ML13309A448

Riverside Public Utilities 1997-1998 Annual Rept

ML13309A448
Person / Time
Site:	San Onofre
Issue date:	12/31/1998
From:	RIVERSIDE, CA
To:
Shared Package
ML13309A443	List: ML13309A442 ML13309A444 ML13309A447 ML13309A448 ML20206H045
References
NUDOCS 9905110030
Download: ML13309A448 (48)

Text

THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE INFORMATION &

RECORDS MANAGEMENT BRANCH.

THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS & ARCHIVES SERVICES SECTION, T5 C3. PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGE(S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.

-NOTICE

~ Our story isn't just about electricity and water.

99051100W0 990504 PDR ADOCK 05000206 PDR

COMMhNI

4 egg S

It's bout orkin towadith Riverside Public Utilities is that utility-your utility. Decisions about electric and water services continue to be made locally by the City Council and Board of Public Utilities to serve the best interests of Riverside. Because we're customer-owned, your prosperity and satisfaction are important. And that really does make a difference. It's part of the reason why major customers are signing long-term agreements with Riverside Public Utilities, including the University of California at Riverside, Kaiser Permanente-Riverside, BF Goodrich Aerospace, and an aggregated customer agreement between Riverside Community Hospital, The Press-Enterprise and Riverside Community College.

"The main strength of our agreement is its partnership aspect. The three agencies involved could not have achieved the same results on their own. By joining forces, we put together an economic and competitive agreement with Riverside Public Utilities that serves everyone' interests. "

-Robert Krull, Riverside Community Hospital "This alliance is an example of both sides contributing to a long lasting, positive result that benefits the community. Its a footprint for other businesses to follow. For us to prosper as a city, we must partner in issues such as this for the benefit ofall."

-Michael A. Miskus, The Press-Enterprise "We have worked together in an unspoken info rmal partnership for the past 12 years.

Our agreement only formalizes that arrangement. It creates a win-win environment for both partners at all levels. It' a unique and unprecedented pact that benefits the community and local economy."

- Greg Murphy, University of Cahfornia at Riverside Riverside Public Utilities is committed to fulfilling the needs of its many publics, from industry to civic to customer responsibilities. On the electric side, we're installing a Riverside Public Utilities new customer information system to meet Year 2000 and deregulation billing require Mission Statement To provide water, electric and other ments, unbundling rates, forming new alliances and restructuring for greater efficiencies.

related services for our customers In the water industry, the new millennium could usher in groundwater regulations that in a safe, reliable, environmentally sensitive, and fiscally responsible may impact the cost of providing drinking water. Riverside Public Utilities has actively manner that furthers the immediate and long-term goals of the city.

participated in industry-wide efforts to secure $2 million in federal funds for arsenic and Elecric yste Esablihed 895radon research, and to ensure water quality parameters that are scientifically sound and Electric System Established 1895 WaeIytmnsalsed11rthec wter pidsrtenwmlenimcuduhri runwtrrgltosta

11<

It's about that unspoken eve of comfort which results natura from years of dependable serv ce.

One of our customers summed it up best: "Sometimes nor having to think about water and electricity is the best compliment you could pay your utility." In addition to our ability to provide superior service now, its imperative that you have confidence in Riverside Public Utilities' ability to meet your future needs. Here are some behind-the scene achievements that have made valuable contributions to enhancing the excellence of SRiverside's electric and water systems:

Electric Utility Achievements

> Formed a power resource alliance with Avista Energy Inc., the nation's 14th largest A

energy marketer, to optimize our power supply, leverage our market position and lower our energy costs, which will help keep electric rates down.

Adopted policies and procedures for Power Supply Management and Operations that set limits, controls, tracking mechanisms, risk management parameters and organi zarional oversight to help ensure sound business decisions in the open marketplace.

> Became the first customer-owned electric utility certified as a Scheduling Coordinator with the Independent System Operator (ISO), allowing us to deal directly on the open market to sell and purchase power, which will help keep costs low.

> Continued to implement work practices under the Workforce 2000 Plan to improve flexibility, customer service and cost savings, while meeting quality and safety standards.

Crews now log faster emergency response times due to increased 24-hour onsite staffing.

Water Utility Achievements Steadfastly defended Riverside's groundwater from two advancing contaminant plumes the Norton Air Force Base Plume and Redlands-Crafon Plume. Worked cooperatively Superior Service and Reliability with the responsible parties to ensure acceptable clean-up plans and water quality, Riverside Water System which has given Riverside greater satisfaction in the results without costly litigation.

Wa 99.99% system availability 33% faster emergency response time

> Brought on-line our first water treatment plant, Raub 5, in April 1998 to treat water Riverside Power System affected by the Norton Air Force Base Plume. While Riverside Public Utilities

" 9.98% system availability Almost four times faster service operates the plant, the Air Force has financed its construction and ongoing costs.

restoration 4

> Collected and tested nearly 10,000 water samples. Riverside's drinking water against investor-owned utilities.

continues to meet or exceed all state and federal standards.

It.

ao* your BOTTOM LIE

19-9'Cstoe evc abotiticsvn t epwae n e

6,1tlepcric anwratslw fodl u C u to ii e rs* If our community prospers, we prosper. If a business fails or a homeowner declares bankruptcy, the effects ripple throughout the city. As a community agency, Riverside Public Utilities is not immune to these effects. The decisions you reach regarding the pur veyor of your water and electric services could also have a far greater impact than just the company name on the invoice. Earning your loyalty is one of our top priorities. Here are some steps we've taken to help reach that goal:

>> Riverside boasts water rates that are among the lowest in Southern California and lower electric rates for residential and small commercial customers than the nearest private competitor. For larger accounts, we offer competitive long-term power agreements and cost-based industry specific rates for aggregated customer groups.

PulSpecialized servicesfor business customers including economic development incentives, expansi on assistance, conservati on programs, account management, and a designated customer service telephone line and walk-up window.

Minding your bottom line also means minding ours. In May 1998, Riverside Public Utilities issued $98.7 million in electric revenue bonds and $31 million in water revenue bonds to refinance a portion of its debt at a lower interest rate and fund new distribution projects, saving $3.3 million over the life of the bonds. Additionally, water and electric operating and capital expenses for 1997-98 were lower than projected targets, resulting in savings of $12 million. These cost-cutting measures enabled a rollover budget for 1998-99 that will absorb inflationary increases instead of passing them along to consumers.

Riverside Public Utilities consistently reviews all options prior to recommending a rate increase. As a result, electric rates have remained stable during the past six years. In August 1997, the City Council approved an 8.5 percent water rate increase in order to maintain water bond covenants and the water utilitys financial stability. Despite this increase, Riverside Public Utilities' water rates are still among the lowest in the region.

Customer Service statistics Power supply costs remain the electric utility's largest expense, accounting for 54 v268,140 telephone calls answered percent of expenditures. Riverside Public Utilities continues to work with its joint with the majority picked up in five seconds or less, project participants to reduce debt obligations at the Intermountain Power Project, v11t,2 wofi lcstos aste Palo Verde Nuclear Generating Station and San Onofre Nuclear Generating Station. In 153,000 meters read monthly aJune 1998, a competitive transition account was established to provide for early debt annual cost of $6.65 per meter, down tram $9.08 just three years ago.

retirement, pay-off of above market contracts, rate stabilization and system emergencies.

RiversiseabomilmakinigeRiverside As a customer-owned utility, Riverside Public Utilities' underlying purpose is community service. One way we help make Riverside a better community is by returning a portion of electric and water revenues to the general fund for vital city services such as police, fire, library, museum and youth programs. In 1997-98, Riverside Public Utilities returned more than $18 million for such valuable community assets.

In addition to providing essential water and electric services to more than 250,000 people, Riverside Public Utilities has offered energy and water conservation programs since the 1970s when the oil crisis and periods of drought brought these concerns to the forefront.

One program that continues to reduce costs for customers and the utility is Riverside Public Utilities' Thermal Energy Storage (TES) Rebate. This program encourages customers on time-of-use rates to reduce operating and capital costs through off-peak cooling, which shifts large power demands to less expensive off-peak hours and helps stabilize electric rates To help fulfill cultural, educational for all customers. During the past year, two projects, one at the Riverside County Farm and entertainment needs for Riverside families, Riverside Public Office Complex and the other at Riverside City Hall, received TES rebates.

Utilities sponstred the Powerwhene oilacrsistan pei o

dro ught rg httese ors to terefron Point and WaterWorks exhibits atToateeiagraepuhtprmtenryrltdrgasdetoeeuain KidZone, Riverside's first youth of the electric industry. Riverside Public Utilities is currently developing $4.5 million museum, which opened in October 1997. The utility also continued to in public benefit programs in accordance with California Assembly Bill 1890, which support local schools by delivering established a public benefits charge (PBC) in January 1998 on electric revenues to energy and water materials and services to nearly 24,000 students support socially beneficial energy programs. Since Riverside owns its electric utility, our at 83 schools lost year.

PBC funds remain here to meet the local needs of residential, commercial and industrial customers. Kick off of the first of three program phases occurred during the latter part of 1998.

Another way Riverside Public Utilities and its employees reach out to the community is by contributing to local events and organizations including the United Way, Orange Blossom Festival, Riverside Wednesday redevelopment, Riverside Public Utilities opened the "Power Works" Night, Festival of Lights, Second Harvest Food Bank, Interpretive Center in April P998.

Inland Empire Jazz & Art Festival, Mayor's Ball for the The center provides an historical and educational glimpse at the Arts, and American Youth Soccer Organization.

Riverside Substation through three windows and hands-on viewing Because, at Riverside Public Utilities, our story scopes. It's part of the utility's wouldn't be complete without supporting the community ongoing efforts to construct facilities that ore sensitive to the we call home, surrounding environment.

S.IS

's op" AS wnA

TABLE OF CONTENTS Fiscal M essage....................

lectric and W ater Statistics 2

Electric Utility Financial Statements Balance Sheets.

8-9 Statements of Operations and Retained Earnings.

...10 Statem ents of Cash Flows...........

11 Notes to the Financial Statements........

12-21 Independent Auditors' Report

.21 ater Utility Financial Statements Balance Sheets

............. 22-23 Statements of Operations and Retained Earnings................

24 Statem ents of Cash Flow s......-

25 Notes to the Financial Statements........

26-30 Independent Auditors' Report...............

30 Governing Bodies and Administration....

31 Riverside Public Utilities Employees.........

Y2 -3 3 Ackn ow led gem ents......................- -33

FISCAL MESSAGE As a customer-owned water and electric utility, Riverside Public Utilities' top priorities include adding value to our customers' day-to-day lives, upholding our superior service reliability, supporting our commitment to our community, and helping our customers and our company maintain positive bottom lines. These basic tenets create a story that's worth telling-one that covers more than just the delivery of water and electricity. It's a story about real people providing real customers with real benefits.

The financial statements are an integral chapter of our story. They are a strong reflection of Riverside Public Utilities' strategic plans, management and operations, resources, organizational structure and fiscal health. In 1997-98, a departmental reorganization, which resulted in staff reductions of almost 13 percent, was among the operational efficiencies implemented by the management team. On the electric side, the primary focus remains preparation for the competitive marketplace. In the water arena, drinking water standards and the preservation of water quality are top priorities.

The comprehensive financial strategy completed for the Electric Utility during the previous fiscal year remains the basis for actions aimed at reducing costs and maintaining competitive rates. Completed action items include a $98 million bond issue that provided funding for capital projects and refinanced outstanding bonds at a lower interest rate, resulting in several million dollars of future savings. The bond rating agencies continue to rate Riverside's Electric Utility as a strong contender.

As we continue to prepare financially for electric competition, Riverside's joint action with other utilities has resulted in savings that will reduce future costs to our customers. In 1997-98, another significant step that was taken to help position the Electric Utility for the open market was the establishment of a competitive transition account. With a beginning balance of more than $33 million, these monies have been specifically reserved for competitive purposes such as early debt retirement.

Riverside's water system continues its strong financial performance due in part to a rate increase during the early part of the fiscal year that significantly improved the financial stability of the Water Utility. Despite this increase, Riverside's water rates remain among the lowest in Southern California. Riverside water customers also continue to enjoy the advantages of a public water system whose reliability, service response and water quality meet or exceed industry standards and regulations.

