L-80-338, Forwards Financial Info Requested by NRC Re Transfer of Ownership Interest to City of Orlando & Orlando Utils Commission.Cash Flow Statement & Bond Info Encl

Forwards Financial Info Requested by NRC Re Transfer of Ownership Interest to City of Orlando & Orlando Utils Commission.Cash Flow Statement & Bond Info Encl

ML17266A357
Person / Time
Site:	Saint Lucie
Issue date:	10/10/1980
From:	Robert E. Uhrig FLORIDA POWER & LIGHT CO.
To:	Eisenhut D Office of Nuclear Reactor Regulation
Shared Package
ML17209A283	List: L-80-338, Forwards Financial Info Requested by NRC Re Transfer of Ownership Interest to City of Orlando & Orlando Utils Commission.Cash Flow Statement & Bond Info Encl ML17209A282
References
L-80-338, NUDOCS 8010290326
Download: ML17266A357 (118)

Text

P.o. BOX 529100 MIAMI,F L 33152 Office of Nuclear Reactor Regulation Attention:

Nr. Darrell G. Eisenhut, Director Division of Licensing U. "-. huclear Regulatory Commission Hashir.gton, D.

C.

20555

Dear Nr. Fisenhut:

FL'ORIDA POIVER & LIGHTCOMPAhIY 0"tober 10, 1980 L-80-338 Re:

St. Lucie Unit 2 Docket No. 50-389 Transfer of Ownership Interest to Cit of Orlando and Orlando Utilities Commission Attached is the financial information required of municipal applicants requested in Nr. Robert'.

Tedesco's letter of September 29, 1980.

This information, with the'xception of the Participation Agreement required in Item 9, was transmitted to Nr..Jim C. Peterson, Utility Finance Branch, Division of Engineering, on September 30, 1980 by the Orlando Utilities Commission.

If.any additional information is needed, or you have any questions

. regarding this matter, please feel free to call.

~ Very truly yours,

~uL

/

Robert E. Uhri g Vice President Advanced Systems and Technology REU:TCG:cf cc:

Harold F. Reis, Esquire Do'ctrot%

3~

Qoorrolrolj&r M~o Doted of Document:

REGUMTO'.1Y BGt,'I(H F1'LE 8"Pt. Oor,oIO 3 2.6 PEOPLE... SERVING PEOPLE

ORLANDO UTILITIES COiEB1I SS ION

'inancial Information Required of Municipal Applicants by NRC.

1.

Projected Source Of Funds of applicant to be paid to lead applicant for acquisition of ownership interest.

$29,700,000 7,243,000 2,200,000

$86,000,000 to be sold in October, 1980

$24,000,000 to be sold in October, 1982 Revenue bonds (validated 8/1/80)

Less:

Funded interest for first 3 years Deposit to sinking fund reserve account (for full funding)

Issuance expenses Available for Payment of Construction and Other Participation Costs (see Item 8)

$110,000,000+

39,143,000

$ 70,857,000 Other Projected Construction Expenditures For Fiscal Year Ending September 30 1981 1982 1983 1984 Thousands of Dollars Mclntosh Unit ~3 (coal-fired plant jointly owned by applicant and City of Lakeland)

Transmission Line to Lakeland Total to be paid from funds on hand from previous bond sales 30, 491 4, 659 8,437 3,730

$ 38,928 8,389 Other Electric Generation and Transmission Projects Major Water projects Total to be paid from funds on hand from previous bond sales Total to be financed from subsequent

bond, sales 3,468 1,180 4, 648 8,715 6,496

$ 41,574 1,095 2,030 4,465 9,810 8,526

$ 46,039

Distribution Plants and Other Property Additions and Improve-ments To be financed from net revenues 7,627 S

8,645 8

8,866 8

9,346 Other projected Construction Expenditures (Continued)

For Fiscal Year Endin September 30 1981 1982 1983 1984 Projected Source of Revenue Funds Electric Operating Revenue

$182,777

$203,149

$226,279

$250,674 Water Operating Revenue Interest and Other Income Funds Available 9,658 1,934 194, 369 10,144 10,899 11,943 2,345 2,659 3,037 215,638 239,837 265,654 Electric Operating Expenses Water Operating Expenses Other Expenses Total Expenses 156,373 172,577 187,704 207, 877 5,979 225 6,531 239 7,050 250 7,528 260 162,577 179,347 195,004 215,665 Net Revenue Less:

Net Debt Service Transfers to City of Orlando Revenue Available for 31,792 14,984 9,479 36,291 16,269 9,129 44,833 17,449 10,320 49,989 28,599 12,534 Plant Additions 7,329

$ 10,893 8 17,064 S

8,856 The basic assumption used in the development of future financial conditions as shown above are as follows:

2.

3.

5.

Average electric sales growth rate for the period 1980-1984 is 4.1% per year.

Average electric base rate increase for the period 1980-1984 is 6,3% per year.

Inflation rate is 8% per year.

Revenue bond interest rate is 7.8~.

Revenue bond life is 30 years.

ORLANDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

2.

It is the intent of the applicant to issue revenue bonds to finance its ownership share of the project over the long term.

The payment of interest charges and principal will be made from net revenues.

The applicant is required to establish rates that will provide net revenues adequate to'ay in each fiscal year at least one hundred twenty-five percent (1259) of the annual interest and principal require-ments of outstanding revenue bonds.

The Charter of the applicant Chapter

9861, Laws of Florida

1923, as amended and supplemented gives the applicant full authority over the management and control of the electric and water plants of, the City of Orlando.

This together with other applicable provisions of Florida law give the applicant the authority to issue revenue bonds.

See fi:nancial data submitted as Item 1 for source of funds for payment of interest charges and principal (debt service).

The applicant can obtain additional external financing to the extent that the maximum debt service including any proposed issuance exceeds 150% of the prior years net revenues, as adjusted (defined in the bond resolution).

The applicant's projected operating data allows for additional external financing in, excess of the

$110,000,000 authorized for the financing of St. Lucie Unit No. 2, as follows:

Year Ending September 30 Thousands Of Dollars 1981 1982 1983 1984 46,542 59,753 47,'634 128,113

ORLANDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

3.

Most recent sale of revenue bonds:

Water and Electric Revenue Refunding and Improvement

Bonds, Series 1978B

$75,000,000 Ratings S 5 P

AA Moody's Aa Eifective Interest Rate 7.679404%

Outstanding Indebtedness:

Water and Electric Revenue Refunding And Improvement Bonds Series 1978 -$110,330,000 Series 1978A 40,000,000 Series 1978B 75,000,000

$225,300,000 The following bonds have been completely advance refunded but have not been legally defeased:

Water and Electric Revenue Bonds Series Series Series Series Series Series Series Series Series Series Series 1957 -$12,500,000 1957 6,000,000 1957 2,000,000 1959 8,000,000 1962 14,000,000 1962 14,000,000 1970" 20,000,000 1971 33,500,000 1973 15,000,000 1975A-10,000,000 1975B-9,875,000 Water and Electric Revenue Refunding Bonds Series 1976 -$8,875,000

ORLANDO UTILITIES COMMISSION Financial Information Required of hIunicipal Applicants by NRC.

4.

Official Statement dated July 21, 1980. for, $75,000,000 Mater and Electric Revenue Refunding and Improvement

Bonds, Series 1978B (attachment).

ORLANDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

5.

Copy of applicants Annual Report as of September 30, 1979 and interim Comparative Financial State'ments and Statistics as of July 31, 1980 (attachments).

ORLANDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

6.

The applicant's energy entitlement in the electrical capacity and output of the plant will be equivalent to its ownership percentage.

(Section 3 of Participation Agreement.)

ORLANDO UTILITIES COMhlISSION Financial Information Required of Municipal Applicants by NRC.

7.

The Orlando Utilities Commission, which is composed of five (5) persons including the Mayor of the City of Orlando, has the authority to establish rules, rates and regulations governing the sale and use of electricity, power and water wherever furnished by the Commission.

The Florida Public.

Service Commission has jurisdiction over the applicant's electric rate structure but not over the rates or revenue requirements.

The applicant is required, according to the bond resolution, to maintain rates so that net revenues, as defined in the bond resolution, are adequate to pay in each fiscal year at least one hundred twenty-five percent (125%) of the annual interest and principal requirements of outstanding revenue bonds.

The commission staff annually conducts an economic study of the most recent fiscal year to assess the adequacy of its water and electric revenues to meet its anticipated revenue requirements for the subsequent year.

The most recent studies resulted in the following changes in revenue require-ments:

Test Year Ended 5'ater Electric Increase (Decrease)

Revenue Requirements 12/31/77 9/30/78 9/30/79 0

($1,423,000) 0 0

146,000 0

The study using the fiscal year ending September 30, 1980 as the test year is scheduled to begin December 1,

1980.

ORLANDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

8.

Estimated payments by applicant to lead applicant of construction and related costs:

ll/30/80 Closing of sale 12/01/80 9/30/81 10/01/81 9/30/82 10/01/82 9/30/83 10/01/83 9/30/84

$44,143,811 9,338,402 10,737,891 5,600,187 1,036,496

$70,856,787

ORLANDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

9.

Copy of St. Lucie Unit No.

2 Participation Agreement between Florida Power 5 Light Company and the Orlando Utilities Commission dated June 6,

1980 (attachment).

ORLAiVDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

10.

The applicant is not a membership organization.

ORLANDO UTILITIES COMMISSION Financial Information Required of Municipal Applicants by NRC.

11.

The procedure to be used by the lead applicant for billing the applicant for construction progress payments subsequent to closing the sale are detailed in Section 9

Payment of Current Costs of the Participation Agreement, copy of which is submitted under Item 9.

Ratings: Moody's: Aa Standard & Poors': AA (See "Ratings" herein)

$75,000,000 Orlando Utilities Commission Water and Electric Revenue Refunding and Improvement Bonds, Series 1978B Dated: April 1, 1980 Due: April 1, as shown below The Water and Electric Revenue Refunding and Improvement Bonds, Series 1978B (the "1978B Improvement Bonds" ) will be issued as coupon bonds in the denomination'of $5,000 each, registrable as to principal only, or as to both principal and interest.

Principal and semi-annual interest (April 1 and October 1, commencing October 1, 1980) will be payable at the principal oSce of The Chase Manhattan Bank, N.A., New York, New York. The 1978B Improvement Bonds are subject to redemption prior to maturity commenEing April 1, 1990 as more fully described herein.

The 1978B Improvement Bonds represent the balance of a total authorization'of $225,330,000 Bonds of which $ 110,330,000 Water and Electric Revenue Refunding Bonds, Series 1978 ("the Refunding Bonds" ), were issued in 1978 and $40,000,000 Water and Electric Refunding and Improvement Bonds, Series 1978A (the "1978A Improvement Bonds" ) were issued in 1979.

The 1978B Improvement Bonds are being issued to complete the financing of the Mclntosh Unit 3 Project currently being constructed with the City of Lakeland, Florida, as more fully described herein.

The 1978B Improvement Bonds will be issued pursuant to a resolution adopted by the Orlando Utilities Commission on April 18, 1978, as amended, and will be payable from and secured by a first lien upon and a pledge of the Net Revenues derived from the operation of the Water and Electric System and from certain investment income.

MATURITIES,AMOUNTS, COUPON RATES AND PRICES OR YIELDS Price or Price or Amount Coupon Yield Maturity Amount Coupon Yield

$ 1,145,000 6.25%

5.20%

1993

$3,120,000 6.80%

6.85%

1,205,000 6.25 5.40 1994 1,255,000 7.00 100 1,270,000 6.25 5.55 1995 1,400,000 7.10 7.15 1,340,000 6.25 5.70 1996 1,555,000 7.30 100 1,415,000 6.25 5.85 1997 1,725,000 7.40 100 1,495,000 6.25 6.00 1998 5,905,000 7.50 7.55 1,585,000 6.25 6.10 1999 8,105,000 7.70 100 1,675,000 6.25 6.25 2000 8,315,000, 7.80 100 1,775,000 7.50 6.40 2001 8,550,000 7.90 100 1,880,000 6.50 6.55 2002 8,800,000 8.00 100 1,995,000 6.70 100 2003 9,490,000 8.00

'9'/r (Plus Accrued Interest from April 1, 1980)

The 1978B Improvement Bonds are offered for delivery when, as and ifissued and received by the Underwriters and subject to the approval of legality by Mudge Rose. Guthrie & Alexander, New York, New York, Bond Counsel.

Certain other legal matters on behalf of the Commission will be passed on by J.

Thomas Gurney, Sr., ofGurney, Gurney &Handley, P.A., Orlando, Florida, Counsel to tlte Commission. Itis expected that the Bonds willbe delivered in New York, New York on or about July 29, 1980.

Maturity.

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 In the opinion ofBond Counsel, interest on the 1978B Improvement Bonds is exempt from all Federal income taxation under existing laws and from taxation under tile laws of the State ofFlorida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, banks and savings associations.

Dated: July 21, 1980

No dealer, broker, salesman or other person has been authorized by the Commission or the Undenvritcrs to give any information or to make any representations other than those contained in this Officia Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by either of the foregoing. This Officia Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 1978B Improvement Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

This Official Statement has been approved by the Commission and the information set forth herein has been furnished by the Commission and other sources which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Underwriters.

The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the afl'airs of the Commission since the date hereof.

TABLE OF CONTENTS Summary Statement DefinitionofCertain Terms..

Introduction.

Authority for Issuance ofthe 1978B Improvement Bonds Description ofthe 1978B Improvement Bonds.

Security for the 1978B Improvement Bonds.

Rate Covenant..

Purpose ofthe Offering.

Application of 1978B Improvement Bond Proceeds.

Debt Service Schedule ($225,330,000);

Debt Service Schedule ($75,000,000)..

Orlando Utilities Commission.

Summary ofCertain Provisions ofthe Resolution.

Litigation.

Ratings.

Tax Exemption.

Legality.

Miscellaneous.

Certificate Concerning OfficialStatement Appendix "A"Financial Statements.

Appendix "B"Copy ofEngineering ReportElectric Appendix "C"Copy ofEngineering ReportWater Appendix "D"Supplemental InformationThe CityofOrlando and Orange County..............

Appendix "E"Copy ofthe Resolution, as amended.

Appendix "F"Form ofBond Counsel's Opinion.

Appendix "G"Participation Agreement Between City of Lakeland and the Orlando Utilities Commission lit I

I I

2 3

3 3

4 5

5 16 23 24 24 24 25 25 A-I B-I C-I D-I F-I G-I

ORLANDO UTILITIESCOMMISSION PRESIDENT Charles J. Hawkins FIRST VICE PRESIDENT Grace C. Lindblom

~ Mayor Carl T. Langford COMMISSIONERS SECOND VICE PRESIDENT H. E. Johnson Grover C. Bryan EXECUTIVE VICE PRESIDENT AND GENERAL MANAGER Curtis H. Stanton ASSISTANT GENERAL MANAGER Harry C.

LuA'ANAGER OF ELECTRIC OPERATIONS II Louis E. Stone MANAGEROF CUSTOMER RELATIONS AND SUPPORT OPERATIONS

.,Stephen P. Willis>>,

MANAGER OF FINANCIALOPERATIONS Harold H. Walker MANAGEROF WATER OPERATIONS Theodore C. Pope GENERAL COUNSEL J. Thomas Gurney, Sr.

Gurney, Gurney & Handley, P.A.

Orlando, Florida CONSULTING ENGINEERS ELECTRIC DEPARTMENT Black & Veatch Orlando, Florida BOND COUNSEL WATER DEPARTMENT CH2M Hill Atlanta, Georgia Mudge Rose Guthrie & Alexander New York, New York FINANCIALCONSULTANT M. G. Lewis & Co., Inc.

Winter Park, Florida

SUMMARY

STATEMENT (Subject in all respects to more complete information contained in this 05cial Statement)

The Orlando Utilities Commission (the "Commission" ) was created by the Florida State Legislature according to Chapter 9861, Laws of Florida, 'Acts of 1923, as amended and supplemented and is a part of the CityofOrlando, Florida (the "City"). The Commission consists of five members, including the Mayor of the City of Orlando.

Members serve without salary and, with the exception of the Mayor, who automatically becomes a member of the Commission, are appointed by the Commission subject to the approval of the City Council.

The Electric and IVater System: Power for the electric system load is supplied from three plants. The Commission's Indian River Plant is located approximately'2 miles east of the City.'his plant is a modern steam power plant having a total net generating capacity of 610,000 kw in three 1800 psi reheat steam turbine-generator units. The Lake Highland Plant is located. in the City. This plant has a total net

/

generating capacity of approximately 117,000 kw consisting of three steam turbine-generator units having a combined net capacity of90,000 kw and two quick-start combustion turbine units having a combined net capacity of26,000 kw and one diesel generator with a net capacity of 1000 kw. The Lake Highland Plant is used primarily for peaking and standby service.

The Commission is a joint owner, along with ten other utilities, ofFlorida Power Corporation's Crystal River Unit 3 Nuclear Plant which is located on the Gulfof Mexico in Citrus County. The Commission owns an undivided interest of 1.6015% of the plant as a tenant in common and is entitled to 13,200 kw ofthe plant net capacity. The Nuclear Plant provides 1.78% ofthe total system capacity.

In addition, the system has substantial interconnection capabilities with Florida Power Corporation and Florida Power and Light Company.

The Electric System currently services approximately 84,300 customers.

The Commission also provides water for the City and outlying areas.

An abundant water supply, obtained from 23 deep wells, is.treated, stored and pumped from eight interconnected plants.

Due to the high quality of the well water, the only treatment needed is that of aeration, chlorination and fiouridation.

.The Water System currently services approximately 65,900 customers.

The Commission has followed a policy of financing expansion of its facilities from internally generated funds to the extent'practic'able'and'has C'on'sis'tenily'increased its accumulated retained earnings.

Equity in the system has averaged more than 40% of total capitalization over the past ten years.

Purpose of the 1978B Improvement Bonds: The 1978B Improvement Bonds are to be issued for the purpose of providing monies to complete construction of the 364,000 kw coal-fired steam-turbine power generation facility, jointly owned by the Commission (40%) and the City of Lakeland, Florida (60%)

which is being constructed by the City of Lakeland at its Mclntosh plant site, and to provide transmission lines between the Mclntosh plant site and the Commission's electric distribution system.

This unit willbe a modern 2400 psi unit designed to fire coal as a primary fuel with fuel oil and refuse as secondary fuel.

Security for the 1978B Improvement Bonds: The 1978B Improvement Bonds are payable from and secured by a lien upon and a pledge of the Net Revenues of the Water and Electric System and from investment income on monies and obligations in the Debt Service Reserve Account and the Investment Account established by the Resolution and deposited in the Interest Account.

The 1978B Improvement Bonds are payable from the Net Revenues and certain investment income pari passu with the Refunding Bonds and the 1978A Improvement Bonds, except that none of the 1978B Improvement Bonds, the 1978A Improvement Bonds or Pari Passu Additional Bonds will be payable from monies or investments on deposit in the Investment Account; only the principal of the Refunding Bonds

, maturing April 1, 2008 is additionally secured and payable from such monies and investments on deposit in the Investment Account. The 1978B Improvement Bonds do not constitute an indebtedness ofeither the Commission or the City but are payable from the Net Revenues of the System and certain investment income.

The City is not obligated to levy any ad v'alorem taxes for the payment of the 1978B Improvement Bonds or to apply any of its funds for such payment.

Rates: The Commission has full power and authority to prescribe rates for its service and to change rates at its discretion.

The rate schedule has been adjusted periodically as considered necessary, the last being a $ L4 million annual decrease for electric service effective September 1, 1979.

The Commission's

HISTORICALAND PROJECTED NET REVENUES (In thousands of dollars)

Historical (a)

Year Ended Dec. 31, Historical (a)

Year Ended Sept. 30, electric rates have consistently been among the lowest in Florida.

The residential rate within the City limits for 1,000 kwh in June 1980 was $44.22 including fuel adjustment.

(See page 8 for further information with respect to rates.)

Rate Covenant: The Commission has covenanted to establish and maintain such rates for the services and facilities of the Water and Electric System as will always provide in each fiscal year, Net Revenues adequate at all times to pay in each fiscal year at least one hundred twenty-five percent (125%) of the Annual Debt Service Requirement for the Refunding Bonds, the 1978A Improvement Bonds and 1978B Improvement Bonds and any Pari Passu Additional Bonds hereafter issued, and that such Net Revenues shall be suScient to make all other payments required by the terms of the Resolution and that such rates, fees, rentals or other charges shall not be so reduced so as to be insuflicient to provide adequate Revenues for such purpose.

Additional Bonds: The Commission may issue Pari Passu Additional Bonds from time to time upon certain conditions as specified in the Resolution.

Such Pari Passu Additional Bonds may be issued only if the Net Revenues during the immediate preceding Fiscal Year or any twelve consecutive months of the fifteen month's immediately preceding the issuance, as adjusted, willequal 150% of the Maximum Annual Debt Service on all outstanding Bonds and the Pari Passu Additional Bonds then proposed to be issued.

Estimated Coverage of Debt Service: Set forth below are the historical and projected Net Revenues, as defined in the Resolution, together with the coverage provided by such revenues.

See "Historical and Projected Operating Data" and "Estimated Debt Service Schedules" contained herein.

Gross Revenues and Income.......

Total Expenses Net Available for Debt Service...

Current Debt Service.

Coverage by Net Revenues.........

1975

$89,756 63,703 26,053 8,104 3.21x 1976 1977 1978

$89,466

$92,534

$99,999 62,268 65,781 '0,026 27,198 26,753 29,973 8,663 8,923 9,172 3.14x 3.00x 3.27x Projected (b)

Year Ended Scptetnber 30 1979

$ 124,509 90,180 34,329, 10,197 3.37x 1980 1981 1982 1983 1984 Gross Revenues and Income..........................

$ 148,160

$ 199,412

$219,026

$247,081

$281,016 Total Expen'ses.

114,779 162,264 178,893 194,469 215,027 Net Available for'Debt Service......................

33,381 37,148 40,133 52,612 65,989 Estimated Debt Service (c)(d)......................

10,235 '5,171 16,323 16,314 16,306 Coverage ofCurrent Debt Service (c)(d).....

3.26x 2.45x 2.46x 3.22x 4.05x

'Coverage ofEstimated Maximum Debt Service (c)(e).

1.98x 2.20x 2.37x 3.11x 3.90x (a) Historical amounts are derived from the Commission's audited financial statements which are prepared on an accrual basis.

See the Commission's "Historical Operating Data" set forth herein.

(b) Projected amounts were developed by the Commission and reviewed and approved by the Consulting Engineer.

Increases in'expenses ofoperation as a result of inflation could be substantial and result in a decrease in the above coverage figures in the absence of a rate increase.

See the Commission's "Projected Operating Data" set forth herein.

(c) Debt Service reflects a credit given with respect to projected and estimated investment income earned

~'n monies and investments on deposit in the Investment Account and the Debt Service Reserve Account.

(d) Debt Service reflects actual debt service requirements on the Refunding Bonds, 1978A Improvement

'onds and the 1978B Improvement Bonds.

'e)

Estimated Maximum Debt Service on the Refunding Bonds, the 1978A Improvement Bonds and 1978B Improvement Bonds is estimated at $ 16,900,000.

DEFINITIONOF CERTAIN TERMS (As used in this Offtcial Statement, the following terms have the meanings indicated below.)

"Annual Debt Service Requirement" means, at any time, the amount required to be deposited in the then current Fiscal Year into the Interest Account, Principal Account, Investment Account and the Bond Redemption

Account, as provided in the Resolution; provided, however, that such amount shall be reduced by any earnings or investment income in the then current fiscal year from monies and investments in the Investment Account and the Debt Service Reserve Account.

'Maximum Annual Debt Service" means, at any time, the maximum amount required to be deposited in the then current or any succeeding fiscal year into the Interest Account, Principal Account, Investment Account and Bond Redemption Account, as provided in the Resolution; provided, however, that such amount shall be reduced (i) by any determinable earnings or investment income projected to be earned on the Investment Account Securities and (ii) by any estimated earnings or investment income from investments in the'ebt Service Reserve Account, which estimate shall be based on the income and earnings to be received from the investments then on deposit in the Debt Service Reserve Account.

"1978A Improvement Bonds" means the $40,000,000 Water and Electric Improvement Bonds, Series 1978A initially issued pursuant to the Resolution in July, '1979 for the purpose of providing the initial financing for the Mclntosh Unit 3 project.

"1978B Improvement Bonds" means the

$75,000,000 principal amount of Water and Electric Improvement Bonds, Series 1978B authorized to be issued under the Resolution and offered by this Official Statement.

"Bonds" means the Refunding Bonds, the 1978A Improvement Bonds, 1978B Improvement Bonds and any Pari Passu Additional Bonds hereinafter issued pursuant to the Resolution.

"Pari Passu Additional Bonds" means (a) any additional Bonds issued under the provisions of the Resolution payable from the Revenues of the Water and Electric System pari passu with the Refunding Bonds, the 1978A Improvement Bonds and the 1978B Improvement Bonds and (b) any Demand Charge Components, when the provisions of the Resolution with respect to the issuance of Pari Passu Additional Bonds are met at the time such Demand Charge Components are incurred.

Such Pari Passu Additional Bonds are not payable from or secured by the monies and investments in the Investment Account.

"Refunding Bonds" means the $ 110,330,000 Water and Electric Revenue Refunding and Improve-ment Bonds, Series 1978 initially issued pursuant to the Resolution in June, 1978 for the purpose of refunding the outstanding obligations of the Commission.

"Investment Account" means an account within the sinking fund established by this Resolution.

All interest derived from all monies and investments on deposit in the Investment Account shall remain in the Investment Account and shall be used and received and credited against the amount of Revenues required to be deposited in the Investment Account.

When there is on deposit in the Investment Account a sufficien principal amount ofinvestment account securities together with any other funds on deposit in the Investment Account to pay the principal of the Refunding Bonds, due April 1, 2008, then all interest or investment income shall be deposited in the Interest Account.

"Serial Bonds" means the Bonds ofan issue which shall be stated to mature in annual or semi-annual installments but not including term Bonds.

"Resolution" means the Resolution, as amended and adopted by the Commission, authorizing the issuance of $225,330,000 Water and Electric Revenue Refunding and Improvement Bonds, Series 1978.

"Revenues" means all rates, fees, charges, or other income received by the Commission or accrued to the Commission from the operation of the Water and Electric System, including the investment income required to be deposited in the Revenue Fund from the investment and reinvestment of monies on deposit in certain funds and accounts created and established by the Resolution.

"Net Revenues" means the Revenues remaining after deduction of Operating Expenses.

Such Operating Expenses do not include (a) Transfer of Funds (b) Payments to Orange County and (c) any Demand Charge Components.

"Operating Expenses" means the current expenses, paid or accrued, of operation, maintenance

and, ordinary current repairs of the Water and Electric System and its facilities and includes, without limiting the generality of the foregoing, insurance premiums, administrative expenses of the Commission relating solely to the Water and Electric System, and such other reasonable current expenses as shall be in accordance with generally accepted accounting practice.

"Operating Expenses" do not include any allowance for depreciation.

"Transfer of Funds" means the transfer of funds made to the general fund of the City of Orlando, which includes but is not limited to (a) funds pledged for the retirement of the City of Orlando's 1955 Sewer Revenue Bonds and (b) funds pledged for the retirement of the City of Orlando's 1970 Improvement Revenue Bonds.

"Paymenrs made ro Orange County, Florida" means contributions made to Orange County, Florida pursuant to the proceedings of the Orlando Utilities Commission, dated March 13, 1973.

"Demand Charge Component" means that portion of any rates, fees, charges or payments which the Commission is obligated to pay to another entity for purchase of electrical output for the specific purpose of meeting principal or interest or both on that entity's obligations.

Demand Charge Components shall be excluded from Operating Expenses, but shall rank on a parity as to payment with the Bonds provided that the provisions of the Resolution regarding the issuance of Pari Passu Additional Bonds are met with respect to Demand Charge Components at the time such Demand Charge Components are incurred.

Otherwise, Demand Charge Components shall be subordinate to the Bonds.

All such Demand Charge Components, however, willnot be payable from or secured by the monies or investments deposited in the Investment Account.

"Water and Electric Sysrem" means the complete water and electric plants now under the control and jurisdiction of the Commission, together with any and all additions, extensions and improvements hereafter made to the Water and Electric System from any sources whatsoever, including the additions, extensions and improvements to the Water and Electric System constructed from the proceeds of the

Bonds, and shall include (without being limited to) all lands or interest therein, plants, buildings, machinery, franchises, pipes, fixtures, equipment and all property, real or personal, tangible or intangible, now or hereafter owned or used in connection with the Water and Electric System.

$75,000,000 Orlando Utilities Commission Water and Electric Revenue Refunding and Improvement Bonds, Series 1978B INTRODUCTION This Offiicial Statement of the Orlando Utilities Commission (the "Commission" ) provides certain information relating to the Commission, its Water and Electric System and its $75,000,000 principal amount of Water and Electric Revenue Refunding and Improvement Bonds, Series 1978B (the "1978B Improvement Bonds" ).

The 1978B Improvement Bonds are being ofiered for the purpose of completing the construction ofa 364,000 kw coal-fired steam-turbine electric power generation facility,jointly owned by the Commission (40%) and the City of Lakeland, Florida (60%) (see Joint-ownership agreement, appendix G herein),

which is being constructed by the City of Lakeland at its McIntosh plant site, and to provide transmission lines between the McIntosh plant site and the Commission's electric distribution system.

The 1978B Improvement Bonds represent the balance of a total authorization of $225,330,000 principal amount of Bonds, of which $ 110,330,000 principal amount of Refunding Bonds have been issued to refund the Commission's outstanding water and electric revenue bonds and ofwhich $40,000,000 principal amount of 1978A Improvement Bonds have been issued to commence the financing of the new power supply facility and other projects.

AUTHORITYFOR ISSUANCE OF THE 1978B IMPROVEMENT BONDS The 1978B Improvement Bonds are being issued pursuant to the authority contained in Chapter 9861, Laws ofFlorida, Acts of 1923, as amended and supplemented, and other applicable provisions oflaw, and pursuant to the Resolution, as amended.

The 1978B Improvement Bonds were validated by judgment of the Circuit Court of the Ninth Judicial Circuit of Orange County, Florida, on May 12, 1978, from which judgment no appeal was taken during the applicable appeal period.

DESCRIPTION OF THE 1978B IMPROVEMENTBONDS Principal Amount, Date, Interest Rate and Maturitles The 1978B Improvement Bonds will be issued in the aggregate principal amount of$75,000,000, will be dated April 1, 1980, and willbe numbered consecutively from one (1) upward in the denomination of

$5000 each.

The 1978B Improvement Bonds will bear interest from April 1, 1980, at the rates set forth on the cover page hereof, payable on October 1, 1980, and semi-annually thereafter on April 1 and October 1 of each year and will mature in the principal amounts and on the dates set forth on the cover page of this Offtcial Statement.

The 1978B Improvement Bonds will be issuable in coupon form registrable as to principal only or as to both principal and interest and may be converted into coupon bonds payable to bearer upon the terms and conditions set forth in the Resolution.

The 1978B Improvement Bonds are payable as to principal, interest and redemption premium, ifany, at the principal offtce of The Chase Manhattan Bank, N.A., New York, New York (the "Paying Agent").

Redemption The 1978B Improvement Bonds shall be subject to redemption at the option of the Commission prior to maturity on or after April 1, 1990, in whole at any time or in part from time to time on any interest payment date in the inverse order oftheir maturities (by lot within a maturity ifless than a full maturity) at par and accrued interest plus '/s of 1% for each year or fraction thereof between the redemption date and.

the stated date of maturity; such premium, however, shall not exceed 2%.

Notice ofsuch redemption (i) shall be published at least thirty (30) days prior to the redemption date in a financial journal of general circulation in New York, New York, and in a newspaper of general circulation in the City of Orlando, Florida; (ii) shall be filed with the Paying Agent; and (iii) shall be mailed, postage prepaid to all registered owners of the 1978B Improvements Bonds to be redeemed at their addresses as they appear on the registration books.

Issuance of Pari Passu Additional Bonds The Commission may issue Pari Passu Additional Bonds from time to time only upon certain conditions, as set forth in the Resolution. Among other things, the Commission is required to receive from its Consulting Engineer a certificate stating that the Net Revenues during the preceding Fiscal Year or any twelve consecutive months of the fifteen months immediately preceding the issuance of such Pari Passu Additional Bonds, subject to certain adjustments, will be equal to at least one hundred fifty percent (150%) of the Maximum Annual Debt Service requirement on (i) all Refunding

Bonds, 1978A Improvement Bonds and 1978B Improvement Bonds then outstanding, (ii) any Pari Passu Additional Bonds then outstanding, and (iii) the proposed Pari Passu Additional Bonds (see "Summary of Certain Provisions of the Resolution Issuance of Pari Passu Additional Bonds" herein).

SECURITY FOR THE 1978B IMPROVEMENT BONDS The 1978B Improvement Bonds (and any Pari Passu Additional Bonds issued hereafter) are payable solely from and secured by a lien upon and pledge of the Net Revenues derived by the Commission from the operation ofthe Water and Electric System and from certain investment income earned on monies and obligations in the Debt Service Reserve Account and the Investment Account and deposited in the Interest Account.

The 1978B Improvement Bonds are payable from the Net Revenues pari passu with the Refunding Bonds and the 1978A Improvement Bonds, except that none of the 1978A Improvement Bonds, the 1978B Improvement Bonds or Pari Passu Additional Bonds will be payable from monies or investments on deposit in the Investment Account; only the principal of the, Refunding Bonds maturing April 1, 2008 is payable from and secured by such monies or investments on deposit in the Investment Account.

The pledge of the Net Revenues derived by the Commission from the operation of the Water'nd Electric System does not constitute a lien upon the Water and Electric System or any part thereof or any other property of the Commission or the City.

The Bonds do not constitute indebtedness of the Commission or the City within the meaning of any constitutional, statutory or charter provisions or limitations, and are payable as described above.

The full faith and credit of the State of Florida or the City are not pledged for payment of the Bonds, and the City is not obligated to levy any ad valorem taxes therefore or to apply any of its funds for the payment of the Bonds.

The Commission is required under the Resolution to deposit in the Debt Service Reserve Account a sum which, when added to the monies and obligations already on deposit therein, willbe at least equal to the combined Maximum Annual Debt Service Requirement on the Refunding

Bonds, the 1978A Improvement Bonds and the 1978B Improvement Bonds. The Commission is further required to replenish deficiencies in the Debt Service Reserve Account in the manner provided in the Resolution so that the Debt Service Reserve Account will contain funds equal to the Maximum Annual Debt Service Requirement on the outstanding Bonds (see also, "Summary of Certain Provisions of the Resolution" herein for more detailed explanation of requirements with respect to replenishment of deficiencies in the Debt Service Reserve Account and the accumulation of deposits therein upon issuance of Pari Passu Additional Bonds).

The Resolution provides that the provisions thereof and ofthe 1978B Improvement Bonds constitute a contract with the holders of the 1978B Improvement Bonds and in accordance with the Resolution, the holders of th'e 1978B Improvement Bonds or any trustee acting for such holders may, either at law or in equity, by suit, mandamus or other proceeding in any court of competent jurisdiction, protect, enforce or compel the performance of all duties required under the Resolution.

RATE COVENANT The Commission has covenanted in the Resolution to establish and maintain such rates for the services and facilities of the Water and Electric System as will always provide in each Fiscal Year Net Revenues adequate at all times to pay in each Fiscal Year at least one hundred twenty-five percent (125%)

of the Annual Debt Service Requirement on the Refunding Bonds, the 1978A Improvement Bonds, the 1978B Improvement Bonds, and any Pari Passu Additional Bonds hereafter issued, and that such Net Revenues shall be sumcient to make all other payments required by the terms of the Resolution and that such rates, fees, rentals or other charges shall not be so reduced so as to be insumcient to provide adequate Revenues for such purpose.

PURPOSE OF THE OFFERING The 1978B Improvement Bonds are to be issued for the purpose of providing monies to complete construction of the 364,000 kw coal-fired steam-turbine power generation facility, jointly owned by the Commission (40%) and the City of Lakeland, Florida (60%) which is being constructed by the City of Lakeland at its McIntosh plant site, and to provide transmission lines between the McIntosh plant site and the Commission's electric distribution system.

This unit willbe modern 2400 psi unit designed to fire coal as a primary fuel with fuel oil and refuse as secondary fuel.

Electric Power Generation The Orlando Utilities Commission and the City of Lakeland entered into a Participation Agreement for the Construction'and Joint Ownership of the Mclntosh Unit Number Three (the "Joint Ownership Project" ), a 364 megawatt coal-fired steam-electric generating

plant, being built adjacent to, and contiguous with, existing electric generating units owned by the City of Lakeland.

The Joint Ownership Project willuse coal as its primary fuel and be capable ofburning number 6 fuel oil and solid refuse as fuel supplements.

The coal supply willbe delivered by rail in "unit trains" and unloaded automatically with a trestle/dumping procedure which empties each coal car while the train maintains a slow forward speed.

The railroad spur and coal storage/handling facilities are part ofthe Joint Ownership Project, as is the flue gas cleaning equipment (a limestone scrubber and a precipitator).

Appropriate storage,

handling, classifying, conveying and shredding equipment associated with processing solid refuse will also be constructed as part of the Joint Ownership Project.

Electric Transmission The Joint Ownership Project includes those 230KV facilities necessary for switching and delivering the energy output of the Joint Ownership Project.

230KV transmission facilities not a part of the Joint Ownership Project willbe constructed by the Commission with a portion of the proceeds ofthis issue. That 230KV. transmission system will be wholly owned by the Commission and include approximately 50 miles of transmission line which will deliver the Commission's portion of the Joint Ownership Project energy output to the Orlando Utilities Commission electric distribution network.

