ML070170378
| ML070170378 | |
| Person / Time | |
|---|---|
| Site: | Columbia  |
| Issue date: | 12/31/2006 |
| From: | Coates E, Parrish J Energy Northwest |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| Download: ML070170378 (22) | |
Text
The Internal Service Fund (formerly General Fund) was the central procurement of certain common goods and established in May 1957. It is currently used to account for services for the Business Units on a cost reimbursement basis.
NOTE B-
SUMMARY
OF SIGNIFICANT ACCOUNTING POUCIES
Utility Plant of analyzing impact to the recording of capitalized interest. CGS is a net-billed business unit, therefore costs Utility plant is stated at original cost. Plant in service is whether expense or capital, are reimbursed each year.
depreciated by the straight-line method over the estimated However, if estimated costs are more than inconsequential useful lives of the various classes of plant, which range an adjustment will be made to allocate capitalized interest from five to 60 years. to the appropriate plant account.
During the normal construction phase of a Capital Facility, The utility plant and net assets of Nuclear Projects which historically has been defined as construction of Nos. 1 and 3 have been reduced to their estimated net a generation facility, Energy Northwest's policy is to realizable values due to termination. A write-down of capitalize all costs relating to the Project, including interest Nuclear Projects Nos. 1 and 3 was recorded in FY 1995 expense, related administrative and general expense, less and was included in Cost in Excess of Billings. Interest any interest income earned. For financing not related to expense, termination expenses and asset disposition costs a Capital Facility, Energy Northwest analyzes the gross for Nuclear Projects Nos. 1 and 3 have been charged to interest expense relating to the cost of the bond sale, operations. Utility Plant activity for the year ended June taking into account interest earnings and draws for 30, 2006, was as follows:
purchase or construction reimbursements for the purpose
Nuclear Fuel Accounts and Other Receivables All expenditures related to the initial purchase of nuclear Accounts and other receivables for the Internal Service fuel for Columbia, including interest, were capitalized Fund include miscellaneous receivables outstanding from and carried at cost. Fuel expenditures relating to the use other Business Units that have not yet been collected. The of funds from the Series 2005-C Bonds for purchases of amounts due to each Business Unit are reflected in the due nuclear fuel were capitalized and carried at cost. When to/from other Business Units account. Accounts and other the fuel is placed in the reactor, the fuel cost is amortized receivables specific to each Business Unit are recorded in to operating expense on the basis of quantity of heat the residing Business Unit.
produced for generation of electric energy. Accumulated nuclear fuel amortization (the amortization of the cost of nuclear fuel assemblies in the reactor used in the Asset Retirement Obligation production of energy and in the fuel pool for less than six Energy Northwest adopted SFAS No. 143, "Accounting for months per FERC guidelines) is $93.3 million as of June 30, Obligations Associated with the Retirement of Long-Lived 2006 for Columbia. Asset", on July 1, 2002. SFAS 143 requires an entity to Energy Northwest has a contract with the Department recognize the fair value of a liability for an asset retirement of Energy (DOE) that requires the DOE to accept title and obligation (ARO), such as nuclear decommissioning and dispose of spent nuclear fuel. Although the courts have site restoration liabilities, in the period in which it is incurred, rather than using a cost-accumulation approach ruled that the DOE had the obligation to accept title to (see Note G, Accounting for Asset Retirement Obligations).
spent nuclear fuel by January 31, 1998, the repository is not expected to be in operation before 2017.
Both decommissioning and site restoration estimates related benefits, $16.6 million for compensated absences, (based on 2005 Study) are used as the basis for and $3.2 million for outstanding warrants, taxes, and establishing a funding plan that includes escalation and retention withheld.
interest earnings until decommissioning activities occur.
