ML13309A440
| ML13309A440 | |
| Person / Time | |
|---|---|
| Site: | San Onofre  |
| Issue date: | 12/31/1997 |
| From: | Carnahan B, Federmeyer D, Llaneza E RIVERSIDE, CA |
| To: | |
| Shared Package | |
| ML13309A436 | List: |
| References | |
| NUDOCS 9806220284 | |
| Download: ML13309A440 (50) | |
Text
9806220284 9801 PIDR ADOCK 05000 I
POR
CITY OF RIVERSIDE "People Serving People" March 12, 1998
SUBJECT:
1996-97 ANNUAL REPORT AND FINANCIAL STATEMENTS Riverside Public Utilities takes pleasure in sending you its 1996-97 Annual Report and Financial Statements. This report highlights the changes occurring in the electric utility industry and the strategic actions being taken to ensure that Riverside's consumer-owned water and electric utilities continue to provide quality utility services at competitive rates. As plans for the restructuring of the electric utility industry have unfolded, Riverside Public Utilities has been preparing for the transition to choice.
As part of our continuing effort to inform and involve our public in their consumer-owned utilities, this report is distributed to legislators, community leaders, local service groups and businesses, and the financial community.
Thank you for your continued support of Riverside's consumer-owned water and electric utilities.
S I C Public Utilities Director enclosure PUBLIC UTILITIES DEPARTMENT 3900 MAIN STREET RIVERSIDE, CALFORNIA 92522 (909)782-5781 FAx (909) 369-0548
During the 1996-97 fiscal year, Riverside Public Utilities has been actively preparing for a successful transition to choice because we are intent on being a key player in the new market place. This report is our calling card. It is about choices, questions, actions, solutions and services.
It explains who we are and what we're doing to benefit you-our customer-owners.
As California begins to break new ground under electric competition, there will be benefits and savings, as well as risks and uncertainties.
But one fact will remain constant. Riverside Public Utilities will continue to deliver reliable, high quality electric and water services at low rates.
Bill D. Carnahan Public Utilities Director
2 Transition to Choice Californians spend $23 billion anno on electricity. For years, Californ electric rates have been among the high est in the nation due to stricter regula tions, non-economic legislative programs and remote generating locations. But all of that begins to change in 1998.
aife r mong the states leading Expectation: I expect to save about Expectation: I'll get the best deal/or its efforts to deregulate 30 percent on my total electric bill my facility through a power genera e
generation segment of Since the only segment of the tion agreement that corporate head the electric utility industry. It is a industry open to competition is quarters signs with one provider.
passage that is demanding the generation, any savings achieved Some businesses served by consumer attention of utilities and consumers wi apply to the generation portion owned utilities will actually h alike. Some customers are adopting of your bill-not your total electric lower power generation costs W a "wait and see approach" to the bill. Savings will vary based upon they remain with their current new energy market, while others the new marketplace and your electric supplier. In such instances, have been signing on the dotted customer classification, individual locations may seek line. The transition has given rise to Exetto:Icnsic oanw separate negotiating power, request a host of confusing offers and the lead agency to offset the expectations.
power supplier without any obliga-increase from aggregate savings, or tions to my previous supplier adjust their budget for a higher Expectation: All electric utilities in Customers who switch to a new electric bill.
California are required to offer power provider will be assessed a customer choice in 1998.
competitive transition charge Expectation: Electric utilities will Only investor-owned or private (CTC) by the previous utility to be more responsive and offer more "rakyu o or utilities, which are governed by cover their fair share of long-term customer services.
astne yu frinyong the California Public Utilities power generation investments made Deregulation will bring about passageathat indemandinggth power to the Texaco Commission, must open their under past market conditions, many consumer gains.
station on Day Street borders to competition for all We had an exatremely customers in 1998. Consumer-R tight constructionFO REODDIFRAINAOTEETICMP IINAD schedule and were very owned or municipal utlities, which RIVERSIDE'S TRANSITION TO CHOICE, CALL (909)782-0330.
pleased with the way are governed by city councils and....I.....
....L.........I........-
Riverside Public Utilitiesm e
whether worked with us to bring Electric service will be divided into three GENERATION the project in on time, participate in the new market by major segments: generation, transmission We look forward to Jan. 1, 2000. Municipal utilities and distribution. The only portion open working with you to competition or customer choice is on other agin electing to open their borders may generation. Riverside Public Utilities will phase in competition through the continue to provide and charge for Dennis Federmeyer, year 2010. Riverside Public Utilities transmission and distribution services.
boards, mus deidoweters General Contractors plans to phase in choice by customer categories beginning January 1999.
DISTRIBUTION
No hn co ma d
ate to lik the-S o~ S1voi~i r
f0 0 C~hmC~0
4 Transition to Choice As your consumer advocate, River Public Utilities staff will offer thei W
professional expertise and resources to review any written power offers.
We'll help you read between the lines of the fine print and understand the terms of the sale. Selecting an unreliable power supplier probably won't affect the delivery of your electric service, but the price you'll pay for emergency service will diminish any potential savings.
adfers are arriving in the mail, COMMON DEREGULATION ACRONYMS tolephone and at your door. But AB 1890 -ASSEMBLY BILL 1890 thstime, it isn't for telephone ser-California legislation enabling restructuring of the electric industry.
vice or airline discounts, it's for elec-CONSUMER-OWNED UTILITY tricity. What should you do? Will Owned by the constituents of various cities or special districts; governed by city you select a reliable supplier and councils and boards -
not the CPUC.
achieve savings that are worth your CPUC -
CALIFORNIA PUBLIC UTILITIES COMMISSION efforts? W~(ould you be better off Regulates investor-owned utilities and is overseeing deregulation.
staying with your current provider?
CTC -
COMPETITIVE TRANSITION CHARGE eFee charged to customers to fairly distribute cost of long-term power generation hinvestments made under past market conditions.
in Californias electric industry, buy-FERC -
FEDERAL ENERGY REGULATORY COMMISSION ers of energy will have more choices, Regulates the transmission and wholesale sales of electricity.
so it's important to be prepared and IOU -
INVESTOR-OWNED UTILITY well informed before making a Owned by stockholders, governed by a private board, and regulated by the CPUC.
commitment.
ISO -
INDEPENDENT SYSTEM OPERATOR Assures safe and fair transfer of electricity from generators to distribution companies.
QUESTIONS To ASK A PX -
POWER EXCHANGE POWER SOLICITOR Serves as the state's new spot price market for electricity COMPANY PROFILE
- How long have you been in the
- Ifyou fail to supply the required
- If IDn dissatisfied and want to Soyr arene dth se so o
power, do you payfor any recon-switch providers before the term of "I had a lot of questions elecc revene toe smt nect or emergencyfees charged by our agreement, is there a penalty?
concerning electric rcommunity my local electric distributor?
Will I need an additional meter if competition, the services as my current provider?
and programs available Will your company e my Hon p
ees m
to my company, and kepterms oare ntavailable?
o* de your offer compare to m my facility's energy account information and energy ogrmetcurrent provider?
consumption patterns, usage confidential?
COSTS emploee tk s
Whatyour best electric rate based ADDED VALUE or oo ere yurg customaer srv ices the time to sit diwn with me, listen to my office and what are its hours?
on my consumption patterns?
-What are my billing options?
concerns and questions, Is m supply rate locked in?
What customer services, I needed" cWhat services am I buyingfom my agent?
provide?
Edgar Llonez*,
you and what will my existing Dow aones
& Co.
utility continue to provide?
LOOKING FOR A SPEAKER ON DEREGULATION? CALL (909)782-5485.
6 Transition to Choice The University of California at Riverside and Riverside Public Utilities have reached a five year conceptual agreement that will serve as a blueprint for future strategic energy partner ships. Key features include aggregation of service, custom billing, application of public benefit funds for related university offerings, emergency load shedding, disaster coordination, long-term planning, resource sharing, environ mental and energy research support, and joint advocation of partnering objectives.
us sRiverside Public Utilities is the university will be reduced by The conversion will reduce operating action to identify and capital-approximately 40 percent, with losses, improve reliability and enable on its strengths in an emerging 30 percent of the cost reduction the utility to serve three times as marketplace, we are also raking a stemming from 69 kV service. As many customers from one circuit, new approach to business that a result, Riverside Public Utilities which will help keep electric rates addresses the specific energy needs retains the university as its primary down by reducing the capital cost of customers. Discussions are under-customer for five years, which in to serve each customer.
way with several of our industrial turn benefits the entire customer Other key actions being taken customers to forge strategic energy base as the university balances out by Riverside Public Utilities in partnerships. One such customer is the electric system load requirements preparation for deregulation include the University of California at and power costs.
improvements to our customer Riverside -
Riverside Public With a customer base of nearly information and telephone systems.
Utilities largest customer.
100,000 water and electric accounts, In 1996-97, the utility approved The University of California Riverside Public Utilities handled the purchase of nearly $200,000 at Riverside is unique among more than 266,000 customer calls, in new telephone software and hard Riverside's electric customers as it 107,000 walk-ins, and 121,000 ware to add 120 new telephone uses more than 75 million kilowatt-service orders last year alone. To stations, distribute incoming calls hours per year, primarily during help ensure the delivey of safe, through a recorded message system, "I would like to bring to of-peak periods. In April 1997, reliable water and electricity to our retain historical reporting data, your attention what the University of California System customers, Riverside Public Utilities program data for specialized reports, I consider exceptional and the California State Unvriy takes piein maintaining saeo-and trc pefrmne The new service rendered to our Tivri dealership. Both the System jointly issued a request for the-art technology. In 1996-97, system has improved employee nand positive qualifications from electric service Riverside committed $1.5 million productivity, flexibility and response actions token by your providers to aggregate loads for all to enhance its electric and water time. The majority of incoming calls employees were greatly appreciated" campuses and related properties.
monitoring and control systems.
are now answered by a customer However, campuses within munici-The upgrades will increase system service representative in five seconds Dave Franklin, pal territories were given the option flexibility, database storage and con-or less.
theUniersty fiClifrnisSyte to negotiate power supply agreements version, calculations, graphics and with their local consumer-owned interactive communication.
utility.
Riverside Public Utilities also Riverside Public Utilities staff embarked on a $34.7 million, and university personnel met over 13-year plan to convert remaining several months to achieve conceptual 4 kV electric facilities to 12 agreement on a five-year strategic energy partnership. Total charges to INTERESTED IN A STRATEGIC ENERGY PARTNERSHIP? CALL (909)782-5782.
Ask n
th ri h
S Sst Ions
SO iTnUC s
Wc t*
S we
- say, U
h tM we take that give our customers confidence 4WS
8 Transition to Choice TRANSITION TO CHOICE: COMPETITIVE FINANCIAL STRATEGY WORK IN PROGRESS SHORT-TERM ACTIONS OBJEC Reduce operating expenses and capital Implement marketing plan.
Renegotiate power supply contracts for improvement projects.
new marketplace.
- Adjust rates to remain competitive.
Establish stranded investment and action Explore strategic alliances.
plan to eliminate debt, patoeiiaedbsurcharge and programs.
Execute power agreements with industrial Restructure "above market" generation debt.
customers.
Obtain new customer information system.
Continue to decrease general fund transfer Implement new market-driven customer duEstablish debt reduction reserve.
surcharges and programs.
of electric revenue to competitive level,.evcsan rgas Issue bonds to construct new electric and water distribution projects.up oratfo Update stranded investment levels.
Set competitive transition charge.
Participate in competitive market.
core activities-from debt and electric field services personnel.
TELECOMMUNICATIONS ering to budget reductions These standards measure productivity PARTNERSHIPS Iting-have been identified assist in operations management, To foster greater customer access and formulated by Riverside Public and provide industry criteria to to high speed telecommunications Utilities staff into a competitive gauge Riverside's performance.
technology, Riverside Public Utilities financial strategy to successfully charged Koerner Co lt g transition to an open marketplace.
