"" "'investments'.and iiiteie'st rec~eiv-able,wh~ic a~ve b'e~nTistricte`; legalyby State L'awv,666b'ordianeo' cnrcts. Riceivablesinvenitories, prepaymen'ts and de feted ctst~,s'aWeasntcpalsesar 8'"'etai~led. Li~abilities' are'segregaýted intocren n nncrrn n ind cictthe Johg-term nat'ure of net,' L '"4 deb te Sutli~easNucearPrje-c~t(STP) aec6"mnissioning lib ilt adefrdven'u'e ir m. fe,'i [" 4"' '"lease tranisactionA fic6 cii'4d list' fiscal year. The baldnc as-e eprsfidn et sstghiclh is' tI c s C iffeene Eýetweeti tl iotfai sc and t -~lliabi fitie sýThefui net 'asset s rc e as thosei~se L .~~~~ in capil'stbt 6f i-elated 'debtth6 reg'l ~sctd; 'an th&?c unresfictd and aviilablc for!-,"'~ ital aset," '4 A t tthoc ga '4".The St ateirýn s 6t~jRevenuiesi[1 jnes and Chnrsi Fzn e asesinld'tiduretadprmya ' revenues and expcinses. 6P6erating results are reported. p~atelfrmnnoraigatitewhc 4'~$rriarl& elittofinncng5dinvesiting.tii Ths tdtdn dentife fo h urent and prior fiscal years "TAthe amountof rveu generated'from existing 'energy sale~s to cover, o rain exenes for the years., '~" 'VA.. Operating exessarc ýshowii b'ymajo cýs't catcgorii., Reeu eaiigi aalble to' pay~de'bt s4'. ervice; city painet toi'n~s~euadtos n op~ ociigencies,'such as ujninsured losses.~ '~ i"" ~>~-< Th~sultifidcate'te sales ain profitabiS 0~n cidi v~tis othe uifl~ity systems as awhole'4<' " "4. 4<4The Staiqem'zts of Ca~h Flowsý present two yearis of cash activity Th ttment ispraeduigt, "~~~~~"f'i>'4' dir5' hd" rhi"h )rit csreccilfls am paymeýnts r' ~ "f""'4in 4 t'"~

4.

4' ~ ~ ~ ~ ~ ~ e4 by atvt anid a reconciliation of pin

ioe, to net,

cash provided yoperating ijtes, Categzories of cash flows presented are, cash.',,ow.s, rom operating e~$c'pitl~adieltedi~iacmn atvties, non-cp' a fian g activities, and iri~.estiný activities

.7activitie, capta 'ýi ,rl'e fiacng v caiainni '4k~~~~~~~Th~~~~~ chne ncs a~ne uigtefs~lers'a~re' an important'iiidicaitor of CPS's liqui lity ad~ lni~thekfi4.,' y '4,f d ,~ 'fuinancia condition.'"<'4""4'-4.'4'*~' 'v s.GASB 33 required a 'change in accounting for contributi'n nado cntucin(AG.sareut .4,> fiscal rcciassffý$263.'2 m~ff1ion'bcwenit cap~itat assets,- net and4'&pqity accouiii'szat ihcý beginning 4 ~ "$of thelfsa year200l:-As offebruar.i 1,266&'4liuio to cosrc aia seswill' flowthrough. th ttmnhts 6f -eae-e "Ep ns'sad Changes in 'und e s's'ndwl be shown as "ar o"f te" 4 Sutility's equit invested in capita and' oter asets.The amount reported int tis new manner forCIAC was ~ $7.1 ilio fo 202as eopaed wih$3 ilon fo 01About 87 percen~t oft e amhount for the yea cae ,romlitgaton ettemetsmainl th eJoint (5perating Agreem-ent 'with' Reliant Eiiergy.The 3/4,. ~~remainder wa contributedb custdd~m ro'ii4ulity extensions and services. ~ 44' 4 4

2 6J ss66-"' ly, the utlt ytmseut snwki i e ses-mutdt 27" oqiaethe imotnt aspetsof te fnanw a mreporingcal~a y i'~e th new bylnc shtet arsetio' y, - s'" adopted balance shee piacilresenttiong focse more oni yasse hwlqudittanhrditionalrprin n drisclosures more 'toses pay 'the liabilite 6-rt i~ee-mployee h~afthý and wvelfaie Oi"_`""S 14 72L innia'ep i aope qprovisionsoi n14aihsrcludedthe". 66 6' plnin its fiiaicials tate iiiiitýfrexternal iep~rtin~ pirposes., hesedassets are" froxe mCPS separately accountedf aiii yarth ineeditc6n Ig fim.hiW chan 2~ 666. '.~.'~ owo.ing mil~atfrf~'l&a2O~ftdnfas were $131.7 million raerhnoebfr' 6~~, ~> ,r, this ~ 7.4 milon er'ais inv~es 6ti earn ~ings from the plans-were less a'thi hcam'P 6~~~66 relaf'ed an the' StakteniitsA,"ft.arh flows reflc~icd thi'oerall chdnges inifash diiestmnitts reate to eloyefa~re plans. These reporting chnge~s ave been inco rated i 4varfovriout o~tii disclosures'as'.well,,.~ 6666' ~6 6 <S;Follo~ving are ote nlssand explanations of the'tran~sactions, activities anid'events that had in'ajor <~ 7 irnpact"cin_ eitfir~th'e' fiuid net assets 'o h-hnei fuind iet assets f6ir fiscal year 2002-1 This discus'sion 6.6' -I wil conmpare resu tso th -r~ft-cal er 6 2 ~ 66 6 'A 16ajor Tansactions and Events: -j 6

• i'"

yesaI er began with'record winter weather. CI'S respon4ded by wrkig wth th 'Cit of 6 S~ ntno enhancernentsiy ýir were activated incluiig exterided customer service hours' f.~r all center anf office personnel Service 6 6 64 6666666 6ons:,64,rif[,ai 6 Jd 'and il payrncn extensions xvre increased In addition CPS lowerd fue cost by 4.9 million from savhgs inlnejotiated coal transportation sett ements. The C it),64666 i~nllonofit pymnt fe~iiCPS back to Sa cno ustoiners.~6 .6 62 666. 7"~ Febuaiy,200l was the beginningo 6theieew I r nsni~sion cost of service rate' filing, This lower ed 6666V regulatory assessments by al~most $15 million dizrnihgthe year, and was a direct savings to customers.,,666 6 Electric Reliability, Council ofrTexas (EROT) th Texa Indqerident System Opra' 6IO) began assessing new6 fees related to theholisll copttv6mrkt 6 ~ i Texas20'ih h6str-poft 6 6 k sta idc6ntrolceni~en CPS'itatdpsig o -o thes costs through toiiatiwi lýA eirictc 6 46 6 4646 6 milionofth~Tc'.sts paidin 2002-haVe'anot as yet be'en bilc cust infmr P dd66 66 recor ti vnuas a recevb"a I'a enadblings-will occuir next' isical year.a 6666666 6 6 1992 Ne'~Seres, B~ds'ltisfin~incia tansaction re~sulte~d in net present va ud savings',of~l ilo.6 6

• ~'6~'

The'2-01 w d..re slatveyaVol-able average inrterest ratfeof3.84 percenL-A' $2:4million'. 6 k4 j4>aceoni~ts~a re ed zini fel-atio~n'toth~i-s 'ýrefunding'. The lo~ss will be' defei~r'rd aind amortized over ~ 46 6 therem pin gn lifý'of theb'ondgsreffinded. 6 4 6 66 6 64 666 66666 Y CP'S also sold $97.2'niillion in Tax-Fxempt Commercial Paper during ficlyer20 which was ~ 46 inv 6 ested untit'iused for con~struction projects. 4 At ye,

end,

$13.6'mlini npn proceed was available'"6 'fo projects next year. 6 6666 66 4666

6466, 6~~3 6

4656

I*, - 3-3S 3 33 ,3333-3.. 33333333.3 --333...... 333-33333-3" 333 33333333 3; 3333-3 'Cmparison 0 .02ad20 Op*' erating-evenue firomnelectric and gsoperations for fiscalya 2001-2002 totaled $1.2 billiori,:-a 10.3. S.... *-

.,<percent decrease from'last year." During the prior fisca year,' San Antonio experienceid extremfely. col

,d'i " temperatures in ithe w~inter month as d d mosofTxsadtentnUuuatmpars craea unexpected demand on daua -h'.T -cb*'mbfidity~prices'to'escalateto thistor-icaily' big~h fic er2>~~~t

<;*"'"recov eries being about $I09,.7-m-1on1.

-o-::.--.

L* !g~e~t~~ia'fsc'f"

,t-a,.*.~rate~felandga'reovryrevenue accounted for record operating : Iseh v eýhr_ bsetatS in fui aniidgas'srecolvery revenue o vr ý'eagoýThs yeaersnadtdr oe

""]Electric sales of 17.2

......billion """.....kWh4: were '" about 3.4... p;";=ercent .4r less, primarily dueI tordcddy msls ?.S e c od: 3 2 66,i li o k:,h i n, s a le s o u ts id e o f th e s e rv ic e a re a. w h c a*un d-o*,,3m i l o n i

• "::F:,:.:.:>L::,peramg rvenu.*Tt s

ivas s ngfican tly lower than the prior year dud to,,the m ilderx ýNea't'h'e'r

Texas,

" *: *:---.,.:ndtoth~e additmonaI merchant plant capacity available for sale in'2002.Serv!ice area customers increased 139 y CmGas sals ttaled 23r7 million MCF,oa 6.S percent decreasefrom last year. Gas customer growth wasEnde ve r m odest th is year.... o +., :*- ..;=*: :" * :,CPS energy base rates, which have not increased since 1991 l;accounted for $772.7 million, or 64.4 :*e.', /* O of t a -pertn gat revenueR nd e from rates decreased aboutr2 1 2 002totaledo 12i bll as the m0ld p e r c y l e s .o n ementh e cra e a e r o m a s t o l a r D ury n gf t he ry s a l t e a e r s.an A n -to n i o e p r n c e x tr e m e l y c o l d temeatures intea ir wa onlpathiasl didfmset of Tea s n h ainUuultme~u&sntoal createa-Recoveriise from d custoonsnoruti ulty co gm i sion assess dewts forltatews detransm oassin co ses d t he n assess ents bryE ERCOT, thelextas ISO.' d t $u6.5 Iti on as compared,vitli,$ 3.7 m illon mlaist ,on, Thereoveryl for tasmessuon costs was reduced 2ad to a rate hhngwh"d fecame e ra.ng -arly.in the a iear, tohitallowed CPS greater cost recovherireslromother utiitiesad hese savings reduecedi

her,

.pass throu ih chares to a Pb cunset oi m rsd o f ieS'totgalo pe t0igfe ard e eaurees.rose&dramat'cally; nd of'it. co~nt

less, tepO

'3d Electri-sae sa bll i ontitueotere rabou 3.4 peto C e r s ari d ea - -Total Olratn Expenses were $885i2 million w ic t wase a whic swe somp

e.

fi 'il~ond66facsntd by~ $66.3 'millionin operating revenu~~~~~~~~~~e. td fhis an sigufc iity lower hnt~ ya u otemle ete nTxs S- ....- to, I.* percent.o Generatinti recirements were about salpercerf lowerith csyear. N ucl er inc ra s c .ouni~d faie al mo2.t 80 milioe ent M ft o ia pent d e r ese omew at gy eaterth Gascisar whi'grow th d wa veyC ods thi year. -gnr io'~i ý': is ye c 3 A s a re ul 3-t3h3e a3ve3rage electrte3prdu o u st 3 pD stributton gas cost's i re$I05.4 million,'or $44o 0 mihon less than the prior year-The2 2 a sverge ut t cost S...**

=-

• " ermfhn _btu dechined igffic~antty to $41,rfet gteptryar volatile ga1aktan ~ h,

-1' pwe ai " g m "n h"the all ar wa ntial yes 20 necord o tpr e ee ein " 33-, drop. e' li"'o3l33mr3e a'~ ,*~ur'_ ý,' lae 11" "d 1ý" '206j 'he` stea .) red ce man e aceep ne emp c* r-a,.; [, gneatr epacmntsw r ben 'aia hzd which wesree exeiec in:=.,-, -ih <'i' ""3CRcveisfo usoesfrvtlthomiso sesaet ochaeietrnmsi~ &cotsbated fo i ,*"",° SThc r-feor foprattrgans misioncotswasdced ipn2002 dutae to a rateiling 3 i.ye h~v vcariousefctise fo th searl ienthyearhato arillowedin~ CPS reater~ c6'ýta-recoverwiesro ohfer utlitediesn hs~ai reduced th tnac x enssi and. heyn 00 and2there'wer twonir ue ino outages, whereas onle yont ic s ve apr tor year,'wmK greater operating expenses: were $885.2 imillion w C PS aboum~st102p ,ec nt g payments oh co prbe 3 m ilho n fosr a 2l 0 E fuela nd p rwcth a$9s 4 "m illone rc o $20 414.' il o decreased by $66. 2 'mil.i,.- 3' 3 or 2 ." perent Geeraio e were abot-.2 pecn lw this year.> c a c 1

44' 2, -4 z'

• -'4 4.4'"** :*

.*444 4" -v + * *:* ° : ; 5 C P S' n o n -fu el, op e' r a t h c hd a n c e pns e f o " t e y t ms o u n te d to $ 2 4 7 ;5 m illio n a d w r "ai abot $t4. mlion higher. fdirthe year. Inc'rea~sed co~sts included ..... sý re e' odlisi" Sraining andyker project managementý as wel 'as a full'yeair of operating 444' nant b4~ T"'- -'f-r 1 S.....- ndmitnnecosts'- l~ te new von Roe r ln rpr'o estsems conver'sions, aeil ,*-.;* <'<.,+andsu",pples. inventory iteml wýýeer reie~iw'edý"w~hi-chesl t '~ so mie ýexpensing of items no long-er to be.l;i ,U÷ LII =,0* +: ued.In ddiion nuerus conistruiction work orders were reviewed nrt ovrinwm asdi> -.:;**' "i~-'] aniu relsiations of cost to expense*ýThls year CPS implemented customr mtiatives and v*, S*,*

,>- a a,<education progrms inmcludlng newi and revised energy, conservation, campmgns whichf increased expenses*

4.is -year Sta4ffwasadded-toh4a4ndle4customer groýoýhand en

arletug, d.u 6h4 n at n

..<--*,*: efforts. -Varoios 'projects relating to.electric distribution system rehab6ilthy co~ntiniue; s'uch'ag the *,<2>*., :

,]! [i2*

• ii'?:{Cab,1eCu'iae"ý process., Which'contribu/e~d to cost:*varianaces';i~.,*;?{!U<ii<:";i)*L;'*>7{
• ":g

,

4. q,"",!.The regulatory assessment expense totaled $17.0 million, down signlf ieantly fro mn tile prior year.- As a ;"*

444resul 44bf 4 t 4Texa Publi4 'ti@ ol io100 peleniosiage stamp ra e 0 Utlt44msiný fet~-,

• .: >. '* vS p te m be6ý r

",1

C P w

• fac ed w fth In~crea~s'ed "cosjts, t ot tra'ns'm is si 6n' a cce's s' 'C P S 15e g n r c er g =&

.+,:.*

• =these cotrom custor sin ethPU rate di ot lo o ulcstrcvfl

,rma01ar'e C"&s' 'ý 6 ~ heP6' '4i -iý 6hO '-l -~eeocy n Spin4 40'1 S hen completed increased the costs rc ,:-:....stae.Ths~lllngbe.aneý effective in car y 2002 *Ahich resulted In 'CPS recordlng suisstantlally. lcss.,[.": exes4eae t' 444~ 2004 e rtto-tra4ns44ss4o.n cost assessmt 2; the ISO began asse4ssingadditionalfees to4 { -).*,*.* : * '.. t o s e e n a g e i t h w o l e al ~ c ~ p e ~ t l e a r k ei T e f e in c r e a s e d s ig n i fi c a n t ly s t a r t i n g :,in A u ~g u s t _ ' 'O "CPS n egau passing through t6 system cusoes fr some of thes amoutd a to miln an d rred LO': 6 ii. bllhn a, contested am~ount until next fiscal year.

