ML18193A401
ML18193A401 | |
Person / Time | |
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Site: | Palo Verde ![]() |
Issue date: | 05/02/1974 |
From: | Salt River Project Agricultural Improvement and Power District |
To: | |
References | |
Download: ML18193A401 (92) | |
Text
NE%'SSUE 850,000,000 SALT HIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, ARIZONA Salt River Project Electric System Revenue Bonds, 1974 Series 8 To be dated May 1, 1974 To mature January 1, as shown bclowt Principal and interest (July 1, 1974 and January 1 and July 1 thereafter) payable at the principal otliccs of the First National Bank of Arizona, Phoenix, Arizona, or Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, or First National City Bank, New York, New York, at the option of the holder. Coupon Bonds in the denomination of $ 5,000 registrable as to principal only and exchangeable for fully registered bonds in any integral multiple of $ 5,000. First National Bank of Arizona, Phoenix, Arizona, is the Trustee.
The 1974 Series B Bonds maturing on January 1, 2012, are subject to redemption on January 1, 1996 and any interest payment date thereafter from amounts accumulated in the Debt Service Fund with, respect to Sinking Fund Installments at the principal amount thereof plus accrued interest to the redemption date. The 1974 Series B Bonds may be redeemed as a whole, or in part in inverse order of maturities, at any time on or after January 1, 1984, at prices ranging from 102th.% for the period January 1, 1984, to and including December 31, 1985, to 100% on and after January 1, 1994, plus accrued interest to the date of redemption, as further described herein.
Interest exempt, in the opinion of Bond Counsel, from Federal income taxes under existing laws, and from
,income taxes within the State of Arizona.
The 1974 Series B Bonds are being issued for the purpose of financing improvements to the Electric System of the District. The 1974 Series B Bonds and the presently outstanding Revenue Bonds are payable from and secured by a pledge of and lien on the net revenues of the District's Electric System, subject to a prior lien of Prior Lien Bonds, as defined in and more particularly described in the Official Statement. The 1974 Series B Bonds are also secured by a pledge of a debt reserve and other funds.
Amounts, Maturities, Coupon Rates and Price or Yield
$ 15,400,000 Serial Bonds Coupon Coupon Price Amount Ma!arity Rate Yield Amount Staturtts Rate or'ield
$ 400,000 1983 7.60% 5.50% $ 1,350,000 1989 7.60% 5.90%*
350,000 1984 7.60 5.60 1,450rooo 1990 7.60 5,95*
450rooo 1985 7.60 5.70 1,550,000 1991 6N 6.00 550,000 1986 7.60 5.75* 1,600,000 1992 6.10 6.00 1,000,000 1987 7.60 5.80* 1,700,000 1993 6.10 6.05 1,450,000 1988 7.60 5.85* 1,750,000 1994 6.10 100 1,800,000 1995 6.10 100 e Priced to First Call Date, January I, 1984.
$ 34,60O,OOO 6V'%erm Bonds Due January 1, 2012 Price 97%
(Accrued Interest to be Added)
The 1974 Series B Bonds are offered when, as and if issued and received by <<s, and subject to the approval of legality by Mudge Rose Guthrie & Alexander, New York, New York, Bond Couttsel.
May 2, 1974
This does not constitute a>> offer'o sell the 1974 Series 8 Bonds its a>sy state to any Person to?chbm i't to make such an offer in such Stare. 1<to dealer, salesman or any other person has been authorized to is'nlawful i
give any information or to <nake any representations, other than those contained herein, in connection with thc offering of the 1974 Series 8 Bon<ts and if gi'ven or inade, such i'>>for>><ati'on or rePresentations ?aust not b<
relied upon. The inforniation set'orth i<eie<'n has beati obtained 'from thc District and other sources which are believed to bc reliable but it is not guaranteed as to accuracy or completeness by, and is not to be constn<ed as a representation by, the under<vritcrs.
MANAGEMENT OF THE DISTRICT Board of Directors The Board of Di,rectors of the,'Salt River Project Agricultural Improvement and Power District consists of 10 members clccted fronI among the shareholders for two-year terms. The Board'stab-'ishes the policies for the management of the District and for the coIItduct of. its'usiness affairs.
GERMAIN H. BALL THQMAs P. HURLEY ALEx M. CONQYAL01?P WILLIAMP. SCHRADER BII.I. RoUssEAU JoHN S. HooeEs LEo C. SMITFI Wi LARKIN FITCH EARNEST C. CHEATHAM THQMAs J. PINLEY
- Principal OIIicers arwl Other Executives KARL F. ABEL . . President JOHN R. LASSEN . Vice, President RGD J. McMULLIN . General Manager FRANCIS E. SMITH, . Secretary A. J. PPIsTER....,. ".....". ...Associate General Manager Pouter T. M. MGRGNG . .,Assistant General Manager and Chief Engineer ~
VAUGHAN A. PIERCE ........ .. Assistant General Manager, Marketing and ~
Commercial Setviceis JOHN O. R'[CH Assistant General Manager Povver Operations CARL T. EYRING Asststatt t Gett eral Manager Constructio'n ttnd 'l fairttenance RonERT F. AMos . Associate General Manager Finance and Operations Services KENNETH J. KNAUER ....... ,... Treasttrer WALTER J. WALL , Corrtptiolldr PRANK G. SCUSSEL .,Director; Project Planning LEROY MICHAEL, JR. . Director, Legal Services STANLEY E. HANcocK 'Dire'cto'r, Communications and Public Affairs E. W. YoRKE ... ..Diiector, Personnel Consultants LEGAI. ADvIsoRs Jennings, Strouss dc Salmon AUDrroRS Arthur Andersen & Co.
CONSULTING ENGINEERS .........., .. Ford, Bacon d'<, Davis lncorporat<.'d BOND COUNSEL . ~... Mudge Rose Guthrie & Alexander FINANCIAL CONSULTANT ... .........., .. Smith, Barney & Co.i~ncorporated
TABLE OF CONTENTS PAGE Summary Statement m Introduction 1 Authorization of the 1974 Series B Bonds 1 Purpose of the 1974 Series B Bonds 1 Security of the 1974 Series B Bonds .................. 1 The District 2 History 3 Organization, Management and Employees 3 Economic Growth in the District's Service Area Irrigation and Water Supply System 8 The Electric System . 9 Area Served . 9 Hydro-electric Facilities 9 Thermal Generating Facilities . 9 Transmission System . 10 Distribution System 10 General Plant 11 Power Resources Historic 11 Summary 11 Power from Four Corners and Mohave Generating Stations .............. 12 Power from Hayden No. 1 . 13 Power Purchased from APA 13 Parker-Davis Project Power Purchased from USBR . ~............. 13 Power Purchased from Colorado River Storage Project of USBR ......... 14 Power Resources Future .......... 15 Summary 15 Power from the Navajo Project . 15 Power from Hayden No. 2 16 Power from Arizona Station . 17 Power from the Combined Cycle Plant 17 Power from Combustion Turbines . 17 Power from the Kaiparowits Project 17 Power from Craig Station . 18 Power from Palo Verde Nuclear Station . 18 Fuel Supply 18 Estimated Loads and Resources 1974 through 1979 19 Power Agreements . 22 Agreement of August 31, 19SS with APS 22 Power Coordination Agreement with APS 22 Four Corners and Mohave Participation Agreements . 22 Power Purchase Agreement with APA 22
'Parker-Davis Power Purchase Agreement with USBR 23 Colorado-Ute Electric Association (Hayden No. 1 and No. 2) Participation Agreement 23 USBR-District Interconnection and Transmission Service Contract of June 26, 1962 23 USBR-District CRSP Purchase Contract . 24 Navajo Project Participation Agreement 24 Yampa Project Participation Agreement . 24 Arizona Nuclear'Power Project Participation Agreement . 24 The Improvement Program 1974 through 1979 25 General Description .. I ~ ~ ~ ~ ~ 25 Summary of Estimated Capital Expenditures for the Improvement Program .. 25 Generation Additions . ~ ~ \ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 26 Transmission Additions . ~ ~ ~ ~ ~ ~ ~ ~ 27
PAGE Distribution Additions, . 27 General Plant . 27 Disposition of thc 1974 Series B Bond Proceeds l 28 Environmental Program. 28 Policy 28 Air Quality Control . 29 Environmental Litigation 32 Summary of Existing Rate Schedules . 34 Customers, Energy Sales, R.evenues and Expenses 1968-1973 ........... 36 Residential 36 Commercial and Small Industria!I 37 Mines and Large Industrial .............. 37 Summary of Customers, Sales and Revenues 1968-1973 . ........ 37 Large Customeirs 37 Summary of; Operating Expenses 196&-1973 38 Estimated Custotner., Energy Sales, Revenues and Expenses~1974-1979 .. 38, General Considerations . 38 Estimated Residential Growth 39 Estimated Commercial Growth ......... I.. 39 Estimated Industrial Growth ........... . 39 I,
Estimated Sales anted Revenues 1974-1979 . 39 Estimated Operating Expenses 1974-1979 40 Voluntary Contributions in Lieu of Taxes . ~
40 Estimated R.evenues Available for Debt Seatic~1974I 1979 ~...,.... 41 Financial Fac:tora of the District .. 41 Outstancling Long Term Iindebteclness . 41 Prior Lien Debt Service Requirements . 43 Debt Service Requiirements for the Revenue Bonds 44 Total-Debt Service Requirements . 45 Estimated Coverage . 46 Description olE 1974 Series B Bonds 47 Summary of Certain Provisions of The Resolution .. 49 Certain .'Defiinitions 49 Pledge of Revenues and Funds 51 Additional Bonds 51 Refunding Bonds 52 Subordinate(d Inde'btedness 53 Allocation of Electric System Revenues 53 Transfer from General Fund . 54 Construction Fund 54 Redemption Fund 55 Investment of Certain Funds ancl Accounts . 55 Electric System Rate Covenant 55 Certain Other Covenants 56 Defeasance . 58 Remedies 58 Supplemental Resolutions 59 Amendment, with Consent of Bondholders .. 60 Tax Exemption 60 Approval of Legal Proceedings: ......., ..., 60 Miscellaneous 61 Appendix A Suimmary Report of Ford, Bacon &:Davis Incorporated .... A-1 Appendix B Combinecl Fiinancial Statements as iof December 31, 1973 and 1972, together wiIth auditor's report B-1 iui
SUMMARY
STATEMENT (Subject in all respects to more complete information contained in this Official Statement)
The Salt River Project Agricultural Improvement and Power District The District is an agricultural improvement district organizednder the laws of the State of Arizona which provides electric service in a 2,900 square mile service territory in parts of Maricopa, Gila and Pinal counties in Arizona. The District provides electric service to mining customers and wholesale power in an additional area of 2,400 square miles in Pinal and Gila Counties. The District's administrative offices are located in Tempe, Arizona, which is adjacent to and'ast of Phoenix.
Purpose of the 1974 Series B Bonds The $ 50,000,000 1974 Series B Bonds, representing the second installment of a total $ 180,000,000 Bonds (of which a first installment of $ 90,'000,000 ha's been issued) authorized under the ~1974 Series Resolu-tion, are being issued for the purpose of financing further construction of and improvements and replacements to structures and equipment necessary to provide electrical power to the District's service. area.
Security for the 1974 Series B.Bonds The Revenue Bonds, which include the 1974"Series.B,Bonds,,are. payable from and secured by a pledge of and lien on all revenues and income derived by the District from. the ownership and operation of the Electric System after the payment of Operating Expenses,and, payments, required'to be made under the Prior Lien Bond Resolutions.
The District covenants not to issue any series of bonds or other obligations or create any additional indebtedness which will have priority over the charge and lien on the Revenues pledged to the Revenue Bonds i
~ except in the instance of refunding bonds issued pursuant to the Prior Lien Bond Resolutions and loans from the United States of America.
The Electric System The District presently obtains power from its wholly owned hydroelectric and thermal generating facilities, participation in jointly owned'hermal plants and'power. purchases. 'The District owns most of its transmission and distribution facilities and shares certain other facilities. under joint ownership arrangements.
At year end 1973 the District served 225,921 customers.,Annual sales in 1973 totaled approximately 6.9 billion kwh, approximately double the 3.4 billion kwh sale's in 1968. Annual revenue of $ 127,656,000 from sales in 1973 compares to $ 53,759,000 in 1968. Due to the fact that the bulk of the population growth in the last decade has been directed toward the suburbs of Phoenix, which is the area served by the District, the District's customer growth rate has been higher than the population growth rates of either the State or Maricopa County.
The District is developing several power sources for future use. Due to the low cost and relative abundance of coal, most of the estimated future generating capacity during the 1970s will come from coal-fired plants. Due to the estimated lower cost of power from these coal-fired plants, certain presently existing gas and oil-fired plants may eventually be utilized mostly for peaking power during heavy energy demands. This change in fuel source can be illustrated by the fact that in 1973 approximately 40% of production was from gas and oil-fired plants and 28% from coal-fired plants, but by 1979 only 11% of production is estimated to come from oil-fired plants and 82% from coal-fired plants. The District is presently estimating that no gas will be available for its use for power generation after 1975.
Electric Rates The District covenants to charge and collect rates, fees and charges as shall be required to pay when, due all expenses of the Electric System, all debt service requirements and aH other charges necessary for the operation of the District's Electric System.
.m
Additional Bonds The District may issue additiona]l parity Revenue Bonds in compliance with the Resolution if, among other things, (1) Revenues Available for Debt Service, as imay be adjusted, of any 12 consecutiVe Calendar months out of the 24 calendar months next preceding the issuance of such additional Revenue Bonds are not
~ j less than 1.20 times the maxhnum annual debt:service for any succeeding year on all Revenue Bonds',and Prior Lien Bonds, which will be outstanding immediately prior to the issuance of the additional .Revenue Bonds, (2) estimated Revenues Available for Debt Service,, as may be adjustedfor each of the five calendar years immediately following the issuance of such additional Revenue Bonds is not less than 1.35 times'the total debt service for each such respective icalendar year-on all Revenue Bond. iricluding all Prior Lien Bonds, outstanding immediately subsequent to the issuance of such'additional Revenue Bonds and (3) thle estimated Revenues Available for Debt Serviice, as may be adjusted, for the fifth calendar year immediately following the issuance of such add.itio.nal Revenue Bonds is not less than 1.35 times the maximum annual debt service for any succeeding year on.,all Revenue Bonds inc'luding all Prior I.ien Bonds, which will be out<tanding immediately subsequent to the issua:nce of such. additional Revenue Bonds.
Economic Consideration,s The District's service area has a well-balanced, growing economy with no one sector dominating the economy. In Maricopa County in 1972, the four largest',employers'; by. industry were: wholesale, retail 22.5%, manufacturing 17.4%, government 1.6.0% anci services and. miscellaneous 15.8%, In Mari'-
copa County the 1962-1972 growth of certain indicators was as follows; population up 36.8%, retail .ales up 157.6%, bank deposits up 248.6% and vehicle registration, up ]i002%..
Outstanding Long Term Indebtedness As of January 2, 1974, the District had a totali of $ 553,217~134 outstanding long term deb't consisting of $ 301,892,000 Prior Lien Bonds, $ 11,256l,911 U. S. Government loans, $ 240,000000 Revenue Bonds, including $ 90,000,000 Rcvcnue Bonds da,ted January 1, 1974, and issued in February 1974,, and other debt of $ 68,223. iIi Coverage For the calendar year. 1973, Revenues Available for Debt Service were,$ 59,571,000. The m'aximuin total annual debt service requirements for all outstanding Prio>> Lien Bonds (including reserve deposits therefor) and the Debt Scryiice requirements on the Revenue Bonds, including Debt Service require-ments on the $ 50,000,000, 1974 Series B Bonds, amount ~to ~$ 45,460,312 (in 1976) and would ]have been covered 1.31 times by such ']i973 Revenues Available for Debt Service. Estimated Revenues Available for Debt Service, as adIjustcd, for 1974-1979 provide estimated coverage for debt service requirements and reserve deposits on all Prior Lien Bonds outstanding and Debt Service requirements on the Revenue Bonds including Debt Service requirements on 'the 1974 Seriesi B iBonds,i ini each of those respective years of 1.62, 1.85, 1.87, 1.99, 2.08 and 2.34 times.
SALT RIVER PROJECT AGRICVLTURAL IMPROVEMENT AND POWER DISTRICT, ARIZONA OFFICIAL STATEMENT Relating to 850,000,000 Salt River Project Electric System Revenue Bonds, 1974 Series B Phoenix, Arizona May 2, 1974 The purpose of this Official Statement is to set forth information concerning the Salt River Project Agricultural Improvement and Power District (the "District") and its Salt River Project Electric System Revenue Bonds, 1974 Series B (the'"1974 Series B Bonds" ) in connection with the sale by the District of the 1974 Series B Bonds and for the information of all who may become holders thereof. The mailing address of the District's administrative offices is Post Office Box 1980, Phoenix, Arizona 85001 (telephone number 602-273-5900) .
AUTHORIZATION OF THE 1974 SERIES B BONDS Pursuant to the Constitution and laws of the State of Arizona and in particular Article 7, Chapter 4, Title 45, Arizona Revised Statutes'(the "Act") and the Resolution Concerning Revenue Bonds, dated as of November 1, 1972 (the "Resolution" ), the District has authorized the issuance of bonds designated as "Salt River Project Electric System Revenue Bonds" (the "Revenue Bonds" ). Pursuant to the Resolution, Bonds may be issued by series resolution at such times and in such amounts as the District shall determine. In 1973, the District issued $ 150,000,000 Revenue Bonds, 1973 Series (the "1973 Bonds" ).
By ser'ies resolution, dated as of October 15, 1973 (the "1974 Series Resolution" ), the District's Board authorized the issuance of $ 180,000,000 Revenue Bonds, 1974 Series (the "1974 Bonds" ). The District's Council by resolution adopted on October 16, 1973, ratified and confirmed the issuance of said 1974 Bonds and the Arizona Corporation Commission in its approving Opinion and Order of November 13, 1973, autho-rized the issuance of said 1974 Bonds. In February 1974, the District issued the initial installment of
$ 90,000,000 1974 Series A Bonds. On April 1, 1974, the District by resolution authorized the sale of the second installment of 1974 Bonds. Said second installment is in the principal amount of $ 50,000,000 and is.,designated as "Salt River Project Electric System Revenue Bonds, 1974 Series B".
PURPOSE OF THE 1974 SERIES B BONDS The 1974 Series B Bonds are being issued to finance a portion of the Improvement Program 1974 through 1979 (the "Improvement Program" ). The Improvement Program includes'construction of and improve-ments and replacements to the generation, transmission, distribution and general plant facilities of the District as more fully explained herein under "The Improvement Program 1974 through 1979".
SECURITY OF THE 1974 SERIES B BONDS The Revenue Bonds, which include the 1974 Series B Bonds, are payable from and secured'by a pledge of and lien on,all revenues and income derived by the District from thc ownership and operation of the Electric, System after the payment of Operating Expenses and payments required to be made for thc Prior Lien Bonds. The 1974 Series B Bonds are also-secured by the proceeds of sale thereof and all funds held under the Resolution, including a debt reserve to equal one-half of'he average annual Debt Service for the Revenue Bonds; but not to exceed'$25,000,000.
The 1974 Series'B Bonds shall not constitute general obligations of the District, and no holder of any of the 1974 Series B Bonds shall ever have the right to compel any exercise of the taxing powers of the District to pay the 1974 Series B Bonds or the interest thereon. The 1974 Series B Bonds and all other Revenue Bonds issued under the Resolution are. equally and ratably secured by a lien on the Revenues and other fundk pledged to the payment thereof.
Pursuant to the Pr'ior Lien Bond Resolutions, revenues and income derived by the District from the ownership and operation of the Electric System are deposited in the "Electric Revenue Fund", created. by the Prior Lien Bond Resolutions. Moneys iin said "Electric Revenue Fund" are used to pay Operating Expenses of the Electric: System and debt servic: on the Prior Lien!Bonds, and maintain reserves therafor.'he
~i District covenants that on the last day of ievery month that Revenue Bonds are outstanding, it Will deposit moneys in said "Electric Revenue Fund" not required to be retained for said Operating Expenses, debt service and reserves, into the Revenue .'Fund established by the Resolution.i Each month the District is then required to transfer moneys in the Revenue Fund to the: Debt Service Fute a!nd to transfer the amount remaining in the Revenue Fund to the Ge:neral Fund. Moneys so transferred to Ithe General Fund may be used for any lawful purpose of the District ahead are no longer pledged to the Revenue Bonds. If for any period funds on deposit in the Debt Service Account are not sufiicient to meet the requiirements thereof, the '.District covenants to trarmfer moneys in the General Fund to such Account to make up such deficiency.
After the retirement of.the Prior Lien Bonds, all revenues and income of the District,'s Flectric System shall be deposited directly in the Revenue Fund. Thereafter the District is required each month to pay Oper-ating Expenses from the Revenue Fund, to transfer moneys in, the Revenue Fund to the DebtService Fund and to transfer the amount remainiing in the Revenue Fund to the General Fund.
The District covenants not to issue any 'bonds or other obligations or create any additional indebtedness which will have priority over the charge and lien on the Revenues pledged to the 1974 Series B Bonds except in the instance of refunding 1bonds iissued pursuant to the Prior Lien Bond Resolutions or loans from the United States of America.
For a more complete description of outstanding long'er& indebtedness see '"Financial Factors of the District Outstanding Long, Term Indebtedness".
Thc District covenants to charge and collect fees and other charges fot the sale of electric power to provide revenues sufiicient to meet its obligations under the Resolution and the Prior Lien Bond ancl'nergy Resolutions. See "Summary of Certain Provisions of the Resolution Electric System Rate Covenant."
THE DISTMCT The District owns and operates an Elcctriic System (hereinafter described) which generates, purchases and i distributes electric power both at wholesale and retail to customers in parts of Maricopa, Pinal and Gila Counties in Arizona. Aa Irrigation Systein (also hereinafter descr!ibecl) is operated by the Salt River Valley Water Users'ssociation (the "Association" ).
Prior to the issuance of the 1973 Bonds the District's outstanding long-term debt was in the fbrm of (1) general obligation bonds secured 1by a tax on all the taxable: real property within the 1boundaries'f'ha District, a gu'aranty by the Psssociation ancl a !prior lien on the net revenues of. the Electric System all hs z'aore fully described in the respective bo'ad resolutions (the "Prior Lien Bond Resolutions" ) and (2) ccIrtafn loans from the United States of America (such 1bonids and loans collectively called the "Prior Lien Bonds" ),. In all years to date the electric revenues have always been more than sufficient to meet all debt service requirements.
Accordingly, the District has never used its taxing power for the Prior Lien Bonds.
The District is an agricultural improvement district organizeid under the laws of the State of Arizona,.
It operates thc Salt River project, a federal recllamation ptoje'ct, hInder contracts with the United States of America and provides electric service to resiidential,, commercial, industrial and agricultural powier >~tseN'6 a 2,900 square mile exclusive serv'ice territory in parts of Maricopa, Gila and Pinal counties, plus wholesale and mine loads in a 2,400 square nnle area in Gila and Pineal cbunties (see map, page A-3).
The District's admiinistrative ofBixs are located in Tkmpe, Ariziona, which is adjacent to and 'east of.
Phoenix. Phoenix, the State: Capital aad ounty Seat of Maricopa County,'is situate in the western portion of the area served by the D.istrict.
History The Salt River Valley Water Users'ssociation, predecessor of the Salt River Project Agricultural Improvement and Power District, was incorporated under the laws of the Territory of Arizona in February, 1903. It was organized to represent the owners and occupants of the lands to be benefited by the Salt River Project. The Salt River Project was the first multi-purpose project authorized under the Federal Reclama-tion Act of'1902. In 1904 the Association and the United States entered into a contract in which the United States was:to construct and operate dams, power. plants, and other facilities incident to the operation of irrigation and power works and improvements and the Association was to repay the cost thereof.
InitiaHy, the United States constructed, operated and maintained Roosevelt Dam and a low dam which diverted the impounded water into a canal system. The prime reason for the existence of the dams was to supply irrigation water to the irrigable lands within the Salt River Project. A small amount of hydroelectric power was the resultant by-product of the impounded water. In 1917 the Association became, by virtue of
,a contract, the operating agency of the Salt River Project for the United States.
In 1937, the'Salt River Project Agricultural Improvement and Power District was formed in order to secure for the Salt River Project the rights, privileges and exemptions granted to political subdivisions of the State. The Association operated aH of the properties until 1949, but presently operates only the irriga-tion and drainage system as an agent of the District.
Generation and sale of electrical power and energy, incidental to the irrigation features of the Salt River Project for many years, has become more and more important in terms of investment and revenues.
Much of the District's electric service area has been suburban to the cities and towns which it surrounds.
Arizona Public Service Co. ("APS") operates in and near the District. From time to time agreements which attempted to delineate the respective areas served were made by and between APS and the District. Historically, the District served rural areas and APS cities and towns. As a result of the agreements, most suburban areas annexed to Phoenix and other cities since 1955 are now served by the District, even though they are within present city limits. For a more complete discussion of these agreements see "Power Agreements". Conse-quently, the service area of the District has accordingly grown as a result of the trend of population migration to the suburbs. This trend has taken much land out of agricultural production and substituted residential, commercial and industrial development. Large shopping centers, extensive home building development, con-siderable industrial development, increased pumping load due to deeper irrigation wells, and the phenomenal
'increase in air conditioning load have aH combined to increase the District's electrical business. Starting with 3,645 kw of installed capacity at the Theodore Roosevelt Dam in 1911, the total generating capability has grown to 241,600 kw in hydro plants and 1,089,000 kw in thermal plants in 1973.
Following the long-standing reclamation principle, electrical revenues available after the" payment of requirements under the Prior Lien Resolutions and the Resolution are used to support water and irrigation operations, thereby keeping water delivery charges at reasonable levels. At the same time, the District main-tains rates for the electric service it provides which are comparable to those of neighboring utilities.
Organization, Management and E'mployees As previously indicated, the District operates the Electric System, and, as an agent of the District, the =
Association operates and maintains the irrigation and drainage system. The President, Vice-President and General Manager have management responsibHities for both the District and the Association. The District and the Association are each governed by, a board and a council elected by landowners. However, represen-tatives of these bodies have always served in a dual capacity.
The Board of Governors of the Salt River Valley Water Users'ssociation and the Board of Directors of the Salt River project Agricultural Improvement and power District consist of 10 members each, elected for two-year terms. The Boards establish the poHcies for management and conduct of business affairs and function as the managing bodies of the District and.Association.
Three councilmen aire elected for two-year terms from each of the ten district areas of the Association and from each of the ten diivision areas of dte District. The Councils enact,and amend bylaws rela'ting to management and help maintain liaison vrith the landowners.
The number of District and Association employees on December, 311973, was 3,021 of which 1,912 hourly. employees are represented by. the International Brotherhood of Electrical 'Workers. A new ithree-yeari 0,
labor contract was signed in early 1971 after extensive negotiations with Local Union 26i6 I.B.E.W. The contract provided for the wage portion to be negotiated yearly, however~ in 1973 an overall adjustment of 6%
in base compensation was negotiated effective April 1, 1973 and another 6'%djustment became effective April 1, 1974.
Economic Growth In The Distri.ct's Service Area General The economic development 'of Arizona as well as the District's service area has been diversified and has actually grown at a more rapid rate than the popu'.lation.
Prior to World War II the, State was principally known as a producer of raw materialIs. Cattle, copper and cotton, together with agricultural foodstuffs, providedi the major source of income. These obviously
,remain important to the economy; however,, the rapidly growing manufacturing industry has became ithei largesti single source of income within the State and at present generates an ittcome Qf over $ 2-billion:a year. Total income for Arizona is now'approaching $ '8-billion with approximately, 57% being generated in the I'hoenix metropolitan area.
Manufacturing presently accounts for about 18% of all employment ia the Phoenix area. The rapid i growth in the non-manufacturititg categories of trade,, government and service reQects the increasing iimpor-tance of Phoenix as a regional'center for'ommercial and governmental activity.
Tourism in recent year.; has added diver.'ification to the State's economy, especiially in the Phoenix area where six to eight million touirists-visit annually.
Maricopa County'has a well-balanced economy with no one section dominating the economy. Table 1 below demonstrates this diversification by showing average employment in 1972.
