ML17275A742

Forwards Annual Financial Rept 1980

ML17275A742
Person / Time
Site:	Columbia, Washington Public Power Supply System, Satsop
Issue date:	12/11/1980
From:	Bouchey G WASHINGTON PUBLIC POWER SUPPLY SYSTEM
To:	Youngblood B Office of Nuclear Reactor Regulation
Shared Package
ML17275A743	List: ML17275A742 ML20049A356
References
ELE-GCS-80-364, NUDOCS 8012160128
Download: ML17275A742 (50)

Text

II REG< ~ORY INFORMATION DISTRIBUT., SYSTEM (RIDS)

ACCESSION NBR: 8012160128 DQC. DATE: 80/12/11 NOTARIZED:

NO F*CIL: 5 9~PPSS Nuclear Pro Jecti Unit 2i Washington Public Powe 50-46~0WPPSS Nuclear Pro Jecti Unit ii Washington Public Pore

-513 WPPSS Nuclear Progecti Unit 4i Washington Public Poise TN-50-508 WPPSS Nuclear Progecti Unit 3i Washington Public STN-50-509 WPPSS Nuclear Progecti Unit Si Washington Public AUTH. Nht~iE AUTHOR AFFILIATION BQUCHEYe G. D.

Washington Public Poeer Supply System REC IP. NAME RECIPIENT AFFILIATION YOUNGBLOQDi B. J.

Licensing Branch 1

SUBJKCT:

Forwards Annua 1 Financ ia 1 Rep t 1980.

DISTRIBUTION COOK:

MOORS COPIES RECEIVED: LTR J ENCL

~l SIZE:

TlTLK: Annual Financial Reports NOTES: PM:

2 copies of all material.

Standardized Plant.

Standardized Plant.

DOCKET ¹ 05000397 05000460 0500051$

OSOOOSOB 05000509 05000397 05000508 05000509 REC IP IENT IO CODE/NAME ACTICE'.

YOUNGBLQODi B LYNCH D.

COPIES LTTR ENCL 0

1 0

RECIPIENT ID CODE/NAKE RUSHBROQKitl.

05 BOURt A.

CQP IES LTTR ENCL 1

1 0

INTERNAL:

NRC PDR UT FIN BR EXTERNAL:

LPDR 03 REG FILE 01 1

1 DEC 17 1980 jl TOTAL NUNBER OF COP IEB REQUIRED:

LTTR + ENCL P

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Washington Public Power Supply System A JOINT OPERATING AGENCY P. 0. BOX Q58 3000 0CO. W*IHIHCTCHWAr RICHLAHD. WAIHIHCTOH QQ353 PHOHC (50Q) 375 5000 December 11, 1980 ELE-GCS-80-364 Docket Nos.

50-397, 50-460/513 50-508/509 Director, Nuclear Reactor Regulation U.

S. Nuclear Regulatory Commission Washington, D.

C.

20555 Attn:

Mr. B. J.

Youngblood, Chief Licensing Branch 1

Gentlemen:

Subject:

WASHINGTON PUBLIC POWER SUPPLY SYSTEM ANNUAL REPORT n Chi )

I ~ I n

Pl Enclosed for your information, as required by 10CFR50.71(b),

please find fifteen (15) copies of the Washington Public Power Supply System Annual Report for 1980.

Copies of the certified financial statements are included as a part of the Annual Report.

bk Director, Nuclear Safety CC:

A Bournia, NRC R.

H. Engelken, NRC ROV M.

D. Lynch, NRC N.

S.

Reynolds, D8L

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C Washington Public Power Supply System ANNUAL REPORT

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The Washington Public Power Supply System: A Profile Nature is generous in providing a supply of free energy, but nature's "free" energy in sun-light, water, wind, wood, coal, uranium and others must first be processed into a form useful to the consumer...and this carries a cost. Energy processing, that is, generating electricity, is the func-tion of the Washington Public Power Supply System, on behalf of its members which are 19 public utilitydistricts and four municipalities in the State of Washington.

Hanford Generating Project. The Supply System's Packwood Hydroelectric Project adds another 27,500 kilowatt capacity to the regional supply.

The concept of the Supply System is that of service...

service to its members, partici-pating utilities, and ultimately, to the seven million people who live in the Pacific Northwest.

Photos:

frhe cover/ Many skills are needed in the construction of nuclear power plants.

Some of them are depicted in the montage of Supply System employees at their jobs.

(belowJ Regular inspection and maintenance contributes to plant reliability.

The Supply System was organized in 1957 as a statewide joint operating agency...an action agency...through which the member utilities may act as one to meet their joint energy needs. Nearly a hundred other consumer and investor-owned utilities in the Pacific Northwest are served as cooperating partici-pants through their contracts to purchase shares of the electricity produced, or shares of plant ownership.

The Supply System is the lead agency for these utilities in the construction of five large nuclear electric plants which will have a capacity of more than six million kilowatts, or about 20 percent of the region's total capacity, when completed.

The Supply System already supplies almost half of the region's nuclear-generated elec-tricitywith its 860,000-kilowatt

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Financial Highlights of 1980

($ in Millions)

Construction Projects Long-Term Revenue Bond Safes Par Values Number of Issues Borrowing Cost (%)

WNP-1 S

150 6.57 I

Total S

125 1

7.41 S

480 S

755 3

5 8.29 7.77 WNP-2 WNP-3 WNP-4I'5 Total Long-Term Revenue Bonds Outstanding Outstanding as of June 30 Annualized Interest Expense Borrowing Cost (%)

Interest Earned Interest on Investments Annual Rate of Return (%)

$ 1,045

$ 1,266 S

680

$ 1,490

$4,481 S

68 S

84 S

43 S

104 S

299 6.52 6.52 6.37 6.99 6.60 S

29 S

26 30 S

47 S

132 9.71 9.06 8.85 10.72 9.71

Board of Directors/

Executive Committee Report "The most economic thermal plants are large units, those of 1-million kilowatts and larger.

No single utilityor small group of utilities can absorb a plant of such size in its normal load-growth pattern."

Joint Power Planning Council Statement, October 1968.

ne of the fundamentals of the District Power Law, enacted by the State of Washington in 1930, authorizing the formation of public utilitydistricts, is:

"Cooperation by mutual agreement between districts on utilityopera-tions to the benefit of the individual districts."

Since it was organized in 1957, the Washington Public Power Supply System has been an extension of this concept of cooperation.

In addition to the 23 members of the Supply System, there are 87 other consumer-owned utilities, for a total of 110, which are financial participants in one or more of the Supply System's five large nuclear projects now under construction.

As a joint operating agency, the Supply System provides the mechanism for the utilities to act as a single entity to meet their individual needs.

In addition, four investor-owned utilities own portions of two plants.

The Supply System's financing and construction program is one of the largest of any consumer-owned utility in the nation.

Attendant to programs of this scope are the challenges of direc-tion and management to meet the problems which are common throughout the nuclear energy industry: schedule delays and cost increases.

Our analysis shows that the aver-age cost of all nuclear power plants has more than doubled and construction time has doubled since the late 1960s.

Even so, this board has taken steps to strengthen its ability to ensure that these plants are completed as soon and as economically as possible. Three permanent board committees were appointed and given specific responsibilities related to costs, schedules, emer-gency planning and external relations.

A Committee on Budget, Finance and Audit was assigned responsi-bilityfor review of all financial matters that may affect cost and schedule. Additionally, the com-mittee will participate with outside agencies which have oversight responsibility in reviewing pro-cedures pertaining to budgets, cost estimates and issues concerning bonds and investments.

A Committee on Corporate Perfor-mance was appointed to review data pertaining to organization and management, contracting proce-dures, construction and plant management.

A Committee on External Relations was appointed to work with the State Legislature, Bonneville Power Administration and other public groups and government agencies.

It also will assess the adequacy of emergency contingency plans and interaction with public safety and community groups.

Another step taken by the Board was the appointment of an inde-pendent Administrative Auditor to conduct continuous performance audits. The Administrative Auditor is responsible to the Board of Directors and communicates regularly with the State Legislature.

The Board also receives direct reports from its own internal inde-pendent financial auditor.

Further strengthening of the rela-tionship with the Bonneville Power Administration was the adoption of a working agreement known as the "Memorandum of Understanding" which clarifies the roles and responsibilities of each party in activities related to Projects WNP-1, 2 and 3, for which BPA purchases all, or most of the output through "net-billing" agreements.

Robert L. Ferguson, a Deputy Assistant Secretary of the Depart-ment of Energy, was selected June 27 to be the Supply System's new Managing Director, succeeding N. O. Strand who resigned in February.

Mr. Ferguson, who was in charge of the Energy Department's nuclear reactor program since 1978, also had been Director of the Fast Flux Test Facility (FFTF) project office for the Energy Department from 1973 to 1978 and was credited with the

Managing Director's Statement successful completion of its con-struction within the final schedule and budget.

His appointment was effective August 1, 1980.

Some changes took place on the Board of Directors and in manage-ment. During the year, Donald Clayhold was appointed to repre-sent the Benton County Public UtilityDistrict and Larry Nickel to represent the City of Ellensburg on the Board. A. E. Fletcher, Clallam County Public UtilityDistrict repre-sentative, was elected Vice Chair-man of the Executive Committee.

Hal Norman, Pacific County Public UtilityDistrict, was elected Vice President of the Board of Directors and Howard Prey, Douglas County Public UtilityDistrict, was elected to the membership on the Executive Committee.

We begin a new decade on a note of hope, recognizing the critical importance of energy and our responsibility as energy suppliers to the people of the Pacific Northwest and in the belief that the Supply System is a strong organization, and the right organ-ization for meeting our future needs.

Ed Fischer Chairman, Executive Committee This is my first opportunity to communicate with the more than 10,000 people who receive the Supply System annual report. Since my appointment as Managing Director in June, I have received many expressions of support from the Northwest public power community and others.

I appreciate that support and I welcome this opportunity to share my initial thoughts on this appointment with you.

I took the assignment of Managing Director of the Supply System because I believe in your commitment to sound and prudent economic development in this region and to the need for the energy supplies that willmake this possible.

I want you to know that I have a commitment also, not only to serve the growing needs of public power in the Northwest, but to the belief that our nuclear projects are the best energy option available at this time. While we all look forward to the development of alternative energy sources in the future, we have an obligation to the citizens of the Northwest to meet their current and near-term energy needs with power generation systems using proven technologies which are safe, reliable, and economically acceptable.

The Supply System has taken on a great responsibility to the ratepayers of the member and participating utilities. It is imperative that the five projects now under construction be completed successfully, for their total output willequal about 20 percent of the total energy resources in the Northwest.

