ML13329A162

City of Anaheim 1990 Annual Rept

ML13329A162
Person / Time
Site:	San Onofre
Issue date:	06/30/1990
From:	Aghjayan E ANAHEIM, CA
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Text

S e rving a Dynamic City

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City of Anaheim Public Utilities Department

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1990 ZZUDM (O~f cpr'

'0 Year Ended June 30, 1990

'9112120248 911210 PDR iADOCK 0!5000206 I

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City of Anaheim Public Utilities Department Table of Contents jReport from the General Manager 2

Power Resources 4

Engineering Field and Warehouse i1 Finance and Administration 16 Statistical and Operational Analysis 23 Management Discussion of Financial Activity 32 Water Utility Fund Audited Financial Statements 37 Electric Utility Fund Audited Financial Statements 47

Highlights Water System Electric System Year ended June 30 Year ended June 30 Operations 1990 1989 1990 1989 Sales 22.260 billion 21.756 billion 2.807 billion 2.419 billion gallons gallons kilowatt-hours kilowatt-hours System peak requirements 94.4 million 97.0 million 522,720 492,960 gallons gallons kilowatts kilowatts Average number of customers 54,603 54,127 100,004 98,228 Financial Billed revenues from sale of water and electricity*

$ 21,870,000

$ 20,504,000

$193,677,000

$175,831,000 Net income

$ 5,467,000

$ 5,896,000

$ 13,506,000

$ 14,202,000 Transferred to City of Anaheim General Fund 875,000 802,000 7,937,000 7,511,000

• Amounts represent revenues derived solely from billings. Electric system revenues also do not reflect any provision for changes in the Power Cost Adjustment Balancing Account which were ($9,090,000) and $15,936,000 in the years ended June 30, 1990 and 1989, respectively, and do not reflect any provision for changes in the Rate Stabilization Account which were $4,952,000 and $12,288,000 in the years ended June 30, 1990 and 1989, respectively. See Note I to Electric Utility Financial Statements.

Moody's Investors Standard and Poor's Credit Rating Service Corporation Electric Revenue Bonds Aa AA Water Revenue Bonds Aa AA Water Revenue Anticipation Notes MIG 1 SP-1+

Electric Tax-Exempt Commercial Paper Prime-I A-1

Report from the General Manager lanning, expansion, revitalization, conservation and environmental awareness -

these are the hallmarks of Anaheim in the 1990s. From its burgeoning hill and canyon area to its westernmost point, Anaheim is 45 square miles of city in motion.

Matching the pace of the vibrant city it serves, the Public Utilities Department marched forward in fiscal 1990. Long-standing plan 2

became reality and fresh ideas began to take shape as the Department con tinued to fulfill its vital supporting role -

delivering reliable, economical water and power to a city rapidly approaching the quarter million mark Edward K. Aghlayan inpouain i population.

.i UShortly after the fiscal year closed, I stepped into Anaheim's exciting environ General Manager ment as public utilities general manager. From my first day on the job, I have been impressed by the strength of the staff assembled by my predecessor, Gordon Hoyt. Their expertise is as evident as their vitality is contagious, and I am proud to report their many accomplishments during fiscal 1990.

Developments in the Department's power resources program highlighted our progress during the year. A new business relationship with Southern California Edison Company, executed in March, resolved several long-standing points of contention and paved the way for reduced power supply costs and increased transmission service in the future.

The Department broke ground, and broke through to a new era of self-genen tion, in February to begin construction of a natural gas-fueled combustion turbine, the city's first generating resource within the city limits in 60 years. This signals a turning point in the history of the Department and signifies that we are geared up to meet the growth taking place in Anaheim daily.

A clear indicator of this growth was our new electric system peak on June 27 1990, when the mercury soared to 103 degrees. Due to the routinely outstanding effort b) field, engineering and operations staff, our system performed flawlessly as demand pushed load to 523 megawatts (MW), breaking the record of 504 MW set the prior day. The pre vious record, set in September 1988, was 493 MW.

Of course, increased demand requires expansion of facilities and systems. Oui Engineering Group looked toward the future during the year with plans for improving existing facilities and building new substations, reservoirs, pumping stations and wells.

The $2.5 million Southwest Substation joined the system in May and provides power to Disneyland and the expanded Anaheim Convention Center, among others.

In 1990, as always, the Department recognized that one of the results of growth is additional responsibility. Our Environmental Services Division continued to

exprand, creating programs that reduced the potential for future liability associated with hazardous waste and saved the Department hundreds of thousands of dollars. In the area of water quality, the Department mailed its first water quality brochure to customers.

Fiscal 1990 was California's fourth dry year, and we continued to encourage wise water use through publications and presentations. Our new Energy Services Section ended the fiscal year in a research mode, laying the groundwork for a major expansion of energy and water conservation programs. As of late 1990, the drought had not abated and the City Council approved the expenditure of $120,000 to implement the Department's water conservation programs.

Our commitment to our customers includes not only a respon sibility to serve their water and power needs, but to do so in a way that is respectful of our environment and conserves our natural resources.

Department-wide, improved safety statistics indicate that our employees continued to make safety a top priority. Our year-old Safety Recognition Program is a proven success, with 304 awards given to employees who completed the year without a lost-time accident. This shows that our employees are not only taking care of their own safety as they work -

they're looking after their coworkers as well.

I've been impressed by the camaraderie that exists in the Department, despite its size. An example of this rose out of tragedy in December, when a water field employee, Tony Pizano Sr., lost his 3-year-old son to cancer. In addition to cash dona-Public Utilities Deparment, tions, more than 100 Utilities and Maintenance employees donated 899 vacation and sick leave hours to Tony, who had exhausted his hours during his son's illness.

This act of generosity demonstrates one reason why people are pleased to be Darrell L. Anient part of the Department -

our employees care about each other as well as their work. They Charles T. Statten take pride in contributing to an organization that has its priorities in the right place.

Dale L. Pehlhman It's clear from this brief recap of 1990 that the Public Utilities Department is thriving during Anaheim's era of expansion. Committed to staying a step ahead, our employees recognize the value of foresight and incorporate it into each project they tackle. On their behalf, I want to thank the City Manager, Mayor, City Council and members of the Public Utilities Board for enabling us to support the growth that lies ahead.

I'm looking forward to next year, when I will have the opportunity to update you on our progress as we continue doing what we do best -

serving a dynamic city.

[., Ic Edward K. Aghjayan Public Utilities General Manager

Power Resources Group Rapid expansion of Anaheim's hill and canyon area in the past few years has provided

• beautiful new homes for hundreds of families. While they arranged the details, from down pay

• ments to landscaping, our Power Resources Group already had taken care of a crucial element

• an adequate, economical power supply.

4 Long before the bulldozers rolled, our energy forecasters anticipated the development

• of Anaheim's east end and figured this phenomenal growth into long-term plans for a reliable,

• diverse supply of economical power. These new consumer-owners benefit from the voters' approval

• 15 years ago of $150 million in electric revenue bonds. Their decision initiated a successful power

• supply program now in its second phase.

Fueled by the achievement of our first goal -

a diversified power supply program

• we are progressing with our current goal --

to replace short-term energy contracts with long-term

• resources in which we have direct ownership or firm contractual interest.

For proof of how vital this is to Anaheim's future, we need only look at the founda

• tion of the Department's current power supply program -Intermountain Power Project OIPP) and San Onofre Nuclear Generating Station (SONGS). Our 3.16 percent ownership of SONGS and our contractual right to 13.225 percent of IPP's output provided about 71 percent of the city's

• energy in fiscal 1990.

Firm contractual purchases from Pacific Gas & Electric, Deseret Generation &

Transmission Co-operative, Hoover Dam and the California Department of Water Resources, coor dinated by our Power Production Division, represented an additional 26 percent of the city's power.

Development in To get the best deals in the day-to-day energy market, our load schedulers shopped Anaheim continued to roll around the clock, purchasing economy energy from utilities throughout the Western U.S. In fiscal eastward last year, as 1990, this provided one percent of our energy, averting the purchase of more costly power from moehesprnupi Southern California Edison Company.

the hill and canyon area.

Reducing high cost capacity purchases from Edison continues to be a priority in TeDprmn a ed our mission to serve Anaheim's growing number of consumer-owners. A fiscal 1990 milestone for this growth, having the groundbreaking for a natural gas-fueled combustion turbine -will help us cut these purcasesfurter.planned for in advance for The $34 million plant is slated to start-up in 1991. It will generate 48 megawatts thpoenwcnsmr (MW) during peak demand periods, operating about six hours a day while meeting tough owners, such as the Southern California air quality standards.

Stewart family, require.

The group took steps at year-end to pursue another Source of energy within the city Thadionlemd

-that which can be saved through additional conservation. The addition of an energy services from these residential manager kicked off what will be a major expansion of the Department's energy and water conser-developments contributed varion programs. Although the Department has regularly promoted wise use of energy and water to the electric system's through bill inserts, literature, and billing credit programs for air conditioner cycling and swim-record-breaking peak ming pool pump timers, it is planning a more aggressive approach for fiscal 1991.

demand of 523 mega There were other Power Resources milestones in 1990. The Department's often watts in June 1990.

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• turbulent relationship with Edison took a positive turn with the negotiation and implementa tinon of a new business relationship in March. The resulting agreements will save the city an

• estimated $50 million over the next decade. This will help provide access to the power needed

• to fuel Anaheim's future growth.

The Department also signed an agreement with Bonneville Power Administration for

• 16 MW year-round and an additional 8 MW during the summer. Pending integration with Edison,7

• this power will be available by summer 1991.

In a city that undergoes perpetual change, it's not enough to develop an economical

• power supply program and pursue it. We must constantly reevaluate our plans, to ensure that they

• are consistent with the latest projections of Anaheim's future needs.

One of the ways we achieve this is through our 20-year forecast, filed biannually with

• the California Energy Commission (CEC). To prepare this report, System Planning staff compile

• data on land use, population growth, plans for development and economic trends. Once again in

• fiscal 1990, our submission to the CEC was adopted without change, reinforcing our reputation as

• a leader in electric load forecasting.

Looking into the future is just part of Power Resources' job. The Systems Operations

• Division concentrates primarily on the present, overseeing the day-to-day performance of the elec

• tric and water systems, including water production and distribution. Using the Department's

• Supervisory Control and Data Acquisition system, staff can monitor utility systems round-the clock from a central location. Their ability to respond rapidly to service problems and fluctuating demand continued to save the Department time and money in 1990.

The number of births at For example, the Department saved $237,000 in electric pumping costs through Martin Luther Hospital has its peak reduction programs, including our participation in the Metropolitan Water District of skyrocketed in the past few Southern California (MWD) "water-banking" program. Through this program, MWD sells years. With 375 babies to surplus imported water at reduced rates to encourage utilities to pump less water from the under care for each month, the ground basin.

nursery staff shouldn't Including these purchases, the Department bought 9.6 billion gallons of imported have to worry about water from MWD during the year, 41 percent of fiscal 1990 water production. Anaheim's lowest powe outges andtheycost source of water, well water, continues to be the city's major water resource. The Department don'. Tanksto he jintpumped about 13.8 billion gallons of water from its 28 active wells during the fiscal year, which accounted for 59 percent of total water production.

effots o opratinsWhile Walt Disney put Anaheimn on the map originally, the Department put the city engieerng ad feldon another map in July 1989 -

that of the U.S. Weather Service. Our weather data collection site persnne tomainaintheat Linda Vista Reservoir became an official U.S.Wearher Service reporting station. It's a small but electric system's integrity, symbolic milestone for Anaheim, indicative of the increasing prominence of a city prepared for the hospital staff can concen-future. Thanks in part to the work of the Power Resources Group, the Department is ready and trate on providing quality waiting as well.

care to their precious newborn patients.

• Engineering Group Investors are evaluating a site for a commercial center....The city is designing a sports

• arena... Disneyland is building a major new attraction... A residential developer wants to construct

• a tract of homes...

At some point in their planning, they all interact with the Department's Electric S

and Water Engineering Divisions, exchanging information that will allow everyone to make the

• best possible decisions. Based on this input and data from several other sources, our engineers

• evaluate when and where growth will occur and what facilities will be needed to meet the

• increased demand for water and power.

On the electric side in fiscal 1990, this planning in response to growth resulted in the

• new 69/12 kilovolt (kV) Southwest Substation, which began operation in May. Located in the

• Disneyland and Anaheim Convention Center area, this $2.5 million substation will help us meet

• the increased electric demand from the convention and tourism industries.

To prepare for greater demand throughout the city and to increase system reliability as the city grows, the Department prepared to install a fourth 220/69 kV transformer at Lewis Substation in fiscal 1990. This $3.4 million project will increase the capacity of Anaheim's con nection with Southern California Edison's 220 kV transmission grid from 840,000 to 1, 120,000 kilovolt amperes. With a projected in-service date of January 1991, the additional transformer will enhance reliability and operating flexibility.

The Department embarked on one of its most farsighted, ambitious projects yet dur

• ing the year with plans to underground 69 and 12 kV overhead electric lines along major streets.

About one-third of the Department's electric lines are already underground, primarily in the east-For Mouseketeers emn end of the city. The policy, which is expected to be carried out over the next 60 years, was rec-around the world, a trip to ommended by the Public Utilities Board and approved by the City Council in July. Designed to Disneyland is a dream increase reliability and improve Anaheim's overall appearance, the project will be financed primar-coetu.Mrthn1 ily through gradual rate increases up to a limit of 4 percent above current rates.milovstrspse Smaller-scale projects matter too, as Electrical Engineering demonstrated by helping the Anaheim Redevelopment Agency with a special request. Because the Department is responsi-thogisgaelstyr ble for streetlight maintenance, electrical engineers assisted in plans to install graceful period-style todlgtineatrc streetlights in a downtown area that includes historical homes.