Table 1 AVERAGE Ii:MPLOYMENT IN iMARICOPA COUNTY (1972)
Number Percent rod nrtrr Employed of Tonu Agricultural ... 13,500 3.2 Manufacthring 74,200 17A Mining ,300 .1 Constructiion , 32,000 7.5 Transportation, IJtilities, i 18,500 4.3 Wholesale, Retaiil 95,900 22 5 Finance, Real 'Estate 27',100 64 Government 67,900 16.0 Services and Miscellaneous . ,
67,,200 15.8 Other 29',000 6.8 Total Employed 425,600 100.0 Souncn: Arizona Statistical Reviewr published September, 1973, by the Valley National Bank, lthoehh. '
SALL The Salt River Project's administration building is headquarters for service to more tlian 220,000 electric customers. lVith completion tliis year of a two-level, 81,000 square-foot addition, the building will Demands for electricity are continually accommodate up to 1,175 ernployes. The increasing willi the steady growth of District Iias added niore than 80,000 metropolitan Plioenix. More thair 54.7 electric customers since the last building percent of Arirona's total population lives expansion in 1~965. Tlie original building in Maricopa County, and the population is was constructed in 1956-1957.
expected to increase from 1,105,000 this year to 1,529,000 in 1980.
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Population and Custonmr Growth.
The City of Phoenix and the suburbs surrounding it in Maricopa County have experienced one of the highest population growth rates in the country. More than ~509o of Arizona's total population is already living in Maricopa County and the county's population is expected 'to i~ncrease from approximately 1,195,090~
in 1973 to 1,529,000 by 1980. Table 2 shows population growth rates in the Stale of Arizona,~'Maricopa'ounty and the City of Phoenix.
With the steady growth of the Phoenix metropolitan atea,'etnan'ds for 'electrical power are continually increasing. Table 3 shows the number of District customers a,nd its growth rate, over the same iperiod.i Iti should be noted that the growth rate in the nulnber of customers is, much greater than that of the
'his is due to the fact that the bulk of the IIIopitlation growth has been directed toward the County'opulation.
suburbs, which is the area setved by the District.
TabIe 2 POPULATION G]RO'WTH (1969-1972)
Ponulatlon Growth Percent Percent Percent Increase Increase Increase Orer Over over State ot Previous afartcotsa Previous City ot Previous Year Artsona Year Countyt I) Year Phoenix Year I
1960 1,302,161(2) 663,510(2) 439,179 (2) 1961 1,40t5,200 8.0 '36,000 10.9 452,009 2.9 1962 1,467,700 4.4 '69,000 4.5 468,000 3.5 1963 1,520,500 3.6 802,090 ',
4'.3 483,009 3l 2 1964 1,562,400 2.8 828,000 3'.2 494,000 2.3 1965 1,585,600 1.5 '45,090 2'.0 ,504,000 2.0 1966 1,609,600 1.5 '68,000 2'.7 511,009 1.4 1967 1,647,5(io ',2.4 '90,000 2.5 519,009 1.6 1968 1,692,0(IO ,'2.7 '1'7,000 3.'0 528,000 1.7 1969 1,725,0(io '.2.0 '44,000 2.9 546,009 3.4 1970 1,772,482 (2 ) 2.8 968,487 (2) 2.'6 581,562(2) 6.1 1,834,000 3.5 1.,005,090 3.8 648,400
'1.5 1971 1972 1s945,000 t5.1 1,058,090 i 4.03 674,000 3.9 Esttmated(1) 1973 2,020,000 1,105,000 4.44 724,000 1975 2,200,000 1,200,090 4.21(3) 786,004) 1980 2,665;000 1,529,090 4.97(3) 920,000 (1) Estimates from Valley hlational BanI<, except for 1960 and 1970 which is thc U. S. Census population.
(2) U. S. Census.
(3) Compound annual rate of growth over intervening years.
Table 3 DISTRICT CUSTOMER GROWTH (1960-1973 and projections to 1980)
Percent Increase Dtstrkt Over Electric Previous Year Customers(1) Year 1960 91,488 14.4 1961 . 101,292 10.7 1962 109,037 7.7 1963 .. 117,085 7.4 1964 .. 125,134 6.9 1965 130,970 4.7 1966 136,617 4.3 1967 141,111 3.3'.8 1968 149,'320 1969 159,202 6.6 1970 ..... 169,774 6.6 l971 . 186,326 9.8 1972 206,441 10.8 1973 . 225,921 9.4 Estlmatea 1975 . 261,200 7.5(2) 1980 . 345,400 5.8(2)
(1) Year end.
(2) Compound annual rate of growth over intervening years.
I ~ Selected Comparative Statistics Table 4 summarizes certain statistical data related to the economy in Arizona, while Table 5 summarizes certain statistical data related to the economy of Maricopa County.
Table 4 COMPARATIVE STATISTICS ON THE ARIZONA ECONOMY (1962-1972)
Pcrccal Category 1962 1972 Change Population ................................ 1,471,000 1,945,000 + 162.2 32.2 Personal Income ..
Retail Sales Bank Deposits
~
......... ~ ..
$ 3,163,000,000
$ 2,119,978,000
$ 1,584,140,000
$ 8,292,000,000
$ 5,191,225,000
$ 5,248,274,000
+ 144.9
+
+ 231.3 Agricultural Production .............. $ 508,317,000 $ 822,318,000 + 61.8 Manufacturing Output (Value Added) .......... $ 501,900,000 $ 1,630,000,000 + 224.8 Mineral Production ..................
................... $ 474,131,000 $ 1,050,881,000 + 121.6 Tourist Exp'enditures $ 350,000,000 $ 650,000,000 + 85.7 Sovnca:..Arizona Statistical Review, published September 1973, by the Valley National Bank, Phoenix.
Table 5 (1962-1972)
COMPARATIVE STATISTICS ON (1962-1972) THE MARICOPA COUNTY ECONOMY Pcrccat Category 1962 1972 Chaage Population 775,000 1,060,000 + 157.6 36.8 Retail Sales $ 1,215,150,000 $ 3,130,825,000 + 248.6 Bank Deposits
.............. .$ 999,'614,000 $ 3,485,035,000 +
Vehicle Registrations 436,767 874,587 + 100.2 Motor Fuel Consumption (gaL) 274,359,000 542,202,000 + 97.6 SouRcE: Arizona Statistical Review, published September 1973, by the Valley National Bank, Phoenix.
Irrigation and Water Supply System Importance il>
As previously indicated, the initial reason fair the existence of the Salt IUver Project was water supply.,
Agriculture in the plains andi vaHeys of south-central Arizona is ahnost wholly dependent upon irrigation due to the low annual rainfall (an average of 7 to 8 iinches per year in the Phoenix, area). An indication of the importance of water supply is the fact that in the State of Arizona,,water rights are recognized by law as being inseparable from the land, and no barter or sale of either cad bb consummated without the other. Lands inside the cities and towns in the Salt River Project area have the same rights as farmlands outside.
Agreements By virtue of an amendment dated Septetnber 12, 1949, to the Agreement between the Association ,'and the District dated March 22, 1937, the Association assumed, as agent of the District, thc direct opera-tion and maintenance of the irrigation and water supply system of the Salt River project. In 1952lthal Association and the City of I'hoenix entered into an agreemcnt under which the City, acting as agent for the Association and the landowners not receiving irrigation vvater, delivers the water appurtenant to those lands within the City's service area which are also within the Project, except where the Association delivers water directly to the owners. Where landowners in the city are not using the water to which they are entitled for irrigation, the City pays to the, Association &ci establiished yearly w'ater charge assessed against these landowners, and makes retail deliivery through its own distribution system, after treatment,,
as a part of the general water, supply to all City lands within, the project area. In 1973 thc City delivered 79,214 acre-ft. of Association water for residential, commercial and industrial purposes. Similar ~agreements have been executed with the: cities of Gilbert, Glendale, Peoria, Tempe, Mesai, Scottsdale and Chandler.
Sources Rights to the waters of the Salt and Verde Riviers were established by virtue of thie 1910 Kent Decree.
A system of dams, two on thc Verde, four on the Salt, and a diviersion dam ordinarily impounds the entire flow of both rivers. The waters of the two rivers are diverted into a large canal system at Granite Reef Dam, near the confluence of the Salt and Verde Rivers. The canals total 131 miles in length, to which are connected 876 miles of laterals of which approximately 75',ro are lined or piped.
Central Arizona Project Except at times of lugh water conditions, the, bed of. the Salt River helot the Granite Reef diversion dam is entirely dry. Water s'upplies have been augmented by the drilling of about 1,700 wells in the Salt Rivei Valley. In the state as a whole, water from underground sources has become increasingly important:as river flows have become completely utilized,. Wells in the Project have shown a continual decrease in water level, requiring added pumping power year after year.
The President of thie United States approved the Centrail Arizona Project (the "CAP") in 1968 culmiinat-ing more than 40 years of eifort by Arizona to obtain additional water supp'lies for the central and southern parts of the state. Upon completion of CAP, anticipated in the early 1980's, approximately 1,200,000 acre-ft.
of Colorado River water pumped from Lake Havasu will be delivered annually to central Arizona. 'This would more than double the surface water available and materially reduce the demand on groundwater resources.
The Salt River Project has requested an allocation of 300,000 acre-ft. of'AP water. The amount to be allotted will be determined at some future daite.
Although the irrigation system or revenues derived from its operation are not pledged to the payinent of thc Revenue Bonds, the availablc water supply is important to the District duc to its influence, on, the growth of the economy in the area. In that regard it is anticipated thatithe economy of the entiire area, as well as that of the District service area, will benefit from the construction and operation of the billion-dollar CAP.
THE ELECTRIC SYSTEM Area Served Thc general area served by the District is shown on the map on page A-3. The District serves major populated sections of Maricopa County, as well as portions of Pinal and Gila Counties. All of the cities within the District's service area except the City of Mesa are partly served by the District and partly by APS.
Negotiations have been completed with the City of Mesa to supply a portion of its load requirements.
Historically, the District began by serving the rural areas and APS, the cities and towns. Over the last fifteen years, however, the portion of the cities served by the District has steadily increased as suburban areas, grew and were annexed, and 73.8% of the combined areas of all of the cities is now served by the District. The urban areas and the adjacent rapidly growing suburban areas now served by the District will continue to be so served even though the latter may, in the future, be annexed to a city, all as provided in agreemcnts with APS, described more fully in "Power Agreements".
The District also provides power directly for mining load requirements principally in Pinal and Gila counties. Additionally, the District provides wholesale power to APS for resale in those portions of Pinal and Gila counties within the District's service area, as well as in a small area north of Scottsdale and a somewhat larger area along the Agua Fria River northwest of Phoenix.
Hydro-electric Facilities The District has five sources of hydro-electric power by virtue of the system of dams. Table 6 gives the certain characteristics of each dam and plant and the reservoir capacity of two storage dams on the Verde River.
The four hydro-electric plants on the Salt River originally were operated at 25-Hertz. Conversion to 60-Hertz was completed at Stewart Mountain in 1963, at Mormon Flat in 1971, and at Horse Mesa in 1972. The eight 50 to 60-year old generators at Roosevelt Dam have been retired. Installation of a. new 36,500 kw generator, directly connected to a new turbine began commercial operation in March 1973. This represents the last hydro plant to be converted to 60-Hertz.
Table 6 CERTAIN CHARACTERISTICS OF DISTRICT DAMS (1973)
Reservoir Plant Annual Capaettr Capabnltr Generatton(2)
Name of Dam River (sere-ft.) kvv(1) (1,000 kvvh)
Theodore Roosevelt ....... Salt 1,381,580 36,500 58,936 Mormon Flat ............ Salt 57,852 60,200(3) 42,181 Horse Mesa ............. Salt 245,138 129,600(4) 99,100 Stewart Mountain ......... Salt 69,765 13,300 42,543 Bartlett Verde 178,477 Horseshoe ................ Verde 139,238 Canal Plant (Crosscut) ..... 2,000 254 Total 2,072,050 241,600 243,014 (1) Capability based on 1973 operating agreements during summer peak demand periods.
(2) 10-year average 1963-1972.
(3) Includes a pumped storage unit rated 50,000 kw (1971).
(4) Includes a pumped storage unit rated 97,000 kw (1972).
Thermal Generating Facilities The District owns and operates three principal wholly-owned thermal plants the largest of which is the Agua Fria plant. It has a capability of 399,800'kw. In 1973 Agua Fria produced 2,308,761 mwh .or 30.57% of total production. The plant is a steam generating plant located west of Glendale, Arizona. It consists of two 109,000 kw units constructed in 1957 and 1958 and one 182,000 kw unit constructed in 1961. All units are designed for both oil-firingand gas-firing.
The Kyrene plant is a steam generating plant located south of Tempe. The Kyrene plant has a capa-bility of 104,200 kw consisting of a 33,700 kw unit installed in 1952 and a 70,500 kw unit iInstalled in 1954.
In 1973 it produced 378,294 mwh or 5.01% of total production. .
Four combustion peaking turbines, totaling 238,800 kw, are iinstaHed at the Kyrene plant, mwh or 4.40% of total production. All peaking units'are deSigned for oil-firing or gas-firinp.
producing'32,325 The Crosscut steam plant located near the City of Tempe has a capability of 34,400 kw, consisting of four 8,600 kw units, three of which were constructed in 1941 and one in 1949. In II.973 Crosscut produced mwh or .19% of total production. '4,050 The Kyrene and Agua Fri'a stcam generating plants were the largest sources of energy for the Districts in the 1960's. At the present time,'the supply of natural gas'vailable to the District is limited and~ declining. 's a result of the impending gas shortage, the District's gas or oRl-fired generating plants are becdmilig i&ere!as- ~
ingly dependent upon low-sulphur oil as a pnmary fuel. The higher'cost of this fuel oil is passed on to District customers pursuant to fuel cost adjustment clauses and cohtralctuhl agreements (see "Fuel Supply",). ,'t is anticipated that the cost of power delivered to the District from the new coal-fired plants (further described herein) will be considerably less than the cost of power obtained from the present gas and oil-fired plants. In such event, the Agua Fria ancl Kyrene plants may e'xpericn'ce a change in operation, eventually ~ending i up as plants utilized mostly for pea'king power during heavy energy demands usually'xperienced during ~the summer and as area protection plants.
Electric System thermal generating facilities presently operating also include the District's iundividcdi ownership interest in the jointly owned plants at Four Corners and Mohave as described herein'under "Power Resources Historic". (
Transmission System The District transmits power from its generating stations to the load centers via transmission anted sub-~
transmission lines and also participates in jointly-owned transmission systems associated with Table 7 lists the District"s transmission line totals.i Table 7 remote'eneration.
~,
DISTR[CT TRAI)iSMISSION LINES As of December 31, 1973 Ctreot t hlllcs Clreolt htlles ot 60.ncrts(1) ot 2S.Herer(1)
Line Voltsscs ISoes 500,000 9(2) i 230,006 140 115,000 I.. 282 110,000 5 69,000 451 Total 882 3 5 (I) Cydcs per secoad.
(2) Dh;trict participation in the Eidoradt) @<~
As of December 31, 1973, the District had transmission substations 'witli an airrregate c(ipaeity kva. of',591,000 The District also owns participation in certain other transmission facilities as more fully described herein.
Distribution System As of December 31, 1973, the District supplied service to 241,003 meters. As of December 31, 1973,
.the District owned and operated 109 distribution .ubstations with at) aggregate capacity of almost '2,734,000 kva. An additional 2 customer-owned substations are served 'by 'he. District.
if'0
At the 'time of the 1973 system peak load the ratio of the residential load'o the residential substation capacity was 77.4%.
The District has three mobile transformer units. Unit 1 is a 69 kv unit with a 6,250 kva capacity.
Unit 2, which is also 69 kv, has a capacity of 13,420 kva. In 1971 Unit 3 was added. This is a 115 kv unit with 20,000 kva capacity. These units are used only on a temporary or emergency basis. The capacity of these three units is included in the distribution substation capacity total.
The District has a residential underground distribution program for providing electric service in new suburban developments. This program added over 1,000 miles of underground cable in 1973 to bring the total underground cable miles.to 3,282. Overhead distribution lines currently total about 4,780 circuit miles.
Table 8 shows comparative increases in overhead and underground transformer capacity.
Table 8 NET ANNUAL INCREASE IN TRANSFORMER CAPACITY (kva)
Underground Overhead 1964 9,000 64,000 1965 14,000 35,000 1966 23,000 39,000 1967 30,000 32,000 1968 40,000 42,000 1969 42,000 49,000 1970 91,000 56,000 1971 162,000 71,000 1972 178,000 63,000 1973 . 215,000 72,000 General Plant The administrative headquarters and general offices of the District are located in Tempe, Arizona, just east of Phoenix, with the major service, garage, warehouse and line facilities in or near Tempe and Phoenix.
General plant also includes substantial investments in a variety of vehicles and an extensive communi-cations facility.
Included in the present administration headquarters is a customer information center, which became fully operational in 1971. The center has continued to expand to meet customer growth. It currently consists of 42 stations. Each station is equipped with a cathode-ray display terminal linked directly to the District's computer facility for direct inquiry and automatic display of customer account information at computer speeds. The center currently operates 76 hours8.796296e-4 days <br />0.0211 hours <br />1.256614e-4 weeks <br />2.8918e-5 months <br /> each week and is manned by highly trained
,personnel who provide a broad range of customer service such as full information on account status, acceptance of routine service orders and acceptance of emergency service orders during storms and other emergencies.
POWER RESOURCES HISTORIC Summary In 1973 the largest source of energy was from thermal plants which supplied 62.1% of requirements (see "The Electric System" ). About 14.8% of requirements were supplied from Colorado River hydro power purchased from Arizona Power Authority ("APA") and the United States Bureau of Reclamation ("USBR").
11
Thermal energy amountiing to IS.1% of requirements was purchased from Hayden No. 1 and others. The remaining g.0% oi the energy used came from t>tstrtct hydro plants iree "The Electric System".). Table 9 provides a detailed breakdown of power sources in 1973. $ 11 Table 9 DISTRICI'ONIs'.R SDURCES (1973)
Pgoduc lion Captabllttiy Ptoductlon Phrccstt ot II the) (1,000 kgb)
District Generation: (1)
Hydro .. 241,600 600,364 7.95 Crosscut Steam 34,400 14,050 .19 Kyrene 104,200, 378,294 5.01 Kyrene (combustion turbiines) i 23i8,800 332,325 4.40 Agua Fria 399,800 2,308,761 30.57 Four Corners (10% participation) ....,. 160,000 956,236 12.t66 Mohave (10% participation) 152,0()0 703,006 '.31 Purchases and Receipts:
'.76 APA 56,200 208,660 USBR Parker-Davis 42,000(2) 68,200 .90 Colorado River Storage Projiect . 380,600(3) 840,576 11.13 Arizona Electric Power Co-op Contract ..., . 7,000 56,637 '75 Hayden No. 1 Contratct 54,000 438,166 5.80 i
Surplus non-firm 83,530 1.10 Plains G&T, . 30,000 120,595 '.t60 Others non-firm 442,798 5 87 (I) Based on 1973 operating agreements during summer peak dematttd period.
(2) Beginning in 1974, 30,000 kw available from 1'hfarch to Scptcmber and 22,000 kw avaiilable from Octdber'hrtyugh February.
(3) Includes 47,600 kw wheeled to other Districts.
Power from Four Corners and Mohave Generating Stations In 1962 plans of certain members of the Western Energy Supply and Transmission Associate<,
association of principal utilities in the Southwest, were annoultced for the construction of two major a'lanning steam-electric generating stations. These plans were the results of a long study which projected the construe'tion of a number of strategically ltccated Iplants iin the next 15 to 20 yearsBecause of t1he large investmeitt rttqui'red, the plants are jointly owned, with several companies supplying capital for construction and sharing oUtput to the investment. in'roportion On April 1, 1966, the Arizona legislature enacted an amendment to the Agricultural Improvement District Act expressly authorizing agricultural improvement districts to own, construct, operate and maintain, severally or in common with othery generating and transmission facilities outside of Arizona.. Thtg Board of Directors subsequently approved the District's 10% participation iin each-of the Four Corners and Mohave~
plants. The District is a member of WEST and the remaining ownership of Four Corners and Mohavei phtnts's by other members of WEST.
Thc Four Corners Plant consists of five units. The District's parti'cipation is in Units 4 and 5 consisting of two 750,000 kw, nominally rated,, coal-fired steam-electric generating units located adjacent to APS~
units 1, 2 and 3 on the Navajo Indian Reservatiion neair Shipi'ock, New Me'xico. Unit 4 went on line for commercial operation in 1969,:and Unit 5 in 1970. Fuel comes from area mines at approximately I'5<
Btu. Certain changes in the: design features of the plant caused by environmerital requirements arc per'illion still to be completed (see "Environmental Program" )., The adciitional estimated cost to the District ftiyr sidch environmental features is $ 18,096,000.
12
The Mohave plant consists of two 750,000 kw, nominally rated, coal-fired units and is located in Clark County, Nevada on the Colorado River, three miles from the USBR Davis Dam. The first unit went on line for commercial operation in April of 1971 and the second in October of 1971. Fuel is supplied from the Black Mesa coalfields in northern Arizona at approximately 22< per million Btu delivered at Mohave.
Technical and environmental diAiculties experienced with plant operation may require design modifications for this plant (see "Environmental Program" ).
The two plants add approximately 312,000 kw to the District's capability. Participation, representing contributions of capital and'equivalent entitlement to power and energy, is given in Table 10. For a discussion of the participation agreements see "Power Agreements".
Table 10 PARTICIPATION IN FOUR CORNERS AND MOHAVE Pcrccnt Percent Parttctpant pour Cotnere hfoharc The District 10 10 Southern California Edison Co.. 56 Los Angeles Dept. of Water & Power 20 Arizona Public Service .. 15 New Mexico Public Service Co.. ~ ~ ~ ~ 13 Tucson Gas & Electric Co.
El Paso Electric Co.
Nevada Power Co. 14 Power from Hayden No. 1 Under a 40-year contract of February 1962 (see "Power Agreements" ), the District is entitled to 50,000 kw of steam power from the Hayden No. 1 plant in Colorado on a firm basis plus a similar block of power which is subject to withdrawal by Colorado-Ute Electric Association ("Colorado-Ute") for its own use at the rate of approximately 5,000 kw per year. Colorado-Ute also has the right to recapture the 50,000 kw on four years'otice. In 1973, a total of 54,000 kw was available as provided for under terms of the contract. Colorado-Ute has notified the District of termination of its entitlement to the 50,000-kw firm block of power after 1975.
The District's allotment is delivered to the USBR and is used to supply USBR customers in Colorado, Utah and Wyoming. USBR delivers a similar amount of power and energy to the District from the Glen Canyon hydroelectric plant. This is "transmission by displacement" and electively reduces transmission investment, operating expenses and losses both for the USBR and for the District.
Power Purchased from APA When the Hoover Dam was completed on the Colorado River in 1934, a share of the power developed there was allocated to Arizona. Installation in 1952 of two generators for Arizona in the Hoover plant made a maximum capacity of 165,000 kw available to the APA. This was resold by APA to various Arizona utilities, including the District and APS, but principaHy to cooperatives and power districts owning no generating facilities.
On January 1; 1971, the District entered into a contract in which the District has firm entitlement to slightly over 24% of APA's portion of Hoover Dam energy.
The District's share amounts to approximately 37,000 kw plus 19,000 kw for delivery to several smaller districts for,whom the District acts as agent. Present charges are expected to average 5.45 mills per lavh. The contract term is to 1987 (see "Power Agreements" ).
t Parker-Davis Project Power Purchased from USBR The USBR has constructed substantial mileage of 230,000 and 161,000-volt transmission lines in Arizona for delivery of power from Hoover, Davis and Parker Dams on the Colorado River as shown on the attached map entitled "High Voltage Transmission Lines and Principal Generating Stations Supplying Salt River Project". All power which USBR has available from Parker-Davis Dams is under contract, and no expansion of this service can be expected. The District's contract for Parker-Davis power of December 18, 1962, provides 13
for purchase over a 10-year period of 30,000 Icw of non-withclrawable power during the summer and 22,600 kw during the winter (October to March), with enerip available at various minimum load factors and increased energy usage depending on availability (see "Power Agreements" ). The monthly rate under thiis contract is $ 1.275 per kw of billiing demand charge and 3.0 mills per kwhr energy, charge. The District renewed ,'the, Parker-Davis contract in January 1973, to continue to 1976 on the'same basic terms and conditions.
Power Purchased from.Colorado $ 5ver Storage Project of USB:R The Colorado River Storage Project (the "CRSP") consi'sts of five dams now in service and ia sixth to be completed by 1976. The, power developed from these dams is largely for tlhe bene6t of the, Upper, Colorado River Basin. Howeverr Atizona, a small part of eastern California and three countiies of Nevada are permanently allocated 20% of the summer and 7% of the winter power by USBR. The Arizona share has been temporarily expanded by power not usable in the Upper Basin states, to be withdrawn later as demand'here increases.
Table 11 shows capacity of the six da,ms, wb,ile Table ).2 shows scheduled deliveries to the. District.
Table 11 CAPACHY OF COlLORADO RIVER STORAGE PROJECT OF USBR Capacity Hrdroetecsrtc Plant (ktr)
'Ilen Canyon 900,000 Elan)lug Gorge . 108,00()
Fontenelle 10,000 Curecanti Project:
Blue 'Mesa . 60,000 Morrow Point 120,000 Crystal (Scheduled for 1976) . 28,000 Total 1,226,000 Table 12 SCIIEDUIED DELIVERIES TO TIIE DISTRICT OF COLORADO RIVER STORAGE PROJECT POWER (kw)
For the Dfatrtct For Other Distr(etc Year (remoter) (1) ttomtner W.later 1974. 49,000 200rOGCI 50,000 1975.
1976.
1977.
~ ~... 49,000 14,000 14r000 112t000 112,,000 112,000 30,000 30,000 30,000 1978. 14,,000 112,000 30,00G 1979 14,000 112,000 30,000 (1) Allocated to distriicts included in the Dhtrict's servitor area for irrigation purposes; this power is taken into the District Electr'ic System and diistributed to other districts for a "wheeling" charge.
The permanent allotment to the I)ishict wiH be 112,000 kw m summer and 30,000 kw in winter. The contract with USBR is eifective to September 30, 1984. Monthly rates charged are $ 1.35 per kw of contract demand and 3.0 mins pei kwh of energy (see "I'ower Agreementg").'n extensive transmissiion system has been constructed by the USBR which serves to interconnect'he USBR plants in Color'adio with the, Hayden plant of ColoradoiUte, thence south,to the Four Corners area and west to Glen Canyon. The latter is in turn tied to the Phoenix 'area at Phmacle Peak subs/ati(i)n 4th two 345,000-volt'lines, and the ~USBR iinterconnection extends west~ from Phoenix to the Hoover-Parker-Davis complex. Thes'e interconnections make possible the transfer of Hayden power and Four Corneal p(itwei. to the District by displacement and also the CRSP power delivery to the District.
14
POWER RESOURCES FUTURE Summary The District is developing several power sources for future use. Due to the low cost and relative abundance of coal, most of the estimated future generating capacity will come from coal-fired plants. Due to the estimated lower cost of power from these coal-fired plants, certain present gas and oil-fired plants may eventually be utilized mostly for peaking power during heavy energy demands. This change in fuel source can be illustrated by the fact that in 1973 approximately 40% of production was from gas and oil-fired plants, but by 1979 only 11% of production is estimated to come from oil-fired plants. The District is presently, estimating that no gas will be used for power generation after 1975 (see "Fuel Supply" ).
Power from the Navajo Project The "Navajo Project" consists of a coal-fired steam-electric generating station, a railroad to deliver coal from the Black Mesa coal field and 500-kv transmission lines and switching stations to deliver the power and energy to the various participants. The District is the Project Manager (responsible for construction) and the Operating Agent (responsible for operations and maintenance) of the railroad and the generating station.
The generating station now under construction is located on the Navajo Indian Reservation. near Page in northern Arizona. The station wiH have three 750,000 kw turbine-generators and coal-fired supercritical reheat boilers. Water for the cooling towers and plant use will be provided from a pumping station located adjacent to Lake Powell. The. first until was "rolled" January 21, 1974 and achieved maximum output of 793,000 kw on March 9, 1974. It is presently, in the testing stage and is scheduled for commercial opera-tion in May 1974, with the other two units scheduled for May 1975 and May 1976, respectively. When completed, the net power output of the station is expected to be over 2,250 megawatts.
Agreements have been signed by utilities to participate in the Navajo Project. Table 13 gives participa-
~
tion in the generating station, based on contributions of capital and equivalent entitlement to power and energy.
Table 13 NAVAJO PROJECT POWER PARTICIPATION
( parttcfpant Percent Partlctpatton The District 21.7 Arizona Public Service Co................... ...........
14.0 Department of Water 8c Power, Los Angeles 21.2 Nevada Power Company 11.3 Tucson Gas 8t Electric Company . 7.5 U.S. Bureau of Reclamation 24.3 The District holds title to 46.0% of the generating station, 21.7% for its. own use and benefit and 24.3%
for the benefit and use of the USBR. All participants, including the USBR, furnish their allocated share of capital for construction of the generating station, pay their portion of operating and maintenance costs, and, in return, are entitled to an equivalent share of power and energy. The USBR share will be used for the'CAP pumping requirements. Prior to the time when the USBR requires its share of the power and energy for the CAP pumping, the remaining participants in the Navajo Project and Southern California Edison have agreed to purchase USBR's share. The District's estimated share is 85,000 kw in 1974, 163,000 kw in 1975 and 107,000 kw thereafter until the USBR requires its share. The USBR must give the participants 5 years advance notice on amounts to be withdrawn for the pumping requirements of the CAP.