2 CITY OF RIVERSIDE ELECTRIC UTILITY STATISTICS ELECTRIC STATISTICS 1997/98 ELECTRIC DOLLAR AND RESOURCES SOURCE OF DISTRIBUTION ENERGY REVENUE OF REVENUE RESOURCES Residential Sales (334)

Purchased Power Supply (62c)

U Coal (52.1%)

Industrial Sales (284)

U Operation & Maintenance (17r)

Nuclear (22.7%)

Commercial Sales (244)

U Debt Service (94)

U Third Party Purchases (22.6%)

Rate Stabilization Account U

Transfer to City General Fund (84)*

Hydropower (2.6%)

Funds (54)

Additional Reserves (34)

Other Sales (54)

Additions & Replacements Interest Income (30) to the System (14)

Oi Other Revenue (2)

• Based on transfer of9.5 percent offiscal year 1996-97 operating revenues (excludes interest and other non-operating income).

CITY OF RIVERSIDE ELECTRIC UTILITY STATISTICS 3

ELECTRIC STATISTICS GENERAL AVERAGE TOTAL FUND NUMBER OF OPERATING TRANSFER CUSTOMERS REVENUE (in rnillion)

(in thoannds)

(in millions)

'A~

00

'A 6-C

-t

-0

'A N

O' C

PRODUCTION PEAK DAY DEMAND ELECTRIC (in million kilowatt-hours)

(in mgoonm rs)

FACTS AND SYSTEM STATISTICS ESTABLISHED:

1895 SERVICE AREA POPULATION:

250,799 SERVICE AREA SIZE (square. miles):

78.1 SYSTEM STATISTICS:

TRANSMISSION LINES (cihruit miles):

88.2 DISTRIBUTION LINES (circuitmiles):

1,041.2 NUMBER OF SUBSTATIONS:

15 1997-98 PEAK DAY (negaatts):

459 Highest single hourly use:

8/6/97, 4pm, 112 degrees HISTORICAL PEAK (mnegaatts):

459 Highest single hourly use:

8/6/97, 4pm, 112 degrees BOND RATINGS FITCH IBCA STANDARD & POOR'S CORP.

A+

A+

4 CITY OF RIVERSIDE WATER UTILITY STATISTICS WATER STATISTICS 1997/98 WATER DOLLAR AND RESOURCES SOURCE OF DISTRIBUTION WATER REVENUE OF REVENUE RESOURCES Residential Sales (574)

U Operation & Maintenance (574)

U San Bernardino Basin Wells (74.8%)

Commercial & Industrial U

Debt Service (204)

U Riverside Basin Wells (24.9%)

Sales (284)

U Transfer to City General Fund (114)

Purchasedwaterwas03percentfor Other Revenue (7t)

U Additional Reserves (104) 1997-98.

Interest Income (4j)

Water Supply (24)

Other Sales (44)

• Based on transfer of 11.5 percent of fiscal year 1996-97 operating revenues (excludes interest and other non-operating income).

CITY OF RIVERSIDE WATER UTILITY STATISTICS 5

WATER STATISTICS GENERAL AVERAGE TOTAL FUND NUMBER OF OPERATING TRANSFER CUSTOMERS REVENUE (in millions)

(in thousands)

(in millions)

PRODUCTION PEAK DAY DEMAND WATER (in acre feet)

(in million gallons)

FACTS AND SYSTEM STATISTICS ESTABLISHED:

1913 SERVICE AREA POPULATION:

250,799 SERVICE AREA SIZE (square miles):

76.4 SYSTEM STATISTICS:

SMALLEST PIPELINE:

1.0" LARGEST PIPELINE:

72.0" MILES OF PIPELINE:

861 NUMBER OF DOMESTIC WELLS:

47 NUMBER OF ACTIVE RESERVOIRS:

16 TOTAL RESERVOIR CAPACITY (galons): 100,400,000 MILES OF CANAL:

12 NUMBER OF FIRE HYDRANTS:

6,176 DAILY AVERAGE PRODUCTION (gallons):

57,068,000 1997-98 PEAK DAY (gallons):

96,015,000 8/6/97, 112 degrees HISTORICAL PEAK (gallons):

96,015,000 8/6/97, 112 degrees C

C CBOND RATINGS FITCH IBCA STANDARD & POOR'S CORP.

AA AA

6 CITY OF RIVERSIDE ELECTRIC UTILITY STATISTICS POWER SUPPLY (MWh) 1997/98 1996/97 1995/96 1994/95 1993/94 San Onofre 291,900 227,200 299,100 272,000 269,400 Intermountain Power 882,900 899,300 566,600 743,200 842,100 Palo Verde 92,200 94,300 88,400 83,400 58,500 Hoover 42,500 37,700 39,500 33,500 36,300 Firm contracts 272,800 267,300 248,400 276,800 278,100 Non-firm contracts 110,500 196,200 446,400 203,400 130,100 Southern California Edison 500 1,500 1,100 2,000 3,400 Total 1,693,300 1,723,500 1,689,500 1,614,300 1,617,900 System peak (MW) 458.5 434.5 432.0 442.0 421.2 ELECTRIC USE I

1997/98 1996/97 1995/96 1994/95 1993/94 Average number of customers Residential 81,640 80,656 79,904 79,749 79,879 Commercial 8,650 8,577 8,500 8,337 8,424 Industrial 203 200 199 201 198 Other 116 128 127 121 127 Total 90,609 89,561 88,730 88,408 88,628 Millions of kilowatt-hours sales Residential 555 563 566 544 517 Commercial 404 408 414 391 383 Industrial 620 618 606 574 586 Other 45 49 46 45 43 Total 1,624 1,638 1,632 1,554 1,529 ELECTRIC FACTS 1997/98 1996/971 1995/96 1994/95 1993/94 Average annual kWh per residential customer 6,796 6,984 7,090 6,823 6,475 Average price (cents/kWh) per residential customer 10.78 10.69 10.86 10.58 10.70 Debt as a percent of net plant' 101%

80.3%

82.4%

88.2%

90.3%

Operating income as a percent of operating revenues 11.4%

14.0%

12.6%

8.0%

16.2%

Employees 278 298 313 311 285

'Net plant includes nuclear jhel inventor ani work in prqress.

CITY OF RIVERSIDE WATER UTILITY STATISTICS 7

WATER STATISTICS WATER SUPPLY (acre feet) 1997/98 1996/97 1995/96 1994/95 1993/94 Pumping 71,597 73,266 71,316 67,636 68,779 Purchases 252 68 285 151 38 Total 71,849 73,334 71,601 67,787 68,817 Percentage pumped 99.7%

99.9%

99.6%

99.8%

99.9%

System peak day (gallons) 96,015,000 93,400,000 93,699,000 95,400,000 94,868,000 WATER USE 1997/98 1996/97 1995/96 1994/95 1993/94 Average number of customers Residential 53,387 53,432 53,351 53,473 53,328 Commercial/industrial 4,164 4,054 4,138 4,118 4,115 Other 664 760 631 591 609 Total 58,215 58,246 58,120 58,182 58,052 CCF sales Residential 15,518,199 17,833,655 17,848,356 16,113,649 15,858,173 Commercial/industrial 8,289,294 9,386,127 9,176,633 8,529,614 8,009,188 Other 1,117,661 1,436,177 1,369,939 1,221,898 1,822,448 Total 24,925,154 28,655,959 28,394,928 25,865,161 25,689,809 WATER FACTS 1997/98 1996/97 1995/96 1994/95 1993/94 Average annual CCF per residential customer 291 361 335 301 297 Average price (cents/CCF) per residential customer 91.7 85.7 79.5 75.5 75.7 Debt as a percent of net plant 40.3%

34.4%

35.3%

37.3%

37.0%

Employees 128 136 137 137 137

8 CITY OF RIVERSIDE ELECTRIC UTILITY BALANCE SHEETS June 30 june 30 1998 1997 ASSETS (In Thousands)

UTILITY PLANT:

Production

$125,424

$124,684 Transmission 15,017 15,005 Distribution 186,913 179,215 General 22,171 22,232 349,525 341,136 Less accumulated depreciation and amortization (141,269)

(130,844) 208,256 210,292 Construction in progress 7,158 7,770 Nuclear fuel, at amortized cost 1,945 2,955 Total utility plant 217,359 221,017 RESTRICTED ASSETS:

Cash and cash equivalents 49,566 21,390 Investments 22,411 23,333 Public benefit programs receivable 471 0

Total restricted assets 72,448 44,723 CURRENT ASSETS:

Cash and cash equivalents 64,178 37,588 Accounts receivable, less allowance for doubtful accounts 1998 $478,000; 1997 $777,000 21,465 19,004 Note receivable 0

16,000 Accrued interest receivable 689 598 Prepaid expenses 4,578 7,836 Nuclear materials inventory 989 1,007 Total current assets 91,899 82,033 OTHER ASSETS:

Unamortized project costs 101 202 Unamortized bond issuance costs 2,448 1,709 Unamortized bond refunding costs 4,390 0

Total other assets 6,939 1,911 Total assets

$388,645

$349,684 See nccompnying notes to the financmal statements

CITY OF RIVERSIDE ELECTRIC UTILITY 9

BALANCE SHEETS June 30 June 30 1998 1997 CAPITALIZATION AND LIABILITIES (in Thousands)

EQUITY:

Retained earnings:

Reserved for debt service

$ 18,099

$ 24,298 Unreserved 70,126 39,919 Total retained earnings 88,225 64,217 Contributed capital 43,470 41,588 Total equity 131,695 105,805 LONG-TERM OBLIGATIONS, LESS CURRENT PORTION 212,672 170,856 Total capitalization 344,367 276,661 OTHER NON-CURRENT LIABILITIES:

Decommissioning liability 22,401 19,586 Rate stabilization account, less current portion 0

24,189 Total non-current liabilities 22,401 43,775 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS:

Accrued interest payable 2,604 2,406 Deferred revenue, public benefit programs 1,308 0

Current portion of long-term obligations 6,555 6,635 Total current liabilities payable from restricted assets 10,467 9,041 CURRENT LIABILITIES:

Accounts payable 5,094 4,464 Accrued liabilities 4,017 4,362 Rate stabilization account 0

9,221 Current portion of long-term obligations 19 4

Customer deposits 2,280 2,156 Total current liabilities 11,410 20,207 COMMITMENTS AND CONTINGENCIES Total capitalization and liabilities

$388,645

$349,684 See accopanying notes to the financial statemnts

10 CITY OF RIVERSIDE ELECTRIC UTILITY For the Fiscal Years Ended June 30 1998 1997 (in Thousands)

OPERATING REVENUES:

Residential sales

$ 59,827

$ 60,246 Commercial sales 43,262 43,669 Industrial sales 51,588 53,164 Other sales 4,901 5,079 Sales to other utilities 4,899 649 Provision for rate stabilization 10,300 11,000 Other operating revenue 1,675 1,844 Total operating revenues 176,452 175,651 OPERATING EXPENSES:

Purchased power 112,864 105,354 Operations 26,373 27,549 Maintenance 5,903 7,073 Depreciation and amortization 11,283 11,031 Total operating expenses 156,423 151,007 Operating income 20,029 24,644 NON-OPERATING REVENUES (EXPENSES):

Interest income 5,411 5,495 Interest expense (10,917)

(10,416)

Gain (loss) on retirement of utility plant 94 (163)

Other 1,413 1,971 Total non-operating revenues (expenses)

(3,999)

(3,113)

Income before operating transfer 16,030 21,531 OPERATING TRANSFER OUT:

Contribution to the City's general fund (15,491)

(16,320)

Net income before extraordinary item 539 5,211 Extraordinary item -transfer of rate stabilization funds to competitive transition account (see Note 1) 23,469 0

Net income 24,008 5,211 RETAINED EARNINGS, BEGINNING OF YEAR 64,217 59,006 RETAINED EARNINGS, END OF YEAR

$ 88,225

$ 64,217 See accomoanvia nore ro th financial statments.