COMPETITIVE FINANCIAL identifyring opportunities forW Sanctioned as sound by rating ASSESSMENT firms to lease or partner in the agencies and approved by the City R.W Beck completed a competitive utilitys telecommunications project Council in September of 1996, financial assessment of the electric to install fiber optic and radio Riverside's competitive financial utility, including calculation of communication networks.
strategy allows the utility to recover total competitive transition cost or and eliminate stranded power plant stranded investments.
CUSTOMER SATISFACTION invetmets wth nly ino impctsBUSINESS SURVEY istmes wpmthe nly ino ias STRATEGIC OPTIONS STUDY Riverside was among several utilities When our water service To further evaluate its competi-Washington International Energy to sponsor a California business sur Sin eparGroup is conducting an overall vey by RKS Research & Consulting wat ner o rWepis werestrRvesd astae I called Riverside Public strategic options study of Riverside's to reveal customer satisfaction levels, Utilities since we require experts to a
electric utility to provide recoi-expectations from deregulation, and water to operate some comprehensive analysis of its water mendations regarding the competi-comparisons between private and equipment Using his and electric utilities for potential ingenuity, your employee alliances and efficiencies. In addi-tiveness of current and potential municipal utilities.
put in a temporary sructres water source. We were totoheejoint etforts, Riverside sultant wilado funcions the uys A-TIGPA down only a minimum Public Utilities has reduced planned fnacastteigoracWthndtydvlpmnscur time. In this day of, capital expenditures by nearly $48 hustle and bustle, ites operations and customer services, ring rapidly, Riverside Public very refreshing toon r
Utilities selected Stone & Webster on act of personal by 12 percent, and streamlined RATE UNBUNDLING STUDY to coalesce market information, consideration beyond stfigb 2pretduringth what is necessary.f To address the complexity of new identif trends, and assist staff with past three fiscal years.
billing requirements, Riverside formalizing a retail strategy. Stone &
Hank Eilerosi Public Utilities has engaged Resource Webster will also advise the utility EXPANDED ENGINEERED Management International to assist on the electric public benefits charge WORK STANDARDS in detailing the components of elec-and related programs mandat One measure taken in 1996-97 was tric service so customers may be billed the deregulation legislation.
the retention of IB. Maynard Co.
for specific agreed upon services.
to update and expand existing work standards to encompass all water FOR BUSINESS PROGRAMS AND FACILITY SURVEYS, CALL (909)782-5485.
OuS-H S
we generate today will serve the need of tom or row
10 Transition to Choice A
Environmental sensitivity is of such par t
importance to Riverside Public Utilitie part of our mission statement. As a mun utility. Riverside is our home-not simply a place to erect reservoirs and string power lines.
For Riverside Public Utilities, this responsibility often calls for embracing added measures and costs to build facilities that complement neigh borhood aesthetics. Designed to blend into the hillsides after landscaping, the 10 million gallon Tilden Reservoir, shown near completion at left, is a concrete buried reservoir.
etbihd as a consumer-owned will serve as a backbone system, Utilities joined with other regional verside Public Utilities' with the potential for extending water agencies to fund a water ng purpose is community recycled water service throughout conservation project at the Seven service. In addition to providing the city. Initial estimates indicate Oaks Dam in neighboring San essential water and electric services 70 percent of the recycled water Bernardino County. Riverside's to more than 241,000 people, will be used for landscape irrigation participation will secure rig t
the Public Utilities Department with the remainder used for indus-an additional 3,227 acre t
returned $18.7 million of the trial purposes. The first customer groundwater annually, or enou electric and water revenue for the under the expansion program is the water to serve 4,338 average 1996-97 fiscal year to the citys Van Buren Golf Center, which will Riverside households. The cost per general fund for vital community use about 200 acre feet of recycled acre foot of water is estimated at services, such as police, fire, library water annually at one-third the cost
$216 or 50 percent less than the Iand youth services. In stark contrast, of domestic water.
current imported water charge.
an investor-owned utility would To ensure its domestic water Riverside Public Utilities' deep return far less to our community, supply continues to meet the high-sense of responsibility to its cus about $2.5 million, from the same est state and federal water quality tomer-owners is evidenced by its amount of utility revenue. On an standards Riverside Public Utilities commitment to system reliability.
individual basis, Riverside Public has been keeping vigilant watch In 1996-97, Riverside operated eWhen a water main in Utilities employees also contribute over three major groundwater electric and water systems that front of our house brake, voluntarily to several humanitarian contaminant plumes. Without provided service 99.99 percent of the crew who repaired t causes. This year, they donated more proper monitoring and treatment, the time. Based on a recent survey was thorough, did the job quickly and ccommo-than $26,500 to various United Way these plumes pose serious threats of 39 investor-owned utilities, doted our family1 They agencies and spearheaded the citys to Riverside's water supply. Public Riverside customers continue to even left the front of our holiday food drive to amass 7,041 Utilities staff has worked diligently experience sgicatyhigher home looking bettersinfctl than it did prior to the pounds of food for families in need with the parties responsible for the service reliability. When interrup leak! We appreciate the of assistance.
contamination and governmental tions do occur, statistics indicate superb job they did."
Riverside Public Utilities' com-agencies to assure that these groups Riverside Public Utilities restores Pietro Family, mitment to the environment is take appropriate and expedient power over five times faster and Riverside, CA just as strong as its civic ties. In corrective actions and reimburse responds to water emergencies 1996-97, Riverside extended its the city for related expenses.
33 percent faster than agencies recycled water system to help con-Adding to its groundwater of comparable size.
serve high quality domestic water production rights, Riverside Public supplies and control long-term water supply costs. The expansion TO REACH CUSTOMER SERVICE, CALL (909)782-0330.
6.g g0 water and electric syste s,
but o
u r
respoinsi
12 Transition to Choice BOARD OF PUBLIC UTILITIES The Board of Public Utilities is composed of seven citizens appointed to four-year terms by City Council to govern ut policies and represent the community. Citizens serve on a voluntary basis without compensation. Applications for new members are solicited annually through an insert with the city services bill. Applicants must be at least 18 years of age and reside within the City of Riverside in order to be eligible to serve on the board. The Board of Public Utilities meets at 8:15 a.m. on the first and third Fridays of each month in City Council Chambers at City Hall, 3900 Main St., Riverside. Board meetings are open to the public.
RAPHAEL DE LA CRUZ DAVID MACHER RONALD MCCOY JACQUELINE MIMMS CONRAD NEWBERRY JR.
1996-97 Board Chairman Occupation: Certified Occupation: Retired, Occupation: Assistant Occupation: Registered Occupation: Senior Public Accountant Farmer Assistant Chief Vice Chancellor of Professional Mechanical Administrator for Riverside resident:
Engineer -Water Campus Relations Engineer 2nd District County lifetime Riverside resident:
Riverside resident Riverside resident Supervisor 16 years 12 years 4 years Riverside resident:
elifetime MAYOR RIVERSIDE PUBLIC RONALD LOVERIDGE UTILITIES AD M INIST RATION CITY COUINCI BILL D. CARNAHAN CHUCK BEATY Director Ward I MICHAEL J. BALDWIN AMEAL MOORE Assistant Director, Ward 2 Operations THOMAS PEVEHOUSE DWIGHT TATE JOY DEFENBAUGH DIETER P.WIRTZFELD Occupation: Economic Occupation: Personal Ward 3 Assistant Director, Development Specialist Financial Planner MARE AEEngineering and Resources Riverside resident:
Riverside resident:
Ward 4 DAVID H.rWRIGHT 12 years lifetime Assistant Director, ALEX CLIFFORD Finance and Administration Ward 5 ANNUAL REPORT TERRI THOMPSON PRODUCTION Ward 6 KARIN K. ROSS LAURA PEARSON Editor Ward 7 ABRAMS CREATIVE CITY MANAGER SERVICES JOHN HOLMES Design and Production JOHN SCHULZ MICHAEL ELDERMAN PUBLIC UTILITIES ARCHIVES STOC K Photography Riverside City Hall
RIVERSIDE PUBLIC UTILITIES 1 996-97
ELECTRIC UTILITY FINANCIAL STATEMENTS BALANCE SHEETS89 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS 1
STATEMENTS OF CASH FLOWSII NOTES TO THE FINANCIAL STATEMENTS 129 INDEPENDENT AUDITORS' REPORT 1
WATER UTILITY FINANCIAL STATEMENTS BALANCE SHEETS201 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS 2
STATEMENTS OF CASH FLOWS 2
NOTES TO THE FINANCIAL STATEMENTS 248 INDEPENDENT AUDITORS' REPORT 2
GOVERNING BODIES AND ADMINISTRATION 2
RIVERSIDE PUBLIC UTILITIES EMPLOYEES30 1
ACKOWLDGEENT 32
Fiscal Message Tran to Stranded investment, competitive in a significant improvement to the Water Utility's financial transition charge, system debt, rate picture. However, Riverside's water rates still remain among adjustments, joint project financing, the lowest in the region. Long-range financial modeling and major customer contracts -
these planning for the Water Utility have established an appropri st a few of the financial issues that have come to the ate balance between revenue and expenses.
rfront as we look toward deregulation. Riverside will relfron as e lok owar deegultio. Rversde ill Financially, as in all areas of operation, Riverside is preparing phase in competition by customer categories beginning for competition. Our strengths will continue to be competi Januaty 1999. A great deal of work has been performed and Janury 999 A rea del o wor ha ben prfomedand tive rates, reliability, customer service, local control and a great deal more is underway to financially position Riverside Public Utilities for the transition to choice.
year 1997-98, Riverside Public Utilities will capitalize on low Riverside Public Utilities has developed a dynamic compre-interest rates by issuing and refunding both water and electric hensive financial strategy that will be continually reviewed revenue bonds. These bonds will allow Riverside Public and updated to ensure competitive rates and services.
Utilities to offer the most competitive rates in the area.
Customer retention is the ultimate goal of the strategy. By choosing to stay with Riverside Public Utilities, the cus tomer retains lower rates; the city preserves funding for vital services; and the utility maximizes revenue for the benefit of evolving marketplace. Riverside Public Utilities is determined to be the best choice its entire customer base.
for its customers and community.
Water services, although less prominent due to electric restructuring, continue to be an essential and important component of Riverside's community-owned utilities. Two rate increases during the last several years have resulted
2 Electric Statistic 19697 ELECTRIC DOL LAR AN o
aEOUCS SOURC~vi - E OPrFk RV-ENU i
DISTR I.B U -T IO N OF REVEN SResieta aes on(3U)
EPurchased Powter Supply (570)
R Coal (52,2%)
F'Idustril Sale (290)
O Operaiotn & Mainteance (190)
O-Third Party Purchases (269%
E3 Commercial Sales (24 )
F1 Debt Service (9jt)
El Nuclear (18.6%)
Rate Stabilization Account 0 Transfer to City General Fund (90)*
E Hydropower (2.2%)
Funds (6y)
El Additions & Replacements Purchases from SCE were 0.1 F1 Interest Income (30) to the System (4c) for 1996-97 SOther Sales(k3g)
W Additional Reserves (20)
- Basedon transfereof 10percent off rr El Other Revenue (2f)
[995.96eparadng revenues(ixando rest and othe r noopeaatincome jDD wat
]
gh bubpo o
e
Electric Statistics ECRIC GENERAL FUND TRANSFER (in -Ions)
BOND RATINGS WMOODY'S INVESTOR SERVICE STANDARD & POOR'S CORP.