• f*-o*

.'1-° 'i > +

• 2*=,'

"*I, S a t$46.5ion expense amountedrto h 189e 0 e nclleons which reflects the accounting change to at noBusi gers Infoireamoriation oytm( CS) ProjeIACh fortided adepreaonjexpense. Last, iscal yaar inclu ed a $12ofipin n-'.ntmrast and dCbt-rflathdcost Were slightlyvn lss than the 4 due n partto the~tnarlemg, 4....... Roebr ln.T prioepare fo h

• sescnvisos aeil se. Iationsi 2002and 200n. Tee'Aouowasnnre ucJFoorunds Used During Constrsion hUDC) caunsed var iiiio rlassificaiosmprodf wit$ i2.temiilion Tis 0

eCPitimen ofted cstojecs ini idtto laned2001, Paymets to the City ofrSandAnti i newadere $168.1 millionwhihdecreased, from the reco-nrdpayments e nses 201,bn revnu reflecte eelo milin'd' ot Icm before contributions was $36.3 rifonn20 acmpdwithi $71'.2 million in 2001; Lower".' related costs, STP operating expen tures, and costs f enouc nartings sach ande 0bi P roJe tiori': '4 '4. 4.::" ] idefforts. V dus jcatsi eaon tng aconservation drograts sccousted forathe rd neinue;'iu bhftre 4 4'. 4 ° C e e phcontnbutronsi.....b.... o s a t -ari c e d' 4' for 4, - 4-l 4 Ie oregultory $7assment reflen ted 1e.ain mlitigation sedowments ifaianly the Jorit y er.ataons '4 44'~ rsukoth-eicas Pubictly ComsIo' (PUC)ýa 100d perceto.p llostg itnm rate duethe~ ),:,.6 i l d n r d w a s g e a t c ri n : 0 1 d d

• " -*
• i
• 16A -ýhe litig'*r atm lin ro

' Total Assets atJannaryb 3,9 C 2002 fameinted to c6.521t billion s aii 6 access. CPof begat $26r6omi vi , 'fm t i l 44-, ,falmount reportedfthat whnu 201Teted ut ccange f6r the empoyee health and welfare plans t 4>'<sthte. This filiagded belhn-to fetv nearly 22e re sulte increase resulted mainly from op- '4 4 4

• =....

expense, rel-a ted = "+.>*" ... <L totrns isiii cost as

• es i
• ie,ts Dtig 02 the ISO beg.*.an assessih"g ad itiona fees to":g 4

4 4 4 4 4' 4 4 4 4 4 4 4 44 4 4 4 4 4 44444 444  44 444 444 '44 444 i '44 1 I  1 4 4'1 4i; 4'ItN 44441 L '44w1 444 44'44 443 '4'1  1 4] A4' 44 444 1 44 4 44 44 A  44' I ' I 44 44 1 ) 4 414 4 144

,.7-4* s .,,a 'o 4.4 4 'ne co st 44,;::*.% 'v: '. For the fiscal ycar ended Januar cas paid for new construction, t emclear fuel purchases amountd t $285.6 miion as compared with $248.2 mulion in 2001. Major constructin,

