ML18036A393
| ML18036A393 | |
| Person / Time | |
|---|---|
| Site: | Browns Ferry, Sequoyah  |
| Issue date: | 10/01/1991 |
| From: | Wallace E TENNESSEE VALLEY AUTHORITY |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NUDOCS 9110040210 | |
| Download: ML18036A393 (36) | |
Text
ACCELERATED DI TPJBUTION DEMONS ATION SYSTEM REGULATORY INFORMATION DISTRIBUTION SYSTEM (RXDS)
ACCESSION NBR: 9110040210 DOC. DATE: 91/10/01 NOTARIZED: NO DOCKET g FACIL:50-259 Browns Ferry Nuclear Power Station, Unit 1, Tennessee 05000259 50-260 Browns Ferry Nuclear Power Station, Unit 2, Tennessee 05000260 50-296 Browns Ferry Nuclear Power Station, Unit 3, Tennessee 05000296 50-327 Secpxoyah Nuclear Plant, Unit 1, Tennessee Valley Auth 05000327 50-328 Sequoyah Nuclear Plant, Unit 2, Tennessee Valley Auth 05000328 AUTH. NAME AUTHOR AFFILIATION WALLACE,E.G. Tennessee Valley Authority RECIP.NAME RECIPIENT AFFILIATION Document Control Branch (Document Control Desk) D
SUBJECT:
Forwards util financial statements for FY ending 900930, power quarterly rept,l-yr internal cash flow projection 6 narrative statement re curtailment of capital expenditure Si
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to assure retrospective premiums,per 10CFR140.
DISTRIBUTXON CODE: M004D COPIES RECEIVED:LTR TITLE: 50.71(b) Annual Financial Report L ENCL 'IZE- A D
NOTES:1 Copy to: LITTLE,B. 05000327 1 Copy to: LITTLE,B. 05000328 D RECIPIENT COPIES RECIPIENT COPIES ID CODE/NAME LTTR ENCL ID CODE/NAME LTTR ENCL HEBDON,F 1 1 ROSS,T. 1 0 WILLIAMS,J. 1 0 LABARGE,D. 1 0 INTERNAL: AEOD/DOA 1 1 REG FILE 01 1 1 EXTERNAL: NRC PDR 1 1 NOTES 1 1 R
D A
D D
NOTE TO ALL "RIDS" RECIPIENTS:
PLEASE HELP US TO REDUCE WASTE! CONTACT THE DOCUMENT CONTROL DESK, ROOM Pl-37 (EXT. 20079) TO ELIMINATEYOUR NAME FROM DISTRIBUTION LISTS FOR DOCUMENTS YOU DON'T NEED!
TOTAL NUMBER OF COPIES REQUIRED: LTTR 8 ENCL 5
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Tennessee Valley Authority. 1101 Market Street. Chattanooga, Tennessee 37402 OCT 01$ 9t U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, D.C. 20555 Gentlemen:
In the Matter of Docket Nos. 50-259 50-327 Tennessee Valley Authority 50-260 50-328 50-296 FINANCIAL INFORMATION REQUIRED TO ASSURE RETROSPECTIVE PREMIUMS To satisfy the requirements of 10 CFR Part 140 and as stated in our December 9, 1977, letter to NRC, TVA has selected alternative five to meet the guarantee requirements of the retrospective premium system. The enclosed statements are submitted to meet this guarantee requirement.
- 1. TVA financial statements for fiscal year ending September 30, 1990
- 2. TVA "Power Quarterly Report"
- 3. A one-year internal cash flow pro)ection for the TVA power system (tabulation A) with an explanation for underlying assumptions
- 4. A narrative statement regarding the curtailment of capital expenditures if retrospective premiums should be paid October 1 is the annual submission date for financial information required to assure retrospective premiums.
If you have any questions, please telephone P. J. Hammons at (615) 751-2736.
Sincerely, E. G. Wallace, Manager Nuclear Licensing and Regulatory Affairs Enclosures cc: See page 2 (QiiO0402io 050OO259 pDR ADOCK pDR J
U.S. Nuclear Regulatory Commission OCT 01891 Enclosures cc: Mr. B. h. Wilson, Prospect Chief U.S. Nuclear Regulatory Commission Region II 101 Marietta Street, NW, Suite 2900 Atlanta, Georgia 30323 Mr. D. E. LaBarge, Project Manager U.S. Nuclear Regulatory Commission One White Flint, North 11555 Rockville Pike
.Rockville, Maryland 20852 NRC Resident Inspector Sequoyah Nuclear Plant 2600 Igou Ferry Road Soddy Daisy, Tennessee 37379 Mr. Thierry M. Ross, Project Manager U.S. Nuclear Regulatory Commission One White Flint, North 11555 Rockville Pike Rockville, Maryland 20852 NRC Resident Inspector Browns Ferry Nuclear Plant Route 12, P.O. Box 637 Athens, Alabama 35609-2000
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Certification of Internal Cash Flow Projections For the Period October 1, 1991, to September 30, 1992 I, Robert L. Yates, Vice President and Treasurer for the Tennessee Valley Authority, hereby certify that the cash flow projections for the TVA power system for the period October 1, 1991, to September 30, 1992, attached hereto represents the current projection of the cash flow of the TVA power program.
Robert L. Yates Vice President an Treasurer State of Tennessee County of Knox Subscribed and sworn to before me this 25th day of September 1990.
'David"C. Reynolds, Jr.
My commission expires February 24, 1993.
Information Regarding the Adequacy of Cash Flows Required to Assure Payment of Retrospective Premiums Tabulation A attached provides a projection of cash flow for the TVA power system. The period of this projection extends from October 1, 1991, to September 30, 1992. The cash shown is the amount available from current revenues after paying all operating expenses.and interest charges. TVA's payments to the U.S. Treasury have been excluded since these payments may be delayed up to two years when, in the judgment of the TVA Board of Directors, such payments cannot feasibly be made because of inadequate funds occasioned by factors beyond the control of the corporation /TVA Act Sec. 15d Subsection (e)/.
With three units at Browns Ferry and two units at Sequoyah Nuclear Plants currently having operating licenses, the maximum quarterly cash flow requirement will be $ 50 million, under the" present= law. The average quarterly cash estimated for the 12-month period is 4206 million. TVA has the option of making rate changes quarterly throughout the period. The actual timing and amount of the rate change to ensure adequate cash flows would be determined by the TVA Board.
Projected TVA power system loads are based on normal weather conditions.
Estimated generation is based on the assumption of normal scheduled and emergency maintenance outage requirements.
0203X
Tabulation A Tennessee Valley Authority Estimated Sources of Funds (Millions of Dollars)
Twelve Months Total 12-Month 1 1-12 ~9~2- IJ22 ~42 ~2 ~72 ~2 Period Net Income or loss (-) 46O $ 124 559 4156 4399 Non-Cash Charges (Credits) to Income 35 35 36 34 140 Depreciation 6 Depletion 89 89 95 96 369 Other (allowance for funds used in construction) -21 =22 Total Funds From Operations 0203X
Statement Regarding the Curtailment of Capital Expenditures If Retrospective Premiums Should Be Paid No curtailment in capital expenditures is expected in the event retrospective premiums have to be made available for payment during this period. It is assumed that sufficient short-term and long-term borrowing capacity will continue to be available to provide funds, for continuing capital expenditures at the projected level.