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Among the drawings and work orders Electrical Engineering issued during the year Dprmn ok lsl were those for 3,481 new residential, commercial and industrial service installations, primarily in wt t eodlretcs the eastern hill and canyon area.

tomer, so that engineers Growth in this area also kept Water Engineering busy. A pump station and two new can design, modify, and reservoirs were added to the system to help serve the area. The Department's largest reservoir, build electric transmission Walnut Canyon, which also serves this area, underwent $1.1 million in improvements to increase and distribution facilities the rate of flow from our connection with MWD.

that will accommodate the Weir Canyon and Serrano Twin Peaks Reservoirs went into service to provide ade-park's exciting plans for quate flows and pressure levels in new developments and increase reliability to the existing hill expansion.

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• and canyon area system. These $4.3 million reservoirs increase treated water storage capacity from

• -77 million gallons to 83 million gallons. The Weir Canyon Pump Station was completed at a cost

• of $1.2 million.

While new facilities were added to the system, older components were rehabilitated

• or replaced to increase efficiency and reliability as part of a comprehensive program funded primar--_____

• ily by current revenues. The division rehabilitated five wells at a cost of $206,000, improving their

• efficiency by 10 percent, which will save 300,000 kilowatt-hours and $21,000 annually.

Of the I11 miles of water mains laid during the year, 1.8 miles were 12-and 16-inch

• mains that replaced old 4-to 10-inch mains, improving pressures and flows in older areas of

• Anaheim. New primary and secondary distribution mains, installed primarily in the developing

• hill and canyon area, totaled 3.3 and 5.9 miles, respectively.

Several water projects shaped up on the drawing board in fiscal 1990, including the

• 1-million-gallon Summit Reservoir, the 4-million-gallon Oak Hills Reservoir and the 1-million

• gallon Deer Ca nyon Reservoir. Scheduled to be complete by early 1992 at a cost of $4.7 million,

• these will serve new developments in east Anaheim.

Design work continued on Linda Vista Reservoir and Pump Station, and the Olive

• Hills Control Facility Project, all of which will increase system reliability and save energy. The

• $4.5 million Linda Vista project, including a chloramination disinfection facility, is scheduled for Like all parents, those completion in January 1992. This project, along with the $2.3 million Olive Hills modifications, whose children ottend due for completion in December 1991, will allow the Department to pump low-cost well water Sunkist Elementary School into the higher elevations currently served with imported water from Walnut Canyon Reservoir.

or one of Anaheim's 62 Three other pump stations -

La Palma, Parkview and Westridge -also are slated other public schools wont for modifications and expansion to further increase reliability, reduce operating costs and meet the the estforthei chldrn -forecasted demand for water. Design work continued on these projects during 1990, the largest of a god edcaton, afewhich is the $3.4 million La Palma Pump Station expansion and modification, scheduled for com neighborhoods, and clean pletion in January 1993. A $1.2 expansion of Parkview will allow us to pump more water into ele vations where water cannot be delivered by gravity flow from Walnut Canyon Reservoir.

air and water.

Reliability is just one of our two top priorities when it comes to water delivery; quali The eparmen's wterty is equally important. Anaheim's water continued to meet all state and federal standards for qualty taffsee to he ot-drinking water in fiscal 1990. Water quality staff conducted more than 55,000 chemical and micro ter, conducting more than biological tests during the year in the Department's own laboratory, at a cost of less than half what 55,00 tets anualy toa private laboratory would charge. MWD and Orange County Water District conducted additional confirm that the city's tests on water they supply to Anaheim.

water meets all state and During fiscal 1990, the Department mailed its first water quality brochure to cus federal standards. They tomers, featuring a detailed chart showing how imported and well water meets state and federal make sure Anaheim's standards. In compliance with stare law, the brochure will be updated and mailed annually.

water is safe for all, even As the preceding list of projects indicates, it was an accompl ishment-filIled year for the goldfish in Mrs. Burris' the Department's engineers. Based on current growth projections, these architects of Anaheim's first-grade classroom, utilities systems can look forward to a dynamic decade.

Field & Warehouse Group Reliability doesn't just happen it's the result of a coordinated effort to design, install, and maintain systems that provide trouble-free performance. The Department's forecasters and designers start the ball rolling, but it's the field and warehouse employees who work round the-clock to keep it in motion.

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In fiscal 1990, preventative maintenance continued to be a priority for the field.

Electric technicians and electricians inspected the Department's 10 substations thoroughly, checking each transformer, relay switch and circuit breaker. Field crews checked overhead distri bution lines and associated equipment.

Anything not up to snuff was repaired or replaced with equipment ready and waiting at the Department's warehouse, which underwent some major changes of its own in fiscal 1990.

Several time-consuming manual processes were eliminated by the installation of a fully computer ized Inventory Control System.

While Anaheim escapes the extreme weather conditions that plague utilities in other parts of the nation, it is subject to windstorms powerful enough to snap tree limbs. To limit wind-related outages, the Department continued its highly successful tree-trimming program, pro vided through a contract with the city's Parks and Recreation Department. This program proved its worth again in fiscal 1990, as Anaheim's electric system remained virtually unscathed during several windstorms.

Preventative procedures comprise one of the Department's best investments.Whether As beneficiaries of it's as basic as hosing off dirty insulators or as high-tech as seeking out loose connections with infra-red scanners, the Department's electric maintenance programs pay off. Our consumer-owners homes have been moved continue to enjoy the reliable service they have come to expect and the Department saves thou to the central city area for sands of dollars in outage response costs.

The Water Field Division also continued its focus on preventative maintenance dur ing the year. Water production crews routinely inspected well pumps and motors, reservoirs, filtra tion and disinfection stations, pumping stations and pressure regulating stations. Where they left off, transmission and distribution crews took over, handling maintenance of mains, pipelines, with the Anaheim valves, fire hydrants and meters. This section also completed a money-saving meter replacement Redevelopment Agency program, installing more efficient meters in situations where increased flow exceeded the capacity and homeowners to estab of older meters.

lish new service lines and Both the Electric and Water Field Divisions worked on the Department's capital pro-modify existing lines. The jects. Coordinating with Electrical Engineering and Operations, field employees completed instal-preservation of these lation and testing of Southwest Substation. Development in the hill and canyon area kept homes shows that Anaheim underground crews busy installing more than six miles of distribution circuit cabling in several new refuses to sacrifice its past residential tracts.

as it ushers in the future.

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Working with Water Engineering, water field and electric test crews helped put

• Weir Canyon Pump Station, the 4-million-gallon Weir Canyon Reservoir and the 2-million

• gallon Serrano Twin Peaks Reservoir in service. They assisted engineers with completion of the Department's well rehabilitation program and will continue assisting with the well replace ment program.

The Department's goal to become a PCB-free utility by the mid-1990s moved one step closer to reality when field personnel completed the removal of all PCB-contaminated capaci tors from substations. Testing of transformers for PCB contamination continued during the year.

The field and warehouse continued to work closely with Environmental Services in several areas,

• including spill response procedures, hazardous waste management and use of surplus equipment.

While the Department's Safety Program is coordinated out of Administrative

• Services, its end results are most critical within the Field and Warehouse Group, where employees

• face the greatest risk of on-the-job injury. Statistics for the year show that employees continued

• their daily commitment to safe work practices. Compared to the five-year average, disabling

• injuries and days away from work dropped 22 and 21 percent, respectively.

While the ultimate responsibility for working safely rests with each employee, the

• Department's electric and water safety committees play a major role as well. This group of field employees meets monthly to discuss general safety issues and investigate "near misses" to help fur ther reduce the potential for on-the-job accidents.

The ongoing expansion All employees receive the Department's Safety Newsletter and are encouraged to of te cty-wnedAnaeimattend quarterly safety meetings. In 1990, these meetings featured personal safety, earthquake Convention Center to more thanI mllio sqare eetpreparedness and employees' roles as emergency disaster workers. The year-old Safety willmakeit te lagestRecognition Program provides awards to employees who maintain good work safety records. just suchcentr onthe estas the Department protects its power and water resources, it aggressively promotes on-the-job Coast. Located in the heart safety to protect its most precious resource -its employees.

of Anaheim's commercial/

Nowhere is safety more vital than in the field. With an average of more than 13 years recreation area, near with the Department, field personnel have developed an unparalleled familiarity with the utility Disneyland, the center

• systems.

These men and women, with their blend of knowledge, skill and intuition, are vital to the fosters growth in several Department's ability to serve Anaheim's growing population.

related industries. South west Substation, added to the electric system in May 1990, will help provide the electricity needed to keep this bustling area running smoothly.

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• Finance & Administration Group As the Department grows along with Anaheim, so do the diverse responsibilities of

• the Finance and Administration Group. From financing capital projects to coordinating work

• force management, these employees provide a myriad of services that allow all employees to do

• their jobs effectively and plan for the future.

16 Sound financial planning continues to be the rock-solid foundation for the

• Department's smooth operation and expansion. In fiscal 1990, our Financial Services Division continued to successfully balance the ongoing need for revenue with the Department's commit ment to competitive rates.

The average residential electric bill for the year was 21 percent lower in Anaheim

• than in surrounding communities served by Edison. Residential water bills remained in the lower

• half of Orange County water purveyors.

In addition to designing rates that make such favorable comparisons possible, our

• financial experts financed the construction of the Department's Combustion Turbine Peaking

• Plant so that the Power Resources Division could carry out its plans. They also worked out funding

• through gradual rate increases for the undergrounding program.

Plans are underway to fund several other investments in the future. Over the next

• five years, the Department plans to spend $18.1 million on water production and distribution facil

• ity replacement projects, $15.8 million for new water facilities, $58.9 million for electric transmis

• sion and distribution facilities, and $44.5 million for power supply projects. The Department is also One of the products

• planning to finance the construction of an 11I-story, $33 million office building in the downtown manufactured by the redevelopment area to house Public Utilities and other city staff.Deatn'slrstc

• While Financial Services helped assure adequate resources, our Environmental tamer, Rockwell Inter

• Services Division continued to save the Department money -

more than $500,000 by the year's national, at its Anaheim

• end. Staff developed several programs to ensure compliance with regulatory requirements, reduce facility is the ring laser

• the costs of overcompliance, and reduce the liability associated with hazardous waste disposal. Key gyro, used in military and projects included reuse of surplus equipment, a quality assurance/control program for hazardous aerospace guidance waste contractors, and chemical spill response plans.

equipment.

• The efforts of this group have cast the Department and Anaheim in a leadership With 7,000 employees, role. Ar the close of fiscal 1990, we received word from the California State Department of Rockwell is the city's sec Health Services that the division's hazardous waste management project proposal had earned the and-largest employer and city a $25,000 state grant.

a major force in the Staff immediately began implementing the project, which evaluates ways to reduce local economy.

the type and volume of hazardous waste generated throughout the city. Because the city's opera-The Department is proud rions are so diverse, other municipalities will be able to use the resulting report as a hazardous of the role its favorable waste management guidebook.

public power rates have As part of the Department's commitment to remain responsive to consumer-owners, played in the success of the division developed a program to monitor and address any concerns that arise over the health this international company.

• effects of electromagnetic fields (EMF). Several groups have conducted inconclusive EMF studies,

• but research continues, some of which is sponsored by the utilities industry. Environmental

• Services continues to review information as it becomes available.

Because our consumer-owners remain our rop priority, the Department's Customer

• Service Division continued its effort to foster a spirited commitment to service during the year.

• The division produced a mission statement, refined procedures and conducted training to help 19

• employees handle their huge volume of work -

1, 149,593 meter readings, 170,330 record

• changes, 73,798 credit inquiries, and 1,702 billing investigations, to cite a few fiscal 1990 statistics.

This emphasis on service also benefirted customers with special needs during the year. The division installed a telecommunications device for the deaf, and, based on an employee

• suggestion, placed medical meter seal insignias on all Life Support Patient merers. Staff continued to participate in the Gatekeeper program, referring elderly or disabled customers in need of assis tance to local social service agencies.

The Consumer Programs Section continued its emphasis on conservation promotion,

• conducting energy and water-use audits and distributing thousands of pieces of literature. More

• than 16,000 students took part in Department-sponsored water conservation awareness programs in Anaheim's schools. Toward year-end, this section made plans to move its programs into the

• Power Resources Group, under the direction of the new energy services manager.

The division proceeded with its comprehensive Customer Information System, which is expected to go on-line in 1992. Once again, improved customer service is the focus, as the sys Delivringabou 100tem will greatly facilitate billing and responsiveness to customers.

arrangements daily, the The diverse Administrative Services Division concentrated on several key projects Visser family's business during the year. Industrial Engineering proceeded with the Department's work force management has grown right along proj ect, primarily re-evaluating labor and construction standards. While continuing to coordinate with Anaheim for 35 years.

the Department's Safety Recognition Program, the Safety and Training Section also implemented A sie-efect f bomingan Earthquake Survival Program for all employees.

business has been In the area of Information Services, the use of local area networks was expanded increased utility usage. To throughout the Department to provide managers with more rapid access to information that assists help give the Vissers more them in making timely, sound business decisions for the overall good of the Department.

control aver utility costs, Because the Finance and Administration Group operates so effectively despite its var the Department conducted ied roles, it is, in a sense, a microcosm of the Department. Similar to the mechanism of a complex a free energy-and water-machine, each division has a specific function that contributes to the organization as a whole.

use audit. By suggesting This successful coordination, fine-tuned through years of carefully managed growth ways to use less electricity and constructive reevaluation, continues to be the Department's foremost asset. With it, we will do and water, these audits more than succeed; we will thrive on the challenges of serving ever-changing Anaheim -

a city help successful businesses with its mind on the present and its eyes on the future.

become even more profitable.