APPLICATION OF 1978B IMPROVEMENT BOND PROCEEDS Allmonies received by the Commission from the sale of the 1978B Improvement Bonds are required under the Resolution to be disbursed as follows:

The acc'rued interest derived from the sale of the 1978B Improvement Bonds is to be deposited in the Interest Account created and established by the resolution and used for the payment of the interest becoming due and payable on the 1978B Improvement Bonds on their next interest payment date.

A suScient amount of the 1978B Improvement Bond proceeds is to be deposited in the Debt Service Reserve Account which, together with other available monies and securities already on deposit in the Debt Service Reserve Account, shall be equal to the combined Maximum Annual'Debt Service on the Refunding Bonds, the 1978A Improvement Bonds and the 1978B Improvement Bonds.

The balance ofthe proceeds ofthe 1978B Improvement Bonds are to be deposited in the Construction Fund created and established by the Resolution and applied in the manner prescribed by the Resolution.

The estimated application of funds derived from the sale of the 1978B Improvement Bonds herein offered is as follows:

Sources of Funds Proceeds ofthe 1978B Improvement Bonds..

Add: Accrued Interest from

,April 1, 1980.

Total Sources.......................

Applications of Funds Deposit to Construction Fund............

Deposit to Debt Service Reserve Account..

L'egal, fiscal and administrative ser-vices and printing costs...................

Ac'crued Interest from April 1, 1980...

Total Applications...............

$74,373,577 1,828,793

$76,202,370

$68,648,577 5,500,000 225,000 1,828,793

$76,202,370 COMBINED DEBT SERVICE SCHEDULE

$225,330,000 Year Ending September 30 Actual Gross Debt Service on Refunding Bonds, 1978A Improvcmcnt

~

Bonds and 1978B lmprovcmcnt Bonds (1)

Less Investmcnt Income from Debt Service Resene Ec invest ments Accounts and iMaturing Principal of Investment Sccurit tcs Applied to Reduce Debt Service (2)

Net Debt Service on Refunding Bonds, 1978A Improvement Bonds and 1978B Improvement Bonds I

$ 1,555,000 2,405,000 2,630,000 2,880,000 3,145,000 3,425,000 3,730,000 4,050,000 4,400,000 4,775,000 5,190,000 5,635,000 6,115,000 6,650,000 6,650,000 6,650,000

~

6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000 6,650,000(3) 1980...................

$ 11,790,783

$ 10,235,783 1981...................

17,576,746 15,171,746 1982...................

18,953,597 16,323,597

~

1983...................

19,194,133 16,314,133 1984...................

'9,451,304 16,306,304

, 1985...................

19,661,816 16,236,816 1986...................

19,893,259 16,163,259 1987...................

~

20,212,039 16,162,039 1988...................

20,581,633 16,181,633 1989...................

20,955,304 16,180,304 1990...................

21,368,693 16,178,693 1991...................

21;788,662 16,153,662 1992...................

22,274,886 16,159,886 1993...................

22,517,333 15,867,333 1994...................

22,960,370.,

16,310,370 1995...................

23,066,160 16,416,160 1996...................

23,140,716 16,490,716 1997...................

23,230,657'6,580,657 1998...................

23,543,498 16,893,498 1999...................

22,415,949 15,765,949 2000...................

21,979,199 15,329,199 2001...................

21,522,689 14,872,689 2002...................

21,074,249 14,424,249 2003...................

21,032,328 14,382,328 2004...................

9,651,718 3,001,718 2005...................

9,678,298 3,028,298 2006...................

8,068,463 1,418,463 2007...................

7,855,379 1,205,379 2008...................

5,894,123(3)

(1) Including deposits to, the Investment Account.

. (2) Debt Service Reserve Account income calculated at 9.0%.

(3) $61,740,000 principal amount of Refunding Bonds maturirig in 2008 will be paid from the proceeds of the U.S. Government securities in the Investment Account.

DEBT SERVICE SCHEDULE

$75,000,000 The following table of debt service requirements is based on the sale of the 1978B Improvement Bonds, which represent the balance of the remaining authorized but unissued Bonds and which are being issued for the purpose of completing the financing of the Joint Ownership Project.

Year Ending September 30 I98 I.............

I 982.............

I983..........::.

1984.............

I985.............

I986.............

I987.............

I988.............

I989.............

I990.............

I99 I........,....

1992.............

I993.............

I994.............

. I995.............

I996 ;............

I997.............

I998.............

I999.............

2000.............

200 I.............

2002.............

2003.............

Totals.......

P Indp I 1,145,000 1,205,000

'1,270,000 1,340,000 1,415,000 1,495,000 1,585,000 1,675,000 1,775,000 1,880,000 1,995,000 3,120,000 1,255,000 1,400,000 1,555,000 1,725,000 5,905,000 8,105,000 8,315,000 8,550,000 8,800,000 9,490,000

$75,000,000 Interest

$ 5,579,370.00 5,579,370.00 5,507,807. 50 5,432,495.00 5,353,120.00

',269,370.00 5,180,932.50 5,087,495.00 4,988,432.50 4,883,745.00 4,750,620.00 4,628,420.00 4,494,755.00 4,282,595.00 4,194,745.00 4,095,345.00 3,981,830.00 3,854,180.00 3,411,305.00 2,787,220.00 2,138,650.00 1,463,200.00 759,200.00

$97,704,202.50 Total Debt Service 5,579,370.00 6,724,370.00 6,712,807.50 6,702,495.00 6,693,120.00 6,684,370.00 6,675,932.50 6,672,495.00 6,663,432.50 6,658,745.00 6,630,620.00 6,623,420.00 7,614,755.00 5,537,595.00 5,594,745.00 5,650,345.00 5,706,830.00 9,759, 180.00 11,516,305.00 11,102,220.00 10,688,650.00 10,263,200.00 10,249,200.00

$ 172,704,202.50 ORLANDO UTILITIESCOMMISSION General Information The Commission was created by the Florida State Legislature according to Chapter 9861, Laws of Florida, Acts of 1923, as amended and supplemented and is part of the CityofOrlando (the "City"). The Commission consists offive members, including the Mayor ofthe CityofOrlando. Members serve without salary and, with the exception ofthe Mayor, who automatically becomes a member ofthe Commission, are appointed by the Commission subject to the approval of the City Council.

Curtis H. Stanton, Professional

Engineer, Executive Vice President and General Manager of the Commission has headed the Commission's management for more than thirty years and has seen the system grow from a very modest base to a system with assets of nearly $300,000,000 as of September 30, 1979.

According to letters received from the State Health Division which are on file with the Commission, the Commission's water treatment plant has been selected by the State Health Division as the best operated among large cities in the State.

Mr. Stanton is the Immediate Past President of the American Waterworks Association.

The Commission has a total of 757 employees with 363 of these involved in electric operations and 113 in water operations.

The remaining number of employees are divided among customer relations, support operations, financial operations and administration.

The number of employees has remained relatively stable for the past five years.

Employees are not unionized.

Electric Properties and Operations Power for the Electric System is supplied from three power plants. A modern steam power plant with reheat turbine generator units is located in Brevard County and is known as the Indian River Plant.

For peaking and standby service, the Commission has a plant located in the City of Orlando known as Lake Highland Plant.

In addition, the Commission is a joint owner, along with 10 other utilities, of Florida Power Corporation's Crystal River Unit 3 Nuclear Plant.

The Electric System serves an area of approximately 200 square miles through a loop transmission system of 230 kv and 115 kv.

Fifteen substations provide reliable service.

Five 230 KV interconnections with other utilities who are members of the Florida Electric Power Coordinating Group (FCG) allow the Commission to operate in a reliable and eflicient manner.

Three of the interconnections are with Florida Power Corporation, one is with Florida Power and Light Company and one is with the City of Kissimmee.

These interconnections greatly facilitate marketing of electric energy and those involved in the interconnections are continually entering into interchange marketing agreements with each other.'he inception of the Florida Broker System has greatly increased the incidence of economy energy exchanges.

Electric energy sales and; purchase arrangements with other utilities have over the years been beneficial to the Commission.

The table below shows the Commission's existing generating facilities, capacity of each unit and other data relating thereto.

EXISTING GENERATING FACILITIES Plant Name 4 loca<lan Unit Fuel'a No.

Type Pri Alt Estimated Date Retirement In Service Date Mo/Yr Mo/Yr Gen Max Nameplate Klv Nct Capability Summer IVintcr

'iV MW Lake Highland Orlando, FL Indian River, Brevard Cnty.

'Crystal River, Citrus County Total System as of Dec. 31, 1979 1

2 3

GT-A GT-B Diesel F

HO NG F

HO NG F 'HO NG CT LO NG CT LO NG D

LO 9/49 12/82 9/54 12/82 6/56 12/82 12/58 12/82 12/58 12/82 1970 12/82 N

N 3/77 Unknown F

HO NG 2/60 12/91 F

HO NG 12/64 12/94 F

HO NG 2/74 12/04 28,750 37,500 37,500 18,750 18,750 1,000 142,250 86,700 207,600 344,500 638,800 860,382 30 31 30 31 30 31 13 16 13 16 1

1 117 126 88 90 204 208 318 321 610 619 13 13 740 758

'UC has an undivided ownership interest of 1.6015% (13.2 MW) as a tenant in common in Florida Power Corporation's Crystal River,¹3, an 825 MW Nuclear Unit "Heavy oil = HO, Light oil = LO, Natural Gas = NG, Nuclear = N

ORLANDO UTILITIESCOMMISSION SERVICE AREA POP UULTION ORANCI-')UNTY44I+31 ORLANDO UTILITIFSCOMMUNION SFRVICF. AREA 2(%1%I

/(/

p(

/

W/I I

~ CRLARCO UTIUTIES COMMISSION SERVICE AREA "rN/rORLANDO CITY UNITS 4,/

The boilers of the Commission burn either natural gas or Number 6 fuel oil and Number 2 fuel oil for

~Aame stabilization.

The boilers will operate under any combination of these fuels.

The natural gas is supplied under a contract with the Florida Gas Transmission Company which expires in 1985.

The Number 6 fuel oil is supplied by Coral Petroleum, Inc.'nder a three year contract which commenced April 1,

1980.

The Commission has an oil storage capacity of 382,000 barrels located at the plant sites.

Additionally, the Commission owns a 325,000 barrel oil storage tank located at Port Canaveral, Florida.

In addition to the tanks, the Commission owns dock facilities which allow the transfer ofoil to or from the storage tank. This facility is'operated by the Belcher Oil Company for the Commission.

Oil is received at the harbor in tanker cargo quantities, transferred into the storage tank and then trans-shipped by Belcher via barges on the intracostal waterway to the Indian River Plant where barge unloading facilities are owned by the Commission.

In 1979, the combined storage ofapproximately 707,000 barrels provided the Commission with an inventory of from 50-80 burn days, depending upon seasonal load variations.

The Commission has received varying amounts of natural gas in recent years to meet a portion of its fuel requirements.

The Florida Gas Transmission Company supplies this form of energy and in 1979, 42 percent of the total electric energy requirements came from this source.

Deliveries of natural gas to the Commission in 1979 amounted to 14,067,000 million BTU's as compared to 19,061,000 million BTU's of Number 6 fuel oil, 17,623 million BTU's ofNumber 2 fuel oil and 640,000 million BTU's of nuclear fuel.

Because ofthe uncertainty of natural gas deliveries in future periods, the projections of revenues, expenses and operations for future years as developed by the Commission staff are based on declining amounts of natural gas thru 1984.

Rates The Commission staff annually conducts an economic study of the most recent fiscal year to assess the adequacy ofits electric and water revenues to meet its anticipated revenue requirements for the subsequent year.

This study for the fiscal year ending September 30, 1979 was completed in March 1980 and showed that the existing rates were adequate to meet revenue requirements for the following year.

Electric Rates The present schedule of electric rates of the Commission are considered to be generally competitive with those ofother similar utilities in the State of Florida. As a result of the Commission's rate adequacy review of fiscal year ending September 30, 1978, the Commission on August 14, 1979 approved a $ 1.4 million annual revenue decrease for electric service (1.907% below 1978 electric revenues) which became effective September 1, 1979.

Rate Designation ELECTRIC RATES-RESIDENTIALCUSTOMERS (SUBJECT TO ADDITIONALCOST FOR FUEL ADJUSTMENT)

KlVHConsumption 200 500 1.000 1,500 2,000 Inside City.

Outside City.

9.10 19.80 37.00 53.54 70.11 9.63 21.01 39.25 56.78 74.33

Electric Rate Comparison-Residential Customers Month of June 1980 (Fuel adjustment charge included) 500 KiVH 1,000 KiVH 1,500 KiVH 2,000 KiVH Jacksonville Lakeland (inside city)..

ORLANDO (inside city).

Tampa Electric Company.

Florida Power Corp..

Florida Power & Light Company....

Gainesville Tallahassee

$34.50 26.41 23.41 31.13 29.19 28.10 30.33 25.97

$66.50 50.34 44.22 57.73 55.13 54.28 57.31 49.97

$98.50 74.28 64.37 83.71 80.32 81.87 84.29 73.97

$ 128.05 98.21 84.55 109.70 105.51 109.46 111.27 97.97

'Electric System Requirements The demand for electric energy in the Orlando area now reaches its peak during the month ofJanuary of each year.

The monthly low peak usually occurs in March.

The table on page 12 shows for the Commission Electric System the net integrated peaks in megawatts for the past five years and the projected peaks through 1989.

The present net generating capacity for short duration periods is 758 megawatts during the winter months and 740 megawatts during the summer months.

These amounts include 13 megawatts of nuclear generating capacity which became available to the Commission on March 13, 1977 because of its participation in the ownership of the Crystal River No. 3 Nuclear Plant.

Annual electric energy sales, expressed in gigawatt hours, as presently projected by the Commission staff, reilect an average annual growth rate ofapproximately 4.1% (see table on page 12). Electric energy from the Crystal River No. 3 Nuclear Plant willprovide approximately 70 gigawatt hours per year of this requirement.

Prior to 1974, due to the rapid growth ofthe Orlando area coupled with increased per capita consumption, the average annual growth rate for the Commission had been approximately 10%.

The recession that occurred after 1974 was accompanied by a substantial increase in fuel costs.

The average annual growth rate since 1974 has leveled offat approximately 4.3%.

Water Properties and Operations The Commission also provides water for the City ofOrlando and outlying areas.

An abundant water supply, obtained from 23 deep wells, is treated, stored, and pumped from eight interconnected plants.

Due to the high quality of the well water, the only treatment needed is that of aeration and chlorination.

The transmission and distribution system and storage facilities provide excellent water pressures and reliable service.

These factors contribute directly to the City's Class 3 Fire Rating.

Water Rates On'August 14, 1979 the Commission adopted a new schedule ofwater rates which became effective on September 1, 1979.

The minimum bill inside the City is $ 1.88 for the first 1,000 gallons and outside the City the minimum bill for the first 1,000 gallons is $2.59. The new water rates for additional service are as follows:

Next 99,000 gals.

Allover 100,000 gals.

Inside City per 1,000 gal.

Outside City per 1,000 gal.....

44.8c 61.1c 37.7C 50.9e These new rates are expected to increase water revenues by $ 146,000 per year or an average increase of 1.8% annually over 1978 water revenues.

Customers The retail sale ofelectric energy during 1979 was up approximately 2.1% over the'previous year (see below).

Both the electric and water systems have experienced consistent increases in the number of connections over the past years.

The following table shows the number of active accounts for both systems as of Sept. 30, 1979 for the years 1975 through 1979.

Date Electric Customers (active)

Ivatcr Customers (active) 9/30/75 73,731 59,243 9/30/76 76,129 59,711 9/30/77 78,737 60,852 9/30/78 81,216 62,549 9/30/79 82,882 64,597

=Thirty-two electric customers out of the total 82,882 account for 7.7% of the total electric revenues.

The largest of these (the U.S. Navy Base) accounts for 2.9% ofthis total. The next largest user ofelectric energy (the Martin Company) accounts for 2.5% of the total electric revenues.

Customer BillingProcedures Meters are scheduled for monthly readings with the actual reading taking place approximately five days before billing. A period of approximately 30 days is maintained for each billing period. The period between meter reading and billing is used to follow up on items such as: dirty dial, unable to read, and meter flooded, reported by the meter reader on his meter reading card.

Bills are prepared on a 20 cycle basis each month. Bills are due and payable upon receipt and become past due on the date indicated on each bill. The past due date is approximately.20 days after the date of mailing the bill. Past due notices are prepared for mailing the day following the past due date ifthere is an unpaid amount due. The notice indicates service will be discontinued within three working days ifthe past due amount is not paid. Actual disconnection of the service takes place five days after the notice is mailed ifthe account is still unpaid:

The Commission's Credit Section reviews all accounts scheduled for disconnect prior to the actual cut-offtaking place.

A sample calendar of events for meter reading through enforced collection is as follows:

Meter reading date August 1

Billingdate August 8 Mailingdateofbill August 9 Past due date on bill August 29 MailingofPast Due Notice August 31 Final day for payment on notice September 3

Date service is discontinued September 5

Past due notices are mailed to customers when their unpaid balance exceeds $ IO, unless they meet one of the following conditions: one, they have a deposit on file that is more than double the unpaid amount due; or two, they have received no past due notices within the past 12 consecutive months.

Regulation Historically, municipal utilities such as the Commission have not been subject to state regulation except for situations involving environmental

concerns, the principal regulating body now being designated the Department of Environmental Regulation.

In 1974, however, the Legislature enacted a

statute which confers jurisdiction in the Florida Public Service Commission to regulate "rate structures" of municipal utilities. It is felt by counsel that this is clearly distinguishable from the total amount of revenues which a particular utility may receive from rates, and that distinction has thus far been carefully made by 10

the Florida Public Service Commission.

Currently, the Florida Public Service Commission is conducting a docket, the purpose ofwhich is to delineate just exactly what type ofcontrols and procedures it willSeek to impose under the new jurisdictional authority.

Existing and proposed interconnection agreements with investor-owned utilities are subject to the review and approval ofthe Federal Energy Regulatory Commission. In addition the Commission is subject to the National Energy Act.

The Environmental Protection Agency has issued a permit for the Commission's Indian River electric generating plant which may in effect require the Co'mmission to provide an off-stream cooling water system for such plant by the mid-1980's in the event that a proposed ecological study shows that, in the opinion of the Agency, the present cooling system is doing substantial damage to the ecological system of the adjacent portion of the Indian River. The cost to the Commission ofsuch study is estimated to be $ 1,275,000. The final determination of the Agency is appealable to the courts. Ifconstruction ofofi'stream cooling facilities were begun now, it is estimated that it would cost approximately $23,000,000.

Future Capital Needs of the Water and Electric System The Commission has by resolution duly adopted on May 14, 1980, as approved by the City Council of the City ofOrlando, Florida, on June 5, 1980, authorized the issuance of$ 110,000,000 Water and Electric Revenue Bonds, Series 1980, for the purpose ofpurchasing additions, extensions and improvements to the Water and Electric System consisting of an undivided interest of approximately 6.09%

as tenants in common in a joint ownership project, being the St." Lucie Unit No. 2, together with the St. Lucie site, common facilities and related facilities in participation with Florida Power & Light Company.

The Water and Electric Revenue Bonds, Series 1980, when issued shall be on a parity and rank equally as to payment from the Net Revenues of the Water and Electric System and from the investment income on monies and obligations in the Debt Service Reserve Account and the Investment Account established by the Resolution and deposited in the Interest Account with the Refunding Bonds, the 1978A Improvement Bonds, the 1978B Improvement Bonds and any Pari Passu Additional Bonds hereafter issued.

The Water and Electric Revenue Bonds, Series 1980, shall not be pa'yable from or have a lien on any monies or investments on deposit in the Investment Account. The complaint for validation of the Water and Electric Revenue Bonds, Series 1980, has been filed by the Commission and a hearing date ofAugust 1, 1980, has been set.

Pension Plan The Commission has a pension plan covering all eligible employees.

The total pension expense for the years 1979 and 1978 was $ 1,622,763 and $ 1,390,132, respectively, which includes amortization ofpast service costs over a period of approximately 30 years.

The funding method used is the entry age normal with the initial unfunded accrued liability frozen.

Funding is by a deposit administration contract.

As of September 1, 1979, the anniversary date of the plan, the pension fund assets exceeded the actuarially computed value of vested benefits.

Financial Statements

)

The Financial Statements for the Commission as of September 30, 1979 are attached hereto as Appendix "A"and are an integral part of this OScial Statement.

Calendar Year ORLANDO UTILITIESCOMMISSION ELECTRICALSYSTEM REQUIREMENTS 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 19&7 1988 1989 NET 60 MINUTEINTEGRATED DEMAND-MW January 345 410 468 430 454 411 February 272 340 409 427 429 447

~

March 311 288 328 340 313 500 April 336 314 325

. 325 335 327 499 521 425 443 371 386 390 406 544 568 592 618 463 483 504 526 402 419 435 453 423 440 458 476 644 670 548 570 471 489 495 514 699 595 509

535, May June July August 369 331 377 353 362 406 385 385 349 389 435 431 411 411 394 433 391 423 439 457 434 453 471 490 452 459 478 497 448 478 497 517 476 Sll 518 539 496 532 539 561 515 537 553 575 560 583 583 607 558 579 598 621 606 629 631 655 603 647 655 682 September October'ovember December 365 384 407 413 434 338 334'41 361 381 319 406 275 311 359 370 379 389 339 424 457 405 383 443 475 494 515 536 421 439 457 475 400 417 436 454 463 483 504 526 557 580 494 514 474 494 549 572 603 626 652 533 555 577 514 536 558 595 621 646 ANNUALENERGY REQUIREMENTS-GWH-EXCLUDINGSALES FOR RESALE Gross 1986 2028 2159 2256 2318 2426 2526 2629 2736 2846 Net 1866'917 2055 2148 2205 2305 2400 2498 2599 2704 Sales 1762 1827 1940 2057 2102 2190 2280 2373 2469

>> 2569 2960 3081 3203 3331 3464 2812 2927 3043 3164 3291 2671 2781 2891 '006 3126 GENERATING CAPACITY-MW(Net, Short Duration)

Winter IRP LHPST LHPGT LH Diesel CRP 3 M

619 Summer

~

IRP 93 LHPST 32 LHPGT I

LH Diesel 13 CRP 3 758 Historical DataThrough and Including April, 1980 Net Instantaneous Demand MW = 1.01019 (Net Integrated Source: Orlando Utilities Commission 6IO 26 I

13 740 Demand) MW.

12

ORLANDO UTILITIESCOMMISSION iVATER AND ELECTRIC SYSTEM HISTORICALOPERATING DATA'000'S Omitted)

Year Ended December 31, Year Ended September 30, Sht Months Ended 51arch 31, 1975 1976(3) 1977 1978 1979 1979 1980 Sources ofRevenue Electric Operating Revenue....................

Water Operating Revenue....................

Total Operating Revenue....................

Interest &Other Income......................

Gross Revenue and Income......................

Expenditures Electrical Operating Expenses (1)............

Water Operating Expenses (1)............

Total Operating Expenses (1)............

Other Expense (1).......

Total Expense (1)........

Net Revenue and Income (1)(2)---------------

Current Debt Service (Principal &Interest)..

Debt Service Coverage.....'...

Distribution ofNet Revenues AfterDebt Service Payments Renewal

& Replace-ment Requirement Per Bond Resolution Transfers to City General Funds and payments to Or-ange County.........

Balance Available for Additional OUC Plant Improvements Over Above Those Monies Spent Through Renewal &

Replacement............

$81,478

$80,254

$82,228

$88,289

$ 109,941

$45,585

$52,400 6,705 7,447 8,091 8,360 9,008 4,263 4,358 88,183 87,701 90,319 96,649 118,949 49,848 1,573 1,765 2,215 3,350 5,560 2,514 56,758 4,089 89,756 89,466 92,534 99,999

" 124,509 52,362 60,847 3,462 3,428 4,056 4,350 4,757 2,270 2,500 63,226 477 63,703 62,099 169 62,268 65,694 87 65,781 69,916 110 70,026 89,963 217 90,180 35,808 115 35,923 44,335 105 44,440 26,053, 27,198 26,753 29,973 34,329 16,439 16,407 8,104 3.21x 8,663 3.14x 8,923 3.00x 9,172 10,197 3.27x 3.37x 4,917 3.34x 5,895 2.78x

$ 7,968

$ 8,818

$ 8,770

$ 6,289 7,227

$ 3,614

$ 3,770 8,156 8,325 7,838 9,356 13,547 4,612 5,210 1,825 1,392 1,222 5,156 3,358 3,296 1,532

$59,764

$58,671

$61,638

$65,566

$ 85,206

$33,538

$41,835 (1) Excludes transfers to the General Funds of the City of Orlando and payments to Orange County.

(2) Net Available for Debt Service (3) In 1976 the Commission changed its fiscal year to September 30.

Source: Orlando Utilities Commission 13

ORLANDO UTILITIESCOMMISSION WATER AND ELECTRIC SYSTEM PROJECTED OPERATING DATA The following information sets forth projected revenues and expenditures of the Commission giving el%et to (1) the sale of$75,000,000 principal amount of the remaining authorized but unissued Bonds for the purpose ofcompleting the funding of the Joint Ownership Project and (2) the increased revenues and expenditures resulting from such project.

(000 Omiucd)

Year ended September 30, 1980 1981 1982 1983 1984 Sources ofRevenue Electric Operating Revenue...

Water Operating Revenue.....

Total Operating Revenue.....

Interest &Other Income.......

Gross Revenue and Income.....

Expenditures Electric Operating Expenses.....

Water Operating Expenses.......

Other Operating Expenses........

... $ 134,111

$ 182,746

$202,849

$230,914

$259;474 9,193 9,658 10,098 10,757 11,490

... $ 143,304

$ 192,404

$212,947

$241,671

$270,964

',856 7,008 6,079 5,410 10,052

... $ 148,160

$ 199,412

$219,026

$247,081

$281,016

... $ 104,036

$ 149,596

$ 165,163

$ 179,755

$ 199,416 2,965 3,496 3,731 3,937 4,115 7,778 9,172 9,999 10,777 11,496 Total Operating Expenses..................

Net Revenue & Income Estimated Current Debt Service (1).........

Estimated Current Debt Service Coverage Estimated Maximum Debt Service Coverage (1) (2)

... $ 114,779

$ 162,264

$ 178,893

$ 194,469

$215,027

. $ 33,381

$ 37,148

$ 40,133

$ 52,612

$ 65,989

... $ 10,235

$ 15,171 16,323

$ 16,314 16,306 3.26x 2.45x 2.46x 3.22x 4.05x 1.98x

'.20x 2.37x '.11x 3.90x (1) Debt service reflects a credit given with respect to projected and estimated investment income earned on monies and investments on deposit in the Investment Account and the Debt Service Reserve Account and deposited in the Interest Account.

(2) Estimated Maximum Annual Debt Service on the Refunding Bonds, the 1978A Improvement Bonds and the 1978B Improvement Bonds is estimated at $ 16,900,000.

/

The foregoing projections have been compiled by the Commission and reviewed and approved by the Consulting Engineers.

The annual supplemental transfer of monies to the City of Orlando Gen'eral Fund and the annual payment to Orange County have not been reAected as expenses in the calculation of Net Revenue and Income.

14

TEN-YEAR CONDENSED BALANCESHEET ORLANDO,UTILITIESCOMMISSION (000 Omitted)

December 31, September 30,~'ssets 1970 1971 1972 1973 1975 1976 1977 1978 1979

$ 103,544

$ 108,353 41,305 52.458

$ 167,195 4,977 97,973 112,331 144,849 160,811 172,172 UtilityPlant In service-depreciated value....... $ 91,402

$ 94,164 Construction in progress.............

6,571 18,167

$ 170,730 8,291 179,021

$ 167,008

$ 170,682

$ 168,505

$ 170,686 11,064 5,609 9,031 24,956 178.072 176,291 177,536 195,642 Restricted Funds Debt service funds.......................

Construction and related funds...

Other.

5,256 2,784 9,014 40,030 9,289 13,712 9,836 14,856 10,174 7,472 11,075 7,205 12,977

~

9,894 13,764 19,781 15,664 22,603 18,403 44,827 8,040 49,044 23,001 24,692 17,646 18,280 22,871 33,545 34,067 67,430 Current Assets Cash..

Marketable securities and spe-cial deposit...............................

Accounts receivable, less allow-ance for doubtful accounts......

Materials and supplies................

Other current assets.....................

Other Assets....

1,829 2,593 3,051 2,162 328 9,963 7

1,571 4,066 2,906 2,006 451 11,000 374 1,599 2,455 80 2,575 253 6,500 3,322 3,930 2,542 4,263 779 840 6,528 7,360 1,047 7,656 6,065 1,535 9,592 10,885 17,390 21.836 2,183 3,500 4,706 6,891 3,539 20,819 299 6,600 6.548 6,912 6,190 26,549 356 161 14,705 10,900 8,382 11,377 5,810 7,051 4,224 5,207 33,377 34,696 SI I5 983 SI72.375 SI77 442 SI96 388

$207208

$279.I37

$22 I,762 S236,385

$245080

$297768 Capitalization and LIabilities Accumulated Retained Earnings....

Contribution. in-aid ofConst..........

Long-Term Debt.

Water and electric revenue

bonds, less unamortized dis-count..........,...,......,......,...,

TOTAL CAPITALIZATION........

Current Liabilities (excluding cur-rent maturities of long-term debt)

Notes payable-bank.................

Accounts payable and accrued

. expenses...................................

Utility plant construction con-tracts.........................................

Customers'eter deposits and other current liabiliucs............

Other Liabilities Customers'ater and electric line extension deposits.............

Commitments'....,,,................,..

$ 55,722

$ 61,317

$ 66,872

$ 72,565

$ 79,020

$ 84,793 1,944 2,787

$ 89,948

$ 96,010

$ 115,904

$ 121,957 3,118 3,742 4,515 5,884 56,359 106,891 104,915 117,517 115,076 121,952 118,949 125.529 110.330 149.860 112,081 168,208 171,787 190,082 196,040 209,532 212,015 225,281 230,749 277,701 1,423 258 1,654 84 1,930 524 2;804 149 3,000 4,354 16 2,250 2,336 197 4,817 289 2,578 23 3,800 17 6,515 10 1,543 1,562 1,822 1.764 2.089 3,264 2.777 6,555 8,127 11,145 678 867 1.379 1.589 1,709 1.558 1,864 1.948 2,387 2,397

$ 115.983

$ 172,375

$ 177,442

$ 196,388

$207,208

$219,137

$221,762

$236,385

$245,080

$297,768

• See Footnotes on following page "Because of'tatutory requirements, the OUC changed its fiscal year from December 31 to September 30, in 1976.

Source: Orlando Utilities Commission 15

Footnotes to Ten-Year Balance Sheet By resolution, the Commission, on July 12, 1955 appropriated

$ 180,000 annually for a period of 26 years commencing April 1, 1955, for the retirement of the Sewer Revenue Bonds of the City ofOrlando dated April 1, 1955 in the amount of$5,438,000.

By an agreement between the City and the Commission, the Commission may offset this contribution against the City of Orlando utilities tax. The agreement whereby the Commission pledges $ 180,000 of its revenues annually

'as become a part of the agreement between the City of Orlando and the bondholders and, therefore, it is a contingent liabilityranking junior only to obligations of the Commission to the holders of the Refunding Bonds, the 1978A Improvement Bonds, and the 1978B Improvement Bonds being offered hereby or any Pari Passu Additional Bonds.

This liability becomes real only if the utilities tax is inadequate and thereafter the City fails to reimburse the Commission from other utilitytax revenues and also fails to levy the sewer tax as required.

On December 22, 1969, the Commission pledged $480,000 of its annual revenues in connection with the issuance by the City of $5,500,000 Improvement Revenue Bonds.

This pledge is for a period of 22 years from the date of issuance by the City of the Improvement Revenue Bonds or such longer period as shall be required to pay and retire all principal and interest on said bonds.

This lien on.the revenues derived from the Utilities shall be junior and subordinate to the lien of the holders of the Refunding Bonds, the 1978A Improvement Bonds, and the 1978B Improvement Bonds being offered hereby or any Pari Passu Additional Bonds but shall be prior and superior to any lien, pledge or encumbrance hereafter made ofsuch revenues for any purposes other than the Refunding Bonds, the 1978A Improvement Bonds, and the 1978B Improvement Bonds being offered hereby, any Pari Passu Additional Bonds hereafter issued by the Commission for water or electric purposes, and the annual Sewer Revenue Bond payment, as described above.

During 1978, authoritative accounting principles required a change in the manner of reporting Contributions in aid of Construction.

Amounts formerly reported as a reduction of plant investment are reclassified as contributed equity.

SUMMARY

OF CERTAIN PROVISIONS OF THE RESOLUTION The following statements are brief summaries of certain provisions of the Resolution.

These summaries do not purport to be complete and reference is made to the Resolution for a full and complete statement of such provisions (a copy of the Resolution appears herein as Appendix "E").

Certain capitalized words and terms used in this summary are defined in the Resolution and have the same meaning herein as therein used unless the context requires some other meaning.

Creation of Funds and Flow of Funds.

The Resolution creates and establishes the following funds and accounts:

The "Water and Electric'System Revenue Fund".

t The "Water and Electric Sinking Fund" and five (5) separate accounts in said Sinking Fund to be known as the "Interest Account", the "Principal Account", the "Investment Account", the "Bond Redemption Account", and the "Debt Service Reserve Account".

The "Water and Electric Renewal and Replacement Account".

In accordance with the Resolution, revenues derived from the operation of the Water amd Electric System are to be deposited in the,"Water and Electric Revenue Fund"'and shall be applied in the following order.

l. Revenues are to be used to pay the current Operating Expenses of the Water and Electric System.

~

2. Revenues are next to be used, to the full extent necessary, for deposit into the Interest Account in the Sinking Fund, on the fifteenth (15th) day of each month, such sums as shall be suScient to pay one-sixth of the interest becoming due on the Bonds on the next semi-annual interest payment date, provided, however, that such monthly deposits for interest shall not be required to be made into the Interest Account to the extent monies are deposited in the Interest Account from the proceeds of the Bonds.

16

Any monies that are deposited in the Interest Account from the earnings and investment income derived from the monies and investments on deposit in the Debt Service Reserve Account and the Investment Account shall be credited against the amount of Revenues required to be deposited in the Interest Account and such Revenues shall not be required to be deposited into the Interest Account as long as the amount on deposit therein'is equal to or greater than the amount required to be on deposit in the Interest Account at the time of such computation.

3. Revenues are next to be used, to the full extent necessary, (a) for deposit in the Principal Account on the fifteenth (15th) day of each month in each year, in such amounts as may be required for the payment of the principal amount of the Serial Bonds which will mature and become due on such annual maturity dates.

(b) for deposit in the Investment Account on the fifteenth (15th) day of each month in each

year, as may be required for the payment or redemption of the Term Bonds payable from the Investment Account.

Any interest or investment income derived from the Investment Account Securities retained in the Investment Account, shall be credited against the amount of Revenues required to be deposited into the Investment Account.

The monies deposited in the Investment Account for the Term Bonds payable therefrom is to be applied to the purchase ofthe Investment Account Securities'. The monies deposited in the Investment Account until applied to the purchase of Investment Account Securities may be invested in (i) direct obligations of the United States ofAmerica, (ii) obligations fullyguaranteed by the United States of America, or (iii)Certificates of Deposit or Repurchase Agreements continuously and fullysecured by (i) or (ii) above or the Federal Deposit Insurance Corporation, which mature prior to the date that such monies shall be required for the purposes of the Investment Account.

In the event that any of the Investment Account Securities shall be called for redemption in accordance with their terms, the monies resulting therefrom may be retained in the Investment Account and may be reinvested in Investment Account Securities.

Such monies or Investment Account Securities may be applied at the option of the Commission for the purchase or redemption of the Term Bonds payable from the Investment Account or th'e payment of said Term Bonds at maturity.

The Investment Account Securities shall be held in trust by a bank or trust company pursuant to an agreement entered into by and between the Commission and said bank or trust company and shall be pledged and applied solely to the payment of the principal of the Term Bonds at maturity or to their payment upon the prior redemption thereof.

All interest or investment income derived from all monies and investments on deposit in the Investment Account is to remain in and become a part of'the Investment Account and such interest or investment income is to be used as received and credited against the amount of Revenues required to be deposited in the Investment Account.

Until applied for the purchase of Investment Account Securities all interest or investment income may be invested as provided above.

When there is on deposit in the Investment Account a suScient principal amount of Investment Account Securities together with any other funds on deposit in the Investment Account to pay the principal of the Term Bonds payable therefrom no further deposits into said Investment Account are necessary.

Thereafter all interest or investment income derived from the Investment'Account Securities is to be deposited in the Interest Account and used for the purposes thereof.

Such interest or investment income derived from all monies and investments on deposit in the Investment Account shall be pledged.to the purchase of Investment Account Securities until there is on deposit in the Investment Account a suScient principal amount of Investment Account Securities together with any other funds on deposit in the Investment Account to pay the principal of the Term Bonds payable therefrom.

(c) for deposit into the Bond Redemption Account on the fifteenth ( 15th) day ofeach month in each year, beginning on such date, in such amounts and in each year as may be required for the payment of the Term Bonds payable from the Bond Redemption Account.

17

The monies in the Bond Redemption Account are to be used at the option of the Comlnission for the purchase or redemption ofthe Term Bonds payable therefrom or such monies or investments may be retained in the Bond Redemption Account, invested and reinvested as provided herein and applied to the payment of said Term Bonds prior to or at their maturity. The Commission may at any time purchase any of said Term Bonds at prices not greater than the then redemption price of said Term Bonds. Ifthe Term Bonds are not then redeemable prior to maturity, the Commission may purchase said Term Bonds at prices not greater than the redemption-price of such Term Bonds on the next ensuing redemption date.

The Resolution provides that no distinction or preference is to exist in the use ofthe monies on deposit in the Revenue Fund for payment into the Interest Account, the Principal Account, the Investment Account and the Bond Redemption Account, such accounts being on a parity with each other.

4.

