ML17299B265

Forwards Projected Cash Flow Statements for 1986,per 10CFR140.21 & Southern California Public Power Authority Rept & Financial Statements for 1984 & Period Ending 850630

ML17299B265
Person / Time
Site:	Palo Verde
Issue date:	06/02/1986
From:	Van Brunt E ARIZONA PUBLIC SERVICE CO. (FORMERLY ARIZONA NUCLEAR
To:	Office of Nuclear Reactor Regulation
References
ANPP-36734-EEVB, NUDOCS 8606090164
Download: ML17299B265 (63)

Text

RE('UL RY INFORi'1ATION DIBTRIBUTI c SYSTEN (RIDS>

SUBJECT:

Fov wards pv objected cash floe statements For 1986, pev 10CFRi40. 2i 8< Bouthevn California Public Power Authov itM v ept Zc Financial statements 850630 5 i%84.

DISTRIBUTION CODE:

N0040 COPIES RECEIVED: LTR J.

ENCL J SIZE: 3R TITLE: Annual Finanzial Rapanta P; nzz net

.1 gjl ta'OTES:

Standandizad plant.

Standal'di led plant.

Standav'd i zed p Kant.

05000528 05000529 05000530 ACCESSION NBR: 8606090ih4 DOC. DATE: 86/06/02 NOTARIZED:

NO DOCKET 4 FACIL:STN-50-528 Palo Vev de Nucleav Btationp Unit id Arizona Pub li, 05000528 STN-50-529 Palo Vev de Nuclear Station>

Unit 2p Av izona Publi 05000529'TN-50-530 Palo Vev'de Nuclear Stat iona Unit 3p Av'izona Pub li 05000530 AUTH. NANE AUTHOR AFFILIATION VAN BRUNT> E. E.

Arizona Nucleav Po~er Pv object (formerly Ari zona Public Bev v RECIP NANE RECIPIENT AFFILIATION OFf-'ice op Nuclear Reactor Regulationp Div ec tov (post 85ii25 REClPlENT ID CODE/NAl'lE PNR-8 PD7 LA Oi LICITRA E COPIES LTTR ENCL i

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PHOENIX, ARIZONA85072-2034 Director of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C. 20555 June 2, 1986 ANPP-36734-EFVB/JRP/98.05

Subject:

Palo Verde Nuclear Generating Station (PVNGS)

Units 1, 2 and 3

Docket Nos.

STN 50-528 (License NPF-41)

STN 50-529 (License NPF-51)

STN 50-530 Licensee Guarantee of Payment of Deferred Premium File: 86-003-240

Dear Sir:

Letter from E. E.

Van Brunt, Jr.,

(ANPP-36093) dated April 15, 1986, to the Director of NRR.

Pursuant to the requirement in 10 CFR 140.21, as defined in subpart (e) of this

section, Arizona Public Service Company, for itself and on behalf of the partici-pants in the Palo Verde Nuclear Generating Station, herewith submits projected 1986 cash flow statements as delineated in the referenced letter.

Should you have any questions, please call.

Very truly yours, F 5, Veu~

E. E.

Van Brunt, Jr.

Executive Vice President Project Director EEVB/JRP/rw Attachments cc:

Director Region V, USNRC NRC Project Manager E. A. Licitra NRC Resident inspector R. P.

Zimmerman 8606090164 860602 l'I.

PDR ADOCK 05000528!,.

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'RIZONA PUBLIC SERVICE COMPANY 1986 NET CASH FLOW PROJECTION FOR PALO VERDE NUCLEAR GENERATING STATION (SOOO)

PARTICIPANT:

Arizona Public Service Company 1985 Actual 1986(1)

~Pro 'ected l.

2. ~

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

Net income after taxes Less dividends paid:

Preferred dividend requirements Dividends on common stock Retained earnings Adjustments:

Depreciation and amortization Deferred income taxes ITC net deferred Allowance for funds used during construction (equity and borrowed)

Other Total Adjustments Internal cash flow (5,- 12)

$ 325,423 (44,412) 194,091) 86,920 99,221(2) 72,855 36,383 (191,788) 3

~1.688) 14,983

$ 101,903

$ 217,170 (41,882) 203,818) 28,530) 167,247(2) 96,163 21,558 (126,451) 3

~1688)

$ 156,829

$ 128,299 14.

Average quarterly cash flow (13

-: 4) 25,476 Percentage ownership in all nuclear units:

Unit 1 - 29.1%

Unit 2 - 29.1%

Unit 3 - 29.1/

Maximum total contingent liability for PVNGS

=

$30,000,000

($10,000,000 per unit) 32,075 Projected data assumes present rate level.

Excludes deferred income taxes on deferred fuel.