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As home to the California Angels and the Los Angeles Rams, Anaheim Stadium brings hundreds of thousands of sports fans to the city. The city-owned stadium was the site of Major League Baseball's 1990 All-Star Game. It is also the site of the annual Freedom Bowl, the Disney Pigskin Classic and a variety of special events and shows through out the year.

Fiscal Year Walter Sales (Billion Gallons) 89-90 22.3 88-89 21.8 87-88 21.9 86-87 22.0 85-86 21.4 Fiscal Year Annual Rainfall (Inches) 89-90 8.7 88-89 8.1 87-88 9.7 86-87 8.4 85-86 16.5 Fiscal Year Peak Day Demand (Million Gallons) 89-90 94.4 88-89 97.0 87-88 96.9 86-87 98.7 85-86 102.0

• Statistical and Operational Analysis The operating results of the Public Utilities Department in fiscal 1990 reflect

• Anaheim's dynamic growth. In meeting record consumer demand for water and power in fiscal 1990, the Department continued to demonstrate its ability to plan for and meet the water and power needs of its consumer-owners.

Water production was 23.4 billion gallons in fiscal 1990 and was down 545 million gal lons from the prior fiscal year. However, total system distribution, the amount of water actually put into the system, including water drawn from reservoir storage, reached a record 23.8 billion gallons.

23 The Department's goal is to pump 70 percent of total production from its own wells and to make up the remaining 30 percent with purchases of imported water from Metropolitan Water District of Southern California (MWD). Wells are the Department's lowest cost source of water.

Production from the water system's 28 active wells was 13.8 billion gallons in fiscal 1990, about 59 percent of total production. Fiscal 1990 well production was down 1.7 billion

• gallons from the prior year. The groundwater aquifers supplying the Department's wells are

• managed by the Orange County Water District (OCWD). The purchase of 9.6 billion gallons

• of imported water from MWD during the fiscal year made up the remaining 41 percent of total

• water production. MWD purchases were up 1.2 billion gallons from the prior fiscal year.

In order to help "bank" ground water for future use during dry years, MWD and

• OCWD once again activated a winter program making surplus imported water available at a price

• comparable to the cost of pumped water.

In fiscal 1990, the Department bought 2.5 billion gallons from MWD that normally

• would have been pumped from the Department's own wells. Adjusting production figures for the

• impact of the joint "water-banking" program yields pumped local water to purchased imported water percentages of 70 and 30 percent, respectively.

In fiscal 1990, consumers used a record 22.260 billion gallons of water, up 504 million gallons, or 2.3 percent, from the prior year. The difference between water production, distribution and water sold varies depending on the amount of water in storage, evaporation and other losses.

System growth and a fourth consecutive dry year contributed to the increase in water sales. Rainfall totaled 8.7 inches during fiscal 1990, up only 0.6 inches from the prior year and well below the annual average for the area of approximately 13 inches. Because the state is entering a fifth dry year, the Department is taking a more aggressive stance in urging consumers to use this precious resource wisely.

Electric system generation and purchases climbed to a record 2.953 billion kilowatt hours (kWh) in fiscal 1990, up by 109.7 million kWh from the prior fiscal year.

The Department's firm, long-term resources - San Onofre Nuclear Generating Station Units 2 and 3, the two coal-fueled units of the Intermountain Power Project and alloca tion of low-cost hydroelectric power from the ongoing uprating at Hoover Dam - continued to

• provide a reliable and economical resource base for Anaheim consumers. These resources

accounted for 73 percent of the Department's total production of electrical energy.

Firm system purchases from Pacific Gas and Electric, Deseret Generation &

Transmission Co-operative, and seasonal purchases from the California Department of Water Resources accounted for 24 percent of total production. The Department purchased approximately 2 percent of its power supply from Edison.

The Department's participation in the Western Systems Power Pool and the purchase of non-firm economy energy from other Western utilities contributed to increased diver sity and lower power supply costs. Non-firm purchases were 1 percent of the system total.

Electric base rates were increased October 1, 1989, the first increase since September 1984. Coupled with an increase in the Power Cost Adjustment in April 1989, the average billing price per kWh for residential consumers increased 7.6 percent in fiscal 1990 compared to the prior year.

In spite of the increases, at year-end Anaheim residential electric consumers were pay ing approximately 21 percent less on the average than consumers in surrounding communities. In fact, a typical one-month 500 kWh residential bill was $43.48, exactly 8 cents lower than in July 1985. During the same time period, the consumer price index was up 20.5 percent.

Electricity sales overall climbed to a record 2.807 billion kWh in fiscal 1990, up 387.5 million kWh, or 16 percent, compared to the prior fiscal year.

Sales of surplus energy to other electric utilities were 587.9 million kWh, up 363.0 million kWh, or 161.5 percent, and accounted for about 94 percent of the overall increase in sales.

Retail sales, excluding sales to other electric utilities, were 2.219 billion kWh, up 24.4 million kWh, or 1 percent. Residential sales were down by 103,785 kWh compared to fiscal 1989, while all other classes except irrigation and pumping recorded sales gains. Irrigation and pumping were down primarily as a result of reduced electric use for water system wells due to increased purchases from MWD.

Average annual use per customer was down in the three major retail customer classes, due to an increase in the number of customers and relatively cooler weather.

Electric system energy use and demand are temperature sensitive and are driven significantly by the increased use of air conditioning during hot weather. Anaheim experienced relatively mild weather for a fifth consecutive year, and fiscal 1990 was cooler overall than the preceding two years.

There were 263 degree days above 72 degrees F recorded in fiscal 1990, compared to 426 and 285 degree days in the prior two years. Degree days indicate the number of degrees and hours the temperature remains above a stated level, in this case, 72 degrees F An early summer heat wave, with temperatures soaring above 100 degrees F, pushed system electric demand to a new all-time peak of 522.7 MW on June 27, 1990.

Fiscal Year Electric Sales (Billion Killowart-Houn) 89-90 2.81 88-89 2.42 87-88 2.66 86-87 2.20 85-86 2.10 Fiscal Year Temperature (Degree Days Above 72 F) 89-90 263 88-89 426 87-88 285 86-87 204 85-86 383 Fiscal Year Electric Peak Demmd (Thousand Kilowatts) 89-90 522.7 88-89 493.0 87-88 470.9 86-87 471.4 85-86 465.6

Water System Operating Statistics Water Supply 1989-90 1988-89 1987-88 1986-87 1985-86 Water Production:

From Metropolitan Water District, million gallons 9,603.7 8,406.9 8,212.8 6,623.8 7,616.7 Percent of Total Production 41%

35%

37%

28%

33%

From Water System Wells, million gallons 13,823.9 15,565.6 14,284.1 16,887.6 15,337.1 Percent of Total Production 59%

65%

63%

72%

67%

Total Production, million gallons 23,427.6

• 23,972.5 22,496.9 23,511.4 22,953.8 Capacity-gallons per minute:

From Metropolitan Water District Connections 58,435 58,435 58,435 58,435 58,435 From Water System Wells, average 46,724 47,209 48,130 41,340 43,022 Filtration Plant Capacity 10,417 10,417 10,417 10,417 10,417 Total Supply Capacity 115,576 116,061 116,982 110,192 111,874 Peak Day Distribution, million gallons 94.4 97.0 96.9 98.7 102.0 Average Daily Distribution, million gallons 65.3 64.1 63.2 63.7 62.9 Water Use Average Number of Customers:

Residential 47,422 47,162 47,007 46,677 46,111 Commercial/Industrial 5,487 5,381 5,328 5,290 5,249 Municipal 362 361 349 346 320 Other 1,332 1,223 1,085 1,105 1,038 Total-all classes 54,603 54,127 53,769 53,418 52,718 Millions of Gallons Sold:

Residential 12,976 12,684 12,631 12,625 12,381 Commercial/Industrial 8,330 8,145 8,393 8,394 8,108 Municipal 699 633 612 629 633 Other 255 294 217 310 270 Total-all classes 22,260 21,756 21,853 21,958 21,392 Anaheim Population Served 247,822 244,300 243,021 242,161 237,506 Population Served Outside City, estimated 5,100 5,100 5,100 5,100" 5,900 Total Population Served 252,922 249,400 248,121 247,261 243,406 Average Daily Sales Per Capita, gallons 241 239 241 243 241 Growth of System Active Wells 28 31 32 32 32 Reservoirs 12 10 10 10 10 Water Storage, million gallons:

Treated 83 77 77 77 77 Untreated 920 920 920 920 920 Water Mains, miles 712 701 698 688 680 Fire Hydrants 6,636 6,513 6,448 6,358 6,196

"'Reduction in average number of people per dwelling unit for estimating purposes.

Water System Sales Comparison Commercial All and Classes Residential Industrial Irrigation Municipal Other Combined Revenue from sale of water:

Year ended June 30 1990

$14,482,000

$5,936,000

$ 89,000

$595,000

$768,000

$21,870,000 1989 13,416,000 5,862,000 113,000 513,000 600,000 20,504,000 Increase (decrease)

$ 1,066,000 74,000

($ 24,000)

$ 82,000

$168,000

$ 1,366,000 Percent increase (decrease) 8.0%

1.3%

(21.2%)

(16.0%)

28.0%

6.7%

Units of 100 cubic feet sold:

Year ended June 30 1990 17,347,338 11,136,710 171,978 934,552 169,121 29,759,699 1989 16,957,194 10,889,296 186,305 846,489 215,680 29,094,964 Increase (decrease) 390,144 247,414 (14,327) 88,063 (46,559) 664,735 Percent increase (decrease) 2.3%

2.3%

(7.7%)

10.4%

(21.6%)

2.3%

Average billing price per 100 cubic feet:

Year ended June 30 1990

.8348

.5330

$.5175

.6367

$ 4.5470

.7349 1989

.7912

.5383

.6065

.6060 2.7819

.7047 Increase (decrease)

.0436

($

.0053)

($.0890)

.0307

$ 1.7651

.0302 Percent increase (decrease) 5.5%

(1.0%)

(14.7%)

5.1%

63.5%

4.3%

Average number of customers:

Year ended June 30 1990 47,422 5,487 41 362 1,291 54,603 1989 47,162 5,381 51 361 1,172 54,127 Increase (decrease) 260 106 (10) 1 119 476 Percent increase (decrease) 0.6%

2.0%

(19.6%)

0.3%

10.2%

0.9%

Average annual use per customer in units of 100 cubic feet:

Year ended June 30 1990 366 2,030 4,195 2,581 1989 360 2,024 3,653 2,345 Increase 6

6 542 236 Percent increase 1.7%

0.3%

14.8%

10.1%

Amounts represent revenue derived solely from billings.

Water Utility Fund Summary of Results for Operations and Net Revenues Available for Long-term Revenue Bond Debt Service 1989-90 1988-89 1987-88 1986-87 1985-86 (In thousands)

Revenues:

Sale of water:

Residential

$14,482

$13,416

$12,859

$11,969

$11,120 28 Commercial/Industrial 5,936 5,862 5,641 5,578 5,185 Municipal 595 513 482 483 453 Other 857 713 598 557 479 Billed revenue from sale of water 21,870 20,504 19,580 18,587 17,237 Change in unbilled water revenue")

156 509 (293) 1,802 Total revenue from sale of water 22,026 21,013 19,287 20,389 17,237 Other (including interest income) 1,533 1,565 1,155 1,127 1,172 Total gross revenues 23,559 22,578 20,442 21,516 18,409 Operating expenses (excluding depreciation and amortization):

Cost of water 9,071 8,184 7,933 7,856 8,164 Operations 2,669 2,526 2,353 2,124 2,384 Maintenance 3,763 3,057 2,955 3,035 2,549 Total operating expenses 15,503 13,767 13,241 13,015 13,097 Net revenues

$ 8,056

$ 8,811

$ 7,201

$ 8,501

$ 5,312 Revenue bond debt service requirements(2)

$ 1,817

$ 1,817

$ 1,817

$ 1,381

$ 1,625 Times revenue bond debt service covered by net revenues 4.4 4.8 4.0 6.2 3.3 m'To provide a better matching of costs and revenues, effective with fiscal year ended June 30, 1987, the Water Utility changed its accounting policy for recording revenue. The new method provides for the accrual of estimated unbilled revenue for water consumed but not billed at the end of a fiscal period. Previously, revenues were recorded when billed to customers.

1989-90 1988-89 1987-88 Estimate of unbilled water revenue for:

Fiscal year

$ 2,174

$ 2,018

$ 1,509 Prior fiscal year 2,018 1,509 1,802 Change in unbilled water revenue 156 509

($

293)

(')Excludes debt service on a portion of the 1984 $6,650,000 Water Revenue Bond Issue which has been advance refunded.

See Note 4 to Water Utility Financial Statements.

