ML13331B454

City of Anaheim Public Utils Dept Annual Rept Fpr Yr Ended 880630

ML13331B454
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Site:	San Onofre
Issue date:	06/30/1988
From:	Hoyt G ANAHEIM, CA
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The mission of the City of Anaheim is to provide the leadership and service necessary to make Anaheim a quality place in which to live, work and play.

The goal of the Anaheim Public Utilities Department is to provide the people of the community, the consumer-owners of the water and electric systems, with high quality, reliable water and electric service at the lowest practical cost, in keeping with sound business practices.

The Department's continued success in meeting its goal is essential to the future growth of Anaheim. Through proactive planning and diversified resource development, the Anaheim Public Utilities Department will pro gress, along with the dynamic and diverse city it serves, into the next century.

Water and Electric System Source & Supply

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1987-1988 Source and Distribution of Revenue THE 1987-1988 THE 1987-1988 WATER DOLLAR ELECTRIC DOLLAR SOURCE OF REVENUE SOURCE OF REVENUE 84194 234 O Residential Sales El Residential Sales O Commercial and Industrial Sales O Commercial Sales E Other Sales U Industrial Sales iIV U, Other Revenue U Other Revenue O Other Sales DISTRIBUTION OF REVENUE DISTRIBUTION OF REVENUE Ol Water Supply Ol Purchased Power Supply agU El Operation and Maintenance El Fuel Used for Generation

• Transfer to City General Fund U Operation and Maintenance A Debt Service U Transfer to City General Fund Ol Available for Additions O Debt Service and Replacements to the 0 Available for Additions System and Replacements to the System 242

1988 and 1987 Fiscal Year Highlights WATER SYSTEM ELECTRIC SYSTEM Year ended June 30 Year ended June 30 OPERATIONS 1988 1987 1988 1987 Sales 21,853 million 21,958 million 2,661 million 2,199 million gallons gallons kilowatt-hours kilowatt-hours System peak requirements 96.9 million 98.7 million 470,880 471,360 gallons gallons kilowatts kilowatts Average number of customers 53,769 53,418 96,699 95,108 FINANCIAL Revenues from sale of water

$19,580,000

$18,587,000

$178,869,000

$174,448,000 and electricity*

Net income

$4,438,000

$6,217,000

$14,486,000

$30,670,000 Transferred to City of

$745,000

$702,000

$7,333,000

$7,218,000 Anaheim General Fund

• Amounts represent revenues derived solely from billings. Electric system revenues also do not reflect any provision for changes in the Power Cost Adjustment Balancing Account which were $3,416,000 and ($826,000) for the years ended June 30, 1988 and 1987, respectively, and do not reflect any provision for changes in the Rate Stabilization Account which were $9,427,000 and $7,291,000 in the fiscal years ended June 30, 1988 and 1987, respectively 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-1 +

Electric Tax-Exempt Commercial Paper Prime -1 A-1 Table of Contents Report from the General Manager............ 4 Water Year 1987-88...................... 6 Electric Year 1987-88......................

14 Officials..............................22 Financial Analysis and Statistics.............23 Audited Financial Statements...............

33 3

Report from the General Manager Senior managers of the Public Utilities Depart ment together have more than 123 years of utility and municipal experience. From left:

Dale L. Pohfman Assistant General Manager Power Resources Darrell L. Ament Assistant General Manager Finance and Administration Edward G. Alarlo Assistant General Manager Field and Warehouse Charles r Slatten Assistant General Manager Engineering Gordon W Hoyt General Manager Success. When you talk about suc-Like the community we serve, the

• Three new deep, high quality wells cess stories, you have to include Public Utilities Department embodies in production Anaheim, California, and its Public the dynamic and diverse spirit needed o Sales of 21.9 billion gallons Utilities Department.

to facilitate Anaheim's growth into the 0 Aggressive production and distribu Anaheim, the largest city in Orange 21st century.

tion system replacement and main County economically is the nation's Our goal is to provide the people and tenance programs continue second fastest growing major metro-businesses of Anaheim with reliable, Electric Utility politan area.

high quality water and electric service Electricity for Anaheim is provided by By the year 1994, more than 9,000 at the lowest practical cost. In fiscal the Public Utilities Department from a new housing units are planned for 1988 we successfully continued to variety of clean, reliable, economical construction in Anaheim; 80 percent meet this goal.

resources throughout the Western will consist of multifamily dwellings.

Water Utility United States. Our reliability is New hotel rooms, stores, shops and Sound planning has paid off in enhanced by our diverse mix of office space will be added. More than Anaheim. Today, 70 percent of our resources:

22 million square feet of additional water comes from wells drilled into

• The coal-fueled Intermountain commercial floor space is expected water-bearing strata deep below our Power Project in Utah by 2005, much of it in modern high-community. We also buy water which Hydroelectric power from Hoover rise development, is imported from the Colorado River Dam on the Colorado River and melting northern Sierra Nevada Our share of Units 2 & 3 from snowpack.

nearby San Onofre Nuclear Gen Anaheim Convention Center is being Noteworthy fiscal 1988 successes:

erating Station expanded to over one million square

• Anaheim water continues to meet Power purchases from Pacific Gas &

feet and will be the largest convention eElectric and Deseret Generation center on the West Coast.

or exceed all state and federal stan and Transmission Co-operative dards for dtrin kimng water 4

• Economy energy purchases from Dedicated Team PUBLIC UTILITIES DEPARTMENT California, Washington, Oregon, When evaluating our accomplish-ADMINISTRATIVE MANAGEMENT New Mexico, Montana, Arizona, ments, it is evident that they result Stephen E. Albright Utah and Texas utilities from the dedication, professionalism Utilities Systems Operations Manager The successes we achieved during and creativity of our people.

Michael A. Bell fiscal 1988 were marked by:

They are risk takers and innovators, Financial Services Manager

• The first full year of Intermountain always striving to find a better, safer, Richard E. Butryn Power Project operation, supplying and more efficient way to get the Power Production Manager 56 percent of our power job done.

• A major reduction in reliance on Diana M. Leach Thei suceses re a diers asthe Administrative Services Manager Edison for power, down to 2 percent community they serve. My special of system production thanks go to each of them for jobs ElecrIcagi

• Record sales of 2.7 billion kWh well done.

• Doubling the capacity of Sharp The Mayor, City Council and Public Diem X. Vuong Substation Utilities Board have earned the Water Engineering Manager Finance Department's gratitude, as well. It is Bonnie A. Woodson Ultimately, everything we do is for their policies that have enabled us to Customer Service Manager our consumer-owners. They voiced turn farsighted plans into reality.

their support of their Utility Depart-By working together, we have pro ment's financial plans in November 1987 with an overwhelming 82 vddAaemwt ies ae percenith aprovarlmn ofa 8rpoe supply and taken the City from reli percent approval of a proposedwholesale power

$14 million Water Revenue Bond supplier to a successful program of authorization.

electric energy diversity and Our financial successes during the independence.

year included:

• Improved credit rating on $5 million Base thes suesses, were Water Revenue Bond issue by creative, sound planning, is the

• Water rates among lowest in key to the future. This philosophy, Orange County combined with outstanding efforts of

• Electric rates unchanged after two the staff, will keep the Anaheim Pub decreases in the prior year lic Utilities Department innovative, Safety productive and effective.

The nature of our business requires that many of our employees perform high risk tasks onaadaily basis. Biut we believe a job is not worth doing unless it is done safely. Our fine Gordon W Hoyt record continued to improve in fiscal Public Utilities General Manager 1988, thanks to the successful efforts of managers and employees.

Our successes in fiscal 1988 com pared to the five-year average were:

s Days away from work down 21.8 percent a

Recordable injuries down 28.6 percent B

Disabling injuries down an out standing 54.5 percent 5

Water Year 1987-88 Visionary planning, diversity of supply and supportive consumer owners spelled success for Ana heim, California's municipal water system in fiscal 1988.

California and much of the West ern United States experienced a second successive year of dry conditions in fiscal 1988. Some communities imposed restric tions on water use. However, the region's planning paid off with minimal impact on Anaheim con sumers and most other Southern Californians.

Dry weather is a way of life on Orange County's semi-arid coastal plain. Anaheim and the region can be proud of their suc cesses in planning and building the diverse water delivery systems and reservoirs needed to assure adequate supplies of water during dry spells.

In addition to supplies of water from northern Sierra Nevada snowpack, Anaheim and its neighbors use water imported from the Colorado River via aque duct. Water flows on the Colo rado River over the past few years have been among the highest ever.

The foresight of Anaheim's water planners in developing a system of wells to take advantage of local ground water supplies also con tinued to pay off for Anaheim consumers in fiscal 1988.

6

WATER SUPPLY SALES SECOND TO FISCAL 1987 16.5 The Department typically is able to RECORD 121 pump about 70 percent of its water In fiscal 1988, consumers used 219 84 108 supply from wells drilled into water-billion gallons of water. While down bearing strata lying deep below the 105 million gallons from the prior community. Supplemented with record year, water use in fiscal 1988 purchases of water imported by the was the second highest level in the 87-88 86-87 85-86 84-85 83-84 Metropolitan Water District of South-history of the Department. Water use ANNUAL RAINFALL ern California (MWD), wells are the in fiscal 1988 topped fiscal 1986 by (INCHES) backbone of Anaheim's water pro-461 million gallons. The difference duction system.

between water produced and water 21.9 22.0 21.4 21.1 20.0 PRODUCTION sold is due to changes in reservoir Water production was 22.5 billion levels, evaporation and other losses.

gallons, down 1.0 billion gallons from The fiscal 1988 decline was due pri fiscal 1987. Reduced consumer use manly to relatively mild temperatures, and a net decrease in reservoir stor-a slight increase in rainfall compared age levels were the primary reasons to the prior fiscal year and increased for overall production falling below consumer awareness in response to the fiscal 1985 level.

conservation messages.

The system's 32 active wells produced Relatively mild temperatures were 14.3 billion gallons in fiscal 1988, or experienced for the second year in a 8788 8687 85-86 84-85 83-84 63 percent of total production. Well row during fiscal 1988 and rainfall was WATER SALES water is Anaheim's lowest cost water 9.7 inches. While up 1.3 inches from (BILLON GALLONS) source. The Department purchased fiscal 1987, it was well below the 8.2 billion gallons of imported water annual average of 13 inches for

%.9 98.7 102.0 from MWD during the fiscal year, the area.

87.9 accounting for the remaining 37 per-Average use per capita declined to cent of total water production.

241 gallons a day from 243 gallons The Department generally pumps in fiscal 1987. The decline marks a about 70 percent of its annual supply return to the level recorded in fiscal from its own wells. In order to help 1986. Average water use also was "bank" ground water for future use, down in each major customer class.

MWD made surplus imported water These declines, particularly in view of available early in fiscal 1988 at a price the increased number of customers, comparable to the cost of pumped are attributable directly to the impact 87-88 86-87 85-86 84-85 83-84 water.

of conservation messages and PEAK DAY DEMAND The Department participated in weather.

MWD's program, purchasing 1.5 billion gallons that normally would have been pumped from wells.

