ML13331B443
| ML13331B443 | |
| Person / Time | |
|---|---|
| Site: | San Onofre  |
| Issue date: | 06/30/1987 |
| From: | Hoyt G ANAHEIM, CA |
| To: | |
| Shared Package | |
| ML13331B036 | List: |
| References | |
| NUDOCS 8804250251 | |
| Download: ML13331B443 (55) | |
Text
City of Anaheim Public Utilities Department Annual Report Year Ended June 30, 1987
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REMOVAL OF ANY PAGE(S) FROM DOCUMENT FOR REPRO DUCTION MUST BE REFERRED TO FILE PERSONNEL.
-NOTICE 8804250251 880413 PDR ADOCK 05000206 DCfD
More than a decade ago, the Anaheim Public Utilities Department embarked on an ambitious journey. The vision was to supply electric ityfrom diverse generating resources and free the city from its reliance on a sole power supplier The quest for true energy independence has not been without its hardships and challenges. But today, Anaheim's power originates from a reliable, economical mix of coal, nuclear and hydroelectric resources located throughout the western United States.
Together with the ability to deliver water supplied from local wells and distant mountain snow packs, the Department in 1987 is proud of its accomplishments in developing the water and power resources which will secure Anaheim's future.
Water and Electric System Source of Supply Sanal Onofr LEGEN Staion POENI
-~0 Trnsisio by otherutilitie for Aahei
) Firm enemtin resourcese economynenergy resources
1986-1987 Source and Distribution of Revenue THE 86-87 WATER DOLLAR SOURCE OF REVENUE DISTRIBUTION OF REVENUE 560 Residential sales 37C Water supply 26C Commercial 244 Operation and and Industrial sales maintenance 5C Other sales 3C Transfer to 13Ct Other revenue City General Fund 6C Debt service 30C Available for additions and replacements to the system THE 86-87 ELECTRIC DOLLAR SOURCE OF REVENUE DISTRIBUTION OF REVENUE 19C Residential sales 55C Purchased power supply 23C Commercial sales 2C Fuel used for generation 4C Other sales 134 Operation and maintenance 114 Other revenue 4c Transfer to City General Fund 43C Industrial sales 10C Debt service 16C Available for additions and replacements to the system 2
1987 and 1986 Fiscal Year Highlights WATER SYSTEM ELECTRIC SYSTEM Year ended June 30 Year ended June 30 OPERATIONS 1987 1986 1987 1986 Sales 21,958 million 21,392 million 2,199 million 2,095 million gallons gallons kilowatt-hours kilowatt-hours System peak requirements 98.7 million 102.0 million 471,360 465,600 gallons gallons kilowatts kilowatts Average number of customers 53,418 52,718 95,108 93,568 FINANCIAL Revenues from sale of water
$18,587,000
$17,237,000
$174,448,000
$183,383,000 and electricity*
Net income
$6,217,000
$3,605,000
$30,670,000
$13,573,000 Transferred to City of
$702,000
$689,000
$7,218,000
$7,206,000 Anaheim General Fund
- Amounts represent revenues derived solely from billings. Electric system revenues also do not reflect any provision for changes in the Pbwer Cost AdjustmentBalancing Account which were $826,000 and ($10,855,000) for the years ended June 30, 1987 and 1986, respectively, and does not reflect any provisionfor changes in the Rate Stabilization Account which were $7,291,000 and $7,196,000 in the fiscal years ended June30, 1987 and 1986, respec tively. See Note I to Electric Utility Financial Statements.
MOODY'S INVESTORS STANDARD AND POOR'S CREDIT RATING SERVICE CORPORATION Electric Revenue Bonds Aa A +
Water Revenue Bonds Aa AA Water Revenue Anticipation Notes MIG 1 SP-l +
Electric Tax-Exempt Commercial Paper Prime-1 A-1 Table of Contents Report from the General Manager.............
4 Water Year 1986-87......................
6 Electric Year 1986-87 14 Officials........................
22 Financial Analysis and Statistics...........
24 Audited Financial Statements.............
33
Report from the General Manager ENERGY DIVERSITY Savings in the cost of power from all eof these resources largely are respon our visio realized.ha or oao providing a reliable, low-cost, diverse sible for the 9.8 percent decrease in power supply now has been achieved.
electric rates over the past fiscal year.
Never again will Anaheim find all of DIVERSE WATER SUPPLY its energy eggs in one basket.
theTh sale ofn
$15 millionh ofelcti Never again will one utility be the strong community support, which Department's only source of supply played such an important part in for its electric power needs.
diversifying Anaheim's power supply, powero suppl nown hasosil been acieed Never again will the cost of our power supply depend so heavily on development of a balanced, reliable, the price and availability of foreign flexible water production system for oil, both of which are determined by the community.
unpredictable world economic and For example, while Orange County political conditions.
as a whole must rely on imported Today, our electricity comes from a water for about 70 percent of its variety of clean, reliable, safe and water needs, Anaheim is capable of economical resources located supplying more than 70 percent of its throughout the western United consumers' needs with high quality States. In addition to buying from water pumped from its own wells.
other utilities using a good mix of resources, our own generation includes coal, hydroelectric and nuclear resources:
- Intermountain Power Project, Utah
- Hoover Dam on the Colorado it has been a long hard road, yet River perseverance has been rewarded and
- San Onofre Nuclear Generating our vision realized.
Station, Southern California Twelve years have passed since the
- Capacity and energy purchases citizens of Anaheim proclaimed their from Pacific Gas & Electric, North energy independence by authorizing ern California, and Deseret Genera the sale of $150 million of electric tion and Transmission revenue bonds to help pay for an Co-operative, Utah ambitious program of power supply Economy energy purchases on the independence.
"spot market" from utilities in Cali fornia, Washington, Oregon, New Mexico, Montana, Arizona, Utah and Texas 4
FISCAL 1987 Safety The accomplishments of the Public m Department's already low disabling Utilities Department in the past fiscal injury incident rate continued to year have been many and varied.
improve They are the result of a dedicated a Recordable injury, disabling injury team of managers, highly profes-and days away from work incident sional technical and support person-rates down by 24 to 26 percent nel, and a labor force committed compared to respective five year to getting the job done safely and averages efficiently.
Highlights of their outstanding list of accomplishments include:
Water Utility
" Record sales of 22.0 billion gallons a
Record production from wells of 16.9 billion gallons c
Drilling three new deep, high qual ity, high production wells
" Capital replacement program con tinued on schedule Electric Utility
- IPP Unit 2 commercial operation two months ahead of schedule Department of the City of Anaheim
- IPP construction completed hun-what it is today, one of the nation's dreds of millions of dollars under leading consumer owned and oper budget ated utilities.
" Record sales of 2.2 billion kWh Thanks also to the mayor and other "members of the City Council and the Elrteri o
members of the Public Utilities H ooernzto Dam erton ene Board for forging public utility poli
- cies which keep Anaheim innovative, Finance productive and effective.
Issued $77.8 million of long-term electric revenue bonds, to refinance My special thanks go out to each of existing higher cost bonds my fellow employees. Your individual
- contributions and your dedication
- $Reficin svig or thn have made the Public Utilitiesfro rGordon W Hoyt
- Lowest true interest costs in eight Public Utilities General Manager years for similarly rated municipal revenue bonds
- Electric rates lowered twice, 9.8 percent lower overall Deateto5h iyo nhi
Water Year 1986-87 its water from the Metropolitan It is difficult to imagine water begin Water District of Southern California ning as cold thin trickles high in the (MWD).
Never Summer Range of the Colo a
rado Rockies or melting snow on the nrugged western slopes of California's As one of MWD's founding members northern Sierra Nevada winding up in 1928, Anaheim has received water filling the glass of a thirsty youngster since 1942 from MWD's first project, in Anaheim.
the 242 mile Colorado River Aque-The journey is a long one, often duct. The Aqueduct supplies more made difficult with engineering and than one billion gallons of water to legal hurdles, not to mention the Southland cities every day.
whims of nature. Yet, it is the diver MWD also imports water from sity provided by those distant water Northern California through the resources that continues to assure State Water Project. Rainfall and Anaheim water consumers of a reli melting snow from California's able supply of high quality water at northern Sierra Nevada form the an economical price.
headwaters of the State Water Proj ect, which is managed by the Califor-RECORD PRODUCTION nia Department of Water Resources.
Water production in fiscal 1987 t
,climbed to a record 23.5 billion gal
- ylons, up 2.4 percent from fiscal 1986.
From Lake Oroville, State Project Department wells supplied 16.9 bil water flows to the Southland down lion gallons, or 72 percent of total Although located in the middle of a the Feather and Sacramento rivers, production, which is also a record.
cal s oater for Anaheim is through the Sacramento/San The balance of Anaheim's water bse-rd coa dvsta d
- ain, an Joaquin River Delta and an intricate supply, 6.6 billion gallons, consisted bluesd wtierWse anld bndnt network of reservoirs, pumping of imported water purchased from sres ae.nts.rildit pat nd50mls faudut.MD underground aquifers, fed by the pat n
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Santa Ana River and surplus imported water, are the backbone of Anaheim's water supply. Typically, wells supply 65 to 70 percent of the Department's annual requirements.
Three new deep, high-production wells, now being developed near the Linda Vista Reservoir, are scheduled to be operational in 1988. These wells replace three older, relatively shallow wells which were contaminated by a gasoline spill at an oil company stor age terminal.
Funded by the oil company as a result of extensive settlement negotia tions, the new wells will offer better quality water and higher capacity, helping to assure a reliable, economi cal supply of water for Anaheim residents.
Percolation basins along the Santa Ana River are main points for replenishing northern Orange County natural groundwater supply IMPORTED SUPPLY Now in its 108th year of service, the Water System buys the remainder of The drilling of this and two other new deep, high production wells will help assurefuture availability of high quality, low cost water for Anaheim consumers.
6
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Water Year 1986-87 RECORD SALES Weather conditions have a major impact on consumer demand for water. Temperature and rainfall not only influence where most of the city's water is going to come from in a given year, they also have a signifi cant impact on water use. Only 8.4 inches of rainfall were recorded in fiscal 1987, a little more than half that of a normal year. This was a primary cause of record sales in the face of relatively mild temperatures during the year.
The system's 53,418 customers used 22.0 billion gallons of water in fiscal 1987, up 566 million gallons from the prior year. The difference between water production and water sold is Hover am and Lake Mead are morntelmesi due to changes in reservoir levels, evaporation and other system losses.
evaortin ndotersyte lsss.
rent revenues. Old wells, pumps, bilitated, they also are tied into the SYSTEM IMPROVEMENTS valves and water mains are being Supervisory Control and Data The Department is now in the midst renovated or replaced by new equip-Acquisition (SCADA) system. Each of a comprehensive ongoing mainte-ment in order to assure continued year, system operators are obtaining nance and replacement program, system reliability greater real time monitoring and which is funded primarily from cur-As key facilities are replaced or reha-control over production and distribu The East Branch aqueduct of the State Water Project wends across the Antelope Valley, State Project water is lifted 1926 feet over transporting Northern California water to the Southland.
the Tehachapi Mountains toward thefinal leg of its southern journey at the A.D.