The estimated cost of the generating station is $ 612,000,000, the District's share of which would be
$ 132,804;000. Construction on the entire generating station is about 62% complete.
The generating station will be fueled with coal, averaging 10,700 Btu per pound, which will be surface mined and delivered from the Peabody Coal Company's Black Mesa coal leases. Sufiicient coal has been dedicated and reserved to operate the Navajo Station for 35 years at 90% load factor. Cost of the coal at the raBhead will range from $ 2.90 to $ 3.00 per ton based on January 1, 1973, costs. The contract contains pro-visions for price escalation based on increases and decreases in mining expenses (see "Fuel Supply" ). Negotia-15
tions are under way, at Peabody's, request, to examme ways of amending the coal supply contract to atteviate the effects of certain unanticipated cctsts.
The coal is transported to the plant site 80 miles away by a railroad that has been completed at a
<Ii cost of $ 54,000,000, the District's share of which i. $ 11,718,000. It will be operated by the participants. The estimated transportation costs are $ 1.33 per ton. 'I'he delivered cost at the generating station is about $ 0.21 per million Btu based on 1972 cost..
The most effective ai,r quality control devices and dust and noise suppression equipment are planned to be installed to enable the station to conform with all. existing laws andi regulations related to environmental protection. Of the estimated cost of the generating station and railroad of $ 666,000,000 over $ 200,000,060 be for environmental protection. For a discuss'ion of enviromneiital considerations related to the N'avajo
,'ill Project see "Environmenta1l Program".
The 500-kv transmission system necessary for delivery of power from the Navajo generating station to the participants includes two 500-kv transmission lines to the Westwing switchyaid near Phoenix and a third 500-im transmission line under construction to the McCullough switchyard located in Southern Nevada near Hoover Dam, about 59 miles north of tlhe Mohave oner'atin'g station. APS is the Project Manager and Operating Agent for the 249-miile long transnussion lines and facilities (southcrn transmission system) delivering power to the Phoenix area. The Los Angeles Dcpartme'nt of Wafer and Power is Pxoject Manager and Nevada Power Company the Operating Agent for the '250-mile transmission line '(western system) to the McCullough switchyard. The participants own and are entitled to use the 'ransmission Navajo transmission system's capacity inicluding its interconnections and 'use'f existing transmission system facilities as required to deliver power and energy to their load centers. The ownership interests in the Navajo transmission system are based on the transmission line capacity required by each participant. The District will own the capacity required for delivery of GAP power to the Westwing (Phoenix) and McCullough switchyards for the use and benefit of the Uniteci States. The USBR, however, will furnish the necessary capital for this construction and will pay the operating and maintenance expenses.
The estimated cost of the southern transmission system is $ 94,079,000. Construction. of these lines, except for switchyard facilities required .for the second, and third geiierating uniits, is complete. Thc District <Ii owns a portion of the system for its own use and beriefit at an estimated cost of about $ 30,083,000. The District holds title to a portion of the system for the use and benefit of the USBR at no cost to the District.
The participation agreement contains special provisions covering the relationship between thi! District the United States. The United States must consent to a1ll Navajo Project agreements which the DiStric[ mIiy
'nd enter into where the United States is not a party, The agreement, also provides'that any liability ar burden incurred by the District because of its relationship with the United States shall be shared among aG the ~
co-owners on the basis of their owiiership interest in the Navajo gerierating station.
The principles incorporated in agreements relating to the construction and operafion of the Navajo Project are substantially similar to agreements reached in the constructioln and. operation of the Foux'orners Mohave Projects (see "Power Agreements"'). 'nd Power from Hayden No. 2 The District and Colorado-Ute are pla:nning the additioiIi oiI a second '250,000 kw coal-fired generating unit for operation in 1976 at Hayden, Colorado, of which the District will initially own 80k df the ~
unit and be entitled to 80%'f the output or about 200,000 kw untiil, January 1, 1982. Under the terms of this agreement the .'District will own 80'%f Hayden No. 2 and Colorado-Ute will'wn 209~o, with the provision that Colorado-Ute must recapture 30% of Hayden No. 2 on January 1, 1982, subject to approval of the Administrator of Rural Electrification Administration (the "REA"). The unit will be
'he located on the same site as the Hayden No. 1, and will share some conIunon facilities. Certain improvemeiits be required in Hayden No. 1 for pollution control and to a'ccoIinm'odate joint operatiion with Hayddn No. 2. 'ill construction cost of the Hayden Project (Hayden No2 plus improvement to Hayden No. 1) is estiinated 'otal to be $ 88,434,000. The 'District's share of the Hayden Pr'ojec':t e'xcluding interest during constructi'on is comprised of $ 68,705,000 for Hayden No. 2 and $ 3 078,000 for th'e improvement to Hayden '71,783,000 No. I. Definitive agreements have been reached (see "Power Agreements" ).
16
Hayden No. 2 is to be a coal-fired stcam generating plant. It is anticipated to be operational in the Spring of 1976. The fuel is to be low-sulphur coal with an estimated 1976 price of $ 4.03 per ton and averaging about 10,800 Btu per pound. Sufficient surface mined coal from an adjacent area has been dedicated and reserved to operate Hayden No. 2 for 35 years at an average life-time load factor of approximately 75%
(see "Fuel. Supply" ) .
The same "transmission by displacement" discussed under Hayden No. 1 will apply to Hayden No. 2.
Power from Arizona Station In order to provide additional capacity, the District now plans on building a new wholly owned generating station to be located within the State of Arizona. The site for the coal-fired plant, the source of coal, and location of transmission lines are still to be decided upon. It is anticipated that the plant will ultimately have three units totaling 1,050,000 kw capacity, with the first two 350,000 kw units scheduled for operation in May 1978 and 1979. The estimated cost of the three units is $ 496,000,000 of which $ 355,524,000 is estimated to be spent in the present Improvement Program. The balance of the total cost is estimated to be financed after 1979. The long-range planning includes approximately $ 60,000,000 for transmission lines to provide for the ultimate 1,050,000 kw capacity of the station.
Environmental hearings on site selections are expected to take place in mid-1974. Two sites are under investigation.
Power from the Combined Cycle Plant Three 73,000 kw combined cycle units are being erected at the Santan site near Gilbert, Arizona. These units utilize a combination of a combustion turbine generator exhausting its high temperature discharge into a boiler which in turn supplies steam to a steam-turbine generator. The combination is more efiicient than either combustion type alone. The combination design also permits ordering and installation in a short period of time.
.0 Location of the plant at the site of the existing substation will permit utilization of the existing trans-mission system without appreciable changes. The plant is scheduled to be completely operational in time for the 1974 summer loads.
A fourth unit is scheduled for operation in 1975.
The estimated installed cost of the four units is $ 57,818,000. All major equipment is presently under contract.
Power from Combustion Turbines Six 'dual-fuel combustion turbines have been purchased with four units totaling 238,800 kw already installed at the Kyrene plant and two 64,000 kw units scheduled for operation at the Agua Fria plant in 1974.
Plans now call for an additional 61,000 kw unit in 1975.
The existing transmission facilities are expected to be utilized without appreciable changes.
Power from the Kaiparowits Project The Kaiparowits Project is to be a large coal-fired generating plant located in southern Utah consisting of four 750,000 kw generating units. Present participants are Southern California Edison Company, San Diego Gas & Electric Company, APS and the District. The planned in-service date of the first unit is 1980, with a unit to foHow each year. The District has agreed to be a 10% participant in the Kaiparowits Project and has entered into the Kaiparowits Project Participation Agreement.
On June 12, 1973, Interior Secretary Rogers Morton announced he would reject right-of-way permits for the proposed Kaiparowits Project in southern Utah. for environmental reasons. The Kaiparowits Project participants:and representatives of the Secretary of Interior have had a number of discussions related to relo-cation. of the plant site and reconsideration of the Secretary's decision. Both groups are studying these possi-bilities and discussions are continuing. On December 18, 1973, the Secretary announced he would consider amended applications for a new site 15 to,16 miles north of the original which will overcome the objections causing rejection of past applications. Expansion of Arizona Station" will be one of the alternatives consid-ered if a replacement of Kaiparowits Project becomes necessary.
17
Power from Craig Station The District and others have selected a site in the Yarnpa Valley area near Craig, Colorado for con-struction of two 350,000 kw coal-fired generating units to be operational in 1978 and 1979,(formerly, gl referred to as the "Yampa project" ). Agreements for the Craig Station are complete and near execution, ~
present plans call for the District to have a l10,000 kw sharc (29%) in each unit. The preliminary estimated cost of the plant is $ 297,000,000 of which the District"s share would be approximately $ 86,000,000 ~excluding ~
interest during construction.
The Craig Station wiB use low-sulphur surface mined coal f'rom a mine adjacent to the Craig plant site.
for the fuel sup]ply have been made. The fuel cost is Aurrlently estimated at $ 3,98 per ton at 1978, 'ontracts prices. (See "Fuel Supply".)
The District anticipates that it will use the "transmission by displacement" concept to minimize 'trans-costs associated w'ith the Craig Station. 'ission Power from Palo Verde Nuclear Station On August 23, 1973, the District signed a participation a'greement for the construction of three 1,270,000 kw pressurized water nuclear reactor units to be in service in time to meet peak demands in 1981, 1983, and 1984. Site selection for this plant was announced on October 30, 1973, as 50 miles west of Phoenix near Wintersburg. The cooling water supply will be delivered from treated sewage efHuent from the metropolitan Phoenix are:a pursuant to contracts between, the District, APS and five cities in the area.
The present participants include. APS as project manager (28.1%) the District (28.1%), Tucson Gas @
Electric Co. (15.4%), El P'aso Electric Co. (15.89~o) and Public Service of New Mexico (10.2%) and AEPCO (2.4% ).
The District will be responsible for construction and operation of a part of the related 500 kw transmission system.
5'UEL SUPPI Y Coal required for olperation of the District's facilities,~ in~ which~it has ownership interests or povver cntitlements (Hayden No. 1 and No. 2, Navajo project, Four Corlne& project Units 4 and 5, Craig Station No.
1 and No. 2 and Mohave Project), is obtained from Peabody Coal Company and Utah International, Inc.,
under long-term contracts and, with exception of Mohave Project, is in'he general vicinity of the generating All coal is mined by surface methods,. Coal for Mohave is transported via coal slurry pipeline. 'nits.
In recent sessions of Congress a number of bills with Widely diff'!rinj, pl.ovilsions have been introduced to the regulation of surface mining and, in particular, to reclamation requirements. One such bill 'elating was recently passed by the Senate. The District cannot predict the likelihood of this bill, with dr or any other such bill presently under consideration or yet to be proposedl, becoming law.
vtrithbut'mendments, However, should any such legislation be adopted the District believe that a consequence cou'Jd be an increase in the cost of coal to the Distric't, as weH as to other power suppliers. An additional consequence might be some reduction in the supply of coal available to purchasers, including the District, the extent and duration of which cannot be predicted. The Distric:t cannot, however, predict the overall impact'of any s'uch or its consequences, upon the Distric:t's accosts and operations.
legis-'ation, Natural gas is a fuel usecl by the Distric:t for some power generation requirements. Although use of natural gas does not result in significant particulate or sulphur dioxide lemissioti, the supply of gas available ~to the ~
District is limited and declining.
Gas is purchased from the Southern Division of El Paso Natural Gas Company ("El Paso" ) under long-term arrangements extencling to 1980. In recent years El Paso has been unable to acquire any substantial new gas reserves for its Southern Division, and not only has the District been. unable to increase tts contract purchase quantities but on increasing occasions El Paso has curtailed its deliveries of gas to industrial cus-tomers, including the District. Curtailment plans in regard to El Paso gas deliveries which would impose relative priorities and limitations among its customers in time of curtailment, are now pending in proceedings before the Federal Power Commission (the "FPC"). An interim decisioi'i has been entered, which places boiiler gas in a fifth priority. The decision as to boiler gas for electric generation places aa Southern Division customers on the same basis. The District expects the final decision to be similar to the interim decision.
18
As a result of the natural gas shortage, the District's gas supply has been steadily decreasmg to the extent that by 1976 it is projected that the District will receive no natural gas for fuel. Thereafter it is expected that the District will be entirely dependent on oil as fuel in its dual-use gas or oil fueled generating facilities.
At this time the District has been able to contract for approximately eighty percent of'ts fuel oil requirements for generation in 1974. However, the recently imposed federal mandatory allocation program for petroleum product fuel pursuant to the enactment of the Emergency Petroleum AHocation Act of 1973 and the promulgation of allocation regulations, along with recent cutbacks in supply of foreign crude oil supplies, has placed into question the ability of the District's oil suppliers to meet contract commitments.
Under the allocation regulations the Federal Office of Oil and Gas in Washington allocates residual oil to electric utilities. The, allocations are based on data filed with the FPC by all utilities. Allocations are based on available residual supplies, utility requirements and non-utility requirements and an applied electric energy conservation factor. Fuel in excess of the allocation may be purchased if available on the market.
The new regulations on distillate fuel were issued on January 11, 1974. They provide that electric utilities shall receive 100% of current requirements for start-up and flame stabilization of coal-fired generating stations and 100% of 1972 base period use by months for other uses including other generation.
The regulations also provide that consideration shall be given to supply of distillate fuel required to replace natural gas supply interrupted pursuant to FPC order. On this basis the District has filed for an increase in its allocation.
Based on current inventory and assuming no increase in the 1972 base year allocations and inability to purchase distillate in amounts greater than 1972 base, the District could incur a deficiency of 1,357,563 barrels of distillate during the remainder of 1974. However, the District's experience to date has shown that distillate fuel in amounts greater than the 1972 base allocation is available on the market. Moreover, if the regional office of the Federal OSce of Oil and Gas follows the clear mandate and intention of the Emergency Petroleum Act of 1973 and the regulations, it will increase the District's allocation of distillate fuel by amounts sufficient to replace natural gas interrupted by El Paso Natural Gas Company pursuant to order of the FPC. Such an increase would cover the above stated deficiency.
The District has a fuel oil storage capacity of 1,384,048 barrels. As of March 28, 1974 there were 1,128,634 barrels of distilate and 167,037 barrels of residual in storage.
The District starters leasing railroad tank cars in October 1973, to help assure delivery of fuel oil purchases, and now has 208 cars in service. Additional cars are on order and are being manufactured and delivered. Scheduled delivery of a total requirement of 250 cars is to be completed by August 1974.
The table below gives estimated percentages of electric energy resources to illustrate the estimated relative significance. of various fuels to the District's sources of electric energy including purchased energy during each of the years 1973 through 1979:
Table 14 FUEL SOURCES Actual 1973; Estimated 1974-1979 Year Hydro Gas Oll Coa1 Misc. Purchases 1973 23% 18%%uo 22% 28% 9%
1974 13 14 36 32 5 1975 9 7 36 47 1 1976 9 0 32 58 1 1977 8 0 28 62 2 1978 7 0 18 74 1 1979 7 0 11 82 0 ESTIMATED LOADS AND RESOURCES 1974 THROUGH 1979 The District has estimated the future sales of energy and examined the present sources and estimated future sources of power that may be used to supply the estimated system requirements. In the opinion of the Consulting Engineers, the estimated future sales of energy are reasonable and the estimated sources of power that may be used to supply the estimated system requirement, are adequate for the foreseeable future.
(See Appendix A Summary Report of Ford, Bacon & Davis Incorporated.)
Table 15 summarizes loads by translating estimates of sales of energy made elsewhere in this Oflicial Statement into kilowatts of peak demand on the system. It also summarizes the previously described future sources of power that may be used to supply the estimated system requirements.
19
The Navajo Generating Stntioit, being built near Page, A'.rizona, will be the state's lnrgest generat-iJig station. 'Construction by the Distr'ict and five otlicr pnrlicipants beganin 1970. Unit No. 1 is going througli slart-up and is scheduled tn be in conuncrcial operation in MayUnits 2 and 3 nre scheduled jor oper'ntioii in May 197($ and
)977(', respectively. The District Which iS constructor-operator, 'ilI
'NH j receive 448,000 kiloewatls o tlu.
~ Iliaam s<atiqn's, 2.25 million kilowatt capacity tVatcr can be recycled to produce electricity at Mormon Flat Dam, site oj thc Southwest's first pumpcd-sloragc generating system.
lVater used lo spin thc 47,000 kilowatt generators can be pumped back jor re-use. There is also a conventional 10,000 kilowatt generator at thc dam A similar system is used at Horse Mesa Dam, where there is a 97,000 kiloivatt pumped-storngc unit nnd three conventionnl 10,000 kilowatt generators.
Table 15 LOADS AND RX'SOURCES (1,000 lrw)
Actual 1973, Estimated 1974-1979 1973 1974 197S 1974 1977 1978 1979 Loads The District .... 1,433 1,700 1,885 2,049 2,209 2,423 2,583 Remote Losses 15 24 34 44 44 62 80 Sales to Other Utilities:
City of Mesa ........ 26 31 35 52 59 66 74 Territorial Equivalent . 143 174 181 199 217 236 251 Contingent Power .... 62 62 62 62 62 62 62 Total Loads ..... 1,679 1,991 ',197 2,406 2,591 2,849 3,050 Resources Hydro 239 241 241 241 241 241 241 Thermal Steam Turbines ....... 538 538 538 538 538 538 538 Combined Cycle Units . 219 . 285 285 285 285 285 Combustion Turbines 224 367 428 428 428 428 428 Hayden No. 1 . 54 50 50 Four Corners .. 158 160 160 160 157 157 157 Noh ave 152 158 158 158 149 149 149 Navajo ............ 163 326 489 489 489 489 Hayden No. 2 ...... 200 200 200 200 Craig Station ... ~... 110 220 Arizona Station ....., 350 700 Purchased Arizona Power Authority ... '56 56 56 56 56 56 56 USBR Navajo 85 163 107 107 107 107 USBR Parker-Davis "...... 42 30 30 30 30 30 30 USBR CRSP (Summer) 380 249 151 126 126 126 126 Other Purchased .......... 37 30 162 Total Resources ... 1,880 2,346 2,586 2,818 2,968 3,266 3,726 Resources in Excess of Load r .... 201'00 355 389 412 377 417 676 Reserve Requirements ......,....,. 261 302 336 363 402 433 Surplus 1 94 87 76 14 15 243
POWER. AGREEMENTS The following are brief suimmaries of the principal agreements of the District related to the I.:lectric System.
Agreement of August 31, 1955 ~ivith APS To resolve differences of opinion between APS and'the District concerning their respective service areas, APS and the District entered into the Agreement of August 31, 1955 defining the service areas af each.'his Agreement has been approved by the Arizona Corporation Commission on behalf of APS and the Secretary of Interior on behalf of thee District. The Agreement has no provisions for termination. except under very limited conditions'of def'ault.
The agreement resulted in (i) continuance of service by District to rural areas then served by it, even though such areas were later annexed by the cities in which AiPS iwas serving, (ii) the District withdirawing from retail service in certain areas and the: assumption of service by APS, and (iii) APS agreeing from District at wholesale,, the power requirements necessary to supply. the retail sales in the to'urchase the District discontinued service. The Agreement also defines types of load to be served by the two areas'here parties in the eastern part of the service area, with the District continuing to serve directly certain ls,rge mining loads and selling wholesale to APS'the other requirement+~ of. the Globe-Miami-Superior area. i i Power Coordination Agreement with APS The electric systems of APS and the District were interconnected at various points at which transactiionst could occur between the systems. On September 15, 1955, APS and the District entered into 'the Agreement to provide (i) for cooperation in the development and operation of their respective Power'oordination electric system, (ii) for the sale and interchange of power and (iii) for mutual emergency assistance between the two systems Four Corners and Mohave Participation Agreements The District and the other participants in the Four Corners and Mohave Projects have acqu'ired or established for both plants, their respective percentage ownership interests in (i) the plant sites an/ ne!cesgary land rights and the facijities tct be. located thereon, (ii) rights td us'e of water in amounts required, (iii) contracts for coal fuel, (iv) ctonstruction contractsand (v) operating agieeriaents. In both projects the basic title document is a Co-Tenancy Agreement which sets forth the undivided percentage 'ownership interests in the projects and establishes cntitlements to power and energy in the same percentages. %hei
,Co-Tenancy Agreements also estab1Iish the basic legal provisions relating to settlements of disputes, defaults, arbitration, and termination as well as establishing the means of administcrlin*g and managing 'the projects.
The Construction Agr'eements desiignatc o'e entity to have responsiibility for construction as 'the Project Manager and provides for funding the project costs in accortd with cost responsibilities. The Project Manager is reimbursed for its costs but receives no fee or profit. The Operating Agreements designate onI: entity as Operating Agent to operate and maintain the project and alloca'tes the,'costs to the co-owners. The Operating Agent is generally supervised by an engineering arid opcratirig committee of all co-owners. The District has also executed contracts for delivery of its portion of the power and energy'from both projects iinto in the Phoenix.area. 'The, participation of the various'tilities in the'wo plants is shown, in Table 10, its'ystem above.
Power Purchase Agreement with APA When the Hoover Klam wa,s,completed on the Colorado River in 1934, a share of the power developed there was,allocated to Arizona. In.tallation in 1952 of two Arizona generators in the Hoover plant made available to APA a maximum capacity of 165,00t0 km. 'This was resold by 'APA'o various Arizona the District.-
It utilities'ncluding
On January 1, 1971, the 1951 contract was replaced by a new contract in which the District'has a firm entitlement to slightly over 24% of APA's.portion of Hoover Dam energy. Customers for this energy also pay their percentage share of the cost of the energy, which APA purchases from USBR and the transmission charges. The power is delivered to the District in the Phoenix area over the USBR transmission system.
Additionally one-half mill is charged by APA for administration.
The District's share amounts to approximately 37,000 L>v plus 19,200 kw received for transmission to several'smaller irrigation and electrical districts. Charges for the current fiscal year are expected to average 5.45 mills per kwh. The contract. term is to 1987.
Parker-Davis Power Purchase Agreement with.USBR The District's Parker-'Davis contract of December 18, 1962, provides for a purchase over a 10-year period of 30,000 kw of non-withdrawable power during the summer and 22,000 kw during the winter (October to March), with energy available at various minimum load factors and increased energy usage depending on availability. Previously the District had a contract with the Colorado River Commission (the "CRC") which entitled the District to the use of 12,000 kw of Parker-Davis power, in exchange for energy'o be transmitted to the CRC. This contract was terminated by CRC on February 1, 1974. Thus, the District's share of Parker-Davis summer power is reduced from 42,000 kw, as reported in previous OEcial'Statements, to 30,000 kw. The power is also delivered to the District in the Phoenix area over the USBR Parker-Davis transmission system. Thc District renewed this contract through 1976, with substantially thc same terms.
Colorado-Ute E<lectric Association (Hayden No. 1 and No. 2) Participation Agreement Under a 40-year contract of February, 1962, the District is entitled to 50,000 kw of coal-fired electric generation from Hayden No. 1 of Colorado-Ute Electric Association on,a firm.basis plus a similar block of power which is subject to withdrawal by Colorado-Ute for its own use at the .rate of approximately.
5,000 kw per year. In 1973 a total of 54,000 kw was available. The Colorado-Utc District contract required the District to prepay the capital costs of the 50,000 kw block with the energy being received at cost. The 50,000 kw withdrawal'block is charged at a negotiated rate with energy at cost. Colorado-Ute has the right to recapture the 50,000 kw firm block on four years'otice upon payment of original cost less depreciation at the rate of 2.52% a year and has served notice of recapture effective January 1, 1976.
The District and Colorado-Ute are in the process of adding a second coal-fired unit at Hayden Hayden No. 2., This unit will be owned. jointly by Colorado-Ute and the District pursuant to arrangements similar to those existing for Four Corners, Mohave and Navajo Projects. The District and Colorado-Ute entered into the Hayden'No. 2 Participation Agreement on August 11, 1972, which has been approved by. the Public Utilities Commission of Colorado and the REA. Hayden No. '2 is scheduled to be in operation in 1976.
Under the terms of this Agreement, the District will own 80% of Hayden No. 2 and'Colorado-Ute.will own 20%, with the provision that Colorado-Ute must recapture a portion of the District's share of Hayden No. 2 on January 1, 1982 subject to the approval of the Administrator of REA. After the date of recapture, the District and Colorado-Ute will each own 50% of 'Hayden No. 2. Contracts for coal fuel for the require-ments of Hayden No. 1 and No. 2 have been made.
USBR-District Interconnection and Transmission Service Contract of June 26, 1962 The District has entered into a contract with the USBR which provides for exchange, transmission and delivery of power and energy from thermal generation interconnected to USBR's Colorado River Storage Project Transmission System, at Hayden, Colorado and Shiprock, New Mexico. Power delivered'to USBR at these two points is exchanged with USBR for hydroelectric generation at Glen Canyon Dam, Arizona. When the exchange does not balance USBR is also obligated to transmit over the CRSP system up,to its capabilities. Under this contract 'thc District receives power equivalent to its. Hayden No. 1 and No. 2, Four Corners Units 4 and 5. and Craig 'Units 1 and 2 (future) entitlements at Pinnacle Peak, Arizona. 'The initial term of this Agr'cement is 'to 2007" with, extensions possible to 2046.
i23
USBR-District CRSP Pur<chase Contract The District. purchases its CRSP power and energy from USBR pursuant to this agreement. Tlfis
. agreement will terminate on September 30, 1984. The charges are $ 1.35 per kw/month and 3 mills per kwh. The District's permanent allotment is 112,000 kw in the summer and 30000 kw in the winter. linger i amounts are available until withdrawal ]is completeAI in 1976,.
Navajo Project Participation Agreement On September 30, 1969, the participants entered into the Navajo Project Participation Agreeinent <which down the principles of construcfion,, ownership, operation and maintenance of the Navajo Project. This 'ets
'agreement will terminate on September',30, 2019. It foHows the pattern described for the Four Corners aiad Mohave Projects. The District is both Project Manager and Operating Agent for the Navajo Project.'he plant site and other land rights have been obtained by lease from the Navajo Tribe and right-of-way grant by the United States. Water rights to 34,100 acre-feet of water from the Colorado River have also been The Navajo Project co-owners have entered into an all.requirements coal fuel contract for the 'btained.
lifetime of the project.
Under the Participation A'greement, the District owns 21.7% of the generating station for its own use and benefit and 24.3% for the use and benefit of thee United States. The United States will use its pow<:r entitle-to pump water for the CAPThe l'Jnited States will pay all capital costs and operating and mairitenance 'ent expense associated with its, entitlement.
Yampa Project Participation Agreement
'The District, Colorado-Ute Electric Association, Zuc., Platte River Power Authority, and Tri4tate Gener-ation and Transmission Association, Inc., arc negotiating the Ysimpa Ptoject Participation Agreement iwhiich provides for ownership, construction, operation and maintenance of the Yampa Project. This agreement follows the general pattern described for the other jointlywwned projects in which t'e '.District participates.
Two 350,000 kw coal-fired unit.~lesignated as the Craig Station will be, located near Craig, Colorado, with the first unit scheduled for operation in early 1978 and the second 'unit in. early 1979. Colorado-Ute Electric Association, Inc., one, of the participants, will be both Projc'ct Manager and Operating Agent for the Yampa Project.
An all-requirements coal supply contract for the .'life of the protect has been secured by the pairticipants with Utah International, Inc. and the plaint site has been acquired from the State of Colorado adjacent to the mine site. The coal will be mined by, surface methods.
Arizona Nuclear Power Project Participation Agreemedt The District, APS, Tucson Gas and Electr'ic Company, Public Service Company of New Mexico, El Paso Electric Company and Arizona Electric Power Cooperative, Inc. entered into the Arixona Nuclear Power Project Participation Agreement dated August 23, 1973. This Agreement provides for ownership, construction, operation and maintenance.of the project, and follows the general pattern described for tihe jointly owned projects in whichi the District participates, 'ther The initial generating station designated the Palo Verde Nuclear Station, consisting of thre'e n'uclear supply systems operating three steam turbine generators, each with an approximate capacityi of i1,270 'team will be located approximateIy 50 miles southwest of Phoenix. The first unit is presently scheduled for 'w, operation in May 1981 the, second ]in November 1982; and the third in May 1984. Consideration is being given to accelerating the conm>ercial operating dates for these t)nits.
The plant site has been acquired and a contract signed with several cities for purchase of waste water efHuent which will be used'for plant operation. APS will be'the Project Manager responsible for cohstructing the generating station. App))ication to the Atomic Energyi, Cemrbssibn for'construction permitS will be made in 1974.