Adjusting production figures for the impact of the joint water conservation program would result in pumped to purchased water ratios of 70 and 30 percent, respectivelyf 7

Water Year 1987-88 CONSUMER-OWNERS SUPPORT LINDA VISTA WELLS tion, the capacity of the booster THEIR UTILITY AND RESERVOIR pumping station at Linda Vista was Water system consumer-owners Three wells, adding 12,930 gallons per increased approximately 10 percent, voiced overwhelming support of their minute to the Department's produc-raising capacity to 11,500 gallons per utility in the November 1987 election.

tion capability, were completed and minute.

An impressive 82 percent of those placed in service in fiscal 1988.

RENEWAL AND REPLACEMENT voting gave their approval to a $14 Drilled into a deep aquifer, the three PROGRAM million water revenue bond authori-high-production wells will replace Increased operating efficiencies and zation. The Department sold $5 mil-capacity lost when three older rela-improved reliability continued to lion of that authorization on January tively shallow wells were contami-mark the success of the Department's 12, 1988, to help pay for system nated by a gasoline spill. Water aggressive maintenance and replace improvements and additions.

pumped from each of the three new ment programs.

wells is of such high quality that no Well Rehabilitation treatment is required.

Department engineers coordinated The project also involved installation the rehabilitation of eight wells during of pipelines and valves to tie the three the year. Cleaning each well, in addi new wells directly to the 4 million tion to the installation of new pumps gallon Linda Vista Reservoir. In addi-and motors, will result in a 10 percent increase in production efficiency or, in other words, increased water pro duction per kilowatt-hour of electric energy. That translates into a bottom line of lower future electric pumping costs for the Department and lower water rates for consumers.

Remote Monitoring and Control As key facilities are replaced or reha bilitated, they are tied into the Super visory Control and Data Acquisition (SCADA) System. Each year, system operators obtain greater real time monitoring and control of water pro duction and distribution facilities. The bottom line result is increased operat ing flexibility and efficiency.

Wells are the backbone of Anaheim s water supply, annually producing about 70 percent of consumers needs. Opposite page, Cheong Ho, associate civil engineer, discusses the performance of one of the Departments newest wells with Mike Casper and Dennis Voll, water production technicians. Together, the three wells are capable of pumping 12,930 gallons of high quality water per minute. The project included construction of valves and a pipeline connecting the new wells to nearby Linda Vista Reservoir.

8

-MIE-

Water Year 1987-88 In spite of the increase, Anaheim Rigorous Testing residential water rates remained gen-Regardless of the source, rigorous erally in the lower third among rates testing programs are firmly in place to charged by other Orange County assure the quality of water delivered water agencies.

to Anaheim consumers. MWD con WATEttinually monitors the water it imports The Department has no higher prior-adtet ro odlvr oAa ity than to supply each customer with heim. In addition, the Orange County water that exceeds all state and fed-Water District tests water from the eral standards for drinking water. The aquifers it manages along the Santa Department continued to meet this Ana River.

commitment in fiscal 1988.

The Water System's Lab Imported Water In Anaheim, the Department operates Both treated and untreated water are its own modern Water Quality Labo purchased from MWD. Treated water ratory to provide the monitoring nec is introduced directly into the system essary to assure consumers that water at six connections with MWD's sup-delivered to the tap meets all require ply system. Imported Colorado River ments for quality drinking water. Over water purchased from MWD is stored 30,000 physical, biological, and The Department tests more than 6,000 in the Department's 920 million gal-chemical tests on approximately samples annually to confirm that its water Ion Walnut Canyon Reservoir prior to 6,000 water supply and distribution meets all state and federal standards.

treatment in the August F. Lenain system samples were conducted by RATES Filtration Plant.

the Department during fiscal 1988.

New water rates adopted effective Local Well Water August 5,B1987, resulted in a 5.8 per-Well water undergoes natural filtra cent increase in the average cost per tion in the underlying soil, sand and unit of water sold by the end of fiscal rock strata before reaching the under 1988. This additional revenue was ground aquifers. Water pumped from used pri mari ly to pay for ongoing the newer deep wells is of such high maintenance and replacement costs quality that no treatment is required.

and higher water supply costs.

Thinh Nguyen, water treatment operator, conducts water quality tests at the August F Lenain Filtration Plant.

Anaheim Water System WALNUT CANYON RESERVOIR quality FWY (no tr at en isRrequir 10i o T si Regardlessio the DSourcergou assured hesquityo ae eiee aPnd Statspiorodlvr oAa Waer Disrict test ater fo h

InNT AnaeAm the, Deatmnpeae it1w0oenWte ult ao

lot 10, p

Water Year 1987-88 PLANNING FOR THE FUTURE Other Hill and Canyon Projects production and distribution facilities, The Department has completed a Design also is underway on a pair of while $25.5 million is slated for the comprehensive study of distribution 4 million gallon storage reservoirs to construction of new facilities.

pipelines in the eastern hill and can-meet water needs of this rapidly THE GOAL yon area of the city. The purpose of developing area. These and other A clear vision, backed up with sound the study was to identify the most reservoirs, along with booster pump-long-range planning, will allow the cost-effective use of capital to meet ing stations, will be paid for primarily Department to make optimum use of growing consumer needs. A similar by developer contributions, its diverse water supply alternatives in study of the flatland area of the city FUTURE CAPITAL EXPENDITURES the coming years.

was completed in fiscal 1987.

During the next five years, the The ongoing commitment of the Serrano/Twin Peaks Reservoir Department plans to invest $50.9 Department to the consumer-owners One result of the hill and canyon million toward improvements in the it serves will remain the delivery of a study, coupled with revised develop-water production and distribution reliable supply of quality water at an ment plans, was to relocate the site for system. Approximately $25.4 million economical price.

the proposed 1 million gallon Twin is targeted for replacement of water Peaks Reservoir. The Department will redesign the project to provide for construction of a 2 million gallon reservoir on land dedicated by the developer.

Colorado River water traverses thedesert via MWsaqueductand isstored in Anaheim 920 million gallon Walnut Canyon Reservoir prior to treatment.

Thom Coughran, right, a water system associate civil engineer, discusses plans for the 2 million gallon SerranolTwin Peaks Reservoir with Steven Riggs, senior project manager for Presley of Southern California.

The developer will construct the reservoir on this site and the entire project will be dedicated to the water system.

12

Electric Year 1987-88 There are few utilities in the nation that can match Anaheim's successful program of power sup ply diversity and independence.

A little more than a decade ago, Anaheim's electric utility was locked into buying power from a single supplier. In 1975, the com munity expressed confidence in the aggressive program of power supply independence envisioned by the managers of their consumer-owned utility.

Today, the Department generates power from its own resources and buys electricity from utilities located throughout the West hydroelectric power and energy from the Pacific Northwest and Colorado River, coal-fueled resources located from the Great Basin to western Texas and nuclear power from nearby San Onofre Nuclear Generating Station.

At the same time, the Public Utili ties Department's distribution system is as modern and techno logically advanced as they come.

Experienced personnel, dedi cated to doing their jobs well and safely, have put together a reli able, flexible system that keeps electricity flowing to homes, busi nesses and schools throughout Anaheim's 45 square miles.

The Department's success can easily be measured at the bottom line. In fiscal 1988, rates charged Anaheim consumers remained unchanged for yet another year, while rates in surrounding com munities increased.

14

RECORD PRODUCTION FROM Fiscal 1975 DIVERSE RESOURCES Electric system generation and pur chases totaled a record 2,846.3 mil lion kilowatt-hours (kWh) in fiscal 1988, up 482.4 million kWh or 20 percent.

Southern Calforia Edison Intermountain Power Project Fiscal 1988 marked the completion of the first full year of operation of both units of the 1.6 million kilowatt Inter-Fiscal 1988 mountain Power Project (IPP).

3%

This highly successful Utah coal fueled project supplied Anaheim with 1,585.3 million kWh of electricity in fiscal 1988, or 56 percent of total generation and purchases.

In fiscal 1988, IPP Units 1 and 2 logged 2%

impressive 88 and 90 percent capac ity factors, respectively, living up to 0 Intermountain Power Project resources, economical federal hydroelec the project's design goal as one of the Units I and 2 tric power from Hoover Dam and water most reliable, efficient generating E Non-firm Economy Energy that is imported by MWD.

stations ever built.

U San Onofre Nuclear Generating purchased from Edison continued to StationnUnetsr2bandt3 Anaheim has contractual rights to fall sharply during the fiscal year to over 13 percent of the generating EHooverDam station's output, the second largest U Firm Power Contracts on 5.miion kw.

share among IPP's 36 participants.

I Southern California Edison from IPP, the significant increase in Anaheim continues to play an active Anaheim has moved from a city totally depen-power purchased under the terms of and visible role in support of ongoing dent upon a single source of electricitytoacom-firm contracts with Pacific Gas &

project management.

munity able to select from a variety of power resources. The bottom line of this program of Electric (PG&E) and Deseret Genera San Onofre energy diversification and flexibility is long-term tion and Transmission Co-operative Adding diversity and reliability is reliability and savings measured in the hundreds led to the decreased reliance on Edi Anaheim's ownership interest in San of millions of dollars for Anaheim consumers son. During the first full year of avail Onofre Nuclear Generating Station Hoover Dam ability the two resources supplied (SONGS), Units 2 and 3. Anaheim's A total of 53.4 million kWh were Anaheim with 634 million kWh.

3 percent share of SONGS supplied delivered by the end of fiscal 1988 Other Power Purchases 427.3 million kWh in fiscal 1988.

from Hoover Dam, the Department's Non-firm, supplemental economy During fiscal 1988, Unit 2 operated at first federal hydroelectric resource.

energy continues to be a significant 64 percent capacity, which included Upon completion of the uprating of low-cost resource for the Depart being out of service 112 days during each of Hoover's 17 generators in ment. For the first time, Anaheim the first half of the fiscal year for 1991, Anaheim's share of Hoover's consumers used electricity the scheduled refueling and mainte-capacity will be 40,000 kilowatts.

Department purchased from the nance. Unit 3 recorded an impressive Firm Power Purchases Bonneville Power Administration, 81 percent capacity factor, in spite of Anaheim has reduced its reliance on Montana Power Company and El being out of service during the last 61 Edison from 96 percent of system Paso Electric Company These and days of the fiscal year for similar sched-production in fiscal 1983 to about 2 other "spot market" purchases sup uled refueling and maintenance.

percent during fiscal 1988. Power plied 86.9 million kWh in fiscal 1988.

15

Electric Year 1987-88 Western Systems Power Pool The relatively mild weather condi-2.66 The Department also is a participant in tions experienced in fiscal 1988 [ed to the Western Systems Power Pool, an another year in which the annual 2.20 210 experimental agreement among 24 peak consumer demand remained 1.9 1.87 consumer-owned and privately owned below the historical peak of 483,400 utilities in the West. The pool facilitates kilowatts recorded in fiscal 1985.

bulk power and transmission sales and purchases among its participants.

