ML12256A995

Report of Independent Auditors and Combined Financial Statements for Southern California Public Power Authority

ML12256A995
Person / Time
Site:	Palo Verde
Issue date:	06/30/2011
From:	Moss-Adams LLP
To:	Office of Nuclear Reactor Regulation
References
102-06575-TNW/RKR
Download: ML12256A995 (112)

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I; Report of Independent Auditors and Combined Financial Statements for Southern California Public Power Authority June 30, 2011 and 2010 MOSSADAMSLLP Certified PubLic Accountants I Business Consuttants Acumen. Agility. Answers.

TABLE OF CONTENTS PAGE REPORT OF INDEPENDENT AUDITORS 1 MANAGEMENT'S DISCUSSION AND ANALYSIS 2-7 FINANCIAL STATEMENTS Combined Financial Statements 8-46 Notes to Combined Financial Statements 47 - 94 SUPPLEMENTAL INFORMATION Supplemental Schedule of Receipts and Disbursements in Funds Required by the Bond Indenture for the Year Ended June 30, 2011 Palo Verde Project 95 San Juan Project 96 Magnolia Power Project 97 Canyon Power Project 98 Hoover Uprating Project 99 Tieton Hydropower Project 100 Milford 1 Wind Project 101 Linden Wind Energy Project 102 Southern Transmission System Project 103 Mead-Phoenix Project 104 Mead-Adelanto Project 105 Natural Gas Pinedale Project 106 Natural Gas Barnett Project 107 Prepaid Natural Gas Project No. 1 108 Multiple Project Fund 109

WWW.MOSSADAMS.COM REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Participants of Southern California Public Power Authority We have audited the accompanying combined and individual project's statements of net assets (deficit) of Southern California Public Power Authority (the Authority) as of June 30, 2011 and 2010 and the related combined and individual project's statements of revenues, expenses and changes in net assets (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined and individual project's financial statements referred to above present fairly, in all material respects, the financial position of Southern California Public Power Authority and each of the Authority's projects: Palo Verde Project, San Juan Project, Magnolia Power Project, Canyon Power Project, Hoover Uprating Project, Tieton Hydropower Project, Milford I Wind Project, Milford II Wind Project, Ameresco Chiquita Landfill Gas Project, Linden Wind Energy Project, Southern Transmission System Project, Mead-Phoenix Project, Mead-Adelanto Project, Natural Gas Pinedale Project, Natural Gas Barnett Project, Prepaid Natural Gas Project No. 1, Ormat Geothermal Energy Project, MWD Small Hydro Project, Pebble Springs Wind Project, Windy Point Project, Multiple Project Fund, Project Development Fund and Projects' Stabilization Fund as of June 30, 2011 and 2010 and the results of the Project's operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The management's discussion and analysis preceding the combined financial statements 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 required supplementary information. However, we did not audit the information and express no opinion on it.

The additional supplemental information, as listed in the table of contents, following the combined financial statements and notes to combined financial statements is also not a required part of the basic financial statements but is supplementary information provided for purposes of additional analysis. We did not audit or perform any other procedures on this information and express no opinion on it.

Portland, Oregon December 6, 2011 Praxity',:

GL08AL ALLIANCE INDEPEN11E1 I))F I Fin1#1

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS The following discussion and analysis of the financial performance of Southern California Public Power Authority (the Authority or SCPPA), provides an overview of the Authority's financial activities for the fiscal years ended June 30, 2011 and 2010. Please read this discussion and analysis in conjunction with the Authority's Combined Financial Statements, which begin on page 8. Description and other details pertaining to the Authority are included in the Notes to Combined Financial Statements.

The Authority is a joint powers authority whose primary purpose has been to provide joint financing and oversight for large joint projects for its member agencies that consist of eleven municipal electric utilities and one irrigation district in California. On a combined basis, these entities provide electricity to more than 2 million retail electric customers. A Board of Directors (the Board) governs the Authority, which consists of one representative from each member agency.

USING THIS FINANCIAL REPORT This annual financial report consists of a series of financial statements and reflects the self-supporting activities of the Authority that are funded primarily through the sale of energy, natural gas, and transmission services to member agencies under project specific take-or-pay contracts that require each member agency to pay its proportionate share of operating and maintenance expenses and debt service with respect to such projects. The contracts cannot be terminated or amended in any manner that will impair or adversely affect the rights of the bondholders as long as any bonds issued by the specific project remain outstanding. The Authority also established take-and-pay contracts for the participants of the prepaid natural gas project where the payments received from the sale of gas will be sufficient to pay debt service. In addition, the Authority has entered into various power purchase agreements. These agreements are substantially take-and-pay contracts but there may be other costs not associated with the delivery of energy that the participants may be obligated to pay.

2

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS Combined Summary of Financial Condition and Changes in Net Assets (Deficit)

(in thousands)

JUNE 30, 2009 2011 2010 As Restated Assets Net utility plant $ 1,454,668 $ 1,364,717 $ 1,070,203 Investments 809,081 870,322 828,151 Cash and cash equivalents 233,543 245,390 143,671 Prepaid and other 1,179,779 747,379 732,168 Total assets $ 3,677,071 $ 3,227,808 $ 2,774,193 Liabilities Noncurrent liabilities $ 3,409,560 $ 3,037,652 $ 2,669,451 Current liabilities 394,590 322,662 273,947 Total liabilities 3,804,150 3,360,314 2,943,398 Net assets (deficit)

Invested in capital assets, net of related debt (609,033) (704,950) (768,276)

Restricted net assets 530,757 564,582 547,675 Unrestricted net assets (48,803) 7,862 51,396 Total net deficit (127,079) (132,506) (169,205)

Total liabilities and net assets (deficit) $ 3,677,071 $ 3,227,808 $ 2,774,193 Revenues, expenses and changes in net assets (deficit) for the year ended June 30 Operating revenues $ 604,170 $ 516,088 $ 464,286 Operating expenses (449,731) (388,129) (347,709)

Operating income 154,439 127,959 116,577 Investment and other income 19,095 36,212 27,741 Derivative gain (loss) (22,199) (8,720) (16,457)

Debt expense (145,770) (128,545) (145,965)

Change in net assets 5,565 26,906 (18,104)

Net deficit, beginning of year (132,506) (169,205) (150,912)

Net contributions/(withdrawals) by participants (138) 9,793 (189)

Net deficit, end of year (127,079) $ (132,506) $ (169,205) 3

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS Combined Financial Statements - (continued)

Net Deficit -

During fiscal year 2011 the Authority's net deficit decreased by $5 million mainly due to the increase in assets of

$441 million offset by the increase in liabilities of $436 million.

The increase in the Authority's assets is due to the following:

Utility Plant - increased by $90 million.

This increase is primarily due to ongoing construction costs of $93 million in the Canyon Power Project.

(CPP); $40 million in Southern Transmission System (STS) for the upgrade of two converter stations; and $23 million ongoing capital improvements or additions in the Palo Verde (PV), Natural Gas Pinedale and Barnett Projects, and the Linden Wind Energy Project; offset by $66 million of scheduled depreciation and amortization in all projects.

• Investments - decreased by $61 million.

This decrease is mainly due to the payment of $85 million of the ongoing construction costs and debt service for CPP; $14 million for the STS upgrade; $22 million for the release of funds from the STS Debt Service Reserve Account for the redemption of the STS 1991 Bonds; and $11 million payment of principal maturity in the Multiple Project Fund. The decreases were offset by the deposit of $36 million remaining bond proceeds from the issuance of the Windy Point/Windy Flats Revenue Bonds Series 2010-1, Milford 1, Revenue Bonds Series 2010-1, and Tieton Revenue Bonds Series A&B; $24 million of accumulated overbillings and advances from the participants of various projects; and $11 million of investment transfers from cash and cash equivalents to long term investments in the Magnolia, Hoover, Mead Adelanto, Mead Phoenix, Milford 1, PSF, Prepaid Gas, and Pinedale and Barnett Natural Gas Projects.

• Cash and cash equivalents - decreased by $12 million.

This decrease is largely due to the payment of $20 million of ongoing construction costs for the STS upgrade; and $11 million transfer of investments to long term investment in the Magnolia, Hoover, Mead Adelanto, Mead Phoenix, Milford 1, PSF, Prepaid Gas, and Pinedale and Barnett Natural Gas Projects. The decreases were offset by $8 million of remaining bond proceeds from the issuance of Windy Point/Windy Flats Revenue Bonds Series 2010-1; and $11 million of accumulated overbillings and advances from various projects.

" Prepaid and Other Assets - increased by $432 million.

This increase is primarily due to the prepayment of a supply of energy and payment for the Siemens Turbine Warranty, in the amounts of $547 million and $20 million, respectively, in the Windy Point/Windy Flats Energy Project; offset by the $65 million decrease in the reported fair value of derivative instruments in the STS due to the refunding of the 1991 Revenue Bonds; $19 million decrease in the fair value of derivatives in Mead Adelanto, Mead Phoenix, and Prepaid Gas Projects, in accordance with GASB 53; and $53 million amortizations of the prepaid assets in the Prepaid Gas Project; Milford 1, and the Windy Point/Windy Flats Project.

4

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS Combined Financial Statements - (continued)

The increase in the Authority's liabilities of $444 million is mainly due to the following:

$514 million issuance of the Windy Points/Windy Flats, 2010-1 Revenue Bonds, at a premium of $69 million; $138 million issuance of the Linden Wind Revenue Notes, 2010 Series A&B, at a premium of $11 million, offset by the redemption of $140 million, Linden 2009 Notes; $53 million issuance of Tieton Hydropower 2010 Series A and B Bonds at a premium of $1 million, offset by the redemption of $48 million of Tieton 2009 A&B Notes; $197 million issuance of STS 2011 Series A&B Bonds at a premium of

$16 million, offset by the redemption of $217 million of STS 1991 Bonds. The increases were offset by the $60 million reduction in the reported fair value of the derivative instruments largely due to the termination of STS 1991 Swap; and $90 million of principal maturities and related amortization for all debt-funded projects.

During fiscal year 2010, the Milford 1 Wind Revenue Bonds, 2010-1, were issued to finance the prepayment of a specified supply of electricity from a wind farm in Milford, Utah; the Linden Wind Revenue Notes, 2009 Series A were issued to provide interim financing for the costs of acquiring the Linden Wind Energy Project; the Tieton Hydropower Revenue Notes, 2009 Series A and B, were issued to provide interim financing for the costs of acquiring the Tieton Hydropower Project; the Canyon Power Revenue Bonds, 2010 Series A and B, and the Canyon Power Revenue Notes, Series A were issued to provide the additional costs of developing and constructing the Canyon Power Project; and the Prepaid Natural Gas Revenue Bonds were restructured to reduce risk, realize savings, reduce the remaining volumes of gas to be delivered, shorten the terms of the agreement, and to reduce the principal amount of bonds outstanding. As a result of these events and other ongoing transactions, such as the scheduled depreciation, and the payment for capital improvements in all projects, in 2010 the Authority's assets increased by $454 million and its liabilities increased by $417 million resulting in a decrease to net deficit of $37 million.

OperatingIncome -

The net increase in operating income by $26 million is mainly due to the following:

• Increase of $8 million in participants billings in the STS Project for debt service payments on the STS 2008B Construction Upgrade Bonds; $24 million of net operating income recognized for a full year's operation of the Milford 1 Wind, Tieton Hydropower, the Windy Point/Windy Flats Projects, and start up of operations in the Ameresco Geothermal Plant and the newly acquired Linden Wind Project.

• Increase of $5 million from the receipt of compensation for the suspension of the cash flows of the MA 2007 Constant Maturity Swap.

4 Decrease of $11 million in participants billing in the San Juan project as there was no provision for major maintenance or outages scheduled for the fiscal year.

During fiscal year 2010, the additional transactions generated from the new Milford 1 Wind and the Windy Point/Windy Flats Projects and the increase in costs related to major maintenance outages in the San Juan Project all resulted in a $5i million increase in operating revenues offset by $40 million of operating expenses.

5

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS Combined Financial Statements - (continued)

Investment and Other Income -

Investment and other income decreased $17 million largely due to the reduction of other income from the prior year's $11 million gain that resulted from the restructure of the Prepaid Natural Gas Project Bonds; $1 million decrease in interest earning resulting from the release of $22 million from the STS 1991 Debt Service Reserve Fund; and $5 million decrease in the market values of investments held in all funds.

Derivative Gain (Loss) -

In June 2008, GASB issued Statement No 53, Accounting and Financial Reporting for Derivative Instruments, effective for financial statements for periods beginning after June 15, 2009. GASB 53 requires that the fair value of derivative instruments be reported in the financial statements as investment income or loss if the derivative fails to effectively hedge the risk of rising or falling cash flows or fair values. $22 million and $9 million were charged to expense related to the Authority's derivative instruments that were deemed investment instruments as of June 30, 2011 and 2010, respectively. The increase in derivative loss of $13 million is mainly due to certain swaps that became ineffective at June 30, 2011 and the termination of the hedge accounting for the STS 1991 Swap when the related STS 1991 Bonds were refunded in January 2011 (see Note 5).

Debt Expense -

Debt expense increased $17 million mainly due to the $26 million of additional debt service payments for the newly issued Tieton Hydropower, Milford 1 Wind, Windy. Point/Windy Flats, and the Linden Wind Energy Bonds; offset by $3 million savings in debt restructuring of the Gas Project Revenue Bonds, Project No. 1, 2007 Series A; $2 million decrease of interest payments in the San Juan and Multiple Projects due to lower outstanding principal amounts; and $4 million decrease in the interest payments of the variable rate bonds in the STS, Palo Verde, Mead-Phoenix, Mead Adelanto, and Magnolia Projects due to improved performance of these bonds in the variable interest rate market.

During fiscal year 2010, debt expense decreased by $17 million primarily due to the restructuring of the Gas Project Revenue Bonds, Project No. 1, 2007. Series A; improved performance of the variable rate bonds in the variable interest rate market; and the loss of refunding that was fully amortized in the Palo Verde Revenue Bonds, 2008 Series A and the San Juan Revenue Bonds, 2002 Series A.

6

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MANAGEMENT'S DISCUSSION AND ANALYSIS Financial Outlook - The Authority's credit strength is based on a number of factors including:

• The collective credit strengths of each project participant

" The absence of concentration risk as evidenced by the lack of substantial reliance by one participant on the resources financed

" The low cost power the Projects provide the participants and

• Strong legal provisions.

The Authority has take-or-pay power sales, natural gas sales, and transmission service contracts that unconditionally require the Participants to pay for the cost of operating and maintaining the Projects, including debt service, whether or not the Projects are operating or operable. Although the contracts have not been court-tested, a municipal utility's authority to enter into such contracts is rooted in the State's constitutional provisions for municipal electric utilities. The Participants of the Prepaid Natural Gas Project No. 1, however, are obligated only to purchase and pay for gas delivered by SCPPA at market-based prices in accordance with the prepaid gas sale agreements in take-and-pay contracts. The Authority has also entered into various power purchase agreements that are substantially take-and-pay contracts but there may be other costs not associated with the delivery of energy that the participants may be obligated to pay.

Through the collaborative efforts of its members, the Authority has developed a comprehensive and dynamic strategic plan that provides a common vision for its members and a platform for joint action. SCPPA continues its involvement in legislative and regulatory affairs at both the state and federal levels to protect represented customers, by assuring resource adequacy, excellent reliability, and environmental stewardship. Backed by one of the strongest financial ratings in the utility industry, SCPPA maintains its traditional role of providing financing for its members' natural gas, generation, and transmission projects. In addition to the conventional areas of power, investments are also being made to provide customers with more renewable generation and energy efficiency.

AB 1890 requires all California electric utilities to commit a portion of their revenue to other Public Benefit Programs, including energy efficiency, renewable energy, research, development and demonstration (RD&D),

and low-income customer assistance. Since 1998, over one billion dollars have been spent by our Members to support local communities.

Renewable Projects - SCPPA Members are committed to the use of renewable energy resourees. Over 800 MW of renewable energy has been added to our Member portfolios in the last three years, bringing renewable energy Lip to 20% of their portfolios. Members are actively seeking projects to meet their goals of 33% by 2020.

Summary The management of the Authority is responsible for preparing the information in this management discussion and analysis, combined financial statements and notes to combined financial statements. The financial statements were prepared according to accounting principles generally accepted in the United States of America, and they fairly portray the Authority's financial position and operating results. The notes to the financial statements are an integral part of the basic financial statements and provide additional financial information.

7

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINED STATEMENTS OF NET ASSETS (DEFICIT)

(AMOUNTS IN THOUSANDS)

JUNE 30, 2011 2010 ASSETS Noncurrent assets Net utility plant $ 1,454,668 $ 1,364,717 Investments - restricted 746,440 810,042 Investments - unrestricted 62,641 60,280 Advance to IPA - restricted 11,550 11,550 Advances for capacity and energy, net - restricted 7,853 9,544 Derivatives and related deferrals 17,308 99,814 Unamortized debt expenses 50,792 49,142 Prepaid and other assets 993,450 507,135 Total noncurrent assets 3,344,702 2,912,224 Current assets Cash and cash equivalents - restricted 158,583 192,773 Cash and cash equivalents - unrestricted 74,960 52,617 Interest receivable 5,732 6,403 Accounts receivable 11,534 15,167 Materials and supplies 20,401 19,796 Prepaid and other assets 61,159 28,828 Total current assets 332,369 315,584 Total assets $ 3,677,071 $ 3,227,808 LIABILITIES Noncurrent liabilities Long-term debt $ 3,264,137 $ 2,823,415 Derivatives and related deferrals 74,987 135,294 Notes payable and deferred credits 40,089 49,702 Advances from participants 30,347 29,241 Total noncurrent liabilities 3,409,560 3,037,652 Current liabilities Debt due within one year 134,450 110,655 Notes payable and deferred credits due within one year 15,238 8,556 Advances from participants due within one year 51,723 43,377 Accrued interest 63,680 39,200 Accounts payable and accruals 124,265 116,123 Accrued property tax 5,234 4,751 Total current liabilities 394,590 322,662 Total liabilities 3,804,150 3,360,314 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants (609,033) (704,950)

Restricted net assets 530,757 564,582 Unrestricted net assets (deficit) (48,803) 7,862 Total net assets (deficit) (127,079) (132,506)

Total liabilities and net assets (deficit) $ 3,677,071 $ 3,227,808 See accompanying notes. 8 See accompanying notes. 8

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINED STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

(AMOUNTS IN THOUSANDS)

YEAR ENDED JUNE 30, 2011 2010 Operating revenues Sales of electric energy $ 414,973 $ 346,848 Sales of transmission services 130,861 113,914 Sales of natural gas 58,336 55,326 Total operating revenues 604,170 516,088 Operating expenses Operations and maintenance 353,019 303,138 Depreciation, depletion and amortization 76,891 68,689 Amortization of nuclear fuel 14,954 11,006 Decommissioning 4,867 5,296 Total operating expenses 449,731 388,129 Operating income 154,439 127,959 Non operating revenues (expenses)

Investment and other income 19,095 36,212 Derivative gain (loss) (22,199) (8,720)

Debt expense (145,770) (128,545)

Net non operating revenues (expenses) (148,874) (101,053)

Change in net assets (deficit) 5,565 26,906 Net assets (deficit) - beginning of year (132,506) (169,205)

Net contributions (withdrawals) by participants (1038) 9,793 Net assets (deficit) - end of year $ (127,079) $ (132,506) 9 See accompanying notes 9 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS)

YEAR ENDED JUNE 30, 2011 2010 Cash flows from operating activities Receipts from participants 580,578 $ 451,526 Receipts from sale of oil and gas 2,906 6,675 Payments to operating managers (257,255) (229,721)

Other disbursements and receipts 4,654 29,629 Net cash flows from operating activities 330,883 258,109 Cash flows from noncapital financing activities Advances by participants, net 4,902 21,392 Cash flows from capital financing activities Additions to plant and prepaid projects, net (745,409) (592,027)

Debt interest payments (129,998) (113,020)

Proceeds from sale of bonds 1,000,049 933,197 Payment for defeasance of revenue bonds (382,747)

Transfer of funds from (to) escrow (48,349) (279,345)

Principal payments on debt (110,655) (86,805)

Payment for bond issue costs (7,847) (6,608)

Net cash used for capital and related financing activities (424,956) (144,608)

Cash flows from investing activities Interest received on investments 18,386 20,394 Purchases of investments (527,515) (705,840)

Proceeds from sale/maturity of investments 586,453 652,272 Net cash provided by (used for) investing activities 77,324 (33,174)

Net increase (decrease) in cash and cash equivalents (11,847) 101,719 Cash and cash equivalents, beginning of year 245,390 143,671 Cash and cash equivalents, end of year $ 233,543 $ 245,390 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) 154,439 $ 127,959 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 102,286 68,689 Decommissioning 4,867 5,296 Advances for capacity and energy 2,898 2,744 Amortization of nuclear fuel 14,954 11,006 Changes in assets and liabilities Accounts receivable 6,042 3,268 Accounts payable and accruals 21,508 14,622 Other 23,889 24,525 Net cash provided by operating activities $ 330,883 $ 258,109 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ 158,583 $ 192,773 Cash and cash equivalents - unrestricted 74,960 52,617

$ 233,543 $ 245,390 See accompanying notes. 10 See accompanying notes. 10

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

GENERATION Magnolia Canyon Palo Verde San Juan Power Power ASSETS Noncurrent assets Net utility plant $ 103,881 $ 81,762 $ 249,642 $ 252,069 Investments - restricted 189,362 32,596 66,389 37,048 Investments - unrestricted 48,606 5,000 1,996 Advance to IPA - restricted Advances for capacity and energy, net - restricted Derivatives and related deferrals - - 3,417 Unamortized debt expenses 307 638 29,728 2,334 Prepaid and other assets Total noncurrent assets 342,156 119,996 351,172 291,451 Current assets Cash and cash equivalents - restricted 10,342 5,745 16,809 41,618 Cash and cash equivalents - unrestricted 5,096 5,679 5,142 Interest receivable 875 30 114 191 Accounts receivable 1,750 182 741 Due from other project - restricted Materials and supplies 8,175 4,124 8,102 Prepaid and other assets 243 212 1,009 _

Total current assets 26,481 15,972 31,917 41,809 Total assets $ 368,637 $ 135,968 $ 383,089 $ 333,260 LIABILITIES Noncurrent liabilities Long-term debt $ 65,578 $ 114,174 $ 351,044 $ 312,241 Derivatives and related deferrals - - 6,861 Notes payable and deferred credits 31,492 -

Advances from participants Total noncurrent liabilities 97,070 114,174 357,905 312,241 Current liabilities Debt due within one year 10,340 12,345 9,395 Notes payable and deferred credits due within one year 5,696 6,816 Advances from participants due within one year 3,000 17,344 2,225 Accrued interest 84 3,236 4,382 8,366 Accounts payable and accruals 14,601 7,627 8,474 10,428 Accrued property tax 1,302 300 Due to other projects Total current liabilities 32,023 26,508 46,411 21,019 Total liabilities 129,093 140,682 404,316 333,260 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants 29,442 (44,119) (76,635)

Restricted net assets 159,551 35,132 50,333 Unrestricted net assets (deficit) 50,551 4,273 5,075 Total net assets (deficit) 239,544 (4,714) (21,227) _

Total liabilities and net assets (deficit) $ 368,637 $ 135,968 $ 383,089 $ 333,260 11 See accompanying notes.

11 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

GENERATION Magnolia Canyon Palo Verde San Juan Power Power ASSETS Noncurrent assets Net utility plant $ 109,904 $ 84,107 $ 259,095 $ 159,339 Investments - restricted 185,157 31,525 55,229 127,563 Investments - unrestricted 54,287 5,993 Advance to IPA - restricted Advances for capacity and energy, net - restricted Derivatives and related deferrals 1,673 Unamortized debt expenses 437 800 31,546 2,503 Prepaid and other assets Total noncurrent assets 349,785 122,425 347,543 289,405 Current assets.

Cash and cash equivalents - restricted 18,843 6,991 21,500 35,341 Cash and cash equivalents - unrestricted 7,080 2,521 3,363 Interest receivable 1,218 23 272 6 Accounts receivable 2,287 190 2,477 Due from other project - restricted Materials and supplies 7,912 3,913 7,971 Prepaid and other assets 234 395 1,621 _

Total current assets 37,574 14,033 37,204 35,347 Total assets $ 387,359 $ 136,458 $ 384,747 $ 324,752 LIABILITIES Noncurrent liabilities Long-term debt $ 74,157 $ 127,268 $ 360,291 $ 312,998 Derivatives and related deferrals - - 11,211 Notes-payable and deferred credits 36,871 3,928 Advances from participants Total noncurrent liabilities 111,028 127,268 375,430 312,998 Current liabilities Debt due within one year 10,030 11,715 9,010 Notes payable and deferred credits due within one year 5,431 Advances from participants due within one year 16,763 Accrued interest 19 3,551 4,393 1,035

'Accounts payable and accruals 23,705 8,514 4,002 10,719 Accrued property tax 1,500 282 Due to other projects Total current liabilities 40,685 24,062 34,168 11,754 Total liabilities 151,713 151,330 409,598 324,752 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants 26,153 (54,077) (69,083) (34,995)

Restricted net assets 148,222 34,987 46,267 34,995 Unrestricted net assets (deficit) 61,271 4,218 (2,035) _

Total net assets (deficit) 235,646 (14,872) (24,851)

Total liabilities and net assets (deficit) $ 387,359 $ 136,458 $ 384,747 $ 324,752 See accompanying notes. 12 See accompanying notes. 12

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

GREEN POWER Hoover Tieton Windy Point Linden Wind Uprating Hydropower Milford I Wind Project Energy ASSETS Noncurrent assets Net utility plant $ - $ 45,505 $ $ $ 141,911 Investments - restricted 2,493 7,278 32,884 18,280 7,627 Investments - unrestricted 1,139 - 5,900 Advance to IPA - restricted Advances for capacity and energy, net - restricted 7,853 Derivatives and related deferrals Unamortized debt expenses 81 686 1,813 3,293 1,128 Prepaid and other assets 198,139 512,082_

Total noncurrent assets 11,566 53,469 232,836 539,555 150,666 Current assets Cash and cash equivalents - restricted 566 267 4,786 17,806 2,070 Cash and cash equivalents - unrestricted 203 1,821 6,664 9,786 6,191 Interest receivable 30 38 146 25 7 Accounts receivable 18 Due from other project - restricted Materials and supplies Prepaid and other assets 1,691 11,401 32,467 Total current assets 2,508 2,126 22,997 60,084 8,268 Total assets $ 14,074 $ 55,595 $ 255,833 $ 599,639 $ 158,934 LIABILITIES Noncurrent liabilities Long-term debt $ 11,406 $ 53,412 $ 244,007 $ 563,067 $ 146,074 Derivatives and related deferrals Notes payable and deferred credits Advances from participants Total noncurrent liabilities 11,406 53,412 2 563,067 146,074 Current liabilities Debt due within one year 1,600 680 7,595 13,760 2,510 Notes payable and deferred credits due within one year Advances from participants due within one year - 202 250 1,000 2,004 Accrued interest 162 1,298 5,639 12,039 3,423 Accounts payable and accruals 41 1,616 6,413 15,028 5,719 Accrued property tax 415 Due to other projects Total current liabilities 1,53 3,796 19,897 42,242 13,656 Total liabilities 13,209 57,208 263,904 605,309 159,730 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants (7,901) (5,545)

Restricted net assets - 6,285 6,281 Unrestricted net assets (deficit) 865 3 (8,071) (5,670) (1,532)

Total net assets (deficit) 865 (1,613) (8,071) (5,670) (796)

Total liabilities and net assets (deficit) $ 14,074 $ 55,595 $ 255,833 $ 599,639 $ 158,934 13 See accompanying notes.