THE IMPROVEMENT PROGRMH 1974 THROUGH 1979 General Description In order to improve its long-range forecasting process, the District implemented a new program during 1971 utilizing a computer-based mathematical model. This corporate model permits analysis of a greatly increased number of alternative factors and effects, as well as signiQcantly reducing the time required to change the inputs and produce revised plans. The corporate model is re-programmcd and revised and its data base up-dated periodically 'to keep the model current for long-range planning. The initial input is a detailed and carefully considered estimate of load growth and new customers expected to be added to the system. The load of each class of customers is estimated separately with eilect given to known industrial developments, new proposed housing, etc. Based upon the expected growth of load, expansions of the power supply is then planned on a comparative basis, and necessary transmission and distribution expenditures then estimated.
District estimates of load growth and the resulting capital requirements follow, in general, the methods used by the Consulting Engineers. Previous independent estimates by the Consulting Engineers and the degree of their conformance with those made by the District, together with a comprehensive check of current estimates lead the Consulting Engineers to accept the estimates and projections of the District as being realistic.
The present Improvement Program is a continuation and updating of the 6-year program for 1974-1979, as reported in the District's OAicial Statement of January 9, 1974, prepared in connection with $ 90,000,000 1974 Series A Bonds. Since then the 1974 portion of the program has been adjusted for current changes in the various categories and by the addition of unexpended funds from 1973. These changes along with the elimination of a 61 mw combustion turbine have increased the 1974-1979 program costs by $ 1,340,000.
Summary of Estimated Capital E<xpenditures for the Improvement Program
>e The Improvement Program, totaling $ 1,373,407,000, includes $ 1,049,204,000 for new thermal generating facilities, $ 142,138,000 for transmission systems, $ 137,421,000 for distribution facilities and $ 44,644,000 for other expenditures. It is anticipated that a substantial portion of funds for the Improvement Program will be provided by additional Revenue Bonds.
Table 16 summarizes estimated capital expenditures for the Improvement Program. Expenditures for 1974-1979 are based on detailed'stimates which include interest during construction.
25
Table 16 ESTIMATED CAPIPAI. EXPENDITURES FOR THE IMPROVEMENT .PROGRAM omitted)
'000's Total 1974 1975 1976 1977 1978 1979 19 j4 19'19.
Four Corners(1) S 2,048 S 1,198 S 12,462 $ 2,388 S i18,096 Navajo Project 30,846 20,563 11679 1,463 64,551 Railroad 660 403 140 1,143 Hayden Project 33,436 20,478 7424 7,177 S 77 68,592 Craig Station 2t207 3,774 24,,003 36,5'86 21,4$ 4 $ 8,027 96,0$ 1 Arizona Station 5,449 18,316 90,926 132,821 76,568 33,569 3S7,649 Kaiparowits(2) 326 1,943 4,138 8,945 3 1,119 40,245 86,716 Combustion Turbines 11,418 2,157 13,575 Santan Combined Cycle Units .......... 23,6!99 2,497 26,196 Palo Verde Nuclear Station .... ...... 3',673 5,561 22,166 61,659 94,59'2 106,499 294,150 Nuclear Fuel 1,113 1,166 1,231 $ 45 264 4,463 8,722 Future Nuclear Projects ........,...... 12 12 696 567 4,163 8,313 13,763 Subtotal Thermal Plants ...... $ 114,82'7 $ 78,068 $ 174,865 $ 252,151 $ 228,177 $ 201.,116 $ 1,049,204 Major Transmission(3) ;l0,471 10,258 18719 51,406 16,949 22,663 130,466 Hydro Conversion and Pumped Slorage . 96 524 620 Other Electric Construction:
Generation 3,540 336 384 504 '528 75ti 6,648 Transmission 3,004 '1,546 1,,634 1,'728 1,827 1,933 11,672 Distribution 21 073 21,830 20880 22,214 26,094 25,330 1,37,421 Project General 11,763 3,691 4,,177 4,160 5,435 6,664 ,35,890 Research and Development ....,..... 1,632 454 2,086 Construction Prograxn Total . S1ti6,310 $ 116,181 $ 220659 $ 332,163 $ 279,106 $ 258,986 $ 1,3,73,4,07 Less:
Interest during Construction ......... 10,084 9,910 10996,,21,011 25,903 26,107 1,04,011 Total (without interest during Con-struction) ................... $ 156,226 $ 106,273 $ 209663 $ 311,152 $ 253,203 $ 232,879 ,$ 1,269,3,96, (1) Units No. 4 and No. S.
(2) On June 124 1973, Interior Secretary Rogers Morton announced he would reject right-af-way Permits for the ProPosed Kaiparowits Project tn southern Utah for environmental reasons. The parlicipants have appealed thc clecision. A number of discussions related to relocation of the plant site have been held with representatives of thc Secretary of Interior. 'Considera-tion of this possibility is continuing. C)n December 18, ]l973 the Secretary, announced hc would consider amended applications for a new site ]lS to 16 miiles north of the original which will overcome the objections causing rejectibn of. past applications. Expansion of Arizona Station is onc alternative if replacement of Kaiparowits project becomes necessary.
(3) Includes District funds for 500-kv transmission systems associated with new power plants as well as all lines over 69 kv.
Generation Additions The Improvement Program includes thermal generating plants plannedbeing constructed, ~or ~being modified at Four Corners, Navajo, Hayden, Craig Station, Ariizona Station, Kaiparowits and Palo Verde Nuclear Station units; and combustion turbine peaking units and combined cycle units. Installation of 189,000 Lm in combustion turbine capacity285,000 kw in combined cycle capacity, completion of Hayden No. 2, operation of two units at Craig Station, two units at Arizona station and operation of three units at Navajo will add 2,190,000 kw to the '.Electric, System's capacity through 1979. The estimated expenditures, 26
t for the additional generating capacity in 1974 through 1979 is $ 1,055,252;000, or 76.9% of the total Improvement Program.
For a more complete description of production additions Transmission Additions see "Power Sources Future".
The Improvement Program calls for the addition of increased capacity of transmission lines to serve new substations and to connect new generating capacity into the-system. Demands for improved appearance often require expensive structure or rerouting that adds to the length and cost. The higher voltages also add to costs, but result in increased capacity advantageous in meeting future demands.
As shown on the map entitled "High Voltage Transmission Lines and Principal Generating Stations Supplying the District", new lines have'been constructed for delivery of power to be generated at Navajo. To deliver the District's and other participants'ower, 500,000-volt lines are completed between Navajo and the proposed Westwing transmission substation near Phoenix. The District's share of the investment required for completion of transmission of Navajo power is approximately $ 22,442,000.
Approximately $ 60,000,000 has been allocated for construction of two new 500-kv transmission lines for delivery of power from the undetermined site of the Arizona Station to the Phoenix area. This amount is predicated on a plant site about 250 miles from Phoenix.
As of December 31, 1973, the District had 16 transmission substations, (receiving or bulk-power stations) with a total capacity of about 4,951,000 kva. This capacity will be increased considerably in the near future by completion of the Westwing substation northwest of Phoenix, a part of the current program. It will be of major size and will become a key distribution point for Navajo power.
The estimated cost of the total 1974-1979 transmission portion of the Improvement Program is I
~ $ 142,138,000, or 10.3% of the total projected electrical construction costs.
Distribution Additions Costs for distribution system additions and improvements for the Improvement Program are estimated at $ 137,421,000 or 10%. Approximately nine new 22,400 kva unit substations must be provided each year to meet residential and commercial load growth.
It is anticipated that the trend toward undergrounding of all new distribution lines will continue (for historic perspective see "Electric System Distribution"). projected costs include $ 55,159,000 for under-ground lines compared to $ 21,021,000 for overhead lines.
General Plant This category includes structures, automotive equipment, communication facilities, etc. The communica-tion system is being, expanded through added District-owned microwave facilities and leased telephone lines to provide remote supervisory control for all substations, both in the transmission and distribution classes.
The number of substations has now become so great that conventional'supervisory control is impractical and the system has, been computerized. With the completion of the system, system operators will have, in a limited space, a continuous indication, of telemetering outputs at widely separated points on the system. It will also provide for the position and operation of line protection devices (breakers) with visual and audible indications of unusual system conditions. The Improvement Program includes extensive renovation and addi-tion to the administration headquarters located in Tempe, Arizona. Construction is nearing completion on the new $ 4.9 million addition. to the headquarters building.. Completion is scheduled for mid-1974. This
-is the second such addition since completion of the original building in 1957.
The estimated costs of all general plant facilities and,other expenditures in the, Improvement Program is
$ 35,890,000 or 2.6% of total costs.
DISPOSITION OF 1974 SERIES' BOND PROCEEDS The $ 50,000,000 1974 Series B Bonds are to be issued to cour tIhe following:
Estimated Amount available for Cost of Construction i. $ 47,576,321 Estimated Deposit in Debt Reserve Account 1,814,154 Estimated Costs, of Financ,'ing 120,000 Bond Discount 489,525 Principal Amount of 1974 Series B Bonds $ 50,000,000 F2PFIRONMEÃTAL PROGRAM Policy It has long been the intent of the District to make all installations and facHities environmentally com-patible with the areas in which they are located.. The District's environmental program is a commitment to take those actions which are necessary for the eco'Logical 'and social well-being, of the area served by the District or affected by its facilities,.
Although the District had demonstrated an environmental awareness prior to the recent wave of public concern over environmental quality, the District formalized its environmental program with the'dopti'on publication of an environmental policy. Under this policy,, the District and the Association are pledged, in
'nd regard to both electric and water facilities, to:
- 1. Conduct those studies necessary to obtain a complete understanding of how any new facility or activity may affect the environment, and take appropria,te action to protect the environment. i
- 2. Inspect and survey all new facility sites so that any historic or archaeological materials Or any species can be saved for posterity.
- 3. Install the necessary air pollution control'equipment at our faciTities so that emissions iof particulate matter and gases will meet or be less than established limits.
- 4. Construct generating stations in a manner which assures that stac'k efHuentshowever 'small,
,'ndangered i
~ )
willbe adequately disper. ed.
- 5. Design facilities, when it is necessary to return water to Jakes, rivers or streams, so there will be no detrimental effect to the ecology of the area from heat,'issolved solids, or chemicals, as deter-mined by ecologists, biologists and'ontrolling agencies. (At the Navajo Generatmg Station no water wiH be returned to Lake Poweiji or the, Colorado River.)
- 6. Provide protection against pollution by dust.
- 7. Build into all generating stations the appropriate facilitiies for noise abatement.
- 8. Design and landscape all new facijlities so that they @ril be incompatible with the surrounding arjea.
Work harmoniously with all Federal, state and locall agencies and groups responsible for or interested in the protection of our environment.
In accorda'nce with this policy', new electrical distHbutiori litotes 'to ho'mes 'are being installed under-ground whenever possible. By the encl of 1973 approximately 3,300 cable miles had been installed underground.
When underground construction is not feasible, the District utHIizes modern gray poles rather thaln the lid style dark poles. Careful consideration is, given to the routing 'of lines which must be built above ground.
In urban areas, every effort is made to keep overhead liiies in alleys and alofig-back property lines; th)s rendus from the street and improves over-aKl neighborhood appearance. In rural areas, routes are ehoSen ,'isibility to use terrain features to reduce vis'ibility of the lines.
I All new electrical substations are of low profile design and are enclosed with attractive walls designed to blend with the architecture of the neighborhoodCompatible landscaping is also added.
28
The District also is conforming to numerous and extensive regulatory restrictions which have been imposed as a result of growing public environmental concern. The Legislature of the State of Arizona has enacted legislation which establishes a siting committee under the Arizona Corporation Commission and requires that certificates of environmental compatibility be obtained for generating stations of 100,000 kw or more and for transmission lines of 115 kv or more. Arizona utilities, including the District, supported this legislation.
Air'Quality Control The District, in common with many other electric utilities and other industries, is subject to increas-ingly stringent standards for air quality control. The standards have substantially increased the cost of electric generating plants.
The Clean Air Act of 1970 requires the Federal Environmental Protection Agency ("EPA") to establish national air quality standards and authorizes each of the states to adopt air contaminant limitations which will permit the attainment and maintenance of the standards established by the EPA, failing which the EPA itself is to establish such limitations. The States of Arizona, New Mexico, Nevada and Colorado have adopted limitations on emissions of particulates by fuel burning equipment which have been approved by the EPA.
EPA has refused to approve the implementation plans of Arizona and New Mexico related to emissions of oxides of sulphur and has promulgated proposed standards which may preclude further industrial develop-ment in the Four Corners Interstate Regional Air Shed. The District and other utilities have challenged EPA's position by filing Petitions for Review in both the Ninth and Tenth Circuit U.S. Courts of Appeal. In August 1973, as a result of a request by the utilities involved, the Environmental Protection Agency held hearings for the purpose of taking additional information to evaluate the regulations which it had promulgated and which had been challenged by the utilities. Based on the evidence presented, EPA has modified the regulations in several important respects, one of which is that the final date for achievement of compliance with the standards imposed will be July 31, 1977 rather than March 15, 1976. The Ninth Circuit Court of Appeals has stayed the various pending cases until March 21, 1974 and in the Tenth Circuit Court of Appeals a motion to stay the cases until April 1, 1974, is pending. In both circuits petitions filed by various environmental groups have been consolidated with the petitions for review filed by the affected utilities.
The scope, interpretation and enforcement of the Clean Air Act and of certain implementing actions taken thereunder are being extensively litigated throughout the country. Among other things, the U.S. Court of Appeals for the District of Columbia has upheld the District Court decision in Sierra Club v. Ruckelshaus which would prohibit any "significant deterioration" (as yet undefined) in existing air quality in those parts of the country where air quality is already better. than the national standards set by the EPA. The United States on behalf of EPA has filed a petition requesting review of this decision by the Supreme Court of the United States. The Supreme Court on June 11, 1973, by a four-to-four vote aSrmed, without a written opinion, the decision of the lower Court. To date there has been no definition of "significant deterioration" by EPA.
On July 16, 1973, EPA -published proposed revised regulations reflecting four alternate regulatory programs for preventing "significant deterioration". EPA has held hearings on the four schemes but has not published final regulations. It is impossible to predict with certainty the impact of the final regulation on new facilities at this time.
The District has a 10% ownership interest in the Four Corners project Units 4 and 5. ApS as the operating agent of this project, is encountering diSculties in complying with the existing applicable standards.
Electrostatic precipitators on Four Corners Units 4 and 5 have been modified to enable them consistently to meet New Mexico standards currently applicable to them for the removal of particulate emissions. Studies are in process on a solution to emissions of oxides of sulphur. If air quality control devices sufficient to meet the prescribed standards cannot be developed and installed by July 31, 1977, the continued operations of Four Corners Units 4 and 5 will depend upon obtaining variances.
29
Low-profile, 56,000 kilou>att combustion turbine generator is one of four at Kyrene Generating Station, south of Tempe, Arizona. The station also has two conventionair steam turbines which have a combined generating capacity of 104,000 kilowatts.
Theodore Roosevelt Dam, completed in 1911, is the keystone of the Salt, River Project's water storage and irrigation system. Its existing generating units were retired and replaced with a new 37,000 kilowatt generating unit crs part of the District's hydroelectric generation expansion program in 1973. With the installation of pumped-storage units at Mormon Flat and Horse Mesa dams, and the Roosevelt Darn generation ex-pansion, the capacity of the four Salt River dams is now approximately 239,000, kw.
The District also owns a 10 percent interest in the Monave Project located in Clark County, Nevada.
Southern California Edison Company, as operating agent of the Mohave Project, has received notices of violation of the Nevada State air pollution regulations applicable in Clark County, Nevada and is operating the plant subject to a variance. The variance required a schedule of compliance to be developed with equipment to,be instaHed by January 1, 1977.
In June, 1973, EPA denied the Nevada State request for an 18 month extension for attainment of national ambient air quality standards for sulphur-dioxides and particulate matter in the air quality control region for Mohave. The denial has the effect of requiring SO abatement equipment to be installed by July 15, 1975. Since prototypes of the requisite equipment to be installed are only now in thc develop-ment stage under a combined Navajo-Mohave Project research and development program conducted at the Mohave Project, the District believes that such schedule cannot be met. Unless necessary extension or.
revisions of regulations are made by appropriate regulatory bodies, it will be necessary to challenge the reasonableness of the regulations in Court.
The District is concerned about the availability of power from Four Corners and Mohave generating units in which it has a percentage ownership. Due to environmental problems, the availability of these units has been less than expected. Although extensive programs are under way to correct these problems, it is antic-
.ipated that operations at reduced loads or temporary complete shutdowns may be experienced in the near term. The. process of installation and checkout of air quality control equipmcnt to meet pollution standards established subsequent to completion of these units has and may in the future cause shutdown of the units or operation at reduced levels.
The District is a participant (21.7%) and the operating agent of the Navajo generating station con-sisting of three coal-fired generating units being built at Page, Arizona. The particulate equipment which has been ordered will meet the existing Arizona standards. Further, the participants in thc Navajo Project have announced their intention to install SO> removal equipment on these units. Module plant SO-'emoval tests will be run at the Mohave Project and the test results will be used to help select SO: removal equipment for the Navajo Project. A final environmental statement for Navajo Project facilities was filed with the Council on Environmental Quality ("CEQ") on February 6, 1972, thus preparing the way for future approval of additional required construction permits.
With regard to the Navajo Project, EPA initially proposed a 70% SO. removal to be effective July 31, 1977. On March 23, EPA promulgated a final regulation requiring 70% SOremoval to be effective by March 15, 1976. The proposed 70% SOremoval is the subject of the test removal module program set forth below. As noted, EPA has reinstated July 31, 1977 as the final date for 70% SO removal.
The Mohave Project participants and Navajo Project participants have jointly conducted pilot tests of various SO~ removal systems. Two SO- removal modules of differing designs each sized for 160,000 kw capacity were scheduled to be placed in operation at the Mohave Project by the end of 1973. Unfortunately one of the two modules was partially destroyed by a fire in January 1974, and the start-up of this module has been rescheduled for September 1974. It is believed some six to twelve months experience with the module will provide the basis for selection, design, construction and placing in operation of SO~
removal equipment at the Navajo Project by July 1, 1977.
The cost of the Navajo generating station and the electric railroad, which will transport coal from the Black Mesa mine to the station, provides a dramatic example of the impact of environmental costs on capital requirements. The total cost of the two facilities will be approximately $ 666,000,000, of which oyer.
$ 200,000,000 will be for environmental protection. The District's sh'arc:of thc $ 200,000,000 plus will be at least $ 43 million.
Environmental evaluation and analysis of the proposed Hayden No. 2 and Yampa Project sites on the western slope in Colorado have been under way for more than two years. The studies include ecology, meteor-ology, water resources and air quality. An environmental statement was filed with, CEQ;by REA for 31
,Hayden No. 2 generating station on Fe]bruary 4, 1972. EPA has refused 'to accept a proposed amendment to the Colorado State imp!lementation plan allowing until January 1, 1978 to install and operate SO:. removal equipment. The effect of this act]ion is to requn;e SO2 removal equipment to be installed by January 1, 1975, 'r in the case of Hayden Unit 2 by its mid Spring 19'76 start up date. Foi reasons discussed above District such date to be unattainable. Representatives of DistrictColorado Ute and EPA are currendy 'elieves discussing changes in the EPA regulation.
In all of the thermal, stations which are owned in whole 6r Part by the District, cooling towers or cooling ~
ponds are employed and no discharges of water are made to water~ courses. As a result, the District is not experiencing any environmental problems related to water pollution~ from its generating stations.
Interruptions in power sources due to inability to satisfy rapidly changing environmental control cpitetia',
, could temporarily reduce t'e District's ability to completely meet consumer demand. The District has developed a load shedding scheme where bloch of load would be discontinued on a selected and rotating basis to meet possible situation. 'uch Environmental Litigation A number of law suits involving environmental matters have been filed which may affect the Four Corners, Navajo and Mohave Projects. ]it is the, opinion of the Distri'ct's'ttorneys and its Legal Advisors that the outcome of these suits will not impair the ability of the District. to meet all of its obligations tinder the and the Prior Lien Bond Resolutions. 'esolution A description of these. law suits follows:
Lomayaktewa, et al: V. Rogers Morton, et al. ~
]
On May 14, 1971, an action was filed in the U. S. District Court for the District of Columbia'y' of Hopi Indians against the Secretary of Interior and Peabody, Coal Company. The plaintiffs 'allege 'umber that a mining lease between the Hopi Tribe and Peabody covering the interest of the Hopi Tribe as lessor of some 40,000 acres of land on the 1882 Executive Order Reservation is invalid, The lands on the 1882 Execut]ive Order Reservation covered by the Hopi and Navajo leases ate the locus of about 49% of the fuel supply dedicated to the Mohave Project and the locus of about 86'%f the fuel supply dedicated to the Navajo Project.
The Motions to Intervene of the: Navajo Project co-owners were granted by the Arizcna Federal District Court on July 20, 1972. Mofions to Dismiss on several grounds inCluding failure.to join the Hopi Triibe 'as an indispensable party have been filed by intcrvenors. The defendants have filed Motions to Dismiss and Motions for Summary Judgment. The Arizona. Federal District 'Court lias rendered a Judgment in favor of the District, Peabody Coal Company, aud the other utility intervenors by granting their Motion to Dismiss the case. The plaintiffs have Gled a Notice of Appeal to the 9th Circuit Court of Appeals. The Di<tridt's attorneys believe the ultimate decisions in this case should be favorablct to'hat District.
Friends of the Earth, et aL v. Ellis Armstrong, et al.
In November, 1970, an action was filled in the U. S. District Court for the District of Columbia by certain environmental organizations and others against, the Commissioner Of Reclamation and the ~Secretory 'f Interior. The suit, which has been transferred to Utah, asks that the Court require the Secretary and Commissioner to limit the level of Lake Powell reservo]ir behind Glen Canyon Dam to 3,600 feet 'above sea level so that it will not encroach:into the boundaries of Rainbow Bridge National Monument. The 'ean limitation would require Lake Powell to be operated 100 feet below the level for which Glen Canyon is constructed and would decrease the potential Ice Powell rdservoid capacity by one-half. There w'ould also be,a,reduction in electric generation at Glen Canyon Dam.
The District exchanges electric ]power and energy from therdml'enera'ting'; capacity installed atl Haydn, Colorado, and Four Corners Project, New Mexico, w]ith hy&oel'ectric power and energy from Glen Canyon 32
pursuant to a Contract for Interconnections and Transmission Service, Contract No. 14-06-400-2468, with the United States Bureau. of Reclamation. The existing exchange is about 230,000 kw. By 1976, the exchange is scheduled to reach 410,000 kw when Hayden No. 2 is completed.
The plaintiffs have filed Motions for Summary Judgment and the defendants'otions to Dismiss which were argued before the court in January, 1972. The Federal District Court for the State of Utah issued a decision enjoining the Secretary and the Commissioner from allowing the level of Lake Powell Reservoir to rise above 3,600 feet. This decision was appealed to the 10th Circuit Court of Appeals which reversed the decision of the District Court and entered its judgment in favor of the Commissioner and the Secretary. The United States Supreme Court has denied plaintiffs'equest to hear appeal of the 10th Circuit decision.
Chemehuevi Tribe of Indians, et al. v. Arizona Public Service Conipany, et al.
On September 10, 1971, a complaint was tendered for filing with the FPC by, two Indian Tribes, two environmental organizations, and five individual Indians as complainants against ten Southwestern utilities as complainees, including the District, who are participants in one or more of the Four Corners, Mohave, Navajo, San Juan, Huntington Canyon and Kaiparowits Projects. The complainants allege that the FPC has licensing jurisdiction over these projects under Part I of the Federal Power Act and ask the FPC to order the complainees to show cause why they should not be required to apply for licenses and why they should not be required to suspend development, planning and construction of the projects pending the outcome of the FPC proceedings.
II The FPC, acting on its own motion, has dismissed the complaint and has denied the complainants'otion for Rehearing. The complainants'ppeal to the Circuit Court of Appeals for the District of Columbia Circuit was heard on oral argument in September 1972. The utility complainees moved the Circuit Court to be permitted to intervene in the appeal and the intervention was granted. On November 9, 1973, the Court of Appeals rendered a decision holding FPC has jurisdiction to license the utilization of United Statessurplus water by thermal electric generating plants. The Court noted (i) that it did not decide whether FPC has jurisdiction in this case over any plants because there was no record on which to make such a determination.
The Court remanded the case to FPC for further proceedings. Should the complainants'osition be upheld, then license to utilize United States surplus water could be required. The Court did not decide what constitutes use of United States surplus water. The owners of the plants involved will request that the United States Supreme Court review the decision of the Circuit Court of Appeals. The District is unable at this time to assess what delay, if any, would ensue in construction of the Navajo Project if it is determined that the Navajo Project is using United States surplus water and a license is required. The District is also unable to assess what effec, if any, a similar determination would have on operation of the Four Corners Project and the Mohave Project.
Arizona Public Service Company, et al. v. EPA, et al.
As a result of the March 23, 1973 promulgation by the Environmental Protection Agency of regulations which would have required 70% SO removal at the Navajo and Four Corners plants by March 15, 1976, the District and some of the other affected utilities petitioned for review of that action in the Ninth and Tenth Circuit Court of Appeals. As noted, EPA has recently reinstated July 31, 1977 as the date for final compliance. The District is a 10% owner of Units 4 and 5 of the Four Corners plant. In the Ninth Circuit, the petitioners are APS and the District; in the Tenth Circuit, the petitioners are APS, El Paso Electric Company, the District and Southern California Edison Company. Various motions are pending in both circuits, but both have granted stays of any further action pending the final promulgation of modifications to the regulations previously promulgated by EPA. While the Ninth Circuit stay is effective only until March 21, 1974, and in the Tenth Circuit a motion to stay until April 1, 1974 is pending, it is not anticipated that either circuit would proceed to dispose of the cases until after the final promulgation by EPA, since, to some extent, such modified final promulgation will moot the present pending petitions. In the Tenth Circuit, the petition filed'by the Distoct and APS has been consolidated with two other cases, Jicarilla Apache Tribe of Indians, et al. v. EPA, and Utah International, Inc., et al. v. EPA. In the Ninth Circuit, Arizona Public Service Com-pany, et al. v. EPA has been consolidated with Committee to Save Black Mesa, Inc., et al. v. EPA, et al, 33
SUMMARY
OI<'XISTING RATE SCHEDUIES The District has maintained rates for electric service which have been sufficient to provide for al l op erat- i ing costs and expenses, repairs, replacements, debt service requirements and for substantial capital additions to the Electric System. J Table 17 compares monthly biHs for residential electric service,'t energy consumption levels considered to be significant for the District, of selected electric utilities in the general geographic area of the District 'as January 1974. The District expects that on a long-term ba'sis, it will 'maintain its relative stalndihg
'f
's to rates with respect to the other utiliIties in the southwest.
Table 17 SELECTED MAJOR ELECX'RIC UTILITKS, Com pari'son of Monthly Electtic Bills~ for~ Residential Services As of January, 1974 Utnitr 250 Ikvrh 500 kvrh 1.000 kwh The District:
May-October $ 8.74 $ 13.7¹ $ 23.74 November-April 8l74 13.12 19.35 Arizona Public Service Co.: (1)
May-October . 8i68 14.35 25.15 Novembe'r-April Tucson Gas and Electric Co.: (1) 8I68 i 13.78 20.80 ill April-October 8 76 14.35 24.75 November-March 8I.76 14.35 23.51 Public Service Co. of llew Mexico: (2)
(Albuquerque) Overhead,............. 7.85 1:3.10 20.80
~Underground .......... 9,.65 14.90 22.60 (Long Beach).....
Southern California Edison: (1) 9.81 15.42 25.70 Dept. of Water & Power:(1)
(Los Angeles) 8.26 13.36 22.81 (1) Rate schedules on file with the District.
(2) National Electric Rate Bool .
Present rate schedule:s were plac:ed irito effect with the January 1974 billing cycleBecause of high sum-mer temperatures, the District is a summer peakittg utility. Fn order to maximize the return on the Electric System, the District has for many years made an effort to balance the summer-v inter load relationships.
A fuel escalator is applied to the standard rates and most special contracts to compensate the District the added fuel costs'incurrerl above: the cost of fuels in effect on October 1, 1962,, In the immediate
'or due to forecasted natural gas curtailments, a large amount of higher. priced fuel oil is expected ~to be 'uture, for generating purposes. The added. impact of such costs will have a substantial effect on'hI: fuel 'urned
'djustments.
34
It is anticipated that use of relatively low cost coal in the new power plants will help limit the fuel oil requirements. Table 18 gives past and current cumulative fuel cost adjustments.
Table 18 FUEL COST ADJUSTMENTS Etfectlre Date Mme per krrh Etteetlre Date Mllh per krrh July 1, 1968 ............ -0.16 June 1, 1972 ............ 0.78 April 1, 1969 ........... -0.06 November 1, 1972 ....... 2.77 May 1, 1970 ............ 0.08 March 1, 1973 ..........