DISTRIBUTION SYSTEM GROWTH Line extensions and services were ELECRIC ATESREMAN STBLE designed for 2,006 residential and 641 Thanks largely to the rate stabilization commercial and industrial customers.

policy formally adopted by the City Approximately three circuit miles of Council in January 1986, the Depart-underground distribution lines were ment has not increased base rates i

87-88 86-87 85-86 84-85 83-84 sinceSeptmber984.installed during fiscal 1988.

since September 1984.

ELECTRIC SALES With the continued success of the Expansion (BILUON KILOWATT-HOURS)

Department's diverse power supply Crews energized a new 69/12 kV Anaheim consumers' rates transformer and related switchgear, program, Anhi6cnuer'rte3s remained stable in fiscal 1988, follow-doubling the capacity of Sharp Sub-se8 ing two decreases in the prior year.

station to 80,000 kilovolt-amperes min e to tNamed after E. C. Sharp, the engineer The bottom line is that the average.responsible for the city's first power billing price per kWh has continued 383 plant back in 1895, the station serves lessal tandAnaeim consumers n dg growing demands in the north central 284.5 less than consumers in surrounding idsra ra 0

comniis industrial area.24 communities.

ENERGY SALES RECORD Electricity sales continued to climb to a system record 2.7 billion kWh in 87-88 86-87 85-86 84-85 83-84 fiscal 1988, up an impressive 463 TEMPERATURE million kWh, or 21 percent, com-(DEGREE DAYS ABOVE 720) pared to the prior fiscal year.

Sales of surplus energy to other elec-483.4 tric utilities were up 380.1 million 470.8 471.4 44 421.9 kWh to a record 509.9 million kWh.

This increase was the primary reason for the overall increase in sales.

Retail sales, excluding sales to other electric utilities, were up 82.6 million kWh, or 4 percent. All customer classes, except Irrigation and Pump ing, recorded sales gains. Irrigation Mike Nash, substation electrician, and and Pumping sales were down pri-Roy Wright, substation test technician 87-88 86-87 85-86 W85 83-84 marily because less land was devoted supervisor, tested systems to ready the ELECTRIC PEAK DEMAND to agriculture.

expanded Sharp Substation for service.

(THoUSAND KILOWATTS)

This control room at IPP represents the latest technology in highly automated coal-fueled power projects.

16

Electric Year 1987-88 Line Mechanic Steve Moyle helps the Department provide another vital service-maintenance of Anaheim's energy-efficient, sodium street lights.

Intermountain Power Project has fulfilled all expectations, with the completion in fiscal 1988 of the first full year of joint operation of both units.

LOOKING AHEAD While proud to be meeting its goals Proactive planning and accurate fore-today, the Department recognizes casting have helped the Department that continued success can be make sound business decisions, en-achieved only by striving to foresee abling it to meet Anaheim's ever and to prepare for what lies ahead.

expanding needs.

With this mission in mind, manage Within the Department, an expert ment and staff are planning new proj team of economists, statisticians and ects that will allow the Department to engineers continuously study eco-meet future challenges successfully.

nomic, land use, climatic and other relevant data. These futurists examine Apprentice Line Mechanic Mitch a wide range of variables and contin-Schroeder and Cable Splicers Barney Allen, gencies to forecast new housing Bob Durbin and Bob Holden use fault starts, taxable sales, employment locator equipment to detect underground figures, government expenditures and other pertinent trends. This informa tion is used to formulate consumer enery an capcit reqiremntsA major part of Anaheim's diversified energy and capacity requirements five and 20 years into the future.

power supply program, SONGS remains one of the United States'most efficient nuclear generating stations.

18

Electric Year 1987-88 Gas Turbine Capital Spending The Department continued prepara-Over the next five years, the Depart tions to request bids for construction ment plans to invest about $96 million of a natural gas turbine generator at in new electric facilities. Approxi Dowling Substation. The turbine is mately $45.8 million relates to power expected to generate up to 48,000 supply and will be financed from kW during periods of peak demand borrowed funds. The remaining $50.2 to offset higher cost capacity pur-million is for electric subtransmission chases from Edison.

and distribution facilities in Anaheim Transmission Projects and will be financed by power sales.

Studies continued on three proposed The Goal regional transmission lines, the Regardless of future developments, California-Oregon, Mead-Adelanto the Department is securely posi and Mead-Phoenix Transmission tioned to take advantage of new projects.

opportunities that will allow it to meet Distribution the power needs of its consumers Line Crew Supervisor Bob Shiveley, above, Bids for construction of Southwest reliably and economically. With a 31-year employee, directs an experienced Substation were under review at year-overhead Subsatin wre nderrevew t yar-strog ladeshi, practve laning construction projects. His crew, including end. Southwest will serve growing and diversified resource develop-Line Mechanic Nick Hutchinson, right, consumer demand in and around ment, the Anaheim Public Utilities keeps the system in step with a rapidly Disneyland and the expanding Department will progress, along with changing city Anaheim Convention Center.

the dynamic city it serves, into the Studies also were underway on the next century addition of a fourth 220/69 kV trans former at Lewis Substation.

Anaheim Electric System borrowed funds. Thqemii g 50.2'

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-5 Kit 40

Officials for the City of Anaheim CITY MANAGEMENT CITY COUNCIL PUBLIC UTILITIES BOARD Bob D. Simpson City Manager George P. Ferrone Finance Director Jack L. White City Attorney Leonora N. Sohl City Clerk Mary E. Turner City Treasurer Miriam Kaywood Mayor ProTem William D. Ehrle Councilman Fred Hunter Richard J. McMillan Mayor Vice Chairman Tom Daly Robert O. Schmahl Councilman S. Dale Stanton Irv Pickler Councilman Carl J. Kiefer Chairman Bob Kazarian Walter J. Smith Joseph R. White 22

CITY OF ANAHEIM PUBLIC UTILITIES DEPARTMENT FINANCIAL ANALYSIS AND STATISTICS 23

Public Utilities Department Financial Analysis In the business world, success is most FISCAL 1988 The net change in unbilled revenue often measured in terms of financial ANOTHER SUCCESSFUL YEAR for fiscal 1988 was a decrease of performance.

The outstanding financial perform-

$293,000. Billed revenue from the The continued operational success of ance of the Water and Electric utilities sale of water was $19,580,000 in fiscal the Public Utilities Department of the during fiscal 1988 included the follow-1988, an increase of $993,000.

City of Anaheim has resulted in the ing significant events:

Operating expenses were strongest financial position ever for

- Voter approval of $14 million water

$14,393,000 in fiscal 1988, up both the water and electric systems.

revenue bond authorization

$417,000 from fiscal 1987. The cost of The year also was a success from the

• Issued $5 million in Water Revenue water was $7,933,000 in fiscal 1988, standpoint of the consumer-owners Bonds at a true interest cost of up $77,000 from the prior year.

of7.3765 percent The unit cost of water increased by 6 systems-the ratepayers.leric

• Water bond rating raised to AA by ercent as a result of increased pur systms-te rtepaers AveageStandard and Poor's Corporation chssoPrae ae rmteMt residential electric bills were 13 per-and confirmed at Aa by Moody's roitWate Ditr Pumped cent lower than those in surrounding Investors Service communities at year end and water e No electric rate increase water accounted for 63 percent of rates remained among the lowest in

• Net gain of $148,000 from sale of total water production.

Orange County.

securities taken in settlement of Other operations and maintenance While credit for this success is due unpaid utility bills expenses were up $149,000 in fiscal largely to successful operations, it also WATER UTILITY 1988, an increase of 3 percent.

can be attributed to the people Operating revenues totaled Water Utility net income was responsible for the Department's

$19,399,000 for the Water Utility in

$4,438,000 in fiscal 1988, down strategic financial planning. They have fiscal 1988, down $1,255,000 from the

$1,779,000 from the prior year. This charted a prudent course through the prior fiscal year. This decrease was decrease was due primarily to often turbulent waters of uncertain p

reduced operating revenues resulting and changing financial marketprmrlthreutoanconig andchagin fnanialmaretpolicy change effective in fiscal 1987 from the impact of the accounting conditions.

regarding unbilled revenue. This pol-policy change regarding unbilled In the coming years, the Department icy change resulted in a one time revenues.

will continue to use a balanced and extraordinary increase in revenue of During the year, a total of $11 million diverse financial program relying on:

$1,802,000 in fiscal 1987. Beginning was invested in water system capital

• Current revenues with fiscal 1988, the Water Utility construction. Approximately $2.9

• Short-term, tax-exempt commercial records only the net change, up or million was provided by current reve paper down, in unbilled revenues from the nues, $1.5 million was provided by

• Long-term revenue anticipation prior fiscal year.

borrowed funds and $6.6 million was notes contributed by developers and others

• Long-term revenue bonds in aid of construction.

• Capitalized lease aContributions in aid of construction 24

ELECTRIC UTILITY operating revenues were up Electric Utility operating expenses Operating revenues totaled

$230,000. Overall, operating reve-were $164,503,000 in fiscal 1988, up

$191,845,000 for the Electric Utility nues increased by $208,000 to

$17,489,000 from the prior fiscal year.

in fiscal 1988, up slightly from the

$191,845,000 in fiscal 1988.

Purchased power cost increased

$191,637,000 recorded the prior fnrae

$191,37,00 reordedthe rior On January 28, 1986, the City Council

$16,636,000 as a result o nrae fiscal year.

adopted a rate stabilization policy purchases from the Intermountain Like the Water Utility, the Electric which included the creation of a Rate Power Project, Hoover Dam and Utility adopted an accounting policy Stabilization Account (RSA). The other firm power contracts. These change effective in fiscal 1987 regard-policy provides that refunds recov-increased purchases were due pri ing unbilled revenue. This policy ered from Edison for wholesale elec-manly to the sale of excess energy change resulted in a one time extra-tric rate overcharges should be from the Intermountain Power Project ordinary increase in revenue of deposited in the RSA. These refunds to other utilities. Other operations and

$8,502,000 in fiscal 1987. Beginning then are used to help stabilize base maintenance expenses increased with fiscal 1988, the Electric Utility electric rates.

$1,178,000 compared to the prior records only the net change, up or About $9.4 million and $7.3 million fiscal year. This increase was due down, in unbilled revenue from the primarily to SONGS, Units 2 and 3, prior fiscal year. The net change in being out of service for scheduled unbilled revenue for fiscal 1988 was a refueling and maintenance. SONGS decrease of $667,000.

maintenance costs were up $878,000 monthly and are based uponfrmtepirisaya.

Billed revenue from the sale of elec-recorded kWh sales.

tricity was $178,869,000 in fiscal 1988, Electric Utility operating income of an increase of $4,421,000. However, Approximately $36.8 million in

$27,342,000 in fiscal 1988 was down the combination of the impact of

$17,281,000 from the prior year. Net lower unbilled revenue in fiscal 1988 income of $14,486,000 was down and the extraordinary revenue of

$16,184,000 from the prior year. Both

$8,502,000 due to the accounting operating income and net income fiscal 1988. Department management wr onaarsl ftecag change in fiscal 1987, resulted in a net is cnie ta s adiioa o and cae decrease of $4.7 million in the sale of ru will be rcv overtesex electricity in fiscal 1988.

purchased power costs.