0203X
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a T ENNESSEE VALLEY AU ORITY POWER T H I R D QUARTERLY REPORT (UNAUDITED)NINE MONIHS ENDED JUNE 30, 1991 TenneSSee Vaeey Autrer'4V. 400 WeSt Summit Hrl DriVe, KreXVil',e, TenneSSee 37902
I NET PWER INCOME AND RETAINED EARNINGS REINVESTED (UNAUDITED)
,e Nine Months Twelve Months Ended June 30 Ended June 30 1991 1990 1991 1990 (MrLUONS) (Mr(UONS)
OPERATING REVENUES Sales of electric energy Municipalities and cooperatives $ 3,050 $ 3,100 $ 4,241 S 4,221 Federalagencies 189 306 297 449 Industries 411 539 543 Electric utillities 7 14 11 16 Other Total operating revenues 32(I1 RES 5JZ OPERATING EXPENSES Fuel and purchased power, net 983 972 1,392 1,319 Other production expense 379 351 539 491 Tax-equivalent payments 180 176 237 233 Depreciation 251 268 324 360 Other Total operating expenses L1K 2311 392l OTHER INCOME AND DEDUCTIONS, NET Total income before interest charges INTERESTCHARGES Interest on debt 1,213 1,212 1,617 1,655 Amortizaticn of debt discount and expense, net 39 Allowance for funds used during construction Totalinterest charges ilK 44
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1931
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152 58 41 NET INCOME 546 (572) 767 (LOSS)'eturn on appropriation investment Increase in retained earnings 314 495 (637) 700 Retaned earnings reinvested at beginning of period 222Z 3232 3226 292l Retained earnings reinvested at end of period $ 3I)IIl $ 3222 $ 3991 $ 222I POWER CASH FLOWS (UNAUDITED)
NET CASH FROM OPERATIONS Net income (loss)'tems
$ 362 $ 546 $ (572) $ 767 not requiring cash 275 345 1,512 469 Other changes, net Net cash provided by operations NET CASH USED IN INVESTING ACTIVITIES Construction expenditures (891) (937) (1,768) (1,342)
Other, net Net cashused in investing activities Kl23)
NET CASH USED IN FINANCING ACTIVITIES Borrowings, net Other Net cash provided by (used in) financing activites
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449 (741)
Net change in cash and cash equivalents 214 (136) 193 (1,106)
Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period $ ~ ~ $ $ ~ ~ $
o a FI C I AL MI G HLI G MTS BALANCE SHEETS (UNAU~D)
NET INCOME June 30 Nine Months Twelve Months 1991 1990 Ended June 30 Ended June 30 ASSETS (MILLIONS) 1991 1990 1991 1990 PROPERTY, PLANT, (MILLIONS) AND EQUIPMENT Operating revenues $ 3,701 $ 3,884 $ 5,157 $ 5,298 Completed plant; see Note $ 12.828 $ 12.406 Operating expenses 2, 166 2,311 3,077 3,137 Less accumulated depreciation Net income 362 546 (572) 767 Net completed plant 8,203 7,920 (toss)'SSETS Construction in progress 6,837 5,833
& DEBT Deferred nuclear generating units 5.914 5.888 June 30 Nuclear fuel and capital lease assets 1991 1990 Total property, plant, and equipment ZK592 2225 (MILUONS) INVESTMENT FUNDS Total assets $ 27,242 $ 27.319 CURRENT ASSETS Lcng-term debt $ 18,655 $ 18,805 DEFERRED CHARGES SALES OF ELECTRIC ENERGY Total assets Nine Months Ended June 30 199 I 1990 CAPITALIZATIONAND LIABILITIES Amount kWh Amount kWh (MILLIONS) (MiILLIONS)
PROPRIETARY CAPITAL Municipalities Appropriation Investment $ 728 $ 748 and cooperatives $ 3,050 69,551 $ 3,100 69,575 Less requirement for repayment Federal agencies 189 1,578 306 1.674 of appropriation investment 15 15 Industries 403 13,192 411 12,846 Retained earnings reinvested Electric utilities in power program Total sales of Total proprietary capital electdlc energy LONG.TERM DEBT Principal 18,655 18,805 Less unamortized discount RESULTS OF OPERATIGNS Total long-term debt lk81 1KRU.
TVA's operating revenues de<Jiined by 3 percent for the quarter ended June 30, 1991, when compared to the same period last year, to $ 1,222 nstfion, down from OTHER LIABIUTIES
$ 1,266 milllion, Of the $ 44 rria'an decrease, $39 nst5on is attributed to the reduction in the Oeprifnnent of Enegy seltlenenl payment. Revenues were aso affected by CURRENT LIABIUTIES the econcrmc downturn.
Short-term notes Total power sales for ore quarter were 26 bil5on Qowatt.hours. an increase of about U.S. Treasury 150 150 1 ~ II2 percent from the ccrrespondiing quarter a year ago. TVA's net income was Federal Financing Bank
$ 1 16 mlfon. rkxwn s5ghtly from $ 1 19 mil5on for the third quaite a year ago. Short-term notes 856 261 Other current liabilities TVAconfsxfes to control opeating costs, which. at $ 711mitlion for Ibis quarte, <<ee 12 percent lower than the $ 607 mitfionreceded for the same period last year. Fiscal Total current liabilities year 1991 operating expenses of $ 2,166 rriill5on are 6 pecent lou,er than lhe $2311 Total capitalization and tiabilities $2ZB2 $ ?I319 mllion rexxded as of the third quarte of last fiscal year. Operating resuhs throug'h the third quafle of fiscal yee 1991 and financial proiectionS fOr fiSCal year 1992 enabled the Chief Financial Otficer to recommend that electric rates be held Nota Tcfsf shgfausa power plant plus fxxkxo of mul".pirpose dsms alocafed lo power. The ford constant for a fiffhconsecudve year. twes."nenl h mubpurrcse dsms af Juo 30. 1991. was 51%5 mike, crsssifcd <<s fescws: peer.
5610 fhTcnf odor programs. 5995 mlflcn.
Operating revenues in the first nine months of fiscal year 1990 were enhanced by the 15ghest denand ever recorded on the TVA poive system, due to colder than normal weather. Conversely, m5d weather cond tions in the first nine months of fecal year 1991 resulted in lower thannormal power demand,
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Scccncroh ffis wriocff srxf <ches because cf as 5voroved csicrahng and froixiff ~.
'Tha no)xify of <<la haf fuss for ala lwdvo nedls ohdod Juio 30. '1991 Is fha wfcooff of fha unaemcd dcfcnel dsbs rcfaxxf Io canceled hucfasr pfshf rxxofrucrei. TVA was abfa lo Had fha wriixxxfs re been node. TVA wcufd have rerefcd hei income of aricrcxinolcfy 5340 mWei kr ffo period.