CITY OF RIVERSIDE ELECTRIC UTILITY 1

For the Fiscal Years Ended June 30 1998 1997 (in Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers and users

$163,703

$164,947 Cash paid to suppliers and employees (136,263)

(144,434)

Other non-operating revenue 1,413 1,971 Net cash provided by operating activities 28,853 22,484 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:

Operating transfers out (15,491)

(16,320)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Purchase of utility plant (8,007)

(9,543)

Purchase of nuclear fuel (183)

(1,419)

Proceeds from the sale of utility plant 315 250 Proceeds from the sale of revenue bonds 99,689 0

Deposit to escrow account for advance refunding of revenue bonds (56,232) 0 Principal paid on long-term obligations (6,641)

(6,226)

Interest paid on long-term obligations (9,472)

(10,059)

Bond issuance costs (1,496) 0 Contributed capital 1,189 815 Net cash provided (used) by capital and related financing activities 19,162 (26,182)

CASH FLOWS FROM INVESTING ACTIVITIES:

Reduction in note receivable to Riverside Redevelopment Agency 16,000 1,049 (Purchase) maturity of investment securities 922 (2,545)

Income from investments 5,320 5,881 Net cash provided by investing activities 22,242 4,385 Net increase (decrease) in cash and cash equivalents 54,766 (15,633)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 58,978 74,611 CASH AND CASH EQUIVALENTS, END OF YEAR

$113,744

$ 58,978 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income

$ 20,029

$ 24,644 Adjustments to reconcile operating income to net cash provided by operating activities:

Other non-operating revenue 1,413 1,971 Depreciation and amortization expense 11,283 11,031 Amortization (burn) of nuclear fuel 1,193 2,012 Provision for uncollectible accounts receivable (299)

(182)

(Increase) decrease in accounts receivable (2,633) 444 (Increase) decrease in prepaid expenses 3,258 (6,449)

(Increase) decrease in nuclear materials inventory 18 (9)

Increase (decrease) in accounts payable 630 (2,641)

Increase (decrease) in accrued liabilities (345) 101 Increase in public benefits charge deferred revenue 1,308 0

Increase in customer deposits 124 34 Increase in decommissioning liability 2,815 2,528 Decrease in rate stabilization account (9,941)

(11,000)

Net cash provided by operating activities

$ 28,853

$ 22,484 SCHEDULE OF NON-CASH INVESTING, CAPITAL AND FINANCING ACTIVITIES:

Contributions in aid of construction 693 357 Purchase of equipment through capital lease 55 0

Cash and cash equivalents also includes cash and cash equivalents In restricted assets.

See a:ccomanving notes to the financial statements.

12 CITY OF RIVER S IDE ELECTR IC UTILITY NOTE S T

THE FINANCIAL STATEMENT S

SUMMARY

OF SIGNIFICANT bills. This surcharge is mandated by state legislation included ACCOUNTING POLICIES in Assembly Bill 1890 and is restricted to various socially The Electric Utility exists under, and by virtue of, the City beneficial programs and services. The programs and services Charter enacted in 1883, and is a component unit of the include cost effective demand-side management services to City of Riverside (City). The Electric Utility is responsible promote energy efficiency and conservation and related edu for the generation, transmission and distribution of electric cation and information; ongoing support and new invest power for sale in the City.

ments in renewable resource technologies; energy research and development; and programs and services for low-ineome Basis of Accounting The accounting records of the electric customers. The activity associated with the surcharge Electric Utility are in accordance with generally accepted for public benefit programs is reflected in the accompanying accounting principles as applicable to governments and financial statements as a restricted asset and deferred revenue.

substantially in conformity with the Uniform System of Accounts prescribed by the Federal Energy Regulatory Cash and Investments The City follows the practice Commission, except for the method of accounting for con-of pooling cash and investments of all funds except for funds tributed capital described below. The Electric Utility is not required to be held by outside fiscal agents under the provi subject to the regulations of the Federal Energy Regulatory sions of bond indentures. Cash accounts for all City hinds are Commission. The Electric Utility is not required to and does pooled for investment purposes to enhance safety and liquidity not elect to implement the pronouncements of the Financial while maximizing interest earnings. Interest income earned Accounting Standards Board issued after November 1989.

on pooled cash is allocated monthly to the various funds of the City based on the month-end cash balances. Cash and Utility Plant and Depreciation All utility plant is investments held by fiscal agents are credited directly to the valued at historical cost or estimated historical cost, if actual related accounts.

historical cost is not available. Cost includes labor; materials; allocated indirect charges such as engineering, supervision, Effective July 1, 1997, the City adopted the provisions of construction and transportation equipment, retirement plan Governmental Accounting Standards Board (GASB) Statement contributions and other fringe benefits; and certain administra-No. 31: Accounting and Financial Reporting for Certain tive and general expenses. Contributed plant is valued at its Investments and External Investment Pools (GASB 31), which estimated fair market value on the date contributed. The cost requires governmental entities, including governmental exter of relatively minor replacements is included in maintenance nal investment pools, to report certain investments at fair value expense.

in the balance sheet and recognize the corresponding change in the fair value of investments in the year in which the change Depreciation is provided over the estimated useful lives of the occurred. In accordance with GASB 31, the City has stated related assets using the straight-line method. The estimated certain investments at fair value and has calculated the cumula useful lives are as follows:

tive effect of the prior year's change to equity as of July 1, Production plant.

30 years 1997, and found it to be immaterial. As required by GASB 31, Transmission and distribution plant.......... 20-50 years investments with maturities greater than one year at the dat of General plant and equipment............. 5-15 years purchase are stated at fair value while those with maturities of Nuclear Fuel The Electric Utility amortizes the cost of nuclear fuel to expense using the "as burned" method. In All highly liquid investments (including restricted assets) with a accordance with the Nuclear Waste Disposal Act of 1982, the maturity of three months or less when purchased are consid Electric Utility is charged one mill per kilowatt-hour of energy ered to be cash equivalents. Cash and investments held on generated by the City's share of San Onofre Nuclear behalf of the Electric Utility by the Ciry Treasurer are consid Generating Station's Units 2 and 3 to provide for estimated ered highly liquid and are classified as cash equivalents for the future storage and disposal of spent fuel. The Electric Utility purpose of presentation in the statement of cash flows.

pays this fee to its operating agent, Southern California Edison Co. (SCE), on a quarterly basis (see Note 7).

Inventories The City maintains a separate Central Stvres inventory. The Electric Utility expenses items as they are Restricted Assets Proceeds of revenue bonds yet to be drawn out of Central Stores. As such, the Electric Utility used for capital projects, as well as certain resources set aside does not include inventories in its financial statements.

for debt service, are classified as restricted assets on the balance sheet because their use is limited by applicable bond Bond Discounts and Issuance Costs Bond dis covenants. Funds set aside for the nuclear decommissioning counts and issuance costs are deferred and amortized over the reserve are also classified as restricted assets because their use term of the bonds using the effective interest method. Bond is legally restricted to a specific purpose.

discounts are presented as a reduction of the face amout. of bonds payable, whereas issuance costs are recorded as other In January 1998, the Electric Utility began collecting a assets.

surcharge for public benefit programs on customer utility

CITY OF RIVERSIDE ELECTRIC UTILITY NOTES TO THE FINANCIAL STATEMENTS 13 Contributed Capital Amounts received from cus-In the current year, as a result of market forces and the effects tomers and others for constructing utility plant are combined of deregulation, the City no longer meets the criteria of with retained earnings to represent equity. Accordingly, con-FASB 71. Therefore, the provisions of Statement of Financial tributed capital is shown in the accompanying balance sheet Accounting Standards No.101: Regulated Enterprises as an equity account and is not offset against utility plant.

Accounting for the Discontinuation of Application of FASB Depreciation of contributed assets is expensed.

Statement No. 71 (FASB 101), apply. As a result, manage ment of the City eliminated the use of the RSA. Instead, During the year, contributed capital increased by the following refunds and other sources of gains previously deferred in the amounts (in thousands):

RSA are redirected for early retirement of debt, or for the repair 1998 1997 of the utility plant in the event of a natural disaster or other Balance, July 1

$41,588

$40,416 emergency. In accordance with the provisions of FASB 101, the Impact fees 1,189 815 balances in the RSA of $23,469,000 have been recorded in Contributed plant 693 357 the Electric Utility's statements of operations and retained Balance, June 30

$43,470

$41,588 earnings as an extraordinary item. During the year, the RSA changed by the following amounts (in thousands):

Nuclear Decommissioning Reserve Federal regula-1998 1997 tions require the Electric Utility to provide for the future Balance, July 1

$33,410

$44,410 decommissioning of its ownership share of the nuclear units at Refunds from SCE 359 0

San Onofre. The Electric Utility has established a trust account Current year provision (10,300)

(11,000) to accumulate resources for the decommissioning of the nuclear Extraordinary item (23,469) 0 power plant and restoration of the beachfront at San Onofre.

Each year the Electric Utility recognizes an expense in the amount of the contribution to the trust account. The funding As discussed above, the balance in the RSA of$23,469,000 was transferred on June 16, 1998 will occur over the useful life of the generating plant. Amounts to a competitive transition account (C).

hel in the trust account are classified as restricted assets in the Customer Deposits The City holds customer deposits accompanying balance sheet. To date, the Electric Utility has as security for the payment of utility bills. The Electric set aside $22,401,000 in cash and investments with the trustee Utility's portion of these deposits as of June 30, 1998 and as Riverside's estimated share of the decommissioning cost of 1997, was $2,280,000 and $2,156,000, respectively.

San Onofre. Based on a cost estimate completed by SCE and approved by the California Public Utilities Commission, the Revenue Recognition The Electric Utility uses the Electric Utility plans to set aside approximately $1.6 million accrual basis of accounting. Revenues are recognized when per year to fund this obligation. Decommissioning is expected earned and expenses are recognized when incurred. Electric to commence around the year 2015.

Utility customers are billed monthly. Unbilled electric service charges are recorded at year-end and are included in accounts Rate Stabilization Account The Electric Utility has receivable. Unbilled accounts receivable totaled $7,780,000 adfiered to Statement of Financial Accounting Standards at June 30, 1998, and $7,557,000 at June 30, 1997.

No. 71: Accounting for the Effects of Certain Types of Regulation (FASB 71), which provides generally that the An allowancc for doubtful accounts is maintained for utility effects of the rate-making process be considered in determin-and miscellaneous accounts receivable. The balance in this ing accounting policies for the recognition of affected costs account is adjusted at fiscal year-end to approximate the and revenues. Specifically, FASB 71 provides that a gain may amount anticipated to be uncollectible. The balance in the be given to customers over future periods by amortizing the allowance account was $478,000 at June 30, 1998, and gain over those future periods and reducing rates to decrease

$777,000 at June 30, 1997.

revenues in approximately the amount of amortization. The recognized gain is not in income of the current period; Compensated Absences The accompanying financial ingead it is recorded as a liability for future reductions of statements include accruals for salaries, fringe benefits and customer charges.

compensated absences due employees at June 30, 1998 and 1997. The Electric Utility treats compensated absences due Accordingly, the Electric Utility's rates and regulations employees as a current liability. The amount accrued for provided for a rate stabilization account (RSA) that was used compensated absences was $3,838,000 at June 30, 1998, and to offset changes in the cost of providing power. Wholesale

$4,233,000 at June 30, 1997, and is included in current rate refunds and over or under collections of revenues resulting liabilities in the accompanying balance sheets.

from the difference between the Electric Utility's actual costs offupplying electric power and energy and the amount billed to customers through existing rates were recorded in the RSA. Use of amounts set aside in the RSA requires specific approval of the Board of Public Utilities and City Council.

Z

-'C bp 0t uv UE.~~

I.