............ 2.37 June 1, 1971 ............ 0.20 May 1, 1973 1.64 January 1, 1972 ......... 0.38 November 1, 1973 ....... 3.91 For many years, negotiated contracts have included price escalators for increases in costs of fuel or purchased power, and cost of labor. Since these are the major elements of operating expense, the contract rates continue to remain compensatory.
Rates in effect in 1973 yielded revenues for the various classes of customers as given in Table 19.
\
Table 19 APPLICATION OF RATES (1973)
Rerenne(1) Salea Percent ol Percent ot Amount Total krrh Sold Total (000) (000)
Residential $ 58,902 46.1 2,640,917 38.2 Commercial and Small Industrial . 33,649 26.4 1,558,782 22.6 Large Industrial . 7,487 5.9 644,858 9.3 Mines 7,810 6.1 691,260 10.0 Agricultural Pumps 2,294 1.8 218,567 3.2 Street Lights 1,171 .9 38,974 .5 Municipalities . 2,578 2.0 201,268 2.9 Interdepartmental .. 896 .7 62,477 .9 Total, District Customers ... $ 114,787 6,057,103 Electric Utilities . 12,869 10.1 855,119 12A Total $ 127,656 100.0% 6,912,222 100%
The current rates for the more widely used schedules arc listed in Table 20. Other schedules now in effect cover: Total. Electric Services for Schools and Churches, Playground Lighting, Dusk-to-Dawn Lighting, Security Lighting, TrafBc Signal Lighting, Street Lighting, Service for Wind Machines for Prost Control, Chilled Water Service and Residential and General Services in the Roosevelt Lake area.
Table 20 MONTHLY ELECTRIC RATES As of January, 1974 Residential Service May-October Norember April
$ 1.70 minimum, including use of 30 kwh $ 1.70 minimum, including use of 30 kwh 3.20< per kwh for next 220 kwh 3.20< per kwh for next 220 kwh 2:00< per kwh for next 950 kwh 1.75(! per kwh for next 350 kwh 1.65< per kwh all additional kwh 1.12< per kwh for next 400 kwh 0.95< per kwh all additional kwh 35
Table, 20 (Continued)
Connnercial Industrial Service slay Octo'ber I'I h Ay Il Service Charge: Service Charge:,
$ 1.40 per kw first 220 kw over 10 kvv $ 1)28 per kw first 220 kw over 10 kw 0.35 per kw next 220 kw 0.'32 per kw next 220 kw Yo Charge for addIitional kw No Charge for additional kw Energy Charge: Energy Charge:
3.67< per kwh fiist 500 kwh . 3.35(s per kwh first 500.kwh 2.81(s per kwh next 2,700 kwh ,"2.57'er kwh next 2,700 kwh 2AO(s per.kwh.next 100 kwh ,
2.19< per kwh next 100 kwh per,l~ of bilhng demand per k(v of billing demand 1.23(s per kwh next 12,000 kwh 1. 1',2(s per kwh next, 12,000'k)vh
. 1.12(,'er kwh'next.42,500 kwh 1.03(s per kwh next 42,500 kwh 0.89(s per kwh next 458,000 kwh ,
0.81(! per kwh next 458,000 kwh 0.76(s per kwh next 3,000,000 kwh '.70(,'er kwh next 3,000,000 kwh 0.65(s per kwh next 175 kwh per kw , 0.60(< per kwh next 175 kwh pcr kw 0.63(s per kwh all additional 0.58(s Iper kwh all additional Agricultural Pumping Service Apr9 '<eptember October A(arch 1.28(s per kwh first 275:kwh 1.00'p per kwh for all kwh per kw of billing demand, 1.00< per kwh for all additional lrfiniimum: $ 5.00 per month CUSTOMERS, ENERG'Y SALES, REVENUES AND EXPENSES 1968.1973 Residential The residential group of customers has historically accounted for thc largest kwh consump'tion. arid largest revenue.
Table 21 summarizes historical customer energy sales for the period 1968-197:3.
Table 21 RESIDENTIAL 'CIUSTOMERS, ENERGY SALES AND AVERA.GE SALE PRICE'1968.1973)
Average Arefase ATefase Ausllsal S,alo Res(death) Total Customer Umse Ps leo Custom e:rs(1) (1000 ksrh) krrh (per krrh) 1968 132,364 1,244,308 9,401 1.94 1969 141,142 1,508,159 10,685 1.93 1970 .. 151,730 1;655,829 10,913 2.00 1971 163,955 1,911,778 11,660 1.95 1972 .. "181,720 2,260,76'7 12,441(2) 2.14 1973 .. 200,336 2,640,917 ].3,183 2.23 (1) Differs from year cud fi~zcs; (2) Comparable U. S. Avcragc 7,691 .'kwh.
36
Commercial and Small Industrial The second largest customer classification is the commercial and small industrial category. At year-end 1973 there were 15,414 customers in this category.as compared w'ith 14,047 in 1972 using 1.56 billion kwh up from 1.4 billion kwh in 1972. This group of customers used 22.6% of energy sold and contribute 26.4% of the revenue for 1973. Since most of the customers included in this class are service-oriented organizations, their growth is linked directly to the growth of the residential customer class.
Mines and Large Industrial In 1973 large industrial and the mines together used 19.3% of the energy sold and yielded 12.0%
of the revenue. 'The relatively low realization from industrial sales (about 1.14$ per kwh) represents.
conventional rate making in the utility industry. The District generally delivers the power at a higher voltage than for smaller customers thus eliminating some of the transformation and facility costs. necessary for delivery at lower voltages. Large amounts of power are usually used on a 24-hour basis for five or more days per week, more fully utilizing the investment in facilities as compared to most of the smaller customers that operate onta one or two shift basis for five days per week.
Summary of Customers, Sales and Revenues 1968-1973 Table 22 gives customers, sales and revenue statistics from: 1968-1973.
Table 22
SUMMARY
OF CUSTOMERS, SALES AND REVENUES (1968-1973)
Dlstrlct Only(l) Annual Peak Annual increase , (1,000 kvv)
Total 'Over Total Annual Revenue Average Increase Customers Sales from Revenue ln Sales Prior Generated at (Slallon Sales per k>>h Revenue (Mllllon Year District and Year End kvrh) (000) (cents) ( io) ksvh) (9o) Generated Purchased Year
'968.....,. 149,320 3,426 . 53;759 1.569 7.9 3 272 '7.7 762 824 1969...... 159,202 4,177 64,183 1.537 19.4 4,051 23.8 944 1,043 1970...... 169,774 4,742 73,480 1.550 14.5 4,530 11.8 1,055 1,172 1971...... 186,326 5,825 84,356 1.448 14.8 4,975 9.8 1,120 1,291 1972...... 206,441 .6,036 103,721 1;718 23.0 5,607 12.7 1,360 1,533 1973...... 225.921't) 6,912 127,'656 1.847 23.1 6,057 8.0 1,448 1,679 Excludes sales to APS and excess sales to others.
Large Customers Table 23 gives the 15 largest customers of the District in 1973.
Table 23 15 LARGEST'DISTRICT CUSTOMERS'
'1973)
Demand Customers R Motorola, Inc. 49,554 Inspiration, Mines . 35,901 Kennecott Mine 29,952 Marathon Steel Co. 22,281 Western Electric Mfg. Co.. 22,188 Magma Mines 14,376 Miami Mines 14,075 Capital Foundry 11,280 Roosevelt Irrigation District . 7,545 Bluebird'ine 4,048
'wift &; Co.. 3,680 2,784 American Express Co.
0 Pinto Valley Mine .
'Revlon, Inc Air Reduction Pacific 2,560 2,320 1,520
Summary of Operating Expenses from 1968-1973 Table 24 summarizes Opera(ting Expenses for 1968 tiirough 1973.
Table 24 OPE'RATING I< JfX'I<'.NSIA'968-1973 (000's omittedl)
Sales and Total Porter Operation and hd Valoretn Operation Year Operation(1) htatntenance(2) Taxes(3) Expenses 1968 ...... ~ , $ 16,101 $ 2,480 '12,281
$ 30,862 1969 ......
~ 20,199 11,808>> >>2,952 34,959 1970 .... 23,099 1.3,183>> >>3,357 39,639 1971 ....... 30,617 14,902 3,857 49,376 1972.....,... 34,080 16,823>> >>4,887 55,'790 1973 ....... 49,221 20,242 6,205 75,668 (1) Excludes charges for falling water.
(2) Excludes depreciation.
(3),Ad Valorem taxes apply to out-of-stale properties owned by tho District.
'n addition to Operating Expenses, the District, made voluntary contributions in lieu of taxes in the amounts for 1968 through 1973: 19t58 $ 1,542,000, ~1969 44,'507,000, 1970 $ 4,175,000, 1'971 foll@w-'ng
$ 5;491,000, 1972 $ 6,0(i8,000 andi 1973 $ (i,207,000.
ESTIMATED CUSTOMERS, ENERGY SALES, REVENUES AND EXPENSES 1974-1979 General Considerations As elsewhere. mentioned', the'istrict developed a confput0riz0d Corporate Madel during 1971.~ With'he present day complexities of sing and buiilding electric poWer plat)ts, projections for ten year0 of mlore're necessary for management to evaluate different expafisio'n plaad and their hnpact on the financing program. The Corporate, Model will simulate long, range operations using various forecasts. A complete utility forecast, due to the large amount of work required, has previously been prepared only once a'ear.
The Corporate Model permits speedy and accurate assessment of any ch,anges that may become ne(xssary or desirable during the year.
The Consulting Engiineers have reviewed and made "indepehdeht Analyses of the Corporate Model fore-cast, particularly with respect to'the satles'evenue and operating ctxpenscg. As a result of such review and analysis, the Consulting Engineers cioncur in and have used (A:rtAin of such data hi their revenue and expense projections of the Consulti'ng Engineers appearing in Appendix A of this Official Statement.
The effects of the voluntary energy conservation pr'ogrI)m on poker'consumption were considered lbut have not been refiected in the preparation of revenue and expense. projections or in the long-range capital improvement program. Sales of electric energy and resulting revenues were 14% below budgeted amounts for January and February. Analysis shows there were two major causes and one minor cause for 'this'.
cause was a reduced electric space heating load duc to an extremely mild winter which had 19%
One'ajor fewer heating degree days dluring. the billiing periods for January and Fcbrtiary 1974 than the for these periods. 'Ihe other major cause vias that two significant loaids froin ruining ion'g-term'verage scheduled to go into service iin November, 1973 did not go into se,rvice until March, 1974. The
'customers'riginally minor cause was the effect of. the energy conservation program. Analysis indicates approximately 3% of the 14% below budget amount .in energy sales and revenues wlas Attributable to the. conservation program. In the long run, the increased use of electricity by commercial, .industrial and residential customers because of the general shortage of natural gas is expected to partially, if not tbta)ly, offset the effect of the conservation program.
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The D>istrict recei ves 50,000 kilowatts of pre-paid power from tire 168,000 kilowatt unit number one of Hayden Generating Station at Hayden, Colo.
Power is delivered to tire District in an exclrange agreement with the U.S. Bureau of Reclanration, thereby eliminating the need for new transmission lines from Colorado. The 250,000 kij'owatt secorrd unit is scheduled for completion in I!976. Tir e Dr<strict willreceive 80 percent of tlrat ur<<it's The District's Agua Fria Generating, Station west of Glendale porver until Jariuary 1982, wlren Colorado-Ute has three steam turbines with a combined generating capacity Electric Association, inc. willlrave tire of 399,800 kiloivatts. Two combustion turbines're sclreduled opportunity to increase its ownership of the unit for completion in May and will provide approxhnately frpm j?0 percent to 50 percent.
128,000 additional kilowatts of generating capiicity.
Construction of power lines in the District area is a con-tinuing job. Many of the newer power poles are de-signed and colored for beauty as well as function.
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Estimated Residential Growth The results of a survey, taken by the District in 1972 indicate planning of a substantial amount of b U ilding g of housing units by nationally known development companies during the remaining portion of this decade. Major developers built about one third of the estimated units built in 1972. The major portion of o the approximately 22,000 new housing units completed in 1973 werc sold to people employed'n the area.
During 1973,<annual new installed meters were 21,250 up from 20,779 in 1972.
Estimated Commercial Growth The vigorous economic activity experienced in the recent past has continued in 1973. Although losses in manufacturing employment occurred through mid-1971, primarily in aero-space related industries, these were counterbalanced by gains in mining and in tourism-travel services and trade employment. The Maricopa County unemployment rate in December 1973 was 3.8% as compared to the national average of 4.9%. About 31,500 new non-agricultural jobs were created in the Phoenix area in 1973.
Phoenix's growth as a major business center in the Southwest is indicated by nationally known corpo-rations, such as Greyhound, moving their headquarters to the area and the opening of the American Express computer facilities to service its national and worldwide operations. Included in the commercial growth are substantial increases in educational facilities, hospitals, shopping centers and service businesses required by a rapidly increasing population as well as facilities to serve the tourist trade.
Estimated Industrial Growth During 1973, manufacturing industries contributed to a substantial growth rate of about 8.1% or about 6,300 new jobs.
With favorable prospects for future growth in U.S. copper production, most of the mines in the area have long term expansion programs. Total mining loads were 140,000 kw in 1973 and are expected to increase to 276,000 kw by 1979.
Estimated Sales and Revenues 1974-1979 The amou'nts of estimated'sales and revenues for 1974-1979 is shown in 'Table 25. The estimated operating revenues for the same period are shown in Table 26.
TabIe 25 E<STIMATL<D SALES AND RE<VE<NUE< 1974-1979 Annual Peak Load Esthnated Estimated Estimated Estimated Dlstrlct Only(2) (1,000 kvv)
Estlmatcd Annual Annual Averasc 1ncrcasc Increase Customers Sales Revenue Revcnuc In Sales over at. (tnlulon From Sales per kvvh Revenue (mllllon Prior Year Year Year End kvvh) ($ 1,000) (1) (ccats)(1) (Qo)(1) kvvh) (/o) Dhtrlct 'otal 1974....... 242,935 8,529 165,671 1.924 '8.6 7,276 20.1 1,724 1,991 1975....... 261,200 9,277 175,022 1.887 6.6 8,355 14.0 1,919 2,197 1976....... 278,031 9,642 185,402 1.923 5.9 8,864 6.1 2,093 2,406 1977....... 294,862 10,282 200,159 1.947 8.0 9,431 6.4 2,253 2,591 1978....... 311,693 11,326 212,675 1.878 6.3 10,393 10.2 2,485 2,849 1979....... 328,524 11,986 221,353 1.847 4.1 10,964 5.5 2,663 3,050 (1.) Based upon January 1, 1974 electric rates. Does not include adjustments displayed on Table 28 or Table 33.
(2) Excludes sales to APS and cxccss sales to others.
39
Table 26
- ESTIMATED OPERATING %%VENUE'19'74-'1979 (000)s omitted)
Rereisue From Other Electric -rota( Elec(etc Year Sales(rl Rercnue Re)enue 1974..........',.... '$165,6'71 $ 1',240 $ 166,911 1975...........,...
1976...........,...
- 1977.'..."...'.... ..'.
175,022 185,402 200,159 '" '
1,186 I ) 161 11204
'86,563 176,2(18 20l';363
.1978, .;,,;.....,. ~
212,675 . -
1)245 21:3,920 1979....:....-;.... 221,3.53 1,286 222,639
-(1) Based upon January 1, 1974 electric raites. Does nol inrIude adjustnIsen(I dislplayed an Tttble 28 ar Table 33.
t Estim'atc(l'Operatin'g'E'xpenses 1974.1979 Estimated Operating Expenses for 1974-1979 are presented in Table 27. Ad valorem taxes Eipply to out-of-state properties owned by the District.
Table 27 II E<STIMAT.ED,,OPERATING EXPENSES 1974-1979 (000)s,omitted)
Estimated Sale~) and 'otal
'po)rcr Operatloa anil hd Valorem ~ Operettas Year Opcratlon(11"" Maintenance(tu Tazcs Esspciascs 1974..... $ 78,661 $ 21,444 $ 6,516 $ 106,621 1975...., 80,964 29,943 7,655 118,56'2 1976..... 83,311 31,840 8,363 123,514 1977..... 99,'911 "'32,589 9,40!l, . 141,901, 1978..... 95,718 :39,'724 10,6033 146,045 1979..... 93,770 -
46,'361 11,432 1'51,563 (1) Excludes charges fiar,falling waiter.
(2) Excludes deprcciallion.
Voluntary Contributions in Lieu of Taxies Although not considered an, Operating Expenses under th(( R()solution, the District has historicallly made voluntary contributions in lieu of taxes in Arizona to.school districts, cities, cxluntics and the State in'accord'-
ance 'with permissive legislation pas'sed by the Arizona'Legislature 'in 1963. 'The intent'of the legislation is to permit utilities,'such as the District",to make voluntary,.'contributions previously prohibited by law, siincc the District is a political subdivision of the State of Arizona exempt from property taxation. The paymi:nts are made voluntary by statute and arc'subject to approval'of the Secretary of the'Ii(terior to avoid possible coni-flict with the interest of the United States in the District. An, important change enacted by the Leppslature in 1969 provides that if thc District elects to make such paymenls, then there is a. minimum for total con-trib'utions of not less than a s'um equal to 7.5% of the previous year's gross revenue from retail sales of electricity to residential, comn'lerclal and industrial (not.including p!umping)) c!ustOmcrs; this percentage is to increase to 10% by 1978. Other major changes relate to deductions. for agricultural pumping poWer, sales
and to deductions for water department costs devoted to municipal use. These changes will tend to eliminate the large fluctuations in contributions that were possible under the previous legislation.
The contributions are niade to the political subdivisions in Arizona within whose boundaries the District has property devoted to furnishing electric service. The amount paid is computed on the same basis as ad valorem taxes on a private utility corporation. Limited exemptions are made, in computing the basis for the payments, of irrigation property or electric property used in the pumping or distribution of water for irrigation or public use. Electric rates were increased by a small amount in 1963 and in 1969 to reimburse the District for these payments. It is estimated that the contributions in lieu of taxes will continue in the following amounts for 1974 through 1979: 1974 $ 9,228,000. 1975 $ 13,548,000, 1976 $ 16,980,000, 1977
$ 19,704,000, 1978 $ 21,048,000 and 1979 $ 29,472,000.
Estimated Revenues Available for Debt Service-1974-1979 Table 28 gives estimated revenues, estimated expenses and estimated Revenues Available for Debt Service for 1974 through 1979.
Table 28 ESTIMATED REVENUE AVAILABLEFOR DEBT SERVICE 1974-1979 (000's omitted)
Calendar Estimated Electric Revenues(1)
Estimated Operating Expenses Esihnated Revennes from Operations Interest and Other Income Nct
'sihnaied Revenne Ava for Debt nable Service Year 1974 $ 166,911 $ 106,621 $ 60,290 $ 5,252 $ 65,542 1975 ... 189,808 (1) 118,562 71,246 6,276 77,522 1976 ... 201,263 (1) 1237514 77,749 7,350 85,099 1977 ... 221,863 (1) 141,901 79,962 8,112 88,074 1978'.... - ~ ~ 228',520(1) 146,045 82;475 8,925 91,400 1979'....... 243,939(l ) 151,563 92,376 9,743 102,119 debt service coverage and (1) While projected revenues at 1974 electric rate levels are estimated to be sufticient to provide to at meet additional Bond tests for the issuance of the 1974 Series B Bonds, rates are expected to bc increased sufllciently least rovide additional revenues of $ 13,600,000 in 1975, $ 14,700r000 in 1976, $ 20,500,000 in 1977, $ 14,600,000 in 1978 and'81,300,000 in 1979, to provide additional funds for construction, to cover increased contributionsElectric in lieu of taxes and are included in total Revenues for to meet other obligations subordinate,to debt service. These additional amounts this'Table and Table 33 on page 46. Such amounts are in addition to the amounts of projected revenues, based on current electric rates included in. Tables 25 and 26 and in the Engineers Report in Appendix A.
FINANCIAL FACTORS OF THE DISTRICT Outstanding Long Term Indebtedness outstanding long term indebtedness presently consists of prior lien bonds, loans from the United States of America, shareholders'dvance payments and the 1973 Bonds. In all years to date, such net revenues have been more than suflicient to meet all debt service requirements and the District has never'used its taxing power for the Prior Lien Bonds.
There appears in Table 29 a list of the bonded indobtedness of the District dated as of January 2, 1974, including $ 11,256,911 non-interest'bearing loans made to the District by the'United States of America and
$ 68,223 shareholders'dvance payments for-construction.
TabIe 29 OUTSTAI!lD)ING LtI)NiG TERM DE!BT OP THE DISTRICT As of January 2, 1974 Orllslnat Date of Amount Amount Interest' utufe Issue Deslsnatlon Issue of Issue Outstaadlna Rates htalarltles Refunding Bonds "F" 7-1-47 $ 262,009 $ 30,000 3% 1974 Refunding Bonds "I" 7-1-47 422,000 262,000 197sII-75 Corporate Bonds P4 8-1-50 3,500,000 2',,100,N)0 2N, 2~/8 1974-77 Corporate Bonds@5 1-1-51 4,500,000 3,75iD,GOG 2', 1974-80 Corp. Bonds 86, Blk 1 1-1-53 5,000,000 3,37i9,000 2'Vi, 3Fs 1974'~82 Corp. Bonds 86, Blk 2 1-1-53 5,iD00,000 3,370,000 1974-82 3'N, Corp. Bonds P6, Blk 3 1-1-53 3,500,000 2,3 6',NN 1974-82 Corp. Bonds P7, Blk 1 1-1-56 11,<DOG,GN) 7,445,NN to 3.40 3'.10 1975-87 Corp. Bonds 88, Ser. B 1-1-5!9 5,000,000 4,099,0(N 3.69, 3Fs 1975-87 SRP Bonds @9, Ser. A 1-1-60 15)D00,000 11,119,000 1 to 4Y4 1975-92 SRP Bonds @9, Ser. B 15,000,000 10,710,000 1 to 4 1975-92 7-I-6'-1-6iD SRP Bonds 89, Ser. C 4,iD00,000 2,93ID,OOO 1 to 4 1975-92
'SRP Bonds 810, Ser. A 7-1-62 10,000,000 7,335,0(6 1 t<o 3I/i 1975-94 SRP Bonds 810, Ser. B 7-1-65 6,000,000 4,320,0(IO 3'o 3.60 1975-92!
SRP Bonds 410, Ser. C 7-1-65 8,000<000 5,760,0C6 3'/4 to 3.60 1975-92',
SRP Refund Bonds 811 7-1-65 13,470<000 11,85(),000 3V4 to3V 1'975-87 SRP Bonds 812, Ser. A 1-1-68 32,000sGN) 26,50(),OCIG 3 to 4' 1'975-98 SRP. Bonds 812, Ser. B 1-1-69 16,000,000 13,800,000 to,5 1975-99i SRP Bonds 813 1-1-69 10,0000N) 8,600,Kj0 4 to 5 SRP Bonds 814, Ser. A 1-1-70 36,000000 32,400,000 4'o 5i/4 1!'975-99'!975-82, SRP Bonds 414, Ser. B 1-1-71 40,000<000 39,400,000 4to SIX 1975-95 SRP Bonds deaf 14, Ser. C 10-1-71 ,52,000<ON) 51s400,000 3K to5 1975-2001 SRP Bonds 814, Ser. D 4-1-72 49,000009 49,000 NN 4K to6 1!979-2093 Total general obligation Bonds $ 344,654,000 $ 301!,892,000 Obligation to U. S. Govt. for Irrigation Plant Annual Contracts Various Dates to 1998 11s25(i,911 1973 Series A Bonds 1-1-73 75,000,009 75000,000 5 to6IA 1976-2010 1973 Series B Bonds 7-1-73 75,000,000 75s000,000 5 to 6'977-2011 1974 Series A Bonds 1-1-74 90,000,009 90s000,000 5.70 to7.20 1983-2012 Total Revenue Bonds $ 240,CK) 0,000 Shareholders Advance Payments 68,223 Total Outstandhtg Iwng Term Debt $ 553,217,134
&%~am 42
Prior Lien Debt Service RetIuirelnents Table 30 gives Prior Lien debt service requirements.
Table 30 PRIOR LIE<N DEBT SERVICE REQUIREMENTS OUTSTANDING GENERAL OBLIGATIONBONDS Total Total Prtor Lien Debt Year Ending Debt Service UB. Scrvlca December 31 P h IpH(1) Interest Reqnlrements Government Loans Reqnlremcnts 1974 $ 8,591,000 $ 13,813,390 $ 22,404,390 $ 658,698 $ 23,063,088 1975 8,707,000 13,456,703 22,163,703 658,698 22,822,401 1976 12,535,000 13,094,114 25,629,114 658,698 26,287,812 1977 12,855,000 12,520,875 25,375,875 668,553 26,044,428 1978 13,392,000 11,923,065 25,315,065 679,770 25,994,835 1979 13,748,000 11,292,010 25,040,010 669,382 25,709,392 1980 14,355,000 10,638,365 24,993,365 510,405 25,503,770 1981 14,517,000 9,957,737 24,474,737 518,908 24,993,645 1982 12,483,000 9,345,256 21,828,256 527,397 22,355,653 1983 13,265,000 8,785,375 22,050,375 535,674 22,586,049
~ 1984 13,445,000 8,183,347 21,628,347 543,930 22,172,277 1985 13,640,000 7,576,162 21,216,162 551,419 21,767,581 I
1986 13,865,000 6,971,210 20,836,210 560,012 21,396,222 1987 11,860,000 6,358,533 18,218,533 530,304 18,748,837 1988 12,730,000 5,781,490 18,511,490 485,434 18,996,924 1989 12,805,000 5,160,705 17,965,705 454,671 18,420,376 1990 12,900,000 4,537,151 17,437,151 419,532 17,856,683 1991 12,960,000 3,925,235 16,885,235 385,520 17,270,755 1992 10,695,000 3,363,625 14,058,625 351,568 14,410,193 1993 10,385,000 2,867,750 13,252,750 293,498 13,546,248 1994 10,100,000 2,386,175 12,486,175 231,387 12,717,562 1995 7,700,000 1',910,450 9,610,450 175,389 9,785,839 1996 7,700,000 1,544,025 9,244,025 119,036 9,363,061 1997 6,800,000 1,185,100 7,985,100 49,134 8,034,234 1998 5,600,000 897,300 6,497,300 19,894 6,517,194 1999 4,800,000 644,100 5,444,100 5,444,100 2000 3,600,000 422,900 4,022,900 4,022,900 2001 3,000,000 247,500 3,247,500 3,247,500 2002 2,500,000 112,500 2,612,500 2,612,500 a (1) Accrued periodic payments to the Trustee.
43
Debt Service Requirements ivor thc Revenue Bonds Table 31 gives debt service requirentients for the Revenue Bonds which includes debt service rdquirelrtent fot'he 1974 Series B Bonds.