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LETTER~M THE CHAIRMAN OF THE BOARD TVA is proud to have marked an important milestone this priced power, and effective programs that help the quarter-the restart of the unit 2 reactor at Browns Ferry Tennessee Valley region and the nation to grow and Nuclear Plant, completing one of the most extensive prosper. And TVA will rely on the experience, expertise, recovery efforts in the nuclear industry. We devoted and flexibility of private contractors for completing its some 15 million engineering workhours to establishing the future construction and modification projects. In that way, engineering criteria, designs, and documentation for unit each viill be doing what it does best. These changes will 2 startup and operation. More than 9 million workhours help TVA make its most important contribution to the were completed to make plant improvements identified by people of the Valley: serving our customers and keeping TVA and the Nuclear Regulatory Commission, and we are our power rates competitive.
very pleased with this progress.
Also during the quarter, we welcomed TVA's 22nd Another milestone was achieved this quarter when Director, William H. Kennoy, who was sworn in as a Board employees at TVA's Sequoyah Nuclear Plant celebrated member May 31. The Lexington, Ky., engineer and 100 days of continuous operation for each of the plant's businessman brings to the Board of Directors more than two nuclear reactors. 30 years of experience as a private business manager.
We are looking forward to his tenure on the Board.
In addition to marking our successes in the nuclear program, we have also made significant improvements in TVA remains committed to service, quality and change, the way TVA conducts its operations. These changes are and we are working hard to be the very best electric utility part of our continuing efforts to hold electric power rates in North America and the most productive and effective steady and to better serve the customers of our power agency in the federal government.
system and resource development programs.
As we focus on excellence in maintaining and operating our power plants, transmission system, and other facilities, we have determined that it will be most cost-effective to have other companies carry out Marvin Runyon construction and major modification projects. Chairman of the Board
'uly29,1991 Hiring companies that specialize in this work will allow TVA to concentrate on our own central business responsibilities providing quality services, competitively
Tennessee Valley Authority 1990 Financial Statements
Tei lessee Valfey Authority a
Percent In Millions 1990 1989 Chan e Operating Revenues $ 5,339 $ 5,287 1.0 Operating Expenses 3,221 3,203 .6 Operating Income 2,118 2.084 1.6 Interest Expense, exclusive of AFUDC 1,670 1,842 (9.3)
Net Income (Loss) (387) 559 (169.2)
Total Assets $27,672 $ 27,183 1.8 Capitalization Proprietary Capital 4,599 5,102 (9 9)
Long-Term Debt 18,583 17,303 7.4 Total Ca italization 23,182 22.405 3.5 Percent (Millions of kilowatt-hours) 1989 Change System Input System Generation Hydro, including Pumped Storage 21,654 19,530 10.9 Coal 78,504 79,493 (1 2)
Nuclear 15,275 12,773 19.6 Combustion Turbine 203 37 448.6 Total Net Generation 115,636 111,833 3.4 Purchased 959 818 17.2 Net Interchange and Wheeling 4,191 3,398 23,3 Total S stem Input 120.786 116,049 4.1 System Output Sales Municipalities and Cooperatives 96,748 92,538 4.5 Federal Agencies 2,336 2,341 (,2) industries 17,134 16,260 5.4 Electric Utilities 265 453 (41.5)
Total Sales 116,483 111,592 4,4 Delivered Under Cogeneration Agreement 1,168 1.621 (27.9)
Losses 3,135 2,836 10.5 Total System Output 120,786 116,049 4.1 Installed Capacity in Service (megawatts) 28,328 28,654 Percent of Average Gross Generation to Installed Capacity in Service 50.02 47.91 4.4 System Peak Load (megawatts) 24,627 20,638 19.3 Annual Load Factor 53.60 61.86 (13.4)
Percent Installed Capacity by Fuel Source Coal 62% 62%
Hydro 20% 21%
Combustion Turbine 9% 9%
Nuclear, excluding Browns Ferry 9 8%
'aTenneqpee Valley Authority Contents Balance Sheets Statements of Operations and Retained Earnings Statements Of Net Expense and Accumulated Net Expense Statements of Cash Flows Notes to Financial Statements Report of Independent Accountants Report of Management Comparative Statistical and Financial Data
Te eSSee Valley AuthOrity rn ~~<~.nr'vr ri+e<~r.r~l@rr'r r~ISrar~r gnirrrrr<nt R
Assets Power program All programs (In Millions) 1990 1989 1990 1989 PROPERTV, PLANT. AND EQUIPMENT Completed plant $ 12,830 $ 12,099 $ 13,989 $ 13,359 Less accumulated depreciation and depletion 4,422 4,232 4,653 4,546 Completed plant, net 8,408 7,867 9,336 8,813 Construction in progress 6,022 5,213 6,117 5,317 Deferred nuclear generating units 5,890 5,884 5,890 5,884 Capital lease assets and nuclear fuel 2.589 2,513 2.589 2,513 Total 22,909 21,477 23.932 22,527 INVESTMENT FUNDS, at accreted cost 297 263 CURRENT ASSETS Cash 5 162 119 256 Accounts receivable 731 707 747 720 Inventories, at average cost 495 464 498 473 Total 1,231 1,333 1,364 1,449 DEFERRED CHARGES AND OTHER ASSETS Loans and other long. term receivables 266 304 Unamortized cost of canceled nuclear generating units 1,612 1.612 Deferred nuclear recovery costs 847 735 847 735 Unamor tized debt issue and reaquisition costs 919 72 919 72 Other deferred charges 9 216 9 216 Total 2.035 2,901 2,079 2,944 Total assets $ 26,472 .$ 25.974 $ 27,672 $ 27,183 The accompanying notes are an integral part of these financial statements.
Capitalization and Liabilities Power program AII programs (In Millions) 1990 1989 1990 1989 CAPITALIZATION Proprietary capital Appropriation investment, net $ 728 $ 748 $ 4,121 $ 4,022 Retained earnings reinvested in the power program 2,777 3,232 2.777 3,232 Accumulated net expense of nonpower programs (2,299) (2,152)
Total 3,505 3,980 4,599 5,102 Long-term debt 18,583 17,303 18,583 17,303 Total 22,088 21,283 23,182 22,405 OTHER LIABILITIES Capital lease obligations 2,383 2.377 2,383 2.377 Decommissioning of nuclear plant 264 213 264 213 Other accrued liabilities 165 125 165 125 Total 2,812 2,715 2,812 2,715 CURRENT LIABILITIES Short-term debt 207 892 207 892 Current portion of capital lease obligations 201 131 201 131 Accounts payable 557 485 635 550 Payrolls and other accrued costs 90 86 118 108 Interest accrued 517 382 517 382 Total 1,572 1,976 1,678 2,063 COMMITMENTSAND CONTINGENCIES Notes 5, 9, 12, 14, and 15 Total capitalization and liabilities $ 26,472 $ 25,974 $ 27,672 $ 27,183
Tennessee Valley Authority Power Pmgram (In Millions) 1990 1989 1988 OPERATING REVENUES Sales of electric energy Municipalities and cooperatives $ 4,292 $ 4,109 $ 4,100 Federal agencies 413 569 623 Industries 548 526 513 Electric utilities 17 21 26 Total sales of electric energy 5,270 5,225 5,262 Other 69 62 60 Total operating revenues 5,339 5,287 5,322 OPERATING EXPENSES Production Fuel and purchased power, net 1,381 1,370 1,589 Other 511 534 640 Tax-equivalent payments 233 232 225 General and administrative 313 299 398 Amortization of canceled nuclear units and deferred nuclear costs 315 311 32 Provision for depreciation 341 343 334 Other operating expenses 127 114 232 Total operating expenses 3,221 3,203 3,450 Operating income 2,118 2,084 1,872 OTHER INCOME AND DEDUCTIONS Interest income 92 Charge related to foss on canceled nuclear generating units (900) (217)
Charge related to deferred operating cost at Browns Ferry (125)
Charges related to losses on uranium and coal properties (93)
Other, net (58) (29) (30)
Total other income and deductions (1,138) 61 (155)
Income before interest charges 980 2,145 1,717 INTEREST CHARGES Interest expense 1,670 1,842 1,829 Allowance for funds used during construction (303) (256) (525)
Net interest charges 1,367 1,586 1,304 NET INCOME (LOSS) (387) 559 413 Return on appropriation investment 67 69 Increase decrease inretained earnings reinvested (455) 492 344 Retained earnings reinvested at beginning of period 3.232 2,740 2,396 Retained earnings reinvested at end of period $ 2,777 $ 3,232 $ 2,740 The accompanying notes are an integral part of these financial statements.