(2)

Amortization of tax benefits sold in 1981 2/4/86

14-Feb-86 (NRC REQ)

SALT RIVER PROJECT-INTERNAL CASM FLOW PROJECTION FOR

- PALO VERDE NCULEAR GENERATING STATION FOR FISCAL YEARS ENDED APRIL >0, 1985 AND 1986

($000) 1985 1986 ACTUAL PROJECTED Net Income a+ ter ta~ es Less di vidends pai d:

Preferred dividend requirements Dividends on common stoct 215, 677 16 <<,98K Retained Earnings 215, 677 16<<.98<<

Adjustments:

Deprecia ion and amorti=.ation De% erred Income Ta::es and Investment Ta" C-edits Allowance Vor Funds Used During Construe ion 40ther

71. 811 94~ 602 (123, 897)

(115, 077) 0

90. 65K Total Adjustments (52,086) 70,1?8 Internal Cash Flow 16 ', 591 2 <<4, 161 Average Quarterly Cash Fl ow 40, 898 5

540 Percentage Ownership in all nuclear unitst Unit Unit Unit I'Z.19/

2.19%

2Z.19%

17.49/

17.49/

1?.49%

SRP e):changed with Los Angeles Dept of 4la er and Power a 5.?0%

interest o% Palo Verde

%or an additional

~0% interest in Coronado Generating Station and

$ 181,274,000, of which

$90,65,000 was received in January 1986.

1986 Internal Cash Flow Projection of Los Angeles Department of Water and Power for Palo Veide Nuclear Power Station (Dollars in Thousands)

Prior Year Projection Actual"Total Year Total Net Income Less Transfer to City Retained Earnings

Adjustments Depreciation and Amortization Allowance for Funds Used During Construction Total Adjustments Internal Cash Flow

$ 213,630 (58,867)

$ 154,763

$ 105,483 (3,208) h

$ 102,275

$ 257,038

$ 279,600 (64,400)

$ 215,200

$ 108,200 (5,400)

$ 102,800

$ 318,000 Average Quarterly Cash Flow 64,260' 79,500 Percentage Ownership in All Operating Nuclear Units Palo Verde 5.7%

Maximum Total Contingent Liability

$ 570,000 EHK:ag 1-13-86

PNM 1986 Proforma Internal Cash Flow

.($000)

E 1.

Net Income After Taxes 2.

Less Dividends Paid:

3.

Preferred Dividend Requirements 4.

Dividends on Common Stock 5.

Retained Earnings 6.

Adjustments:

7.

Depreciations and Amortization 8.

Deferred Income Taxes 9.

ITC Adjustment Net 10.

Allowance for Funds used During Construction (Equity

& Borrowed) 11.

Other 12.

Total Adjustments 13.

Internal Cash Flow (5 12) 14.

Average Quarterly Cash Flow (13

4)

Pecentage Entitlement In All Nuclear Units Unit 1 10.2%

Unit 2 - 10.2%

Unit 3 10.2%

1986 PROFORMA

$128,878 (10,679)

'105,902) 12,297 49,846 21,614 (3,939)

(62,549) 0 4,972 (7,325)

(1,831)

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~P SOUTHERN CALIFORNIA EDISON COMPANY 1986 International Cash Flow Projections (Dollars in Thousands) 1985 Actual.

1986 Pro'ected Net Income After Taxes Dividends Paid Retained Earnings Ad)ustments:

Depreciation

& Amortization Deferred Taxes Allowance for Funds Used During Construction

..Total Adjustments Internal Cash Flow

$774~000 532 000

$242'F000 455,000 277i000 158 000

$574,000 816 000 526,000 283,000 113 000

$696,000 Average Quarterly Cash Flow 204 000 Percentage Ownership in All Nuclear Units:

San Onofre Nuclear Generating Station Unit 1 Southern California Edison Company San Diego Gas

& Electric Company San Onofre Nuclear Generating Station Units 2 and 3

Southern California Edison Company San Diego Gas

& Electric Company City of Anaheim City of Riverside Palo Verde Nuclear Generating Station Units 1 and 2

Maximum Total Contingent Liability:

80.00%

20.00%

75.054 20.004 3.164 1.79%

15.80%

San Onofre Nuclear San Onofre Nuclear San Onofre Nuclear Palo Verde Nuclear Palo Verde Nuclear Generating Station Generating Station Generating Station Generating Station Generating Station Unit 1 Unit 2 Unit 3 Unit 1 Unit 2

$10,000

$10,000

$10,000 1,580 1 580

,~33 160 Company policy prohibits disclosure of financial data which will enable unauthorized persons to forecast earnings or dividends, unless assured confidentiality.

The Net Estimated Cash Flow for 1986 is expected to be comparable to the Actual cash Flow for 1985.

1985 CONSOLIDATED INTERNAL CASH FLO>Y STATEMEHT FOR F'" LQ VERDE NUCLEAR GENERATING STATION

-- -(coco) 7or t',ie yea." ending December 31, 3985 PAR<3Cl'[V?iT:

ET, PASO ELECTR}C COHPhNY

. 1985

.ACTUAL 1 986 PROJECTED l.

Net income, after taxes

2. Less dividends paid:,

3, P.-"efe."red dividend requirement.s Dividends on common st.ock 9.

Beta ned eaminm 6.

Retained earnings 7,

Adjustments; Depreciation and amorti at]os Dei'erred income ta"es ITC adjustment

- net Allo~ance for funds used during, collstiHction (equity Er boll 04ed) 13,3,07'4,754 50 867 47,450 l4,755 46,085 (3,764)

(99,040}

135,702 14,200

3.859 47,643 17p59 3 39,482

{3,022)

(135,019) 13.