13 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

GREEN POWER Hoover Tieton GREEN Windy Point Linden Wind Uprating Hydropower Mil ford I Wind Project Energy ASSETS Noncurrent assets Net utility plant $ $ 46,896 $ 1, $ $ 145,159 Investments - restricted 2,266 - 19,965 2,999 Investments - unrestricted Advance to IPA - restricted Advances for capacity and energy, net - restricted 9,544 Derivatives and related deferrals Unamortized debt expenses 108 2,091 - 237 Prepaid and other assets 1 4 50 209,540 219 -

Total noncurrent assets 11,918 46,946 231,596 219 148,395 Current assets Cash and cash equivalents - restricted 1,971 562 9,015 3,575 Cash and cash equivalents - unrestricted 13 261 4,650 8,856 Interest receivable 8 - 164 2 3 Accounts receivable 106 110 - 2,057 Due from other project - restricted Materials and supplies Prepaid and other assets 1,306 - 11,401 -

Total current assets 3,404 933 25,230 10,915 3,578 Total assets $ 15,322 $ 47,879 $ 256,826 $ 11,134 $ 151,973 LIABILITIES Noncurrent liabilities Long-term debt $ 12,752 $ 47,705 $ 253,813 $ - $ 140,211 Derivatives and related deferrals Notes payable and deferred credits Advances from participants Total noncurrent liabilities 12,752 47,705 253,813 140,211 Current liabilities Debt due within one year 1,540 - -

Notes payable and deferred credits due within one year Advances from participants due within one year 209 257 1,006 Accrued interest 177 627 4,448 1,862 Accounts payable and accruals 34 88 4,393 10,128 9,900 Accrued property tax Due to other projects Total current liabilities 1,751 924 9,098 11,134 11,762 Total liabilities 14,503 48,629 262,911 11,134 151,973 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants - (237)

Restricted net assets 734 -

Unrestricted net assets (deficit) 85 (513) (6,085)

Total net assets (deficit) 819 (750) (6,085)-

Total liabilities and net assets (deficit) $ 15,322 $ 47,879 $ 256,826 $ 11,134 $ 151,973 See accompanying notes. 14 See accompanying notes. 14

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

TRANSMISSION Southern Transmission System Mead- Phoenix Mead- Adelanto ASSETS Noncurrent assets Net utility plant 329,800 $ 35,822 $ 104,481 Investments - restricted 61,520 10,279 39,262 Investments - unrestricted Advance to IPA - restricted 11,550 Advances for capacity and energy, net - restricted Derivatives and related deferrals 4,690 3,526 Unamortized debt expenses 5,435 521 1,123 Prepaid and other assets Total noncurrent assets 412,995 46,622 148,392 Current assets Cash and cash equivalents - restricted 24,530 3,004 5,282 Cash and cash equivalents - unrestricted 634 175 601 Interest receivable 134 213 863 Accounts receivable 2,200 Due from other project - restricted 7,216 19,844 Materials and supplies Prepaid and other assets Total current assets 27,498 10,608 26,590 Total assets 440,493 $ 57,230 $ 174,982 LIABILITIES Noncurrent liabilities Long-term debt 747,373 $ 46,902 $ 151,897 Derivatives and related deferrals 43,967 4,259 14,225 Notes payable and deferred credits 2,648 512 5,437 Advances from participants Total noncurrent liabilities 793,988 51,673 171,559 Current liabilities Debt due within one year 27,995 5,190 14,305 Notes payable and deferred credits due within one year 1,267 86 1,373 Advances from participants due within one year Accrued interest 14,456 863 2,593 Accounts payable and accruals 17,497 374 1,743 Accrued property tax Due to other projects Total current liabilities 61,215 6,513 20,014 Total liabilities 855,203 58,186 191,573 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants (428,179) (15,748) (67,408)

Restricted net assets 71,289 19,810 61,690 Unrestricted net assets (deficit) (57,820) (5,018) (10,873)

Total net assets (deficit) (414,710) (956) (16,591)

Total liabilities and net assets (deficit) 440,493 $ 57,230 $ 174,982 15 See accompanying notes.

15 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

• COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

TRANSMISSION Southern Transmission System Mead- Phoenix Mead- Adelanto ASSETS Noncurrent assets Net utility plant $ 308,795 $ 37,214 $ 108,994 Investments - restricted 98,169 8,920 31,265 Investments - unrestricted Advance to IPA - restricted 11,550 Advances for capacity and energy, net - restricted Derivatives and related deferrals 69,543 4,724 15,777 Unamortized debt expenses 5,324 605 1,309 Prepaid and other assets Total noncurrent assets 493,381 51,463 157,345 Current assets Cash and cash equivalents - restricted 39,420 4,192 12,714 Cash and cash equivalents - unrestricted 5,892 159 674 Interest receivable 181 227 865 Accounts receivable 1,770 784 Due from other project - restricted 6,717 18,472 Materials and supplies Prepaid and other assets Total current assets 47,263 11,295 33,509 Total assets $ 540,644 $ 62,758 $ 190,854 LIABILITIES Noncurrent liabilities Long-term debt 793,763 $ 51,428 $ 164,275 Derivatives and related deferrals 95,840 4,724 15,422 Notes payable and deferred credits 1,498 598 6,807 Advances from participants Total noncurrent liabilities 891,101 56,750 186,504 Current liabilities Debt due within one year 32,990 4,895 13,490 Notes payable and deferred credits due within one year 749 86 2,290 Advances from participants due within one year Accrued interest 11,309 1,018 3,018 Accounts payable and accruals 17,987 421 2,128 Accrued property tax Due to other projects Total current liabilities 63,035 6,420 20,926 Total liabilities 954,136 63,170 207,430 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants (466,815) (19,188) (76,558)

Restricted net assets 92,192 19,012 59,638 Unrestricted net assets (deficit) (38,869) (236) 344 Total net assets (deficit) (413,4921 (412) (16,576)

Total liabilities and net assets (deficit) 540,644 $ 62,758 $ 190,854 See accompanying notes. 16 See accompanying notes. 16

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

NATURAL GAS Prepaid Natural Pinedale Barnett Gas ASSETS Noncurrent assets Net utility plant $ 51,006 $ 56,431 $

Investments - restricted 30,995 46,140 13,931 Investments - unrestricted Advance to IPA - restricted Advances for capacity and energy, net - restricted Derivatives and related deferrals S- 5,675 Unamortized debt expenses 701 715 2,289 Prepaid and other assets S- 283,084 Total noncurrent assets 82,702 103,286 304,979 Current assets Cash and cash equivalents - restricted 8,747 (439) 5,264 Cash and cash equivalents - unrestricted 6,113 7,054 26 Interest receivable 28 89 57 Accounts receivable 2,816 1,193 1,986 Due from other project - restricted Materials and supplies Prepaid and other assets 552 - 13,584 Total current assets 18,256 7,897 20,917 Total assets $ 100,958 $ 111,183 $ 325,896 LIABILITIES Noncurrent liabilities Long-term debt $ 31,784 $ 74,691 $ 326,336 Derivatives and related deferrals 5,675 Notes payable and deferred credits Advances from participants 21,037 9,310 _

Total noncurrent liabilities 52,821 84,001 332,011 Current liabilities Debt due within one year 3,368 7,972 5,295 Notes payable and deferred credits due within one year Advances from participants due within one year 20,332 1,579 Accrued interest 910 2,142 2,778 Accounts payable and accruals 12,074 1,536 3,085 Accrued property tax 3,217 Due to other projects Total current liabilities 39,901 13,229 11,158 Total liabilities 92,722 97,230 343,169 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants (4,483) 9,734 Restricted net assets 19,081 Unrestricted net assets (deficit) (6,362). 4,219 (17,273)

Total net assets (deficit) 8,236 13,953 (17,273)

Total liabilities and net assets (deficit) $ 100,958 $ 111,183 $ 325,896 17 See accompanying notes.

17 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

NATURAL GAS Prepaid Natural Pinedale Barnett Gas ASSETS Noncurrent assets Net utility plant $ 45,584 $ 59,630 $

Investments - restricted 29,949 41,981 18,252 Investments - unrestricted Advance to IPA - restricted Advances for capacity and energy, net - restricted Derivatives and related deferrals - 8,097 Unamortized debt expenses 848 865 2,469 Prepaid and other assets - 297,326 Total noncurrent assets 76,381 102,476 326,144 Current assets Cash and cash equivalents - restricted 13,054 5,625 2,596 Cash and cash equivalents - unrestricted 4,167 6,733 Interest receivable 33 94 61 Accounts receivable 1,329 1,079 1,962 Due from other project - restricted Materials and supplies Prepaid and other assets 552 13,319 Total current assets 19,135 13,531 17,938 Total assets $ 95,516 $ 116,007 $ 344,082 LIABILITIES Noncurrent liabilities Long-term debt $ 35,153 $ 82,662 $ 331,963 Derivatives and related deferrals - 8,097 Notes payable and deferred credits Advances from participants 19,412 9,829 _

Total noncurrent liabilities 54,565 92,491 340,060 Current liabilities Debt due within one year 2,929 6,941 5,715 Notes payable and deferred credits due within one year Advances from participants due within one year 20,188 1,594 Accrued interest 961 2,263 2,825 Accounts payable and accruals 7,551 2,926 5,723 Accrued property tax 2,969 Due to other projects Total current liabilities *34,598 13,724 14,263 Total liabilities 89,163 106,215 354,323 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants (11,581) 1,431 Restricted net assets 22,917 3,455 Unrestricted net assets (deficit) (4,983) 4,906 (10,241)

Total net assets (deficit) 6,353 9,792 (10,241)

Total liabilities and net assets (deficit) $ 95,516 $ 116,007 $ 344,082 See accompanying notes. 18 See accompanying notes. 18

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

POWER PURCHASE AGREEMENTS Ormat Ameresco Geothermal MWD Small Pebble Milford 1I Chiquita Energy Hydro Springs Wind Landfill Gas ASSETS Noncurrent assets Net utility plant $ $ - $ - $ - $

Investments - restricted Investments - unrestricted Advance to IPA - restricted Advances for capacity and energy, net - restricted Derivatives and related deferrals Unamortized debt expenses Prepaid and other assets - - - ~~~145 ______

Total noncurrent assets - - - ~~~145 ______

Current assets Cash and cash equivalents - restricted Cash and cash equivalents - unrestricted 4,651 1,358 8,305 3,342 2,119 Interest receivable Accounts receivable 2 50 Due from other project - restricted Materials and supplies Prepaid and other assets Total current assets 4,651 l1358 8,307 3,37 2,119 Total assets $ 4,651 $ 1,358 $ 8,307 $ 3,537 $ 2,119 LIABILITIES Noncurrent liabilities Long-term debt $ $ $ - $ - $

Derivatives and related deferrals Notes payable and deferred credits Advances from participants Total noncurrent liabilities Current liabilities Debt due within one year Notes payable and deferred credits due within one year Advances from participants due within one year 857 500 250 400 Accrued interest Accounts payable and accruals 3,794 858 8,304 3,287 1,719 Accrued property tax Due to other projects Total current liabilities 4,651 1,358 8,304 3,537 2,119 Total liabilities 4,651 1,358 8,304 3,537 2,119 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants Restricted net assets Unrestricted net assets (deficit) 3 Total net assets (deficit) 3 Total liabilities and net assets (deficit) $ 4,651 $ ,38 $ 8,307 $ 3,537 $ 2,119 19 19 See accompanying notes.

See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

POWER PURCHASE AGREEMENTS Ormat Geothermal Energy MWD Small Hydro Pebble Springs ASSETS Noncurrent assets Net utility plant $ $ $

Investments - restricted Investments - unrestricted Advance to IPA - restricted Advances for capacity and energy, net - restricted Derivatives and related deferrals Unamortized debt expenses Prepaid and other assets Total noncurrent assets Current assets Cash and cash equivalents - restricted Cash and cash equivalents - unrestricted 511 1,541 6,196 Interest receivable Accounts receivable 1,016 Due from other project - restricted Materials and supplies Prepaid and other assets Total current assets 1,527 1,541 6,196 Total assets 1,527 $ 1,541 $ 6,196 LIABILITIES Noncurrent liabilities Long-term debt $ - $ $

Derivatives and related deferrals Notes payable and deferred credits Advances from participants Total noncurrent liabilities Current liabilities Debt due within one year Notes payable and deferred credits due within one year Advances from participants due within one year 860 S00 Accrued interest Accounts payable and accruals 667 1,041 6,196 Accrued property tax Due to other projects Total current liabilities 1,527 1,541 6,196 Total liabilities 1,527 1,541 6,196 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants Restricted net assets Unrestricted net assets (deficit)

Total net assets (deficit)

Total liabilities and net assets (deficit) $ 1,527 $ 1,541 $ 6,196 See accompanying notes. 20 Se mpnin a nts.2

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

MISCELLANEOUS Multiple Project Projects' Project Development Stabilization Fund Fund Fund Total Eliminations Total Combined ASSETS Noncurrent assets Net utility plant $

$ 2,358 $ - $ 1,454,668 $ $ 1,454,668 Investments - restricted 61,198 - 89,158 746,440 746,440 Investments - unrestricted S- 62,641 62,641 Advance to IPA - restricted 11,550 11,550 Advances for capacity and energy, net - restricted 7,853 7,853 Derivatives and related deferrals 17,308 17,308 Unamortized debt expenses 50,792 50,792 Prepaid and other assets - - 993,450 993,450 Total noncurrent assets 61,198 2,358 89,158 3,344,702 3,344,702 Current assets Cash and cash equivalents - restricted 1,231 10,955 158,583 158,583 Cash and cash equivalents - unrestricted - - 74,960 74,960 Interest receivable 2,249 - 643 5,732 5,732 Accounts receivable - 596 - 11,534 " 11,534 Due from other project - restricted - 27,060 (27,060)

Materials and supplies 20,401 20,401 Prepaid and other assets - 61,159 - 61,159 Total current assets 2,249 1,827 11,598 359,429 (27,0621 332,369 Total assets $ 63,447 $ 4,185 $ 100,756 $ 3,704,131 $ 27,060 $ 3,677,071 LIABILITIES Noncurrent liabilities Long-term debt $ 24,151 $ $ 3,264,137 $ $ 3,264,137 Derivatives and related deferrals 74,987 74,987 Notes payable and deferred credits 40,089 40,089 Advances from participants 30,347 30,347 Total noncurrent liabilities 24,151 - 3,409,560- 3,409,560 Current liabilities Debt due within one year 12,100 134,450 134,450 Notes payable and deferred credits due within one year S- 15,238 15,238 Advances from participants due within one year 1,780 51,723 51,723 Accrued interest 1,309 - 63,680 63,680 Accounts payable and accruals - 47 124,265 124,265 Accrued property tax 5,234 5,234 Due to other projects 27,060 - 27,060 (27,060)

Total current liabilities 40,469 1,827 421,650 (27,060) 394,590 Total liabilities 64,620 1,827 3.831,210 (27,060) 3,804,150 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants 1,809 (609,033) (609,033)

Restricted net assets - 549 100,756 530,757 530,757 Unrestricted net assets (deficit) (1,1731 - (48,803) (48,803)

Total net assets (deficit) (1,173) 2,358 100,756 (127,079) (127,079)

Total liabilities and net assets (deficit) $ 63,447 $ 4,185 $ 100,756 $ 3,704,131 $ (27,060) $ 3,677,071 21 See accompanying notes.

21 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF NET ASSETS (DEFICIT)

JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

MISCELLANEOUS Project Projects' Multiple Development Stabilization Total Pro'ect Fund Fund Fund Total Eliminations Combined ASSETS Noncurrent assets Net utility plant $ - $ $ - $ 1,364,717 $ 1,364,717 Investments - restricted 70,784 86,018 810,042 810,042 Investments - unrestricted - - 60,280 60,280 Advance to IPA - restricted 11,550 11,550 Advances for capacity and energy, net - restricted 9,544 9,544 Derivatives and related deferrals 99,814 99,814 Unamortized debt expenses 49,142 49,142 Prepaid and other assets - - 507,135 507,135 Total noncurrent assets 70,784 86,018 2,912,224 2,912,224 Current assets Cash and cash equivalents - restricted - 2,000 15,374 192,773 192,773 Cash and cash equivalents - unrestricted - - - 52,617 52,617 Interest receivable 2,601 645 6,403 6,403 Accounts receivable - - 15,167 15,167 Due from other project - restricted 25,189 (25,189) -

Materials and supplies 19,796 19,796 Prepaid and other assets - - - 28,828 28,828 Total current assets 2,601 2,000 16,019 340,773 (25,189) 315,584 Total assets $ 73,385 $ 2,000 $ 102,037 $ 3,252,997 $ (25,189) $ 3,227,808 LIABILITIES Noncurrent liabilities Long-term debt $ 34,976 $ $ $ 2,823,415 $ $ 2,823,415 Derivatives and related deferrals 135,294 135,294 Notes payable and deferred credits 49,702 49,702 Advances from participants 29,241 29,241 Total noncurrent liabilities 34,976- 3,037,652 3,037,652 Current liabilities Debt due within one year 11,400 110,6S5 110,655 Notes payable and deferred credits due within one year - 8,556 8,S56 Advances from participants due within one year 2,000 43,377 43,377 Accrued interest 1,694 - 39,200 39,200 Accounts payable and accruals 116,123 116,123 Accrued property tax 4,751 4,751 Due to other projects 25,189 25,189 (25,189) -

Total current liabilities 38,283 2,000 347,051 (25,189) 322,662 Total liabilities 73,259 2,000 3,385,503 (25,189) 3,360,314 NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt and advances from participants - - (704,9S0) (704,950)

Restricted net assets 126 102,037 564,582 564,582 Unrestricted net assets (deficit) - - 7,862 7,862 Total net assets (deficit) 126 102,037 (132,506) (132,506)

Total liabilities and net assets (deficit) $ 73,385 $ 2,000 $ 102,037 $ 3,252,997 $ (25,1891 $ 3,227,808 See accompanying notes. 22 See accompanying notes. 22

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

GENERATION Palo Verde San Juan Magnolia Power Canyon Power Operating revenues Sales of electric energy $ 84,340 $ 80,830 $ 75,310 $

Sales of transmission services Sales of natural gas Total operating revenues 84,340 80,830 75,310 Operating expenses Operations and maintenance 43,014 57,928 49,224 Depreciation, depletion and amortization 19,801 6,257 11,006 Amortization of nuclear fuel 14,954 - -

Decommissioning 3,324 1,543 _

81,093 65,728 60,230 Total operating expenses Operating income (loss) 3,247 15,102 15,080 Non operating revenues (expenses)

Investment and other income 3,523 1,255 542 Derivative gain (loss) S- 6,095 Debt expense (2,872) (6,199) (18,093)

Net non operating revenues (expenses) 651 (4,944) (11,456)

Change in net assets (deficit) 3,898 10,158 3,624 Net assets (deficit) - beginning of year 235,646 (14,872) (24,851)

Net assets (deficit) - end of year 239,544 $ (4,714) $ (21,227) $

23 See accompanying notes.

23 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

GENERATION Palo Verde San Juan Magnolia Power Canyon Power Operating revenues Sales of electric energy $ 77,847 $ 93,438 $ 95,533 $

Sales of transmission services Sales of natural gas Total operating revenues 77,847 93,438 95,533 Operating expenses Operations and maintenance 43,371 60,213 70,421 Depreciation, depletion and amortization 19,224 5,553 11,454 Amortization of nuclear fuel 11,006 - -

Decommissioning 3,753 1,543 Total operating expenses 77,354 67,309 81,875 Operating income (loss) 493 26,129 13,658 Non operating revenues (expenses)

Investment and other income 5,465 1,348 1,949 Derivative gain (loss) S- (9,538)

Debt expense (3,022) (6,734) (18,700)

Net non operating revenues (expenses) 2,443 (5,386) (26,289)

Change in net assets (deficit) 2,936 20,743 "(12,631)

Net assets (deficit) - beginning of year 232,710 (35,615) (12,220)

Net assets (deficit) - end of year $ 235,646 $ (14,872) $ (24,851) $

See accompanying notes. 24 See accompanying notes. 24

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

GREEN POWER Hoover Tieton Milford I Windy Point Linden Wind Uprating Hydropower Wind Project Energy Operating revenues Sales of electric energy $ 2,554 $ 4,035 $ 32,590 $ 77,364 $ 15,004 Sales of transmission services Sales of natural gas Total operating revenues 2,554 4,035 32,590 77,364 15,004 Operating expenses Operations and maintenance 3,208 1,132 25,498 69,540 7,257 Depreciation, depletion and amortization 1,462 4,602 Amortization of nuclear fuel Decommissioning Total operating expenses 3,208 2,594 25,498 69,540 11,859 Operating income (loss) (654) 1,441 7,092 7,824 3,145 Non operating revenues (expenses)

Investment and other income 51 69 330 236 776 Derivative gain (loss)

Debt expense 649 (2,373) (9,408) (13,730) (4,717)

Net non operating revenues (expenses) 700 (2,304) (9,078) (13,494) (3,941)

Change in net assets (deficit) 46 (863) (1,986) (5,670) (796)

Net assets (deficit) - beginning of year 819 (750) (6,085) -

Net assets (deficit) - end of year $ 865 $ (1,613) $ (8,071) $ (5,670) (796) 25 See accompanying notes.

25 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

GREEN POWER Hoover Tieton Milford I Windy Point Linden Wind Uprating Hydropower Wind Project Energy Operating revenues Sales of electric energy $ 2,486 $ 2,686 $ 9,758 $ 36,441 $

Sales of transmission services Sales of natural gas Total operating revenues 2,486 2,686 9,758 36,441 Operating expenses Operations and maintenance 2,978 2,344 12,387 36,453 Depreciation, depletion and amortization 829 Amortization of nuclear fuel Decommissioning Total operating expenses 2,978 3,173 12,387 36,453 Operating income (loss) (492) (487) (2,629) (12)

Non operating revenues (expenses)

Investment and other income 40 371 272 12 Derivative gain (loss)

.Debt expense 225 (634) (3,728)

Net non operating revenues (expenses) 265 (263) (3,456) 12 Change in net assets (deficit) (227) (750) (6,085) -

Net assets (deficit) - beginning of year 1,046 -

Net assets (deficit) - end of year $ 819 $ (750) $ (6,085) $ $

See accompanying notes. 26 See accompanying notes. 26

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

TRANSMISSION Southern Transmission System Mead- Phoenix Mead- Adelanto Operating revenues Sales of electric energy $ 9, $ -0 $

Sales of transmission services 97,849 9,056 23,956 Sales of natural gas Total operating revenues 97,849 9,056 23,956 Operating expenses Operations and maintenance 20,635 1,116 2,032 Depreciation, depletion and amortization 19,381 1,460 4,514 Amortization of nuclear fuel Decommissioning Total operating expenses 40,016 2,576 6,546 Operating income (loss) 57,833 6,480 17,410 Non operating revenues (expenses)

Investment and other income 2,137 455 1,802 Derivative gain (loss) (12,981) (4,259) (11,054)

Debt expense (48,207) (3,220) (8,173)

Net non operating revenues (expenses) (59,051) (7,024) (17,425)

Change in net assets (deficit) (1,218) (544) (15)

Net assets (deficit) - beginning of year (413,492) (412) (16,576)

Net assets (deficit) - end of year $ (414,710) $ (956) $ (16,591) 27 See accompanying notes.

27 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

TRANSMISSION Southern Transmission System Mead- Phoenix Mead- Adelanto Operating revenues Sales of electric energy $ 8, $ -4 $

86,311 8,480 Sales of transmission services 19,123 Sales of natural gas Total operating revenues 86,311 8,480 19,123 Operating expenses Operations and maintenance - 18,064 .1,012 2,124 Depreciation, depletion and amortization 18,708 1,406 4,514 Amortization of nuclear fuel Decommissioning Total operating expenses 36,772 2,418 6,638 Operating income (loss) 49,539 6,062 12,485 Non operating revenues (expenses)

Investment and other income 2,923 495 1,859 Derivative gain (loss) 71 747 Debt expense (48,847) (3,640) (9,877)

Net non operating revenues (expenses) (45,853) (3,145) (7,271)

Change in net assets (deficit) 3,686 2,917 5,214 Net assets (deficit) - beginning of year (417,178) (3,329) (21,790)

Net assets (deficit) - end of year $ (413,492) $ (412) $ (16,576)

See accompanying notes. 28 See accompanying notes. 28

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS INTHOUSANDS)

NATURAL GAS Prepaid Natural Pinedale Barnett Gas Operating revenues Sales of electric energy $ - $ $

Sales of transmission services Sales of natural gas 9,910 25,348 23,078 Total operating revenues 9,910 25,348 23,078 Operating expenses Operations and maintenance 3,538 12,276 13,663 Depreciation, depletion and amortization 2,836 5,572 Amortization of nuclear fuel Decommissioning Total operating expenses 6,374 17,848 13,663 Operating income (loss) 3,536 7,500 9,415 Non operating revenues (expenses)

Investment and other income 314 1,095 815 Derivative gain (loss)

Debt expense (1,967) (4,434) (17,262)

Net non operating revenues (expenses) (1,653) (3,339) (16,447)

Change in net assets (deficit) 1,883 4,161 (7,032)

Net assets (deficit) - beginning of year 6,353 9,792 (10,241)

Net assets (deficit) - end of year $ 8,236 $ 13,953 $ (17,273) 29 See accompanying notes.

29 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

NATURAL GAS Prepaid Natural Pinedale Barnett Gas Operating revenues Sales of electric energy $ $ $

Sales of transmission services Sales of natural gas 7,345 22,355 25,626 Total operating revenues 7,345 22,355 25,626 Operating expenses Operations and maintenance 1,853 9,854 13,396 Depreciation, depletion and amortization 1,210 5,791 Amortization of nuclear fuel Decommissioning Total operating expenses 3,063 15,645 13,396 Operating income (loss) 4,282 6,710 12,230 Non operating revenues (expenses)

Investment and other income 447 1,157 11,605 Derivative gain (loss)

Debt expense (2,110) (4,719) (20,333)

Net non operating revenues (expenses) (1,663) (3,562) (8,728)

Change in net assets (deficit) 2,619 3,148 3,502 Net assets (deficit) - beginning of year 3,734 6,644 (13,743)

Net assets (deficit) - end of year $ 6,353 $ 9,792 $ (10,241)

See accompanying notes. 30 See accompanying notes. 30

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

POWER PURCHASE AGREEMENTS Ameresco Ormat MWD Small Pebble Milford II Chiquita Geothermal Hydro Springs Wind Landfill Gas Operating revenues Sales of electric energy $ 9,406 $ 3,402 $ 25,386 $ 2,817 $ 1,935 Sales of transmission services Sales of natural gas Total operating revenues 9,406 3,402 25,386 2,817 1,935 Operating expenses Operations and maintenance 9,409 3,403 25,394 2,817 1,935 Depreciation, depletion and amortization Amortization of nuclear fuel Decommissioning Total operating expenses 9,409 3,403 25,394 2,817 1,935 Operating income (loss)

Non operating revenues (expenses)

Investment and other income 3 1 11 Derivative gain (loss)

Debt expense Net non operating revenues (expenses) 3 1 11-Change in net assets (deficit) 3 Net assets (deficit) - beginning of year Net assets (deficit) - end of year $ -- $

$ $ 3 $ $

31 See accompanying notes.

31 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

POWER PURCHASE AGREEMENTS Ormat MWD Geothermal Small Hydro Pebble Springs Operating revenues Sales of electric energy $ 9,173 $ 2,998 $ 16,488 Sales of transmission services Sales of natural gas Total operating revenues 9,173 2,998 16,488 Operating expenses Operations and maintenance 9,180 2,999 16,489 Depreciation, depletion and amortization Amortization of nuclear fuel Decommissioning Total operating expenses 9,180 2,999 16,489 Operating income (loss) (7) (1) (1)

Non operating revenues (expenses)

Investment and other income 7 1 1 Derivative gain (loss)

Debt expense Net non operating revenues (expenses) 7 1 1 Change in net assets (deficit)

Net assets (deficit) - beginning of year Net assets (deficit) - end of year $ - $ - $

See accompanying notes. 32 See accompanying notes. 32

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS INTHOUSANDS)

MISCELLANEOUS Project Projects' Multiple Project Development Stabilization Fund Fund Fund Total Combined Operating revenues Sales of electric energy $ $ $ $ 414,973 Sales of transmission services 130,861 Sales of natural gas 58,336 Total operating revenues - -604,170 Operating expenses Operations and maintenance 353,019 Depreciation, depletion and amortization 76,891 Amortization of nuclear fuel 14,954 Decommissioning 4,867 Total operating expenses 449,731 Operating income (loss) 154,439 Non operating revenues (expenses)

Investment and other income 4,465 1,215 19,095 Derivative gain (loss) - - (22,199)

Debt expense (5,764) - (145,770)

Net non operating revenues (expenses) (1,299) 1,215 (148,874)

Change in net assets (deficit) (1,299) 1,215 5,565 Net assets (deficit) - beginning of year 126 102,037 (132,506)

Net withdrawals by participants 2,358 (2,496) (138)

Net assets (deficit) - end of year $ (1,173) $ 2,358 $ 100,756 $ (127,079) 33 See accompanying notes.