Edmonston Pumping Plandt Greg Rishero waterrproduction technician, fine tunes one of Department a
new gener ation of efficient, high capacity, deep wells which help supply more than 70 percent of Anaheim s annual water needs.
9
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Water Year 1986-87 tion facilities. The bottom line result Architectural design for Twin Peaks WATER QUALITY is increased operating flexibility and Reservoir has been completed. The Water supplied to all of Anaheim's efficiency.
one million gallon reservoir, sched-consumers continued to exceed all Approximately two more miles of old uled for operation in fiscal 1988, will state and federal standards for unlined four to eight inch pipelines serve growing demand in the eastern drinking water.
were upgraded during the year to hill and canyon area.
Water pumped from the Depart eight and sixteen inch pipelines, During fiscal 1987, the Department ment's wells undergoes natural filtra capable of meeting the pressure and completed a major, comprehensive tion in the underlying soil, sand and required fire flows of the growing study of distribution pipelines in the rock strata as it percolates, or soaks, community.
flatlands west of the Santa Ana into the underground aquifers. In River. The purpose of the study was to identify facilities in need of reha-28.2 bilitation and make the most cost effective use of capital to meet growing customer needs. A similar study of the hill and canyon area will 16.5 be completed in fiscal 1988.
12.1 10.8 RATES 8.4 The City Council, in recognition of their stewardship responsibility for Anaheim's water infrastructure, 86-87 85-86 84-85 83-84 82-83 approved rates effective August 1, ANNUAL RAINFALL (INCHES) 1986 which resulted in a 5.1 percent increase in the average cost per unit 22.0 21.4 211 of water sold. The additional revenue 20.0 primarily is being used to fund the 17.9 Department's ongoing maintenance and capital replacement programs.
Rigorous testing ensures that Anaheim's water supply meets or exceeds all state and federal drinking water standards.
NEW FACILITIES Drilling was completed on two new 86-87 85-86 84-85 83-84 82-83 wells and was nearing completion on WATER SALES a third well at year end. Located near (BILLION GALLONS)
Linda Vista Reservoir, the three high production wells will replace capacity 98.7 87.9 94.0 lost when three older, relatively shal-87.9 87.0 low wells were contaminated by a gasoline spill. By tapping deeper aquifers, the Department expects Scheduled maintenance and replacement higher quality water.
of old, worn valves and other equipment drilling will extend the tradition of reliable service In addition to completing the drlig to future consumers.
of the third well, fiscal 1988 will see the installation of a pipeline and valves tying the new wells to Linda Vista Reservoir.
86-87 85-86 84-85 83-84 82-83 PEAK DAY DEMAND (MILLION GALLONS)
Jude Fleming, laboratory technician I prepares one of more than 4,000 annual tests conducted by Water Quality Section to ensure delivery of high quality water to Anaheim consumers.
11
Water Year 1986-87 water delivered to the tap meets all is targeted for replacement of water requirements for drinking water.
production and distribution facilities, Over 4,000 physical, biological and while the remaining $28.0 million is chemical tests of the water supply slated for new capital facilities.
were conducted by the Department during fiscal 1987. Those tests were in THE GOAL addition to tests of imported water Anaheim has joined other Southern conducted by MWD and tests of California communities and water groundwater by the Orange County agencies in adopting the Southern Water District.
California Water Policy. This policy TOWARDsupports implementation of a future TOWAD TE FUUREplan for delivering more water from During the next five years, the Northern California, part of the Department plans to invest $42.9 ongoing commitment to a steady The Delta of the San Joaquin and Sacra-million toward improvements in the supply of quality water at an eco mento rivers is a key intersection for water production and distribution nomical price for Anaheim and for water destined for Southern Calfornia system. Approximately $14.9 million the region.
communities.
many instances, water from newer, deep, high production wells is of such high quality that no treatment is required.
Imported water from the Colorado River is filtered and treated at the Department's August Fa Lenain FilS tration Plant before it flows into the distribution system. Other water purchased from MWD directly is treated by MWD before delivery to Anaheim.
Personnel operating the Depart ment's own modern Water Quality Laboratory provide the monitoring Anaheim stores 920 million gallons of Colorado River water in its Wa/nut Canyon Reservoir necessary to assure consumers that BSP,04~~~~
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Electric Year 1986-87 The mid-seventies. The energy crisis was in full bloom. Reliance on for eign oil, suddenly in short supply, wreaked havoc on the American economy. Three hour waits for a tank of gasoline, assuming it was even available, and skyrocketing prices became the norm.
At the time, the Southern California Edison Company (Edison) supplied the Department with all its bulk power needs and Edison relied on oil and natural gas-fueled electric generating units.
The crisis served notice to all Ameri cans, particularly to Anaheim citi zens, that the time had come to find and develop alternative energy resources, to find other ways of generating electricity.
COMMUNITY SEEKS DIVERSITY Utah c05J 4.
tonsaya willbe Seeing the need for diverse resources, huge boiles.
Anaheim's citizens ratified their Declaration of Energy Independence.
in 1975. Voters approved $150 million in electric revenue bonds to buy rights or ownership interests in new Fiscal 1975 Fiscal 1987 electrical generation and transmis sion projects. The singular purpose Southe was to provide Anaheim consumers with reliable, more economical elec-Edison tric energy.
BIG PAYOFF 1000o Today, 12 years later, the goal of those farsighted voters is being attained:
" A secure power supply from a wide ranging network of electric energy resources
- Rates reduced twice in fiscal 1987, lower by 9.8 percent overall
" Possibility of no overall rate Aaehsmovedfthoug thsca i total enent IPP's aP scimney sre thia eomnty incseca unti5 siscal 1987 1
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Electric Year 1986-87 DIVERSE RESOURCES Unit 1 was commercially available for Anaheim's resources produced a operation on June 10, 1986, while record 2,363.9 million kilowatt-hours Unit 2 came on line May 1, 1987. IPP (kWh) in fiscal 1987, up approxi-supplied 942.7 million kWh of elec mately 164.9 million kWh or 7.5 tricity this year, 40 percent of total percent.
system requirements.
San Onofre Intermountain Power Project Anaheim's 3.16 percent, or 67,900 Anaheim takes special pride in kilowatt (kW), ownership interest in the completion of the coal-fueled, San Onofre Nuclear Generating Sta 1,600,000 kilowatt Intermountain tion (SONGS) Units 2 and 3, located Power Project (IPP). Located on a south of San Clemente, California, 4,600 acre site in the Utah desert 100 supplied 476.8 million kWh in fiscal miles southwest of Salt Lake City, 1987. SONGS Unit 2 operated at an IPP is a modern, highly automated impressive 95 percent capacity factor.
generating station, which has been Unit 3, which was out of service 69 designed and constructed to be one days for refueling, recorded a 66 of the most reliable generating sta-percent capacity factor, higher than tions ever built. Anaheim has been the national industry average for a driving force behind IPP since the nuclear plants.
first conceptual meetings in 1973.
IPPs 6 artcians dstibteHoover Dam Line mechanics Randy Majors and Larry IPP's 36 participants distributelines to clean, economical power to con-Anaheim received its first deliveries handle Anaheim's growing demandfor sumers in seven states. Anaheim has of hydroelectric power from Hoover electricity contractual rights to 13.225 percent Dam on June 1, 1987. A total of 4.3 of the generating station's output.
million kWh were delivered by the end of fiscal 1987. Upon completion of the uprating of each of Hoover's 17 generators in 1992, Anaheim's share of Hoover's capacity will be 40,000 kilowatts.
Firm Power Purchases As part of the ongoing effort to reduce power supply costs, the Department also negotiated firm capacity and energy purchase agree ments with Pacific Gas & Electric (PG&E) and Deseret Generation and Transmission Co-operative (Deseret).
In addition to energy, both agree ments result in capacity credits and thus will provide significant savings for Anaheim consumers in coming years. Deliveries under these agree
~
ments began from PG&E on May 1 Anaheim owns 3.16percent of Units 2 and3 of San Onofre Nuclear Generating Station.
and from Deseret on June 1, 1987.
Refueling operations inside Unit 3 of San Onofre Nuclear Generating Station.
17
Electric Year 1986-87 Expensive purchases from Edison A radio network, linked through a plummeted in fiscal 1987 to 11 per-combination of utility-owned com cent of total production, or 265.1 munication cables, radio frequency million kWh. Anaheim purchased control units, remote transceivers and 63 percent of its system needs from Police Department microwave equip Edison in the prior fiscal year.
ment combines increased reliability Other Power Purchases with simplified operation for system operators.
In addition, non-firm or supplemen tal economy energy agreements have 2.20 been negotiated and executed with Uprating, modications increasing the utilities throughout the western output of each of Hoover Dam s 17 United States, all the way from the generators, is currently under way Pacific Northwest to west Texas.
"Spot market" purchases under these agreements supplied 618:6 RECORD SALES million kWh in fiscal 1987.
In spite of mild weather conditions, the mildest of the past five years, NEW FLEXIBILITY sales reached an all-time high of 2.20 Under a new operating agreement billion kWh, up 104 million kWh 86-87 85-866 84-865 83-84 82--83 with Edison, the Department gained over fiscal 1986. All customer classes ELECTRIC SALES the flexibility necessary to schedule except residential recorded sales (BILLION KILOWATHOURS) its own resources. That means the gains. Residential sales were down Department now determines how because relatively cooler weather 653 much power it is going to receive resulted in decreased residential use from each of its resources each hour of air-conditioning. The difference of the day in order to maximize the between production and sales is due economic benefit to Anaheim con-to conversion and line losses.
sumers. Savings from Anaheim's program of power supply diversifica-O R
N tion and flexibility totaled more than IMPROVEMENTS
$10 million in fiscal 1987.
Renovation of the Operations Con LOWERRATEStrol Center was completed prior toI LOWER RATES year-end. New work stations provide 86-87 85-86 84-85 83-84 82--a3 The bottom line for all of the Depart-system operators with rapid access to TEMPERATURE ment's activities is the impact on all critical system control and radio (DEGREE DAYS ABOVE 720) consumers. In fiscal 1986 the City equipment for maximum efficiency 483A Council established a rate stabiliza-during emergencies, peak consumer 471.4 465.6 tion policy whereby refunds received use periods as well as normal from Edison for wholesale rate over-operations.
charges would be used to help offset the need for Anaheim to increase Almjreeti itiuinsse the eed or Aahem toincrasefacilities are now on the Supervisory retail rates.
retal raes.Control and Data Acquisition With the refunds and savings from (SCADA) system. A separate power power supply diversification, the supply, ensuring continued power to Department not only has avoided vital SCADA computer equipment rate increases, but also has been able during outages, is now operational.
to decrease rates. The bottom line is 86-87 85-86 84-85 8384 82-83 that the average billing price per kWh ELECTRIC PEAK DEMAND fell 9.4 percent in fiscal 1987.