TennessIze Valley Authority Nonpower Programs (In Millions) 1990 1989 1988 NATURALRESOURCES DEVELOPMENT Navigation operations $ 14 $ 13 $ 12 Flood hazard analysis 12 11 10 Recreation resources 10 9 9 Economic development and analysis 7 5 6 Regional water and waste supply management 12 8 5 Land Between The Lakes operations 8 7 7 Other natural resources development projects 18 22 24 Net expense of natural resources development 81 75 73 FERTILIZER DEVELOPMENT Research and development 15 15 16 Fertilizer technology development 8 9 9 Developmental production 42 49 9 Net expense of fertilizer development 65 73 34 OTHER EXPENSE, NET NET EXPENSE 147 149 111 Accumulated net expense at beginning of period 2,152 2,003 1,892 Accumulated net expense at end of period $ 2,299 $ 2,152 $ 2,003 The accompanying notes are an integral part of these financial statements.
Tenn ssee Valley Authority R
Power program All programs (In Millions) 1990 1989 1988 1990 1989 1988 CASH FLOWS FROM OPERATING ACTIVITIES Net power income (loss) $ (387) $ 559 $ 413 $ (387) $ 559 $ 413 Net expense of nonpower programs (147) (149) (111)
Items not requiring (providing) cash Provision for depreciation 341 343 335 350 357 348 Amoritzation of canceled nuclear units and deferred nuclear costs 315 311 249 315 311 249 Allowance for funds used during construction (303) (256) (525) (303) (256) (525)
Charges related to losses on canceled nuclear generating units, deferred operating costs, and uranium and coal properties 1,118 1 ~ 118 Other, net 111 (17) (12) 111 25 (12)
Changes in current assets and liabilities Accounts receivable, net (25) (14) 2 (28) (15) 8 Inventories (31) 27 80 (24) 28 80 Prepaid expenses 12 12 Accounts payable '6 (8)
(8)
(5)
(5) 94 (8)
(4)
(4)
(5)
Interest payable 135 (15) 30 135 (15) 30 Net cash provided by operating activities 1,362 922 562 1,246 833 471 CASH FLOWS FROM INVESTING ACTIVITIES Construction expenditures (1,814) (1,114) (1,451) (1,830) (1,123) (1,465)
Allowance for funds used during construction 303 256 525 303 256 525 Transfer of certain costs of canceled nuclear generating units 410 410 Other, net 11 (34) (131) 43 (31) (123)
Cash construction expenditures (1,090) (892) (1,057) (1,074) (898) (1,063)
Nuclear fuel (38) (37) (31) (38) (37) (31)
Investments 2 892 (127) 2 '92 (127)
Net cash used in investing activities (1 126)
~ (37) (1,215) (1,110) (43) (1,221)
CASH FLOWS FROM FINANCING ACTIVITIES Long-term debt Issues 8,000 700 8,000 700 400 Redemptions (400) (500) (400) (500)
Debt defeased (6,100) (806) (6,100) (800)
Short-term borrowings, net (685) 136 345 (685) 136 345 Borrowing expenses, net (1,120) (182) (1 120)
~ (182)
Congressional appropriations and transfers 120 104 103 Payments to U.S. Treasury (88) (87) (89) (88) (87) (89) e cas provi e y use in financing activities (393) (733) 656 (273) (629) 759 Net change in cash and cash equivalents (157) 152 3 (137) 161 9 Cash and cash equivalents at beginning of year 162 10 7 256 95 86 Cash and cash equivalents at end of year $ 5 $ 162 $ 10 $ 119 $ 256 $ 95 The accompanying notes are an integral part of these financial statements.
Tennessee Valley Authority The Tennessee Valley Authority (TVA) is a whollywwned corpoiation of the United States Government created by the Tennessee Valley Authority Act of 1933. The Tennessee Valley Authority was created for the purpose of maintaining and operating the properties owned by the United States in the vicinity of Muscle Shoals, Alabama, in the interest of the national defense and for agricultural and industrial development, and to improve navigation in the Tennessee River and to control the destructive flood waters in the Tennessee River and Mississippi River Basins. Power rates are established by the TVA Board of Directors as authorized by the TVA Act.
- 1. Sou>marl/ of sigrificant accounting policies Power accounts are maintained in accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Commission. Nonpower accounts are maintained in accordance with applicable generally accepted accounting principles.
~ Plant additions and retirements Additions to plant are recorded at cost, which indudes material and labor as well as indirect construction costs. Indirect costs include general engineering, a portion of corporate overhead, and an allowance for funds used during construction. The cost of renewals and betterments of units of property is capitalized. 1he mst of current repairs and minor replacements is charged to operating expense. The original cost of property retired, together with removal costs less salvage value, is charged to accumulated depreciation.
~ Depreciation and depletion Straight-line depreciation is provided for substantially on a composite basis.
Rates of depreciation are derived from engineering studies of useful life and are reviewed each year.
Depletion of coal land and landrights is provided on a unit of production basis. The average of the composite rates that were applied individually to each major class of plant for fiscal years 1990, 1989, and 1988 was 2,78 percent, 259 percent, and 2.98 percent, respectively. As a result of studies, the estimated useful lives of the Sequoyah and Browns Ferry nuclear plants were revised in Fiscal years 1990 and 1989 fmm 30 to 37 and 38 years, respectively. The effed of this revision was to reduce the annual depreciation provisions for 1990 and 1989 by $ 35 million and $ 18 million, respectively.