33 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS (DEFICIT)

FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

MISCELLANEOUS Project Projects' Multiple Project Development Stabilization Fund Fund Fund Total Combined Operating revenues Sales of electric energy $ - $ $ $ 346,848 Sales of transmission services 113,914 Sales of natural gas 55,326 Total operating revenues 516,088 Operating expenses Operations and maintenance 303,138 Depreciation, depletion and amortization 68,689 Amortization of nuclear fuel 11,006 Decommissioning 5,296 Total operating expenses 388,129 Operating income (loss) - -127,959 Non operating revenues (expenses)

Investment and other income 5,171 3,089 36,212 Derivative gain (loss) - - (8,720)

Debt expense (6,426) (128,545)

Net non operating revenues (expenses) (1,255) 3,089 (101,053)

Change in net assets (deficit) (1,255) 3,089 26,906 Net assets (deficit) - beginning of year 1,381 89,155 (169,205)

Net withdrawals by participants - 9,793 9,793 Net assets (deficit) - end of year $ 126 $ $ 102,037 $ (132,506)

See accompanying notes. 34 See accompanying notes. 34

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

GENERATION Palo Verde San Juan Magnolia Power Canyon Power Cash flows from operating activities Receipts from participants $ 66,713 $ 85,571 $ 59,012 $

Receipts from sale of oil and gas Payments to operating managers (42,743) (59,659) (24,611)

Other disbursements and receipts 7,634 - -

Net cash flows from operating activities 31,604 25,912 34,401 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net -_ - - 2,225 Cash flows from capital financing activities Additions to plant and prepaid projects, net (29,727) (6,347) (120) (81,296)

Debt interest and swap payments (922) (7,102) (15,879) (5,184)

Proceeds from sale of bonds Payment for defeasance of revenue bonds Transfer of funds from (to) escrow Principal payments on debt (10,030) (11,715) (9,010)

Payment for bond issue costs (702)

(40,679) (25,164) (25,009) (87,182)

Net cash used for capital and related financing activities Cash flows from investing activities Interest received on investments 557 1,269 1,382 658 Purchases of investments (55,907) (23,340) (68,448) (58,399)

Proceeds from sale/maturity of investments 53,940 23,235 54,762 148,975 Net cash provided by (used for) investing activities (1,410) 1,164 (12,304) 91,234 Net increase (decrease) in cash and cash equivalents (10,485) 1,912 (2,912) 6,277 Cash and cash equivalents, beginning of year 25,923 9,512 24,863 35,341 Cash and cash equivalents, end of year $ 15,438 $ 11,424 $ 21,951 $ 41,618 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 3,247 $ 15,102 $ 15,080 $

Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 19,801 6,257 11,006 Decommissioning 3,324 1,543 -

Advances for capacity and energy Amortization of nuclear fuel 14,954 - -

Changes in assets and liabilities Accounts receivable 537 8 1,642 Accounts payable and accruals (9,988) 3,029 4,028 Other (271) (27) 2,645 Net cash provided by operating activities $ 31,604 $ 25,912 $ 34,401 $

Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted 10,342 5,745 16,809 41,618 Cash and cash equivalents - unrestricted 5,096 5,679 5,142

$ 15,438 $ 11,424 $ 21,951 $ 41,618 35 See accompanying notes.

35 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

GENERATION Palo Verde San Juan Magnolia Power Canyon Power Cash flows from operating activities Receipts from participants $ 66,060 $ 98,983 $ 60,909 $

Receipts from sale of oil and gas Payments to operating managers (44,975) (57,820) (33,022)

Other disbursements and receipts 7,634 - 20 Net cash flows from operating activities 28,719 41,163 27,907 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net Cash flows from capital financing activities Additions to plant and prepaid projects, net (33,648) (14,846) (994) (79,217)

Debt interest payments (1,179) (7,699) (15,296) 485,710 Proceeds from sale of bonds Payment for defeasance of revenue bonds Transfer of funds from (to) escrow (279,345)

Principal payments on debt (10,360) (11,115) (8,695)

Payment for bond issue costs (446) (2,568)

Net cash used for capital and related financing activities (45,187) (33,660). ('25,431) 124,580 Cash flows from investing activities Interest received on investments 973 1,445 1,343 489 Purchases of investments (44,762) (31,655) (52,689) (192,568)

Proceeds from sale/maturity of investments 72,764 27,092 55,944 91,880 Net cash provided by (used for) investing activities 28,975 (3,118) 4,598 (100,199)

Net increase (decrease) in cash and cash equivalents 12,507 4,385 7,074 24,381 Cash and cash equivalents, beginning of year 13,416 5,127 17,789 10,960 Cash and cash equivalents, end of year $ 25,923 $ 9,512 $ 24,863 $ 35,341 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 493 $ 26,129 $ 13,658 $

Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 19,224 5,553 11,454 Decommissioning 3,753 1,543 -

Advances for capacity and energy Amortization of nuclear fuel 11,006 -

Changes in assets and liabilities Accounts receivable (526) 4,078 (1,183)

Accounts payable and accruals (5,031) 3,881 2,443 Other (200) (211 1,535 Net cash provided by operating activities $ 28,719 $ 41,163 $ 27,907 $ -

Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted 18,843 6,991 21,500 35,341 Cash and cash equivalents - unrestricted 7,080 2,521 3,363 _

$ 25,923 $ 9,512 $ 24,863 $ 35,341 See accompanying notes. 36 See accompanying notes. 36

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

GREEN POWER Hoover I ieton Windy Point Linden Wind Uprating Hydropower Milford I Wind Project Energy Cash flows from operating activities Receipts from participants $ 2,643 $ 5,577 $ 34,345 $ 90,849 $ 21,373 Receipts from sale of oil and gas - - (5,943)

Payments to operating managers (305) (1,045) (13,912) (50,806)

Other disbursements and receipts Net cash flows from operating activities 2,338 4,532 20,433 40,043 15,430 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net Cash flows from capital financing activities Additions to plant and prepaid projects, net - (71) (569,220) (11,139)

Debt interest and swap payments (678) (1,017) (10,087) (7,491) (3,606)

Proceeds from sale of bonds 54,149 583,149 149,501 Payment for defeasance of revenue bonds (139,680)

Transfer of funds from (to) escrow (48,349) ...

Principal payments on debt (1,540) -

Payment for bond issue costs (734) -1) (3,749) (1,237)

Net cash used for capital and related financing activities (2,218) 3,978 (10,088) 2,689 (6,161)

Cash flows from investing activities Interest received on investments 40 60 452 161 37 Purchases of investments (5,886) (7,805) (35,882) (50,918) (7,620)

Proceeds from sale/maturity of investments 4,511 500 22,870 26,761 3,000 Net cash provided by (used for) investing activities (1,335) (7,245) (12,560) (23,996) (4,583)

Net increase (decrease) in cash and cash equivalents (1,215) 1,265 (2,215) 18,736 4,686 Cash and cash equivalents, beginning of year 1,984 823 13,665 8,856 3,575 Cash and cash equivalents, end of year $ 769 $ 2,088 $ 11,450 $ 27,592 $ 8,261 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ (654) $ 1,441 $ 7,092 $ 7,824 $ 3,145 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 1,462 25,395 4,602 Decommissioning Advances for capacity and energy 2,898 Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable 88 110 - 2,276 Accounts payable and accruals 6 1,519 2,002 5,302 7,683 Other - 11,339 (754)}

Net cash provided by operating activities $ 2,338 $ 4,532 $ 20,433 $ 40,043 $ 15,430 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted 566 267 4,786 17,806 2,070 Cash and cash equivalents - unrestricted 203 1,821 6,664 9,786 6,191

$ 769 $ 2,088 $ 11,450 $ 27,592 $ 8,261 37 See accompanying notes.

37 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

GREEN POWER Hoover Tieton Windy Point Linden Wind Uprating Hydropower Milford I Wind Project Energy Cash flows from operating activities Receipts from participants 2,347 $ 2,591 $ 13,525 $ 35,210 $

Receipts from sale of oil and gas Payments to operating managers (235) (2,945) (4,696) (27,370)

Other disbursements and receipts 3 Net cash flows from operating activities 2,115 (354) 8,829 7,840 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net - 250 1,000 Cash flows from capital financing activities Additions to plant and prepaid projects, net - (47,408) (231,049) (134,285)

Debt interest payments (738) - - -

Proceeds from sale of bonds - 48,174 257,686 141,627 Payment for defeasance of revenue bonds Transfer of funds from (to) escrow Principal payments on debt (1,480) - - -

Payment for bond issue costs - (526) (2,201) (867)

Net cash used for capital and related financing activities (2,218) 240 24,436 - 6,475 Cash flows from investing activities Interest received on investments 26 11 18 16 81 Purchases of investments (5,079) - (19,868) (92,981)

Proceeds from sale/maturity of investments 6,715 - - - 90,000 Net cash provided by (used for) investing activities 1,662 11 (19,850) 16 (2,900)

Net increase (decrease) in cash and cash equivalents 1,559 (103) 13,665 8,856 3,575 Cash and cash equivalents, beginning of year 425 926 - -

Cash and cash equivalents, end of year $ 1,984 $ 823 $ 13,665 $ 8,856 $ 3,575 Reconciliation of operating income (loss) to net cash provided

. by operating activities Operating income (loss) (492) $ (487) $ (2,629) $ (12) $

Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 829 Decommissioning Advances for capacity and energy 2,744 Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable (106) (110) - (2,057)

Accounts payable and accruals (31) (586) 4,392 10,127 Other 7,066 (218)

Net cash provided by operating activities $ 2,115 $ (354) $ 8,829 $ 7,840 $ -

Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted 1,971 -3,575 562 9,015 Cash and cash equivalents - unrestricted 13 261 4,650 8,856 3

$ 1,984 $ 823 $ 13,665 $ 8,856 $ 3,575 See accompanying notes. 38 Se acmpnin nts.3

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

TRANSMISSION Southern Transmission System Mead- Phoenix Mead- Adelanto Cash flows from operating activities Receipts from participants $ 100,908 $ 9,134 $ 23,978 Receipts from sale of oil and gas Payments to operating managers (22,671) (1,262) (2,047)

Other disbursements and receipts - -_ 82 Net cash flows from operating activities 78,237 7,872 22,013 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net Cash flows from capital financing activities Additions to plant and prepaid projects, net (34,210) (109)

Debt interest and swap payments (38,965) (3,147) (9,835)

Proceeds from sale of bonds 213,250 Payment for defeasance of revenue bonds (243,067)

Transfer of funds from (to) escrow Principal payments on debt (32,990) (4,895) (13,490)

Payment for bond issue costs (1,424)

Net cash used for capital and related financing activities (137,406) (8,151) (23,325)

Cash flows from investing activities Interest received on investments 2,352 465 1,792 Purchases of investments (72,354) (5,382) (16,865)

Proceeds from sale/maturity of investments 109,023 4,024 8,880 Net cash provided by (used for) investing activities 39,021 (8931 (6,193)

Net increase (decrease) in cash and cash equivalents (20,148) (1,172) (7,505)

Cash and cash equivalents, beginning of year 45,312 4,351 13,388 Cash and cash equivalents, end of year $ 25,164 $ 3,179 $ 5,883 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 57,833 $ 6,480 $ 17,410 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 19,381 1,460 4,514 Decommissioning Advances for capacity and energy Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable (430) 784 Accounts payable and accruals 1,400 (68) (695)

Other 53 _

Net cash provided by operating activities $ 78,237 $ 7,872 $ 22,013 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ 24,530 $ 3,004 $ 5,282 Cash and cash equivalents - unrestricted 634 175 601

$ 25,164 $ 3,179 $ 5,883 39 See accompanying notes.

39 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

TRANSMISSION Southern Transmission System Mead- Phoenix Mead- Adelanto Cash flows from operating activities Receipts from participants $ 84,672 $ 8,334 $ 19,837 Receipts from sale of oil and gas Payments to operating managers (13,894) (1,178) (6,353)

Other disbursements and receipts 568 5,060 Net cash flows.from operating activities 70,778 7,724 18,544 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net Cash flows from capital financing activities Additions to plant and prepaid projects, net (45,381) (279)

Debt interest payments (47,110) (3,352) (10,416)

Proceeds from sale of bonds Payment for defeasance of revenue bonds Transfer of funds from (to) escrow Principal payments on debt (30,585) (2,870) (9,480)

Payment for bond issue costs Net cash used for capital and related financing activities (123,076) (6,501) (19,896)

Cash flows from investing activities Interest received on investments 4,249 505 1,814 Purchases of investments (101,948) (3,573) (11,726)

Proceeds from sale/maturity of investments 162,152 2,940 12,010 Net cash provided by (used for) investing activities 64,453 (128) 2,098 Net increase (decrease) in cash andcash equivalents 12,155 1,095 746 Cash and cash equivalents, beginning of year 33,157 3,256 12,642 Cash and cash equivalents, end of year $ 45,312 $ 4,351 $ 13,388 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 49,539 $ 6,062 $ 12,485 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 18,708 1,406 4,514 Decommissioning Advances for capacity and energy Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable 3,239 568 (784)

Accounts payable and accruals (732) (312) (2,692)

Other 24 - 5,021 Net cash provided by operating activities $ 70,778 $ 7,724 $ 18,544 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ 39,420 $ 4,192 $ 12,714 Cash and cash equivalents - unrestricted 5,892 159 674

$ 45,312 $ 4,351 $ 13,388 See accompanying notes. 40 See accompanying notes. 40

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

NATURAL GAS Prepaid Natural Pinedale Barnett Gas Cash flows from operating activities Receipts from participants $ 6,226 $ 13,385 $ 9,989 Receipts from sale of oil and gas 2,120 6,729 Payments to operating managers (3,121) (8,444) 13,150 Other disbursements and receipts - (3,062)

Net cash flows from operating activities 5,225 11,670 20,077 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net 3,267 (36)

Cash flows from capital financing activities Additions to plant and prepaid projects, net (7,891) (2,969)

Debt interest and swap payments (1,871) (4,405) (16,805)

Proceeds from sale of bonds Payment for defeasance of revenue bonds Transfer of funds from (to) escrow Principal payments on debt (2,929) (6,941) (5,715)

Payment for bond issue costs Net cash used for capital and related financing activities (12,691) (14,315) (22,520)

Cash flows from investing activities Interest received on investments 361 1,089 820 Purchases of investments (3,033) (7,080) (20,852)

Proceeds from sale/maturity of investments 4,510 2,929 25,169 Net cash provided by (used for) investing activities 1,838 (3,062) 5,137 Net increase (decrease) in cash and cash equivalents (2,361) (5,743) 2,694 Cash and cash equivalents, beginning of year 17,221 12,358 2,596 Cash and cash equivalents, end of year $ 14,860 $ 6,615 $ 5,290 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 3,536 $ 7,500 $ 9,415 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 2,836 5,572 Decommissioning Advances for capacity and energy Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable 204 (114) (24)

Accounts payable and accruals (130) (237) (2,635)

Other (1,221) (1,051) '-13,321 Net cash provided by operating activities $ 5,225 $ 11,670 $ 20,077 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ 8,747 $ (439) $ 5,264 Cash and cash equivalents - unrestricted 6,113 7,054 26

$ 14,860 $ 6,615 $ 5,290 41 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

NATURAL GAS Prepaid Natural Pinedale Barnett Gas Cash flows from operating activities Receipts from participants $ 5,522 $ 12,893 $ 12,556 Receipts from sale of oil and gas 982 5,693 Payments to operating managers (1,765) (5,971) (450)

Other disbursements and receipts - - 16,344 Net cash flows from operating activities 4,739 12,615 28,450 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net 6,684 405 _

Cash flows from capital financing activities Additions to plant and prepaid projects, net (2,412) (2,508)

Debt interest payments (1,955) (4,606) (17,280)

Proceeds from sale of bonds Payment for defeasance of revenue bonds Transfer of funds from (to) escrow Principal payments on debt (1,956) (4,639) (5,625)

Payment for bond issue costs Net cash used for capital and related financing activities (6,323) (11,753) (22,905)

Cash flows from investing activities Interest received on investments 397 1,145 791 Purchases of investments (393) (1,924) (27,816)

Proceeds from sale/maturity of investments 1,220 6,162 21,468 Net cash provided by (used for) investing activities 1,224 5,383 (5,557)

Net increase (decrease) in cash and cash equivalents 6,324 6,650 (12)

Cash and cash equivalents, beginning of year 10,897 5,708 2,608 Cash and cash equivalents, end of year $ 17,221 $ 12,358 $ 2,596 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 4,282 $ 6,710 $ 12,230 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 1,210 5,791 Decommissioning Advances for capacity and energy Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable 112 706 347 Accounts payable and accruals (336) 675 2,759 Other (5291 (1,267) 13,114 Net cash provided by operating activities $ 4,739 $ 12,615 $ 28,450 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ 13,054 $ 5,625 $ 2,596 Cash and cash equivalents - unrestricted 4,167 6,733

$ 17,221 $ 12,358 $ 2,596 See accompanying notes. 42 Se -acmpnin nts.4

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

POWER PURCHASE AGREEMENTS urmat Ameresco Geothermal MWD Small Chiquita Energy Hydro Pebble Springs Milford l1 Wind Landfill Gas Cash flows from operating activities Receipts from participants $ 13,535 $ 3,550 $ 26,150 $ 4,280 $ 3,360 Receipts from sale ofoil and gas Payments to operating managers (9,398) (3,734) (24,049) (957) (1,641)

Other disbursements and receipts Net cash flows from operating activities 4,137 (184) 2,101 3,323 1,719 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net 400 Cash flows from capital financing activities Additions to plant and prepaid projects, net - ~ 1-Debt interest and swap payments Proceeds from sale of bonds Payment for defeasance of revenue bonds Transfer of funds from (to) escrow Principal payments on debt Payment for bond issue costs Net cash used for capital and related financing activities Cash flows from investing activities Interest received on investments 3 8 19 Purchases of investments - - (1,480) -

Proceeds from sale/maturity of investments 1,480 Net cash provided by (used for) investing activities 3 8 19 _

Net increase (decrease) in cash and cash equivalents 4,140 (183) 2,109 3,342 2,119 Cash and cash equivalents, beginning of year 511 1,541 6,196 -

Cash and cash equivalents, end of year $ 4,651 $ 1,358 $ 8,305 $ 3,342 $ 2,119 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) (3) $ (1) $ (8) $ $

Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization Decommissioning Advances for capacity and energy Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable 1,012 - (1) (50)

Accounts payable and accruals 3,128 (183) 2,110 3,518 1,719 Other - - - (1451 _

Net cash provided by operating activities $ 4,137 $ (184) $ 2,101 $ 3,323 $ 1,719 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit) $ 46 $ 13 $ 83 $ 3 $

Cash and cash equivalents - restricted Cash and cash equivalents - unrestricted 4,651 1,358 8,305 3,342 2,119

$ 4,651 $ 1,358 $ 8,305 $ 3,342 $ 2,119 43 See accompanying notes.

43 See aCcompanvin~ notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

POWER PURCHASE AGREEMENTS Ormat Geothermal Energy - MWD Small Hydro Pebble Springs Cash flows from operating activities Receipts from participants $ 6,110 $ 2,893 $ 19,084 Receipts from sale ofoil and gas Payments to operating managers (9,140) (3,039) (16,868)

Other disbursements and receipts Net cash flows from operating activities (3,030) (146) 2,216 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net 860 400 _

Cash flows from capital financing activities Additions to plant and prepaid projects, net Debt interest payments Proceeds from sale of bonds Payment for defeasance of revenue bonds Transfer of funds from (to) escrow Principal payments on debt Payment for bond issue costs Net cash used for capital and related financing activities Cash flows from investing activities Interest received on investments 8 10 Purchases of investments Proceeds from sale/maturity of investments Net cash provided by (used for) investing activities 8 1 10 Net increase (decrease) in cash and cash equivalents (2,162) 255 2,226 Cash and cash equivalents, beginning of year 2,673 1,286 3,970 Cash and cash equivalents, end of year $ 511 $ 1,541 $ 6,196 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ (7) $ (1) $ (1)

Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization Decommissioning Advances for capacity and energy Amortization of nuclear fuel Changes in assets and liabilities Accounts receivable (1,016)

Accounts payable and accruals (2,007) (145) 2,217 Other Net cash provided by operating activities $ (3,030) $ (146) $ 2,216 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ - $ - $

Cash and cash equivalents - unrestricted 511 1,541 6,196

$ 511 $ 1,541 $ 6,196 See accompanying notes. 44 See accompanying notes. 44

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

MISCELLANEOUS Project Multiple Project Development Projects' Fund Fund Stabilization Fund Total Combined Cash flows from operating activities Receipts from participants $ - $ $ $ 580,578 Receipts from sale of oil and gas 2,906 Payments to operating managers (257,255)

Other disbursements and receipts 4,654 Net cash flows from operating activities 330,883 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net 1,542 (2,496) 4,902 Cash flows from capital financing activities Additions to plant and prepaid projects, net (2,311) (745,409)

Debt interest and swap payments (3,004) (129,998)

Proceeds from sale of bonds 1,000,049 Payment for defeasance of revenue bonds (382,747)

Transfer of funds from (to) escrow (48,349)

Principal payments on debt (11,400) (110,655)

Payment for bond issue costs - - (7,847)

Net cash used for capital and related financing activities (14,404) (2,3111 (424,956)

Cash flows from investing activities Interest received on investments 4,817 2,044 18,386 Purchases of investments (906) (85,358) (527,515)

Proceeds from sale/maturity of investments 10,493 81,391 586,453 Net cash provided by (used for) investing activities 14,404 - (1,923) 77,324 Net increase (decrease) in cash and cash equivalents (769) (4,419) (11,847)

Cash and cash equivalents, beginning of year 2,000 15,374 245,390 Cash and cash equivalents, end of year $ $ 1,231 $ 10,955 $ 233,543 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ $ $ $ 154,439 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 102,286 Decommissioning 4,867 Advances for capacity and energy 2,898 Amortization of nuclear fuel 14,954 Changes in assets and liabilities Accounts receivable 6,042 Accounts payable and accruals 21,508 Other 23,889 Net cash provided byoperating activities $ $ $ $ 330,883 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ $ 1,231 $ 10,955 $ 158,583 Cash and cash equivalents - unrestricted - - 74,960

$ $ 1,231 $ 10,955 $ 233,543 45 See accompanying notes.

45 See accompanying notes.

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY COMBINING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2010 (AMOUNTS IN THOUSANDS)

MISCELLANEOUS Project Multiple Development Projects' Prolect Fund Fund Stabilization Fund Total Combined Cash flows from operating activities Receipts from participants $ $ $ $ 451,526 Receipts from sale of oil and gas 6,675 Payments to operating managers (229,721)

Other disbursements and receipts 29,629 Net cash flows from operating activities 258,109 Cash flows from noncapital financing activities Advances (withdrawals) by participants, net 2,000 9,793 21,392 Cash flows from capital financing activities Additions to plant and prepaid projects, net (592,027)

Debt interest payments (3,389) (113,020)

Proceeds from sale of bonds 933,197 Payment for defeasance of revenue bonds Transfer of funds from (to) escrow (279,345)

Principal payments on debt (86,805)

Payment for bond issue costs (6,608)

Net cash used for capital and related financing activities (3,389) (144,608)

Cash flows from investing activities Interest received on investments 5,068 2,004 20,394 Purchases of investments (2,798) (116,060) (705,840)

Proceeds from sale/maturity of investments 1,000 100,925 652,272 Net cash provided by (used for) investing activities 3,270 (13,131) (33,174)

Net increase (decrease) in cash and cash equivalents (119) 2,000 (3,338) 101,719 Cash and cash equivalents, beginning of year 119 - 18,712 143,671 Cash and cash equivalents, end of year $ - $ 2,000 $ 15,374 $ 245,390 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ - $ $ $ 127,959 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation, depletion and amortization 68,689 Decommissioning -- 5,296 Advances for capacity and energy 2,744 Amortization of nuclear fuel 11,006 Changes in assets and liabilities Accounts receivable 3,268 Accounts payable and accruals 14,622 Other 24,525 Net cash provided by operating activities $ $ - $ 258,109 Cash and cash equivalents as stated in the Combined Statements of Net Assets (Deficit)

Cash and cash equivalents - restricted $ $ 2,000 $ 15,374 $ 192,773 Cash and cash equivalents - unrestricted -- 52,617

$ $ 2,000 $ 15,374 $ 245,390 See accompanying notes. 46 See accompanying notes. 46

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE The Southern California Public Power Authority (the Authority or SCPPA), a public entity organized under the laws of the State of California, was formed by a Joint Powers Agreement dated as of November 1, 1980 pursuant to the joint Exercise of Powers Act of the State of California. The Authority's participants consist of eleven municipal electric utilities and one irrigation district in the State of California. The Authority was formed for the purpose of planning, financing, developing, acquiring, constructing, operating and maintaining projects for the generation, transmission, and procurement of electric energy and natural gas for sale to its participants. The Joint Powers Agreement has a term of fifty years or until all bonds and notes of the Authority and the interest thereon have been paid in full or adequate provision for payments have been made.

The Authority has interests in the following projects:

Palo Verde Project - On August 14, 1981, the Authority purchased a 5.91% interest in the Palo Verde Nuclear Generating Station (PVNGS), a 3,810 megawatt nuclear-fueled generating station near Phoenix, Arizona, a 5.44%

ownership interest in the Arizona Nuclear Power Project High Voltage Switchyard (ANPP HVS), and a 6.55%

share of the right to use certain portions of the Arizona Nuclear Power Project Valley Transmission System (collectively, the Palo Verde Project). Units 1, 2 and 3 of the Palo Verde Project began commercial operations in January 1986, September 1986, and January 1988, respectively.

Since inception of the ANPP HVS capital additions, new terminations, and other events have successively changed the respective ownership interests in the ANPP HVS. In FYE 2011, the PVNGS fourth transformer became the 14th termination in the ANPP HVS, and caused the Authority's proportional ownership percentage to change from 5.56% to 5.44%. This change became effective on April 1, 2011.

Units 1, 2, and 3 each operated under a 40-year Full-Power Operating License from the Nuclear Regulatory Commission (NRC), expiring in 2025, 2026, and 2027, respectively. In April 2011, after a detailed, two-year process, the NRC approved the application to extend the operating licenses for all three units for an additional 20 years, allowing Unit 1 to operate through 2045, Unit 2 through 2046, and Unit 3 through 2047.

San Juan Project - Effective July 1, 1993, the Authority purchased a 41.80% interest in Unit 3 and related common facilities of the San Juan Generating Station (SJGS) from Century Power Corporation. Unit 3, a 497-megawatt unit, is one unit of a four-unit coal-fired power generating station in New Mexico.

Magnolia Power Project - The Magnolia Power Project (MAG) consists of a combined cycle natural gas-fired generating plant with a nominally rated net base capacity of 242 megawatts and was built on a site in Burbank, California. The plant is the first that is wholly owned by the Authority and entitlements to 100% of the capacity and energy of the Project have been sold to six of its members. The City of Burbank, a Project participant, managed its construction and also serves as the operating agent for the Project. Commercial operations began on September 22, 2005.

Gas Supply and Services Agreement: SCPPA entered into an agreement with Occidental Energy Marketing, Inc. (OEMI) beginning January 2005. This agreement is renewed each year unless notification is given by either party prior to December 31, of each year. OEMI provides 100% of the natural gas plant requirements on a daily basis, and also includes an option for the participants to bring in their own gas supply. In addition, OEMI provides gas balancing services.

47

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

• Natural Gas Transportation: SCPPA has an agreement with Southern California Gas Company (SoGas) for intrastate transmission services. The agreement took effect in January 2005 and will expire in February 2013. SoGas provides transportation, storage, and balancing services of natural gas from the Southern California Border to the MAG Plant.

" *.Parts and Special Services Agreement: SCPPA entered into an 18-year agreement with General Electric International (GE) in September 2005. Initially, the agreement covered only the gas turbine, but the agreement was amended in August 2007, to include coverage for the gas generator, the steam turbine, and the steam generator. GE provides planned and unplanned maintenance, including replacement parts, based on factored fired hours.

Canyon Power Project - The Authority approved the construction of a new generating plant located on approximately 10 acres of land within an industrial area of the City of Anaheim, California (Anaheim). The Canyon Power Project (the Project) consists of a simple cycle natural gas-fired power generating plant, comprised of four General Electric LM 6000PC Sprint combustion turbines with a combined nominally rated net base capacity of 200 MW, and auxiliary facilities. The Project is owned by the Authority and constructed, operated, and maintained by Anaheim. The cost of the Project is estimated to be $320 million of which $15 million was spent to obtain the necessary emission credits for the Project. The Project is expected to be substantially complete in September 2011 (see Note 11).

Hoover Uprating Project - As of March 1, 1986, the Authority and six participants entered into an agreement pursuant to which each participant assigned its entitlement to capacity and associated firm energy to the Authority in return for the Authority's agreement to make advance payments to the United States Bureau of Reclamation (USBR) on behalf of such participants. The Authority has an 18.68% interest in the contingent capacity of the Hoover Uprating Project (HU).