I believe we can meet this responsibility. The Supply System has an outstanding and dedicated staff and I plan to supplement this staff with additional proven management leadership to coordinate and direct their efforts. The tasks before us are formidable and they will require our best efforts if we are to overcome the very real problems we face in com-pleting the projects. But we already have our most important resource in place talented people. With that talent and with your continued

support, I am confident that we can build safe and economic power plants that willserve the Northwest for many years in the future.

"1. To serve all who come,

2. With adequate facilities,

3. At reasonable rates, and

4. Without discrimination."

Principles ofpublic responsibility for Public Utility Districts.

Glenn C. Walkley President, Board of Directors Robert L. Ferguson Managing Director

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"Basic to the entire principle of public development of the Columbia 'River power resources

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has been the long~~;~iii4h

term purpose of~

balancing the Pacific Northwest L

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region's timber=

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development;"

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Sterling Munro, BPA Administrator, 1980

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"And far up the river is Grand Coulee Dam, The mightiest thing ever built by a man To run the great factories and water the land, It's roll on, Columbia, roll on."

Woody Guthrie ballad, 1941 1

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The Pacific Rim Is Next Door The Pacific Northwest is the gate-way to the Pacific Rim nations and Alaska, with its untold wealth of the Northwest Slope oil and other natural resources.

The increased use of large shipping containers and the development of inland navigation facilities on the major rivers bring landlocked interior states within reach of the Pacific Ocean for shipment of agricultural

products, a process already well begun.

Agriculture: A Growth Industry Agriculturenow more correctly agribusiness, with the inclusion of food processing is the traditional heart of the economy. More than one half million acres of the Columbia Basin south of Grand Coulee Dam have had irrigation water available for many years, while another half million acres in the eastern part of the irrigation project were dependent upon the vagaries of the nature's weather patterns to grow crops.

Major facilities to bring water to these dry lands were completed during the fiscal year. The invest-ment in the huge, energy intensive irrigation system is now nearly 81.4 billion and eventually will increase.

Expanding farm output also has attracted many food pro-cessing firms to the area, creating many new jobs.

Newcomers Keep Arriving The region's population increased at a more rapid pace than other regions. As an example, new-comers entered the state of Wash-ington at a rate of more than 100,000 a year in 1978 and 1979.

The visible growth that contributes to the strength of the economy also is contributing to possible energy shortages in the years ahead, even with completion of the Supply System's 6-million kilowatts of generating capacity.

The Pacific Northwest Utilities Con-ference Committee (PNUCC),

consisting of essentially all elec-trical power generating interests in the region, makes an annual load and resource analysis, projecting both ten years into the future.

The Pacific Northwest has the most highly developed hydroelectric system in the nation, producing more than 80 percent of the energy used in the region. However, the amount of energy which can be generated in the powerhouses along the rivers depends upon the amount of rain and snow which falls in the mountains of the Columbia River drainage.

When precipitation is lower than average, the water flow in the rivers drops and the amount of energy available is reduced. This is known as "adverse water condi-tions" and is the basis for the regional forecast.

Comparisons of forecasts since 1977 reveal some serious trends.

Since the 1977 forecasts, the maximum energy deficit for any one year has grown steadily to an amount equal to two large thermal power plants. Deficits of more than 3,000 average megawatts are ex-pected in five of the next 11 years and there is a high probability that the available energy will be in-sufficient to meet the firm loads now forecast.

Despite the possibility of an energy shortage, economists foresee growth at a more rapid pace than the national economy, with in-creased concentration on the quality rather than the quantity of growth.

"...It is certain...

that there is going to continue to be a demand for energy, and growing demand at that."

Or. Paul Raver, BPA Administrator, 1954.

PACIFIC NORTHWEST LOADS AND RESOURCES PNUCC West Group Forecast (May 1980)

(In millions ofkilowettsJ i 25 o 20

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0 FY 80 81 82 83 84 85 86 87 88 89 NOTE: Estimates ol hydroelectric resources ere based on "critical period water conditions.

~ 'ESTIMATEDELECTRIC LOAD(DEMANDJ WPPSS NUCLEARPLANTS (SUPPLYJ 0

WNP-2 0 WNP-1 D WNPI3 0 WNP-4 0 WNP-5 CI 'OTHER RESOURCES (SUPPLYJ 0 'HYDROELECTRICRESOURCES (SUPPLYJ

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navigator has just landed in the new world. The natives are friendly."

Coded telephone call from Arthur Holly Compton in Chicago to James B. Conant at Harvard after the demonstration of the first sustained chain nuclear reaction by Enrico Fermi, December 2, 1942.

Generating Energy Gives Meaning 5 Purpose to the Supply System he Hanford Generating Project (HGP) completed another successful operating year on May 15, 1980, when the Department of Energy shut down its N Reactor for the scheduled summer refueling and maintenance program.

The 860,000-kilowatt HGP again proved its reliability by maintaining 100 percent availability during the time that steam was available from N Reactor. The Supply System paid

$32.3 million to the Department of Energy for steam during the fiscal year.

Total electrical generation for the operating year was 3,795,606,000 kilowatt hours, the equivalent of six million barrels of oil.

Since it began operating in 1966, HGP has generated more than 48 billion kilowatt hours, or the equivalent of the electrical energy available from burning about 75 million barrels of oil.

Packwood: Hydro Energy The 27,500-kilowatt Packwood Hydroelectric Project operated at less than full capacity during most of the year, primarily because of low water levels in Packwood Lake.

Electrical energy from Packwood is distributed by Bonneville Power Administration to Clark, Lewis and Snohomish County Public Utility Districts which are among the 12 project participants. The three PUDs are expected to purchase about 27,500,000 kilowatt hours of the project output in fiscal year 1981. The remainder, about 62,500,000 kilowatt hours, will be exchanged with BPA for demand billing capacity.

Realistic Training Builds Skills The accident at Three Mile Island focused attention on the need for extensive training and more frequent retraining of reactor oper-ators, with new standards for realism.

At the time of the accident, the Supply System's WNP-1/4 control-room simulator was in final assembly and was utilized by the Nuclear Regulatory Commission to study certain Three Mile Island operations.

The computer-directed simulator can provide realistic training by allowing operators to practice for hundreds of expected, or unex-pected conditions or events which might be met in plant operations.

The simulator looks exactly like the plant control room and to the oper-ators, it "feels" like the plant by producing the same instrument indications as the real control room instruments.

Scheduled retraining of licensed operators enables them to maintain their skills in recognizing any abnormal situation quickly, for safety, more efficient plant opera-tion and more reliable electric power production.

The WNP-1 and WNP-4 simulator was installed, tested and placed in service in the fall of 1979.

A simulator for WNP-2 was ordered so that operators might also benefit from training under conditions which exactly duplicate operational conditions. Other simu-lators for training WNP-3 and WNP-5 operators were expected.

Each of the simulators will be installed in facilities near the respective plant.

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a nation dedicated to living in peace is forging, not a sword, but a plowshare, the Hanford steam electric generating plant."

President John F. Kennedy, September 26, 1983, at the groundbreaking.

Photos:

(facing pagej A control room simulator provides realistic training.

/left) Gauges are checked regularly at the Packwood Hydroelectric plant.

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Construction Requires Human Skill 5 Ingenuity 9

he Supply Sys-tem has five large nuclear electric gener-ating facilities under construc-tion. Three are on the federal Hanford Reservation near Richland, Washington, a historic center of energy research and development, and two are in Grays Harbor County, Washington, near the town of Satsop. The projects are identified with the initials WNP, followed by a number.

Hanford During fiscal year 'l980, the work at WNP-2, a 1,100,000-kilowatt boiling water plant and the one nearest completion, entered a new phase, characterized by inspection, testing and making necessary adjustments to ensure performance reliability when the plant goes into operation. All primary buildings were completed, major piping and the principal control systems were installed.

A number of separate systems received provisional acceptance and were placed in service. These included the major electrical and water systems used to provide building power and water and also construction water to the neigh-boring sites of WNP-1 and WNP-4.

One important task completed was the installation of the "Omega" seal, shaped like the Greek letter for which it is named and which seals the wetwell flower portion) from the "drywell" (upper portion) of the containment vessel. The stainless steel ring, 12 inches in diameter, extends around the 335-foot circumference of the structure.

It is capable of maintaining a seal despite a possible 25 pound per square inch pressure differential between the building sections.

At WNP-1, a 1,250,000-kilowatt pressurized water plant, the start of the turbine-generator assembly marked a start of the mechanical installation phase.

Utilizing the world's largest land transportable mobile crane, known as the "Transi-Lift",workmen placed the 387-ton pressure vessel and two 500-ton steam generators inside the containment.

The system of lifting heavy com-ponents "over the top" and down into place contrasts with the conventional method of skidding the heavy materials into place from the side, and leaves the work areas clear for other work for a longer time.

At WNP-4, a twin of WNP-1, work continued in the civil and structural construction phase. A major milestone was the completion of the nuclear steam supply system support slab which cleared the way for construction of interior building walls.

Satsop The projects being built near Satsop are twin 1,240,000-kilo-watt, pressurized water plants designated WNP-3 and WNP-5.

At WNP-3, a major accomplish-ment of the year was the post-weld heat treatment of the large steel containment vessel. The entire steel structure 150 feet in diameter and 190 feet highwas heated through pipe openings on the sides with 10 forced-air, oil burners. The inside temperature was raised to about 1100'F to relieve any stress in the field welds. It is the largest containment vessel ever to be field stress relieved, a treatment required of all welds greater than 1~/2 inches thick.

Above-ground work began on the 500-foot-high natural draft cooling tower which will be the dominant visible structure on the site. Instal-lation of pipe began in the reactor auxiliary and turbine buildings,

"...utilities...have an obligation to supply power that is needed by a growing population and a technological society that is highly dependent upon energy."

Alex Radin, Executive Director, American Public Power Association, 1980.

Photos:

(facing pagej WNP-2 rises in the parched desert land of eastern Washington.

(left) The cooling tower rises.

marking the beginning of a tran-sition to the mechanical and elec-trical installation phase.

A milestone at WNP-5 was the non-stop slipform construction of the 212-foot-high, 64-foot-diameter reactor shield wall in the record time of 15 days. A total of 11,000 cubic yards of concrete and 2,985 tons of reinforcing steel were placed to complete the wall.

Schedules Reassessed An assessment of project schedules made during the year indicated that extensions ranging from 12 months for WNP-4 and WNP-5, to 16 months for WNP-2 and 18 months for WNP-1 and WNP-3 were necessary.

Commer-cial operation dates are now scheduled to be January 1983 for WNP-2; June 1985 for WNP-1; June 1986 for WNP-3 and WNP-4 and June 1987 for WNP-5.

The new schedules reflect a reduction of six months in the lag time between the first and second units in each of the dual-plant projects, making the separation 12 months instead of 18. This is in keeping with the industry exper-ience in construction of dual plants.