projects for the year included underground electric distribution system nmitiatives for reliability and service improvements the BIS Project; the rhase of railcas for t*o unit rains to suppleen aingfleet and progress on cbnstructing several transmiission substatiohs and lines within the service area.,The'BIS project itmplementation will continue next year, The 'emaming budeet of $16 5;million will.be.spent'on

~~~~~ytr an. pes work mnagement", system.*j< theimplementation oýf the customer fonnatn system and phase,1 of the ma Actul '~~~ fun'ded frodin SActualexpenditures for new construIion, net removal costs, and nuclear fuel purchaseswere I$udedfo the folluwing so~rce~s.: $123.6 iiiillion fromn'Tax-Exeip't Commercial Paper (TECP, prces$76. I .million from theRepair and Replacement Account; $73.5 million from contributions in id of 'construction; $8.,9 milion from the Overhead Conversion Fund; and $5.6 million from taxable bon'd pr. '.4.' .At January 31,'2002, CPS had $13.6 million of TECP funds and $26.3 million oftaxable bond proceeds available for eligible projects and Constrnuction next yeanr., 7 The three major, municipal bond rating agencies reaffirmed our excellent ratings on revenue bonds and commercil paper: Fitch,`'Tnc. AAX -1+; Moody s Investors Service, Ine.Aal/P-,; Standard and Poor's. -'Rating Services AAtA-+.- Debt service coveragefor bonds was a strong 2.62x for the year. Interest rates on bonds and conimercial paperdeclined again in 2002 due to the 'financing strategies and transactions, and favorable market 5'ndions.CPS's fund net assets'to total6debt nd fund net assets, as restated, was )Sp

..y75 e

cnt,up from 45.3 percent for 2001. CPS's pating pec r ar 002 and '\\200 1 F-or more information about CPS contactlRobert G. McCullough, Director of Corporate Communications at (210) 353-2344 or at PO Box 1771, San Antnio, Texas, 78296-1771. 4 4 .4 4 4.391 4 .4" "'4 4-,4 A, Y.('* 44,. F 4,>* } 4- 'ot 4,{ ".?.. ,:.O~,v.

• '* z' *.

?' { x **g I J * ;. ÷ ?

• 4 a ',
• '=,-

-, o .v

44.4 A ".: L '; 4"4. ' 4"."¸¸U**

• 4 4'4 4

'*4,

• .4>

4

• .44-,4

..4... 2 Su.", mmary of Balance Sheet Infotrmation 1 4i..i 1; I 'Janua-Y311 (*n thousands) > U Current and other as-cts's-2,067,182 1,889,536".* / Capital assets, net 4454 64 4,365 709 Total Assets e 6,521.346 6,255,245 Lhibilities' 4 4 5 544 ,S4 4 44 .Othei liabilities [ ".' '1 [ '5 "1 29 7 ,456 5 *......,

c 1,129,927,:

rE 5 "4 6 tblan -tIrrn'&3/4.et 2,726,848 2,687,689 S.. .T Liaiiie~ 3,856,775 3,839,145 Invested in capital assets, net of related debt "1,690,076, 41,679,157 Res.rictl': <725,224 ., 504,263 Unrestricted 254,274, .{,*232,6580 Fund NetAssets 2*',-..4 2664,571 S 2,416,100 -i', Unrestricte. of C itr Assets; Net of Deprecatio 2If328i0on, (Dollar in ho'sad n 44444."4End:*:" '-s4" 4$*.; 74 8. .5,a)* $... ~'4..,534 44 4 .'*6 v('v 4 4 " L and S '15 2.4

• o,*<.@!*:*,<,',YSxstems zuid nm-p Irovemrents,. ;,, -, -"

o.< =:

J S.......Transm~issicn and distrbution,*"

1,209,239," :

• i,(40,801, -

68',438*'") 6.001 / Gas -- U 6 8,697*,*,.. .:276,2f3. ý16 .. I,484`...:.., 3.8%* *., 4......*'4 .4-4 446o .',,o4 'achinery anid equ ipmn'ent 2i,606 210,094 ",4 2 2; 1 4' 19,12 19,9*"i(94) 4. 6 -(0, 4 "". fuel: 30,968e 3'4,:20 (3,).*' "0452),°* (10 0)y/a, 4fur '?.,); ".4 "e 6sfut'oni rogress,,, - 190,717... 0 G SSummaryfapal t N Assets, Net of Depreciation Info r mi8,455n.

2. 0 4~44 444

5.

444.4 44 (D~l~'s i '4 ,444 4 4 4 3 15 4huads ~ 4 4 ~ 4 4~ 44 4 .4 04

54' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Snna of.4 Revenues3 3 3"*'3 44 '3,4' -*.34~ ~~43" '4~ 4tlt 4 prti. 1,0084 $4,3890(3, 4 1 ) 'Total~S mn~r.o Revenuese 1,5,7 1,40,50 (5,30)(09M Ex en es and Ch n esiiunseeA stsI f rm to (DDlr in thousands 21,2 2 ,1 61 .) 200 'tnac 201 hageChnc -ne t av 316 10 43 0330. /40 T talEppIalies" '~ 3/4'4Q 1,200,8460 ,3 $1,338,9070 t (1378,1437(03/ 71 19 33 4 44, Ih c4utn Poic 10939 16,6 (3.43 43 ~ ~ ~ m

34.

txene ofz Chng 4In 3,, Otheroperting and iaic nac 2467,1471 741 7144,6 8411 5~1.20%4 4 Fu4 nte Nes! andebt relate As Re 4'e 2,4163,1510 2,216,740 16*4,367 0 Payud xN t Aseto henCity ofSa,664i,> l571 S2,41851006 (16.48,71) 10,30'a

A' Al4 111 Rul VAMLA 11 .S 9U%5>l2C +,vAfr~iT

• e' 15u I'hi Ekzird of Tru.;,*ecs Cil M I'uhl!i $mice Bozi-d cl' Sm Antonio, T.--a;,:

(City Public Smcr.e), a cornpinernl wiit of tItle C2 2(X4I. anid the rceicd 54 v nicnts of rev. ucs, ex~p InU' rnement Our re5spo)ft~ibity R~ to express an o WVe iffid neAi udit -tic ri:anclal statmenlsof CityP hcfi inancial sta-mm ts (if th~e C~IwTd[eSr I lc~ilth M-ins (Employce He-alth and Weclfare Elrlm Mamer Tri.i.i thir tht: 'Sv:uth rexas Project in 200~ Service rEiiiployces' Pension Pla-t is injlt&itl~ in taitat -sct zivid total Ikbiliftic'. rcspecticzkv of for ffic So~uth Trx-.-, 1'raojc~t i-, of Jkrmairv 3 1.: Wc:tri: PI-,ns repre-ct 2% am-J M'o of the total Those firlarajl~l 'Iakitrm'1It Iwcr Iudircd by Mitt tvrw bc.- furnisbicd to urs, nnd ow-upii on III A a-d.,% ts~ 10 ho amotints mid disclomires incleded ro Ciiv Pulc Frmc plu'm If.lc-16 awli Well'at AMriver Trust for thie Soet Te%.ii Pwiject, ii liai~e We wridoclka iltr auudits in acce-rc r ith mti ad it Ameicia-Tho-ýw standar&ý rt~.u~i: i we ;lar A %i lieihcr the rmanuc i-sal ~acui~nt:ts 3x free o ~maritu ¶ ~' l1.li!;, mkcriueic supporting~ Ili amounts :iid diic Ic asesing the Icconfiring pritiipksi tisicl and s, evalriating 0h 0Yrmil fill.nc~ atei~ur1 prru - w midr' rm~d a remsnable bai is. filt ourOpno In c ir ouinin", hvwd ion our auidit anid the repolm above prescriT.-Yity, in.il I-rn js.- the Ii: 20012 and 2001. nit] sle ietfulti (ifij ye- -ipcinius au t' 1.~ ~unti~ icips icne t yd all npiedus-1 Aiý disnisw ini not-, 1. City P'ublic Sicr icc adopi:c Bloard Smiernw.rit Nfo, J4, ITil,;k /77t rrcujI SVftepi. State Cafl bpca! Garerve-reniO, Icapic~1 I~; prov $ýtatmczat No, 33, wO4ui~trti Fnzr..joef ZRpv I iet cl id ý"r IccrumIintlpg far a~s wts wc u inu Wecd 10 finl lApAVAuAAAA.A

• A Atl "AAAAAAAA A A

SASS 'AA , ' A A5 A ,A A A AS A A A A A( A A A' A A A A 2 A I' A ' A A N' 'A 'A A A A -'A 'A A A I' A A LEAL & CARTER, P.C. IflTfli t Atidltors' lRepcirt 5OrilIC C11V PUbli Sk'~ Board OfSwin Ainon;io, Tcxmr Itv vir.%n Anionic, Tcxas, is. of Jaiiar3 31, 202 anud znse;, andI chinges tit Curml retl asvM* and caqi tXows for crnts arc the resporui~i~liiy of City Itzblic: Service' piaiwm onr II-e-e l-nznzial stitcmerrts bared on our widitc. ublk Serv it% Ejn'ulq.%e& Pertsion Kill in '4oM)Z or 2001, we L):%bilily Inconme. Group Life lrimufant:e anrd tirxurp i) iii 2(1U2J, 4or 11-m City Vablic Servic-c Drcornunissioniiu.

1. The rimi~nnia1 inforntritan' refired to IN"! City IPubilic fxloTiotc 7 of die notcs to the t-mnacial ;zatemeints. Tht!

uEli Chy NMbIc S,ýrvice lv Ommmis-i-mning, Nartr TFrust 01o, rqprcAcm 2% 3nd 314 of --ue ti-tal &,,soi and total and net msc~rspeclivcly, i; the lEmp!ocec Hea~lth ind aiiets, a'Id towl runul 'It oftsvt Civ W'h 10"smizje. nu(i~tora. fo~r U.e %ears itidi~ned, r~u~ueport% thereotn U C1,13 Pýubllk Scrvicc tnanciat sE3CTalemttS, iaroSjf~r aq it r the City Il~ubli rcmie,- LCui]loyces' Per.0cri Plan, OŽc v PIflam. and -lie Ciil' Ptjhhc Seii'uc%, Deccinnimjionin,: inIfli tvrri reon if otherr miudiwos. 1m. tindaids LýuLAtwuiav avepcifu in the U rfie~d stums or pe.rromithe a~u dit to obtain auht2asr.ueaol -11 oir-iinicnitit An audili inclu~des, cxamianunu-Ocfl a te~x fitrei al the~ rinxicti~dsa wt Ar. :nidit z1Ea* includes gniflxmtcann nawes made byv irmwimu.eiuwrlt

vt I'teII as twn-~ W.c belivei

1vut cur alidts and the rt',potvi o oikelhr s of %m.Ner auditvt. ithe Imrunic-al aIacui.-it relkrred to 11e1L11 positiol OFCitY PLhJ1 Clk kt!.Ij 3 1,.

4i~t m cvmh 11-mi% i for the- ý ears then enlded hi n wii-imlt~iy L. Ifilite-d Stitt:- o(Amncicýi.

he vrw k'iorinu of (o eraniierta) iccourtiag Standardi WNx wi ' iU getjewf*n&'vnr r~i-v~i~i 1, Im.

lnai v -fo 'isons oCr Goic~rniamun Ac'counting StandilsrI Licajrd aul~c ujo. Pimi ew vv rr msk om.in hajŽ.i A "A A A Th I~ L-

'".4 "" "'V '44 444' 44.444 44444444444.4 44.44 44#444 .4.444 - '444444444' 4 444444' '444,44 43/44'..4 4.4' 44444 44 4  )'4'4>r" 44-; ' 4 .4 44.44' 444 44444 4' '4 '3/4. 44 4 4 .4 '44 4' 444 4.4.4.'4 4' .4 44 4 4'4 44 '" V '4 .4 '4 .'4 '4 '4 3/4 '..'" 44

4.

4 .4 4: 44' =, The management's discussion and analysis on pages 35 to 41 is not a required part of the basic financial statements, but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. .~frC LUP March 22, 2W-> 4'

4.

4 3/4 . 44 4* 4." 4., 4 " 4.4 4 , 4

44.

44 4

-]-..

4 ;, 4 4 ; 4 : 44 4L 4 4 1 4 4 i.44** ii, 44 Q : 44 444.4 .4 '.+ 4'4 4444*"1i;44 444444

"Balnc e 444'-4 4 i'.444 44" 4, Shee" an

• +*+:.

" " *..... :Unresticted"cashiandcLsh cquvýalents (Nate lrand2).,

• ..... +..... :.;....

$-'303,,593. S; 21,554:.+ -- * + nrestrictedinwstments pWbte'8`1ar'd2)-.. - "i+ +-, + + 11,019

• + 230,10S, 3/4 1131

.-*t +.*.?-.-Customer ac~coimts r~eceiabýleless allowaýnce for doubtful acco~unts<;- + ,Y+ +o.*+:* "4' ofA $6s 36s s 2 20120021and $5,567 i 1260> 1,' 128,987 Unrcs*....:

• ::* *:+M tericte csh a nd cappish equivalents (?4te I andj:!,:<.:

- 5.L.`' :::+.;i 2)'. 30 593' YSSi.+$44 *: 21 554+'+ 'V A" Interest receiabl 4.... ,2. 11,3192 Cusi tmernt ant receivable:,lsao ne rduf ac ns' A., 27.227 4 A..... F --- Ia d h u,aens - IIIId:, 7..

2. 9.7..........

18,,54 4 5, 199 4 Inetories, 4 ai 4 4 asrage cost-4 4 444 4 j4 "Materials h nd shupplies n .47 9 444 e SFs fuels-4 r~y et 'I 4 2 26,526" 24,26s 4 "44 a
rno t sanld-. b-r 44," 4 2.6, 27227 '6583,, 5 ,(3 561 44' 4 T-aC h n ah uventt s e ts.. o 0394s '561 4 7"4 4+.: 1 Restricted-. ~ ~ '~4 L Debt seniice"-6VotesIand

2) 4 Csh anid cash equtvalents

,68, 44 4 444 4 4Capitalfprojeczs-(Vte 6ad2 4 4 Cash and6 ca equialc'n1ts . 444-4 4"4* 13606 - 40128" 4444< Investments 26324. 32,6465' 44,123 +m .+.... ,3 6 0 -Inties '*.+ ++ + + + .1 I... I+ ý_ I*+ + + +*+¢*' p+ + Interestrceivable.. 65....*5 618 Bond ordinn ( 11 1 655~ + 444,4e'V fý I4 a'2

InetetV, 588,557, 503,927 Emplo+yee health and welfaroje.t dNoe ssland. 2.)ad 4444 44 j""

" 44 43 4.: Cash and 'cash 'equivalents .9-455"0 446" 0 +. 4-44 44 44; + 4.4. + 4444++, +

• t

?'+ .4'" +' +

• t

+ +o +.+ ?

+,

'4, + + +. + +* 4... I 9,4 _s nteret receivae ..4 1 775701 1 +4.+ South<Texas Nuclear P"roject deco "mmissioning master trust Ates 1,. 2, and 10)' 4'+ + "4 4 "L *' " +" '. - Cah and cash equi xalents 565 3 4-"44-4 44 Investments ,-................"........143.657, 18187 44 + 't'4-+. 2" +."+'+. +. +.-- +* +.....+ +.+...... .:+" .+ .+. + "i. 4 4* j 44 4' 4 Interest receivable., 4 ,,6S61 44 1,65 44-.* 44. +

4. :

Prjep ct Warmnl-e aseb aI nd 2)o d 34 4

4.

4 4 44 4 103 Ca sh a nl cas teqivalents. 744.5 -nvestmen. 5 I 40 Interest receivable, 7,4 4)41720 Other"non-*ta current ass ets and defered csts ( .ote I)' 4159 0 44 44 .44. 281 0'rpi rent - e s b c ~ isI a d 1 )... +- +a + ¢. 57 ,5 1 -, 4 4 + CapitI l assets, net (M+ -es 1,3 "o;..and 14) 27,5904 44414.4579 4o 4,454 164 4-44" T t, Ttal Non-current Assets 4,36444 .9530 5 ,769378 44444 + .+ + + .+¶- + +... 5,97, 30 5,693,748 +

~ ~ ~ T ta ~ s t

+ ++ ++, ++ o .+ +.++- +, + +:* =. ++ %~st $4S 6,521,346 S 6,255,245" 44A 44 0, ,44&,eeaccompanyg notesto theo h, 4cialstat ents 44 + ,v si in nca s 4 f 444 "44 44 4444

• -1+--

++ ,T 44........4 44...444...4"4. '++* + *+ L. +

• • ....+:+

+ :+ +.

• 2

+ .,++ ++ + +J {.

1+

44.

+4+l*./ + + "4'44"44j+

• +

i + + + .++ ++ +÷ ++ + + ++ + + + +.+ .+++4... .44444.*. 4 -4 44 444 44444444444. 4*+< 44 .4.++ + +* + + ++ + j + 4+o+ +*¢ '+.** 4 4

• +

+ + 44 44?. + + + + + + + ++ + +++ -. 5 % + 4+ 444 44 4444 +444 +; 7" s'*'*:-; i ,44 4' d 4+ + 44 + + "

• +

4 1+ + " +. +" + + 44 44 + 44 4, 444 4"4 4.4" 4:. =

+

+ + 5 ++* 3--+ + d +

• + * *

+ +. "'+ : , + <+'; + ';+

• +,
• Z.]"

+°:' '++ ,+++ r *':":. .. + *

• + ?.*+*

  '+',.++'* "*

+: +" 44 44 4 44 4 4 444 4 44.. ,? 44+, '.i },:+*+ ".4,+ + +. "+ * - * =' ' +* + *. + + ., + ~ * :'* " j444

• +

4444 ..1 4... 4...444 44 4+-+ 44'44+ 44!: + -

+,

+ + -

44 1 4 44 44 44* 444 1... + W + "+ i 44444 ,,44 + +, *.

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...444+.,: '44 4" 444+ ' + " ] +

• +

+

• +

+ : * ' + + + Y 444+. +44 + 4 4 4 44,444444 4 1:

44. -

4444 44 + + +, +. .+ +. .+ + + , + + + + <. +, + 44444.++ + + 44 4.4++ 4 +, 44-- 44+- m +, +

• +

+ -+ + _ ++ + + + + 1 4444* .4 4 4 + + + 4+* + + + r + + +. 4 4. 4> I.I++. .+* ,+ +. ++..+* +* + + ? + +" +j < .+ " '4 44++ + + +g 44t 34, 1+ "*+ ++ + +

+

+.

+

+ +- +' <+ + + ++ +,+;..... ?

++

.+ + *' '+ +- +1Z 1 + 444+ 4.44 +. +.* + + + ++ m + + +. ,+ 44-44444444444+-+ -44. 444+ 44.444444.

4. 4

++,, +. ++ +* "+ + + ++ * + -+ + +. 4 4 44- + + + +, + +' + * + + + L: +> + e + + + +,+

• + +< +

+ + ++ +* "+ + ++++ "+ + -+" ° + " Y ". +,' +, 44 4,.. + 4444-',"-4 "44 4444 44'+++ + ++ + +. + +" 4 44 "4444 44+ 4444 +

• r

% +. L ZJ+,.+ + + + + + + + + + 4 + +' +* + 3/4,v" + +* +; 4 4 '4 + 4-4+ ++

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+ ',+ + + + + 44 4 4 44 44 44+ * + + + + * +. + 4¢- 4 444 + .+ +44++ +* 3 +

~~2002 200144 4 p... 4.. 190,789 -<'4- '4-4-44, ,-v F7% 3$ , 94685* $ g -,7,7 5 *** lfbh'

44.

-health and 4*elt 'are rayables (Moles I and 9) ,0 ,r n-' Labiltie 2001i 2001t Curr4 e nt' La nhiTot lCuretL bles g* ':....4.*,, (I ho snd) -4 1 ,5.,.., $44 ureLong-tr debt, oret (vAores 4, 5, b nd 6) 5 S 2,726,848 7 9 7,6S, AccounshbNulea Projct a deomilso o145,87 119,8407 ,* *.Cu to erde osts*. '. .,.*; a.., *.,*..:. z

• , -. v. h28;269 2.*:

6,879, FmploeehealthanDefdd f e aye (Notes 9)i d 656, 135 678,696' O T otal niCurrn liabilities zidd*r rdt .Vl 238..... 61945 262 497 Non CurnTtl on-ib urrnies

,t..

1618,58a. 3.576,601 atonterni debtne es

4.

5 d

6)

..- 2,726,848 2.687,6 891 Tu d e Aoui 'tex s Nucci PojetdcrmsinAlNtsln

0)

,1588 91, I** 'nv¢ested in capital assets, net otfrelte .,d debt 1,679,15*.. .7,. *+, +,, , Restricted]..:'. .,a 72,2 ,*,**a ` 504,263-,. "C% stordeposits........................9 326879

A. 4 Un leatrscted

' e.. enu 1 d 1

x o* 1,......*13) 256,1274 678,69 14Total Non-curent La bilitis' 2,6

,7 1,0 Total L iablites and Fund Net Assets 3.......... S 6,521,346 1 $6255,245 Seevaccompe in notes toathe basted debt s,9,7mes,7 -o"..< C*" e stri-ctcd X 2.2I h-0 ,6 444 - U.fC"tr.... K

4.

.* / ......2527 232.680 4" 4

• 7 445

~'joa Labltis n FndNt sst 4...;.$ ,2134 -S- .5z4

4 "" 4

• ,'.4."".,4 44 '4 4'4r

.4,.4 .'.¢ taitements of eenueS', Expe*nse~s and:l hanges* i n Fund Net AI ,4 + " -I ] V'.i ,0,:< 4"4, "i 2001 OpStatingmeentsý 4ofc Reeus1xess)dCags i~ udNtAst S l e S. 1.....,028,259' S 1124,414 $ I ,$,i, 4414 *.1 Re.. ..nue 172 214,556 Tt Operating Reve..R*uvenue.(. (i d)..1,(338,970. < -Elec, tric O p ra m ge. .,.....,0,8,.5,-.-.1,1 2 4,4 1 4 -" Lo,4*- 006>,- t-p g E penses (otesl;1, ZandS).,* 4ga 4 Fuelpur aed po an d...-,.,.. 5 0 - ' 460,210 -, ther operating Rv enu e 283,200 4 ,2393470

Employee hcalth'and *elfare pNotev I and 9)

I ,¢.:', 19935,Q':I 829,-

"..: ",-o+oRegu atoryassessments 1 6'[ ?80 tI*

29,335 +*< ... "O erat ing stncome =.,.: *. . z......:'-*....... . ".... 2i.6 2,03 243 7), .... Ite st ad th in comý'en s........ 882.0 986,193, Op ra in Incom 31, 662. 3-, 52,777 4*-> Nonperatin g lcine(Expense ) Nts,7 anod 8'" ~*4~ Futeelt pucaned po wer andcom riuer gas....... 3520203 4160,9 Other,..t atDecommissinig inve enaincome and change mfair vale......... 10,084 14,922 e Employec health and welfare (nvestment ihv 193 ""S,829 S188*9lg99 0,125: cresttexpenset E pnotes d,.8-986,1 93,15Q 0 1 " Amortizatno*fdebt reaequsion, issuance, diso 'n S A gnce fn construction ate 7062' 12,593777 -o4r. e'.s'h4defeasanceofdebt (*te)'.... 4 42, 586 DecommnPayinngsntovleeC steofS Antoniome and c i fair value (°'16,183 (145,202'. "In tere texpi e nse... es...a d6)............... 0....... 3,16,38 1 ( 1,154) Allowaont cfbutofn d s aid of Constructn Notesn aNd3) -. 7 6 12,593,.' %,"-*, --',Change in rund Net Asset's B'efobre'(Clige in A~cotmfin: Poficev '."*":';)";- -7...109,397'i*,;* 164,360 'S ,Cmuts rcwsh eE fest of Chan debt (Accounting Pehi

e.

,'0',- ("o2,586) -) co ne und etAssts A r ange counting PolicyBfr, o...,.iu..os. 248,471 1 'Fund Net Assets-Beginning, AsRestated out o* I .,.h........ 2,416,100, 2,164, 0 Chand Net Assets -End A rg. a. e nA.c.u g4..,.47.1.. S, 164,3601 n " :i.I. See aceomtpanvingnotes to thre basýIc fin'ancial state~ments,',!; " -o i 44 4

""2 4 + 2*A 2 , 22* ?

• o

- +.

• +'.

-+ +

• ,.""i *Cash Flw Recive ro m c

ust om r i*.. ,,*,,g,.,. Ciih R~ tive foo~ uso~uer 128 4 5 -S, (56263,00 ""'4 '2"C f' ~i. 'fr+*~m n... o ~ lt ~lii ndntrmvl ot (oe1md );;; ":¢J?::+,17i16')9 ' 2*:i'2iL

9) 702

"-,*+Cash-Cont ribu tio s, tm id r o fcons ru m go o tes and sevie z........ ',..,.+. (56""-" 30 6 * :"** 95.669 ") ýC l P tyroc eed s fr om is anp c o fc o rmmcrem'l pe oe .+, Y +.,.; c.

• .!,:+

(1197090 N**" QM2*I 18,0 Ne Cash P) ra'. n,. Activities.... -, :C::..... ý1 I. ý-