Tieton Hydropower Project - On November 30, 2009, the Authority acquired the Tieton Hydropower Plant pursuant to an Asset Purchase Agreement, dated as of October 19, 2009. The Tieton Hydropower Project (the Project) consists of a 13.6 MW nameplate capacity "run-of-the-reservoir" hydroelectric generation facility, comprised of: a powerhouse located in Yakima County, Washington; a 21-mile 115 kV transmission line; other related assets, property, and contractual rights. Prior to acquisition of the Project, the Authority was entitled to purchase the energy output of the facility for a period of 20 years through a power purchase agreement dated August 21, 2008.

• Contractor Service Agreement: SCPPA entered into a 2-year agreement on December 1, 2009, with an independent contractor to direct the operations of the Tieton Hydropower facility and to provide certain technical services with respect to the operation and maintenance of the facility.

Milford 1 Wind Project - On February 9, 2010, the Authority financed the prepayment of a specified supply of electricity from a wind farm located in Milford Utah (the Facility). The Facility is a 203.5 megawatt nameplate capacity wind farm comprised of 97 wind turbines located near Milford, Utah, together with a 90-mile transmission line, and other related facilities. Under the related Power Purchase Agreements by and between SCPPA and Milford Wind Corridor Phase I, LLC (the Seller), SCPPA will receive 6.7 million megawatt hours over a 20-year delivery term. SCPPA has also agreed to make monthly payments to the Seller for any energy delivered in each year that exceeds the guaranteed annual quantity of 338,215 Megawatt hours. Commercial operation began on November 16, 2009.

48

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

Linden Wind Energy Project - On September 15, 2010 the Authority acquired the Linden Wind Energy Project (the Project) pursuant to the terms of the Asset Purchase Agreement, dated as of June 23, 2009. The Project is an approximately 50 MW nameplate capacity wind farm comprised of 25 wind turbines and related facilities, located in Klickitat County, Washington, developed and constructed by Northwest Wind Partners, LLC. The Authority has also entered into power sales agreements with LADWP and the city of Glendale to sell 100% of its entitlement to capacity and energy in the Project on a "take-or-pay" basis. Through a separate layoff agreement, the city of Glendale has sold 100% of its entitlement to capacity and energy to LADWP.

Windy Point/Windy Flats Project - On September 9, 2010, the Authority financed the purchase of a supply of energy from the Windy Point/Windy Flats Project (the Project) for an initial delivery term of 20 years, pursuant to the terms of a power purchase agreement, dated June 24, 2009. The Authority also entered into power sales agreements with LADWP and the City of Glendale to sell 100% of its entitlement to capacity and energy in the Project on a "take-or-pay" basis.

The Project is a facility with a 262.2 MW nameplate capacity wind farm comprised of 114 wind turbines located in the Columbia Hills area of Klickitat County, Washington near the city of Goldendale. The Project is owned by Windy Flats Partners, LLC, a limited liability company organized and existing under the laws of the State of Delaware. The initial delivery term began on the commercial operation date of the first of two phases of the Facility. The first phase commenced operations on January 25, 2010 and the second phase on March 1, 2010.

Southern Transmission System Project - On May 1, 1983, the Authority entered into an agreement with the Intermountain Power Agency (IPA), to defray all the costs of acquisition and construction of the Southern Transmission System Project (STS), which provides for the transmission of energy between the Southern California and the Rocky Mountain regional markets, including long-term renewable resources such as Milford 1 Wind, from the Intermountain Generating Station located in Utah to Southern California. STS commenced commercial operations in July 1986. Construction to upgrade two AC/DC converter stations and increase their combined rating from 1,920 MW to 2,400 MW was completed in May 2011. The Department of Water and Power of the City of Los Angeles (LADWP), a member of the Authority, serves as project manager and operating agent of the Intermountain Power Project (IPP).

Mead-Phoenix and Mead-Adelanto Projects - As of August 4, 1992, the Authority entered into an agreement to acquire an interest in the Mead-Phoenix Project (Mead-Phoenix), a transmission line extending between the Westwing substation in Arizona and the Marketplace substation in Nevada. The agreement provides the Authority with an 18.31% .interest in the Westwing-Mead project component, a 17.76% interest in the"Mead Substation project component and a 22.41% interest in the Mead-Marketplace project component.

As of August 4, 1992, the Authority also entered into an agreement to acquire a 67.92% interest in the Mead-Adelanto Project (Mead-Adelanto), a transmission line extending between the Adelanto substation in Southern California and the Marketplace substation in Nevada. Funding for these projects was provided by a transfer of funds from the Multiple Project Fund and commercial operations commenced in April 1996. LADWP serves as project manager and operating agent of Mead-Adelanto.

49

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

Natural Gas Pinedale Project - On July 1, 2005, the Authority, together with LADWP and Turlock Irrigation District (TID), acquired 42.5% of an undivided working interest in three natural gas leases located in the Pinedale Anticline region of the State of Wyoming. The Authority's individual share in these interests equals 14.9%. The purchase includes 38 operating oil and gas wells and associated lateral pipelines, equipment, permits, rights of way, and easements used in production. The natural gas field production is expected to increase for several more years as additional capital is invested on drilling new wells and then decline over a life expectancy greater than 30 years.

• Joint Operating Agreement (JOA): In July 2005, SCPPA's purchase of the natural gas reserve interests at Pinedale, Wyoming (Pinedale) included an underlying long-term JOA with the operator, Ultra Resources, Inc. SCPPA pays the operator for SCPPA's share of both operating and drilling/capital expenses on a monthly basis.

• Gathering and Processing Agreements: SCPPA's purchase of Pinedale included underlying agreements with Jonah Gas Gathering Company, Questar Gas Management Company, and Mountain Gas Resources, Inc. for gathering and processing of the natural gas.

Natural'Gas Barnett Project - Natural gas resources in the Barnett shale geological formation in Texas were acquired from Collins and Young Holding, L.L.P (C&Y) for a total of $84 million. The acquisition settled on October 26, 2006 and was completed on December 7, 2006 when the participants, together with TID, exercised their option to purchase additional resources from C&Y.

Joint Operating Agreement (JOA): In October 2006, SCPPA's purchase of the natural gas reserve interests in Barnett, TX (Barnett) included an underlying long-term ]OA with the operator, Devon Energy Production Company; L.P. SCPPA pays the operator for SCPPA's share of both operating and drilling/capital expenses on a monthly basis.

50

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

Participant Ownership Interests - The Authority's participants may elect to participate in the projects. As of June 30, 2011, the members have the following participation percentages in the Authority's operating projects:

GENERATION TRANSMISSION Southern Trans-Magnolia Canyon mission Mead- Mead-Palo Verde San Juan Power Power System Phoenix Adelanto Participants .Project Project Project Project Project Project Project City of Los Angeles 67.0% 59.5% 24.8% 35.7%

City of Anaheim 38.0% 100% 17.6% 24.2% 13.5%

City of Riverside 5.4% 10.2% 4.0% 13.5%

Imperial Irrigation District 6.5% 51.0%

City of Vernon 4.9%

City of Azusa 1.0% 14.7% 1.0% 2.2%

City of Banning 1.0% 9.8% 1.0% 1.3%

City of Colton 1.0% 14.7% 4.2% 1.0% 2.6%

City of Burbank 4.4% 31.0% 4.5% 15.4% 11.5%

City of Glendale 4.4% 9.8% 16.5% 2.3% 14.8% 11.1%

City of Cerritos - - 4.2% - - -

City of Pasadena 4.4% 6.1% - 5.9% 13.8% 8.6%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

GREEN POWER NATURAL GAS Hoover Tieton Linden Windy Prepaid Uprating Hydro- Milford I Wind Point Pinedale Barnett Natural Gas Participants Project power Wind Energy Project Project Project Project City of Los Angeles 92.5% 90.0% 92.4%

City of Anaheim 42.6% 35.7% 45.4% 16.5%

City of Riverside 31.9%

Imperial Irrigation District City of Vernon City of Azusa 4.2%

City of Banning 2.1%

City of Colton 3.2% - - 7.1% 9.1% 11.0%

City of Burbank 16.0% 50.0% 5.0% 14.3% 27.3% 33.0%

City of Glendale - 50.0% - 10.0% 7.6% 28.6% - 23.0%

City of Cerritos City of Pasadena 2.5% 14.3% 18.2% 16.5%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

51

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

The Authority has entered into power sales, natural gas sales, and transmission service agreements with the above project participants. Under the terms of the contracts, the participants are entitled to power output, natural gas, or transmission service, as applicable. The participants are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service. The contracts cannot be terminated or amended in any manner that will impair or adversely affect the rights of the bondholders as long as any bonds issued by the specific project remain outstanding.

The contracts expire as follows:

Palo Verde Project 2030 San Juan Project 2030 Magnolia Power Project 2036 Canyon Power Project 2030 Hoover Uprating Project 2018 Tieton Hydropower Project 2028 Milford I Wind Project 2030 Milford !1Wind Project 2031 Ameresco Chiquita Landfill Gas Project 2030 Linden Wind Energy Project 2035 Windy Point Project 2030 Southern Transmission System Project 2027 Mead-Phoenix Project 2030 Mead-Adelanto Project 2030 Natural Gas Pinedale Project 2030 Natural Gas Barnett Project 2030 The Authority's interests or entitlements in natural gas, generation, and transmission projects are jointly owned with other utilities, except for the Magnolia Power Project, Canyon Power Project, Tieton Hydropower Project, and the-Linden Wind Energy Project which are wholly owned by the Authority. Under these arrangements, a participating member has an undivided interest in a utility plant and is responsible for its proportionate share of the costs of construction and operation and is entitled to its proportionate share of the energy, available transmission capacity or natural gas produced. Each joint plant participant, including the Authority, is responsible for financing its share of construction and operating costs. The financial statements reflect the Authority's interest in each jointly owned project as well as the projects that it owns. Additionally, the Authority's share of expenses for each project is included in the statements of revenues, expenses, and changes in net assets (deficit) as part of operations and maintenance expenses.

Prepaid Natural Gas Project No. 1 - On October 11, 2007, the Authority made a one-time prepayment of $481 million to acquire the right to receive approximately 135 billion cubic feet of natural gas from 1. Aron & Company (J. Aron) to be delivered over a 30-year term, beginning July 1, 2008. On October 3, 2007, prior to the acquisition of the prepaid gas supply, the Authority entered into five separate Prepaid Natural Gas Sales Agreements (the Gas Sales Agreements) with J. Aron and simultaneously, five Prepaid Natural Gas Supply Agreements (the Gas Supply Contracts) in which the Authority sold its interest in the natural gas, on a "take-and-pay" basis, to the cities of Anaheim, Burbank, Colton, Glendale, and Pasadena (the Project No. 1 Participants). Through the Gas Supply Contracts, SCPPA has provided for the sale to the Project Participants, on a pay-as-you-go basis, of all of the natural gas to be delivered to SCPPA pursuant to the Gas Sales Agreements. The Natural Gas contracts expire in 2038.

.52

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

On October 22, 2009, the Prepaid Natural Gas Sales Agreements and certain other agreements were restructured to reduce risk, provide an acceleration of a portion of the long-term savings, reduce the remaining volumes of gas to be delivered from 135 billion to 90 billion cubic feet, and shorten the term of the agreements from 30 years to 27 years. As a result of the restructuring, $165.5 million principal of the 2007 Natural Gas Project Bonds were terminated (see Note 6).

Under the Gas Supply Contracts, the approximate average Daily Quantity of gas to be purchased by each Project Participant is as follows:

Average Daily Quantity (1)

Revised Original Participant-Project Participant Volumes Volumes Percentage (%)

City of Anaheim 1,467 2,000 16.5%

City of Burbank 2,924 4,000 33.0%

City of Colton 1,007 1,375 11.0%

City of Glendale 2,015 2,750 23.0%

City of Pasadena 1,464 2,000 16.5%

TOTAL 8,877 12,125 100.0%

(1) The average Daily Quantity is in MMBtu and is calculated over the term of the applicable Gas Supply Contracts. The contracts were restructured and volumes revised in October 2009.

Ormat Geothermal Energy Project - The Authority entered into long-term Power Purchase Agreements in December 2005 with divisions of Ormat Technologies, Inc. for up to 20 MW of electric generation. The Project started delivery of approximately 5 MW in January 2006 from geothermal energy facilities located in Heber, California and the agreements were amended to allow for excess capacity in May 2008. The City of Anaheim acts as the scheduling coordinator on behalf of the project participants. The term of the contract is 25 years.

MWD Small Hydro Project - Consists of a Power Purchase Agreement for the output from four small hydroelectric plants on the MWD system in Southern California, having a total nameplate capacity of 17.04 MW, and a historical output of 40,130 MWH per year. Transmission is accomplished through the California Independent System Operator, with the City of Anaheim acting as scheduler. The term of the contract is 15 years and 2 months, expiring December 31, 2023. Operations began on November 1, 2008.

Pebble Springs Wind Project - In December 2007, the Authority entered into a Power Purchase Agreement for the facility output of a wind project with 98.7 MW, located in Gilliam County, Oregon. SCPPA along with LADWP, Burbank, and Glendale are now scheduling the energy through transmission agreements which bring this renewable energy from the project substation to the project participants. The term of the Project is 18 years with a right of first offer to potentially purchase the entire project after the 10th contract year. Operations formally began on January 31, 2009.

53

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

Ameresco Chiquita Energy Project - In March 2004 SCPPA entered into a power purchase agreement with Ameresco Chiquita Energy LLC, subsequently amended in September 2006, for 100% of the electric generation from a landfill gas to energy facility located at the landfill site in Valencia, California (Ameresco Landfill Gas to Energy Project). The SCPPA participants in the project include the cities of Burbank and Pasadena. This project will initially be for 10 megawatts with the right of first refusal on any increase in output. Operations began in November 2010. The term of the contract is 20 years from the commercial operation date.

Milford [I Wind Energy (Milford 2 Wind) Project - On March 1, 2010 the Authority entered into a Power Purchase Agreement (the Agreement) for the prepayment of a supply of energy from the Milford Wind Corridor Phase 2 Project (the Milford 2 Project), for a delivery term of 20 years (unless earlier terminated) beginning on the Commercial Operating Date (COD) of the Facility. The Authority also entered into power sales agreements with LADWP and the City of Glendale to sell 100% of its entitlement to capacity and energy in the Facility on a "take-or-pay basis."

The Milford 2 Project achieved COD May 2, 2011 and the Agreement calls for the prepayment to be made 90 days after the COD. Test Energy is currently being generated by the facility and delivered to the project participants. The Department holds entitlement shares of 95.098% in this project and the City of Glendale 4.902%. Under a separate contract, the City of Glendale has agreed to sell its entitlement share of energy to LADWP until Glendale exercises its option to repurchase its share (see Note 11).

The Authority has entered into power purchase agreements with project participants as follows. These agreements are substantially take-and-pay contracts where there may be other obligations not associated with the delivery of energy.

54

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND PURPOSE - (continued)

Participant Ownership Interests Power Purchase Agreements Ormat Ameresco Geothermal Pebble MWD Small Chiquita Energy Springs Hydro Milford 11 Landfill Participants Project Wind Project Project Wind Project Gas Project Capacity 17MW 98.7 MW 17.04MW 102MW 10MW City of Los Angeles 69.6% 95.1%

City of Anaheim 60.0% 56.4%

City of Azusa 21.8%

City of Banning 10.0%

City of Colton 21.8%

City of Burbank 10.1% 16.7%

City of Glendale 15.0% 20.3% 4.9%

City of Pasadena 15.0% 83.3%

100.0% 100.0% 100.0% 100.0% 100.0%

Contract Expires 2031 2025 2023 2031 2030 Multiple Project Fund - During fiscal year 1990, the Authority issued Multiple Project Revenue Bonds for net proceeds of approximately $600 million to provide funds to finance costs of construction and acquisition of ownership interests or capacity rights in one or more, then unspecified, projects for the generation or transmission of electric energy. Certain of these funds were used to finance the Authority's interests in Mead-Phoenix and Mead-Adelanto.

Project Development Fund - Holds funds related to projects in the development phase, including the funds related to the acquisition and renovation of the SCPPA Office Building located in the city of Glendora (see Note 3).

Projects' Stabilization Fund - In fiscal year 1997, the Authority authorized the creation of a Projects' Stabilization Fund. Deposits may be made into the fund from budget under-runs, after authorization of individual participants, and by direct contributions from the participants. Participants have discretion over the use of their deposits within SCPPA project purposes. This fund is not a project-related fund; therefore, it is not governed by any project Indenture of Trust. The members participate in the Projects' Stabilization Fund by making deposits to the fund at their discretion.

55

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 2 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting and presentation - The combined and individual financial statements of the Authority are prepared under the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America issued by the Governmental Accounting Standards Board (GASB) applicable to governmental entities that use proprietary fund accounting and the Financial Accounting Standards Board (FASB) issued prior to November 30, 1989 that do not conflict with rules issued by the GASB. Revenues are recognized when earned and expenses are recognized when incurred. The format of the Statement of Net Assets (Deficit) follows the inverted approach which is consistent with the Federal Energy Regulatory Commission (FERC).

• Invested in capital assets, net of related debt and advances from participants - This component of net assets consists of (a) capital assets, (b) net of accumulated depreciation, and (c) unamortized debt expenses, reduced by the outstanding balances of any bonds, other borrowings, and advances from participants that are attributable to the acquisition, construction, or improvement of those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to the unspent proceeds is not included in the calculation of invested in capital assets, net of related debt. Rather, that portion of the debt is included in the same net assets component as the unspent proceeds.

" Restricted - This component consists of net assets on which constraints are placed as to their use.

Constraints include those imposed by creditors (such as through debt covenants), contributors, or laws or regulation of other governments or constraints imposed by law through constitutional provisions or through enabling legislation.

• Unrestricted - This component of net assets consists of net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt and advances from participants."

Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Utility plant - The Authority's share of construction and betterment costs, natural gas reserves, intangibles, and nuclear fuel associated with PVNGS, STS, Mead-Phoenix, Mead-Adelanto, SJGS, Magnolia Power Project, the Natural Gas Pinedale Project and the Natural Gas Barnett Project, together the Natural Gas Projects, Canyon Power, Tieton Hydropower Project, and Linden Wind Energy Project are included as utility plant and recorded at cost. Costs include labor, materials, capitalized interest costs on funds used in construction, and allocated indirect charges such as engineering, supervision, transportation and construction equipment, retirement plan contributions, health care costs, and certain administrative and general expenses. The costs of routine maintenance, repairs, and minor replacements incurred to maintain the plant in operating condition are charged to the appropriate operations and maintenance expense accounts in the period incurred. The original cost of property retired, net of removal and salvage costs, is charged to accumulated depreciation.

Depreciation expense is computed using the straight-line method based on the estimated service lives, principally fifty-five years for PVNGS, STS, Mead-Phoenix and Mead-Adelanto; thirty years for Magnolia; thirty-seven years for SJGS; fifty years for the Tieton Hydropower Project; and twenty-five years for Linden Wind Energy Project. There is no depreciation expense for the Canyon Power Project, currently under development.

56 I

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 2 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Natural gas reserve depletion - Depletion expense for the Natural Gas Projects is computed using the unit of production method based on the future production of the proved developed producing wells, estimated at 43.3 for the Natural Gas Pinedale Project and 40 years for the Natural Gas Barnett Project. The estimate is based on site specific studies prepared by independent consultants as of October 2010 and January 2011, respectively.

The depletion rate for the Natural Gas Pinedale Project was $1.89/MMbtu and $1.59/MMbtu; and the estimated total net revenue volume was 22,791,724 MMBtu and 27,239,718 MMBtu up to the period ending 2053, for fiscal years 2011 and 2010, respectively. The depletion rate for the Natural Gas Barnett Project was $2.61/MMbtu and

$4.95/MMbtu; and the estimated total net revenue volume was 22,872,450 MMBtu and 12,599,884 MMBtu up to the period ending 2050, for fiscal years ended June 30, 2011 and 2010, respectively.

Nuclear fuel - Nuclear fuel is amortized and charged to expense on the basis of actual thermal energy produced relative to total thermal energy expected to be produced over the life of the fuel. Under the provisions of the Nuclear Waste Policy Act of 1982, the federal government assesses each entity with nuclear operations, including the participants in PVNGS, $1 per megawatt hour of nuclear generation. The Authority records this charge as a current year expense. See Note 10 for information about spent nuclear fuel disposal.

Nuclear decommissioning - Decommissioning of PVNGS is expected to commence subsequent to the year 2046. The total cost to decommission the Authority's interest in PVNGS is estimated to be $121.3 million in 2008 dollars ($275.6 million in 2022 dollars, assuming a 6% estimated annual inflation rate). This estimate is based on an updated site specific study prepared by an independent consultant in 2007. The Authority is providing for its share of the estimated future decommissioning costs over the remaining life of the nuclear power plant through annual charges to expense, which amounted to $3.3 million and $3.8 million in fiscal years 2011 and 2010. The decommissioning liability is included as a component of accumulated depreciation and was $234.2 million and $230.9 million at June 30, 2011 and 2010, respectively.

The 40-year Full-Power Operating Licenses for the PVNGS Units 1, 2, and 3 granted by the NRC and expiring in the years 2025, 2026, and 2027, respectively, were extended for an additional 20 years allowing Unit I to operate through 2045, Unit 2 through 2046, and Unit 3 through 2047. A new study, dated March 2011, issued by the independent consultant evaluating the cost to decommission Palo Verde, was updated to incorporate the 60 years of operations. The cost to decommission the Authority's interests is now estimated to be $133.7 million in 2010 dollars (see Note 1).

The Authority contributes to external trusts set up in accordance with the Arizona Nuclear Power Plant participation agreement and Nuclear Regulatory Commission requirements. As of June 30, 2011, decommissioning funds totaled approximately $163.2 million, including approximately $0.8 million of interest receivable.

Asset retirement obligation - Demolition of SJGS is projected to commence subsequent to the year 2030.

Based upon the study performed by an independent engineering firm, the Authority's share of the estimated demolition costs is $47.4 million in 2008 dollars. The Authority is providing for its share of the estimated future demolition costs over the remaining life of the power plant through annual charges to expense of $1.5 million.

The demolition liability is included as a component of accumulated depreciation and totaled $51.3 million and

$49.8 million at June 30, 2011 and 2010, respectively.

As of June 30, 2011, the Authority has not billed participants for the cost of demolition nor has it established a demolition fund.

57

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 2 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Investments - Investments include United States government and governmental agency securities, guaranteed investment contracts, medium term notes and money market accounts. These investments are reported at fair value and changes in unrealized gains and losses are recorded in the statement of revenues, expenses and changes in net assets (deficit) with the exception of the guaranteed investment contracts which are recorded at amortized cost. Gains and losses realized on the sale of investments are generally determined using the specific identification method.

The Bond Indentures for the Projects and the Multiple Project Fund require the use of trust funds to account for the Authority's receipts and disbursements. Cash and investments held in these funds are restricted to specific purposes as stipulated in the Bond Indentures.

Accounts receivable - Accounts receivable consists primarily of participant receivables. As such no allowance is deemed necessary.

Prepaid and other assets - SCPPA entered into a prepaid gas contract with a supplier for a 30-year gas supply at a fixed discount and simultaneously entered into a contract with each of the project participants for the delivery of natural gas. SCPPA has also entered into prepaid contracts for all of the energy generated by the MilfordWind Facility for a 20-year term and from the Windy Point/Windy Flats Facility, with corresponding power sales contracts with each project participant (see Note 1).

Advances for capacity and energy - Advance payments to the United States Bureau of Reclamation for the uprating of the 17 generators at the Hoover Power Plant are included in advances for capacity and energy. These advances are being reduced by the principal portion of the credits on billings to the Authority for energy and capacity. The current portion of these advances is recorded under Prepaid and Other Assets in the Current Assets Section of the Combined Statements of Net Assets (Deficit).

Advance to IPA - Advance to IPA consists of cash transferred to IPA for reserve, contingency and self insurance funding.

Unamortized premiums, discounts, debt expenses and losses on refunding - Debt premiums, discounts, and debt expenses are deferred and amortized to expense over the lives of the related debt issues. Losses on refunding related to bonds redeemed by refunding bonds are amortized over the shorter of the life of the refunding bonds, or the remaining term of bonds refunded. Unamortized issue costs are recorded as a non-current asset. All other unamortized debt expenses are recorded as an offset or addition to long-term debt.

Cash and cash equivalents - Cash and cash equivalents include cash and investments with original maturities of 90 days or less.

Materials and supplies - Materials and supplies consist primarily of items for construction and maintenance of plant assets and are stated at the lower of cost or market.

Arbitrage rebate and yield restrictions - The unused proceeds from the issuance of tax-exempt debt have been invested in taxable financial instruments. The excess of earnings on investments, if any, over the amount that would have been earned if the investments had a yield equal to the bond yield or yield restricted rate, is payable to the IRS within five years of the date of the bond offering and each consecutive five years thereafter until final maturity of the related bonds.

58

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 2 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

The recorded liability of the Multiple Project Fund of $27.0 million ($7.2 million payable to the Mead-Phoenix Project and $19.8 million payable to the Mead-Adelanto Project) is a result of the cumulative savings from the 1994 refunding of the 1989 Multiple Project Bonds. The partial refunding within five years of the original issuance triggered a recalculation of the arbitrage yield, reducing the Multiple Project Fund's rebate liability.

During the fiscal year ended June 30, 2011, the Authority made rebate payments to the IRS of $2.2 million for the STS bonds.

Recorded arbitrage rebate and yield restriction liabilitiesas of June 30, 2011, were $0.15 million for STS, $0.2 million for Mead-Phoenix, and $1.0 million for Mead-Adelanto.

Revenues - Revenues consist of billings to participants for the sales of electric energy, natural gas and transmission service in accordance with the participation agreements. Generally revenues are fixed at a level to recover all operating and any debt service costs over the commercial life of the property.

In September 1998, the Palo Verde participants approved a resolution authorizing the Authority to bill the participants an additional $65 million annually through June 30, 2004 to pay for increased debt service costs as a result of a refunding completed in October 1997. In addition, the participants resolved to transfer any over billings, renewal and replacement excess funds or surplus amounts through June 30, 2004 into the Palo Verde reserve account. On November 20, 2003, the Authority adopted a resolution to utilize the amounts on deposit in the reserve accounts to pay a portion of the operating and maintenance expenses of the Palo Verde Project starting July 1, 2004. Funds held in the reserve account as a result of this resolution totaled $39.5 million and

$45.1 million as of June 30, 2011 and 2010, respectively.

Transportation costs - As a result of the sales and purchases agreements for natural gas entered into by SCPPA, the participants receive less volume than processed incurring embedded transportation costs. These costs are recorded as participants' revenue and expense to the Natural Gas Pinedale Project. At June 30, 2011 and 2010, transportation costs were approximately $229 thousand and $133 thousand, respectively, for the Natural Gas Pinedale Project.

In kind contribution - Each participant of the Magnolia Power Plant is responsible for their own share of natural gas. They may elect to bring fuel to the plant or purchase fuel from Occidental Energy Marketing, Inc.

(OEMI). OEMI computes the daily imbalances of fuel volume per participant using the daily consumption data that the operating manager provides. Monthly, actual fuel burnt is reported together with the daily imbalances, participants' in kind contribution, and fuel purchases from OEMI.

In kind contributions are valued at fair market value and recorded as participant revenue and fuel expense to the Magnolia Power Project. SCPPA values the participants' fuel contribution using monthly average pricing from the Project's OEMI fuel purchases. During the fiscal years ended June 30, 2011 and 2010 the participants' contribution in kind was approximately 6.5 million MMbtu and 9.5 million MMbtu and was valued at approximately $26.6 million and $41.1 million, respectively.

59

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 2 -

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES - (continued)

Build America Bonds (BABs) - Build America Bonds are taxable municipal bonds, that were created under the American Recovery and Reinvestment Act of 2009, and carry special tax credits and federal subsidies for either the bond issuer or the bondholder. BABs provide for a subsidy payment from the Department of the Treasury to be paid directly to the issuer (Direct Payment) or the bondholder (Tax Credit BABs) in an amount equal to 35%

of the bond's interest. These Bonds must be issued before January 1, 2011. On June 9, 2010, SCPPA issued $191 million of Canyon Power 2010 Series B, Direct Payment BABs. The Linden Wind 2010 Series B, Direct Payment BABs, were issued on September 28, 2010 (see Note 11).