Other Non-Current Liabilities-Includes deferrals to cask Payments to the decommissioning and site restoration liability of $26.4 million which relates to the storage and funds have been made since January 1985. The fair value disposal of spent fuel.
of cash and investment securities in the decommissioning and site restoration funds as of June 30, 2006 totaled approximately $100.5 million and $12.9 million, Fair Value of FinancialInstruments respectively. Since September 1996 these amounts have The fair value of financial instruments has been been held and managed by BPA in external trust funds estimated using available market information and certain in accordance with NRC requirements and site certification assumptions. Considerable judgment is required in agreements and as discussed in the Management's interpreting market data to develop fair value estimates Discussion and Analysis under the Balance Sheet Analysis and such estimates are not necessarily indicative of for CGS, the balances in these external trust funds are not the amounts that could be realized in a current market reflected on Energy Northwest's Balance Sheet. exchange. The following methods and assumptions were used to estimate the fair value of each of the following Materialsand Supplies financial instruments.
Materials and supplies are valued at cost, using a Financial instruments for which the ca weighted-average cost method. considered a reasonable approximatio inc Financing Discount and P,
Act of 1992 to promote increases in the generation and of billings. Energy Northwest invests exclusively in U.S.
utilization of electricity from renewable energy sources and Government securities and agencies. Energy Northwest's to further the advances of renewable energy technologies. accounts receivable and costs in excess of billings are This program, authorized under section 1212 of the concentrated with Project Participants and BPA through Energy Policy Act of 1992, provides financial incentive the net billing agreements (see Note E, Long-Term Debt, payments for electricity produced and sold by new Security-Nuclear Projects Nos. 1, 3, CGS and Packwood qualifying renewable energy generation facilities. The Nine Lake Hydroelectric Project). The long-term receivable is Canyon Wind Project recorded a receivable for 44 percent with a large and stable company which Energy Northwest of the applied REPI funding in the amount of $1.2 million considers to be of low credit risk. Other large receivables for FY 2006, representing its share of funded amounts. are secured through the use of letters of credit and other The payment stream from project participants and the REPI similar security mechanisms or are with large and stable receipts were projected to cover the total costs over the companies which Energy Northwest considers to be of low purchase agreement. Permanent shortfalls in REPI funding credit risk. As a consequence, Energy Northwest considers will lead to future increases in the billing of the Project the exposure of the Business Units to concentration of participants in order to cover total Project costs. credit risk to be limited.
Concentrationof C Statements of Cash Flows Financial instruments whici
AMORTIZED COST UNREALIZED GAINS UNREALIZED LOSSES FAIR VALUE U.S. Government Agencies11,365 3 Total $ 1135$- 13 1,7 U.S. Government Treasury Bills $ 2,439 $ $ $ 2,439 Total 2,439 $ $ $ 2,439 U.S. Government Agencies $ 4i,;22 1 $ (9) $ 48,213 Total $ 48,222 $ $ (9)$ 48,213 U.S. Government Agencies $ 51,630 $ $ (9) $ 51,621 Total 1 - $ ( 1.465 Total $ 1.466 $, $ 1 i ,6 U.S. bovernment Agencies I I 1$ 28.529 11 I ý I I U.S. Government Agencies Is Q ýýL II U.S. Government Agencies Is 0 ~0 I ~
NOTE D-RETIREMENT BENEFITS Substantially all Energy Northwest full-time and qualifying at the age of 55 with 25 years of service. The annual part-time employees participate in one of the following benefit is 2 percent of the average final compensation per statewide retirement systems administered by the year of service, capped at 60 percent. The average final Washington State Department of Retirement Systems, under compensation is based on the greatest compensation cost-sharing multiple-employer public employee defined benefit during any 24 eligible consecutive compensation months.
and defined contribution retirement plans. The Department If qualified, after reaching the age of 66 a cost-of-living of Retirement Systems (DRS), a department within the allowance is granted based on years of service credit and is primary government of the state of Washington, issues a capped at 3 percent annually.