93
$13.7 94
$16.1 95
$16.3 96
$16.3 ELECTRIC FACTS AND SYSTEM STATISTICS 97
$16.3 ESTABLISHED:
1895 SERVICE AREA POPULATION:
241,630 SERVICE AREA SIZE (square miles):
79.6 AVERAGE NUMBER OF CUSTOMERS SYSTEM STATISTICS TRANSMISSION LINES (ir cuit miles):
68.7 93 88,284 DISTRIBUTION LINES (circuit miles) 1,002.3 NUMBER OF SUBSTATIONS:
is 94 88,628 1996-97 PEAK DAY (megawatts):
435 95 88,408 Highest single hourly use: B/I3/96, 4pm. 106 degrees 96 88,730 HISTORICAL PEAK (megawatts):
448 Highest single hourly use: B/I 17/92, 3:30pm. 107 degrees 97 9561 TOTAL OPERATING REVENUE (in mihsBiO 93
$166.3 94
$161.3 95
$155.9 96
$164,8 97
$175.7
- EDUCTION FiA mANDYST kEM TAT.hISTI 93 11653 94 1.618 95 1,614 96 1A690 97 1,724 PEAK DAY DEMAND 1
7n n9 9Pg6 PAs9 K 93 448.0 94 14212 95 442.0 96 432.0 97 434.5 0
OUTO i
ilo ioathus
4 W ater Statistics 1996/97 WATER DOLLAR AND RESOURCES SOURCE OF REVENUE DISTRIBUTION OF REVENUE WATER RESOURCES U Residential Sales (60%)
Operation & Maintenance (561)
San Bernardino Basin Wells (80.8%)
El Commercial & Industrial Sales (27%)
171 Debt Service (19%)
7 Riverside Basin Wells (19.1%)
V] Other Revenue (7%)
EU Transfer to City General Fund (9%)*
Purchased Water was 0.1%
E Interest Income (41%)
3 Additional Reserves (9e)
F! Other Sales (2g)
U Additions & Replacements to the System (5%)
Basedaontransfrofl1.5percencoffiscalyer El Water Supply (2U) 199S-96 operating revenues (excludes interest and other non-operating income)
VJe provided enosugh eter in on e y
to fll bulb
Water Statistics WATER GENERAL FUND TRANSFER (in milions)
BOND RATINGS MOODY'S INVESTOR SERVICE STANDARD & POOR'S CORP.
93
$2.0 Aa AA 94
$2.1 95
$2.1 WATER FACTS AND SYSTEM STATISTICS 96
$21 ESTABLISHED:
1913 97
$2.4 SERVICE AREA POPULATION:
241,630 SERVICE AREA SIZE (square miles):
76.4 SYSTEM STATISTICS:
AVERAGE NUMBER OF CUSTOMERS SMALLEST PIPELINE:
1.5" LARGEST PIPELINE:
60" MILES OF PIPELINE:
850 93 58,145 NUMBER OF ACTIVE WELLS:
45 94 58.052 NUMBER OF RESERVOIRS:
16 95 58,182 TOTAL RESERVOIR CAPACITY (gallons):
100,400,000 MILES OF CANAL:
12 96 58,120 NUMBER OF FIRE HYDRANTS:
6,33 1 97 58,246 DAILY AVERAGE PRODUCTION (gallons):
58,700.000 1996-97 PEAK DAY (gallons):
93,410,000 7/30/96, 103 degrees HISTORICAL PEAK (gallons):
95,396,000 6/28/90, 103 degrees TOTAL OPERATING REVENUE (in millions) 93
$18.3 94
$18.3 95
$18.6
$21.4
$23.5 PRODUCTION (in acre feet) 93 65,622 94 68,817 95 67,787 96 71.601 97 73,334 PEAK DAY DEMAND (in million gallons) 93 93.7 914 94.9 95 95.4 96 93.7 97 93.4
Electric Statistics POWER SUPPLY (MWh) 1996/97 1995/96 1994/95 1993/94 1992/93 San Onofre 227,200 299,100 272,000 269,400 312,000 Intermountain Power 899,300 566,600 743,200 842,100 839,500 Palo Verde 94,300 88,400 83,400 58,500 83,900 Hoover 37,700 39,500 33,500 36,300 28,400 Firm contracts 267,300 248,400 276,800 278,100 143,900 Non-firm contracts 196,200 446,400 203,400 130,100 151,200 Southern California Edison 1,500 1,100 2,000 3,400 94,400 Total 1,723,500 1,689,500 1,614,300 1,617,900 1,653,300 System peak (MW) 434.5 432.0 442.0 421.2 448.0 ELECTRIC USE 1996/97 1995/96 199495 193/94 1992/93 Average number of customers Residential 80,656 79,904 79,749 79,879 79,665 Commercial 8,577 8,500 8,337 8,424 8,314 Industrial 200 199 201 198 182 Other 128 127 121 127 123 Total 89,561 88,730 88,408 88,628 88,284 Millions of kilowatt-hours sales Residential 563 566 544 517 557 Commercial 408 414 391 383 392 Industrial 618 606 574 586 56 Other 49 46 45 43 41 Total 1,638 1,632 1,554 1,529 1,556 ELECTRIC FACTS 1996/97 1995/96 1994/95 1993/94 1992/93 Average annual kWh per residential customer 6,984 7,090 6,823 6,475 6,992 Average price (cents/kWh) per residential customer 10.69 10.86 10.58 10.70 10.31 Debt as a percent of net plant, 80.3%
82.4%
88.2%
90.3%
95.2%
Operating income as a percent of operating revenues 14.0%
12.6%
8.0%
16.2%
15.9%
Employees 298 313 311 285 288
'Net plant includes nuclear fuel inventory and work in progress.
Water Statistics WATER SUPPLY (acre feet) 1996/97 1995/96 1994/95 1993/94 1992/93 Pumping 73,266 71,316 67,636 68,779 65,018 Purchases 68 285 151 38 604 Total 73,334 71,601 67,787 68,817 65,622 Percentage pumped 99.9%
99.6%
99.8%
99.9%
99.1%
System peak day (gallons) 93,400,000 93,699,000 95,400,000 94,868,000 93,655,000 WATER USE 1996197 1995/96 1994/95 1993/94 1992/93 Average number of customers Residential 53,432 53,351 53,473 53,328 53,463 Commercial/industrial 4,054 4,138 4,118 4,115 4,098 Other 760 631 591 609 584 Total 58,246 58,120 58,182 58,052 58,145 CCF sales Residential 17,833,655 17,848,356 16,113,649 15,858,173 16,320,462 Commercial/industrial 9,386,127 9,176,633 8,529,614 8,009,188 8,228,209 Other 1,436,177 1,369,939 1,221,898 1,822,448 1,560,370 Total 28,655,959 28,394,928 25,865,161 25,689,809 26,109,041 WATER FACTS 1996/97 1995/96 1994/95 1993/94 1992/93 Average annual CCF per residential customer 361 335 301 297 305 Average price (cents/CCF) per residential customer 85.7 79.5 75.5 75.7 72.4 Debt as a percent of net plant 34.4%
35.3%
37.3%
37.0%
38.2%
Employees 136 137 137 137 137
City of Riverside Electric Utility June 30 June 30 1997 1996 ASSETS (In Thousands)
UTILITY PLANT:
Production
$124,684
$124,079 Transmission 15,005 14,692 Distribution 179,215 151,303 General 22,232 21,935 341,136 312,009 Less accumulated depreciation and amortization (130,844)
(122,403) 210,292 189,606 Construction in progress 7,770 29,516 Nuclear fuel, at amortized cost 2,955 3,548 Total utility plant 221,017 222,670 RESTRICTED ASSETS:
Cash and cash equivalents 21,390 21,432 Investments 23,333 20,788 Total restricted assets 44,723 42,220 CURRENT ASSETS:
Cash and cash equivalents 37,588 53,179 Accounts receivable, less allowance for doubtful accounts 1997 $777,000; 1996 $959,000 19,004 19,26 Note receivable 16,000 17,04 Accrued interest receivable 598 983 Prepaid expenses 7,836 1,387 Nuclear materials inventory 1,007 998 Total current assets 82,033 92,862 OTHER ASSETS:
Unamortized project costs 202 686 Bond issuance costs 1,709 1,872 Total other assets 1,911 2,558 Total assets
$349,684
$360,310 The notes to the financial statements are an integral ar of this statement
City of Riverside Electric Utility June 30 June 30 1997 1996 CAPITALIZATION AND LIABILITIES (In Thousands)
EQUITY:
Retained earnings:
Reserved
$ 24,298
$ 23,407 Unreserved 39,919 35,599 Total retained earnings 64,217 59,006 Contributed capital 41,588 40,416 Total equity 105,805 99,422 LONG-TERM OBLIGATIONS, LESS CURRENT PORTION 170,856 177,212 Total capitalization 276,661 276,634 OTHER NON-CURRENT LIABILITIES:
Decommissioning liability 19,586 17,058 Rate stabilization account, less current portion 24,189 33,410 Total non-current liabilities 43,775 50,468 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS:
Accrued interest payable 2,406 2,495 Current portion of long-term obligations 6,635 6,190 Total current liabilities payable from restricted assets 9,041 8,685 CURRENT LIABILITIES:
Accounts payable 4,464 7,105 Accrued liabilities 4,362 4,261 Rate stabilization account 9,221 11,000 Current portion of long-term obligations 4
35 Customer deposits 2,156 2,122 Total current liabilities 20,207 24,523 COMMITMENTS AND CONTINGENCIES Total capitalization and liabilities
$349,684
$360,310 The notes to the financial sa ents are an integral part of ths statement.
0 City of Riverside Electric Utility For the Fiscal Years Ended June 30 1997 1996 (In Thousands)
OPERATING REVENUES:
Residential sales
$ 60,246
$ 61,544 Commercial sales 43,669 44,308 Industrial sales 53,164 51,784 Other sales 5,079 4,780 Sales to other utilities 649 782 Provision for rate stabilization 11,000 0
Other operating revenue 1,844 1,624 Total operating revenues 175,651 164,822 OPERATING EXPENSES:
Purchased power 105,354 100,788 Operations 27,549 26,769 Maintenance 7,073 5,864 Depreciation and amortization 11,031 10,626 Total operating expenses 151,007 144,047 Operating income 24,644 20,775 NON-OPERATING REVENUES (EXPENSES):
Interest income 5,495 5,720 Interest expense (10,416)
(10,765 Gain (loss) on retirement of utility plant (163) 201 Other 1,971 1,671 Total non-operating revenues (expenses)
(3,113)
(3,173)
Income before operating transfer 21,531 17,602 OPERATING TRANSFER OUT:
Contribution to the City's general fund (16,320)
(16,335)
Net income 5,211 1,267 RETAINED EARNINGS, JULY I 59,006 57,739 RETAINED EARNINGS, JUNE 30
$ 64,217
$ 59,006 The notes to the finm statemenncs re anintegral part of this statement.
City of Riverside Electric Utility For the Fiscal Years Ended June 30 1 997 1996 (in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users
$164,947
$161,618 Cash paid to suppliers and employees (144,434)
(128,587)
Other non-operating revenue 1,971 1,671 Net cash provided by operating activities 22,484 34,702 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:
Contribution to the City's general fund (16,320)
(16,335)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Purchase of utility plant (9,543)
(18,464)
Purchase of nuclear fuel (1,419)
(1,143)
Proceeds from the sale of utility plant 250 259 Principal paid on long-term obligations (6,226)
(5,896)
Interest paid on long-term obligations (10,059)
(10,386)
Contributed capital 815 899 Net cash used by capital and related financing activities (26,182)
(34,731)
CASH FLOWS FROM INVESTING ACTIVITIES:
Reduction (increase) in note receivable to Riverside Redevelopment Agency 1,049 (17,049)
Purchase of investment securities (2,545)
(2,353)
Income from investments 5,881 6,094 Net cash provided (used) by investing activities 4,385 (13,308)
Net decrease in cash and cash equivalents (15,633)
(29,672)
CASH AND CASH EQUIVALENTS, JULY I 74,611 104,283 CASH AND CASH EQUIVALENTS, JUNE 30
$ 58,978
$ 74,611 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income
$ 24,644
$ 20,775 Adjustments to reconcile operating income to net cash provided by operating activities:
Other non-operating revenue 1,971 1,671 Depreciation and amortization expense 11,031 10,626 Amortization (burn) of nuclear fuel 2,012 1,249 Provision for uncollectible accounts receivable (182)
(477)
(Increase) decrease in accounts receivable 444 (2,658)
Increase in prepaid expenses (6,449)
(30)
Increase in nuclear materials inventory (9)
(47)
Increase (decrease) in accounts payable (2,641) 1,268 Increase (decrease) in accrued liabilities 101 (42)
Increase (decrease) in customer deposits 34 (69)
Increase in decommissioning liability 2,528 2,436 Decrease in rate stabilization account (11,000) 0 Net cash provided by operating activities
$ 22,484
$ 34,702 SCHEDULE OF NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES:
Contributions in aid of construction 357 311 The,otes to the financial satements are a iegral pat of this statement.