However, this decrease was offset by based on decisions of the administra-Investments in construction of new increased transfers from the Power tive law judges hearing these whole-electric system facilities totaled $8.5 Cost Adjustment Account (PCA) and sale rate cases which are now before million for fiscal 1988. Of this amount Rate Stabilization Account (RSA) to

$2.6 million was invested in construc the Revenue Fund compared to the Mission. The RSA balance at June 30, prior fiscal year. The PCA and RSA 1988, was $12,861,000. The Depart were up $2.6 million and $2.1 million, ment expects that this amount will be respectively, in fiscal 1988. Other sufficient to stabilize overall electric rates at least through the Summer of1989.

25

Public Utilities Department Financial Analysis tion and nuclear fuel related to Ana-LONG-TERM DEBT principal payments of $330,000 and heim's ownership in SONGS. The MANAGEMENT

$6,090,000 were paid from the Water remaining $5.9 million was invested In November 1987, Anaheim voters and Electric utilities, respectively.

in electric subtransmission and distri-overwhelmingly approved a $14 mil-SELF-SUPPORTING bution facilities in Anaheim.

lion water revenue bond authoriza-The Public Utilities Department pays NOTE PROGRAM tion. On January 1, 1988, the Water all costs of operation and debt service As of June 30, 1988, the Electric Utility Utility issued $5,000,000 in Water and part of the cost of capital improve had outstanding $20,450,000 in Revenue Bonds at a true interest cost ments from current revenues. The short-term, tax-exempt commercial (TIC) of 7.3765 percent. The proceeds remainder of the cost of water and paper. The Department used this of this issue are being used to finance electric system capital improvements commercial paper to finance the water system additions and improve-is met through the sale of revenue purchase and processing of nuclear ments.

bonds or revenue anticipation notes fuel for SONGS. The Electric Utility IMPROVED BOND RATING and contributions by developers notes were rated Prime-1 and A-1 The Department's financial strength, and others in aid of construction.

by Moody's Investors Service and strong management and sound plan-SUPPORT FOR CITY Standard and Poor's Corporation, ning continued to be recognized in GOVERNMENT respectively.

the ratings assigned to Water and In addition to meeting all costs of The Water Utility note proceeds of Electric Utility securities by Moody's operation from current revenues,

$4.3 million helped pay for water and Standard and Poor's. Aa ratings including payments to the City of system capital replacements. Moody's by Moody's were maintained for both Anaheim for services rendered by the and Standard and Poor's rated the Water and Electric Utility revenue various municipal departments, the Water Utility notes MIG 1 and SP-1+,

bonds. Standard and Poor's raised its Public Utilities Department annually respectively.

rating of the Department's long-term transfers a percentage of the prior The Department's Revolving Credit Water Revenue Bonds from AA-to year's gross revenues, up to a maxi Agreement may be used in the event AA. The Department's Electric Reve-mum of 4 percent. In fiscal i988, the that the Water or Electric Utility notes nue Bonds are rated A+ by Standard Department transferred $8,078,000 cantb eiacda hymtr.and Poor's.

Ifrom retained earnings to the General cannot be refinanced as they mature.

The existing agreement is with Bank OUTSTANDING BONDS Fund of the City in support of general of America NT&SA and Morgan Guar-Bonds outstanding at the end of the municipal city government, the maxi anty Trust Company. Bank of America year totaled $19,510,000 in the Water mum allowable under the City Char atyTst C.lopnyo hEeti Utility and $238,365,000 in the Elec-ter. The Water and Electric utilities backs $13.0 million of the Electric Utility's $21.0 million credit line. Mor-tric Utility Maturing revenue bond transferred $745,000 and $7,333,000, gan Guaranty Trust Company backs the remaining $8.0 million of the Electric Utility line and the entire $4.3 million of the Water Utility credit line.

26

Water System Operating Statistics WATER SUPPLY 1987-88 1986-87 1985-86 1984-85 1983-84 Water Production:

From Metropolitan Water District, million gallons............................

8,212.8 6,623.8 7,616.7 10,843.1 11,711.9 Percent of Total Production.......................

37%

28%

33%

48%

54%

From Water System Wells, million gallons..........

14,284.1 16,887.6 15,337.1 11,714.7 9,866.8 Percent of Total Production......................

63%

72%

67%

52%

46%

Total Production, million gallons................

22,496.9 23,511.4 22,953.8 22,557.8 21,578.7 Capacity-gallons per minute:

From Metropolitan Water District Connections..........................

58,435 58,435 58,435 58,435 58,545 From Water System Wells, average..................

48,130 41,340 43,022 43,545 38,678 Filtration Plant Capacity.......................

10,417 10,417 10,417 10,417 10,417 Total Supply Capacity.......................

116,982 110,192 111,874 112,397 107,640 Peak Day Distribution, million gallons..............................

96.9 98.7 102.0 94.0 87.9 Average Daily Distribution, m illion gallons..............................

63.2 63.7 62.9 61.4 60.6 WATER USE Average Number of Customers:

Residential.................................

47,007 46,677 46,111 45,429 44,696 Commercial/Industrial........................

5,328 5,290 5,249 5,170 5,095 M unicipal..................................

349 346 320 316 323 Other.....................................

1,085 1,105 1,038 981 879 Total-all classes...........................

53,769 53,418 52,718 51,896 50,993 Millions of Gallons Sold:

Residential................................

12,631 12,625 12,381 12,145 11,478 Commercial/Industrial..........................

8,393 8,394 8,108 7,883 7,488 M unicipal..................................

612 629 633 702 567 Other.....................................

217 310 270 398 448 Total-all classes...........................

21,853 21,958 21,392 21,128 19,981 Anaheim Population Served.....................

243,021 242,161 237,506 234,700 233,019 Population Served Outside City, estimated.............

5,100 5,1001 5,900("

6,500 6,500 Total Population Served......................

248,121 247,261 243,406 241,200 239,519 Average Daily Sales Per Capita, gallons...............

241 243 241 240 228 GROWTH OF SYSTEM ActiveW ells.......................

32 32 32 32 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............................

698 688 680 662 650 Fire Hydrants.................................

6,448 6,358 6,196 5,999 5,890

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

27

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

Year ended June 30 1988..........................

$12,859,000

$ 5,641,000

$ 133,000

$ 482,000

$ 465,000

$19,580,000 1987..........................

11,969,000 5,578,000 158,000 483,000 399,000 18,587,000 Increase (decrease)................$

890,000 63,000

($ 25,000) ($

1,000) $ 66,000 993,000 Percent increase (decrease).........

7.4%

1.1%

(15.8%)

(0.2%)

16.5%

5.3%

Units of 100 cubic feet sold:

Year ended June 30 1988..........................

16,886,937 11,220,542 213,797 818,442 75,510 29,215,228 1987..........................

16,877,890 11,221,432 289,822 840,893 125,132 29,355,169 Increase (decrease)...............

9,047 (890)

(76,025)

(22,451)

(49,622)

(139,941)

Percent increase (decrease).........

0.1%

(0.0%)

(26.2%)

(2.7%)

(39.7%)

(0.5%)

Average billing price per 100 cubic feet:

Year ended June 30 1988..........................

.7615

.5027

.6221

.5889

$ 6.1581

.6702 1987..........................

.7092

.4971

.5452

.5744 3.1886

.6332 Increase........................

.0523

.0056

.0769

.0145

$ 2.9695

.0370 Percent increase.....................

7.4%

1.1%

14.1%

2.5%

93.1%

5.8%

Average number of customers:

Year ended June 30 1988..........................

47,007 5,328 54 349 1,031 53,769 1987..........................

46,677 5,290 57 346 1,048 53,418 Increase (decrease).................

330 38 (3) 3 (17) 351 Percent increase (decrease).........

0.7%

0.7%

(5.3%)

0.9%

(1.6%)

0.7%

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

Year ended June 30 1988..........................

359 2,106 3,959 2,345 1987..........................

362 2,121 5,085 2,430 Increase (decrease)...............

(3)

(15)

(1,126)

(85)

Percent increase (decrease)..........

(0.8%)

(0.7%)

(22.1%)

(3.5%)

Amounts represent revenue derived solely from billings.

28

Water Utility Fund Summary of Results for Operations and Net Revenues Available for Long-Term Bond Debt Service 1987-88 1986-87 1985-86 1984-85 1983-84 (in thousands)

Revenues:

Sale of water:

Residential........................................

$ 12,859

$ 11,969

$ 11,120

$ 10,845

$ 8,837 Commercial/Industrial................................

5,641 5,578 5,185 5,042 4,063 Municipal.........................................

482 483 453 492 363 Other.............................................

598 557 479 549 496 Billed revenue from sale of water........................

19,580 18,587 17,237 16,928 13,759 Change in unbilled water revenue........................

(293) 1,802 Total revenue from sale of water.........................

19,287 20,389 17,237 16,928 13,759 Other (including interest income).........................

1,155 1,127 1,172 979 680 Total gross revenues..................................

20,442 21,516 18,409 17,907 14,439 Operating expenses (excluding depreciation and amortization):

Costofwater.........................................

7,933 7,856 8,164 8,272 6,524 Operations..........................................

2,353 2,124 2,384 2,004 1,798 Maintenance...................

2,955 3,035 2,549 2,402 2,050 Total operating expenses.................

13,241 13,015 13,097 12,678 10,372 Net revenues..........................................

7,201 8,501 5,312 5,229

$ 4,067 Revenue bond debt service requirements"....................

1,817 1,381 1,625 1,205 874 Times revenue bond debt service covered by net revenues........................

4.0 6.2 3.3 4.3 4.7

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

1987-88 1986-87 Estimate of unbilled water revenue for:

Fiscal year........................................

1,509 1,802 Prior fiscal year............

1,802 0

Change in unbilled water revenue......................

($

293) 1,802

'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.

29

Electric System Operating Statistics POWER SUPPLY 1987-88 1986-87 1985-86 1984-85 1983-84 Own Generation:

San Onofre Nuclear Generating Station, kWh..............427,297,605 476,785,844 304,229,709 286,779,260 183,183,951 Firm Purchases:

Intermountain Power Project, kW h.....................

1,585,321,000 942,740,589 82,560,196 Hoover, kW h.....................

53,407,000 4,307,000 Power Contracts, kWh...............

634,001,745 56,267,180 Southern California Edison Company, kWh...........................

59,394,969 265,134,768 1,391,023,534 1,521,205,882 1,628,917,965 Non-Firm Purchases, kWh.............

86,924,376 618,624,268 421,189,000 304,017,000 171,578,000 System Total, kWh..................

2,846,346,695 2,363,859,649 2,199,002,439 2,112,002,142 1,983,679,916 System Peak Demand, kW.............

470,880 471,360 465,600 483,360 421,920 ELECTRIC USE Average Number of Customers:

Residential.......................

82,030 81,043 79,967 79,827 78,439 Commercial.......................

13,942 13,353 12,901 11,826 11,037 Industrial........................

559 546 533 527 511 Other...............................-.

168 166 167 167 167 Total-all classes.................

96,699 95,108 93,568 92,347 90,154 Kilowatt-Hour Sales:

Residential.......................