Other To:al adjust,ments 2,702 (3S,262)

(+3)323)

Internal cash floe (5 ~ 32) 1$. Average qvarterlj cash floe (33-; 4)

Percentage oc'nership Kn all nuclear units UniUn-'-

Unit 3 2,047 15.8~

15.8~

15.8~

jl6, 320

$4,080 Haximum total contingent l aholic'y i'or PVHCS = y30,000,OOO (q>O,OOO,000 pe-. unit)

"- I Paso K/ec.tric Company's share

=

$ 4,740,000

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY REPORT AND FINANCIAL STATEMENTS JUNE 30, 1985 AND 1984

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400 South Hope Street Los Angetes, CA90071-2889 Telephone 2132363000 I'rice Paterhouse September 25, 1985 To the Board of Directors of Southern California Public Power Authority In our opinion, the accompanying balance sheet and the related statements of changes in financial position and of revenue bonds and bond anticipation notes payable present fairly the financial position of Southern California Public Power Authority at June 30, 1985 and 1984 and the changes in its financial position for the years then ended, in conformity with generally accepted account-ing principles consistently applied.

Our examinations of these statements were made in accordance with generally accepted audit-ing standards and accordingly included such tests of the account-ing records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying separate balance sheets of the Authority's Palo Verde

Project, Southern Transmission Project and Mead-Phoenix Project and the related separate statements of changes in financial position present fairly the financial position of each of the Projects at June 30, 1985 and the changes in each of their financial positions for the year then

ended, in conformity with generally accepted accounting principles con-sistently applied.

Our examinations of these statements 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.

Our examinations were made for the purpose of forming an opinion on the basic financial statements taken as a whole.

The supp-lemental balance sheets and supplemental statements of changes in financial position for the Palo Verde Project and Southern Transmission Project at June 30, 1985 and 1984 and for the years then ended and the supplemental schedules of receipts and dis-bursements in funds for the Palo Verde Project and Southern Transmission Project for the year ended June 30, 1985 are pre-sented for purposes of additional analysis and are not a required part of the basic financial statements.

Such supplemental finan-cial data and schedules have been subjected to the auditing procedures applied in the examinations of the basic financial statements

and, in our opinion, are fairly stated in all ma-terial respects in relation to the basic financial statements taken as a whole.

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SOUTHERN CALIPORNIA PUBLIC POWER AUTHORITY BALANCE SHEET lIn th nsands1 ASSETS June 30 1985 Utilit lant-Construct on work in progress S ecial funds (Notes 8

C and D):

Investments Interest receivable Cash Accounts receivable (Note E)

Palo Verde

~Pt

$ 499 430 368,596 14,576 254 383,426 678 Sout em Transmission

~Po t

9 534 176 561,674 11,880 573,554 5,997 Nea Phoenix

~Po t

8 675 59535 13 5,548 Total

$ 1 042 281 9359805 26,456 267 962,528 6,675 June 30, 1984 Total 8

617 311 1,138,808 279832 155 1,1669795 Unamortized debt expenses, less accumulated amortization of $ 9,061 and

$ 4,703 in 1985 and 1984 36 189 22 505 51 58 745 36 353

$ 919 723

$ 1 136 232

$ 14 274

$ 2 070 229

$ 1 820 459 Lon -term liabilities:

Revenue on s

Notes B and D)

Bond anticipation notes Bank loan payable (Note C)

Current liabilities (Notes 8 and C):

on ant c pat on notes Accrued interest payable Accounts payable and accrued liabilities Commitments and contingencies (Note P)

LIABILITIES

$ 789,014 75,000 864 014 48,708 7 001 55,709 828,878 200,000 1 028

$78 49,245 58 109 107,354

$ 14 148 14 1 ~ 8 75 51 126

$ 19617,892 275,000

~34 1 ~ 8 1 907 040 98,028 65 161 163,189

$ 191839558 200,000

~14 1st 1 397 706 312,875 72,163 37 715 422,753 5919 723

$ 1 136 232

$ 14 274

$ 2 070 229

$ 1 820 459 See accompanying notes to financial statements.

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c SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY STATEMENT OF CHANGES IN FINANCIAL POSITION In thousands Year ended June 30 1985 Financial resources rovided b Sale o

revenue onds Sale of refunding bonds Sale of bond anticipation notes Long-term bank loan Decrease (increase) in-Investments Interest receivable Cash

'ncrease (decrease) in-Accrued interest payable Accounts payable and accrued liabilities Other, net Palo Verde

~era ect

$198,395 205,918 75,000 (67,496)

(58955) 15,329 2,285 153

$ 423 629 Southern Transmission

~Pro ect

$ 235,000 269,534 7,331 10,557 25,305 14

$547 741 Mead Phoenix

~Pro ect 965 (21)

(144) 800 Total

$433,395 205,918 75,000 203,003 1,376 25,865 27,446 167

$ 972 170 Year ended June 30, 1984 Total 593,859 512,875 2,836 1,337 38,238 36,577 228

$ 1 105 950 Financial resources used for:

tx ty p ant - construct on work in progress-Payments-in-aid of construction Interest expense Generating station Startup and preoperating expenses Nuclear fuel Other Investment earnings

$ 84,977 19,765 17,827 8,567 4,644 (40 577)

$ 315,391 101,305 2,299 (02 129)

$1,196 295 (590)

$ 315,391 187,478 19,765 17,827 8,567 7,238 (131 296) 194,638 109,896 199417 13,452 2,709 109095 (67 732)

Total utility plant construction work in progress Payment of bond anticipation notes Deposits to escrow account Increase (decrease) in-Cash Investments Accounts receivable Interest receivable Unamortized debt expenses 87,203 112,875 205,146 113 678 17 614

$ 423 629 336,866 901 200,000 5,997 4

870 (100)

$547 741 000 424,970 312,875 205,146 112 6,675 22 392

$972 170 282,475 2209000 643,820 21,675 17 900

$ 1 105 950 See accompanying notes to financial statements.