(THOUSAND KILOWATS)
The Department f
share offirm electric energy and capacity from Hoover Dam is Anaheim eairst allocation of federal hydro powern 19
Electric Year 1986-87 SYSTEM GROWTH LOOKING AHEAD Capital Spending Distribution line extensions and Gas Turbine Over the next five years, the Depart services were designed for 1,350 Feasibility studies are under way for ment plans to invest about $81 mi residential and 629 commercial and the installation of a natural gas tur-lion in new electric facilities.
industrial customers. About 16 circuit bine generator. The turbine would be Approximately $30.1 million will miles of underground distribution used during periods of high demand be related to power supply and may lines were installed during fiscal 1987.
to offset capacity purchases from come from revenue bond or revenue Approximately 1.5 circuit miles of 4 Edison, offsetting millions of dollars anticipation note proceeds. The kilovolt (kV) distribution lines were in future power supply costs.
remaining $50.9 million will be changed over to 12 kV operation, financed by power sales.
under an ongoing conversion Transmission Projects The Goal program.
Studies continued on a third major transmission link to the Pacific Teear tmrientiill cone to Northwest, the California-Oregonserhfrdvsiednrg thesure intalaio ofe aoa natra gasplturg Transmission Project, a joint project usedaei duringer period ofehghadman of all the major California utilities.
Studies also continued on a new path service at the lowest possible cost.
for power transactions in the South west, the Mead-Adelanto and Mead Phoenix Transmission projects.pa Distribution An additional 69/12 kV transformer and associated switchgear are ready for installation at Sharp Substation, doubling its capacity to 80,000 kilovolt-amperes. Bids for the con struction of Southwest Substation were under review at year-end. The substation eventually will serve increasing consumer demand in the Anaheim participation in IPP and addi Dennis Ellenberger, utilities load scheduler, Disneyland/Convention Center area.
tional share of associated transmission makes one of hundreds of "spot market" capacity opened the doorforfirm and economy energy purchases which helped economy power purchasesfmm other loweroAnaheim electric rates infiscal 1987.
utilities.
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\\-N P'is.EXISTING pRopOSED ELECI'RIC SYSTEM i-69000 Volt Transmission Distribution Substation Southern California Edison 2200nV Volt Transmission 220 000 Volt Substation SANTA ANA t o 500,000 Volt Transmission 500,000 Volt Substation Electricity generated at the coal-fueled Bonanza Generating Station is the pri mary source offirm power purchased from the Deseret Generation and Trans mission Co-operative.
20
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Officials for the City of Anaheim CITY COUNCIL BEN W BAY Mayor MIRIAM KAYWOOD WILLIAM D. EHRLE FRED HUNTER IRV PICKLER Mayor ProTem Councilman Councilman Councilman PUBLIC UTILITIES BOARD KENNETH M. KEESEE JAMES H. TOWNSEND Chairman Vice Chairman CARL J KIEFER RICHARD J McMILLAN S. DALE STANTON JOSEPH R. WHITE 22
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CITY OF ANAHEIM PUBLIC UTILITIES DEPARTMENT FINANCIAL ANALYSIS AND STATISTICS 24
Public Utilities Department Financial Analysis Having made tremendous strides in
- Reduced cost of purchased power Other operations and maintenance resource diversity, while continuing 10 percent expenses were up $226,000 in fiscal to improve reliability and operating m Reduced cost of water 4 percent 1987 primarily as a result of increased flexibility, the Public Utilities scheduled maintenance.
Department of the City of Anaheim m Recognition of unbilled revenues continued to improve its already In order to provide a common basis
$6,217,000 in fiscal 1987, up sound financial condition in fiscal for making comparisons with other
$2,612,000 from the prior year.
1987.
utilities, both private and consumer A change in accounting policy to The planned diversity, which assures owned, the financial reports of the record unbilled revenues at year-end reliable supplies of water and power Water and Electric utilities are pre-accounted for $1,802,000 of this for Anaheim's future, also applies to sented in conformity with generally increase. The change was made in the financing decisions made by the accepted accounting principles and order to provide a better match Public Utilities Department.
accounting principles and methods between revenues and expenses and Th eaten ssabalanced prescribed by the C -alifornia Public conform with the industry trend of The prn uses Utilities Commission and the Federalbala financing progra which includes:
Energy Regulatory Commission,
- Current revenue from the sale of respectively The Water and Electric During the year, a total of $6.6 mil water and electricity utilities are not subject to regulation lion was invested in water system
- Short-term, tax-exempt commercial by these commissions.
capital construction. Approximately paper$1.8 million was provided by current pape WATR UTLITYrevenues,
$1.4 million was provided
- Long-term revenue anticipation Water Utility operating revenues by borrowed funds and $3.4 million notes totaled $18,852,000 in fiscal 1987, up was contributed by developers and
- Long-term revenue bonds
$1,504,000 from the prior fiscal year.
others in aid of construction.
- Capitalized lease obligations Approximately 60 percent of this increase is due to an 8.3 percent ELECTRIC UTILITY
- Contributions by developers and increase in water rates effective Electric Utility revenue produced by others in aid of construction August 1, 1986. The balance of the the sale of electricity in fiscal 1987 FISAL197 HGHIGTSincrease was.due to increased water was $174,448,000, down $8,935,000 FISCAL 1987 HIGHLIGHTSsales.
from the $183,383,000 recorded in The outstanding financial perform-Operating expenses were $13,976,000 the prior fiscal year. Total kilowatt ance of the Water and Electric utili-in fiscal 1987, up only $116,000 from hours (kWh) billed were up 4.9 per ties during fiscal 1987 included the fiscal 1986. The cost of water was cent compared to the prior fiscal following significant events:
$7,856,000 in fiscal 1987, down year.
- Saved $10.8 million by advance
$308,000 from the prior year.
Despite the increase in kWh sales, refunding a portion of outstanding The unit cost of water fell by 6.1 per-lower revenue in fiscal 1987 was the higher cost electric revenue bonds cent as a result of increased produc-direct result of lower electric rates
- Issued $77.8 million electric tion from wells, the least cost source charged to Anaheim consumers.
revenue bonds at true interest cost of water for the Water Utility Electric rates were reduced twice of 6.7737 percent, an eight year low Pumped water accounted for 72 during the year, resulting in an overall for similarly rated municipal utility percent of total production which reduction of 9.8 percent. The average bonds was up 557.6 million gallons com-billing rate per kWh sold was down
- Electric rates reduced because of pared to fiscal 1986.
9.4 percent overall as a result of the
- Reduce costatepudecreeapowe lower power costsp 25
Public Utilities Department Financial Analysis On January 28, 1986, the City Coun cil adopted a Rate Stabilization Pol icy which included the creation of a Rate Stabilization Account (RSA).
The policy provides that refunds recovered from Southern California Edison Company for wholesale elec tric rate overcharges should be depos ited in the RSA. These refunds then are used to help stabilize base electric rates.
About $7.3 million and $7.2 million were transferred to the Revenue Fund from the RSA in fiscal 1987 and 1986, respectively. The transfers are made monthly and are based upon recorded kWh sales.
While no additional refunds were received in fiscal 1987, Department management is confident that signifi cant additional refunds will be received over the next two fiscal years. Approximately $34.6 million Soundplanning is the source of the Department financial strength. DarrellL. Ament, in refunds and interest have been assistant general manager-finance and administration; Dr Brian G. Thomas, revenue placed in the RSA since the account requirements manager; Diana M Leach, administrative services manager; and Michael A.
was established in 1986. The RSA Bell, financial services manager are key members of the Utility Department financial team.
balance at June 30, 1987 was
$20,130,000. The Department expects Th hs aunt savings resulting from economy Investments in construction of new fipcit toa stbiizeoerawll elri energy purchases on the "spot mar-electric system facilities totaled $8.9 ficient to stabilize overall electric ke Other operating expenses million for fiscal 1987. Of this rates increased $1,403,000 compared to the amount, $1.9 million was invested in 1990.prior fiscal year. The increase largely construction and nuclear fuel related Total operating revenues for fiscal was due to the staffing and operation to Anaheim's 3.16 percent ownership 1987 were $183,135,000, an increase of the load scheduling group which share of San Onofre Nuclear Gener of $2,916,000 over the prior year.
made the "spot market" purchases.
ating Units 2 and 3 (SONGS). The Electric Utility operating expenses Electric Utility operating income remaining $7.0 million was invested in electric subtransmission and distri were $147,014,000 in fiscal 1987, increased to $36,121,000 in fiscal 1987 bution facilities in Anaheim.
down $7,223,000 from the prior from the $25,982,000 in fiscal 1986.
fiscal year. Purchased power cost Net income was up by $17,097,000 to NOTEPROGRAM declined $11,444,000. The decrease
$30,670,000, including the recogni-As of June 30,1987, the Electric was due to lower power costs from tion of unbilled revenues of the Intermountain Power Project and
$8,502,000.adm iity otsang
$20,450,000 26
in short-term, tax-exempt commer-were sold at a true interest cost (TIC)
OUTSTANDING BONDS cial paper. The Department uses this of 6.7737 percent. This excellent rate, Bonds outstanding at the end of the commercial paper to finance the which was an eight year low for SimI-year totaled $14,840,000 in the Water purchase and processing of nuclear larly rated municipal power issues, is Utility and $244,445,000 in the Elec fuel for SONGS.
one indication of the favorable light tric Utility. Maturing revenue bond The Water Utility's 8 percent iwhichaheinvestmn comuity principal payments of $470,000 and
$2,900,000 two-year revenue antici-vewaeiv l
$3,850,000 were paid from the Water pation notes, maturing October 9, and Electric utilities, respectively.
1986, were advance refunded on Sep-The 1986, Second Issue, refunding tember 12, 1986 with a portion of the will further reduce the Department's SELFSUPPORTING proceeds from the issuance of $4.3 principal and interest payments by The Public Utilities Department pays million of new two-year notes at 5
$10.8 million over the life of the all costs of operation and debt service percent. The balance of the Water bonds.
and part of the cost of capital Utility note proceeds are being used Under the Department's aggressive improvements from current revenues.
to help pay for water system capital debtreduction program, $214.2 mil-The remainder of the cost of water replacements. The notes were issued lion in Water and Electric Refunding and electric system capital improve with the highest rating possible-from Bonds have been issued over the past ments is met through the sale of Moody's Investors Service and Stan-two years. As a result, total Water revenue bonds or revenue antici dard and Poor's Corporation, MIG 1 and Electric Utility debt payments pation notes and contributions by and SP-1 +, respectively.
have been reduced by $22.7 million developers and others in aid of The Department has a Revolving over the life of the bonds. Annual construction.