A 496-foot-high derrick, owned and operated by Chicago Bridge and Iron Co., collapsed at WNP-3 on May 20. Portions of the heavy structure plunged through a two-foot-thick, reinforced concrete floor slab in the reactor auxiliary build-

11 ing. There were no serious injuries, but there was damage to the building which was in the early stages of construction. The derrick was demolished in the collapse and was removed after thorough inspection by several investigating teams. The effects on cost and schedule had not been determined by the end of the fiscal year.

Disputes Impede Progress Labor disputes impaired progress at all sites, but most severely at the Hanford locations.

A major jurisdictional dispute in March resulted in over two weeks'uspension of work on two major contracts at WNP-1 and WNP-4.

More than 1,000 craft workers were affected.

Many collective bargaining agree-ments between contractors and their craft unions expired on May

31. In some cases contractors and unions failed to reach agreements for new contracts at the Hanford Reservation. Some of the unions withdrew their services, resulting in large reduction in forces by con-tractors due to their inability to function efficiently and safely with-out the support of these crafts.

Approximately 5,300 craft workers were affected out of a total contractors'ork force of about 5,950.

A strike by Cement Masons at WNP-3 and WNP-5 against several contractors in June resulted in the loss of seven work days by the affected contractors. Picket lines also disrupted other contractors for a short period during this strike.

This action was the result of break-down of negotiations for a new collective bargaining agreement to replace one which had expired on May 31. At one time, over 1,500 contractor employees were affected.

Such complete work stoppages affect project completion schedules on a day-for-day basis.

The Mountain Erupts The awesome eruptions of the volcano Mount St. Helens in south-western Washington on May 18 and 25 also affected construction of all projects to some degree. A third eruption on June 13 had no effect. These were the first erup-tions of the volcano in 123 years.

Areas within a few miles of the mountain were devastated in the explosions, but damage became less severe with distance. Chemical analysis of the ash proved it did not contain any corrosive elements and that only clean-up would be required.

The three plants on the Hanford Reservation near Richland were at the edge of the ash plume from the May 18 eruption and received one-eighth to one-quarter inch of ash.

There was minor impact on WNP-2 which is completely enclosed.

Clean-up was completed within three days. The impact on WNP-1 and WNP-4 was slightly greater, although the amount of ash was the same as at WNP-2, because much of the work is not enclosed.

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(facing pagaj Fog lends an ethereal quality to a heavy lift.

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Work did not return to normal for about a week.

Ash from the May 25 explosion was carried westerly by an unusual wind pattern and was deposited to a depth of three-eighths to one-half inch at the Satsop site. Clean-up was a major activity for about five days.

Three Mile Island: Its Impact The accident at Three Mile Island in March 1979 has had a contin-uing impact on the entire nuclear industry. Numerous design and operating changes are being incorporated into all Supply System projects.

The Supply System is continuing its participation with industry groups in reviewing information derived from the TMI "Lessons Learned" to make certain that the essential changes in design or operation are included in the Supply System plants.

The Nuclear Regulatory Commis-sion also served notice of its rededication to enforcing its regula-tions concerning quality assurance since TMI with a $61,000 civil penalty against the Supply System for work which did not meet NRC quality assurance standards at WNP-2.

Primarily the violations concerned faulty documentation, but a more serious circumstance was the dis-covery of faulty welding and concrete work on the sacrificial shield which is a thick concrete and steel cylinder enclosing the reactor. The work was done several years ago.

The Supply system considered the penalty severe and the situation as serious and took immediate action to avoid future occurrences by be-coming more deeply involved in day-to-day construction and quality con-trol activities and to develop an action plan for repairing defective work.

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$120 million from five construction contractors, one material supply firm and two bonding firms associated with the work criticized by the NRC.

Photos:

(facing page J Floodlights at the Satsop site permit non-stop work.

(fefrJ Engineers check work against the blueprints.

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Technology: A System for Simple Order 15 ur world today is a world of high technology

...compu-ters, space satellites, transistors, microcircuits, lasers, nuclear power and dozens of other applications of recently developed technologies.

To many, high technology means complexity. With about 50,000 components, such as valves, pumps, motors and control instru-ments, a nuclear generating station is considered complex.

But, simple order is being brought to the complex array of mechanical and electrical components through an extensive plant reliability program.

A complete history of each compo-nent, starting with its manufacture and continuing through installation, operation, in-service inspection, maintenance, repair and failure is recorded and stored in a computer.

This will make easier the task of keeping the plants operating safely and reliably.

The Supply System's plant reli-ability program is keyed into a national data system through which utilities may share their reliability information.

A Search for Fuel The Supply System is one of many utilities actively engaged in explor-ing for uranium reserves in the west. The goal of the Supply System exploration program is to identify 10 million pounds of ura-nium reserves to supplement the supply already purchased under contract previously.

Exploration continued in four states during fiscal 1980 with some encouraging indications of the presence of uranium at some locations.

A Search for Energy The Supply System is participating on behalf of Northwest public util-ities in a joint venture with other regional utilities: The Raft River Geothermal Project in southern Idaho.

The five megawatt project is a pro-totype to determine the feasibility and economics of generating elec-tric power from the moderate temperature geothermal resource with a binary system using low-boiling isobutane as the heat-transfer medium. It is expected to go into operation in 1980 and the production testing and economic assessment to be completed in 1983.

Technical support and guidance during startup and engineering testing is being given by the partic-cipating utilities under a contract with the federal Department of Energy.

~ +.

~ C, "Tech-no-lo-gy

...the totality of the means employed to provide objects necessary for human sustenance and comfort."

Webster's New Collegiate Dictionary.

Photos:

(facing page) A scale model is useful in preventing interferences.

(top left) Instruments are fine tuned in a calibration laboratory.

fbottom left) Atmospheric sampling devices are aligned preclseIy.

Tomorrow s frontier is the edge of the human mind."

Howard Chase, Howard Chase Enterprises, Inc.

Management Services:

People Helping People 17 he concentra-tion of thou-sands of workers at Supply System construction sites puts heavy demands on neighboring communities.

To assist these communities in coping with increased demand on the available public and social services, the Supply System com-pensates them for the impact arising out of its projects. The pay-ments began in 1976 in the Hanford region and in 1978 in the Grays Harbor area.

At the end of fiscal year 1980, the Supply System had made payments totaling more than $ 11 million to school districts, cities and other taxing districts.

In addition to these payments, the Supply System, by state law, must pay sales or use tax on materials and equipment purchased for con-struction. Most of the tax money goes into the state general fund, but a percentage is also returned to the counties in which the construc-tion is taking place.

At the end of the fiscal year, tax payments by the Supply System totaled more than $97 million.

A Wealth of Talent Supply System projects provide thousands of job opportunities for skilled craftsmen and create new jobs in secondary support service activities. Apart from this, the Supply System has its own staff of persons with specialized technical and construction management skills to keep pace with its need.

The Supply System has a technical staff of about 570 persons who represent some 4,600 man-years of experience in the nuclear field and 2,700 man-years of non-nuclear experience.

A Concern for All In addition to the need for improve-ment in design, instrumentation and operator training, the Three Mile Island accident indicated a need for realistic and functional emergency plans.

Supply System plans were being developed before Three Mile Island, but the work was accelerated and given more emphasis, particularly in the areas of health physics monitoring, radiation dose assess-ment capability, emergency response and communications facilities and ten-mile resident warning systems. The offsite emer-gency plan was expanded to meet new requirements for capability to assess conditions in the event of an accident within a 50-mile radius and to take whatever actions are necessary for protection of the public. Planning was coordinated closely with federal, state and local agencies.

Professional fire marshalls were designated at three of the sites and fire brigade training was conducted for all 195 security force members, more than 60 persons on the oper-ations staff, and enough contractor employees to maintain a qualified fire brigade of at least 20 members at each site.

The value of the fire-fighting train-ing was underscored when security officers saved permanent plant equipment valued at about

$ 100,000 from a fire at WNP-1 in April.

During the year, the securitv force was expanded to 195 officers to meet increasing needs during con-struction activities. In addition to the fire training, all were trained in first aid, safety, security procedures, law, communications and loss prevention.

"Who befriends his neighbor befriends himself."

Sophoc/es, 408 BC.

Photos:

(facing page J New requirements call forwide area emergency planning.

(leftj Word processing machines speed communications.

~ 18 Finance Group Activities (S in Millions/

WNP-1 WNP-2 WNP-3 WNP-4/5 Supply System Funding Requirements June 30, 1980 48 5oio S

1 045

$2,155 64.7%

S 1,285 S 1,986 37.3%

S 680 S 1,822 20.6%

S 1,490

$ 7,231 ssential to the Supply System's primary task-to construct the five nuclear projects is a successful capital financing program. Our success in the capital financial markets is measured by our ability to issue revenue bonds, at the lowest possible cost.

The Supply System's financial strength lies in its project partic-cipants who provide electrical service to the broad and diverse economic base of the Pacific North-west. This helps make the Supply System's revenue bonds one of the most secure investments one can make.

Fiscal year 1980 was another successful year for the Supply System's financing program. Despite the economic pessimism prevailing in the capital markets, the Supply System's long-term tax-exempt revenue bonds continued to main-tain their excellent ratings. A total of S755 million of long-term revenue bonds were sold in five separate trips to the'municipal bond market. These sales increased the Supply System's total revenue bonds issued to approximately S4.5 billion at an average weighted bor-rowing cost of 6.6 percent.

Of the S755 million, two issues totalling S275 million were sold for the net-billed projects (WNP Nos. 1, 2, and 3) bringing our financing program for these projects to

approximately 50.5 percent com-plete on June 30, 1980. Three issues totalling $480 million were sold for WNP-4/5 bringing the financing program for these projects to approximately 20.6 percent com-plete on June 30, 1980.

The financing highlight for the Supply System during fiscal year 1980 was its first negotiated public offering of revenue bonds in the Supply System's history. The record high interest rates prevailing in the bond market during the scheduled sale for WNP-4/5 in April 1980 created a situation in which the Supply System chose to reject the single bid and enter into a negotiated public offering. This decision and negotiated effort resulted in $3.8 million of addi-tional bond proceeds and $27.5 million in interest cost savings over the life of the issue.

The Supply System's financing schedule for fiscal year 1981 calls for the issuance of approximately

$ 1.5 billion of revenue bonds.

In an effort to protect and enhance the Supply System's access to the municipal revenue bond market and to facilitate the completion of the financing program at the lowest possible cost, the Board of Directors approved the concept of a Balanced Financing Program for Nuclear Projects No. 4 and 5. This action culminated many months of concerted effort by the staff of the Supply System, the Financial Advisor, Consulting Engineer, Bond Counsel and Special Counsel. Of the many financing mechanisms analyzed, the Board of Directors approved the use of short-term and intermediate-term debt, in conjunc-tion with the long-term financing schedule.