~ Decommissioning Provision for decommissioning costs of nuclear generating units is derived through engineering studies of useful life and estimated costs based on the dismantling/removal method. The cost estimates for decommissioning as provided in fiscal year 1990 were based on a current dollar value amounting to $ 150 million and $ 190 million per unit, respectively, for TVA's two pressurized water and three boiling water reactors in completed plant. The excess of the annual provision over earnings from the investments designated for funding decommissioning costs is financed by revenues, and accordingly, is included with the provision for depreciation on the statements of operations and retained earnings and cash flows.
~ Investment funds Certain power funds have been invested in order to provide adequate funding for decommissioning nuclear power plants. Investments are carried at cost, adjusted for amortization of premiums and accretion of discounts at the yield rate over the life of each instrument.
~ Allowance for funds used-1he practice of capitalizing an allowance for funds used during construction is followed in the power program. In accordance with the TVA Board of Directors'riteria for establishing wholesale power rates, the allowance is applicable to construction in progress exduding deferred nuclear generating units. The amount of interest capitalized is limited to the amount of depreciation and certain other noncash charges less the amount of the repayment of the appropriation investment to the U.S.
Treasury. The method used provides for the monthly calculation of interest on debt equivalent to the average balance of construction work in progress. The interest is calculated on the most recent debt issues except for those representing refunding of existing debt, in which case the maturity date of the original issue is used.
~ Nuclear fuel The cost of nuclear fuel is charged to operations on a unit of production basis in amounts
'equal to lease payments (the cost of fuel burned plus finance charges) and a provision for spent nudear fuel disposal. Total charges for nuclear fuel included in fuel expense amounted to (in millions) $ 153, $ 138, and
$ 31 for fiscal years 1990, 1989, and 1988, respectively.
~ Umnortized mst of canceled nudear generating units-During the five-year period ended September 30, 1989, certain costs related to canceled nuclear generating units were being amortized and included in rates charged to customers over a ten year period. In August 1990, the TVA Board of Directors elected to transfer
$ 410 million of the unamortized cost to "plant held for fuhue use," as TVA has identiTied certain alternative generation uses for one of the canceled sites. The Board also elected not to recover fromcustomers through
Tennessee Valley Authority 8
rates the remaining unamortized balance of $900 million. Accordingly, that amount has been charged to the 1990 statement of operations.
~ Other deferred charges-Certain costs associated with uranium and coal mine and mill development activities, and annual aggregate depreciation and fuel interest charges for Units One and Two at Browns Ferry had been deferred. In August 1990 the Bmrd elected not to recover these deferred amounts from customers. Accordingly the respective unamortized balances have been charged to the statement of operations.
~ Deferred nuclear recovery costs The costs incurred by TVA at the nonoperating completed nuclear production plants to accomplish the corrective actions necessary to obtain the Nuclear Regulatory Commission's approval to restart the plants are deferred and charged to operations over a ten-year period beginning with the restart of each idled unit. Unit Two at Sequoyah was returned to full commercial operation on July 1988 <and Unit One returned to service in January 1989. Amortization of the deferral costs amounted to $ 42 million for fiscal year 1990 and $38 million for fiscal year 1989.
~ Tax~uivalent payments-The TVA Act requires TVA to make payments to states and local governments in which the power operations of the corporation are carried out. The basic amount is five percent of gross revenues from the sale of power to other than Federal agencies during the prmding year, with the provision for minimum payments under certain circumstances.
~ Statements of Cash Flows For purposes of the Statements of Cash Flows, TVA considers the cash available in commercial bank accounts and U.S. Treasury accounts to be cash and cash equivalents. During fiscal years 1990, 1989, and 1988, interest paid (net of amount capitalized) was $ 1,179 million, $ 1596 million, and $ 1/68 million, respectively.
~ Borrowing expenses-Issue and reacquisition expenses (discounts) on power borrowings from the public are amortized (accreted) on a straight-line basis over the term of the related securities. Issue expenses on power borrowings from the Merai Financing Bank are amortized over a five-year period except amounts under six thousand dollars are expensed as incurred. Reacquisition expense of recalled debt and call premiums and other costs associated with advance refunded debt are amortized over the remaining term of the replacement issues.
- 2. Nuclear power program The nuclear power program at September 30, 1990 consists of nine generating units at four locations with investments as follows and in the status indicated:
Completed Construction Fuel Scheduled Capacity Plant, Net ln Progress Deferred Investment Operation (Megawatts) (Millions)
Sequoyah Unit 1 1.221 $ 424 $ 34 $ - $ 126 Operating Unit 2 1,221 418 11 171 Operating Common 746 110 Browns Ferry Unit 1 1 ~ 152 175 24 177 Winter 1996 Unit 2 1,152 197 12 170 Spring 1991 Unit 3 1 152
~ 183 116 Winter 1993 Common 469 651 Watts Bar Unit 1 1,270 4,773 135 Spring 1992 Unit 2 1,270 1,623 144 Fall 1995 Beliefonte Unit 1 1,332 3,474 184 Fall 1997 Unit 2 1,332 793 185 Fall 1997 Raw Materials 941 Total 11,102 $ 2.612 $ 5.615 $ 2.349
~ The completed units at Browns Ferry were taken offline in March 1985 for plant modifications and regulatory improvements. The modiTications and improvements are expected to be completed as shown in the above schedule. Unit One at Watts Bar under construction is substantially complete. Systems testing began in fiscal year 1990, and the majority of the fiscal year 1991 work effort willbe focused on verification
Tennessee Valley Authority
'E and corrective action programs related to quality issues. Operation is scheduled for 1992. Interest capitalized related to Unit One at Watts Bar during fiscal year 1990 was $ 244 million. It is anticipated no interest willbe capitalized in subsequent years, since the unit is substantially comp! ete.
~ Construction of Unit Two at Watts Bar was suspended in 1988 to permit TVA to more efficiently concentrate its efforts and resources on the completion of Unit One. Current assessments indicate Unit Two will be completed and placed in service prior to 1996. A 1990 study of the two Bellefonte units was conducted to assess the feasibility of resumption of construction to allow the units to be placed in service around 1998-2000. Although no formal action has been taken to resume construction of these units, TVA has developed a systematic approach to coordinate placing these three units in service to meet forecasted generation capacity requirements. For financial reporting purposes the cost of these three units is presented as deferred nuclear generating units. Interest capitalization for these units was suspended in 1988.
Budgeted 1991 expenditures for these three units are limited to certain licensing and design studies, and maintenance costs. The total project costs to complete these suspended construction and deferred units cannot reasonably be estimated until firm completion dates are established.
~ All units not operating are expected to be completed as scheduled. Ifabandonment of any of these units should occur, TVA would recover these costs (including fuel) tluough rates charged to future customers.
~ Nuclear waste As provided in the Nuclear Waste Policy Act of 1982, TVA has entered into contracts with the United States Department of Energy (DOE) for disposal of spent nuclear fuel. Under the terms of the contract, TVA is required to pay a fee to the DOE of one mill per kilowatt-hour on the net electricity generated by each of its reactors. Total fees charged to operations for the years ended September 30, 1990, 1989, and 1988 were $ 15 million, $ 13 million, and $2 million, respectively.