Credit Agreement to be used in the debt payments have been reduced an SUPPORT FOR CITY event that the Water Utility notes or average of $1.1 million.
GOVERNMENT Electric Utility commercial paper cannot be refinanced as they mature.
RATINGS In addition to meeting all costs of The existing agreement is with Bank The Department's financial strength operation from current revenues, of America NT&SA and Morgan and strong management also can be including payments to the City of Guaranty Trust Company. Bank of recognized in the continued high Anaheim for services rendered by the America backs $13.0 million of the ratings assigned to Water and Electric various municipal departments, the Electric Utility's $21.0 million credit Utility securities by Moody's Inves-Public Utilities Department transfer line. Morgan Guaranty Trust Com-tors Service and Standard & Poor's red $7,920,000 from retained earn pany backs the remaining $8.0 mil-Corporation. Aa ratings were main-ings to the General Fund of the City lion of the Electric Utility credit line tamed for both Water and Electric in support of general municipal city and the entire $4.3 million of the Utility bonds from Moody's. An government. The Water and Electric Water Utility credit line.-
Electric Utility bond rating of A +
utilities transferred $702,000 and and Water Utility bond rating of
$7,218,000, respectively.
DEBT MANAGEMENT AA-were confirmed by Standard and Poor's. The Department's com The Electric Utility issued mercial paper and notes maintain the
$77,780,000 Electric Revenue Bonds, highest available ratings from both Second Issue of 1986, to advance agencies.
refund portions of the Electric Reve nue Bonds, Issue of 1980. The bonds 27
Water Statistics WATER SUPPLY 1986-87 1985-86 1984-85 1983-84 1982-83 Water Production:
From Metropolitan Water District, milliongallons.............................
6,623.8 7,616.7 10,843.1 11,711.9 5,844.6 Percent of Total Production....................
28%
33%
48%
54%
29%
From Water System Wells, million gallons...........
16,887.6 15,337.1 11,714.7 9,866.8 14,015.7 Percent of Total Production....................
72%
67%
52%
46%
71%
Total Production, million gallons..............
23,511.4 22,953.8 22,557.8 21,578.7 19,860.3 Capacity-gallons per minute:
From Metropolitan Water District Connections........................
58,435 58,435 58,435 58,545 58,545 From Water System Wells, average...............
41,340 43,022 43,545 38,678 36,583 Filtration Plant Capacity......................
10,417 10,417 10,417 10,417 10,417 Total Supply Capacity......................
110,192 111,874 112,397 107,640 105,545 Peak Day Distribution, million gallons...............................
98.7 102.0 94.0 87.9 87.0 Average Daily Distribution, milliongallons...............................
63.7 62.9 61.4 60.6 54.6 WATER USE Average Number of Customers:
Residential..................................
46,677 46,111 45,429 44,696 44,293 Commercial/Industrial........................
5,290 5,249 5,170 5,095 4,996 M unicipal...................................
346 320 316 323 316 Other.......................................
1,105 1,038 981 879 992 Total-all classes...........................
53,418 52,718 51,896 50,993 50,597 Millions of Gallons Sold:
Residential..................................
12,625 12,381 12,145 11,478 10,380 Commercial/Industrial........................
8,394 8,108 7,883 7,488 6,486 Municipal...................................
629 633 702 567 501 Other.......................................
310 270 398 448 482 Total-all classes...........................
21,958 21,392 21,128 19,981 17,849 Anaheim Population Served......................
242,161 237,506 234,700 233,019 228,980 Population Served Outside City, estimated..........
5,1001 5,90011 6,500 6,500 6,500 Total Population Served......................
247,261 243,406 241,200 239,519 235,480 Average Daily Sales Per Capita, gallons.............
243 241 240 228 208 GROWTH OF SYSTEM Active W ells....................................
32 32 32 33 33 Reservoirs.....................................
10 10 10 10
.10 Water Storage, million gallons:
Treated......................
77 77 77 77 77 Untreated...................................
920 920 920 920 920 Water Mains, miles...............................
688 680 662 650 643 Fire Hydrants..................................
6,358 6,196 5,999 5,890 5,877
('Reduction in average number of people per dwelling unit for estimating purposes.
28
Water Sales Comparison Commercial All and Classes Residential Industrial Irrigation Municipal Other Combined Revenue from sale of water:
Year ended June 30 1987.............................
$11,969,000
$ 5,578,000
$ 158,000
$ 483,000
$ 399,000
$18,587,000 1986.............................
11,120,000 5,185,000 143,000 453,000 336,000 17,237,000 Increase..........................
849,000 393,000
$ 15,000 30,000
$ 63,000
$ 1,350,000 Percent increase...................
7.6%
7.6%
10.5%
6.6%
18.8%
7.8%
Units of 100 cubic feet sold:
Year ended June 30 1987.............................
16,877,890 11,221,432 289,822 840,893 125,132 29,355,169 1986.............................
16,551,558 10,839,965 256,905 846,146 103,621 28,598,195 Increase (decrease).................
326,332 381,467 32,917 (5,253) 21,511 756,974 Percent increase (decrease)...........
2.0%
3.5%
12.8%
(0.6%)
20.8%
2.6%
Average billing price per 100 cubic feet:
Year ended June 30 1987.............................
.7092
.4971
.5452
.5744
$ 3.1886
.6332 1986.............................
.6718
.4783
.5566
.5354 3.2426
.6027 Increase (decrease).................
.0374 $
.0188
($
.0114) $
.0390
($
.0540)
.0305 Percent increase (decrease).............
5.6%
3.9%
(2.0%)
7.3%
(1.7%)
5.1%
Average number of customers:
Year ended June 30 1987.............................
46,677 5,290 57 346 1,048 53,418 1986.............................
46,111 5,249 61 320 977 52,718 Increase (decrease).................
566 41 (4) 26 71 700 Percentincrease(decrease)...........
1.2%
0.8%
(6.6%)
8.1%
7.3%
1.3%
Average annual use per customer in units of 100 cubic feet:
Year ended June 30 1987.............................
362 2,121 5,085 1986.............................
359 2,065 4,212 Increase..........................
3 56 873 Percent increase...................
0.8%
2.7%
20.7%
Amounts represent revenue derived solely from billings.
29
Electric Statistics POWER SUPPLY 1986-87 1985-86 1984-85 1983-84 1982-83 Own Generation:
San Onofre Nuclear Generating Station, kWh..............
476,785,844 304,229,709 286,779,260 183,183,951 Firm Purchases:
Intermountain Power Project, kW h.......................
942,740,589 82,560,196 Hoover, kW h.......................
4,307,000 Power Contracts, kWh................
56,267,180 Southern California Edison Company, kW h...............................
265,134,768 1,391,023,534 1,521,205,882 1,628,917,965 1,663,794,959 Non-Firm Purchases, kWh..............
618,624,268 421,189,000 304,017,000 171,578,000 173,559,000 System Total, kWh...................
2,363,859,649 2,199,002,439 2,112,002,142 1,983,679,916 1,837,353,959 System Peak Demand, kW.................
471,360 465,600 483,360 421,920 409,920 ELECTRIC USE Average Number of Customers:
Residential.......................
81,043 79,967 79,827 78,439 76,787 Commercial......................
13,353 12,901 11,826 11,037 10,653 Industrial..........................
546 533 527 511 484 Other..............................
166 167 167 167 175 Total-all classes..................
95,108 93,568 92,347 90,154 88,099 Kilowatt-Hour Sales:
Residential........................
470,309,712 475,055,915 494,519,080 463,058,218 435,078,021 Commercial........................
490,775,601 480,552,216 471,732,433 448,055,902 417,017,307 Industrial..........................
1,066,954,519 1,048,774,980 991,719,855 932,219,674 851,518,601 Other..............................
170,740,072 90,803,292 31,698,296 28,065,923 40,898,651 Total-all classes..................
2,198,779,904 2,095,186,403 1,989,669,664 1,871,399,717 1,744,512,580 Average Annual kWh per Residential Customer.............
5,803 5,941 6,195 5,903 5,666 GROWTH OF SYSTEM Transmission, 69 kV, circuit miles.........
59 59 59 57 57 Distribution, 12 kV and lower, circuit miles:
Overhead...........................
890 890 888 886 886 Underground.......................
395 379 351 343 332 Total.............................
1,344 1,328 1,298 1,286 1,275 Transformer Capacity, kVa:
220 kV to 69 kV.....................
840,000 840,000 840,000 840,000 840,000 69 kV to I2 kV......................
552,000 552,000 552,000 552,000 552,000 12 kV to Customer...................
930,000 905,000 868,000 843,000 809,000 30
Electric Sales Comparison Public street and Irrigation Other All highway and electric classes Residential Commercial Industrial lighting pumping utilities combined Revenue from sale of electricity:
Year ended June 30 1987...............$37,145,000
$44,179,000
$ 84,978,000
$1,007,000
$2,031,000
$ 5,108,000
$ 174,448,000 1986...............
39,999,000 46,357,000 90,272,000 1,063,000 1,891,000 3,801,000 183,383,000 Increase (decrease).
($ 2,854,000) ($ 2,178,000) ($
5,294,000) ($
56,000) $ 140,000
$ 1,307,000 ($
8,935,000)
Percent increase (decrease)......
(7.1%)
(4.7)
(5.9)
(5.3) 7.4 34.4%
(4.9%)
Kilowatt-hours sold:
Year ended June 30 1987...............470,309,712 490,775,601 1,066,954,519 11,990,744 29,002,806 129,746,522 2,198,779,904 1986...............475,055,915 480,552,216 1,048,774,980 11,688,265 24,781,317 54,333,710 2,095,186,403 Increase (decrease).
(4,746,203) 10,223,385 18,179,539 302,479 4,221,489 75,412,812 103,593,501 Percent increase (decrease)......
(1.0) 2.1%
1.7%
2.6 17.0%
138.8%
4.9%
Average billing price per kilowatt-hour:
Year ended June 30 1987...............$
.0790
.0900 $
.0796
.0840
.0700
.0394
.0793 1986................
.0842
.0965
.0861
.0909
.0763
.0700
.0875 Increase (decrease).
($
.0052) ($
.0065) ($
.0065) ($
.0069) ($
.0063) ($
.0306) ($
.0082)
Percent increase (decrease)......
(6.2%)
(6.7%)
(7.5%)
(7.6)
(8.3%)
(43.7)
(9.4%)
Average number of customers:
Year ended June 30 1987................
81,043 13,353 546 102 63 1
95,108 1986................
79,967 12,901 533 102 64 1
93,568 Increase (decrease).1,076 452 13 0
(1) 0 1,540 Percent increase (decrease)......
1.3%
3.5%
2.4%
0.0%
(1.6%)
0.0%
1.6%
Average annual use per customer in kilowatt-hours:
Year ended June 30 1987................
5,803 36,754 1,954,129 1986................
5,941 37,249 1,967,683 Increase (decrease).(138)
(495)
(13,554)
Percent increase (decrease).(2.30)
(1.3%)
(0.7%)
Amounts represent revenue deived solely from billings.