Electric System Operating Statistics poe.

upp 1989-90 1988-89 1987-88 1986-87 1985-86 power Supply Own Generation:

844 304,229,709 San Onofre Nuclear 417,591,656 492,562,602 427,297,605 476 Generating Station, kWh Firm Purchases:

82,560,196 Intermountain Power 1,693,678,000 1,434,285,100 1,585,321,000 942,740,589 Hoover, kWh 47,824,000 45,733,000 53,407,000 4,307,000 Power Contracts, kWh 701,610,000 689,994,000 634,001,745 56,267,180 Powtern Cntra kEd78i,31,2353 Southern California Edison 55,376,533 73,036,778 59,394,969 265,134,768 1,391,023,534 om 37,162,457 107,842,787 86,924,376 618,624,268 421,189,000 System Purchases, kWh 2,953,242,646 2,843,454,267 2,846,346,695 2,363,859,649 2,199,002,439 System Peak Demand, kW 522,720 492,960 470,880 471,360 465,600 Electric Use Average Number of Customers:

84,540 83,131 82,030

,03 79,967 Residential 8,4 3118,3 1037,6 Commercial 14,674 14,337 13,942 13,353 12,901 Industrial 606 589 559 546 166 Other 178 169 167 165 166 Other Utilities621 Total-all classes 100,004 98,228 96,699 95,108 93,568 Kilowatt-Hour Sales:47,591 Residential 498,665,200 498,768,985 483,700,118 470,309,712 4505 15 Commercial 524,116,063 518,876,801 510,345,288 490,775,601 480,552,216 Industrial 1,159,838,729 1,139,252,784 1,121,912,987 1,066,954,519 1,048,774,980 Other 36,092,030 37,356,996 35,638,126 41,220,770 37,037,292 Other Utilities 587,866,427 224,818,564 509,874,878 129,519,302 53,766,000 ot l2,806,578,449 2,661,471,397 2,198,779,904 Total-all classes 2,419,074,130 Average Annual kWh 5896,000 5,897 5,8035,4 per Residential Customer 5,899 600587,035,941 Groweth of System Transmission, 69kV, circuit miles 609 Distribution, 12 kV and lower, circuit miles:

Overhead 888 888 888 890 890 Oerhed 410 404 398 3 44 379 Underground 1,351 1,345 1,328 Total Transformer Capacity, kVa:

840,000 840,000 840,000 000 0,0O 220kV to 69kV 632,000 592,000 592,000 552,000 5,000 69kV to 12kV 134,000 1,2,000 97,000 12 kV to Customer 1,034,000 1,021,000 974,000 930,000 905,000

Electric System Sales Comparison Public Street and Irrigation Other All Highway and Electric Clse Residential Commercial Industrial Lighting Pmig Ultes Cmbined Revenue from sale of electricity:

Year ended June 30 1990

$ 40,845,000 $ 48,174,000 $ 93,430,000 $ 1,086,000 $ 1,622,000 $ 8,520,000

$ 193,677,000 1989 37,970,00 44,767,00 6,746,000 1,007,00 1,686,000 Increase (decrease)

-3650 7,3,0 Pecease (ecrease

)

$ 2,875,000 3,407,000 $ 6,684,000 $

79,000($

64,000) $ 4,865,000 17,846,000 Percent increase (decrease) 7.6%

7.6%

77%

7.8%

(3.8%)

133.1%

10.1%

Kilowatt-hours sold:

Year ended June 30 1990 498,665,200 524,116,063 1,159,838,729 13,186,909 22,905,121 587,866,42 7 2,806,578,449 1989 498,768,985 518,876,801 1,139,252,784 12,430,597 24,926,399 224,818,564 2,419,074,130 Increase (decrease)

(103,785) 5,239,262 20,585,945 756,312 (2,021,278) 363,047,863 387,504,319 Percent increase (decrease)

(0.0%)

1.0%

1.8%

6.1%

(8.1%)

161.5%

16.0%

Average billing price per kilowatt-hour:

Year ended June 30I 1990

.0819 $

.0919 $

.0806 $

.0824 $

.0708 $

.0145

.0690 1989

.0761

.0863

.0761

.0810

.0676

.0163

.0727 Increase (decrease)

.0058 $

'.0056

.0045 $

.0014 $

.0032 ($

.0018) ($

.0037)

Percent increase (decrease) 7.6%

6.5%

5.8%

1.7%

(.%

(10.9%)

(5.1%)

Avetage number of Customers:

Year ended June 30 1990 84,540 14,674 606 116 62 6

100,004 1989 83,131 14,337 589 07 62 2

.0690 Increase 1,409 05

$7 9

0 1,776 Percent increase 1.7%

2.4%

2.9%

8.4%

0.0%

200%

1.8%

Average annual use per customer in kilowatt-hours:

Year ended June 30 1990 5,899 35,717 1,913,925 1989 6,000 36,191 1,934,215 Increase (decrease)

(101)

(474)

(20,290)

Percent increase (decrease)

(1.7%)

(1.3%)

(1.0%)

Amounts represent revenue derived solely from billings.

Electric 'Utlilty Fund Summary of Results for Operations and Not Revenues Available for Long-term Revenue Bond Debt Service 1989-90 1988-89 1987-88 1986-87 1985-86 (In thousands)

Revenues:

Sale of electricity:

Residential

$ 40,845

$ 37,970

$ 37,211

$ 37,145

$ 39,999 Commercial 48,174 44,767 44,874 44,179 46,357 31 Industrial 93,430 86,746 86,172 84,978 90,272 Other 2,708 2,693 2,730 3,057 2,996 Other utilities 8,520 3,655 7,882 5,089 3,759 Billed revenue from sale of electricity 193,677 175,831 178,869 174,448 183,383 Change in unbilled electric revenue")

2,192 (369)

(667) 8,502 Total revenue from sale of electricity 195,869 175,462 178,202 182,950 183,383 Provision for power cost adjustment (9,090) 15,936 3,416 826 (10,855)

Provision for rate stabilization 4,952 12,288 9,427 7,291 7,196 Other (including interest income) 8,363 8,009 6,499 5,690 6,638 Total gross revenues 200,094 211,695 197,544 196,757 186,362 Operating expenses (excluding depreciation and amortization):

Cost of purchased power 124,439 136,570 124,936 108,300 119,744 Fuel used for generation 3,549 4,023 4,399 5,227 2,913 Operations 20,673 18,956 17,174 17,127 15,724 Maintenance 11,534 10,719 8,937 7,806 7,586 Total operating expenses 160,195 170,268 155,446 138,460 145,967 Net revenues

$ 39,899

$ 41,427

$ 42,098

$ 58,297

$ 40,395 Revenue bond debt service requirements(2')

$ 21,387

$ 21,370

$ 21,394

$ 19,852

$ 21,932 Times revenue bond debt service covered by net revenues 1.9 1.9 2.0 2.9 1.8

<"To provide a better matching of costs and revenues, effective with fiscal year ended June 30, 1987, the Electric Utility changed its accounting policy for recording revenue. The new method provides for the accrual of estimated unbilled revenue for electricity consumed but not billed at the end of a fiscal period. Previously, revenues were recorded when billed to customers.

1989-90 1988-89 1987-88 Estimate of unbilled electric revenue for the:

Fiscal year

$ 9,658

$ 7,466

$ 7,835 Prior fiscal year 7,466 7,835 8,502 Change in unbilled electric revenue

$ 2,192

($

369)

($

667)

(')Excludes debt service on the 1982 and a portion of the 1980 and 1983 bond issues that have been advance refunded.

See Note 6 to Electric Utility Financial Statements.

Management Discussion of Financial Activity The Public Utilities Department continued its long record of outstanding financial performance in fiscal 1990. Significant financial events in fiscal 1990 included the following:

• Settlement of outstanding litigation with Southern California Edison resulted in a new business relationship and a $10 million reduction in power supply costs.

• Electric system Certificates of Participation in the amount of $44.3 million were issued to a2

• finance construction of a 48-megawatt Combustion Turbine Peaking Plant.

• Water and Electric Utility long-term credit ratings were maintained at Aa by Moody's Investors Service.

• After fiscal year end, Standard and Poor's Corporation affirmed its AA rating of Water Utility long-term credit and raised its rating of Electric Utility long-term credit to AA-.

• $3.7 million of one-year Water Revenue Anticipation Notes were sold at an interest rate of 6.15 percent to retire maturing notes.

Water Utility The Water Utility's operating revenues totaled $22,147,000 in fiscal 1990, an increase of $892,000 over the prior fiscal year.

This increase was primarily the result of the increase in water rates effective September 1, 1989, and the increase in unbilled revenue over the prior year. In fiscal 1990, billed revenue from the sale of water was $21,870,000, an increase of $1,366,000 over the prior fiscal year.

In fiscal 1990, unbilled revenue of $2,174,000 represents an increase of$156,000 over fiscal 1989.

Water Utility operating expenses in fiscal 1990 were $16,814,000, an increase of

$1,872,000 over the prior fiscal year.

The $9,071,000 expended for cost of water in 1990 reflects an increase of $887,000 over the prior year and was due to increased distribution, including purchases and water drawn from storage during the fiscal year. Water purchased from the Metropolitan Water District of Southern California (MWD) accounted for 41 percent of the total water production in fiscal 1990, compared to 35 percent in the prior year. Purchases of treated water from MWD included water made available at a reduced rate under MWD's "water-banking" conservation program.

Net non-operating income increased $551,000 over fiscal 1989 largely as a result of a one-time refund of $286,000 which reduced fiscal 1990 interest expense on the lease for the Allen-McColloch Pipeline.

Other operations and maintenance expenses of $6,432,000 for the year were

$849,000 higher than fiscal 1989. Approximately $706,000 of the increase was a result of a higher level of service connection maintenance than in prior years.

Water Utility net income of $5,467,000 in fiscal 1990 was down $429,000 from the prior fiscal year.

During the year, the value of water system facilities in service increased $15.8 million.

About $6.0 million was financed by current revenues and borrowed funds. The remaining $9.8 mil lion of the increase was in dedicated water system facilities contributed by developers and others.

Electric Utility Electric Utility operating revenues totaled $192,529,000 in fiscal 1990, a decrease of

$11,938,000 compared to the prior year.

Billed revenue from the sale of electricity was $193,677,000 for the fiscal year, up

$17.8 million over the prior year. Revenue from sales to other utilities was $8.5 million in fiscal 1990, representing an increase of $4.9 million from the prior year. The major reason for the increase in sales to other utilities was settlement of a dispute with Edison over the price of power that it has purchased from the City. Retail sales to Anaheim consumers of $185.2 million repre sented an increase of $12.9 million over the prior year.

Unbilled revenue from the sale of electricity in fiscal 1990 was $9,658,000, an increase of $2,192,000 from the prior fiscal year. The increase in unbilled revenue was the result of a surge in kilowatt-hour sales due to an early summer heat wave.

Increases in billed and unbilled revenue were offset by decreased transfers from the Power Cost Adjustment Account (PCA) and the Rate Stabilization Account (RSA). The PCA and RSA transfers decreased $25.0 million and $7.3 million, respectively, in fiscal 1990.

The Department's rate stabilization policy provides that refunds recovered from Edison for wholesale electric rate overcharges should be deposited in the RSA. These refunds are then used to stabilize base electric rates. Transfers from the RSA to Electric Revenue are made monthly and are based upon the recorded kilowatt-hour sales.

Approximately $41.2 million in refunds and interest have been placed in the RSA since the account was established in 1986. No additional refunds were received in fiscal 1990 and the balance of the RSA at June 30, 1990, was zero. Department management is projecting significant additional refunds in the future. The projections are based on decisions of administra tive law judges assigned the wholesale rate cases. Those decisions are now before the Federal Energy Regulatory Commission for review and action.

Electric Utility operating expenses were $169,516,000 in fiscal 1990, down $10,117,000 from the prior fiscal year. Purchased power cost of $124,439,000 was down $12,131,000 from the prior fiscal year.

The decrease in purchased power cost was primarily the result of the settlement of several disputes between the Department and Edison which resulted in a new business, or operating, relationship between the Department and Edison. The net financial impact on the Department in fiscal 1990 was a $10 million reduction in purchased power costs.

Fuel used for generation was $3.5 million in fiscal 1990, down $500,000 from the prior year. The decrease was due primarily to planned refueling activities at both Units 2 and 3 of San Onofre Nuclear Generating Station (SONGS) during the fiscal year. In the prior year,

only Unit 3 was out of service for planned refueling.

Other operation and maintenance expenses were $32,207,000, up $2,532,000 compared to fiscal 1989. Operating expenses increased approximately $1.7 million due to increased staffing levels in the engineering, field, and finance and administration support groups.

Maintenance expenses were $11,534,000, up $815,000 over fiscal 1989.

Electric Utility net income was $13,506,000 in fiscal 1990, down $696,000 from the prior fiscal year.

Investment in construction of new electric system facilities totaled $30.8 million for fiscal 1990. Of this amount, $25.8 million consisted of $9.8 million in electric subtransmission and distribution facilities in Anaheim and $16.0 million for construction of the new 48-megawatt Combustion Turbine Peaking Plant. The remaining $5.0 million was invested in construction and nuclear fuel purchases related to the Department's ownership interest in SONGS.

Short-term Financing Short-term financing continues to play a key role in the Department's financial operations. As of June 30, 1990, the Water Utility had $3.7 million in short-term notes outstand ing. Note proceeds are used to help pay for water system capital replacements. The Water Utility short-term notes are rated MIG 1 and SP-I+ by Moody's and Standard and Poor's, respectively.