483,700,118 470,309,712 475,055,915 494,519,080 463,058,218 Commercial......................

510,345,288 490,775,601 480,552,216 471,732,433 448,055,902 Industrial........................

1,121,912,987 1,066,954,519 1,048,774,980 991,719,855 932,219,674 Other...........................

545,513,004 170,740,072 90,803,292 31,698,296 28,065,923 Total-all classes.................

2,661,471,397 2,198,779,904 2,095,186,403 1,989,669,664 1,871,399,717 Average Annual kWh per Residential Customer............

5,897 5,803 5,941 6,195 5,903 GROWTH OF SYSTEM Transmission, 69 kV, circuit miles........

59 59 59 59 57 Distribution, 12 kV and lower, circuit miles:

Overhead......................

888 890 890 888 886 Underground...................

398 395 379 351 343 Total.............................

1,345 1,344 1,328 1,298 1,286 Transformer Capacity kVa:

220 kV to 69 kV...................

840,000 840,000 840,000 840,000 840,000 69 kV to 12 kV....................

592,000 552,000 552,000 552,000 552,000 12 kV to Customer.................

974,000 930,000 905,000 868,000 843,000 30

Electric System 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 1988..............

$37,211,000 $44,874,000 $ 86,172,000 $1,007,000

$1,622,000 $ 7,983,000 $ 178,869,000 1987..............

37,145,000 44,179,000 84,978,000 1,007,000 2,031,000 5,108,000 174,448,000 Increase (decrease)...

66,000 $

695,000 $

1,194,000 0 ($ 409,000) $ 2,875,000 $

4,421,000 Percent increase (decrease)......

0.2%

1.6%

1.4%

0.0%

(20.1%)

56.3%

2.5%

Kilowatt-hours sold:

Year ended June 30 1988..............

483,700,118 510,345,288 1,121,912,987 12,219,540 23,418,586 509,874,878 2,661,471,397 1987..............

470,309,712 490,775,601 1,066,954,519 11,990,744 29,002,806 129,746,522 2,198,779,904 Increase (decrease)...

13,390,406 19,569,687 54,958,468 228,796 (5,584,220) 380,128,356 462,691,493 Percent increase (decrease)......

2.8%

4.0%

5.2%

1.9%

(19.3%)

293.0%

21.0%

Average billing price per kilowatt-hour:

Year ended June 30 1988..............

.0769

.0879 $

.0768 $

.0824 $

.0693 $

.0157 $

.0672 1987..............

.0790

.0900

.0796

.0840

.0700

.0394

.0793 Increase (decrease)...

($

.0021) ($

.0021) ($

.0028) ($

.0016) ($

.0007) ($

.0237) ($

.0121)

Percent increase (decrease)......

(2.7%)

(2.3%)

(3.5%)

(1.9%)

(1.0%)

(60.2%)

(15.3%)

Average number of customers:

Year ended June 30 1988.................

82,030 13,942 559 105 62 1

96,699 1987.................

81,043 13,353 546 102 63 1

95,108 Increase (decrease)...

987 589 13 3

(1) 0 1,591 Percent increase (decrease)......

1.2%

4.4%

2.4%

2.9%

(1.6%)

0.0%

1.7%

Average annual use per customer in kilowatt-hours:

Year ended June 30 1988.....

5,897 36,605 2,007,000 1987................

5,803 36,754 1,954,129 Increase (decrease)...

93 (149) 52,871 Percent increase (decrease)......

1.6%

(0.4%)

2.7%

Amounts represent revenue derived solely from billings.

31

Electric Utility Fund Summary of Results for Operations and Net Revenues Available for Long-Term Bond Debt Service 1987-88 1986-87 1985-86 1984-85 1983-84 (in thousands)

Revenues:

Sale of electricity:

Residential.........................................

$ 37,211

$ 37,145

$ 39,999

$ 39,440

$ 33,498 Commercial.........................................

44,874 44,179 46,357 43,045 37,785 Industrial..........................................

86,172 84,978 90,272 81,772 69,576 O ther.............................................

10,612 8,146 6,755 2,525 2,112 Billed revenue from sale of electricity.....................

178,869 174,448 183,383 166,782 142,971 Change in unbilled electric revenue' (667) 8,502 Total revenue from sale of electricity......................

178,202 182,950 183,383 166,782 142,971 Provision for power cost adjustment.......................

3,416 826 (10,855) 8,312 (4,420)

Provision for rate stabilization............................

9,427 7,291 7,196 Other (including interest income).........................

6,499 5,690 6,638 8,080 7,008 Total gross revenues..................................

197,544 196,757 186,362 183,174 145,559 Operating expenses (excluding depreciation and amortization):

Cost of purchased power................................

124,936 108,300 119,744 122,495 102,602 Fuel used for generation................................

4,399 5,227 2,913 2,706 1,894 O perations..........................................

17,174 17,127 15,724 16,794 13,491 Maintenance.................

8,937 7,806 7,586 8,208 4,714 Total operating expenses..............................

155,446 138,460 145,967 150,203 122,701 Net revenues..........................................

$ 42,098

$ 58,297

$ 40,395

$ 32,971

$ 22,858 Revenue bond debt service requirements"'....................

$ 21,394

$ 19,852

$ 21,932

$ 14,229 1,048 Times revenue bond debt service covered by net revenues...........................................

2.0 2.9 1.8 2.3 21.8

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

1987-88 1986-87 Estimate of unbilled electric revenue for the:

Fiscal year.........................................

$ 7,835

$ 8,502 Prior fiscal year.....................................

8,502 0

Change in unbilled electric revenue....................

($

667)

$ 8,502

"'Excludes interest paid from bond proceeds on 1980 $84 million; 1982 $70 million, Issue A and B; and 1983 $730.4 million, Issue A, B and C, Electric Revenue Bond issues prior to December 1, 1984. The 1980, 1982 and 1983 issues were for the citys 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, 1988 AUDITED FINANCIAL STATEMENTS 33

City of Anaheim Water Utility Fund Balance Sheets June 30 1988 1987 Assets (in thousands)

Utility plant:

Land............................

$ 1,554

$ 1,554 Source of water supply............................................................

10,030 9,842 Pum ping.......................................................................

4,872 4,573 Transm ission and distribution........................................................

104,466 96,369 G eneral........................................................................

2,460 2,429 123,382 114,767 Less - accumulated depreciation and amortization.....................................

(21,797)

(20,144) 101,585 94,623 Construction w ork in progress.......................................................

5,014 3,203 106,599 97,826 Restricted cash and investments 11,536 6,756 Current assets:

Cash and investments 2,432 2,481 Customer and other accounts receivable, net........................................2,921 3,202 Accrued interest receivable.....................................................

172 170 Materials and supplies, at average cost..............................................

136 230 Purchased water in storage 220 570 5,881 6,653 Other assets:

Unamortized bond refunding costs...................................................

1,081 1,159 Unam ortized debt issuance costs....................................................

396 155 Total assets......................

$ 125,493

$ 112,549 34

June 30 1988 1987 Equity, liabilities and other credits (in thousands)

Equity:

Beginning fund balance contributed by the City.........................................

$ 19,280

$ 19,280 Retained earnings...............................................................

18,091 14,398 Total eq uity...................................................................

37,371 33,678 Long-term debt, less current portion......................

18,701 18,386 Capitalized lease obligation, less current portion...........................................

2,681 2,734 Total capitalization..............................................................

58,753 54,798 Current liabilities (payable from restricted assets):

Current portion of long-term debt....................................................

4,520 202 Accrued interest.................................................................

529 449 C ustom er deposits................................................................

752 841 5,801 1,492 Current liabilities (payable from current assets):

Current portion of long-term debt....................................................

277 261 Current portion of capitalized lease obligation...........................................

53 49 Accounts payable and accrued expenses...............................................

1,954 2,733 Custom erdeposits................................................................

163 241 2,447 3,284 Total current liabilities...........................................................

8,248 4,776 Other liabilities and deferred credits:

Contributions in aid of construction...................................................

58,492 52,975 Com m itm ents and contingencies....................................................

Total equity, liabilities and other credits.............................................

$125,493

$112,549 See accompanying Notes to Financial Statements 35

City of Anaheim Water Utility Fund Statements of Income Year Ended June 30 1988 1987 Operating revenues:

(in thousands)

Sale of w ater..............................................

$ 19,287

$ 20,389 O ther operating revenues....................................

112 265 Total operating revenues..................

19,399 20,654 Operating expenses:

C ost of w ater..............................................

7,933 7,856 O ther operations.................................................................

2,353 2,124 M aintenance....................................................................

2,955 3,035 Depreciation and am ortization......................................................

1,152 961 Total operating expenses.........................................................

14,393 13,976 Operating income..............................................................

5,006 6,678 Other income (expense):

Interest and other incom e..........................................................

1,043 862 Interestexpense.................................................................

(1,611)

(1,323)

(568)

(461)

Net income....................................

4,438 6,217 STATEMENTS OF CHANGES IN RETAINED EARNINGS Balance at beginning of year......................................................

$ 14,398 8,883 Net income for the year...........................................................

4,438 6,217 Transfer to the General Fund of the City...............................................

(745)

(702)

Balance at end of year..........................................................

$ 18,091

$ 14,398 See accompanying Notes to Financial Statements 36

City of Anaheim Water Utility Fund Statements of Changes in Financial Position june 30 1988 1987 Financial resources were provided by:

(in thousands)

Operations N et incom e...................................................................

4,438 6,217 Charges to income not involving working capital Depreciation and am ortization...................................................

1,152 961 Amortization of debt issuance costs and bond discount................................

181 176 W orking capital provided by operations.............................................

5,771 7,354 Increase in current liabilities (payable from restricted assets)................................

4,309 Contributions in aid of construction...................................................

6,574 3,451 Increase in long-term debt..........................................................

5,000 4,300 21,654 15,105 Financial resources were used for:

Purchase and contribution of utility plant, net..........................................

10,981 6,619 Decrease in long-term debt and capitalized lease obligation................................

4,823 516 Transfertothe General Fund of the City................................................

745 702 Increase in restricted cash and investments..............................................

4,780 1,136 Increase in debt related costs........................................................

260 Debt refinanced during the current period..............................................

2,900 Decrease in current liabilities (payable from restricted assets)...............................

.352 21,589 12,225 Increase in working capital..........................................................

65

$ 2,880 Increase (decrease) in working capital:

Cash and investm ents.............................................................

($

49) 1,212 Customer and other accounts receivable...............................................

(281) 1,817 Accrued interest receivable.........................................................

2 (9)

M aterials and supplies.............................................................

(94) 25 Purchased w ater in storage..........................................................

(350) 159 (772) 3,204 Current portion of long-term debt....................................................

(16)

(46)

Current portion of capitalized lease obligation...........................................

(4)

(4)

Accounts payable and accrued expenses...............................................

779 (496)

Customer deposits.....................................................................

78 222 837 (324)

Increase in working capital..........................................................