2 City of Riverside Electric Utility Notes to the Financial Statements
SUMMARY
OF SIGNIFICANT of bond indentures. Cash accounts for all City funds at ACCOUNTING POLICIES pooled for investment purposes to enhance safety and liqui The Electric Utility exists under, and by virtue of, the City ty while maximizing interest earnings. Investments are stat Charter enacted in 1883, and is a component unit of the at cost or amortized cost. Interest income earned on pooled City of Riverside (City). The Electric Utility is responsible cash and investments is allocated monthly to the various for the generation, transmission and distribution of electric funds of the City based on the month-end cash balances.
power for sale in the City.
Interest income from cash and investments held by fiscal agents is credited directly to the related account.
Basis of Accounting The accounting records of the Electric Utility are in accordance with generally accepted All highly liquid investments (including restricted assets) with accounting principles as applicable to governments and sub-a maturity of three months or less when purchased are con stantially in conformity with the Uniform System of Accounts sidered to be cash equivalents. Cash and investments held on prescribed by the Federal Energy Regulatory Commission, behalf of the Electric Utility by the City Treasurer are consid except for the method of accounting for contributed capital ered highly liquid and are classified as cash equivalents for the described below. The Electric Utility is not subject to the reg-purpose of presentation in the statement of cash flows.
ulations of the Federal Energy Regulatory Commission. The Electric Utility is not required to and does not elect to imple-n ment the pronouncements of the Financial Accounting inventory. The Electric Utility expenses items as they are Standardsdrawn out of Central Stores. As such, the Electric Utility Stanard Boad isue aftr Nvembr 189.does not include inventories in its financial statements.
Utility Plant and Depreciation All utility plant is Bond Discounts and Issuance Costs Bond dis valued at historical cost or estimated historical cost, if actual counts and issuance costs are deferred and amortized over the historical cost is not available. Cost includes labor; materials; term of the bonds using the effective interest method. Bond allocated indirect charges, such as engineering, supervision, con-discounts are presented as a reduction of the face amount of struction and transportation equipment, retirement plan contri-bonds payable, whereas issuance costs are recorded as butions and other fringe benefits; and certain administrative deferred charges.
and general expenses. Contributed plant is valued at its estimated fair market value on the date contributed. The cost of relatively Contributed Capital Amounts received from minor replacements is included in maintenance expense.
tomers and others for constructing utility plant are combi Depreciation is provided over the estimated useful lives of the tr ted ai s o in eopyi A
lc he related assets using the straight-line method. The estimated useful lives are as follows:
Depreciation of contributed assets is expensed.
Production plant.......................
30 years Transmission and distribution plant........
20-50 years During the year, contributed capital increased by the following General plant and equipment.............
5-15 years amounts (in thousands):
1997 1996 Nuclear Fuel The Electric Utility amortizes the cost of nuclear fuel to expense using the "as burned" method. In accordance with the Nuclear Waste Disposal Act of 1982, the Impact fees 815 899 Electric Utility is charged one mill per kilowatt-hour of energy Contributed plant 357 311 generated by the City's share of San Onofre Nuclear Balance, June 30
$41,588
$40,416 Generating Station's Units 2 and 3 to provide for estimated future storage and disposal of spent fuel. The Electric Utility nclear D em isiig Reserve fer re pays this fee to its operating agent, Southern California Edison tionsirequire th EtrU it to ve for t t
Company (SCE), on a quarterly basis (see Note 8).
dcmisoigo t wesi hr ftenceruisa Compny SCE, o a uarerlybass (ee ote8).San Onofre. The Electric Utility has established a trust account Restricted Assets Proceeds of revenue bonds yet to be to accumulate resources for the decommissioning of the nudear used for capital projects, as well as certain resources set aside power plant and restoration of the beachfront at San Onofre.
for debt service, are classified as restricted assets on the bal-Each year the Electric Utility recognizes an expense in the ance sheet because their use is limited by applicable bond amount of the contribution to the trust account. The funding covenants. Funds set aside for the nuclear decommissioning will oceur over the useful life of the generating plant. Amounts reserve are also classified as restricted assets because their use held in the trust account are classified as restricted assets in the is legally restricted to a specific purpose.
accompanying balance sheet. To date, the Electric Utility has set aside $19,586,000 in cash and investments with the trustee Cash and Investments The City follows the practice of as Riverside's estimated share of the decommissioning cos pooling cash and investments of all funds except for funds San Onofre. Based on a cost estimate completed b C
required to be held by outside fiscal agents under the provisions approved by the California Public Utilities Commission, the
City of Riverside Electric Utility Notes to the Financial Statements 13 lectric Utility plans to set aside approximately $1.6 million Self-Insurance Program The Electric Utility partici per year to fund this obligation. Decommissioning is expected pates in a self-insurance program for workers' compensation to commence around the year 2015.
and general liability coverage that is administered by the City.
The Electric Utility pays an amount to the City representing Rate Stabilization Account The Electric Utility's an estimate of amounts to be paid for reported claims rules and regulations provide for a rate stabilization account incurred and incurred but unreported claims based upon past (RSA) that is used to offset changes in the cost of providing experience, modified for current trends and information.
power. Wholesale rate refunds and over or under collections of revenues resulting from the difference between the Electric Although the ultimate amount of losses incurred through Utility's actual costs of supplying electric power and energy June 30, 1997, is dependent upon future developments, man and the amount billed to customers through existing rates are agement believes that amounts paid are sufficient to cover recorded in the RSA. Use of amounts set aside in the RSA such losses.
requires specific approval of the Board of Public Utilities and City Council.
Deferred Compensation and Employee Retirement Plans There were no refunds to the RSA during fiscal years 1997 Deferred Copensation Plan The City offers its employees a and 1996, but there was an $11.0 million charge to the RSA deferred compensation plan created in accordance with the during fiscal year 1997. The Electric Utility's fiscal year Internal Revenue Code, Section 457. The plan, available to all 1997-98 budget includes the recognition of revenues in the City employees, permits deferral of a portion of an employee's amount of $9,221,000 from the RSA to be used to offset rate salary until future years. The deferred compensation is not inizroses, available to employees until termination, retirement, death, or anunorseabeseegecy Customer Deposits The City holds customer deposits as security for the payment of utility bills. The Electric As a result of changes under the Small Business Job Protection Utility's portion of these deposits as of June 30, 1997 and Act of 1996, all amounts of compensation deferred under the 1996, was $2,156,000 and $2,122,000, respectively.
plan, all property and rights purchased with those amounts, venue Recognition The Electric Utility uses the and all income attributable to those amounts must beheld in aecrual basis of accounting. Revenues are recognized when a trust, custodial account or annuity contract for the exclusive earned and expenses are recognized when incurred. Electric benefit of the employee participants and their beneficiaries.
Utility customers are billed monthly. Unbilled electric service The new law effectively repeals the requirement that a Section charges are recorded at year-end and are included in accounts receivable. Unbilled accounts receivable totaled $7,557,000 property of the employer, subject only to the claims of the at June 30, 1997, and $7,341,000 at June 30, 1996.
employer's general creditors. For plans in existence on the date at~un 30, 997,of enactment of the new law (August 20, 1996), a trust need An allowance for doubtful accounts is maintained for utility not be established until January 1, 1999. The City is currently and miscellaneous accounts receivable. The balance in this working toward the establishment of the necessary trust.
account is adjusted at fiscal year-end to approximate the amount anticipated to be uncollectible. The balance in the it is th f
the lal cos hat the City ha no allowance care that would be required of an ordinary prudent investor.
$959,000 at June 30, 1996.The assets and liabilities of the plan are recorded in an agency Compensated Absences The accompanying financial fund in the City's "Comprehensive Annual Financial Report."
statements include accruals for salaries, fringe benefits and compensated absences due employees at June 30, 1997 and Employee Retirement Plan The City contributes to the 1996. The Electric Utility treats compensated absences due California Public Employees Retirement System (PERS), an employees as a current liability. The amount accrued for agent multiple-employer public employee retirement system compensated absences was $4,233,000 at June 30, 1997, and ts as a common investment and administrative agency
$4,197,000 at June 30, 1996.
for participating public entities within the state of California.
Employees receive 10 to 25 vacation days a year based upon All permanent full-time and selected part-time employees are length of service. A maximum of two years vacation can be accu-eligible for participation in PERS. Benefits vest after five mulated and unused vacation is paid in cash upon separation.
years of service and are determined by a formula that considers the employee's age, years of service and salary. Employees ployees primarily receive one day of sick leave for each may retire at age 55 and receive 2 percent of their highest W nth of employment with unlimited accumulation. Upon average annual salary for each year of service completed.
retirement or death only, a percentage of unused sick leave is PERS also provides death and disability benefits. These benefit paid to certain employees or their estates in a lump sum provisions and all other requirements are established by state based on longevity, statute and City ordinance.
14 City of Riverside Electric Utility Notes to the Financial Statements Employee contributions are 7 percent, while the Electric Utility Contribution to the City 's General Fund Pusuan@*
is required to contribute the remaining amounts necessary to to the City Charter, the Electric Utility may transfer up to fund the benefits for its members using the actuarial basis rec-11.5 percent of its prior year's gross operating revenues to the ommended by the PERS actuaries and actuarial consultants and City's general fund. In fiscal years 1996-97 and 1995-96, the adopted by the PERS Board of Administration. The Electric Electric Utility transferred 10.0 and 10.5 percent of gross Utility pays both the employee and employer contributions.
operating revenues, or $16,320,000 and $16,335,000, respectively.
Citywide information concerning elements of total assets in excess of pension benefit obligations, contributions to PERS Budgets and Budgetary Accounting The Electric for the year ended June 30, 1996, and recent trend informa-Utility presents, and the City Council adopts, an annual bud tion may be found in the notes of the City's "Comprehensive get. The proposed budget includes estimated expenses and Annual Financial Report" for the fiscal year ended June 30, forecasted revenues. The City Council adopts the Electric 1996. Due to PERS implementation of a new actuarial com-Utilitys budget at its last meeting in June via an adopting res puter system, they were unable to provide June 30, 1997, data olution. The Electric Utility's budgeted expenses for fiscal prior to publishing this report.
years 1996-97 and 1995-96 amounted to $188,533,000 and
$192,707,000, respectively.