At June 30, 1990, the Electric Utility short-term tax-exempt commercial paper out standing totaled $20,450,000. The Department uses this commercial paper to finance nuclear fuel purchases and processing for its interest in SONGS. The Electric Utility notes are rated by Moody's and Standard and Poor's as Prime-I and A-1, respectively.

The Department's note program is backed by a Revolving Credit Agreement with Bank of America NT&SA and Morgan Guaranty Trust Company. Bank of America backs

$13.0 million of the Electric Utility's $21.0 million credit line. Morgan Guaranty Trust Company backs $8.0 million of the Electric Utility line and the entire Water Utility credit line. The credit lines may be used to pay maturing notes in the event the Department cannot refinance the notes as they mature.

Long-term Financing Strong ratings of the Department's long-term water and electric revenue bonds are another indication of the overall financial strength of the Water and Electric Utilities. Strong management and sound planning continued to be recognized in the high ratings maintained for Water and Electric Utility securities by Moody's and Standard and Poor's. Aa ratings by Moody's were maintained for both the Water and Electric Utility revenue bonds. Standard and Poor's maintained the revenue bond ratings of the Water Utility at AA and the Electric Utility at A+.

Subsequent to the end of the fiscal year, Standard and Poor's raised the Electric Utility's long term bond rating to AA-.

At June 30, 1990, revenue bonds outstanding totaled $18,690,000 in the Water Utility and $225,010,000 in the Electric Utility. During fiscal 1990, maturing revenue bond principal pay ments of $465,000 and $6,900,000 were paid by the Water and Electric Utilities, respectively.

Self-Supporting In addition to providing reliable water and electric service at economical rates, the Public Utilities Department is self-supporting.

It pays all costs of operation, including payments to the city for services rendered 35 by various municipal departments, as well as debt service payments and part of the cost of capital improvements from current revenues. The remaining cost of water and electric system capital improvements is met through the sale of revenue bonds or revenue anticipation notes and contributions by developers and others in aid of construction.

The Department also annually transfers to the city a percentage of the prior year's gross revenues from retained earnings, up to a maximum of 4 percent. In fiscal 1990, the Department transferred a total of $8,812,000 from retained earnings to the General Fund of the City in support of general municipal government, the maximum allowable under the City Charter. The Water and Electric Utilities transferred $875,000 and $7,937,000, respectively.

1989-1990 Water Dollar Source of Revenue Distribution of Revenue Residential Sales 611 Water Supply 38

• Commercial and Industrial Sales 25 U Operation and Maintenance 27 O Other Sales 7

O Transfer to City General Fund 4

• Other Revenue 7

U Debt Service a

0 Available for Additions and Replacements 23 1989-1990 Electric Dollar Source of Revenue Distribution of Revenue

• Residential Sales 20 U Purchased Power Supply 62

• Commercial Sales 24 U Fuel Used for Generation 2

E Industrial Sales 47 El Operation and Maintenance 16

• Other Sales 6

U Transfer to City General Fund 4

El Other Revenue 3

0 Debt Service 11 El Available for Additions and Replacements 5

City of Anaheim Public Utilities Department Years Ended June 30, 1990 and 1989 Water Utility Fund Audited Financial Statements

Cily of Anaheim Wager Utility Fund Balance Sheeft June 30 1990 1989 (In thousands)

Assets 38 Utility plant:

1,554

$ 1,554 Source of water supply 10,654 10,612 Pumping 6,285 4,990 Transmission and distribution 121,591 107,097 General 2,700 2,701 142,784 126,954 Less -accumulated depreciation and amortization (25,301)

(23,334) 117,483 103,620 Construction work in progress 7,738 7,722 125,221 111,342 Restricted cash and investments 14,216 12,544 Current assets:

Cash and investments 860 1,250 Customer and other accounts receivable, net 4,015 4,168 Accrued interest receivable 366 203 Materials and supplies, at average cost 193 168 Purchased water in storage 323 569 5,757 6,358 Other assets:

Unamortized bond refunding costs 928 1,004 Unamortized debt issuance costs 341 370 Total assets

$146,463

$131,618

June 30 1990 1989 (In thousands)

Equity, liabilities and other credits Equity:

Beginning fund balance contributed by the City

$ 19,280

$ 19,280 Retained earnings 27,777 23,185 Total equity 47,057 42,465 Long-term debt, less current portion 17,730 18,165 Capitalized lease obligation, less current portion 2,565 2,624 Total capitalization 67,352 63,254 Current liabilities (payable from restricted assets):

Current portion of long-term debt 320 298 Accrued interest 509 522 Customer deposits 1,594 1,321 2,423 2,141 Current liabilities (payable from current assets):

Current portion of long-term debt 194 320 Current portion of capitalized lease obligation 58 58 Accounts payable and accrued expenses 2,924 2,433 Short-term debt 3,700 3,700 Customer deposits 260 289 7,136 6,800 Total current liabilities 9,559 8,941 Other liabilities and deferred credits:

Contributions in aid of construction 69,552 59,423 Commitments and contingencies Total equity, liabilities and other credits

$146,463

$131,618 See accompanying Notes to Financial Statements.

City of Anahelim Water Utillty Fund Statements of Income June 30_

1990 1989 (In thousands)

Operating revenues:

Sale of water

$22,026

$21,013 Other operating revenues 121 242 Total operating revenues 22,147 21,255 Operating expenses:

Cost of water 9,071 8,184 Other operations 2,669 2,526 Maintenance 3,763 3,057 Depreciation and amortization 1,311 1,175 Total operating expenses 16,814 14,942 Operating income 5,333 6,313 Other income (expense):

Interest and other income 1,412 1,323 Interest expense (1,278)

(1,740) 134 (417)

Net income

$ 5,467

$ 5,896 See accompanying Notes to Financial Statements.

Statemnts of Changes In Retained Earnings June 30 1990 1989 (In thousands)

Balance at beginning of year

$23,185

$18,091 Net income for the year 5,467 5,896 Transfer to the General Fund of the City (875)

(802)

Balance at end of year

$27,777

$23,185 See accompanying Notes to Financial Statements.

City of AauIelm Water Utilily Fuund Statemnents of Cash F lows June 30 1990 1989 (In thousands)

Operating activities:

Operating income

$ 5,333

$ 6,313 41 Adjustments to reconcile operating income to net cash provided by operations:

Depreciation and amortization 1,311 1,175 Amortization of debt issuance costs and bond discount 184 185 Changes in current assets and liabilities:

Customer and other accounts receivable, net 152 (1,247)

Materials and supplies (25)

(32)

Purchased water in storage 246 (349)

Accounts payable and accrued expenses 491 479 Customer deposits 244 696 Total adjustments 2,603 907 Net cash provided by operations 7,936 7,220 Capital and related financing activities:

Proceeds from borrowings 3,700 3,700 Principal reduction in debts and capitalized lease (4,377)

(4,849)

Interest paid (1,291)

(1,747)

Transfer to General Fund of the City (875)

(802)

Contributions in aid of construction 1,536 983 Net cash provided by (used in) financing activities (1,307)

(2,715)

Investing activities:

Capital expenditures (6,597)

(5,971)

Interest received 1,249 1,292 Net cash used in investing activities (5,348)

(4,679)

Increase (decrease) in cash and investments 1,281 (174)

Cash and investments, at beginning of year 13,795 13,968 Cash and investments, at end of year

$15,076

$13,794 Schedule of noncash financing and investing activities:

Contributions in aid of construction

$ 9,776

$ 1,058 See accompanying Notes to Financial Statements.

City of Anaheim Water Utility Fund Notes to Financial Statements Note 1 Summary of Significant Cash and Investments Vacation and sick pay Accounting Policies The City pools idle cash from all funds Vacation and sick pay for all City Basis of accounting for the purpose of increasing income employees is paid by the General Benefits through investment activities. Invest-and Insurance Fund of the City. The The Water Utility Fund (the Water ments are carried at cost, which approxi-General Benefits and Insurance Fund is Utility) of the City of Anaheim (the City) mates market value. Interest income on reimbursed through payroll charges to the 42 was established June 30, 1971, at which investments is allocated to the various Water Utility based on estimates of bene time the portion of the City's General funds of the City on the basis of average fits to be earned during the year. Vested Fund equity relating to water system daily cash and investment balances.

vacation and sick pay benefits are accrued operations was transferred to Water Utility For purposes of the Statements of Cash in the General Benefits and Insurance equity. The financial statements of the Flows, the Water Utility considers cash Fund and amounted to $290,000 and Water Utility are presented in conformity and investments, including restricted

$245,000 for the Water Utility at June 30, with generally accepted accounting princi-amounts, to be cash equivalents. Cash 1990 and 1989, respectively.

ples and accounting principles and methods equivalents are cash and highly liquid Transfers to the General Fund prescribed by the California Public Utilities investments which are included in the of the City Commission (CPUC). The Water Utility Water Utility's share of the City's pool and is not subject to the regulations of the in accounts held by the fical agents.

Article XII of the City Charter provides CPUC.

that transfers to the General Fund of the Utility plant and depreciation Revenue recognition City shall not exceed 4% of the gross To provide a better matching of costs revenue of the prior year. Such transfers The cost of additions to utility plant and revenues, effective with fiscal year are not in lieu of taxes and are recorded and replacement of retired units is capital-ended June 30, 1987, the Water Utility as distributions of retained earnings.

ized. Utility plant is recorded at cost, or in changed its accounting policy for recogniz-ReclassifIcations the case of contributed plant, at fair mar-ing revenue to a method which provides Certain reclassifications have been ket value at the date of the contribution, for the accrual of estimated unbilled except that assets acquired prior to July 1, revenues for water sold but not billed at made to the 199 a lstatmnt 1977 are recorded at appraised historical the end of a fiscal period; previously, cost. Cost includes labor; materials; allo-revenues were recognized when billed to Note 2 Operating Expenses cated indirect charges such as engineering, customers. Residential and smaller com-Operating expenses shared with the supervision, construction and transporta-mercial accounts are billed bimonthly and Electric Utility amounted to $16,520,000 tion equipment, retirement plan contribu-all others are billed monthly.

and $15,203,000 for the fiscal years ended tions and other fringe benefits; and certain The Water Utility's Rates, Rules and June 30, 1990 and 1989, respectively, of administrative and general expenses. The Regulations include a water commodity which $3,303,000 and $3,041,000 were cost of relatively minor replacements is adjustment formula by which billings to allocated to the Water Utility.

included in maintenance expense. The net customers are subject to adjustment, up or The shared expenses are allocated to book value of assets retired or disposed of, down, to reflect variations in the cost of each Utility based upon estimates of the net of proceeds, is recorded in accumulated water production to the Water Utility benefits each Utility derives from those depreciation.

Depreciation of utility plant is provided Debt issuance costs common expenses.

by the straight-line method based on the Debt issuance costs are deferred and Note 3 Short-Term Debt following estimated service lives of the amortized over the lives of the related On September 12,1989 the City issued properties:

bond issues on a basis which approximates

$3,700,000 of Water Revenue Anticipa the effective interest method.

tion Notes at an interest rate of 6.15 per Transmission and Bond refunding costs cent. At the same time, the City paid off distribution plant 20 to 75 years Bond refunding costs are deferred and

$3,700,000 of one year Water Revenue Other plant and amortized over the lives of the related Notes at 6.2 percent issued in 1988. The equipment 5 to 50 years bond issues on a basis which approximates Water Utility maintained a $4.3 million Depecitio oncotriute asetsis the effective interest method.

revolving credit agreement, which can be Depreciationused in the event that the debt cannot be charged directly to Contributions in aid Pension plan refinanced as it matures.

of construction.

All full-time City employees are members of the State of California Public Employees' Retirement System (PERS).

The City's policy is to fund all pension costs accrued; such costs to be funded are determined annually as of July 1 by the PERS' actuary.

Note 4 Long-Term Debt The Water Utility is indebted as follows:

June 30 1990 1989 Water Revenue Bonds, 1980 Series, TIC 8.6401%, dated January 1, 1980, sold February 26, 1980 in the amount of $7,350,000, of which (1) $3,270,000 at rates ranging from 7.6% to 8.0%

mature serially to July 1, 1999 in annual principal installments ranging from $185,000 to $400,000, and (2) $3,185,000 at rates of 8% are term bonds maturing July 1, 2005, subject to mandatory call and redemption from July 1, 2000 to July 1, 2005 in annual principal installments ranging from

$435,000 to $640,000; total debt service of $10,741,000 to maturity

$ 6,095,000

$ 6,280,000 Water Revenue Bonds, 1984 Series, TIC 10.317%, dated October 1, 1984, sold October 9, 1984 in the amount of $6,650,000 at rates ranging from 7.4% to 10.4%, of which $5,370,000 maturing April 1, 1996 through 2009 were advance refunded on March 31, 1986; the remaining bonds mature serially to April 1, 1995 in annual principal installments ranging from $120,000 to

$180,000; total debt service of $992,000 to maturity 765,000 885,000 Water Revenue Bonds, 1986 Series, TIC 7.048%, dated March 1, 1986, sold March 4, 1986 in the amount of $7,160,000, of which (1) $2,735,000 at rates ranging from 5.5% to 6.9% mature serially to April 1, 2001 in annual principal installments ranging from $75,000 to $415,000, (2) $1,405,000 at rates of 5.75% are term bonds maturing April 1, 2004, subject to mandatory call and redemption from April 1, 2002 to April 1, 2004 in annual principal installments ranging from $445,000 to

$495,000, and (3) $2,920,000 at rates of 5.75% are term bonds maturing April 1, 2009, subject to mandatory call and redemption from April 1, 2005 to April 1, 2009 in annual principal installments ranging from $520,000 to $650,000; total debt service of $12,186,000 to maturity 6,915,000 6,990,000 Water Revenue Bonds, 1988 Series, TIC 7.3765%, dated January 1, 1988, sold January 12, 1988 in the amount of $5,000,000 at rates ranging from 6.3% to 7.6%, maturing serially to October 1, 2012 in annual principal installments ranging from $85,000 to $425,000; total debt service of

$10,144,000 to maturity 4,915,000 5,000,000 Total revenue bond debt 18,690,000 19,155,000 Note Payable to General Fund of the City, 7%, issued July 1, 1980 in the amount of $1,021,000, the final principal and interest payment of $144,000 was made June 1, 1990.