- 3. Coniyletcd plant-Completed plant for All Programs is stated at cost and consists of the following at September 30, 1990 and 1989:
(Millions) 1990 1989 Steam production plants $ 4,537 $ 4,350 Nuclear production plants 3,503 3,471 Transmission plants 2,064 2,021 Multipurpose dams System allocation 1,091 1,079 Project allocation 413 407 Single. purpose dams 431 403 Other 1,950 1,628
$ 13,989 $ 13,359
- 4.
Allocation of cost %nnltiynrpose projects The TVA Act requires TVA's Board of Directors to allocate, subject to the approval of the President of the United States, the cost of completed multipurpose projects.
The cost of facilities installed exclusively for a single purpose is assigned directly to that purpose; the cost of multiple-use facilities is allocated among the various purposes served.
~ The total investment in completed multipurpose dams at September 30, 1990 and 1989 is:
Investment
~Oir ~MI lgffgy Tot I (Millions) 1990 1989 1990 1989 1990 1989 Power $ 387 $ 379 $ 222 $ 220 $ 609 $ 599 Navigation 295 294 172 170 467 464 Flood control 65 65 195 194 260 259 Recreation 6 6 116 114 122 '120 Local economic development 46 44 46 44 Total $ 753 $ 744 $ 751 $ 742 $ 1,504 $ 1,486
Tenn see Valley Authority
~ ~
- 5. Expenditures for comyleterf plant projected expenditures, including capitalized interest, are estimated to amount to $ 1.6 billion, $ 2.1 billion, and $ 2.6 billion for fiscal years 1991, 1992 and 1993, respectively.
These estimates are reviewed and revised periodically to reflect changes in emnomic mnditions and other factors consider in their determination. Substantial commitments have been incurred for these projects.
- 6. Certnirr norrpower yrojects The S115 million cost of the North Alabama coal gasiTication projed, which was financed by mngressional appropriations, is carried in mmpleted plant. The project is in a defense energy reserve status subject to periodic evaluations of the project's viability.
~ The construction required to complete the Columbia Dam and Reservoir, a multipurpose project financed by congressional appropriations, has been suspended due to budget restrictions and environmental concerns. The total mst of the project, $82 million, is camed in construction in progress.
Studies are being mnducted to mnsider alternative uses of the land And facilities should the project not be mmpleted.
- 7. Leases Nuclear fuel is obtained directly from vendors and through contractual arrangements providing for mining, milling, and fabrication of raw materials obtained from land leased by TVA. Under an agreement entered into in fiscal year 1980, TVA sells and leases back nuclear fuel on hand. TVA leases property, plant, and equipment under lease agreements with terms ranging'from one to thirty years.
Under most of the agreements, TVA pays the property taxes, maintenance costs, and other costs of operation. Many of the agreements are the result of sale-leaseback arrangements. Most of the agreements include purchase options and/or renewal options which cover substantially all the economic lives of the properties.
~ The following is a summary of obligations under capital and noncancelable operating lease agreements in effect at September 30, 1990 and 1989:
Capital Leases (Millions) 1990 1989 Nuclear fuel>
Assets under capital fease $ 3,233 $3.046 Accumufated provision for amortization 889 781 Net nuclear fuel 2,344 2.265 General plant Assets under capital lease 258 259 Accumulated provision for amortization 18 16 Net general plant 240 243 Total net proper ties $ 2.584 $ 2.508 Obligations under capital leases $ 2,S84b $ 2.S08
- a. Includes capitalized interest in the amount of $ 941 million for 1990 and $820 million for 1989.
- b. Includes payments due in 1991 of $ 4 million, excluding nuclear fuel.
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Tennessee Valley Authority a
Future Minimum Lease Payments (Millions)
General Plant Noncancelable Capital Leasesc Operating Leases Fiscal Period 1991 $ 39 $ 4 1992 39 4 1993 39 4 1994 40 4 1995 40 3 Thereafter 556 3 Total future minimum lease payments 753 $ 22 Less interest element included 513 Present value of future minimum lease payments $ 240
- c. Payments under nuclear fuel lease, which are based on fuel burns, are estimated to be (in millions) $ 197, $ 276, $ 321, $ 369, and $ 453 including financing charges, for fiscal years 1991-1995, respectively.
~ Amortization of capital leases, including nuclear fuel, for the years ended September 30, 1990, 1989, and 1988 was (in millions) $ 110, $95, and $ 21, respectively., Operating expenses for the s~e respective periods included finance charges for capital leases in the amounts of (in millions) $ 65, $69, and $ 46.
~ Annual rents for one capital lease range from $2.7 million to $ 51.9 million under the lease terms now in effect. TVA is providing for the levelization of these rentals in its operating expenses over the hventy-five year term of the lease which expires in 2011. The accrued liability for future lease payments is $ 123 million at September 30, 1990.
~ Operating lease costs charged to operations for the years ended September 30, 1990, 1989, and 1988 were
$7 million, $9 million, and $ 10 million, respectively.
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- 8. hpyropriation investrrrerr t-Changes in the appropriation investment during the years ended September 30, 1990, 1989, and 1988 were as follows:
Se tember 30 (Millions) 1990 1989 1988 Power Program Congressional AppropriatiOns $ 1,419 $ 1,419 $ 1,419 Transfers of Property from other Federal agencies 24 24 24 Repayments to General Fund of the U.S. Treasury Beginning of year (695) (675) (655)
For the year (20) (20) (20)
(715) (695) (675)
Net Appropriation Investment $ 728 $ 748 All Programs Congressional appropriations Beginning of year $ 4,697 $ 4,594 $ 4,491 For the year 119 103 103 4,816 4,697 4,594 Transfers of Property from other Federal agencies Beginning of year 62 61 61 For the year 1 62 62 61 Repayments to General Fund of the U. S. Treasury Beginning of year (737) (717) (697)
For the year (20) (20) (20)
(757) (737) (717)
Net Appropriation investment $ 4,121 $ 4,022 $ 3,938
~ Congressional appropriations for fiscal year 1991 in the amount of $ 135 million have been approved.
~ The TVA Act requires the payment to the US. Treasury from net power proceeds of a return on the net appropriation investment in power facilities plus repayments of such investment. The amount of return payable during each year is based on the appropriation investment as of the beginning of that year and the computed average interest rate payable by the US. Treasury on its total marketable public obligations as of the same date. Under the terms of the repayment schedule, TVA is required to make annual payments of 520 million until a total of $ 1 billion has been repaid. The payments required by the TVA Ad may be deferred under certain circumstances for not more than hvo years.
Valley Authority
~ Required payments have been made as follows:
(Millions) Return R~epe ment Total Total to September 30, 1989 $ 1,901 $695 $ 2,596 Year ended September 30, 1990 68 20 88
$ 1,969 $ 715 $ 2,684
~ For fiscal year 1991 the total required payments will be $ 84 million: $64 million as a return on the appropriation investment at the computed average interest rate of 8.843 percent, and $20 million as a repayment.
~ In addition to the payments from net power proceeds, certain nonpower proceeds are paid to the US.
Treasury under the provisions of the TVA Act. The total payments from nonpower proceeds through fiscal year 1990 amounted to $ 42 million.