Revenues are next to be used, to the full extent necessary, for deposits into the Debt Service Reserve Account on the fifteenth (15th) day ofeach month in each year, such sums as will be suilicient to pay an amount equal to one-twelfth of twenty percent (1/12th of 20%) of the Maximum Annual Debt Service; provided, however, that no payments are required to be made into said Debt Service Reserve Account whenever and as long as the amount deposited therein is equal to the Maximum Annual Debt Service.

There shall be initially deposited in the Debt Service Reserve Account,,from the proceeds derived from the sale ofthe Bonds and the monies and securities transferred from the debt service reserve accounts created and established for the Outstanding Obligations, an, amount equal to the Maximum Annual Debt Service on the Bonds.

Monies in the Debt Service Reserve Account are to be used only for the purpose of making payments into the Interest Account, Principal Account, Bond Redemption Account and Investment Account when the monies in the Revenue Fund are insuScient therefor.

In the event that any monies shall be withdrawn from the Debt Service Reserve Account for payments into tlie Interest Account, Principal Account, Bond Redemption Account and the Investment Account such withdrawals shall be subsequently restored from the first Revenues or funds available after all required payments have been made into such Accounts, including any deficiencies for prior payments.

Any monies in the Debt Service Reserve Account in excess of the Maximum Annual Debt Service for the Bonds and any Pari Passu Additional Bonds may be transferred to and deposited in the Renewal and Replacement Fund and used as provided herein for'said fund.

5.

Revenues are next to be used for the payment of any subordinated obligations issued by the Commission in accordance with the Resolution; provided, however, such subordinated obligations are to be paid only after payment of the Transfers of Funds.

6.

Revenues are next to be used, to the full extent necessary, for deposits in the Renewal and Replacement Fund on the fifteenth (15th) day ofeach month, such sums as shall be suScient to pay one-twelfth (1/12th) ofhfteen per centum (15%) ofthe Revenues derived from the Water and Electric System during the preceding Fiscal Year, after deducting from such Revenues a sum equal to one hundred per centum (100%) of the fuel expense and energy component of purchased power expenses incurred during such Fiscal Year. No further payments are required to be made into the Renewal and Replacement Fund when there shall have been deposited therein, an amount at least equal to fifteen per centum (15%) of the Gross Revenues derived from the Water and Electric System for the preceding Fiscal Year, after deducting from such Gross Reveneues a,sum equal to one hundred per centum (100%) of the fuel expense and energy component ofpurchased power expenses incurred during such Fiscal Year, provided, however, that (i) such required amounts for deposit may be increased or decreased as the Consulting Engineer shall certify is necessary for the purpose of the Renewal and Replacement Fund, and (ii) in the event that the Co'nsulting Engineer shall certify that the amounts on deposit are excessive for the purposes of the Renewal and Replacement Fund such excess may be withdrawn from the Renewal and Replacement Fund by the Commission and used for any lawful purpose in connection with the Water and Electric System.

18

The monies in the Renewal and Replacement Fund are to be used, when necessary, for the purpose of paying the costs of extensions, improvements or additions to, or the replacement or renewal of capital assets of the Water and Electric System, or extraordinary repairs of the Water and Electric System.

The monies in the Renewal and Replacement Fund are also to be used for payment into the Interest Account, Principal Account, Investment Account and Bond Redemption Account when the monies in the Revenue Fund and Debt Service Reserve Account are insuNcient therefor.

The Resolution provides that there shall be initially deposited into the Renewal and Replacement Fund all monies and securities on deposit in the renewal and replacement funds created and established by the proceedings which authorized the issuance of the Outstanding Obligations and such amounts are to be credited against the amount required to be deposited in the Renewal and Replacement Fund, as provided in this resolution.

7.

Thereafter, the balance of any Revenues remaining in said Revenue Fund shall be used (i) to make any Transfers of Funds, and (ii) for any lawful purpose in connection with the Water and Electric System; provided, however, that none ofsuch Revenues is to be used for the purposes described in (i) and (ii) of this paragraph unless all payments required in paragraphs (1) to (6) above, including any deficiencies for prior payments, have been made in full to the date of such use, and the Commission shall have fully complied with all covenants and agreements contained in the Resolution.

8.

Monies on deposit in the Revenue Fund, Interest Account, Principal Account and in the Bond Redemption Account may be invested (i) in direct obligations of the United States of America (ii) in obligations fully guaranteed by the United States, (iii) in Certificates of Deposit or Repurchase Agreements continuously and fully secured by (i) or (ii) above or insured by the Federal Deposit Insurance Corporation, maturing not later than the dates on which such monies will be needed for the purposes ofsuch fund or account, or (iv) such other obligations as are permitted by the applicable laws of the State of Florida.

Monies on deposit in the Debt Service Reserve Account may be invested (i) in direct obligations of the United States of America, or (ii) in obligations fully guaranteed by the United States of America, maturing not later than the final maturity of any of the Bonds.

Monies on deposit in the Renewal and Replacement Fund may be invested (i) in direct obligations of the United States ofAmerica, (ii) in obligations fullyguaranteed by the United States ofAmerica, (iii)in Certificates of Deposit or Repurchase Agreements continuously and fully secured by (i) or (ii) above or insured by the Federal Deposit Insurance Corporation, or (iv) in such other obligations as are permitted by the applicable laws of the State of Florida, which mature within five (5) years from the time of such investment.

All income and earnings received from the investment and reinvestment of monies on deposit in the Interest Account, Principal Account, Bond Redemption Account and Renewal and Replacement Fund are to be transferred on the next business day following their receipt to the Revenue Fund and used in the same manner and order of priority as other monies on deposit therein.

All income and earnings received from the investment and reinvestment of monies on deposit in the Investment Account are to remain on deposit therein'until the maximum amount required to be on deposit in said Investment Account is on deposit therein.

Thereal'ter such income and earnings are to be transferred on the next business day following their receipt to the Interest Account.

All income and earnings received from the investment and reinvestment of monies on deposit in the Debt Service Reserve Account are to be transferred on the next business day following their receipt to the Interest Account.

Issuance of Pari Passu Additional Bonds.

The Commission may issue Pari Passu Additional Bonds for the purpose of financing the cost of construction of additions, extensions, and improvements to or construction of revenue producing utilities within the operation, maintenance and control or jurisdiction of the Commission, either alone or jointly with other persons, public bodies or private bodies, or the cost of acquisition of revenue producing utilities to be, when acquired, within the operation, maintenance and l9

control or jurisdiction of the Commission, either alone or jointly with other persons, public bodies or private bodies or for the purpose of refunding outstanding Bonds issued pursuant to this Resolution.

Demand Charge Components are deemed to be Pari Passu Additional Bonds for purposes of the Resolution if the conditions for the issuance of Pari Passu Additional Bonds are met at the time of incurrance with respect to the incurring of such Demand Charge Components.

Pari Passu Additional Bonds shall be issued payable from the Revenues of the Water and Electric System pari passu with Bonds originally authorized and issued pursuant to the Resolution;

except, however, that such Pari Passu Additional Bonds are not secured by or payable from the monies and investments on deposit in the Investment Account.

No such Pari Passu Additional Bonds are to be issued unless the following, among other conditions, are complied with:

( I ) The Commission must be current in all deposits into the various funds and accounts and all payments theretofore required to have been deposited or made by it under the provisions of the Resolution and have complied with the covenants and provisions of the Resolution and any supplemental resolutions hereafter adopted for the issuance of Pari Passu Additional Bonds.

(2) The amount of the Net Revenues, as adjusted, during the immediate preceding Fiscal Year or any twelve (12) consecutive months selected by the Commission of the fifteen (15) months immediately preceding the issuance of said Pari Passu Additional Bonds, as certified by the Consulting Engineer, will be equal to One Hundred Fifty per centum (150%) of the Maximum Annual Debt Service on outstanding Bonds and the Pari Passu Additional Bonds then proposed to be issued.

For the purpose of this summary the phrase "immediate preceding Fiscal Year or the twelve (12) consecutive months of the fifteen (15) months immediately preceding the issuance of said Pari Passu Additional Bonds" shall be sometimes referred to as "twelve (12) consecutive months".

The Net Revenues calculated pursuant to the foregoing subsection (2) may be adjusted, at the option of the Commission, as follows:

(a) Ifthe Commission, prior to the issuance of the proposed Pari Passu Additional Bonds, shall have increased the rates, fees, rentals or other charges for the services of the Water and Electric System, the Net Revenues for the twelve (12) consecutive months immediately preceding the issuance of said Pari Passu Additional Bonds, shall be adjusted to show the Net Revenues which would have been derived from said Water and Electric System in such twelve (12) consecutive months as ifsuch increased rates, fees, rentals or other charges for the services ofsaid Water and Electric Systems had been in efiect during all of such twelve (.12) consecutive months.

(b) Ifthe Commission shall have acquired or has contracted to. acquire any privately or publicly owned existing water system or electric system, the cost of which shall be paid from all or part of the proceeds of the issuance of the proposed Pari Passu Additional Bonds, then the Net Revenues derived from the Water and Electric System during the twelve (12) consecutive months immediately preceding the issuance of said Pari Passu Additional Bonds, shall be increased by adding to the Net Revenues for said twelve (12) consecutive months the Net Revenues which would have been derived from said existing water system or electric system as ifsuch existing water system or electric system had been a part of the Water and Electric System during such twelve (12) consecutive months.

(c) If the Commission, in connection with the issuance of Pari Passu Additional Bonds, shall enter into a'contract (with a duration not less than the final maturity of such Pari Passu Additional Bonds) with any public or private entity. whereby the Commission agrees to furnish services in connection with.any water system or electric system, then the Net Revenues of the Water and Electric System during the twelve (12) consecutive months immediately preceding the issuance of said Pari Passu Additional Bonds shall be increased by the least amount which said public or private entity 20

shall guarantee to pay in any one year for the furnishing of said services by the Commission, after deducting therefrom the proportion of operating expenses and repair, renewal and replacement cost attributable in such year to such services.

Such payments shall be deemed to be Revenues derived from said Water and Electric System and pledged for the Bonds in the same manner as other Revenues derived from said Water and Electric System.

"t (d).lfthe Commission shall be constructing or acquiring additions, extensions or improvements to the Water and Electric System from the proceeds of such Pari Passu Additional Bonds and shall have established rates or charges to be charged and collected from users ofsuch facilities when service is rendered, such Net Revenues may be adjusted by (i) adding thereto eighty per cent (80%) of the average annual Net Revenues estimated by the Consulting Engineer to be derived during the first three Fiscal Years of operation after completion of the construction or acquisition of said additions, extensions and improvements to the Water and Electric System, and (ii) dividing such total amount by two (2).

Insurance, That the Commission is required to carry such insurance as is required by the State of Florida or is ordinarily carried by private or public corporations owning and operating similar utilities as the Water and Electric System with a reputable insurance carrier or carriers, including public liability insurance and such other insurance against loss or damage by fire, explosion, hurricane, cyclone or other hazards and risks.

Books and Records.

Any holder of a Bond or Bonds shall have the right at all reasonable times to inspect said Water and Electric System and all parts thereof, and all records, accounts and data of the Commission relating thereto.

The Commission is required to promptly after the close of each Fiscal Year cause the books, records and accounts of the Water and Electric System for such Fiscal Year to be properly audited by a qualified, recognized and nationally known independent firm of certified public accountants, and shall file the report ofsuch certified public accountants in the once ofthe General Manager of the Commission and shall mail upon request, and make available generally, said report, or a reasonable summary thereof, to any holder or holders of Bonds issued pursuant to this resolution.

Operating Budget.

That the Commission is required to annually prepare and adopt by proper proceedings of its governing body a detailed budget of the estimated expenditures for operation and maintenance of the Water and Electric System during the suc'ceeding Fiscal Year.

The Commission is required to mail copies of such annual budget and all resolutions authorizing increased expenditures for operation and maintenance

'to any holder or holders of Bonds who shall file his address with the Commission and request in writing that copies of all such budgets and resolutions be furnished him or them, and shall make available such budgets and all resolutions authorizing increased expenditures for operation and maintenance of the Water and Electric System at all,reasonable times to any holder or holders of the Bonds.

Maintenance of the Water and Electric System.

The Commission has covenanted to maintain the Water and Electric System in good condition and continuously operate the same in an eScient manner and at a reasonable cost as a revenue producing enterprise.

The Commission is also required, prior to the end ofeach Fiscal Year, to cause the Water and Electric System to be inspected by the Consulting Engineers, who are required to make a written report of such inspection and of the condition of the Water and Electric System and are required to file such annual report with the original purchasers ofthe Bonds and the Commission.

The Commission is required to mail upon request, and make available generally, the report of said Consulting Engineers, or a reasonable summary thereof, to any holder of Bonds issued pursuant to the Resolution.

Services Rendered By The Commission.

The Commission is prohibited under the Resolution from rendering any free services of any nature by its Water and Electric System or any part thereof, nor willany preferential rates be established for users ofthe same class; and in the event the City, or any other political subdivision, public body,.or any department, agency or instrumentality, ofiicer or employee thereof, shall 21

avail itselfof the facilities or services provided by said Water and Electric System or any part thereof, the same rates, fees or charges applicable to other customers receiving like services under similar circumstances are required to be charged the City, 'or such other political subdivision, public body, or any such department, agency, instrumentality, officer or employee.

Such provisions shall not be deemed in any way to apply to any reduced rates for any classification of users for services and facilities of the Water and Electric System in effect on the date ofthe adoption ofthe Resolution and shall be subject to any present or future applicable laws or regulations.

Enforcement of Collections.

The Commission has covenanted that it will diligently enforce and collect all fees, rentals or other charges for the services and facilities of the Water and Electric System, and take all steps, actions and proceedings for the enforcement and collection of such fees, rentals or other charges which shall become delinquent to the full extent permitted or authorized by applicable laws and regulations.

No Competing System.

Neither the Commission nor the City will grant any franchise, license or permit, or cause or permit the granting ofany franchise, license or permit, to any firm, corporation, agency or body, public or private, or any person whatsoever, for the supplying ofwater and electric power within the corporate limits of the City in competition with the Water and Electric System, except as may now exist.

Discharge and Satisfaction.

The covenants, liens and pledges entered into, created or imposed pursuant to the Resolution may be fully discharged and satisfied with respect to the Bonds in any one or more of the following ways:

(l) by paying the principal of and interest on Bonds when the same shall become due and payable; or (2) by depositing in the Interest Account, Principal Account, Investment Account, and Bond Redemption Account and such other accounts monies sufficient at the time of such deposit to pay the Bonds, all appurtenant interest coupons and the redemption premium, ifany, as the same become due on the Bonds on or prior to the redemption date or maturity date thereof; or (3) by depositing in the Interest Account, Principal Account, Investment Account and Bond Redemption Account and such other accounts monies which when invested in direct obligations ofthe United States of America or obligations fully guaranteed by the United States of America or in time deposits in banks or trust companies fully secured by direct obligations of the United States of America or obligations that are fullyguaranteed by the United States ofAmerica, willprovide monies which shall be sufficient to pay the Bonds, all appurtenant interest coupons and the redemption premium, ifany, as the same shall become due on the Bonds on or prior to their redemption date or maturity date thereof.

Modification or Amendment.

No material modification or amendment of this resolution or of any resolution amendatory thereof or supplemental thereto, may be made without the consent in writingof the holders oftwo-thirds or more in principal amount of the Bonds ihen outstanding; provided, however, that no modification or amendment shall permit a change in the maturity of such Bonds or a reduction in the rate of interest thereon, or affect the unconditional promise of the Commission to fix, maintain and collect fees, rentals and other charges for the Water and Electric System or to pay the interest ofand principal on the Bonds, as the same mature or become due, from the Revenues of the Water and Electric System, or reduce such percentage of holders of such Bonds required above for such modification or amendments, without the consent of the holders of all the Bonds.

22

LITIGATION Set forth below is a summary of the items of material litigation in which the Commission is currently involved:

On May 16, 1979, a final judgment was rendered in an alleged class action lawsuit brought by Rosalind Holding Company against the City ofOrlando and Orange County, as well as the Commission, in the Circuit Court, Orange County, Florida.

The judgment found against the plaintifi's and for the Commission as well as the other defendants, and, in addition, dismissed the complaint.

The plaintifF has filed notice of appeal.

The lawsuit seeks to enjoin the making of payment by the Commission to Orange County ofone percent (1%) of the Commission's gross electric revenues earned outside of the City and to require repayment of the amounts paid amounting to about. $ 12,000 per month since March, 1973.

Secondly,'t seeks to enjoin the Commission from transferring to the general fund of the City any part of the Commission's profits from its operations, which is currently the practice.

The complaint also alleged that the Commission's rates are unreasonable, that payment for certain expenses are unreasonable and seeks an award for overcharges from 1970 to date, plus attorney's fees.

If the plaintiff is ultimately successful, the amount of liabilitywhich could be imposed upon the Commission is almost impossible to estimate at this time. Legal counsel for the Commission is of the opinion that the suit is not well founded.

The Orlando Utilities Commission is defending a lawsuit brought by United States Fidelity &

Guaranty Company, in the United States District Court, Middle District of Florida, seeking damages in connection with alleged contractual liability arising out of a construction project on one of the Commission's power plants.

The maximum liability is estimated at approximately $ 1,100,000.

Legal counsel for the Commission is of the opinion that this suit is not well founded and that Commission's counterclaim for $2,500,000 is well founded although not necessarily fully collectible.

The Orlando Utilities Commission is named as defendant in a number of bodily injury cases.

However, any possible recovery is thought to be adequately covered by insurance.

The attorneys for the Commission are of the opinion that the chance of an adverse judgment in excess of insurance coverage is unlikely.

The Environmental Protection Agency has, issued a permit for the Commission's Indian River electric generating plant which in effect requires the Commission to provide an off-stream cooling water system for such plant by some date in the mid-1980s in the event that an ongoing ecological study in the opinion of the Agency shows that the present cooling system is doing substantial damage to the ecological system of the adjacent portion of the Indian River.

The cost to the Commission of such study is estimated to be

$ 1,274,980.

The final determination of the Agency is appealable to the courts. Ifconstruction of off-stream cooling facilities were begun now, it is estimated that they would cost approximately $23,000,000 which figure would in all likelihood substantially increase by the time construction was begun ifit is required.

The Orlando Utilities Commission, along with most of the utilities, both public and investor owned, in the State, including all the large ones, is currently going through an administrative procedure to attempt to relax the opacity and particulates rules under the Clean AirAct. Certain Florida utilities are in the process of attempting to obtain relief from these regulations and requirements.

The City of Orlando, acting for and at the request of Orlando Utilities Commission is presently engaged in a series of suits filed for the purpose of condemnation of rights-of-way extending from the facilities of the McIntosh Plant located in or near the City of Lakeland, Florida to its facilities in Orange County, Florida. This litigation will call for the expenditure of moriey for the purpose ofobtaining these rights-of-way. Orlando Utilities Commission is presently engaged as a party to a contract with'the City of Lakeland in the construction of a coal-fired generating plant at or near Lakeland, Florida. The estimated costs to the Orlando Utilities Commission for obtaining these rights-of-way is impossible to determine at this time, but it is possible that such costs will run into several hundred thousand dollars and will be paid by the Orlando Utilities Comrriission.

23

On March 10, 1980, the Economic Regulatory Administration of the Federal Government issued an order granting special temporary public interest exemption authorizing the Orlando Utilities Commission and certain other utilities to burn gas to replace residual oil in their generating plants.

This order permits the Orlando Utilities Commission to continue to use natural gas as a complementary fuel until October 31, 1981. Without this order, it would appear that the Orlando Utilities Commission would have been denied the use of this fuel gas.

The order referred to has been appealed by certain industrial gas users to two

, United States District Courts ofAppeal and at the present time is resting there pending a decision. Ifthe order of the Economic Regulatory Administration is reversed, or if such exemption is denied future consideration, it willoperate as a matter of serious consequence insofar as the cost of fuel of the plants of Orlando Utilities Commission is concerned.

It would be diflicult to estimate the amount per year of such difference in costs ofoperation for the reason that the Orlando Utilities Commission facilities are equipped only to use gas or oil or a combination of the two.

RATINGS Moody's Investor Service, Inc.

Moody's Investors Service, Inc. ("Moody's") has given the 1978B Improvement Bonds a rating ofAa.

Bonds which are rated Aa are judged by Moody's to be of high quality by all standards and are. generally considered high grade bonds.

They are rated lower than the Aaa bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

Standard & Poor's Corporation Standard & Poor's Corporation ("Standard & Poor's") has given the 1978B Improvement Bonds a rating of AA.

Bonds rated AA are considered by Standard & Poor's to qualify as high-quality debt obligations.

The issuer's capacity to pay principal and interest is considered very strong.

The Commission furnished to such rating agencies certain information and materials in respect to the Commission and the 1978B Improvement Bonds.

Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions made by the rating agencies.

There is no assurance that such ratings willcontinue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both ofsuch rating companies, ifin the judgment of either or both companies, circumstances so warrant.

Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse eflect on the market price of the 1978B'mprovement Bonds.

TAX EXEMPTION In the opinion of Bond Counsel, interest on the 1978B Improvement Bonds is exempt from all Federal income taxation under existing laws and from taxation under the laws of the State ofFlorida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest, income or profits on debt obligations owned by corporations, banks and savings associations.

LEGALITY The 1978B Improvement Bonds were validated by judgment of the Circuit Court ofthe Ninth Judicial Circuit in and for Orange County, Florida rendered on May 12, 1978, from which judgment no appeal was taken during the applicable appeal period.

Alllegal matters in connection with the issuance of the 1978B Improvement Bonds are subject to the approval of Mudge Rose Guthrie & Alexander, New York, New York, Bond Counsel to the Commission whose approving opinion will be available at the time of delivery of the. 1978B Improvement Bonds.

Certain legal matters in connection with the oflering of the 1978B Improvement Bonds willbe passed on in behalf of the Commission by J. Thomas Gurney, Sr., of Gurney, Gurney & Handley, P.A., Orlando, Florida, Counsel to the Commission.

24

MISCELLANEOUS K

So far as any statements made in this Olllcial Statement involve matters of opinion or of estimates, whether or not expressly

stated, they are set forth as such and not as representations of fact.

No representation is made that any of the opinions or estimates will be realized.

CERTIFICATE CONCERNING OFFICIALSTATEMENT It is expected that the Commission will approve the form and use of this OScial Statement.

The certificate set forth in the next succeeding paragraph will be executed as of the date of delivery of the 1978B Improvement Bonds.

We, the undersigned Executive Vice President and General Manager, and Manager of Financial Operations of the Orlando Utilities Commission, DO HEREBY CERTIFY THAT (i) we have reviewed the OScial Statement dated July 21, 1980 with respect to the 1978B Improveinent Bonds of the Orlando Utilities Commission (the "OScial Statement" ), and that to the best of our knowledge and belief the statements therein are true and correct; and (ii) nothing has come to our attention which would lead us to believe that the OScial Statement contains an untrue statement of a material fact or omits to state a

material fact which should be included therein for the purpose for which the OScial Statement is intended to be used, or which is necessary to make the statements contained therein, in light of. the circumstances under which they were made, not misleading.

IN WITNESS,WHEREOF, we have hereunto set our hands this 29th day of July, 1980.

ORLANDO UTILITIES COMMISSION By By 25

E ORLANQO UTILITIES COMMISSION 500 SOUTH ORANGE AVENUE ~ P. O. BOX 3193

~ ORLANDO. FLORIDA 32802

~ 305/423-9100 GAOVER C. BAYAN President MANAGEMENT '

REPORT

'CHARLES J. HAWKINS First Vice President GRACE C. UNOBLOM Second Vice President Operations for the year ended September 30, 1979 reflect an increase in gross revenues of 24.55 for electric operations and 7.8X for water operations.

The substantial increase in electric gross revenue is directly attributable to the pass through of the increased cost of fuel oil (42.2X).

Other operating expenses for electric operations (excluding depreciation) decreased 2.6X.

Water operating expenses increased 9.2X.

This reflects the effort by the Commission to control costs when compared to an inflation rate of approximately 12K.

Statistical data relating to electric and'water operations for the fiscal years ended September 30, 1979 and 1978 is as follows:

CARL T. LANGFOAO Meyor HENRY T. MEINER Immedlete Pest President CUATIS H. STANTON Executive Vice President b Generel Meneger Active Services at 9/30:

Electric Water Average Annual Usage:

, Electr ic (kilowatt-hour)

Residential Small Commercial Mater (1,000 gallons)

Average Price to Customers:

Electric (kilowatt-hour)

Residential Small Commercial Water (1,000 gallons)

Amount 1979 1978 82,882 819216 64,597 62,549 11,988 12,321 20,855 20,972 234 222 3.83tt:

3.724 4.764.

4.68It:

56.554 57.044 Percent Incr Deer 1979 1978 2.1 3.1 3.3 2.8 (2.7) 1.9 (0.6) 0.7 5.4 (3.1) 3.0 (5.6)

(7.1)

(0.9) 3.1 J. THOMAS GUANEY. SR.

Generel Counsel P. O. Box 1273 Orlendo, FL 32802 305/8d3-9500 Me were able to lower our basic electric rates this year because of increased bulk sales of electricity to other utilities.

This was made possible to a certain extent by our maintenance of a high degree of generating unit availability.

The rates were adjusted effective September 1, 1979, to'provide approximately

$1.4 million less revenue.

Mater rates were also adjusted to provide an additional

$ 146,000 in revenues.

As noted last year, the Commission has a participation agreement with the City of Lakeland, Florida, for the joint ownership (Lakeland - 60K, Orlando Utilities Commis'sion - 40%) of a 364 megawatt coal-,fired generating plant.

Construction of this plant (C.

D. McIntosh Plant Unit 83) was commenced during this fiscal year.

At September 30,

1979, we had expended approximately

$ 16.7 million of an estimated cost to us of $75 million. It is anticipated that this 'unit will come on line in 1982.

To partially finance the construction of McIntosh Unit P3, we sold

$40 million of revenue bonds during the current year.

This is, part of an authorization of $225,330,000 of which

$75,000,000 remains unissued.

These bonds received a rating of Aa and AA by the rating agencies which is consistent with our previous issue.

During the current year we began a cash management program utilizing a pooled investment account as explained in NOTE, A to the Financial Statements which follow.

Combining cash resources of several funds enables us to purchase larger and therefore more profitable investments.

We recognize the importance of electricity and water to our customers and the need to be less dependent on petroleum, as cited in the National Energy,Act.

Wi& this in mind, we are investigating other sources of power (coal, nuclear, and solid waste) in our continuing effort to provide reliable service as well as good quality water at reasonable costs to our customers.

C.

H.

STANTON Executive Vice President and General Manager Orlando Utilities Commission

7

[THIS PAGE INTENTIONALLYLEFT BLANK.]

APPENDIX A rnst8cVVhtnney c

ifidp<<bli A.......

332 North Magnolia Ave.

P.O. Box 3426 Orlando, Florida 32802 H

305/841-2050 Orlando Utilities Commission Orlando, Florida We have examined the balance sheets of the Orlando Utilities Commission as of September 30, 1979 and 1978, and the related statements of income and accumulated retained earnings and changes in financial position for the years then ended.

Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered ne'cessary in the circumstances.

In our opinion, the financial statement:s referred to above present fairly the financial position of the Orlando Utilities Commission at September 30, 1979 and 1978, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Orlando, Florida December 7,

1979

BAL'ANGL'l)EETS ORLANDO UTILITIES COMM1SSION ASSETS September 30 1979 1978 UTILITY PLANT In service:

Electric Water Common Allowances for depreciation and amortization (deduction)

$201,202,982 47,911,304 11,838,795

$196,755,277 43,899,677 11,668,344 (90 266 585)

(83 818 587) 1 70 7 686 7 496 168 504 71 1 Construction work in progress Notes A and E

24 955 636 9 031 328 RESTRICTED ASSETSNotes A and B

Debt service funds Construction and related funds 195,642,132, 177,536,039 22,602,963 15,664,661 44 826 980 18 402 724.

67,429,943 34,067,385 CURRENT ASSETS Cash Short-term iqvestments Pooled investments-,-Note A

Customer accounts receivable, less allowance for doubtful accounts (1979

$217,318; 1978

$196,531)

Accrued utility revenues Materials and supplies Accrued interest receivable Miscellaneous receivables, prepaid expenses and deferred charges 161,270 10,900,283 11,367,933 4,767,912 7,050,995 154,524 293 868 3476967785

'356,084 14,705,000 8,311,813 3,679,358 5,810,235 218,136 396 512 33,477,138 2

7 62 A-2

CAPITALIZATIONAND LIABILITIES September 30 1979 1978 CAPITALIZATION Equity:

Accumulated retained earnings:

Appropriated for debt service Invested in or appropriated

for, utility plant and working capital

$ 17,962,375

$ 12,236,214 103 994 673 103 667 986 121,957,048 115,904,200 Contributed capital 5 884 072 4 515 014 Long-term debtNote C:

Bond principal Unamortized discount and expense (deduction) 127,841,120 120,41'9,214 150,330,000 110,3307000 (469 732) 149 860 268 110 330 000 277,701,388 230,749,214 CURRENT LIABILITIESpayable from restricted assets Accrued interest'ayable on long-term debt CURRENT LIABILITIESpayable from current assets Accounts payable and accrued expenses Customer meter deposits and interest thereon Collections for state and political subdivisions Due to the General Fund of the City of OrlandoNote D

4,640,588 6,525,003 2,252,249 2,153,374 2 099 070 13;029,696 3,428,447 3,800,435 2,311,188 1,919,354 484 578 8,515,555 OTHER LIABILITIES Customer water and electric line extension deposits COMMITMENTS AND CONTINGENT LIABILITIESNote E

2,397,188 2,387,346 See notes to financial statements A-3

~)TATE,!E it1 8 0,"

INCOME AND ACCU,"1ULATEIJ RETA i'ED EARNINGS ORLANDO UTILlTIES COMMISSION Year Ended September 30 1979 1978 Operating revenues

$ 118,948,769 0 96,649,494 Operating expenses:

Production Transmission and distribution Customer accounting General and administrative State utilities tax Consumer education Payments to the General Fund of the City of OrlandoNote D

Depreciation Note A Interest and other income 76,158,045 5,000,302 2,092,358 5,527,792 1',065,693 118,844 3 032 403 92 995 437 OPERATING INCOME 25,953,332 7 496 659 18,456,673 5 466 360 56,810,200 5,155,871 1,988,964 4,826,196 1,023,166 111,411 2 860 474 72 776 282 23,873,212 7 412 202 16,461,010 3 349 538 Other deductions principally interest INCOME BEFORE EXTRAORDINARY ITEM 23,923,033 7

601 185 16,321,848 19,810,548 5 342 253 14,468,295 Extraordinary itemgain on advance refunding of long-term debtNote G 11 686 231 NET INCOME 16,321,848 26,154,526 Accumulated retained earnings at beginning of year 115 904 200 96 009 674 Less transfers to the General Fund of the City of OrlandoNote D

ACCUMULATED RETAINED EARNINGS AT END OF YEAR 132,226,048 122,164,200 (10 269 000)

(6 260 000)

See notes to financial statements A-4

~ ~~'li~'i;"!': f.'. OF C!LQlGES 1gq FJNANCBQ. POS1TCOh ORLANDO UT11ITIES COMMISSION

~

~

~

SOURCE OF FUNDS Income before extraordinary item Charges to operations not requiring current outlay of working capital:

. -Depreciation and amortization Amortization of bond discount and expense TOTAL FROM OPERATIONS BEFORE EXTRAORDINARY ITEM Extraordinary itemgain on advance refunding of long-term debt Amortization of bond discount and expense not requiring current outlay of working capital Year Ended September 30 1979 1978 7,948,773 2 747 7,810,044, 46 867 24,273,368 22,325,206 11,686,231 1 308 769

$ 16,321,848

$ 14,468,295 TOTAL FROM OPERATIONS Proceeds from the sale of revenue bonds Contributed capital Increase in restricted liabilities Increase in other liabilities 24,273,368 40,000,000 1,369,058 1,212,141 9 842 12 995 000 35,320,206 110,330,000 772 737 830,568 439 102 66,864,409 147,692,613 APPLICATION OF FUNDS Additions to utili'ty plantnet Transfers to the General Fund of the City of Orlando Reduction of long-term debt Increase in restricted assets Expenses attributable to sale of revenue bonds 26,054,866 10,269,000 335362,558 472 479 9,055,228 6,260,000 126,885,000 522,617 INCREASE (DECREASE) IN WORKING CAPITAL 70 158 903

.142 722 845 4

6 CHANGES IN COMPONENTS OF WORKING CAPITAL Increase (decrease) in current assets:

Cash Investments Customer accounts receivable Materials and supplies Other receivables and'ccounts Increase (decrease) in current liabilities:

Accounts payable and accrued expenses Utility plant construction contracts Customer meter deposits and interest thereon Collections for state and political subdivisions Due to the General Fund of the City of Orlando (194,814)

(3,804,717) 3,056,120 1,240,760 922 298 1,219,647 2,724,568 (58,939) 2340020 1 614 492 4 514 141 56,833

',105,000 1,763,579 (1,102,028)

(1 896 378) 6,927,006 1, 222, 660 (23,466) 373,240 221,609 163 195 1 957 238 INCREASE (DECREASE)

IN WORKING CAPITAL See notes to financial statements 4

i 7

8 A-5

NOTES TO F INANCIAL STATEMENTS ORLANDO UTILITIES COMMISSION NOTE ASENARY OF SIGNIFICANT ACCOUNTING POLICIES which includes payroll and related cost, general and administrative cost and cost of equipment used in construction.

It is the policy of the Commission not to capitalize interest during construction.

Undivided Interest in Joint Pro ects:

The Commission accounts for undivided ownership interests in electric generation plants, with other utilities based on the pro rata share of the projects'ssets, liabilities, revenues and expenses.

De reciation and Maintenance:

The utility plant is being depreciated using the straight-line method, at rates calculated to amortize the cost over the estimated economic useful lives of the assets.

Such amounts are charged to depreciation or operating expense.

The Commission charges maintenance with the cost of repairs and minor renewals of property, and the plant accounts with the cost of renewals and replacement of property units.

The cost of significant unusual repairs are deferred and,amortized over periods not exceeding 24 months.

Pooled Investments:

During the year ended September 30, 1979 the Commission created a pooled'nvestment account whereby all investments (restricted and unrestricted) except for those in the Invested Sinking Fund, have'een placed in this, account.

The investments consist mainly of time certifi-cates of deposit, debt instruments of federal agencies, and securities held under repurchase agreements.

These investments are carried at cost, which approximates market.

Pooled investments by classification at September 30, 1979 consisted of

$60,600,957 in restricted assets and

$ 10,900,283 in current assets.

(See Note B)

Materials and Su lies:

Materials and supplies are stated at average cost.

Reclassifications:

Certain items on the balance sheet as of September 30, 1978 have been reclassified to 'be comparative to current year classifications.

A-6

NOTES TO FINANCIAL STATE.'ANTS--CONTINUED OIU.ANDO UTILITIES COM1ISSION NOTE B--RESTRICTED ASSETS Restricted assets consist of the following funds:

September 30 1979 1978 Increase (Decrease)

Sinking Fund Sinking Fund Reserve Renewal and Replacement Fund Construction Trust Funds

$ 11,158,485

$ 6,417,412

$ 4,741,073 11,444,478 9,247,249 2,197,229 7,226,621 6,288,426 938,195 37 600 359 12 114 298 25 486 061 TOTALS 4

2 8

The above funds are classified in the balance sheet as:

Debt service funds Construction and related funds

$22,602,963

$15,664,661

$ 6,938;302 44 826 980 18 402 724 26 424 256 TOTALS 42 The funds consist of:

Cash and Certificates of Deposit United States Treasury securities-at cost (approximate market value:

1979

$5,691,000; 1978

$25,875,000)

Short-term investments Pooled investments--Note A

Interest receivable Orlando Utilities Commission Revenue Bondsat cost TOTALS 5, 6901407 60,600,957 1,136,931 2 4

25,754,567 3,479,000 399,355 58 958 1,648

$ 4,375,505 A-7

i"i'I!:." TO FINANCI/O. 8 iATL"ai:iiTS"-CONTI:i<'LD ORLANDO UTILITIES COMMISSION NOTE C--LONG-TERM DEBT By resolution dated April 18, 1978 and amended May 15, 1978, the Commission provided for the advance refunding of all of its water and electric revenue bonds outstanding at April 1, 1978 in the aggregate principal amount of

$123,325,000 (Refunded Bonds) by the sale of $110,330,000 Water and Electric Revenue Refunding and Improvement

Bonds, Series 1978 and

$94,650,000 Special Obligation Bonds, Series 1978.

From the proceeds of the sale of the two

issues, monies were invested in United States obligations in an irrevocable Escrow Deposit Trust Fund.

Such United States obligations will mature at such time and in such amounts so as to provide sufficient funds for the payment of maturing principal and interest on the Refunded Bonds.

All interest earned or accrued on the United States obligations has been pledged and will be used for the payment of the principal and, interest on the Special Obligation Bonds, Series 1978.

The Refunded Bonds are treated as extin'guished debts in the accompanying financial statements even though the Refunded Bonds do not have a provision for defeasance.

The transaction has been accounted

..for in the'ame manner as a defeased transaction because the obligation of the Commission for the Refunded Bonds has been satisfied in substance al-though not'in form.

On July 27, 1979 the Commission issued

$40 million Water and Electric Revenue Refunding and Improvement

Bonds, Series 1978A as part of the April 18, 1978 resolution, as amended.

The Series 1978'nd 1978A are payable from and secured by a first lien upon the pledge of the. net revenues derived by the Commission from the

/

operation of the water and electric system and from investment income earned on monies and obligations in certain sinking fund accounts.

Bonds outstanding as of September 30 are's follows:

1979 1978 1978 series, 5.8%-6.375%,

due serially 1994 to 2008 1978A series, 5.6%-6.4%,

due serially 1993 to 2008 40 000 000 $ 110,330,000

$ 110,330,000 KMBN A-8

.OTi;S TO FINANCIAL STATE.'iL'NTS--CV~'i'INULD ORLANDO UTILITIES COi~'IMISSION NOTE D PAYMENTS AND TRANSFERS GENERAL FUND OF THE CITY OF ORLANDO The Commission makes payments based on gross revenues from services within the City to the General Fund of the City of Orlando which are considered operating expenses.