publicly available comprehensive annual financial report Plan 2 retirement benefits are vested after an employee (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR completes five years of eligible service. Plan 2 members may be obtained by writing to: Department of Retirements may retire at the age of 65 with five years of service, or at the age of 55 with 20 years of service, with an allowance Systems, Administrative Services Division, RO. Box 48380, Olympia, WA 98504-8380. The following disclosures are of 2 percent of the average final compensation per year made pursuant to GASB Statement No. 27, "Accounting for of service. The average final compensation is based on Pensions by State and Local Government Employers." the greatest compensation during any eligible consecutive 60-month period. Plan 2 retirements prior to the age of 65 receive reduced benefits. If retirement is at aae 55 or
--,""I'll-,
Funding Policy benefits to retirees who are eligible to receive pensions under PERS Plan 1, Plan 2, and Plan 3. Ninety-seven Each biennium, the state Pension Funding Council adopts retirees have elected to participate in this insurance. In Plan 1 employer contribution rates, Plan 2 employer 1994, Energy Northwest's Executive Board approved and employee contribution rates, and Plan 3 employer provisions which continued the life insurance benefit contribution rates. Employee contribution rates for Plan 1 to retirees at 25 percent of the premium for employees are established by statute at 6 percent for state agencies who retire prior to January 1, 1995 and charged the full and local government unit employees, and 7.5 percent 100 percent premium to employees who retired after for state government elected officers. The employer and December 31, 1994. The life insurance benefit is equal employee contribution rates for Plan 2 and the employer to the employee's annual rate of salary at retirement for contribution rate for Plan 3 are developed by the Office non-bargaining employees retiring prior to January 1, of the State Actuary to fully fund Plan 2 and the defined 1995. The cost of coverage for employees who retired benefit portion of Plan 3. All employers are required to after January 1, 1995 is $2.33 per $1,000 of coverage with contribute at the level established by the Legislature. a maximum limit of $10,000. Employees who retired prior PERS Plan 3 defined contribution is a non-contributing to January 1, 1995 contribute $.58 per $1,000 of coverage plan for employers. Employees who participate in the while Energy Northwest pays the remainder. Premiums are defined contribution portion of PERS Plan 3 do not paid to the insurer on a current period basis.
contribute to the defined benefit portion of PERS Plan
- 3. The Employee Retirement Benefits Board sets Plan 3 At the time each employee retires, I employee contribution rates. Six rate options are available accrues a liability for the actuarial v, ranging from 5 to 15 percent; two of the options are premiums, net of retiree contributic graduated rates dependent on the employee's age. The methods used to determine the contribution requirements
NOTE E-LONG-TERM DEBT Each Energy Northwest Business Unit is financed gain of $8.1 million, based on the present value of debt separately. The resolutions of Energy Northwest service comparison, was obtained. The economic gain authorizing issuance of revenue bonds for each Business was recorded according to GASB 7, "Advance Refundings Unit provide that such bonds are payable from the Resulting in Defeasance of Debt."
revenues of that Business Unit. All bonds issued under The Series 2006-B Bonds, issued for Nuclear Project No.1, Resolutions Nos. 769, 775 and 640 for Nuclear Projects Nos. 1, 3 and Columbia, respectively, have the same Nuclear Project No. 3 and Columbia, in the aggregate priority of payment within the Business Unit (the "Prior amount of $14.1 million, are taxable fixed-rate bonds with Lien Bonds"). All bonds issued under Resolutions Nos. a weighted average coupon interest rate of 5.16% for 835, 838 and 1042 (the "Electric Revenue Bonds") for Nuclear Project 1; 5.21% for Nuclear Project 3; and 5.23%
Nuclear Projects Nos. 1, 3 and Columbia, respectively, are for Columbia. The 2006-B Bond Proceeds were used for subordinate to the Prior Lien Bonds and have the same the purpose of paying costs relating to the issuance of the Series 2006-A and Series 2006-B Bonds as well as certain subordinated priority of payment within the Business Unit.
costs relating to the refunding of certain outstanding During the year ended June 30, 2006, Energy Northwest bonds.