The Supply System staff is develop-ing the necessary legal documents to implement the short-term (27 year maturities) bond issue seg-ment of the Program. These docu-ments will require the consent of the WNP-4/5 Participants prior to implementation.

Next in importance to the acquisi-tion of funds is the management and control of expenditures. This control includes the annual up-dating of detailed construction, operating, administrative and special program budgets based on established goals and action plans, followed by issuance of periodic financial measurement reports.

There are numerous approval and concurrence steps and interactions in this total process. The integrated planning, budgeting and reporting

sequence, for which the Finance Group has a key role, together with the many accompanying interrela-tionships is depicted on the chart on page 21.

The extensive annual budgeting cycle ended in late July 1980 with approval by the Board of Directors of new project budgets for fiscal year 1981.

The combined project construction budgets, including all overheads, fuel, cost of financing, and special programs increased to $ 15.95 billion fr'om $ 11.75 billion a year earlier.

The amount which the Supply Sys-tem will be required to finance is

$ 13.19 billion.

A number of reasons accounted for the increases, including higher than anticipated inflation, additional regulatory requirements, and plant delays from various causes.

Higher plant costs will influence the future cost of power, as will all other increases related to the delivered cost of power. Similar to recent past and expected future cost of other forms of energy, all phases of electric power are pro-jected to continue to increase.

Operating and maintenance costs have steadily advanced, cost of new transmission and distribution facilities has escalated very rapidly, and cost of money has substantially increased.

Analysis based on present project budgets and projects by the pub-licly-owned project participants, indicate that in 1990:

~ Fifty percent more customers will be served, representing an annual increase of 3.9 percent.

~ Even after conservation efforts, the average customer (includes industrial and commercial) will use 10 percent more electricity.

~ The Supply System projects will provide about one third of their power sales.

~ The cost per kwh will increase 4.4 percent a year to 1.9 cents in 1980 constant dollars.

~ The cost per kwh, in terms of the inflated 1990 dollars, will be 4.2 cents, which is less than the average residential cost of elec-tricity in the United States today.

Another principal accomplishment was the effective implementation of several check-and-balance func-tions to improve the level of finan-cial involvement in each of the construction projects. These efforts, initiated in August 1979, included the establishment of a Budget Review Group, consisting of repre-sentatives of the Participants Review Board, Participants Com-mittee, Investor-Owned Utilities, BPA and the Board of Directors Budget Committee. This group met approximately once a month during the year to review present con-struction progress and budget vari-ances, and other related Supply System activities.

The steadily expanded scope of responsibilities and influence of the Finance Group included the forma-tion of a Financial Management Controls staff charged with independent review, analysis and evaluation of project estimating, cost, and schedule performance; the placing of accounting personnel of the Construction Manager firms under Supply System financial management control, to improve efficiency and cost control; the formation of a Financial Studies and Analysis Staff to concentrate the capabilities of broadly experi-enced senior staff members on emerging financially related issues throughout the Supply System; and assigning Financial Representatives to each major functional organiza-tion to assist managers in budget-ing, cost control and financial analysis of the operations.

Also particularly noteworthy is the Treasury Division's sophisticated investment program. Through efforts of the investment staff, who assured that all available funds were continuously invested in authorized money market instru-ments, approximately $ 133 million was earned in fiscal year 1980.

The average daily investment balance of S1.17 billion earned an average return of 9.72 percent.

This compares with an average cost of 7.77 percent for new funds acquired during the year.

The reader is invited to examine the following financial statements.

We also welcome requests for copies of recent financing official statements, which present addi-tional information about the Supply System's projects and financial affairs.

Participants and Members 23.

Public 8c Peoples UtilityDistricts Oregon Central Lincoln Peoples UtilityDistrict Clatskanie Peoples UtilityDistrict Northern Wasco County Peoples UtilityDistrict Tillamook Peoples UtilityDistrict Washington Benton County PUD Chelan County PUD Clallam County PUD Clark County PUD Cowlitz County PUD Douglas County PUD Ferry County PUD Franklin County PUD Grant County PUD No. 2 Grays Harbor County PUD Kittitas County PUD Klickitat County PUD Lewis County PUD Mason County PUD Mason County PUD No. 3 Okanogan County PUD Pacific County PUD No. 2 Pend Orielle County PUD Skamania County PUD Snohomish County PUD Wahkiakum County PUD Whatcom County PUD Cooperatives California Surprise Valley Electrification Corp.

Idaho Clearwater Power Co.

East End Mutual Electric Co., Ltd.

Fall River Rural Electric Cooperative, Inc.

Farmers Electric Co., Ltd.

Idaho County Light & Power Cooperative Association, Inc.

Kootenai Electric Cooperative, Inc.

Lost River Electric Cooperative, Inc.

Northern Lights, Inc.

Prairie Power Cooperative, Inc.

Raft River Rural Electric Cooperative, lnc.

= Riverside Electric Co., Ltd.

Rural Electric Co.

Salmon River Electric Cooperative, Inc.

South Side Electric Lines, Inc.

Unity Light & Power Company Montana Flathead Electric Cooperative, Inc.

Glacier Electric Cooperative, Inc.

Lincoln Electric Cooperative, Inc.

Missoula Electric Cooperative, Inc.

Ravalli County Electric Cooperative, Inc.

Vigilante Electric Cooperative, Inc.

Nevada Wells Rural Electric Cooperative, Inc.

Oregon Blachly-Lane County Cooperative Electric Association Columbia Basin Electric Cooperative, Inc.

Central Electric Cooperative, Inc.

Columbia Power Cooperative Assn., Inc.

Consumers Power, Inc.

Coos-Curry Electric Cooperative, Inc.

Douglas Electric Cooperative, Inc.

Harney Electric Cooperative, Inc.

Hood River Electric Cooperative, Inc.

Lane County Electric Cooperative, Inc.

Midstate Electric Cooperative, Inc.

Salem Electric Umatilla Electric Cooperative Assn.

Wasco Electric Cooperative, Inc.

West Oregon Electric Cooperative, Inc.

Washington AIder Mutual Light Company Benton Rural Electric Assn., Inc.

Big Bend Electric Cooperative, Inc.

Columbia Rural Electric Assn., Inc.

Elmhurst Mutual Power & Light Inland Power & Light Co.

Lincoln Electric Cooperative, Inc.

Nespelem Valley Electric Cooperative, Inc.

Ohop Mutual Light Okanogan County Electric Cooperative, Inc.

Orcas Power & Light Company Parkland Light & Water Company Tanner Electric Wyoming Lower Valley Power & Light, Inc.

Municipalities Idaho Albion Heyburn Bonners Ferry Idaho Falls Burley Minidoka Declo Rupert Oregon Bandon Canby Cascade Locks Drain Eugene Washington Blaine Centralia Cheney Coulee Dam Ellensburg McCleary Forest Grove McMinnville Milton-Freewater Monmouth Springfield UtilityBoard Port Angeles Richland Seattle Steilacoom Sumas Tacoma Irrigation Districts Consolidated Irrigation District 19 Vera Irrigation District 15 Investor Owned Utilities Montana Power Company Pacific Power & Light Company Portland General Electric Company Puget Sound Power & Light Company The Washington Water Power Company Total Participants and Members by Classification Cooperatives: 52 Municipalities: 32 Public UtilityDistricts: 26 Investor Owned Utilities: 5 Total: 115

, 24 The Supply System is an energy center for the Pacific Northwest gg Public Agencies Private Utilities Public & Private Combined

~ Municipalities WPPSS Nuclear Projects

~

Packvvood Lake Hydroelectric Project NP No 3 No

~

a Ce umbia Rn e

,ortland ps Ja Tr ieit See Inset e

ASHINGTON ID MONTANA Hele WYOMING cQ MAP INSET Bola Columbia 'r A'HanfortI Gen. Project Hanf rd Reservation WNP-No. 4 z Rtchlan UFORNIA NEVA A OREGON Snake River Salt Lake City

The Budget Planning Process 21 Project Corporate Planning Process Budget Process Owners'ommittee 3

5 Panic pants'eview Board 1 23 Board Budget Committee 1 2 3 4 5 INPUT CONCURRENCE WITH CORPORATE GOALS REVIEW OF ESTIMATES BUDGET ACTION Participants'ommittee Bonneville Power Administration 1 2 3 4 5 Washington Public Power Supply System Board ofDirectors.

Executive Committee ESTABLISH CORPORATE OBJECTIVES APPROVE SUPPLY)

SYSTEM GOALS FINAL APPROVAL OF BUDGET h1anaging Director Washington Public Power Supply System Staff IMPLEMENT

DEVELOP, CORPORATE ASSESS OBJECTIVES COORDINATE:

Managing GOALS Director ~

& TASKS ~

RECOMMEND CORPORATE GOALS TO BOARD Managing Director PREPARE PREPARE RECOMMEND

& REVIEW AND ISSUE BUDGETS ESTIMATES:

BUDGET ~ Managing CONSTRUCTION, DOCUMENTS Director OWNERS'OSTS, NUCLEAR FUEL

. 22 Supply System Board of Directors (Row 2/ Donald R. Cfayhofd Assistant Manager and Chiel Engineer Benton County PUD Robert Kaiser Commissioner Cheian County PUD A. E. Fletcher Commissioner Clallam County PUD Oonatd E. Hughes Manager ol Engineering fk Planning Cowlits County PUD Howard Prey Commissioner Douglas County PUD Larry Nickel (not p(cturedJ Councilper son Gty ol Ellensburg (Row 3( Wgliam G. Kuehne Commissioner Ferry County PUD C. K. Jolly Commissioner Grant County PUD No. 2 John J. Welch Commissioner Grays Harbor County PUD Harold W. Jenkins Commissioner Kinitas County PUD Marion Babb Commissioner Klickitat County PUD (Row 4( Arnold James Commissioner Lewis County PUD Edwin W. Taylor Commissioner Mason County PUD No. 3 Stanton H. Cain Commissioner Okanogan County PUD Hal Norman Commissioner Pacifrc County PUD No. 2 Thomas M. Logston Mayor City of Richland (Row 5( Robert Murray Superintendent Seattle City ught Roll E. Jemtegaard Commissioner Skamania County PUD C. Stanford Otsen 6mmissioner Snohomish County PUD Paul J. Nolan Director Department of Public Utilities Tacoma City Light Charles F. Emerick Commissioner Wahkiakum County PUD

)

'y Chairman, Executive Committee Ed Fischer(left)

Commissioner, Clark County PUD President, Supply System Board Glenn C. Walkley Commissioner, Franklin County PUD

gO Construction Projects Expenditures (continued)

(Sin thousandsj Cumulative Costs Tllru June 30, 1980 1981 Construction Budget Percent Expended NUCLEAR PROJECT NO. 5 Construction 6r Fuel.