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~ 4 SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY STATENENT OF REVENUE BONDS AND BOHD ANTICIPATION NOTES PAYABIE JUNE 30 1985 AND 1984 Series Date of sale Effective interest rate

~000 an rate Naturity

~an Jal 1

June 30 1985 1984 Eln thousands'ower Project Revenue Bonds 1982 A

8/13/82 1982 B

11/12/82 1983 A

4/8/83 1984 A

7/18/84 12.36\\

10.52%

9.371 11.77%

7.0% to 12.0%

6.0% to 10.25%

7.0% to 9.25%

8.75'o 11.50%

1988 to 2017 1988 to 2017 1988 to 2017 1990 to 2017 350,000 150,DDO 1508000 200 000 850 000 3508000 150,000 150,000 650 000 Power Project Refunding Bonds Transmission Project Revenue Bonds Total principal amount 1985 A 5/22/85 1984 A

2/9/84 1984 B

10/17/84 10.18%

11.481 7.5t to 10.08 8.75t to 11.251 1990 to 2023 1990 to 2021 6008000 235 000 835 000 1 893 335 9.708 6.508 ta 9.258 1988 ta 20!i 208 335 600,000 600 000 1 250 000 Unamortized bond discount8 Power Project Revenue Bonds (Note h)

Unamortized bond discount>

Transmission Project Revenue Bonds (Note h)

Total unamortized bond discount Revenue bonds payable less unamortized bond discount Power Project Refunding Bond Escrow Account (Note G)

Revenue bonds payable, net 648175 6 122 70 297 18823 '38 205 146 81 617 892 608306 6

135 66 4'

1,183,559 81 183 559 Power Project Bond Anticipation Notes 1983 A

8/16/83 1984 A

7/18/84 7.27%

8.448 6.5%

8.0%

4/15/85 6/01/87 75,000 1127875 Transmission Project Bond Anticipation Notes 1984 h

2/9/84 6.85%

6.0% to 6.75%

4/15/85 and 1/01/87 200 000 8

275 000 F00 000 8

612 875 See accompanyinq notes financial statements.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTES TO FINANCIAL STATEMENTS NOTE A Summary of significant accountin olicies:

Or anization

and, ur ose Southern California Public Power Authority (the Authority),

a public entity organized under the laws of the State of California, was formed by a Joint Powers Agreement dated as of November 1, 1980 pursuant to the Joint Exercise of Powers Act of the State of California.

The Authority's membership consists of ten Southern California cities and one public district of the State of Califor-nia.

The Authority was formed for the purpose of planning, financ-ing, developing, acquiring, constructing, operating and maintaining projects for the generation or transmission of electric energy.

The Joint Powers Agreement has a term of fifty years.

The Authority, pursuant to an assignment agreement dated as of August 14, 1981 with the Salt River Project Agricultural Improve-ment and Power District (Salt River Project),

has purchased a 5.91%

interest in the Palo Verde Nuclear Generating

Station, a

3,810 megawatt nuclear-fueled generating station being constructed near

Phoenix, Arizona, and a

6.55%

share of the right to use certain portions of the Arizona Nuclear Power Project Valley Transmission System (collectively, the Palo Verde Project).

The Authority is also studying the feasibility of constructing the proposed Mead-Phoenix DC Intertie Project (Mead-Phoenix Project),

a transmission line from Arizona to Nevada.

The Authority's present interest in the Mead-Phoenix Project is 93.75%.

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NOTE A Summary of significant accountin olicies:

(Continued)

The Authority, pursuant to an agreement dated as of May 1, 1983 with the Intermountain Power Agency (IPA), has agreed to make payments-in-aid of construction to IPA to defray the costs of acquisition and construction of the Southern Transmission

Project, a

transmission line which will provide for the transmission of energy from the Intermountain Power Project in Utah to Southern California.

The Authority entered into an agreement also dated as of May 1, 1983 with six of its members pursuant to which each member assigned its entitlement to capacity of the Southern Trans-mission Project to the Authority in return for the Authority's agreement to make payments-in-aid of construction to IPA.

The Authority maintains its records substantially in accord-ance with accounting principles and methods prescribed by the Federal Energy Regulatory Commission and the California Public Utilities Commission.

The Authority is not subject to regulation by such commissions.

Utilit lant All expenditures, including

general, administrative, other overhead

expenses, payments-in-aid of construction and interest, net of related investment

income, are capitalized as utility plant construction work in progress until a facility begins commercial operation.

Unamortized debt discount and ex enses Unamortized bond and note discount and expenses related to the issuance of debt are amortized over the terms of the respective issues.

Amortization expense is charged to utility plant con-struction work in progress until a facility begins commercial operation.

NOTE A Summary of significant accountin olicies:

(Continued)

Investments Investments include repurchase agreements and United States Government and Government Agency Securities and are stated at amortized cost.

Investment income is recorded as a

reduction of construction costs.

As discussed in Notes B

and C,

all of the investments are restricted as to their use.