issued, for Nuclear Projects 1, 3, and Columbia, the Series and
ENEGYNOTHES 015 CLOS G-C ER 4LiE D BT :
OUTSTAND~IN i19A b.-IU I-V-ZUIZ I u,uuu
$50,000 $4,530 1993A 5.70-5.80 7-1-07/2008 $8,595 2003F 5.00-5.25 7-1-07/2018 $41,330
$8,595 $41,330 1994A 6.00 7-1-2007 $79,405 2004A 3.75-5.25 7-1-08/2018 $403,080 (A) 7-1-2009 $4,776 $403,080 5.40 7-1-2012 $100,200 2004B 5.50 7-1-2013 $12,715
$184,381 $12,715 1996A 6.00 7-1-2008 $17,475 2004C 5.25 7-1-07/2018 $26,620
$17,475 $26,620 1997B 5.00-5.20 7-1-09/2011 $15,000 2005A 5.00 7-1-15/2018 $114,985
$15,000 $114,985 1998A 5.00-5.75 7-1-07/2012 $161,230 2005B 4.11 7-1-2008 $1,600
$161,230 $1,600 2001A 5.00-5.50 7-1-13/2017 $186,600 2005C 4.34-4.74 7-1-09/2015 $91,890
$186,600 $91,890 2001B 5.50 7-1-2018 $48,000
$48,000 I- ,h4* .*. /n11) 2002A 5.20-5.75 7-1-17/2018 $157,260 qA A-,
$157,260 2002B 5,35-.00 7-1-2018 $123,815 WS 138151
$3,425 COPON INTRS OD ACE IO $622 REVNU BOD PAAL I,9,S
ENERGY NORTHWEST OUTSTANDING LONG-TERM DEBT 1989B 7.125 7-1-2016 $41,070 2003B 4.06 7-1-2009 $18,210
$41,070 $18,210 1990B 7.25 7-1-2009 $3,590 2004A 5.25 7-1-2013 $62,485
$3,590 $62,485 1993A 7.00 7-1-07/2008T $15,325 2004B 5.50 7-1-2013 $1,135
$15,325 $1,135 19938 5.60-7.00 7-1-07/2009 $21,970 2005A 5.00 7-1-13/2015 $72,175
$21,970 $72,175 1993C 5.10-5.20 7-1-07/2008T $3,875 2005B 4.11 7-1-2008 $925
$3,875 $925 1996A 6.00 7-1-2008T $40,050 2006A 5.00 7-1-07/2017 $338,775
$40,050 $338,775 1996C 5.25-6.00 7-1-07/2009 $8,925 20068 5.16 7-1-2007 $9,160
$8,925 $9,160 4 4.-
1997A 1 6.00 17-1-07/2008 1 1993-1A-1 VARIABLE 4 4 4-
ENEGYNOTHES EBT D :
1 7l OUTSTANING ek]~[UI~~
LOGTR I ý16ýM ýA) /-1-U//Z014 lul 2004A I 5.25 7-1-14/2016 j $83,835
$13,057 $83,835 1989B (A) 7-1-07/2014 $44,772 2004B 5.50 7-1-2013 $1,515 7.125 7-1-2016 $76,145 $1,515
$120,917 2005A 5.00 7-1-13/2015 $129,265 1990B (A) 7-1-07/2010 $11,650 $129,265
$11,650 2005B 4.11 7-1-2008 $1,060 1993B 5.60-7.00 7-1-07/2009 $34,215 $1,060
$34,215 2006A 5.00 7-1-08/2018 $54,760 1993C 5,10-7.50 7-1-07/2008 $29,565 $54,760 (A) 1 7-1-13/2018 $23,963 2006B 5.21 7-1-2008 $525
$53,528 $525 1996A 5.50 7-1-2007 $7,315
$7,315 $19,310 1997A 5.10-6.00 7-1-07/2018 $100,650
$100,650 $126,290 1998A 5.25 7-1-17/2018 $53,825
ENEGYNOTHES YEAR*** PRINCIPAL INTEREST TOTAL YEAR*** PRINCIPAL INTEREST TOTAL 6/30/2006 Balance:* - $40,637 $40,637 6/30/2006 Balance:* $213 $31 $244 2007 88,455 120,562 209,017 2007 648 85 733 2008 126,285 115,305 241,590 2008 674 62 736 2009 115,806 114,765 230,571 2009 572 37 609 2010 157,650 102,782 260,432 2010 274 16 290 2011 95,405 94,604 190,009 2011 122 6 128 2012-2016 622,745 366,962 989,707 2012 43 2 45 4.