NOTE 3 - UTILITY PLANT At June 30, 2011, Utility Plant consisted of the following (amounts in thousands):

June 30, 2011 GENERATION GREEN POWER Magnolia Canyon Hoover Linden Palo Verde San Juan Power Power Uprating Tieton Hydro- Wind Project Proiect Project Project Project power Energy Utility plant Production $ 689,148 $ 237,370 $ 282,936 $ -$ $ 47,785 $ 123,082 Transmission 15,466 - 15,233 - 23,431 General 3,188 7,167 15,403 21 11 -

Natural gas reserves 707,802 244,537 313,572 21 47,796 146,513 Less accumulated depreciation 668,935 166,820 64,817 21 2,291 4,602 38,867 77,717 248,755 - - 45,505 141,911 Construction work in progress 21,309 4,045 887 252,069 - -

Nuclear fuel, at amortized cost 43,705 - -

Net utility plant $ 103,881 $ 81,762 $ 249,642 $ 252,069 $ $ 45,505 $ 141,911 TRANSMISSION NATURAL GAS OTHERS Southern Project Transmission Mead- Mead- Development System Phoenix Adelanto Pinedale Barnett Costs (SCPPA Project Project Project Project Project Building) Total Utility plant Production $ $ - $ $ $ $ $ 1,380,321 Transmission 770,325 54,760 172,798 1,052,013 General 44,355 2,730 474 1,650 "- 74,999 Natural gas reserves - - - 53,117 73,292 126,409 814,680 57,490 173,272 54,767 73,292 2,633,742 Less accumulated depreciation 484,880 21,914 68,791 12,017 19233 1,514,321 329,800 35,576 104,481 42,750 54,059 1,119,421 Construction work in progress - 246 - 8,256 2,372 2,358 291,542 Nuclear fuel, at amortized cost S- - - - 43,705 Net utility plant $ 329,800 $ 35,822 $ 104,481 $ 51,006 $ 56,431 $ 2,358 $ 1,454,668 In June, 2011, the Authority made a one-time payment to acquire an 11,500 sq ft building located in the city of Glendora to be used as SCPPA office facilities. The building is currently under renovation and the estimated completion date is the second quarter of 2012. Acquisition and construction costs were financed by contributions from SCPPA members (see Note 1).

60

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 3 - UTILITY PLANT - (continued)

At June 30, 2010 Utility Plant consisted of the following (amounts in thousands):

June 30, 2010 GENERATION GREEN POWER GENERATION GREEN POWER Palo Magnolia Canyon Hoover Verde San Juan Power Power Uprating Tieton Hydro- Linden Wind Project Prolect Project Project Project Power Energy Utility plant Production $ 679,322 $ 239,417 $ 281,833 $ - $ 47,714 $

Transmission 14,018 - 15,237 General 2,876 7,168 15,395 21 11 Natural gas reserves 696,216 246,585 312,465 21 47,725 Less accumulated depreciation 648,899 171,220 53,811 21 829 47,317 75,365 258,654 - 46,896 Construction work in progress 18,744 8,742 441 159,339 - 145,159 Nuclear fuel, at amortized cost 43,843 - - - - -

Net utility plant $ 109,904 $ 84,107 $ 259,095 $ 159,339 $ $ 46,896 $ 145,159 TRANSMISSION NATURAL GAS Southern Transmission Mead- Mead-System Phoenix Adelanto Pinedale Barnett Project Project Project Project Project Total Utility plant Production $ - $ - $ - $ $ $ 1,248,286 Transmission 674,606 54,390 172,798 931,049 General 18,911 2,721 473 1,254 48,830 Natural gas reserves - - - 50,831 70,218 121,049 693,517 57,111 173,271 52,085 70,218 2,349,214 Less accumulated depreciation 465,499 20,454 64,277 9,181 13,661 1,447,852 228,018 36,657 108,994 42,904 56,557 901,362 Construction work in progress 80,777 557 - 2,680 3,073 419,512 Nuclear fuel, at amortized cost - - - - - 43,843 Net utility plant $ 308,795 $ 37,214 $ 108,994 $ 45,584 $ 59,630 $ 1,364,717 61

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 3 - UTILITY PLANT - (continued)

A summary of changes in Utility Plant follows (amounts in thousands):

Balance Balance July 1, 2010 Additions Disposals Transfers June 30, 2011 Nondepreciable utility plant Land $ 42,658 $ - $ - $ 1,172 $ 43,830 Construction work in progress 413,757 160,739 (402) (293,181) 280,913 Construction work in progress - gas 5,755 10,629 (5,755) 10,629 Nuclear fuel* 43,843 12,249 (12,387) 43,705 Total nondepreciable utility plant 506,013 183,617 (12,789) (297,764) 379,077 Depreciable utility plant Production Nuclear generation (Palo Verde Project) 678,402 - (3,051) 12,878 688,229 Coal-fired plant (San Juan Unit 3 Project) 239,417 (12,201) 10,153 237,369 Gas-fired plant (Magnolia Power Project) 281,832 - 1,104 282,936 Green power 34,425 71 - 121,910 156,406 Transmission 902,601 818 (11) 120,167 1,023,575 General 48,830 2 (36) 25,798 74,594 Natural gas reserves 121,049 - 5,754 126,803 Total depreciable utility plant 2,306,556 891 (15,299) 297,764 2,589,912 Less accumulated depreciation (1,447,852) (81,759) 15,290 - (1,514,321)

Total utility plant, net $ 1,364,717 $ 102,749 $ (12,798) $ $ 1,454,668

• Nuclearfuel disposals representamortization.

NOTE 4 - INVESTMENTS The Authority's investment function operates within a legal framework established by Sections 6509.5 and 53600 et. seq. of the California Government Code, Indentures of Trust, and instruments governing financial arrangements entered into by the Authority to finance and operate Projects and the Authority's Investment Policy.

Guaranteed investment contracts (GICs) are contracts that guarantee the owner principal repayment and a specified interest rate for a predetermined period of time. GICs are typically issued by insurance companies and marketed to institutions that qualify for favorable tax status under federal laws. These types of securities provide institutions with guaranteed returns. GICs are negotiated on a case-by-case basis.

Based on SCPPA's Investment Policy, certain vehicles such as GICs, flexible repurchase agreements or forward debt service agreements, may be entered into only upon approval of the SCPPA Board. In addition, eligible securities and general limitations are derived from each Project's Indenture of Trust, the Government Code and SCPPA's evolving investment practices.

62

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 4 - INVESTMENTS - (continued)

The operative Indentures of Trust in which securities are authorized for investment purposes relate to the Palo Verde Project Bonds, the Southern Transmission System Project Bonds, the Hoover Uprating Project Bonds, the Mead-Phoenix Project Bonds, the Mead-Adelanto Project Bonds, the Multiple Project Fund Bonds, the San Juan Project Bonds, the Magnolia Power Project Bonds, the Natural Gas Projects Bonds, Prepaid Natural Gas Project No. 1 Bonds, the Canyon Power Project Bonds, the Milford Wind Phase 1 Project Bonds, the Linden Wind Project Bonds, the Tieton Project Bonds, and the Windy Point/Windy Flats Bonds. Authorized investments for the Projects' Stabilization Fund are set forth in a resolution approved by the Board in 1996.

Eligible securities include:

• United States Treasury Securities, which are bonds or other obligations secured by the full faith and credit of the United States of America;

• Federal Agency Obligations, which have the full financial backing of the U.S. Government;

• Government Sponsored Enterprise Obligations, which are created by acts of Congress to provide liquidity for selected lending programs targeted by Congress;

• Repurchase Agreements, which are collateralized loan contracts where the seller includes a written agreement to repurchase the securities at a later date for a specified amount;

• Negotiable Certificates of Deposit, which are deposit liabilities issued by a nationally or state-chartered bank, a savings or a federal association or by a state-licensed branch of a foreign bank which has short-term ratings of at least "A-i" by S&P and at least "P-i" by Moody's;

• Banker's Acceptances, a short-term draft or bill of exchange guaranteed for payment at face value to the holder of the instrument on its maturity date, which has a short-term rating of at least "A-i" by S&P and at least "P-i" by Moody's;

• Commercial Paper, a short-term unsecured promissory note issued by non-financial or financial firms with a rating of at least "A-i" by S&P and at least "P-i" by Moody's;

• Medium Term Notes rated "A" or better and only those issued by corporations organized and operating within the United States, or by depository institutions licensed by the United States or any state and operating within the United States;

• Equity-Linked Notes, which are categorized as medium-term corporate notes and are subject to the constraints set forth in the Government code and the Authority's Investment Policy.

63

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 4 - INVESTMENTS - (continued)

As of June 30, 2011, the Authority held the following as cash and cash equivalents and investments:

• Carrying Value Weighted Average Investment Type (in thousands) Maturity (Years) Percent of Portfolio U.S. Agency Securities $ 470,308 2.34 45.1%

Guaranteed Investment Contracts 227,163 8.05 21.8%

Money Market Funds 181,405 0.08 17.4%

Commercial Paper 91,387 0.02 8.8%

Negotiable CDs 71,271 0.03 6.8%

U.S. Discount Notes S- 0.0%

Banker's Acceptance 1,090 0.03 0.1%

Total $ 1,042,624 2.83 100.0%

The "weighted average maturity in years" calculation assumes that all investments are held until maturity.

Investments at June 30, 2011 are as follows (amounts in thousands):

GENERATION GREEN POWER TRANSMISSION Southern Magnolia Hoover Tieton Linden Transmission Mead-Palo Verde San juan Power Canyon Oprating Hydro- Milford I Windy Point Wind System Phoenix Mead- Adelaoto Project Project Project Power Project Project power Wind Project Energy Project Project Project U.S.Agencies $ 184,212 $ 14,655 $ 55,798 $ 28,542 $ 2,254 S 5,481 $ 24,361 S 10,911 $ 2,322 S 30,734 E 1,759 S 5,800 Agency Discount Notes Negotiable CDs 1,400 899 5,823 35,311 1,797 1,000 2,654 2,765 4,371 2,825 10,752 Bankers Acceptance - - - 1,090 Commercial Paper 16,364 719 2,900 6,400 1,379 100.23 12,615 4,540 18,625 1,500 GIC's 39,549 21,323 3,863 - - - 7,789 5.695 23,198 Money Market Funds 11,881 11,424 21,952 R,413 768 2,088 8,950 24,502 6,261 25,565 3p179 5,895 Total S 253,406 $ 49,020 $ 90,336 $ 78,666 $ 4,401 $ 9,366 $ 44,334 $ 51,772 $ 15,888 S 86,684 $ 13,458 S 45,145 Restricted investments $ 189,362 $ 32,596 $ 66,389 $ 37,048 $ 2,493 $ 7,278 $ 32,804 $ 18,280 $ 7,627 $ 61,520 $ 10,279 $ 39,262 Unrestricted investments 48,606 5,000 1,996 - 1,139 - 5,900 -

Cash and cash equivalents 15,438 11,424 21,951 41,618 769 2,088 11,450 27,r592 8,261 25,164 3,179 5E83 Total B 253,406 $ 49,020 $ 90,336 $ 78,666 $ 4,401 S 9,366 $ 44,334 S 51,772 $ 15,888 $ 86,684 $ 13,458 $ 45.145 POWER PURCHASEAGREEMENTS NATURALGAS MISCELLANEOUS Ormat Geo- Ameresco Multiple Project Projects' thermal MWD Small Pebble Milford II Chiquita Pinedale Barnett Prepaid Project Development Stabilization Project Hydro Springs Wind Landfill Gas Project Project Natural Gas Fund Fund Fund Total U.S.Agencies S $ $ $ $ 15,030 $ $ $ S $ 80,448 $ 470,307 Agency Discount Notes Negotiable CDs -

• 1,000 2,674 71,271 Bankers Acceptance 1,090 Commercial Paper 6,799 2,798 6,016 710 91,388 GiC's 10,493 40,124 13,931 61,198 227,163 Money Market Funds 4,651 1,358 506 3,342 2,119 14,860 6,615 5,290 - 1,231 10,955 181,405 Total $ 4.651 $ 1,358 $ 8,305 $ 3,342 $ 2,119 $ 45,855 $ 52,755 S 19,221 $ 61,198 $ 1,231 $ 100.113 $ 1,042,624 Restricted investments $ $ $ $ $

S 30,995 $ 46,140 S 13,931 $ 61,198 $ $ 89,158 $ 746,440 Unrestricted investments 62,641 Cash and cash equivalents 4,651 1,318 8,305 3,342 2,119 14,860 6,615 5,290 1,231 10,955 233,543 Total $ 4,651 $ 1,358 $ 8,305 $ 3,342 $ 2,119 $ 45,855 $ 52,755 $ 19,221 $ 61,198 $ 1,231 $ 100,113 $ 1,042,624 64

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 4 - INVESTMENTS - (continued)

Investments at June 30, 2010 are as follows (amounts in thousands):

GENERATION GREEN POWER TRANSMISSION Magnolia Canyon Hoover Southern Mead- Mead-Palo Verde San juan Power Power Uprating Tieton Hydro. Milford I Windy Point Linden Wind Transmission Phoenix Adelanto Proiect Proiect Project Proiect Project power Wind Project Energy System Proiect Project Proiect U.S.Agencies $ 174,119 $ 4,204 $ 51,366 $ 6,102 $ 1,706 $ $ 18.966 $ $ $ 28,995 $ 1,758 $ 5,808 Agency Discount Notes 7,994 1,5001 1,330 999 15,498 91900 Negotiable CDs 10,800 3,997 9,663 19,638 1,000 2,100 Bankers Acceptance - 660 5,198 Commercial Paper 111,798 2,999 GIC's 45,056 21,323 3,863 - 37.179 6,409 23,457 Money Market Funds 35,392 9,512 22,703 35.341 1,214 823 13o665 1,856 3575 36,973 4,104 12,488 Total $ 2kS,3k7 $ 47,030 $ 80,092 $ 162.904 $ 4,250 $ 823 $ 33,630  % 8,856 S 6,574 S 143,481 $ 13,271 $ 44,653 Restricted investments $ 185,157 $ 31,525 $ $ 127,563 $ 2,266 $ $ 19o965 $ $ 2,999 $ 98,169 $ 8,920 $ 31,265 Unresiricted investments 54,287 5,993 55,229 -

Cash anld cash equivalents 25,923 9,512 24,863 35,341 1,954 823 13,665 8,856 3,575 45,312 4,351 13,308 Total $ 265,367 $ 47,030 $ 80,092 $ 162,904 S 4,250 $ 823 $ 33,630 $ 8,856 S 6,574 $ 143,481 $ 13.271 $ 44,653 POWER PURCHASEAGREEMENTS NATURALGAS MISCELLANEOUS Ormat Geo- Project Projects' thermal MWD Small Pebble Pinedale Barnett Prepaid Multiple Development Stabilization Prolect Hydro Springs Proiect Project Natural Gas Project Fund Fund Fund Total U.S.Agencies $ $ $ $ 3,577 $ 503$ . $ .$ $ 86,018 $ 383,122 Agency Discount Notes 4,000 4,599 5,600 3,598 - 46,018 Negotiahle CDs 3,499 1,480 52,077 Bankers Acceptances 3,407 500 9,765 Commercial Paper 4,322 119,119 GIC's 14,644 41,478 14,654 70,784 - 278,847 Money Market Funds 511 1,541 2,196 13,122 4,778 2,596 - 2,000 15,374 226,764 Total $ 511 $ 1,541 $ 6,196 $ 47,170 $ 54,339 $ 70,784 2,000 $ 101,392 $ 1,115,712 Restricted investments $ - $ -5 29,949 $ 41,981 $ 18,252 $ 70,784 S $ 86,018 $ 754,13 Unrestricted investments 115,509 Cash and cash equivalents 511 1,541 6,196 17,221 12,358 2,596 2,000 15,374 245,390 Total $ 511 $ 1,541 $ 6,196 $ 47,170 $ 54,339 $ 20,848 $ 70,784 $ 2,000 $ 101,392 $ 1,115,712 Interest rate risk - The Authority's investment policy limits the maturity of its investments to a maximum of 5 years for investments in the United States Treasury, Federal Agency, and Government Sponsored Enterprise securities, excluding: investments held in Project Debt Service Reserve; long-term commitments or agreements approved by the Authority's Board; 5 years for medium term corporate notes; 270 days for commercial paper; 180 days for banker's acceptances; and one year for negotiable certificates of deposits.

Credit risk - Under its investment policy and the State of California Government Code, the Authority is subject to the prudent investor standard of care in managing all aspects of its portfolios. As an investment standard, each investment shall be made with "judgment and care under circumstances then prevailing, which a person of prudence, discretion and intelligence would exercise in the management of his/her affairs, not in regard for speculation, but in regard to the permanent disposition of funds, considering the probable income as well as the probable safety of the capital to be invested." The Authority's investment policy does not preclude active management of the portfolio to address market opportunities. All transactions shall be undertaken in the best interest of the Authority and its participants.

65

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 4 - INVESTMENTS - (continued)

The Authority's investment policy specifies that all project funds may be invested in shares of beneficial interest for temporary periods, pending disbursement or reinvestment as allowed under the state of California Government Code (Code). The Code requires that the fund must have either 1) attained the highest ranking or highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations (NRSRO) or 2) retained an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years experience managing money market mutual funds with assets under management in excess of five hundred million dollars. As of June 30, 2011, money market funds in the portfolios with Bank of New York Mellon have attained the following ratings: AAA by Standard and Poor's, and Aaa- by Moody's Investors Service; while money market funds in the portfolios with US Bank have attained ratings of A-l+ by Standard and Poor's, P-1 by Moody's Investors Service, and Fl+ by Fitch Ratings.

The U.S. government agency securities in the portfolio consist of securities issued by government-sponsored enterprises, which are not explicitly guaranteed by the U.S. government. As of June 30, 2011 and 2010, the U.S.

government agency securities in the portfolio carried the highest possible credit ratings by the NRSRO's that rated them.

The Guaranteed Investment Contracts in the portfolio with American International Group (AIG) consist of securities issued by corporations and carry a rating of A- by Standard and Poor's, Baal by Moody's Investors Service and BBB by Fitch Rating. The Guaranteed Investment Contracts in the portfolio with PNC carry a rating of A by Standard and Poor's, A3 by Moody's Investors Service, and A+ by Fitch Ratings.

The Investment Agreement Contract in the portfolio with Financial Security Assurance (FSA) consists of securities issued by corporations and carries a rating of AA+ by Standard and Poor's, and Aa3 by Moody's Investors Service.

Concentration of credit risk - The Authority's investment policy specifies a 50% to 100% limitation on the amount that can be invested in U.S. government agency securities, except in certain issues of other Authority projects, such as the Mead-Adelanto and Mead-Phoenix projects.

Of the Authority's total investments as of June 30, 2011, $94 million (9%) was invested in securities issued by the Federal Home Loan Bank; $92 million (9%) was invested with Farm Credit Bank; $93.6 million (9%) was invested in GIC's with AIG; $127 million (12%) was invested in securities issued by the Federal National Mortgage Association; $148.7 million (14%) was invested with Federal Home Loan Mortgage; $90 million (8%)

was invested in GIC's with PNC Financial Securities Group.

Of the Authority's total investments as of June 30, 2010, $142.0 million (13%) was invested in securities issued by the Federal Home Loan Bank; $78.6 million (7%) was invested with Farm Credit Bank; $129.3 million (12%)

was invested in GIC's with AIG; $128.5 million (12%) was invested in securities issued by the Federal National Mortgage Association; $65.1 million (6%) was invested with Federal Home Loan Mortgage; $100.4 million (9%)

was invested in GIC's with PNC Financial Securities Group.

66

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS Objective of the swaps - SCPPA uses derivative instruments to hedge its exposure to changing interest rates through the use of interest rate swaps and also to manage its exposure to fluctuating natural gas prices through the use of natural gas hedge contracts. An interest rate swap is the exchange of payments between SCPPA and a counterparty in order to potentially obtain a lower cost of funding than traditional fixed rate bonds, or to hedge interest rate exposure on SCPPA's assets or liabilities. The Authority has entered into eight separate pay-fixed, receive-variable interest rate swaps and four basis swaps to produce savings or to result in lower costs over the life of each transaction than what the Authority would have paid using fixed-rate debt. While these instruments carry additional risks, SCPPA's swap policy and favorable negotiations have helped to reduce such risks.

Effective July 1, 2009, the Authority adopted Statement No. 53 of the GAS1, Accounting and FinancialReporting for Derivative Instruments. This Statement addresses the recognition, measurement, and disclosure of information regarding derivative instruments. In accordance with Statement No. 53, SCPPA recognizes the changes in fair values of effective hedging derivative instruments as either assets or liabilities on the Authority's balance sheet and includes changes in the fair value of an investment derivative instrument in earnings.

For fiscal year ending June 30, 2010, the balance for the swaps deemed to qualify for hedge accounting under GASB 53 was a net liability of $96.3 million. During fiscal year ending June 30, 2011, the liability decreased by

$94.1 million for an ending net liability balance of $2.2 million. For the swaps that were deemed investment instruments under GASB 53, the changes were reported in the statement of operations. The net liability balance for fiscal year ending June 30, 2010 for the investment instruments was $35.5 million, but during fiscal year ending June 30, 2011, the liability decreased by $21.1 million.

Terms, fair values, and credit risk - The terms, including the fair values and credit ratings of the counterparties under the outstanding swaps as of June 30, 2011, are included on the following page. In most cases, and with the exclusion of basis swaps, the notional amount of any swap matches the principal amount of the associated debt. Except as discussed under the rollover risk, and when associated with basis swaps, the Authority's swap agreements contain scheduled reductions to outstanding notional amounts that are expected to approximately follow scheduled or anticipated reductions in the associated "bonds payable" category.

67

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS - (continued)

Fair Values Swap Notional Amount Effective (in Termination Counterparty (in thousands) Date Fixed Rate Paid Variable Rate Received thousands) Date Credit Rating*

MPP 2010-1 Swap (Barclays) $ 100,000 5/11/2010 SIFMA 80.4% of 3-month LIBOR $ (1,892) 7/1/2036 AA-/Aa3/AA-MPP 2010-2 Swap (RBC) 100,000 5/12/2010 SIFMA 81% of3-month LIBOR (1,552) 7/1/2036 AA-/Aal/AA MPP 2009-1 Swap (Citibank) 111,159 4/21/2009 3.125% SIFMA 1,740 7/1/2036 A+/A1/A+

MPP 2009-2 Swap (IPMorgan). 111.035 4/21/2009 3.129% SIFMA 1,677 7/1/2036 AA-/Aal/AA-STS 2006 Amended Swap 100,000 5/1/2016 SIFMA 58.99% of 10-yr LIBOR CMS rate plus .664% 4,690 7/1/2023 AA-/Aal/AA-STSSwaption/Swap 125,000 2/6/2001 4.250% 60% of LIBOR (29,283) 7/1/2022 A/A3/A+

STS 2001 Swap 79,795 6/7/2001 4.240% SIFMA less .40% (14,683) 7/1/2021 A÷/Aa3/A+

MP 2004 Amended Swap 28,700 10/2/2008 3.925% 65% of LIBOR (4,259) 7/1/2020 A,/Aa3/A+

MA 2007 Swap 100,000 6/1/2018 1-month LIBOR 100% of 10-yr LIBOR CMS rate less .414% 3,S26 9/15/2030 AA-/Aal/AA-MA 2004 Amended Swap 96,025 10/2/2008 3,921% 65% of LIROR (14,225) 7/1/2020 A+/Aa3/A+

Prepaid Natural Gas 2007 Swap 36.000 10/11/2007 5,0475% 67% of 3-Month LIBOR plus 1.47% (1,671) 11/1/2038 A/Aa3/A+

$ 987,714 $ (59,936)

S&P/Moody's/Fitch ratings MAG 2010-1 Swap - In May 2010, SCPPA executed $100,000,000 SIFMA/LIBOR floating-to-floating basis swap related to Magnolia Power Project A Refunding Bonds 2009-1. SCPPA pays the 6-month average of the weekly reset SIFMA Municipal Swap Index semi-annually on an Actual/Actual basis in exchange for receiving 80.4% of average 3-Month LIBOR, reset quarterly and paid semi-annually on an Actual/360 day basis. The swap expires on July 1, 2036.

MAG 2010-2 Swap - In May 2010, SCPPA executed $100,000,000 SIFMA/LIBOR floating-to-floating basis swap related to Magnolia Power Project A Refunding Bonds 2009-2. SCPPA pays the 6-month average of the weekly reset SIFMA Municipal Swap Index semi-annually on an Actual/Actual basis in exchange for receiving 81.0% of average 3-Month LIBOR, reset quarterly and paid semi-annually on an Actual/360 day basis. The swap expires on July 1, 2036.

MAG 2009-1 Swap (Restated) - This swap transaction amends the MAG 2007-1 Swap, which had an original trade date of April 30, 2007. The transaction was amended and restated as of April 21, 2009. The Authority pays its counterparty a fixed rate of 3.125% in exchange for receiving 100% of the Securities Industry and Financial Markets Association Swap Index (SIFMA) on a notional amount of $111.7 million. In order to provide more favorable terms to the participants, SCPPA made a payment of $15.7 million to the counterparty which has been deferred and is being amortized as an interest yield adjustment over the life of the swap. The amendment allowed the parties to recoupon the swaps, change the collateral posting requirements, and to move to uninsured swaps.

68

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS - (continued)

MAG 2009-2 Swap (Restated) - This swap transaction amends the MAG 2007-1 Swap. The original transaction was novated from Bear Stearns to JP Morgan on November 6, 2008 and was amended and restated on April 21, 2009. The Authority pays its counterparty a fixed rate of 3.129% in exchange for receiving 100% of the SIFMA Index on a notional amount of $111.5 million. In order to provide more favorable terms to the participants, SCPPA made a payment of $15.7 million to the counterparty which has been deferred and is being amortized as an interest yield adjustment over the life of the swap. The amendment allowed the parties to recoupon the swaps, change the collateral posting requirements, and to move to uninsured swaps.

• STS 2006 Swap (Amended) - In July 2006, the Authority executed an amendment to the STS $100 million, floating-to-floating fixed-spread basis swap entered into in November 2004. Under an amendment, which became effective on August 1, 2007, SCPPA continued to pay the swap counterparty the SIFMA index but began to receive 58.99% of the 10-Year LIBOR plus 66.4 basis points, instead of 65% of the 1-month LIBOR plus 66.4 basis points. In addition, the STS 2006 Constant Maturity Swap was suspended for 5 years effective May 7, 2008, for which SCPPA received $3.7 million as compensation for the suspension of the cash flows of the 2006 Basis Swap, which was deferred to be amortized over the suspension term. The notional amount of the Swap Agreement remains at $100 million. On March 22, 2011, the suspension of the STS 2006 Swap was further extended to May 2016 for additional compensation of $2.6 million, which was also deferred and amortized over the suspension term. The swap expires on July 1, 2023.

• STS Swaption/Swap - In February 2001, the Authority entered into a transaction whereby it sold an option (the Swaption) on a floating-to-fixed interest rate swap. The Swaption was exercised on April 1, 2002. The

• floating rate on the swap paid by the counterparty is 60% of the one-month LIBOR; the annual fixed rate on the swap paid by the Authority is 4.25%. In exchange for the right to exercise the Swaption, the counterparty paid the Authority a one-time up front option premium amount of $7.9 million which has been deferred and is being amortized as an interest yield adjustment over the life of the option. The counterparty has the option to cancel the agreement at the counterparty's discretion. The swap expires on July 1, 2022.

" STS 2001 Swap - In June 2001, the Authority entered into an interest rate swap agreement with a counterparty for the purpose of hedging against interest rate variations arising from the issuance of the Southern Transmission Project 2001 Subordinate Refunding Series A Revenue Bonds. The notional amount of the Swap Agreement is equal to the par value of the bonds. The Swap Agreement provides for the Authority to make payments to the counterparty at a fixed rate of 4.24%, and for the counterparty to make reciprocal payments based on a variable rate. The reset dates of the variable rate occur weekly and the rate for a reset date will be the rate determined by the SIFMA Index minus 40 basis points. The counterparty has the option to cancel the agreement on July 5, 2006 and on every Fixed Rate Payer Payment Date, thereafter, should the SIFMA index average more than 7% over a consecutive 180-day period. The floating rates on the bonds were 3.00% and 0.37% at June 30, 2011 and 2010, respectively. The swap expires on July 1, 2021.

69

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS - (continued)

STS 1991 Swap (Terminated) - On January 25, 2011, the STS 1991 bonds were refunded and the STS 1991 Swap terminated. In fiscal year 1991, the Authority entered into an interest rate swap agreement with counterparty for the purpose of hedging against interest rate fluctuations arising from the issuance of the 1991 Subordinate Refunding Series Southern Transmission Project Revenue Bonds. The notional amount of the Swap Agreement was equal to the par value of the bonds. Under the Swap Agreement, the Authority paid the counterparty a fixed rate of 6.38%; in exchange, the Authority received payments mirroring the bond variable coupon rate 0.25% at June 30, 2010. (see Note 6)

• MP 2004 Swap (Amended) - The MP 2004 Swap was amended and restated on October 2, 2008 to amend the fixed rate from 3.894% to 3.925% and to remove the insurance provisions and to adjust the collateral posting requirements. All other terms and provisions of the original agreement prevail. The amended swap was also transferred to the MP 2008 Refunding Bonds.