65

$ 2,880 See accompanying Notes to Financial Statements 37

City of Anaheim Water Utility Fund Notes to Financial Statements NOTE I - 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 provides The Water Utility Fund (the Water through investment activities. Investments that transfers to the General Fund of the Utility) of the City of Anaheim (the City) are carried at cost, which approximates City shall not exceed 4% of the gross was established June 30, 1971, at which market value. Interest income on revenue of the prior year. Such transfers time the portion of the City's General investments is allocated to the various are not in lieu of taxes and are recorded as Fund equity relating to water system funds of the City on the basis of average distributions of retained earnings.

operations was transferred to Water Utility daily cash and investment balances.

Reclassifications equity. The financial statements of the Revenue recognition Certain reclassifications have been Water Utility are presented in conformity To provide a better matching of costs made to the 1987 financial statements to with generally accepted accounting and revenues, effective with fiscal year conform to the 1988 presentation.

principles and accounting principles and ended June 30, 1987, the Water Utility NOTE 2-Operating Expenses methods prescribed by the California changed its accounting policy for Public Utilities Commission (CPUC).

recognizing revenue to a method which Oerating expen ed wt the The Water Utility is not subject to the provides for the accrual of estimated Electric4Utilityfamountedetos$13,545,000 regulations of the CPUC.

unbilled revenues for water sold but not and 13,405

, respeded June Utility plant and depreciation billed at the end of a fiscal period; The cost of additions to utility plant and previously, revenues were recognized

$2,709,000 and $2,670,000 were replacement of retired units is capitalized.

when billed to customers. Residential and allocated to the Water Utility Utility plant is recorded at cost, or in the smaller commercial accounts are billed The shared expenses are allocated to case of contributed plant, at fair market bimonthly and all others are billed each Utility based upon estimates of the value at the date of the contribution, monthly benefits each Utility derives from those except that assets acquired prior to July 1, The Water Utility's Rates, Rules and common expenses.

1977 are recorded at appraised historical Regulations include a water commodity cost. Cost includes labor; materials; adjustment formula by which billings to allocated indirect charges such as customers are subject to adjustment, up engineering, supervision, construction or down, to reflect variations in the cost of and transportation equipment, retirement water production to the Water Utility plan contributions and other fringe Debt issuance costs benefits; and certain administrative and In accordance with industry practices, general expenses. The cost of relatively minor replacements is included in debtise ots are dfereand maintenance expense. The net book aord orles o f thearelated value of assets retired or disposed of, net bondoisues on afbasi ich of proceeds, is recorded in accumulated approxe depreciation.

method.

Depreciation of utility plant is provided by the straight-line method based on the All full-time City employees are following estimated service lives of the members of the State of California Public properties:

Employees' Retirement System (PERS).

Transmission and The City's policy is to fund all pension distribution costs accrued; such costs to be funded are dtribuato ant...2do7 er determined annually as of July 1 by the Other plant and equipment............. 5 to 50 years PERSs actuary Depreciation on contributed assets is Vacation and sick pay charged directly to Contributions in aid of Vacation and sick pay for all City construction.

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 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

$203,000 and $205,000 for the Water Utility at June 30, 1988 and 1987, respectively n

38

NOTE 3 - Long-Term Debt The Water Utility is indebted as follows:

June 30 1988 1987 Water Revenue Bonds, 1980 Series, TIC 8.6401%, dated January 1, 1980, sold February 26, 1980 in the amount of $7,350,000, of which (1) $3,270,000 at rates ranging from 7.6% to 8.0% mature serially to July 1, 1999 in annual principal installments ranging from $175,000 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 $12,097,000 to maturity.....................

$ 6,455,000

$ 6,615,000 Water Revenue Bonds, 1984 Series, TIC 10.317%, dated October 1, 1984, sold October 9, 1984 in the amount of $6,650,000at 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 $110,000 to

$180,000; total debt service of $1,394,000 to maturity.................................

995,000 1,095,000 Water Revenue Bonds, 1986 Series, TIC 7.048%, dated March 1, 1986, sold March 4, 1986 in the amount of $7,160,000, of which (1) $2,735,000 at rates ranging from 5.5% to 6.9% mature serially to April 1, 2001 in annual principal installments ranging from $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 $13,184,000 to maturity...............................................................

7,060,000 7,130,000 Water Revenue Bonds, 1988 Series, TIC 7.3765%, dated January 1, 1988, sold January 12, 1988 in the amount of $5,000,000 at rates ranging from 6.3% to 7.6%, maturing serially to October 1, 2012 in annual principal installments ranging from $85,000 to $425,000; total debt service of

$10,941,000 to maturity 5,000,000 Total revenue bond debt 19,510,000 14,840,000 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 $4,397,000 to maturity............................

4,300,000 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

$288,000 to maturity......................................................

268,000 389,000 Note Payable to Internal Service Fund of the City, 8.95%, issued October 13, 1984 in the amount of

$335,000, semi-annual principal and interest payments ranging from $14,000 to $29,000 through October 31, 2003; total debt service of $554,000 to maturity............................

319,000 303,000 Total other long-term debt..................................................

4,887,000 4,992,000 Total long-term debt 24,397,000 19,832,000 Less: current portion........................................................

4,797,000 463,000 bond discounts........................................................

899,000 983,000

$18,701,000

$18,386,000 39

NOTE 3 -

Long-Term Debt (continued)

Annual debt service requirements at June 30, 1988 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 1989 355,000 $ 1,381,000

$ 1,736,000

$4,442,000 $148,000

$4,590,000

$ 6,326,000 1990 465,000 1,351,000 1,816,000 153,000 30,000 183,000 1,999,000

.1991 500,000 1,316,000 1,816,000 14,000 23,000 37,000 1,853,000 1992 540,000 1,277,000 1,817,000 16,000 22,000 38,000 1,855,000 1993 580,000 1,235,000 1,815,000 18,000 21,000 39,000 1,854,000 Thereafter 17,070,000 11,546,000 28,616,000 244,000 119,000 363,000 28,979,000

$19,510,000

$18,106,000

$37,616,000

$4,887,000

$363,000

$5,250,000

$42,866,000 Current interest costs of $299,000 and $539,000 have been included in Construction work in progress for fiscal years ended June 30, 1988 and 1987, 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 10% of the depreciated book value of the utility plant in service.

The bond issues outstanding at June 30, 1988 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, 1988, outstanding principal of the refunded 1984 Bonds totaled $5,370,000. Over the life of the 1986 Bonds the Water Utility expects to save approximately $1,049,000 in debt service as compared to the refunded 1984 Bonds.

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

June 30 1988 1987 Held by Fiscal Agent:

Bond Reserve Fund.........................................................$

1,905,000

$ 1,499,000 Bond Service Fund............................................................

437,000 428,000 Held by City Treasurer:

Bond Service Account.........................................................

264,000 175,000 Renewal and Replacement Account...............................................1,016,000 946,000 Restricted bond proceeds......................................................

7,914,000 3,708,000

$11,536,000

$ 6,756,000 40

NOTE 4 -

Capitalized Lease Obligation NOTE 7-Cash and Investments NOTE 9 -

Subsequent Events The City has a long-term non-At June 30,1988, all of the City's pooled On September 12, 1988, the City paid cancelable lease with the Municipal cash and investments were insured, off the two year, $4,300,000 Water Water District of Orange County to registered or collateralized, with the Revenue Anticipation Notes issued in finance the acquisition of a 7.2% share exception of amounts invested by fiscal September 1986; at the same time the in the capacity of the Allen-McColloch agents. A summary of the Water Utility's City sold a new issue of $3,700,000 in one Pipeline. The lease provides for participation in the City's pooled cash and year Water Revenue Anticipation Notes at semiannual payments of $147,000 investments is allocated based on the a rate of 6.2 percent.

commencing August 1, 1981 and overall percentage participation as Report of Independent Auditors continuing until February 1, 2008. Future follows:

minimum lease payments under this lease U.S. government securities.. $ 4,946,000 Coth onoae Cionil are as follows:

Negotiable certificates Fiscal Year ofdeposit.............4,643,000 We have audited the accompanying 1989.................. $

294,000 Bankers acceptances.......798,000 balance sheets of the Water Utility Fund of 1990..................

294,000 Repurchase agreements...

451,000 theCityofAnaheim,CaliforniaasofJune 1991.................

294,000 Cash and time deposits....

94,000 30,1988 and 1987, and the related 1992..................

294,000 Local agency investment statements of income, changes in retained 1993..................

294,000 fund (state pool).........694,000 earnings and changes in financial position Thereafter..............

4,410,000 Total cash and investments forthe years then ended. These financial 5,880,000 controlled by statements are the responsibility of the Less interest at 8.8%........3,146,000 City Treasurer.........11,626,000 Water Utility's management. Our Present value of Amounts invested by responsibility is to express an opinion future minimum fiscal agents...........2,342,000 on these financial statements based on lease payments.......... $ 2,734,000 Total cash and investments.. $13,968,000 We codte u

Current portion.......... $

53,000 Fiscal agents on behalf of the City hold accordance with generally accepted Long-term portion........

2,681,000 and invest funds from long-term debt auditing standards. Those standards

$ 2,734,000 issuances. Fiscal agents are mandated by require that we plan and perform the bond indenture as to the types of audit to obtain reasonable assurance The asset related to this lease is investments in which proceeds can be about whether the financial statements recorded in Utility plant, Transmission invested. Investments by fiscal agents are free of material misstatement. An audit and distribution, and at June 30, 1988 predominantly consist of U.S.

includes examining, on a test basis, amounted to $3,059,000. The related Government securities held in book entry evidence supporting the amounts and accumulated amortization at June 30, form.

disclosures in the financial statements. An 1988 and 1987 was $265,000 and During the year the City invested in audit also includes assessing the

$224,000, respectively. Amortization commercial paper and treasury notes. No accounting principles used and significant expense for each fiscal year amounted to investments were held in commercial estimates made by management, as well

$41,000.

paper and treasury notes at June 30,1988.

as evaluating the overall financial NOTE 5 -

Pension Plan NOTE 8-Commitments and statement presentation. We believe that The City has a contributory pension Contingencies our opo plan for its full-time employees under the Litigation In opinion, State of California Public Employees' A number of claims and suits are rr o aboe pre fail inall Retirement System. Information is not pending against the City for alleged maerrespecst fail in of available separately for the Water Utility as mtra epcs h iaca oiino toaae serat forte te damages to persons and property and for the Water Utility Fund of the City of actuarially computed present value of other alleged liabilities arising out of Anaheim, California at June 30, 1988 and vested and non-vested accumulated lo matters usually incident to the operation 1987 and the results of its operations and veeist an roeted acumu ated pla of a utility such as the water system of the the changes in its financial position for the benefits, the related assumed rates of return used and the actuarially computed City In the opinion of management, the years then ended in conformity with value of vested benefits over the related liability under these claims and suits generally accepted accounting principles.

pension fund assets.

would not materially affect the financial position of the Water Utility as of June 30,

.7 NOTE 6 - Self-Insurance Program 1988.

r fao The Water Utility is part of the City's Capital expenditures Peat Marwick Main & Co.

self-insured workers' compensation and The Water Utility's budget for the October14,1988 general liability program. The liability for L

such claims is transferred to the City in consideration of self-insurance premiums expenditures of approximately $10,042,000 paid by the Water Utility Effective July 1, of which $6,141,000 will be funded by 1986, the City became self-insured. Costs water revenue bond proceeds and relating to the litigation of claims are Ssnti c

itment e n

charged to expense as incurred mad in vs co tments here ithe patiiain conin ther'spedcahhan

City of Anaheim Electric Utility Fund Balance Sheets June 30 1988 1987 Assets (in thousands)

Utility plant:

Production....................................