Engineering 6r Construction Management..

Owner's Cost Net Interest, Financing & Reserves" Other Authorized Cost Total Funding Requirements Less: Private Utility's Funded Ownership" Total WPPSS Funding Requirements.....

S 393,775 80,798 28,873 40,604 5,275 549,325 (53,6761 S 495,649 S2,260,249 215,097 172,984 1,345,095 8.081 4,001,506 (384,378) 93,617,128 17.4 37.6 16.7 3.0 65.3 13.7 14.0 13.7 (Sin Millions)

Project No. 1 8931 82,736 Project No. 2 Project No. 3 8626

~ 81,347 82,467 83,130 Project No. 4 Project No. 5 8666 83,614 84,002 0

A 500 1,000 A

1,600 2,000 2.500 A

3,000 3,600 A

4,000 Washington Public Power Supply System 1981 Private Utilities'wnership Bonneville Power Administration Cumulative costs through June 30. 1980 "Assumes that net financing costs applicable to the private uti%ties'wnership shares are proportionally the same as the Supply System's.

Construction Projects Expenditures (S in thousandsJ NUCLEAR PROJECT NO. 1 Construction & Fuel.

Engineering & Construction Management..............

Owner's Cost Net Interest, Financing & Reserves Total Funding Requirements Less: Interest, Financing & Reserves Funded by BPA.

Total WPPSS Funding Requirements...............

NUCLEAR PROJECT NO. 2 Construction & Fuel.

Engineering & Construction Management..............

Owner's Cost Net Interest, Financing & Reserves Total Funding Requirements Less: Interest, Financing & Reserves Funded by BPA.

Total WPPSS Funding Requirements...............

Cumulative Costs Thru June 30. 1990 S 723,928 85,953 38,223 82,530 930,634 S 930,634 S 915,932 153,473 97,632 180,211 1,347,248 (235.778)

S1,111,470 1991 Construction Budget S1,653,160 178,948 168,720 734,816 2,735,644 (580,960)

S2,154,684 S1,516,835 219,808 214,531 515,791 2,466,965 (480.854)

S1,986,111 Percent Expended 43.8 48.0 22.7 11.2 34.0 43.2 60.4 69.8 45.5 34.9 54.6 49.0 56.0 NUCLEAR PROJECT NO. 3 Construction & Fuel.

Engineering & Construction Management..............

Owner's Cost Net Interest, financing & Reserves" Total Funding Requirements Less: Interest, Financing & Reserves Funded by BPA Private Utilities'unded Ownership"...........

Total WPPSS Funding Requirements...............

S 470,775 80,799 28,872 45,407 625,853 (185,671)

S 440,182 S1,941,329 215,096 172,983 800,315 3,129,723 (389,662)

(918,388)

S1,821,673 24.2 37.6 16.7 5.7 20.0 20.2 24.2 NUCLEAR PROJECT NO. 4 Construction & Fuel.

Engineering & Construction Management...

Owner's Cost Net Interest, Financing & Reserves Other Authorized Cost.

Total WPPSS Funding Requirements..

S 482,529 85,953 38,223 54,489 5,275 S 666,469 S2,039,509 178,948 168,720 1,218,642 8,081 S3,613,900 23.7 48.0 22.7 4.5 65.3 18.4

" Assumes that net financing costs applicable to the private utilities'wnership shares are proportionally the same as the Supply System's.

.18 Statements of Debt Service Requirements (co tinued)

(S in thousands J WNP-2 Year 1981 S

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016.

2017 2018 Principal 6,500 14,130 15,010 15,940 16,925 17,975 19,085 20,215 21,415 22,690 24,045 25,495 27,060 28,730 30,515 32,425 34,475 36,665 39,005 41,515 44,240 47,160 50,280 53,615 57,170 60,995 65,075 69,445 74,110 79,095 84,410 90,090 Interest 82,601 82,217 81,353 80.437 79,464 78,431 77,335 76,217 75,032 73,770 72,422 70,984 69,428 67,769 65,991 64,085 62,044 59,853 57,512 55,003 52,266 49,328 46,194 42,842 39,266 35,415 31,305 26,902 22,202 17,183 11,826.

6,107

$1,265;500

$ 1,812,784 Annual Debt Requirements 89,101 96,347 96,363 96,377 96,389 96,406 96,420 96,432 96,447 96,460 96,467 96,479 96,488 96,499 96,506 96,510 96,519 96,518 96,517 96,518 96,506 96,488 96,474 96,457 96,436 96,410 96,380 96,347 96,312 96,278 96,236 96,197

$3,078,284 WNP-3 WNP-4&5 Annual Debt Requirements Annual Debt Requirements Principal Interest Principal Interest 43,284 43,285 43,285 43,193 43,094 42,759 42,403 42,024 41,620 41,191 40,734 40,247 39,727 39,170 38,571 37,929 37,239 36,501 35,711 34,843 33,912 32,908 31,837 30,695 29,475 28,152 26,740 25,233 23,625 21,909 20,068 18,096 15,991 13,744 11,343 8,780 6,044 3 121 43,284 43,285 44,965 44,978 49,269 49,289 49,303 49,324 49,345 49,366 49,389 49,412 49,437 49,465 49,496 49,529 49,554 49,591 49,621 49,658 49,697 49,738 49,782 49,830 49,880 49,907 49,940 49,978 50,015 50,049 50,093 50,136 50,181 50,229 50,283 50,335 50,394 50,456 27,400 S

106,084 104,193 104,193 104,193 104,193 104,193 104,193 104,194 104,194 103,142 102.027 101.314 99,589 98,259 96,847 95,344 93,825 92.200 90,483 88,634 86,648 84,505 82,190 78.055 75,343 72,441 69,337 66,015 62,462 58,651 47,503 43,093 38,369 33,335 27,945 22,172 13,386 6,695 133,484 104,193 104,193 104,193 104,193 104,193 104,193 104,194 120,754 120,672 120,592 120,979 120,419 120,329 120,237 119,149 119,145 119,140 119,163 119,184 119,208 119,230 136,830 117,625 117,633 117,636 117,642 117,650 117,657 193,086 110,603 110,613 110,624 110,630 110,650 140,657 108,126 108,140 S

1,680 1,785 6,175 6,530 6,900 7,300 7,725 8,175 8,655 9,165 9,710 10,295 10,925 11,600 12,315 13,090 13,910 14,815 15,785 16,830 17,945 19,135 20,405 21,755 23,200 24,745 26,390 28,140 30,025 32,040 34,190 36,485 38,940 41,555 44,350 47,335 16,560 17,530 18,565 19,665 20,830 22,070 23,390 23,805 25,320 26,940 28;680 30,550 32,560 34,725 54,640 39,570 42,290 45,195 48,305 51,635 55,195 134,435 63,100 67,520 72,255 77,295 82,705 118,485 94,740 101,445

$680,000

$1.188,483

$1,868,483

$1,517,400

$2,969,439

$4,486,839

Statements of Debt Service Requirements J

e30, 1980 17.

(S in thousands Hanfol'd Year 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Principal 2 810 2,915 2,915 3,010 3,125 3,240 3,255 3,360 3,485 3,455 5,065 5,585 5,835 800 Interest

$ 1,483 1,393 1,303 1,210 1,114 1,014 913 806 693 580 425 246 58 4

Annual Debt Requirements

$ 4,293 4,308 4,218 4,220 4,239 4,254 4,168 4,166 4,178 4,035 5,490 5,831 5,893 804

$48,855

$11,242

$60,097 Packwood Principal 140 145 155 160 170 175 180 190 195 265 275 290 300 315 330 340 360 380 400 465 490 515 540 565 590 615 640 665 690 715 618 155 Interest 440 434 429 424 418 411 405 398 391 384 375 365 354 343 332 319 307 294 280 265 248 230 212 192 171 150 127 104 80 55 28 6

$ 12,028

$8,971 Annual Debt Requirements 580 579 584 584 588 586 585 588 586 649 650 655 654 658 662 659 667 674 680 730 738 745 752 757 761 765 767 769 770 770 646 161 WNP-1 Principal 3,695 S

3,815 4,045 9,245 9,785 10,355 10,970 11,615 12,310 13,045 13,835 14,675 15,575 16,535 17,560 18,665 19,845 21,110 22,455 23,940 25,530 27,235 29,065 31,030 33,135 35,380 37,780 40,345 43,085 46,015 49,145 52,505 56,100 59,940 64,050 68,445 73,140 Interest 68,177 67,972 67,761 67,537 67,032 66,495 65,923 65,315 64,668 63,977 63,238 62,449 61,605 60,700 59,726 58,681 57,559 56,358 55,075 53,630 52,084 50,422 48,643 46,726 44,652 42,435 40,068 37,537 34,834 31,945 28,836 25,494 21,923 18,104 14,021 9,656 4,989 Annual Debt Requirements 71,872 71,787 71,806 76,782 76,817 76,850 76,893 76,930 76,978 77,022 77,073 77,124 77,180 77,235 77,286 77,346 77,404 77,468 77,530 77,570 77,614 77,657 77,708 77,756 77,787 77,815 77,848 77,882 77,919 77,960 77,981 77,999 78,023 78,044 78,071 78,101 78,129

$20,999

$1,045,000

$1,806,247

$2,851,247

Statement of the State Auditor To Whom It May Concern:

The Washington State Auditor's Division of Municipal Corporations conducts a continuous examination of all the operations of the Washington Public Power Supply System, including each and every project. Reports are issued covering each fiscal year and are public documents.

On every such examination, state law requires that inquiry shall be made as to the financial condition and resources of the Supply System, whether the Constitution and laws of the state, the resolutions and orders of the Supply System, and the requirements of the Division of Municipal Corporations have been properly complied with; and into the methods and accuracy of the accounts and reports.

Very truly yours, Robert V. Graham, State Auditor Richard L. Husk Chief Examiner Division of Municipal Corporations

Report of 1ndependent Accountants Board of Directors Washington Public Power Supply System Richland, Washington We have examined the individual and combined financial statements, as listed in the financial statements section of the table of contents, of Washington Public Power Supply System's Hanford Project, Packwood Lake Hydro-electric Project, Nuclear Project No. 1, Nuclear Project No. 2, Nuclear Project No. 3, Nuclear Projects Nos. 4 and 5, and the Internal Service Fund for the years ended June 30, 1980 and 1979. 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 necessary in the circumstances.