In connection with the issuance of the Mead-Phoenix Project 2004 Revenue Bonds Series A auction-rate security in May 2004, the Authority entered into an interest rate swap on March 3, 2004. The floating-to-fixed rate swap created synthetic fixed-rate debt for the Authority. Under the Swap Agreement, the Authority pays the counterparty a fixed rate of 3.894% and in exchange the Authority receives a floating rate index equal to 65% of the one-month LIBOR. The swap agreement expires July 1, 2020. The Authority received approximately $1.8 million in an upfront payment in connection with the execution of the swap, which has been deferred and is being amortized as an interest yield adjustment over the life of the option. The floating rate on the related bonds was 0.03% and 0.12% at June 30, 2011 and 2010, respectively. The MP 2004 bonds were refunded on October 2, 2008 and the related interest rate swap transferred to the MP 2008 Refunding Bonds.

• MA 2007 Swap (Amended) - In January 2007, the Authority entered into a Constant Maturity Swap (CMS) in connection with its outstanding Mead-Adelanto Project. The transaction consisted of a $100 million basis swap and does not relate to any single series of the Mead-Adelanto bonds. The amended swap terms became effective on February 1, 2008 and the Authority pays the swap counterparty 100% of the 1-month LIBOR in exchange for receiving 100% of the 10-year LIBOR minus 41.4 basis points. The swap expires on September 15, 2030. On November 5, 2008 the MA 2007 Swap was novated from Bear Stearns to JP Morgan.

In addition, the swap was suspended until November 1, 2011. As part of the novation, the credit terms of the existing swap agreements will be maintained and SCPPA received $4.1 million from JP Morgan as compensation for the suspension of the cash flows of the MA 2007 CMS. The $4.1 million was deferred to be amortized over the suspension term.

In June 2010, the MA 2007 CMS Agreement was amended to extend the suspension period from November 1, 2011 to June 1, 2018. SCPPA received $5 million as compensation for the suspension of the cash flows of the swap, which was deferred and is being amortized over the suspension term. The credit terms of the existing swap agreements remains unchanged.

• MAj2004 Swap (Amended) - The MA 2004 Swap was amended and restated on October 2, 2008 to amend the fixed rate from 3.89% to 3.921% and to remove the insurance provisions and to adjust collateral posting requirements. All other terms and provisions of the original agreement prevail. The amended swap was also transferred to the MA 2008 Refunding Bonds.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS - (continued)

In connection with the issuance of the 2004 Mead-Adelanto Revenue Bonds Series A auction-rate security in May 2004, the Authority entered into an interest rate swap on March 3, 2004. The floating-to-fixed rate swap created synthetic fixed-rate debt for the Authority. Under the Swap Agreement, the Authority pays the counterparty a fixed rate of 3.89% for the swap and in exchange the Authority receives a floating rate index equal to 65% of the one-month LIBOR. The swap agreement expires July 1, 2020. The Authority received approximately $5.9 million in an upfront payment in connection with the execution of the swap, which has been deferred and is being amortized as an interest yield adjustment over the life of the swap.

Approximately $45.1 million in Mead-Adelanto 2004 Project Revenue Bonds Series A are not swapped and remain floating-rate bonds. The average floating rate on the related bonds was 0.03% and 0.12% as of June 30, 2011 and 2010 respectively. The MP 2004 bonds were refunded on October 2, 2008 and the related interest rate swap transferred to the MA 2008 Refunding Bonds.

" PNG 2007 Swap - In October 2007, SCPPA entered into an interest rate swap agreement in connection with the issuance of the Prepaid Natural Gas Project No. 1 Series 2007B Bonds. The swap hedges the interest-rate risk on the LIBOR Floating-rate bonds, where SCPPA pays a fixed rate of 5.0475% in exchange for receiving 67% of 3-month LIBOR plus 1.47%. The floating index on the swap exactly matches the coupon on the Bonds and therefore provides a hedge with no tax or basis risk. The swap expires on November 1, 2035.

• PNG 2007 Commodity Swap - At the same time, SCPPA also entered into five commodity price swap agreements, on behalf of each of the Prepaid Natural Gas Project No. 1 Participants, in order to hedge against reductions to its gas sale revenues resulting from changes in monthly market index prices. SCPPA pays a floating natural gas price over a thirty-year period and receives specified fixed natural gas prices at an agreed pricing point as determined in the Prepaid Natural Gas No. 1 Agreements. The swaps became effective on July 1, 2008 and will all expire on September 30, 2035.

Fair value - Fair values take into consideration the prevailing interest rate environment, the specific terms and conditions of a given transaction and any upfront payments that were received. All fair values were estimated using the zero-coupon discounting method. This method calculates the future payments required by the swap, assuming that the current forward rates implied by the yield curve are the market's best estimate of future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for a hypothetical zero-coupon rate bond due on the date of each future net settlement on the swaps. While some of SCPPA's current mark to market values are negative, this valuation would be realized only if the swaps were terminated at the valuation date and only SCPPA retains the right to optionally terminate most of the transactions.

Interest rate risk - Interest rate risk is the risk that changes in interest rates will adversely affect the fair values of SCPPA's financial instruments or cash flows. SCPPA is exposed to interest rate risk on its pay-fixed, receive variable interest rate swaps. As the LIBOR or the SecUrities Industry and Financial Markets Association (SIFMA) swap index decreases, SCPPA's net payment on swaps increases. In addition, SCPPA is exposed to interest rate risk if the counterparty to the swap defaults or if the swap is terminated.

Market access risk - Market access risk is the risk that SCPPA will not be able to enter credit markets or that credit will become more costly. SCPPA's financial rating is tied to the credit strength of the major participants of the specific project for which each financial instrument is issued. SCPPA is also exposed to market access' risks caused by disruptions in the municipal bond market.

71

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS - (continued)

Credit risk - As of June 30, 2011, the net fair values of the Authority's applicable swaps for which payments were made were negative for each counterparty except for the STS 2006, MA 2007, MAG 2009-1 and MAG 2009-2 swaps. However, should interest rates change and the fair values of the swaps become positive, the Authority may be exposed to credit risk in the amount of the derivatives' fair value.

The swap agreements contain varying collateral agreements with the counterparties. The swaps require full collateralization of the fair value of the swap should the counterparty's (or if applicable, the guarantors of the counterparty's) credit rating fall below AA- as issued by Standard & Poor's or Aa3 as issued by Moody's Investors Service for the Amended STS 2006, and the MA 2007 Swaps; A+/A1 for the STS 2001; A/A2 for the PNG 2007 Commodity Swap; and A-/A3 for the MAG 2010-1, MAG 2010-2, MAG 2009-1, MAG 2009-2 and the STS Swaption/Swap. The MP 2004 and the MA 2004 Swaps, all require full collateralization if rating fall below A as issued by Fitch, and A2 as issued by Moody's. Collateral on all swaps is to be in the form of U.S. government securities held by a third-party custodian.

The swap agreements provide that when the Authority has more than one derivative transaction with a given counterparty involving the same Authority project (and having the same swap/bond insurer), should one party become insolvent or otherwise default on its obligations, close-out netting provisions permit the non-defaulting party to accelerate and terminate all such related transactions and net the transactions' fair values so that a single sum will be owed by, or owed to, the non-defaulting party.

Basis risk - Basis risk is the risk that the interest rate paid by the Authority on underlying variable rate bonds to bondholders exceeds the variable swap rate received from a counterparty, and the risk that both legs of a basis swap are not exactly equal. With the exception of the PNG 2007 Swap, the Authority bears basis risk on each of its swaps. The PNG 2007 Swap is perfectly hedged since the counterparty pays the Authority its actual variable bond rate on the related bonds. All the other swaps have a basis risk since under each of those swaps the Authority received a percentage of LIBOR or a percentage of, or spread to SIFMA to offset the actual variable bond rate or variable swap rate the Authority pays on any related bonds or on any basis swap. The Authority is exposed to basis risk should the floating rate that it receives on a swap be less than the actual variable rate the Authority pays on any related bonds; or in the case of the floating-to-floating fixed-spread basis swap, less than the variable rate paid to the swap counterparty.

Depending on the magnitude and duration of any basis risk shortfall, the expected cost savings from a swap may not be fully realized. The 2001 swap is based on SIFMA rate minus 40 basis points (bps); similar to the LIBOR-based swaps, SIFMA minus 40 bps may not exactly hedge the underlying variable rate. As of June 30, 2011, the SIFMA rate was 0.128%; the SIFMA rate, minus 40 bps, was -0.277%; 60% of LIBOR was 0.115%; 65% of LIBOR was 0.124%; and 67% of 3-month LIBOR plus 147 bps was 1.6530%.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS - (continued)

The following is a summary of interest rates paid to and received from the counterparties as of June 30, 2011:

Type of Derivative Swaption/ MP 2008 MA 2008 MAG 2009- MAG 2009. MAG 2010- MAG 2010- NG Prepay Swap 2001oSwap Swap Swap 1 Swap 2 Swap 1 Swap 2 Swap 2007 Swap Payments to counterparty 4.250% 4.240% 3.925% 3.921% 3.125% 3.129% 0.128% 0.128% 5.048%

Less, variable payments from counterparty 0.115% -0.277% 0.124% 0.124% 0.128% 0.128% 0.245% 0.247% 1.6S3%

Net interest rate swap payments 4.135% 4.517% 3.801% 3.797% 2.997% 3.001% -0.117% -0.119% 3.394%

Add, variable-rate bond coupon payments N/A 3.000% 0.030% 0.030% 0.070% 0.060% N/A N/A 1.653%

Synthetic interest rate on bonds 4.135% 7.517% 3.831% 3.827% 3.067% 3.061% -0.117% -0.119% 5.048%

Termination risk - The Authority or the counterparty may terminate any of the swaps if the other party fails to perform under the terms of the contract. In addition, the Swap/Swaption provides the counterparty with an option to cancel the swap agreement if the consecutive 180-day averaged rate of the SIFMA index exceeds 7.0%.

The counterparty for the 2001 Swap also has a cancellation option which can be executed by the counterparty at their discretion. If any of the swaps were terminated, any associated variable rate bonds would no longer be hedged to a fixed rate. If at the time of termination the swap has a negative fair value, the Authority would be liable to the counterparty for a payment equal to the swap's fair value.

Rollover risk - Rollover risk is the risk that the swap contract is not co-terminus with the related bonds. The Authority is exposed to rollover risk on the STS Swap/Swaption and the STS 2001 Swap because the counterparty has the option to terminate the agreement prior to the maturity of the associated debt. In the event that this swap terminates, the Authority would be exposed to variable interest rates on the underlying bonds.

The STS 2001 Subordinate Refunding Series Bond is exposed to rollover risk. The final maturity date and the swap termination dated for the STS 2001 Bonds is July 1, 2021.

73

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 5 - DERIVATIVE INSTRUMENTS - (continued)

Swap payments and associated debt - Using rates as of June 30, 2011, debt service requirements of the Authority's outstanding variable rate debt and net swap payments are as follows. As rates vary, variable rate bond interest payments and net swap payments will vary.

(Amounts in thousands)

Variable-Rate Bon ds Interest Rate Fiscal Year Ending June 30, Principal Initerest Swaps, Net Total 2012 $ 22,620 $ 2,671 $ 20,009 $ 22,680 2013 22,740 2,655 19,076 21,731 2014 53,770 2,617 16,860 19,477 2015 23,095 2,601 15,913 18,514 2016 19,425 2,169 15,063 17,232 2017-2021 194,305 5,222 52,832 58,054 2022-2026 36,180 769 33,944 34,713 2027-2031 167,120 572 25,336 25,908 2032-2036 217,945 628 15,046 15,674 2037-2041 64,220

$ 821,420 $ 19,904 $ 214,079 $ 233,983 The following table shows the changes in fair value of derivative instruments (amounts in thousands):

Change in Fair Description June30,2010 Value June 30, 2011 Assets Magnolia - Derivative instruments $ 1,673 $ 1,744 $ 3,417 STS - Deferred debits 69,370 (69,370)

STS - Derivative instruments 173 4,517 4,690 Mead Phoenix - Deferred debits 4,724 (4,724)

Mead Adelanto - Deferred debits 15,777 (12,251) 3,526 Prepaid Natural Gas - Deferred debits 8,097 (2,422) 5,675

$ 99,814 $ (82,506) $ 17,308 Liabilities Magnolia - Deferred credits $ 1,673 $ 1,744 $ 3,417 Magnolia - Derivative instruments 9,538 (6,094) 3,444 STS - Derivative instruments 95,840 (51,873) 43,967 Mead Phoenix - Derivative instruments 4,724 (465) 4,259 Mead Adelanto - Derivative instruments 15,422 (.1,197) 14,225 Prepaid Natural Gas - Derivative instruments 8,097 (2,422) 5,675

$ 135,294 $ (60,307) $ 74,987 74

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT Long-term debt outstanding at June 30, 2011 consisted of "new money" bonds, refunding bonds, and subordinate refunding bonds due in varying annual amounts through July 1, 2040. The new money bonds were issued to finance the purchase and construction or acquisition of the Authority's interest in each of the Projects.

The subordinate refunding bonds were issued to refund specified new money bonds.

In accordance with the bond indentures, the new money bonds and refunding bonds are special, limited obligations of the Authority. With the exception of the Magnolia Power Project B, Lease Revenue Bonds (City of Cerritos, California) 2003-1 (Project B Bonds), the bonds issued by each project are payable solely from and secured solely by interests in that project as follows:

• Proceeds from the sale of bonds;

• All revenues, incomes, rents and receipts attributable to that project and interest earned on securities held under the bond indenture or indentures; and

• All funds established by the indenture or indentures.

The Authority has agreed to certain covenants with respect to bonded indebtedness, including the requirement to enforce the natural gas, power, and transmission sales agreements with the participants. At the option of the Authority, all outstanding new money bonds and refunding bonds are subject to redemption prior to maturity, except for the 2006-1 Magnolia Revenue Bonds; the 2002 Subordinate Refunding Series B Bonds, the 2011 Series A and B Subordinate Refunding Bonds, and portions of the 1988A Refunding Bonds, the 1992, the 2008A and the 2009A Subordinate Refunding Bonds issued for the Southern Transmission System; the 2002A San Juan Revenue Bonds; a total of $97 million of the Multiple Project Revenue Bonds; the 2007 Series A and B Prepaid Natural Gas Project No. 1 Bonds; portions of the 2010 Series A and B Canyon Power Revenue Bonds; portions of the 2010-1 Milford 1 Wind Revenue Bonds; portions of the 2010 Series A Linden Wind Revenue Bonds; and portions of the 2010-1 Windy Point/Windy Flats Revenue Bonds.

Variable rate debt includes debt with rates based on daily, weekly and long term rates as determined by a Remarketing Agent.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT - (continued)

A summary of changes in long-term debt follows (amounts in thousands):

GENERATION GREEN POWER Hoover Palo Verde San Juan Magnolia Canyon Power Uprating Tieton Hydro- Milford I Windy Point Linden Wind Project Project Power Project Project Project . Wind Project Energy Total long-term debt at June 30, 2010 74,157 $ 127,268 S 360,291 $ 312,998 S 12,752 $ 47,705 S 253,813 $ $ 140,211 Total debt due within one year at June 30, 2010 10,030 11,715 9,010 - 1,540 - -

Total debt at June 30, 2010 04,187 138,983 369,301 312,998 14,292 47,705 253,813 140,211 Principal payments (10,030) (11,710) (9,010) (1,540) -

Revenue bonds issued -5 014,160 Ponds refunded/defeased (47.655) (139,680)

Refunding bonds issued 52,730 138,325 Change in unamortized debt-related costs, net 1761 (749) 148 (757) 254 1,312 (2,211) 62,667 9,728 Total debt at June 30, 2011 75,918 126,519 360,439 312,241 13,006 54,092 251,602 576,827 148,584 Total debt due within one year at June 30, 2011 0,0t30 14 9395 (lt600) (6801 (7,59ý5 (13,7601 (2,510)

Total long-term debt at June 30, 2011 $ 17 31-2,241 $ 110406 53.412 $ 44,007$ 063067 $ 146_E74 TRANSMISSION NATURALGAS MISC.

Southern Mead-Transmission Mead- Phoenix Adelanto Barnett Prepaid Multiple System Project Project Project Pinedale Project Project Natural Gas Project Fund Total Total long-term debt at June 30, 2010 $ 793,763 $ 51,428 $ 164,275 $ 35,153 $ 82,662 $ 331,963 $ 34.976 $ 2,823.415 Total debt due within one year at June 30, 2010 32,990 4,895 13,490 2,929 6,941 5,715 11.400 110.655 Total debt at (one 30, 2010 026,753 56,323 177,765 38,082 89.603 337,670 46.376 2,934.070 Principal payments (32.990) (4,895) (13,490) (2,930) (6,940) (5,715) (11.400) (110,655)

Revenae bonds issued 514,160 Ponds refunded/defeased (216.600) (403.935)

Refunding bonds issued 196,990 388,045 Change in unamnortized debt-related costs, net 1.21S 664 1,927 - (332) 1,275 76,902 Total debt at June 30, 2011 775,368 52.092 166,202 35,152 82.663 331,631 36,251 3.398,507 Total debt due within one year at June 30. 2011 L279 901 7 14,3 05 13.368* (7,972) _ 5.295* 112,1001 113744501 Total long-term debt at June 30, 2011 $7 747, 373 $ 69.2 $015.897 31.8 $ 74,691 326.336 $ 24.11 $ . 1 Palo Verde Project - Debt consists of subordinate refunding series bonds with variable interest rates and final maturities during 2017.

San Juan Project - Debt consists of refunding series bonds with fixed interest rates between 5.0% and 5.5% and final maturities during 2020.

Magnolia Power Project - Debt consists of revenue and refunding series bonds with variable and fixed interest rates between 3.0% and 5.25% with final maturities occurring in 2036.

Of the outstanding Magnolia Power Project Revenue Bonds, $13.0 million of "Project B Bonds" are secured by lease rental payments to be made by the City of Cerritos (the City) in connection with the lease of certain facilities and premises owned by the City to the Authority and the leaseback of such facilities and premises to the City. The Base Rental Payments will be equal to the principal and interest on the Project B Bonds. In accordance with the Assignment Agreement between the Authority and the Trustee, the Authority will assign certain of its rights under the Lease, including its right to receive the Base Rental Payments, to the Trustee for the benefit of the owners of the Project B Bonds.

The City has covenanted to budget and appropriate sufficient funds to make all payments required to be made under the Lease. The Lease has a term of 55 years.

Canyon Power Project - As of June 30, 2011, debt consists of revenue bonds with fixed interest rates ranging from 4.0% to 5.943% and final maturity occurring in 2040.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT - (continued)

Canyon Power Project Revenue Bonds - On June 9, 2010, SCPPA issued $301.5 million of the Canyon Power Project Revenue Bonds consisting of $110.5 million of 2010 Series A Fixed Rate Bonds and $191.0 million of the Series B, Taxable Build America Bonds (the 2010 Series B Bonds), together the 2010 Bonds. The 2010 Bonds were issued to retire the $170.4 million outstanding Canyon Power Project Revenue Notes, 2009 Series A; to provide additional costs of development, construction, and acquisition of the Canyon Power Project (including a portion of the interest accruing on the 2010 Bonds through October 1, 2011; to fund a debt service reserve for each Series of the 2010 Bonds; and to pay costs of issuance related to the 2010 Bonds. The 2010A Bonds due on or before 7/1/2019 are not subject to redemption prior to maturity. The 2010 Bonds were issued at a true interest cost of 3.90%. This transaction resulted in a net refunding loss for accounting purposes of $0.4 million.

The 2010 Series B Bonds were issued as Build America Bonds that are "qualified bonds" under the provisions of the American Recovery and Reinvestment Act of 2009. The interest on these bonds will not be excluded from gross income for federal income purposes, but will be exempt from the State of California personal income taxes.

As such, the Authority expects to receive a cash subsidy from the United States Treasury equal to 35% of the interest payable on the 2010 Series B Bonds which will be applied to offset the interest costs of the 2010 Series B Bonds.

Canyon Power ProjectRevenue Notes - On November 18, 2009, SCPPA issued $170.4 million of the Canyon Power Project 2009 Series A Revenue Notes, which matured on August 3, 2010. The 2009 Notes were issued to refund all of the $104 million outstanding Canyon Power Project, Revenue Notes, 2008 Series A and to fund the remaining costs of construction. These notes are not subject to optional or mandatory redemption prior to maturity. The true interest cost of the Revenue Notes was 0.67%.

Hoover Uprating Project - Debt consists of refunding series bonds with fixed interest rates between 4.0% and 5.25% and a final maturity occurring in 2017.

Tieton Hydropower Project - As of June 30, 2011, debt consists of revenue bonds with fixed interest rates between 1.69% and 5.80% and a final maturity occurring in 2040.

Tieton Hydropower Project Revenue Bonds - On August 10, 2010, SCPPA issued $36.3 million and $16.4 million of the Tieton Hydropower Project, Revenue Bonds, 2010 Series A (Tax Exempt Bonds) and B (Taxable Bonds),

respectively, in the aggregate principal amount of $52.7 million. The 2010 Bonds were issued to retire the $47.7 million outstanding Revenue Notes, 2009 Series A and B. The 2010 Bonds are also being issued to finance additional costs of development and construction of the Project, to fund a Debt Service Reserve, and to pay costs of issuance relating to the 2010 Bonds. These notes are subject to optional or mandatory redemption prior to maturity. The true interest cost of the Revenue Bonds was 4.76%.

Tieton Hydropower Project Revenue Notes - On November 24, 2009, SCPPA issued $33.4 million and $14.3 million of the Tieton Hydropower Project, Revenue Notes, 2009 Series A and B, respectively, in the aggregate principal amount of $47.7 million. The 2009 Notes were issued to provide interim financing for the costs of acquisition of the Tieton Hydropower Project, a 13.6 MW nameplate capacity hydroelectric plant and an approximately 21-mile, 115 kV transmission line from the plant to the point of interconnection with the electrical grid and related assets, property and contractual rights. The 2009 Notes are also being issued to fund a Reserve and Contingency Fund and costs of issuance relating to the 2009 Notes. These notes are not subject to optional or mandatory redemption prior to maturity. The true interest cost of the Revenue Notes was 0.76%.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT - (continued)

Milford 1 Wind Project - As of June 30, 2011, debt consists of revenue bonds with fixed interest rates ranging from 2.0% to 5.0% and final maturity occurring in 2030.

Milford Wind CorridorPhase 1 Revenue Bonds - On February 9, 2010, SCPPA issued $237.2 million Milford Wind Corridor Phase 1 Project, Revenue Bonds, 2010-1. These fixed rate bonds were issued for the purpose of financing the prepayment of a specified supply of electricity from a wind farm located in Milford Utah (the Facility); to fund a deposit to the 2010-1 Debt Service Reserve Account; and to pay the related costs of issuance of the 2010-1 Bonds. The 2010-1 Bonds maturing on or before July 1, 2019 are not subject to redemption prior to maturity, while the 2010-1 Bonds maturing on or after July 1, 2020 are subject to optional redemption, without premium, at the option of SCPPA. The 2010 Bonds were issued at a true interest cost of 4.16%.

Linden Wind Energy Project - As of June 30, 2011, debt consists of revenue bonds with fixed interest rates between 2.0% and 5.92% and final maturity occurring in 2035.

Linden Wind Energy Project Revenue Bonds - On September 28, 2010, SCPPA issued $138.3 million of the Linden Wind Energy Project Revenue Bonds, consisting of $96.8 million of 2010 Series A Tax Exempt Bonds and $41.5 million of the Series B Taxable Build America Bonds, together the 2010 Bonds. The 2010 Bonds were issued to retire the $139.7 million outstanding Linden Wind Energy Revenue Notes, 2009 Series A, to finance additional costs of acquisition of the Linden Wind Energy Project to fund a debt service reserve for each Series of the 2010 Bonds and to pay related costs of issuance. The 2010 Series A Bonds maturing on and before July 1, 2020 are not subject to redemption prior to maturity, while the 2010 Series B Bonds are subject to optional or mandatory redemption. The true interest cost of the 2010 Bonds was 3.72%.

The 2010 Series B Bonds were issued as Build America Bonds that are "qualified bonds" under the provisions of the American Recovery and Reinvestment Act of 2009. The interest on these bonds will not be excluded from gross income for federal income purposes, but will be exempt from the State of California personal income taxes.

As such, the Authority expects to receive a cash subsidy from the United States Treasury equal to 35% of the interest payable on the 2010 Series B Bonds which will be applied to offset the interest costs of the 2010 Series B Bonds.

Linden Wind Energy Project Revenue Notes - On November 10, 2009, SCPPA issued $139.7 million of the Linden Wind Energy Project, Revenue Notes, 2009 Series A. The 2009 notes were issued to provide interim financing for the costs of acquisition of the Linden Wind Energy Project and to pay related costs of issuance. These notes are not subject to optional or mandatory redemption prior to maturity. The true interest cost of the Revenue Notes was 0.63%.

Southern Transmission System Project - Debt consists of refunding and subordinate refunding series bonds with fixed interest rates ranging from 3.50% to 6.00% and final maturities occurring in 2027.

STS Project Refunding - On January 25, 2011, SCPPA issued $169.3 million and $27.6 million of the Southern Transmission Project, Subordinate Refunding Bonds, 2010 Series A and B (Taxable Bonds), respectively, in the aggregate principal amount of $196.9 million. The bonds were issued to redeem all of the outstanding $216.6 million outstanding Transmission Project Subordinate Refunding Bonds, 1991 Series A; to terminate the related interest rate swap and liquidity guaranty agreement related to the refunded bonds; and to pay related costs of issuance. These bonds are not subject to redemption prior to maturity. This transaction resulted in a net loss for accounting purposes of $44.8 million.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT - (continued)

Windy Point/Windy Flats Project - As of June 30, 2011, debt consists of revenue bonds with fixed interest rates between 2.0% and 5.0% and final maturity occurring in 2030.

Windy Point/WindyFlats Revenue Bonds - On September 9, 2010, SCPPA issued $514.1 million of the Windy Point/Windy Flats Project, 2010-1 Revenue Bonds. These fixed rate bonds were issued to finance the prepayment of a specified supply of electricity from a 262.2 MW nameplate capacity wind farm comprised of 114 wind turbines located in the Columbia Hills area of Klickitat County, Washington and related facilities pursuant to a Power Purchase Agreement, dated as of June 24, 2009; to fund a debt service reserve; and to pay costs of issuance related to the 2010 Bonds. The 2010 Bonds maturing on and before July 1, 2020 are not subject to redemption prior to maturity. The true interest cost of the Revenue Bonds was 3.49%.

Mead Phoenix/Mead Adelanto Projects - Debt consists of revenue and refunding series bonds with variable interest and fixed interest rates. Fixed interest rates range from 3.921% and 5.15% with final maturities occurring in 2020.

Natural Gas Projects - Debt consists of revenue bonds with fixed interest rates ranging from 3.43% to 6.03%

and final maturities occurring in 2032.

Prepaid Natural Gas Project No. 1 - Debt consists of revenue bonds with variable and fixed interest rates ranging from 5.0% to 5.25% and final maturity occurring in 2035.

In October 2009, the Series 2007A Fixed Rate Bonds, the Prepaid Natural Gas Agreements and certain other agreements were restructured to reduce risk, realize savings, provide an acceleration of the long-term savings, reduce the remaining volumes of gas to be delivered from 135 billion to 90 billion cubic feet, and shorten the term of the agreements from 30 to 27 years. As a result of the restructure $165.5 million principal amount of the bonds were canceled, leaving $333.4 million of total bonds outstanding subsequent to the November 1, 2009 principal maturity.