U U~o~

O Y

-C 0

0g 0

0 v0:*~

-o o

C-E.u 0 0 C

0 U

bn v

u C; 0-H r,

b-Uz C) tz E

Qjr

)"

O".C r-bb Nl

>~f ON Q' ',6~

E 6

0 a

U E

0 9Eu lu u

Ro 0

U E0

-c c;

m0 xU a

7--

C

- C 0

-~~~

US 0

C,-c ~

U 0~0

~~~-

Vo 0

~

0S 0

u- I US 2

0 Vf j

u 5,~

0 10 U

-0~O u0

-o

~'u v

0

-0 0~0~S 0S

~u I

r_>~

C 0

0 0

Qj o~.2 v

-,uS 00 Ud 0 C

0

~~

Eo~~~~~-

02.-

Z'-

"'CL~~~~U 2

~

0

~

'S~~~T 0.Cd~'J U0 u2

-0o~

'r 0.

-Z'~~~2

CITY 0 F RIVER S IDE ELECTRIC UTILITY NOTES T 0 THE FINANCIAL S TATEMENTS 15 CASH AND INVESTMENTS Cash and investments atJune 30, 1998 and 1997, consist of the following (in thousands):

June 30. 1998 June 30, 1997 Fair Value Pooled investments with City Treasurer

$ 82,753

$57,789 Cash and investments at fiscal agent i

53,402 24,522

$136,155

$82,311 The amounts above are reflected in the accompanying financial statements as:

June 30. 1998 June 30, 1997 Cash and cash equivalents

$ 64,178

$37,588 Restricted assets:

Cash and cash equivalents 49,566 21,390 Investments 22,411 23,333 71,977 44,723

$136,155

$82,311 Authorized Investments Under provisions of the The Electric Utility's share of the City's investments at June City's investment policy and in accordance with California 30, 1998, represents approximately 31 percent or Government Code Section 53601, the City Treasurer may

$136,155,000 of the City's total cash and investments of invest or deposit in the following types of investments:

$433,299,000. Information concerning credit risk and fair Securities of the U.S. government, or its agencies value of the City's deposits and investments may he found in Local agency investment fund (state pool) deposits the notes of the City's "Comprehensive Annual Financial Small Business Administration loans Report" for the fiscal year ended June 30, 1998. Cash and Passbook savings account demand deposits investments at fiscal agent are insured or registered, or held in Negotiable certificates of deposits the name of the Electric Utility or its agent, or are not subject Repurchase agreements to risk categorization.

Banker's acceptances The City's portfolio held a limited amount of variable rate secu Mutual funds Mutua fund rioes including floating rate, inverse floating rate and structured Commercial paper of "prime" quality notes as a mechanism to protect the portfolio's overall market Medium-term corporate notes value. The majority of the City's investment instruments are highly rated federal agency or corporate securities with minimal Credit Risk and Fair Value of Deposits and credit risk. Although variable rate securities may have market In ves tmen ts Cash and non-negotiable certificates of fluctuations that are greater than non-variable instruments, the deposit are classified in three categories of credit risk as follows:

portfolio is highly liquid and diversified and the City does not Category 1 -insured or collateralized with securities held by expect to redeem any securities prior to maturity.

the City or its agent in the City's name; Category 2-collater alized with securities held by the pledging financial institution's trust department or agent in the City's name; Category 3 uncollatera0ized.

Investments are also classified in three categories of credit risk as follows: Category m-insured or registered, or securities held by the City or its agent in the City's name; Category 2 untnsured and unregistered, with securities held by the counterpartyRs trust department or agent in the City's name; Category 3-uninsured and unregistered, with securities held by the counterparo ecs trust department or agent but not in the City's name. Investments in pools managed by other govern ments or in mutual funds are not required to be categorized.

16 CITY OF RIVERSIDE ELECTRIC UTILITY NOTES TO THE FINANCIAL TATEMENTS NOTE RECEIVABLE points (.50 percent) and was due and payable in its entirety On June 18, 1996, $17,000,000 from the Electric Utility's 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. In current citywide investment pool interest rate plus 50 basis September 1997, this note was repaid in full.

LONG-TERM OBLIGATIONS Long-term obligations consist of the following (in thousands):

June 30, 1998 June 30, 1997 Capital Lease Electric Utility's Share of Equipment Purchased Through Capital Lease:

$55,100 capital lease due in monthly installments of $1,121 through November 1, 2002, interest at 8.5 percent 53 4

Total capital lease 53 4

Revenue 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 0

800

$68,175,000 1991 Electric Revenue Bonds: $27,395,000 serial bonds due in annual installments from $1,360,000 to $1,955,000 through October 1, 2003, interest from 5.9 percent to 6.4 percent (partially advance refunded in 1998) 8,020 63,705

$118,550,000 1993 Electric Refunding Revenue Bonds: $92,245,000 serial bonds due in annual installments from $4,955,000 to $8,005,000 through October 1, 2010, interest from 4.0 percent to 8.25 percent; $26,305,000 term bonds due October 1, 2013, interest at 5.0 percent 108,005 112,005

$4,100,000 1994 FARECal Electric Revenue Bonds: $2,105,000 serial bonds due in annual installments from $120,000 to $220,000 through July 1, 2010, interest from 4.9 percent to 5.9 percent; $1,995,000 term bonds due July 1, 2017, interest at 6.0 percent 3,985 4,100

$98,730,000 1998 Electric Refunding/Revenue Bonds: $63,165,000 serial bonds due in annual installments from $4,650,000 to $7,085,000 through October 1, 2013, interest from 4.25 percent to 5.38 percent; $21,595,000 term bonds due October 1, 2018, interest at 5.0 percent; $13,970,000 term bonds due October 1, 2022, interest at 5.0 percent.

98,730 0

Total electric revenue bonds payable 218,740 180,610 Total obligations 218,793 18014 Less: Current portion (6,574)

(6,639)

Unamortized bond (discount) premium 453 (3,119)

Total long-term obligations

$212,672-

$170,856

CITY OF RIVERSIDE ELECTRIC UTILITY N

TES T0 THE FINANCIAL STATEMENTS 17 Annual debt service requirements to maturity as of June 30, 1998, are as follows (in thousands):

1999 2000 2001 2002 2003 Thereafter Total Capital lease 19 10 11 13 0

0 53 Bond interest requirements 10,620 10,742 10,431 9,982 9,499 71,914 123,188 Bond principal requirements 6,555 6,610 6,930 7,385 12,490 178,770 218,740 Unamortized bond (discount) premium (62)

(51)

(52)

(57)

(60) 735 453 Total

$17,132

$17,311

$17,320

$17,323

$21,929

$251,419

$342,434 Debt Service Coverage Ratio The Electric Utility's electric energy for sale to its participants. SCPPA is governed bond indentures require the Electric Utility to maintain a by a Board of Directors, which consists of one representative debt service coverage ratio, as defined by the bond covenants, for each of the members. During the 1997-98 and 1996-97 of 1.25. The Electric Utility's debt service coverage ratio was fiscal years, the Electric Utility paid approximately 3.76 at June 30, 1998, and 2.86 at June 30, 1997.

$21,477,000 and $18,491,000, respectively, to SCPPA under various take-or-pay contracts that arc described in Advanced Refundings On May 1, 1998, $98,730,000 greater derail in Note 8. These payments are reflected as a of electric revenue bonds were sold with a true interest cost component of purchased power in the financial statements.

of 5.01 percent to provide project funds and advance refund

$53,965,000 of previously outstanding electric revenue Power Agency of California On July 1, 1990, the City of bo.nds. The advance refunding resulted in a difference Riverside joined with the cities of Azusa, Banning and Colton between the reacquisition price and the net carrying amount to create the Power Agency of California (PAC) by a joint of the old debt of $4,390,000, which is reflected on the Powers Agreement under the laws of the state of California.

4ance sheet as other assets. The difference, reported in the The city of Anaheim joined PAC on July 1, 1996. The statement of cash flows as a deduction from bond primary purpose of PAC is to take advantage of synergies and proceeds, is being charged to operations through 2016 using economies of scale as a result of the five cities acting in a proportional method. The City completed the advance concert. PAC has the ability to plan, finance, develop, refunding to reduce aggregate debt service payments over the acquire, construct, operate and maintain projects for the next 18 years by $1,038,000 and to obtain an economic gain generation and transmission of electric energy for sale to its (difference between present value of the old and new debt participants. PAC is governed by a Board of Directors, which service payments) of $3,007,000.

consists of one representative for each of the members. The term of the Joint Powers Agreement is 50 years. During the RESERVED RETAINED EARNINGS fiscal years ended 1997-98 and 1996-97, the Electric Utility A reserve for debt service has been established pursuant to paid approximately $45,000 and $46,000, respectively, to applicable bond indentures. Bond indentures for Riverside's PAC for administrative expenses and advanced $285,000 for electric revenue and refunding bonds require reserves that operating capital.

equate to the maximum annual debt service required in future years plus three months interest and nine months Financing Authority for Resource Efficiency of'Calfornia On principal due in the next fiscal year. The reserve for July 1, 1993, the City of Riverside joined with the cities of Riverside's portion of FARECal revenue bonds is equal to 10 Anaheim, Colton, Compton, Healdsburg, Los Angeles, Palo percent of the program agreement amounts. Additional Alto, Pasadena, Redding, Santa Cruz; the North Man reserves for the 1998 and 1991 revenue bonds are not Water District; the Northern California Power Agency; the required due to the purchase of surety bonds to cover the Sacramento Municipal Utility District; and Turlock required reserve requirements.

Irrigation District to create the Financing Authority for Resource Efficiency of California (FARECal). The primary JOINTLY-GOVERNED ORGANIZATIONS purpose ofFARECal is to issue bonds and use the proceeds Southern California Public Power Authority On November to promote, advance, encourage and participate in conserva 1, 1980, the City of Riverside joined with the Imperial tion, reclamation and other programs that are designed to Irrigation District and the cities of Los Angeles, Anaheim, utilize energy or water resources more efficiently. FARECal Vernon, Azusa, Banning, Colton, Burbank, Glendale and is administered by a Board of Directors comprised of one Pasadena to create the Southern California Public Power representative from each charter member (the cities of Authority (SCPPA) by a Joint Powers Agreement under the Anaheim, Los Angeles, Palo Alto and Riverside and the laws of the state of California. The primary purpose of North Main Water District) and three voting-based directors, SCPPA is to plan, finance, develop, acquire, construct, operate which currently are representatives from Trinity Public and maintain projects for the generation and transmission of Utilities District, Colton and Pasadena.

CITY OF RIVERSIDE ELECTRIC UTILITY NOTES TO THE FINANCIAL STATEMENTS JOINTLY-OWNED UTILITY PROJECT respective financial statements. The Electric Utility's 1.79 Pursuant to a settlement agreement with SCE, dated August 4, percent share of the capitalized construction costs for 1972, the City was granted the right to acquire a 1.79 percent SONGS totaled $125,424,000 and $124,683,000 for fiscal ownership interest in San Onofre Nuclear Generating Station years ended June 30, 1998 and 1997, respectively. The accu (SONGS), Units 2 and 3. In the settlement agreement, SCE mulated depreciation amounted to $61,277,000 and agreed to provide the necessary transmission service to deliver

$56,491,000 for the fiscal years ended June 30, 1998 and the output of SONGS to Riverside. SCE and the City 1997, respectively. The Electric Utility made provisions during entered into the SONGS Participation Agreement that sets fiscal years 1997-98 and 1996-97 for nuclear fuel burn of forth the terms and conditions under which the City,

$1,193,000 and $2,012,000, respectively, and for future through the Electric Utility, participates in the ownership decommissioning costs of $1,581,000 for 1997-98 and and output of SONGS. Other participants in this project 1996-97 fiscal years (see Note 1). The Electric Utility's portion include SCE, 75.05 percent; San Diego Gas & Electric of current and long-term debt associated with SONGS is Company, 20.00 percent; and the city of Anaheim, 3.16 included in the accompanying financial statements.

percent. Maintenance and operation of SONGS remain the responsibility of SCE, as operating agent for the City.

A atcpn nSNS h

lcrcUiiycudb respnsiiliy ofSCE asopertin agnt fr te Cty.subject to assessment of retrospective insurance premiums in There are no separate financial statements for the jointly-the 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 COMMITMENTS Take-or-Pay Contracts The Electric Utility has entered into a power sales contract with Intermountain Power Agency (IPA) for the delivety of electric power. The Electric Utility's share of IPA power is equal to 7.6 percent of the generation output of IPA's 1,600 megawatt coal-fueled generating station located in central Utah.