In our opinion, the financial statements listed in the aforementioned table of contents present fairly the respective individual and combined financial positions of Washington Public Power Supply System's Hanford Project, Packwood Lake Hydroelectric Project, Nuclear Project No. 1, Nuclear Project No. 2, Nuclear Project No. 3, Nuclear projects Nos. 4 and 5, and the Internal Service Fund at June 30, 1980 and 1979, and the respective individual and combined results of operations and changes in financial position of the operating projects and sources and uses of funds of the construction Projects Nos. 1, 2, 3, and 4 and 5 for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Seattle, Washington August 29, 1980

14 OutStanding LOng-Term Debt (continued)

($ in thousandsJ Project Series Effective Date Interest Offering of Sale Rate Prices Coupon Rate Serial.

or Term Maturities 1980 June 30 1979 Revenue Bonds Revenue Bonds 1978B 1978C 5-23-78 6.86 10-12-78 6.81 (A) 100 100 (A) 99.50 100 6.006.60 6.80 6.90 6.006.50 6.75 7.00 7-1-89/2003 7-1-2010 7-1-2018 7-1-89/2003 7-1-2010 7-1-2018 37,785 32,960 79,255 150,000 45,225 42,970 81,805 170,000 37,'785 32,960 79,255 150,000 45,225 42.970 81,805 170,000 Revenue Bonds 1979A 2-14-79 7.16 (A) 100 100 6.306.90 7-1-89/2003 7.125 7-1-2010 7.25 7-1-2018 47,515 43,140 84,345 175,000 47,515 43,140 84,345 175,000 Revenue Bonds Revenue Bonds Revenue Bonds 1979B 1979C 1980A 8-28-79 7.69 12-11-79 8.30 5-9-80 9.23 (A) 100 100 99 (A) 100 99.50 71.47 (A) 100 99.25 93.50 7.007.10 7.40 7.60 7.625 7.908.75 8.50 8.50 5.75 7.908.70 9.30 9.375 8.50 7-1-89/1999 7-1-2003 7-1-2010 7-1-2018 7-1-89/2002 7-1-2010 7-1-2017 7-1-2018 7-1-89/1 995 7-1-2003 7-1-2010 7-1-2016 25,505 14.600 37,425 72.470 150,000 39,145 54,020 89,185 17,650 200,000 7,000 17,575 75,425 30,000 130,000

$1,517,400 S1,063,140 (Aj Various Prices

13.

Project Series Date of Sale Effective Interest Rate Offering Prices Coupon Rate Serial or Term Maturities 1980 June 30 1979 WPPSS Nuclear Project No. 3 Revenue Bonds 1975 12-3-75 7.87%

(A) 100 100 5.407.25%

7-1-83/1998 7.875 7-1-2010 7.875 7-1-2018 26,145 52,695 71,160 150,000 26,145 52,695 71,1 60 150,000 Revenue Bonds 1976 4-13-76 6.48 (A) 99.625 100 5.506.00 6.50 6.60 7-1-83/1998 7-1-2010 7-1-2018 19,605 35,100 45,295 100,000 19,605 35,100 45,295 100,000 Revenue Bonds 1977 9-12-77 5.71 (A) 99.50 99.50 5.005.30 5.70 5.80 7-1-85/2000 7-1-2009 7-1-2018 59,305 63,535 107,160

~'230,000 59,305 63,535 107,1 60 230,000 Revenue Bonds 1978 9-12-78 6.27 (A) 100 99 5.906.00 7-1-85/2004 6.375 7-1-2010 6.40 7-1-2018 66,385 42,985 90.630 200,000 680.000 66,385 42,985 90,630 200,000 680,000 WPPSS Nuclear Projects Nos. 4 and 5 Revenue Bonds($ 27,400,000 and 925,740,000 due within one year at June 30, 1980 and 1979)

Revenue Bonds Revenue Bonds Revenue Bonds Revenue Bonds 1975 7-24-75 1977A 2-3-77 19778 5-24-77 1977C 9-13-77 1978A 1-31-78 7 04%

5.93 6.32 5.96 6.07 (A)

(A) 100 100 (A) 100 (A) 100 (A) 99.75 100 6.756.90%

6-1-80/1981 5.505.75 7-1-89/2001 5.90 7-1-2008 6.00 7-1-2015 6.006.20 7-1-89/2001 6.40 7-1-2012 5.205.70 7-1-89/2001 6.00 7-1-2018 5.505.75 7-1-89/2000 6.00 7-1-2010 6.125 7-1-2018 27,400 42,105 40,605 62,290 145,000 33,485 56,515 90,000 20,480

. 109,520 130,000 27,700 43,900 78,400 150,000 53,140 42,105 40,605 62,290 145,000 33,485 56,515 90,000 20,480 109,520 130,000 27,700 43,900 78,400 150,000

-12 Outstanding Long-Term Debt (continued)

(S in thousandsj Project Series Effective Date Interest Offering of SaIe Rate Prices Coupon Rate Serial or Term Maturities 1980 June 30 1979 WPPSS Nuclear Project No. 2 Revenue Bonds (S3,000,000 due July 1, 'l 980 and 1979)

Revenue Bonds (S2,500,000 due July 1, 1980 and 1979)

Revenue Bonds (S1,000,000 due July 1, 1980 and 1979)

Revenue Bonds Revenue Bonds Revenue Bonds Revenue Bonds Revenue Bonds Revenue Bonds 1973 1974 1974A 1975A 1976 1976A 1978 1979 1979A 6-26-73 5.66%

7-23-74 7.21 11-26-74 7.67 3-6-75 6.71 6-3-76 6.63 11-18-76 5.87 7-11-78 6.7'I 3-13-79 6.49 10-17-79 7.69 (A) 100 (A) 100 100 (A) 100 100 (A) 100 100 (A) 99.25 100 (A) 100 99.50 (A) 100 100 (A) 100 100 (A) 100 100 5.005.10%

7-1-80/2010 5.70 7-1-2012 6.506.90 7-1-80/1994 7.00 7-1-1999 7.375 7-1-2012 7.20 7-1-80/1994 7.40 7-1-1999 7.75 7-1-2012 6.60 7-1-82/1994 6.60 7-1-1999 6.875 7-1-2012 5.406.25 7-1-82/1998 6.625 7-1-2006 6.75 7-1-2012 5.505.875 7-1-82/2002 6.00 7-1-2007 6.00 7-1-2012 5.506.60 7-1-82/2000 6.80 7-1-2006 6.875 7-1-2012 5.506.00 7-1-82/1999 6.40 7-1-2004 6.75 7-1-2012 6.407.30 7-1-82/1999 7.60 7-1-2004 7.75 7-1-2012 16,600 124,400 141,000 20,500 15,000 37,000 72,500 29,000 15,000 78.000 122,000 32,000 15,000 78,000 125,000 27,840 42,300 49.860 120,000 94,195 44,815 60,990 200,000 68,250 45,520 66,230 180,000 62,905 33,490 83,605 180,000 44,950 23,050 57.000 125,000 19,600 124,400 144,000 23,000 15,000 37,000 75.000 30,000 15,000 78,000 123,000 32,000 15,000 78,000 125,000 27,840 42,300 49.860 120,000 94,195 44,815 60,990 200,000 68,250 45,520 66,230 180,000 62,905 33,490 83,605 180,000 (Aj Various Prices S1,265,500 S1,147,000

Outstanding Long-Term Debt 11.

(S in thousands)

Project Series Effective Date Interest Offering Coupon of Sale Rate Prices Rate Serial or Term Maturities 1980 June 30 1979 Hanford Project Revenue Bonds (S2,810,000 and S2,710,000 due within one year at June 30, 1980 and 1979 respectively) 1963 5-8-63 3.260/0 (A) 98 2.903.10/0 9-1-80/1986 S

3.25 9-1-1996 21,270 27,585 23,980 27.585 Packwood Lake Hydroelectric Project (S140,000 and S101,250 due within one year at June 30, 1980 and 1979 respectively)

Revenue Bonds Revenue Bonds 1962 1965 3-20-62 3.66 11-4-65 3.76 99.425 100.5 3.625 3-1-2012 3.75 3-1-2012 48,855 9,153 2,875 12,028 51,565 9,278 2,950 12,228 WPPSS Nuclear Project No. 1 Revenue Bonds 1975 9-18-75 7.73 (A) 100 100 5.757.40 7.70 7.75 7-1-81/2000 7-1-2010 7-1-2017 42,000 58,300 74,700 175,000 42,000 58,300 74,700 175,000 Revenue Bonds Revenue Bonds Revenue Bonds Revenue Bonds Revenue Bonds (Aj Various Prices 1976A 1976B 1978A 19788 1979 2-4-76 6.84 8-31-76 6.37 3-21-78 5.69 12-5-78 6.61 6-19-79 6.64 (A) 100 100 (A) 100 99.50 (A) 100 100 (A) 100 100 99.50 (A) 100 100 100 6.006.25 7-1-81/1998 6.90 7-1-2010 7.00 7-1-2017 5.005.90 7-1-81/1998 6.50 7-1 -2010 6.50 7-1-2017 5.005.50 7-1-84/2002 5.80 7-1-2010 5.875 7-1-2017 5.506.00 7-1-84/1998 6.35 7-1-2003 6.60 7-1-2009 6.80 7-1-2017 6.00 7-1-84/1998 6.40 7-1-2003 6.70 7-1-2009 6.80 7-1-2017 37,020 66,485 76,495 180,000 41,825 66,940 71,235 180,000 64,270 50,920 64,810 180,000 38,355 22,305 38,190 81,150 180.000 29,385 18,560 32,370 69,685 150,000 S1,045,000 37,020 66,485 76,495 180,000 41,825 66,940 71,235 180,000 64,270 50,920 64,810 180,000 38,355 22,305 38,190 81,150 180,000 895,000

1.0 NOteS tO FinanCial StatementS (continued)

It was initiallyintended that Nuclear Project No.

1 would be constructed adjacent to the Hanford Project and would provide the energy source to operate the project when DOE ceased opera-tion of the New Production Reactor.

Because studies indicated that generating resources in the Pacific Northwest would be inadequate in the late 1970's and early 1980's, the Supply System determined that the Hanford Project should be kept available for power production.

Therefore, the Nuclear Project No.

1 Net Billing, Exchange and Project Agreements were amended to pro-vide for the separation of Nuclear Project No.

1 from the Hanford Project and to provide that Hanford Project costs, to the extent not otherwise provided for, will be treated as Nuclear Project No.

1 costs having a first claim on the revenues of that project.

The amended agreements provide for the payment by Nuclear Project No.

1 participants of all debt service costs of the Hanford Project, com-mencing July 1, 1980, regardless of continued operation of the reactor. If the plant ceases opera-tions, revenues arising from the aforementioned payments will nevertheless be recorded each year thereafter in amounts that will result in full realization of the carrying value of the plant.

The U.S. Government has an option to acquire ownership of the Hanford Project upon obtaining Congressional approval. If the Government exercises its option, it must assume all rights and obligations of the project, including the obligation to pay all revenue bonds.

Litigation The Supply System is involved in various legal actions as both a plaintiffand a defendant and in certain claims arising in the normal course of business for a large con-struction program. Although some suits and claims are significant in amount, final disposition is not determinable.