The Commission transfers additional monies to the General Fund of the City of Orlando based on the Commission's income.

NOTE E COMMITMENTS AND CONTINGENT LIABILITIES (1)

By resolution, the Orlando Utilities Commission, on July 12," 1955, appropriated

$180,000 annually for a period of 26 years commencing April 1, 1955, for the retirement of the Sewer Revenue Bonds of the City of Orlando dated April 1, 1955, in the amount of $5,438,000.

By an agreement between the City and the Orlando Utilities Commission, the Commission may offset this contribution against the City of Orlando utilities tax.

The agreement whereby the Commission pledges

$180,000 of its revenues annually has become a part of the agreement between the City of Orlando and the bondholders and, therefore, it is a contingent liability ranking )unior only to obligations of the Orlando Utilities Commission to the holders of its Water and Electric Revenue Bonds.

This liability becomes payable only if the utilities tax is inadequate and thereafter the City fails to reimburse the Commission from other utility tax revenues and also fails to levy a sewer tax as required.

(2)

On December 22, 1969, the Orlando Utilities Commission pledged

$480,000 of its annual revenues in connection with the issuance by the City" of Orlando of $5,500,000 Improvement Revenue Bonds.

This pledge is for a period of 22 years from the date of issuance by the City of the Improve-ment Revenue Bonds or such longer period as shall be required to pay and retire all principal and interest on said bonds.

This lien on the revenues derived from the Utilities shall be )unior and subordinate to the lien of the holders of any obligations of the Commission out-standing or pari passu obligations hereinafter issued for purposes of the Commission, and to the annual payment for the retirement of th' Sewer Revenue Bonds described in the preceding paragraph, but shall be prior and superior to any lien, pledge or encumbrance hereafter made of such revenues for any purposes other than said obligations of this Commission for water or electric purposes, and said annual Sewer Revenue Bond payment.

A-9

NOTES TO FINANCIAL STATEMENTSCONTlNUED ORLANDO UTILITIES COMMISSlON NOTE E COMMITMENTS AND CONTINGENT LIABILITIES CONTINUED 4

T (3) 'he approximate cost to complete construction contracts in progress (4)

(5) entered 'into as of September 30, 1979 is

$ 12,900,000.

It is currently anticipated that additional future expansion program costs, planned for the next three years'ill approximate

$85 million.

These amounts in-clude a joint project with the City of Lakeland to'- construct a 364 lN steam-electric generating plant to be located in Lakeland.

The Commission will have a

40% ownership in the generating plant and 'be

entitled to 40% of its capacity.

The Commission leases real estate for a fuel supply terminal under an operating lease through the year 2023.

Future minimum payments for this lease at September 30, 1979 are

$11,880 annually.

The Commission has filed a claim against the bonding company of a con-tractor alleging damages for delays in the performance of certain construction. contracts.

If the Commission is unable to show delay

damage, retainages of approximately

$500,600 would be due the contractor.

The accompanying financial statements do not include a provision for liability, if any, that may result from settlement thereof.

(6)

The Commission was one of the defendants in an alleged class acti'on lawsuit brought against the City of Orlando and Orange

County, as well as the Commission.

The lawsuit sought to enjoin the making of payments by the Commission to Orange County of one per'cent (1%) of the Commission's gross electric'evenues earned outside the City and to require repayment of the amounts paid amounting to about.

$12,000 per month since March.

1973.

Secondly, it sought to enjoin the Commission from paying to the General Fund of the City any part of the Commission's net income, which is currently the practice.

The complaint was amended Februa'ry. 7, 1978, to allege that rates charged for utilities services are unreasonable, that payment for certain expenses are unieasonable and to seek an injunction for overcharges from 1970 to date plus attorneys'ees.

The court has'ecided in favor of the defendants.

The plaintifs,

however, have filed an intent to appeal the decision.

(7)

The Environmental Protection Agency has issued a'ermit for the

'Commission's Indian River electric generating plant which requires the Commission to provide an off-stream water cooling system for such plant by some date in the mid-1980's in the event that an ecological study, in the opinion of the Agency, shows that the present cooling system is doing substantial damage to the ecological system of the

'-10

NOTE~~

'JO F1Nr~~C1AL Sl'ATL1ENTSCUNTI tli,'L'D ORLANDO UTILITIES CO."1HISSION NOTE E COMMITHENTS AND "CONTINGENT LIABILITIES CONTINUED adjacent portion of the Indian River.

The cost to the Commission of such study is estimated to be

$1,300,000 of which approximately

$800,000 has been incurred as of September 30, 1979.

The final determination of the Agency is appealable to the courts.

If construction of off-stream cooling facilities were begun now, it is estimated that they would cost approximately.$20,000,000.

(8)

In August 1978, the Commission adopted a plan of paying employees having at least'two years of employment for a portion of their unused sick leave accumulated at the date they terminate or retire.

The maximum estimated liability, calculated on the basis of unused sick leave for eligible employees at September 30, 1979 is approximately

$775,000.

It is the policy of the Commission to record the costs of the plan only as benefits are paid.

Benefit payments for the year ended September 30, 1979 were

$38,508.

NOTE F PENSION PLAN The Orlando Utilities Commission has a pension plan covering substantially all employees.

The total pension expense for the year's 1979 and 1978 was

$ 1,622,763 and

$ 1,390,132, respectively, which includes amortization of past service costs over a period of approximately 30 years.

The funding method used is the entry age normal with the initial unfunded accrued liability frozen.

Funding is by a Deposit Administration Contract.

As of September 1, 1979, the anniversary date of the plan, the Pension Fund assets exceeded the actuarially computed value of vested benefits.

NOTE G EXTRAORDINARY ITEN As a result of 'the April 1978 advance refunding of the Commission's out-standing revenue bonds as explained in Note C, a gain was recognized in accordance with generally accepted accounting principles.

The recorded gain (non-current cash) was computed as follows:

Net carrying amount of refunded debt.

$123,325,000 Less unamortized discount and issue costs 1 308 769 Refunding bonds issued 122,016,231 110 330 000 GAIN (NON-CURRENT CASH)

ON ADVANCE REFUNDING OF BONDS 68 2

.'".)'1!'.8 FLNiNCl' STATEMENTS--CONTI':UED Oi<L/2~DO UTILITIES CO)~1~11SSION NOTE H--BUSINESS SEGMENTS The Commission operates in two business

'segments, the generation, trans-mission and distribution of electricity and the production, treatment, transmission and distribution of water.

A summary of the segment informa-tion is summarized below:

Year Ended Se tember 30 1979 Electric Water Administration Total Operating revenues Operating income

-Identifiable assets Depreciation Capital expenditures Year Ended Se tember 30 1978

$ 109,940,707 21,950,648 243,607,004 6,485,817 23,463,953

$ 9,008,062

$ 4,002,684 42,579,933 11,581,923 1,010,842 2,744,463 $ 118,948,769 25,953,332 297,768,860 7,496,659 26,208,416 Operating revenues Operating income Identifiable assets Depreciation Capital expenditures

$ 88,289,612

$ 8,359,882

$ $ 96,649,494 20,094,153 3,779,059 23,873,212

.195,214,805 42,331,574 7,534,183

.. 245,080,562 6,463,830 948,372

, 7,412,202 7,078,492 2,142,883 9,221,375 Operating revenue of the electric segment includes approximately

$ 13 million in interchange sales to another utility for each of the years ended September 30, 1979 and 1978.

NOTE I INCOME TAXES In the opinion of the Commission and. its counsel, the enterprise is exempt from federal and state income taxes.

A-l2

APPENDIX B B LACK 6

YEA TC H CONSULTING ENGINEERS TEI.. (913) 967-2000 TELEX 42 6263 1500 MEADOW LAKE PARKWAY MAILINOADDRESS< P.O. DOX NO. 8405 KANSAS CITY'ISSOURI 64114 July 3, 1980 Mr.

C.

H. Stanton Executive Vice President Orlando Utilities Commission P.O.

Box 3193 Orlando, Florida 32802

Dear Mr. Stanton:

This letter summarizes pertinent information relative to your electric system operations, for inclusion in the Official Statement being prepared by your financial consultants.

I.

Electric S stem Load Growth In January

1978, we presented to the Commission the results of our power supply study for the electric system.

This study indicated that the gross system 'peak demand was estimated to increase at an average annual rate of 5.3 percent per year from 1978 through 1986.

The gross system peak demand to date in 1980 and the net system energy requirement for 1979 have been about five percent below the projections presented in this study, The Commission's staff has subsequently established demand and energy requirement projections at a reduced growth rate and these projections have been utilized in recent feasibility studies which we have prepared.

These current projections indicate that the 1979 system energy requirements will be doubled in 1997.

II.

Power Su 1

Facilities Power for the electric system load is supplied from the Commission's

'ndian River Plant, their Lake Highland Plant and from the Florida Power Corporation Crystal River No.

3 nuclear unit owned in part by the Commission.

The Indian River Plant is located approximately'2 miles east of Orlando and is a modern steam plant having a t:otal generating capacity of 639,000 KW in three 1800 psi reheat steam turbine generator units.

BLACK & VEATCH Orlando Utilities Commission July 3, 1980 The -Lake Highland Plant is located in the City of Orlando and has a total generating capacity of approximately 120,000 KW in three 30,000 KW steam turbine-generator units and two 15,000 KW quick-start combustion turbine units.

Cold start capability is provided for this plant by a 1000 KW diesel engine generator.

The Lake Highland Plant is used primarily for peaking and standby service.

~

The Crystal River No. 3 nuclear unit is a nominally rated 825,000 KW unit utilizing a pressurized water reactor nuclear steam supply system.

The= unit is managed and operated by Florida Power Corporation but 13,200 net KW of the capacity is owned by the Commission.

The Indian River Plant and the Lake Highland Plant fire either natural gas or fuel oil and ample fuel oil storage is provided at each plant site.

Additional fuel oil facilities are installed at Port Canaveral.

These facilities include handling facilities and a storage tank capable of receiving tanker quantities of fuel oil and transferring the oil to barges for transport to the Indian River Plant via the Intercoastal Waterway.

New power supply facilities for the Commissions system include

)oint ownership of a coal fueled unit and a nuclear fueled unit.

Joint ownership of the coal fueled unit consists of 146,000 KW of capacity in a nominally rated 364,000 KW steam turbine generator unit being constructed by the City of Lakeland, Florida at their Mclntosh plant site.

All ma)or construction activities for this unit are currently in progress.

This unit will be a modern 2400 psi unit designed to fire coal as the primary fuel with fuel oil and refuse as secondary fuels.

The unit will be designed so that up to ten percent of the total fuel requirement could be supplied from refuse collected by the City of Lakeland.

Sewage treatment plant effluent water will be used as makeup for the plant cooling tower and sulphur removal system.

This plant will be among the first in Florida to use refuse and treated sewage effluent water in its operation.

Operation of this unit is scheduled for late 1981.

Joint ownership of the nuclear fueled unit consists of 48,840 net KW of capacity in a nominally rated 802,000 net KW unit utilizing a pressurized water reactor nuclear steam supply system.

The unit is being constructed by Florida Power and Light Company and is designated St. Lucie Unit" No.

2.

The plant is currently under construction and is scheduled to be in full commercial operation in late 1983.

Power S stem Facilities Power is transmitted from the Indian River Plant to the Orlando

'oad area over two 115 KV and one 230 KV transmission lines which terminate at a major switching substation (Pershing) located in B-2

BLACK & VEATCH Orlando Utilities Commission July 3, 1980 the southeast corner of the load area.

A 230 KV line extends from this (Pershing) substation to another major substation (Southwood) located in the southwest corner of the load area to firmly connect the eastern and western sections of the Orlando load area.

Power from the 230 KV system is supplied to a 115 KV loop network which covers the Orlando load area.

The Lake Highland Plant is connected to this 115 KV network.

Power is delivered to the Commission's primary distribution systems through twelve major load area substations strategically located on the 115 KV network.

The Commission's power system is interconnected with the Florida Power Corporation system at three widely separated substations in the Orlando load area, and with the Florida Power and Light Company at the Indian River Plant substation.

These interconnections provide the Commission's system with ready access to reserve capacity available in the Florida interconnected system.

The power system is'onitored and controlled through a central dispatching center and a supervisory control system.

Expansion of the dispatching center is in progress and operation of the new computer based supervisory control and data acquisition system is scheduled for early 1981.

New power system facilities include the addition of transformer capacity and distribution feeder switchgear at three existing substations currently under construction and a new 230 KV transmission line extending from a new substation at the south central portion of the Commission's system to the Mclntosh plant of the City of Lakeland.

The new transmission line is currently being designed and is scheduled to be under construction by October 1980.

This line will facilitate transmission of the power from the new coal fired unit into the Commission's load area.

IV.

Electric Rates The Commission has developed in house capability for routinely reviewing the adequacy of rate levels and for determining the amount and appropriate distribution of rate adjustments.

The electric rates of the Orlando Utilities Commission are competitive with the rates of other electric utilities serving the surrounding area.

Respectively submitted, BLACK & VEA CH E.

C. Windisch ECW:dk B-3

(This page left blank intentionally. J

CH2M L HILL

('Il"I II('(.'r')

~ Il<tnn(.rh

('('OlloilllS lS s(i( nlists APPENDIX C June 6,

1980 GN11701.80 Mr. C.

H. Stanton Executive Vice President Orlando Utilities Commission 500 South Orange Avenue P.

O.

Box 3193 Orlando, Florida 32820

Dear Mr. Stanton:

The purpose of this letter is to summarize certain pertinent information regarding the Water Operations Department for inclusion in the Official Statement currently being prepared in connection with the issuance of the 1978B Improvement Bonds.

Historical Back round of Water S stem Prior to 1956, Orlando obtained its water supply from a chain of lakes in the north central part of the city.

A comprehensive engineering study of the water utility was prepared by Black, Crow and Eidsness in 1956, which showed the inadequacy of this supply and resulted, in the estab-lishment of a program to replace the surface water supply with that of deep wells, approximately 1,400 feet deep, penetrating the Middle Eocene formation.

The water obtained from these wells proved to be of excellent chemical and bacterial quality, and greatly reduced treatment costs.

In 1978 the Navy Plant was completed, thereby increasing service to the northeastern side of the area.

A Ten-Year Master. Plan has been prepared by Black, Crow and Eidsness covering the period 1973 through 1983.

This plan has recently been updated by OUC staff covering the time period 1980 through 1990. It incorporates projections to meet future consumer demands and provides for the continued orderly development of the water system.

C-l Atlanta Office 401 West Peachtree Street, N.E., Suite 1640, Atlanta, Georgia 30308 404/588-1990

Mr. C.

H. Stanton Page,2 June 6,

1980 GN11701.80 Present Water-Treatment and Pum in Facilities With the exception of the Navy Plant, all plants treat the incoming raw water by the same

method, namely, aeration, chlorination and fluoridation.

In the case of the Navy Plant a successful research program has been advanced to the design stage wherein new technology will be employed to eliminate the aeration step.

It is anticipated that with construction of the first full scale installation at the Navy Plant in 1980, and following a successful demonstration of that operation, similar modi-'ications will be. made at the other plants in subsequent years.

Plant Raw Water Aeration Capacity Capacity (mgd)

(mgd)

High Service Pumping Capacity (mgd)

Reservoir Capacity (106 gal)

Navy Kirkman 0*

12 15 2.0 2.0 Highland Primrose Pine Hills Kuhl Martin Conway Total 35 15" 15 15 10 107 35 15 15 15

. 6 10 101 48 21 24 27 12 14 173 3.5 2.0 2.0 2.0 1.0 2.0 16.5

• Substitute system to be installed.

C-2

Mr. C.

H. Stanton Page 3

June 6,

1980 GN11701.SO Water Distribution S stem The water distribution system consists of mains from 2 inches to 36 inches in diameter and presently provides service for an area of approximately 150, square miles.

A trunk main system comprised of mains 12 inches to 36 inches in diameter provides a belt loop interconnecting all plants and elevated tanks.

Elevated storage tanks connected to the trunk main system are shown below.

Location ELEVATED WATER STORAGE Capacity (gallons)

Rugby Hazel Copeland Gore Hiawassee Oak Ridge Total 500,000 500,000 1,000,000 500,000 500,000 500,000 3,500,000 Rate Structure During 1972 the management of the Orlando Utilities Commission, recognizing the need to increase

revenues, offset increased operating

expenses, and provide for necessary expansion of the syst'm, authorized this firm to conduct a comprehensive fiscal analysis of the Water Operations Department.

Periodic updates of this analysis have resulted in increases to water rates leading to the current rate structure.

C-3

Mr. C.

H. Stanton Page 4

June 6,

1980 GN11701.80 The most recent adjustment to rates became effective September 1, 1979, and is shown be'low:

CHARGES PER 1000 GALLONS Monthly Consumption Inside in Gallons

.City Limits Outside City Limits 0 -

1,000*

01.88

$ 2.59 1,000 100,000 Over 100,000

. 448

.377

.611

..509

• Residential (3/4" meter) minimum monthly,charge.

Cost of Service Stud In order to establish an accurate definition of cost 'of service for the variety of classes of water customers served

'by Orlando Utilities, a study was inititated in early 1978.

The first two phases of this study will be completed during 1980 and following a full year of data collection, phase three will be concluded in 1981.

Historical Record and Pro'ections of Water Connections and Consum tron The Water Operations Department's historic records and projections of water connections, population served, and consumption are shown below:

C-4

Mr. C.

H. Stanton Page 5

June 6,

1980 GN11701.80 Average Active Population Year Services 'erved'otal Average Maximum Sales'ay Day 1970 1971 1972 1973 1974 1975 1976 1977 1978

'979'980 1985'1,393 53,109 54,838 56,760 58,144 59,166 59,618 60,412 61,870 63,794 64,769 69,267 197,564 204,751 211,754 218 I 778 225,446 231,957 238,310 244 i 512 250,573 256,493 262,054 288,911',920 10,613 10,979 11,498 12,384 13,025 13,004 13,973 13,985 15,095 15,559 17,665 31.0 34.2 36.9 39.2 40.3 41.7 40.3 43.6 44 '

45.6 47.6 53.1 60.6 65.1 60.8 70.1 73.3 71.6 64.1 70.0 7-3. 1 76.2 80.2 88.1

'Data are compiled on a fiscal year basis, October 1 through September 30.

~Determined by using the traffic. zone population defined by the East Central Regional Planning Council.

Revised due to projected population differences of Orange County from

Orange, Seminole, and Osceola Statistical data by East Central Florida RegionalPlanning Council and University of Florida Population Bulletin I48.

'Millions of gallons'.

"Millions of gallons of water delivered to the system.

The above indicates a very stable position from the stand-point of supply and demand, particularly with respect to fire protection.

The city enjoys an outstanding National Board of Fire Underwriters rating of three.

This rating is due in a large part to the capability of the water system.

Conclusions l.

Population and load growth projections indicate steadily increasing sales of treated water within the service area.

C-5

Mr. C.

H. Stanton Page 6

June 6,

1980 GN11701.80 2.

Total requirements for treated water are expected to reach 80,200,000 gallons per maximum day during 1980.

3.

Previous studies by our firm, and others, indicate that an abundant supply of high quality water is available to supply these requirements.

4.

Adequate and proper planning of required future plant expansions is being achieved affording orderly develop-ment of the water system.

5.

The foresightedness of the Orlando Utilities Commission, through recently adopted rate structure adjustm'ents, will ensure that future revenues will be adequate to meet the demand for anticipated plant expansion and provide for Water Operations Department pro rata share of present and future debt service and coverage'.

6.

Orlando Utilities has occupied a leading position in the technology of.wa:.er services for many years.

With continued good management

systems, this excellent record will be demonstrated throughout the years to come.

Respectfully submitted, Lawrence F. Pinson Manager of Economics Eastern District sjhxc'r.

H. 'H. Walker Mr. T.

C, Pope Mr."R.'; "Savarese Mr. H.

C. Luff Mr. J. J.

Smith C-6

APPENDIX D SUPPLEMENTAL INFORMATION THE CITY OF ORLANDO AND ORANGE COUNTY The following information concerning the City ofOrlando and 0'range County is included only for the purpose of supplying general information regarding the City and the County.

The 1978A Improvement Bonds are payable solely from the Net Revenues of the Commission derived from the operation of the Water and Electric System and are not payable or secured by" the City or the County, or any political subdivision of the State.

General Orange County, established by the Florida Legislature in 1824, is located geographically in the approximate center of the State of Florida, midway between Jacksonville to the north and Miami to the south, between St. Petersburg-Tampa on the Gulf of Mexico on the west and Daytona Beach on the Atlantic co'ast on the east.

Two of the State's major highways, Interstate 4 for east-west travel and the Florida Turnpike for north-south travel, intersect just outside of Orlando.

The County encompasses approximately 1,003 square miles, ranking nineteenth in the State in terms of land area, and ranks sixth in Florida in terms ofpopulation.

The County enjoys an excellent. climate, with temperatures ranging from an average ofapproximately 54'(F.) in January to an average ofapproximately 81'(F.) in August. Long noted for its.natural scenic beauty, Orlando's central location and mild climate have proven to be especially attractive to residents and a broadening economy.

The Orlando area offers a unique range of living styles from a quiet countryside to the cultural and entertainment amenities of a major urban area.

Government The City operates under a mayor-council form ofgovernment.

The Mayor is the City's administrative head, elected for. a.term of four years.

The Mayor's responsibilities include the enforcement of laws, control ofCity departments and divisions, appointment and removal ofoIIicers and employees, supervision of City property, and negotiation of contracts.

The Mayor makes recommendations for creation of ordinances and resolutions to the City Council, and presents the annual budget for approval.

The City Council is the legislative branch of City government, and is responsible for taxation, finances, zoning regulations and boundaries.

The five City Commissioners including the Mayor review plans and specifications for public improvements, enact legislation governing City operations and approve the City budget.

They are elected for four-year terms.

Population Recent estimates by the United States Bureau of the Census document that the Orlando SMSA (Standard Metropolitan Statistical Area) has become the Nation's second fastest growing metropolitan area. The following table indicates the continuing growth of the County and the City in relation to the State of Florida:

Year Orlando Orange County Florida 1950 1960 1970 1971 1972 1973 1974 1975 1976 1977 1978

• 1979 52,367 88,135 99,006 106,615 111,000 114,500 117,435 118,457 118,661 122,090 123,534 124,658 114,950 236,540 344,311 361,000 412,253 428,517 424,000 424;556 420,552 434,543 438,278 441,337 2,810,400 4,951,600 6,671,100 7,120,000 7,441,500 7,845,100 8,248,900 8,485,200 8,551,800 8,717,300 8,966,400 9,245,231 Source:

U.S. Census; and University of Florida, Bureau of Economic and Business Research

's of April I, 1979 D-I

Tax Data The City is limited by the Constitution of the State of Florida to an ad valorem tax levy of 10 mills on each dollar of assessed valuation for operating expenditures.

The millage in 1980 for operating expenditures amounted to 8.690 mills per dollar of assessed valuation.

REAL ESTATE AND PERSONAL PROPERTY TAXES City of Orlando Real Estate Taxes (000's Omitted)

Year Nct Taxable Assessed Valuation Mills Levy General Fund Mills Levy G.O. Bond Fund Total Mills Levy Collected 1975 1976 1977 1978 1979

$ 1,040,304 1,072,494 1,098,906 1,181,792 1,237,984 8.150 8,478 8.515 9,132 8.557 9,403 8;487

'0,028 8.354 10,358

.520 541

.470 504

.428 471

.392 463

.336 416 8.670 9,019 8,734 8.985

'9,636 9,312 8.985 9,8'47 9,403 8.879 10,491 10,111 8.690 10,774 (a)

Personal Property Taxes 1975 1976

1977, 1978 1979 252,336 282,617 291,647

, 292,832

'23,299 8.150 8.515

',557 8.487 8.354 2,057 2,406 2,496 2,509 2,731

.520 131

.470 133

.428 125

.392 116

.336 109 8.670 2,188 8.985 2,539 8.985

~

2,621 8.879 2,625 8.690 2,841 2,088 2,445 2,517 2,449 (a)

(a) Not available Source:

OSce of Finance Administrator, City of Orlando Industry and Commerce Located within Orange County and/or immediately adjacent are Martin-Mariena Corp., a missile and electronic production plant having approximately 6,500 employees and an annual payroll of approxi-mately $90 million; Walt Disney World, located on a 43-square-mile tract of land approximately 16 miles southwest ofthe City ofOrlando, with a total construction cost ofover $700 million, having approximately 13,000 employees with a weekly payroll averaging approximately $ 1.1 million and another $ 1 million spent on goods and services each week; twenty-seven industrial parks encompassing more than 18,000 acres, containing national or regional companies, including Chrysler, Dow Jones & Co., Inc., Pepsi Cola Bottling Co., Masonite Corp., Westinghouse, Federal Pacific Electric, Continental National American Group of Insurance Companies, Lumbermans Mutual Insurance Co., Montgomery Ward and others.

Minutes away from the City of Orlando is Sea World of Florida, the world's largest marine life park.

Opened in December 1973 at a cost of $23 million, Sea World has quickly become Florida's third most popular attraction, drawing in excess of 2.7 million persons in 1978.

There are over 750 manufacturers in the Orlando metropolitan area providing more than 34,000 jobs.

The Florida Department of Labor reports that in 1978 Orlando led Florida's 16 Standard Metropolitan Statistical Areas in the net gain of manufacturing jobs adding 3,600 new jobs to the employment picture, D-2

an 11.8 percent increase over 1977. A central location, modern facilities, qualified labor market, and determined leaders place Orlando in a better position than ever before for attracting new industries.

New firms in the area include Excello Corporation, Reliance Electric, Invenex, Desoto, Amoco Container and Quip Systems: Other industries in the area include Applied Devices, Stromberg-Carlson, and the Lamp Division of General Electric. Further complementing the prospects of expansion, projected industrial activities at Walt Disney World's EPCOT willenhance Orlando's draw as an industrial/distribution center.

Construction began in 1979 on the EPCOT Center, a permanent international exposition, which includes the World Showc'ase.

The exposition is scheduled to open in 1982 and will be larger than the existing theme park.

The opening of Walt Disney World spawned unprecedented growth of travel accommodations in Orlando, and the area now ranks sixth in the world in the number of hotel and motel rooms available behind New York City, London, Chicago, Las Vegas and Washington, D.C. From 6,300 hotel and motel rooms available in 1971 when Walt Disney World opened, the Orlando area room count has grown to more than 32,000.

Conventions are occupying a larger part of the Orlando area travel picture. Increasing numbers of national groups are choosing to meet in Orlando, resulting in larger and longer conventions. Approxi-mately 440,867 delegates attended conventions in Orlando in 1979, with an estimated economic impact of approximately $66.3 million. A convention center is scheduled for completion in March, 1982 at a cost of about $39 million.

Tremendous growth in retail trade has matched the rapid industrial and tourism growth during the past few years. Orlando, as a national retail market, moved from 75th place in 1970 to 48th place in 1978.

Gross retail sales reached approximately $3.9 billion in 1979. Recognizing Orlando's potential, developers have opened four regional and 33 other major shopping centers during the past nine years, which centers include 6.5 million square feet of shopping space.

Approximately 1,000 businesses and 25 government buildings and public facilities, employing in excess of 13,000 persons, are located in downtown Orlando. Retailwriented space totals in excess of 6 million square feet. The Orlando Central Neighborhood Development Board forecasts that by 1980 downtown Orlando will add 700,000 square feet of office space, 79,820 square feet of retail space and 6,500 more employees. Included in $35 millionin construction recently completed in the downtown area is the $8.5 million Southeast National Bank Building and the $8.5 million Federal Office Building. Plans have been announced for four new high rise office buildings comprising 800,000 square feet ofoffice space and an expenditure in excess'of $50 million. In addition, there is a growing complex ofpublic offices along Interstate 4 named Government Plaza.

Besides the Federal Office Building, the area includes the Municipal Justice Building, and the recently completed $9.2 millionState Office Building. An Action Plan also calls for preserving historic landmarks and cooperating with the Church Street Station project, historic Orlando's complete entertainment and dining complex.

'rowing as a center of government, finance, insurance and general business activity, downtown Orlando has remained a pleasant place to live as well as work. Some ofthe City's finest neighborhoods are near the central business district, and new developments include several high and low rise apartments and condominiums. Lake Eola and its surrounding park enjoy increasing popularity for outdoor concerts, art shows and holiday celebrations, and several smaller parks are maintained in the City's core. for residents and workers.

D-3

Employment Principal categories of manufacturing in Orange and nearby counties, together with approximate employment at March 1979 and March 1980 are as follows:

1980 1979 Durable Goods:

Stone, clay and glass products.

Fabricated metal products.

Ordnance and electrical machinery....

Machinery except electrical.

Other durable goods.

Nori-durable Goods:

Food and kindred products.

Printing and publishing.

Other non-durable goods..

Total Manufacturing..

'Note:

Includes Orange, Osceola and Seminole Counties Source:

Florida Department of Labor, Statistics Division 1,000 2,300 8,700 2,800 9,400 5,200 2,700 4,500 36,600 1,100 2,000 8,000 2,700 9,600 4,700 2,700 4,100 34,900 EMPLOYMENTSECTOR ORLANDO SMSA (In Thousands)

" 1973 1974 1975 1976 1977 1978 1979 Manufacturing (durable/nondurable)

Contract Construction...................

Transportation, Cominunication

&Public Utilities.......................

Trade, Wholesale & Retail...........

Finance, Insurance & Real Estate Service & Miscellaneous.......'........

Government.

Total (Including Other)...............

28.8 28.3 30.2 24.2 12.1 12.5 54.7 59.1 13.8 14.9 51.4, 52.1 30.9 34.2 221.9 225.3 11.8 11.5 57.3 59.8 14.4 14.3 51.5 54.7 35.2 36.1 207.3 213.8 11.5 12.2 63.5 69.7 15.5 16.4 58.8 64.9 36.4 40.2 225.9 250.2 24.5 25.7 27.4 31.7 12.6 11.7 12.8 15.1 ss.z 18.8 13.6 73.6 17.5 70.5 42.1 271.3 Note:

The above hgures do not include self-employed, unpaid family or domestic.

Source:

Florida Department of Labor;Statistics Division D-4

COMPARISON OF UNEMPLOYMENTRATES Calendar Year End 12/31 (Percentage)

Orlando Metropolitan Arcs~

Florida United States 1971 5.2 4.9 1972 4.2 4.5 1973 4.4 4.3 1974 6.6 6.3 1975 11.3 10.6 1976 9.1 9.0 1977 8.0 8.2 1978 '.4 '.6 1979 5.8

6.0 Source

Florida Department of Labor, Statistics Division

• Includes Orange, Osceola and Seminole Counties 5.9 5.6 4.9 5.6 8.5 7.7 7.0 6.0 5.8 Transportation Orlando International Airport provides air transportation to all parts of the United States and increasing service for both cargo and passengers to foreign cities. Eastern, National, Delta, Republic, Air Florida, Braniff, United, TWA, U.S.Air, Northwest and Ozark Airlines, along with a number of intrastate carriers, provide far-reaching, efficient air transportation for thousands of passengers per day and play a vital part in the area's growing tourist industry. During 1979, the total number of arriving and departing passengers at the airport was 6,533,656, which represents a 26% increase over the 1978 total of 5,182,264.

Total air freight increased from 18,791, tons in 1978 to 21,548 tons in 1979. The airport provides approximately 1,300 jobs and generates approximately $ 180 million a year in revenues.

During 1976 the airport terminal was remodeled and enlarged to handle increased passenger loads when it became an international port of entry. Further development of2,500 acres of land acquired from the U.S. Air Force will result in a new airport complex employing up to 5,000 persons, complementary airport industry, and the introduction of international flights. A new $260 million terminal scheduled to open in 1980 is under construction.

The airport also contains 201 acres designated as a Foreign Trade Zone within which goods may be stored duty-free and quota-free until processed and shipped.

The Orlando area is also served by three satellite airports.

Herndon Airport, a 1,000-acre facilitynear downtown, is home base for three fixe'd base operators and over 265 locally owned aircraft.

Sanford Industrial Airport, in nearby Seminole County, includes over 1,600 acres and is ideal for aviation-oriented industries, companies which operate executive aircraft, and for those who use chartered aircraft.

A modern 6,000 square foot terminal houses Kissimmee Municipal Airport in adjacent Osceola County.

The Orlando area is crossed by Interstate 4 for east-west travel and the Florida Turnpike for north-south travel. The Martin Andersen Beeline Expressway links the east coast beaches with Interstate 4 and the Turnpike. The Holland East-West Expressway expedites traSc through the City and is connected by a full interchange to Interstate 4.

The metropolitan area is served by 30 common carrier truck lines, most of which have local terminals.

In addition to several parcel delivery and package express services covering Orlando and neighboring communities, 15 freight forwarding companies provide service.

Greyhound and Trailways Bus Lines offer charter, express and passenger service.

Seaboard Coastline Railroad provides freight and passenger service.

Rail passenger stations in the Orlando area are the D-5

busiest in the southeast, with some 600-Amtrak passengers arriving and leaving daily.

Auto-Train transports passengers and their automobiles between Sanford and suburban Washington, D.C.

Military On July 1, 1968 the U.S. Naval Training Center, Orlando, was commissioned on the site formerly occupied by Orlatido Air Force Base.

Supporting 27 commands and activities, the Center is one of the largest Naval Training Facilities on the A'tlantic coast, and one of the most modern in the Navy.

It includes Recruit Training Command, Service School Command, Naval Training Equipment

Center, Advanced Undersea Weapons School, Navy Finance Offtce, Defense Contract Administration Service, Naval Hospital, and various concomitant departments and support facilities. In addition, two new training facilities, the Basic Electricity & Electronics School and the Enlisted Navy'ecruiter Orientation Detachment, began operation during July 1975.

The Center currently employs approximately 5,000 military and civilian personnel and between 4,500 and 9,500 recruits.

The Navy's two Nuclear Power Schools were recently moved to Orlando in two stages.

The first phase of the consolidation move brought the Nuclear Power School from Bainbridge, Maryland to Orlando during 1975, while the second phase brought the Navy's Nuclear Power School at Mare Island, California to Orlando during the first quarter of 1977.

The Naval Nuclear Power School has a teaching staff of 290 and a student body of about 2,500 enlisted and offtcer personnel. Three hundred additional family housing units have recently been constructed at the Naval Training Center Annex at McCoy (formerly McCoy AirForce Base) to supplement the existing 668 homes in preparation for the arrival of the married staff and personnel assigned to the Nuclear Power School.

The Naval Training Center disbursed about 305 million dollars in 1978. The 1978 payroll was

.approximately 112 million dollars with another 121 million dollars mailed to retired military personnel within a 50-mile radius. Over 30 million dollars was spent on services and materials and 24 million dollars in construction costs.

Federal impact funds to Orange and Seminole County Schools for military dependents amounted to 1.2 million dollars.

Housing The development boom of the 1971-1973 period in the greater Orlando area (Orange-Seminole-Osceola Counties) resulted in the construction of several thousand condominium and apartment units which numbered 66,939 at the end of 1978.

Single-family residences and mobile homes totaled 157,141 and 20,071 respectively, for the same period. The total number of residential units in the City of Orlando is 48,430.

5.5% of residential units were unoccupied as of April 1, 1978.

These units are within the Orlando Utilities Commission service area and are already connected to its water and electric systems.

As these units become occupied, the Commission willnot have to assume hook-up and meter installation costs since they have already been paid for from the system's earnings.

A review of the number of building permits issued for single-family dwelling units in Orange County indicates that there has been a leveling offin this type ofconstruction activity in recent periods.

Set forth below are the number ofpermits issued during the four quarters of 1978 and 1979 together with the totals for those periods:

Quarter I

II III IV Total 1978 847 1,030 818 1,176 3,871 1979 1,053 1,052 929 795 3,829 Source:

East Central Florida Regional Planning Council, Autumn, 1979 D-6

Another important indicator in housing market and population analysis is the number of residential electric meters.

The number ofmeters in Orange County (served by the Orlando Utilities Commission and Florida Power Corp.) shows that the number ofactive meters during the fourth quarter of 1979 represents an increase of 3.9% over the same period for the prior year. The number of meters in Orange County are as follows: 'uarter Number Meters Quarter Number Meters I/78 II/78 III/78 IV/78 158,106 158,232 159,663 162,615 I/79 164,570 II/79 164,808 III/79 166,085 IV/79 168,980 Source:

East Central Florida Regional Planning Council, Autumn, 1979 Agriculture and Citrus Three of the State's largest manufacturers of frozen concentrate orange juice are located in Orange County at Winter Garden, Plymouth and Orlando.

Plymouth Citrus Growers Association, a large fresh citrus shipper, is located just north of Orlando.

Orange County is currently the fourth largest citrus producing county in the state with 51,174 acres producing approximately 11.3 million boxes (worth approximately $48 million)offruit annually.

Farmers in the Zellwood area are major producers ofsweet corn, celery and leafy vegetable crops, the value ofwhich exceeds $20 million per year. Apopka, the heart of the nation's leading foliage plant producing area, is located in the County,.

Production of ornamental foliage plants in 1979 was over $65,000,000 which makes this facet ofhorticulture number one in terms of production dollars.

Production of dairy products, cattle and poultry have a combined annual worth of

$ 15,000,000.

Banking and Finance At the end ofJanuary, 1979, Orlando had 35 main banks with 45 branches reporting total loans of 1.1 billion dollars and total deposits ofover 1.9 billion dollars. The geographic location of Orlando, coupled with the recent rapid economic growth, has caused the area to become a mature financial center in record time.

The area has become an insurance center, with ten regional home offices and six national home offices.

Employment in insurance Arms has increased from 4,000 employees in 1972 to over 5,500 employees in 1979.