( 5 28

+l54,9154) ":*'+'*".., ~ ~ ~ a -*. w fromL' °e Capital(U nd) ReCitl ate d FinanigAtedF*ahivities:**;.

• i :+.:,:.**::.*

Id )rhpametstoovalt oconsts o(Note I and.3) (273,910';

• (;+:.. :'*.7 '-'*:::¢!*.(14,6)

+ *-; (2376,062) +*j Ca2 a~ '(1,66 (11,093

~ ~

~ ~ ~ Cs d: f-i 3)".'.+*'* e Cs Ue) yNncpia iacigAtwm...... .. ;t 140'_ >+

• • o

'2, 4 lai. ad fc2*ruton( " <Piroceeds ftbromsalsuance ofr~matu tnsof nvestmeno ts 5). 2,: :+.: -+' 11,2 80,2 -9+++ 821,195 *:*+

• +:~~~

~~ r&

• -+.,"",

et cis ir~icrei iuinceo S otm~th~ Texa tNcl r Prjetdeo miso ning mate 97s ses. '-:*Z 200. 11,98 8 " ':(,000 P ic'z n i t i ash creas ve mast d for' 1 -6v n e mployei sed hA~cah nd* lfr.............,....;.... 1,52,0 6,040': J' (+'+<.. Prnin gci a sh a nd ca'o sh W equv' ae' n tebnis hel a~hd for emp sioy e oflt ad webt ar -. ot 5 .*+ .+ ,35

-*2.5,3 0.3ý

+ .'nterest pa'd i'"oth r n5 'd 6 ( ",o J1 + 51"54 P I.. I.... +N3t,907"

• ,:.++.;*.<:*'ebt iiutoai Z...

,I era e shan dCfash aqucvalsts p idj',e,;... w 0)............ (2-,2 244 . + , 29954.... ):

• + +

0 6ý,.': 1'Cah 1n) I.

?

S mnC Fow P, Flows Ende January3 1"

itie, "Cs"E22' nt tBe2 2 "

2° ' 2 2 ' 2' '°2": ¢ "* +'" d fP r ont....... (.....029) '2" C ash Fow from Ocits n to tie ity~o cSUl Vec) An" '2(ntosd Cash Red.ived from.c,.toxners ','S 1+ 28A'3460 44

• S 1 6,13

,"05 Cash p ayments Ito sheplier f.or.go. ad "se/ vic es (5948) (5'...... ) AlP ayments to e m efordoservla cet I<. J..L. (1,0.6,3279) L:>' 'q , ' ', -': L',,+,"':"*L ro ni,.iiti e)rn dc aseý ' n cu to e accoun' i~ints re m a l, ne ". ;. .+.. ,.* 1,8 '6 + ):i+* ,~ ~ ~ ~ ~ ~ ~~e cas me re"a's + -n'S;6th T

as' N+c+ci(lncr'eace) decraemnithrseitoning,<.,.....ast.e.r tru...

st as-s-ets "(15...,69S.... 6,45-) + (19,357) "Net Cash Pro"ided 50y" Oeaing Mtivi ct t 101 2"" ' 6'2584.n14 Net I nc~reaeiCase h adeCr as h Eqinvre ayments....... r. ,.. *+;.. ,*;+ 0,* ,+:,* I**+ _272,* (447 5t+*+,(5,445 +, Cah ýý(C -I) c F.qsuidcralnse 'atnd ofiPer i o d-ur+n 34et 630 derre coQ -;

. * **t-**

, 19451 +!*+ Cash Flows fromn Opeatpita nd eatedrnnigciviti c' 'Oper~atig noe I I, I. +.. I -S + 1, 662* 35,777+*:

• +~ ~

~ ~ ~ ~ ~ ~ ~ ~ ~................... oesr~edlotpaal ,.+... .90 S Cshparýidfraddtion stuily la and & ito xpns netc reoa cost 3 oe. n 1839,065 (237,062) Cash-.. pad nuclear Soutche Texs Nucear roetd omm.s.on.ng........... (+l 2603 ' (i 093) CNuntributie'ain arnid olcnsrution Io~' aind

3) 73 1,096 15,8230 Alo ac rob(

co n otes

795, 0

'4,195 'rChe Iro issancd othervenu bonds (Nailties-) Progcs fncrtromissac fomrilppr(~t )~9,0 1 0 "P (Increase n decrease nouebo nd and ca...eerablhne. ofebt. .164.2 ), '(2654330) -. ln-c.r.** i p d (% i-e Indma ,\\+i d i +.. ",.-. ( 65 ) 42 ( 6,501.... '.t ( e2'ase)- def+cr eas a cos t fues p.a. n (2,25 S,. (, 07) 93 (2,99) PIncreae(ds ecr ' e~ase) tian cto accrued liailiie J3 .S,07 759,000 K' Payments fo leasbac rasctu~ion (Notes I nd 3)'. ~' 42 '2~~Chngetash in ed by-ci~ Capi thcalad lts'ad FinancingAciiteies-f (3'~ 4" ~ ~ ~ ~ ~ i r" Cas Flowss from Nodaia F..a.in....id S"'

,*..+

Cas-cps ts to tei ty of s .*e*'.m onioe.deposit paa - (170..62*) 26,*38 *

• .,3 7.

nCiash pay entasetoth City fromt Icase uliias ac transact ion f 4l2..6 Inc' Cash (Uesed) by emplonyc aalt .in'ancing A LZL2).Z..iSS.3A5+ -23'2 d' h idi" fr ul2f Cah to i roms lcrcivstin Actidtiesrrri (N teslndite 2)iabilities'

• +",T.'

'+" ++ ,,4 ++.+ ",. See ouchp n m oe oteb sciasetal tate entmeits'. '5. '"2 :,"'2 (1+,067,329) .(l,l04,59..2-).+, +.; .2.. -N Cash P.Pr o e l d maturities of.. v . +..Actr........ o 1.240.82 V+ 'ý 88,8 ' '2,' "S Net-cas incregcn*ass*ets t theld for n employe healthl and 'tc 3 0 2' .Intere st.+5 ++-' and othe inc me. + + +, -+ + ++. ,+ t 4+ +* '+'.. +"s',+p" 1'2. +' 2+. +t ..

• T +

' 2' +- + "Ne' Cash Provided (Used) by Investing -+ -cti i ,-e '...+ ,+ .+ .192",.f: '...L+-o l '2++" + Net+

+ ++

+ +*'.:

+.

+, Inceas in Ca h a d C sh Equvalnt + '+.."'2 .2 -+ '-2 ""*;++' '2 -+

• 27 44

'+*:' + 5 ,445" '.2.

• +,

++.+ '2+ ++ 2'5 + +. 2' 2 2 "'.'2'++ +

• +

"+ '

• ÷ *

+ * + +. + + " + +* ""2.2' ". 2 ' '<2' 4 2 \\ ' + "+. + ;

+ -

+ + "

+

+.. + ... > + +. +.+ S ':* 3 +.:

• " ++

+ ' '2 + Cash.+.++ + -, / and. Ct<h-quisa.. at-B eg. nning' of. Pe io (Not e.) "-+ ,2' ", + ++;-7 +< - +.:..... +

.'2 5

,+ 'i' 2., +,. 2+: >++,+-" "Cash+,: and Cv is+ Equ ivalents, + m, + at End"f:er -o I I + ',+. 'v ": +++S++ + 334-63+:,+ 0 S'+'+5++, 1+ +: :,

++:.

2-, +. + ÷ + "..'+ .. '+ +: +- " "+. 2 '2+ + '2'.; -+ " + 2' I + .+'. ( -'+ +-

• +
• +
• +."

o

• + - >

4: + ' + ' 22'"

.+

'+ + '2* + N,*>+ , 2'++

2. ".

+ * 2+' "N' 2' '2. \\ "'2'**" 2 + 4 R,-e"o n+-i+ l++- ai io ; 'n . +* " of.... +a... ln ome" ,to+ Net Cash.Povid-by + On rtn Activities .2+. +*+ +,. 7 .*+ £

+ '

+* T* -+

....2

,' C ashL+ . F lo w s from-,+ +O p.+ rting + A ctiv itie ':,.. *+.,++' + 2 -.2-'2 2'.* +*+: +, d '+ +.. +. + * +, .+ .+:.L., +'

a, 9~.'a -aa.a-.99 aaa 9a9'aa 9 9 'aaa a~a.'aaaa a-. -a aa' ta a,a a a ~ t a - a a ~ aaaa99a~a~aaa~a~a' Noe-o ia nca Statementsa. 9 9 -,.a Jan ar 31,2,0 and 9,'099 a,1a I., Sumryo Sigifian Acontn 9Oja Reotnaiý iý'P-'i a'~vc ,B r of Sa Anoi (P) a muicpa ,aliyowe ali. City ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ of Sa5.9noýh:Ciy,'rvde lcrFt~n~aua~a'oSi'i'oi' urudn ra re ndprsn proert tae9ý ptov &S~a ce amet a nd en

oteCt, a

s. reuie9 on

-a~ces"'adsitl pcs'cn d'o prn un oiih Ci e a,,, a' Basi Ofa Acontn Th fiacattmnso P are prsete in accrdnc Wih accunin .1kie not .9 Noeso FiNanihIp Statnemientots a-i~nanc9aI Acontn

a.

ý6d Bor (AA),ku In accrac wit ail aiilf ca-n

eouir, P

a dpe heu oi a~ ~ ~ ccut pprescribe bni y faa itc Pubonl Aservic~Bard o`f Sangunton UiityPS a municsipalr utility owe yThe 9 aaS ~City ofstanemAntons (the Cisety); ' tries elcctriity and nfatcuralagast.a noi n urudn ra As al' murenicipalrtlt, CPS isanexempts frolic pbac ntofinfome assets stateranchiseo pand shlabic litaiesan a bon aorinianesa~ a'dicnetlya presentkMd cmponlt uitofth Chh ity the fo'inyancial stati emencts fCS p are w- ,in finrundncaret orts~s oft-egni 'A fo 9' CS&ilye eiihadWlaepas. ~~~~~~~N -3,Basis'icni OfA cutS. h iaca tatements' fCS'r rsne nacodne iconig..a a ~ ~ ~ ~ ~ ~ ~ ~~a ana rnipe anaalyacpe incrthe Uite et.aesses of A e incaefrtainrestatemelnts of pro~r inena1 year,9, aoi u'n6SBY. aditin pi'crdaxyicepwith' GABetaienedh o 20,rinswr Accutn an Ficcas ~oingfr. aaa!PipitoyFid andsiie Ote Goermeta Enhee Boar (FsI) aniid K _'ategoizd 'a sa a n'a, ae in' -cpitla es,'n La o, f e'a'rsrcc and 'n'ratitd-a,Th,,,9-'lii ge a flo reotn andtead fa rit' disc sI iada 'curdsp aU i o, aaaenes a, ysi as a a, Re aconilitspecibed bya Euthy NastioaltAsocitio: fRgltr tlt oiisoe~~AU)~h ,fiA ical statetynas o res'entd, on the -accpreiual ss oy a onig a, a tearilyear halt anrduto wefaicbriefiatio As a rsidt9. (hschne8n,740)i uultv~ fe~I fds ti mf Oeprfiyp 0Ias restate AReiifichangen Certa.~ion' andmo.nsi 34, Basicre' financial Sttnetsatendn Maagembent Disclassifiead to Aonalyaristo irStatye and Lbcenat Govnmet. hsipe~tto'c'utdi eotn otiuin nad ~

isc The*' iscsca year ene Janua~ry '31, 202 isrei3tohri s202; ;the fiscal, as'i*: ,ended Januar 3,20,Jnuary 31,'2000, and Jnar 3,3I1999,,are referred to h'erine as 2001, 2000,< Revenue And Expenses -,-<Revenue is led4when biled. Customers' mecters are read an-bls are cadii thas permi adusmnt' So*-=. 4; * <.en d r enddreii fithl;. -Rate sc}edules iriclude~fue~l aridasc st aýiment ............ cassta emtrcvr< "......."o*" -he-nih

6 rý'd'CP tort&

s fue~l and distnb utoi hesmnb fisal ear Th fi y ed au

3as, 20 the fiscaess as it econded Jaury c.20 aur3 00ddJnay3,99,aerfr 4 e ~ eena 0120 rndCPS'sfl cont adjustment clause permits rfcover a

of regulatory adsusessncentstaBegtnpemg in varch 2of0, fuelandgas ost in he onthincrre CPS repotslt tom-iio'n gb' s cb-1 Aiesaebssa CPS began recovering assessments from the Public Utility Commissin of Texas (PUC) for transmission access charge's and from the Texas Independent Sj'stem Operator(ISO), als6kno~n asthe Electrie e: 'Reliabiliti"Council of Texas (ERCOT),for is operating costs and other charges applicable to CPS as a - 'holesale provider of power to other utilities. 4 444ati an micla nos reeu eae t-lcrc Oprtn revenue includes reepsfrom44energ ae .ad gasnsystems opeations.This includes late paymcnt fees, rental income, jobbing and contract work,. S...":*' *:* "anmcillarý,;services, anid mrnrichafdise "sales'. 0ieratinof expenses inclu~de tlose ex*p~ense's t'hat rsl ro h gopraios of the elc tricý and'gas systes .44, 444 .'Non-operating revenue consists primarily of investment income, including fair value adjustments. The .amortization of net gamirsftromi the lease-leseback and the sale of water rights inmprior years are also-4. 3/4 included. Some miscellaneous income from renting general p'roperty and miscellaneous service is also h -ecordc din nonoperatingwhen it's44not diirectlyidentified with the lectric or gas systems,.' Capital Assets -- The costs of capital asset additions and replacements of capital assets identified as A maor omponent, orpdet dnts, a-rc-c~ap`16lized. Mainteniance -and ieplaicicmcnts of minor itcms are' chargd to operating exp'nses. The cost of depreciable plant retired is eliminated romhe' plant accounts and such costs plus removal expense less salvage are charged to accumulated depr'ciation., Utility plant is stated at the cost of construction, including expenditures 'for: contracted services direct . quipment; material; labor; indirect costs,including general engineering, labor,equipment, and material 4'-*, 4....- overheads;an'd an allowance for funds;used during cohstruction (AFUDC).,CPS coiputesAFLlDC, using 4 -rates which apprxmate the cost of borrowved funds or the short-terinminvestment rate for other funds used r,' for constrction,:'AFUDC igs applied to projects stitiated to cost in excess 'of $250,000 and to requre -thirt dajs or more to corn lete2 44 447 o S' .- 3As of February, 2000. proce~eds from customers and certain litigation settlemcnts' to'parally tfnd 4 -

• -t.-,'construction expenditures are reported in the stateient ofr u

expenses and 4change in fund net.' - 4444 4. 0,7

• assets as increases in fund net assets in accordance with the requir'ements of GASB 33.,)

4 In 2001 and prioryears CPS computed depreciation using the straight-line method over the estimated -4 service lives of the depreciable roperty using class lives for certain aisset categories and specifically)- 44-* '-4¢ 44 "7assigned lives for~certain assets. in 2002;CPS computed dpeciation usg the stralight-line method over .- -the estimated seruvice lives of the propertyusing identified service lives for each '4* _asset tye Total depreciation and r epletinasa percentage of total depreciable assets net of nuclear fuel 4 44 - '4 4 wvas 2 99 percent in 2002 aind 3.55 percent in 2001.* 4 lyivsegs a sructures are0 years Systems and improvemnents 44 Generation. 4 -4 6-30 years 4 4 Transmission and distribution 20.50.years ,.4 Gas4 4 4 4 40-65 years Machinery and equipmfent -- S-40 years 4 .`ht and other4 40 years-< 44 444 44 44 XT. ('** 4 4 4 1 4,* =- 47 "= .¢ = minera ulearf l.I rg e "4-4"1-2 years4 49 44

."3' + A' '4'.'-'. 43+ 4444 -". -*<* . ' t"4.. 4.o 4* 3'4+.'+ .'-4 44' * 'A4 +4'44"'4, 1" ,**++ 7-'...*

v

+:,, 444 + '4"* 4 '3 Unrestricted and Restricted Cash EquivallfitsAnd lhvstrents2= CPS invZstiei atrtrdate whn 1i yearCsCs Equivlent And mo n izestmen siCP winvstetswiha ,"fhmaturity dpte wthin urchasedaare eortedatamoized costswhic approximates fair "..alue;.Amortizationrof prem*tuinfand accretion*of discount are'recordd over the terms of the investm.e'nts tha-mature -within one year: CPS stents with a maturity date of 1 year or longer from the purchase' S,,. date a +e ac d fo uisin'g fa4ir'value. 4. Fai*,alu*is determined by using generally accepted finanial _K ". reporting 'services and pubhcatidns anid approved deal'ers and brokers as necessaiy, The specific e identirficatort method isu'sed to determie costIn computing gainor loss on sales of securities 7 j' CPS reports all South Texas Nuclear Project (STP) decommissioning master trust investments and', empio"ee health and welfare investments at fair' 'alue. 4 4,4 la gnerally for uses other, thnA current operations.Th are degnaed orw an or contract to acqire or construct 6noncurr'en assets Funds consst priiarily of unspent bond issue or comiime'rcial, paperipr'ceeds, debtservice r*eqýi'ed fo'rthle New Series B'ohnds, andfindf ffr

• utr F-constructioin or co-ntmigencics. This category also mcludes customer assistane pi ramswhere rces are received fio

-uoutside paities.,The South Texas Nuclear Proj'et (STP) decommissiong master trust assets and the CPS s employee health and 'welfare plans as's ets 'are als considered restricted "'°' 4, The CPS Board authorized that Repair and ReplacemenhtAccoufit funds be desijgated for converting'.' .4 helad tr fac4es to3 *ndergroun'd. 's om rees .+ ,:+!,, verhea O6ne perc e nt of the prmir fisa year' s e Ie~ri c re v'cn u'e'fi*on s anid Vincorpcrated iie'a~s'.--r by CPS are appropriated for this program. This i's inclded ,itfiAt'asiet ovred lcri ailte toudrron.Oe peren ofte isio fi'a ~rs~eti eee focieS' rcstrctedr by ond o6rdinance.,.. '

4111 "Other Non-Current Assets And Deferred Costs In June 2000; CPS entered into a lease/leaseback-f' "transactionwith ýUcom Corporationf(Uicom).,The long-tern portioii 6fprcpaid rent relate' tothis transaction was recorded as a deferred cost in 200k1In addition, $12.3' millhion less'expenses of $350$'.

thousand was 'paid to the Cit, of San Antonio, in accordanýice with the Ne'w Series Bond Ordinainde,'f6r its '4 .t 14 percent shae of 'the net benefit from the'trncsaction':.This i's recorded'as a prepaid itemi and is bein*i amortized oVer'the life of the Ic'la Seonot 13, fnor morci nfdrhfiation. ,4 3' '4 3 Non-current assets include unamortzed debt issuance expenses, whih are amortized o~er the 'period of the "4. 'outstanding bonds.' Oth6ras'sets include' the long-terni re'ceivable fromr the S'an A'ntonio Water System fdr the' i sal' of water rights in fiscal 'year 2000!4 -',.4..- - Non-current deferred costs also inc lude a Department of Energy (DOE) special assessment fee for3' I., decommissiong of U.S. nuclear fuel enrichmnent facilities. CPS reord'idthis in filsal'1994 to'be amorized over a 15-year period to nuclear fuel e*pense. 3 , 4 4" ' ' 1 ",OtherNon-Curre'nt Liabilities'And Deferred Credits'-The long-term poition of the deferred revenue associated with the leas'e of the'J.K. Spruc Plaýnti was recorded'as a deferred credit and is bin-amortized ov' r t*e'lile of the fease. See note 13 for mo re'info'ration, a 4 4 o d -,,. Other liabilitiesand deferred credits generally include the STP decommissionng lbilty, customer serwvice'e depsis; dv e" p"ayments from customeýrý f6r'csnsthi'ct6, and the, DOE special assess'ments See other< + non-current assets and deferred costs. The long-term portion of the payable to the Greate? Kelly ;3 i.,' >' 4

34.

'!f,;'DeVel~pmnen Ai~tfiriiy.for 'he[..... +..... "ucaeýiai' as ha "'Iso.... purchia ofreah ned electric and gas properties in 2000 has also been'l" re c o rd e d w ith o th e r lia b ilitie s. 4 ~ 4 44 4 emet Of Cash Flows -For purposes cash CPS all highlI ",-',re dedwi~fl3 'o.h ablte*
ig'. liquid d..' '4",4.4 44 .+'4'", ' in,..+-Statements+ Of Ca~sh, Flwith. a m..dtFourity e of reotm cah i,o-flw,,, PScn Aer; '.al h ,hy ... h3,det* 'o,, 'i ruetsximately 3 months or 1ess to be cashp eqoivalents. '3t?, > s ,.Use Of Estinates -"The preparation of financial atements in conf ormity with accounting principles general y accepted in the United States of, America requires managemento'n ake estimates andt aassumptions that affect the repoed amo(uintso'bf assets amd liabiliiies andldisclos*rle ofcontingeit assets and liabilities at-, the da'te'of the finan-cial statemenis 'and thd' reported amounts of'revefijes 'and expenses during th, reporting period. Actual res could diffe.r.fom. those estia-es" ,st4mates,4 1 4 50 4 4 4444444: 444 " ,.,,-T. 3' + '= +

• 4 4 S.

J ,4.+,

4.

3, +. /..? +-* 4 4'> 4". d L' ( a'. + ,( + 4:+ + 4+ +.. +....++ + +, 4 4, 4>. ..+. +, + 4- + , +. + + +. + + - + 4 4 4 4 4 4, 4 , 4 +- ++ ++

• + e

}..+* +, + + + + " ++ + + + ÷ + , :+ +%.+ ++* + +++ ,4. + r +: + = + ++ + +. + + + + + 4, 4 4 4,. 4,+ + 4 44- +* >+,' 4-*< + +. + ++

• +

2 ' { ' ¢ 4 44 4:-. 4 4 4z' 1 '4" 4* S...

• -+'

'+

• Z

.'4. "4 4.4 + + :+-+ 2

• +

+... <,:+, + -+ 4 ,4 4+-+.

• ++;

4 44" 444 44,'# '4 44 >.4 44.++-+ .,++ ,<+ "+ '+

?

+

• + + +#

¢ + ,*++ r <7."

• + '+ '+'

+ 4 ".4 " 4 4> 4'" 4'.

• . {* L -*+ 4
• + :"

, 'g +" + U -. + ; ',5, '+` ?

L'5,

'+ +.>

+ , + 44' 4 0, 4 4 4 4+. + 3',, + 4:> ,,+.. +.,, . ++,

+ - <...

' " 4 44 444,< 44.S 4'. +. +* - <+ 3 + +.+. 'o

4.

7 +

• '4 4

4+ + 3 4+ 4 4+ 4-3++ +. ( 4 ]