31
Summary of Results for Operations and Net Revenues Available for Long-Term Bond Debt Service WATER UTILITY FUND 1986-87 1985-86 1984-85 1983-84 1982-83 Revenues:
Sale of water:
Residential...........................................
$ 11,969
$ 11,120
$ 10,845 8,837 7,562 Commercial/Industrial.................................
5,578 5,185 5,042 4,063 3,183 M unicipal............................................
483 453 492 363 292 Other................................................
557 479 549 496 461 Total revenue from sale of water..........................
18,587 17,237 16,928 13,759 11,498 Other (including interest income)...........................
1,127 1,172 979 680 374 Totalgrossrevenues....................................
19,714 18,409 17,907 14,439 11,872 Operating expenses (excluding depreciation and amortization):
Cost of water...........................................
7,856 8,164 8,272 6,524 4,584 Operations.............................................
2,124 2,384 2,004 1,798 2,892 M aintenance............................................
3,035 2,549 2,402 2,050 1,708 Total operating expenses................................
13,015 13,097 12,678 10,372 9,184 Effect of recognition of unbilled revenues.....................
1,802 Netrevenues..............................................
8,501 5,312 5,229 4,067 2,688 Revenue bond debt service requirements"'.....................
1,381 1,625 1,205 874 876 Times revenue bond debt service covered by net revenues..............................................
6.2 3.3 4.3 4.7 3.1 ELECTRIC UTILITY FUND Revenues:
Sale of electricity:
Residential...........................................
$ 37,145
$ 39,999
$ 39,440
$ 33,498
$ 30,791 Commercial..........................................
44,179 46,357 43,045 37,785 32,986 Industrial............................................
84,978 90,272 81,772 69,576 57,330 O ther................................................
8,146 6,755 2,525 2,112 2,865 Total revenue from sale of electricity......................
174,448 183,383 166,782 142,971 123,972 Provision for power cost adjustment........................
826 (10,855) 8,312 (4,420) 1,422 Provision for rate stabilization.............................
7,291 7,196 Other (including interest income)...........................
5,690 6,638 8,080 7,008 3,117 Total gross revenues...................................
188,255 186,362 183,174 145,559 128,511 Operating expenses (excluding depreciation and amortization):
Cost of purchased power..................................
108,300 119,744 122,495 102,602 104,249 Fuel used for generation..................................
5,227 2,913 2,706 1,894 Operations.............................................
17,127 15,724 16,794 13,491 8,733 Maintenance...........................................
7,806 7,586 8,208 4,714 3,127 Total operating expenses...............................
138,460 145,967 150,203 122,701 116,109 Effect of recognition of unbilled revenues....................
8,502 Net revenues..........................................
$ 58,297
$ 40,395
$ 32,971
$ 22,858
$ 12,402 Revenue bond debt service requirements'.....................$
19,852
$ 21,932
$ 14,229 1,048 1,050 Times revenue bond debt service covered by net revenues...................
2.9 1.8 2.3 21.8 11.8
"'Excludes debt service on a portion of the 1984 $6,650,000 Water Revenue Bond Issue which has been advance refunded. See Note 3 to Water Utility Financial Statements.
oExcludes interest paid from bond proceeds on 1980 $84 million; 1982 $70 million, Issue A and B; and 1983 $130.4 million, IssueA, B and C, Electric Revenue Bond issues prior to December 1, 1984. The 1980, 1982 and 1983 issues were for the city's share of San Onofre Nuclear Generating Station, Units 2 and 3, construction costs. The 1982 and a portion of the 1980 and 1983 bond issues have been advance refunded. See Note 4 to Electric Utility Financial Statements.
32
CITY OF ANAHEIM PUBLIC UTILITIES DEPARTMENT YEAR ENDED JUNE 30, 1987 AUDITED FINANCIAL STATEMENTS 33
City of Anaheim Water Utility Fund Balance Sheet June 30 1987 1986 Assets (in thousands)
Utility plant:
Land 1,554 1,554 Source of water supply 9,842 9,772 Pumping.....................................................................
4,573 1,706 Transmission and distribution 96,369 87,245 General..
2,429 2,432 114,767
.102,709 Less -
accumulated depreciation and amortization....................................
(20,144)
(18,620) 94,623 84,089 Construction work in progress.....................................................
3,203 9,067 97,826 93,156 Restricted cash and investments......................................................
6,756 5,620 Current assets:
Cash and investments 2,481 1,269 Customer and other accounts receivable, net...........................................
3,202 1,385 Accrued interest receivable.........................................................
170 179 Materials and supplies, at average cost.................................................
230 205 Purchased water in storage.........................................................
570 411 6,653 3,449 Other assets:
Unamortized bond refunding costs....................................................
1,159 1,237 Unamortized debt issuance costs......................................................
155 166 Total assets......................................................................
$112,549
$ 103,628 34
June30 1987 1986 Equity, liabilities and other credits (in thousands)
Equity:
Beginning fund balance contributed by the City.........................................
$ 19,280
$ 19,280 Retained earnings..................................................................
14,398 8,883 Total equity................................................................
33,678 28,163 Long-term debt, less current portion.....................................................
18,386 17,366 Capitalized lease obligation, less current portion...........................................
2,734 2,783 Total capitalization...............................................................
54,798 48,312 Current liabilities (payable from restricted assets):
Current portion of long-term debt.....................................................
202 376 A ccrued interest....................................................................
449 502 C ustom er deposits..................................................................
841 966 1,492 1,844 Current liabilities (payable from current assets):
Current portion of long-term debt.....................................................
261 215 Current portion of capitalized lease obligation...........................................
49 45 Accounts payable and accrued expenses................................................
2,733 2,237 C ustom er deposits..................................................................
241 463 3,284 2,960 Total current liabilities.............................................................
4,776 4,804 Other liabilities and deferred credits:
Contributions in aid of construction...................................................
52,975 50,512 Com m itm ents and contingencies......................................................
Total equity, liabilities and other credits..............................................
$112,549
$103,628 See accompanying Notes to Financial Statements 35
City of Anaheim Water Utility Fund Statement of Income Year Ended June 30 1987 1986 Operating revenues:
(in thousands)
Sale of w ater.......................................................................
$ 18,587
$ 17,237 O ther operating revenues............................................................
265 111 Total operating revenues...........................................................
18,852 17,348 Operating expenses:
Cost of water...............
7,856 8,164 O ther operations...................................................................
2,124 2,384 Maintenance..........................................
3,035 2,549 Depreciation and amortization.......................................................
961 763 Total operating expenses...........................................................
13,976 13,860 O perating incom e................................................................
4,876 3,488 Other income (expense):
Interest and other incom e............................................................
862 1,061 Interest expense....................................................................
(1,323)
(944)
(461) 117 Income before recognition of unbilled revenues.......................................
4,415 3,605 Effect of recognition of unbilled revenues...............................................
1,802 N et incom e..........................................................................
6,217 3,605 STATEMENT OF CHANGES IN RETAINED EARNINGS Balance at beginning of year..........................................................
8,883 5,967 Netincom efortheyear............................................................
6,217 3,605 Transfer to the General Fund of the City..............................................
(702)
(689)
Balance at end of year...............................................................
$ 14,398 8,883 See accompanying Notes to Financial Statements 36
City of Anaheim Water Utility Fund Statement of Changes in Financial Position June30 1987 1986 Financial resources were provided by:
(in thousands)
Operations Net income..............................................................$
6,217 3,605 Charges to income not involving working capital Depreciation and amortization..................................................
961 763 Amortization of debt issuance costs and bond discount................................176 63 Working capital provided by operations...........................................7,354 4,431 Increase in current liabilities (payable from restricted assets)................................304 Contributions in aid of construction.................................................
3,451 4,391 Increase in long-term debt........................................................4,300 7,160 Decrease in restricted cash and investments.
4,460 15,105 20,746 Financial resources were used for:
Purchase and contribution of utility plant, net.........................................
6,619 12,779 Decrease in long-term debt and capitalized lease obligation.................................516 636 Transfer to the General Fund of the City...............................................
702 689 Increase in restricted cash and investments.............................................1,136 Increase in debt related costs.
1,882 Debt refinanced during the current period.............................................2,900 5,370 Decrease in current liabilities (payable from restricted assets)................................352 12,225 21,356 Increase (decrease) in working capital...............................................
2,880
($
610)
Increase (decrease) in working capital:
Cash and investments 1,212 149)
Customer and other accounts receivable..............................................
1,817 37 Accrued interest receivable..........................................................
(9)
(87)
Materials and supplies.............................................................
(14)
Purchased water in storage.........................................................
159 68 3,204 (145)
Current portion of long-term debt....................................................
(46)
(35)
Current portion of capitalized lease obligation...........................................
(4)
(4)
Accounts payable and accrued expenses...............................................
(496)
(191)
Customer deposits...............................................................
222 (235)
(324)
(465)
.Increase (decrease) in working capital.................................................
2,880
($
610)
See accompanying Notes to Financial Statements 37
City of Anaheim Water Utility Fund Notes to Financial Statements NOTE 1-Summary of Significant Cash and investments Transfers to the General Fund of Accounting Policies The City pools idle cash from all funds the City Basis of accounting for the purpose of increasing income Article XII of the City Charter Thethrough investment activities. Investments provides that transfers to the General TetrUtility) ofteCtfuAndhi (the ater are carried at cost, which approximates Fund of the City shall not exceed 407 of Utility) of the City of Anaheim (the City) market value. Interest income on the gross revenue of the prior year. Such was established June 30, 1971, at which investments is allocated to the various transfers are not in lieu of taxes and are time the portion of the City's General funds of the City on the basis of average recorded as distributions of retained Fund equity relating to water system daily cash and investment balances.
earnings.
operations was transferred to Water Utility equity. The financial statements of Revenue recognition Reclassifications the Water Utility are presented in To provide a better matching of costs Certain reclassifications have been conformity with generally accepted and revenues, effective with fiscal year made to the 1986 financial statements to accounting principles and accounting ended June 30, 1987, the Water Utility conform to the 1987 presentation.
principles and methods prescribed by the changed its accounting policy for NOTE 2-Operating Expenses California Public Utilities Commission recognizing revenue to a method which (CPUC). The Water Utility is not subject provides for the accrual of estimated Oeratig expen ed th the to the regulations of the CPUC.
unbilled revenues for water and $12,015,000 for the years ended June Utility plant and depreciation billed at the end of a fiscal period; The cost of additions to utility plantand 1986,0spe eloaic and replacement of retired units pa when billed to customers. Residential and is, and $4,0ealt and rplacmentof rtire unis issmaller commercial accounts are billed t
h ae tlt capitalized. Utility plant is recorded at bimonthly and all others are billed The shared expenses are allocated to cost, or in the case of contributed plant, monthly each Utility based upon estimates of the at fair market value at the date of the contribution, except that assets acquired The Water Utility's Rates, Rules and ben ehtler o
prior to July 1, 1977 are recorded at appraised historical cost. Cost includes adjustment formula by which billings to labor; materials; allocated indirect customers are subject to adjustment, up charges such as engineering, supervision, or down, to reflect variations in the cost construction and transportation of water production to the Water Utility equipment, retirement plan contributions Debt issuance costs and other fringe benefits; and certain In accordance with industry practices, administrative and general expenses. The debt issuance costs are deferred and cost of relatively minor replacements is amortized over the lives of the related included in maintenance expense. The net bond issues on a basis which book value of assets retired or disposed approximates the effective interest of, net of proceeds, is recorded in method.
accumulated depreciation.