CASH AND INVESTMENTS Cash and investments atJune 30, 1997 and 1996, consist of theafollowing (in thousands):
June 30, 1997 June 30, 1996 Carrying Contratuay/
Carrying Contractualb Amount Market Value Amount Market Value Pooled investments with City Treasurer
$57,789 i$57,432
$72,515
$71,397 Cash and investments at fiscal agent 24,522 24,390 22,884 22,505
$82,311
$81,822
$95,399
$93,902 The amounts above are reflected in the accompanyingUfinancial statements as:
June 30, 1997 June 30, 1996 Cash and cash equivalents
$37,588
$53,179 Restricted assets:
Cash and cash equivalents 21,390 21,432 Investments 23,333 20,788 44,723 42,220
$82,311
$95,399 Authorized Investments Under provisions of the the City's name; Category 2 - collateralized with securities City's investment policy and in accordance with California held by the pledging financial institution's trust department or Government Code Section 53601, the City Treasurer may agent in the City's name; Category 3-uncollateralized.
invest or deposit in the following types of investments:
invet o depsitin he flloing ype ofinvetmets:Investments are also classified in three categories of credit risk Securities of the U.S. government, or its agencies as follows: Category 1 - insured or registered, or securities Local agency investment fund (state pool) deposits held by the City or its agent in the Citys name; Category 2 Small Business Administration loans uninsured and unregistered, with securities held by the coun Passbook savings account demand deposits terparty's trust department or agent in the City's name; Negotiable certificates of deposits Category 3 - uninsured and unregistered, with securities held Repurchase agreements by the counterparty's trust department or agent but not in the Banker's acceptances City's name. Investments in pools managed by other gover Mutual funds Commercial paper of "prime" quality Medium-term corporate notes The Electric Utility's share of the City's investments at June 30, 1997, represents approximately 22 percent or Credit Risk, Carrying Amount and Contractual/
$82,311,000 of the City's total cash and investment Market Value of Deposits and Investments
$364,748,000 (contractualmarket value of $3 6 3,,
0 Cash and non-negotiable certificates of deposit are classified in Information concerning credit risk, carrying amount and con three categories of credit risk as follows: Category I - insured tractuallmarket value of the City's deposits and investments or collateralized with securities held by the City or its agent in may be found in the notes of the City's "Comprehensive
City of Riverside Electric Utility Notes to the Financial Statements Annual Financial Report" for the fiscal year ended June 30, notes as a mechanism to protect the portfolio's overall market
- 997.
Cash and investments at fiscal agent are insured or reg-value. The majority of the City's investment instruments are tered, or held in the name of the Electric Utility or its agent, highly rated federal agency or corporate securities with minimal or are not subject to risk categorization.
credit risk. Although variable rate securities may have market fluctuations that are greater than non-variable instruments, the The City's portfolio held a limited amount of variable rate secu-portfolio is highly liquid and diversified and the City does not rities including floating rate, inverse floating rate and structured expect to redeem any securities prior to maturity.
NOTE RECEIVABLE On June 18, 1996, $17,000,000 from the Electric Utility no later than June 30, 1997. The terms of this note were Rate Stabilization Account was loaned to the Riverside extended on June 24, 1997, for a period not to exceed six Redevelopment Agency to fund the construction of the U.S.
months. The amount receivable under this note, including Bankruptcy Court building. The note bears interest at the accrued interest, is $16,000,000 at June 30, 1997, and current citywide investment pool interest rate plus 50 basis
$17,049,000 at June 30, 1996. In September 1997, this note points (.50 percent) and was due and payable in its entirety was repaid in full (subsequent to year-end).
LONG-TERM OBLIGATIONS Long-term obligations consist of the following (in thousands):
June 30, 1997 June 30, 1996 Certificates of Participation and Capital Lease Electric Utility's Share of Certificates of Participation: Interest rates from 5.75 percent to 9.4 percent; balance was paid in full on August 1, 1996 0
23 Electric Utility's Share of Equipment Purchased Through Capital Lease:
Due in monthly installments of $1,031 through November 1, 1997, interest at 8.0 percent 4
17 Total certificates of participation and capital lease 4
40 evenue Bonds Payable
$121,025,000 1986 Electric Revenue Refunding Series A Bonds:
$36,410,000 serial bonds, final annual installment of $800,000 due October 1, 1997, interest at 6.4 percent 800 4,620
$68,175,000 1991 Electric Revenue Bonds: $27,395,000 serial bonds due in annual installments from $1,720,000 to $3,590,000 through October 1, 2005, interest from 5.8 percent to 6.6 percent; $40,780,000 term bonds due October 1, 2015, interest at 6.0 percent 63,705 65,125
$118,550,000 1993 Electric Refunding Revenue Bonds: $92,245,000 serial bonds due in annual installments from $4,000,000 to $8,005,000 through October 1, 2010, interest from 3.75 percent to 8.25 percent;
$26,305,000 term bonds due October 1, 2013, at 5.0 percent 112,005 112,955
$4,100,000 1994 FARECal Electric Revenue Bonds: $2,105,000 serial bonds due in annual installments from $115,000 to $220,000 through July 1, 2010, interest from 4.75 percent to 5.9 percent; $1,995,000 term bonds due July 1, 2017, at 6.0 percent 4,100 4,100 Total electric revenue bonds payable 180,610 186,800 Total obligations 180,614 186,840 Less: Current portion (6,639)
(6,225)
Unamortized bond discount (3,119)
(3,403)
Total long-term obligations
$170,856
$177,212
16 City of Riverside Electric Utility Notes to the Financial Statements Annual debt service requirements to maturity as of June30, 1997, are as follows (in thousands):
1998 1999 2000 2001 2002 Thereafter Total Capital lease 4
0 0
0 0
0 4
Bond interest payable 9,631 9,321 8,995 8,643 8,150 54,160 98,900 Bond principal payable 6,635 6,940 7,275 7,625 8,115 144,020 180,610 Unamortized bond discount (279)
(271)
(263)
(253)
(244)
(1,809)
(3,119)
Total
$15,991
$15,990
$16,007
$16,015
$16,021
$196,371
$276,395 Debt Service Coverage Ratio The Electric Utility's bond indentures require the Electric Utility to maintain a debt service coverage ratio, as defined by the bond covenants, of 1.25. The Electric Utility's debt service coverage ratio was 2.86 at June 30, 1997, and 2.55 at June 30, 1996.
RESERVED RETAINED EARNINGS On July 1, 1990, the City of Riverside joined with the cities A reserve for debt service has been established pursuant to of Azusa, Banning and Colton to create the Power Agency of applicable bond indentures. Bond indentures for Riverside's California (PAC) by a joint Powers Agreement under the electric revenue and refunding bonds require reserves that laws of the state of California. The city of Anaheim joined equate to the maximum annual debt service required in PAC on July 1, 1996. The primaty purpose of PAC is to future years plus three months interest and nine months take advantage of synergies and economies of scale as a result principal due in the next fiscal year. The reserve for of the five cities acting in concert. PAC has the ability to Riverside's portion of FARECal revenue bonds is equal to 10 plan, finance, develop, acquire, construct, operate and main percent of the program agreement amounts, rain projects for the generation and transmission of electric energy for sale to its participants. PAC is governed by a LITIGATION Board of Directors, which consists of one representative for The Electric Utility is a defendant in various lawsuits arising e
nt is 50 ears. During the isca yre e
s in the normal course of business. Management, based in part A
n 1995 teElecric tilya endedx199 t
on the opinion of outside legal counsel, does not believe that the ultimate resolution of these matters will have a material
$46,000 and $10,000, respectively, to PAC for administra effect on the financial position or results of operations of the tive expenses and advanced $284,000 for operating capital.
Electric Utility.
On July 1,1993, the City of Riverside joined with the cities 110T JOITLYGOVENED RGAIZATONS of Anaheim, Colton, Compron, Healdsburg, Los Angeles.
JOINTLY-GOVERNED ORGANIZATIONS Palo Alto, Pasadena, Redding, Santa Cruz; the North Man On November 1, 1980, the City of Riverside joined with the Water District; the Northern California Power Agency; the Imperial Irrigation District and the cities of Los Angeles, Sacramento Municipal Utility District; and Turlock Anaheim, Vernon, Azusa, Banning, Colton, Burbank, Irrigation District to create the Financing Authority for Glendale and Pasadena to create the Southern California Resource Efficiency of California (FARECal). The primary Public Power Authority (SCPPA) by a Joint Powers purpose of FARECal is to issue bonds and use the proceeds Agreement under the laws of the state of California. The pri-to promote, advance, encourage and participate in conserva mary purpose of SCPPA is to plan, finance, develop, acquire, tion, reclamation and other programs that are designed to construct, operate and maintain projects for the generation utilize energy or water resources more efficiently. FARECal and transmission of electric energy for sale to its participants.
is administered by a Board of Directors comprised of one SCPPA is governed by a Board of Directors, which consists representative from each Charter Member (the cities of of one representative for each of the members. During the Anaheim, Los Angeles, Palo Alto and Riverside and the 1996-97 and 1995-96 fiscal years, the Electric Utility paid North Mann Water District) and three voting-based direc approximately $18,491,000 and $17,346,000, respectively, tots, which currently are representatives from Trinity Public to SCPPA under various take-or-pay contracts that are Utilities District and Colton. One board position is vacant.
described in greater detail in Note 9. These payments are reflected as a component of purchased power in the financial statements.
City of Riverside Electric Utility Notes to the Financial Statements 17 JOINTLY-OWNED UTILITY PROJECT Pursuant to a settlement agreement with SCE, dated August percent share of the capitalized construction costs for 4, 1972, the City was granted the right to acquire a 1.79 per-SONGS totaled $124,683,000 and $124,079,000 for fiscal cent ownership interest in San Onofre Nuclear Generating years ended June 30, 1997 and 1996, respectively. The accu Station (SONGS), Units 2 and 3. In the settlement agree-mulated depreciation amounted to $68,193,000 and ment, SCE agreed to provide the necessary transmission ser-
$51,798,000 for the fiscal years ended June 30, 1997 and vice to deliver the output of SONGS to Riverside. SCE and 1996, respectively. The Electric Utility made provisions dur the City entered into the SONGS Participation Agreement ing fiscal years 1996-97 and 1995-96 for nuclear fuel burn of that sets forth the terms and conditions under which the
$2,012,000 and $1,249,000, respectively, and for future City, through the Electric Utility, participates in the owner-decommissioning costs of $1,581,000 for 1996-97 and ship and output of SONGS. Other participants in this pro-1995-96 fiscal years (see Note 1). The Electric Utility's por ject include SCE, 75.05 percent; San Diego Gas & Electric tion of current and long-term debt associated with SONGS Company, 20.00 percent; and the city of Anaheim, 3.16 is included in the accompanying financial statements.
percent. Maintenance and operation of SONGS remain the responsibility of SCE, as operating agent for the City.
As a participant in SONGS, the Electric Utility could be sub ject to assessment of retrospective insurance premiums in the There are no separate financial statements for the jointly-event of a nuclear incident at San Onofre or any other owned utility plant since each participant's interests in the licensed reactor in the United States.
utility plant and operating expenses are included in their respective financial statements. The Electric Utility's 1.79 COMMITMENTS Take-or-Pay Contracts The Electric Utility has entered into a power sales contract with the Inrermountain Power Agency (IPA) for the delivery of electric power. The Electric Utility's share of IPA power is equal to 7.6 percent of the genera tion output of IPA's 1,600 megawatt coal-fueled generating station located in central Utah.
- 1he contract constitutes an obligation of the Electric Utility to make payments solely from operating revenues. The power Wsales contract requires the Electric Utility to pay certain minimum charges that are based on debt service requirements. Such payments are considered a cost ofipurchased power.
The Electric Utility is a member of the Southern California Public Power Authonty (SCPPA), a joint powers agency (see Note 7).
SCPPA provides for the financing and construction of electric generating and transmission projects for participation by some or all of its members. To the extent the Electric Utility participates in projects developed by SCPPA, the Electric Utility will be obligated for its proportionate share of the cost of the project.
The projects and the Electric Utility's proportionate share of Take-or-pay commitments expire upon final maturity of out SCPPA's obligations are as follows:
standing bonds for each project. Final maturities are as follows:
PROJECT PERCENT SHARE PROJECT EXPIRATION DATE Palo Verde Nuclear Generating Station....