ti- -Tor 9' .t9. .9ixe 2~'..G'~ Cash Ctsli or.vlets and rnesmen Govei~' rnmn. gec TJS avrmnSgaatedoliain helvi b~ortaeýok enatry ormiu by th FeerllReerv Ban 'rin CP's6f ý nam isudb,, tt,,n oabn o ai CPnStallwbe invexstmnt asdfie b Bor 'eourco and Policy Bnds Odeinanes Ta k In he tat ofTexs, irest repurchase agreements, reverse rprhs gerets eiedbakr ( 9aceptances and commýrciial~pape, no-load ino'ney'm'ark& tmutitfns ah te esofsp'ec'iric

4.

, ~~~secured or guaraniteed inrvestmients. V.,99 9 . 2CPS's iny'stmefitsiini the STP decommissionn m-tr rsta held by nidpdettseeTris ~~> investments a.re, limie tU..Gvnmnt or Govcrrhnient Av'ency br U.S:,Governinent. guarantee~d oblijatioriis by CPS B~oa~rdReso6l'ution and Pol'ic~', 'Tru'siAgreemnent, and'State Law. These investments -9 9 are subject to market r sk aii ý' -d their market value' will vary as initerest raties fluctuate.'This could' affect the valuie at which t'he~s'e 'securities are recorded. - 9~,9 9~ I nvestmenits ini the ernj~loyee health and wvelfare plans are held,hy an independent trustee. These nvestments are limited totose au6thoirized by the-pans AdminisratieCmite h rs '9 ~Agreemients a'nd Sta~te Law' -Th'ese ini,.estments Iare,subject to m narketý ris,k and their mairket -Value will vayas i nterest ratesi fluctuate.- This-could affect the valu atNvic thes securities are record. T, These investment poicbiies. follow the prudent man concept 4 9 9 9 49~~9 9 99..

"Cash C3S A.'san nesmnt auay3 A"'-~~2 ?001'A A Ca? an Cas Equvalnts Cas,T [Cash andCquiv~ualetad nctmnts 3 6' a0 u62,311 A-CP'S un~restricted and restricted 9~~S 346,09 S 286337 STI~decom6missioning imastie trutst restricted 14-2110396 1/2 ' Em~ployee health and welfare. restijcted 1 64 R4 Total Cash ad as Equiva~iadfenv~i L22734610 627183 nInvestmentvalent CI'S unrestricted and restrfited 321 1948,09 828.633 A STPA decAonimissianingj master trust,- restricted 565 4422 1309 A l'mployee health and welFare'- restrciced' 9, 1484S5A A' Total Cash, CassiEquivaents and Inv estme~ntsA~ S' t,229,731 Less: Investet ihoiiadmtrtesoc~ta A' Cas andn~ daysh eqiN iclden i cas equvlents S A.1A ,554' k ISuneticemneststimtd 'v tAYA A 1,022108' 210S,109, E loce e'thad elae-restricted 'Total U;s~tuaet 14,612 251,662

• "TtlCash ad cash equivalents 2n ietnnsS 1,229 173 4095329 A'eir~it 61.8154

,9 Totl'CS 303593 58181 'Cash and cash equivalents 0 2,5A "Insestmcnti~ ______ 12538 20.1 Total

UCirsh, ctd C.

Aj~,'aet Aai lnetr t S 31,622',7 9 51.9662 - '1/2 Restritced:~ CP deposits' Bon p asying casheugaents - debt 'c 2601 89 4,30 TOWesResriected A pst 92 2 SITP decomtniisioning oiatser trust -rsice5635898 JtlCash and c ash Equivalents' 56. 39 A Or' -Zvtret AA 5 1 8 . A" A. " A.

• ,:7 A.

A. A 'A "4, Z A' 7A "A' U' bA.iA.1 A.j. .j It II, K'. '1 I ii I  A  I Al  itrs I 2 fA. A I [IA. I> A.. A.' A. 'A1/2'A. 'At A." A.A. A. 21 3' ':i -i 1/2A. -A. A A. A. 'A SA. A. B.' A. IA. .1 A Z 'A. IA A." A' 'A., 'A F1 2.**

.. Depoits \\; ire classified into hree categories of credit risk based u the following: Category. Djescrip~tion ~ "1 Deposits insured by the FDIC or collateralized with securities held by CPS or CPS s agent mi CPS s name, 2.. Deposits 'c6ltateralized iby securitiles held by the pledging bank's agent in'>,, . "Deposits uncollateralized ihtch include deposits collateralized by_ securities held by the pledlging financial injstitutio'n or by'its trust o'sis With Financial Institutions aCarryBnk-"--, Category (dollar's i. thousands) Amounts Balance 1 2 3-" January 3 I U

2.

1, 260. 2,305 S 110,797 yS 10,797 anuary312001 s eca" 24,085 Investments a classified to threecfoeorinsof-crdit rsk baed upn thef;o* Categoryctegne ues~'ponth flowng_ S Includes investments that are insured or registered. or fot which the securities are held by CPS's agent i

• n ' namn.e..

nve -th securitied are inclu~des uninsuired and une istrd invetments for~which tescrte r k '. ': held by the counterparty's trust department or agent in CPS s name. 3 Includes uninsured and utiregistered investments for wvhich the securities are . 2;

• held by" the-couterarty or by its trust department or agent but not in di the': of Cps's name.'

Accoringy, investments of CPS are categorized below to give an indication of the le vel of risk assumed: Total Investments By Category CategoD -Carrying Fair (dollars'in fotýýhoua ) I 2" 3

X'mount

~' Value 'U.S Tes Gvmin. A-gecn Sccurities 948,08 "948,098 S 950,932 Decommssibring W Te'rust 'Employee'l lealtli and Welfare: 848 ) j Corporate bonds 184S18481849 S : Comimonsoc stok 67,6689 ' -s 67,668 4 67,668 4 " U. S U'vernment 4 S -*K*

Agency Setintics 28,113 28, 113 ? ' 28,113 Gfobal bonds ,4598, .,i'5,980 '5,980 Foreign equities 5,127 "-5,t27 5.127 Totail 1-ealth'and Welfare 25,in'stisCategonied PS 386 125 386 4125,386 Incsim ntsno Categorized 5,8 E_ Money.vmarket Mutual Funzd 9,455 -9,.455 -Total Em.loy cI IMcaltF and --Welfare Funds S 134,84t S 134,841 4, -4' 5v

'4' "1

3. CapitalAssets Capital asset actiNity for tle years ended January 31, 2001 and January 31,2002 was as follows (in thousands):

""

'+"

i;I L-+{;i(- : ": ' +;"' ': a "a.... Iteela~s.siicano, "as Reported > for CIf AC Restated Additions Reductions nalace at 01..,.-2000, 02 001) Balance Increaes e% Decrea*e 01-31 -2001 NonDepreciable Assets: Land-S -'48,111 8-48,111 S 5,225 S 0 533363 6 Land held for future use 12,599-0 12,599 -0' 0 12,599' ',Construction-in-progress .:+ 345ý75! T,>, 2, ."* 2525+

-*<", 348 003""1*< 237,720',,"

+,*-;441,21i3 , 144,510 ***:*: "'U Total N~on-Depreciable Assets 406,41 2,52 40ý,7 - 242,945 441*~, osrcto-npors 35.5 ~ Q Q ~ ,213 21044 S>-"3/4 -- .~ Depreciable Assets,, Electric plant 4,759,692 201, 3 76

• 4,961,068 362,99 38,751 5,285,236 G

Gas plant n 381,306' -26,067 /' F 407,373 16,8407 1,669. - . 422,544 - 4 General plant - 337,759 .... 2,251. 1, 340,010 56,626. 5,446

• '391,,190 S Utility'propehtyleased" 2-18,785'

' <7 0, 18,785"C--' 0 0" 785 '00'7 , Nuclearful'>" 47 0 14A, *"j*fl93-;' 0-2'71 2816 Total Depreciable Assets 1ý 5,744,685 <'- 29,694 5,974,379 447.478 45,866' 6,375,991, .4' ~Accumulated Depreciation, Depletion and Amortiz-ation: '2' %'-+* ::

• '<:i

-+':< -+.. Etectri'c' (1,621,5;73)7" 2'.> ":*"- '*

](22,765)

-2 -,,5438*i: 16,5)'j-( -,3j,, ,('1,758,761) El~tri'ý(1 21 71 (22,65) (1,644,33Sf (167,857) (53,434)',. 17871 - -- Gas' (5, 404131,82) (137,225) (349) 2' (2,879) (1465) "(1 1,21 S++.',**(,i 1? '*] -(4 1 +:' 134,695) [.'* ' Gn l - (55,4S3) (571)' (56,054) (48,919) (1,656) (103,3174, Utilityprprt [cad (72)

0leased, (72)

• (66) 1

'(138) N(207,991) 0 (207,991) (15.825) 0 (223,816) . Total". ,,o(2,016.9401 (28,740) -. , (2,045,680) (233,016) (57,969) (2,220,727)V "D reciable assets, net S 33.727,745 ' $ 200,954 3,928,699..S 214.462 'S 02, 103) S 4,155,264 - 4 capitala ,net*.:

203,206' V;,

$-33 7 412 457.407 S 429,110 4,365709 'Cash p.id f6r additions,i'net removal costs and nuclear fuel was $248,155 sad nonCd-sAFIUDCwdS $12,M3 fora total of$260,748: p*Pr C't Do aid .amortization totaled $232 950, Depletion was S66 and a net removal adjustment v.as $565,' .4 Balance al, Additions Reductions Balansce at 02-0l-2001 i ncreases Decreases 0*1-301-2002 Non-Depreciable Assets:' Land S,*+

• $S 53,336 5....S 54,889 1

' La'ndheldforfuture use 12,599 0 .0.'- 12,599,: Construction-in-progress 144,510." 274.283' - o7 .676 01790,1. 7 't Total Non-DpreciableAsset, 2t0,445 275,841 228.081 258,205 Depreciable Assets ,.+'...:; Electric plan 5,285236 141,597' 18,366 2' '5,408467

.6-6 6's splant' 422,544" M 65' 1,312 440,397

"','1916',7 '39l 190 2'

<-,67,717. -7,40, 451,876-' ' -- Utility Iprop"rt lease 'i U '18,7S5'7 -0 C 0' " '18,785, Nuclear fuel" 2___,216 11,666... 269.902'.. ,2s*23j '<7-114 i.,666'*,+<* -.. 0',- ~~ , Toia DepreciahleAssets-6 375,' 1 240.145 26,709 6,589.427. Accumulatled De preiationiDepletion and Aniortizatio, -o Elecine .i (1,758,761)

,-(161 628J)

(25,671) (1,894,718) 'ai 44.44' S...a.s .(134,695) 7( 34) (142,386) General 1)(7,4) (4037)' (117,226)- Utility property leased 6

0.

(204) Nuclear fuel' (223,816)' (I 8). (1 8 (23934) 1ota1 (2.220,727) (204,183)(34) ~ (239(318)442) Depreciable assets. net -4,155,264 . 35,962' (4733)) 4195,959' Capital assets, net 4 ,709 11,03 '4 ,223,4 S 4454164 I Ca"" h paid for additions net remosval costs and nuLt ear tuel was $285,576 and okin-cash AIAFUbD'Cas $7,062 for a totatlof oS295,63. DereraCtion depletion and amortizaton totaled S204,183 44 541 f-4 S..... :, :...., + + +,,, +, -, - + - -+.> +. ; ; ',,,, +.+ :,,...,, .+.,. - + : +, +..+..+, +.

• ; : + + ; '#

+ + ">+ # \\ + '*..> " " +. + + ++ - ^' ' Y +, + ' % " / :+ ° ++ + z + >,' + +* *'f ') ; +- '++ '*

+" + >+,++--4 4'. 4 '

+ -*+ + +

4. oenu+Bond and Commercial Paer Or~dinances

..,ui,+iment As fJafiuary* 31.-2OO2;the bond ordinances for NewN Series Bonds issued on and afe uust 6,'l*..? 992*: .. *"%:+'+ the I tefA'iin "ro ii ,contain, among oth rs, tef1o gprvs ns. **'** ':,'-?,i**

2 '-: : ;'*-*

L*.;

F undl i CPS's "Generiil"Ac count sha be pledged and~ appi prop te to beuse~d co nm the foolwwing priority: ?(a)' o*r ma~intnnce( anh 'op-ihh erise'nes-of th6 S gfo}ms`, (b) fo154 e f'}'the N wSrl Boands," c),*.+:+ 'for the pýýmfeýtCUfanyoblIfgations'ihnerigo~gft th~we~sBnds~vhhmabesud-r:to.... .:,tfin amouint equa~fl t6 6 `p'rcc-nfit6f the' gr_&s* e', -fe ifh6y-t so 13 d~lbositec!iniý' t "e Repai d, :?;,:+.:: A Replaement Account, (e) for cash payments'and benefits to the CttT not to exceed theAgross R nand (f) Papet revenaes i tto h epar anee r e e u O t'- e - m p s y st e m h e.. G e e a

• 1/4*b~t~tsfrrd~'eedited to the General 0Fn~

oe th rmtenet". A revenues of the systems cburng any fisal foar Nw Se.s nsue goss revenues noafat 6s1992 A A contan, amongaihershthlfollotiegjrovdsion A-Funds the CPSalue of gasan elctrm es ofbthesypeded ros used imuntcpadpurposes ant priority -(a)mfor.aunts enpened adurin a thenfiscal year or addithons to ftrpetagmtg'system. o he percentagesond c fttemo tp' the n oeriorin ito re theaNew Se Bond which Ctty e issud ()fr e"e'A

gross revenuies o the sý,s--

G ra Fu o otth` Gner 'v'+,,.-. ):!slall :b d t r i d n., th 6,tl* 14% mi t hith io~fi)"by'the [god e g b d~ o ld, emini ..; +*.",, The net requal to6of the systems are pledged too the payment ofsprtocepal of and thterest ont nd AP Bonds.rAflW6WSerieg B6`hd afio the piantesnest therseon shall eh nota first lienxepone net rce*enuest AtAe Iuat ll at a times mamtai rates and charg"s for theoric energ-gas, orand other sepcm es furnt shed, provded, 'and s by t A Ct and all A,"*:;: "A A A A A "'+ " A" A A "+ A+ .all Te maximum andndinca imonetry and whrch will produce th come and revenues sufficient C o pay: -" +- e'(a) a tl mainsysten d'rng 'a tny "a isy a shdall n iationex eed 4%icf the and betterenu t ex ten mses' A a nd ,. / o t h e r,c o s t s a s m a yi ) b e r ~e q u r.ý 'ý C -ý ' r l.0 ' " ' ' " m ' e d d .6s -b v r m n o e ' A6 (btsft'Nw Syties Bond - when the sathe

due,

/A4. A'~Aaou ts ~ inerpen s t-oing a he prisca, yerf'ra ddl in jo -tastre aging' s t . T p e~cntg ofe,' AAAA AAAA m:: " : ... *" + '+ +-arnd for the estabhishime nit and, m~amnte'nanrce-of th~e feunds and account cir'eaited for the 'payment and p A A~~ fleiA' t' gr thrvne~ ti the sysamstbe arei r~easriabl'atcripted to'the peeraid withvilabl of veth e s Ciy (ach yearine A it~t!"iýmanc athorzn pltedgmedc pye t of t prn~i o ari rnd ia fal oea ih ,,eai aj'"4m;6 defne in sai orin nc) and A _ <-. The. ne.t. rseveur of the sytSems Bonde to the d -nterest.on he. N Sr 'A ;. '+B n(d) to tle Seest tohns sand the reast ther aonttp shall tove prsth liebn e etrevenuess tef

• ~ ~

~ ~A or...-a 3:. 1,~*+-':.; 202 th mneathorTng Exemp Commercal Paper, Ordinanes

ontains, prmonga oaNthers, tas AP,.

A:;- 4 A AA,.+- A ,.:+ "',+"* dfndmsa rm neail tecei agreme t 4 (a ei e m r ad rman.)An +*-+: +, AA+:+')" +' " "+ -. + 7 + +A '... ():... ' et _atno h systems. As and A t Ae Ari". pa ,hill )procme dse.. fro (]th.... e 2' f

o.

ap r 0 t i n e n N S eA A 2'" N AA A 'A ." 4A, +;+'2.... "+" A' A:" ++ + A.. A : Au "+ A A A other nar 1,202-P provided coppliane' byt thesyt~ems tof the City andie alBhrondsanmtes which erovicesuiosh 55 A/'-% (a)+""..;* b o i~n*all mainteinance andoperating~c f exese't~ps';sdpiciindre(2j cii

tan (be3et xess A1

+,- 2 '+ a.B nd rcmaynsplde o theuru baym t o TChPte amended.. +.;++;+..: * +u"verni-ent-- uue+++! A'++ '+ A A' A

+ +

"+ A'*. . + L Texas:' A .... i ,,'A ' A : '>+ AZ. '; A terest. prnia on.V New..Bonds..... "B nsh all A.-++- L ,AsoJandufry theestabliShmentand mintenmpance oft the fudsadmccutsof created forith paymentandPA AA +.-+ + %,: ':-' "+" 2- °,:+...... =* .+*-*,,:-*+:.+-...*?*' ":::-*.*;+:V Z. =A A 'A +,...,,,,'+:, + "..+',* +",ord ance.+;-,* +,+-.+,,-.+-

'+-o +,

+: ++. + >,,-+...

++,

• Series<"

'A A" "A A. AA+; + ':+:"+" ,:'7:'>+::%°+" + " ; ++; +++"A'.

• +A,,

C,,.. ,,:+," P,.TAAA +t+ '.,A'I ++.A+¢ "+,, A A A .A " AAA+ ,.+. .. +.... A+. ..A.A . + ..+A 0 15 AJIL-A A A,,,,.. -+.+, A* A ' A.": + A.. '..+A -+ A.*i+) +," ' A A.' + :+. - *"-% ° :+: to A A* 4 A.A A

• A

+. A AA i A.*. + AAA.....AA. .+, >,...- +' 4 :c the'extent* the2 am, ar reasonably':,+=';: ' *, anticipa .ed to ' be.% pai wihaalal revenues++ (as>,7 defined+'],"21'.,., A A int-e >'diri".an.e*+authorizing the Commercial-+P.p.r.,.-.':,nte" "t on< "nd.principal of.all Not +s (as .A A.A -,o.. + A + +. A', '..,+,,.. ,,- ++,,. ' +, 'A: '++: ,.+.... ! ~ ,,,o: + +,.+ ,: :+ A +v:+.- *+'++:.+ ... defined in sai o ,'rd ace, an the. c, '"redito agreement (as' c" i-ne....... in" si oidn c; and}" 7: +M *:" +' - :+ ' + *.:¢

,, :+

.;++*++ ,:-[

*:*.- ++ :+ ?+> /,+-

+,,.. .+-. " A+ AA, ++ !.:'. +,A shal .~.A..~ A + A.A A A A A-A A '+ A "A A A. "AA ~ ~ A AA A '+ AA . + A..A? ++ o, A -A A'" + + + +- z, + +, 2. AA- "j + +' +A* + + ": + +iA '+ A'! A".+ +. ,+ " AA m AA% A. A+::+ A3 A A",5

• '+

+ + ?. .+,: +, + ,+ +. +' "f r 7 "r ,n 5' '"'i" '"+* y'.- ++: ':+, '. 'As<% of Jaur 3 l '20....... h"e'Tax Exeip Com". cia

• • +...

contains -7,"

• +

+

• amon oters the A;

3.

A*< + +* '+ +"' + + +

• +

+ " "*+' A 3/4z< ".+ .2 <... + 'A+< S+. + "+,." ' ".+' '+ \\*°" 3' AJSL"AAA > +- ':+ +, A A

'A

+ + A. + "A ? i + A'.' 'A A.-. AA+* A .f+ A. ++ + +: +'* ++. + + .'+ +, g' ++ + + + +, + +,+. +

• +

A' A A. A A.

• +*

-A, -A-A A'++ S.. ...... + + ++ .. + A A, A A

• ." + -*"

++'.

+

+ +.s, ++.3 +* . +* +. ÷% +.++ :+= s o .*\\ +.,o:!lo. *n A+ A A- +'.+ A.+A A. 'A..* + + : "++ ++ '+++ '+ + , + +* ;+.+ '<A* + "+ A : A;: A A Ad +, ( *

+ *

.+z + +. P."+' :+ + +"+ To: secure the'+; paymen of. TEC* P prncpa ' and+ inteesta pedg is:2+++\\ mad ot:':++2(a) + >+ proeed fro (I hesl AA A of+. ,++:: bonds an adiioa ,ote isue fo suh 4 purposes,'and (2) the sale of + I EC (b).. T "- pri+ ed v '2....< "* "+ " ++. "L+*+be'* usd.or hrie purposes* and (c) the..++ ne reene of+'. + the sysem after' paymen ,..+. 'on"-:'° Ne Seres .A; + ++ ,.°: o+. -?;4 + _,+.:++. +,

• '+

+ + + :

• A A",.+*

A" + ("'"+% '.. .:++ A+.% V A'+, + + Bond-requirement*. s" pledged-. to-the, :.++->++ +- pay en on TEPA 'A' + A +,* ',*+'*.+++"*+,d ++++ 4 + -.,,;+ ,o. +.,.. +, A A + A+ A ? A.*.

..; + + A

+....+ : . + +,+++<:, *. ,.+. com lia... ce with. the.. terms of...e.e. Series, Bo.... *".:'nds i the

"In November 2001,- CPS issuede$115.31;pirceo ofheCPSeries 2001LRevenuie Rep miuh Bons at a *:true;:i,. iners rat'"f"il bonds were sold at a combined net prmu f$ 10 mill:n 7'1

,7"e jr~ekrundig bonds we6re-issued to refuind'$122.5 millon in ce'rtain o'utstanding '1992N'Iewi Series Bonids

'*i.*-;

,<,, "and wereý $7.2 millhon liess than the amount of bnds refunded Ih eudn rnato eutd]i*~i,; . -. flow, avings of $14.Z mtlho'n'hich equates t4 apr'esent-valu~e, sainjs' o$11.7 m il lion,:'4 9.6 percen*- o S.... ;'*,:*,"*:[the phiaramou~nt of refundedý bonds... This transaction resultedn loss for accountin Oupses of $2.4*-£:i 't4d whb has be4ei shbr444r of lif-of the' rf444 bon~d.

• n e r

"1rk_ ov b0t2000, $215.7 millhon par value of 1992 New, Series bonds were legallydefeased with cash.

,T li niet acco u n t in o s o $.mi l b re p~o rted iii l d d t ep ai'v al q of t les i J 8*i l ' n p i fýfi'ct eesance, phus uniamortized reacusto Ti odige dt of $20.2 miflio"a'r~."*}

7:" In 2001; CPS issued $221.2 millioni revenu bonds which consisted of $170.8 million' iný<Tax-Exempt Bond -at an. av rg inl erevenue1 aS rate o 5 4 e6 taneage interest fro N ew S fro-es' 2e0 e01ie1 2000di'

$18 4.9 'rill Ii 6i i*asus'sed toe i eii l brse the'Repaif ahd<Reo lhcem 6Atl

,......,*" iaccounft for prior-construction expenditures.' rin additio'n;,$34.0 million'bf n'eW'........

, lroce 'eddfre de i., a , d Bond' Costruction Fund to finance' tran'smislon poet. S7.:,"-<.

.. **: +**WWe ighte d-Average Interest Rate:,**<

,;.*+...

• -,,,--,Maturities Ja..ry,.002 2002 -:,

+

_.'44 : 4 44",.-- .4 x "+ 0 2<.*44'*' 0 1;, L ?.<," ?Tax-Exe mnpt New S eries 4 44-Bonds4 1998442001;2 2040,3,-'20214 6.6744 " 144,59 147,470 -[>)' Total R, e*,*'Seri* B oinds°'-6it*ahding ' 5... 317% 5.1%:,,+, 2,589,86075" 2,668,820