2017-2021 765,585 177,813 943,398 $2,546 $239 $2,785 2022-2024 314,400 32,008 346,408 Adjustment ** 6,224 (6,224) -
$2,292,555 $1,159,214 $3,451,769
Security-NuclearProjects Nos. I and 3 Project No. 3, the ownership agreement among Energy Northwest and private companies was terminated in FY and Columbia 1999. The ownership of all real and personal property Project Participants have purchased all of the capability of interests was transferred to Energy Northwest.
Nuclear Projects Nos. 1 and 3 and CGS. BPA has in turn acquired the entire capability from the Participants under contracts referred to as net-billing agreements. Under Security-Packwood Lake Hydroelectric the net-billing agreements for each of the Business Units, Project Participants are obligated to pay Energy Northwest a Energy Northwest, Benton County PUD and Franklin pro rata share of the total annual costs of the respective County PUD have signed a Power Sales agreement, as Projects, including debt service on bonds relating to each amended, which extends the period through October Business Unit. BPA is then obligated to reduce amounts 1, 2008. The agreement became effective November 1, from Participants under BPA power sales agreements by 2002. Benton and Franklin County PUDs agree to pay the same amount. The net-billing agreements provide that Energy Northwest in exchange for the total output of Participants and BPA are obligated to make such payments electric capacity and energy delivered from the Packwood whether or not the Projects are completed, operable Generation Project. In addition, the Project is required or operating and notwithstanding the suspension, to supply a specified amount of power to Benton and interruption, interference, reduction or curtailment of the Franklin County PUDs. If power production does not Projects' output. supply the required amount of power, the Project is On May 13, 1994, Energy Northwest's Board of Directors required to provide any shortfall by purchasing power adopted resolutions terminating Nuclear Projects Nos. on the open market. The Packwood Participants are 1 and 3. The Nuclear Projects Nos. 1 and 3 Project agreements and the net-billing agreements, except for accr acare
NOTE F-COMMITMENTS AND CONTINGENCIES NuclearProject No. 1 Termination plan. Accordingly, EFSEC's conditional approval provides Since the Nuclear Project No.1 termination, Energy for additional reviews once the details of the plan are Northwest has been planning for the demolition of Nuclear finalized. A new plan with additional details was submitted Project No. 1 and restoration of the site, recognizing the in FY 2003. This submittal was used to calculate the ARO fact that there is no market for the sale of the Project in discussed in Note G of the financial statements.
its entirety and to date, no viable alternative use has been found. The final level of demolition and restoration will be Business Development Fund Interest in in accordance with agreements discussed later in Note F Northwest Open Access Network under "Nuclear Projects Nos. 1 and 4 Site Restoration."
The Business Development Fund is a member of the Northwest Open Access Network ("NoaNet"). Members Nuclear ProjectNo. 3 Termination formed NoaNet pursuant to an Interlocal Cooperation In June 1994, the Nuclear P No. 3 Owners Agreement for the development and efficient use of a Committee voted unanimoi terminate the Project. communication network in conjunction with BPA for use During 1995, a group from W/chinnrtnn fnrmnrl th,( r-
1
11111111 presented on a net basis in the Statements of Operations user fees, to retrospective premiums for nuclear liability as the Business Development Fund does not take title to insurance, and to license modification, suspension, or the enriched uranium, does not have inventory risk and is revocation or civil penalties in the event of violations of only at risk for the net margin. For FY 2006 the Business various regulatory and license requirements.