~ The TVA Act provides for annual payments to the Treasury of any power or nonpower proceeds not needed for the operation of dams and reservoirs, the conduct of the power program, <and the manufachue
<and distribution of fertilizers, as determined by the TVA Board of Directors.
- 9. Fuel coutrnct couuuitmeuts Approximately $2.9 billion in long-term commitments, ranging in terms of one year to five years, have been entered into for the puitchase of coal to provide for the fuel requirements of the steam generating plants. In addition, S291 million is committed under contracts expiring no later than 2014 for uranium and enrichment services.
- 10. Borrorviug authority The TVA Act authorizes TVA to issue bonds, notes, and other evidences of indebtedness up to a total of $30 billion outstanding at any one time (including defeased debt). Debt service on these obligations, which is payable solely from TVA's net power proceeds, has precedence over the payment to the U.S. Tieasury described in Note 8. Issues outstanding (excluding S4.9 billion of defeased debt) on September 30, 1990, consist of the following:
(Millions)
Long. term debt Held by the public Maturing in 1992- 5.70% and 6,375% $ 130 Maturing in 1994 8.25% - 1,000 1,130 Maturing 1996 through 1999 - 7.00% to 8.375% 3,750 Maturing 2019 through 2029 - 8.625% to 8.75% 4,500 9,380 Federal Financing Bank Maturing 2001 through 2004 - 7.625% to 9.565% 4.700 Maturing 2012 through 2017 - 7.285% to 12.095% 4,725 9,425 Total tong term debt 18,805 Less unamortized discount 222 18,583 Short.term debt U.S. 150 Treasury'ederal Financing Bank 57 Total short-term debt 207 Total $ 18.790
~ The interest rate on short-term debt owed to the US. Treasury as of September 30, 1990, was 8.00 percent and the weighted average rate on short-term debt outstanding with the Federal Financing Bank as of September 30, 1990; was 7.73 percent.
~ During fiscal years 1990, 1989, and 1988, the maximum amounts of short. term bonowings outstanding (in millions) were $ 680, $ 1,165, and $756, respectively, and the average amounts (and weighted average interest rates) of such borrowings were approximately (in millions) $ 290 ( 8.033 percent), $ 678 (8A8 percent),
and $ 604 (6.6 percent), respectively.
~ In June 1989, TVA sold its Bond Retirement Fund investments using the proceeds to advance refund outstanding long-term debt totaling $ 800 million. In October and November 1989, TVA issued $ 8 billion in bonds to the public, using most of the proceeds to advance refund $ 65 billion of long-term debt of which
$ 4.9 billion in principal is outstanding at September 30, 1990. These advance refundings were effected through the redemption of a $ 400 million debt issue and through insubstance defeasance transactions totaling $ 6.1 billion, wherein TVA transferred sufficient funds to establish irrevocable trusts to hold securities which are schedu! ed to earn interest and mature in amounts sufficient to meet debt service requirements for the aforementioned debt issues. TVA incurred a premium of $ 892 million to effect the $ 65 billion advance refunding, which is being deferred and recognized as an expense ratably tluough the maturity dates of the new debt issues.
~ The bonowings from the public by TVA in fiscal year 1990 represented a departure from its practice since 1974 of borrowing only from the Federal Financing Bank (FFB), excluding advances from the U.S. Treasury.
FFB has advised TVA that FFB policy does not permit Federal agencies which access public markets financing also to freely access FFB Financing, However, FFB has entered into an agreement, which expires in October 1991 unless extended, under which TVA can make short-term boirowings (maturities of 180 days or less) from the FFB with the total amount of such boriowings not to exceed $2 billion outstanding at any one time. In addition, the FFB has agreed, for a period ending in October 1993, to continue to make available up to $25 billion in financing for Seven States Energy Corporation, from which TVA leases nuclear fuel.
Presently outstanding long-term debt held by FFB is not affected by this change.
~ In October 1990, TVA sold investments from the investment fund with a recorded value of $ 148 million, using the proceeds to redeem a $ 150 million FFB debt issue bearing interest at I? 095 percent, maturing in 2015. The net premium on this advance refunding was not significant.
- 11. Retireinnit plan TVA's retuement plan is a contributory, defined benefit plan covering most full-time employees. The plan is comprised of two funds: Fixed Benefit Fund and Variable Annuity Fund. Plan assets are primarily stocks, bonds, and real estate. TVA contributes to the Fixed Benefit Fund such amounts as are necessary on an actuarial basis to provide assets sufficient to meet the obligations for benefits to be paid to members. A member elects to have the member's current contributions credited to the Fixed Benefit Fund or the Variable Annuity Fund or a portion to each. The pension is based on the member's years (to the nearest month) of creditable service, average base pay for the highest three consecutive years, and the pension rate for the member's age, less a Social Security offset.
~ Net pension costs for fiscal years 1990, 1989, and 1988 include the following components:
(Millions) 1989 1988 Service cost $ 69 $ 84 Interest cost on projected benefit obligation 204 194 174 ActuaI return on assets 224 (414) (52)
Net amortization and deferral (430) 225 (117)
Net pension costs $ 66 $ 74 $ 89
':R Tennessee Valley Authority The plan's funded status is as follows:
At September 30 (Millions) 1990 1989 Actuarial present value of benefit obligations:
Vested benefit obligation $ (2,134) $ (2,133)
Nonvested benefits (59) (58)
Accumulated benefit obligation (2,193) (2,191)
Effects of projected future compensation levels (358) (328)
Projected benefit obligation (2,551) (2,519)
Plan assets at fair value 2.451 2,675 Excess (deficit) of plan assets over projected benefit obligalion (100) 156 Unrecognized net loss (gain) (148)
Unrecognized net obligation being amortized over 15 years beginning October 1, 1987 4 4 Prepaid (accrued) pension cost $ (8) $ 12
~ For determining the actuarial present value of the projected benefit obligation in fiscal years 1990 and 1989, the discount rate of 8.5 percent was used, and the assumed annual rates of increase in future compensation levels for 1990 and 1989 ranged from 4.8 peKent to 9.8 percent. The expected long-term rate of return on plan assets for 1990 and 1989 was 9 percent.
- 12. Nuclear insurance The Price-Anderson Act sets forth an indemnification and limitation of liabilityplan for the U.S. commercial nuclear industry. Recent amendments to this Act substantially increased the limitof liability from an accident at a US. Nuclear Regulatory Commission-licensed reactor to approximately $ 7.4 billion.
~
exceed this liability insurance covemge, each NRC licensee could be retrospectively ~
AllNRC licensees (including TVA) are required to maintain nuclear liability insurance in the amount of
$ 200 million for each p!ant site with units licensed to operate. Should the damages from a nuclear accident for each of its units licensed to operate, an amount not to exceed $63 million per nuclear accident, subject to a maximum annual assessment of $ 10 million per unit per accident. In the event the liability from a nuclear accident exceeds the liability limit, the reactor licensee can be assessed an additional 5 percent of the $ 63 million assessment per unit. TVA maintains nuclear liability insurance in the amount of $ 200 million for each of its two nuclear plant sites with units licensed to operate. In the event of a nuclear accident, TVA's financial responsibility is limited to $ 50 million per year per accident.