BUSINESS BAROMETER (Orlando Metro Area)

Income/Sales 1960 1970 1975 1976 1978 l,698 5,356 443,987 596,076 2,999 9,471 872,075 1,394,079 PowerSales Management Income per capita.

Income per Household................................

Retail Sales..

Etrective Buying Income (000)...................

Source:

1979 Survey of Buying 4,680 '5,120 13,586 l4,719 2,059,078 2,406,349 2,891,010 3,079,141 5,634 l5,840 2,757,220 3,399,260 6.292 l7,279 3,245,990 3,844,603 D-7

Economic Indicator Dec.

1979 Dec.

1978 Percent Chantte Year to Date 1979

<<Year to Date 1978 Percent Construction No. ofResidential Units Value Residential Units(000)

Total Value(,000)

Employment(a) r Civilian Labor Force Non-Farm Manufacturing Unemployed Unemployment Rate Transportation(a)

Total AirPassengers AirCargo/Mail Enplaned( tons)

Tourism Hotel/Motel Occupancy Rate Hotel/Motel Rooms Rented Per Night Number ofConvention Delegates Number ofconventions Real Estate(b)

Real Estate Sales(000)

Real Estate Mortgages(000) 868

$ 20,686

$ 36,665 303,772 267,300 35,000 16,859 5.5%

500,634 2,123 58%

18,212 18,240 120

$ 62,241

$ 47,650 870

$ 28,114

$ 50,077

+ 40.9%

+ 19.0%

'39.8%

296,153 278,409 32,800 17,744 6.0%

+2.6%

-4.0%

+6.7%

-5.0%

308,853 261,809 34,273 17,950 5.8%

292,310 249,700 31,100

18,477

~ 6.3%

+ 5.7%

+ 4.8%

+ 10.2%

-2.9%

412,112

+21.5%

6,034,585 1,759

+ 20.7%

20,252 4,762,919

+26.7%

19,307

+ 4.9%

47%

+ 23.4%

71%

67%

+ 6.0%

14,758

+23.4%

19,376

-5.9%

129

-7.0%

22,294 440,027 2,133 20,835

'430,488 2,252

+ 7.0%

-2.2%

-5.3%

$ 61,876

$ 63,449

+ 1.0%

-24.9%

$ 1,013,627 801,116

$799,740

+ 26.7%

, $666,913

+ 20. 1%

2%

12,677 8,999

-26.4%

348,720 293,003

'-26.8%

628,869 449,946 (a) Previous Month (b) Orange County h'ource:

Economic Research Department, Orlando Area Chamber of Commerce Education The Orlando area has five major institutions of higher learning: University of Central Florida (formerly Florida Technological University), Rollins College, Seminole Community College, Valencia Community College, and Jones College. UCF, which opened in 1968, is located 12 miles east of Orlando.

It is four-year coeducational university with an enrollment of approximately 13,000 students.

Rollins College in Winter Park, the oldest four-year institution of higher learning in the State, is an independent, coeducational liberal arts college with an enrollment ofapproximately 1,300. Valencia Community College has an enrollment of approximately 14,500 students.

Seminole Community College has approximately

',000 students. Jones College is a four year accredited business college with two campuses in the Orlando area.

The Orange County School Board operates 74 elementary schools, 20 junior high schools and 11 senior high schools with a combined current enrollment of approximately 85,000 students.

D-8

APPENDIX E THE BOND RESOLUTION TABLEOF CONTENTS ARTICLEI STATUTORYAUTHORITY,FINDINGS, AND DEFINITIONS

'SECTION l.

AUTHORITYOF THIS RESOLUTION.

SECTION 2.

FINDING..

SECTION 3.

RESOLUTION CONSTITUTES CONTRACT.

SECTION 4.

DEFINITIONS ARTICLEII AUTHORIZATION,TERMS, EXECUTION AND REGISTRATION OF BONDS Page E-2 E-2 E-3 E-3 SECTION 1

SECTION 2

SECTION 3

SECTION 4

SECTION 5

SECTION 6

SECTION 7

SECTION 1

SECTION 2

SECTION 3

SECTION 4

SECTION 1

SECTION 2

SECTION 3

SECTION 4

SECTION 5

AUTHORIZATIONOF BONDS DESCRIPTION OF BONDS.

REDEMPTION PROVISIONS EXECUTION OF BONDS ANDCOUPONS NEGOTIABILITYAND REGISTRATION.

BONDS MUTILATED,DESTROYED, STOLEN OR LOST FORM OF BONDS ANDCOUPONS.

ARTICLEIII COVENANTS, FUNDS ANDAPPLICATIONTHEREOF BONDS NOTTO BE INDEBTEDNESS OF THE COMMISSION ANDTHE CITY BONDS SECURED BY PLEDGE OF NET REVENUES AND CERTAIN INVESTMENTINCOhfE APPLICATIONOF BOND PROCEEDS COVENANTS OF THE COMMISSION.

A.

ARBITRAGECOVENANT B.

RATES C.

WATERANDELECTRIC SYSTEihf REVENUE FUND.....

D.

OPERATION ANDhfAINTENAiVCE.

E.

DISPOSITION OF REVENUES F.

SALE OF THE WATERANDELECTRIC SYSTEM.........

G.

ISSUANCE OF OTHER OBLIGATIONSPAYABLE OUT OF REVENUES.

H.

ISSUANCE OF PARI PASSU ADDITIONALBONDS.......

I.

INSURANCE J.

BOOKS AND RECORDS K.

OPERATING BUDGET L.

MAINTENANCEOF THE WATER AND ELECTRIC SYSTEM ihf.

SERVICES RENDERED BYTHE COhfihfISSION...........

N.

REMEDIES.

0.

ENFORCEMENT OF COLLECTIONS P.

NO COhfPETING SYSTEhf Q.

CONSULTING ENGIiVEER R.

TRANSFER OF OUTSTANDINGOBLIGATIONS, FUNDS'AND ACCOUNTS S.

SIMULTANEOUSDELIVERY.

T.

DISCHARGE ANDSATISFACTIONOF BONDS............

ARTICLE IV MISCELLAiVEOUSPROVISIONS ihfODIFICATIONOR AihfENDhfENT.

SEVERABILITYOF INVALIDPROVISIONS VALIDATIONAUTHORIZED SALE OF BONDS.

EFFECTIVE DATE E-5 E-5 E-5 E-5 E-5 E-6

,E-6 E-8 E-8 E-8 E-9 E-9 E-9

. E-10

. E-10

. E-10

. E-12

. E-13

. E-13

. E-14

. E-14

. E-14 E-15

. E-15 E-15

. E-16

'-16 E-16 E-16 E-16

. E-16

. E-17

. E-17

. E-17

. E-17

. E-17

A RESOLUTION AMENDING"ARESOLUTION AUTHORIZINGTHE ISSUANCE OF NOT EXCEEDING $250,000,000 WATER AND ELECTRIC REVENUE REFUNDING AND IM-PROVEMENT BONDS, SERIES 1978, OF THE ORLANDO UTII.ITIESCOMMISSION, TO FINANCEPART OF THE COST OF THE CONSTRUCTION OF ADDITIONS,EXTENSIONS ANDIMPROVEMENTS TO THE WATER AND ELECTRIC SYSTEM, ANDTHE REFUND-ING OF CERTAIN OUTSTANDINGOBLIGATIONSHERETOFORE ISSUED BYTHE OR-LANDOUTILITIESCOM5IISSION; ANDPROVIDINGFOR THE TERMS OF SAIDWATER AND ELECTRIC REVENUE REFUNDING AND IMPROVEMENTBONDS, SERIES 1978, ANDTHE RIGHTS, SECURITY AND REMEDIES OF THE HOLDERS THEREOF."

Whereas, the Commission has duly adopted a Resolution au-thorizing the issuance of1Vater and Electric Revenue Refund-ing and Improvement Bonds, Series 1978, on April 18, 1978 and hereby determines to amend said Resolution, therefore be it resolved by the Orlando Utilities Commission that said Re-solution be amended to read in fullas follows:

ARTICLEI STATUTORYAUTHORITY,FINDINGS ANDDEFINITIONS SECTION 1. AUTHORITY OF THIS RESOLUTION.

This resolution is adopted pursuant to the provisions ofChap-ter 9861, Laws of Florida, Acts of 1923, as amended and supplemented by Chapter 10968, Laws of Florida, Acts of 1925, as amended by Chapter 13198, Laws of Florida 1927, Chapter 24758, Laws of Florida 1947, Chapters 31075, 31076, 31077, 31078, 31080 and 31092, Laws of Florida 1955, Chapter 2589, Laws ofFlorida 1961, and other applicable provisions of law.

SECTION 2. FINDINGS. It is hereby ascertained, deter-mined and declared:

A.

That the Commission now operates, maintains and con-trols a municipal Water and Electric System forthe supply and distribution of water and electricity within and without the City of Orlando, Florida. The Commission,"pursuant to the authority set forth in Section 1 hereof was created and estab-lished to operate, maintain and control the 1Vater and Electric System, as a part of the City of Orlando, and has since 1923, had fulland complete control and jurisdiction ofthe Water and Electric System.

B.

That there is hereby authorized the construction of additions, extensions and improvements to the Water and Electric System including but not limited to an additional steam electric generating unit at ilfcIntosh Plant, withrail and coal unloading storage and handling facilities, a solid refuse burning facility,and sewage efQuent handling facilities forthe cooling requirements of the generating unit, additions to the electric transmission and substation facilities, additions to the water production plant and transmission systems and to the water plant central computer control system, and other facilities appurtenant, necessary, or incidental to any of the above listed facilities. The said additional steam electric generating unit shall be an undivided 40% interest as tenants in common in a joint ownership project in participation with the City of Lakeland, Florida, which shall own the remaining undivided 60% interest in the project.

C.

That the construction of additions, extensions and im-provements to the Water and Electric System is impe> ative in order to preserve the public health and safety ofthe citizens of the City of Orlando and other customers, and it is essential to the physical and economic necessity of said City that the Water and Electric System be continued, maintained, im.

proved and extended as provided in this resolution.

D.

The Commission has constructed additions, extensions and improvements to the Water and Electric System, financed pursuant to a resolution adopted by the Commission on March 13, 1948 (hereinafter referred to as the "Original Resolution" ),

by the proceeds of $20,500,000 Water and Electric Revenue Bonds, Series 1957, dated October 1, 1957, issued pursuant to

, a resolution supplemental to said Original Resolution, adopted November 26, 1957, by the proceeds of $8,000,000 Water and Electric Revenue Bonds, Series 1959, dated October 1, 1959, issued pursuant to a resolution supplemental to said Original Resolution, adopted October 13, 1959, by the proceeds of

$28,000,000 Water and Electric Revenue Bonds, Series 1962, dated April 1, 1962, issued pursuant to a resolution supple-mental to said Original Resolution, adopted March 27, 1962 by the proceeds of $20,000,000 Water and Electric'evenue Bonds, Series 1970, dated October 1, 1970, issued pursuant to a resolution supplemental to said Original Resolution adopted September 21, 1970, by the proceeds of$33,500,000 Water and Electric Revenue Bonds, Series 1971, dated October 1, 1971, issued pursuant to a resolution supplemental to said Original Resolution adopted July 13, 1971, by the proceeds of

$ 15,000,000 1Vater and Electric Revenue Bonds, Series 1973, dated April 1, 1973, issued pursuant to a resolution supple-mental to said Original Resolution, adopted April 10, 1973 by the proceeds of $10,000,000 Water and Electric Revenue Bonds, Series 1975-A, dated April1, 1975, and of $9,875,000 Water and Electric Revenue Bonds, Series 1975-B, issued pursuant to a resolution supplemental to said Original Resolu-tion adopted July 8, 1976. That the Commission has refunded the 1Vater and Electric Revenue Bonds, Series 1975-A, dated April 1, 1975 maturing in the years 1986 to 2002, inclusive, from the proceeds of the $8,875,000 1Vater and Electric Re-venue Refunding Bonds, Series 1976, issued pursuant to a resolution supplemental to said Original Resolution adopted September 23, 1976.

E.

That the Commission has heretofore issued and has now outstanding and unpaid the Outstanding Obligations.

F.

That the Revenues derived from the operation of the Water and Electric System are not pledged or encumbered in any manner except forthe payment ofprincipal ofand interest on the Outstanding Obligations. That the Commission also makes Transfers of Funds which are subordinate to the lien on the Revenues of the Bonds authorized by this resolution.

G.

That there is hereby authorized the payment and re-funding of the Outstanding Obligations,all in the manner as provided by this resolution.

H.

That for the payment and refunding ofthe Outstanding Obligations the Commission shall as provided herein deposit part of the proceeds derived from the sale of the Bonds in a E-2

special Escrow Deposit Trust Fund together with the pro-ceeds derived from the gale of Special Obligation Bonds to be authorized by the Commission and issued simultaneously with the Bonds which shall be sufficient, at the time ofsuch deposit, to pay and refund the Outstanding Obligations as the same become due and payable or are redeemed prior to maturity, all as provided in this resolution.

I.

That the estimated Gross Revenues to'be derived in each year hereafter from the operation ofthe 1Vater and Elec-tric System willbe sufficient to pay all the costs of operation and maintenance of the Water and Electric System, the prin-cipal ofand interest on the Bonds to be issued pursuant to this resolution, as the same become due, and all sinking fund, reserve and other payments provided for in this resolution.

J.

That the principal of and interest on the Bonds to be issued pursuant to this resolution, and all of the reserve, sinking fund and other payments provided for in this resolu-tion willbe paid solely from the Net Revenues derived from the operation of the Water and Electric System and certain investment income, except, however, the principal of certain term bonds are additionally secured by and payable from moneys and investments on deposit in the Investment Ac-count, all as provided herein; and the ad valorem taxing power of the City, or the taxation of real estate in the City or the application ofany other funds ofthe Commission willnever be authorized to pay the principal ofand interest on the Bonds to be issued pursuant to this resolution, or to make any of the reserve, sinking fund or other payments provided for in this resolution, and the Bonds issued pursuant to this resolution shall not constitute a debt ofthe Commission or the Cityor be a lien upon the Water and Electric System or upon any other property whatsoever ofthe Commission or ofthe City.

K.

That the cost. of the construction of the additions, ex-tensions and improvements to the 1Vater and Electric System and the refunding of the Outstanding Obligations shall be deemed to include but shall not be limited to the cost of any lands or real estate, including easements or other interests therein, or any other property, real or personal, necessary therefor, interest on the Bonds issued pursuant to this resolu-tion prior to, during, and for one year after the completion of the construction of the additions, extensions and improve-ments to the Water and Electric System authorized by this resolution; administration expenses; capitalization of all or part of the reserve or other funds created and established pursuant to this resolution; discount on the sale ofthe Bonds, if any; engineering and legal expenses; expenses for fiscal age'nts or financial services; expenses for estimates of costs and of revenues; expenses for plans, specifications and sur-veys; and such other expenses as may be necessary or inciden-tal to the construction of the additions, extensions and improveinents to the Water and Electric System authorized by this resolution and the placing of the same in operation; provided, however, such cost shall not include any legal ex-

penses, expenses for fiscal agents or financial services, ex-penses for estimates of costs and of revenues and such other expenses as may be necessary or incidental and incurred by the Commission in connection with the issuance of the Bonds which shall be paid from the Escrow Deposit Trust Fund as provided herein.

L.

That the Bonds authorized to be issued by this resolu-tion may be issued at one time or from time to time as deter-mined by the Commission; provided, however, that a suffi-cient amount of Bonds authorized by this resolution shall be issued simultaneously with the Special Obligation Bonds which shall provide a sufficient amount of Bond proceeds to pay and refund the Outstanding Obligations in the manner provided in this resolution.

SECTION 3. RESOLUTION CONSTITUTES CON-TRACT. In consideration of the acceptance of the Bonds au-thorized to be issued hereunder by those who shall hold the same from time to time, this resolution shall be deemed to be and shall constitute a contract between the Commission and such Bondholders and the covenants and agreements herein set forth to be performed by said Commission shall be for the equal benefit, protection and security of the legal holders of any and ail ofsuch Bonds and the coupons attached thereto, all of which shall be of equal rank and without preference, prior-ity, or distinction of any of the Bonds or coupons over any other thereof except as expressly provided therein and herein.

SECTION 4. DEFINITIONS. That, as used in this resolu-tion, the followingter'ms shall have the followingmeanings:

A.

"Act"shall mean Chapter 9861, Laws of Florida, Acts of 1923, as amended and supplemented by Chapter

10968, Laws of Florida, Acts of 1925, as amended by Chapter 13198, Laws of Florida 1927, Chapter 24758, Laws of Florida 1947, Chapters 31075, 31076, 31077, 31078, 31080 and 31092, Laws ofFlorida 1955, Chapter 2589, Laws ofFlorida 1961, and other applicable provisions oflaw,

. B.

"Annual Debt Senesce Requirement" shall mean, at any time, the amount required to be deposited in the then current Fiscal Year into the Interest Account, Principal Account, In-vestment Account and the Bond Redemption Account, as pro-vided in this resolution; provided, however, that such amount shall be reduced by any earnings or investment income in the then current Fiscal Year on moneys and investments on de-posit in the Investment Account and the Debt Service Reserve

.Account.

\\

C.

"Murimum Annual Debt Sennce" shall mean, at any time, the maximum amount required to be deposited in the then current or any succeeding Fiscal Year into the Interest Account, Principal Account, Investment Account and Bond Redemption Account, as provided in this resolution; provided, however, that such amount shall be reduced (i) by any deter-minable earnings or investment income projected to be earned on the Investment Account Securities and (ii) by any esti-mated earnings or investment income from investments in the Debt Service Reserve Account which estimate shall be based on the income and earnings to be received from the invest-ments then on deposit in the Debt Service Reserve Account.

The amount of Term Bonds maturing in any Fiscal Year shall not be included in determining the biaximum Annual Debt Service.

D.

"Bondholder" or "Holder of Bonds" or any similar term, shall mean any persor, who shall be the bearer or owner ofany Bond or Bonds registered to bearer or not registered, or the registered owner, ofany outstanding Bond or Bonds which shall at the time be registered other than to beareror of coupons representing interest accrued or to accrue on said Bonds.

E.

"Bonds" shall mean the $250,000,000 Water and Elec-tric Revenue Refunding and Improvement Bonds, Series 1978, authorized to,be issued pursuant to this resolution, to-E-3

gether with any pari passu additional Bonds hereafter issued pursuant to this resolution in the manner herein provided, and the interest coupons attached to the Bonds.

(ii) Water and Electric Revenue Bonds, Series

1959, dated October 1, 1959, outstanding in the amount of

$5,900,000 maturing April 1 in the years 1979-1986; F.

"City"shall mean the Cityof Orlando, Florida.

G.

"Consulting Engineer" shall mean any qualified and recognized nationally known engineer or engineering firm as determined by the Commission.

H.

"Comniisaion" shall mean the Orlando Utilities Commission.

I.

"Escrow Deposit Agreement" shall mean the Escrow Deposit Agreement, dated as ofApril1, 1978, entered into by and between the Commission and a bank or trust company or national banking association, as trustee, to be hereafter des-ignated by resolution of the Commission, in connection with the refunding ofthe Outstanding Obligations.

J.

"Fiscoi Year" shall mean that period commencing on October 1 and continuing to and including the next succeeding September 30, or such other annual period as may be pre-scribed by law.

K.

"Invcstnicnt Account Securities" shall mean the direct obligations ofthe United States ofAmerica or obligations that are fullyguaranteed by the United States of America which are to be deposited in the Investment Account in the Sinking Fund for the payment of the principal of the Term Bonds payable from said Investment Account.

, L.

"Revenues" or "Gross Rcvcnucs" shall mean all rates, fees, charges or other income received by the Commission or accrued to the Commission or any agency thereof in control of the management and operation ofthe Water and Electric Sys-tem, and all parts thereof, from the operation ofthe Water and Electric System, and shall also include the investment income deposited in the Revenue Fund derived from the investment and reinvestment of moneys on deposit in the various funds and accounts created and established by this resolution, which by the terms and provisions of this resolution are required to be deposited in the Revenue Fund.

M.

"lVefRevenues" shall mean the (i) Gross Revenues re-maining after deduction of (ii) Operating Expenses not inclu-sive of (a) Transfers of Funds and (b) Payments to Orange County and (c) any Demand Charge Components.

N.

"Operating Expenses" shall mean the current ex-

penses, paid or accrued, of operation, maintenance and ordi-nary current repairs of the Water and Electric System and its facilities and shall include, without limitingthe generality of the foregoing, insurance premiums, administrative expenses of the Commission relating solely to the Water and Electric System, and such other reasonable current expenses as shall be in accordance with generally accepted accounting practice.

"Operating Expenses" shall not include any allowance for depreciation.

O.

"Oufstanding Obiigatons" shall mean the following outstanding obligations of the Commission:

(i)

Water and Electric Revenue

Bonds, Series

1957, dated October 1, 1957, outstanding in the amount of

$ 10,325,000 maturing April 1 in the years 1979-1984; (iii) Water and Electric Revenue Bonds, Series

1962, dated April 1, 1962, outstanding in the amount of

$23,600,000, maturing April 1 in the years 19Z9-1992; (iv) Water and Electric Revenue Bonds, Series

1970, dated October 1, 1970, outstanding in the amount of

$ 18,915,000, maturing April 1 in the years 1979-1996; (v)

Water and Electric Revenue Bonds, Series

1971, dated October 1, 1971, outstanding in the amount of

$31,530,000, maturing April1 in the years 1979-1998; (vi) Water and Electric Revenue Bonds, Series

1973, dated April 1, 1973, outstanding in the amount of

$ 13,525,000, maturing April1 in the years 1979-2003; (vii) Water and Electric Revenue Bonds, Series 19Z6 A, dated April 1, 1975, outstanding 'in the amount of

$ 1,300,000, maturing April 1 in the years 1979-1985; (viii) Water and Electric Revenue Bonds, Series 1976 B, dated April1, 1975, outstanding in the amount of$9,730,000 maturing April1 in the years 1979-2005; (ix) Water and Electric Revenue Refunding Bonds, Series 1976, dated April1, 1976 outstanding inthe amount of

$8,500,000, maturing in the years 1986-2002; and (x)

Interest which becomes due on or before April1, 1985 on the Water and Electric Revenue Bonds, Series 1976 A, dated April1, 1976 maturing April1 in the years 1986-2002.

P.

"Serial Bonds" shall mean the Bonds ofan issue which shall be stated to mature in annual or semi-annual installments but not including Term Bonds.

(}.

"Special Obligation BonCh" shall mean or have refer-ence to a principal amount of not exceeding $125,000,000 of Special Obligation Bonds, Series 1978, of the Commission, to be issued simultaneously with the Bonds which are issued to provide iorthe refunding ofthe Outstanding Obligations.

R.

"Tenn Bonds" shall mean the Bonds of an issue which shall be stated to mature on one date and for the amortization of which payments are required to be made into the Invest-ment Account or the Bond Redemption Account in the Sinking Fund.

S.

"Trunsfers oIFunds" shall mean the transfers of funds made to the general fund of the City which includes but not limited to (a) funds pledged in the amount of$180,000 per year for the retirement of the City's 1955 Sewer Revenue Bonds; and (b) funds pledged in the amount of $480,000 per year for the retirement of the City's 1970 Improvement Revenue Bonds.

T.

"Payments (o Orange County" shall mean contribu-tions made to Orange County, Florida pursuant to the pro-ceedings ofthe Orlando UtilitiesCommission, dated biarch 13, 1973.

U.

'Water and E/ectric System" shall mean the complete water and electric light plants now under the control and EA

jurisdiction ofthe Commission, together with any and all addi-tions, extensions and improvements hereafter made to the Water and Electric System from any sources whatsoever, including the additions, extensions and improvements to the Water and Electric System constructed from the proceeds of the Bonds, and shall include (without being limited to) all lands of interest therein, plants, buildings, machinery, franchises, pipes, fixtures, equipment, and all property, real or personal, tangible or intangible, now or hereafter owned or used in connection withthe Water and Electric System.

V.

"U.S. Obl(gntions" shall mean the direct obligations of the United States of America held by the trustee under the Escrow Deposit Agreement.

W.

"Demand Charge Coinponent" shall mean that portion ofany rates, fees, charges or payments which the Commission is obligated to pay to another entity for purchase of electricai output forthe specific purpose ofmeeting principal or interest or both on that entity's obligations. Demand Charge Compo-nents shall be excluded from Operating Expenses, but shall rank on a parity as to payment with the Bonds provided the provisions ofArticleIII,Section 4H are met, at the time such Demand Charge Components are incurred. Otherwise, De-mand Charge Components shall be subordinate to the Bonds.

Words importing singular number shall include the plural number in each case and vice versa, and words importing persons shall include firms and corporations.

ARTICLEII AUTHORIZATION,TERMS, EXECUTION AND REGISTRATION OF BONDS SECTION 1. AUTHORIZATIONOF BONDS. Subject and pursuant to the provisions ofthis resolution, obligations ofthe Commission to be known as "Water and Electric Revenue Refunding and Improvement Bonds, Series 1978" are hereby authorized to be issued in the aggregate principal amount of not exceeding TWO HUNDRED FIFTY MILLIONDOL-LARS ($250,000,000) for the purpose of financing part of the cost of the additions, extensions and improvements to the Water and Electric System and the payment and refunding of the Outstanding Obligations as provided in this resolution.

SECTION 2.

DESCRIPTION OF BONDS. The Bonds shall be dated, shall be in the denomination of $5,000 each; shall bear interest at not exceeding the maximum rate or rates permitted by law, payable semi-annually on April 1 and Oc-tober 1 of each year, and shall mature annually on April 1 of each year or semi-annually on April 1 and October 1 of each year in such amounts, as provided for by subsequent resolu-tion ofthe Commission.

The Bonds shall be issued in coupon form, shall bear interest at such rate or rates, shall be payable at such place or places of payment withinor without the State ofFlorida as the Commis-sion shall determine by subsequent resolution.

SECTION 3.

REDE5IPTION PROVISIONS. The Bonds may be subject to redemption prior to maturity at such times, at such redemption prices and upon such terms in addition to the terms contained in this resolution as may be determined by subsequent resolution ofthe Commission.

SECTION 4.

EXECUTION OF BONDS AND COUPONS. Said Bonds shall be signed in the name of the Commission by the President of the Commission and its seal shall be affixed thereto or imprinted or reproduced thereon and attested by the Secretary of the Commission. The signa-tures of said President and Secretary on said Bonds may be a manual or facsimile signature, provided that one ofsuch signa-tures shall be a manual signature. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer of the Commission before the Bonds so signed and sealed shall have been actually sold and delivered, such Bonds may nevertheless be sold and delivered as herein provided and may be issued as if the person who signed and sealed such Bonds had not ceased to hold such office. Any Bond may be signed and sealed on behalf of the Commission by such person as at the actual time of the execu-tion of such Bond shall hold the proper office, although at the date of such Bonds such person may not have held such office or may not hav'e been so authorized.

The coupons to be attached to the Bonds and the validation certificate on the back thereof may be signed with the fac-simile signatures of the present or any future President and Secretary, aforesaid, and the Commission may adopt and use for that purpose the facsimile signature ol any person who shall have been such President and Secretary atany time on or after the date ofthe Bonds, notwithstanding that he may have ceased to be such President or Secretary at the time when said Bonds shall be actually delivered.

SECTION 5.

NEGOTIABILITYAND REGISTRA-TION. The Bonds may be registered at the option ofthe holder as to principal only, or as to both principal and interest, at the office of the Registrar as shall be hereafter appointed, or such other Registrar as may thereafter be appointed, such regis-tration to be noted on the back of said Bonds in the space provided therefor. Aftersuch registration as to principal only, or as to both principal and interest, no transfer of the, Bonds shall be valid unless made, at said office by the registered owner, or by his duly authorized agent or representative and similarlynoted on the Bonds, but the Bonds may be discharged from registration by being in like manner transferred to bearer and thereupon transferability by delivery shall be re-stored. Atthe option of the holder, the Bonds may thereafter again from time to time be registered or transferred to bearer as before. Such registration as to principal only shall not affect the negotiability ofthe coupons which shall continue to pass by delivery.

The Bonds shall be and have all the qualities and incidents of negotiable instruments under the law merchant and the Uni-

'orm Commercial Code-Investment Securities Law of the State of Florida, and each successive holder, in accepting any of said Bonds or the coupons appertaining thereto, shall be conclusively deemed to have agreed that such Bonds shall be and have all the qualities and incidents of negotiable instru-ments under the law merchant and the Uniform Commercial Code-Investment Securities Law of the State of Florida, and each successive holder shall be conclusively deemed to have agreed that said Bonds shall be incontestab! e in the hands of a bong fide holder for value.

SECTION 6.

BONDS MUTILATED, DESTROYED, STOLEN OR LOST. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Commission may, in its discretion, issue and deliver a new Bond with all unmatured coupons attached of like tenor as the Bond and attached

part ofthe cost ofthe construction ofcertain additions, exten-sions and improvements to the Water and Electric System of the Orlando Utilities Commission and together with the pro-ceeds of $ 125,000,000 Special Obligation Bonds, Series 1978, to be issued by the Commission simultaneously withthe Bonds of the issue of which this Bond is one, to refund certain out-standing obligations of the Orlando Utilities Commission coupons, if any, so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond, upon sur-render and cancellation of such mutilated Bond and attached coupons, ifany, or in lieu of and in substitution for the Bond and attached coupons, if any, destroyed, stolen or lost and upon the holder furnishing the Commission proof ofhis owner-ship thereof and satisl'actory indemnity including any ex-penses or costs the Commission may incur in connection therewith and complying with such other reasonable regula-tions and conditions as the Commission may require. All Bonds and coupons so surrendered shall be cancelled by the Secretary and held for the account of the Commission. Ifany such Bond or coupon shall have matured or be about to mature, instead of issuing a substituted Bond or coupon, the Commis-sion may pay the same upon being indemnified as aforesaid, and ifsuch Bond or coupon be lost, stolen or destroyed, with-out surrenderthereof.

Any such duplicate Bonds and coupons issued pursuant to this Section shall constitute additional contractual obligations on the part of the Commission, whether or not the lost, stolen or destroyed Bonds or coupons be at any time foi. d by anyone, and such duplicate Bonds and coupons shall be entitled to equal and proportionate benefits and rights as to lien on and source and security forpayment from the Net Revenues ofthe Water and Electric System and certain investment income, with all other Bonds and coupons issued hereunder.

SECTION 7.

FORM OF BONDS AND COUPONS. The text of the Bonds and coupons shall be of substantially the followingtenor, withsuch omissions, insertions and variations as may be necessary and desirable and authorized or permit-ted by this resolution or any subsequent resolution adopted prior to the issuance thereof:

under the authority of and in full compliance with the Con-stitution and Statutes ofthe State ofFlorida, including Chap-ter 9861, Laws of Florida, Acts of 1923, as amended and supplemented by Chapter 10968, Laws of Florida, Acts of 1925, as amended by Chapter 13198, Laws of Florida 1927, Chapter 24758, Laws ofFlorida 1947, Chapters 31075, 31076, 31077, 31078, 31080 and 31092, Laws ofFlorida 1955, Chapter 2589, Laws of Florida 1961, and other applicable provisions of law, and a resolution duly adopted by the Orlando Utilities Commissionon, 1978 as amended (hereinafter referred to as the "Resolution" ) and is subject to all the terms and conditions ofsaid Resolution:

[Redemption Provisions)

This Bond and the coupons appertaining thereto are payable solel)g from and secured, by a first lien upon and pledge of the

. net revenues derived from the operation of the Water and Electric System and certain investment income~, all in the manner provicled in the resolution authorizing said issue of Bonds. Reference is made to the Resolution forthe provisions, among others, relating to the terms, lien and security for the Bonds, the custody and application of the proceeds of the Bonds, the rights and remedies ofthe holders ofthe Bonds and the rights, duties and obligations of the Orlando Utilities Commission.

This Bond does not constitute an indebtedness of the Or-lando Utilities Commission or the City, of Orlando within the meaning of any constitutional, statutory or charter provision or limitation; and it is expressly agreed by the holder of this Bond and the coupons appertaining thereto that such holder shall never have the right to require or compel the exercise of the ad valorem taxing power ofthe City, or the taxation ofreal estate in the City or the application of any other funds of the Commission or the City, forthe payment ofthe principal ofand interest on this Bond or the making of any sinking fund, re-serve, or other payments provided for in the Resolution au-thorizing this issue of Bonds.

It is further agreed between the Orlando Utilities Commis-sion and the holder oi'this Bond that this Bond and the obliga-tion evidenced theieby shall not constitute a lien upon the Water and Electric System, or any part thereof, or on any other property ofthe Orlando UtilitiesCommission or the City ofOrlando, but shall constitute a lien only on the net revenues No.

$5gtc00 UNITEDSTATES OF AMERICA STATE OF FLORIDA COUNTY OF ORANGE ORLANDOUTILITIESCOMMISSION WATER AND ELECTRIC REVENUE REFUNDING AND IilIPROVEMENTBOND. SERIES 1978 KNOW ALLMEN BY THESE PRESENTS, that the Or-lando Utilities Commission, in Orange County, Florida, for value received, hereby promises to pay to the bearer or, ifthis Bond be registered, to the registered holder as herein pro-vided, on the first dayof,, solely from the net revenues and certain investment income, hereinafter men-tioned, the principal sum of FIVETHOUSAND DOLLARS with interest thereon at the rate of per centuin(

%) per annum, payable semi-annually on the firstday ofApriland the firstday ofOctober ofeach year, upon the presentation and surrender ofthe annexed coupons as they severally fall due. Both principal of and interest on this Bond are payable at derived from the operation of the tVater and Electric Sys-tem', all in the manner provided in the Resolution.

The Commission, in the gesolution, has convenanted and agreed with the holders oi'he Bonds to fix, establish and maintain such rates and collect such fees, rentals, or other'harges forthe services and facilitiesofthe Water and Electric System, and to revise the same from time to time whenever necessary, as willalways provide in each year, net revenues adequate at all times to pay at least one hundred twenty-five percent (125%) of the annual debt service requirement (as defined in the Resolution) for the Bonds and any pari passu additional Bonds hereafter issued, and that such net revenues sh~ll be sufficient to make all other payments required by the in law-ful money ofthe United States of America.

This Bond is one of an authorized issue of Bonds in the aggregate principal amount of not exceeding $250,000,000 of like date, tenor, and effect, except as to number, date of maeuriayandinioresarate.iesuediorthepu poseoHinaneing iirigaurissdisTearmB deasyro6lofoeasrhslasesnurar and investmcnts on deposit in the investment account cstablis 1b be inserted ice all Bonds not pnynbte from the luvcstment and investments on deposit in the investment account estnbli, E-6 Account." "nnd is ndditionnlly secured byand payable from nconeys hed pursuant to the Reeolutioic."

Account: "This Bond(>> not secured by nnd payable f>om moneys shed picreuaut to the Rcsolutlun."

terms of the Resolution and that such rates, fees, rentals or other charges shall not be reduced so as to be insufficient to provide funds for such purposes.

Additional bonds, payable from revenues pari passu with the Bonds of which this Bond is one, inay be issued by the Commission from time to time upon conditions and in the manner provided in the Resolution. Such pari passu additional bonds shall not be secured by oi payable from the moneys and investments on deposit in the investment account established by the Resolution.

Itls hereby certified and recited that all acts, conditions and things required to exist, to happen, and to be performed, precedent to and in the issuance of this Bond exist, have happened and have been performed in regular and due form and time as required by the Laws'and Constitution ofthe State of Florida applicable thereto, and that the issuance of this Bond, and ofthe issue ofBonds ofwhich this Bond is one, is in lull compliance with all constitutional, statutory or charter limitations or provisions.

ORLANDOUTILITIES COMMISSION (SEAL)

Attest:

President Secretary IN WITNESS WHEREOF, the Orlando Utilities Commis-sion has caused this Bond to be signed by its President, either manually or with his facsimile signature, and the seal of the Orlando Utilities Commission or a facsimile thereof to be af-fixed hereto or imprinted or reproduced hereon, and attested by the Secretary of the Orlando Utilities Commission, either manually or with his facsimile signature, and the coupon at-tached to be executed with the facsimile signatures of said President and Secretary, all as ofthe firstdayof, 1978.

This Band, and the coupons appertaining thereto, ls and has all the qualities and incidents ofa negotiable instrument under the law merchant and the. Uniform Commercial Code-Investment Securities Law of the State of Florida, and the original holder and each successive holder ofthis Bond, or of the coupons appertaining thereto, shall be conclusively deemed by his acceptance thereof to have agreed that this Bond and the coupons appertaining thereto shall be and have all the qualities and incidents ofnegotiable instruments under the law merchant and the Uniform Commercial Code-Investment Securities Law'of the State of Florida, and the original holder and each successive holder of this Bond, and of coupons appertaining thereto, shall be conclusively deemed to have agreed and consented to the following terms and conditions:

(a)

Title to this Bond, unless registered as herein pro-vided, and to the annexed interest coupons, may be trans-ferred by delivery in the manner provided for negotiable instruments payable to bearer in the law merchant and the Uniform Commercial Code-Investment Securities Law of the State of Florida; and (b)

Any person in possession ofthis Bond, unless regis-tered as herein provided, or of the interest coupons hereunto appertaining, regardless ofthe manner in which he shall have acquired possession, is hereby authorized to rep-resent himself as the absolute owner hereoi'nd is hereby granted power to transfer absolute title hereto by delivery hereof to a bona fide purchaser, that is, to anyone who shall purchase the same forvalue (present or antecedent) without notice of prior defenses or equities or claims of ownership enforceable against his transferor. Every prior taker or owner of this Bond, unless registered as herein provided, and ofthe annexed coupons, waives and renounces all ofhis equities and rights herein in favor of each such bona fide purchaser; and every such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby; and (c)

The Commission may treat the bearer of this Bond, unless registered as herein provided, or of the interest coupons hereunto appertaining, as the absolute owner hereof for all purposes without being affected by any notice to the contrary.