$171,198

$167,906 Transmission....................................................................

12,313 12,227 Distribution....................................................................

89,323 81,563 General.......................................................................

10,380 10,376 283,214 272,072 Less - accumulated depreciation....................................................

(58,433)

(50,158) 224,781 221,914 Construction work in progress........................................................

7,013 8,042 Nuclear fuel, at amortized cost.......................................................

10,199 12,916 241,993 242,872 Restricted assets:

Cash and investments.............................................................

48,950 49,798 O ther..........................................................................

377 380 49,327 50,178 Current assets:

Cash and investments.............................................................

46,895 42,845 Customer and other accounts receivable, net............................................

23,770 22,482 Prepaid purchased power...........................................................

742 8,016 Accrued interest receivable..........................................................

1,926 1,774 M aterials and supplies, at average cost..................................................

2,226 2,065 75,559 77,182 Other assets:

Unamortized bond refunding costs...................................................

27,578 29,932 Unam ortized project costs..........................................................

4,792 3,142 Unamortized debt issuance costs..........................................

1,775 2,020 34,145 35,094 Total assets..................................

$401,024

$405,326 42

1988 1987 Equity, liabilities and other credits (in thousands)

Equity:

Beginning fund balance contributed by the City..........................................

$ 14,629

$ 14,629 Retained earnings.................................................................

80,001 72,848 Total equity....................................................................

94,630 87,477 Long-term debt, less current portion.....................................................

223,147 228,920 Total capitalization...............................................................

317,777 316,397 Current liabilities (payable from restricted assets):

Current portion of long-term debt.....................................................

4,900 4,620 Accrued interest..................................................................

3,952 3,997 Accounts payable.................................................................

144 536 Tax-exem pt com mercial paper.......................................................

20,450 20,450 29,446 29,603 Current liabilities (payable from current assets):

Current portion of long-term debt.....................................................

1,909 1,801 Accounts payable and accrued expenses...............................................

7,947 6,552 C ustom er deposits...............................................................

920 785 Power cost adjustment balancing account..............................................

6,960 12,591 Rate stabilization account...........................................................

12,861 20,130 Test energy billings................................................................

3,064 33,661 41,859 Total current liabilities............................................................

63,107 71,462 Other liabilities and deferred credits:

Contributions in aid of construction...................................................

17,521 15,528 Decom m issioning reserve...........................................................

2,619 1,939 Com m itm ents and contingencies.....................................................

Total equity, liabilities and other credits.............................................

$401,024

$405,326 See accompanying Notes to Financial Statements 43

City of Anaheim Electric Utility Fund Statements of Income June 30 1988 1987 Operating revenues:

(in thousands)

Sale of electricity................................................................

$178,202

$182,950 Provision for power cost adjustment...................................................

3,416 826 Provision for rate stabilization........................................................

9,427 7,291 O ther operating revenues...........................................................

800 570 Total operating revenues.........................................................

191,845 191,637 Operating expenses:

Cost of purchased power..........................................................

124,936 108,300 Fuel used for generation............................................................

4,399 5,227 Other operations.................................................................

17,174 17,127 M aintenance....................................................................

8,937 7,806 Depreciation....................................................................

9,057 8,525 Am ortization of project costs........................................................

29 Total operating expenses.........................................................

164,503 147,014 Operating income..............................................................

27,342 44,623 Other income (expense):

Interest incom e...................................................................

5,699 5,120 Interest expense.................................................................

(18,555)

(19,073)

(12,856)

(13,953)

N et incom e..................................................

$ 14,486

$ 30,670 STATEMENTS OF CHANGES IN RETAINED EARNINGS Balance at beginning of year........................................................

$ 72,848

$ 49,396 Net income for the year.....................................

14,486 30,670 Transfer to the General Fund of the City.........................

(7,333)

(7,218)

Balance at end of year.........................................

$ 80,001

$ 72,848 See accompanying Notes to Financial Statements 44

City of Anaheim Electric Utility Fund Statements of Changes in Financial Position June 30 1988 1987 Financial resources were provided by:

(in thousands)

Operations Net income.

$ 14,486

$ 30,670 Charges to income not involving working capital Depreciation............................................

9,057 8,525 Amortization of project costs...................................

29 Amortization of debt costs.......................................

3,522 3,334 Increase in decommissioning reserve............................................

680 734 Working capital provided by operations.......................................27,745 43,292 Increase in current liabilities (payable from restricted assets).

882 Decrease in restricted assets.....................................................

851 688 Contributions in aid of construction...............................................2,356 1,313 Increase in long-term debt 77,780 30,952 123,955 Financial resources were used for:

Purchase and contribution of utility plant, net........................................8,541 8,864 Decrease in long-term debt.....................................................6,696 6,438 Transfer to the General Fund of the City.

7333 7,218 Increase in unamortized project costs..............................................1,650 860 Decrease in current liabilities (payable from restricted assets).................................

157 Increase in debt related costs.

5,519 Debt refinanced during the period 72,775 24,377 101,674 Increase in working capital.

$ 6,575

$ 22,281 Increase (decrease) in working capital:

Cash and investments..............

4,050

($

723)

Customer and other accounts receivable............................................1,288 7,261 Prepaid purchased power......................................................

(7,274) 8,016 Accrued interest receivable......................................................

152 926 Materials and supplies.........................................................

161 (191)

(1,623) 15,289 Current portion of long-term debt.................................................(108)

(591)

Accounts payable and accrued expenses...........................................(1,395) 2,715 Customer deposits...........................................................(135)

(162)

Power cost adjustment balancing account...........................................5,631 (121)

Rate stabilization account......................................................7,269 5,151 Test energy billings (3,064) 8,198 6,992 Increase in working capital..................................................

$ 6,575

$ 22,281 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 The Electric Utility Fund (the Electric capitalized. Utility plant is recorded at through investment activities. Investments Utility) of the City of Anaheim (the City) cost, or in the case of contributed plant, are carried at cost, which approximates was established June 30, 1971, at which at fair market value at the date of the market value. Interest income on time the portion of the City's General contribution, except that the assets investments is allocated to the various Fund equity relating to electric system acquired prior to July 1, 1977 are recorded funds of the City on the basis of average operations was transferred to Electric at appraised historical cost. Cost includes daily cash and investment balances.

Utility equity. The financial statements labor; materials; allocated indirect charges Revenue recognition of the Electric Utility are presented in such as engineering, supervision, To provide a better matching of costs conformity with generally accepted construction and transportation accounting principles and accounting equipment, retirement plan contributions a

enes efe with the fic principles and methods prescribed by the and other fringe benefits; and certain year ned un 30c98,the Elic Federal Energy Regulatory Commission administrative and general expenses. The Utiing e t autg poic (FERC). The Electric Utility is not subject cost of relatively minor replacements is rogizin r t a med to the regulations of the FERc.

included in maintenance expense. The aitodnes for ea rua of ei t

Tet bokvau of asetios re tility orubildreeusantneg olu nnot billed at the end of a fiscal period; disposed of, net of proceeds, is recorded previously, revenues were recognized in accumulated depreciation.

when 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 adjusts Depreciation on contributed assets is revenues from the sale of electricity for charged directly to Contributions in aid of overcollections or undercollections of construction, revenues resulting from differences between the Electric Utility's actual cost of power and the amount billed to customers through 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) which 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 of the City NOTE 3-Unamortized Project Costs Accounting Pblicies (continued)

Article XII of the City Charter provides The City plans to participate in various Nuclear fuel that transfers to the General Fund of the power generation projects with other The Electric Utility amortizes the cost of City shall not exceed 4% of the gross agencies. Unamortized project costs nuclear fuel to expense using the "as revenue of the prior year. Such transfers includes $4,792,000 which represents burned" method. In accordance with the are not in lieu of taxes and are recorded as advance payments to participating Nuclear Waste Disposal Act of 1982, the distributions of retained earnings agencies for preliminary engineering and Electric Utility is charged a fee for the Reclassifications environmental impact studies for the disposal of nuclear fuel at the rate of one Certain reclassifications have been related projects.

mill per kwh on the Electric Utility's share made to the 1587 financial statements to In addition, the City is participating in of electricity generated by the San Onofre conform to the 1988 presentation.

other projects which are being financed Nuclear Generating Station, Units 2 and 3 by outside third parties. If the projects are (SONGS). The Electric Utility pays the fee NOTE 2-Operating Expenses ultimately abandoned, the Electric Utility quarterly to the Southern California Operating expenses shared with the will be required to reimburse the third Edison Company (Edison) which is acting Water Utility amounted to $13,545,000 parties for the Electric Utility's share of as the agent for SONGS participants.

and $13,405,000 for the years ended June project costs, which at June 30, 1988 Federal regulations also require the 30,1988 and 1987, respectively, of which amounted to approximately $200,000.

Electric Utility to provide for the future

$10,836,000 and $10,735,000 were costs of decommissioning SONGS.

allocated to the Electric Utility Decommissioning costs are charged to The shared expenses are allocated to other operating expenses and are each Utility based upon estimates of the provided for over the remaining life of the benefits each Utility derives from those plant.

common expenses.

Debt issuance costs In accordance with industry practices, 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

$646,000 and $626,000 for the Electric Utility at June 30, 1988 and 1987, respectively.

47

NOTE 4 -

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

June 30 1988 1987 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 $525,000 to $675,000; total debt service of

$3,283,000 to m aturity.......................................................

$ 2,975,000

$ 3,475,000 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

$8,057,000 to maturity...............

4,750,000 4,875,000 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 $1,700,000 to $2,000,000; total debt service of $6,240,000 to maturity...........................................

5,550,000 7,150,000 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 $952,000 to maturity........................

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

$1,360,000, respectively; total debt service of $3,808,000 to maturity......................

2,560,000 2,560,000 Electric Revenue Bonds, Issue C of 1983, TIC 9.1023%, dated April 1, 1983, sold April 27, 1983 in the amount of $80,400,000 at rates ranging from 5.25% to 9.0%, of which $5,650,000 maturing serially October 1, 1995 through 1998 and $52,500,000 of term bonds maturing October 1, 2007 were advance refunded on March 31, 1986; the remaining bonds mature serially through October 1, 1994 in annual principal installments ranging from $2,100,000 to

$2,850,000; total debt service of $21,381,000 to maturity.............................

16,750,000 18,700,000 Electric Revenue Bonds, Issue of 1986, TIC 7.006%, dated March 1, 1986, sold March 4, 1986 in the amount of $129,275,000, of which (1) $59,740,000 at rates of 5.25% to 6.9% mature serially through October 1, 2001 in annual principal installments ranging from $1,030,000 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 $235,154,000 to maturity................

128,290,000 129,275,000 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) $46,700,000 at rates of 4.3%

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

$975,000 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

$139,599,000 to maturity.....................................................