In the opinion of management and legal counsel, the outcome of any such litigation or claims will not have a material effect on the financial positions of the projects. The estimated cost of the projects may either be increased or decreased as a result of the outcome of these matters.

Net BillingAgreements On November 14, 1977, the City of Portland, Oregon and five residents of the City commenced a lawsuit against Bonneville and the Secre-tary of the Department of Energy.

The Supply System and the partici-pants have been added as defen-dants in this lawsuit. The action is brought under the National Envi-ronmental Policy Act of 1969 (NEPA) and alleges, among other things, that Bonneville did not pre-pare, publish, circulate and file detailed environmental impact statements concerning each of its Net BillingAgreements entered into after NEPA became effective on January 1, 1970. The Supply Sys-tem projects involved are Nuclear Projects Nos. 1, 2 and 3. The com-plaint seeks, among other things, (1) a declaratory judgement declar-ing the Net BillingAgreements null and void; (2) an order enjoining the performance of the Net Billing Agreements; and, (3) an order requiring the defendants to prepare, publicly circulate, file and consider a final and adequate environmental impact statement for each such Net BillingAgreement.

Legal counsel for the Supply Sys-tem have advised that there is a possibility that the court might find noncompliance with NEPA in some respect and that in such event the court might enter an order designed to enforce compliance. However, counsel are of the opinion that even if the court should decide that Bonneville has not fullycomplied with the provisions of NEPA, under applicable legal principles the Net BillingAgreements will not be declared null and void nor will performance of the obligations thereunder of the participants to make payments and Bonneville to make credits or make payments be enjoined. Accordingly, legal counsel are of the opinion that the lawsuit is without substantial merit insofar as it deals with the Net Billing Agreements.

not available. The Supply System's required contributions were S2,907,523 in 1980 and S1,847,063 in 1979.

Note CLong-Term Debt Except for Nuclear Projects Nos. 4 and 5, which are being financed together as one utilitysystem, all Supply System projects are financed separately. The revenue bonds issued with respect to each project are payable solely from the revenues of that project.

Outstanding revenue bonds of the various projects as of June 30, 1980 and 1979 are presented on Pages 11 through 14.

SecurityAgreements and Contracts The United States of America, Department of Energy (DOE), acting by and through the Bonneville Power Administration (BPA) has purchased the entire capability of the Hanford Project and the Supply System's ownership share of the projects'apability in Nuclear Proj-ects Nos. 1, 2 and 3 from its statu-tory preference customers and, in addition, with respect to Project No.

1, five of its private utility customers.

Each of these customers has, in turn, purchased such capability from the Supply System, all under the Net Billing and Exchange Agreements.

BPA is obligated to pay the participants, and the participants are obligated to pay the Supply System its pro rata share of the total annual costs of the projects including debt service on the bonds, whether or not the projects are completed, operable or operating and notwith-standing the suspension, reduction or curtailment of the projects'utput.

The Supply System's Packwood Project revenue bonds are secured by Power Sales Contracts between the Supply System and each of its 12 member purchasers.

Pursuant to these agreements, member purchasers pay for their percentage allocation of power specified there-in at rates sufficient to operate and maintain the project, including debt service on the bonds. Such payments continue until the bonds are paid or provision is made for their payment or retirement.

As security for the Generating Facilities revenue bonds for Nuclear Projects Nos. 4 and 5, the Supply System has entered into Participants'greements with 88 utilities operating principally in the western United States. Pursuant to the Participants'greements, the participants are obligated to pay their respective share of project annual costs, including debt service on the bonds, whether or not the projects are completed, operable or operating and notwithstanding the suspension, reduction or curtail-ment of the projects'utput. Bill-ings to the participants for Nuclear Projects Nos. 4 and 5 willbegin on July 1, 1988 or the date of com-mercial operation for the respective projects, whichever is earlier.

Advances from Members and Participants and Unearned Revenue As of September 1, 1977, the parti-cipants in Nuclear Project No. 2 were required to fund debt service, working capital and reserve requirements as provided in the Net BillingAgreements.

The debt service portion of this funding was previously recorded as a reduction in Construction Work in Progress. This portion of the advance funding has been reclas-sified as Unearned Revenue, a

deferred credit, which will be recognized as earned revenue during the operating period of the plant.

Note DCommitments and Contingencies Contracts The Supply System has entered into substantial contracts covering a portion of total estimated costs for certain major equipment and material, and for services relating to financing, design and the supply of nuclear fuel for the projects under construction.

Hanford Project andits Relation-ship to Nuclear Project No.1 The Department of Energy owns and operates a nuclear reactor, the New Production Reactor. This reac-tor provides by.product steam to the Hanford Project. The Supply System's current agreement with DOE provides for the continuation of this dual-purpose operation of the reactor through June 1983.

8 NOteS tO FinanCial StatementS (continued)

Investments held in the Bond Fund Reserve Accounts (included in Debt Service Funds) and Reserve and Contingency Funds (included in Special Funds) are stated at the lower of amortized cost or market as provided by their respective bond resolutions.

The market values of investments held in Debt Service and Special Funds and in Current Assets (Oper-ating Fund) approximate amortized cost as of June 30, 1980 and June 30, 1979.

Income Earned on Investments Income earned on investments includes gains and losses from the sale of investments. Income earned on investments held by projects under construction is recorded as a reduction in con-struction costs. Income earned on investments held by operating projects accrues to the applicable project's Operating Fund.

Capitalization of Construction Costs and Overhead Expenses During the construction phase of a project, the Supply System will capitalize all costs of the project including general, administrative, interest, certain depreciation and other overhead expenses.

The overhead expenses of the Supply System are allocated from the Internal Service Fund to the various project primarily on the basis of direct labor cost or direct usage.

The cost of the abandoned plant site, carried as a deferred charge in Nuclear Project No.

1 at June 30, 1979, has been retroactively reclassified to Construction Work in Progress.

Utility Plant and EquipmentAt Cost Provisions for depreciation are computed by the straight-line method based on the estimated useful lives of the projects, which approximate the term of the related revenue bonds.

Provisions for amortizaton of improvements to U.S. Government owned facilities are being amortized over the period covered by the contract for dual-purpose operation of the Department of Energy's New Production Reactor.

Contributions Used for Purchase ofEquipment Packwood and Hanford Projects Monies provided by participants to acquire equipment since comple-tion of the Project are recorded and accounted for as a reduction of the carrying value of such equipment included in UtilityPlant.

Debt Discount. Premium and Expenses Debt discount or premium and expenses relating to the issuance of revenue bonds are amortized by the straight-line method over the terms of the respective issues.

Revenues Member purchasers of power are contractually obligated to pay proj-ect annual costs including debt service (excluding depreciation and amortization). The Supply System records these reimbursable annual costs as operating revenues for the Hanford and Packwood Projects. In addition to recovery of project annual costs, the Supply System records as revenue each year an amount equal to the provisions for depreciation and amortization, less the recorded gains on bond re-demption. This accounting policy is used in order to spread such revenues equally over the full term of the bonds.

Cumulative reimbursable annual costs, less payments by member purchasers for bond redemption, are reflected as Unbilled Reimburs-able Costs in the accompanying balance sheets.

For Project No. 2, payments received from member purchasers for bond redemption and interest, less the annual amortization of debt discount, are shown as Unearned Revenue in the accom-panying balance sheets.

Retirement Plan The Supply System participates'in the Washington State Public Employees'etirement System that provides retirement benefits to eligible employees. Cost of the plan to the Supply System is determined by the Retirement System's Board.

The actuarially computed value of pension benefits exceeds the fund assets for the Retirement System.

However, because the Retirement System is a multi-employer'system, the amount of such excess, if any, that relates to the Supply System is

Notes to Financial Statements 7.

Note AOrganization The Washington Public Power Sup-ply System was organized in 1957 as a municipal corporation and joint operating agency of the State of Washington. Its membership consists of 19 public utilitydistricts and 4 municipalities that own and operate electric systems within the State of Washington. It is empowered to acquire, construct and operate facilities for the generation and transmission of electric power and energy.

The Supply System has constructed and is now operating the Packwood Lake Hydroelectric Project (Pack-wood) a'nd the Hanford Generating Project and has five nuclear elec-tric generating plants under con-struction (Nuclear Projects Nos. 1, 2, 3, 4 and 5). In addition, the Sup-ply System has an Internal Service Fund (formerly General Fund) to account for the central procure-ment of certain common goods and services for the projects on a cost-reimbursement basis.

Nuclear Projects Nos. 1, 2, and 4 are owned by the Supply System.

Nuclear Project No. 3 is jointly owned by the Supply System (70%)

and four investor-owned utilities (30%). Nuclear Project No. 5 is also jointly owned by the Supply System (90%) and one investor-owned utility(10%).

Each joint owner is responsible for its own financing costs, providing its share of the, costs of construction and operation and willbe entitled to its ownership share of the projects'apability.

In accordance with the covenants of the bond resolutions, the Supply System is authorized to recover its cost of operation and debt service over the life of the plant or bonds outstanding. Accordingly, the Sup-ply System realizes no income or loss and equity is not accumulated.

Note BSummary of Significant Accounting Policies The Supply System has adopted accounting policies and practices that are in accordance with gener-ally accepted accounting principles applicable to the utility industry.

Separate books of account are maintained for each project except for Nuclear Projects Nos. 4 and 5, which are accounted for as a single entity.

.Principles of Combination The individual and combined finan-cial statements have been prepared to facilitate an understanding of the financial position and results of operations of each project, the Internal Service Fund and, because of common management control,'he Supply System as a whole. All significant interproject due to*and from balances have been elimi-nated from the combined columns.

Restricted Funds In accordance with project bond resolutions and certain related agreements, separate restricted funds are required to be established for each of the projects.

The assets held in these funds are restricted for specific uses including construction, debt service and other special reserve requirements.

Restricted funds currently include the following:

Special Funds

~ Construction

~ Construction Revolving or Trust

~ Construction Fuel

~ Fuel Development-Uranium Program

~ Development-Energy Program

~ Reserve and Contingency Debt Service Funds

~ Bond Fund Principal

~ Bond Fund Retirement' Bond Fund Reserve

~ Bond Fund Interest

~ Construction Interest Current Assets and Current Liabilities Assets and liabilities shown as current in the accompanying balance sheets exclude current maturities on revenue bonds and accrued interest thereon because Debt Service Funds are provided for their payment.

Investments Investments include time certifi-cates of deposit, repurchase agree-ments (secured by U.S. Govern-ment securities) and United States Government and Government.

Agencies securities. Investments are stated at cost or amortized cost as appropriate and include accrued interest.

6 Statements of Source and Use of Funds (S in thousands)

Nuclear Projects Nos.