139,000 Note Payable to Internal Service Fund of the City, 8.95%, issued October 13, 1984 in the amount of

$335,000, semi-annual principal and interest payments ranging from $14,000 to $29,000 through October 31, 2003; total debt service of $476,000 to maturity 292,000 306,000 Total other long-term debt 292,000 445,000 Total long-term debt 18,982,000 19,600,000 Less: current portion 514,000 618,000 bond discounts 738,000 817,000

$17,730,000

$18,165,000

Note 4 Long-Term Debt (continued)

Annual debt service requirements at June 30, 1990 to maturity are as follows:

Total All Revenue Bond Debt Other Long-Term Debt Long-Term 44 Fiscal Year Principal Interest Total Principal Interest Total Debt 1991 500,000

$ 1,316,000

$ 1,816,000

$ 14,000

$ 23,000

$ 37,000

$ 1,853,000 1992 540,000 1,277,000 1,817,000 16,000 22,000 38,000 1,855,000 1993 580,000 1,235,000 1,815,000 18,000 21,000 39,000 1,854,000 1994 625,000 1,189,000 1,814,000 22,000 19,000 41,000 1,855,000 1995 675,000 1,139,000 1,814,000 16,000 18,000 34,000 1,848,000 Thereafter 15,770,000 9,217,000 24,987,000 206,000 81,000 287,000 25,274,000

$18,690,000

$15,373,000

$34,063,000

$292,000

$184,000

$476,000

$34,539,000 Current interest costs of $475,000 and $387,000 have been included in Construction work in progress for fiscal years ended June 30, 1990 and 1989, respectively.

In accordance with the bond resolutions, a reserve for maximum annual debt service has been established and a reserve for renewal and replacement is being accumulated equal to a maximum of 1% of the depreciated book value of the utility plant in service.

The bond issues outstanding at June 30, 1990 require the establishment of a Bond Service Account accumulating monthly one-sixth of the interest which will become due and payable on the outstanding bonds within the next six months and one-twelfth of the principal amount which will mature and be payable on the outstanding bonds within the next twelve months.

On March 31, 1986, the Water Utility defeased a portion of the Water Revenue Bonds, 1984 Series, in the aggregate principal amount of $5,370,000 at rates ranging from 9.7% to 10.4%, with a portion of the proceeds from the sale of $7,160,000 of Water Revenue Bonds, 1986 Series at rates ranging from 5.0% to 6.9%. The excess of the amount required to advance refund the 1984 Bonds over the carrying value of those bonds at the refunding date amounted to $1,250,000. This amount is being deferred and amortized over the life of the 1986 Bonds using the effective interest method. At June 30, 1990, outstanding principal of the refunded 1984 Bonds totaled $5,370,000. Over the life of the 1986 Bonds the Water Utility expects to save approximately $1,049,000 in debt service as compared to the refunded 1984 Bonds.

Restricted cash and investments includes reserved amounts, as well as undisbursed bond proceeds, as follows:

June 30 1990 1989 Held by Fiscal Agent:

Bond Reserve Fund

$ 1,887,000

$ 1,910,000 Bond Service Fund 449,000 443,000 Held by City Treasurer:

Bond Service Account 331,000 328,000 Renewal and Replacement Account 1,131,000 1,036,000 Restricted bond proceeds 10,418,000 8,827,000

$14,216,000

$12,544,000 The Water Utility cash expenditures for interest expense for the years ended June 30, 1990 and 1989 were $1,529,000 and

$1,899,000, respectively.

Note s Capitalized Lease Obligation Note 6 Pension Plan Note 8 Cash and Investments The City has a long-term non-cancel-The City has a contributory pension At June 30, 1990, the carrying amount able lease with the Municipal Water plan for its full-time employees under the of the Water Utility's share of the City's District of Orange County to finance the State of California Public Employees' pooled deposits was $3,909,000. Of this acquisition of a 7.2% share in the capacity Retirement System. Information is not amount, $3,034,000 is insured or collater of the Allen-McColloch Pipeline. The available separately for the Water Utility alized with securities held by the City or lease provides for semiannual payments of as to the cost of benefits funded, the its agent in the City's name. The remain

$147,000 commencing August 1, 1981 and actuarially computed present value of ing $875,000 is collateralized with securi continuing until February 1, 2008. Future vested and non-vested accumulated plan ties held by the pledging financial institu minimum lease payments under this lease benefits, the related assumed rates of ton's trust department in the City's name.

are as follows:

return used and the actuarially computed At June 30, 1990, all of the City's value of vested benefits over the related pooled investments were insured or reg Fiscal Year 1991a Ye29,00 pension fund assets.

istered with the exception of amounts 1991

$ 294,000 1992 294,000 Note 7 Self-Insurance Program invested by fiscal agents. A summary of the Water Utility's participation in the 1993 294,000 The Water Utility is part of the City's City's pooled investments is allocated 1994 294,000 self-insured workers' compensation an based on the overall percentage 1995 294,000 general liability program. The liability r

participation as follows:

Thereafter 3,822,000 such claims is transferred to the City in 5,292,000 consideration of self-insurance premiums U.S government securities $ 3,126,000 Less interest at 8.8%

2,669,000 Bankers acceptances 238,000 1986, the City became self-insured. Costs Repurchase agreements 25,000 Present value of future relating to the litigation of claims are Commercial paper 4,432,000 minimum lease payments

$2,623,000 charged to expense as incurred.

Current portion 63,000 fund (state pool) 993,000 Long-term portion 2,560,000 Controlled by

$2,623,000 City Treasurer 8,814,000 Amounts invested by The asset related to this lease is fiscal agents 2,353,000 recorded in Utility plant, Transmission Total investments

$11,167,000 and distribution, and at June 30, 1990 amounted to $3,059,000. The related accu-Fiscal agents on behalf of the City hold mulabed amortization at June 30, 1990 and and invest funds from long-term debt 1989 was $346,000 and $305,000, respec-issuances. Fiscal agents are mandated by vively.

Amortization expense amounted to bond indenture as to the types of invest

$41,000 and $40,000 for the fiscal years ments in which proceeds can be invested.

ended June 30, 1990 and 1989, Investments by fiscal agents predomi respectively, nantly consist of U.S. Government securities held in book entry form.

Amounts invested by fiscal agents include investments that are insured or registered or for which the securities are held by the City's agents in the City's name.

Note 9 -

Commitments and Note 10 Subsequent Events Independent Auditors' Report Contingencies On August 14, 1990, the City issued To the Honorable City Council Litigation

$9,000,000 of Water Revenue Bonds, 1990 City of Anaheim, California A number of claims and suits are pend-Series, dated July 1, 1990. The Bonds were We have audited the accompanying ing against the City for alleged damages to sold at a true interest cost of 7.0226 balance sheets of the Water Utility Fund persons and property and for other alleged percent with rates ranging from 6.25 of the City of Anaheim, California as of liabilities arising out of matters usually to 7.00 percent.

June 30, 1990 and 1989, and the related incidental to the operation of a utility On September 12, 1990, the City statements of income, changes in retained such as the water system of the City. In paid off the one year, $3,700,000 Water earnings and cash flows for the years then the opinion of management, the exposure Revenue Anticipation Notes issued ended. These financial statements are the under these claims and suits would not September 12, 1989; at the same time the responsibility of the Water Utility's man materially affect the financial position City sold a new issue of $3,700,000 eight agement. Our responsibility is to express of the Water Utility as of June 30, 1990.

month Water Revenue Anticipation an opinion on these financial statements Capital expenditures Notes at a rate of 6.15 percent.

based on our audits.

The Water Utility's budget for the fiscal We conducted our audits in accordance year ending June 30, 1991 provides forstand capital expenditures of approximately ards. Those standards require that we plan

$11,444,000 of which $5,915,000 is expected to be funded by water revenue bond proceeds and contributions in aid statements are free of material misstate of construction.

ment. An audit includes examining, on a Substantial commitments have been rest basis, evidence supporting the amounts made in connection therewith.

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 financial statements referred to above present fairly, in all material respects, the financial position of the Water Utility Fund of the City of Anaheim, California as of June 30, 1990 and 1989, and the results of irs operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.

KPMG Peat Marwick October 12, 1990 Orange County, California

Cit of Anaei Puli Utlte AudCitedAnhi 5

Financial Deaaetment v~-~

~ ~

J, Yer nddjn 3,19 ad18

City of Anaheim Electric Utility Fund Balance Sheets June 30 1990 1989 (In thousands)

Assets 48 Utility plant:

Production

$175,529

$172,914 Transmission 12,370 12,315 Distribution 103,685 94,691 General 11,581 11,288 303,165 291,208 Less -

accumulated depreciation (74,441)

(65,838) 228,724 225,370 Construction work in progress 27,919 8,419 Nuclear fuel, at amortized cost 8,543 9,213 265,186 243,002 Restricted assets:

Cash and investments 81,840 52,778 Other 446 414 82,286 53,192 Current assets:

Cash and investments 29,289 53,371 Customer and other accounts receivable, net 32,695 19,757 Prepaid purchased power 2,107 1,468 Accrued interest receivable 1,684 2,047 Materials and supplies, at average cost 3,492 2,817 69,267 79,460 Other assets:

Unamortized bond refunding costs 23,026 25,274 Unamortized project costs 5,760 5,938 Unamortized debt issuance costs 1,961 1,563 30,747 32,775 Total assets

$447,486

$408,429

June 30 1990 1989 (In thousands)

Equity, liabilities and other credits Equity:

Beginning fund balance contributed by the City

$ 14,629

$ 14,629 Retained earnings 92,261 86,692 Total equity 106,890 101,321 Long-term debt, less current portion 252,692 216,740 Total capitalization 359,582 318,061 Current liabilities (payable from restricted assets):

Current portion of long-term debt 5,586 5,225 Accrued interest 3,681 3,756 Accounts payable 159 202 Tax-exempt commercial paper 20,450 20,450 29,876 29,633 Current liabilities (payable from current assets):

Current portion of long-term debt 1,837 2,054 Accounts payable and accrued expenses 9,100 7,878 Customer deposits 1,070 1,140 Power cost adjustment balancing account (8,869)

Rate stabilization account 4,869 Test energy billings 3,635 3,315 Surplus energy billing reserve 2,159 Intermountain Power Agency refund account 16,458 24,918 32,100 37,464 Total current liabilities 61,976 67,097 Other liabilities and deferred credits:

Contributions in aid of construction 21,087 t9,474 Decommissioning reserve 4,841 3,797 Commitments and contingencies Total equity, liabilities and other credits

$447,486

$408,429 See accompanying Notes to Financial Statements.

City of Anaheim Electric Utility Fund Statements of Income June 30 1990 1989 (In thousands)

Operating revenues:

Sale of electricity

$195,869

$175,462 Provision for power cost adjustment (9,090) 15,936 Provision for rate stabilization 4,952 12,288 Other operating revenues 798 781 Total operating revenues 192,529 204,467 Operating expenses:

Cost of purchased power 124,439 136,570 Fuel used for generation 3,549 4,023 Other operations 20,673 18,956 Maintenance 11,534 10,719 Depreciation 9,113 8,786 Amortization of cancelled project costs 208 579 Total operating expenses 169,516 179,633 Operating income 23,013 24,834 Other income (expense):

Interest income 7,565 7,228 Interest expense (17,072)

(17,860)

(9,507)

(10,632)

Net income

$ 13,506

$ 14,202 See accompanying Notes to Financial Statements.

Statements of Changes in Retained Earnings June 30 1990 1989 (In thousands)

Balance at beginning of year

$ 86,692

$ 80,001 Net income for the year 13,506 14,202 Transfer to the General Fund of the City (7,937)

(7,511)

Balance at end of year

$ 92,261

$ 86,692 See accompanying Notes to Financial Statements.

City of Anaheim Electric Utility Fund Statements of Cash Flows June 30 1990 1989 (In thousands)

Operating activities:

Operating income

$ 23,013

$ 24,834 Adjustments to reconcile operating income to net cash provided by operations:

Depreciation 9,113 8,786 Amortization of nuclear fuel 3,115 3,531 Amortization of cancelled project costs 208 579 Amortization of debt costs 3,265 3,400 Increase in decommissioning reserve 1,044 1,178 Changes in current assets and liabilities:

Customer and other accounts receivable, net (12,956) 4,013 Prepaid purchased power (639)

(726)

Materials and supplies (675)

(591)

Accounts payable and accrued expenses 1,179 (11)

Customer deposits (70) 220 Power cost adjustment balancing account 8,869 (15,829)

Rate stabilization account (4,869)

(7,992)

Intermountain Power Agency refund account (8,460) 24,918 Test energy billings 320 251 Surplus energy billing reserve (2,159) 2,159 Total adjustments (2,715) 23,886 Net cash provided by operations 20,298 48,720 Capital and related financing activities:

New long-term debt, net of discount 42,557 Reduction of long-term debt (7,280)

(6,810)

Interest paid (17,147)

(18,055)

Payments to the General Fund of the City (7,937)

(7,511)

Contributions in aid of construction 1,031 1,715 Debt issuance costs (596)

(11)

Net cash provided by (used in) financing activities 10,628 (30,672)

Investing activities:

Capital expenditures (31,385)

(10,544)

Interest received 7,914 7,070 Nuclear fuel expenditures (2,445)

(2,545)

Project costs (30)

(1,725)

Net cash used in investing activities (25,946)

(7,744)

Increase in cash and investments 4,980 10,304 Cash and investments at beginning of year 106,149 95,845 Cash and investments at end of year

$111,129

$106,149 Schedule of noncash financing and investing activities:

Contributions in aid of construction 995 629 See accompanying Notes to Financial Statements.