Pension plan Depreciation of utility plant is provided All full-time City employees are by the straight-line method based on the members of the State of California Public following estimated service lives of the Employees' Retirement System (PERS).
properties:
The City's policy is to fund all pension Transmission and costs accrued; such costs to be funded are distribution plant......
20 to 75 years determined annually as of July 1 by the Other plant and PERS's actuary equipment............
5 to 50 years Vacation and sick pay Depreciation on contributed assets is Vacation and sick pay for all City charged directly to Contributions in aid employees is paid by the General Benefits of construction.
and Insurance Fund of the City The General Benefits and Insurance Fund is reimbursed through payroll charges to the Water Utility based on estimates of benefits to be earned during the year.
Vested vacation and sick pay benefits are accrued in the General Benefits and Insurance Fund and amounted to
$239,000 and $248,000 for the Water Utility at June 30, 1987 and 1986, respectively.
38
NOTE 3 -
Long-Term Debt The Water Utility is indebted as follows:
June 30 1987 1986 Water Revenue Series 1971 Bonds, TIC 4.9861%, dated July 1, 1971, sold July 1, 1971 in the amount of $2,000,000 at rates ranging from 4.4% to 6.0%, maturing serially to a final principal installment of $195,000 paid July 1, 1986...............
195,000 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) $3,430,000 at rates ranging from 7.6% to 8.0% mature serially to July 1, 1999 in annual principal installments ranging from $160,000 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 $12,775,000 to maturity.........................
6,615,000 6,765,000 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 $100,000 to
$180,000; total debt service of $1,592,000 to maturity..................................
1,095,000 1,190,000 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) $2,805,000 at rates ranging from 5.0% to 6.9% mature serially to April 1, 2001 in annual principal installments ranging from $70,000 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 $13,687,000 to maturity....................................................................
7,130,000 7,160,000 Total revenue bond debt........................................................
14,840,000 15,310,000 Revenue Anticipation Notes, 8.0%, issued October 9, 1984 in the amount of $2,900,000, in the form of tax-exempt notes maturing October 9, 1986; the notes were advance refunded September 12, 1986.............................................................................
2,900,000 Revenue Anticipation Notes, 5.0%, issued September 12, 1986 in the amount of $4,300,000, in the form of tax-exempt notes maturing September 12, 1988; the notes are backed by a $4.3 million revolving credit agreement, which can be used in the event that the notes cannot be refinanced as they mature; total debt service of $4,623,000 to maturity.................................
4,300,000 Note Payable to General Fund of the City, 7%, issued July 1, 1980 in the amount of $1,021,000, monthly principal and interest payments of $12,000 to June 1, 1990; total debt service of
$432,000 to maturity................................................................
389,000 502,000 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 $7,000 to $29,000 through October 31, 2003; total debt service of $593,000 to maturity...............................
303,000 315,000 Total other long-term debt......................................................
4,992,000 3,717,000 Total long-term debt 19,832,000 19,027,000 Less: current portion..............................................................
463,000 591,000 bond discounts 3..............................................................9 1,070,000
$18,386,000
$17,366,000 39
City of Anaheim Water Utility Fund Notes to Financial Statements (cont.)
NOTE 3 -
Long-Term Debt (continued)
Annual debt service requirements at June 30, 1987 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 1988 330,000
$ 1,049,000
$ 1,379,000 133,000
$265,000
$ 398,000
$ 1,777,000 1989 355,000 1,024,000 1,379,000 4,442,000 148,000 4,590,000 5,969,000 1990 380,000 997,000 1,377,000 153,000 30,000 183,000 1,560,000 1991 410,000 967,000 1,377,000 14,000 23,000 37,000 1,414,000 1992 440,000 934,000 1,374,000 16,000 22,000 38,000 1,412,000 Thereafter 12,925,000 8,243,000 21,168,000 234,000 168,000 402,000 21,570,000
$14,840,000
$13,214,000
$28,054,000
$4,992,000
$656,000
$5,648,000
$33,702,000 Current interest costs of $539,000 and $879,000 have been included in Construction work in progress for fiscal years ended June 30, 1987 and 1986, 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, 1987 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. In accordance with industry practices, this amount is being deferred and amortized over the life of the 1986 Bonds using the effective interest method. At June 30, 1987, 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:
June30 1987 1986 Held by Fiscal Agent:
Bond Reserve Fund..................................................................
$1,499,000
$1,582,000 Bond Service Fund..................................................................
428,000 618,000 Held by City Treasurer:
Bond Service Account 175,000 203,000 Renewal and Replacement Account..................................................
946,000 932,000 Restricted bond proceeds 3,708,000 2,285,000
$6,756,000
$5,620,000 40
NOTE 4 -
Capitalized Lease Obligation NOTE 6-Self-Insurance Program NOTE 8-Commitments and The City has a long-term non-The Water Utility is part of the City's Contingencies cancelable lease with the Municipal Water self-insured workers' compensation and Litigation District of Orange County to finance the general liability program. The liability for A number of claims and suits are acquisition of a 7.2% share in the such claims is transferred to the City in pending against the City for alleged capacity of the Allen-McColloch consideration of self-insurance premiums damages to persons and property and for Pipeline. The lease provides for paid by the Water Utility. Effective July 1, other alleged liabilities arising out of semiannual payments of $147,000 1986, the City became self-insured. Costs matters usually incident to the operation commencing August 1, 1981 and relating to the litigation of claims are of a utility such as the water system of continuing until February 1, 2008. Future charged to expense as incurred, the City. In the opinion of management, minimum lease payments under this lease NOTE 7-Cash and Investments the liability under these claims and suits are as follows:
At June 30, 1987, all of the City's would not materially affect the financial Fiscal Year pooled cash and investments were position of the Water Utility as of June 1988...................
$ 294,000 insured, registered or collateralized with 30, 1987.
1989.....................
294,000 securities held by the City or its agent in Capital expenditures 1990.....................
294,000 the City's name. A summary of the Water The Water Utility's budget for the 1991.....................
294,000 Utility's participation in the City's pooled fiscal year 1987-88 provides for capital 1992.....................
294,000 cash and investments is allocated based expenditures of approximately $6,182,000 Thereafter................
4,704,000 on the overall percentage participation as of which $2,558,000 will be funded by 6,174,000 follows:
water revenue bond proceeds and Less interest at 8.8%........3,391,000 U.S. government securities... $3,231,000 contributions in aid of construction.
Present value of Negotiable certificates Substantial commitments have been future minimum of deposit..............2,507,000 made in connection therewith.
lease payments............
$2,783,000 Repurchase agreements.
1,031,000 Report of Independent Accountants Cash and time deposits.......
110,000 Current portion...........
49,000 Local agency investment To the Honorable City Council Long-term portion.........
2,734,000 fund (state pool)..........431,000 City of Anaheim, California
$2,783,000 Total cash and investments We have examined the balance sheet of The asset related to this lease is controlled by the Water Utility Fund of the City of recordedCity Treasurer...........7,310,000 Anaheim, California as of June 30, 1987 and distribution, an t Tn smission Amounts invested by and 1986 and the related statements of amnd e
istributio
,0.
nd atJuel0,198 fiscal agents............
1,927,000 income, changes in retained earnings, and amounted to $3,059,000. The related accumulated amortization at June 30, Total cash and investments
$9,237,000 changes in financial position for the years then ended. Our examinations were made 1987 and 1986 was $224,000 and Fiscal agents on behalf of the City hold in accordance with generally accepted
$183,000, respectively. Amortization and invest funds from long-term debt auditing standards and, accordingly, expense for each fiscal year amounted to issuances. Fiscal agents are mandated included such tests of the accounting
$41,000.
by bond indenture as to the types of records and such other auditing NOTE 5 -
Pension Plan investments in which proceeds can be procedures as we considered necessary in The City has a contributory pension
- invested, the circumstances.
plan for its full-time employees under the During the year the City invested in In our opinion, the aforementioned State of California Public Employees' commercial paper, bankers acceptances financial statements present fairly the Retirement System. Information is not and treasury notes with no investments financial position of the Water Utility available separately for the Water Utility held in these areas at June 30, 1987.
Fund of the City of Anaheim, California as to the cost of benefits funded, the at June 30, 1987 and 1986 and the results actuarially computed present value of of its operations and the changes in its vested and non-vested accumulated plan financial position for the years then benefits, the related assumed rates of ended, in conformity with generally return used and the actuarially computed accepted accounting principles applied on value of vested benefits over the related a consistent basis except for the change, pension fund assets. The earnings yield with which we concur, in the method of (including capital gains) for the year accounting for unbilled revenues as ended June 30, 1987 was 8.5%, plus an described in note 1 to the financial extra dividend of 0.5% which was statements.
declared on all accounts.
r a
October 9, 1987 Los Angeles, California 41
City of Anaheim Electric Utility Fund Balance Sheet June30 1987 1986 Assets (in thousands)
Utility plant:
Production...........................................................................
$167,906
$164,696 Transm ission..........................................................................
12,227 12,047 D istribution..........................................................................
81,563 75,880 General..............................................................................
10,376 10,315 272,072 262,938 Less-accumulated depreciation.........................................................
(50,158)
(41,671) 221,914 221,267 Construction work in progress...........................................................
8,042 6,694 Nuclear fuel, at am ortized cost...........................................................
12,916 14,911 242,872 242,872 Restricted assets:
Cash and investm ents...................................................................
49,798 49,267 Other...............................................................................
380 1,599 50,178 50,866 Current assets:
Cash and investm ents...................................................................
42,845 43,568 Customer and other accounts receivable, net................................................
22,482 15,221 Prepaid purchased power...............................................................
8,016 Accrued interest receivable..............................................................
1,774 848 M aterials and supplies, at average cost.....................................................
2,065 2,256 77,182 61,893 Other assets:
Unamortized bond refunding costs.......................................................
29,932 22,360 U nam ortized project costs...............................................................
3,142 2,311 Unamortized debt issuance costs.........................................................
2,020 2,470 35,094 27,141 Total assets.........................................................................
$405,326
$382,772 42
June30 1987 1986 Equity, liabilities and other credits (in thousands)
Equity:
Beginning fund balance contributed by the City.............................................
$ 14,629
$ 14,629 Retained earnings......................................................................