Development Fund recorded net revenues of $128.4K in The Price Anderson Act currently provides for nuclear operating revenues under this agreement.
liability insurance of $10.8 billion per incident, which is covered by a combination of commercial nuclear Other Litigation and Commitments insurance and mandatory industry self-insurance. Energy Energy Northwest is involved in various claims, legal actions Northwest has purchased the maximum commercial insurance available of $300 million, which is the first layer and contractual commitments and in certain claims and of protection. The second layer of protection is provided contracts arising in the normal course of business. Although some suits, claims and commitments are significant in through a mandatory industry self-insurance plan wherein each licensed nuclear facility required to participate in the amount, final disposition is not determinable. In the opinion plan (currently 104 participants) may be assessed up to of management, the outcome of such litigation, claims or
$100.6 million per incident, subject to a maximum annual commitments will not have a material adverse effect on the financial positions of the Business Units or Energy Northwest assessment of $15 million per year.
as a whole. The future annual cost of the Business Units, Nuclear property damage and decontamination liability however, may either be increased or decreased as a result of insurance requirements are met through a combination the outcome of these matters. of commercial nuclear insurance policies purchased by Energy Northwest and BPA. The total amount of insurance Nuclear Licensing and Insurance purchased is currently $2.75 billion. The deductible for this coverage is $5.0 million per occurrence.
Energy Northwest is a licensee of the Nuclear Regulatory Commission and is subject to routine licensing and
An adjustment was made in FY 2006 for Nuclear Project No. 1 to account for costs incurred for decommissioning and site restoration. Costs incurred in FY 2006 of $0.48 million combined with current year accretion expense of $0.67 million and revision in future restoration estimates of $0.25 million resulted in a small decrease to the ARO of $0.06 million. Nuclear Project No. 1 has Balance at June 30, 2005 $ 95.50 a capital decommissioning net asset value of $0 and an Current year accretion expense 5.00 accumulated liability of $13.2 million.
ARO at June 30, 2006 $100.50 Under the current agreement, the Nine Canyon Wind Project has the obligation to remove the generation Balance at June 30, 2005 $ 1.43 facilities upon expiration of the lease agreement if Current year accretion expense 0.07 requested by the lessors. The Nine Canyon Wind Project recorded the related ARO in FY 2003. As of June 30, ARO at June 30, 2006 $ 1.50 2006, the Nine Canyon Wind Project has a capital decommissioning net asset value of $0.4 million and an Balance at June 30, 2005 $13.31 accumulated liability of $0.6 million. 1 -tý
.- Q-+- -AI ti- AMA Packwood's K the time frar
CURN TNEBR BILLED RUAT DING TEDIE)AYO ATN i
VAIAL RAT DEBFTH OO Bank of America Long Term AA- Aal Short-Term A-11+ P-1 JPMorgan Chase Bank Long-Term AA- A+ Aa3 Short-Term A-1+ F1 VMIG-l IMBIA Insurance Corporation AAA AAA Aaa AMBAC Assurance Corporation AAA AM Aaa Financial Guaranty Insurance Company A. AAA Aaa XL Capital Assurance Inc. AAA AAA Aaa Financial Security Assurance AAA MAA Credit Suisse First Boston A-1+P-Dexia A-1+ F1 VIG-
Energy Northwest pays special tribute to our Fiscal Year 2006 Board members and officers.
Edward (Ted) Coates, Chairman Dan Gunkel, Vice Chairman Roger Sparks, Secretary Tim Sheldon, Assistant Secretary Tom Casey Vera Claussen K.C. Golden Jack Janda Larry Kenney Sid Morrison
AsotnCut Bento Couny PU Chela Couny PU City f Rihlan Cowliz Couty PU
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