City of Anaheim Electric Utility Fund Notes to Financial Statements Note 1 Summary ofSignificant Cash and investments On January 28, 1986, a wholesale rate Accounting Policies The City pools idle cash from all funds refund policy (Policy) which included Basis of accounting for the purpose of increasing income establishing a Rate Stabilization Account Thethrough investment activities. Invest-(RSA) was adopted as part of the Electric TheEletrc Uiliy und(th Eectic ments are carried at cost, which approxi-Utility's Rates, Rules and Regulations.

Utility) of the City of Anaheim (the City) mates market value. Interest income on The Policy provides for establishment of a 52 was established June 30, 1971, at which investments is allocated to the various rate, in cents per kilowatt-hour of sales, by time the portion of the City's General funds of the City on the basis of average which funds are transferred from the RSA Fund equity relating to electric system daily cash and investment balances, to the Electric Utility Revenue Fund. This operations was transferred to Electric For purposes of the Statements of Cash transfer is made on a monthly basis.

Utility equity. The financial statements of Flows, the Electric Utility considers cash Nuclear fuel the Electric Utility are presented in con-and investments, including restricted formity with generally accepted account-amounts, to be cash equivalents. Cash of n ler Ulit pense s

the cas ing principles and accounting principles equivalents are cash and highly liquid bue" meto In crn th the and methods prescribed by the Federal investments which are included in the Nuclear Wate Ispoac o192 the Energy Regulatory Commission (FERC).

Electric Utility's share of the City's pool Eler Ut isphagedt f for the The Electric Utility is not subject to the and in accounts held by the fiscal agents.

d il f

care a tee of oe regulations of the FERC.

UtilityRevenue recognition mill per kwh on the Electric Utility's share Utiityplat ad dpreiaton To provide a better matching of costs of electricity generated by the San Onofre The cost of additions to utility plant and revenues, effective with the fiscal year Nuclear Generating Station, Units 2 and and of replacement of retired units is capi-ended June 30, 1987, the Electric Utility 3 (SONGS). The Electric Utility pays the talized. Utility plant is recorded at cost, or changed its accounting policy of recogniz-fee quarterly to the Southern California in the case of contributed plant, at fair mar-ing revenue to a method which provides Edison Company (Edison) which is acting ket value at the date of the contribution, for the accrual of estimated unbilled as the agent for SONGS participants.

except that assets acquired prior to July 1, revenues for energy sold but not billed Federal regulations also require the Electric 1977 are recorded at appraised historical at the end of a fiscal period; previously, Utility to provide for the future costs of cost. Cost includes labor; materials; allo-revenues were recognized when billed to decommissioning SONGS. Decommis cated indirect charges such as engineering, customers. Residential and smaller com-sioning costs are charged to other operat supervision, construction and transporta-mercial accounts are billed bimonthly and ing expenses and are provided for over the tion equipment, retirement plan contribu-all others are billed monthly.

remaining life of the plant.

tions and other fringe benefits; and certain The Electric Utility's Rates, Rules and administrative and general expenses. The Regulations provide for the use of a Power cost of relatively minor replacements is Cost Adjustment (PCA) billing formula included in maintenance expense. The net which, when in use, would be included in book value of assets retired or disposed of, customer billings to reflect variations in net of proceeds, is recorded in accumu-the cost of power to the Electric Utility.

lated depreciation.

The PCA provides for adjustments to Depreciation of utility plant is provided revenues from the sale of electricity for by the straight-line method based on the over collection or under collection of following estimated service lives of the revenues resulting from differences properties:

between the Electric Utility's actual cost of power and the amount billed to Production 30 years customers through the billing formula.

Transmission and These over or under collections would be distribution plant 20 to 75 years recorded in the PCA balancing account Other plant and until they are refunded to, or recovered equipment 5 to 50 years from, utility customers.

Effective October 1, 1989, the Electric Depreciation on contributed assets is Utility elected to recover all power costs charged directly to Contributions in aid of in base rates and set the PCA at a zero construction, balance. Should substantial changes in power costs occur, the Electric Utility meay seek City Council approval to activate the PCA.

Note 1 Summary of Significant Note 2 Operating Expenses Note 4 Short-Term Debt Accounting Policies (continued)

Operating expenses shared with the The Electric Utility has outstanding Debt issuance costs Water Utility amounted to $16,520,000 Revenue Anticipation Notes in the form Debt issuance costs are deferred and and $15,203,000 for the years ended June of short-term tax-exempt commercial amorize ove th livs o therelted 30, 1990 and 1989, respectively, of which paper for the purpose of financing nuclear amortized over the lives of the related issues~~~~~~ on a ai hc prxmts

$3,217,000 and $12,162,000 were alto-fuel purchases related to the ownership bond issues on a basis which approximatesinterest in SONGS. The balance out the effective interest method.

theeffctie iterst ethd.The shared expenses are allocated to standing at June 30, 1990 and 1989 totaled Bond refunding costs each Utility based upon estimates of the

$20,450,000. The interest rates on this Bond refunding costs are deferred and benefits each Utility derives from those debt at June 30, 1990 ranged between amortized over the lives of the related common expenses.

5.90% and 6.15% with maturities ranging bond issues on a basis which approximates Note 3 UnamortiZed Project Costs from 53 to 97 days. The Electric Utility the effective interest method.

has obtained a $21 million revolving The City plans to participate in various credit agreement, which can be used in the Pension plan power generation projects with other All full-time City employees are mem-agencies. Unamortized project costs repre eenandas it matures.

bers of the State of California Public sent advance payments to participating Employees' Retirement System (PERS).

agencies for preliminary engineering and Note 5 Jointly-Owned Utility Project The City's policy is to fund all pension environmental impact Studies for the The Electric Utility owns a 3.16%

costs accrued; such costs to be funded are related projects, interest as a tenant in common in SONGS determined annually as ofJuly 1 by the In addition, the City is participating in The other participants in Units 2 and 3 PERS' actuary.

other projects which are being financed are Edison, 75.05%; San Diego Gas &

Vacation and sick pay by outside third parties. If the projects are Electric Company, 20%; and the City of ultimately abandoned, the Electric Utility Riverside, 1.79%. Units 2 and 3 became Vacation and sick pay for all City will be required to reimburse the third operational on October 9, 1983 and April employees is paid by the General Benefits parties for the Electric Utility's share of 1, 1984, respectively. The Electric Utility's and Insurance Fund of the City. The project costs, which at June 30, 1990 cumulative share of construction costs, General Benefits and Insurance Fund is amounted to approximately $200,000.

which amounted to $175,529,000 at June reimbursed through payroll charges to the 30, 1990, was included in Utility plant Electric Utility based on estimates of bene-at June 30, 1990. The Electric Utility fits to be earned during the year. Vested recorded depreciation related to SONGS vacation and sick pay benefits are accrued of $5,822,000 and $5,720,000 for the in the General Benefits and Insurance Fund years ended June 30, 1990 and 1989, and amounted to $860,000 and $741,000 respectively The Electric Utility made for the Electric Utility at June 30, 1990 provisions during fiscal year 1990 for and 1989, respectively.

disposal costs of spent nuclear fuel and for Transfers to the General Fund future decommissioning costs (see Note I) of the City of $434,000 and $1,044,000, respectively.

Article XII of the City Charter provides These costs along with the Electric Utility's that transfers to the General Fund of the nance costs have been included in Oper City shall not exceed 4% of the gross revenue of the prior year. Such transfers are not in lieu of taxes and are recorded as distributions of retained earnings.

Reclassifications Certain reclassifications have been made to the 1989 financial statements to conform to the 1990 presentation.

Note 6 Long-Term Debt The Electric Utility is indebted as follows:

June 30 1990 1989 Electric Revenue Bonds, Issue of 1972, TIC 4.9263%, dated April 1, 1972, sold March 28, 1972 in the amount of $8,000,000 at rates ranging from 2.0% to 7.0%, maturing serially to July 1, 1992 in annual principal installments ranging from $600,000 to $675,000; total debt service of

$1,998,000 to maturity

$ 1,900,000

$ 2,450,000 Electric Revenue Bonds, Issue of 1976, TIC 6.07%, dated May 1, 1976, sold April 27, 1976 in the amount of $6,000,000 at rates ranging from 5.0% to 8.0%, maturing serially to May 1, 2006 in annual principal installments ranging from $150,000 to $400,000; total debt service of

$7,215,000 to maturity 4,475,000 4,625,000 Electric Revenue Bonds, Issue of 1980, TIC 9.173%, dated October 1, 1980, sold October 10, 1980 in the amount of $84,000,000 at rates of 8.0%, of which (1) $19,250,000 maturing serially from October 1, 1991 through October 1, 1997, (2) $16,650,000 of term bonds maturing October 1, 2001, and (3) $36,875,000 of term bonds maturing October 1, 2007, were advance refunded on November 25, 1986; the remaining bonds mature October 1, 1990 in a principal installment of $2,000,000; total debt service of $2,080,000 to maturity 2,000,000 3,850,000 Electric Revenue Bonds, Issue A of 1983, TIC 9.3051%, dated April 1, 1983, sold April 27, 1983 in the amount of $10,000,000 at rates ranging from 8.0% to 9.0%, of which $900,000 maturing serially October 1, 1995 through 1998 and $8,460,000 of term bonds maturing October 1, 2007 were advance refunded on March 31, 1986; the remaining bonds mature on October 1, 1993 and October 1, 1994 in annual principal installments of $300,000 and

$340,000, respectively; total debt service of $849,000 to maturity 640,000 640,000 Electric Revenue Bonds, Issue B of 1983, TIC 9.3051%, dated April 1, 1983, sold April 27, 1983 in the amount of $40,000,000 at rates ranging from 8.0% to 9.0%, of which $3,600,000 maturing serially October 1, 1995 through 1998 and $33,840,000 of term bonds maturing October 1, 2007 were advance refunded on March 31, 1986; the remaining bonds mature on October 1, 1993 and October 1, 1994 in annual principal installments of $1,200,000 and

$1,360,000, respectively; total debt service of $3,395,000 to maturity 2,560,000 2,560,000 Electric Revenue Bonds, Issue C of 1983, TIC 9.1023%, dated April 1, 1983, sold April 27, 1983 in the amount of $80,400,000 at rates ranging from 5.25% to 9.0%, of which $5,650,000 maturing serially October 1, 1995 through 1998 and $52,500,000 of term bonds maturing October 1, 2007 were advance refunded on March 31, 1986; the remaining bonds mature serially through October 1, 1994 in annual principal installments ranging from $2,400,000 to

$2,850,000; total debt service of $14,810,000 to maturity 12,400,000 14,650,000 Electric Revenue Bonds, Issue of 1986, TIC 7.006%, dated March 1, 1986, sold March 4, 1986 in the amount of $129,275,000, of which (1) $59,740,000 at rates of 5.25% to 6.9% mature serially through October 1, 2001 in annual principal installments ranging from $1,145,000 to

$8,955,000, (2) $30,665,000 at rates of 5.75% are term bonds maturing October 1, 2004, subject to mandatory redemption from October 1, 2002 to October 1, 2004 in annual principal installments ranging from $9,590,000 to $10,875,000, and (3) $37,885,000 at rates of 5.75% are term bonds maturing October 1, 2007, subject to mandatory redemption from October 1, 2005 to October 1, 2007 in annual principal installments ranging from

$11,550,000 to $13,600,000; total debt service of $217,406,000 to maturity 126,175,000 127,260,000 Electric Revenue Bonds, Second Issue of 1986, TIC 6.7737% dated October 15, 1986, sold November 25, 1986 in the amount of $77,780,000, of which (1) $46,700,000 at rates of 4.3%

to 6.5% mature serially through October 1, 2002 in annual principal installments ranging from

$1,070,000 to $4,960,000, and (2) $30,150,000 at rates of 6.75% are term bonds maturing October 1, 2007, subject to mandatory redemption from October 1, 2003 to October 1, 2007 in annual principal installments ranging from $5,275,000 to $6,815,000; total debt service of

$127,964,000 to maturity 74,860,000 75,875,000 Total revenue bond debt

$225,010,000

$231,910,000

Note 6 Long-Term Debt (continued)

June 30 1990 1989 Note Payable to the General Fund of the City, 7%, issued July 1, 1980 in the amount of