This Bond may be registered as to principal only, or as to both principal and interest, in accordance with the provisions endorsed hereon.

CERTIFICATE OF CITYOF ORLANDO The issuance ofthis Bond, and the issue ofwhich this Bond is one, has been approved, ratified, and confirmed by a resolu-tion adopted by the City Council of the City of Orlando, Florida,on, 1978.

City Clerk Mayor FORM OF COUPON No.

then due on its Water and Electric Revenue Refunding and Improvement Bond, Series 1978, dated 1, 1978.

ORLANDOUTILITIES COMMISSION Attest:

By President Secretary

'To be inserted in coupons maturing after firstprior redemp-tion date; "(unless the Bond to which this coupon was attached has been duly called for redemption prior to maturity and payment thereof duly provided for)"

On the dayof, 19," Orlando UtilitiesCom-mission, in Orange County, Florida, will pay to the bearer at in lawful money of the United States of America, from the revenues described in the Bond to which this coupon is at-=

tached, the sum of dollars ($

), upon presentation and surrender of this coupon, being the semi-annual interest E-7

FORM OF VALIDATION CERTIFICATE This Bond is one of a Series of Bonds which were validated by judgment of the Circuit Court ofthe Ninth Judicial Circuit ofFlorida, in and for Orange County, Florida, rendered on the dayof, 1978.

President Secretary PROVISIONS FOR REGISTRATION This Bond may be registered in the name ofthe holder on the books to be kept by the as Registrar, or such other Registrar as may hereafter be duly appointed, as to principal only, such registration being noted hereon by such Registrar in the registration blank below, after which no transfer shall be valid unless made on said books by the registered holder or his duly authorized agent, or rep-resentative duly authorized and similarly noted in the regis-tration blank below, but may be discharged from registration by being transferred to bearer, after which it shall be trans-ferable by delivery, but it may be again registered as before.

The registration of this Bend as to principal shall not restrain the negotiability of the coupons by delivery merely, but the coupons may be surrendered and the interest made payable only to the registered holder, in which event the Registrar shall note in the registration blank below that this Bond is registered as to interest as well as principal, and thereafter the interest willbe remitted by mail to the registered holder.

With the donsent of the holder and of the Orlando Utilities Commission, this Bond, when converted into a Bond regis-teied as to both principal and!nterest, may be reconverted into a coupon Bond and again converted into a Bond registered as to both principal and interest as hereinabove provided.

Upon reconversion ofthis Bond, when registered as to princi-pal and interest into a coupon Bond, coupons representing the interest to accrue upon this Bond to date of maturity shall be attached thereto by the Registrar and the Registrar shall note in.the registration blank below whether this Bond is regis-tered as to principal only or payable to bearer.

Date of Registration In Whose Manner Signature Name of of Registered Registration Registrar ARTICLEIII COVENANTS, FUNDS AND APPLICATIONTHEREOF SECTION 1.

BONDS NOTTO BE INDEBTEDNESS OF THE COMMISSIONANDTHE CITY. Neither the Bonds nor the coupons appertaining thereto shall be or constitute an indebtedness ofthe Commissio'n or the City, within the mean-ing of any constitutional, statutory or charter provisions or limitations; but shall be payable solely from the Net, Revenues derived from the operation of the Water and Electric System and certain investment income except, however, the Term Bonds payable from the Investment Account are additionally secured by and payable from moneys and investments on

'eposit in the Investment Account, as herein provided. No holder or holders of any Bonds issued hereunder, or of any coupon appertaining thereto, shall ever hive the right to com-pel the exercise ofthe ad valorem taxing power ofthe City, or taxation in any form of any real property therein, or the application ofany other funds ofthe Commission or the City to pay the Bonds or the interest thereon'.

SECTION 2.

BONDS SECURED BY PLEDGE OF NET REVENUES AND CERTAIN INVESTMENT INCOME.

The payment ofthe principal ofand interest on all ofth'e Bonds issued hereunder and any pari passu additional Bonds here-after issued, as provided. herein, shall be secured forthwith equally and ratably by a first lien on and pledge of the Net Revenues derived from the operation of the Water and Elec-tric System and of the earnings and investment income de-rived from the moneys and investments on deposit in the In-vestment Account and the Debt Service Reserve Account and deposited in the Interest Account in the manner provided in this resolution. The Term Bonds payable from the Investment Account are additionally secured by and payable fr'om moneys and investments on deposit in the.Investment Account. The Net Revenues derived from the Water and Electric System and the certain investment income, in an amount sufficient to pay the principal of and interest on the Bonds herein au-thorized and to make the payments into the sinking fund and

<<ll other payments provided for in this resolution, are hereby irrevocably'pledged to the payment of the principal of and interest on t,he Bonds authorized hei ein, and other pay!nents provided for herein, as the same become due and payable.

SECTION 3.

APPLICATION OF BOND PROCEEDS.

Allmoneys received by the Commission from the sale of the Bonds originally authorized and issued pursuant to this resol-ution shall be disbursed as I'ollows:

A.'he accrued interest derived'from the sale ofthe Bonds shall be deposited in the Interest Account hereinafter created and established and used forthe purpose ofpaying the interest becoining due and payable on said Bonds on their next interest payment date.

B.

Asufficient amount ofBond proceeds shall be deposited in the Debt Service Reserve Account hereinafter created and established which together with all of the moneys and securities on deposit in the debt service reserve accounts created pursuant to the proceedings which authorized the issuance of the Outstanding Obligations, which by the terms and provisions of this resolution shall be transferred to the Debt Service Reserve Account, shall be equal to the Maximum Annual Debt Service.

C.

A sufficient amount of Bonds proceeds together with the proceeds derived from the sale of the Special Obligation Bonds. which shall. be issued simultaneously with the Bonds shall be deposited in an escrow denosit trust fund to be held by a bank or trust company, as Trustee, under the terms and provisions of the Escrow Deposit Agreement and applied in the followingmanner; (i)

A portion ofsaid moneys shall be deposited irrevoca-bly in trust in the escrow deposit trust fund under the terms and provisions of the Escrow Deposit Agreement, such moneys shall at the time of:uch deposit be sufficient to pay the principal ofand interest on the Outstanding Obligations E-8

as the same shall become due and payable or are redeemed prior to their maturity, and shall be invested in U.S. Obliga-tions in the manner set forth in the Escrow Deposit Agree.

ment, which investments (being the principal of the invest-ments purchased in accordance with the terms ofthe Escrow Deposit'Agreement), shall mature at such times and in such amounts as shall be sufficient to pay the principal of and interest on the.Outstanding Obligatio'ns as the same mature and become due and payable or are redeemed priorto matur-ity. Such investments shall further provide sufficient in-come and earnings to pay the principal ofand interest on the Special Obligation Bonds as the same mature and become due and payable in the manner provided in the resolution which authorized their issuance and in the Escrow Deposit Agreement.

(ii)

The balance of said moneys provided for in this sub-section C shall also be deposited into a special account in the escrow deposit trust fund and used forthe purpose ofpaying the expenses incurred by the Commission inconnection with the issuance ofthe bonds and the Special Obligation Bonds.

D.

The balance ofthe Bond proceeds, shall be deposited in a "Construction Fund" in a bank or trust company which is eligible under the laws of the State of Florida to receive de-posits of state and municipal funds, which fund is hereby created apd established.

No withdrawals shall be made from the Construction Fund without the written approval of the Consulting Engineer and only upon receipt ofa written requis-ition executed by the duly authorized officialin charge of the Water and Electric System, specifying the purpose for which such withdrawal is to be made and certifyingthat such purpose is one ofthe purposes provided forin this resolution provided, however, that no such written approval shall be required for legal, financial and engineering expenses and fees in connec-tion with the construction of the additions, extensions and improvements to the Water and Electric System, and interest on the Bonds prior to, during and for one year after the com-pletion of the construction of the additions, extensions and improvements to the Water and Electric System. Iffor any reason the moneys in said Fund, or any part thereof, are not necessary for, or are not applied to the purposes provided in this resolution then such unapplied proceeds shall be deposited, upon certification of the Consulting Engineer that such unapplied proceeds are not needed forthe purposes ofthe Construction Fund, in the followingorder:

First to the Debt Service Reserve Account herein-after created and established to the full extent necessary to make the amount then on deposit therein equal to the maximum amount required to be on deposit in the Debt Ser-vice Reserve Account in accordance with the terms of this t esolution.

Second to the Renewal and Replacement Fund hereinafter created and established to the full extent necessary to make the amount then on deposit therein equal to the maximum amount required to be on deposit in the Renewal and Re-placement Fund in accordance with the terms of this resolu-tion.

Third the balance, ifany, forany lawfulcapital expenditures in connection with the Water and Electric System or the re-demption or purchase ofoutstanding Bonds.

The moneys deposited in the Construction Fund may, pend-ing their use for the purposes provided in this resolution, be temporarily invested (i) in direct obligations of the United States of America, (ii) in obligations fullyguaranteed by the United States of America, (iii) Certificates of Deposit and Repurchase Agreements continuously and fully secured by direct obligations ofthe United States ofAmerica, obligations fullyguaranteed by the United States of America, or insured by the Federal Deposit Insurance Corporation, maturing not later than the dates on which such moneys willbe needed for the purpose of the Construction Fund, or (iv) such other obli-gations as are permitted by the applicable laws of the State of Florida. All the income and earnings from such investments and reinvestments shall remain in and become a part of the Construction Fund and used forthe purposes ofthe Construc-tion Fund.

Any moneys received by the Commission from the State of Florida or from the United States of America or any agencies thereof for the purpose of financing part of the cost of the additions, extensions and improvements to the Water and Electric System authorized herein, shall be deposited in the Construction Fund and used in the same manner as Bond proceeds are used therein; provided, however, that separate accounts may be established in the Construction Fund I'r moneys received pursuant to the provisions of this paragraph whenever required by Federal or State regulations.

All of the proceeds of the sale of the Bonds shall be and constitute trust funds for the purposes hereinabove provided and there is hereby created a lien upon such moneys, until so applied, in favor of the holders ofsaid Bonds.,

~ SECTION 4.

COVENANTS OF THE COMMISSION.

The Commission hereby covenants and agrees with the hol-ders ofany and <<ll ofthe Bonds issued pursuant to this resolu-tion as follows:

A.

ARBITRAGE COVENANT. The Commission agrees that it will not direct the investment of the proceeds of the Bonds in a manner which would cause the Bonds to be "arbi-trage bonds" as defined in Section 103(c) of the Internal Revenue Code of 1954, as amended, or the regulations there-under, proposed or in effect as of the date of issuance of the Bonds.

B.

RATES. That the Commission willfix, establish and maintain such rates and collect such fees, rentals or other charges forthe services and I'acilities ofits Water and Electric

System, and revise the same from time to time whenever necessary, as will always provide in each Fiscal Year, Net Revenues adequate at all times to pay in each Fiscal Year at least one hundred twenty-five percent (125%) of the Annual Debt Service Requirement for the Bonds and any pari passu additional Bonds hereafter issued, and that such Net Rev-enues shall be sufficient to make all other payments required by the terms of this resolution and that such rates,

fees, rentals or other charges shall not be so reduced so as to be insufficient to provide adequate Revenues for such purpose.

C.

WATER AND ELECTRIC SYSTEM REVENUE FUND. That the entire Gross Revenues derived from the operation ofsaid Water and Electric System shall be deposited in a special fund in a bank or trust company which is eligible under the laws of the State of'lorida to receive deposits of state and municipal funds, which fund is hereby created, es-tablished and designated as the "Water and Electric Revenue Fund" (hereinafter referred to as the "Revenue Fund"). Said Revenue Fund shall constitute a trust fund for the purposes

provided in this resolution, and shall for the purposes of an accounting be kept separate and distinct from all other funds of the Commission and used only for the purposes and in the manner provided for in Section 4E ofthis ArticleIII.

D.

OPERATION AND MAINTENANCE.That it will maintain in good condition the Water and Electric System and all parts thereof, and willoperate the same in an efficient and economical manner, making such expenditures ior equipment and for renewal, repair and replacement as may be proper for the economical operation and maintenance thereof.

E.

DISPOSITION OF REVENUES. There are hereby created and established the followingfunds and accounts:

The "Water and Electric Sinking Fund" (hereinafter re-ferred to as the "Sinking Fund"). There are also hereby created five (6) separate accounts in said Sinking Fund to be known as the "Interest Account," the "Principal Account," the

, "Investment Account," the "Bond Redemption Account" and the "Debt Service Reserve Account."

The "Water and Electric Renewal and Replacement Fund" (hereinafter referred to as the "Renewal and Replacement Fund").

The, Sinking Fund and the five (5) separate accounts therein and the Renewal and Replacement Fund shall be deposited in a bank or trust company which is eligible under the laws of the State of Florida to receive. deposits of state and municipal funds.

Allrevenues at any time remaining on deposit in the Rev-enue Fund shall be disposed ofonly in the followingmanner:

1.

R'eveiuies shall be used to pay the current Operating Expenses ofthe Water and Electric System.

2.

Revenues shall next be used, to the full extent neces-sary, for deposit into the Interest-Account in the Sinking Fund, on the fifteenth (15th) day of each month, beginning with the fifteenth (15th) day of the first full calendar month followingthe date on which any or all of the Bonds are deliv-ered to the purchaser thereof, such sums as shall be sufficient to pay one-sixth of the interest becoming due on the Bonds on the next semi. annual interest payment date, provided, how-ever, that such monthly deposits for interest shall not be required to be made into the Interest Account to the extent moneys are deposited in the Interest Ac'count from the pro-ceeds ofthe Bonds as provided in Sections 3A and 3D ofArticle IIIhereof and are sufficient for such purpose.

Any moneys that are depos'ited in the Interest Account from the earnings and investment income derived from the moneys and investments on deposit in the Debt Service Reserve Ac-count and the Investment Account shall be credited against the amount of Revenues required to be deposited in the In-terest Account as provided in this subsection and such Rev-enues shall not be required.to hr,.deposited into the Interest Account as long as the amount on deposit therein is equal to or greater than the amount required to be on deposit in the Interest Account at the time ofsuch computation.

~

3.

Revenues shall next be used, to the full extent necessary, (a) for deposit in the Principal Account on the fifteenth (16th) day of each month in each year, one-sixth (I/5th) of the principal amount of the Bonds which will mature and become due on such semi-annual maturity dates and one-twelfth (V12th) of the principal amount of the Serial Bonds which willmature and become due on such annual maturity

'ates, beginning on such dates, as shall hereafter be deter-~

mined by subsequent resolution of the Commission.

(b) for deposit in the Investment Account on the fifteenth (16th) day of each month in each year, beginning on such date, in such amounts and in each year as may be required for the payment or redemption of the Term Bonds payable from the Investment Account as shall hereafter be deter-mined by subsequent resolution of the Commission'. Any interest or investment income derived from the Investment Account Securities retained in the Investment Account, shall be credited against the amount of Revenues required to be deposited into the Investment Account as provided in this subsection.

The moneys deposited in the Investment Account for the Term Bonds payable therefrom shall be applied to the purchase of the Investment Account Securities at such times and in such amounts as the Commission shall deter-mine by subsequent resolution. The moneys deposited in the Investment'Account until applied to the purchase of In-vestment Account Securities may be invested in (i) in direct

- obligations of the United States of America or (ii) obliga-tions fullyguaranteed by the United States ofAmerica, (iii) in Certificates of Deposit, or Repurchase Agreements con-tinuously and fullysecured by (i) or (ii)above or insured by, the Federal Deposit Insurance Corporation, which mature prior to the date that such moneys shall be required for the purposes ofthe Investment Account.

In the event that any of the Investment Ac'count Secur--

ities shall be called forredemption in accordance with their terms, the moneys resulting therefrom may be retained in the Investment Account and may be reinvested in Invest-

'ment Account Securities.

Such moneys or Investment, Account Securities may be applied at the option ofthe Com-mission for the purchase or redemption of the Term Bonds

" payable from the Investment Account or the payment ofsaid Term Bonds at'maturity.

The Investment Account Securities shall be held in trust by a bank or trust company pursuant to an agreement entered into by and between the Commission and said bank or trust company, and shall be pledged and applied solely to the pay-ment ofthe principal ofsaid Term Bonds at maturity or totheir, payment upon the prior redemption thereof.

There shall be initiallydeposited in the Investment Ac-count all moneys and investments on deposit in the sinking fund created and established by the proceedings which au-thorized the issuance ofthe Outstanding Obligations except forthe debt service reserve account therein.

Allinterest or investment income derived from all moneys and investments on deposit in the Investment Account shall remain in and become a part of the Investment Account and such interest or investment income shall be used as received and credited against the amount of Revenues required to be dep'osited in the Investment Account as provided in this Sec-tion 4E(3) (b)'ofthis ArticleIII.Untilapplied forthe purchase of Invest'ment Account'Securities all interest or investment income may be invested as provided in this Section 4E(3) (b) of this Article III. When there is on deposit in the Investment Account a sufficient principal amount of Investment Account Securities together with any other funds on deposit in the Investment Account to pay the principal of the Term Bonds

payable therefrom no further deposits into said Investment Account shall be necessary and thereafter aH interest or in-vestment income derived from the Investment Account Se-curities shall be transferred on the next business day following their,receipt and deposited in the Interest Account and used for the purposes thereof.

Such interest or investment income derived from aH moneys and investments on deposit in the Investment Account shall be pledged to the purchase of Investment Account Securities

, until there is on deposit in the Investment Account a sufficient principal amount of Investment Account Securities together with any other funds on deposit in the Investment Account to pay the principal ofthe Term Bonds payable therefrom.

(c) fordeposit into the Bond Redemption Account on the iifteenth(15th) day ofeach month in each year, beginning on such date, in such amounts and in each year as may be required for the payment of the Term Bonds payable from the Bond Redemption Account, as shall hereafter be deter-mined by subsequent resolution ofthe Commission.

The moneys in the Bond Redemption Account shall be used at the option of the Commission for the purchase or redemption of the Term Bonds payable therefrom or such moneys or investments may be retained in the Bond Re-demption Account, invested and reinvested as provided he-rein and applied to the payment ofsaid Term Bonds prior to or at their maturity. The Commission may at any time purchase any ofsaid Term Bonds at prices not greater than the then redemption price of said Term Bonds. Ifthe Term Bonds are not then redeemable prior to maturity, the Com-mission may purchase said Term Bonds at prices not greater than the redemption price ofsuch Term Bonds on the next ensuing redemption date. The Commission at its option may use any moneys in said Bond Redemption Account for the redemption prior to maturity of such Term Bonds in such manner and at times as shall be determined by subsequent resolution nrovided.

No distinction or preference shaH exist in the use of the moneys on deposit in the Revenue Fund for payment into the Interest Account, the Principal Account, the Investment Ac-count and the Bond Redemption Account, such accounts being on a parity with each other.

4.

Revenues shall next be used, to the full extent neces-sary, for deposits into the Debt Service Reserve Account on the fifteenth (15th) day ofeach month in each year, beginning with the fifteenth (15th) day of the first full calendar month following the date on which any or aH of the Bonds issued hereunder are delivered to the purchaser thereof, such sums as shall be sufficient to pay an amount equal to one-twelfth of twenty percent (1/12th of 20%) of the Maximum Annual Debt Service; provided, however, that no payments shall be re-quired to be made into said Debt Service Reserve Account whenever and as long as the amount deposited therein shall be equal to the Maximum Annual Debt Service.

There shall be initiallydeposited in the Debt Service Re-serve Account, from the proceeds derived from the sale of'he Bonds and the moneys and securities transferred from the debt service reserve accounts created and established for the Outstanding Obligations, an amount equal to the Maximum Annual Debt Service, as provided in Section 3D ofthis Article III.

Moneys in the Debt Service Reserve Account shall be used only for the purpose of making payments into the Interest Account, Principal Account, Bond Redemption Account and Investment Account when the "moneys in the Revenue Fund are insufficient therefor'rovided, however, that moneys on deposit in the Debt Service Reserve Account shaH be used for the purpose ofmaking payments into the Investment Account when the moneys in the Revenue Fund and/or the interest or investment income derived from the Investment Account Se-curities are insufficient therefor and such payments made into the Investment Account in accordance with this paragraph shall be invested in such manner as not to breach or to violate the "Arbitrage Covenant" as set forth in Section 4A of this ArticleIII.

In the event that any moneys shall be withdrawn from the Debt Service Reserve Account forpayments into the Interest Account, Principal Account, Bond Redemption Account and the Investment Account such withdrawals shall be sub-sequently restored from the first Revenues or funds avail-able after aH required payments have been made into the Interest Account, Principal Account, Bond Redemption Account and Investment Account including any deficiencies for prior payments.

Any moneys in the Debt Service Reserve Account in excess of the Maximum Annual Debt Service for the bonds and any pari passu additional Bonds hereafter issued may, in the dis-cretion of the Commission, be transferred to and deposited in the Renewal and Replacement Fund and used as provided herein for said fund.

5.

Revenues shall next be used for the payment of any subordinated obligations hereafter issued by the Commission in accordance with Section'4G of this Article III;provided,

however, such subordinated obligations shall be paid only'fter payment ofthe Transfers of Furids.

6.

Revenues shaH next be used, to the full extent neces-sary, for deposits in the Renewal and Replacement Fund on the fifteenth (15th) day of each month, beginning with the fifteenth (15th) day of the first fullcalendar month foHowing the date on which any or aH ofthe Bonds issued hereunder are delivered to the purchasers thereof, such sums as shall be sufficient to pay one-twelfth (V12th) of fifteen per centum (15%) of the Gross Revenues derived from the Water'nd Electric System during the preceding Fiscal Year, after de-ducting from such Gross Revenues a sum equal to one hundred per centum (100%) of the fuel expense and energy component of purchased power expenses incurred during such Fiscal Year. No futher payments shall be required to be made into the Renewal and Replacement Fund when there shall have been deposited therein, an amount at least equal to fifteen per centum (15%) of the Gross Revenues derived from the Water and Electric System for the preceding Fiscal Year, after de-ductingg from such Gross Revenues a sum equal to one hundred per centum (100%) of the fuel expense and energy component of purchased power expenses incurred during such Fiscal Year, provided, however, that (i) such required amounts for deposit may be increased or decreased as the Consulting En-gineer shall certify is necessary for the purposes of the Re-newal and Replacement Fund, and (ii) in the event that the Consulting Engineer shall certify that the amounts on deposit are excessive for the purposes of the Renewal and Replace-ment Fund such excess amount may be withdrawn from the Renewal and Replacement Fund by the Commission and used for any lawful purpose in connection with the Water and Elec-tric System.

The moneys in the Renewal and Replacement Fund shall be used, when necessary, for the purpose of paying the cost oi'xtensions, improvements or additions to, or the replacement or renewal of capital assets of the Water and Electric System, or extraordinary repairs of the Water and Electric System.

The moneys in the Renewal and Replacement Fund shall be used for the payment into the Interest Account, Principal Account, Investment Account and Bond Redemption Account when the moneys in the Revenue Fund and Debt Service Reserve Account are insufficient therefor.

There shall be initially deposited in the Renewal and Re-placement, Fund all moneys and securities on deposit in the renewal and replacement funds created and established by the'roceedings which authorize'd the issuance ofthe Outstanding Obligations and such amounts shall be credited against the amount required to be deposited in the Renewal and Replace-ment Fund, as provided in this resolution.

7.

Thereafter, the balance of any revenues remaining in said Revenue Fund shall be used (i) to make any Transfers of Funds, and (ii)for any lawful purpose in connection with the Water and Electric System; provided, however, that none of such revenues shall ever be used for the. purposes provided in this paragraph (7) unless all payments required in paragraphs (1) to (6) above, including any deficiencies forprior payinents, have been made in I'ullto the date ofsuch use, and the Commis-sion shall have fullycomplied with all covenants and agree-ments contained in this resolution:

8.

The Interest Account, Principal Account, Investment Account, Bond Redemption Account, Debt Service Reserve Account, Renewal and Replacement Fund and a)l other special I'unds created and established by this resolution shall consti-tute trust funds.

Moneys on deposit in the Revenue Fund, Interest Account, Principal Account and the Bond Redemption Account may be invested (i) in direct obligations of the United States of America (ii) in obligations fully guaranteed by the United States, (iii)in Certificates of Deposit or Repurchase Agree-ments continuously and fully secured by (i) or (ii) above or insured by the Federal Deposit Insurance Corporation, maturing not later than the dates on which such moneys willbe needed for the purposes of such fund or account, or (iv) such other obligations as ar'e permitted by the applicable laws ofthe State of Florida.

Moneys on deposit in the Debt Service Reserve Account may be invested (i)in direct obligations ofthe United States of America, or (ii)in obligations fullyguaranteed by the United States of America, maturing not later than the final maturity ofany ofthe Bonds.

Y Moneys on deposit in the Renewal and Replacement Fund may be invested (i) in direct obligations ofthe United States of America, (ii) in obligations fully guaranteed by the United States of America, (iii) in Certificates of Deposit or'Repur-chase Agreements continuously and fullysecured by (i)or (ii) above or insured by the Federal Deposit Insurance Corpora-tion, or (iv) such other obligations as are permitted by the applicable laws of the State of Florida, which mature within five (5) years from the time ofsu'ch investment.

Allincome and earnings received from the investment and reinvestment of moneys on deposit in the Interest Account, Principal Account, Bond Redemption Account and Renewal and Replacement Fund shall be transferred on the next busi-ness day followingtheir receipt to the Revenue Fund and used in the same manner and order of priority as other moneys on deposit therein.

'llincome and earnings received froin the investment and reinvestment of'moneys on deposit in the Investment Account shall remain on deposit therein until the maximum amount required to be on deposit in said Investment Account is on

'deposit therein, thereafter such income and earnings shall be transferred on the next business day followingtheir receipt to the Interest Account and used as provided in Section 4E(2) of this ArticleIII.

Allincome and earnings received from the investment and reinvestment of moneys on deposit in the Debt Service Re-serve Account shall be transferred on the next business day followingtheir receipt to the Interest Account and used in the same manner as with moneys on deposit therein as provided in Section 4E(2) hereof.

For the purpose ofinvesting orreinvesting, the Commission may commingle moneys in the funds and accounts created and established hereunder in order to achieve greater investment income; provided that the Commission shall separately ac-count forthe amounts so commingled.

9. Ifon any payment date the Revenues are insufficient to place the required amount in any ofthe funds or accounts or for any of the purposes provided above, the deficiency shall be made up on the subsequent payment dates.

F.

SALE OF THE WATER ANDELECTRIC SYSTEM.

That the Water and Electric System may be sold or otherwise disposed ofonly as a whole or substantially as a whole, only if the net proceeds to be realized, together with other moneys available for such purpose, shall be sufficient fullyto retire all ofthe Bonds issued pursuant to this resolution and all interest thereon to their respective dates of maturity or earlier re-demption dates. The proceeds from such sale or other disposi-tion of the 1Vater and Electric System shall immediately be deposited in the Sinking Fund and shall be used only for the purpose ofpaying the principal ofand interest on the Bonds as the same shall become due, or the redemption of callable Bonds, or the purchase of Bonds at a price not greater than the redemption price of said Bonds, or, ifthe Bonds are not then redeemable prior to maturity, at prices not greater than the redemption price of such Bonds on the next ensuing redemp-tion date.

The foregoing provision notwithstanding, the Commission shall have and hereby reserves the right to sell, lease or otherwise dispose ofany ofthe tangible property comprising a part of the Water and Electric System in the following manner, ifany one of the following conditions exist: (i) such property is not necessary for the operation of the Water and Electric System or (ii)such property is not useful in the opera-tion of the Water and Electric System or (iii)such property is not profitable in the operation of the Water and Electric Sys-tem.

Prior to any such sale, lease or other disposition of said property; (i) ifthe amount to be received therefor is not in excess ofone. hundredth (V100th) ofone per centum (1%) of the value of the gross plant of the tVater and Electric System at original cost, the general manager or other authorized officer in charge ofthe tVater and Electric System shall make a finding in writing determining that such property comprising a part of such Water and Electric System is either no longer necessary, useful or profitable in the operation thereof.

(ii) Ifthe amount to be received from such sale, lease or other disposition of said property shall be in excess of one-tenth (V10) of one per centum (1%) of the value of the gross plant of the Water and Electric System at original cost, the general manager or other duly authorized officer in charge of the Water and Electric System and the Consulting Engineer shall each firstmake a findingin writingdetermining that such property comprising a part ofsuch Water and Electric System is either no longer necessary, useful or profitable in the opera-tion thereof, and the Commission. shall, by resolution duly

adopted, approve and concur 'in the finding of the general manager or other duly authorized officer and the Consulting Engineer.

Such proceeds shall be deposited in the Renewal and Re-placement Fund to the extent necessary to make the amount on deposit therein equal to the amount then required to be on deposit therein; and any additional moneys not needed forsaid Renewal and Replacement Fund shall be used for any capital expenditures in connection with the 1Vater and Electric Sys-tem or the purchase or redemption nfoutstanding Bonds.

G.

ISSUANCE OF OTHER OBLIGATIONSPAYABLE OUT OF REVENUES. That the Commission will not issue any other obligations, except upon the conditions and in the manner provided herein, payable from the Revenues, nor vol-untarily create or cause to be created any debt, lien, pledge, assignment, encumbrance or any other charge having priority to or being on a parity with the lien of the Bonds issued pursuant to this resolution and the interest thereon, upon any ofthe Revenues. Anyother obligations issued by the Commis-sion in addition to the Bonds authorized by this resolution or pari passu additional Bonds issued under the terms, restric-tions and conditions contained in this resolution, shall contain an express statement that such obligations are junior', inferior and subordinate in all respects to the Bonds issued pursuant to this resolution as to lien on and source and security for pay-ment from the Revenues and in all other respects. Any such subordinate indebtedness shall also be subordinate to the Transfers ofFunds.

H.

ISSUANCE OF PARI PASSU ADDITIONAL BONDS. That no pari passu additional Bonds, as in this sub-section defined, payable pari passu with Bonds issued pur-suant to this resolution out of Revenues shall be issued after the issuance of any Bonds pursuant to this resolution except upon the conditions and in the manner herein provided. Such pari passu additional Bonds shall not be secured by or payable from the moneys and investments on deposit in the Invest-ment Account. Any Demand Charge Component shall be deemed to be an outstanding pari passu additional Bond for purposes of this resolution if the conditions hereinafter set forth are met.

The Commission may issue pari passu additional Bonds for the purpose of financing the cost of construction of additions, extensions, and improvements to or construction of, revenue producing utilitieswithinthe operation, maintenance and con-trol or jurisdiction of the Commission, either alone or jointly withother persons, public bodies or private bodies, or the cost of acquisition of revenue producing utilities to be, when ac-quired, within the operation, maintenance and control or jurisdiction of the Commission, either alone or jointly with other persons, public bodies or private bodies or for the pur-pose of refunding outstanding Bonds issued pursuant to this resolution.

No such pari passu additional Bonds shall be issued unless the following, among other conditions, are complied with:

{1)

The Commission must be current in all deposits into the various funds and accounts and all payments theretofore required to have been deposited or made by it under the provisions of this resolution and have complied with the convenants and provisions of this resolution and any sup-plemental resolutions hereafter adopted for the issuance of additional pari passu Bonds.

{2) The amount of the Net Revenues during the im-mediate preceding Fiscal Year or any twelve (12) consecu-tive months selected by the Commission of the fifteen (15) months immediately preceding the issuance of said pari passu additional Bonds, adjusted as hereinafter provided, as certified by the Consulting Engineer, willbe equal to One Hundred Fity per centum (150%) of the Maximum Annual Debt Service on (1) the Bonds originally issued pursuant to this resolution and then outstanding, (2) any pari passu additional Bonds theretofore issued and then outstanding, and (3) the pari passu additional Bonds then proposed tb be issued.

For the purpose ofthis Section 4H the phrase "immediate preceding Fiscal Year or the twelve(12) consecutive months of the fifteen (16) months immediately preceding the is-suance of said pari passu additional Bonds" shall be some-times referred to as "twelve (12) consecutive months".

The Net Revenues calculated pursuant to the foregoing subsection {2) may be adjusted, at the option of the Commis-sion, as follows:

(a) If the Commission, prior to the issuance of the proposed pari passu additional Bonds, shall have in-creased the rates, fees, rentals or other charges for the services ofsaid Water and Electric System, the Net Rev-enues forthe twelve(12) consecutive months immediately preceding the issuance of said pari passu additional Bonds, shall be adjusted to show the Net Revenues which would have been derived from said Water and Electric System in such twelve (12) consecutive months as ifsuch increased

rates, fees rentals or other charges for the services of said Water and Electric System had been in effect during all ofsuch twelve (12) consecutive months.

(b) Ifthe Commission shall have acquired or has eon-

'racted to acquire any privately or publicly owned exist-ing water system or electric system, the cost of which shall be paid froin all or part of the proceeds of the is-suance of the proposed pari passu additional Bonds, then the Net Revenues derived from the Water and Electric System during the twelve (12) consecutive months, im-mediately preceding the issuance of said pari passu addi-tional Bonds, shall be increased by adding to the Net Revenues forsaid twelve (12) consecutive months the Net Revenues which would have been derived from said exist-ing water system or electric system as ifsuch existing water systeir. or electric system had been a part of the Water and Electric System during such twelve (12) con-secutive months. For the purposes of this paragraph, the net revenues derived from said existing water system or electric system during such twelve (12) consecutive months shall be adjusted to determine, such net revenues by deducting the cost ofoperation and maintenance ofsaid existing water system or electric system from the gross revenues of said existing water system or electric, in the manner provided in this resolution for the determination ofNet Revenues.

(c) Ifthe Commission, in connection with the issuance ofpari passu additional Bonds, shall enter into a contract (with a duration not less than the final maturity of such.

pari passu additional Bonds) with any public or private entity whereby the Commission agrees to furnish services in connection with any water system or electric system then the Net Revenues ofthe Water and Electric System during the twelve (12) consecutive months immediately preceding the issuance ofsaid pari passu additional Bonds shall be increased by the least amount which said public or private entity shall guarantee to pay in any one year for the furnishing of said services by the Commission, after deducting therefrom the proportion of operating ex-penses and repair, renewal'nd replacement cost at-tributable in such year to such services. Such payments shall be deemed to be revenues derived from said Water and Electric System and pledged for the Bonds in the same manner as other Revenues derived from said Water and Electric System.

(d) Ifthe Commission shall be constructing or acquir-ing additions, extensions or improvements to the Water and Electric System from the proceeds ofsuch pari passu additional Bonds and shall have established rates or charges to be charged and collected from users of such facilities when service is rendered, such Net Revenues may be adjusted by (i) adding thereto eighty per cent (80%) ofthe average annual net revenues estimated by the Cotisulting Engineer to be derived during the first three Fiscal Years ofoperation after completion ofthe construc-tion or acquisition of said additions, extensions and im-provements to the Water and Electric System, and (ii) dividing such total amount by two (2).

the Water and Electric System, which rank equally as to lien and source and security for their payment from such Revenues, with Bonds issued pursuant to this resolution except in the manner and under the conditions provided in this subsection.

In the event that the total amount of'Water and Electric Revenue Refundingand Improvement Bonds, Series1978 herein authorized to be issued are not issued simultane-ously, such Bonds which are subsequently issued shall be subject to the restrictions, conditions and limitations of this Section 4H ofthis ArticleIII.

I.

INSURANCE. That the Commission will carry such insurance as is required by the State ofFlorida or is ordinarily carried by private or public corporations owning and operat-ing similar utilities as the Water and Electric System with a reputable insurance carrier or carriers, including public liabil-ityinsurance and such other insurance against loss or damage by fire, explosion, hurricane, cyclone or other hazards and risks.

J.

BOOKS AND RECORDS; That the Commission will keep books and records of the Water and Electric System, which shall be separate and apart from all other books, records and accounts ofthe City, in which complete and correct entries shall be made in accordance with generally accepted account-ing principles of all transactions relating to the )Vater and Electric System, and any holder of a Bond or Bonds issued pursuant to this resolution, shall have the right at all reasona-ble times to inspect said Water and Electric system and all parts thereof, and all records, accounts and data of the Com-mission relating thereto.

The term "pari passu additional Bonds" as used in this resolution shall be deemed to mean additional obligations evidenced by Bonds issued under the provisions and within the limitations of this subsection payable from the Revenues of said Water and Electric System pari passu with Bonds originally authorized,and issued pursuant to this resolution. Such Bonds shall be deemed to have been issued pursuant to this resolution the same as the Bonds originally authorized and issued pursuant to this resolu-tion and all ol the covenants and other provisions of this resolution (except as to details of such Bonds evidencing such pari passu additional obligations inconsistent there-with), shall be forthe equal benefit, protection and secur-ity of the holders of any Bonds originally authorized and issued pursuant to this resolution and holders of any Bonds evidencing additional obligations subsequently is-sued within the limitations ofand in compliance with this subsection. Allof such Bonds, regardless of the time or times of their issuance shall rank equally with respect to their lien on the Revenues of the Water and Electric System, and theirsourcesand securityforpayment there-from without preference of any Bonds, or coupons, over any other.

The term "pari passu additional Bonds" as used in this resolution shall not be deemed to include bonds, notes,

" certificates or other obligations subsequently issued under the terms ofthis resolution, the lien ofwhich on the Revenues of the Water and Electric System is subject to the, prior and superior lien on the Revenues of Bonds issued pursuant to this resolution, as provided in Section 4.G ofthis ArticleIV,and the Commission shall not issue

.any obligations whatsoever payable from the Revenues of The Commission shall promptly after.the close ofeach Fiscal Year cause the books, records and accounts of the Water and Electric System forsuch Fiscal Year to be properly audited by a qualified, recognized and nationally known independent firm ofcertified public accountants, and shall filethe report ofsuch certified public accountants in the office of the general man-ager ofthe Commission, which report shall cover in reasonable detail the operation ofthe Water and Electric System and shall mail upon request, and make available generally, said report, or a reasonable summary thereof, to any holder or holders of Bonds issued pursuant to this resolution.