• 4,'"

t+" es's: Cur~rent mnatuirities' ofrbornds '"*

5 S 7-

,;+

• :78 5)

-;71,755- :: S...... ~Total New-Seriie* Bon'ds'ou]tstan'ding, :net i <7;, v.., of current maturities S2,512,035' $;2,597,065 4,;,* L 44:*>: 4 4 44.;; k<.,r ; Prin;:, cipal and interest amounts duie (in fdiousarnds) fo ech of tile next five years afd thereaftr to T*:. .7y.,:20042 ",.:,;30,,5 5, o132,686-v/, ý, k,;};", 2006*\\@ .." :-2,3 .;!'L 121,369-{d: 248,004.?*.,*" ÷" " "":'" .. ""'" ': ""t00*) 7 ? ,t*'134,5 15: -. t14,766*-: *:249,28 L, <', '::,+z,":,',,,: ,*,.. *}: C:2008>-20-12 ý:.*)7776,510 -:'*Q 1463,9W9 "(,,i 2402479(ii,

• <.:2:]

S-20 2017 740,305 250,425 990 73 0

• " "',*'*Z

-.° :':-*+'],<"*, ,:-J 017-202f*",. ;:513.720"'+,,, 60,43L ' 41 F S. "":."*, "'i """:," =

"<<,...Totals*

-: $2,589,860 S-'$1,407,597 * "$3,997,457 : ")<...'> .4Z<"'% 44 44... 7 .1 4; -,4,. 4...- 5 6

Long-Term Debt Activity (Dol lars in thous~ands) 4* J 4° "'Final Q Balance Bal aance original Principal, -Interest Outstanding Additions Decreases Outstanding S

• Amount Paym-nent Rnlteq (%) February 1, "000 During Year During Year 'January I A,2001 Revenue and Refuinding Bonds r

a" S 700,805 2017 6.048 S>47940 o 0254,155

1994-ATax-exempt 0.4 8

49,460 S 0 2,0 9-5805

I 994-Ba-exempt 684,700 2014 5.00 595,805

,.95805 1941 a-xi~t,37,000 2006 "5.008 '22,990 _0 ~22,990 0k'~ ,15;94-CTax-xept5600 2006 *'-5.00 42,710 0 0 .42,710 T1997ax-exempt 2018,500-0. 2995~~~J3 3.15001 1,0'~ 0 250 3312,3700 "1997 Tax-exemvpt-350,000 2020 5.3 '~ 3,1 '.~0 J 32,570 " "empt 7 2014 5509 7270,195. 10 243 1 -245, 19 4.918 90,04527 767:1. 6 98A.Tax' -t 785,515 2021 o.91 '773,435 0 6275.

1999B Taxable, 2 ()96 2020 6

-343 ,"98,610 0 1,565 r 97,045 2000A Tax-exempt ,170,770 20*7 5.374 0 70,770 0 '170,770 2000B Taixable -50,425 2021 7,403 0-50,425 '0' 50,425 V-'-", ~.2,730,575 221 1j95 .282,950 -2,668,820'-" ""-Lss Bond current maturities' 4-, ' ,67,215 "4540 0,. 71,755 Lesa Bond dicutriim (17.675-(6,040) 8,150 "3,485'"

-Les Bond reacquisition costs 191,830 0

33,139 158,691 ,--,Revenue Bonds, Net -"'2,453.855 222,695 ' ,'241,661 2,434,889 'Tax-Exempt Conmer.al Pap (-.,)

'-a 134,800 118,000 0

."252,800 Lortz-r Debt, Net '2,588,655 S 340,695 S 241 6 ,( $ S2,687,689 S.... Logterm Debt, N'et '.,7 Long Term Debt Activity ~~~(Dollars in thousands) 'a. ~05' " Balance ~Balance Original Principal Interest ' Outstanding Additions Decreases Outstanding -Amount Pavmient Rtates (%)I Februarv 1, 2001 DUrinil Ye'aý' DurinLYcar January 31: 2002 ~ "-Revernue and Reloading Bonds '~a 7085~~2l .4~~ "It992 Tax-veempt< '254,155 a 0 S132,540 1' '1,615 "1994-A-Tax-xemp -'.684,700" 2014 59,05 008 ,,595,805..'f -0 30,235 19,6,000 "*,2006 ,5.008' "-- 42,710 S.0 - 0 ,42,70 1 1995 TaxJexempt 125,000 -'.2018 5.500 112,300 0 3,000 .109,300 1997 Tax-eienmpt 550.000 .. 202 5738 350' 2332570 0 '0 332,570 " 1997 Tax*-*empt '311,170 "2014 '5,509 245,880 575 244,305 r..19A.......".. 785,515 202 ". '4918 t '767,160 .- 0 24010 743,150' ~1998B'taiiable

• 99,615 2,

2020 *" 6.343 -;'7,045 0 655 S, i"( .2000ATix-exemPt 170,770 -'2017,< 5.374 '. 170,770. .:,0 17,,' 7,770 '- 2000BT able 50,425 , 2021 7.W 0 1,2:2'550,425 0" 2,225", -t 49,200 ,2001 Tax-excmpt 12 2011 3843 0 115,280 - 0 115.*.0 2668820 115,280 194.240 2,589.860 L
ss'
,-"

"..7*2'71,755 6 77,825 4 <Less Bond current maturities 0',- 3(41 'Less Bond discountl(premium) 3,485 (10,528) `3,499 (10,542) .Less Bond reacquision costs 158691 5,611 - 18573 Re~cnu Bo'nds, Net> 'i 2,434,889, 114,127 172,168' 2,376,848 '.Tax Lxenipt-Commerci1ls Paper (TECP) 252,S00 97,200 0 3-.50:000

a.

4a?' 'Sif i* ':]

276 8:'

ao Long-term Debt, Net ,2,687,689 211,327 S 172168 '726,848 q77 2 r'

a.

a

6. CommercialPaper An 1988, the City Council of San Antonio,iTexas (City Council) adopted an ordinance authorizigthe Sssuance of up to $300 million in TECP, This 6ordinance as amended pru`ides fo'r' fudndin to ass" i

.financing ofeligible projects in an aggregate amount not to exceed $450 milon Ehigble rojets. include fuel acquisition and capital improvements to the utility sysef&s(the Systems). and to refinance or refud anyoutstanding o bligations.whiýh are. secured bynand p b r a ie of net revenues ofte Systems, The program s scheduledmaximum maturies wit not extend beyond -Noviimb'erfl;,2028.7 T ha been classified as long-term in accordance+wit the refinaicina teirms under a' revolving credit agreement with a'coiisotiunf of banks, wchcsýuhc.pporsthe comrercial paper. nUnder the termsof th-e reement,. CPS may borrow up to an aggregate amount notto exceed $350 millio tile ag~rn~no~ niý, e b50'mii' foi-the Purpose o payingprincipal due tnder theeTECP. The credit agreement has a term of two years, currently extended until Novermbcr 1, 2003, and iiay' be rgnewved for additional pýýjids eTo dte, tere have been no borrowings under the credit agreement.3TheJTECP is secured by the net, 4 S..,* ,+revenues of the Systems,-Such pledge ofneit re'venuies j_'§i*rdin~iýtf~ninfenor to thpe' pledge s'ecu Irin*. +",':. ?i., pa'*ymenfit o.fexisting Nrew Sre n' n any to be "i....... Series~4 Bo.4nd A iii 4'f"Pti +" :oCPS sold -eIhnofTECP in fisai ear 2002n 8 nillion in 2001 SI23.6 million has been used to fund construction expendiures through January 2002. A sA'summarof.TEC~is as follo" I 7 January31 1

2002, 2001 TECP. outstanding (Dollars' in thousands)h

$S350,000 -$252,800 new money issues (Dollari in-,+s thos s 97,200 118,000 Neighted-average iterest'rate ofoutstandingTEcp approx'mate 1.36% .3.95%, Average life of out'landing TECP approximate number of days " 80 j 92 +

7. Benerit Plans4,

• i Th eCity Public Service Pe:nsion Plan is a s

fined-benefit conttibutor W,:+i"t:d s 'pensionplan (Plan) coverinrg substaintially all employees who have completed one year of service;-Normal I 2.retirement~~~~ ~~~~ iag65hoeeeryrtemn vailable-with12Sy~ars of beiflefit sýirvice aiýd to thos employeeswhoere 'ages 55.or. older5with at least 10 ýearsofbenefit seMvie. i i 4-1 .. Retirement benefits are based on length of servieeand compensation, ad benefits are reduced for>. retirement before age 55 with 25 years or more of benefit seMe, or a 62 with less thai 25yvars4 nof)., , ervice. The Pla is sponsored by and may be amended by CPS, Plan net assets; havmg a market value of ,$790.1,miiomn at December 31, 200Fand $823,5 million'at December 3 l,'2000, are2 held inaseparate,:,, trust tatisperiodically'audited and which statements include historcal trend informatii., Foi further informfationcointact th' Emplojie'e Befiefits Division a CPS' -+. .The current policy of CPS is to establish fundink levels, considering annual actuarial evaluations and .recominendations ofthe Administiatve/Investment Committee; us.ing both employee and em lo eri+.: S cntributions. Generally, patfc'ipatinmg emplovyes contibute 5 percent of their totaI comrehsation and are normally fully vested in CPS's contfrihultio~ii afteý'rcomp'le~ting,7 years of c redited seric r atg40. Employee ontributions comrnmence with the effective date of participation, and continue until attaining normal or carly retirement age or termination of cmpsoymenta The balance'of Piac~itributions arc t responsibilit ofCPS giving consideration to actuarial inforinatioii, budget controls, legal requirements, compliance and industry 'and/or commn it~hy normhs. 44' ,4-44**:. o p i fc n u ty a c o ot m h t

• hi m n s +"*..

,*++ +, :+++"'i ...+ ' 4, '++ 4 it++: + + ' +

• : +....

"++.+':

+* :

4 4*+* 4 o+,,+

,<* *,-'++,,

+--.:, +,,+,"

• ':+,+ +-- +,+ +.+++'+:,++::+.++.....: +*.

...,+ *+,++*++.*.++'.+-*,+, + ]+'. + ; 1 4*" +

^, +..

.++. + ,,+ + ++. .44,+ + : ++ ', .;44:, 4, + + + + + 4 + ; + +-+\\ +,+,,+

• p

+ + , + + - + + +: 8 44 4 , +, i, ,4.4+

du rest nictio n onnne t a oun's

• de r, tl R et oration P ans have been
• -S T*

• ':.:t he total *employer and emnployee tnsion ftnc6g, whcnldsamriaino as service costs*

the Nunt credit costtuarial; method, is sumNmarized as follows :... S......... ploy" ec contributions S:*

$i+7,981 S

7,;57197-1 CPS: '?) "

• contributions 1,0 S,3 Toa otiuin S

9029 S) - 1(32,830,

. : "i*,.*

"-Covered "payrioll:],,ii 5, 165.314 S: 1-$*-i48,9365, 'The ctuai~ll,-d

• ed ineconttritbution requirements for fiscal ),cars 2002 and 2001,were computd usinicr n't, 2001ýand 2(00 thepat-e ustga assumed rate of return o 8,5 pei"

ý,F61ifilcai yeais '2002, )6200 asi-' costs were aortized over a argetedlO years, acoprdto aq 5.-year* amiortitzaton for fsa 99-N "changes,in ac a on.,V r .....s...........a: ]-,'.would affect the comhiarablhty 6freesults with the pnri year.-. I*1"*i"" I*i CPS' Cotriutins o'the Plan amontued to 0.6' pecnt of coveredparlinfsl20,3. ec Iti ,= ;.f iscal,2.0.01 and 9.0 percent in-fiscal 2000iL..1 ".,,2?':"A schedule of fUhdndm progress: follows-

i,2

)-," c u ra v i e6 g e,: 1;=* i.i ' N' .,al vau fast$563.4' ,'iabilit (AAL)' 65 S.... =... i'-3.,Un'funddi-A- AL'(UA',L)I: *(2)-=(1) (70.1 (37.)

1.

6. UAALas a "percentae of,.

,,,,0D.,

*.,j.

Lcvcred payroll 1.(3),

5)

(42.4)%'.(25.1)% 1.2%, Actur aialp aluatio 'rcethodslused forti 2 ,Janu0ary0 I,, 99 to s l ntclut pai the Plve-yean duetoedraltaretritos tnd bnit crediu under t eans h S *?:...:':,,;smoothed miarketffor asset'ivaluation; (b) t e'rj tailacud,ýiiy t'he total eimoyer a n oyepnion Ofun.ing hich c desmtininz rtization fps 'ervice ot g haeunoar it

1cu2001,

` 1999 i 989 e 1.01- .0 yi resptivuly mrd aildulat usrgtelv Ndllrbe aN'6rtiz (on thousads) ,.-eSinnificant actutarial assuntionsused fuorthe January.s2001; 2000,and-1999 actuarial Valuations "÷,* i , " -: i* mclude (a) ii 'rate-ot. return Ion th'e investmen t of.,resnt and,futur,e ass "etsý ot8.5 pe Ircen It per~year.,, [,:*

QI Tscompoundc au b

g.0 percent, ai (ment cost C'ýal.,b';ojveid payroll $ ;165.314 'S 148,936 S".:-", , +" f~iving increases of 2.0 percenth f rce T14ar inrassinclude an iiflatin rate 6f 4.0 pe'rcent..,, 2*:-+ as ~

n.

Toalayol sal i $164,143 F 9 !.= ] 2 5 t..' "= +*.;2 " = +. =

i.

'N '

• D

.+: i2 [ -,I,.,'< '=, <:-+<* ']+'-,- -.. ,',i' .. °_' N ","'*N

4-4 44 CPSs anua pensioncoýst an 'etpesiio obligainfrth-y3 fica peAriuas pended costua (AC)1 200 Jn -r 3P cotrb0n ere relts to IAR 6 h u Adu4mn

tdAR4, (14 0

3 49 ) ~ ~~i C ;: Ices (eras)t PO.* ,<,%L? (99)).

• f< (39 1):

"olgain beginin o, yea 994< f4 Pece o C ntrlbuted< 115% 100.0% 103.00' ," "*Employv. .;es who retiredt prior to; 1983 *'s'are" receivig annuity payments" f* rom "*an inmsurance "* "P <'icarrer as wella receivin 'som16e"e'fit directly from CPS. CPS'sc6stnfor fiscal 2002atd 2001 were 295 thousan and pension,-cost$3 1 othousannd, respectivethedfiscal iods ended J nuaiy31, i002,i. rd S,**

• C PS pr o wides certain health care and i~

h fe suran ee benefi ts* for'retired &m'ploy~ees. M ost form er

• C PS*

,employees are ehgible f6r these b3n1f, 0 u00 reirtrent fias CPS. Plan assets are held>4s part of CPS's 4i 4'44 H'lh~n Lif 4444434-nee

44.

nt i0~~~~~~~~~~ ~~~~~ ,,zhi ":; "* rupHatan LeinuacPan ln funding is from b ot 'partcipant and emnployer c e6ti-ibioi*;ns' " '%S*

%*-"}

',-=:detemiined by 'annualýh'atuar-at'a'nd'ifii'-hofiS* alculatioiis? Ret'ire'd"eni'o1o',e'e's'ctridiaieto'th'ehfealtli'blan

• "P*<

, ~ ~ i v ary ing a moun ts'depe nýd mfig upi o n an e m tyt f or u a t a co sd ers ag an( y ears of serv ice, T he, p lan -, ,: > 4 = < t ', L. ><:G;:-:may. be aedd by, CPSI*The'an'nual 'c'ost of retiree h'ealth caeand life irisfi mne ae ran~ce 136'i ýfits ftiinded by CPS'C'<! ; ?q. *?]d<?:;: *.costs approxiiinat~d $3.4 inillio'n-ffo['12062 and $2,7*ih1i _n for 2001" 6PS re'iilnb'rsedc~eria'in e~ds an~di] ,)* {% ) . :. ;.}, % th e ii ; gl o u s'ý s eh ro lle d hi, M e d ic-a're P 'a( B p] e rc niit k e of th e 'm o6 f f y p e n ii : C s i t i i d 2 0 ! f : < X ,*y' "* '?>

"):*"7

, i!: %£,,,thousandl fdr 2002"adnd'$219I tlibusafidfor 200 1# v: *.? ';'?'.i ¢ "*:"'P**:% *'

• Retiri{d emplbyees'and covered dependents ontributed $1.!3 mililion" ad 1'.1-miillion for their heal~th care:

ziýdlie isra~eb'n~ti i i~eai 202an 201respectvel ther nwisere approximately d ~ ~ ~ ~ ~ lf deedet elgbe o 11te s.': "<.,2,098 retirees and covered deednsegbefrhat aread lfeinsurance bcnefits, as compared -,* >+-% ,< -.In view of the potential econornic sgficac othsbeeits' CP as revewe 0h rsn Vl*o: ." v.,"the posternpioyment benefit obligations for cuirrentf retirees."'mie Jainuar l ýautions Sr

62. 5million' ini

?. % 1:,?v [ ;2001' amd $45.2millibn in 26000 f6r healIthalid $ 16.§ hhlioni~ii 2001ffrýd $1'6.6 i~illifin in 2006 fbi life,< , 3,.,,*:-,f in-'s u* ,ingan cd ti8e eits. The actuarial analyiso th peetvalue -f orpot'empl6omefit benfii~ob igitions for:%*

* *. -¢{v

".

• th r p rt~ p a ts fu lly elig ib le f or b en efits are'estim'a ted to b e $ 4. 'iil hio n f o he a t, $ 4tnu oi f dr,%

S..:, : ;,.1 f6 insracan $2.5 millihon for disabi Iity b'enef it'sýCPS began partilacal adfun~ding of 'rojected ' *):') ,;.future6 beneifits i 19921 Funding, totaled $6.5-rmflhon in fiscal 2002' $2.6 mitllhon in 2001 and $3

million,

..."...,Foro, the heahhL, plan, the actuarial cost method used is the Projected Unit Credit Actuarial Co'st Method.] For i t6 I th hf i nsurnc 'p ~abhYlans,. CPS uses a piesent valu mehdto detennine the cost of b~enefits*. ý,.?*-Sig Riant actuaria assumptions us~ed fi th'e calculations for the Januay,0 1 2n 2000 actuarial,;, -- 4at~irsfnc~i f45re e -44 , ;+,, ] ,=. :d vauat0nsnc~de(a) a rate ofretum on the investment o present: and tture assets o 8.5,'rdtir ]=:'".'] *e..,i* :. S-.", *,2=.<yearrheeat, If.adte disabilhty, plans ()poetd slrmreses for the' plans, ranging from <!.' '4{,,*: , =,:.. = 4.5 percent to',12 0peircenft' dependin on a e for base'and othe'r saad and (Yne mdicrcfos~t inc-re~,;ases

• =,

o " pr'jce. at 8.0 opercent for, 2002'and 6.0,. ercent f6r 0 Ii : i*. ,...,,;+O,*.* .O L';

• ,,.{w*

,,*£. -..<: *, * ¢' '.: -o-., ;:.:< 4, 4a. 4 44 4 ',-",*L

444, Incterestone~nso'biainNO 8

"14 A Adut0 ttAC 4,4 .2~ (9'~4 Annal enion&~tAP)' 64 )92 1,40 .0 I

9.4. Risk Management4 4W,~~444 4 CPS s eposd t' vrios rsksof ossincudig'toserelaed o trtsthet ri'dstrctin 'f aset,4eror an ormssions, ..44 ana di' '.4ls;;P p4'4ii -K'a -i;blt n rpfýistac oeaet rvd 44u ri 4 444.4 ,ýýl t64-4 ne' it 4444444to

i.

ev4e addisexonCSe i xpd tovaos risks of lossincudin thos rea ath to, i tort thef or destrction ofsetserrorsanda 31rot002ond event CfPSrgcaastiophulicd loses PS performs actuar"iallt stu'des3 pc i ici~~on, dsc~terin~ its knu§ce.tntosA aTuaia stuyws las pcoiiý_i~erfored in 200 ti-laiii r c1Ue'rýP'_ a_ -extefi~nf trusts for thiese accumulateapoxmel$

l. dziilonnd S 13I s;ll~n rep fiv~y Ciat

,,'sta~et. C hs, r~ h apnde related clias nPSsfnaca In 001 CP re~red 120 iillonadditional depreciation expense odimnlgofsreo adenalL

porty, lcationsl.

CPS ize~o&od~destinate'd costs for landfill and fly ash pond closure,' 4 dismantlingan r~eiati6n-bf $400 thousan'd in20 Closure and posiclosur~e cot Were estim'ated for the Class I non-haza~or wast ladfil i acordnceith' EP'r'gulatioin'. No' additional8 d"'"reihition expense or-costs fofdism'antlingo ~'

~

~,rernediation ivere'ecorded in

2002, Based upon the guidance of GASB Statement No'.~

10, Accounting'and Financial Repotn for Risk'Fin rncing and ,Rla t e In ur'a-n'ce 1s su e, thfolwn nforaio is Wpovde re~arding the changes in the insurance reserves for piroperty,and emplo~e'ean~dpublic liabilitycla~ims_ for the j'earirsnided Januiary 31', 2002 and 2001:1 "~ '.,' ~,. ~ Proerty KLiab lty' j' Health and k ~ ~ Insurance Claminý 6 Welfare Claimi Baac' 1/310 S~ 5,603 S 0 444 ~,S Pay et (20) (2,880)0 ~ Incurredl Claimns. - 406 3,117 '0 Bal~nce 1/31019,944 .5,8402 -0 X-4 'Aceounting Policy 0 '0 -'36S. ~ Pa m 4 e~nt~s '-(1,32'7) -~~ (2,8

88)

(24,381) '. ~ 4. 4 .lncur~r~ Claimrs "a' r 7' 4 2,056' 24,397 4 4 ~Balan c-1/31/02 4-.. -K-S '8,624 i$ -"5,008' ~ .3,641: 2-The enijoye'e li'elth 'and ~~lfarg pla assets are s6egregked from CPS's ass'ts. They are sepatIymnieby v -committee whosg men. mers are appointed byjthe CPS Gene'ra~l M'anager and CfEO", h~se plans have separate i:. 4 ,- ~finan'cial'statements for caledar years 2001 arid,20100,These separately audited finian-cial statements are available444 ~,up~on request from ýCPS. 2' 41n 2002,-,CPS entered into twro short term natural gas -forwvard contracts to purchase fixed quan~tities of iittural 'as 'at fixedpiriccs for specific m~oniths throigh Feb'ruary,2002., CPS'c enee into thiis`cntiaet to, help 4 lnraua a cotsad o rtect itself agjains n nres in'th6 marketlprice of thec cmmodity during'the winiter moth'f." 144 002 arid thIe eatrly'p~rt f nex't year. At January 31,ý2002, market natural ga's j'ri'ces"'were'lo~wýe'r thain the contractual' 4 prcesAsa

resut, CPS m~a-y incur additiona~lnatural gas costs of appr6-i~tl S2.1.mtillionnFbur.20 4 -