1 through 5 NUCLEAR NUCLEAR PROJECT PROJECT NO. 1 NO. 2 NUCLEAR NUCLEAR PROJECT PROJECTS NO. 3 NOS. 4 & 5 1980 1979 COMBINED YEAR ENDED JUNE 30 SOURCE OF FUNDS:

Collected Under Net Billing.

Bond Proceeds........................

Interest Income...........................

Charged to Joint Owners Decrease in Restricted Funds Revaluation of Investments................

Other 147,816 3,590 102,464 1,361 S 86 918 S149,884 122,700 29,135 25,813

$466,306 S 30,310 47,085 56,542 20,713 148,808 (369)

S 86.918 738,890 132,343 77.255 399,088 992 3,590 S

81,377 1,078,971 104,573 68,415 84,694 955 3,439 TOTAL SOURCE OF FUNDS

$330,425

$339,256

$235,660

$533,735

$1.439,076

$ 1,422,424 USE OF FUNDS:

Construction Costs.

Interest Expense Nuclear Fuel Financing Expense.

Bonds Redeemed Increase in Restricted Funds...........................

Increase in Amounts Due Participants Preliminary Survey and Investigation Costs (Energy and Uranium Programs)

Other

$257,439 68,177 4,036 384 389

$244,376 79,899 69 359 6,500 7,494 559

$ 192,307 43,285 68

$369,549 89,192 42,874 892 25,740 2,853 2,635

$ 1,063,671 280,553 46,979 1,703 32,240 2,853 7,494 2,635 948 S

919,091 217,838 16,297 2,165 30,670 229,360 3,689 3,233 81 TOTAL USE OF FUNDS

$330,425

$339,256

$235,660

$533,735

$ 1,439,076

$ 1,422,424 See accompanying notes to financial statements.

Statements of Changes in Financial Position (S in thousandsj Hanford and Packwood Projects HANFORD PROJECT PACKWOOD PROJECT 1980 1979 COMBINED YEAR ENDED JUNE 30 SOURCE OF FUNDS:

Operations Net Revenue Items Not Affecting Working Capital:

Depreciation and Amortization..............

Decrease (Increase) in Costs Reimbursable from Power Purchasers Less Gain on Redemption of Revenue Bonds Total from Operations.

Contributions for Improvements..............

Advances from Participants for Working Capital Decrease in Unbilled Reimbursable Costs.....

Increase in Liabilities Payable from Restricted Assets TOTALSOURCE OF FUNDS.............

~

2,613 309 (129) 2,793 149 500

$3,442 260 (58)

(65) 137 S

137 S 0 2,873 251 (194) 2,930 149 500

$3,579 2,873 147 193) 2,827 4,214 618 434 237

$8.330 APPLICATION OF FUNDS:

Net Improvements Cost of Revenue Bonds Purchased and Retired Increase in Restricted Assets.................

S 149 2,710 83 2,942 S

137 137 S

149 2,847 83 3,079

$4,214 2,774 724 7,712 Changes in Working Capital Cash and Investments Receivables and Other Payables and Other.

Net Increase in Working Capital..........

TOTALAPPLICATION OF FUNDS......

3,541 11 385 95 (3.426) ~106) 500 0

$3,442 S

137 3,552 480 3,532 600

$3,679 (1,643) 324 1,937 618

$8,330 See accompanying notes to financial statements.

Statements of Operations (S in thousands)

Hanford and Packwood Projects HANFORD PROJECT COMBINED YEAR ENDED JUNE 30 PACKWOOD PROJECT 1980 1979 OPERATING REVENUES S37,577 S

864 938,441 936,650 OPERATING EXPENSES:

Reactor Availability Depreciation and Amortization...............

Power Production and Transmission.........

Maintenance.

Administrative and General.................

Net Operating Revenue OTHER INCOME AND EXPENSE:

Interest and Other Income Interest Expense and Discount Amortization..

NET REVENUE.

32,063 2,546 1,184 865 566 37,224 353 1,357 (1,710)

(353) 256 143 101 48 548 316 161 (477)

(316)

S0 32,063 2,802 1,327 966 614 37,772 669 1,518 (2,187)

(669)

S 0 29,695 2,814 1,265 883 963 35,620 1,030 1,130 (2,160)

(1,030)

S 0 See accompanying notes to financial statements.

LIABILITIES HANFORD PROJECT PACKWOOD LAKE HYDRO-ELECTRIC PROJECT NUCLEAR PROJECT No. 1 NUCLEAR PROJECT NO. 2 NUCLEAR PROJECT NO. 3 NUCLEAR PROJECTS NOS. 48t 6 INTERNAL SERVICE FUND COMBINED JUNE 30 1980 1979 CURRENT LIABILITIESOPERATING FUND Accounts Payable and Accrued Expenses Due to Other Projects..................

S 8,096 S

331 1

S 18,262

$8,833 S

35.522 S

23,621 148 TOTAL CURRENT LIABILITIES OPERATING FUND LIABILITIESPAYABLEFROM RESTRICTED ASSETS NOTES B & C Special Funds (Primarily for Construction)

Accounts Payable and Accrued Expenses Retention Withheld from Contractors...

Due to Other Projects and Internal Service Fund Due to Other Funds-Net...............

8,096 847 847 332 18,262 S

30,678 30,160 25,332 S

37,733 S

78,582 32,450 19,459 34,152 2,896 661 67 821 60,838 61,339 57,259 113,555 8,981 35.522 23,621 172,325 116,221 144,313 80,496 1,508

"'53 290,054 225,662 Debt Service Funds Accrued Bond Interest Payable..

Due to Other Funds Net.......

518 430 146 34,088 21,642 49,680 72 3,728 545 4,055 19,725 106,074 28,555 86,911 20,723 TOTAL LIABILITIESPAYABLE FROM RESTRICTED ASSETS..

948 1,795 218 37,816 545 25,697 69,405 218 98,654 61,884 82,956 182,960 134,629 107,634 424,683 333,296 LONG-TERM DEBTNOTE C Revenue Bonds Payable......:..........

48,855 12,028 1,045,000 1,265,500 680,000 1,517,400 Less Unetnotdzed Discount on BondsNet ~913) ~t)4) ~6)44 ~7)46 ~4166 ~2360)

TOTAL LONG-TERM DEBT..............

47.942 11,914 1,038,856 1,258,354 675,815 1,493,799 4,568,783 3,848,933 (42,103)

(24,535) 4,526,680 3,824,398 OTHER LIABILITIESAND DEFERRED CREDITS Unearned Revenue Deferred Gain on Revenue Bonds.......

Advances from Members and Participants TOTAL OTHER LIABILITIES AND DEFERRED CREDITS............

COMMITMENTSAND CONTINGENCIES NOTE D 2,091 1,400 3,491 121 121 192,530 390 43,248 390 235,778 192,530 2,212 113,106 2,344 341 240,121 159,895 341 45,379 44,445

$61,324

$ 12,585

$ 1,137.900

$1,574,278

$758,771

$ 1,676,759

$9,322

$5,227,006

$4,341,210 See accompanying notes to financial statements.

2 Balance Sheets (S in thousands)

ASSETS PACKWOOD LAKE HYDRO-HANFORD ELECTRIC PROJECT PROJECT NUCLEAR PROJECT NO. 1 NUCLEAR PROJECT No. 2 NUCLEAR PROJECT NO. 3 NUCLEAR PROJECTS NOS. 4 8( 8 INTERNAL SERVICE FUND COMBINED JUNE 30 1980 1979 CURRENT ASSETS OPERATING FUND Cash and Investments...................

Accounts Receivable Prepaid and Other Advances to Internal Service Fund.......

Due from Other Funds..................

TOTALCURRENT ASSETS OPERATING FUND RESTRICTED ASSETS NOTES B 8E C Special Funds (Primarily for Construction)

Cash and Investments..................

Receivable from Joint Owners and Other Assets Due from Other Projects and Internal Service Fund Due from Other Funds Net............

S 9,515 303 304 197 1,277 11,596 3,347 3,347 S

168 S

210 3

7 59 390 S

20,049 7

1,206 390 21,262 182 128,741 161,528

$ 181,815 S

171,657 85 594 111 10,837 4,333 466 1,440 1,823 13 3,728 4,055 19,725 280 133,529 161,639 198,147 197,538 2,542 2,394 6,819 40,310 31,248 647,270 1,017,012 15,960 19,420 27,521 19,184 690,751 1,055,616 S4,410 S

34,532 S

26,887 218 738 477 2,191 2,498 1,490 Debt Service Funds Cash and Investments..................

TOTAL RESTRICTED ASSETS...........

UTILITYPLANTANDEQUIPMENTNOTE B In Service Improvements to U.S. Government Facilities Less Allowance for Depreciation and Amortization.

Construction Work in Progress..........

Nuclear Fuel and Prepaid Enrichment Services.

Less Amount Charged to Joint Owners..

7.098 719 71,679 42,422 119,480 313,730 511,268 67,013 12,205 14,411 (44,129) ~4,(02) 37,295 8,103 2.743

~394) 2,349 875,087 1,306,847 594,700 1,142,805 55,547 38,052 17,531 58,379

~(72.049 ~49,6( 6 930,634 1,344,899 440,182 1,151,568 10,445 999 205,208 204,061 317,627 555,128 493,411 1.245,879 1,549,027 4,783 86,744 14,411 84,189 14,411 2,503 50,250 50,870 3,919,439 2,723,259 169,509 111,982

~22(.665

~l44.4581 3,867,283 2,690,783

~2.280)

(50.905) ~47.730)

TOTAL UTILITYPLANT AND EQUIPMENT.

OTHER ASSETS AND DEFERRED CHARGES Unbilled Reimbursable Costs..........

Preliminary Survey and Investigation Costs.........

Unamortized Debt Expense......:....

TOTAL OTHER ASSETS AND DEFERRED CHARGES..............

37,295 8,103 930,634 1,347,248 440,182 1,151,568 2,503 3,917,533 2,741,653 1,822 3,005 4.827 5,077 10,550 10,550 7,503 166 31 1,668 1,707 962 3,373 7,907 6,702 1,988 3,036 1,668 1,707 962 13,923 23,284 19,282

$ 61,324 S12.585 S1,137.900 S1.574,278 S758,771 S1,676,759 S9,322 S5,227.006 S4.341.210

Table of Contents Financial Statements:

Balance sheets/2 Statements of operations Hanford and Packwood Projects/4 Statements of changesin financial positionHanford and Packwood Projects/5 Statements of source and use of fundsNuclear Projects Nos.

1 through 5/6 Notes to financial statements/7 Report ofindependent accountants/15 Statement of the state auditor/16 Statements of debt service requirements/17 Construction projects expenditures/19 Mfashington Public Power Supply System ANNUAL REPORT Financial Section June 30, 1980