The contract constitutes an obligation of the Electric Uity to make payments solely from operating revenues. The power sales con tract requires the Electric Utility to pay certain minimum charges that are based on debt service requirements. Such payments are considered a cost of purchased power.

The Electric Utility is a member of the Southern California Public Power Authority (SCPPA), a joint powers agency (see Note 6).

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 ut 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 Intermountain Power Project 2023 Southern Transmission System..........t10.2 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 Interest rates on the outstanding debt associated with the current and long-term obligations. Management intends to take-or-pay obligations range from 3.45 percent to sd7 pay these obligations from operating revenues received percent. The schedule on the following page details the during the year that payment is due.

amount of principal that is due and payable by the Electric Utility as part of the take-or-pay contract for each project in the fiscal year indicated.

CITY OF RIVERSIDE ELECTRIC UTILITY NOTES TO THE FINANCIAL STATEMENTS 19 PRINCIPAL PAYMENTS (In Thousands)

Palo Verde*

Intermountain Nuclear Southern Hoover Mead-Mead Power Generating Transmission Dam Phoenix Adelanto All Year Ending June 30 Project Station System Uprating Transmission Transmission Projects 1999

$ 11,399

$ 1,729

$ 2,241

$ 176 0

0

$ 15,545 2000 11,794 1,906 1,966 185 86 802 16,739 2001 12,562 2,002 2,469 196 93 861 18,183 2002 11,884 1,701 1,959 208 99 921 16,772 2003 11,193 2,174 2,363 365 106 980 17,181 Thereafter 294,318 43,111 107,384 8,597 3,241 34,324 490,975 Subtotal 353,150 52,623 118,382 9,727 3,625 37,888 575,395 Less: Unamortized bond discount (14,944)

(4,219)

(9,021)

(1,079)

(156)

(1,584)

(31,003)

Refunding charge (65,422) 0 0

0 0

0 (65,422)

Total

$272,784

$48,404

$109,361

$8,648

$3,469

$36,304

$478,970 During the 1997-98 fiscal year, SCPPA issued $375 million in refunding revenue bonds as part of a restructuring plan to accelerate the payment of all fixed rate bonds by fuly 1.2004. Under the restructuring plan, Riverside's payment to SCPPA for the Palo Verde debt service increased by opproximately $3.5 million per year until 2004.

Pover Sales Agreements The Electric Utility has The agreement with SCE is for the purchase of firm executed nine firm power sales agreements. The agreements capacity and associated energy for a period of eight years ending are with Deseret Generation and Transmission Cooperative December 31, 1998. The monty amount of Firm capacity (Deseret) of Murray, Utah; California Department of Water from SCE is for 38 megawatts during 1997 and 30 Resources (CDWR); Bonneville Power Administration megawatts during 1998.

(BPA); Southern California Edison Co. (SCE); and Washington Water Power (WWP). The minimum annual There are four separate agreements with CDWR. CDWR 11 obligations under each of these contracts are shown in the is for the purchase of 20 megawatts of firm capacity and table below.

ciated energy during the months of May through October of each year beginning May 1, 1992. Riverside has provided Minimum Obligations 1998-99 (In Thousands)

CDWR with a notice of termination of this agreement effective SUPPLIER CAPACITY ENERGY TOTAL May 1, 2000. CDW III is for the purchase of23 meawatt Deseret

$10,504

$1,286

$11,790 of capacity and associated energy from May through October SCE 1,665 0

1,665 of each year beginningJune 1, 1996, for 15 years. CDWRIV CQWR II 394*

237 631 is for the purchase of 30 megawatts of capacity and associated CDWR III 204*

255 459 energy from May through October beginning June 1,1996, CDWR IV 266*

332 598 for 15 years. CDWR V is for the purchase of 50 megawatts of CDWR V 200*

288 488 capacity and associated energy from June through September BPA (two agreements) 683 0

683 for three years beginning July 16, 1996, and ending WWP 467 1,017 1,484 September 30, 1998.

Total

$14,383

$3,415

$17,798 The first agreement with BPA is for the purchase of firm

• Estimated capacity (23 megawatts in the summer months and 16 The agreement with Deseret is for five megawatts from megawatts in the winter months) and associated energy January 1, 1992, through December 31, 1994, then increasing beginning Februay 1, 1991, for a period of 20 years. The Jnuas meaat hog eebr3,20.Atncen 1996 BPA agreement is for the purchase of capacity (50 to4 52 megawatts through December 31, 2009. A notice of termination of the power sales agreement was provided megawatts during the summer months and 13 megawatts to Deseret effective March 31, 1998. As a result of litigation during the winter months) and associated energy beginning (see Note 9), Riverside has temporarily agreed to perform April 30, 1996, for 20 years. Effective May 1, 1998, these under the contract as though the contract had not been summer and winter capacity amounts increased to 60 terminated.

megawatts and 15 megawatts, respectively, for the remainder of the 1996 agreement. A notice of termination of both power sales agreements (two agreements) was provided to BPA effective March 31, 1998. A short-term contract is cur rently in effect with an ending date of May 1, 1999, which temporarily extends the otherwise terminated agreements.

20 CITY OF RIVERSIDE ELECTRIC UTILITY NOTES TO THE FINANCIAL STATEMENTS The agreement with WWP is for the purchase of 25 competitiveness. The consultant also reviewed stranded megawatts of firm capacity and associated energy during the investment solutions, financial strategies, governance and months of May through October of each year beginning May operations. Their recommendations, issued in December 1, 1995, for nine years. In accordance with the contract, the 1997, include establishing alliances for power marketing and Electric Utility discontinued deliveries for the month of May retail value-added services, installation of a new customer for the remainder of the agreement beginning with May information system, and creation of a marketing division.

1997. A notice of termination of the power sales agreement These and other recommendations are currently being was provided to WWP effective March 31, 1998. A short-implemented as part of Riverside Public Utilities' overall term contract is currently in effect with an ending date competitive strategic plan.

of May 1, 1999, which temporarily extends the otherwise terminated agreement.

LITIGATION Inipct f Eectrc Uiliy Dreguatin

i. n The Electric Utility is a defendant in various lawsuits arising Impact of Electric Utility Deregulation in inteomcorefunes California Deregulation of the electric industry in California is one of the most significant issues facing the Power Sales Agreement-Deseret Generation and City. Due to long-term contracts with Intermountain Power Transmission Cooperative On September 2, 1997, Agency and Southern California Public Power Authority, the City filed an action with the Federal Energy Regulatoty most of which obligate the City to purchase power and/

Commission (FERC) seeking modification of the rates for or services at a cost that is projected to be higher than the capacity and energy charged by Deseret under the City's market in a deregulated environment, the City is faced with power sales agreement with Deseret (Deseret Agreement).

commitments for purchased power costs in excess of market FERC has accepted this case and is setting the matter for value. California Assembly Bill 1890 provides for the recov-hearing in 1999.

ery of this stranded investment through a "competitive tran sition charge" on each customer's utility bill.

On March 26, 1998, the City notified Deseret that the City was exercising its termination rights under the Deseret A competitive financial strategy, which includes a 10-year Agreement effective March 31, 1998. The City has filedsuit financial planning model, was developed in 1996 and updated in the U.S. District Court, Central District of California, in 1997. This strategic plan serves as the blueprint for managing seeking an order declaring the contract terminated. Deseret the Electric Utility through the open market transition. The disputes the City's asserted right to terminate the Deseret strategy includes recovery and elimination of the excess costs Agreement and filed an action, which is pending in the U.S.

with minor impacts on customer rates over five years. In District Court, District of Utah, to enjoin the City from addition, labor groups and management have been jointly terminating the Deseret Agreement. The City believes its meeting to address deregulation and formulate recommenda-exercise of termination rights under the Deseret Agreement tions to the Board of Public Utilities and City Council.

was lawful. While the City cannot predict the outcome of the Durig te Fsca yea, te Cty btaied he ervces FERC case or the District Court cases, the City does not During the fiscal year, the City obtained the services of Washington International Energy Group to review the believe that such litigation will have an adverse material effect current and potential structures of the Electric Utility. The upon the financial condition of the Electric Utility.

consultant reviewed potential partnerships, alliances, and Other Litigation Present lawsuits and other claims outsourcing of discreet and multiple functions to increase against the Electric Utility are incidental to the ordinary course of operations of the Electric Utility and are largely covered by the City's self-insurance program. In the opinion of management and the City Attorney, such claims and litigation will not have a materially adverse effect upon the financial position or results of operations of the Electric Utility.

CITY OF RIVERSIDE ELECTRIC UTILITY INDEPENDENT AUDITORS '

REP 0 RT 21 YEAR 2000 (UNAUDITED)

Plan" fordealingwith theYear2000issue.Anextensiveeval The Year 2000 issue is the result of shortcomings in many uation was performed, the results of which led to the City's electronic data processing systems and other equipment that decision to purchase replacement hardware and software for may adversely affect operations in the year 1999 and beyond.

all of its financial systems. Additionally, the City identified Problems affecting a wide range of governmental activities other critical systems requiring replacement, which included will likely result if computers and other electronic equipment the human resources/payroll system, municipal billing services dependent upon date-sensitive coding are not corrected.

and cash receipting. The estimated cost of the project is These problems have the potential to cause a disruption in

$10,521,000, which was approved by the City Council in some operations and may temporarily increase the cost of June of this fiscal year. The City spent $848,000 in 1997-98 those operations.

with the balance to be expended during the next year. The In 1997, the City contracted with a firm to manage itscompleted by October 1999. The Information Systems Department. With the assistance of this firm, the City developed an "Information Systems Strategic To the Honorable City Council and Board ofdPublic Utilities City of'Riverside, Calfirntia We have audited the accompanying balance sheets of the City of Riverside Elernc Utility as of June 30,1998 and 1997, and the related statements of operations and retained earnings and cash flows fr the years then ended. These financial statements are the responsibility of the Electric Utility's 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

$misstatement.

An audit inaudes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the fiancial statements refprred to above present fairly, in all material respects, the financial position of the City of Riverside Electric Utility as ofEJune 30, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

As discussed in Note I to the financial statements, the City adopted the provisions of the Governmental Accounting Standards Board Statement No. 27, "Accounting for Pensions by State and Local Governmental Employers," and Governmental Accounting Standards Board Statement No. 31, "Accounting and Financial Reporting for Certain Investments and External Investment Pools," in 1998.

October 30, 1998 We cnduted ur udis inaccrdace wth eneallyaccpte audtin stndars.

hos stadars rquir tht w

22 CITY OF RIVERSIDE WATER UTILITY BALANCE SHEETS june 30 June 30 1998 1997 ASSETS (in Thousands)

UTILITY PLANT:

Source of supply

$ 25,549

$ 23,833 Pumping 8,592 8,172 Treatment 398 398 Transmission and distribution 166,079 161,247 General 5,228 5,202 Intangible 5,534 5,534 211,380 204,386 Less accumulated depreciation and amortization (64,158)

(60,144) 147,222 144,242 Construction in progress 10,580 10,093 Total utility plant 157,802 154,335 RESTRICTED ASSETS:

Cash and cash equivalents 13,305 5,559 Investments 2,581 2,667 Total restricted assets 15,886 8,226 CURRENT ASSETS:

Cash and cash equivalents 14,531 13,121 Accounts receivable, less allowance for doubtful accounts 1998 $91,000; 1997 $123,000 3,425 3,262 Accrued interest receivable 144 178 Advances to the City's general fund 56 111 Total current assets 18,156 16,672 OTHER ASSETS:

Unamortized bond issuance costs 782 704 Unamortized bond refunding costs 679 0

Total other assets 1,461 704 Total assets