~~~based on thc fixed qantities remain n _to eprhsdCSwl asayadtoa ot hog ois 1customne'r~s i6der'the fiel aiid gas co'tajsmn rvsos of th rate tariffs.: 4,,,,444 N'atural Glas Fora'ard Contracts* 2D4 44. 4 Volumnecineaining in NMMBtu .~.560,000,44 0

4.

4 ried~lPricep6er MMfltii ,44 45 0SS ',Natural Gas Two WaiyCollar: ~44* 44.-4 4 \\-olumre Remini~ang n NMM3tu 420,000 0 '4 4 C11eiling Price pe~r MM tu, 0 F T lo-or Price per Mf tsu $44 1 4 d4Mrket Price at Januay 31 $225 04 4~44 4 4' 4 4

• aat
• '*t.#aa t'a,. K,-4,4,aa

,< r '>'m m "*','*¸*: 1Y '4'>" a,: 4,4a.

• a,,aa

'.. aa. a a" - a a.>-4,.a a,.a s**'.a Subeiucitt o &iiiesa r~c efid, the CPS Board oft .........ov21 aOoliý f or°

'.'!Sb

• tpoeeneigy, price rsc management <."'...

"199" axlsU 9 auity deregui'lat"ion legislatin; Senate Bl ,7,l ont a p sn a 'riodfyin.tiie Tea'. Public Funds l' esim4aA ct'tallb4mianici'i ltil'iti4s fli6abilityto purchas..and rgy related

+: *:...... *:......