5.4 percent Intermounain Power Project.................
2023 Southern Transmission System.........10.2 percent Palo Verde Nuclear Generating Station..........
2017 Hoover Dam Uprating...............31.9 percent Southern Transmission System................
2023 Mead-Phoenix Transmission............
4.0 percent Hoover Dam Uprating......................
2017 Mead-Adelanto Transmission..........
13.5 percent Mead-Phoenix Transmission..................
2020 Mead-Adelanto Transmission.................
2020 As part of the take-or-pay commitments with IPA and SCPPA, the Electric Utility has agreed to pay its share of cur-Interest rates on the outstanding debt associated with the rent and long-term obligations. Management intends to pay take-or-pay obligations range from 3.45 percent to 9.7 per these obligations from operating revenues received during the cent. The schedule on the following page details the amount year that payment is due.
of principal that is due and payable by the Electric Utility as part of the oake-or-pay contract for each project in the fiscal year indicated.
City of Riverside Electric Utility Notes to the Financial Statements PRI NCI PAL Palo Verde*
(In Ihousandi)
Intermountain Nuclear Southern Hoover Mead-Mead Power Generating Transmission Dam Phoenix Adelanto All Year Ending June 30 Project Station System Uprating Transmission Transmission Projects 1998
$ 10,569
$ 1,543
$ 2,179 164 0
0
$ 14,455 1999 11,399 1,631 2,241 176 0
0 15,447 2000 11,794 1,730 2,357 185 52 481 16,599 2001 12,562 1,826 2,494 196 56 516 17,650 2002 11,884 1,878 2,656 208 59 552 17,237 Thereafter 335,104 49,655 109,208 8,962 3,459 36,340 542,728 Subtotal 393,312 58,263 121,135 9,891 3,626 37,889 624,116 Less: Unamortized bond discount (15,192)
(4,602)
(10,237)
(1,114)
(163)
(1,647)
(32,955)
Refunding charge (68,368) 0 0
0 0
0 (68,368)
Total
$309,752
$53,661
$110,898
$8,777
$3,463
$36,242
$522,793
- Subsequent to year-end, SCPPA issued $375 million in refunding revenue bonds as part of a restructuring plan to accelerate the payment of all fixed rate bonds by July 1, 2004. Under the restructuring plan, Riverside's payment to SCPPA for the Palo Verde debt service will increase by approximately $3.5 million per year until 2004.
Power Sales Agreement The Electric Utility has exe-There are four separate agreements with CDWR. CDWR 11 cuted nine firm power sales agreements. The agreements are is for the purchase of 20 megawatts of firm capacity and asso with the Deseret Generation and Transmission Cooperative ciated energy during the months of May through October of (Deseret) of Sandy, Utah; California Department of Water each year beginning May 1, 1992. Riverside has provided Resources (CDWR); Bonneville Power Administration CDWR with notice of termination of this agreement effectio (BPA); Southern California Edison Company (SCE); and May 1, 2000. CDWR III is for the purchase of 23 t
Washington Water Power (WWP). The minimum annual of capacity and associated energy from May through October obligations under each of these contracts are shown in the of each year beginning June 1, 1996, for 15 years. CDWR IV table below.
is for the purchase of 30 megawatts of capacity and associated energy from May through October beginning June 1, 1996, Minimum Obligations 1997-98 (In Thousands) for 15 years. CDWR V is for the purchase of 50 megawatts of SUPPLIER CAPACITY ENERGY TOTAL capacity and associated energy from June through September Deseret
$ 10,302
$1,230
$11,532 beginningJuly 16, 1996, for three years.
SCE 3,725 1,314 5,039 CDWR 394 24 636 The first agreement with BPA is for the purchase of firm CDWR III 204 232 436 capacity (23 megawatts in the summer months and 16 CDWR IV 266 302 568 megawatts in the winter months) and associated energy begin CDWR V 200 0
200 ning Februaty 1, 1991, for a period of 20 years. The 1996 BPA (two agreements) 669 0
669 BPA agreement is for the purchase of capacity (50 megawatts WWP 445 978 1,423 during the summer months and 13 megawatts during the win WWP 45 78 1423 ter months) and associated energy beginning April 30, 1996.
Total
$16,205
$4,298
$20,503 Effective May 1,1998, these summer and winter capacity The agreement with Deseret is for five megawatts frommegawatts, January 1, 1992, through December 31, 1994, then increas ing to 52 megawatts through December 31, 2009.
The agreement with WWP is for the purchase of 25 megawatts Theof firm capacity and associated energy during the months of The gremen wih SC isforthepurcaseof irm May through October of each year beginning May 1, 1995, for capacity and associated energy for a period of eight years end-nine years. In accordance with the contract, the Electric Utility ing December 31, 1998. The monthly amount of firm capac-discontinued deliveries for the month of May for the remainder ity from SCE is for 38 megawatts during 1997 and 30 of the agreement beginning with May 1997.
megawatts during 1998.
p
City of Riverside Electric Utility Independent Auditors' Report 19 Impact of Electric Utility Deregulation in aging the Electric Utility through the open market transition.
California Deregulation of the electric industry in The strategy includes recovery and elimination of stranded California is one of the most significant issues facing the investment with minor impacts on customer rates over five City. Due to long-term contracts with Intermountain Power years. In addition, labor groups and management have been Agency and Southern California Public Power Authority, jointly meeting to address deregulation and formulate recoi most of which obligate the City to purchase power and/or mendations to the Board of Public Utilities and City services at a cost that is projected to be higher than market in Council.
a deregulated environment, the City is faced with "stranded investment" estimated at more than $200 million. California The City has obtained the services of Washington Inter Assembly Bill 1890 provides for the recovery of this stranded national Energy Group to review the current and potential investment through a "competitive transition charge" on each structures of the Electric Utility. The consultant is reviewing customer's utility bill.
potential partnerships, alliances, and outsourcing of discreet and multiple functions to increase competitiveness. The con A competitive financial strategy, which includes a 10-year sultant will also review stranded investment solutions, finan financial planning model, was developed in 1996 and updated cial strategies, governance and operations.
in 1997. This strategic plan serves as the blueprint for man INDEPENDENT AUDITORS' REPORT To the Honorable City Council and Board offTublic Utilities City of Riverside, California We have audited the accompanying balance sheets of the City of Riversie Electric Utility as ofJune 30. 1997 and 1996, and the related statements ofoperations and retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Electric Utilittys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatementp An audit includes examining, on a test basis, evidence supporting the amounts and disclo sures in the financial statements. An audit also inludes assessing the accounting principles used and significant esti mates 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 Financial statements referred to above present fairly, in all material respects, the financial posi tion of the City of Riverside Electric Utility as of June 30, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally aecepted accounting principsds.
Orange Countv, California October 31, 1997
20 City of Riverside Water Utility June 30 June 30 1997 1996 ASSETS (In Thousands)
UTILITY PLANT:
Source of supply
$ 23,833
$ 23,263 Pumping 8,172 7,770 Treatment 398 330 Transmission and distribution 161,247 149,154 General 5,202 5,015 Intangible 5,534 5,534 204,386 191,066 Less accumulated depreciation and amortization (60,144)
(56,447) 144,242 134,619 Construction in progress 10,093 18,678 Total utility plant 154,335 153,297 RESTRICTED ASSETS:
Cash and cash equivalents 5,559 6,716 Investments 2,667 3,784 Total restricted assets 8,226 10,500 CURRENT ASSETS:
Cash and cash equivalents 13,121 10,584 Accounts receivable, less allowance for doubtful accounts 1997 $123,000; 1996 $161,000 3,262 3,395 Accrued interest receivable 178 163 Advances to the City's general fund 111 106 Total current assets 16,672 14,248 OTHER ASSETS 704 769 Total assets
$179,937
$178,814 The notes to the financial statements are an integral part of this statement.
V is
City of Riverside Water Utility 21 June 30 June 30 1997 1996 CAPITALIZATION AND LIABILITIES (in Thousands)
EQUITY:
Retained earnings:
Reserved
$ 6,983 6,914 Unreserved 15,497 14,938 Total retained earnings 22,480 21,852 Contributed capital 101,013 99,603 Total equity 123,493 121,455 LONG-TERM OBLIGATIONS, LESS CURRENT PORTION 50,773 52,150 Total capitalization 174,266 173,605 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS:
Accrued interest payable 597 626 Current portion of long-term obligations 2,265 2,015 Total current liabilities payable from restricted assets 2,862 2,641 CURRENT LIABILITIES:
Accounts payable 609 276 Accrued liabilities 1,752 1,842 Current portion of long-term obligations 154 161 Customer deposits 294 289 Total current liabilities 2,809 2,568 COMMITMENTS AND CONTINGENCIES Total capitalization and liabilities
$179,937
$178,814 The notes to the financial stateents are an integral part of this statement,
22 City of Riverside Water Utility For the Fiscal Years Ended June 30 1997 1996 (in Thousands)
OPERATING REVENUES:
Residential sales
$15,280
$14,188 Commercial sales 6,938 6,297 Other sales 624 548 Other operating revenue 651 344 Total operating revenues 23,493 21,377 OPERATING EXPENSES:
Operations 9,236 9,815 Maintenance 2,052 2,177 Purchased energy 3,125 2,707 Purchased water 600 450 Depreciation and amortization 3,993 3,830 Total operating expenses 19,006 18,979 Operating income 4,487 2,398 NON-OPERATING REVENUES (EXPENSES);
Interest income 1,121 1,343 Interest expense (3,613)
(3,662)
Gain on retirement of utility plant 32 71 Other 1,009 982 Total non-operating revenues (expenses)
(1,451)
(1,266 Income before operating transfer 3,036 1,132 OPERATING TRANSFER OUT:
Contribution to the City's general fund (2,408)
(2,101)
Net income (loss) 628 (969)
RETAINED EARNINGS, JULY 21,852 22,821 RETAINED EARNINGS, JUNE 30
$22,480
$21,852 The note, to the financial statement urn an integral part of this statement.
City of Riverside Water Utility 23 For the Fiscal Years Ended June 30 1997 1996 (in Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers and users
$23,630
$20,412 Gash paid to suppliers and employees (14,769)
(15,794)
Other non-operating revenue 1,009 982 Net cash provided by operating activities 9,870 5,600 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Contribution to the City's general fund (2,408)
(2,101)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Purchase of utility plant (4,677)
(8,202)
Proceeds from the sale of utility plant 68 104 Principal paid on long-term obligations (2,028)
(1,930)
Interest paid on long-term obligations (2,683)
(2,779)
Contributed capital 1,020 1,134 Net cash used by capital and related financing activities (8,300)
(11,673)
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of investment securities 1,117 4,461 Income from investments 1,101 1,377 Net cash provided by investing activities 2,218 5,838 Net increase (decrease) in cash and cash equivalents 1,380 (2,336)
CASH AND CASH EQUIVALENTS. JULY I 17,300 19,636 CASH AND CASH EQUIVALENTS, JUNE 30
$ 18,680
$ 17,300 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income
$ 4,487
$ 2,398 Adjustments to reconcile operating income to net cash provided by operating activities:
Other non-operating revenue 1,009 982 Depreciation and amortization expense 3,993 3,830 Provision for uncollectible accounts receivable (38)
(62)
(Increase) decrease in accounts receivable 171 (893)
Increase (decrease) in accounts payable 333 (682)
Increase (decrease) in accrued liabilities (90) 37 Increase (decrease) in customer deposits 5
(10)
Net cash provided by operating activities
$ 9,870
$ 5,600 SCHEDULE OF NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Contributions in aid of construction 390 905 The notes to the financial statements are an integral part of this statement.
24 City of Riverside Water Utility Notes to the Financial Statements
SUMMARY
OF SIGNIFICANT behalf of the Water Utility by the City Treasurer are consid ACCOUNTING POLICIES ered highly liquid and are classified as cash equivalents for the The Water Utility exists under, and by virtue of, the City purpose of presentation in the statement of cash flows.