72,848 49,396 Total equity.........................................................................
87,477 64,025 Long-term debt, less current portion........................................................
228,920 225,417 Total capitalization...................................................................
316,397 289,442 Current liabilities (payable from restricted assets):
Current portion of long-term debt........................................................
4,620 2,933 A ccrued interest.......................................................................
3,997 4,970 A ccounts payable......................................................................
536 368 Tax-exempt commercial paper...........................................................
20,450 20,450 29,603 28,721 Current liabilities (payable from current assets):
Current portion of long-term debt........................................................
1,801 1,210 Accounts payable and accrued expenses....................................................
6,552 9,267 Custom er deposits.....................................................................
785 623 Power cost adjustment balancing account..................................................
12,591 12,470 Rate stabilization account...............................................................
20,130 25,281 41,859 48,851 Total current liabilities................................................................
71,462 77,572 Other liabilities and deferred credits:
Contributions in aid of construction......................................................
15,528 14,553 Decom m issioning reserve...............................................................
1,939 1,205 Com m itm ents and contingencies.........................................................
Total equity, liabilities and other credits..................................................
$405,326
$382,772 See accompanying Notes to Financial Statements 43
City of Anaheim Electric Utility Fund Statement of Income June30 1987 1986 Operating revenues:
(in thousands)
Sale of electricity
$174,448
$183,383 Provision for power cost adjustment.....................................................
826 (10,855)
Provision for rate stabilization 7,291 7,196 Other operating revenues.............................................................
570 495 Total operating revenues 183,135 180,219 Operating expenses:
Cost of purchased power................................................................
108,300 119,744 Fuel used for generation.................................................................
5,227 2,913 O ther operations......................................................................
17,127 15,724 M aintenance..........................................................................
7,806 7,586 D epreciation..........................................................................
8,525 8,172 A m ortization of project costs............................................................
29 98 Total operating expenses..............................................................
147,014 154,237 O perating incom e....................................................................
36,121 25,982 Other income (expense):
Interestincom e........................................................................
5,120 6,143 Interest expense.......................................................................
(19,073)
(18,552)
(13,953)
(12,409)
Income before recognition of unbilled revenues.........................................
22,168 13,573 Effect of recognition of unbilled revenues 8,502 Net income
$ 30,670
$ 13,573 STATEMENT OF CHANGES IN RETAINED EARNINGS Balance at beginning of year
$ 49,396
$ 43,029 Net income for the year 30,670 13,573 Transfer to the General Fund of the City...............................................
(7,218)
(7,206)
Balance at end of year
$ 72,848
$ 49,396 See accompanying Notes to Financial Statements 44
City of Anaheim Electric Utility Fund Statement of Changes in Financial Position June30 1987 1986 Financial resources were provided by:
(in thousands)
Operations N et incom e.........................................................................
$ 30,670
$ 13,573 Charges to income not involving working capital D epreciation......................................................................
8,525 8,172 A m ortization of project costs........................................................
29 98 A m ortization of debt costs..........................................................
3,334 1,176 Increase in decommissioning reserve..................................................
734 474 Working capital provided by operations..............................................
43,292 23,493 Increase in current liabilities (payable from restricted assets)..................................
882 D ecrease in restricted assets..............................................................
688 3,431 Contributions in aid of construction......................................................
1,313 3,959 Increase in long-term debt...............................................................
77,780 129,275 123,955 160,158 Financial resources were used for:
Purchase and contribution of utility plant, net..............................................
8,864 14,538 Decrease in long-term debt..............................................................
6,438 4,143 Transfer to the General Fund of the City...................................................
7,218 7,206 Increase in unam ortized project costs......................................................
860 994 Decrease in current liabilities (payable from restricted assets)..................................
802 Increase in debt related costs.............................................................
5,519 24,609 Debt refinanced during the period........................................................
72,775 104,950 101,674 157,242 Increase(decrease)inworkingcapital.......................................................
$ 22,281 2,916 Increase (decrease) in working capital:
Cash and investments...............................................................
(723)
$ 24,904 Customer and other accounts receivable.................................................
7,261 5,480 Prepaid purchased power 8,016 Accrued interest receivable............................................................
926 253 Materials and supplies...............................................................
(191) 76 15,289 30,713 Current portion of long-term debt......................................................
(591)
(52)
Accounts payable and accrued expenses.................................................
2,715 (107)
Customer deposits (162) 19 Power cost adjustment balancing account.................................................
(121)
(11,100)
Rate stabilization account 5,151 (16,557) 6,992 (27,797)
Increase (decrease) in working capital 22,281 2,916 See accompanying Notes to Financial Statements 45
City of Anaheim Electric Utility Fund Notes to Financial Statements NOTE 1 -
Summary of Significant Utility plant and depreciation Cash and investments Accounting Policies The cost of additions to utility plant The City pools idle cash from all funds Basis of accounting and of replacement of retired units is for the purpose of increasing income Elcrc capitalized. Utility plant is recorded at through investment activities, Investments The Electric Utility Fund (the Electri cost, or in the case of contributed plant, are carried at cost, which approximates Utility) of the City of Anaheim (the City) at fair market value at the date of the market value. Interest income on was established June 30, 1971, at which contribution, except that the assets investments is allocated to the various time the portion of the City's General acquired prior to July 1, 1977 are recorded funds of the City on the basis of average Fund equity relating to electric system at appraised historical cost Cost includes daily cash and investment balances.
operations was transferred to Electric labor; materials; allocated indirect charges Re.enue recognition Utility equity. The financial statements of such as engineering, supervision, the Electric Utility are presented in construction and transportation conformity with generally accepted ions and revenues, effective with the fiscal year accounting principles and accounting and other fringe benefits; and certain ened Jun 30c98the lic Ul principles and methods prescribed by the administrative and general expenses. The cang its a ounting oi Federal Energy Regulatory Commission cost of relatively minor replacements is rogizin r t
a met d
(FERC). The Electric Utility is not included in maintenance expense. The proid es for ea rua of ei td subject to the regulations of the FERC.
net book value of assets retired or billed re isenues fr e er odb disposlied. tiityo proced is recorded bildaateedo isa eid accumuaed efproeis code previously, revenues were recognized in cwhen billed to customers. Residential and Depreciation of utility plant is provided smaller commercial accounts are billed by the straight-line method based on the bimonthly and all others are billed following estimated service lives of the monthly.
properties:
The Electric Utility's Rates, Rules and Production.............
30 years Regulations provide for a Power Cost Transmission and Adjustment (PCA) billing formula which distribution plant...
20 to 75 years is included in customer billings to reflect Other plant and variations in the cost of power to the equipment............
5 to 50 years Electric Utility. The Electric Utility Depreciation on contributed assets is adjusts revenues from the sale of charged directly to Contributions in aid.
electricity for overcollections or of construction.
undercollections of revenues resulting from differences between the Electric Utility's actual cost of power and the amount billed to customersthrough the billing formula. These over or under collections are recorded in the PCA balancing account until they are refunded to, or recovered from, utility customers.
On January 28, 1986, a wholesale rate refund policy (Policy) mahich included establishing a Rate Stabilization Account (RSA) was adopted as part of the Electric Utility's Rates, Rules and Regulations.
The Policy provides for establishment of a rate, in cents per kilowatt-hour of sales, by which funds are transferred from the RSA to the Electric Utility Revenue Fund. This transfer is made on a monthly basis.
46
NOTE 1 -
Summary of Significant Transfers to the General Fund NOTE 3-Unamortized Project Costs Accounting Policies (continued) of the City The City plans to participate in various Nuclear fuel Article XII of the City Charter power generation projects with other The Electric Utility amortizes the cost provides that transfers to the General agencies. Unamortized project costs of nuclear fuel to expense using the "as Fund of the City shall not exceed 4% of includes $3,142,000 which represents burned" method. In accordance with the the gross revenue of the prior year. Such advance payments to participating Nuclear Waste Disposal Act of 1982, the transfers are not in lieu of taxes and are agencies for preliminary engineering and Electric Utility is charged a fee for the recorded as distributions of retained environmental impact studies for the disposal of nuclear fuel at the rate of one
- earnings, related projects.
mill per kWh on the Electric Utility's Reclassifications In addition, the City is participating in share of electricity generated by the San Certain reclassifications have been other projects which are being financed Onofre Nuclear Generating Station, Units made to the 1986 financial statements by outside third parties. If the projects are 2 and 3 (SONGS). The Electric Utility to conform to the 1987 presentation.
ultimately abandoned, the Electric Utility pays the fee quarterly to the Southern will be required to reimburse the third California Edison Company (Edison) parties for the Electric Utility's share of which is acting as the agent for SONGS Operating expenses shared with the project costs, which at June 30, 1987 participants. Federal regulations also Water Utility amounted to $13,405,000 amounted to approximately $2.5 million.
require the Electric Utility to provide for and $12,015,000 for the years ended June the future costs of decommissioning 30, 1987 and 1986, respectively, of which SONGS. Decommissioning costs are
$10,735,000 and $9,612,000 were charged to other operating expenses and allocated to the Electric Utility.
are provided for over the remaining life of The shared expenses are allocated to the plant.
each Utility based upon estimates of the Debt issuance costs benefits each Utility derives from those In accordance with industry practices, common expenses.
debt issuance costs are deferred and amortized over the lives of the related bond issues on a basis which approximates the effective interest method.
Pension plan 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's actuary.
Vacation and sick pay Vacation and sick pay for all City employees is paid by the General Benefits and Insurance Fund of the City. The General Benefits and Insurance Fund is reimbursed through payroll charges to the Electric Utility based on estimates of benefits to be earned during the year.
Vested vacation and sick pay benefits are accrued in the General Benefits and Insurance Fund and amounted to
$723,000 and $672,000 for the Electric Utility at June 30, 1987 and 1986, respectively.
47
City of Anaheim Electric Utility Fund Notes to Financial Statements (cont.)
NOTE 4 -
Long-Term Debt The Electric Utility is indebted as follows:
June 30 1987 1986 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 $500,000 to $675,000; total debt service of
$3,927,000 to m aturity............................................................
3,475,000
$ 3,950,000 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 $125,000 to $400,000; total debt service of
$8,475,000 to m aturity...........................................................
4,875,000 5,000,000 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 serially through October 1, 1990 in annual principal installments ranging from $1,600,000 to $2,000,000; total debt service of $8,348,000 to maturity...............................................
7,150,000 81,375,000 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 $1,004,000 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 $4,015,000 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 $1,950,000 to
$2,850,000; total debt service of $24,652,000 to maturity..............................
18,700,000 20,500,000 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) $60,725,000 at rates of 5.0% to 6.9% mature serially through October 1, 2001 in annual principal installments ranging from $985,000 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 $244,035,000 to maturity................
129,275,000 129,275,000 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) $47,630,000 at rates of 3.8%
to 6.5% mature serially through October 1, 2002 in annual principal installments ranging from $930,000 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
$145,412,000 to m aturity.........................................................