Table 31 DEBT SERVICE REQUIREMENTS FOR MIIl RIEV.C'NUE BONDS It>74 Scrtcs B Bonds Total 'rotal, Total Debt Service Debt Service Debt Service Requirements Term Bond Requlremcnts Requirements Year Kndtna Pre>tously Issued Serbdl Sinldnn Pund 1)>74 Series B for the December 31, Revenue Bonds Ms<turttles Requlrensents Bonds Revenue Bonds 1974 $ 12,728,747 ( I ) $ 1,882,CI98 ( I ) $ 1,882,098 ( I ) $ 14,610,845(1) 1975 14,059,688 3,211,162 3,2]I 1,162 17,270,850 1976 14,838,338 3,211,] 62 3,211,162 18,049,500 1977 .. 14,818,0,38 3,211,162 3,211,162 18,029,200 1978 .. 14,797,213 3,2.11,162 3,211,162 18,008,375 1979 .. 14,770,538 3,211,162 3,211,162 I7>981>70GI 1980 14,748,013 3,2i1,162 ,3,211,162 l7,959,175 1981 14,723,998 3,2l1,162 3,211,162 17,935,160 1982 15,443,138 $ 400>000 3,211,1'62 3,611,162 19,054,300 1983'. 15,261,4i63 350,009 3,1&0,762 ',3,530,762 18,792,225 1984 15,339,513 450,000 3,1.') 4,162 3,664,162 18,943,675 1985 15,278,638 550,000 3, I I9,962 3,66)9,962 18,948,600 1986 15,268,7l53 1,000,000 ',078,162 4,078,162 19,346,925 1987 15,888,525 1,450,000 3,002,162 4,452,162 20,340,687 1988 15,828,3I53 1,350,000 '.2>& tI 1,962 4,241,962 :) 0,070,325 1989 15,790,975 1,450,000 2,789,362 4,239,362 :) O,CI30,337 1990 15,901,575 1,550,000 2,679,1'62 4,229,162 :) 0,130,737 1991 15,895,9IO 1,60P,PPO I2,550,350 .4,18>0,350 20,CI76,260 1992 15,985,960 1,709,000 I2,4',7'50 4,182,750 20,168,710 1993 15,918,740 1,750,000 :2,3/9,050 4,129,050 20,647,'790 1994 15,845,810 1,800,000 2,272,300 4,0/2,300 19,918,110 1995 15,768,4:35 $ 1,000,00CI 2,1t')2,500 3,162,500 18,930,935 1996 15,687,035 1,100,000 '.2,100,090 3,2CI0,000 18,887,035 1997 .. 15,651,090 1,200,009 2,031,250 ?3,231,250 18,882,349 1998 15,604,920 1,000,000 1,956,250 :?,956,250 18,561,170 1999 15,557,750 1,000,000 l,893,750 :?,893,7,50 18,451,500 2000 15,612,019 1,100,000 1,831,250 2,931,250 18,543,269 2001 15,550,381 1,100,000 1,762>500 862 500 18,412,881 2002 15,483,000 1,200,006 ',693,750 2,893,750 1. 8,376,750 2003 16,614,125 2,200,000 1,618,750 3,818,750 2004 16,564,300 2,300,006 1,481,250 3,7&1,250 2.0,432,875'0,345,550 2005 16,505,706 2,400,000 1,337,590 3,737,500 2006 .. 16,437,325'6,508,100 2,600,000 1,187,500 3,787,500 2007 2,700,000 1,02',5,060 3,725,090 2I0,243,006't0,204,I325'l0,2l33,100',0,214,713 2008 16,508,463, 2,850,000 856,2,30 3,706,250
'2009 16,510,2CI6 3,075,000 678,125 3,753,125 20,263,331 2010 .. 11,776>173 3,400,090 485,937 3';8&5,937 15,6i62,110 2011 7,251,02',0 '4,375,000 273,437 4,648,437 11,8!99,457 (I) Net of Accrued Interest.
Total Debt Service Requirements Table 32 gives total debt service requirements immediately following the issuance of the 1974 Scrles B Bonds.
Table 32 TOTAL DEBT SERVICE REQUIREMENTS Total Debt Service Total Requlrcmcnt Total Debt Scrvlee Prcvtousty Debt Service Year Requirement Issued Requlremcuts Total Ending Prior Llcn Rcvcnuc 1974 Series B Debt Servlcc December 31 Indebtedness(1) Bonds(2) Bonds(2) Rcqulrements 1974 $ 23,063,088 $ 12,728,747 $ 1,882,098 $ 37,673,933 1975 22,822,401 14,059,688 3,211,162 40,093,251 1976 26,2S7,812 14,838,338 3,211,162 44,337,312 1977 26,044,428 14,818,038 3,211,162 44,073,628 1978. 25,994,835 14,797,213 3,211,162 44,003,210 1979. 25,709,392 14,770,538 3,211,162 43,691,092 1980. 25,503,770 14,748,013 3,211,162 43,462,945 1981 24,993,645 14,723,998 3,211,162 42,928,805 1982 22,355,653 15,443,138 3,611,162 41,409,953 1983. 22,586,049 15,261,463 3,530,762 41',378,274 1984. 22,172,277 15,339,513 3,604,162 41,115,952 1985. 21,767,581 15,278,638 3,669,962 40,716,181 1986. '21,396,222 15,268,763 4,078,162 40,743,147 1987. 18,748,837 15,888,525 4,452,162 39,089,524 1988. 18,996,924 15,828,363 4,241,962 39,067,249 1989. 18,'420,376 15,790,975 4,239,362 38,450,713 1990. 17,856;683 '5,901,575 4,229,162 37,987,420 1991. 17,270,755 15,895,910 4,180,350 37,347,015 1992 14,410,193 15,985,960 4,182,750 34,578,903 1993 13,546,248 15,918,740 4,129,050 33,594,038 1994. 12,717,562 15,845,810 4,072,300 32,635,672 1995 9,785,839 15,768,435 3,162,500 28,716,774 1996 9,363,061 15,687,035 3,200,000 28,250,096 1997 8,034,234 15,651,090 3,231,250 26,916,574 1998. 6,517,194 15,604,920 2,956,250 25,078,364 1999 5,444,100 15,557,750 2,893,750 23,895,600 2000 4,022,'900 15,612,019 2,931,250 22,566,169 2001 3,247,500 15,550,381 2,862,500 21,660,381 2002 2,612,500. 15,483,000 2,893,750 20,989,250 2003. 16,614,125 3,818,750 20,432,875
'004 16,564,300 3,781,250 20,345,550 2005 16,505,706 3,737,500 20,243,206, 2006. 16,437,325 3,787,500 20,224,825 2007 16,508,100 3,725,000 20,233,100 2008 16,508,463 3,706,250 20,214,713 2009 16,510,206 3,753,125 20,263,331 2010 11,776,173 3,885,937 15,662,110 201 1 7,251,020 4,648,437 11,899,457 (1) See Table 30.
(2) See Table 31.
' Estimated Coverage Table 33 gives application of revenues, debt service requirements and pro-forma coverage.
45
Table 33.
APPLICATION OF REVENUES, DEBT SERVICE REQUIREMENTS AND PRO FORMA COVERAGE OF DEBT SERVICE REQUIREMENTS; 1969-1979 (000's omitted)
Actual 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Total Electric Revenues (1) $ 64,991 $ 74,295 $ 85,286 $ 104,699 $ 128,859 $ 166'1 $ 189,808 $ 201,263 Operating Expenses (2) .......... 34,959 39,639 49,376 55,790 75,668 106,621 118,562 123,514
$ 221,863 141,901
$ 228,520 146,045
$ 243,939 151,563 Revenues from Operations ........ $ 30,032 $ 34,656 $ 35,910 $ 48,909 S 53,191 $ 60,290 $ 71,246 $ 77,749 $ 79,962 $ 82,475 $ 92,376 Interest and Other Income (Net) .. 2,087 1,749 1,774 2,299 6,380 5,252 6,276 7,350 8,112 8.925 9.743 Revenues Available for Debt Service $ 32,119 $ 36,405 $ 37,684 $ 51,208 $ 59,571 $ 65,542 $ 77,522 $ 85,099 $ 88,074 $ 91,400 $ 102,119 Debt Service Requirements Prlnr 7 >>>n Rnn>lt Interest $ 5,975 $ 7,516 S 9,856 S 13,449 $ 14,171 S 13,813 $ 13 457 $ 13,094 T>rlnni>>e1 $ 12,521 $ 11,923 $ 11,292 A la >ll 4>333 5>529 I >037 I >151 8>469 8,59 1 8,707 12,535 12,855 13,392 13,748 Repayment of U.S. Debt 931 741 607 613 634 659 659 659 669 680 669 Deposit tv Debt Rcacf ra 999 1>909 .2,546 3>443 3,270 2,865 1,922 1,123 225 Tntal c tn tr r>st> c ~ r mr $ 20,046 $ 24,656 $ 26,544
> k>c a>> t1> J>t>7d $ 25,928 S 24, /45 $ 27,411 S 26,270 S 25,995 $ 25,709 Revenge Bnnds FSne Tahle 3!%
Interest Prim >nai
$ $ $ $ $ 5,502 $ 14,611 $ 16,481 S 16,430 S 16,324 S 16,213 $ 16,097 790 1,620 1,705 1,795 1,885 Total (3) $ $ S $ S 5,502 S 14,611 $ 17,2I 1 S 18,050 $ 18,029 $ 18,008 $ 17,982 Total Debt Service (4) ............,..... $ 12>238 $ 15,695 $ 20,046 $ 24,656 $ 32,046 S 40,539 $ 42,016 $ 45,461 S 44,299 $ 44,003 $ 43,691 Coverage of Total Debt Service by Revenues Available for Debt Service ........... 2.62 2.32 1.88 2.08 1.86 1.62 1.85 1.87 1.99 2.08 2.34 Balance afier Debt Service ............. $ I9,881 $ 20,710 $ 17,638 $ 26,552 27,525 25,003 Cbntribution In Lieu of Taxes (5) ....... S S S 35,506 S 39,638 S 43,775 S 47,397 S 58,428 4 507 4 175 5,491 6,068 6,.207 9,228 13>548 l 6 9go i a 704 2! 048 29 472 Contribufions to Water Operations (2) ... 7,155 7,758 7,855 8,792 8,278 9,530 12,770 12,943 13,319 15,592 17,458 Balance Availabie ior Corporate Purposes S f,219 S 8,777 S 4,292 $ 11,692(6)S 13,040(6)S 6,245 $ 9,188 $ 9,715 S 10,752 S 10,757 S 11,498 (1) +h!je PfoJcctcd rcvcnues at 1974 electric rate levels are estimated tn hc sufjlcjcnt !n provjdc rich! service cnverag> and rncct adA't Qal B d t t fo issuance of thc 1974 Series B Bonds, rates are expected to be increased sufficiently to at least provide additional revenues of $ 13!600,000 in 1975, 14,700,000 in 1976> $ 20>500>000 ln 1977> $ 14>600 000 !Q 1978 and $ 21 300 000 jn !979 tn nrovj>]e addjtjnnal fgndS fnr nnnttruet'On,tn CO>r ' >>: ~:$ << .' t
.taxes and to meet other obligations subordinate to debt service. These additional amounts. are included in total Electric Revenues for this Table and Table 28 On page 41. SuCh amOuntS are in additiOn tO the amOuntts Of prOJeCted reVenueS baSed On CuffC'il CICC>fle X>>>CS l>>CpuuCu lrt TaulCS 25 aliu 26 and jii ihC Etn inCCfS eport in Appendix A.
(2, Charge for falfing 'vatcr is omitted from operating expenses oi electric sysiem and exciuded from revenues of the irrigation system.
(3) Under its program of financing the facilities expected to be required to provide for proiected growth durihg the next decade,. the Dis!tf!ct present!y expecis to issue additional Revenue Bonds (not included in Table 33) in the following approximate amounts:
$ 40,000,000 in 1974, $ 75,000,000 in 1975,
$ 210,000,000 in 1976, $ 250,000,000 in 1977, $ 280,000,000 in 1978 and $ 225>000>000 in 1979 (4) Includes Deposit to Debt Reserve for Prior Lien Bonds.
(53 Scc discussion of Voluntary Contributions hl Lieu of Taxes.
(6) May bc reconciled with combined net revenues shown on ganc Bp as follows Add Debt Service Rcauirements fnr hnntl nrinn>nat mnaumnnt nF TT a Debt and deposit to Debt Reserve as shown above. Add (because it is an addition to income) allowance for Funds Used for Construction shown as a deduction to financing costs in Combined Revenue Statement, gage B-4. Deduct dcufccia!inn anti amnr!iza!inn amnrtjxatjnn nf bnnrd J;sc Q> d,,o >>,'o f!
issue expense, page
DESCRIPTION OF THE l974 SERIES B BONDS Principal Amount, Date, Interest anti Maturities The 1974 Series B Bonds are issued in the principal amount of $ 50,000,000, and are dated and bear interest from May 1, 1974. The 1974 Series B Bonds mature on the. dates and in the principal amounts, and bear interest (payable on January 1 and July 1) at the respective rates, as shown below.
$ 50,000,000 1974 SERIES B BONDS MATURITIES AND INTEREST RATES Amount Interest Amount Interest Januart I hlaturlng Rate January I htaturtutt Rate 1983 $ 400,000 7.60% 1990 $ 1,450,000 7.60%
1984 350,000 7.60 1991 1,550,000 6Ãs 1985 450,000 7.60 1992 1,600,000 6.10 1986 550,000 7.60 1993 1,700,000 6.10 1987 1,000,000 7.60 1994 1,750,000 6.10 1988 1,450,000 7.60 1995 1,800,000 6.10 1989 1,350,000 7.60 2012 34,600,000 6t/~
Redemption The 1974 Series B Bonds maturing after January 1, 1984 shall be redeemable at thc election of the District on 30 days'ublished notice, as provided in the Resolution, at any time on or after January 1, 1984, as a whole, or in part in inverse order of maturities (and in the event that less than all of the 1974 Series B Bonds of an entire maturity are redeemed, the 1974 Series B Bonds of such maturity shall be selected at random in a manner deemed fair by the Trustee), at the respective Redemption Prices (expressed as per-centages of the principal) set forth below, together with accrued interest to the redemption date.
REDEMPTION PRICES Period During Whtch Rcdcemed Rcdem pt ton (both dates Included) Price January 1, 1984-December 31, 1985 .
102'%02 January. 1, 1986-December 31, 1987 January 1, 1988-December 31, 1989 . 101'A January 1, 1990-December 31, 1991 101 100'A t
January 1, 1992-December 31, 1993 .
January 1, 1994 and Thereafter 100 The 1974 Series B Bonds maturing on January 1, 2012, will also be subject to redemption, by operation of the Debt Service Fund to satisfy Sinking Fund Installments required by the Resolution, on January 1, 1996, and on each interest payment date thereafter, at 100% of the principal amount of the 1974 Series B Bonds 47
so to be redeemed plus accrued;interest,~if any, to'the redenlption (late, 'and" such Sinking Fund Instaliiments will be sufficient to redeem the principal amounts of such 1974 Series B Bonds on the dates set for'th below.
r.
'SINKING'UND .INSTALLMENTS january 1 Prlnclpal Arnoant Januarr i Principal Amoaal 1996... ....,... $ 1,000,000 2005 $ 2,300,000 1997... '1,100;000 2006. 2,400,000 1998 1,200,0CIO ,2007. 2,600,000 1999... 1,000,000 2008. 2,700,000
-2000... 1,000,000 200'9. 2,850,000 2001... 1,100,000 2010. 3,075,000 2002... 1,100,000 2011. 3,400,000 2003 1,200,000 2012 4,375,000 2004 2,200,000 Form, Denominations, and Interchangeability Definitive 1974 Series,;B Bonds wiill be issued in coupon form registrable as to principal only in the denomination of $ 5,000, and, in fully registered form without coupons in the denominations of $ 5,000 or integral multiples thereof. Coupon 1974 Series B Bonds and fully regis'tered 1974 Series B Bonds Ilre inttIr-changeable at the oflice of the Trustee in the manner, subject to the conditions and upon the payment of charges provided in the Resolution.
Payin Agents Principal, premium, if apy, and interest on the -1974 Series B Bonds wiill be payable at the option of 'the holder at, the respective oiIices of the following Payi'ing Agents",
First National Bank of Arizona,'Phoenix, Arizona Continental Illinois National Bank and"I'r'ust Compariy.of Chicago, Chicago; Ill,inois First National City Bank,, New York, New York Trustee First National Bank of Arizolna, Phoenix, Arizona, is Trustee under the Resolution.
h I
h 48
SUMMARY
OF CI<'RTAIN PROVISIONS OF THE RESOLUTION Certain Definitions The following are definitions in summary form of certain terms contained in the Resolution and used herein:
Accounting Practice: Generally accepted accounting principles appropriate to the electric utility industry.
Accrued Aggregare Debt Service: As of any date of calculation, an amount equal to the sum of the amounts of accrued Debt Service with respect to all Series calculating the accrued Debt Service with respect to each series at an amount equal to the sum of (i) interest on the Revenue Bonds of such Series accrued and unpaid and to accrue to the end of the then current calendar month, and (ii) Principal Installments due and unpaid and that portion of the Principal Installments for such Series next due which would have accrued (if deemed to accrue in the manner set forth in the definition of Debt Service) to the end of such calendar month.
Aggregate Debt Service: For any calendar year, and as of any date of calculation, the sum of the amounts of Debt Service for such year with respect'o all Series.
Cost of Construction: The District's cost of physical construction, costs of acquisition by or for the District of a Project for the Electric System, and costs of the District incidental to such construction or acquisition, the cost of any indemnity and surety bonds and premiums on insurance during construction, engineering. expenses, legal fees and expenses, cost of financing, audits, fees and expenses of the Fiduciaries, amounts, if any required by the Resolution or any Series Resolution to be paid into thc Debt Service Fund upon the issuance of any Series of Revenue Bonds, payments when due (whether at the maturity of principal or the due date of interest or upon redemption) on any indebtedness of the District (other than the Revenue Bonds) incurred for a Project for the Electric System, costs of machinery, equipment and supplies and initial working capital and reserves required by the District for the commencement of operation of a Project for the Electric System, and any other costs properly attributable to such construction or acquisition, as determined by Accounting Practice, and shall include reimbursement to the District for any such items of Cost of Construction theretofore paid by the District. Any Series Resolution may provide for additional items to bc included in the aforesaid Cost of Construction.
Debt Reserve Requirement: As of any date of calculation, an amount equal to one-half of the average annual Debt Service on all Outstanding Revenue Bonds, but not to exceed $ 25,000,000.
Debt Service: For any period, as of any date of calculation and with respect to any Series, an amount equal to the sum of (i) interest accruing during such period on Revenue Bonds of such series (except to the extent that such interest is to be paid from deposits in the Debt Service Account in the Debt Service Furid made from Revenue Bond proceeds, as described in the Resolution), and (ii) that portion of each Principal Install-ment for such Series which would accrue during such period if such Principal Installment were deemed to accrue daily in equal amounts from the next preceding Principal Installment due date for such series (or, if there be no such preceding Principal Installment due date, from a date one year preceding the due date of such Principal Installment). Such interest and principal installments for such Series shall be calculated on the assumption that no Revenue Bonds of such Series Outstanding at the date of calculation will cease to be Outstanding except by reason of the payment of each Principal Installment on the due date thereof.
Electric System: Properties and assets to which legal title is vested in the District and was so vested on the date of adoption of the Resolution and all properties and assets acquired by the District as renewals and replacements, additions and expansion, and improvements thereto, as recorded in the books of the District pursuant to Accounting Practices, but shall not include properties and assets that may be hereafter purchased, constructed or otherwise acquired by the District as a separate system or facility, the revenue of which may be pledged to the payment of bonds or other forms of indebtedness issued to purchase, construct or otherwise acquire such separate system or facility and shall not include properties or assets charged to Irrigation Plant.
lnvestmeni Securities: Any of the following, if and to the extent the same are at the time legal for investment of District funds.
(i) Direct obligations of or obligations guaranteed by, the United States of America or the State of Arizona; (ii) Certificates of deposit, and banker's acceptances whose maturity value shall not bc greater than I/25 of the capital and surplus of the accepting bank; 49
(iii) Bonds, debentures or notes issued by any of the following Federal Agencies: Bank for Cooper-atives; Federal Intermediate Credit Banks; Federal Home Loan Bank System; Export-Import Badk of Washington; Federal Land Banks; the Federal National Mortgage Association (Including Par'ticii)atibn Certificates issued by such Association); or the Government Nitional.Mortgage Association; the United States Postal Service; the Tennessee Valley Authoritj]>; dr afiy Agency'r instrumentality of the United States of America which shall be established for the pur'pos'e of acquiring the obligations of any of the foregoing or otherwise providing financing therefor; (iv) Public Housing Bonds issued by public agencies and municipalities and fully secured as to the payment of both'principal and interest by a pledge of anniial contributions under an Annual Con-tributions Contract or Contract.; with the United States of .America; or Project Notes issued by public agencies or municipalities, in each case, fully secured aS to'he payment of both principal and interest by a requisition or payment agreement with the United States of America; and (v) Direct and general obligations of any State within the territorial United States, to the pa)ment of the principal of and interest on which the full faith and credit of such State is pledged, provided that at the time of their purchase under the Resolution, such obl)gations are rated in any of the three highest rating categories by a nationally recogiiized bond rating agency.
Irrigation Plant: All land and land rights, structure, facifitiek arid equipment used or usable by the District or the Salt River Valley Water Users'ssociation solely for the development, storage, transportation, distribution and delivery of water to the owners or occupants of t]he lands wiithhi the Salt River project 6avi6g rights thereto or to anyone acting on behalf thereof pursuant to contracts with the Salt River Valley Water Users'ssociation or the District.
Operating Expenses: The District's expenses of operating the Electric,'System, including all costs of purchased power, operation, maintenance, generation, production, transmission> di<>tribution, repairs> replace-ments, engineering, transportation, administrative and general, audit, legal, .financial, pension, retirement, health, hospitalization, insurance, taxes, and any other ex))icnses actually paid or accruedwithout limitation, expenses of thc District applicable to the Electric,'System, as recorded on its books pursuant to Accounting Practice and any other expenses of the '.District applicable to~ the Eiectric System, as recorded on its books pursuant to Accounting Practice, and any other expenses incurtcd'or payments by the District ttndr>r the provisions of the Resolution or in discharge of obligations required tti be paid by local, state or federal law',
all to the extent properly allocable to the Electric System under. Accounting Practice. Operating Expens'cs shall not include any costs or ex]penses for new construction falling water used in hydroelectric operktion]s of the District, charges for depreciation, voluntary payments in lieu of taxes and operation, maintenance, repairs, replacement and construction of the Irrigation Plant.
Principal Installment: As of any date of calculation, and wiith respect to-any Series of,Revenue Bonds, (i) the principal amount of Revenue Bonds of such Series due on a certain future date for which nb Sinkifig Fund Installments have been established, or (ii) the unsatisfied balance of any Sinking Fund Installments due on a certain future date for bonds of such series, plus the amount of sinking fund redemption premiur'as which would be applicable u]pon redemption of such Revenue .'Bonds in a principal amount equal td said unsatisfied balance of such Sinking Fun.d Installments or (iii) if such future dates coincide as to different Revenue Bonds of such Series, the sum of such principal'ambunt of Re'venue Bonds and of such unsatisfied balance of Sinking Fund Installments due on, such futur6 dfitc plu< such applicable redemption premiums, If aily.
Prior Lien Bond Resolutions: The bond resolutions'f'hi! District authorizing the issuance, of:
$ 1,929,000 Refunding Corporate. Bond., Bond Issue Number One, Series E, F, 6, H & I, aH adbpti'.d November 3, 1948; $ 3,500,000 Corporate Bonds, Bond I'ssue Number Four, adopted July 28, 1956;
$ 4,500,000 Corporate Bonds, Bond Issue Number Five, adopted January 30, 1951; $ 5000,060 CorI'>ora'te Bonds, Bond Issue Number Six (first installment), adopted December 1, 1952; $ 5,000,000 Corporate Bonds, Bond Issue Number Six (second installment), adopted December 7, 1953; $ 3,500,000 Corporate Bonds, Bottd Issue Number Six (third installment), ado]pted May 4, 1954; $ 11>000,000 Corporate Bonds, Bond Issiie Number Seven (first install, ment), adopted April 25> 1956 $ 5,'000,000 Corporate Bonds, Bond Issue Numbrr Eight, Series B, adopted February 9, 1959; .'>15,000,006 Salt River Project Bonds, Bond Issue Number Nine, Series A, adopted Novemlber 9, 1959; $ 15,006,000 Salt~ River ~Project Bonds, Bond Issue Number Nine, 50
Series B, and $ 4,000,000 Salt River Project Bonds, Bond Issue Number Nine, Series C, adopted July 6, 1960;
$ 10,000,000 Salt River Project Bonds, Bond Issue Number Ten, Series A, adopted May 7, 1962; $ 6,000,000 Salt River Project Bonds, Bond Issue Number Ten, Series B, and $ 8,000,000 Salt River Project Bonds, Bond Issue Number Ten, Series C, adopted August 31, 1965; $ 13,470,000 Salt River Project Refunding Bonds, Bond Issue Number Eleven, adopted August 31, 1965; $ 32,000,000 Salt River Project Bonds, Bond Issue Number Twelve, Series A, adopted January 8, 1968; $ 16,000,000 Salt River Project Bonds, Bond Issue Number Twelve, Series B, adopted January 6, 1969; $ 10,000,000 Salt River Project Bonds, Bond Issue Number Thirteen, adopted January 6, 1969; $ 36,000,000 Salt River Project Bonds, Bond Issue Number Fourteen, Series A, adopted February 10, 1970; $ 40,000,000 Salt River project Bonds, Bond Issue Number Fourteen, Series B, adopted November 2, 1970; $ 52,000,000 Salt River Project 'Bonds, Bond Issue Number Fourteen, Series C, adopted October 4, 1971; $ 49,000,000 Salt River Project Bonds, Bond Issue Number Fourteen, Series D, adopted March 6, 1972, together with all supplemental resolutions adopted in accordance with the terms thereof, and certain loan agreements with the United States of America, heretofore, or here-after made or assumed by the District.
Prior Lien Bonds: Outstanding bonds of the District authorized'and issued pursuant to the Prior Lien Bond Resolutions, and ail outstanding loans with the United States of America, heretofore, or hereafter made or assumed, by the District which have a prior lien on revenues of the Electric System.
Prior Lien Debs Service: For any period, as of any date of calculation, all payments required by the Prior Lien Bond Resolutions on account of principal and interest for the Prior Lien Bonds, and all such, loan repayments made to the United States of America.
Project: The purchase, replacement, construction, leasing or acquisition of any real or personal property or interest therein, works or facilities which the District is authorized by law to purchase, replace, construct, lease or otherwise acquire, or the improvement, reconstruction, extension or addition to any real or personal property, works or facilities owned or operated by the District, or any program of development involving real or personal property, works or facilities which the District is authorized by law to purchase, replace, construct, lease or otherwise acquire or the improvement, reconstruction, extension or addition to
' such program.
Revenues: (i) AII funds transferred by order of the Treasurer of the District from the "Electric Revenue Fund" (established, created and maintained pursuant to the Prior Lien Bond Resolutions) to the General Fund of the. District for deposit in the Revenue Fund pursuant to Sections 504 and 716 of the Resolution and (ii) after the Retirement Date of the Prior Lien Bonds aH revenues, income rents and receipts derived by the District'from the ownership and operation of the Electric System and the proceeds of any insurance covering business interruption loss relating to the Electric System and (iii) interest received on any moneys or securities (other than in the Construction Fund) held pursuant to the Resolution and paid into the Revenue Fund.
Revenues Available for Debt Service: For any calendar year or period of 12 calendar months shall mean all revenues, income, rents and receipts derived by the District from the ownership and operation of the Electric System and the proceeds of any insurance covering business interruption loss relating to the Electric System for such year or period less the amounts of the Operating Expenses for such year or period.
[Resolution, Section 101].
Pledge of Revenues and Funds The payment of the principal and redemption price of, and interest on the Revenue Bonds, including the 1974 Series B Bonds, is secured by (i) the proceeds of sale of the Bonds, (ii) the Revenues, and (iii) all Funds established by the Resolution, including the investments, if any, thereof. The pledge, insofar as it relates to the Revenues is subject and subordinate in all respects to the pledges and liens created by the Prior Lien Bond Resolutions and in addition, is subject to transfer on the first day of the month of Rcvcnues to the General'Fund of the District, after all payments required by the-Resolution have been made.
[Resolution, Section 501).
~
Additional Bonds The District may issue additional parity Revenue Bonds in compliance with the Resolution if, among other
. things,; (a) Revenues Available for Debt Service, adjusted as provided in the Resolution, of any 12 consecutive 51
calendar months out of the 24 calendar months, next preceding the issuance of such additional Rdveitue Hotbeds are not less than 1.20 times the maximum total of thc Debt Service and the Prior Lien Debt Selrvicc fear any year on all Revenue Bonds and Prior I.ien Bonds, wthich will be outstanding immediIitelIy p/ior to 'ucceeding the issuance of the Additional. Revenue Bonds, (b) estiimated Revenues Available. for Debt Service, adjusted'as in the Resolution, for each of the five calendar years immediately following the issuance of such pro- 'rovided posed additional Revenue Bonds are not less than 1.35 times the totIil, for each such respective calendar year, of the Debt Service and the: Prior Lien Debt Service on 6H Bonds Md all Prior Lien Bonds, which will be outstanding immediately subsequent to the issuance of such prOpo~cd additional Revenue Bonds and (c) the estimated Revenues Available for Debt Service, adjusted as provided in the Resolution, for the fifth ca1endar year immediately following the issuance of such proposed additional Revenue Bonds are not ides thaA 1.35 the maximum total Debt Serv'ice and Priior 'Lien Debt Service for any succeeding year on all Revenue 'imes Bonds and all Prior Lien Bonds, which, will be outstanding immediately sttibsdqui!nt to the issuance ot sttch additional Revenue Bonds. 'roposed In determining the amount of Revenues Available for. Debt Service, the Authorized Officer of tlie 6istiict adjust the Revenues Avaiilable for D'ebt Service by adding'thereto'he. following: 'ay (i) in the event the District,shall have acquired an operating'tility or facility subsequent to the beginning of the 12 month period selected;pursuant tb clause (ti) abo've, 'and estimate maHe gaby an Officer of tlhe .'District of such additional Revenues,Available, for De'bt Seri'ice for'dch 'uthorized 12 month period which would have resulted had. such operating utility or facility been acquired 'at t'e of such 12 mo.nth periiod; and 'eginning (ii) in the event any adjustment of rates with respect to the Electric System shall have become subsequent to t)he beginning of the 12 month period selected pursuant to clause (a) tiboVe, 'an 'ffective estimate made by an Authorized Oflicer of the District of such additional Revenues Available for Debt Service for such 12 month period which would have resulted had such rate adjustment been in effect for the entire period.