K.

OPERATING BUDGET. That the Commission shall annually prepare and adopt by proper proceedings of its gov-erning body a detailed budget of the estimated expenditures for operation and maintenance ofthe Water and Electric Sys-tem and the estimated Revenues of the Water and Electric System during the succeeding Fiscal Year. During that Fiscal Year the Commission shall cause to be prepared, each month, a detailed report in which actual expenditures are computed with budget amounts.

The Commission shall review these reports, examine variances, and institute appropriate correc-tive action ifthey determine such variances are contrary to prudent utility management.

The Commission shall mail copies of such annual budget and all resoiutions authorizing increased expenditures for operation and maintenance to any holder or holders of Bonds who shall file his address with the Commission and request in writing that copies of all such budgets and resolutions be furnished him or them, and shall make available such budgets and all resolutions authorizing increased expenditures for operation and maintenance of the Water and Electric System at all reasonable times to any holder or holders ofBonds issued pursuant to this resolution.

L.

MAINTENANCE OF THE WATER AND ELEC-TRIC SYSTEM. That the Commission will maintain said Water and Electric System in good condition and continuously operate the same in an efficient manner and at a reasonable cost as a revenue producing enterprise.

The Commission shall also, prior to the end of each Fiscal Year, cause the Water and Electric System to be inspected by the Consulting Engineers, who shall make a written report of such inspection and of the condition of the Water and Electric System ofthe Commission and filesuch annual report withthe original purchasers ofthe Bonds and the Commission, and the Commission shalt mail upon request, and make available gen-erally, the report of said Consulting Engineers, or a reasona-ble summary thereof, to any holder of Bonds issued pursuant to this resolution.

M.

SERVICES RENDERED BY THE COMMISSION.

That the Commission willnot render or cause to be rendered any free services of any nature by its Water and Electric System or any part thereof, nor willany preferential rates be established for users of the same class; and in the event the City, or any other political subdivision, public body, or any department, agency or instrumentality, officer or employee thereof, shall avail itself of the facilities or services provided by said Water and Electric System or any part thereof, the same rates, fees or charges applicable to other customers receiving like services under similar circumstances shall be charged the City, or such other political subdivision, public body, or any such department, agency, instrumentality, of-ficer or employee. Such charges shall be paid as they accrue.

The revenues so received shall be deemed to be Revenues derived from the operation ofthe IVater and Electric System, and shall be deposited and accounted forin the same manner as other Revenues.

Provisions ofthis subsection shall not be deemed in any way to apply to any reduced rates forany classification ofusers for services and facilities of the Water and Electric System in effect on the date ofthe adoption ofthis resolution and shall be subject to any present or future applicable laws or regulations.

N.

REMEDIES. Any holder of Bonds or of the coupons appertaining thereto issued under the provisions of this resol-ution or any trustee acting forsuch Bondholders in the manner hereinaAer provided, may either at law or in equity, by suit, action, mandamus or other proceedings in any court ofcompe-tent jurisdiction, protect and enforce any and all rights under the laws of the State of Florida, or granted and contained in this resolution, and may enforce and compel the performance of all duties required by this resolution or by any applicable statutes to be performed by the Commission or by any officer thereof, including the fixing, charging and collecting ofrates, fees or other charges for the services and facilities of the Water and Electric System.

In the event that default shall be made in the payment ofthe interest on or the principal ofany ofthe Bonds issued pursuant to this resolution as the same shall become due, or in the making of the payments into the Sinking Fund, including the accounts therein or any other payments required to be made by this resolution, or in the event that the Commission or any officer, agent or employee thereof shall failor refuse to comply with the provisions of this resolution or shall default in any covenant. made herein, and in the further event that any such default shall continue fora period ofsixty (60) days, any holder ofsuch Bonds, or any trustee appointed to represent Bondhol-ders as hereinafter provided, shall be entitled as ofrightto the appointment ofa receiver ofthe Water and Electric System in an appropriate judicial proceeding in a court of compete'nt jurisdiction, whether or not such holder or trustee is also seeking or shall have sought to enforce any other right or exercise any other remedy in connection with Bonds issued pursuant to this resolution.

The receiver so appointed shall forthwith, directly or by his agents and attorneys, enter into and upon and take possession of the Water and Electric System, and each and every part thereof, and shall hold, operate and maintain, mariage and control the IVater and Electric System, and each and every part thereof, and in the name ofthe Commission shall exercise all the rights and powers ofthe Commission with respect to the Water and Electric System as the Commission itselfmight do.

Such receiver shall collect and receive all Revenues and main-tain and operate the Water and Electric System in the manner provided in this resolution and comply under the jurisdiction ofthe court appointing such receiver, with all of'the provisions of this resolution.

Whenever all that is due upon Bonds issued pursuant to this resolution, and interest thereon, and under any covenants of this resolution for reserve, sihking funds or other funds, and upon any other obligations and interest thereon having a charge, lien or encumbrance upon the Revenues of the Water and Electric System, shall have been paid and made good, and all defaults under the provisions of this resolution shall have been cured and made good, possession ofthe tVater and Elec.

tric System shall be surrendered to the Commission upon the entry of an order of the court to that effect. Upon any sub-sequent default, any holder of Bonds issued pursuant to this resolution, or any trustee appointed for Bondholders as hereinafter provided, shall have the rightto secure the I'urther appointment ofa receiver.

Such receiver shall in the performance of the powers hereinabove conferred upon him be under the direction and supervision of the court making'such appointment, shall at all times be subject to the orders and decrees of such court and may be removed thereby and a successor receiver appointed in the discretion of such court. Nothing herein contained shall limit or restrict the jurisdiction of such court to enter such other and further orders and decrees <>84 1,270,000 1995 1,400,000 1985 I 340,000 1996 1,555,000 1,415,000

1997, 1,725,000 1,495,000 1998 5,905,000 1988 1,585,000 1999 8,105,000 1989 I 675 ppp',

2000 8,315,000

,. 1990 1,775,000 2001 8,550,000 1,880,000 2002 8,800,000 1992 1,995,000 2003 9,490,000 Being the balance of a total authorized. issue of $225,330,000 of which $ 150,330,000 haec been previously issued and are now outstanding and unpaid.

, Principal and interest payable at The Chase Manhattan Bank, N.A., New York, New York.

The Water and Electric Revenue Refunding and Improvement Bonds,.Series 1978B (hereinafter sometimes referred to as "1978B Improvement Bonds" ) shall be subject to redemption prior to maturity, at the option of the Commission on or after April I, 1990 in whole at any time or in part from time to time on any interest payment'date in the inverse, order. of their maturities (by lot within a maturity ifless than a full'=maturity) at the price of par and accrued interest to the date of redemption plus Kth ol'1% for each year or fraction thereof between the redemption date and the stated date of maturity; such premium,

~ however, shall not exceed two per centum (.2%).

F-I

Notice ofsuch redemption (i) shall be published at least thirty (30) days prior to the redemption date in a financial journal of general circulation in New York, New York and in a newspaper of general circulation in the City of Orlando, Florida; (ii) shall be filed with the Paymg Agent; and (iii)'shall be mailed, postage prepaid to all registered owners of the 1978B Improvement Bonds to be redeemed at their addresses as they appear on the registration books.

We have also examined orie of said 1978B Improvement Bonds'as executed (1978B Improvement Bond No. 1).

We are of the opinion that such proceedings and proofs show lawful authority for the issuance and sale of said 1978B Improvement Bonds pursuant to the Constitution and Statutes of the State of Florida and pursuant to a resolution entitled: "A RESOLUTION AUTHORIZINGTHE ISSUANCE OF NOT EXCEEDING $250,000,000 WATER AND ELECTRIC REVENUE REFUNDING AND IMPROVE-MENTBONDS, SERIES 1978, OF THE ORLANDO UTILITIESCOMMISSION TO FINANCE PART OF THE COST OF CONSTRUCTION OF ADDITIONS,EXTENSIONSAND IMPROVEMENTS TO THE WATERAND ELECTRIC SYSTEM, ANDTHE REFUNDING OF CERTAIN OUTSTANDING OBLIGATIONS HERETOFORE ISSUED BY THE ORLANDO UTILITIES COMMISSION; AND PROVIDING FOR THE TERMS OF SAID WATER AND ELECTRIC REVENUE REFUNDING AND IMPROVEMENT BONDS, SERIES 1978, AND THE RIGHTS, SECURITY AND REMEDIES OF THE HOLDERS THEREOF," duly adopted by the Orlando Utilities Commission on April 18, 1978, as amended and supplemented (hereinafter collectively referred to as "Resolution" ) and that said Bonds are valid and legally binding obligations of the Orlando Utilities Commission, payable solely as to both principal and interest from the net revenues derived from the operation of the Water and Electric System under the control, management and jurisdiction of said Orlando Utilities Commission and certain investment income, all as provided in said Resolution.

We are further ofthe opinion that the lien on the holders ofthe 1978B Improvement Bonds on the net revenues derived from the operation ofthe Water and Electric System and certain investment income is on a parity and ranks equally with the lien thereon ofthe outstanding Water and Electric Revenue Refunding and Improvement Bonds, Series 1978 (the "Refunding Bonds" ) and the outstanding Water 'and Electric Revenue Refunding and Improvement

Bonds, Series 1978A (the "1978A Improvement Bonds" )

heretofore issued by the Orlando Utilities Commission,

except, however, that the principal of the outstanding Refunding Bonds,.maturing on April 1, 2008, is additionally secured by and payable from monies and investments on deposit in the investment account established by the Resolution, all as provided in the Resolution.

We are further of the opinion that the Orlando Utilities Commission has validly covenanted and is legally obligated to fix, establish and maintain fees, rentals or other charges for the services and facilities of the Water and Electric System, and to revise the same from time to time whenever necessary, as will always provide in each year net revenues adequate at all times to pay at least one hundred twenty-five per

~ centum (125%) of the annual debt service requirements for the outstanding Refunding Bonds, the 1978A Improvement Bonds, the 1978B Improvement Bonds and any pari passu additional bonds hereafter issued and that such net 'revenues shall be suScient to make all other payments required by the terms of the Resolution; and that such fees, rentals and other charges shall not be reduced so as to be insufiicient to provide adequate revenues for such purposes, and has further covenanted to create and maintain certain reserve funds and renewal and replacement funds, all to the extent and in the manner more particularly described in the Resolution.

We're further of the opinion that under the terms, restrictions and conditions contained in the Resolution, the Orlando Utilities Commission may hereafter issue pari passu. additional bonds which will rank equally as to lien on and sources and security 1'r payment from the. net revenues derived from the operation of Water and Electric System with the lien thereon of the holders of the 1978B Improvement Bonds and the outstanding Refunding Bonds and the,l978A Improvement Bonds heretofore issued by the Orlando Utilities Commission, except, however, that such pari passu additional bonds shall not be secured by or payable from the monies and investments on deposit in the investment account established by the Resolution, all as provided in the Resolution, and that except for such pari passu additional bonds any F-2

other obligations hereafter issued by the Orlando Utilities Commission payable from the net revenues derived from the Water and Electric System will be junior,.inferior and subordinate as to the lien on and source and security for payment from the net revenues and in all other respects to the 1978B Improvement Bonds and the outstanding Refunding Bonds and the outstanding 1978A Improvements Bonds heretofore issued by the Orlando Utilities Commission, and any pari passu. additional bonds thereafter issued

'pursuant to said Resolution.

The Orlando. Utilities Commission has entered into certain other covenants and agreements with the holders of the Bonds for the terms ofwhich reference is made to the Resolution.

We are further of the opinion that the interest on the 1978B Improvements Bonds is exempt from all Federal income taxation under existing laws and from taxation under the laws of the State of Florida, except as to estate taxes and taxes imposed by Chapter 220, Florida Statutes, on interest income or profits on debt obligations owned by corporations, banks and sayings associations.

Respectfully yours, MUDGE ROSE GUTHRIE & ALEXANDER F-3

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APPENDIX G PARTICIPATIONAGREEMENT PARTICIPATIONAGREEMENT BETWEEN CITY OF LAKELAND ORLANDO UTILITIESCOMMISSION FOR THE JOINT OWNERSHIP OF McINTOSH UNITTHREE GENERATION PROJECT

This AGREEMENT, dated April4, 1978 is between the City of Lakeland,

Florida, hereinafter referred to as "Lakeland" and Orlando Utilities Commission, hereinafter referred to as "OUC".

~ WHEREAS, Lakeland is a municipal corporation owning,

'perating and maintaining electric generation, transmission

'nd distribution systems in order to meet the requirements of its customers and a

WHEREAS, OUC is an entity, created by the legislature, operating and maintaining electric generation, tranamiss(on and distribution systems in order to meet the requirements of its customers; and WHEREAS, in order to meet the future power needs of their customers,. to reduce the requirements for imported fuel oil, to rea)lxe savings in capital and operating costs, through economies of scale, by the installation of a larger and more efficient and economical steam electric generating unit than would be undertaken by the parties in separately owned and operated phnts, Lakeland and OUC desire to participate

'with each other as tenants in common with'n und(v(ded ownership interest in McIntosh Unit No. 3,. a coal fueled steam-electric power plant hereinafter referred to as the "Project"; and WHEREAS, the Parties desire to establish the terms and conditions relating to their ownership, as tenants in

common, and the

planning, financing, acquisition, construction, operation and maintenance of the Project NOW, THEREFORE, for and in consideration of the mutual covenants by them to be kept and performed, all as hereinafter set forth, Lakeland and OUC hereto mutually agree as follows:

1.09 FERC: Federal Energy Regulatory Commission (FERC), formerly Federal Power Commission.

1.10 FUEL: Coal, oil, oiladditives, solid refuse, and any other combustibles used in the firing and start-up of the steam generator.

1.11 MINIMUMCAPABILITY:The minimum genera-tion at which the generating unit may be operated as deter-mined by Lake)and, but not less than the minimum genera-tion permitted by the manufacturer's recommendations.

1.12 NET CAPACITY OUT OF THE PROJECT: The instantarieous power flow,out of the high side of the main step.up transformer minus the instantaneous power flow to the station service bus for emergency and start up service, adjusted for the reserve transformer losses.

1.13 NET ENERGY OUT OF THE PROJECT: The

'nergy measured at the high side of the Project main step up transformer minus the energy delivered to the Project station service bus for start up and emergency

service,

.adjusted for the reserve transformer losses.

'1.14 OPERATION OR OPERATING WORK:

Engineering, contract preparation, construction, purchasing,

repair, supervision, recruitment,

training, operation, expediting, inspection, accounting,

testing, protection,

'equipment retirement, reconstruction, maintenance and'ther activities associated with operating the Project.

1.16 OUTPUT: The net capacity and net energy from the Project.

1.16 OWNERSHIP SHARE:'f a party is the fractional share specified in Section 2 hereof.

1.17 PLANT SITE: The land on which the Project is located, as described in Exhibit 3 attached hereto.

1.18 PRIME RATE: The minimum commercial lending rate existing from time to time for borrowers of the highest credit standing at Morgan Guaranty Trust Company of New York, or such successor as may be selected by the Project Committee..

SECTION 1. DEFINITIONS 1.01 The following terms, when used herein shall have the following meanings, unless the context otherwise indicates:

1.02 CAPITAL IMPROVEMENTS: Any units of property which are added to the Project, the betterment of any units of property constituting a part of the Project, and the replacement of any units of property with other un(ts of property in the Project.

1.03 COMMERCIALOPERATION: The condition. of operation in which the complete steam-electric generating unit with all sub.systems and supporting equipment is available for continuous operation at variable loads up to and including rated capacity without', abnormal operating limitations.

1.04 COMMON USE FACILITIES:Allimprovements, facilities and structures located on the Plant Site which are necessary or required for licensing, construction, start.up,

, operation, maintenance, control, supply, or shutdown of the Project; wh(ch are required and used for operation, maintenance, control, and supply of McIntosh Units 1 and 2; and are not included in the Costs of Construction of the Project. These facilities are more particularly described in Exhibit 1 attached hereto and may be revised from time to time pursuant to the terms hereof.

1.05 CONSTRUCTION:

Designing, engineering,

, )lcenslng, perm(tting, purchasing, acquiring, installing, PARTICIPATIONAGREEMENT starting up, testing the Project to make it ready for commercial operation.

l.'06 COSTS OF OPERATION: All costs associated

, with Operating Work. These costs shall include production expenses (including joint fuel payments) and production

'upervision; insurance and liability payments; employee benefits (including payroll tares); allocations of all expenses classified as Administrative and General (A and G) expenses associated with operation of the Projectrepairs, renewals

'nd replacements necessary to assure design capability; all in keeping with Prudent UtilityPractice. Credits relating to such costs, Including insurance proceeds, shall be applied to Costs of Operation when received.

1.07 EXTERNAL FACILITIES: All improvements, facilities, and'tructures necessary for construction, ope'ration maintenance, control, supply, or shutdown of the

'roject, but which are not within the Project site. These facilities are more partlcu(arly described in Exhibit," 2 attached hereto and may be revised from time to time pursuant to the terms hereto.

1.08 FCG: Florida Electric Power Coordinating Group.

G-2

1.19 PROJECT: Project means (a) the coal. fueled 364 megawatt generating unit, McIntosh Unit No. 3; (b) Project 230KV Switchyard; (c) necessary real property; (d) all

licenses, permits, rights and approvals necessary or

. convenient for construction, operation,,maint'enance and

'retirement of the Project; (e) roads,"-railrbad spurs, docks, parking lots, fencing and similar faciliYies; (f) Lakeland's energy management system additions assignable to the Project; (g) sewage effluent pipeline and handling faciHt(es and (h) all things acquired by the Parties for use in construction, operation, maintenance and repair of the Project, aH water rights as permitted for use,in the Project, but exclud(ng the transmission line to be constructed by OUC, referred to hereinafter in Section 2.14. Adescription of the Project, Exhibit 4, a statement of the estimated cost, Exhibit 6; and a list of major Project facilities, Exhibit 6 are attached and made a part hereof.

1.20 PROJECT 230KV SWITCHYARD: Line and switching facilities connecting McIntosh Unit 3 to the Project, 230KV Switchyard; line and switching facilities for connecting the reserve transformer; 230KV

buses, Insu)ators, structures and foundations; bus tie switching facilities; 230KV bus potential and current transformers, relays and meters and control devices for these bus facilities installed and made operational with the Project and switch(ng faciHties and other equipment required for interconnecting Lakeland and OUC respective transmission systems.

1.21 PRUDENT UTILITY PRACTICE: Shall mean the exercise of reasonable judgment'in light of the facts known at the time a decision is made, and shall require the use of practices; methods and expertise commonly employed in the electric utility

• industry, for the purpose of accompHshing desired results at the lowest reasonable cost consistent with the safe, efficient and reliable operation of an electric utflity. Prudent UtiHty Practice includes due regard for manufacturer's warranties and shall apply not only to functional parts of the Project, but also to appropriate structures,

)andscaping,

painting, signs, lighting, other faciHties and public relations programs reasonably designed to promote public understanding and acceptance of the Project.

Prudent Utility Practice is not intended to be limited to an optimum practice, method or act to the exclusion of all others, but rather'hall apply to a balance of the complete spectrum of electric utiTity practices, methods or acts.

1.22 UNIFORM. SYSTEM OF ACCOUNTS:

The FERC Uniform System of Accounts prescribed for Class A Public Ut(Ht(es and Licenses in effect on January 1, 1970, as the same may be amended from time to time.

SECTION

2. OWNERSHIP, RIGHTS AND OBLI.

GATIONS 2.01 The Parties shall have title to the Project excluding Cominon Use Facilities and External FaciHitles as tenants in common with an undivided interest therein and shall, subject to the terms of this Agreement, own the Project, have the related rights and obligations, including payment therefor, and be entitled to the Output as follows:

Party Ownership Share Lakeland 60%

OUC '0%

Title to OUC will be in the names of Orlando Utilities Commission, a statutory commission under the laws of the State of Florida and the City of Or)ando, a municipal corporation.

2.02 Subject to Paragraph 2.09, the Parties shall promptly and with all due diligence, acting jointly or individuaHy as may be appropriate, take aH necessary actions and seek all regulatory approvals, Hcenses and permits necessary to carry out their obligations under this Agreement, and all licenses, permits, approvals, contracts, obligations and commitments obtained, made and entered into or incurred by Lakeland prior to the effective date of this Agreement in connection with the acquisition and construction of the Project are hereby ratified and approved by OUC. A list of licenses, permits; approvals, contracts, obligations and commitments and the amounts, expended and committed therefor, prior to.the effective date of this Agreement is attached hereto as Exhibit 7 and made a part hereof.

2.03 Lakeland shall within a reasonable time and upon receipt of any required regulatory approvals and from time to time, execute and deliver deeds, bills of sale and such other documents as may be necessary in addition to this.

Agreement to vest ownership in the Parties as set forth in

'Paragraph 2.01 above.

2.04 The

duties, obligations and liabHities of the Parties are intended to be several and not joint or collective, and neither Party shall be jointly or severally Hable for the acts, omissions or obligations of the other Party, except that OUC shall be severally liable, in proportion to its Ownership Share of the Project, for the acts, omissions, or obligations heretofore or hereafter performed, omitted or incurred by Lakeland in connection with the Project.

2.05 Lakeland shall have the right, subject to review by OUC, to enter into contracts. agreements and any other commitments for the expenditure of funds toward the Construction and Operation of the Project. Lakeland shall have the right to bind and obligate itself and OUC, as OUC's

agent, each in proportion to its Ownership Share, for the costs incurred by the said contracts, agreements and other commitments.

The Parties hereby covenant and agree to bear their respective obligations relative to all of the said commitments and to pay the said costs as they become due.

2.06 Each contract entered into by Lakeland in 1978 shaH be cancellable by Lakeland if this Agreement is itself cancelled pursuant to Section 2.17 hereinafter.

2.07 Neither Party shall have the right or power to bind the other Party without its written consent, except as expressly provided in this Agreement.

Each Party shall severaHy bear its Ownership Share of aH obligations, inc)uding the supply of energy for station use when not generated by the

Project, and shall severally bear its Ownership Share of liabiHties relating to the Project as they arise.'.08 OUC shall have the right to go upon and into the Project at any time subject to insurance and industrial security requirements and the necessity of efficient and safe Construction and Operation of the Project.

2.09 In order to provide unified management of the

Project, OUC authorizes and designates

Lakeland, and Lakeland agrees to so act, as its agent to Construct and Operate the Projectunder the terms of this Agreement, and the Parties agree that Lakeland shall have sole possession and control of the Project for the Parties subject to the provisions of Paragraph 2.08, and shall have sole authority for the Construction, Operation and retirement of the G-3

Project in accordance with Prudent Utility Practice. The Parties agree that such relationship shall not be changed except by the written consent of both Parties.

2.10 In the Construction, Operation, and retirement of the Project, each Party shall act without compensation other than payment or reimbursement of costs and expenses as provided herein.

2.11 Each Party releases the other Party, its agents and employees from any consequential loss or damage arising out of the Construction, Operation or retirement of the Project for any reason, including negligence, except for damage resulting from breach of this Agreement or for willfulor wanton misconduct. Lakeland, acting for and on behalf of OUC and itself, shall take thnely and appropriate legal action to recover losses from damages resulting from breach of any other contract relating to the Project, and shall promptly notify OUC of any such breach and anticipated loss resulting therefrom.

Any cost of such proceedings shall be shared in accordance with the Party's respective Ownerstup Share.

2.12 Any loss, cost, liabiTity, damage or expense to the Parties or either of them, other than damages to either Party resulting from loss of use and occupancy of the Project or any part thereof, arising out of the Construction, Operation or retirement of 'the Project and based upon injury to or death of per'sons or damage to or loss of Project property and property of others.

to the extent not covered by collectible insurance, shall be charged to Costs of Construction or Costs of Operation, whichever may be appropriate.

2.13 If, in the future, OUC determines to construct a steam electric generating facility of 270 MW (two hundred seventy) net capacity or larger, Lakeland shall have the first option to become a joint owner of at least an amount of capacity equivalent to OUC's participation in McIntosh Unit 3.

2.14 OUC shall, subject to provisions'of Section 2.17 hereinafter, construct a 230KV transmission line from its service area to the McIntosh Plant.

In the event that Lakeland shall become a joint owner in a future project with OUC, in accordance with Section 2.13 above, and providing OUC's bond requirements can be met, Lakeland shall have a right to purchase,, or lease, a portion of, or an undivided percentage interest in said line and related substation equipment at OUC's terminus of the line. The portion, or percentage, to which Lakeland shall be entitled shall be commensurate with Lakeland's transmission needs relative to Lakeland's ownership share in the said future project.

2.15 In the event that OUC is unable to sell the said portion or percentage, due to its Bond Resolution requirements.

then OUC agrees to lease and Lakeland shall have the option to lease the said portion or percentage, for the expected life of the said future project. The purchase price or lease. rate to Lakeland shall be based on the replacement cost of the line and related terminal equipment determined by application of the Handy.Whitman Index as of the date of sale or lease, less depreciation calculated on the basis of replacement costs. Ifneither of these options are exercised, then Lakeland shall otherwise provide transmission facilities or make other arrangements to fulfill its transmission needs relative to its ownership share in said future project.

2.16 Each Party releases the other Party, its agents and employees from any consequential loss or damage arising out of a delay in commencement of construction, construction, operation or retirement of said transmission line for any reason, including negligence, except for damage resulting from breach of this Agreement or for willfulor wanton misconduct.

~

2.17 If, by December 19, 1978, the necessary State of Florida, or Federal licenses or permits for the construction of the Project and/or the 230KV transmission line between Lakeland and Orlando have not been obtained, then, or at any other time by mutual agreement, either Party may, at

, its'ption, be released from this Agreement and Lakeland may cancel the contracts that it has entered into and each Party shall be obligated to pay its Ownership Share of all costs accrued to the PIoject, as of the date of the release. If this Agreement is terminated as provided above and Lakeland elects to continue with the Project as defined by this Agreement, then OUC shall be r'eimbursed by Lakeland for the actual payments OUC has made toward the Project contracts.

2.18 In the event of such release OUC willcause to be delivered to Lakeland or its designee all instrumerits reasonably necessary for the conveyance of OUC's interest in the Project.

SECTION 3. DESIGN, ENGINEERING AND CON-STRUCTION RESPONSIBILITY.

3.01 Lakeland has entered into an "Agreement for Professional Engineering Services" with Chas. T. Main, Inc..

dated November 7, 1977, relating to the Project. Lakeland agrees to retain on a continuous basis said engineering firm or other nationally recognized firm until the Project has been completed and subject to termination provisions of the said Agreement for, Professional Engineering Services.

Lakeland shall use all reasonable efforts to cause the engineer to perform all its obligations under the said contract.

Installation and Completion of Project.

3.02 The Project facilities shall be installed and completed by Lakeland as herein provided, Lakeland, for itself and for OUC shall have the responsibility for the supervision of the Construction of the Project, as hereinafter set forth. Contracts related to construction shall be let on the basis of competitive bidding.

3.03, Upon execution of this Agreement, Lakeland shall submit to OUC an estimate of total cost and as soon as practicable thereafter a schedule setting forth the estimated

costs, by months, of constructing and completing the Project. Lakeland shall thereafter submit quarterly revisions of such monthly schedule to OUC, together with a summary

.report of the Construction costs accumulated to date and other pertinent data including, when requested, copies of construction contracts and purchase orders relating to the progress of Construction.

Construction I

3.04 The Project shall be constructed at the lowest reasonable cost and in a prudent and skillful manner in accord both with standards prevailing in the utilityindustry for projects of a similar size and nature and substantially in accordance with the description of the Project set forth in Exhibits 4 and 6. The Project shell substantially conform to

designs, plans, specifications and construction schedules which have or will be made avagable to OUC as such are available. It is intended that the contracts for purchase of G-4

equipment and construction of the Project shall be scheduled so as to provide for a date, of initial test and operation of the Project, presently scheduled for 1981, and for the completion and commercial operation of the Project not later than October 1981.

3.05 Lakeland has heretofore entered into agreements, purchase contracts and orders in its own name providing for the purchase of materials, equipment and services for the Project, and Lakeland shall with reasonable expedition as agents for themselves and OUC enter into further such contracts, and contracts for the Construction of the Project.

Lakeland shall continue as agent for itself and OUC to incur obligations and make expenditures relating to the engineering and other services necessary for continued Project planning and engineering.

3.06 Lakeland, on its own behalf as to its own interest, and as agent for OUC, shall supervise, perform engineering and other services in connection with, may provide materials and supplies from its inventory for, and shall pay taxes properly levied against, the Construction of the Project, except any tax assessed directly against OUC. Lakeland's costs and expenses for such services performed by Lakeland under this subparagraph 3.06 shall be included in the cost of

.the Project as hereinafter provided, except the cost of any feasibi(ity studies.

3.07 Lakeland shall

maintain, or cause to be maintained, separately, appropriate documentation and records of such expenditures made and costs incurred by Lakeland, together with all other charges, payments and any expenses or receipts relating to the Project. Such records of Lakeland's shall be made available for inspection by OUC

'nd its auditors at all reasonable times.

3.08 Lakeland shall keep OUC informed of all significant matters with respect to the Construction of the Project (including plans, specifications, engineering studies, environmental reports, budgets and supporting data, fuel

plans, and staffing), and, when practicable, shall furnish such information in time so that OUC may submit comments and recommendations thereon, when appropriate, before decisions are made, and shall confer with OUC as and whenever needs arise.

Lakeland shall furnish or make available any and all other information relating to any aspect of the Project upon request of OUC.

3.09 Allbids, contracts and related documents shall be made availagle to OUC as information. The award of any contracts in excess of $20,000, and any change order which would increase a contract price by an amount in excess of

$ 20,000, shall be reviewed by OUC'which shall forward its recommendations to Lakeland in a timely manner.

3.10 All recommendations shall be considered in good faith, but shall not be binding on Lakeland.

SECTION 4. PROJECT COSTS AND PAYMENTS Project Costs 4.01 Project costs shall include all payments made and obligations incurred in connection with Construction of the Project, and shall include but not be limited to the following items:

4.02 Preliminary investigation and development, labor and other costs, engineering, contractors'ees, construction labor, materials and supplies, including spare parts, operator and other personnel training, testing (less net receipts relating to testing), and ail other costs properly allocable to the Project. Any net receipts relating to Construction shall be credited against Project cost.

4.03 All costs of insurance obtained pursuant to Section 7

hereof, and applicable to the period of Construction.

4.04 AII costs relating to injuries and damage claims which may be payable and paid arising out of the Construction of the

Project, less proceeds of insurance maintained under Section 7 hereof.

4.05 All federal, state or local taxes imposed upon the Project and payments in lieu of

taxes, during the Construction period, except tax assessed directly against one Party unless such tax was assessed upon both Parties.

4.06 Appropriate amounts of administrative and general expenses as mutually agreed to by the Parties and in accordance with generally accepted cost accounting principles.

4.07 The value of all Common Use Facilities and External Facilities shall be determined by Lakeland and based on replacement cost of the said facilities determined by application of the Handy. Whitman Index as of the date

'fexecution of this Agreement, less depreciation calculated on the basis of replacement cost.

4.08 Allother costs incurred by Lakeland and OUC di.

rectly applicable to the Project including, but not limited to:

(a)

Payroll of employees, which can be directly assignable to the Project on an actual time basis including related employee benefit costs such as Social Security Taxes.

Unemployment Insurance

Expense, Grou p Life Insurance, Group Hospitalization and Medical Expenses Insurance, Pension Funding

Expense, Workmen' Compensation, Long Term Disability and other Insurance, and Paid Leave.

(b)

Materials and supplies including related purchasing and handling costs.

(c)

Traveling expense including use of company transportation equipment.

(d)

Construction power costs.

(e)

Other miscellaneous costs.

Payment of Project Costs 4.09 Each Party shall pay its share of the Project Costs as determined by its respective Ownership Share under the procedures hereinafter set forth.

4.10 Lakeland shall furnish OUC with payment schedules for all major contracts, in which the contract price is for $50,000, or more. Upon receipt of invoices from major contractors, Lakeland, upon approval and authorization of

payment, shall notify OUC that payment is due on such invoices, and OUC shall promptly make payments of its share of the said invoices to the contractors involved.

4.11 For payment of all other Project Costs, Lakeland shall establish a separate checking account in a bank of its choice for deposit by OUC of its share of the Project Costs.

4.12 Lakeland

shall, on or before the 15th of each month. furnish OUC an invoice showing the current estimate of OUC's share of all other Project Costs required for the following month (Cost Month).

4.13 OUC shalL following receipt of said

invoice, deposit in the said checking account, by the 10th of the Cost

Month or the first working day thereafter, the amount of the said invoice.

Lakeland shall withdraw the funds so deposited.

as re'quired to make payment for OUC's

.Ownership Share of the said other Project Costs.

4.14 Any difference between the said deposits made by OUC and actual payments for OUC made by Lakeland shall be adjusted by Lakeland on the next invoice following the close of the Cost Month.

4.15 In the event, that such differences are substantial and/or continuous.

the Project Committee shall determine how corrections should be made.

4.16 Lakeland shall pay directly to the contractors involved its Ownership Share of all Project Costs.

SECTION 5. ACCOUNTING 5.01 Lakeland shall keep

separate, complete and accurate accounts of all receipts and expenditures of Project Costs, as described in Section 4, and Costs of Operation, as described in Section 9, and other costs of the Project in a manner agreed to by the Project Committee. Each of the Parties shall keep complete and accurate accounts of all costs incurred by it for the Project. All accounts shall be kept in accordance with the Uniform System of Accounts.

The allocation of costs by Lake)and between Project Costs and Costs of Operation pursuant to this Agreement shal) be binding on the Parties for purposes of this Agreement, but the manner in which accounts are kept pursuant to this Agreement is not intended to be determinative of the manner in which they are treated in the separate books of account of the Parties.

5.02 OUC shall have the right at any reasonable time to examine the separate books of account relating to the Project kept by Lakeland pursuant to this Section and to examine and copy all

plans, specifications, bids and contracts relating to the Project. Each Party shall have the right to examine the account books and all supporting data and documents relating to amounts for which the other Party is to be reimbursed. The measure of the acceptability of the amounts for which a Party is to be reimbursed shall be Prudent UtilityPractice.

'.03 The Parties hereto shall, promptly upon execution of this Agreement and from time to time as needed thereafter, require the proper accounting personnel from each of the Par-ties to meet for the purpose of establishing and maintaining mutually acceptable accounting methods and procedures. This activity shall be under the surveillance of the Project Commit-tee, as provided in Section 8 of this Agreement.

5.04 Lakeland shall cause all accounts to be audited by a firm of Independent Certified Public Accountants who are members of a Division of CPA Firms sponsored by the AICPA acceptable to both Parties at annual intervals and when such accounts are closed. Copies of such audits shall be supplied to OUC.

SECTION 6. LICENSES AND PERMITS 6.01 Upon the expiration of any licenses or permits required for the operation of the Project. or should any additional or further licenses or permits be

required, Lakeland agrees to file timely applications for a new or further license or permit, as the case may be, to be held as tenants in common in the undivided interests set forth hereinabove.

A list of licenses and permits either approved and/or applied for as of the date of this Agreement shall be supplied to OUC by Lakeland upon request.

SECTION 7. INSURANCE AND TAXES Insurance 7.01 Lakeland shall procure at the earliest practicab time and thereafter maintain in effect at ai) times hereinafte provided, to the extent available, at reasonable cost and in accord with standards prevailing in the utility industry for projects of similar size and

nature, adequate insurance coverage for the Construction and Operation of the Project with responsible

insurers, with each Party as a named insured and with losses payable to the respective Parties by their respective Ownership Shares for their benefit as their respective interests may

appear, to protect, and insure against:

i1) Comprehensive Liability for bodily injury and property damage, i2) all risks of loss and physica! damage to property or equipment, including the perils of transportation, installation and testing.

Lakeland shall procure such other insurance as the Parties deem necessary, and with reasonable limits 'and subject to appropriate exclusions and deductibles.

7.02 Upon sustaining a loss covered by said insurance, Lakeland shall promptly advise OUC and give proper notice and make proper claims to the insurance agents or carriers.

Lakeland shall also proceed with appropriate repair or replacement of loss or damage to Project equipment or property and the cost of such repair or replacement shall be borne by the Parties in proportion to their respective Ownership Shares.

Proceeds of such claims shall be disbursed to the Parties in the same proportion.

7.03 The premium costs for such insurance coverages until the comp)etion of construction shall be a Project Cost and shall thereafter be an operating cost and shall be borne by the Parties in relation to their respective Ownership Share.

7.04 Lakeland shall keep OUC informed as to the status of insurance in force and ifit does so, Lakeland shell not be liable to OUC for any failure to insure or inadequac of coverage.

OUC may request additional insurance to th extent available, and Lakeland shall purchase such

~

requested insurance.

Any portion of said additional insurance not, agreed to by Lakeland shall be paid for by OUC. The proceeds from any claim with regard to the additional insurance paid for solely by OUC shall accrue solely to the benefit of OUC.

Taxes 7.05 Lakeland, acting as agent for OUC, shall have sole responsibility for negotiating the valuation of any assessments on the Project for taxation purposes.

7.06 It shall be the responsibility of each Party to obtain such exemptions from taxation to which it may be entitled.

7.07 Lakeland, acting as agent for OUC, shall use its best efforts to have the levy of any taxes or payments in lieu thereof (except payroll and sales and use taxes),

made directly and separately against the Ownership Shares of Lakeland and OUC, or in such other manner as will allow each Party to perfect any 'exemption to which it may be entitled.

7.08 Ifany property taxes, or payments in lieu thereof, or any other taxes or assessments related to the Project are levied against the Project as a

whole, such taxes or payments in lieu thereof shall be apportioned between Lakeland and OUC in accordance with their Ownership G-6

Shares.

Lakeland shall bill such apportioned taxes or assessments to OUC in t(me for OUC to take avaQable tax d(scounts. IfOUC then makes tax payments to Lakeland in time for discounted rates and Lakeland does not take available tax discounts, OUC shall not be charged for the increased tax costs. Sales and use taxes shall be charged as part of the cost of the materials or services.