77,780,000 Total revenue bond debt............................................................
$244,455,000
$243,300,000 48
NOTE 4 - Long-Term Debt (continued)
June 30 1987 1986 Note Payable to the General Fund of the City, 7%, issued July 1, 1980 in the amount of
$2,382,000, monthly principal and interest payments of $28,000 to June 1, 1990; total debt service of $1,008,000 to maturity...
907,000 1,170,000 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 $27,000 to
$108,000 through October 31, 2003; total debt service of $2,372,000 to maturity............
1,213,000 1,260,000 Total other long-term debt.....................................................
2,120,000 2,430,000 Total long-term debt...........................................................
246,575,000 245,730,000 Less: current portion...............................................................
6,421,000 4,143,000 bond discounts...............................................................
11,234,000 16,170,000
$228,920,000
$225,417,000 Annual debt service requirements at June 30, 1987 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 1988 6,090,000
$ 15,304,000
$ 21,394,000
$ 331,000 161,000
$ 492,000
$ 21,886,000 1989 6,455,000 14,915,000 21,370,000 354,000 136,000 490,000 21,860,000 1990 6,900,000 14,487,000 21,387,000 379,000 110,000 489,000 21,876,000 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 63,000 88,000 151,000 20,894,000 Thereafter 210,450,000 123,143,000 333,593,000 934,000 672,000 1,606,000 335,199,000
$244,455,000
$195,413,000
$439,868,000
$2,120,000
$1,260,000
$3,380,000
$443,248,000 49
City of Anaheim Electric Utility Fund Notes to Financial Statements NOTE 4 - Long-Term Debt (continued)
Current interest costs, net of current interest income, of $1,167,000 and $586,000 have been included in Construction work in progress for fiscal years ended June 30, 1987 and 1986, 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.
The bond issues outstanding at June 30, 1987 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, 1987, outstanding principal of the refunded 1982 Bonds totaled $63,500,000. 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 $129,275,000of 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. In accordance with industry practice, this amount is being deferred and amortized over the life of the 1986 Bonds using the effective interest method. At June 30, 1987, 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. In accordance with industry practice, 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, 1987, 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 1987 1986 Held by Fiscal Agent:
Bond Reserve Fund..
$22,346,000
$21,661,000 Bond Service Fund.............................................................
588,000 565,000 Held by City Treasurer:
Bond Service Account.........................................................
7,928,000 7,248,000 Renewal and Replacement Account 6,741,000 6,721,000 Decommissioning and fuel reserves................................................
6,179,000 3,147,000 Restricted bond proceeds 6,016,000 9,925,000 Other restricted assets............................................................
380,000 1,599,000
$50,178,000
$50,866,000 50
NOTE 5-Short-Term Debt NOTE 6-Jointly-Owned Utility Project NOTE 8-Self-Insurance Program The Electric Utility has outstanding The Electric Utility owns a 3.160 The Electric Utility is part of the City's revenue anticipation notes in the form of interest as a tenant in common in self-insured workers' compensation and short-term tax-exempt commercial paper SONGS. The other participants in Units 2 general liability program. The liability for for the purpose of financing nuclear fuel and 3 are Edison, 75.050; San Diego such claims is transferred to the City in purchases related to the ownership Gas & Electric Company, 200; and the consideration of self-insurance premiums interest in SONGS. The balance City of Riverside, 1.790.
Units 2 and 3 paid by the Electric Utility. Effective July outstanding at June 30, 1987 and 1986 became operational on October 9, 1983 1, 1986, theCity became self-insured.
totaled $20,450,000. The interest rates on and April 1, 1984, respectively The Costs relating to the litigation of claims this debt at June 30, 1987 ranged between Electric Utility's cumulative share of are charged to expense as incurred.
3.95% and 5.25% with maturities construction costs, which amounted to NOTE 9-Refunds ranging from 7 to 80 days. The Electric
$167,906,000 at June 30, 1987, was Utility has obtained a $21 million included in Utility plant at June 30, 1987.
Uing fisca yearn1986rth Elic revolving credit agreement, which can The Electric Utility recorded depreciation tiliy received refunds oEs be used in the event that the commercial related to SONGS of $5,722,000 during taln
$22,408,000.
t rund have paper cannot be refinanced as it matures, fiscal year 1987. The Electric Utility hasownsiaR3.
made provisions for disposal costs of and 1986, total principal and interest spent nuclear fuel and for future amounted to $20,130,000 and decommissioning costs (see Note 1) of
$25,281,000, respectively The City intends
$432,000 and $734,000, respectively to refund these amounts to Electric These costs along with the Electric Utility customers in the form of Utility's share of SONGS operating and reductions to future rate increases maintenance costs have been included in through the Rate Stabilization Policy (see Operating expenses for fiscal year 1987.
Note 1).
NOTE 7-Pension Plan These refunds have been reflected in the Electric Utility's Financial The City has a contributory pension Statements.
plan for full-time employees under the NT 0-Cs n
netet State of California Public Employees' Retirement System. Information is not At June 30, 1987, all of the City's available separately for the Electric pooled cash and investments were Utility as to the cost of benefits funded, insured, registered or collateralized with the actuarially computed present value of securities held by the City or its agent in vested and non-vested accumulated plan the City's name. A summary of the benefits, the related assumed rates of Electric Utility's participation in the return used and the actuarially computed City's pooled cash and investments is value of vested benefits over the related allocated based on the overall percentage pension fund assets. The earnings yield participation as follows:
(including capital gains) for the year U.S. government securities.. $30,811,000 ended June 30, 1987 was 8.5%, plus an Negotiable certificates extra dividend of 0.5% which was of deposit.............23,910,000 declared on all accounts.
Repurchase agreements....
9,829,000 Cash and time deposits.....
1,046,000 Local agency investment fund (state pool).........
4,113,000 Total cash and investments controlled by City Treasurer..........
69,709,000 Amounts invested by fiscal agents...........
t 22,934,000 Total cash and investments.. $92,643,000 Fiscal agents on behalf of the City hold and invest funds from long-term debt issuances. Fiscal agents are mandated by bond indenture as to the types of investments in which proceeds can be invested.
During the year the City invested in commercial paper, bankers acceptances and treasury notes with no investments held in these areas at June 30, 1987.
51
City of Anaheim Electric Utility Fund Notes to Financial Statements NOTE 11 -
Commitments and Fiscal Year Rate challenges and other actions Contingencies 1988................$52,563,000 The City has filed several complaints Take or pay contracts 1989................$55,512,000 against Edison challenging various rate Theincreases and a suit alleging that Edison The ityhasenteed ntoagremens 190............$60417000 has violated certain anti-trust laws. These with the Intermountain Power Agency 1991................$59,611,000 actions could potentially result in refunds (IPA), a political subdivision of the State 1992................$60,529,000 or payment of damages to the Electric of Utah, Utah Power & Light (UP&L) and the Southern California Public These payments are not expected to have Utility; however, no opinion can be Power Authority (SCPPA), a public an adverse impact on the Electric Utility's rendered at this time as to the probable entity organized under the laws of the rate structure in that such payments are in outcome of these actions.
State of California. The City has agreed lieu of payments which would have been Capital expenditures with IPA and UP&L, pursuant to power made to purchase power from Edison.
The Electric Utility's budget for the sales contracts, to purchase 13.225% of The City projects that there will be fiscal year 1987-88 provides for capital the generation output of IPAs 1,600 substantial long-term power supply cost expenditures of approximately megawatt two unit coal-fueled generating savings from the take or pay contracts
$27,244,000, of which $16,087,000 will station (the Station) in central Utah. Unit compared to purchase from Edison.
be funded from electric revenue bond 1 of the Station became available for During the year ended June 30, 1987, proceeds.
commercial operation June 10, 1986.
payments to IPA for power were based Report of Independent Accountants Unit 2 was commercially available May 1, upon IPAs budget for the year. IPA 1987. Cost of construction of the Station determined that its actual costs for the Toth onae Cionil and related transmission lines, including year were less than budgeted, resulting in the Southern Transmission System (STS)
$8,016,000 which will offset against We have examined the balance sheet from Utah to Southern California, was future power payments by the Electric of the Electric Utility Fund of the City of financed principally through sales of Utility to IPA. This amount has been Anaheim, California as of June 30, 1987 IPAs power supply revenue bonds and reflected in the Electric Utility's Financial and 1986 and the related statements of payments in aid of construction by Statements.
income, changes in retained earnings, and SCPPA. The City has agreed with Litigation changes in financial position for the years SCPPA to purchase rights to 17.6% of then ended. Our examinations were made the transmission capacity in the STS.
O Edison filed a in accordance with generally accepted Thecomplaint against the City in Superior auditing standards and, accordingly, ofthe contractsa c nstituteta o lgato n Court seeking to recover approxim ately included such tests of the accounting the revenues of the Electric olly from
$49 million in costs related to the City's records and such other auditing theyreenus, ofic the ElericnUttyhes acquisition of an additional 1.507 interest procedures as we considered necessary in payments, which are based upone in SONGS. The City believes the the circumstances.
City's share of IPA's debt serviceadditional costs sought by the complaint requirements and production costs and are unsupportable and intends to contest inncia tents reentite SCPPA's debt service requirements, began the complaint. No opinion can be financial stionth eet tilty in July 1986, the month in which Unit 1 rendered at this time as to the probable fun o
ity of Ahei Calin of the Station and the STS began outcome of the complaint, aun e 0, 18 and 1
andterut commercial operation. These payments will be considered a Cost of purchased On July 31, 1984, Edison filed a claim of its operations and the changes in its power. As of June 30, 1987, IPA has with the city clerk against the City financial position for the years then issued $5.3 billion in revenue bonds and seeking to recover approximately ended, in conformity with generally revenue bond anticipation notes to
$388,000 in costs related to nuclear fuel accepted accounting principles applied on finance construction of the Station and purchases made by Edison for SONGS, a consistent basis except for the change, SCPPA has issued $1.1 billion in revenue Units 2 and 3. The claim also included with which we concur, in the method of bonds and revenue bond anticipation Edison's estimate of future damages accounting for unbilled revenues as notes to finance payments in aid of totaling $4,359,000. The City believes the described in note 1 to the financial construction.
costs sought by the claim are statements.
Theunsupportable and has denied the claim.
minimum payments for purchased power due under these take or pay contracts for as to the probable outcome of the claim.
the next five years are as follows:
A number of claims and suits are A1 pending against the City for alleged October 9, 1987 damages to persons and property and Los Angeles, California for other alleged liabilities arising out of matters usually incident to the operation of a utility such as the electric system of the City. In the opinion of management, the liability under these claims and suits would not materially affect the financial position of the Electric Utility as of June 30, 1987.
52
City of Anaheim Public Utilities Department 200 S. Anaheim Boulevard, Anaheim, CA 92805 Reliable Water and Electric Service to Anaheim Since 1895