In determining thc ainount of esthnated Revenues Available for Debt Service for the purpose of c1au<es (b) and (c) the Authorized Office of the District with the approva~l of'he Consulting Engineers may adjust the estimated Revenues Available for Debt Service by adding thereto any estimated increase in revenue result-
~
ing from any increase in electric rates which, in the opinion of the Authorized Officer of the District and the Consulting Engineers, are economically feasible, and reasonably considered necessary based on prdjec/ed operations for such 5 year period.
[Resolution, Section 204].
'efunding Bonds One or more series of Revenue Bonds ("Refunding Bbndsi") may be issued to refund (a) all or any part of the Revenue Bonds of one or more series then outstanding or (b) all or any part of the Prior Lien Bonds of any one or more series then outstanding.
The issuance of Refunding Bonds to refund outstanding ReNentie Bonds is subject to the condition that the District certify that the Aggregate Debt Service for the theri ciirrent and each future year shall not be increased by such refunding. Issuance of such Refunding Bonds to refund Revenue Bonds is subjI:ct to following conditions: (i) the Trustee shall receive, irrevocablle instructions to give due notice olI reillemp- 'he tion; (ii) if the Revenue Bonds to be refunded are not, subject t6 reidemption within 60 days thereat.aft':r, instructions to the Trustee to make due publication of notice; (iiii) receipt by the Trustee of 'rrevocable moneys sufficient to elIect payment at the applicable redempfion price of the Revenue Bonds to be refunded, together with accrued interest on such bonds to redemption date; or receipt by the Trustee of Inves'tment Securities in such principal amounts, of such,matujdties and bearing such interest, subject to the qualification that such Investment Securities be non-callable and suKcient to effect payment at the, applicable redemption price, together with accrued interest on such, bonds to redemption date.
The Issuance of Refundiing Bonds to refund Prior Licit B6nd4 is subject. to the following conditions:
(i) the Trustee shall recei:ve eviclence as to the discharge an'd s'atisfaction of the pledge of the revenues to 52
such Prior Lien Bonds under the Resolutions, and (ii) the District shall fulfill the requirements, conditions and tests referred to in the above section for Additional Bonds which are made applicable to Refunding Bonds for Prior Lien Bonds under this subsection.
[Resolution, Section 205].
Subordinated Indebtedness The District may, at any time, or from time to time, issue evidences of indebtedness payable out of Revenues and which may bc secured by a pledge of Revenues provided, however, that such pledge shall be and shall be expressed to be, subordinate in all respects to the pledge of the Revenues, moneys, securities and funds created by the Resolution.
[Resolution, Section 509].
Allocation of E<lectric System Revenues The Resolution establishes the following Funds and Accounts for the application of Revenues:
Fund Held ny Revenue Fund . District Debt Service Fund Trustee Debt Service Account . . Trustee Debt Reserve Account . . Trustee Pursuant to the Prior Lien Bond Resolutions, revenues and income derived by the District from the ownership and operation of the Electric System are deposited in the "Electric Revenue Fund", created by the Prior Lien Bond Resolutions. Moneys in said "Electric Revenue Fund" are used to pay Operating Expenses of the Electric System and debt service on the Prior Lien Bonds, and maintain reserves therefor. The District covenants that on the first day of every month that Revenue Bonds are outstanding, it will deposit moneys in said "Electric Revenue Fund" not required to be retained for said Operating Expenses, debt service and reserves into the Revenue Fund established by the Resolution.
The District shall (i) out of the moneys in the Revenue Fund, pay, free and clear of any lien or pledge created by the Resolution, all amounts required for reasonable and necessary Operating Expenses, and (ii) at all times retain in the Revenue Fund amounts deemed by the District to be reasonable and necessary for working capital and reserves for Operating Expenses including expenses which do not recur annually; provided that the total amount of such reserves set aside during any year shall not exceed 20% of the amount of Oper-ating Expenses for such year. Prior to the Retirement Date of Prior Lien Bonds, no moneys in the Revenue Fund shall be applied to the payment of any such Operating Expenses (or reserves therefor) the payment of which shall be provided for pursuant to the Prior Lien Bond Resolutions.
Amounts in the Revenue Fund not retained for Operating Expenses, working capital, and reserves for Operating Expenses are to be paid monthly to the following Funds and Accounts in the order of priority as follows:
(1) To the Debt Service Fund: (i) for credit to the Debt Service Account, to the extent required so that the balance in said Account shall equal the Accrued Aggregate Debt Service; provided that, for the purposes of computing the amount to be allocated to said Account, there shall be excluded the amount, if any, set aside in said Account which was deposited therein from the proceeds of Revenue Bonds less an amount equal to the interest accrued and unpaid and to accrue on Revenue Bonds (or any Refunding Bonds issued to refund Bonds) to the last day of the then current calendar month; and (ii) for credit to the Debt Reserve Account, an amount equal to one-twelfth of twenty percent (1/12 of 20%) of the amount necessary to make thc total moneys on deposit in the Debt Reserve Account equal to the Debt Reserve Requirement; provided, however, that no deposits need be made into the Debt Reserve Account when the amount on deposit therein shall equal or exceed $ 25,000,000.
53
(2) The District shall out of the moneys in the Revenue Fund not reta,ined therein for operating expenses and not applied for credit oi the Debt Service, Account or the Debt Reserve Account, on or before the first working day of each month transfer such remaining balance )in the Revenue Fund to the General Fund of the District. Any amount so transferred to the General Fund'f 'the District may 'be used by the District for any lawful purpose.
0 So long as there shall be held in the Debt Service Fund an amount sufficiient to fully pay all Outsiandiing Bonds in accordance with their terms (including principal or applicable siinking fund Redemption Price and interest thereon), no deposits shall be required to be made intro the Debt Service Fund.
The Trustee shall pay fror'n the Debt Service Account the amounts required (i) for the payment of~
interest and Principal Installinents on the Reve:nue Bonds when due, (ii) on or before the day preceding, any redemption date if the Revenue, Bonds, for payment of the redemption price and accrued interest 'on of Revenue Bonds, and the, purchase price on the purchase of Revenue Bonds, through appliica- 'the'edemption tion of moneys accumulated in the Debt Service Account with respect to any sinking f'und installment, and through application of any moneys in the Debt Service Account when applied from 40 to 60 days prior'o 'the'ue date of a sinking fund installment to the retirement of the balance of such installment, and (iii) accrued interest included in the purchase price of Revenue Bonds purchased for retirement.
If on the first working day of any month the amount in~ the Debt Service Account shall be less than the amount required to be in such Account, the Trustee shall apply, amounts from the Debt Reserve Account to'he extent necessary to make good the deficiiency.
Whenever moneys on deposit in the Debt Reserve Account shall exceed the Debt Reserve Requirement, the excess shall be applied by the Trustee in the. same manner as Revenues.
Whenever the amount in the Debt Reserve Account, together with the amount in the Debt Service Account, is sufficient to pay in full all outstanding Revenue Bonds in accordance with their terms, including principal or applicable sinking fund Redemption Price and interest thereon the funds on deposit in the Debt shall be transferred to the Debt Service: Account.
Reserve'ccount
[Resolution, Sections 501-508].
Transfer from General Bmd In the event there is a deficiency in the Bond Fund established by the P<dor Lien Bond Resolutions or ill the Debt Service Account and if such a deficiency is n<ot paid from other sources the District shall~
transfer money in the General:Fund to said Bond Fund oi< said Debt Service Account or both iti atnoiints sufficient to make up such deficiency or deficiencies. tResolution, Section 717].
Construction Fund The Resolution establishes a <Construction Fund, to be held'y'he District, and provides ~that there~
shall be paid into the Construction Fund: (i) the balaiice of Revenue Bond proceeds, remaining after the deposit of an amount equal to the accrued interest on such bonds to the date of delivery of th<<~ Revenue'onds of each series in-the )Debt Service Account, and any other deposits required 'by the Series '.Resolution to be. made in the Debt Service Account and Debt Reserve Account; (ii) 'insurance proceeds, if any, from physical loss of or damage to a Project, or of contractors'erformance bond proceeds, unless'therwise'equired to be applied by Prior Lien Bond Resolutions,oij other<)vise pet'mit'ted to be applied by the provisi'ons'f the Resolution.
In addition there may be paid into the ~Coz<struction Fund, at the option of the District, any for or in connection with the )Electric System by the District from any other. source, unless required Non'eys'eceived to be otherwise applied as provided by the Resolution.
Amounts in the Constriicti<on '.Fund shall be applied to the purpose or purposes specified in the Series Resolution authorizing the Revenue )Bonds, unless otherwise prov)idedl for in the. Resolution,.
To the extent that other moneys are not available therefor, amounts in the Construction Fun'd to the payment of principal of and interest on Revenue Bonds when due.
54 shallrbe'pplied 0
Amounts in the Construction Fund shall be invested by the District to the fullest extent practicable
'in Investment Securities maturing in such amounts and at such times as may be necessary to provide funds when needed to pay the Cost of Construction or such other purpose to w'hich such moneys are applicable.
The District may, and to the extent required for payments from the Construction Fund shall, sell any such Investment Securities at any time, and the proceeds of such sale, and of aH payments at maturity and upon redemption of such investments, shall be held in the Construction Fund. Interest received on moneys or securities in the Construction Fund shall be deposited in the Construction Fund.
[Resolution, Section 503].
Redemption Fund The Resolution establishes a Redemption Fund, and requires that proceeds from the sale or exchange by the District of any property constituting part of the Electric System and not necessary, in the opinion of the District, in the operation thereof, and not required to be applied otherwise by Prior Lien Bond Resolutions, shall be deposited in either the Construction Fund or the Redemption Fund, at the discretion of the District.
In addition, the proceeds of any insurance against damage or destruction, other than against business interruption loss not applied by the District to constructing or replacing damaged or destroyed property or in acquiring property or assets of the Electric System shall be paid to the Trustee for deposit in the Redemption Fund.
Amounts in the Redemption Fund shall be used by the District for the purchase or redemption of any Revenue Bonds, and expenses in connection with the purchase or redemption of'any Revenue Bonds.
[Resolution, Sections 510, 707 and 713].
Investment of Certain Funds and Accounts
- 0 The Resolution provides that certain Funds,and Accounts held thereunder may, and in the case of the Construction Fund, Revenue Fund, Debt Service Account and the Debt Reserve Account shall, be invested to the fullest extent practicable in Investment Securities. The Resolution provides that such investments shall mature no later than such times as shall be necessary to provide moneys when needed for payments from such Funds and Accounts, and in the case of the Debt Reserve Account, may be invested in Investment Securities having a maturity of not more than 15 years.
Net interest earned on any moneys or securities in such Funds 'or Accounts, other than thc Construction Fund, shall be paid into the Revenue Fund. Interest earned on any moneys or in the Construction Fund shall be deposted in the Construction Fund.
Obligations purchased as an investment of moneys in any Fund created under the provisions of the Resolution shall be deemed at aH times to be a part of such Fund and any profit realized from the liquidation of such investment shall be credited to such Fund and any loss resulting from the liquidation of such investment shall be charged to the respective Fund.
[Resolution, Sections 503, 603 and 604].
'Electric System Rate Covenant The District covenants that it shaH charge and collect fees and, other charges for the sale of electric power and energy and.other services, facilities and commodities of the Electric System as shall be required to provide revenues and income at least sufficient in each calendar year 'for the payment of the sum of:
(a) Operating Expenses during such. calendar year, including" reserves, if.any, therefor provided for in the Annual Budget for such year; (b) An amount equal to the Aggregate Debt Service for such calendar year;
.0 (c) The amount, if any, to be paid during such calendar year into the Debt Reserve Account in the Debt Service Fund;
'55
(d) An amount equal to the Prior Lien Debt Service for such calendar year; (e) The amount, if any, to be paid during such calendar y'ear into the Debt Service Reserve Pun'd piur-suant to the Prior Lien Bond Resolution;, and (f) All other charges or liens whatsoever payable out~'of~ revenues 'and inCome during such calendar year and, to the extent not otherwise provided for, all amounts payable on subordinated Indebtedness.
The collection of revenues and, income in any calendar year in an amo'unt in excess of the'aggregate specified for such calendar year shall not be taken into account as a credit against such aggregate 'ayments payments for any subsequent calendar year or years.
On or before December 1 in each year the District shall. complete a review of its financial condition for the purpose of estimating whether the revenues and income frc'tm the 'operation of the Electric Systein, in- ~
eluding investment income treated as revenues for such year, will be suKciient to provide all of the payments and meet all other requirements as specified and shall by resolution make a determination wifh r'esp'ect If the District deterniines that:,uch revenues and', inCom'e may not'be 'sufmcient to provide such pay- 'hereto.
ments and meet such othe.r requirement., it shall forthwith make a study for the purpose of making a schni-ule of rates, fees and charges for the Electric,'System which wilL cause,sufiicient revenues and inccjme'o'be collected in the following ca'lenclar year to provide funds for all the payments and other requirements as specified in subsection 1 of this Section for such following year and will cause additional revenues aitid ihcotne ~
to be collected in such following and later calendar years sufiicient 'to restore the amount of such 'deficiency the earliest practicable time. If, in any calendar year the revenues and income collected shall not, hhve
't suflicient to provide all of the payments and meet all other requirements as specified in said subsection 1, 'een the District shall as promptly as permitted by law establish and place in effect a schedule of rates fees and charges which will cause sufiicient revenues and income to be &11&ted.
~'he failure in any calendar year to comply with the Electric System Rate Covenant shall not 'conistitute an Event of Default under the Resolution, if the District sh'all 'coinply with the requirements of the imme-diately preceding paragraph.
[Resolution, Section 711].
Certain Other Covenants lVo Free Service: The District will not furnish or supply power or'nergy'ree of charge to any persbn, or corporation, public or private, and will promptly enforce payment of any and all accounts owing to fke 'irm District by reason of the ownershiip and operation of the Electric System to the extent dictated by sound busi-practice. 'ess f Resolution, Section 711-3].
Creadon of Liens; Disposition of Properties.; The District will ifot issu6 bonds or other evidences of indebtedness including any bonds issued pursuant to the Prior Lien Bond Resolutions, other than the Revenue Bonds payable out of or secured by a pledge of any Revenues'or 'income of the Electric System or of the moneys, securities or fundls held or set aside under the Resoilution, nor will it create or cause to be created, any lien or charge thereon except with respect to (i) Subordinated Indebtedness: (ii) prior Lien Boifds in liieu of or in substitution for other Prior Lien Bonds in connectidn >kith servicing the Prior Lien Bond~ or'rior Lien Bonds in connection, with the refunding of Prior Lien Bonds;, (iii) Loans made or assumed with fIie United States of America,, which. loans may be secured by a lien on')Revenues and income of th6 Elect'ric System prior to the lien, of Re~'enue Bonds issued pursuant to the Resolution.
'o part of the Electric System shall be: solid, mortgaged, lea'sed'or 'otherwise diisposed of or encumbered, except: (i) for sales and exchanges of any property constituting part of the Electric System which, in the opinion of the District is not nei:essary in the operation of the'~Electric Sfstefn; '(ii) the District m'ay lease or make contracts or grant licenses for the operatiion of, or grant easements or other rights with resp'o,
'$6
any part of the Electric System if such lease, contract, license, easement or right does. not matcriaHy impede or unduly restrict the operation by the District of the Electric System. Any proceeds received by the Dis-trict for sale or exchange of unnecessary property not applied in accordance with Prior Lien Bond Resolu-tions shall be deposited in either the Construction Fund or the Redemption Fund at the discretion of the District. Any payment received by the District under or in connection with any such lease, contract, license, easement or right of way in respect of the Electric System or any part thereof on and after the Retirement Date of the Prior Lien Bonds shall constitute Revenues.
[Resolution, Section 707].
Consulting Engineers: The District shall, until thc Revenue Bonds and the interest thereon shall have been paid or provision for such payment shall have been made, for the purpose of performing and carrying out the duties imposed on the Consulting Engineers by the Resolution, employ an independent engineer or engineering firm or corporation having a favorable reputation for skill and experience in such work.
[Resolution, Section 708].
Annual Budget: Not less than 30 days prior to the beginning, of each calendar year, the District shall prepare an Annual Budget for the ensuing calendar year. Each such Annual Budget shaH include estimates for Operating Expenses for such year. Such Annual Budget may set forth such additional material as the District may determine. The District may at any time adopt an amended Annual Budget for the remainder of the then current calendar year.
[Resolution, Section 709].
Insurance: The District shall provide protection for the Electric System in accordance with sound electric utility practice which may consist of insurance, self insurance and indemnities. Any insurance shaH be in the form of policies or contracts for insurance with insurers of good standing, shall be payable to the District as its interest may appear, and may provide for such deductibles, exclusions, limitations, restrictions and'restrictive endorsements,customary in policies. for similar coverage issued to entities operating properties similar to the properties of the Electric System. Any self insurance shall be in the amounts, manner and of the types provided -by entities operating properties similar to the properties of the Electric System.
[Resolution, Section 712].
Accounts and Reports: The District shall keep, in accordance with Accounting Practice, proper books of record and account of its transactions relating to the Electric System, the Funds and accounts and reserves under the Prior Lien Bonds 'Resolutions, together with all contracts for the sale of power and energy and aH other books and. papers of the District, including insurance policies, relating to the Electric System and such Funds and accounts.
The Trustee shall advise the District promptly after the end of. each month of its transactions during such month relating to the Funds and accounts held by it under the Resolution.
The District shall annually, within 180 days after the close of each calendar year, file with the Trustee, and otherwise as provided by law, a copy of'the annual report of the District for such year, accompanied by an Accountant's Report. In addition, the District will file with the Trustee a statement, or statements, accompanied by an Accountant's Report of each Fund and account established under the Resolution and the electric revenue fund, bond fund and debt service reserve fund established under the Prior Lien Bond Reso-
'lutions, summarizing the receipts therein and disbursements therefrom during such year and the amounts held therein at the end of each year. Such Accountant's Report on the statement summarizing the transactions in the Funds established under the resolution shall state whether or not, to the knowledge of the signer, default.'7 the District is in default with respect to any of the covenants, agreements or conditions as set forth in Section 801 of the Resolution, insofar as they pertain to accounting matters, and if so, the nature of such
The reports, statements and other documents required to be furnished to the Trustee pursuant to Section 714 of the Resolution shall be available for the inspection of the Revenue Bondholders at the office of the Trustee and shall be mailed to each Revenue Bondholder wh'o shall file a written request therefor with the District.
[Resolution, Section 714].
Defeasance Outstanding Revenue Bonds shall prior to the maturity or redemption date thereof be deemed to have been paid and shall cease to be entitled to'ny lien, benefit or security under the Resolution if the~ foHowing are met: (i) in case of Revenue'.Bonds to be redeemed, the District shaH have given to the Trustee 'onditions irrevocable instructions to publish the notice of redemption theretor, (ii) there shall have been depdsite8 vtIith Trustee in trust either moneys in an, amount which shall be sufficient, or investment securities (which shall 'he consist of the securities described in items (i), (iii) and (iv) in the 'definition of "Investment Securitiesi') the of and interest, on which, when due,, wiiH provide moneys which, together with any moneys also 'rincipal shall be sufficient to pay when due the principal or redemption price, if applicable, and interest due 'eposited or to become due on such R.evenue Bonds, and (iii) in the, event such Revenue Bonds are not subject to redemption within the next succeeding 60 days, the District shall have given the Trustee irrevocable instruc-tions to publish, as soon as practiicable, a notice to the holders of such Revenue Bonds that the above deposit has been made with the Trustee and that such Revenue Bonds are deemed to be paid,and stating the maturity redemption date upon which moneys are to be available to pay the principal or redemptIIon price, 'r.
if applicable, of such Revenue Bonds.
[Resolution, Section 1201].
Remedies Events of Default specified in the Resolution .include faHure to pay principal or redemption price of any Revenue Bond when due; failure for 30 days to pay any interest insItaHrnent or the: unsatisfied balance of any sinking fund installment thereon when due; failure to icomply with the rate and fee covenants with respect to the Electric System, if such failure i,s not remedied by compliance with subsection 2, of Section 711 of, the Resolution; failure for 60 days after written notice thereof to the District by the Trustee or the DistriCt a~nd
~ '
by the holders of not less than 10% of the principal amount of the Revenue Bonds Outstandingin the 'rustee
~
observance or performance of any other covenants, agreements or'onditions; and the filing of a p'etition seeking a composition of indebtedness under the Federal Bankruptcy Laws, or a .Federal or Arizon statulte.
the happening of an'y such Event of Default the Trustee or the holders of not less than 25% in principal 'pon amount of the Revenue Bond.; then outstanding may declare the principal and accrued interest on aH Revenue then outstanding due and payablc. Such declaration may be rescinded by written notice to 6e bisect 'onds to the Trustee of the holders of a .majority of thc prindipaJ anliount of the Revenue Bonds outstanding 'nd at any time after such declaration but prior to the maturity of the Revenue Bonds by their tenn, if: (i) aH overdue installments of interest upon the Revenue Bonds, interest upon such overdue installments permitted by law, the reasonable and proper charges,, expenses and likbili~ties of the Trustee and aH other sums then due under the Resolution (except the principa1l of and interest 6ccr'ued upon the Revenue Bonds due solely by virtue of such declaration) shall either be paid by or for the account of the District or provision for such payment satisfactory to the Trustee shall be made; (ii) aH defaults under the Revenue Bond or Resolution shall be cured, made good, or secured (or provIision for such 'cure, making good oi securing be made) Ito the of the Trustee. 'atisfaction If the Trustee shall have acted itself, and if there, shall nest hhve'been there'tofore delivered to th'e'trustee direction to the contrary by the Holders of a majority in lprincipal amount of the Revenue Bbndls then 'ritten
~
Outstanding, then any such declaration shaH ipso facto be deemed to be rescinded and any such default and its consequences shaH ipso.facto be deemed to be annuHed, btit n6 st)eh rescission and annulment shN tIxte'nd or affect any subsequent default or impair or exhaust any right or power consequent thereon.
'o Upon occurrence of an Event of Default, the District shaH subject the books of record and account of the District, and aH other records relating to the Ellectric System 'to the 'use'of the Trustee and its agents and attorneys.
58
- Upon occurrence of an Event of Default, which shall not have remedied, the District shall, if demanded by the Trustee, account as a trustee of an express trust, for aH Revenues, moneys, securities and funds pledged under the Resolution, and pay over to the Trustee aH assets held in any fund or account under the Resolution
-and, as received, aH Revenues. The Trustee shall apply such moneys, securities, funds and Revenues and income therefrom in the foHowing order: (i) to the payment of the amounts required for reasonable and necessary Operating Expenses, and for reasonable renewals, repairs and replacements of the Electric System to prevent loss of Revenues, to the extent not required by Prior Lien Bond Resolutions; (ii) to the payment of reasonable and proper charges, expenses and liabilities of the Trustee and its engineers; (iii) to the payment of interest and principal or Redemption price then due on the Revenue Bonds, subject to the provisions of Section 803(2) of the Resolution.
If aH defaults under the Revenue Bonds or the Resolution shall be cured, made good or secured to the satisfaction of the Trustee, the District and the Trustee shall be restored to their former position and rights, and aH Revenue shaH be applied as if there had been no Event of Default.
If an Event of Default shall have occurred and not be remedied the Trustee may, or on request of the holders of not less than 25% in principal amount of Revenue Bonds outstanding shall, take such steps by a suit or suits in equity or at law, whether for the specific performance of any covenants of the Resolution or in aid of the execution of any power granted in the Resolution, or for an accounting against the District, or in the enforcement of any other legal or equitable right as the Trustee shall deem most effectual to enforce any of its rights or to perform any of its duties under the Resolution.
The holders of not less than a majority in principal amount of Revenue Bonds then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred upon the Trustee (subject to the Trustee's right to decline to follow such direction upon advice of counsel as to the unlawfulness thereof or upon its good faith determination that such action would involve the Trustee in personal liability or would be unjustly prejudicial to bondholders not parties to such direction).
The Trustee may, upon the request of the holders of a majority in principal amount of the Revenue Bonds then outstanding, and upon being furnished with reasonable security-and indemnity, shall be under no obliga-tion to institute and prosecute a proper action to prevent any impairment of the security under the resolution or to preserve or protect the interests of the Trustee and of the bondholders.
In case an Event of Default shall occur (which shall not have been cured) the Trustee shall be required to exercise and use the same degree of care and skill as a prudent man would exercise and use under the circumstances in the conduct of his own affairs.
No holder of any Revenue Bond or Coupon shall have any right to institute any suit, action or proceeding for the enforcement of any provision of the Resolution or the execution of any trust under the Resolution or for any remedy under the Resolution, unless such holder shall have previously given the Trustee written notice of the Event of Default, and the holders of at least 25% in principal amount of the Revenue Bonds then outstanding shall have filed a written request with the Trustee and shall have afforded the Trustee a reasonable opportunity to exercise its powers or institute such action, suit or proceeding, and unless there shall have been offered to the Trustee adequate security and indemnity against its costs, expenses and liability to be incurred and the Trustee shall have refused to comply with such request within 60 days. Nothing in the Resolution or the Revenue Bonds affects or impairs the District's obligation to pay the Revenue Bonds and interest thereon when due or the right of any bondholder to enforce such payment.
[Resolution, Section 801-808]
Supplemental Resolutions For any of the following purposes, a Supplemental Resolution of the District may bc adopted, whic, 'h upon the filing with the Trustee, shall be fully effective: (1) To provide additional limitations and restrictions on the delivery of Revenue Bonds or the issuance of other evidences of indebtedness; (2) To add other covenants and agreements to be observed by the District which are not contrary to or inconsistent with the Resolution as theretofore in effect; (3) To add'other limitations and restrictions to be observed by the District 59
which are not contrary to or inconsi.stcnt with the Resolution as heretofore in effec; (4) 'To authorize Revenue Bonds of a Series and any other matters and things relative to such Revenue Bonds which are n'ot contrary to or inconsistent with-the Resolution or to amend, modifIy ot rescind any such authorization, Ibriot toI the first delivery of such Revenue Bonds; (,5) To confirm, as further assurance, any pledge under, and the subjection to any lien or pledge of the Revenues or of any Iothhr Moneys, securities or funds; (6) To mddify any of the provisions of the Resolution in any respect what'll;veri, provided that (i) such modification shall. be, and be expressed to be, effective only after all Revenue B6ndd of'n9 Series Outstanding at the 'date; of the adoption of such Suppleraental Resolution shajll cease to be Outstanding, and (ii) such Supplemental Resolution shall be specifically referred to in the text of all Revenue Bonds of any Series delivered after the datI: oil thI:
adoption of such Supplemental Resolution and iof Revenue Bonds issued in exchange therefor or in place thereof; (7) To cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in the Resolution; (8) To insert such provisions clarifying matters or questions arising under the Resolution as are necessary or desirable all are not contrary to or inconsistent with the Resolution as theretofore in effect'.
[Resolution, Section 1001].
Amendment with Consent of 3ondhojlders Any modification or amendment of the Resolution may be made in any particular by a, Supplemental Resolution, with the written conse:nt (i) of the holders of at least two-thirds in principal amdunt of thk Revenue Bonds Outstanding at the tirae such consent is given and (ii) in case less than all of the several Series of Revenue Bonds then Outstandling or Jless than all the Revenue Bonds of a Series then Outstanding arc affected by the modificztioa or amendment of the Holders 'of at least two-thirds in principal amount of'he Revenue Bonds so affected and Outstanding at the tiiric such consent is given, and (iii) in ca< e the rnodifica'tion or amendment changes the terms of any Sinking Fund Installracn't, of the Holders of at least two-thirds ia principal amount of the Revenue Bonds entitled to such Slink/ng Fund Installment and Outstanding at'he; time such consent is given. If such modificati.on or amendmcnt will, by its terms, not take effect so ion) a0 any Revenue Bonds of aay specified like Series and maturity remain Outstanding, the consent of the Holders of such Revenue Bonds shalll not be required.
No such modification or amendment shall permit'a change in the terms of (i) redemption or maturity of the principal of any Outstanding Revenue Boxid; (ii) an/ in'stallment of interest thereon.; (iii) a reduction in the principal amount; (iv) the Redemption Price thereof; (V) .in the rate'f'interest thereon without the consent of the Holder of such R.evenue Bond; (vi) sliall reduce'thc percentages or otherwise affect the classes of Revenue Bonds; (vii) or shall change or modlify any of the, rights or obligations of the Truste.e and 'any Paying Agents or all without its written asseat thereto.