Investments, in thousands, were as follows:

June 30,

~Pro 'ect Cost Market Cost Market Palo Verde Southern Transmission Mead-Phoenix

$ 368,596 561,674 5,535

$ 381,339 301,100 291,982 572

$ 320 831 5208 813

$ 1 1 1 5 560 6,321 6,066

$ 935 805

$ 959i219

$ 1 138 629

$1i111i159 NOTE B Revenue bonds payable and bond antici ation notes a able:

Palo Verde Pro ect To finance the purchase and construction of the Palo Verde

Project, the Authority issues Power Project Revenue Bonds and Power Project Bond Anticipation Notes pursuant to the Authority's Indenture of Trust dated as of July 1, 1981 (Bond Indenture),

as amended and supplemented, and the Authority's Power Project Bond Anticipation Note Resolution (Note Resolution) adopted August 13,

1982, as amended and supplemented.

See Statement of Revenue Bonds and Bond Anticipation Notes Payable at June 30, 1985 and 1984 for

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NOTE B Revenue bonds payable and bond antici ation notes a able:

(Continued) details related to outstanding bonds and notes.

The Bond Inden-ture provides that the Revenue Bonds shall be special, limited obligations of the Authority payable solely from and secured sole-ly by (1) proceeds from the sale of bonds, (2) all revenues, in-

comes, rents and receipts attributable to the Palo Verde Project (see Note D) and interest on all moneys or securities (other than in the Construction Fund) held pursuant to the Bond Indenture and (3) all funds established by the Bond Indenture (excluding the Decommissioning Account in the Reserve and Contingency Fund).

The Note Resolution provides that the Bond Anticipation Notes shall be special, limited obligations of the Authority payable from the pro-ceeds of additional

bonds, notes or loans obtained under the Re-volving Credit Agreement.

All outstanding Power Project Revenue Term

Bonds, at the option of the Authority, are subject to redemption prior to matur-ity.

The Bond Indenture requires mandatory sinking fund instal-ments to be made beginning in 1998 for the 1982 Series A Bonds, 1999 for the 1982 Series B Bonds and the 1983 Series A Bonds, and 2001 for the 1984 Series A Bonds and 1985 Series A'onds.

Sched-uled principal maturities for the Palo Verde Project during the five fiscal years succeeding June 30, 1985 are

$4,360,000 in 1989 and

$4,705,000 in 1990.

No principal maturities of bonds outstand-ing at June 30, 1985 are scheduled for fiscal 1986, 1987 and 1988.

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NOTE B Revenue bonds payable and bond antici ation notes a able:

(Continued)

The funds required by the Bond Indenture and Note Resolution contain balances as follows:

June 30,

~n thousand~s Construction Fund-Initial Facilities Account Debt Service Fund-Debt Service Account Debt Service Reserve Account Note Escrow Fund Note Fund Bond Anticipation Note Fund Operating Fund Reserve and Contingency Fund Bond Escrow Fund Total Palo Verde Project Funds

$ 63,595 194,092 99,013 2,188 12,318 6,275 5,945 383,426 210,539

$593,965

$ 81,007 138,824 70,262 38 7 $ 552 6,093 6,086 309,862 8309,862 Southern Transmission Pro 'ect To finance payments to IPA for construction of the Southern Transmission

Project, the Authority issues Transmission Project Revenue Bonds and Transmission Project Bond Anticipation Notes pursuant to the Authority's Indenture of Trust dated as of May 1, 1983 (STS Bond Indenture),

as supplemented, and the Authority's Transmission Project Bond Anticipation Note Resolution (STS Note Resolution) adopted January 20, 1984.

See Statement of Revenue Bonds and Bond Anticipation Notes Payable at June 30, 1985 and 1984 for details related to the outstanding bonds and notes.

The STS Bond Indenture provides that the Revenue Bonds shall be

special, limited obligations of the Authority payable solely from and secured solely by (1) proceeds from the sale of bonds, (2) all

revenues, incomes, rents and receipts attributable to the Southern Transmission Project (see Note D) and interest on all moneys or

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NOTE B

Revenue bonds payable and bond antici ation notes a able:

(Continued)

The Bond Indenture and Note Resolution for the Palo Verde Project and for the Southern Transmission Project each require certain funds to be established to account for the Authority's receipts and disbursements.

The moneys and investments held in these funds are restricted for use only for the purposes as stip-ulated in the bond indentures and note resolutions.

A summary of these funds follows:

Fund Construction Debt Service

~Held b Trustee Trustee

~Pur use To disburse funds for the cost of acquisition and construction of the Project To pay interest and principal related to the Revenue Bonds Note Escrow Fiscal Agent To pay interest and principal related to the Bond Anticipa-tion Notes Note Fiscal Agent To pay interest and principal related to the 'ond Anticipa-tion Notes Bond Anticipation Note Revenue Trustee Trustee To pay interest related to the Bond Anticipation Notes To initially receive all rev-enues and disburse them to other funds Operating Reserve and Contingency Trustee Trustee To pay operating expenses To pay capital improvements and make up deficiencies in

other, funds

and, in the case of the Palo Verde

Project, accumulate funds for decommissioning General Reserve Trustee To make up any deficiencies in other funds and any other pur-pose related to the Project

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NOTE B Revenue bonds payable and bond antici ation notes a able:

(Continued) securities (other than in the Construction Fund) held pursuant to the STS Bond Indenture and (3) all funds established by the STS Bond Indenture.