$2,382,000, the final principal and interest payment of $336,000 was made June 1, 1990 324,000 Note Payable to Internal Service Fund of the City, 8.95%, issued October 13, 1984, in the amount of $1,342,000, semi-annual principal and interest payments ranging from $55,000 to $106,000 through October 31, 2003; total debt service of $1,909,000 to maturity 1,169,000 1,224,000 Electric System Certificates of Participation (Combustion Turbine Peaking Plant), TIC 7.313%,

dated September 15, 1989, sold October 12, 1989 in the amount of $44,336,145.10 at rates ranging from 6.20% to 7.20% of which (1) $18,730,000 mature serially from October 1, 1992 through October 1, 2000, (2) $5,356,145.10 Capital Appreciation Certificates mature serially from October 1, 2001 through October 1, 2005, (3) $6,000,000 at rates of 7.20% are term certificates maturing October 1, 2009, subject to mandatory redemption from October 1, 2006 to October 1, 2009, in annual principal installments ranging from $1,350,000 to $1,660,000, and (4) $14,250,000 at rates of 6.50% are term certificates maturing October 1, 2011, subject to mandatory redemption from October 1, 2006 to October 1, 2111 in annual principal installments ranging from $1,495,000 to $3,950,000; total debt service of

$87,954,000 to maturity 44,336,000 Total other long-term debt 45,505,000 1,548,000 Total long-term debt 270,515,000 233,458,000 Less: current portion 7,423,000 7,279,000 bond discounts 1,400,000 9,439,000

$252,692,000

$216,740,000 Annual debt service requirements at June 30, 1990 to maturity are as follows:

Total All Revenue Bond Debt Other Long-Term Debt Long-Term Fiscal Year Principal Interest Total Principal Interest Total Debt 1991

$ 7,365,000 $ 14,016,000 $ 21,381,000 $

59,000 $

93,000 $

152,000 $ 21,533,000 1992 7,195,000 13,548,000 20,743,000 1,263,000 2,040,000 3,303,000 24,046,000 1993 7,705,000 13,092,000 20,797,000 1,745,000 2,611,000 4,356,000 25,153,000 1994 8,145,000 12,583,000 20,728,000 1,868,000 2,499,000 4,367,000 25,095,000 1995 8,765,000 12,003,000 20,768,000 1,960,000 2,379,000 4,339,000 25,107,000 Thereafter 185,835,000 85,465,000 271,300,000 38,610,000 30,833,000 69,443,000 340,743,000

$225,010,000 $150,707,000

$375,717,000 $45,505,000 $40,455,000 $85,960,000 $461,677,000

Note 6 Long-Term Debt (continued)

Current interest costs of $749,000 and $578,000 have been included in Construction work in progress for fiscal years ended June 30, 1990 and 1989, respectively.

In accordance with the bond resolutions, a reserve for maximum annual debt service has been established and a reserve for renewal and replacement is being accumulated equal to a maximum of 2% of the depreciated book value of the utility plant in service.

56 The bond issues outstanding at June 30, 1990 require the establishment of a Bond Service Account by accumulating monthly one sixth of the interest which will become due and payable on the outstanding bonds within the next six months and one-twelfth of the principal amount which will mature and be payable on the outstanding bonds within the next twelve months.

On June 1, 1983, the Electric Utility defeased Electric Revenue Bonds, Issue A of 1982, in the aggregate principal amount of

$18,000,000 at rates of 8.0%, and Issue B of 1982, in the principal amount of $52,000,000 at rates ranging from 7.5% to 11.5%, with a portion of the proceeds from the sale of $80,400,000 Electric Revenue Bonds, Issue C of 1983 at rates ranging from 5.25% to 9.0%.

The excess of the amount required to advance refund the 1982 Bonds over the carrying value of those bonds at the refunding date amounted to $7,567,000. In accordance with industry practices, this amount is being deferred and amortized over the life of the Issue C of 1983 Bonds using the effective interest method. At June 30, 1990, outstanding principal of the refunded 1982 Bonds totaled

$55,350,000. Over the life of the Issue C of 1983 Bonds, the Electric Utility expects to save approximately $12,297,000 in debt service as compared to the refunded 1982 Bonds.

On March 31, 1986, the Electric Utility defeased a portion of the Electric Revenue Bonds, Issues A, B and C of 1983, in the principal amounts of $9,360,000, $37,440,000 and $58,150,000, respectively, at rates ranging from 8.3% to 9.0%, with a portion of the proceeds from the sale of $129,275,000 of Electric Revenue Bonds, Issue of 1986 at rates ranging from 5.0% to 6.9%. The excess of the amount required to advance refund the 1983 Bonds over the carrying value of those bonds at the refunding date amounted to

$21,476,000. This amount is being deferred and amortized over the life of the 1986 Bonds using the effective interest method. At June 30, 1990, outstanding principal of the refunded 1983 bonds totaled $104,950,000. Over the life of the 1986 Bonds, the Electric Utility expects to save approximately $10,849,000 in debt service as compared to the refunded 1983 Bonds.

On November 25, 1986, the Electric Utility defeased a portion of the Electric Revenue Bonds, Issue of 1980, in the principal amount of $72,775,000, at rates of 8.0%, with a portion of the proceeds from the sale of $77,780,000 of Electric Revenue Bonds, Second Issue of 1986 at rates ranging from 3.8% to 6.75%. The excess of the amount required to advance refund the 1980 Bonds over the carrying value of those bonds at the refunding date amounted to $9,693,000. This amount is being deferred and amortized over the life of the Second Issue of 1986 Bonds using the effective interest method. At June 30, 1990, outstanding principal of the refunded 1980 bonds totaled $72,775,000. Over the life of the Second Issue of 1986 Bonds, the Electric Utility expects to save approximately

$10,818,000 in debt service as compared to the refunded 1980 Bonds.

Included in Restricted assets are Restricted cash and investments which include reserved amounts, as well as undisbursed bond proceeds, as follows:

June 30 1990 1989 Held by Fiscal Agent:

Bond Reserve Fund

$22,117,000

$22,487,000 Bond Service Fund 653,000 618,000 Certificates of Participation Proceeds 26,123,000 Held by City Treasurer:

Bond Service Account 8,509,000 8,302,000 Renewal and Replacement Account 8,371,000 8,304,000 Decommissioning and fuel reserves 15,127,000 12,344,000 Restricted bond proceeds 941,000 723,000 Other restricted assets 446,000 414,000

$82,287,000

$53,192,000 The Electric Utility cash expenditures for interest expense for the years ended June 30, 1990 and 1989 were $15,723,000 and

$16,371,000, respectively.

Note 7 Pension Plan Ne 10 Cash and Investments Note I1 Commitments and Contingencies The City has a contributory pension At June 30, 1990, the carrying amount Take or pay contracts plan for full-time employees under the of the Electric Utility's share of the City's The City has entered into agreements State of California Public Employees' pooled deposits was $27,045,000. Of with the Intermountain Power Agency Retirement System. Information is not this amount, $20,990,000 is insured or available separately for the Electric Utility collateralized with securities held by the oA a ptal sbiso o t Stare as to the cost of benefits funded, the City or its agent in the City's name. The actuarially computed present value of remaining $6,055,000 is collateralized Anthoth Calfa public Powery vested and non-vested accumulated plan with securities held by the pledging finan benefits, the related assumed rates ofthe State of beneits th reate asume raes f cal istiutin'strut dparmen inthe California. The City has agreed with IPA return used and the actuarially computed City's name.

valued of vested benefits over the related At June 30, 1990, all of the City's pensioncontracts, to purchase 13.225% of the penson undassts.poold ivesmens wre isurd o reis-generation output of lPAs 1,600 megawatt Note Self-Insurance Programtered with the exception of amounts in vested by fiscal agents. A summary of twuntca-eldgerigsaio The Electric Utility is part of the City's the Electric Utility's participation in the (the Station) in central Utah. Unit 1 of self-insured workers' compensation and City's pooled investments is allocated general liability program. The liability for based on the overall percentage parricipa-mercial operation June 10, 1986. Unit 2 such claims is transferred to the City in tion as follows:

consideration of self-insurance premiums Cost of construction of the Station and paid by the Electric Utility. Effective July U.S. government securities

$21,625,000 related transmission lines, including the 1, 1986, the City became self-insured.

Southern Transmission System (STS)

Costs relating to the litigation of claims Bankers acceptances 1,649,000 from Utah to Southern California,was are charged to expense as incurred.

Repurchase agreements 172,000 financed principally through sales of IPA's Note 9 Refunds Commercial paper 30,665,000 power supply revenue bonds and payments in aid of construction by SCPPA. The Since fiscal year 1986 the Electric Local agency investment City has agreed with SCPPA to purchase Utility has received refunds from Edison fund (state pool) 6,868,000 rights to 17.6% of the transmission totaling $35,705,000. These refunds have Controlled by been placed in the RSA. The City did not City Treasurer 60,979,000 The contracts constitute an obligation receive any refunds from Edison during the reciv ay rfudsfro Eisn drig he Amounts invested by of the City to make payments solely from 4

1990 fiscal year. At June 30, 1990 and 1989 fiscal yer.AtiJunea30,i1990ean fiscal agents 23,105,000 the revenues of the Electric Utility. These 1989,payments, which are based upon the City's amounted to zero and $4,869,000, Total investments

$84,084,000 share of IPA's debt service requirements respectively. The City intends to refund any future refunds to Electric Utility cus-adpouto ot n CPsdb anyfutre efuds o Eectic tilty us-Fiscal. agents on behalf of the City hold service requirements, began in July 1986, tomers in the form of reductions to future rate in th ro f reductionsto futur and invest funds from long-term debt the month in which Unit I of the Station rat inreaes hrogh he ateStailia-issuances. Fiscal agents are mandated by and the STS began commercial operation.

tion Policy (see Note 1).

tio Poicy(se Nte ).bond indenture as to the types of invest-These payments will be considered a Cost These refunds have been reflected in Thes reund hae ben eflcte in ments in which proceeds can he invested, of purchased power. As of June 30, 1990, the Electric Utility's Financial Statements Investments by fiscal agents predominantly issued $5.3 billion in revenue as part of the RSA.

consist of U.S. Government securities bonds and revenue bond anticipation held in book entry form.

notes to finance construction of the Amounts invested by fiscal agents Station and SCPPA has issued $1.1 billion include investments that are insured in revenue bonds and revenue bond anti or registered or for which the securities cipation notes to finance payments in aid are held by the City's agents in the of construction.

City's name.

The Electric Utility's projected mini mum payments for purchased power due under these take or pay contracts for the next five years are as follows:

Fiscal Year 1991

$64,581,000 1992 66,140,000 1993 65,772,000 1994 65,909,000 1995 65,951,000

Note 11 Commitments.and Contingencies Rate challenges and other Independent Auditors' Report (continued)atos (coninue) acionsTo the Honorable City Council The City does not expect these payments The City has filed several complaints City of Anaheim, California to have an adverse impact on the Electric against Edison challenging various rate Utility's rate structure in that such pay-increases and a suit alleging that Edison We have audited the accompanying ments are in lieu of payments which would has violated certain anti-trust laws. These balance sheets of the Electric Utility Fund have been made to purchase power from actions could potentially result in refunds of the City of Anaheim, California as of Edison. The City projects that there will or payment of damages to the Electric June 30, 1990 and 1989, and the related be substantial long-term power supply cost Utility; however, no opinion can be statements of income, changes in retained savings from the take or pay contracts rendered at this time as to the probable earnings and cash flows for the years then compared to purchase from Edison.

outcome of these actions.

ended. These financial statements are the On July 1, 1988, the.Certificate of responsibility of the Electric Utility's Completion of the initial facilities of the management. Our responsibility is to Intemourai Poer rojct as xe-The Electric Utility's budget fot the express an opinion on these financial Intermountain Power Project was exe-fsa er19-1poie o

aia cited and as a result the surplus in IPA's fiscaliyer 90 proide forcapital statements based on our audits.

Construction Fund was transferred to IPA's of approximate $17,0 We conducted our audits in accordance General Reserve Fund and will be allocated f whic

$7630i eeed tob with generally accepted auditing standards.

to the various participants based upon the Those standards require that we plan and Plan for the Disposition of Surplus Funds.

perform the audit to obtain reasonable The Electric Utility's share of these surplus assurance about whether the financial funds was approximately $35.8 million statements are free of material misstate which the Electric Utility is using to ment. An audit includes examining, on a reduce future IPP purchased power costs.

test basis, evidence supporting the amounts At June 30, 1990, the Electric Utility's and disclosures in the financial statements.

remaining share of these surplus funds was An audit also includes assessing the approximately $16.5 million, which the accounting principles used and significant Electric Utility will use to reduce IPP estimates made by management, as well as purchased power costs over the next evaluating the overall financial statement 2 to 3 years.

presentation. We believe that our audits Test nerg bilingsprovide a reasonable basis for our opinion.

TestIn our opinion, the financial statements On August 5, 1988, as a precondition to referred to above present fairly, in all entering into an arbitration agreement on material respects, the financial position of disputed billings, Edison paid the City the Electric Utility Fund of the City of

$3,064,000 for contested Intermountain Anaheim, California as of June 30, 1990 Power Project test energy which is and 1989, and the results of its operations included in cash and offset by a current and irs cash flows for the years then ended liability. This money will not be expended in conformity with generally accepted for any purpose until such time as the arbitration has been completed.

Litigation A number of claims and suits are pending against the City for alleged damages to persons and property and for other alleged liabilities arising out of matters usually incidental to the operation Octobe of a utility such as the electric system of 12, 1990 the City. In the opinion of management, Orange County, California the exposure under these claims and suits would not materially -affect the financial position of the Electric Utility as of June 30, 1990.

City of Anaheim Public Utilities Department 200 South Anaheim Boulevard Anaheim, California 92805 Reliable Water and Electric Service to Anaheim Since 1895