$193,305

$179,937 See accompanying notes to the financiatstatements.

CITY 0 F RIVERSIDE WATER UTILITY 23 BALANCE SHEETS June 30 June 30 1998 1997 CAPITALIZATION AND LIABILITIES Un Thousand,)

EQUITY:

Retained earnings:

Reserved for debt service

$ 6,258

$ 6,983 Unreserved 15,825 15,497 Total retained earnings 22,083 22,480 Contributed capital 104,345 101,013 Total equity 126,428 123,493 LONG-TERM OBLIGATIONS, LESS CURRENT PORTION 60,784 50,773 Total capitalization 187,212 174,266 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS:

Accrued interest payable 624 597 Current portion of long-term obligations 2,780 2,265 Total current liabilities payable from restricted assets 3,404 2,862 CURRENT LIABILITIES:

Accounts payable 411 609 Accrued liabilities 1,784 1,752 Current portion of long-term obligations 169 154 Customer deposits 325 294 Total current liabilities 2,689 2,809 COMMITMENTS AND CONTINGENCIES Total capitalization and liabilities

$193,305

$179,937 See accompanying notes to the finandal statements.

24 CITY OF RIVERSIDE WATER UTILITY For the Fiscal Years Ended June 30 1998 1997 On Thousands)

OPERATING REVENUES:

Residential sales

$14,226

$15,280 Commercial sales 6,941 6,938 Other sales 932 624 Other operating revenue 946 651 Total operating revenues 23,045 23,493 OPERATING EXPENSES:

Operations 9,407 9,236 Maintenance 2,217 2,052 Purchased energy 2,599 3,125 Purchased water 603 600 Depreciation and amortization 4,290 3,993 Total operating expenses 19,116 19,006 Operating income 3,9294,487 NON-OPERATING REVENUES (EXPENSES):

Interest income 1,134 1,121 Interest expense (3,725)

(3,613)

Gain on retirement of utility plant 29 32 Other 885 1,009 Total non-operating revenues (expenses)

(1,677)

(1,451)

Income before operating transfer 2,252 3,036 OPERATING TRANSFER OUT:

Contribution to the City's general fund (2,649)

(2,408)

Net income (loss)

(397) 628 RETAINED EARNINGS, BEGINNING OF YEAR 22,480 21,852 RETAINED EARNINGS, END OF YEAR

$22,083

$22,480 s"o arraneavn notes ro the HinI ternmer

CITY OF RIVERSIDE WATER UTILITY 25 STATEMENTS OF CASH FLOWS For the Fiscal Years Ended June 30 1998 1997 (In Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers and users

$22,913

$23,630 Cash paid to suppliers and employees (14,991)

(14,769)

Other non-operating revenue 885 1,009 Net cash provided by operating activities 8,807 9,870 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:

Contribution to the City's general fund (2,649)

(2,408)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of utility plant (5,531)

(4,677)

Proceeds from the sale of utility plant 73 68 Proceeds from the sale of revenue bonds 30,675 0

Deposit to escrow account for advance refunding of revenue bonds (19,322) 0 Principal paid on long-term obligations (2,271)

(2,028)

Interest paid on long-term obligations (2,679)

(2,683)

Bond issuance costs (318) 0 Contributed capital 1,062 1,020 Net cash provided (used) by capital and related financing activities 1,689 (8,300)

CASH FLOWS FROM INVESTING ACTIVITIES:

Reduction in advances to the City's general fund 55 0

Maturities of investment securities 86 1,117 Income from investments 1,168 1,101 Net cash provided by investing activities 1,309 2,218 Net increase in cash and cash equivalents 9,156 1,380 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR' 18,680 17,300

.ASH AND CASH EQUIVALENTS, END OF YEAR

$27,836

$18,680 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income

$ 3,929

$ 4,487 Adjustments to reconcile operating income to net cash provided by operating activities:

Other non-operating revenue 885 1,009 Depreciation and amortization 4,290 3,993 Provision for uncollectible accounts receivable (32)

(38)

(Increase) decrease in accounts receivable (101) 171 (Increase) in advances to the City's general fund (29) 0 Increase (decrease) in accounts payable (198) 333 Increase (decrease) in accrued liabilities 32 (90)

Increase in customer deposits 31 5

Net cash provided by operating activities

$ 8,807

$ 9,870 SCHEDULE OF NON-CASH INVESTING. CAPITAL AND FINANCING ACTIVITIES:

Contributions in aid of construction

$ 2,270 390 Purchase ofequipment through capital lease 55 0

Cash and cash equivalents also Includes cash and cash equivalents In restricted assets.

See accomponying notes to the financial statements.

26 CITY OF RIVERSIDE WATER UTILITY NOTES TO THE FINANCIAL STATEMENTS

SUMMARY

OF SIGNIFICANT Investments and External Investment Pools (GASB 31),

ACCOUNTING POLICIES which requires governmental entities, including governmental The Water Utility exists under, and by virtue of, the City external investment poois, to report certain investments at Charter enacted in 1883, and is a component unit of the fair value in the balance sheet and recognize the corresponding City of Riverside (City). The Water Utility is responsible for change in the far value of investments in the year in which the production, transmission and distribution of water for the change occurred. In accordance with GASB 31, the City sale in the City.

has stated certain investments at fair value and has calculated the cumulative effect of the prior year's change to equity as of Basis of Accounting The accounting records of the July 1, 1997, and found it to be immaterial. As required by Water Utility are in accordance with generally accepted CASB 31, investments with maturities greater than one year accounting principles as applicable to governments and at the date of purchase are stated at fair value while those substantially in conformity with the Uniform System of with maturities of less than one year are stated at cost or Accounts prescribed by the California Public Utilities amortized cost.

Commission, except for the method of accounting for contributed capital described below. The Water Utility is not All highly liquid investments (including restricted assets) with subject to the regulations of the California Public Utilities a maturity of three months or less when purchased are con Commission. The Water Utility is not required to and does sidered to be cash equivalents. Cash and investments held on not elect to implement the pronouncements of the Financial behalf of the Water Utility by the City Treasurer are consid Accounting Standards Board issued after November 1989.

ered highly liquid and are classified as cash equivalents for the purpose of presentation in the statement of cash flows.

Utility Plant and Depreciation All utility plant is valued at historical cost or estimated historical cost, if actual Inventories The City maintains a separate Central Stgres historical cost is not available. Cost includes labor; materials; inventory. The Water Utility expenses items as they are allocated indirect charges such as engineering, supervision, drawn out of Central Stores. As such, the Water Utility does construction and transportation equipment, retirement plan not include inventories in its financial statements.

contributions and other fringe benefits; and certain adminis trative and general expenses. Contributed plant is valued Bond Discounts, Capital Appreciation and at its estimated fair market value on the date contributed.

Issuance Costs Bond discounts, capital appreciation and The cost of relatively minor replacements is included in issuance costs are deferred and amortized over the term of the maintenance expense.

bonds using the effective interest method. Bond discounts and capital appreciation are presented as a reduction of the face Depreciation is recorded over the estimated useful lives of the amount of bonds payable, whereas issuance costs are recorded related assets using the straight-line method. The estimated as other assets. Capital appreciation is the annual increase in useful lives are as follows:

the value of bonds originally issued at a discounted amount.

Supply pumping and treatment plant.......... 20-50 years These bonds do not pay annual interest and mature at a prede Transmission and distribution plant........ 30-50 years termined par value.

General plant and equipment....................5-50 years Contributed Capital Amounts received from cus Restricted Assets Proceeds of revenue bonds yet to be tomers and others for constructing utility plant are combined used for capital projects, as well as certain resources set aside for with retained earnings to represent equity. Accordingly, con debt service, are classified as restricted assets on the balance tributed capital is shown in the accompanying balance sheet sheet because their use is limited by applicable bond covenants.

as an equity account and is not offset against utility plant.

Depreciation of contributed assets is expensed.

Cash and Investments The City follows the practice of pooling cash and investments of all funds except for funds During the year, contributed capital increased by the following required to be held by outside fiscal agents under the provi-amounts (in thousands):

sions of bond indentures. Cash accounts for all City funds 1998 1997 are pooled for investment purposes to enhance safety and Balance, July 1

$101,013

$ 99,603 liquidity while maximizing interest earnings. Interest income earned on pooled cash is allocated monthly to the various Contributed plant 2

390 funds of the City based on the month-end cash balances.

Cash and investments held by fiscal agents are credited Balance, June30

$104,345

$101,013 directly to the related accounts.

diretlyto he elatd acouts.Customer Deposits The City holds customer deposits Effective July 1, 1997, the City adopted the provisions of as security for the payment of utility bills. The Water Governmental Accounting Standards Board (GASB) Statement Utility's portion of these deposits as of June 30, 1998 and No. 31: Accounting and Financial Reporting for Certain 1997, was $325,000 and $294,000, respectively.

CITY OF RIVERSIDE WATER UTILITY N 0 TES TO THE FINANCIAL STATEMENTS 27 Revenue Recognition The Water Utility uses the deferred under the plan, A property and rights purchased accrual basis of accounting. Revenues are recognized when with those amounts, and all income attributable to Ehose earned and expenses are recognized when incurred. Water amounts must be held in trust, custodial account or annuity Utility customers are billed monthly. Unbilled water service contract for the exclusive benefit of the employee participants charges are recorded at year-end and are included in accounts and their beneficiaries.

The new law effectively repeals the receivable. Unbilled accounts receivable totaled $1,422,000 requirement that a Section 457 plan sponsored by a gover at June 30, 1998, and $1,302,000 at June 30, 1997.

mental entity be solely the property of the employer, subject only to the claims of Ehe employer's general creditors. For An allowance for doubtful accounts is maintained for utility plans in existence on the date of enactment of the new law and miscellaneous accounts receivable. The balance in this (August 20, 1996), a trust need not be established until account is adjusted at fiscal year-end to approximate the January 1, 1999. The City is currently working toward the amount anticipated to be uncollectible. The balance in the establishment of the necessary trust.

allowance account was $91,000 at June 30, 1998, and

$123,000 at June 30, 1997.

It is the opinion of the City's legal counsel that the City has no liability for losses under the plan but does have the duty Compensated Absences The accompanying financial of due care that would be required of an ordinary prudent statements include accruals for salaries, fringe benefits and investor. The assets and liabilities of the plan are recorded in compensated absences due employees at June 30, 1998 and an agency fund in the City's "Comprehensive Annual 1997. The Water Utility treats compensated absences due Financial Report" and are not reflected in the accompanying employees as a current liability. The amount accrued for balance sheets of the Water Utility.

compensated absences was $1,701,000 at June 30, 1998, Emplovee Retirement Plan The City contributes to the andL$1,698,000 at June 30, 1997, and is included in current liabilities in the accompanying balance sheets.

agent multiple-employer public employee retirement system Employees receive 10 to 25 vacation days a year based upon that acts as a common investment and administrative agency length of service. A maximum of two years vacation can be accu-for participating public entities within the state of California.

mulated and unused vacation is paid in cash upon separation.

All permanent full-time and selected part-time employees are Employees primarily receive one day of sick leave for each eligible for participation in PERS. Benefits vest after five month of employment with unlimited accumulation. Upon years of service and are determined by a formula that considers retirement or death only, a percentage of unused sick leave is the employee's age, years of service and salary. Employees paid to certain employees or their estates in a lump sum may retire at age 55 and receive 2 percent of their highest based on longevity.

average annual salary for each year of service completed.

PERS also provides death and disability benefits. These bene Self-Insurance Program The Water Utility participates fit provisions and all other requirements are established by in a self-insurance program for worker's compensation and state statute and City ordinance.