The STS Note Resolution provides that the Bond Anticipation Notes shall be

special, limited obligations of the Authority payable from the proceeds of additional

bonds, notes or loans obtained under the Revolving Credit Agreement.

All outstanding Transmission Project Revenue Term Bonds, at the option of the Authority, are subject to redemption prior to maturity.

The STS Bond Indenture requires mandatory sinking fund instal-ments to be made beginning in 2000 for the 1984 Series A Bonds and 2001 for the 1984 Series B Bonds.

Scheduled principal maturities for the Southern Transmission Project during the five fiscal years succeeding June 30, 1985 are

$200,000,000 in 1986 and

$3,835,000 in 1990; no principal maturities of bonds outstanding at June 30, 1985 are scheduled for fiscal 1987, 1988 and 1989.

The funds required by the STS Bond Indenture and STS Note Resolution contain balances as follows:

June 30,

~In thousands~

Construction Fund Debt Service Fund Debt Service Account Debt Service Reserve Account Note Fund Total Southern Transmission Project Funds

$ 310,427 129,744 93,320 40,063

$573 554

$582,367 150,781 62,199 55,072

$850,419

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Note B

Revenue bonds payable and bond antici ation notes a able:

'(Continued)

Refundin bonds In fiscal 1985 the Authority sold

$ 208,335,000 Power Project Refunding Bonds to advance refund

$ 180,000,000 of the Authority's Power Project Revenue Bonds.

The net proceeds of the Refunding Bonds were placed in an escrow account.

Interest payments on the revenue bonds will be made from interest earned on investments held in the escrow account until the bonds are called on July 1, 1992.

At June 30,

1985,

$205,146,000 of this escrow account has been offset against revenue bonds in the accompanying balance sheet.

After the moneys in the escrow account are applied to redeem the revenue

bonds, the outstanding advance refunding bonds will be payable from revenues earned on the Palo Verde project.

Subsequent to June 30, 1985 the Authority sold two additional series of advance refunding bonds.

On July 2,

1985,

$ 214,205,000 Power Project Revenue

Bonds, 1985 Refunding Series B, were issued to advance refund

$157,970,000 of the Authority's Power Project Revenue

Bonds, 1984 Series A.

On August 15, 1985

$219,050,000 Transmission Project Revenue

Bonds, 1985 Refunding Series A, were issued to advance refund

$216,230,000 of the Authority's Trans-mission Project Revenue

Bonds, 1984 Series B.

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NOTE C

Lon -term bank loan a able:

As of June 30, 1985, the Authority has borrowed

$14,148,000 to finance the feasibility study and development costs of the Mead-Phoenix Pzoject.

This loan bears interest at approximately 65% of the prime rate;

however, the interest rate cannot exceed 12%.

The average interest rate on this loan was 7.63%

and 7.44% during 1985 and 1984.

Interest is paid on December 1 and June 1 of each year.

The proceeds of the loan were deposited in a Development Fund for which the lender is the trustee and can only be used for pay-ment of Mead-Phoenix Project development

costs, costs of issuance of the loan, including general and administrative expenses of the Authority related to the Mead-Phoenix

Pzoject, and loan principal and interest.

At June 30, 1985 and

1984, the balance in the Development Fund was

$ 5',548,000 and

$ 6,514,000 of which

$5,535,000 and

$ 6,321,000 were invested in United States Government Securities.

If the Mead-Phoenix Project is terminated foz any reason prior to the issuance of long-term bonds to refinance the loan, ten Cali-fornia cities, Salt River Project and the United States Department of Energy, Western Area Power Administration, have contracted to make payments to the Authority based on their participation per-centage sufficient to retize the loan and accrued interest thereon.

The loan is secured solely by the restricted assets and the above mentioned contracts.

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NOTE D Power sales and transmission service contracts:

The Authority has sold its entitlement to the output of the Palo Verde Project pursuant to Power Sales Contracts with nine municipalities and a California public district.

Under the terms of the power sales contracts, the purchasers are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service on Power Pro-ject Revenue Bonds and other debts, whether or not the Palo Verde Project or any part thereof is operating or operable (or has been completed),

or its output is suspended, interfered with, reduced or curtailed or terminated.

The contracts expire October 31, 2030

and, as long as any Power Project Revenue Bonds are outstanding, cannot be terminated or amended in any manner which will impair or adversely affect the rights of the bondholders.

The Authority has entered into Transmission Service Contracts with six of its members (Project Participants).

Under the terms of the Transmission Service Contracts, the Project Participants are entitled to transmission service utilizing the Southern Transmis-sion Project and are obligated to make payments on a "take or pay" basis for their proportionate share of operating and maintenance expenses and debt service on Transmission Project Revenue Bonds and other debt, whether or not the Southern Transmission Project or any part thereof has been completed, is operating or is operable, or its service is suspended, interfered with, reduced or curtailed or terminated.

The contracts expire June 15, 2027 and, as long as any Transmission Project Revenue Bonds are outstanding, cannot be ter-minated or amended in any manner which will impair or adversely affect the rights of the bondholders.

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NOTE E

Related art transactions:

Under the terms of the various contracts, the Authority reim-bursed the following entities for work performed on the respective projects.

The Department of Water and Power of the City of Los Angeles (Department) has performed administrative and other work for the Authority totaling

$ 379,000 and

$317,000 for the years ended June 30, 1985 and 1984.