Multiple Project Fund - Debt consists of revenue bonds with fixed interest rate of 6.75% and final maturity occurring in 2013.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT - (continued)

Debt-related costs - Unamortized debt-related costs, net are as follows (amounts in thousands):

June 30, 2011 Loss on (Premium)

Unamortized Debt-related Costs, Net Refunding Discount Total Palo Verde Project $ 3,522 $ 3,522 San Juan Project 2,110 (4,144) (2,034)

Magnolia Power Project 12,768 (2,467) 10,301 Canyon Power Project (10,771) (10,771)

Hoover Uprating Project 55 (106) (51)

Tieton Hydropower Project (1,362) (1,362)

Milford I Wind Project (14,367) (14,367)

Windy Point Project (62,667) (62,667)

Linden Wind Energy Project (10,259) (10,259)

Southern Transmission System Project 81,686 (8,949) 72,737 Mead-Phoenix Project 3,094 559 3,653 Mead-Adelanto Project 9,216 1,532 10,748 Prepaid Natural Gas Project No. 1 (3,976) (3,976)

Multiple Project Fund 2,549 2,549

$ 112,451 (114,428) $ (1,977)

June 30, 2010 Loss on (Premium)

Unamortized Debt-related Costs, Net Refunding Discount Total Palo Verde Project $ 5,283 $ $ 5,283 San Juan Project 2,481 (5,264) (2,783)

Magnolia Power Project 13,421 (2,972) 10,449 Canyon Power Project 301 (11,829) (11,528)

Southern Transmission System Project 65,293 8,659 73,952 Mead-Phoenix Project 3,695 622 4,317 Mead-Adelanto Project 10,974 1,701 12,675 Hoover Uprating Project 339 (136) 203 Tieton Hydropower Project (50) (50)

Milford I Wind Project (16,578) (16,578)

Linden Wind Energy Project (531) (531)

Prepaid Natural Gas Project No. 1 (4,308) (4,308)

Multiple Project Fund - 3,824 3,824

$ 101,787 (26,862) $ 74,925 80

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT - (continued)

Fair value - The fair value of the Authority's long-term debt (including the current portion) is approximately

$3.62 billion and $3.04 billion at June 30, 2011 and 2010, respectively. Management has estimated fair value based on the quoted market prices for the same or similar issues or on the current average rates offered to the Authority for debt of approximately the same remaining maturities, excluding the effect of a related interest rate swap agreement.

Advance refundings - The Authority has established irrevocable escrow trusts with the proceeds from issuance of subordinate refunding bonds. These investments will be used to pay specified revenue bonds called at scheduled redemption dates.

Defeasance of debt - The Authority has defeased specified revenue bonds by placing the proceeds from the issuance of subordinate refunding bonds in irrevocable trusts to provide for all future debt service payments on the refunded bonds. The trust investments and related liability for bonds that are considered legally defeased are not included in the Authority's financial statements. At June 30, 2011 and 2010, $758.0 million and $758.1 million, respectively, of revenue bonds outstanding are considered legally defeased.

The refunded bonds constitute a contingent liability of the Authority only to the extent that cash and investments presently in the control of the refunding trustees are not sufficient to meet debt service requirements and are therefore excluded from the combined financial statements because the likelihood of additional funding requirements is considered remote.

Debt service - The scheduled debt service payments for future years ending June 30 are included in the table on the following page. The variable rates used for the PV 2008 Subordinate Refunding Series A and B were 0.05%

and 3.00%, respectively. The variable rates used for the MA and MP 2008 Subordinate Refunding Series A were 0.03%. The variable rates used for the MA and MP 2008 Subordinate Refunding Series B were 0.17%. The variable rates used for the STS 2000 and 2001 Subordinate Refunding Series A were 0.07% and 3.00%,

respectively. The variable rates used for the MAG 2009-1 and MAG 2009-2 were 0.07% and 0.06%, respectively.

All of the preceding variable rates were the rates at June 30, 2011. The variable rates are set by the bond-remarketing agent on a weekly basis based on economic conditions and bond ratings.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT - (continued)

GENERATION GREEN POWER Magnolia Canyon Power Hoover Tieton Hydro- Linden Wind Palo Verde San Juan Power Project Uprating power Milford I Wind Windy Point Energy 2012 Principal $ 10.340 $ 12,345 $ 9,395 $ - $ 1,600 $ 680 $ 7,595 $ 13,760 $ 2.510 2012 Interest 1,857 6,472 13,348 16,732 614 2,590 11,146 23,941 3,423 2013 Principal 10,660 13,010 9,780 - 1,670 775 7,860 17,240 3,360 2013 Interest 1,594 5,808 12,940 16,732 537 2,576 10,876 23,498 6,795 2014 Principal 10,980 27,250 10,220 - 1,755 790 8,135 17,850 3,425 2014 Interest 1,324 5,093 12,511 16,732 455 2,557 10,581 22,850 6,728 2015 Principal 11,330 13,200 10,650 - 1,835 815 8,450 18,535 3,530 2015 Interest 1,045 3,594 12,057 16,732 368 2,532 10,236 22,081 6,625 2016 Principal 11,690 13,855 11,135 - 1,930 840 8,820 19,390 3,670 2016 Interest 757 2,934 11,542 16,732 270 2,503 9,874 21,277 6,484 2017 - 2021 Principal 24,440 44,825 44,035 36,730 4,165 4,780 50,535 110.375 20,850 2017 - 2021 Interest 616 5,075 50,621 79,766 220 11,902 42,591 92,301 29,929 2022 - 2026 Principal - - 54,235 46,365 - 7,810 64,135 139,310 26,115 2022 - 2026 Interest 40,249 69,793 10,410 28,647 62,450 24,661 2027 - 2031 Principal 69,655 59,105 8,420 81,705 177,700 33,315 2027 - 2031 Interest 29,962 56,060 8.049 10,609 23,078 17.461 2032 - 2036 Principal 85,175 72,110 10,745 - - 41,550 2032 - 2036 Interest 17,630 36,938 5,664 7.566 2037 - 2041 Principal 66,460 87,160 17,075 -

2037 - 2041 Interest 1,060 13,342 2,539 Principal $ 79,440 $ 124,485 $ 370,740 $ 301,470 $ 12,955 $ 52,730 $ 237,235 $ 514,160 $ 138,325 Interest $ 7,193 $ 28,976 $ 201,920 $ 339,559 $ 2,464 $ 51,322 $ 134,560 $ 291,476 $ 109,672 TRANSMISSION NATURAL GAS MISC.

Southern Transmission Mead- Prepaid Multiple System Mead- Phoenix Adelanto Pinedale Barnett Natural Gas Project Fund Total 2012 Principal $ 27,995 $ 5,190 $ 14,305 $ 3,368 $ 7,972 $ 5,295 $ 12,100 $ 134,450 2012 Interest 36,268 2,584 8,109 1,756 4,132 16,530 2,211 155,518 2013 Principal 56,970 5,530 15,230 2,549 6,016 4,805 12,900 168,355 2013 Interest 34,268 2,230 7,135 1,640 3,857 16,278 1,367 148,533 2014 Principal 49,845 5,905 16,265 2,253 5,302 4,065 13,800 177,840 2014 Interest 32,242 1,853 6,096 1,539 3,619 16,056 466 141,117 2015 Principal 51,160 5,000 17,135 2,219 5,211 3,87S 152,945 2015 Interest 30,986 1,530 5,121 1,439 3,384 15,858 133,518 2016 Principal 52,720 5,420 17,990 2,274 5,326 4,075 159,135 2016 Interest 29,661 1,265 4,225 1,331 3,128 15,659 127,569 2017 - 2021 Principal 275,720 28,700 96,025 9,148 21.447 28,435 800,210 2017 - 2021 Interest 115,113 2,904 9,709 5,048 11,869 74,632 531,837 2022 - 2026 Principal 267,580 - - 6,387 15,013 57,550 684,500 2022 - 2026 Interest 48,194 2,940 6,931 63,727 357,3S6 2027 - 2031 Principal 66,111 5,115 12,040 98,965 612,13S 2027 - 2031 Interest 4,025 1,284 3,035 43,705 196,434 2032 - 2036 Principal - 1,839 4,336 120,590 336,345 2032 - 2036 Interest 108 255 13,838 80,769 2037 - 2041 Principal S- - - 170,695 2037 - 2041 Interest S- - - - 16,941 Principal $ 848,105 $ 55,745 $ 176,910 $ 35,152 $ 82,663 $ 327,655 $ 38,800 $ 3,396,610 Interest $ 330,757 $ 12,366 $ 40,395 $ 17,085 $ 40,210 $ 276,283 $ 4,044 $ 1,889,592 82

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 7 - NOTES PAYABLE AND DEFERRED CREDITS Notes payable and deferred credits consist mainly of Palo Verde Participants' overbillings from prior periods; an allowance for future major maintenance expenses for the Magnolia Power Project; and swap-related transaction fees received in STS, Mead Adelanto, and Mead Phoenix Projects. The notes payable held in the Palo Verde Project are invested in a guaranteed investment contract (GIC) that will mature in June 2017. The GIC is unsecured, bear an interest rate at 4.97%, and is paid out in monthly installments of $0.6 million. On June 30, 2011, the remaining balance of the GIC is $37.2 million.

The Authority received approximately $1.8 million and $5.9 million in upfront payments in connection with the execution of the Mead Phoenix and Mead Adelanto 2004 Swaps, respectively, to be deferred through 2020. The deferred balance is $0.6 million and $2.0 million, respectively, as of June 30, 2011. The 5-year suspension of the STS 2006 Constant Maturity Swap (CMS) in May 2008 netted a compensation of $3.7 million. In March 2011, the suspension was extended to May 2016 for net compensation of $2.59 million. The deferred balance is $3.9 million as of June 30, 2011. The 3-year suspension of the Mead Adelanto 2007 CMS (the CMS Swap) in November 2008 netted a compensation of $4.1 million. In June 2010, the suspension was extended to June 2018 for net compensation of $5.0 million. The total deferred balance of the CMS is $4.8 million as of June 30, 2011 (see Note 5).

Notes payable and deferred credits rollforward (amounts in thousands):

Amortization Payments/ of Surplus Description June 30, 2010 Additions Amortization Fund June 30, 2011 PV prior year overbillings $ 42,302 $ - $ (5,507) $ 393 $ 37,188 MPP major maintenance 3,928 2,888 - - 6,816 STS 2006 Swap suspension 2,247 2,590 (922) 3,915 Mead Phoenix 2004 Swap upfront fees 684 (86) 598 Mead Adelanto 2004 Swap upfront fees 2,274 (284) 1,990.

Mead Adelanto 2007 Swap Suspension 6,823 - (2,003) - 4,820

$ 58,258 $ 5,478 $ (8,802) $ 393 $ 55,327 83

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 8 - ADVANCES FROM PARTICIPANTS Advances from participants consist mainly of billings to participants related to acquisition, capital drilling, and inventory wherein the matching operating expenses will be recognized at a future date. Also, and specific only to the Natural Gas Pinedale Project, advances held by the project are funds from LADWP .and TID, both owners independent of SCPPA, are for their share of operating costs and capital expenditures pursuant to their respective Agency Agreements.

Advances from participants' rollforward (amounts in thousands):

Description June 30, 2010 Activity June 30, 2011 San Juan advances from participants $ - $ 3,000 $ 3,000 MAG advances from participants 16,763 581 17,344 Canyon Power advances from participants - 2,225 2,225 Tieton advances from participants 209 (7) 202 Milford I advances from participants 257 (7) 250 Windy Point advances from participants 1,006 (6) 1,000 Linden Wind Energy advances from participants 2,004 2,004 NG Pinedale advances from participants 39,600 1,769 41,369 NG Barnett advances from participants 11,423 (534) 10,889 Ormat advances from participants 860 (3) 857 MWD advances from participants 500 500 Milford II advances from participants 250 250 Ameresco advances from participants 400 400 PDF advances from participants 2,000 (220) 1,780

$ 72,618 $ 9,452 $ 82,070 NOTE 9 - NET ASSETS (DEFICIT)

The Authority's billing amounts to the participants are determined by its Board of Directors and are subject to review and approval by the participants. Billings to participants are designed to recover "costs" as defined by the power sales, natural gas sales, and transmission service agreements. The billings are structured to systematically provide for debt service requirements, operating funds and reserves in accordance with these agreements. The accumulated difference between billings and the Authority's expenses calculated in accordance with accounting principles generally accepted in the United States of America are presented as net assets (deficit). It is intended that this difference will be recovered in the future through billings for repayment of principal on the related bonds.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 9 - NET ASSETS (DEFICIT) - (continued)

Net assets (deficit) are comprised of the following (in thousands):

Fiscal Year Fiscal Year June 30, 2009 2010 Activity June 30, 2010 2011 Activity June 30, 2011 GAAP items not included in billings to participants Depreciation of plant $ (1,191,457) $ (68,689) $ (1,260,146) $ (76,891) $ (1,337,037)

Nuclear fuel amortization (5,860) (5,860) (5,860)

Decommissioning expense (196,676) (5,296) (201,972) (4,867) (206,839)

Amortization of bond discount, debt issue costs, and loss on refundings (712,195) (19,318) (731,513) (7,711) (739,224)

Interest expense (56,991) 171 (56,820) 15,967 (40,853)

Loss on defeasance of bonds (85,827) (85,827) (85,827)

Derivatives and related charges (26,760) (8,720) (35,480) (22,199) (57,679)

Bond requirements included in billings to participants Operations and maintenance, net of investment income 313,528 (5,824) 307,704 (41,539) 266,165 Costs of acquisition of capacity 11,896 (1,322) 10,574 (1,305) 9,269 Billings to amortize costs recoverable 382,050 382,050 382,050 Reduction in debt service billings due to transfer of excess funds (90,020) (90,020) - (90,020)

Principal repayments 1,230,524 102,640 1,333,164 125,434 1,458,598 Other 168,047 31,430 199,477 18,760 218,237 (259,741) 25,072 (234,669) 5,649 (229,020)

Multiple Project Fund net assets 1,381 (1,255) 126 (1,299) (1,173)

Project Development Fund - - - 2,358 2,358 Projects' Stabilization Fund net assets 89,155 12,882 102,037 (1,281) 100,756

$ (169,205) $ 36,699 $ (132,506) $ 5,427 $ (127,079)

NOTE 10 - RETIREMENT PLAN The Authority is a participating public employer in the California Public Employees Retirement System (CalPERS) Miscellaneous 2.5% at 55 Risk Pool Employees' Retirement Plan, which is an agent multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and Authority resolution. CalPERS issues a separate comprehensive annual financial report, which is available from the CalPERS' Executive Office, 400 P Street, Sacramento, California 95814.

The Authority makes the plan contributions required of its employees on their behalf and for their account. The Authority is required to contribute at an actuarially determined rate of annual covered payroll. The contribution requirements of plan members and the Authority are established and may be amended by CaIPERS.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 10 - RETIREMENT PLAN - (continued)

Summary of certain plan provisions and benefits in effect for fiscal year ended June 30, 2011:

Required service for eligibility 5 full-time years Benefit payments (% of final annual salary) Monthly for life Minimum retirement age 50 Monthly benefit 2.00% @ age 50 to 2.50% @ age 55 & up Required employee contribution rate 8.000%

Required employer contribution rates 15.536% normal service Actuarial annual required contribution (based on estimated payroll) $108,436 Actual employer portion contributions to the plan totaled $209,933 and $168,308 for fiscal years 2011 and 2010, respectively. The Agency's annual required contribution (based on actuarially established rates) was determined as part of a June 30, 2009, actuarial valuation using the entry age normal actuarial cost method.

The primary actuarial assumptions included a 7.75% annual investment rate of return (net of administrative expenses); forecasted annual salary increases that vary by age, service and type of employment ranging from 3.55% to 14.45%; a 3.25% overall annual payroll growth; an individual salary growth of 3.00%; an annual production growth of 0.25%; and, an inflation component of 3.00%.A 15-year rate smoothed market approach is used to spread investment returns. At fiscal year end June 30, 2009 (the date of the actuarial valuation), the Agency had 8 eligible active employees and 2 retirees drawing benefits under this program.

Trend Information for Agency CalPERS Retirement Plan Annual Percentage Net Fiscal Year Pension of APC Pension Ending Cost (APC) Contributed Obligation June 30, 2009 $187,444 100.0%

June 30, 2010 $168,308 100.0%

June 30, 2011 $209,933 100.0%

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 10 - RETIREMENT PLAN - (continued)

Funded Status of the CalPERS Miscellaneous 2.5% at 55 Risk Pool (In Thousands)

Actuarial Actuarial Annual Unfunded Actuarial Valuation Actuarial Actuarial Value Accrued Funded Covered Accrued Liability as Accrued Unfunded Date Liability of Assets Liability Ratio Payroll  % of Payroll (a) (b) (a) - (b) (b) / (a) (c) [Ha) - (b)l / Cc)

June 30, 2007 $1,315,454 $1,149,247 $166,207 87.4% $289,090 57.5%

June 30, 2008 $1,537,910 $1,337,708 $200,202 87.0% $333,308 60.1%

June 30, 2009 $1,834,425 $1,493,431 $340,994 81.4% $355,150 96.0%

Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into CalPERS. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. All changes in liability due to plan amendments, changes in actuarial assumptions, or changes in actuarial methodology are amortized over a period of time. The average remaining amortization period at the June 30, 2009 valuation date was approximately 19 years. Operating gains and losses of the plan are amortized over a 30-year rolling period with the exception of gains and losses in fiscal years 2008-2009, 2009-2010 and 2010-2011 in which each year's gains and losses will be isolated and amortized over fixed and declining 30 year periods. If the plan's accrued liability exceeds the actuarial value of plan assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30-year amortization period. CalPERS actuarial valuations become available approximately two years after the Agency's fiscal year-end.

NOTE 11 - COMMITMENTS AND CONTINGENCIES Industry restructuring - Since the passage of Assembly Bill 1890 (the Bill) in September 1996, the electric industry in California continues to remain uncertain. The deregulation experiment has, for the most part, been abandoned. The public power participants of SCPPA were not required to comply with the Bill's provisions.

Public benefits - The members continue to collect the public benefit charge through existing rate structures and have instituted in excess of $1 billion of programs to benefit their customers including conservation and energy efficiency programs, public educational programs, research and development, and low income rate subsidies. The decisions on how these funds are allocated are made by the local governing authority, in most cases this is the city council.

Executive action and state legislation - The California Legislature approved several bills that affected the electric. utility industry. In general, these bills provide for reduced greenhouse gas emission standards and greater investment in energy-efficient and environmentally friendly generation alternatives through more stringent renewable resource portfolio standards. The following is a brief summary of certain of these bills:

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 11 - COMMITMENTS AND CONTINGENCIES - (continued)

Greenhouse gas emissions - Executive Order S-3-05 placed an emphasis on efforts to reduce greenhouse gas emissions by establishing statewide greenhouse gas reduction targets. The targets are: (i) a reduction to 2000 emissions levels by 2010; (ii) a reduction to 1990 levels by 2020; and (iii) a reduction to 80% below 1990 levels by 2050.

Assembly Bill 32, the Global Warming Solutions Act of 2006 (the GWSA) became effective as law on January 1, 2007. The GWSA prescribed a statewide cap on global warming pollution with a goal of reaching 1990 greenhouse gas emission levels by 2020. In addition, the GWSA establishes a mandatory reporting program for all investor-owned utilities (IOUs), municipal utilities and other load-serving utilities to inventory and report greenhouse gas emissions to the California Air Resources Board (CARB) and requires CARB to adopt regulations for significant greenhouse gas emission sources (allowing CARB to design a "cap-and-trade" system) and gives CARB the authority to enforce such regulations beginning in 2012. CARB adopted a "scoping plan" to reduce greenhouse gas emissions which includes a mixed approach; market structures, regulation, fees and voluntary measures. The scoping plan includes a cap-and-trade system that covers 85% of all California greenhouse gas emissions and will be implemented in coordination with the Western Climate Initiative regime, which is a regional zone consisting of seven states and three Canadian provinces that is in the process of establishing a greenhouse gas trading framework. CARB has begun developing regulations for greenhouse gas emissions limits and reduction measures. The regulations were originally scheduled to go into effect and be enforceable beginning January 1, 2012. However, a version of the cap-and-trade regulation released for public comment on July 25, 2011 changed the start date of emission compliance obligation under the regulation to January 1, 2013.

The cap-and-trade program will include the distribution of carbon allowances. Unlike the IOUs who will be forced to auction their allowances, the POUs, such as the Project Participants, will be able to retain their allocated allowances for compliance purposes. The Authority and the Project Participants are unable to predict at this time the full impact of the cap-and-trade program on the Project Participants' respective electric utilities or on the electric utility industry in general. However, the Project Participants could be adversely affected by the implementation of a cap-and-trade program requiring the Project Participants to purchase carbon allowances to cover the carbon emissions of their respective resource portfolios. The cost of doing so could be substantial in the absence of an administrative allocation of allowances adequate to cover the Project Participants' emissions.

Energy procurement and efficiency reporting - Senate Bill 1037 requires each POU, including each Project Participant, prior to procuring new energy generation resources, first acquire all available energy efficiency, demand reduction, and renewable resources that are cost effective, reliable and feasible, then report annually to its customers and to the CEC its investment in energy efficiency and demand reduction programs. Each Project Participant has complied with such reporting requirements.

Assembly Bill 2021 requires that POUs establish, report, and explain the basis of the annual energy efficiency and demand reduction targets every three years for a ten-year horizon since 2007. Each of the Project Participants has complied with this reporting requirement.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 11 - COMMITMENTS AND CONTINGENCIES - (continued)

Renewable Portfolio Standard (RPS) - Senate Bill 1078 (SB 1078), which became law on January 1, 2003, requires that the IOUs adopt a Renewable Portfolio Standard (RPS) to meet a minimum of 1% of retail energy sales needs each year from renewable resources and to meet a goal of 20% of their retail energy needs from renewable energy resources by the year 2017. SB 1078 also directed the State's POUs to implement and enforce an RPS that recognizes the intent of the Legislature to encourage development of renewable resources, taking into consideration the impact on a utility's standard on rates, reliability, financial resources, and the goal of environmental improvement. Senate Bill 107 requires IOUs to have 20% of their electricity produced by renewable sources by 2010 and prescribes that POUs meet the intent of the legislation. Executive Order S-14-08 provides that the RPS target established for California shall require retail electricity sellers to serve 33% of their retail loads with eligible renewable energy resources by 2020. In order to help utilities overcome the challenges associated with meeting the accelerated RPS goals, the CPUC and the CEC supported the implementation of a renewable energy certificate (REC) trading system. SB107 allows RECs to be used for RPS compliance. In parallel, pursuant to SB 1078, the CEC, collaboratively with the Western Governors Association and the Western Electricity Coordinating Council (WECC), established the Western Renewable Energy Generation Information System (WREGIS) to ensure the integrity of RECs and prevent the double counting of certificates. The Authority has elected to use WREGIS to transfer and account for the RECs associated with the renewable energy procured by the Authority on behalf of certain of its members.

Senate Bill X1 2 (SBX1 2), the "California Renewable Energy Resources Act," was signed into law by Governor Jerry Brown on April 12, 2011. As enacted, SBX 1 2 makes the requirements of the RPS program applicable to POUs. The governing boards of POUs are responsible for implementing the requirements and each POU is required to adopt and implement a renewable energy resources procurement plan. The plan must require the utility to procure a minimum quantity of electricity product from eligible renewable energy resources, including RECs, as a specified percentage of total kilowatt hours sold to the utility's retail end-use customers to achieve specific targets. Certain enforcement authority with respect to POUs is given to the CEC and CARB, including authority to impose penalties. SBX1 2 grandfathers any facility approved by the governing board of a POU prior to June 1, 2010 for procurement to satisfy renewable energy procurement obligations adopted under prior law if the facility is a "renewable electrical generation facility" as defined in the bill (subject to certain restrictions).

Solar power - Senate Bill 1 (also known as the California Solar Initiative), which was signed into law on August 21, 2006, requires POUs, including the Project Participants, to establish a program supporting the stated goal of the legislation to install 3,000 MW of photovoltaic energy in California. POUs are also required to establish eligibility criteria in collaboration with the CEC for the funding of solar energy systems receiving ratepayer-funded incentives. Each of the Project Participants has established programs in accordance with the requirements of the California Solar Initiative.

The effect of these developments in the California energy markets on the Project Participants cannot be fully ascertained at this time. Also, volatility in energy price in California may return due to a variety of factors which affect both the supply and demand for electric energy in the western United States. This price volatility may contribute to greater volatility in the revenues of their respective electric systems from the sale (and purchase) of electric energy and, therefore, could materially affect each of Project Participant's financial condition. Each Project Participant undertakes resource planning, risk management activities and manages its resource portfolio to mitigate such price volatility and spot market rate exposure.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 11 - COMMITMENTS AND CONTINGENCIES - (continued)

Federal energy legislation - Under the federal Energy Policy Act of 2005 (EPAct 2005) FERC was given refund authority over municipal utilities if they sell into short-term markets, like the ISO markets, and sell 8 million MWhs or more of electric energy on an annual basis. In addition, FERC was given authority over the behavior of market participants. EPAct 2005 requires the creation of an electric reliability organization (ERO) to establish and enforce, under FERC supervision, mandatory reliability standards to increase system reliability and minimize blackouts. Failure to comply with such mandatory standards exposes a utility to significant fines and penalties by the ERO.

Other legislation - Numerous bills have been under consideration in Congress addressing United States energy policies and various environmental matters, including those related to energy supplies, global warming and water quality. Many of these bills, if enacted into law, could have a material impact on the Authority and the Project Participants and the electric utility industry generally. The Authority and the Project Participants are unable to predict the outcome or potential impacts of any possible legislation at this time.

Environmental issues - Electric utilities are subject to continuing environmental regulation. Federal, state and local standards and procedures which regulate the environmental impact of electric utilities are subject to change. There is no assurance that any Authority or Project Participant facility or project will remain subject to the laws and regulations currently in effect, will always be in compliance with future laws and regulations or will always be able to obtain all required operating permits. The Authority is unable to predict the outcome of these legal and legislative challenges.

American Recovery and Reinvestment Act of 2009 - The American Recovery and Reinvestment Act of 2009 (the Act) is an economic stimulus bill which includes a number of investments and tax incentives for certain energy-related projects. SCPPA has issued Build America Bonds, which were created under the Act and carry special tax credits and federal subsidies for either the bond issuer or the bondholder (see Note 6).

Other factors - The electric utility industry in general has been, or in the future may be, affected by a number of other factors which could impact the financial condition and competitiveness of many electric utilities and the level of utilization of generating and transmission facilities. Any factors including those mentioned above could have an adverse effect on the financial condition of any given electric utility and likely will affect individual utilities in different ways. The Authority is unable to predict what impact such factors will have on the business operations and financial condition of its members but the impact could be significant. Extensive information on the electric utility industry is available from the legislative and regulatory bodies and other sources of public domain.

Nuclear spent fuel and waste disposal - Under the Nuclear Waste Policy Act, the Department of Energy (DOE) was to develop the facilities necessary for the storage and disposal of spent fuel and to have the first such facility in operation by 1998. DOE collected a fee of 0.1 cents/kwh of electric generation from the nuclear plant operators to fund the development and operation of the disposal facility.

In July 2002, a measure was signed into law designating the Yucca Mountain in the state of Nevada as the nation's high-level nuclear waste repository. This meant that the DOE could then file a construction and operation plan for Yucca Mountain with the Nuclear Regulatory Commission (NRC). Due to a series of setbacks including scientific challenges by the National Academy of Science, falsified research data by consultants, delays in submitting the construction application to the Nuclear Regulatory Commission, the operation date of the repository was pushed back several times.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 11 - COMMITMENTS AND CONTINGENCIES - (continued)

In June 2008, the DOE submitted to the NRC a license application to construct the repository. In 2009, the federal government, under the new administration, decided to cut off all the appropriated funds for the development of the repository at Yucca Mountain at the urge of the Congress except a small budget allocation for the closing of the project. DOE subsequently submitted a request to the NRC to withdraw the license application.

The withdrawal request was denied by the NRC due to a lack of valid reasons. Concurrently, an independent commission was formed by the DOE to find a solution for the nuclear waste disposition that would include Yucca Mountain among the different options. There are questions among utilities as well as public utility commissions nationwide about the continued collection of disposal fees by DOE for the Nuclear Waste Fund recognizing that there is a lack of spent fuel disposal policy from the federal government.

The Palo Verde Operating Agent on behalf of the co-owners has litigated the DOE to recover the costs of storing spent fuel at Palo Verde because the DOE failed to honor the contract to remove and dispose of spent fuel as scheduled. In 2010, the federal court ruled in favor of Palo Verde and granted a compensation of $30 million.

Palo Verde continues to pursue cost recovery through the DOE as additional spent fuel related expenses are accumulated for the continued operation of the plant.