general liability coverage that is administered by the City.

The Water Utility pays an amount to the City representing an estimate of amounts to be paid for reported claims Utility is required to contribute the remaining amounts nec incurred and incurred but unreported claims based upon past essary to fund the benefits for its members using the actuarial experience, modified for current trends and information.

basis recommended by the PERS actuaries and actuarial con sultants and adopted by the PERS Board of Administration.

Although the ultimate amount of losses incurred through The Water Utility pays both the employee and employer June 30, 1998, is dependent upon future developments, contributions.

management believes that amounts paid are sufficient to cover such losses.

The City implemented GASB Statement No. 27:

Accounting for Pensions by State and Local Governmental Dejrred Compensation and Employee Retirement Plans Employers, which establishes standards for the measurement, Deferred Compensation Plan The City offers its employees recognition and display of pension expenditures and related a deferred compensation plan created in accordance with the liabilities, assets and note disclosures. The effect of adopting Internal Revenue Code, Section 457. The plan, available to this standard was immaterial to the accompanying financial all City employees, permits deferral of a portion of an statements.

employee's salary until future years. The deferred compensa-Ci tion is not available to employees until termination, retire-atwid e o ati conrin s o f the funded ment, death or an unforeseeable emergency.

year ended June 30, 1998, and recent trend information may As a result of changes under the Small Business Job be found in the notes of the City's "Comprehensive Annual Protection Act of 1996, all amounts of compensation Financial Report" for the fiscal year endedJune 30, 1998.

28 CITY OF RIVERSIDE WATER UTILITY NOTES TO THE FINANCIAL STATEMENTS Contribution to the City's General Fund Budgets and Budgetary Accounting The Water Pursuant to the City Charter, the Water Utility may transfer Utility presents, and the City Council adopts, an annual up to 11.5 percent of its prior year's gross operating revenues budget. The proposed budget includes estimated expenses to the City's general fund. In fiscal years 1997-98 and 1996-97, and forecasted revenues. The City Council adopts the Water the Water Utility transferred 11.5 percent of gross operating Utility's budget at its last meeting in June via an adopting revenues, or $2,649,000 and $2,408,000, respectively.

resolution. The Water Utility's budgeted expenses for fiscal year 1997-98 and 1996-97 amounted to $34,824,000 and

$30,860,000, respectively.

CASH AND INVESTMENTS Cash and investments atJune 30, 1998 and 1997, consist of the following (in thousands):

June 30, 1998 June 30, 1997 Fair Value Pooled investments with City Treasurer

$17,935

$17,094 Cash and investments at fiscal agent 12,482 4,253

$30,417

$21,347 The amounts above are reflected in the accompanying financial statements as:

June 30, 1998 June 30, 1997 Cash and cash equivalents

$14,531

$13,121 Restricted assets:

Cash and cash equivalents 13,305 5,559 Investments 2,581 2,667 15,886 8,26

$30,417

$21,347 Authorized Investments Under provisions of the counterparty's trust department or agent in the City's name; City's investment policy and in accordance with California Category 3-uninsured and unregistered, with securities Government Code Section 53601, the City Treasurer may held by the counterparty's trust department or agent but invest or deposit in the following types of investments:

not in the City's name. Investments in poois managed by Securities of the U.S. government, or its agencies other governments or in mutual funds are not required to be Local agency investment fund (state pool) deposits categorized.

Small Business Administration loans The Water Utility's share of the Citys investments at Jane Passbook savings account demand deposits 30, 1998, reptesents approximately 7 percent or $30,417,000 Negotiable certificates of deposits of the City's total cash and investments of $433,299,000.

Repurchase agreements Information concerning credit risk and fair value of the Banker's acceptances City's deposits and investments may be found in the notes of Mutual funds the City's "Comprehensive Annual Financial Report" for the Commercial paper of "prime" quality fiscal year ended June 30, 1998. Cash and investments at fis Medium-term corporate notes cal agent are insured or registered, or held in the name of the Credit Risk and Fair Value of Deposits and Water Utility or its agent, or are not subject to risk catego In vestments Cash and non-negotiable certificates of rization.

deposit are classified in three categories of credit risk as The Citys portfolio held a limited amount of variable +1te follows: Category 1-insured or collateralized with securities securities including floating rate, inverse floating rate and held by the City or its agent in the City's name; Category 2-structured notes as a mechanism to protect the portfolio's collateralized with securities held by the pledging financial overall market value. The majority of the Citys investment institution's trust department or agent in the City's name; instruments are highly rated federal agency or corporate 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 securities non-variable instruments, the portfolio is highly liquid and held by the City or its agent in the City's name; Category rified an th ityd 2-uninsured and unregistered, with securities held by the

CITY OF RIVERSIDE WATER UTILITY NOTES TO THE FINANCIAL STATEMENTS 29 LONG-TERM OBLIGATIONS Long-term obligations consist ofthefollowing (in thousands):

June 30, 1998 June 30, 1997 Contracts Payable and Capital Lease Water Stock Acquisitions: Payable on demand to various water companies

$ 1,258

$ 1,259 Water Utility's Share of Equipment Purchased Through Capital Lease: $55,100 capital lease due in monthly installments of $1,121 through November 1, 2002, interest at 8.5 percent 53 4

Total contracts payable and capital lease 1,311 1,263 Revenue Bonds Payable

$69,840,000 1991 Water Revenue Bonds: $25,050,000 serial bonds due in annual installments from $2,260,000 to $3,100,000 through October 1, 2002, interest from 5.9 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 (partially advance refunded in 1998) 39,080 60,100

$4,710,000 1994 FARECal Revenue Bonds: $2,420,000 serial bonds due in annual installments from $140,000 to $255,000 through July 1, 2010, interest from 4.9 percent to 5.9 percent; $2,290,000 term bonds due July 1, 2017, at 6.0 percent 4,575 4,710

$30,965,000 1998 Water Refunding/Revenue Bonds: $15,055,000 serial bonds due in annual installments from $205,000 to $4,055,000 through October 1, 2013, interest from 4.0percent to 5.37 percent; $10,155,000 term bonds due October 1, 2018, interest at 5.0 percent; $5,755,000 term bonds due October 1, 2027, interest at 5.0 percent 30,965 0

Total water revenue bonds payable 74,620 64,810 Total obligations 75,931 66,073 Less: Current portion (2,949)

(2,419)

Unamortized capital appreciation (11,656) 1 (12,586)

Unamortized bond discount (542)

(295)

Total long-term obligations

$ 60,784

$ 50,773 Annual debt service requirements to maturity as of June 30, 1998, are as follows (in thousands):

1999 2000 2001 2002 2003 Thereafter Total Capital lease

$ 169

$ 160

$ 161

$ 162

$ 150 509

$ 1,311 Bond interest requirements 2,663 2,633 2,427 2,166 1,880 20,389 32,158 Bond principal requirements 2,780 2,755 2,955 3,215 3,500 59,415 74,620 Unamortized capital and bond discount (1,021)

(1,090)

(1,164)

(1,243)

(1,328)

(6,352)

(12,198)

Total

$4,591

$4,458

$4,379

$4,300

$4,202

$73,961

$95,891 Debt Service Coverage Ratio The Water Utility's The advance refunding resulted in a difference between the bond indentures require the Water Utility to maintain a debt reacquisition price and the net carrying amount of the old debt service coverage ratio, as defined by the bond covenants, of of $679,000, which is reflected on the balance sheet as other 1.25. The Water Utility's debt service coverage ratio was 2.30 assets. This difference, reported in the statement of cash flows as at June 30, 1998, and 2.52 at June 30, 1997.

a deduction from bond proceeds, is being charged to operations through 2016 using a proportional method. The City complet Advance Refundings On May 1, 1998, $30,965,000 of ed the advance refunding to reduce aggregate debt service pay water revenue bonds were sold with a true interest cost of 5.21 ments over the next 18 years by $3,558,000 and to obtain an percent to provide project funds and advance refund economic gain (difference between present value of the old and

$18,890,000 of previously outstanding water revenue bonds.

new debt service payments) of $2,301,000.

30 CITY OF RIVERSIDE WATER UTILITY INDEPENDENT AUDITORS' REPORT RESERVED RETAINED EARNINGS LITIGATION A reserve for debt service has been established pursuant to The Water Utility is a defendant in various lawsuits arising in applicable bond indentures. Bond indentures for Riverside's the normal course of business. Management, based in part on water revenue bonds require reserves that equate to the maxi-the opinion of outside legal counsel, does not believe that the mum annual debt service required in future years plus three ultimate resolution of these matters will have a material effect months interest and nine months principal due in the next on the financial position or results of operations of the Water Utility.

fiscal year. The reserve for Riverside's portion of FARECal revenue bonds is equal to 10 percent of the program agree-YEAR 2000 (UNAUDITED) ment amounts. Additional reserves for the 1998 revenue The Year 2000 issue is the result of shortcomings in many bonds are not required due to the purchase of surety bonds electronic data processing systems and other equipment that to cover the required reserve requirements.

may adversely affect operations in the year 1999 and beyond.

Problems affecting a wide range of governmental activities will jOINTLY-GOVERNED ORGANIZATIONS likelyresultifcomputersandotherelectronicequipmentdepen On July 1, 1993, the City of Riverside joined with the cities dent upon date-sensitive coding are not corrected. These prob of Anaheim, Colton, Compton, Healdsburg, Los Angeles, lems have the potential to cause a disruption in some operations Palo Alto, Pasadena, Redding, Santa Cruz; the North Marin and may temporarily increase the cost of those operations.

Water District; the Northern California Power Agency; the Sacramento Municipal Utility District; and Turlock In 1997, the City contracted with a firm to manage its Irrigation District to create the Financing Authority for Information Systems Department. With the assistance of this Resource Efficiency of California (FARECal). The primary firm, the City developed an "Information Systems Strategic purpose of FARECal is to issue bonds and use the proceeds Plan" for dealing with the Year 2000 issue. An extensive eval to promote, advance, encourage and participate in conserva-uation was performed, the results of which led to the City's tion, reclamation and other programs that are designed to decision to purchase replacement hardware and softwarefor utilize energy or water resources more efficiently. FARECal all of its financial systems. Additionally, the City idented is administered by a Board of Directors comprised of one other critical systems requiring replacement, which included representative from each charter member (the cities of the human resources/payroll system, municipal billing set Anaheim, Los Angeles, Palo Alto and Riverside and the vices and cash receipting. The estimated cost of the project is North Marin Water District) and three voting-based directors,

$10,521,000, which was approved by the City Council in which currently are representatives from Trinity Public June of this fiscal year. The City spent $848,000 in 1997-98 Utilities District, Colton and Pasadena.

with the balance to be expended during the next year. The project is expected to be completed by October 1999. The Water Utility's share of the estimated cost is $1,465,000.

To the Honorable otthi Councilpand Board ofoPublic Utilities CiWy ofWRiverside, Cal2Drnia We have audited the accompanying balance sheets of the City of Riverside Water Utility as ofJune 30,1998 and 1997, and the related statements of operations and retained earnings and cash flowd for the years then ended. These financial statements are the responsibility of the Water Utility's 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 fee of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as welt 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 mateial respects, the financial position of the.

City ofRiverside Water Utility as ofJune 30,u1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

As discussed in Note I to the financial statements, the City adopted the provisions of the Governmental Accounting Standards Board Statement No. 27, "Accounting for Pensions by State and Local Governmental Employers," and Governmental Accounting Standards Board Statement No. 31, "Accounting and Financial Reporting for Certain Investments and External Investment pools," in 1998.