7.09 To the extent permitted by'state law, OUC shall be exempted from any taxation levied upon its share of the Project by Lakeland.

SECTION 8. PROJECT COMMITTEE 8.01 As a means of securing effective cooperation, interchange of information and management of the property owned in common, on a prompt and orderly basis in connection with various administrative and technical problems which may arise from time to'time under the terms and conditions of this Agreement, the Parties hereby estabBsh an advisory Project Committee. The committee shall consist of at least two representatives from each Party, but not more than four from each Party.

8.02 The Project Committee shall have as its chairman an appointee representing Lakeland and designated by Lake)and for the duration of Construction of the Project and its first year of.Commercial Operation. The chairmanship will then rotate, on an annual

basis, between OUC and Lakeland. The chairman shall be designated by the Party having the chairmanship.

8.03 The Project Committee shall keep written records of aB meetings.

~

8.04 The Project Committee shall appoint Ad Hoc Committees as necessary to perform detailed work and conduct studies regarding matters requiring investigation.

8.05 Each Party shall notify the other Party in writing promptly upon execution of this Agreement of the designation of its representatives on the Project Committee and shall notify the other Party promptly of any subsequent change in its designations.

Either Party may, by written notice to the other Party, designate an alternate(s) to act as its representative(s) on the Committee in the absence of its regular member(s) of the Committee, or to act on specified occasions or with respect to specified matters.

8.06 The Project Committee shall have no authority to modify any of the provisions of this Agreement.

8.07 The Project Committee shall meet at such times as reasonably requested by either Party and shall inspect the Project facilities, receive reports on construction, operation and maintenance of the Project.

Functions 8.08 The Project Committee shall have the following functions, among others:

8.09 Provide Baison between the Parties at the management leveL In this effort, Lakeland shall keep the Project Committee informed of aB significant matters with respect to Construction and Operation, of the Project and, when practicable, shall furnish such information in time for the Committee to submit comments and recommendations thereon before decisions are made.

8.10 Provide liaison between the Parties w'ith respect to the financial and accounting aspects of Construction and Operation of the Project. These shell include such items as:

Annual Capital Improvements

budget, annual Operation

budget, planned

outages, written statistical and administrative reports.

8.11 Copies of aB records, reports and forms and other information pertinent to the Project shall be provided to the Project Committee by Lakeland.

8.12 Upon notification by Lakeland of intent to retire the Project, review and determine the details of the ultimate disposition of the'Project.

8.13 Review, discuss and try to resolve disputes arising under. this Agreement.

8.14 Expenses incurred by employees of either Party while serving on the Project Committee or any other committee related to the Project, shall be accounted for in accordance with Sections 4 and 9.

SECTION 9. OPERATIONS MANAGEMENT,OPER-ATING COSTS AND PAYMENTS Operation Management 9.01 Lakeland, as sole manager of the Project, sha(L 9.02 Perform aB Operating Work, execute, administer, perform and enforce contracts for Operating

Work, including, without limitation, any and all warranties on equipment, facilities, materials, and services furnished pursuant to any such contract.

9.03 Furnish or recruit the necessary personnel and provide for such training as may be required to qualify them to perform the Operating Work.

9.04 Purchase and

procure, through and from any source it may select, the equipment, apparatus.

machinery, tools, services, materials, supplies and spare parts necessary for the performance of Operating Work and the addition of Capital Improvements.

9.05 Expend funds in accordance with the terms and conditions of this Agreement.

9.06" Have the right to enter into any arrangement for the purchase, delivery, and handling of fuel.

9.07 Take any action required in an emergency for the safety of and the Operation of the Project.

9.08 Provide OUC with regular reports on Operation of the Project.

9.09 Submit to OUC, on or before June 15 of each year.

a preluninary budget of its estimate of the Costs of Operation by calendar months for the opera((ng year beginning October I next following. OUC shaB review the preliminary budget.

and shall submit to Lakeland its recommendations relative to said budget on or before August

1. Lakeland shall give due consideration to the recommendations.

The budget shall include such items of expenditure for replacement and repair of Project facilities as are normal to projects of a similar'character and shall provide an adequate contingency item for emergency repairs and replacements.

Lakeland shall submit budget revisions as may become necessary from time to time during any operating year. OUC shall promptly consider these revisions and make any recommendations it may have relative to them.

Lakeland shall give due consideration to the recommendat(ons.

9.10 Submit to OUC, on or before June 15 of each year ~

a. preliminary construction budget of items of Capital Improvements (other than normal replacements budgeted G-7

under the'revious paragraph) and items of retirement of facilities and equipment, relating to Project facilities as may be proposed by either Party and mutually agreed to by both Parties, for construction or retirement commencing during the year beginning October 1, next following. OUC shall review the preliminary budget, and shall submit to Lakeland its recommendations relative to said budget on or before August

1. Lakeland shall give due consideration to the recommendation.

9.11 The Parties recognise that it willbe necessary for continued Operation of the Project that Lakeland be in a position to meet commitments for payrolL repairs, and replacements, materials and supplies, services and other expenses of a continuing nature in order that it may fulfill its obligations under this Agreement.

Accordingly, regardless of the foregoing provisions of this

Section, Lakeland may make all expenditures in the normal course of

business, or in any emergency, as necessary for the proper and safe Operation of the Project. As soon as practicable after the making of any such expenditures, Lakeland shall make a full report thereof to OUC.

9.12 Lakeland shall switch and provide safety dearances of OUC's 230KV transmission line, at the Project 230KV Switchyard as requested by OUC.

9.13 OUC shall have the right to specify relay settings for the protection of its transmission line, provided however that such settings shall be coordinated with the Project's relaying and Lakeland's system relaying, in accordance with Prudent UtiTity Practice.

Costs of Operation and Payments 9.14 Each Party shall pay its share of the Costs of Operation as determined, by its respective Ownership Share under the procedures hereinafter set forth.

9.15 Lakeland

- shall furnish OUC with payment schedules for all major contracts and purchases in which the purchase or contract price is for 550,000 or more. Upon receipt of invoices frbm said major contractors or suppliers, Lakehind, upon approval and author(sation of payment, shall notify OUC that payment is due on such invoices, and OUC shall promptly make payments of its share of the said invoices.

9.16 For payment of all other Costs of Operation, Lakeland shall establish a 'separate checking account in a bank of its choice, 'for deposit by OUC of its Ownership Share of all other Costs of Operation.

9.17 Lakeland

shall, on or before the 15th of each month, furnish OUC an invoice showing the current estimate of OUC's Ownership Share of all other Costs of Operation required for the following month (Cost Month).

9.18 OUC shall, following receipt of the said invoices, deposit in the said checking account by the 10th of the Cost Month or the first working day thereafter, the amount of the said invoices.

Lakeland shall withdraw the funds so deposited, as required to make payment for OUC's Ownership Share of the said other Costs of Operation.

9.19 Any difference between the said deposits made by OUC and actual payments for OUC made by Lakeland shall be adjusted by Lakeland on the next invoice following the dose of the Cost Month.

9.20 In the event that such differences are substantial and/or continuous, the Project Conunittee shall determine how corrections should be made.

9.21 Lakeland shall pay directly to the contractors and suppliers its Ownership Share of all Costs of Operation.

Capital Improvements 9.22 The Parties shall be responsible for payment o their respective Ownership Shares of the cost of any Capital Improvement.

Lakeland shall

perform, or cause to be performed, such construction under procedures sinular to the Project construction.

The rights, titles and interests including Ownership Shares of each Party in and to any such Capital Improvement shall be in the same percentage as the Ownership Shares herein provided.

SECTION 10. SCHEDULING AND DELIVERY OF PROJECT OUTPUT AND SCHEDULING OF OUTAGES 10.01 OUC shall, by the time the Project goes into Commercial Operation, construct at its own cost, 230KV transmission facilities necessary to deliver its Ownership Share of the Output of the Project to its own service area.

10.02 Each Party shall be entitled to schedule all or any part of its Ownership-Share of the Output of the Pioject. Lakeland shall'accurately measure the Output of the Project.

10.03 Unless otherwise mutually agreed, each Party shall schedule capacity and adhere as closely as practicable to the capacity to which it is entitled.

10.04 Lakeland shall be responsible for the dispatclpng of capacity available from the Project to meet the requirements of the provisions of this Agreement.

10.05 Lakehnd shall accurately measure the flows at all of its points of interconnection so that OUC's share of the Project Output adjusted for Lakeland's incremental transinission losses associated with OUC's share of the Project Output will be delivered to the said points of interconnection.

These losses shall be determined by Lakeland froin load flow studies, made annually or otherwise as mutually agreed.

10.06 In the event of the loss of OUC's transmission

line, described in Section 10.01

above, Lakeland shall provide transmission capacity over its 230KV transmission system to deliver OUC's Ownership Share of the Output of the Project, adjusted as said above, to Lakeland's points of interconnection.

10.07 OUC shall report its hourly schedule for the followingday to Lakeland by 4 o'lock p.m. each day, except that the schedule for hoUdays, Saturdays and Sundays, and for the day following such days shall be submitted by 4 o'lock p.m. of the preceding workday; provided, however, that OUC shall have the right to request a change in its schedule on shorter notice to reflect changes in its requirements.

10.08 Lakehind shall notify OUC if fulfilling the requested schedules would require operation of the Project below Minimum Capability and the Parties shall reschedule such that e'ach shall receive their respective Ownership Shares of such Minimum Capability, unless other arrangements are agreed to by the Part'ies.

10.09 If one Party schedules less than its Ownership Share of the Project capacity. the other Party shall have the first option to purchase the remaining capacity or any portion thereof, from the first Party, on the following basis:

(a) such sale of remaining capacity shall be in accordance with the contract for interchange service between the

,G-8

Parties dated May 2, 1977, as revised as of the date of such sale, or (b) as otherwise agreed to by the Parties.

10.10 With respect to firm interchange sales between the Parties out of the Project, the capacity shall be priced by the selling Party on the basis of the original cost of the capacity. and its levelized fixed carrying charges based on an expected service life of thirty years.

10.11 Itis understood and agreed that ifany portion or aH of the said remaining capacity not scheduled by one Party is not purchased by the other Party, then the Party owning the said remaining capacity may sell or otherwise dispose of as it chooses, the said portion, or aH, of the remaining capacity not so purchased by the other Party.

10.12 When start-up, testing or any noncommercial operation of the Project requires generation, each Party shall make provisions for acceptance of its Ownership Share of such generation unless other arrangements are agreed to by the Parties. Lakeland shall notify OUC of test schedules as far in advance as practicable.

10.13 Lakeland shall provide station service require.

ments, including losses, whenever the Project Output is zero or negative. OUC shall reimburse Lakeland for its share of such station service requirements by an exchange of energy in kind or, at Lakeland's option, by making a payment in accordance with the provisions of Section 9.

10.14 Lakeland shall operate the Project so as to minimize losses due to reactive power generation, consistent with Prudent Utility Practice.

OUC and Lakeland shaH cooperate in the operation of their respective high voltage transmission facilities related to the Project to faciHtate the above.

10.15 Each Party shall operate its system in such a

manner as to make the actual net deliveries of the Output from the Project as near as practicable to the net scheduled, and actual net deliveries shall be accounted for and settled according to the established procedures for interconnected system operation in accordance with the FCG Operating Committee Handbook.

10.16 The Parties shall coordinate their transmission line maintenance schedules so as not to place an undue burden on the system of either Party.

10.17 Each Party shall maintain or provide for spinning reserve as required to cover its additional generating capacity acquired in the Project and as calcu)ated in accordance with the principles established and as may be revised from time to time, by the Operating Committee of FCG.

ScheduHng of Outages 10.18 Scheduled outages for major maintenance shall be as required by the manufacturers'ppHcable conditions of sale and delivery of the affected facilities and equipment or otherwise as agreed to by the Parties.

Lakeland shall coordinate planned Project outages with OUC as far in advance as practicable.

Lakeland may shut the Project down, reduce power or take other appropriate action which in the judgment of Lakeland is necessary to insure proper Operation of the Project.

10.19 In the event of emergency

outages, or forced outages, or reductions in Project capability for any reason, OUC may request that Lakeland expedite the

repairs, replacements or other restoration measures provided that OUC shall bear the expediting costs involved.

SECTION 11. FUEL 11.01 Lakeland shall

locate, purchase, and arrange transportation for aH Fuel for the Project, including an initial reserve coal 'stock sufficient to supply the Project at its expected Output for a period of sixty (60) days. The initial reserve coal stock shaH become a part of the Project and the cost, of each Party's Ownership Share thereof may be capitaHzed by either Party as they elect.

11.02 The cost of Fuel shall include aH obligations, HabiTit(es, credits and recoveries with respect to insurance,

shipping, lease and service charges from any supplier or shipper, and the expense of unloading, storing and handling up to the point where fuel enters the first container or holding vessel within the boiler structure.

11.03 Lakeland and OUC shall share in the cost of the initial reserve coal stock in the same proportion as their respective Ownership Shares.

11.04 Lakeland shall exercise its best judgment in the securing of aH fuel for the Project. OUC shall have the right to review aH specifications,

bids, contracts and other documents related to fuel for the Project, as they become available, and shall make recommendations to Lakeland regarding the securing of the fuel supply.

11.05 OUC shall furnish to Lakeland as requested, forecasts of its generation requirements from the Project.

Lakeland shall use such forecasts together with forecasts of its generation requirements from the Project in arranging for fuel deliveries and in preparing a fuel budget, as required for the total budget for the Project, in accordance with Section 9.09.

11.06 Lakeland shall estimate

and, as nearly as practicable, cause to be deHvered during the month it is to be burned, the fuel which will be required for the Project's use for that month. Lakeland shall by the 15th of each month provide OUC an estimate of the delivered price of fuel to be delivered in the following month. Lakeland and OUC shall share in the cost of fuel delivered each month for the Project in the same proportion as their respective Ownership Shares, except as follows.

11.07 Ifduring any month the fuel burned for a Party is less than its Ownership Share of the total fuel burned, then the difference in expense between its Ownership Share of the total fuel burned and the fuel burned for said Party, shall be credited to said Party's payment and charged to the other Party's payment for deliveries in the following month.

11.08 Ifduring any month the fuel burned for a Party is moro than its Ownership Share of the total fuel burned, then the difference in expense between its Ownership Share of the total fuel burned and the fuel burned for said Party, shaH be charged to said Party's payment and credited to the other Party's payment for deliveries in the following month.

11.09 Ifduring any month the fuel burned is less than or greater than the deliveries in that month, then Lakeland shall use its best efforts to adjust the foHowing month's deliveries to compensate for the differences so as to maintain the initial reserve coal stock.

This provision may be suspended when circumstances require the reserve coal stock to be changed from its normal volume.

11.10 The monthly fuel consumption shall be divided between the Parties in the same ratio.as their net energy bears to the total net energy.

The accounting for fuel consumed shall be as agreed to by the Project Committee, in accordance with generally accepted accounting principles, G-9

11.11 Lakeland shaH, unless otherwise agreed, prepare monthly operating

records, based, as appropriate, upon measured or estimated quantities which shall contain, with other details to be

- agreed upon:

fuel delivered, fuel consumed and net kilowatt-hours delivered ihourly and.

daily) to each Party during the preceding month. Lakeland shall consult with OUC regarding such records and make revisions as appropriate.

SECI'ION 12. SOLID REFUSE BURNINGFACILITIES 12.01 The Project shall include the facilities necessary for burning solid refuse materiaL Included shall be aH equipment,

storage, handling, conveying and other equipment and facilities necessary or desirable to the burning of the solid refuse in the boiler furnace.

12.02 The capital costs of the said solid refuse facilities shall be shared by the participants in the same proportion as their Ownership Shares in Che Project. AH costs associated with obtaining and receiving the refuse and

storing, handling, processing, and burning the refuse shall be shared by the Parties in the same proportion as their Ownership Shares. These said costs shall include aH costs of operation, maintenance, and testing of the said facility. The said costs shall also include all insurance and taxes.

12.03

'Any and aH revenues, receipts, or credits of any kind accruing to the said solid refuse burning facilities shall likewise be shared by the Parties in proportion to their Ownership Shares.

12.04 Any savings in fuel costs for the Project resulting from burning the said solid refuse shall accrue to the beneflt of the Parties in the same proportion as their respective Ownership

Shares, except whenever a Party schedules other than its proportionate share of the Output of the Project, as provided in,Section 10. In the event that either Party schedules other than its proportionate share of the Output from the Project, any savings in the cost of fuel for the project accruing from the burning of the said solid

, refuse shall accrue to Che Parties in proportion to the respec.

tive quantity of capacity scheduled by each Party, for and during the period of time that Che said scheduling is not in proportion to each Party's Ownership Share in the Project.

12.05 Savings in the cost of fuel resulting from the burning of the solid refuse shall be credited to each Party only during the tune period in which the said solid refuse is actually being burned, and shall accrue to each Party in proportion to its scheduled Output from the Project during the same period of time. Savings on fuel costs shall not be accumulated, reserved, and carried forward for either Party; 12.06 Any

increase, or decrease in the cost of maintenance to the boiler, scrubber, precipitator, or any other Project facility, caused by or suspected of being caused by the inclusion and use of the said solid refuse burning facility shall be shared by the Parties in the same proportion as their Ownership Shares in the Project.

SECTION 13. DISPOSAL OF WASTE OR SURPLUS COMMODITIES, MATERIALS, EQUIPMENT AND OTHER PERSONAL PROPERTY 13.01 The flyash extracted by the precipitators, sludge from scrubbers, bottom ash from Che boiler furnace and any other waste products from the Project shall be disposed of as mutually agreed to by the Parties.

13.02 Any commodities, inaterials, equipment, or other personal property including the items referred to in Section 13.01 which is produced from or is available from Che Project and which is surplus to the then presenC or reasonably foreseeable future requirements of the Project may be sold or otherwise disposed of upon such terms and conditions and for such periods of time as may be mutually agreed to by the Parties. The receipts from such sales and/or the shared costs of such disposal shell be shared by the Parties in proportion to their respective Ownership Shares.

13.03 The foregoing shall not be applicable under any circumstances or in any manner to sale or disposal of electric energy from the Project.

SECTION 14.

TRANSMISSION, LOSSES AND SERVICE CHARGES 14.01 OUC shall provide its own transmission facilities from the Project site to Orlando to facilitate delivery of its Ownership Share of the Output of the Project.

14.02 In the event OUC supplies Lakeland with energy, through OUC's transmission facilities, payment for losses shall be in accordance with the contract between the Parties for interchange service, dated May 2, 1977 as revised as of the date of such transaction.

No transmission service charges will be assessed by either Party for such bilateral

'transactions because the Parties will be directly interconnected.

SECTION 15. DAMAGETO OR DESTRUCTION OF PROJECT DISPOSITION UPON ABANDONMENT.

15.01 If aH or substantially aH of the Project be, destroyed'r damaged beyond repair or damaged to the extent that the cost of repah substantially exceeds the proceeds of insurance, as outlined in Section 7, available for reconstruction or repair and the Parties do not agree Co jointlyreconstruct'or repair the Project, or iffor any reason the Parties determine to abandon the

Project, the salvageable portion of the Project shall be disposed of in~

accordance with a procedure agreed upon by the Parties, or~

if the Parties cannot

agree, this matter shall become an arbitrable dispute subject to the provisions of Section 17 herein.

15.02 The proceeds from such disposition shall be distributed to Che Parties in accordance with their respective Ownership Shares.

Any demolition, removal and cleanup costs shall be charged against and borne by, the Parties in accordance with Cheir respective Ownership Share.

15.03 Lakeland may elect to reconstruct the Project in which event the value of the Project shall be appraised by three independent appraisers, one selected by each Party and the third selected by the first two. Lakeland shall pay OUC its respective Ownership Share of such appraised value, and OUC shall cause'ts interest in the Project to be conveyed to Lakeland.

15.04 In the event that less than substantially aH of the Project shall be destroyed or damaged, and the cost of repair, restoration or reconstruction does not substantially exceed the proceeds of applicable insurance, the Project shall be repaired, restored or reconstructed by the Parties in such manner as to restore the Project 'to substantially the same general character and use as the original Project, unless otherwise mutually agreed to by the Parties.

SECTION 16. DEFAULTS AND NON PAYMENTS 16.01 Lakeland and OUC hereby agree that they shall~

pay aH monies and carry out, aH other duties and obligations

agreed to be paid and/or performed by them pursuant to all of the terms and conditions set forth and containe'd in this Agreement and failure of either Party to fulfilland keep the obligations and covenants herein shall be an act of default by the Party.

16.02 In the event of an act of default by either Party, the other Party shall promptly notify the defaulting Party, in writing, of the existence and nature of the default. Upon giving the said notice, the non-defaulting Party may elect to provisionally remedy the default by paying or meeting the ob)igations of the defaulting Paity.

16.03 Within ten(10) daysafter writtennotice has been given, the defaulting

~ Party shall cure such default and reimburse the non-defaulting Party the total amount of money paid or expense incurred by such non.defaulting Party as a result of said default. together with interest on such money or expense, at an annual rate equal to 1.30 times Prime Rate at the time of default. Such interest shall accrue from the date of paying such money or incurring such expense to the date of reimbursement by the defaulting Party.

16.04 Should an act of default, by either Party in the payment of monies or performance of any obligation under this Agreement continue for a period of thirty (30) days from the giving of said written notice without having been cured by'the defaulting Party, then the non.defaulting Party may, by written notice, suspend the right of the defaulting Party to receive any part or all of its proportionate share of the Output of the Project and may suspend the right of the defaulting Party to be represented on or participate in the actions of any Project committees.

16.05 Should the suspension of the defaulting Party continue for a period of thirty (30) days or longer, after the giving of written notice of such suspension, the non.

defaulting Party shall have the option of purchasing any portion or all of the Ownership Share and all applicable legal and equitable interests in the Project of the suspended Party. Such option to purchase shall be exercisable by the serving of written notice of intent to purchase to the suspended Party. Afterapplying appropriate credits due the non.defaulting Party for'onies theretofore expended and/or expense incurred, plus interest, on behalf of the suspended Party, the purchase price and terms shall be subject to negotiations. Should the Parties be unable to agree on the net purchase

price, and the terms to consummate the transaction, within thirty (30) days of the giving of written notice of intent to purchase, the matter shall then become an arbitrable dispute subject to the provisions of Section 17 herein.

SECTION 17. ARBITRATION 17.01 If a dispute between the Parties should arise under this Agreement, either may call for submission of the dispute to arbitration, which shall be binding, ifboth Parties agree to such arbitration.

17.02 The Party calling for arbitration shall give written notice to the other Party, setting forth in such notice in adequate detail the nature of the dispute, the amount or amounts of money, ifany, involved in such dispute, and the remedy sought by the Party caEng for arbitration.

17.03 Within twenty (20) days followingdelivery of the said written

notice, the

Parties, acting through their representatives on the Project Committee, shall each designate two arbitrators. The arbitrators so selected shalL within twenty (20) days following their selection, select one additional arbitrator.

-17.04 If the arbitrators selected by the Parties, as herein provided, shall fail to select the additional arbitrator within the said twenty (20) day period, then the arbitrators selected by the Parties shall request from the American Arbitration Association (or a similar organization if the American Arbitration Association should*not at the time exist) a list of arbitrators who are qualified and eligible to serve as hereinafter provided. The arbitrators selected by the Parties shall take turns striking names from the list of arbitrators furnished by the American Arbitration Association, and the last name remaining on said list shall be the additional arbitrator.

17.05 All arbitrators'hall be persons skilled and.

experienced in the field which gives rise to the dispute, and no person shall be eligible for appointment as an arbitrator who is an officer or employee of any of the Parties-to the dispute or may otherwise have an interest in the outcome of the arbitration.

17.06 Except as otherwise provided in this Section 17, the arbitration shall be governed by the rules and practice of the American Arbitration Association (or the rules and practice of a

similar organization if the American Arbitration Association should not at that time exist),

except that ifsuch rules and practice, conflict with state or federal

law, specifically applicable to such arbitration proceedings, such law shall govern.

17.07 The fees and expenses of the arbitration shall be shared by the Parties equally, unless the decision of the arbitrators shall specify some other apportionment of such fees and

expenses, which other apportionment may be requested by either Party.

17.08 In the event that one Party shall attempt to carry out the provisions herein set forth in regard to arbitration, and such Party shall not be able to obtain a valid and enforceable arbitration decree, or ifboth Parties do not agree to arbitration. either Party shall be entitled to seek legal remedies.

17.09 Pending the resolution of the dispute by arbitration, Lakeland shall proceed with the

Project, including all Construction work, Operating work, or other work in a manner consistent with this. Agreement and Prudent UtilityPractice, and OUC shall advance the funds required to proceed with the Project in accordance with the applicable provisions of this Agreement. Amounts advanced by OUC pursuant to this Section during the pendency of such dispute shall not be subject to refund except upon a final determination that the expenditures were made in a manner inconsistent with this Agreement and Prudent UtilityPractice.

SECTION 18. MISCELLANEOUS 18.01 Governing Law. The validity interpretation, and performance of this Agreement and each of its provisions shall be governed by the laws of the State of Florida. It is agreed that this Agreement is entered into pursuant to the provisions, powers, and authority granted by Chapter 361, Florida Statutes of 1975, known as "The Joint Power Act".

18.02 Notice. Any notice, request.

consent, or other communication required by this Agreement shall be deemed properly given when deposited in the United States

Mail, postage prepaid, and ifgiven to Lakeland shall be addressed to: City of Lakeland, Department of Electric and Water

Utilities, P. O. Box 368, 1000 East Parker Street, Lakeland, Florida 33802, marked: NOTICE to Director; and ifgiven to OUC shall be addressed to: Orlando Utflities Commission, P.O. Box 3193, 500 Orange Avenue, Orlando, Florida 32802, marked:

NOTICE to Executive Vice President.

Routine communications during construction and operation shall be exempt from this provision.

18.03 Section Headings Not to Affect Meaning. The descriptive headings of the various Sections of this Agreement have been inserted for convenience of reference only and'shall in no way modify or restrict any of the terms and provisions thereof.

18.04 Severability.

In the event any of the terms, covenants, or conditions of this Participation Agreement, its Appendices, and Exhibits, or the application of any such term, covenant, or condition, shall be held invalid by any court having jurisdiction, all other terms, covenants, and conditions of this Agreement and their application shall not be affected thereby, and shall remain in force and effect.

18.05 Integration. The terms and provisions contained in this Participation Agreement,. including Appendices and Exhibits, constitute the entire agreement between Lakeland and OUC and shall supersede all previous communications, representations, or agreements, either verbal or written, between Lakeland and OUC with respect to the Project and this Agreement.

18.06 Cooperation. Lakeland and OUC shall cooperate with each other in all activities relating to the Project including, without limitation, the filing of applications for authorizations, permits or licenses and the execution of such other documents as may be reasonably necessary to carry out the provisions of this Agreement. Without Lakeland's written consent. OUC shall not incur any obligation which would or could obligate Lakeland to any third party.

18.07 Assignment.

During the existence of this Agreement, neither Party shall have the right to sell, lease, convey, transfer, or'assign in any manner whatsoever its Ownership Share, or any portion thereof, in the Project, without first offering such sale, lease or other conveyance to the other Party upon the same terms and conditions as in a proposed sale, lease, or conveyance to a third party.

18.08 Amendments. This Agreement may be amended by and only by a written instrument duly executed by each of the Parties hereto.

8'll reasonable dispatch the cause or causes preventing the carrying out of this Agreement; provided that the settlement of strikes, lockouts and other labor disputes shall be entirely within the discretion of the said Party, and shall not be required to make settlement of strikes, lockou and other labor disputes by acceding to demands which are unfavorable, in the judgment of the said Party.'8.11 Time. Lakeland and OUC agree that time is of the essence in this Agreement.

SECTION

19. RETIREMENT OR ABANDONMENT OF PROJECT 19.01 Upon Retirement of the Project in accordance with the terms of this Agreement or upon Abandonment of the Project in accordance with Section 15..OUC shall cause its interest and that of the City of Orlando in the real property conveyed under Section 2.03 hereof to be reconveyed to Lakeland in exchange for the payment to OUC by Lakeland of the sum originally paid by OUC to Lakeland for such interest in that real property.

SECTION 20. EFFECTIVE DATE AiVDTERM 20.01 This Participation Agreement shall become effective on April4. 1978, and terminate i1) at the expiration of 50 years from the date of execution. or i2) at such time as Mclntosh

//3 is retired from service and all attendant obligations under this Agreement have been fulfilled, whichever occurs first.

SECTION 21. EXECUTION OF AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed by their duly authorized officers, and copies delivered to each party, as of the day and year first above stated.

ORLANDO UTILITIESCOMMISSION By:

President, ATTEST:

18.09 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon Lakeland and OUC and their respective successors.

This Agreement shall inure to the benefit of and be binding upon the assigns of Lakeland and OUC,when such assignment is made in accordance with the provisions of Section 18.07.

18.10 Force Majeure. Lakeland and OUC shall not be liable or responsible for any loss, damage, injury or expense iincluding consequential damages and cost of replacement power) resulting from or arising out of any delay in the perfor'mance or, the inability to perform, any duty or obligation required by this Agreement in the event of a force majeure occurrence. The obligation to pay money in a timely manner is absolute and shall not be subject to the force majeure

'provisions.

Force majeure as used herein shall mean, without limitation, the following. natural disaster, prolonged strikes and/or lockouts, sabotage, riot, fire, flood, war, explosion, or any other similar extreme cause or event reasonably beyond the control of either Party. The Party suffering an occurrence of force majeure shall remedy with Secretary CITY OF LAKELAND,FLORIDA By:

ATFEST:

Mayor-Commissioner City Attorney, Lakeland, Florida City Clerk Approved as to form and correctness:

EXHIBITI COMMON USE FACILITIES

1. Fire water system and elevated tank~

2. Air compressors.

3. Electrical ties between existing units and Unit 3.

4, Auxiliary steam system cross connections.

6. Warehousing.

6. Chemical storage.

7. Fuel Oil Unloading.

8. Roads.

9. Fence and gate security.

10. Wells.

ll. Offices.

12. Transportation.

13. Fuel Oil Storage.

14. Sanitary sewers.

15. Maintenance shops.

16. Land.

17. Make-up Water Interface.

18. Control Room.

EXHIBIT2 EXTERNALFACILITIES

1. Lakeland's energy management system additions.

2. Sewage effluent pipeline.

3. Railroad spur.

EXHIBIT3 LEGALDESCRIPTION OF PLANT SITE That'part of fractional east Vi of west i/s of northwest Yi which lies southwesterly of Lake Parker Drive, and also the west N of the northwest N, all being in Section 4, Township 28S, Range 24E, and also U.S. Government lots 1 and 2 in Section 6, Township 28S, Range 24E, less and except: Begin at the northwest corner of said U.S. Government lot 2, the same being the northwest corner of the northeast i/i of said Section 5, run thence east along the north line thereof a distance of 664.25 feet, thence south 1365.59 feet, thence east 330.0 feet, thence south to Lake Parker, thence westerly along Lake Parker to the west line of said northeast

~/i, thence north along said west line 2640 feet more or less to the point of beginning, and also the southeast i'fthe southeast i/< of Section 32, Township 27S, Range 24E, and also beginning 664.25 feet east of the northwest corner of U.S. Government lot 2 in Section 5, Township 28S, Range 24E, run thence north 660.0 feet, thence east 1417.38 feet to the west line of the southeast N of the southeast, i/4 of Section 32, Township 27S, Range 24E, thence south along said'West line a distance of 660.0 feet to the southwest corner of said southeast 14 of southeast i/i, thence west 1412.14 feet to the point of beginning, being in Section 32, Township 27S, Range 24E, and also the southwest ili of the southwest l4 of Section 33Township 27S, Range 24E, all of the above described property being subject to that certain road right.of way as deeded'to Polk County, Florida and described in Official Record Book 1098, pages 946, 947 and 948 of the Public Records of Polk County, Florida.

Power Plant Engineering Fee EXHIBIT5 PROJECT COST Sewage Effluent System 230 KVSwitchyard Railroad spur Solid Refuse Burning Facility Escalation

$ 147,760,000 6,100,000 5,400,000 3,573.000 2,200,000 2,000,000 23,390,000 Total Project Cost 8190,423,000 EXHIBIT6 PROJECT FACILITIES

1. Turbine. Generator, auxiliaries.

2. Boiler, boiler feed pump, fans.

3. Scrubber, limestone handling facilities.

4. Precipitator.

EXHIBIT4 DESCRIPTION OF PROJECT The Project is a 364 megawatt steam electric generating plant to be jointly owned by the City of Lakeland and Orlando Utilities Commission. The location of the Project is on the north side of Lake Parker in Lakeland, Florida, at the site of the existing McIntosh Steam. Electric Generating Plant which consists of two generating

units, namely McIntosh Units 1 and

2. The Project will be constructed adjacent to and contiguous with the existing units and shall be designated McIntosh Unit P3. The Project shaU use coal as its primary fuel and shall be capable of burning l6 fuel oil.

The Project shall also have the facilities for and the capabiHty of burning solid refuse as a fuel supplement.

The Project shall utilize cooling towers to cool the condenser water and the makeup water for the cooling towers shall be suppUed from Lakeland's sewage effluent, through a piping and effluent handling system to be constructed as part of the Project.

The coal is to be delivered to the Project by railroad,

- using the "unit train" concept to transport the coal from the coal supplier'. The coal will be unloaded with a trestle and dumping arrangement which allows unloading the cars without stopping the train. The railroad spur and all coal storage and handling facilities shall be part of the Project.

The'Project'hall have boiler flue gas cleaning facilities which shall include a

limestone type scrubber and an electrostatic precipitator.

The Project shall have facilities for burning solid refuse which include limited storage, handling and/or classifying equipment, conveying and shredding equipment, and facilities for injecting the refuse material into the boiler furnace.

The electrical output of the Project shall be at 230KV.

230KV switching facilities shall be included in the Project for delivering for each participant its proportionate share of the output from the Project.

The Project shall include any other facilities that are necessary or desirable for the safe, efficient, economic, and reliable operation of the said steam electric generating unit and the associated facilities.

5. Step-up transformer.

6. Auxiliary transformer.

7. Start up transformer.

8. Boiler feed pump turbine.

9. Cooling tower, circulating system.

10. Sewage effluent line and handling facilities.

11. Solid refuse burning and handling facilities.

12. Railroad spur, trestle, unloading facilities.

13. Coal handling and storage facilities.-

14. 230KV switching facilities.

16. Buildings, appurCenances.

16. Land, land rights.

17. Sludge and ash handling facilities.

McINTOSH POWER PLANT Engineering Fees Paid To be reimbursed by Bond Proceeds Date Paid

~Pa ee 11.14-V7 Chas.T. Ma(n, Inc.

11-16-77 Dawk(ns &Associates, Inc.

12-12-77 Chas. T. Ma(n, Inc.

1.9-78 Chas. T. Main, Inc.

2.7-78 Chas.T. Main, Inc.

Amount

$ 29,800 500 59,600 101,320 178,800 2.17.78

'.7-78 Edwards-Panter Surveying

&Engineering, Inc.

Chas. T. Main, Inc.

4,000 226,480 6600,500 Letters of Intent (attached):

General Electric Company (Turbine generator) 614,000,000 Babcock &WilcoxCompany (Boiler) 35,550,000 March 21, 1978 The Babcock & Wilcox Company 600 Southland Drive Birnungham. Ahbama 35226 Attention: T. O. Johnson Birnungham Sales Gentlemen:

Subject:

City of Lakeland C. D. McIntosh Jr., Power Phnt, Unit 3 Specification No. 3297-1-3020 This letter is your notice of our intent, to purchase from you the boiler and gas cleaning equipment in accordance with the City of Lakeland Specification No.

3297.1-3200, dated

.October 24, 1977, as amended by Addenda No. 1 through Z, dated October 27, 1977, November 3, 197Z, November 9, EXHIBIT7 REQUIRED PROJECT PERMITS

1. State of Florida Power Plant Site Certification.

2. Federal Environmental Protection Agency (EPA) New Source Review, and Permit to Construct.

197V, December 2, 1977, December

14. 1977. December.22, 1977 and December 29, 1977 respectively and your Proposal No.

P12.4640 dated January 11, 1978 for the sum of 335,550,000r It is understood between the City of Lakeland and th Babcock & Wilcox Company that the City can cancel this letter of intent as of the following listed dates and not be obligated for any charges in excess of the listed Total Cancellation Charges corresponding to Che said dates.

Cancellation Date Total Cancellation Ch es April4, 1978 4-May 1, 1978 60,000 June 1, 1978 100,000 July 1, 1978 160,000 August 1, 1978 200,000 September 1, 1978 300,000 October 1, 1978 500,000 November 1, 1978 750,000 December 1, 1978 1,000,000 January 1, 1979 1,250,000 We expect to begin negothtions with your company in the near future to arrive at the terms of a contract between Babcock & Wilcox and the City of Lakeland.

Very truly yburs, R. V. Youkey City Manager July 8, 1977 General Electric Company 103 Century 21 Drive Suite 101

~Jacksonville, Florida 32211 Attention: Roy E. Elliott Sales Engineer Gentlemen:

Re: City of Lakeland McIntosh Plant, Unit 3 Specification No. COL-1 This letter is your notice of our intent to purchase from you a turbine generator equipment in accordance with the City of Lakeland Specification No. COI 1 dated June 6, 1977 as amended by Addendum No. 1 dated June 7, 1977 and your proposal No. LTSD.2519 dated June 22, 1977 FGK. for the sum of $ 10,931,496 with the option of changing rating using the pricing structure in effect, before July 10, 1977 to a 300 MW unit or any other size as may 'be determined at a hter date.

It is understood between the City of Lakeland and General Electric Company Chat in the event the project is aborted for any reason, Che City of Lakeland can cancel this letter of intent, wiCh no cost to Che City of Lakeland.

Very Cruly yours, R. V. Youkey City Manager