~ In accordance with NRC regulations, TVA carries, at each licensed nuclear plant, insurance of $ 1.06 billion for the cost of stabilizing or shutting down a reactor after an accident, decontamination, and property damage. Some of this insurance may require the payment of retrospective premiums of up to a maximum of approximately $ 54 million.
- 13. Major custoruers Sales of electric power to one Federal agency-principa! Iy in the form of demand charges-have amounted to 10 percent of power sales in fiscal years 1988,1989 and 65 percent in1990. This "customer, in accordance with contract provisions, had exercised its right prior to fiscal year 1987, through notices eight years in advance, to reduce the amount of electric power to be purchased. An agreement between TVA and the customer was reached in December 1987 whereby the customer's payment obligations are being satisfied ttuough a series of payments to TVA totaling over $ 1.8 billion. The scheduled payments are $375 million, received in fiscal year 1988, $ 465 million in fiscal year 1989, $ 311 million in fiscal year 1990, and $ 160 miHion each year from 1991 through 1994, the end of the contract term. TVA will also receive payment for its obligation under the agreement to deliver up to 125 megawatts of power. The reductions in demand have been taken into account in TVA's future supply plans.
~ One municipal customer accounts for approximately 10 peKent of total power sales revenues and four other municipal customers account for an additional 19 percent of total power sales revenues. Four out of the five distributors, including the largest customer, have contracts without stated expiration dates, and in no event would the contract term be less than ten years. The other distributor has a contract which extends until January 2009 and which cannot be terminated prior to January 1999.
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- 14. Acid lain legislation-Congress has recently passed the Clean Air Act Amendments which upon signature by the President would result in significant expenditures for the reduction of sulfur dioxide, nitrogen oxide and possible toxic emissions at several of TVA's coal. fired generating stations. Management is currently evaluating several options for complying with this legislation. Until a compliance plan is developed, TVA cannot estimate the cost of complying with the legislation. TVA expects to recover compliance cost from the ratepayers.
- 15. Litigation TVA is a party to various civil lawsuits and claims which have arisen in the ordinary course of its business. It is the opinion of TVA counsel that although the outcome of pending litigation cannot be predicted with any certainty, the ultimate outcome should not have a material adverse effect on TVA's financial position.
Coopers 8 Lybrand To thc Board of Directors of Tennessee Valley Authority We have audited the accompanying balance sheets (power program and ail programs) of Tennessee Valley Authority as of September 30, 1990 and 1989> and the related statements of operations and retained earnings (power program)>
nct expense and accumulated net expense (nonpower programs) and cash flows (power program and all programs) for each of the three years in the period ended September 30> 1990. These financial statements are the responsibility of Tennessee Valley Authority's management. Our rcsponsLbility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and Covernment Auditing Standards, issued by the Comptroller General of the United States. Those standards rcqulrc that we plan and perform the audit to obtain reasonable assurance about whether the ELnanclal statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provldo a reasonable basis for our opinion.
Ln our opinion> the financLal statements referred to above present fairly, ln all material respects, the financial position of the power program a'nd all programs of Tennessee Valley Authority as of September 30, 1990 and 1989> and the results of operations of the po~er program and nonpower programs and cash flows of the power program and all programs for each of the three years in the period ended September 30, 1990, Ln conformity with generally accepted accounting principles.
Knoxville, Tennessee November 9> 1990
Tennessee Valley Authority. 400 West Sumrivt Hilt Drive, Knoxville. Tennessee 37902 William F. Malec Senior Vice President and Chief Financial Oificer Management is responsible for the preparation, integrity and objectivity of the financial statements of Tennessee Valley Authority as well as all other information contained in the annual report. The financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis and, in some cases, reflect amounts based on the best estimates and judgments of management, giving due consideration to materiality. Financial information contained in the annual report is consistent with that in the financial statements.
Tennessee Valley Authority maintains an adequate system of internal controls to provide reasonable assurance that transactions are executed in accordance with management's authorization, that financial statements are prepared in accordance with generally accepted accounting principles and that the assets of the corporation are properly safeguarded. The system of internal controls is documented, evaluated and tested on a continuing basis. No internal control
, system can provide absolute assurance that errors and irregularities willnot occur due to the inherent limitations of the effectiveness of internal controls; however, management strives to maintain a balance, recognizing that the cost of such a system should not exceed the benefits derived. No material internal control weaknesses have been reported to management.
Coopers & Lybrand was engaged to audit the financial statements of Tennessee Valley Authority and issue reports thereon. Their audits were conducted in accordance with generally accepted auditing standards. Such standards require a review of internal controls, examination of selected transactions and other procedures sufficient to provide reasonable assurance that the financial statements neither are misleading nor contain material errors. The Report of Independent Accountants does not limit the responsibility of m<anagement for information contained in the financial statements and elsewhere in the annual William F. Malec Senior Vice President and Chief Financial Officer
Tenne~e Valley Authority W
1990 1989 1988 1987 1986 Sales (millions of kilowatt-hours)
Municipalities and cooperatives 96,748 92,538 91,392 90,813 84,884 Federal agencies 2,336 2,341 2,277 2,270 2,300 Industries 17,134 16,260 15,141 14,530 14,983 Electric utilities 265 453 517 439 426 116,483 111,592 109,327 108,052 102,593 Operating Revenues (millions of dollars)
Electric Municipalities and cooperatives 4,292 4,109 4,100 3,974 3,487 Federal agencies 413 569 623 608 531 Industries 548 526 513 502 556 Electric utilities 17 21 26 20 18 Other 69 62 60 52 47 5,339 5,287 5,322 5,156 4,639 Installed Generating capacity (megawatts)
Hydro 5 730a 6,056 6,054 6,054 6,034 Coal 17,647 17,647 17,647 17,647 17,647 Nuclear units in service 2,441 2,441 1,221 Gas turbine 2,510 2,510 2,510 2,510 2.510 28,328 28,654 27,432 26,211 26,191 System Peak Load (megawatts) 24,627 20,638 21,343 19,772 20,424 Percent Gross Generation Coal 68% 71% 86% 82% 89%
Hydro 190/ 18o/ 11% 18% 11o/
Nuclear 13% 11% 3%
Fuel Cost Per Kilowatt hour (mills)
Coal 13.7 14.1 14.3 14.6 15.2 Nuclear 10.0 10.8 13.6 Aggregate Fuel Cost Per kWh Net Commercial Generation 13.2 13.7 14.4 14.8 15.5 Revenue Per Kilowatt hour (mills)b 42.6 42.7 44.7 47.2 44,8 Fuel Data Net Commercial Generation (millions of kilowatt-hours) 93,595 92,106 86,278 78,449 84,834 Billion Btu 946.113 925.455 865.876 786.608 845,963 Fuel expense (millions of dollars) 1,233 1.261 1,240 1,163 1,313 Cost Per Million Btu (cents) 130.36 136.26 143,22 147.83 155.26 Net Heat Rate 10,109 10.048 10,036 10,030 9,970
- a. Excludes TAPOCO.
- b. Excludes DOE settlement payment.