The spent fuel storage in the wet pool at Palo Verde exhausted its capacity in 2003. A Dry Cask Storage Facility (the Facility), also called the Independent Spent Fuel Storage Facility, was built and completed in 2003 at a total cost of $33.9 million (about $2 million for the Authority). In addition to the Facility, the costs also include heavy lift equipment inside the units and at the yard, railroad track, tractors, transporter, transport canister, and surveillance equipment. The Facility has the capacity to store all the spent fuel generated by the Palo Verde plant until 2027. To date, over 88 casks, each containing 24 spent fuel assemblies were placed in the Facility. The current plan calls for the transfer of about 240 fuel assemblies from the wet pool to the Facility every year. The costs incurred by the procurement, packing, preparation and transportation of the casks are accounted as part of the fuel expenses, and are estimated at approximately $13 million a year (about $760,000 for the Authority).

In the aftermath of the nuclear incident at Fukushima Daiichi Nuclear Station in Japan following the strong earthquake and subsequent tsunami in 2011, Palo Verde decided to accelerate its campaign to transfer spent fuel from the spent fuel pool to the Dry Cask Storage Facility to relieve the congestion within the pool. Currently the plan is to make an annual transfer of 384 fuel assemblies at a cost of $30 million per year (about $1.77 million for the Authority) for the years of 2012 and 2013. This cost includes the purchase of new large-capacity casks that were designed to hold 36 assemblies per cask and help to extend the storage capacity of the current Dry Cask Storage Facility possibly until 2047. Storing spent fuel at Palo Verde is now considered indefinite with undetermined costs until spent fuel is removed from the plant site.

Nuclear insurance - The Price-Anderson Act (the Act) requires that all utilities with nuclear generating facilities share in the payment for liability claims resulting from a nuclear incident. The Act limits liability from third-party claims to approximately $12.6 billion per incident. Participants in the Palo Verde Nuclear Generating Station currently insure potential claims and liability through commercial insurance with a $375 million limit; the remainder of the potential liability is covered by the industry-wide retrospective assessment program provided under the Act. This program limits assessments to $111.9 million per reactor for each licensee for each nuclear incident occurring at any nuclear reactor in the United States; payments under the program are limited to $17.5 million per reactor, per incident, per year to be indexed for inflation every 5 years. Based on the Authority's 5.91% interest in Palo Verde, the Authority would be responsible for a maximum assessment of

$19.84 million per incident for all 3 units, limited to payments of $3.1 million per incident, per year.

In addition to the above, the Authority may be subject to retroactive insurance assessments for its participation in the Neil Property Insurance Program in the amount of $2.3 million.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 11 - COMMITMENTS AND CONTINGENCIES - (continued)

Other legal matters - Claims and a lawsuit for damages have been filed with the Authority, Intermountain Power Authority (the IPA), and LADWP seeking $100 million in special damages and a like amount in general damages. The claimants allege, among other things, that due to improper grounding of the transmission line of STS, their dairy herds were damaged and the value of their land was diminished. The Authority believed these claims were substantially without merit as to itself because the Authority has no ownership or operational control over the subject transmission lines, and merely acted as a financing agency with respect to STS. SCPPA moved the Utah court to dismiss the action as to SCPPA. This motion resulted in the dismissal of certain of the causes of action in the complaint against SCPPA however other causes of action still remain. The ultimate outcome of this litigation cannot be predicted at this time. No provision for this litigation matter has been included in the accompanying financial statements.

On December 10, 2010, SCPPA was served in the case of Dulle, Pritchett, and Murrin, Jr. vs. Devon Energy Production Company, Devon Energy Corporation, Southern California Public Power Authority, Turlock Irrigation District, Collins & Young, LLC, Collins & Young Holdings L.P., and Collins & Young Holding, LLC; arising out of its non-operating working interest in oil and gas production property situated in the Barnett Shale in certain Texas counties including Hood County, Texas. Devon Energy Production Company (Devon) acts as SCPPA's operator with respect to all oil and gas operations upon this property. The plaintiff in this lawsuit has alleged that the royalty payments which have been made to them by Devon were not properly calculated for a substantial period of time and were less than the amounts which were owed under the plaintiffs leases. The matter was settled on October 14, 2011 and provided for payment of $1.2 million to the plaintiffs and as a participant of this project, the Authority is responsible for $172,000 of this amount. The terms of the lease were also amended to eliminate the potential for litigation of the lease issues which were raised in this case in the future. No provision for this litigation matter was included in the accompanying financial statements.

SCPPA possesses an ownership interest in Unit 3 of the San Juan Generating Station (SJGS) in New Mexico. The operator of the SJGS, on behalf of SCPPA and the other SJGS participants was and is Public Service Company of New Mexico (PNM) which is also a co-owner of the plant. Fuel for the SJGS is provided from the San Juan coal mine which is located near the SJGS. The San Juan Coal mine (Mine) is operated by the San Juan Coal Company (Company) which carries out mining operations at this site and provides the fuel to the plant pursuant to agreements entered into for this purpose with PNM. On April 8, 2010, the Sierra Club filed a lawsuit in the United States District Court for the District of New Mexico against PNM Resources, the parent company of PNM;,

PNM as the operator of the SJGS;, BHP Billiton Limited; and the Company, as the operator of the Mine; over alleged surface and groundwater contamination stemming from coal ash placement in the mine and from plant operations. The potential statutory penalties alleged by Sierra Club would be in excess of $66 million, not including penalties going forward from the date of filing the complaint. Sierra Club tendered an offer to settle its claim for $20 million which was rejected. Both parties have engaged in extensive settlement negotiations in this matter since the inception of the case, however, the parties' positions are very divergent with respect to the central issues presented by this case and these settlement negotiations have not been productive. SCPPA is a participant in this project and is responsible, along with the other project participants, for its proportionate share, attributable to its interest in this facility, in any financial consequences which may occur as a result of this litigation. This case has proceeded through a number of early stages and the parties are currently attempting to settle the matter. At the current time it cannot be predicted with any level of certainty how these matters will evolve in the future litigation of this action.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 11 - COMMITMENTS AND CONTINGENCIES - (continued)

On September 16, 2011, the Public Service Company of New Mexico (PNM), on behalf of itself and the other SJGS owners filed a Petition for Review in the United States Court of Appeals for the Tenth Circuit. This action arises out of a significant dispute under the Federal Clean Air Act between the owners of the SJGS and the United States Environmental Protection Agency (EPA). San Juan is a four-unit, coal-fired electric generating facility with a generating capacity of 1,800 gross megawatts located in Waterflow, New Mexico. SCPPA owns forty three percent of Unit 3. The Clean Air Act (Act) requires states to prevent air pollution from sources within their borders from impairing air quality and visibility in other states. The Act also requires states to reduce pollution from significant sources whose emissions reduce visibility in the nation's pristine and wilderness areas (such as the Grand Canyon), and contribute to regional haze. When a state has not adopted plans as required b5'these provisions, EPA must put such a plan in place. The EPA usually defers to the states to implement plans and programs to carry forth the purposes of the Act and the State of New Mexico had proposed such a plan for the SIGS which would carry forth these purposes through a long term program at a potentially reasonable cost. EPA issued a pronouncement proposing to disapprove New Mexico's Implementation Plan for the SJGS and proposed a more expensive source-specific plan to cut pollution from SJGS and to address adverse visibility impacts which the EPA contended originated from the plant. EPA's proposed rule, among other things, imposed extremely stringent additional limits on certain emissions from the SJGS than already existed at the plant and mandated installation of a very expensive Selective Catalyst Reduction System (SCRS). During the ensuing comment period with respect to this new EPA rule, the SJGS owners protested the installation of the proposed SCRS that would cost the owners between $750 million to a billion dollars. The EPA disputed this assertion and indicated that the proposed upgrade would only cost approximately $345 million dollars.

On August 22, 2011 the EPA published its final ruling in this matter ordering the installation of the full SCRS at the SJGS. While this case has concluded the administrative stages of this dispute before the EPA, the parties are just beginning the course of the litigation in the appellate courts. If the San Juan owners lose the litigation, they may be faced with costs for installation of the SCRS of as much as one billion dollars. At the current time, it cannot be determined with any certainty whether the owners will prevail in this matter or whether the EPA will prevail or what the eventual outcome or determination of the courts might be.

The Authority is also involved in various other legal actions. In the opinion of management, the outcome of such litigation or claims will not have a material effect on the financial position or the results of operations of the Authority or the respective separate Projects.

NOTE 12 - SUBSEQUENT EVENTS Milford Wind Corridor Phase II Project - Issuance of Revenue Bonds to Prepay a supply of energy -

Pursuant to a power purchase agreement dated March 1, 2010, the Authority agreed to purchase from the Milford Wind Corridor Phase II, LLC a supply of energy from the Milford Wind Corridor Phase II Facility (the Facility) for a delivery term of 20 years beginning on the Commercial Operating Date (COD) of the Facility. The Authority also entered into power sales agreements with LADWP and the City of Glendale to sell 100% of its entitlement to capacity and energy in the Facility on a "take-or-pay basis."

The Facility is a 102MW nameplate capacity wind powered electric generating facility comprised of 68 1.5 MW wind turbines and related facilities located near Milford, Utah. Currently LADWP has 90% entitlement shares of the power generated by this facility and Glendale has 10%. A separate layoff agreement has been executed between LADWP and Glendale.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 12 - SUBSEQUENT EVENTS - (continued)

On August 25, 2011, SCPPA issued $157,465,000 Milford Wind Corridor Phase II Project Revenue Bonds, 2011-1.

These fixed rate bonds were issued for the purpose of financing the prepayment of a specified supply of electricity from the Project; to pay related development costs of the Project; to fund a deposit to the 2011 Debt Service Reserve; and to pay costs of issuance of the 2011-1 Bonds.

Canyon Power Project - Commercial operation date reached - The Canyon Power Project (the Project) consists of a simple cycle natural gas-fired power generating plant comprised of four combustion turbines with a combined nominally rated net base capacity of 200 MW, located in an industrial area in the city of Anaheim (Anaheim). Testing was successfully completed on Units 3 and 4, of the four units of the Project and the two units were declared for commercial operations on August 1, 2011 by Anaheim, who managed the construction of the Project. The two units were declared for commercial operations in advance of completion of the entire plant in order to maximize energy output based on permitting criteria for retail load purposes, to support the California Independent System Operator (the ISO), and to allow Anaheim to provide capacity from the two units to the ISO for reliability purposes under resource adequacy and local capacity obligations. Units 1 and 2 began their respective testing in July 2011 and both reached COD on September 15, 2011 (see Note 1).

Hoover Uprating Project - Contract Renewals - Over the past two years, contractors from Arizona, Nevada, and California for the Hoover Uprating Project, have been meeting to negotiate terms for renewal of the contracts for electric service, which expire on September 30, 2017. The Contractors developed proposed legislation, that became known as the Hoover Power Allocation Act (the Act), which would extend the availability of Hoover power to the existing Contractors for anadditional fifty years and create a pool for new entrants. The Act was first presented to both houses of Congress in late December 2009. Concurrently, Western proceeded with their administrative renewal process and drafted a similar proposal, including public comment meetings. The Act was passed by the House of Representatives on October 3, 2011 and by the Senate on October 18th, but because of some technical language changes to the enrollment of the bill, the House may need to pass a correcting resolution that authorizes these changes before the Act can become law. Western's process will be discontinued when the Act is passed and the Contractors plan to meet with Western to negotiate an agreement in conformity with the new law.

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SUPPLEMENTAL INFORMATION SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Decom- General Debt Service missioning Escrow Reserve Operating Reserve & Revenue Fund Trust Fund Account Account Issue Account Account Contingency Fund Total Balance at June 30, 2010 $ $ 159,558 $ 226,198 $ 1,305 $ 15,537 $ 64,540 $ 22,855 $ $ 489,993 Additions I nvestment earnings 3,350 19,886 1 12 2,287 387 25,923 Discount on investment purchases 1 2 3 3 9 Distribution of investment earnings (2) (14) (163) (386) 565 -

Revenue from power sales - - - - 66,713 66,713 Distribution of revenue 8,272 46,603 12,403 (67,278) -

Transfer from escrow 3,704 (21,088) 17,384 - - -

Other receipts - - 1,786 1,786 Total 3,704 3,350 (1,202) 25,656 50,516 12,407 94,431 Deductions Construction expenditures 17,271 17,271 Operating expenditures 3 42,743 42,746 Fuel costs - 14,242 14,242 Payment of principal 10,030 10,030 Interest paid - non escrow 922 922 Premium and interest on investment purchases 1 4 5 Payment of principal and interest - escrow 3,704 - 17,384 - - 21,088 Total 3,704 3 - - 28,336 56,986 17,275 106,304 Balance at June 30, 2011 $ - $ 162,905 $ 224,996 $ 1,305 $ 12,857 $ 58,070 $ 17,987 $ $ 478,120 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $47 and $57 held in the revolving fund at June 30, 2011 and 2010, respectively.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SAN JUAN PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Debt Service Reserve &

Debt Service Reserve Operating Contingency Escrow Fund Account Revenue Fund Fund Fund Account Total Balance at June 30, 2010 $ 3,551 $ 21,323 $ $ 8,478 $ 13,585 $ 73,960 $ 120,897 Additions Investment earnings 9 1,104 1 6 151 3,020 4,291 Discount on investments 1 15 6 22 Distribution of investment earnings (10) (1,104) 1,292 (21) (157)

Revenue from power sales 85,571 85,571 Distribution of revenues 18,503 (86,864) 61,837 6,524 Other 3,772 1 (3,772) 1 Total 22,275 61,838 6,524 (752) 89,885 Deductions Operating expenses 59,659 59,659 Construction expenses 6,347 6,347 Payment of principal and interest - escrow 3,772 3,772 Payment of principal 11,715 11,715 Interest paid - non-escrow 7,102 7,102 Total 18,817 3,772 59,659 6,347 88,595 Balance at June 30, 2011 $ 7,009 $ 17,551 $ - $ 10,657 $ 13,762 $ 73,208 $ 122,187 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $22 and $29 held in the revolving fund at June 30, 2011 and 2010, respectively.

96

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MAGNOLIA POWER PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Debt Debt Service Operating General Service Reserve Project Reserve Reserve and Operatin Revenue Reserve Escrow Account Account Fund Fund Contingency g Fund Fund Fund Fund Total Balance at June 30, 2010 $ 14,021 $ 30,332 $ 4,182 $ 4,919 $ 13,496 $ 3,338 $ - $ 9,228 $ 213,468 $ 292,984 Additions Investment earnings 7 748 82 55 289 16 1 180 9,688 11,066 Discount on investment purchases 2 1 2 5 - 10 Distribution of investment earnings (9) (748) (56) (291) (16) 1,120 -

Transfer of funds for debt service payment 10,119 - (10,119) -

Receipt from participants - - 59,012 59,012 Distribution of revenues 25,694 - 5,680 28,389 (60,133) 370 -

Total 35,813 82 5,680 28,389 555 (431) 70,088 Deductions Construction expenditures - (170) 290 - - - 120 Operating expenses - - - 24,611 24,611 Payment of principal 9,010 - 9,010 Interest paid 25,998 - - - 25,998 Total 35,008 - (170) 290 24,611 59,739 Balance at June 30, 2011 $ 14,826 $ 30,332 $ 4,434 $ 4,919 $ 18,886 $ 7,116 $ $ 9,783 $ 213,037 $ 303,333 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $22 and $26 held in the revolving fund at June 30, 2011 and 2010, respectively.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY CANYON POWER PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

U.S. Treasury Debt Service Debt Service Cost of Direct Subsidy Fund Reserve Fund Project Fund Issuance Fund Escrow Fund Total Balance at June 30, 2010 $ - $ 15,771 $ 19,506 $ 126,879 $ 737 $ 172,810 $ 335,703 Additions Investment earnings 35 227 401 39 702 Discount on investments purchases 3 2 5 Distribution of investment earnings (12) 12 Other 1,981 2,225 - 35 (35) - 4,206 Total 1,981 2,263 215 450 (35) 39 4,913 Deductions Construction expenses - 81,296 81,296 Interest paid 7,165 - 7,165 Debt issue costs - 702 - 702 2009A Notes Redemption & Interest Payment-Escrow - - - 172,849 172,849 Total - 7,165 - 81,296 702 172,849 262,012 Balance at June 30, 2011 $ 1,981 $ 10,869 $ 19,721 $ 46,033 $ - $ - $ 78,604 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost These balances do not include accrued interest receivable or unrealized gain (loss) on investments, and $6 and $16 held in the revolving fund at June 30, 2011 and 2010, respectively.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY HOOVER UPRATING PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

General Reserve Debt Service Fund Fund . Operating Fund Revenue Fund Total Balance at June 30, 2010 $ 1,330 $ 1,703 $ 1,199 $ $ 4,232 Additions Investment earnings 32 7 39 Discount on investment purchases 1 1 Distribution of investment earnings (1) (31) (7) 39 Revenue from power sales 2,643 2,643 Distribution of revenue 2,250 432 (2,682)

Other 18 18 Total 2,250 450 2,701 Deductions Operating expenses - 323 323 Payment of principal 1,540 *1,540 Interest paid 678 678 Accrued interest purchases 4 4 Total 2,218 4 323 2,545 Balance at June 30, 2011 $ 1,362 $ 1,700 $ 1,326 $ $ 4,388 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $16 and $13 held in the revolving fund at June 30, 2011 and 2010, respectively.

99

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY TIETON HYDROPOWER PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Reserve &

Operating Debt Service Debt Service Contingency General Cost of Issuance Revenue Fund Fund Fund Reserve Fund Fund Reserve Fund Project Fund Fund Escrow Fund Total Balance at June 30, 2010 $ - $ 261 $ - $ - $ 500$ . $ 21 $ 35 $ - $ 817 Additions Investment earnings 5 (1 1 52 2 1 57 Distribution of investment 57 (1) (1) (52) (2) (1) earnings Bond proceeds 2010A&B 5,008 793 48,348 54,149 Receipt from participants 5,577 - - - - 5,577 Distribution of revenues (5,634) 2,612 3,057 24 - (59) -

Other 56 - - - (21) (35) -

Total 2,668 3,057 5,008 24 (21) 699 48,348 59,783 Deductions Acquisition costs 71 71 Operating expenses 1,046 - 1,046 Debt issue costs - - 734 734 Interest paid 1,017 - 1,017 2009 A&B redemption - - - 48,348 48,348 Total 1,117 1,017 - - - 734 48,348 51,216 Balance at June 30, 2011 $ $ 1,812 $ 2,040 $ 5,008 $ 500 $ 24 $ $ - $ -$ 9,384 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $9 and $6 held in the revolving fund at June 30, 2011 and 2010, respectively.

100

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MILFORD I WIND PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Debt Service General Operating Cost of Revenue Operating Debt Service Reserve Reserve Reserve Issuance Fund Fund Fund Fund Fund Fund Project Fund Fund Total Balance at June 30, 2010 $ - $ 4,642 $ 4,448 $ 18,874 $ 2,520 $ 3,000 $ 16 $ 26 $ 33,526 Additions Investment earnings 10 4 417 2 4 437 Discount on investments 2 2 4 Distribution of investment earnings 441 (10) (6) (417) (4) (4) -

Receipt from participants 34,345 - - - - - 34,345 Distribution of revenues (34,786) 15,913 18,873 - - -

Other - - 25 (25) -

Total 15,913 18,873 25 (25) 34,786 Deductions Operating expenses 13,912 13,912

- 13,912 Debt issue costs 1 1 Interest paid 10,087 - 10,087 Premium and interest on investment purchases 2 2 Total 13,912 10,087 2 1 24,002 Balance at June 30, 2011 $ $ 6,643 $ 13,234 $ 18,872 $ 2,520 $ 3,000 $ 41 $ - $ 44,310 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $19 and $7 held in the revolving fund at June 30, 2011 and 2010, respectively.

101

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY LINDEN WIND ENERGY PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Debt Service Debt Service General U.S. Treasury Cost of Revenue Fund Operating Fund Fund Reserve Fund Reserve Fund Project Fund Direct Subsidy Issuance Escrow Fund Total Balance at June 30, 2010 $ - $ - $ - $ - $ - $ 6,548 $ - $ 18 $ - $ 6,566 Additions Investment earnings 4 4 11 25 Discount on investments 1 4 Distribution of investment 20 (5) (4) (11) earnings Revenue from power sales 21,373 - - - - 21,373 Distribution of revenue (21,393) 12,017 7,702 - 1,897 (222) 1 Bond Proceeds 2010A&B - - 2,324 - 3,718 - 1,288 142,171 149,501 Other transfers 770 - 69 (770) - (69) - -

Other receipts 335 - - - 653 - - 988 Total 13,122 7,702 2,324 69 4,854 431 1,219 142,171 171,892 Deductions Construction expenses - - - - 10,820 - - - 10,820

.Operating expenses 6,597 - - 6,597 Debt issuance costs - 1,237 1,237 Payment of principal - - 139,680 139,680 Interest paid - 1,768 - 2,491 4,259 Total 6,597 1,768 - - 10,820 - 1,237 142,171 162,593 Balance at June 30, 2011 $ $ 6,525 $ 5,934 $ 2,324 $ 69 $ 582 $ 431 $ - $ -$ 15,865 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $15 and $7 held in the revolving fund at June 30, 2011 and 2010, respectively.

j' 102 102

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION SYSTEM PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Upgrade General Construction Escrow Fund Reserve Fund Issue Fund Fund Operating Fund Revenue Fund Total Balance at June 30, 2010 $ - $ 4,639 $ 83,274 $ 45,814 $ 8,390 $ - $ 142,117 Additions Investment earnings 102 1,861 337 38 2 2,340 Discount on investment purchases 6 11 13 5 - 35 Distribution of investment earnings (87) (1,729) - (42) 1,858 -

Revenue from transmission sales - - - 100,908 100,908 Distribution of revenue 25 82,447 22,886 (105,358) -

Bond Proceeds 2011 A&B 185,586 - 27,663 - 213,249 Other transfers 31,051 (25) (31,051) 25 - -

Other receipts - - - - 2,590 2,590 Total 216,637 21 79,202 350 22,912 - 319,122 Deductions Construction expenses 34,210 34,210 Operating expenses 22,696 22,696 Payment of principal 32,990 32,990 Interest paid 39,160 2,371 41,531 Debt issuance costs 27,854 27,854 Premium and interest on investment purchases 1 1 Payment of principal and interest expense 216,637 - - - - 216,637 Total 216,637 1 100,004 34,210 25,067 375,919 Balance at June 30, 2011 $ - $ 4,659 $ 62,472 $ 11,954 $ 6,235 $ $ 85,320 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $22 and $26 held in the revolving fund at June 30, 2011 and 2010, respectively.

103

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-PHOENIX PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Debt Service Reserve &

Debt Service Reserve Contingency Cost of Revenue Fund Account Account Operating Fund Fund Issuance Fund Total Balance at June 30, 2010 $ - $ 5,307 $ 7,072 $ 146 $ 720 $ 10 $ 13,255 Additions Investment earnings 10 404 51 465 Distribution of investment earnings 241 (2) (232) (7)

Transmission revenue 9,134 9,134 Distribution of revenues (9,375) 7,754 427 1,278 (454) 370 -

Total 7,762 599 1,278 (410) 370 9,599 Deductions Construction expenditures 109 109 Operating expenses 1,262 - 1,262 Principal payment 4,895 - 4,895 Interest paid 2,832 - 315 3,147 Total 7,727 1,262 109 315 9,413 Balance at June 30, 2011 $ $ 5,342 $ 7,671 $ 162 $ 201 $ 65 $ 13,441 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $12 and $13 held in the revolving fund at June 30, 2011 and 2010, respectively.

104

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MEAD-ADELANTO PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Debt Service Debt Service Operating Reserve & Cost of Account Reserve Fund Fund Contingency Revenue Fund Surplus Fund Issuance Fund Total Balance at June 30, 2010 $ 15,489 $ 22,066 $ 660 $ 6,388 $ - $ 1 $ 26 $ 44,630 Additions Investment earnings 39 1,293 1 459 1,792 Discount on investment earnings 1 1 Distribution of investment earnings (1,293) ([1) (459) 1,762 (9)

Transmission revenue 23,978 23,978 Distribution of revenues 22,657 1,893 - (25,740) 1,190 -

Other 250 82 (250) - 82 Total 22,938 1,975 (250) 1,190 25,853 Deductions Principal payment 13,490 - - - 13,490 Interest paid 8,790 - 1,045 9,835 Operating expenses - 2,047 - 2,047 Total 22,280 2,047 - 1,045 25,372 Balance at June 30, 2011 $ 16,147 $ 22,066 $ 588 $ 6,138 $ $ 1 $ 171 $ 45,111 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $12 and $13 held in the revolving fund at June 30, 2011 and 2010, respectively.

105

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NATURAL GAS PINEDALE PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS INTHOUSANDS)

Debt Service General Revenue Fund Operating Fund Fund Reserve Fund Project Fund Capital Fund Total Balance at June 30, 2010 $ - $ 8,546 $ 3,904 $ 47 $ 15,674 $ 18,879 $ 47,050 Additions Investment earnings 10 2 359 159 530 Discount on investment purchases 24 1 6 31 Distribution of investment earnings 2 (2)

Receipt from participants 5,824 57,987 - 63,811 Sales of natural gas 1,212 11,511 - - 12,723 Distribution of revenues (7,038) (45,982) 5,180 - 47,840 -

Other transfer 9 - (9) (4,509) 4,509 -

Total 23,559 5,181 (9) (4,150) 52,514 77,095 Deductions Construction expenditures - - - 47,349 47,349 Operating expenses 26,205 - - 26,205 Payment of principal - 1,872 1,872 Interest paid - 2,929 - 2,929 Total 26,205 4,801 - 47,349 78,355 Balance at June 30, 2011 $ $ 5,900 $ 4,284 $ 38 $ 11,524 $ 24,044 $ 45,790 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $31 and $41 held in the revolving fund at June 30, 2011 and 2010, respectively.

106

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NATURAL GAS BARN ETT PROJECT SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Debt Service General Revenue Fund Operating Fund Fund Reserve Fund Project Fund Capital Fund Total Balance at June 30, 2010 $ - $ 2,076 $ 9,205 $ 110 $ 47,447 $ (4,523) $ 54,315 Additions Investment earnings 1 3 3 1,076 6 1,089 Discount on investment purchases 3 1 4 Distribution of investment earnings 7 (7)

Receipt from participants 13,284 255 13,539 Sales of Natural Gas 5,505 1,224 6,729 Distribution of revenues (18,797) 6,542 12,255 Other transfer 86 (2,429) 2,343 -

Total 8,110 12,254 (1,353) 2,350 21,361 Deductions Construction expenditures - - 2,969 2,969 Operating expenses 8,636 - - 8,636 Payment of principal - 6,941 6,941 Interest paid - 4,405 - 4,405 Total 8,636 11,346 - - 2,969 22,951 Balance at June 30, 2011 $ $ 1,550 $ 10,113 $ 110 $ 46,094 $ (5,142) $ 52,725 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $19 held in the revolving fund at June 30, 2011 and 2010.

107

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PREPAID NATURAL GAS PROJECT No. 1 SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Revenue Fund Operating Fund Debt Service Fund Project Fund Total Balance at June 30, 2010 $ - $ 14,084 $ 6,745 $ $ 20,829 Additions Investment earnings 7 324 484 815 Discount on investment purchases 5 5 Distribution of investment earnings 484 (484)

Receipt from gas sales 9,990 9,990 Distribution of revenues (23,624) 572 23,052 Commodity swap settlement 13,150 13,150 Other receipts 614 614 Total 584 23,990 24,574 Deductions A & G expenses 1,458 1,458 Payment of Principal 5,715 5,715 Payment of interest 17,419 17,419 Prior year overbillings payout 1,602 1,602 Total 1,458 24,736 26,194 Balance at June 30, 2011 $ - $ 13,210 $ 5,999 $ - $ 19,209 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable, unrealized gain (loss) on investments, and $12 and $16 held in the revolving fund at June 30, 2011 and 2010, respectively.

108

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY MULTIPLE PROJECT FUND SUPPLEMENTAL SCHEDULE OF RECEIPTS AND DISBURSEMENTS IN FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30, 2011 (AMOUNTS IN THOUSANDS)

Proceeds Account Debt Service Account Earnings Account Total Balance at June 30, 2010 $ 57,542 $ 13,242 $ - $ 70,784 Additions Investment earnings 3,844 974 4,818 Distribution of investment earnings (3,844) 10,493 (6,649)

Transfer for debt service payment (10,493) 3,844 6,649 Total (10,493) 15,311 .4,818 Deductions Interest paid 3,004 3,004 Payment of principal 11,400 11,400 Total - 14,404 14,404 Balance at June 30, 2011 $ 47,049 $ 14,149 $ $ 61,198 This schedule summarizes the receipts and disbursements in funds required under the Bond Indenture and have been prepared from the trust statements. The balances in the funds consist of cash and investments at original cost. These balances do not include accrued interest receivable.

109