Arizona Public Service Company (APS) as project manager of the Palo Verde Project, billed the Au-thority for various construction costs

$35,252,000 and

$ 36,777,000 for the years ended June 30, 1985 and 1984.

The Authority has determined that APS has billed

$678,000 in excess of its contrac-tual agreement for fiscal 1985.

This amount is included as an account receivable at June 30, 1985.

GAPA billed the Authority for payments-in-aid of construction relating to the Southern Trans-mission Project

$321,388,000 and

$194,638,000 for the years ended June 30, 1985 and 1984.

The Authority has determined that IPA has billed

$5,997,000 in excess of its contractual agreement for fiscal 1985.

This amount is included as an account receivable at June 30, 1985.

Salt River Project, as development manager of the Mead-Phoenix

Project, billed the Authority for various development costs

$299,000 and

$3,223,000 for the years ended June 30, 1985 and 1984.

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NOTE E Related art transactions:

(Continued)

Project participants involved in the Palo Verde and Southern Transmission projects have participation percentages as follows:

Pro ect Partici ation Percenta e

Partici ant City of Los Angeles City of Anaheim City of Riverside Imperial Irrigation District City of Vernon City of Azusa City of Banning City of Colton City of Burbank City of Glendale City of Pasadena Palo Verde 67.0%

5.4%

6.5%

4.9%

1.0%

1.0%

1.0%

4.4%

4.4%

4.4%

100.0%

Southern Transmission 59.5%

17.6%

10.2%

4.5%

2.3%

5.9%

100.0%

NOTE F Commitments and contin encies:

The Authority estimated as of May 30, 1985 that the total financing requirements for the Authority's interest in the Palo Verde Project will approximate

$1,020,000,000, of which approximate-ly $ 500,000,000 will be expended for construction costs.

On Decem-ber 31, 1984

APS, the project

manager, received a 40-year Full-Power Operating License from the Nuclear Regulatory Commission for Unit 1 of the Palo Verde Project.

APS loaded nuclear fuel into Unit 1 in January 1985 and achieved initial criticality in May 1985.

Commercial operation of Unit 1 has been scheduled for December 1985.

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NOTE F Commitments and contin encies:

(Continued)

The Authority estimated as of July 19, 1985 that the total financing requirements for the acquisition of the rights to ca-pacity in the Southern Transmission Project will approximate

$1,070,000,000, of which approximately

$ 740,000,000 will be ex-pended for payments-in-aid of construction to IPA.

The Department, as project

manager, has scheduled completion of testing of the Southern Transmission Project for April 1986.

The Authority is involved in various legal actions.

In the opinion of management, the outcome of such litigation or claims will not have a material effect on the financial position of the Authority.

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SOUTHERN CALIFORNIA PUBLIC PONER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL BALANCE SHEET ASSETS June 30,

~In thousands~

Utilit lant onstructx.on work in progress S ecial funds:

nvestments Interest receivable Cash Account receivable Unamortized debt expenses, less accumulated amortization of

$5,581 and

$ 3,475 in 1985 and 1984

$499,430 368,596 14,576 254 383,426 678 36,189

$919,723

$412,227 301,100 8,621 141 309,862 18,575

$740,664 Lon -term liabilities:

evenue on s

Bond anticipation notes Current liabilities:

on anticipat on notes Accrued interest payable Accounts payable and accrued liabilities Commitments and contingencies LIABILITIES

$ 789,014 75,000 864,014 48,708 7 001 55,709

$919,723

$ 589,694 589,694 112,875 33,379 4,716 150,970

$ 740,664

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEMENTAL STATEMENT OF CHANGES IN FINANCIAL POSITION Financial resources rovided b Year ended June 30 7In thousandsT a

e o revenue on s

Sale of refunding bond Sale of bond anticipation notes Decrease in-Cash Investments Increase in-Accrued interest payable Accounts payable and accrued liabilities Other, net

$198,395 205,918 75,000 15,329 2,285 153

$497,080

$112,875 1,314 186,611 4,191 222

$ 305,213 Financial resources used for:

ti ty p ant construct on work in progress-Interest expense Generating station Startup and preoperating expenses Nuclear fuel Other Investment earnings Total utility plant construction work in progress Payment of Bond Anticipation Notes Deposits to escrow account Increase in-Cash Investments Account receivable Interest receivable Unamortized debt expenses Decrease in-Accrued interest payable

$ 84,977 19,765 17,827 8,567 4,644 (48 577) 87,203 112,875 205,146 113 67,496 678 5,955 17,614

$497,080 74,850 19,417 13,452 2,709 5,920 (34,547) 81,801 220,000 2,464 465 483

$ 305,213 I;

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'8 SOUTHERN CALIPORNIA PUBLIC POWER AUTHORITY PALO VERDE PROJECT SUPPLEHENTAL SCHEDULE OP RECEIPTS AND DISBURSEHENTS IN FUNDS REQUIRED BY THE BOND INDENTUPE POR THE YEAR ENDED JUNE 30 1985 Construction Pund Initial Pacilities Account Debt Service Account De t Service Reserve Account Debt Service Pund Note Escrow Pund Bond Anticipation Note Fund Note Pund

~(n t onsanas)

Bond Escrow Pund Reserve and Operating Contingency Pund Fund Total Balance at June 30, 1984 Additions:

6 80 723

$ 136 227

$ 69 616 8 $

38 S

7 337 S ~$ 6 014

~$ 6 001

$ 305 956 Bond and note proceeds Bond and note interest received Investment earnings Transfer of investments Transfer for interest payment Transfer for note payment Transfer of account balance 2409869 783 7,794 (16,022) 370 5,697 17,260 10g332 24,000 11,562 5g690 9,145 (3,668)

(116,875) 6,668 116,875 (370) 1,487 79 398 (3,000) 109663 203 '30 478,562 6g480 765 48,490 Transfer of bond and note proceeds Total Deductions:

(230 150) 116 01 ~

3 64 ~

1 ~ 9 303 41 252 111 39$ 123 173 9 150 2 738 205 8'

39$

765 533 53?