October 30, 1998

GOVERNING BODIES AND ADMINISTRATION 31 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 Occupation: Administrative Occupation: Certified Occupation: Retired, Former Occupation: Assistant Vice Analyst Public Accountant Assistant Chief Engineer-Water Chancellor of Campus Relations Riverside resident:

Riverside resident:

Riverside resident:

Riverside resident:

lifetime lifetime 17 years 13 years Years of service: 5 Years of service: 6 Years of service: 8 Years of service: 7 PUBLIC UTILITIES ADMINISTRATION BILL D. CARNAHAN Director DAVID H. WRIGHT Deputy Director, Marketing and Customer Service MICHAEL). BALDWIN Assistant Director, Electric DIETER P. WIRTZFELD CONRAD NEWBERRY JR.

THOMAS PEVEHOUSE DWIGHT TATE Assistant Director, Water Occupation: Registered Occupation: Economic 1997-98 Board Chairman Mechanical Engineer Development Specialist Occupation: Personal iefFSci Oer Riverside resident:

Riverside resident:

Financial Advisor 5 years 13 years Riverside resident:

Years of service: 1 Years of service: 3 lifetime Years of service: 4 ALEX CLIFFORD RONALD LOVERIDGE CHUCK BEATY Ward 1 TERRI THOMPSON JOHN HOLMES AMEAL MOORE Ward 6 Ward 2 LAURA PEARSON JOY DEFENBAUGH Ward 7 Ward 3 MAUREEN KANE Ward 4

32 PEOPLE SERVING PEOPLE R IV ERSIDE PUBL IC UTI L I T I E S E MPLO0 Y EE S YEARS OF SERVICE 24 YEARS Peter Nesic Linda K. Rogan TO THE CITY David A. Alfaro Carol A. Torchia Alvin M. Tannenbaum 36 YEARS Michael E. Brown David C. Wilson 13 YEARS Dennis G. Sims Ronald D. Frost Ralph F. Wollerton Carlos Castro 35 YEARS Bacilio Gutierrez Jr.

Charles R. Wormington Jeffrey D. Clausen Barry J. Niemiec Lester W. Jameson Jr.

18 YEARS John T. Denham Charlie R. Penunuri Ray D. Neal Jr.

Ron W. Barry James G. Grady Brian Simpson David J. Porchia Walter N. Bell Jr.

Barbara A. Grillo Victor G. Velasquez Mark S. Ensign Gus W. Knie 34 YEARS Karol L. Veu Casovic Wanda F. Hedlund Kenneth B. McGregor Edward P. Hansen Ronald J. White Robert L. Lucas David M. McLellan Delbert L Schroeder 23 YEARS Margery 1. McDowell Donald R. Pulsifer 33 YEARS Sandra L. Lewis Bonnie C. Negrete Bruce C. Taylor Theresa S. Waldschmitt Arthur P. Madril Mildred A. Ridges Ronald H. Wigg 32 YEARS 22 YEARS Donald C. Rogers Brian R. Willis Samuel L. Scarcello Alan P. Wohlfarth Thomas R. Gibbins Jeanette E. Barnes 31 YEARS Malcolm N. Duckett Joey M. Toth 12 YEARS Bruce C. Benter Randall W. Olgren Michael J. Baldwin Terry L. Stroud Adrian Saint 17 YEARS Vahid Bazel Ben G. Wong 21 YEARS Gary L. Bender Harold J. Bell SYERichard C. Aguilera Cheryl E. Clelland Bill D. Carnahan 30 YEARS John ). Enderson Thomas J. Collins Domingo Aguilar Joseph S. Chavez Thomas E. Glass Richard J. Dickinson Fernand R. Boucher Richard S. Drobek James P. Henke Scott L Faust William E. Fagan TmT un Daniel W. Randall Tam T. Huynh Ronald T. Fiske James T. Hornbarger CrsA oac Isac j. Sanchez Chris A. foranco Robert B. Gill Mary T. Whaley Daniel Hurtado Darrell R. Otjen Edward L. Kostjal Jr.

Robeta.

WoackIsmael E. Mercado Roberta A. Womack Clyde B. Parker Jeffrey K. McKown 29 YEARS Dinie D. Rhderd Richard H. Skelton Martin W. McLeod 0

EARDaniel D. Shackelford Gerald R. Burton Michael J. Torelli 16 YEARS Rita Nicks Andrew J. Kirkland Jr.

Edward M. Wdowiak Arthur V. Anaya Rey M. Perez Henry A. Loya Helen M. Azevedo William D. Ryan Gilbert S. Penunuri Linda L. Camacho Angel H.Sanchez Del R. Ballard Sammie L. Shepeard Brian G. Bozarth Mark S. Connor T.D. Sweatt Kerry W. Dittler Joseph A. Garozzo Cindy L. Chan Maurice S. Taks Stella L. Garcia 27 YEARS Linda S. Conerly RogerL.Hunt Diane J. Tepper Doris L. Perry Peter E. Diaz Mary S. Leavitt Dieter P. Wirtzfeld Dennis J. Stirlen Michael H. Luitwieler Lucinda Norried 11 YEARS Walter L. White Gregory L. Prator Richard M. Ryno ChristoperAvila Joseph M. Tenenbaum 26 YEARS Omar E. Shehab Thomas G. Bradshaw Paul O. Westover Jr.

Gerald A. Gandara Roger J. Wagner Gregory M. Diaz David A. Smart 15 YEARS Mercedes P. Diaz Clarence R. Voll Jr.

Robert S. Ayers Jr.

Antoine S. Abu Shabakeh Kathleen M. Falco Banda Craig W. Bostrom Thomas D. Garcia LJoseph Chavez Da. Raniada Eugene L. Ginsberg Ruben M. Leivas Danny L. Clemons John W. Hair Dwight W. Page James H. Deal 14 YEARS Richard E. Holmes Jerry L. Smith Robert Delgado Guillermo Armenta Marvin L. Infante Richard Gastelum William D. Bedford Jr.

James E. Johnson Paul R. Gearhart Randell S. Carder Steven T. Johnson Patrick B. Hannifin Jackie L. Cunningham Randal A. Koers Victor H. Hernandez Yolanda C. Garcia Tully Jeffery J. Lewis Daniel L. McClenathan Marilyn J. Grayston Arthur R. Montano 11 Lois G. McGinnis Edward K. Hogerty Alvino P. Orozco Kevin S. Milligan

PEOPLE SERVING PEOPLE 33 Gloria M. Purifoy Greg H. Coffman Hernando B. Tagle NEW EMPLOYEES David L Redding Bobby V. Cordova Robert A. Worthington Mi Abraham John L. Sevey Albert T. Dykstra 4 YEARS Carolyn M. Adams Candice C. ShihRikFae Cadc C hh ikFrneKenneth A. Anderson Nicholas P. Banko, James R. Sinner Kelly L Hell Michael G. Bach Gayla D. Branco Adrian A. Valdez Arnold P. HohI Jr.

Hazel L Bratcher Michael J. Vernon Daniel H. Hotchkiss Casey L. Whitney Bonnie M. Ivy Steven S. Dowell Rosalie A. Casioce 10 YEARS Jeffrey S. Karalun Joyce E. Drake Jesus E. Chavez Raymond S. Aguilar William D. Kilpatrick Catherine E. Ference Braylicet M. Espana JohnJ. Bailey James R. King VictorA-Garcia David A. Glstrap Matthew Blais Enrique S. Marquez Alan H. Gatter Harry G. Hanson Tom R. Corrigan Max C. Mendoza John L Graham Erich J. Heyner Billie I. Crumley Jr.

Gary L Nolif John M. Heiden Robert F. Holloway David W. Eich Marilyn F. Pieper Joon H. Jin lalene L Isaac George E. Kelley Michael R. Price James W. Kyle Nichelle L Johnson Paul A. Lindsay Daniel Mares Zulema J. Johnson Jaime J. Magby Julie A. Smith Frederick H. Mason Peter). Keprios Allison L. McDaniel Arshad J. Syed Ponciano P. NiIo Michele Kovach Kei.MnsVincent N. Trepepi Ronald D. Pendergrass Marcus S. Kugler Kevin D. Munns Grgr

.MesRichard D. Velasco StvnR hgnSherron G. Kunhart Gregory L. Myers See

.Paa Mary A. Nevarez Joan C. Worones Aladdin Shaikh Judy A. Lewis Mark R. Ogawa 7 YEARS Marcia A. Solis Alan W. Massey Stan V. Reynolds Donna L Aguilera Juan Vargas Jr.

Timothy R. O'Connell Cynthia L Thompson Cathleen R. Baswell 3 YEARS Stephe K. cortn Dale L. Underwood John N. Chapman G

R epe J Smit Peggy L. Wales Kenneth W. Coffey Trey S. Anthon Robert R. St Edward T. Wilks Vivian C. DeGeere Karen L Wood Carol J. Fuhrman Veronica Craghead Bridgett A. Tarpley 9Edgar A. Pryor Robert D. ingstrom SYEARS E

PatiGnlel Kenneth A. Starbuck Veronica C. Vargas Jacqueline M. Bishop LyleH Chiu C. Wong Misty R. Vassar Loretta F. Butler Dock Jones Vickie L Williams Alan D. Craig SeeA oe ER AaD.CagRamona R. Martinez Loretta K. Burton Daniel P. Duron ParcaEtaaAnne M. Nukaya Karen M. ConnorAN ULRP T

Patricia EstradaANULR O T Anita L. Gatter Ann L Pangborn Benny Esseling PRODUCTION MaulS ryFrank G. Paz Weishen GongDAIH.W GT Manuel S. Gray VI NWR T

Jefffey S. Hill Karin K. Ross Norma J. Johnson Lila M. Johnson Carolyn K. Snow Ashraf B. Lavasany ein C

S David W. Krell Donna 1. Stevener Lilah M. Martinez Stephen E. Lafond DonaJ.Wuister I YEAR ChiefFacalcer Lisa S. Lambert Edrie V. Yambao Nathaniel C. Adams KAREN T. BERGH Babalola Makinde-Odusola 6 YEARS AnnaE.Akers ManagingEditor Christina M. McCaslin Fredrick D. Ehemann Karen T. Bergh KARIN K. ROSS Richard G. Mendoza Micahel R. Mahr Anna K. Campos Patrick L. Pruitt William F. Mainord Christina M. Diaz JAMES H. DEAL Lorraine H. Saint Mingwei C. McCann Marilyn J. Flournoy CYNTHIAB. REELEY Marco J. Sortilton Gerald L McGrath Ale J. Garcia CANDICE C. SHIN Kelly C. Starkey Zahra Panahi Michael P. Grossmann FicaSment Freuerick J. Stoiber Cynthia B. Reeley Pamela Malyszka ABRAMS CREATIVE SERVICES Mark Wholley Angela A. Scarcello Elaine D. McMoran Design Wayne M. Woodall Marta E. Sois Robert G. McNeil JOHN SCHULZ David H. Wright 5 YEARS AngelR.Sanchez MICHAEL EIDERMAN Lynn C. Scott STOCK 8 YEARS JerryC.AlexanderJr.

MaryLSullivan Stephen H. Badgett James R. Buckley Caterina Williams Lawrence T. Beat Glenn M. Cox Special thanks to the Riverside public Library ReLawrence A. Yao or providing the reference books for the lFelix Zapata cover photograph

RVERSIDE PUBLIC UTILITE 3900 MAIN STREET RIVERSIDE, CA 9252' TEL 909.782.5789 FAX 909 369.0548 WWf IESD.AU UTLTE

It's, about making Riverside a BETTER PLACE to live.

PU LI Riverside Public Utilities is committed to providing lower rates, reliable services and valuable community benefits. Even after all of B E N E F the changes in the

industry, un tI ers ndustPRO0GRAMS Riverside Public Utilities' electric rates for both Tm residential and small commercial b

s customers are still of 0ur story.

nearly 10% lower than the rates charged by local competitors.

And in recent industry co comparisons with investor-owned utilities, our reliability remains superior.

In addition to providing essential water and M

electric services to more than 250,000 people, Riverside Public Utilities offers a variety of conservation and assistance programs.

This brochure will tell you more about the new and expanded programs and services we offer.

All of these services and programs benefit you - our customer-owners. Because we know that serving the needs of real people provides real benefits.

RIVERSIDE Riverside Public Utilititt 3900 Main St.

Riverside, CA 92522 PUBLIC UTILITIES (909) 782-5485 E-R1298 www.ci.riverside.ca.us/utilities

Residential Time-of-Use Rate New Costruction Efficiency Incentives Offers a reduced rate for customers who use more Offers, incentives for new or expansion Air Conditioning Replacement Incentive than 9,000 kilowatt-hours (Wh) annually and Air Conditioning Replacement Incentive construction projects that incorporate energy Offers customers rebates for replacing older will shift usage to off-peak hours.

Offers non-residential customers rebates up to efficient electric heating, cooling and building inefficient central electric air conditioners with

$5,000 for replacing older inefficient central envelope systems.

high efficiency units.

Shade Tree Planting electric air conditioners with high efficiency units.

Supplies free shade trees for customers to plant in Security Lighting Rebate Energy Education Program locations around their home to help save on Customer-Directed Funding Provides a rebate for the replacement of less Supplies energy education and conservation summer cooling costs.

Allows industrial customers who sign long-term efficient outdoor security lighting with new infolmation to local households and schools.

power agreements with the utility to direct a high efficiency equipment.

Swimming Pool Pump Incentive portion of their contributions to programs that Hoine Energy Analysis Provides pool owners with a blling credit for specifirally benefit their organization.

Shade Tree Planting Generates a free analysis of your energy use to operating their pool pump during off-peakhours.

Supplies free shade trees for customers to

(

identify potential energy efficiency measures Electric Transportation plant in locations around their building to and savings.

Weatherization Services Linked to the "Clean Cities" project, this program help save on summer cooling costs.

Provides a free home energy survey and the free helps fund the installation of electric vehicle Low-Income Assistance installation of energy-saving devices for senior, charging stations and the development of other Thermal Energy Storage Rebate Assists qualifying low-income households disabled and low-income customers.

electric transportation options.

Encourages industrial customers on time-of-use with their electric deposit and bills. Program rates to utilize this rebate program to help fund is administered by the Riverside County Energy Efficiency Incentives for Cooling, the installation of an off-peak cooling system Department of Community Action. Call Motors and Equipment that reduces operating and capital costs.

(909) 955-6478.

Provi4es rebates for replacing older inefficient equipinent with new high efficiency units.

Medical Life-Support Rate Provides a reduced electric rate for the Energy Efficient Lighting operation of specific types of life-support Provides rebates for replacing older inefficient equipment.

lighting with new high efficiency lighting equipment.

Public Safety - Electric-Powered Bicycles Provides funds to purchase electric-powered Energy Management Services bicycles for Riverside Public Safety bike patrols.

Offers technical expertise for on-site analysis of energy use, power quality and rate impacts.

Refrigerator Purchase & Recycling Customers receive specific low-cost and no-cost Incentives Save energy, energy efficiency recommendations.

RIVERSIDE Provides rebates for replacing older inefficient refrigerators with new high efficiency units, save money.

Energy Research & Demonstration Funds and recycling old operating refrigerators.

As a member of the American Public Power Assotiation's DEED Program, the utility can PUBLIC UTILITIES apply for program scholarships and grants to assist customers with the development and application Special thanks to the Riverside Public Library for of energy-efficient technologies, providing reference booksfor our coer photograph.

IVIERSIDEll