76,850,000 77,780,000 Total revenue bond debt.....................................................

$238,365,000

$244,455,000 48

NOTE 4 - Long-Term Debt (continued)

June 30 1988 1987 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 $672,000 to maturity...............................................

626,000 907,000 Note Payable to Internal Service Fund of the City, 8.95%, issued October 13, 1984, in the amount of $1,342,000, semi-annual principal and interest payments ranging from $55,000 to

$106,000 through October 31, 2003; total debt service of $2,216,000 to maturity.............

1,276,000 1,213,000 Total other long-term debt...........................

1,902,000 2,120,000 Total long-term debt.......................................................

240,267,000 246,575,000 Less: current portion..........................................................

6,809,000 6,421,000 bond discounts..........................................................

10,311,000 11,234,000

$223,147,000

$228,920,000 Annual debt service requirements at June 30, 1988 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 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 1993 7,705,000 13,092,000 20,797,000 70,000 83,000 153,000 20,950,000 Thereafter 202,745,000 110,051,000 312,796,000 977,000 476,000 1,453,000 314,249,000

$238,365,000

$180,109,000

$418,474,000

$1,902,000

$986,000

$2,888,000 $421,362,000 49

NOTE 4 -. Long-Term Debt (continued)

Current interest costs of $1,598,000 and $1,500,000 have been included in Construction work in progress for fiscal years ended June 30, 1988 and 1987, 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, 1988 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, 1988, outstanding principal of the refunded 1982 Bonds totaled

$61,000,000. Over the life of the Issue C of 1983 Bonds, the Electric Utility expects to save approximately $12,297,000 in debt service as compared to the refunded 1982 Bonds.

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

$21,476,000. 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, 1988, outstanding principal of the refunded 1983 bonds totaled $103,000,000. 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, 1988, outstanding principal of the refunded 1980 bonds totaled $71,175,000. 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 1988 1987 Held by Fiscal Agent:

Bond Reserve Fund

$22,356,000

$22,346,000 Bond Service Fund.......................................................

602,000 588,000 Held by City Treasurer:

Bond Service Account 8,096,000 7,928,000 Renewal and Replacement Account..........................................

6,792,000 6,741,000 Decommissioning and fuel reserves..........................................

9,241,000 6,179,000 Restricted bond proceeds..................................................

1,863,000 6,016,000 Other restricted assets......................................................

377,000 380,000

$49,327,000

$50,178,000 50

NOTE 5 -

Short-Term Debt NOTE 6-Jointly-Owned Utility NOTE 9-Refunds The Electric Utility has outstanding Project Since fiscal year 1986 the Electric Utility revenue anticipation notes in the form of The Electric Utility owns a 3.16%

received refunds from Edison totaling short-term tax-exempt commercial paper interest as a tenant in common in SONGS.

$32,226,000. These refunds have been for the purpose of financing nuclear fuel The other participants in Units 2 and 3 are placed in the RSA. At June 30, 1988 purchases related to the ownership Edison, 75.05%; San Diego Gas & Electric and 1987, total principal and interest interest in SONGS. The balance Company, 20%; and the City of Riverside, amounted to $12,861,000 and outstanding at June 30, 1988 and 1987 1.79%. Units 2 and 3 became operational

$20,130,000, respectively The City totaled $20,450,000. The interest rates on on October 9, 1983 and April 1, 1984, intends to refund these amounts to this debt at June 30, 1988 ranged between respectively The Electric Utility's Electric Utility customers in the form of 4.65% and 4.90% with maturities ranging cumulative share of construction costs, reductions to future rate increases through from 20 to 61 days. The Electric Utility has which amounted to $171,198,000 at June the Rate Stabilization Policy (see Note 1).

obtained a $21 million revolving credit 30,1988, was included in Utility plant at These refunds have been reflected in agreement, which can be used in the June 30,1988. The Electric Utility the Electric Utility's Financial Statements.

event that the commercial paper cannot recorded depreciation related to SONGS be refinanced as it matures, of $5,997,000 during fiscal year 1988. The NOTE 10 - Cash and Investments Electric Utility has made provisions for At June 30,1988, all of the Citys pooled disposal costs of spent nuclear fuel and for cash and investments were insured, future decommissioning costs (see Note 1) registered or collateralized, with the of $428,000 and $680,000, respectively exception of amounts invested by fiscal These costs along with the Electric agents. A summary of the Electric Utility's Utility's share of SONGS operating and participation in the City's pooled cash and maintenance costs have been included in investments is allocated based on the Operating expenses for fiscal year 1988.

overall percentage participation as NOTE 7 -

Pension Planfor The City has a contributory pension S. government securities. $31,006,000 plan for full-time employees under the Negotiable certificates State of California Public Employees'ofdpst.

2,100 ofner

$428,000ce and. $68,00,reseciv0y Retirement System. Information is not Baerchse a eept nces.....5,00,000 available separately for the Electric Utility as to the cost of benefits funded, the Cash and time deposits...

591,000 actuarially computed present value of Local (age investment 43500 vested and non-vested accumulated plan fua c nd ta esoltments

,31,0 benefits, the related assumed rates of in return used and the actuarially computed controlled by value of vestedbenefits over the related City Treasurer.........72,887,000 pension fund assets.

Amounts invested by NOTE 8-Self-insurance Program fiscal agents..........22,958,000 The Electric Utility is part of the City's Total cash and investments.

95,845,000 self-insured workers' compensation and Fiscal agents on behalf of the City hold general liability program. The liability for and invest funds from long-term debt such claims is transferred to the City in issuances. Fiscal agents are mandated consideration of self-insurance premiums by bond indenture as to the types of paid by the Electric Utility Effective July 1, investments in which proceeds can be 1986, the City became self-insured. Costs invested. Investments by fiscal agents relating to the litigation of claims are predominantly consist of U.S.

charged to expense as incurred.

Government securities held in book entry form.

During the year the City invested in commercial paper and treasury notes. No investments were held in commercial paper and treasury notes at June 30, 1988.

51

NOTE I1 -

Commitments and The City does not expect these payments NOTE 12-Subsequent Events Contingencies to have an adverse impact on the Electric On July 1, 1988, the Certificate of Take or pay contracts Utilitys rate structure in that such Completion of the initial facilities of payments are in lieu of payments which the Intermountain Power Project was The City has entered into agreements would have been made to purchase executed and as a result the surplus in with the Intermountain Power Agency power from Edison. The City projects that PAs Construction Fund was transferred (IPA), a political subdivision of the State there will be substantial long-term power to IPAs General Reserve Fund and will of Utah, Utah Power & Light (UP&L) supply cost savings from the take or pay be allocated to the various participants and the Southern California Public Power contracts compared to purchase from based upon the Plan for the Disposition Authority (SCPPA), a public entity Edison.

of Surplus Funds. The Electric Utility's share organized under the laws of the State of California. The City has agreed with IPA Duringthe year ended June 30,1987, of these surplus funds is approximately and UP&L, pursuant to power sales payments to PA for power were based

$35.8 million which the Electric Utility conracsto urcas 132251oof he upon PA's budget for the year. IPA will use to reduce future IPP purchased contracts, to purchase 13.225% of the generation output of IPA's 1,600 megawatt determined that its actual costs for the power costs.

two unit coal-fueled generating station year were less than budgeted, resulting in Report of Independent Auditors (the Station) in central Utah. Unit 1 of the

$8,016,000 which will offset against future To the Honorable City Council Staton ecam avilabe fr comerial power payments by the Electric Utility to Station became available for commercialCiyoAnhmalfra operation June 10, 1986. Unit 2 was IPA. This amount has been reflected in the commercially available May 1, 1987. Cost Electric Utility's Financial Statements.

We have audited the accompanying of construction of the Station and relatedUtility Fund transmission lines, tain and reltedg of the City of Anaheim, California as of trasmisio liesincudig te Suthrn On August 5, 1988, as a precondition to June 30, 1988 and 1987, and the related Transmission System (STS) from Utah entering into an arbitration agreement on statements of income, changes in retained to Southern California, was financed disputed billings, Edison paid the City earnings and changes in financial position principally through sales of IPA's power

$3,064,000 for contested Intermountain for the years then ended. These financial supply revenue bonds and payments in Power Project test energy which is statements are the responsibility of the aid of construction by SCPPA. The City included in Accounts Receivable and Electric Utility's management. Our has agreed with SCPPA to purchase rights offset by a current liability This money responsibility is to express an opinion to 17.6% of the transmission capacity in will not be expended for any purpose on these financial statements based on the STS.

until such time as the arbitration has been our audits.

The contracts constitute an obligation completed.

We conducted our audits in of the City to make payments solely from Litigation accordance with generally accepted the revenues of the Electric Utility. These A number of claims and suits are auditing standards. Those standards payments, which are based upon the City'smshare btservice pending against the City for alleged require that we plan and perform the requirements and production costs damages to persons and property and for audit to obtain reasonable assurance SCPPA's debt service requirements, began other alleged liabilities arising out of about whether the financial statements in July 1986, the month in which Unit matters usually incident to the operation are free of material misstatement. An audit the Station and the STS began commercial of a utility such as the electric system of includes examining, on a test basis, operation. These p en wil e

the City In the opinion of management, evidence supporting the amounts and onseredoa.Csteo purchatse powler.A the liability under these claims and suits disclosures in the financial statements. An consideredwould not materiall affect the financial audit also includes assessing the of June 30, 1988, IPA has issued $5.3 y

billion in revenue bonds and revenue position o E

c t

fatin pie u and snect bond anticipation notes to finance 31 eimats mae by manantal construction of the Station and SCPPA has Rate challenges and other actions issued $1.1 billion in revenue bonds and The City has filed several complaints oaudits proiea reasonable a revenue bond anticipation notes to against Edison challenging various rate our opo finance payments in aid of construction.

increases and a suit alleging that Edison The Electric Utility's projected has violated certain anti-trust laws. These In our opinion, the financial statements minimum payments for purchased power actions could potentially result in refunds referred to above present fairly in all due under these take or pay contracts for or payment of damages to the Electric ofte eect tiFn o

ityof the next five years are as follows:

Utility; however, no opinion can be Anahe lforia t un e 0, 1 a

Fiscal Year rendered at this time as to the probable 18ahe reulsof t oerations and 1989................. $57,567,000 outm ee ctios the changes in its financial position for the 1990................. $62,187,000 years then ended in conformity with The Electric Utility's budget for generally accepted accounting principles.

1991................. $62,189,000 the fiscal year 1988-89 provides for 1992................. $63,675,000 capital expenditures of approximately 1993.......p.........ae$63,324,000

$4, 158,000, of which $31,616,000 will be funded from electric revenue bond Peat Marwick Main & Co.

proceeds.

October 14,1988 Los Angeles, California 52

Meter Reader Bob Blair uses a hand-held microcomputer to record an average of 450 water and electric readings daily

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CITY OF ANAHEIM PUBLIC UTILITIES DEPARTMENT 200 S. Anaheim Boulevard, Anaheim, CA 92805 Reliable Water and Electric Service to Anaheim Since 1895