Charter enacted in 1883, and is a component unit of the City of Riverside (City). The Water Utility is responsible for inventore The C
ity anans te al tore the production, transmission and distribution of water for in entoal The Water Utility me salenot include inventories in its financial statements.
Basis of Accounting The accounting records of the Bond Discounts, Capital Appreciation and Water Utility are in accordance with generally accepted Issuance Costs Bond discounts, capital appreciation and accounting principles as applicable to governments and sub stantially in conformity with the Uniform System of bonds using the effective interest method. Bond discounts and Accounts prescribed by the California Public Utilities Commission, except for the method of accounting for con-apit apcon are pre as anredct of tefae tributed capital described below. The Water Utility is not amounteofebonds payable, whereaslissuance costs areerecorded subject to the regulations of the California Public Utilities Commission. The Water Utility is not required to and does accompanying balance sheet. Capital appreciation is the annual not elect to implement the pronouncements of the Financial aseun Theve bonds original isuedt a dicue Accounting Standards Board issued after November 1989.
t m Tee ond do n a
lt n
t Utility Plant and Depreciation All utility plant is valued at historical cost or estimated historical cost, if actual p
historical cost is not available. Cost includes labor; materials; tomers and others for constructing utility plant are combined allocated indirect charges, such as engineering, supervision, with retained earnings to represent equity. Accordingly, con construction and transportation equipment, retirement plan tributed capital is shown in the accompanying balance sheet contributions and other fringe benefits; and certain adminis-as an equity account and is not offset against utility plant.
trative and general expenses. Contributed plant is valued at Depreciation of contributed assets is expensed.
its estimated fair market value on the date contributed. The ing cost of relatively minor replacements is included in mainte-amounts (in thousands):
nance expense.
997 1996 Depreciation is recorded over the estimated useful lives of the Balance, July 1
$ 99,603
$97,564 related assets using the straight-line method. The estimated impact fees 1,020 1,240 useful lives are as follows:
Contributed plant 390 799 Supply pumping and treatment plant........ 20-50 years Balance, June30
$101,013
$99,603 Transmission and distribution plant......... 30-50 years General plant and equipment..............
5-50 years Customer Deposits The City holds customer deposits as security for the payment of utility bills. The Water Restricted Assets Proceeds of revenue bonds yet to be Utility's portion of these deposits as of June 30, 1997 and used for capital projects, as well as certain resources set aside for 1996, was $294,000 and $289,000, respectively.
debt service, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants.
Revenue Recognition The Water Utility uses the accrual basis of accounting. Revenues are recognized when Cash and Investments The City follows the practice earned and expenses are recognized when incurred. Water of pooling cash and investments of all funds except for funds Utility customers are billed monthly. Unbilled water service required to be held by outside fiscal agents under the provi-charges are recorded at year-end and are included in accounts sions of bond indentures. Cash accounts for all City funds receivable. Unbilled accounts receivable totaled $1,302,000 are pooled for investment purposes to enhance safety and liq-atJune 30, 1997, and $1,386,000 atJune 30, 1996.
uidity while maximizing interest earnings. Investments are stated at cost or amortized cost. Interest income earned on An allowance for doubtful accounts is maintained for utility pooled cash and investments is allocated monthly to the various and miscellaneous accounts receivable. The balance in this funds of the City based on the month-end cash balances.
account is adjusted at fiscal year-end to approximate the Interest income from cash and investments held by fiscal amount anticipated to be uncollectible. The balance in the agents is credited directly to the related account.
allowance account was $123,000 at June 30, 1997, All highly liquid investments (including restricted assets) with a maturity of three months or less when purchased are con sidered to be cash equivalents. Cash and investments held on
City of Riverside Water Utility Notes to the Financial Statements 25 ompensated Absences The accompanying financial It is the opinion of the City's legal counsel that the City has statements include accruals for salaries, fringe benefits and no liability for losses under the plan but does have the duty compensated absences due employees at June 30, 1997 and of due care that would be requited of an ordinary prudent 1996. The Water Utility treats compensated absences due investor. The assets and liabilities of the plan are recorded in employees as a current liability. The amount accrued for an agency fund in the City's "Comprehensive Annual compensated absences was $1,698,000 at June 30, 1997, Financial Report."
and $1,814,000 at June 30, 1996.
Employee Retirement Plan The City contributes to the Employees receive 10 to 25 vacation days a year based upon California Public Employees Retirement System (PERS), an length of service. A maximum of two years vacation can be accu-agent multiple-employer public employee retirement system mulated and unused vacation is paid in cash upon separation.administrative agency mulaed nd uuse vaatio ispai in ashupo sepraton.
for participating public entities within the state of California.
Employees primarily receive one day of sick leave for each All permanent full-time and selected part-time employees are month of employment with unlimited accumulation. Upon eligible for participation in PERS. Benefits vest after five retirement or death only, a percentage of unused sick leave is paid to certain employees or their estates in a lump sum yerofsvieadreetmndbyaomlahtcni based on lonety, ers the employee's age, years of service and salary. Employees base on ongeitymay retire at age 55 and receive 2 percent of their highest Self-Insurance Program The Water Utility partici-average annual salary for each year of service completed.
pates in a self-insurance program for worker's compensation PERS also provides death and disability benefits. These bene and general liability coverage that is administered by the fit provisions and all other requirements are established by City. The Water Utility pays an amount to the City repre-state statute and City ordinance.
senting an estimate of amounts to be paid for reported claims incurred and incurred but unreported claims based upon Emlyecotiuinsaestrcnwie h
ae experience, modified for current trends and information, past Utility is required to contribute the remaining amounts nec expeiene, mdifed or crret trndsandinfomaton.
essary to fund the benefits for its members using the actuarial though the ultimate amount of losses incurred through basis recommended by the PERS actuaries and actuarial con ne 30, 1997, is dependent upon future developments, sultants and adopted by the PERS Board of Administration.
40anagement believes that amounts paid are sufficient to The Water Utility pays both the employee and employer cover such losses, contributions.
Deferred Compensation and Employee Citywide information concerning elements of total assets in Retirement Plans excess ofpension benefit obligations, contributions to PERS Deferred Compensation Plan The City offers its employees for the fiscal year ended June 30, 1996, and recent trend a deferred compensation plan created in accordance with the information may be found in the notes of the City's Internal Revenue Code, Section 457. The plan, available to "Comprehensive Annual Financial Report" for the fiscal year all City employees, permits deferral of a portion of an ended June 30, 1996. Due to PERS implementation of a employee's salary until future years. The deferred compensa-new actuarial computer system, they were unable to provide tion is noC available to employees until termination, retire-June 30, 1997, data prior to publishing this report.
ment, death, or an unforeseeable emergency.
Contribution to the City's General Fund As a result of changes under the Small Business Job Pursuant to the City Charter, the Water Utility may transfer Protection Act of 1996, all amounts of compensation up to 11. 5 percent of its prior year's gross operating revenues deferred under the plan, all property and rights purchased to the City's general fund. In fiscal years 1996-97 and 1995 with those amounts, and all income attributable to those 96, the Water Utility transferred 11.5 percent ofgross oper amounts must be held in trust, custodial account or annuity ating revenues, or $2,408,000 and $2,10 1,000, respectively.
contract for the exclusive benefit ofthe employee participantsn e
and their beneficiaries. The new law effectively repeals the u
eti a
a c
cnt The e
P S alsoty presents, and the City Council adopts, an annual
- budget. The proposed budget includes estimated expenses mental entity be solely the property of the employer, subject and forecasted revenues. The City Council adopts the Water only to the claims of the employer's general creditors. For Utility's budget at its last meeting in June via an adopting plans in existence on the date of enactment of the new law Io e
trUtis ee e
(August 20, 1996), a trust need not be established until rslto.TeWtrUiiysbdee xessfrfsa Utilit 1996-97ired 1995-96tribunted reaiin
$30,80,00 ndc
,gleuary 1, 1999. The City is curiently working toward the 00 respectively.a r
Wbblis hm ent of the necessary trust.
actuaries andactarallon
26 City of Riverside Water Utility Notes to the Financial Statements CASH AND INVESTMENTS Cash and investments atJune 30, 1997 and 1996, consist of the following (in thousands):
June 30, 1997 June 30, 1996 Carrying Contractual/
Carrying Contractual/
Amount Market Value Amount Market Value Pooled investments with City Treasurer
$17,094
$16,988
$14,571
$14,346 Cash and investments at fiscal agent 4,253 4,254 6,513 6,513
$21,347
$21,242
$21,084
$20,859 The amounts above are reflected in the accompanying financial statements as:
June 30, 1997 June 30, 1996 Cash and cash equivalents
$13,121
$10,584 Restricted assets:
Cash and cash equivalents 5,559 6,716 Investments 2,667 3,784 8,226 10,500
$21,347
$21,084 Authorized Investments Under provisions of the City's name; Category 3-uninsured and unregistered, with City's investment policy and in accordance with California securities held by the counterparty's trust department or Government Code Section 53601, the City Treasurer may agent but not in the City's name. Investments in pools man invest or deposit in the following types of investments:
aged by other governments or so mutual funds are not Securities of the U.S. government, or its agencies required to be categorized.
Local agency investment fund (state pool) deposits The Water Utility's share of the City's investments a J Small Business Administration loans t
Salloo Bsinss adminstio lomanesit 30, 1997, represents approximately 6 percent or $2 1,347,0 Passook avigs acout deanddepoitsof the City's total cash and investments of $364,748,000 Negotiable certificates of deposits (contractual/market value of $363,246,000). Information Repurchase agreements concerning credit risk, carrying amount and contractual/mar Banker's acceptances ket value of the City's deposits and investments may be Mutual funds found in the notes of the City's "Comprehensive Annual Commercial paper of "prime" quality Financial Report" for the fiscal year ended June 30, 1997.
Medium-term corporate notes Cash and investments at fiscal agent are insured or registered, Credit Risk, Carrying Amount and Contractual!
or held in the name of the Water Utility or its agent, or are Market Value of Deposits and Investments not subject to risk categorization.
Cash and non-negotiable certificates of deposit are classified in The City's portfolio held a limited amount of variable rate three categories of credit risk as follows: Category 1 - insured securities including floating rate, inverse floating rate and or collateralized with securities held by the City or its agent in structured notes as a mechanism to protect the portfolio's the City's name; Category 2 - collateralized with securities overall market value. The majority of the City's investment held by the pledging financial institution's trust department or instruments are highly rated federal agency or corporate agent in the City's name; Category 3 - uncollateralized.
securities with minimal credit risk. Although variable rate Investments are also classified in three categories of credit securities may have market fluctuations that are greater than risk as follows: Category I - insured or registered, or securi-non-variable instruments, the portfolio is highly liquid and tieshel bytheCit orits gen intheCit's ame diversified and the City does not expect to redeem any secu ties held by the City or its agent in the City's name; riesportmauty Category 2 - uninsured and unregistered, with securities held by the counterparty's trust department or agent in the
City of Riverside Water Utility Notes to the Financial Statements 27 E
LONG-TERM OBLIGATIONS co ng-term obligations consist of the fillowing (in thousands).