Construction expenditures Interest Payment of bond anticipation notes Pinancing costs 399632 296 9'71 769635 13,337 112,875 5,065 39,632 90,268 112g875 14,236 Transfer of in estnent earninSs (2$

59 F 1 23 5$ 2 12 147 (3 001)

~

~ 60 (9 757) 398 765 Total Balance at June 30, 1985 20 505 100 217 9 63

$ 62

$ 185 313 12 147

$ 9$

721 9 123 211

~

~ 60 (4 692) 39$

765 257 011 8 $ 12

$ 27

$ 210 539

~$ 6 01 ~

~$ 6 001

$ 562 477 This schedule summarizes the receipts and disbursements in funds required under the bond indenture and has been prepared from the trust statements.

The balances in the funds consists oi cash and investments at original cost.

These balances do not include accrued interest receivable of

$ 14,576 and

$8,621 at June 30, 1985 and 1984, nor do they include total amortized net investment premiums of ($3,088) and

($4,715) at June 30, 1985 and 1984.

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION PROJECT SUPPLEMENTAL BALANCE SHEET ASSETS June 30

~In thousands~

Utilit lant-ontructxon work in progress 534,176 197,310 S ecial funds:

nvestments Interest receivable Account receivable Unamortized debt expenses, less accumulated amortization of

$ 3.,094 and

$ 942 in 1985 and 1984 561,674 11,880 573,554 5,997 22s505

$ 1 136,232 831,208 19,211 850,419 17,627

$1,065,356 I.

Lon -term liabilities:

evenue on s

Bond anticipation notes Current liabilities:

on antxcipatxon notes Accrued interest payable Accounts payable and accrued liabilities Commitments and contingencies LIABILITIES 828,878 200,000 1,028 878 49,245 58,109 107,354

$ 1 136,232 593,864 200,000 793,864 200,000 38,688 32 804 271,492

$ 1 065,356

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSMISSION PROJECT SUPPLEMENTAL STATEMENT OF CHANGES IN FINANCIAL POSITION Financial resources rovided b Year ended June 30,

~In thousands~

a e

o revenue on s

Sale of bond anticipation notes Decrease in-Investments Interest receivable Increase in-Accrued interest payable Accounts payable and accrued liabilities Other, net

$ 235,000 269,534 7 j 33 1 10,557 25,305 14

$ 547,741 593,859 400,000 38,688 32,803 6

$ 1 065,356 Financial resources used for:

ti x.ty p ant constructs.on work in progress Payments-in-aid of construction Interest expense Other Investment earnings Total utility plant - construction work in progress Payment of bond anticipation notes Increase in-Investments Account receivable Interest receivable Unamortized debt expenses

$ 315,391 101,305 2,299 (82 129) 336,866 200,000 5,997 4,878

$547,741 194,638 33,935 1,079 (32,342) 197,310 831,208 19,211 17,627

$ 1,065,356

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY SOUTHERN TRANSHISSION PROJECT

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SUPPLEHENTAL SCHEDULE OF RECEIPTS AND DISBVRSEHENTS IN -FUNDS REQUIRED BY THE BOND INDENTURE FOR THE YEAR ENDED JUNE 30 1985 Debt Service Fund Balance at June 3001984 Additions:

Bond and note proceeds Bond and note interest received Investment earnings Transfer for interest payment Transfer for note payment Total Deductions:

Payments-in-aid of construction and administrative costa paid Payment of note Interest paid Financing costs paid Transfer of investment earnings Total Balance at June 30, 1985 Construction Fund Initial Facilities Account

$567 032 2078797 528676 (3,548) 169 754 426 679 295,828 169,754 1,365 79038 215 024 609 009

$ 305 502 Debt Service Account

$147

~ 70 39272 170002 30548 23 022 670536 (25 305) 42 151

~)29 141 Debt Service Reserve Account

()n t~nnssn s)

SSD 930 27,203 8$ 382 35 505 5 954

~595 4

$ 9D 569 Note Fund

$52 921 5,124 6,000 30 246 41 370 30,246 25,672 55 910

$ 30 373 Note Escrow Fund 0 10,407 (6,000)

(200 000)

(195 593)

(195 593)

()95 593) 5 Total

$029 161 235,000 30272 93,591 331 063 2950828 2000000 940573 7,038 597 439

$ 563 505 This schedule summarizes the receipts and disbursements in funds required under the bond in63enture and has been prepared from the trust statements.

The balances in the funds consists of cash and investments at original cost.

These balances do not include accrued interest receivable of 811,880 and 6199211 at June 30, 1985 and 1984, nor do they include total amortized net investment premiums and discounts of ($ 1991 1) and 82, 047 at June 30, 1985 and 1984.

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