" i~

il 'ns~ iieng n~ref6 hdg brfibitigati. thý_effect'of ma'rkel; -' fl.... '-... flha~i~ j~sirin~cts n oreii hege rice fluctuations of naturallgas ,* *feloi, ndeecneenrg~fh phc pproved by the Board requires that general operating pr~oeedtires _3f~ .' *3

• t (arid guidelines aswell 'as basle oversight and conitrol'structu'res be in place prior to irmplemientation or i*. %

4,.,ati 46 ext a A 4, 4, .a ,;.**;: ::;CPS is on~e of, four participants' -itihe ST'P,,which consists of two 1,250-inlegaw.atr 1uc ar generatigu nt d xas.Tl, e Rlian Energya formerly knowna as '4,,sto e' a 4, an. t, -J" *, <?'--*"?7:."Hu toh ighting*& P6-w A'er°l erici ~ cfi o& eitral P6`'veldiad°Li&htC0o"_a_ y ad eh' City( -- ofAustin. n-srvice dates f6rST ero Unit" and June, 1989 fo Unit-2CPS' 28-, pin the ST represents 70 megawatts ity. anuary.-3,a2002, and 2001, oCPSs yves arent end the CSTP utiliBo plat was approxmatey$ pln, netfor accumulateg r magmnt' Thre ia999 Tectiy dereguato lgsai tePcipation coreement amongs niodne th Texas ten ..amenided nds nvrestated andthe STPtNuleoar Omcatilge Comipany (STP OpuCO)ha:Texsn sellnereni*e 11 -inanmember corporation cr dertto hedge oartic gatth, effec rtsonsi ilit, pas t ui a lice nased 44, ]Ta' LY"£*:';";') fuel o3t il, ~N d elecm. atrePolicy. cT,' policy approvhe edea bythg o aerdmn ressiiidresptatgnerlt forteperatig aroedures a and gu::* ,kf i deos lne asf wellt q is ear i ove r C s igh han*d contro f6'idstrctsa be in~ plale pirto iplee ntatioh n or se.d .1 pans, a. -PS' A of fe ST a ab.s operation P geeato tha I., NS-1: .Th i 6 p " of." four p articipnts in prop Stio t of..tw.. ' o ngment gnr atinga un its 4'_ sts, ' i it'it nde ofl aru--tiii. its share datescfor STid foreuth t ffit'98 fr snt o anuni189forun me'CPd U 2 p..- eNitoW nersurhicn'the ST Areidse 70raigAats cofmpraent capacity. Atsl er and0"t CPS's invaestmunteir theSPu-erstiol'y At was a pprximsatly $1. r b plaonts' ofis9 3 baclioiiuat d ir,> , t.." .. ¢*+*i:-. idepre aciatityi Eff 9mlhn sbectieN vebr1,97,the adjstet ri nfation Ag r tem e'ntumong r th , oners oif STP wasr¢*< i?*; a-lm endd ad oresa e aensd rntea paNuclear Opati$10 Cm pahneyer ( P rCto, aeiac nonlprofitidont". ,iriembrco,"ratnScedeaa o thehe t partic ipantso ase sujed torepnsiblh as nto e arlrcngsem ben ort of Sthidi The pastiso atheinares cotse n ownership interentest ncludin allibitens P handex s w of a nm S- : l T eOC h'e1

l.

s al n"cleata li'Ai i at2 Tr e linit f ibiyud-- Actb iese ea r powe p ants L'T' *.z v>;::-( Cm codnc illtefnaca roetonI'iem nso the Price-Anderson'cton-".>*.

• .*'fi-.-,*

f "Ii

93. ilciii

• '(L:*Sii'TL' iny'A aste.Workerm-(iiucleariabtiih~ty olcywth aese mayiu hb io asssse foll hoinga fo~aric t

e'nucetriadlt*Jan,

?:,-*:z

)in a< mincmui'm utý i f $0.06 billiornsuji.tNto rdgulanions a~lsflra~icinetti*p6*eslriftisfiuhd*;* N prain abasis o t e r o r i e nT theragovrment theIdo aTP -- 3, CP~eSidamortes ,Titss6r of nucea fue fo-h T fae exense on a'nit5-rdcto ehdUdr

a.

pheosaers of sp TP nucleafurenl CPSaisctain geliond dmis o p nuclear n is el, wlibch is based tho: '4 ai a as qu iPS'share d y of th oT p f genera iion ta tis is fess lie tftoC ctounaiers Ti schag'i 1xcsed Tii' :- r'e"' d' '6' 1 b i have b-o6. i sub te 1 4 t'44 'a*' o c t ore ose n ifig accrdric r~it te-fifandilpoerson i~qieeti'ofth' iceAaerri A t. . " '. Mat e-W rakie on n uclear 1-iabilta poicy g verns tarhl inde mnitied lisin effect nilieo' fouth i*ro2*02 Tliearimis a of rlabint ii..ir th ricende of nuclear p owerapla*s to and o n-sit property damage insurance i$, inci Thema m bill'n. that each liceneeniay beasseIolwnyi lunis6id fis 6'e'icesuie hihel'ýsed'reactor, pa bl at $10le" milo peya i.cor sona'cipre ent.an asignifican 6theiresjke'thve -publsic linetei rsaests, ain STP. "or'pulse fthe anysesshtmeniio'h SiTP has twot a , licye orse fd'rea tosheN 'A'tcpat flni"repica~dtemxmmlmt fncerlaiiy nuaie requir ~yd C. lay anraec~' n emnification agreementse wvit fabe frcl~arieg iiratoiComssi'on Tli' owMaster.of Pcur entlyarnLability poic,75witham3io rnun imit pop $460 insrac,,wio h for then ove'a idtiety<2'. af Cf reuain 1'.0 bilia,-.s ý ta'tettl h olfvila1 o Z2.5bli76frilequ ir 6ýe rt ornucriea'ricecnii o 50mlini - property~dm,, insurancein-., an 22:bilf' nsurangea f 6ke. bepe use fis tot enur that~e~i~ theii L'ee rmaeatris nsur'ansaf andi stabledniii omt ivn n'~ .~signif aca idnt rik to the p ublc healt r slanety inurd then toI cmpete a'de ita natio oeataions thtý. r a e oree bythhR.Ay id eanhgwudte e available fo"oerinufdirclsest

NroErTy, a

retop~t~ .asemn col oc mu a ggeae asssmn unerciiei Ooi 4 foe and $2.25bihndofe~x'ce~ss pr'operty da-magL insur'anceýiý, 48 boh ubec o trium ý eig 4 fr bthpriar anexessprpery dmae isuanc i $2.8milo tiiig aniy onc-policy year., a a -a A .4' 2

Nuclear4444 Decommissioning4 4-,CP together4 ,vt th oterovnr o heSP'-ie wt terR ce~icaeo iia6i~ýýsbrace't~rhe~6ýbiifs~inih~tie~nucl'arpo'*444at s'ih 49,Nl J444 4444em mmýd orisoinfrdh euie'rt'anaidýtýN 1 SP; -4iietiaciaas I an-4-4tc~ iitiiii44f& Ad 4 ceThfcae ofnefinanca as urance fo h eommissioning of th ula ourpln.Tecrfc Thb T wes gcdi e re wiiica suac lner chat their d estimate of"- 'eom~iii costs.wud' be,eieýe'd and update'dperiodicaýlly In 1995, th~e ownr cnutd arvewlof decomn'is'sioning cst l'he results etmed" CSs share f decommissionn costs. at approximately $')7Q millioni l9 dollrs which al'so e-xce'eded NRC iiu eureetn19 the owýn~ers c6nducted an additioal '~ ~ rvi'~fcc~idsinig adresult ih d ht CPS's-share ofdeco'11Mmssio ing~costs arc now 44 4-4init y 3Imlin in998 dollars. '/ 4444444 In 1991,P st~da~mli hdecohiinsioniig funidsin an xtcrnaliitust, in accordance with the': 1, CSusartedns ae~cummulating nithe lls 7 i NRC 'seg -'aiqsTxeDT' asset adeltdiabilities are include inCPs -4financial statemnents'as a 'eompcnent unit., At Janu~a'ry 31, ý2002, 'd" ha ~ti~tlapo Imtl $145.9 million 6'f funds in the external trust. Based on the annual calculatio'n of finahncial as's'irance 4 requircd byý the NRC,,CSs rs baacecedthcauledfanalsurne amoiionts of $6 1.44 ' 'mIllio'natkecmber' ~00t and S61.0rntillionf Decernbe 31, 2000.'4- -444 4~ Based upon the 1998 and 1994 decommissioning; cost studies, the annual level funding into the trust of44 4-4 $15.9 million and $9.4 million for 2002 and 2600, waxs expenised by Cps -' It1.' Lian'ite Mining Lease 'and Assignmfenit Agree'ment '4

CPS has'aniniree'ment with the Aluminumn Companyof America (ALCOA) dated Dec Iember 28, 1998 4

-4.444 4 -4 re'ga'rdingj CPS's lignite reserves in Bastrop and Lee Counties, Texs. AC beamkigdVance 44 -~ 4.'royalty paymentsto'CýPSuýnde'r th'e'a-gr'eem'ent in Januýr,i 999. Th6'1 ýterm "f the agreement runs 44' ~throiigh'2013.-ALCOA has the optio'no ebýxercise si aditional five-'year xesoso the gemn.-'-~' Thu~~, irALCOA exercises'all 'six extensions, the-a'grec'e~n't vil1 ýreminaiýný'ýff'ec-t4unt'iI 2_043.i, .~ 44< ~agremcn prvides fr~royalty 'payments to CPS based on amount of lignite mined yACA subject to certaijn minimum `amounts per year, once mniningjhas com~meniced. -The "currenit es't irmate of the '- c ,amountof theý ijinite to emined byALCOA undert teagreemen i Omlintosver a 3-year period, -ýaltfhough ALCOA miaymi mine' 'more-or lesis _thain'this a'miounrt.'CPS 4wil mrtz th~basis of the4 lignite reseres aprxmaey$18.8 4million, as royalty payment-_;"s are reýei'ed.A'sof.Januar 2002,, ~ g ftelignite by'AIJCOA Was notC co~mced. C'PS -r6e~ced ahdvanfce royalty 0'aymie-nts of$ 1,0 '~ miningo ei m n riilion ii2002 and-4$6 1.0 illion ~in-42001': 444~ 4 4 -4 4 44 iti 0rierations'44 '444 'en Joint~prtosjcmn'JA reslte fro the liti-4 4-4~le6-4ith 4-4-4 44ry 4 4 -4 ftormry knoN.n as Houston Lightingd'& Power, over its maniagement of STP duiing the construction and 4 44early operatuig periods. The JOA is ahnar'rangement'to joi~tly dispatch CPS's anid Reliant's gen~erating 4 plantd. to take idvantzige ofthe most eficien'rt plants and favorable fuel prices-cof each utility. CPS i6eceivtcs, in~inonthl~y s-a"sh paýyments;,90 percentof the savings reaie I~ th oity prated iystc~is;Th'is JOA - 4 must iesult iniat les 1 ilo n cumulative saviiigs-4per year to 4CS rRlatwl aeu 4< -- 44444 ~ 4-difference in -cash. A similar paymenrt 'vill be mýade byý Reliant to "ensure bixn'e-ii to'. 4 I -o $1 -4O -4 4-4l' 4 4~~~savings during tli6 ten-5'ear life of this ~mgrcemenrt. In Api 12001 Relian e teJA 10milo -4 4cumulative savingr biain 4' I1n August26 200, the JOA'was'extended until 2009. Under the e-x'ten'ded areent CPS will receive' the" '7 beniefit of 90 percentof the coýmbined savings iachieved under theJoint dis'patchitnguin-til'thebtotalbenefit' 40CPS reaches $200 m'illion a-fte-r' which'the beniefit will b3e'shared equially. As of Janu~ary 31,--2002, CPS's -4 total cutmulativie savins er $190.3 million.- 4 4444 -- 4 ,,4-444 '4 4-44 -4o

' 4 4 ~ 4. 4 4 4 4 4 4 4 4 ~ 4. 4 4 4 4 4 4. 4 ~ ~ 4 4 4 4 4 4 ~ 4 4 4 4 4 4 4 4 4 4 4 4 4 4 ~ 4 4 4 4' 4 ~ ' '4 p 4 4 4 4 4 4 4 44 '4 4 4 4 4 4 4 ' 4 4 4 4 4 4. 4 4 4 4 4 4 4 4 -4 4 4f 13'Le'e/Le-ehac 444 44 4.4 4 4 A

4.

CPS'etere '444' fia4a -iisto ih nhfl~ On.4n' 2,. 200 4o 4co nolig44' .4144 44nuiith6 i 13 ro onsl~aebc e 4 of ap'oiaey6 years fin combin~ation with~ aIesbcko h f~iciliiyby-CPS frapoiaey3 years. CSrtisfe si mpkc, title to and opera~ting conrolot~aii n ean l revenues generated from saleis of electricityý `pinduc~ed fromj thei facility, CPS re-'edvc the' ap'p'r~aiied fair -value of the unit' $725.0 iiilli&ýnýwhich w4ill be'aanibritize'do'ver' 3§1 m~ontf;s'Tlie riihiictio'eps 4aid leas'ebhcik~ "coss~o $37. ri~low xerercr as prepaid iteims in 2001adarben amortzed ovcr'381 [months'. The utilityha diiste option to c'aniel the headlease a~rt i11~ lea.seback expires by making a payme~nt to

4' Uniýý6m's affiliatel CPS eIire nt coltrlzdýp""ient44 iidertaking"'ag-ree' me'n-t th'at will 'g'iein"rate' ftinds sufficient to flund thice ancellaiioi iopn pa~yrrent., FPSs net benctits wvere approximaite]y $880

mnillion. Tli6 City` wa.s'paid S12.34million inS accordaice 'with the New Series bond Ordinane-o t 14 pecet hae fthikýnet bienefit`.,This par~t~a eoddsapeam ii 01and isbig' 4 4 ~~~amortized ove31 finonths.'As a result,ý net procce'ds fromf the iransacinoaprxatlS7.mlin wil b'epedvr. the 32-year lýaiebac'k term; 1n 2002 and ý2001, the n et amountt recorided ais i~icome byCPS was $2.8 rnifli6n anid $'1'8 mliA epci~y ~ ~ 2 ~ ~ ~ ~. 4 14.Ci~mnitmcieits ai'd'Cofiiingeficics< K 4 4.4 e4 444 Ini the normal course of business,- CPS, is, involved in legal proceedings related to alleged personal and 4 2 property, damiiiies, breach'of contract; condemn-iti~on appeals4 a'i~d dikrihiiiation cases iis adtoi.CS 244~ power genrto aciiis an ote~iiypeain r subject ece stvate and' fderaI p'l,., environnmental regulation; n tlie opinion ofmhanagciiieir of CPS" th6'o4t6o 6f suh p~o~idin'gs Will4 4 niothavea m'ate-rial'adversec effdct: on44tlie financia poAition borresultsof-operaiionis of CPS$ 4 urchs~'n~ cnstictinlommtme'ntsamount~d to a.pproximatelyý $26 billion at January 31, 2002. This aoninludes approximtel $17ilio~n 'that is exp~ected to be paid fior iiatural'gas' tu~ac o be mnade unde'rthe "'~ c I"rr in ef'ect thiou'gh June 2002; the'd ac "alm.ount to e& pai il e& Upon CPS's a-clua~l -req~uiremeiits diuring the 'c6ontiact period "and thei'pricec of gasý. Corniiitmrents also ',ýinc lude $78.1 milion forl~pipeline -qua it,'~gas to be pro uced frmsoCtnf a noi 4 l~r 4444 dardeni,',landlfill undei the conffact'which is'curr'ently ili effect tithe begtrniig of te~yeac 2017. Also ,,includediis$65.0 illi~ionf~ror nal puichaes'sthrough Decemnber 2003,'$331,.silloi forca' I'24 trnsorato' troghD~eme ' 204 iad $3.0 million fotrealted cooling wýater-through December IQs5 bsd pothmiiimuiii flinn comiten unpde th6*se not~?t. 4 44 -CShsalrsoucommeitted: miton inchs $289.4 million in wind poxý'eir'and S40.0 million in additional nat'ural ga~eurmnt;$38m iniirailcars; $31.9 milnlion forigeneratio'n plaint maintenance ~services; -an d44 S44.6 million for distribution 'systerit'consitruto n nitnne. 4 44 4 44 ' Additional puichasecommiitnifiets atJaniuary 31, 2002; whichi are 4related to STP, include approximately.

4. 44$335.5 million for raiw uiranium;i associated fabr~icatio'n and conversion services. This amount represents44.

4services thiat w ill be4 neecded rrrfcikt es, wo ruengtroug ithe year 2028. ~ 444

4.

ThePC~p~mugatd hw rlesin 996designed to'cornpiy.wt legislative hnhe alTectinig the utilty us.Te -Transmis'sio'n Priingad Access Rule'(Rule) mitrndates that electric, utiltis c 444ge A 4 ~~ sereb br whlea en transmission access accordin-g to a formula 11s t~mount land A srebyeaciiiitility. CPS's 60 o aeid'6f 2000 and 200 wer Itr .44 $.6 milIlio~n'r'esp~ectiv.e'ly. Thle estiimated co'stffdr'ýale44ndar yeiar 2002 is a'pp ox'i'mately $1. mijllion, thle,4 4 decrease in amount's paid for ~calendai year 200[ is aii su t of CPS's success in updatirig theCS .44 transmission cost of service 4approve6d by the PLI*C. This ne~w cost became-'effective in January 2001. In M arch 2000, CPS beg~anrec~oveing' thfesecosts romi 6ustoniiers.44 V4 I4 64 4

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