June 30, 1997 June 30, 1996 Contracts Payable and Capital Lease Water Stock Acquisitions: Payable on demand to various water companies
$ 1,259
$ 1,260 Water Utility's Share of Equipment Purchased Through Capital Lease:
Due in monthly installments of $1,031 through November 1, 1997, interest at 8.0 percent 4
17 Total contracts payable and capital lease 1,263 1,277 Revenue Bonds Payable
$69,840,000 1991 Water Revenue Bonds: $25,050,000 serial bonds due in annual installments from $2,130,000 to $3,100,000 through October 1, 2002, interest from 5.8 percent to 9.0 percent; and
$25,900,000 serial capital appreciation bonds due in annual installments from $3,235,000 to $3,240,000 from October 1, 2003, to October 1, 2010, interest from 6.65 percent to 7.0 percent; and
$18,890,000 term bonds due October 1, 2015, at 6.0 percent 60,100 62,115
$4,710,000 1994 FARECal Revenue Bonds: $2,420,000 serial bonds due in annual installments from $135,000 to $255,000 through July 1, 2010, interest from 4.75 percent to 5.9 percent; $2,290,000 term bonds due July 1, 2017, at 6.0 percent 4,710 4,710 Total water revenue bonds payable 64,810 66,825 Total obligations 66,073 68,102 e
s: Current portion (2,419)
(2,176)
Unamortized capital appreciation 0
(12,586)
(13,453)
Unamortized bond discount (295)
(323)
Total long-term obligations
$ 50,773
$ 52,150 Annual debt service requirements to maturity as ofjune 30, 1997, are as follows (in thousands):
1998 1999 2000 2001 2002 Thereafter Total Contracts payable/capital lease
$ 155
$ 150
$ 150
$ 150
$ 150 508
$ 1,263 Bond interest payable 2,509 2,374 2,228 2,032 1,781 15,455 26,379 Bond principal payable 2,265 2,400 2,550 2,745 2,995 51,855 64,810 Unamortized capital and bond discount (956)
(1,020)
(1,088)
(1,163)
(1,240)
(7,414)
(12,881)
Total
$3,973
$3,904
$3,840
$3,764
$3,686
$60,404
$79,571 Debt Service Coverage Ratio The Water Utility's bond indentures require the Water Utility to maintain a debt ser vice coverage ratio, as defined by the bond covenants, of 1.25. The Water Utility's debt service coverage ratio was 2.52 at June 30, 1997, and 2.12 at June 30, 1996.
Advance Refu n di ngs In prior years, the Water Utility defeased certain revenue bonds by placing the proceeds of the new bonds in an irrevocable trust to provide for all future debt service payments on outstanding bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the Water Utility's financial statements. At fiscal year-end, $10,635,000 of bonds outstanding are considered defeased.
28 City of Riverside Water Utility Independent Auditors' Report RESERVED RETAINED EARNINGS JOINTLY-GOVERNED ORGANIZATIONS A reserve for debt service has been established pursuant to On July 1, 1993, the City of Riverside joined with the citi applicable bond indentures. Bond indentures for Riverside's of Anaheim, Colton, Compton, Healdsburg, Los Angele water revenue bonds require reserves that equate to the maxi-Palo Alto, Pasadena, Redding, Santa Crux; the North Man mum annual debt service required in future years plus three Water District; the Northern California Power Agency; the months interest and nine months principal due in the next Sacramento Municipal Utility District; and Turlock fiscal year. The reserve for Riverside's portion of FARECal Irrigation District to create the Financing Authority for revenue bonds is equal to 10 percent of the program agree-Resource Efficiency of California (FARECaI). The primary ment amounts.
purpose of FARECal is to issue bonds and use the proceeds to promote, advance, encourage and participate in conserva LITIGATION tion, reclamation and other programs that are designed to The Water Utility is a defendant in various lawsuits arising in utilize energy or water resources more efficiently. FARECal is the normal course of business. Management, based in part on administered by a Board of Directors comprised of one repre the opinion of outside legal counsel, does not believe that the entative from each Charter Member (the cities of Anaheim, ultimate resolution of these matters will have a material effect Los Angeles, Palo Alto and Riverside and the North Man on the financial position or results of operations of the Water Water District) and three voting-based directors, which cur
- Utility, rently are representatives from Trinity Public Utilities District and Colton. One board position is vacant.
INDEPENDENT AUDITORS' REPORT To the HonoraPlP Ciay Council and Board ofCPublrt Utilities CiWt ofRiverside, Califtrhia We have audited the accompanying balance sheets of the City of Riverside Water Utility as of June 30, 1997 and 1996, and the related statements of operations and retained earnings and cats flows for the years then ended. These financial statements are the responsibility of the Water Utility's management. Ou responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generaly accepted auditing standards. Theose standards require that we plan and perform the audit to obtain reasonable assurance about hether the financial statements are free of material misstatement. An audit includes examining, un a test basis, evidence supporting the amounts and disclo sures in the financial statements. An audit also includes assessing the accounting principles used and sneifrcant estimates made by management, as wsl as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements refWrred to above present fairly, in all material respects, the financial posi tion of the City of Riverside Water Utility as of June 30, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Oange County, California October 31, 1997
Governing Bodies and Administration 29 A*_OARD OF PUBLIC UTILITIES The Board of Public Utilities is composed of seven citizens appointed to four-year terms by City Council to govern utility policies and represent the community. Citizens serve on a voluntary basis without compensation. Applications for new mem bers are solicited annually through an insert with the city services bill. Applicants must be at least 18 years of age and reside within the City of Riverside in order to be eligible to serve on the board. The Board of Public Utilities meets at 8:15 a.m. on the first and third Fridays of each month in City Council Chambers at City Hall, 3900 Main St., Riverside. Board meetings are open to the public.
RAPHAEL DE LA CRUZ DAVID MACHER RONALD MCCOY JACQUELINE MIMMS 1996-97 Board Chairman Occupation: Certified Occupation: Retired, Occupation: Assistant Occupation: Senior Public Accountant Former Assistant Chief Vice Chancellor of Administrator for 2nd Riverside resident:
Engineer - Water Campus Relations District County Supervisor lifetime Riverside resident:
Riverside resident:
Riverside resident:
16 years 12 years lifetime RIVERSIDE PUBLIC UTILITIES ADMINISTRATION BILL D. CARNAHAN Director MICHAEL J. BALDWIN Assistant Director, Operations DIETER P. WIRTZFELD Assistant Director, Engineering and Resources CONRAD NEWBERRY JR.
THOMAS PEVEHOUSE DWIGHT TATE DAVID H. WRIGHT Occupation: Registered Occupation: Economic Occupation: Personal Assistant Director, Professional Mechanical Development Specialist Financial Planner Finance and Administration Engineer Riverside resident:
Riverside resident:
Riverside resident:
12 years lifetime 4 years MAYOR CITY COUNCIL ALEX CLIFFORD RONALD LOVERIDGE CHUCK BEATY Ward 5 Ward I TERRI THOMPSON CITY MANAGER AMEAL MOORE Ward 6 JOHN HOLMES Ward 2 LAURA PEARSON JOY DEFENBAUGH Ward 7 Ward 3 MAUREEN KANE Ward 4
30 People Serving People Antoine S. Abu Shabakeh Linda M. Brown Steven S. Dowell Patrick B. Hannifin Nathaniel C. Adams Louise 1. Brown Joyce E. Drake Edward P. Hansen Domingo Aguilar Michael E. Brown Richard S. Drobek Wanda F. Hedlund Raymond S. Aguilar James R. Buckley Malcolm N. Duckett John M. Heiden Donna L. Aguilera Gerald R. Burton Daniel P. Duron Kelly L. Heil Richard C. Aguilera Loretta K. Burton Albert T. Dykstra Alfred W. Heinen Anna E. Akers Loretta F. Butler Fredrick D. Ehemann James P. Henke Jerry C. Alexander Jr.
Linda L. Camacho David W. Eich Patricia J. Henwood David A. Alfaro Anna K. Campos John J. Enderson Victor H. Hernandez Arthur V. Anaya Gabriela Campos Mark S. Ensign Jeffrey S. Hill Greg R. Anderson Julian Cardenas Benny Esseling Lyle E. Hill Kenneth A. Anderson Randell S. Carder Patricia Estrada Edward K. Hogerty Kenneth J. Anderson Bill D. Carnahan William E. Fagan Arnold P. Hohl Jr.
Lisa L. Anderson Joseph Carrasco Scott L. Faust Richard E. Holmes Mary L. Anderson Carlos Castro Catherine E. Ference James T. Hornbarger Troy S. Anthony Arcelia A. Cervantes Ronald T. Fiske Daniel H. Hotchkiss Guillermo Armenta Cindy L. Chan Marilyn J. Flournoy Kenneth L. Humphrey Christopher Avila John N. Chapman Joseph D. Francese Roger L. Hunt Robert S. Ayers Jr.
Joseph Chavez Rick Franke Daniel Hurtado Helen M. Azevedo Joseph S. Chavez Ronald D. Frost Tam T. Huynh Michael G. Bach Jeffrey D. Clausen Carol J. Fuhrman Marvin L. Infante Stephen H. Badgett Cheryl E. Clelland Gerald A. Gandara Jalene L. Isaac John J. Bailey Danny L. Clemons Alex J. Garcia Bonnie M. Ivy Charles F. Baldwin Kenneth W. Coffey Stella L. Garcia Lester W. Jameson Jr.
Michael J. Baldwin Greg H. Coffman Thomas D. Garcia Mark Jelen Del R. Ballard Donald J. Colgan Victor A. Garcia Joon H. Jin Frederick H. Barkley Thomas J. Collins Yolanda C. Garcia Tully James E. Johnson Jeanette E. Barnes Linda S. Conerly Joseph A. Garozzo Lila M. Johnson Ron W. Barry Karen M. Connor Richard Gastelum Norma J. Johnson Cathleen R. Baswell Mark S. Connor Alan H. Gatter Russell D. Johnson Vahid Bazel Bobby V. Cordova Anita L. Gatter Sam R. Johnson Lawrence T. Beal Tom R. Corrigan Paul R. Gearhart Steven T. Johnson Linda C. Bedford Ruth H. Couch Thomas R. Gibbins Dock Jones William D. Bedford Jr.
Glenn M. Cox Robert B. Gill Steve A. Jones Harold J. Bell Veronica Craghead Eugene L. Ginsberg Chris A. Joranco Walter N. Bell Jr.
Alan D. Craig Thomas E. Glass Jeffrey S. Karalun Gary L. Bender Billie I. Crumley Jr.
Veronica Gomez George E. Kelley Bruce C. Benter Jackie L. Cunningham Weishen Gong William D. Kilpatrick Jacqueline M. Bishop Vivian C. De Geere Patrick Gonzales James R. King Matthew Blais James H. Deal Ronald W. Goodermuth Andrew J. Kirkland Jr.
Charles R. Bluemel Robert Delgado James G. Grady David R. Knapp Teresita G. Bluma John T. Denham John L. Graham Gus W. Knie Craig W. Bostrom Christina M. Diaz Manuel S. Gray Randal A. Koers Fernand R. Boucher Gregory M. Diaz Marilyn J. Grayston Edward L. Kostjal Jr.
Nancy A. Bove Mercedes P. Diaz Richard J. Greenwalt David W. Krell Brian G. Bozarth Peter E. Diaz Barbara A. Grillo Marcus S. Kugler Thomas G. Bradshaw Richard J. Dickinson Michael P. Grossmann James W. Kyle Gayla D. Branco Kerry W. Dittler Bacilio Gutierrez Jr.
Tom G. Lacey Linda S. Brocker Charlene L. Dixon John W. Hair Stephen E. Lafond
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32 Acknowledgements Special thanks to the staff of Riverside Public Utilities' Financial Services Division, under the leadership of Donna Stevener, Accounting/Finance Manager, for their contribution to this report ANNUAL REPORT PRODUCTION KARIN K. ROSS Editor ABRAMS CREATIVE SERVICES Design and Production JOHN SCHULZ MICHAEL ELDERMAN PUBLIC UTILITIES ARCHIVES STOCK Photography
RIVERSIDE Riv rsde ub ic Utilities City Hall, 3900 Main Street Riversid
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RIVERSIDE PUBL IC I'T ItflE1S River-side Public Utilities City Hall, 3900 Main Street Riverside, California 92 2
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