[Resolution, Sections 1102 and 1103].
TAX EXEMPTI()N In the opinion of Ivludge Rose Guthrie & Alexander,, Bdnd Counsel, interest on thc 1974 Sl:riel 9 Bonds is exempt, under existing laws f'rom Federal income taxes and from income taxes within tile State of Arizona.
The District has certified in the Resolution Authoriziing thc Sale of,'>50,009,000 Salt River Project.
Electric System R'cvenuc Bonds, 1974 Series B that it is not expected that on the basis of the facts and circumstances in existence on the date of adoption of the said resolution, that the proceeds of the 1974 Series B Bonds will be used in a manner that would cause the 1974 SerIles B Bonds to be arbitrage bonds within the meaning of section 10:3(d) of the Internal Revenue Code, as amended, and the regulations thereunder.
APPROVAL OF LEGAL PROCEEDINGS Alllegal matters incident to the authorization and issuance of the 1974 Series B Bonds are subject to the approval of Mudge Rose Guthrie & Alexander of New York, Bondl Counsel, whose final approving opinion'will be delivered with-the 1974 Series B Bonds. Jennings, Strouss & Salmon, Phoenix, Arizona, Legal Advisors to the District, will deliver a no-litigation certificate with the 1974 Series B Bonds.
MISCELLANEOUS The reference herein to the Act, the Prior Lien Bond Resolutions, the Resolution Concerning Revenue Bonds and certain other statutes, resolutions and contracts are brief outlines of certain provisions thereof.
Such outlines'do not purport to be complete and reference is made to such documents for full and complete statements of such provisions.
The information herein related to engineering matters has been approved by Ford, Bacon & Davis Incorporated, Consulting Engineers.
Any statements made in this OKicial Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not representations of fact, and no representation is made that any of the estimates will be realized.
The delivery of the Official Statement by its President and General Manager has been duly authorized by the District.
SALT RIVER PROJECT AGRICULTURAL IMPROVBMBNT AND POWBR DISTRICT
/s/ KARL F. Asar.
President
/s/ RoD J. McMULLIN General Manager Attest Secretary 61
b APPENDIX A ESTABLlSHED XS94 gor0, 58acott R, Pavie 4ercorp orated
<mgiwere OHIO%GO CONSTRUCTION VAIUATIONS REPORTS MANAGEMENT SAN FRANCISCO R BROXDWAY NEW YORK, N.Y. 10004 New York, May 2, 1974 Salt River Project Agricultural Improvement and Power District Phoenix, Arizona
Subject:
Summary Report on Propeity, Operations, and 1974-1979 Construction Program
~
Dear Sirs:
We present this summary of portions of our analysis of your property and its operations, the District's I construction program, and future operating revenues and expenses from which estimates of revenues available for debt service are derived.
This summary has been prepared as an appendix to the District's Official Statement for the issuance of
$ 50,000,000 in Electric Revenue Bonds, 1974 Series B. We have reviewed the information taken from portions of our analysis as contained in the Official Statement and consider them to fairly represent our Qndings.
The Salt River Project Agricultural Improvement and Power District controls and is responsible for the property and operations of two utilities. The electric system is operated, by the District directly while the'irrigation system is operated by the Salt River Valley Water Users'ssociation under an agency agree-ment.
. The Electric System As shown in Exhibit No. 1, the electric service area served exclusively by the District totals about 2,900 square miles and embraces the major populated areas of Maricopa County as well as western portions of Pinal and Gila Counties. Except for the City of Mesa, all of the cities within this area, including Phoenix, Scottsdale, Tempe, Glendale, Peoria, Gilbert, and Chandler, are partly served by the District'nd partly by Arizona Public Service Co. The District recently began to supply the City of Mesa with a portion of its load requirements. The District also supplies all of the mining loads in Gila County'and the eastern portion of Pinal County as well as providing Arizona Public Service Co. with all power requirements for resale in this area and for a small area to the west of Phoenix and Peoria. These areas encompass an additional 2,400 square miles.
~ ~ ~
The District owns about 500 miles of high-voltage transmission lines and participates in jointly-owned transmission systems associated with remote generation. Some of these systems and the location of remote jointlywwned generating stations are shown on Exhibit No. 3.
A-1
Power Resources In 1973 the largest source of energy (62.1%) was from the District thermal plants and about 8.0%
from its hydro plants Although the hydro generation does not supply a significant. portion of tIie dnerjgy requirements, the pumped storage units add appreciably to the system's ability to provide for peak loads.
Refer to Table 9, page 12 of the OAicial Statement for a dc:tail'ed listing of the District's 1973 jpower sollrces.
About 40.1% of the District's energy requirements for 1973 came from its plants located in the. valley, while 22.0% came from its participation in the Four Corners plant located in New Mexico and the Mohave located in southern Nevada. It is anticipated that the production from the latter two plants will be 'lant increased after the technical and ienviironmental problems asscciated 'with th'em have been resolved.
The District purchased through firm power contracts about 22.9% of its 1973 energy requike-mcnts. The largest portion, about 11.1%, was obtained from the iCol'orado River Storage PrOjec't. Under l terms of this contract the USBR will furnislh declining amounts of power, from 380,000 kw~ in~ 1973 ~
to its permanent allotment of 126,000 kw in 1976. The seCond largest .~oui.ce, from Hayden No. ~1, to 5.8%. Other firm purchases amounting to 6.0%'ame from the Arizona Power Authority, 'mounted the Parker-Davis hydro plants of the U.S.B.R., Arizona Electric Power Cooperative and the Plains G & T Co-op. The remaining 7% of the annual production consisted~of non-firm energy obtained through the Power Coordination Agreement with Arizona Public Service oi'rom other sources.
The District's power requirements durbzg the coming decade will increase more rapidlly than. the national average, rising from 1,679,000 kw hi 1973 to 3,752,000 kw in 1982. The District will meet this increasing demand by developing those resources which will provide the greatest impliability at the least cost while protecting the environment.
Table 15, page 21 of tlhe Statement converls subsequent estimates of sales of eriergy into kilowatts of peak demands. on the system. It also idientifies future sources of power that may be used to supply the estimated system requirements. The following tabulation excludes details of loads and resources contained in the table.
Loads and Resources (1,000 kw)
Actual 19'73; Estimated 1974-1979 1973 1974 1975 1976 1977 1978 194i9 Total Resource's ........ . 1,880 2,346 2,586, 2,818 2,968 3,266 '3,7l26 Total Loads 1,679 1,991 2,197, 2,406 2,591 ',849
'3,050 Resources in Excess of Load .... 201 355 389 ~
412 377
'17
76 Requirements 200 261 302 336 363 402 433 'eserve Surplus . 1 94 87 76 14 15 243
'he last line of the tabulation illustrates the changes from small surpluses in the early years of the program to a substantial surplus in 1979. This willi help lncitease the reliability of tlhe system'and will place the District in a better position to provide for unforeseen loadl requirements or to continue tali pilovile for its commitments in the eveiat that delays occur in sc'heduled operating dates of niew production plants. It is anticipated that if a substantial surplus is av:diable in 1979, it can be lsold on a short-term basis.
The 1974-1979 Improvement Pro~mam The present program. is a continuation, and updlating of t'e prolpam reported by the Engineers on January 9, 1974.
A.-2
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EXHIBIT NO. 1 LEGEND AREAS SERVED EXCLUSIVELY BY DISTRICT DISTRICT PROVIDES POWER REQUIREMENTS QF MINING SERVICE, AREA LOADS AND OF ARIZONA PUBLIC SERVICE FOR RESALE DISTRICT PROVIDES FULL POWER REQUIREMENTS OF OF THE ARIZONA PUBLIC SERVICE FQR RESALE AREAS WITHIN DISTRICT BOUNDARY SERVED BY DISTRICT ARIZONA PUBLIC SERVICE RH R
dbnd VNBLV n4%&% CCIIUCn CV 44 ~
7UC IIIC 4 5
ITV rIC II I vr 4~ Cad mean HORSESHOE DAM 0
SCALE OF MILES In Ir an av 0 DISTRICT SUBSTATIONS forli, Srtcon tL Iiyrtvis Je0Ãrallti DISTRICT POWER PLANTS &Btncern N illa 44ad Ial llapg44 ARIZONA PUBLIC SERVICE POWER PLANTS USSR SUBSTATION TO GLEN CANYON RESERVOIR
~ ddt001 ~ 0 DISTRICT AND ASSOCIATION BOUNDARYQ BARTLETT DAM TO DAVIS DAM L ~
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Scottsdale 0 y
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'4 GOLDFIELD aIARICOPA COUNTY Pl dldL I OIJNTY 0
1 GILA COUNTY GRAHAae ICOUNTY
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~ a 0 ~<> Ciilarl d 0KYRENE TRANSMISSION Li¹S ~ Oe n
fle ~,
IBadap SANTAN 0 0 nrKBKBBB f WILLIAM vr a ~~~
~ Superior t
~, Chandteron~ a 0,Il I ~
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UBBI 345 KV 0
USBR 230 KV
> o o MARICOPA COUNTY PINAL COUNTY ~n'LK~
USBR 161 KV s L gRay 0
Bl" "l I I KK Mais B I
DISTRICT 11S KV alaaaadaN DISTRICT 1'IO KV Gi CChristrnas COOI IDGE a BaaB a ~ ~ ~ ~ wa a a~a~a . I0 I BB Hayden A-3
Estimates 'by, the District of load growth and of the resulting capital requirements in, general follow methods used by the Engineers. Previous independent estimates by the Engineers and the degree of their conformance with those made by the District, together with a comprehensive check of current estimates, lead the Engineers to accept the estimates and projections of the District as realistic.
The 6-year plan (1974-1979) of the District includes generating plants planned or being constructed, in widely separated locations, combustion turbines and combined-cycle units in the Valley, conventional thermal units at Yampa and Hayden in Colorado, Kaiparowits in Utah, Navajo in northern Arizona, a new plant at an undetermined site in Arizona and the Palo Verde Nuclear Station west of Phoenix. During the 1974-1976 portion of the program, about 20% of the new plant capacity is to replace the loss of 254 mw from the Colorado River Storage Project. This represents a significant capital expenditure during the early
,years of the program. The estimated expenditure for production plant in 1974-1979 is $ 1,049,204,000 or 76.4% of the total program.
Transmission lines are, added or increased in, capacity to serve new substations, and new generating capacity requires transmission lines to connect it, into the system. Demands for improved appearance often require expensive structures or rerouting that add.to the length and cost.. Higher and higher voltages,add to costs but result in increased capacity advantageous in meeting future demands. The recently completed 500,000-volt transmission lines built to deliver Navajo power and other high-voltage transmission lines supplying power to the District are shown in Exhibit No. 3.
The estimated cost of the total 1974-1979 transmission program is $ 142,138,000, or 10.3% of the total projected construction costs.
Costs for distribution system additions and improvements for the 1974-1979 program are estimated at
$ 137,421,000 or 10.0% of the program. Thousands of items are included: new substations, transformers, meters, new-customer line extensions varying from 100 ft. to several miles of line in a new.suMivision.
Approximately nine new 22,400-kva unit substations must be provided each year to meet residential and commercial load growth: Projected costs include $ 62,674,000 for underground lines compared io '$25,081,000 for overhead lines, which indicate the continuing trend toward undergrounding of all new distribution lines.
The general plant additions include automotive equipment, communications, supervisory control of sub-
- stations from a system dispatch office, and a $ 4,900,000 addition to the main office building. 'The 6-year program calls for an expenditure of $ 35,890,000 or 2.6% of the total.
Expenditures shown below for 1974-1979 are based on, detailed estimates which include interest during construction.,
As stated previously, this program is a continuation and updating of the 6-year program of 1974-1979.
The new estimates rcfiect changes in estimated costs for the current year and elimination of a combustion turbine from the program., Such t;hanges are inevitable in 'a growing utility. Comparison of estimates follows:
Est)mote Est!mote Feblllst7 October 1074 1973
'b (000) (000)
Expenditures for 1974 . $ 166,310 $ 154,256 Expenditures for 1975 . 116,183 116,183 Expenditures for 1976 .." '20;659 229,283 Expenditures for 1977 . 332,163 334,253 Expenditures for 1978 .. 279,106 279,106 Expenditures for 1979 258,986 258,986
$ 1,373,407 $ 1,372,067 A'-5
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT Summary Estiimated Capital Expenditures for 1974-1979 Elt]ctric Construction Program(1)
'000)
Total 1974 15>75 1976 1977 197S 1979 1974-1979 Four Corners(2);........... $ 2,048 $ 1,198 $ 12,462 $ 2 388 $ 18,09li Navajo . 30,846 20,563 11,679 1,463 64,551 Railroad i500 403 140 ]I,143 Hayden Project ............. 33,436 20,478 7,424 7,177 $ 77 68,592 Yampa Project 2,207 :1,774 24,003 36,.'586 21,454 $ 8,027 9t>,051 Arizona Station ............ 5,449 18,31ti 90,926 132,821 76;568 33,569 357,649 Kaiparowits ,'326 ]I,943 4,138 8,945 31,119 40,245 8ti,716 Combustion Turbines .. ~..... 11,418 2 15/ 13,57!5 Santan Combined-Cycle 'Units 23,699 2,497 "255,196 Palo Verde Nuclear Station .. 3,673 .'5,561 22,F66 61,659 94,592 106,499 294,150 Nuclear Fuel 1,113 1,16ti 1>231 .'545 204 4,463 8,722 Future Nuclear Projects ..... 12 12 696 567 41,163 8,313 1:3,763 Subtotal Thermal Plants ........,... $ 114,827 $ 78,068 $ 174,865 $ 252,151 $ 228,177 $ 201,116 $ 1>049,204 Major Transmission(3) ...,... 10,471 10,258 18,719 51,406 16>949 22,663 130,46i6 Pumped Storage '............ 96 524 620 Other I3]ectrio Construction:
Generation 3,540 336 384 504 528 756 i6,048 Transmission ....... ... 3,004 1,54i5 1,634 1,728 1,827 1,933 11,672 Distribution .........,... 21,073 21,830 20,880 22,214 26,094 25,330 137,421 Project General 11,763 3,69,1 4,177 4,160 ~
> 43>> 6,664 Research and Development ... 1,632 454 Construction Program Total $ 166,310 $ 11',18,'3 $ 220,659 $ 332,163 $ 279,106 $ 258,986 $ 1,373,407 Less:
Interest during Construc-lion (IDC) >......,... 10,0&4 9,910 10,996 21,011 25,903 26,107 104,011 Total (without IDC) $ 156,226
~~a
$ 10i6,273 $ 209,663 $ 311,152
~~$
$ 253,203 $ 232,879 $ 1,269,396 Note: (1) Costs of future, sulfur dioxide removal systems at Mohavc not included. Results from the test prog'rain now under way at this station will determine future costs.
(2) Units No. 4 and No. S.
(3) Includes District funds for lransmis.ion systems associated with new power Iplants as well as ail iincS oVer 69 kV.
I.
Operating Revenues and Expense!>
Table 19, page 35 of the: O]ilicial Statement contains the cstimatedi 1973 revenues available from the various customer classification.;. The resiidential group of customers in 1973 accounted for the largest kwh consumption, 38.2%, and yielded 46.1% of the revenue. The residential load has been growing consistently, and there was a significant increase of annual housing completions from 14,500 in 1971 to 18,500 iin 1972 and almost 22,000 in 1973.
The second largest customer category iis the commercial and small industrial category. Id, 1973 thi's group used about 22.6%%u4> of the energy solcl and contributed about 26.4% of the revenue. Since most of the customers included in this class are service oriented organizations, their growth is linked directly to the growth of the residential customer class. Sales in both the residential and commercial and small industrial classes'are expected to increase by 53% during the 1974-1979 period.
Large Industrial and the Mines together u.ed 19.3% of~ the electricity sold and yielded 12.0% of the 1973 revenue. With favorable prospects for future growth in U. S. copper production, most of the mines in the area have long-term expansion programs. 1nspiration'onsolidated Cop'per Company added about A-6
44,000 kw of interruptible load for electric reverberatory furnaces in 1974; Miami Copper operations anticipate a 50,000-kw requirement for its new Pinto Valley Development; Kennecott Copper Company plans .an additional 30,000 kw at Hayden, Arizona, by 1980. Total eastern mining area loads were 140,000'kw for 1973 and are expected to increase to 276,000 kw by 1979.
In 1921 the Association had 21 electric cus-tomers. By the end of World War II the number had grown to 10,611. Subsequently,.the customers ANNUAL SALES, CUSTOMERSI doubled every 5 years up to 1960, and at the end ANNUAL REVENUE of 1973 the 225,921 customers represented'n AVERAGE REVENUE PER NWH increase of about 10% per year, compounded annually over the last 20 years. Exhibit No. 2 illustrates the accompanying growth in sales and revenues.
Sales to APS are based on the terms of the Power Coordination Agreement referred to else- IKIMKIINII NN 1NK7 K where. This agreement provides for the supply of an increasing number of kilowatts of demand by the District to the Company each year with a cor- NNIN IIKMIINN INII el HIIO IN 7I7 responding increase in revenues based primarily I ~
7I
,on the demand charge. IKKINNK IN17 hNNKM) 5 i' K KINNIhl INI OKN K M) 7 '7l 77'll 71' 77 1771717 NO. 7
' 77 ') '77 We reviewed and made independent analyses of the District forecasts, particularly in respect of the sales revenue and electric utility operating expenses. As a result, of the independent review and analysis, we concur with and have used certain of'such data in the revenue and expense projections.
In the 1963-73 period, revenue from sales increased from $ 37,724,000 to $ 127,656,000, an increase of 238%. The growth in revenues has of course included sales to other utilities. Perhaps a better measure of District growth lies in sales of energy to customers other than utilities. Sales to utilities vary widely from year to year and it is difficult to estimate future sales with accuracy. The kwh sold to District customers, excluding utilities, was 2,312,000,000 kwh in 1963 and 6,057,000,000 kwh in 1973, an increase of 162%. This was an increase of about 11% a year, compounded annually.
The estimated total operating revenues is the sum of sales of electricity and "Other Electric Revenue."
The latter in 1973 amounted to $ 1,203,000 and consisted of rent from electric property, reconnect charges and interest on delinquent bills, fees for connecting services, and miscellaneous service revenue.
Purchased power, principally from APA, USBR, and Colorado-Ute and capacity charges from Arizona Electric Power Co-op amounted to 18% of 1973 operating expenses. The largest item, about 46% of these costs, was incurred from District thermal power generation. During the next few years, the shortage of gas supplies will require a greater dependence on fuel oil for power generation, which is also in short supply. In future years the lower cost power available from large coal-fired and nuclear plants now being built or planned will enable the District to furnish its base load from these sources while reducing its utili-A'-7
zation of high-cost gas and oil fuels. Units using these fuelsi will then be used for emergency duties and for short periods of time dur'ing system peaks.
The following tabulation suminadzes total operating revenues and total operating expensesconsisting of production and other p!ower cost.', operating and maintenance expense, and taxes. The projections include estimated escalation in cost levels.
.Net Revenues, Available fiom Operationts 1973 Actual 1974-1979 Estimated (001))
Operathag Revenues Operating Expen<es Povrer Operating Sales and Net Revenues Prom Total Operations aad Ad Valorem Total from Sales(1) Eteetrtc (2) htatetensnee(4) Tasse (s) Opemtlons 1973 $ 127,656 $ 1>203 $ 128,859 $ 49,221 $ 20,242 $ 6,205 $ '75,668 $ 53,191 1974 ... 165,671 1,240 166,911 78,661 21,444 6,516 106,621 60,290 1975 ... 175,022 221,353'ther(2) 1,186 176,208 80,964 29,943 7!655 118,562 57,646 1976 ... 185,402 1,1i51 186,563 83,311 31,840 8,363, 123,514 63,04!9 1977 200,159 1,204 201,363 99,911 32,589 9,401 141,901 59,462 1978 ... 212,675 1,245 213,920 95,718 39,724 10,603 146,045 67,87.'5 1979 ... 1,286 222,639 93,770 46,361 11,432 151,563 71,07l5 NOTEs: (1)! For the years 1974-79, includes rate increase effective (vith Janttaryl 1974 billing cycle.
(2) Excluding interest ami investment income.
(3) Excludes charges for falling water.
(4) Excludes depreciation.
(5) Excludes contributions in lieu of taxes, depreciation, and otherwise in accordance with thc Bond Resolution.
A-8
CONCLUSIONS Based upon our studies and analysis which are summarized herein we are of the opiiuon that:
- 1. The properties of the District are weH maintained, provide reliable electric service, and have sub-stantial insurance coverage.
- 2. The 1974-1979 construction program is well conceived, the estimates are reasonable, and the ncw facilities along with purchased capacity will provide adequate generating reserves to enable the District to supply its future load requirements.
- 3. The rates for electric service are comparable to or lower than those of neighboring utilities.
- 4. The revenue and expense projections are reasonable.
- 5. The effects of voluntary curtailments in power consumption have been considered but not reflected in the preparation of revenue and expense projections and in the long-range capital improvement program. Sales of electric energy and resulting revenues were substantially below projected amounts during January and February but Arizona was experiencing an extremely mild winter and this factor contributed significantly to the lower level of usage with a small portion attributable to conservation measures. Indi-cations are that if present conservation trends continue, revenue projections may be reduced slightly for the short term; however due to the general shortage of natural gas, conversion plans of commercial and
, industrial users to electric service and a larger proportion of new all-electric residential construction will probably offset the effects of the conservation program.
t
- 6. The District is in full compliance with clauses (b) and (c), paragraph 2 of section 204 of the Bond Resolution dated November 1, 1972, as described in the following paragraph:
"(b) the estimated Revenue Available for Debt Service, adjusted as provided in paragraph 4.hereof, for each of the five (5) calendar years immediately following the issuance of such proposed additional Bonds is not less than one and thirty-five hundredths (1 35/100ths) times the total, for each such respective calendar year, of the Debt Service and Prior Lien Debt Service on all Bonds and Prior Lien Bonds which will be outstanding immediately subsequent to the issuance of the proposed additional Bonds, and (c) the estimated Revenues Available for Debt Service, adjusted as provided in paragraph 4 hereof, for such fifth calendar year is not less than one and thirty-five hundredths (1 35/100ths) times the maximum total of Debt Service and Prior Lien Debt Service for any succeeding year on all Bonds and Prior Lien Bonds which will be outstanding immediately subsequent to the issuance of the proposed additional Bonds." Based upon the estimated Revenues Available for Debt Service and the Debt Service requirements of the additional Bonds, the provisions of clauses (b) and (c) can be complied with without requiring adjustments as provided in paragraph 4, above.
Very truly yours, F~,6 PoRD, BAcoN 8i DAYIs INc.
A-9
il 4t,,
4
Axx>>ENDxx B AUDITORS'EPORT To the Board of Directors and Board of Governors of Salt River Project Agricultural Improvement and Power District, and Salt River Valley Water Users'ssociation:
We have examined the combined balance sheet of SAI.T RIvER PRoJEcT AGRIGULTURALIMPRovEMENT AND PowER DISTRIGT (a political subdivision of the State of Arizona) and its agent, SAI.T RIvER VALLEYWATER UsERs'ssocIATIoN, together referred to as the SALT RIYER PRQJEGT, as of'December 31, 1973, and December 31, 1972, and the.related combined statements of net revenues and sources of funds for additions to utility plant for the years then ended. Our examinations were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing. procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the financial position of the Salt River Project as of December 31, 1973, and Decem-ber 31, 1972, and the results of its operations and sources of funds for additions to utility plant for the years then ended, in conformity with generally accepted accounting principles consistently applied during the periods.
ARTHUR ANDERSEN & Co.
Phoenix, Arizona, February 13, 1974.
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT ITS AGEM.; SAI.T iRIVER VALLEY WATER USERS'SSOCIATION,
'ND COMBINED BALANCI'EIEET DECEMBER 31, 1973 AND 1972 ASSETS 1972 1972 UTILITYPLANT, at original cost, (Notes 1, 2 and 3):
Plant in service Electric <<(>380;199;002 $ 328>673 >965 Irrigation 71,997,620 66,503,010 General Total plant in service Less Accumulated'depreciation.on pliant in service .. <
.. i...
25,704,188
$ 477,900,810 129,071,089 23,335,390
$ 418,512',,365 116,579>,864
$ 348,829,721 $ 301>932!,501 Construction work in progress , 210,177,530 101>406,942 Total utiility plant $ 559,007,251 $ 403,339,443 SEGREGATED FUNDs, consisting of cash and IJ. S. Govern'ment obiligations set aside in accordance with b'ond resoltiitions:
Debt service funds,, excluding $ 11,115,000 in 19'73 and $ 7,894,000 in 1972 for payment of accrued interest (Note 7') ......'...,... $ 44,645,865 $ 32,634,273 Construction funds 138,498 , 301,440
$ 44,784,363 $ 32>935,713 CURRENT ASSETS:
Cash, including $ 4,000,000 rcstriicted by line of'. credit (Note 8) .... $ 4,592,901 $ 2239,270 Temporary investments, a,t cost, held primarily for construction ...,. 37,818,741 i 25I297,542 Deposit in debt service fund for payment of accrued interest on bonds 11,11,5,396 7,894,246 Accounts receivable, less reserves of $ 642,000 in 1973 'nd
$ 1,425,000 in 1972 for dc>ubtful accounts .. 13,881,592 11>695,644 Fuel stocks, at average cost . '7,652,322 1>357,29'4 Materials and supplies, at average cost 7,066,411 5>079,363 Prepayments, interest receiva'ble and other 1,857,109 1,497,732
$ 83,984,472 $ 55>061,09i1 OTHER ASSETS AND DEEERRED> CHARGES; Advances for dedicated capacity and beneficial interest in, electric plant of others less accumu'.lated sllraight-line amortiizati'.on over 39 years $ 10,763,179 $ 9>384,336 Nonutility plant, less accumulated depreciation of $ 400,000 in 1973 and $ 536,000 in 1'972 1,299,433 1,229,462 Bond expense being amortized 1,689,652 1,385,850 Miscellaneous deferred charges . 4,879,536 3,954,490
$ 18,631,800 $ 15,954,138
$ 706,407,886 $ 507 290 385 The accompanying notes to combined financial statements are an integral part of this balance sheet.
3-2
SALT RIVER PROSPECT AGRICULTURAL'IMPROVEMENT AND POWER DISTRICT AND ITS AGENT, SALT RIVER VALLEY WATER USERS'SSOCIATION COMBINED BALANCE SHEET DECEMBER 31, 1973 AND 1972 CAPITALIZATIONAND LIABILITIES 1978 1972 LoNG-TERM DEBT (Note 7):
General obligation bonds $ 304,872,729 $ 311,741,004 Electric system revenue bonds . 148,548,103 Obligations to U. S. Government . 11,256,911 11,109,147
-Other obligations 68,223 79,576
$ 464,745,966 $ 322,929,727 AccUMUI.ATED NET REvENUEs, invested principally in utility plant:
Balance beginning of year $ 109,663,321 $ 96,902,577 Net revenues for the year 17,459,416 12,760,744 Balance end of year $ 127,122,737 $ 109,663,321 Total capitalization, consisting of long-term debt and ac-cumulated net revenues . $ 591,868,703 $ 432,593,048 CURRENT LIABILITIEs, excluding $ 8,950,000 in 1973 and $ 7,897,000 in 1972 representing current portion of long-term debt which is to be paid from segregated funds:
Notes payable to banks (Note 8) $ 41,250,000 $ 21,500,000 Accounts payable 18,016,469 6,508,577 Accrued taxes and tax equivalents 4,047,535 3,751,874 Accrued interest . 11,250,233 8,023,561 Customers'eposits 1,656,334 1,318,726 Other, current and accrued liabilities 1,956,105 1,970,983
$ 78,176,676 $ 43,073,721 DEFERRED CREDITs AND REsERVEs:
Irrigation assessments levied for subsequent year $ 1,353,241 $ 1,203,610 Advances for construction . 866,112 841,467 Other . 622,597 680,379
$ 2,841,950 $ 2,725,456 CGMMITMENTs AND CGNTINGENGIEs (Notes 3, 4, 5 and 6) .
CONTRIBUTIONS IN AID OF CONSTRUCTION:
Electric plant $ 10,889,549 $ 7,970,426 Irrigation plant 22,631,008 20,927,734
$ 33,520,557 $ 28,898,160
$ 706,407,886 $ 507,290,385 The accompanying notes to combined financial statements are an integral part of this balance sheet.
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT AND ITS AGENT SAI.T RIVER VALI.EY PYATER USERS'SSOCIATION D STAT]EMENT OF ].'4IET REVENUES 'OMBIM For the Years Ended December 31, 1973 and 1972 1%73 OPERATING REvENUEs:
Electric $ 128,334,924 $ 102,627,839 Water and irrigation 1,578,819 2,070,781 Total operating revenues $ 129,913,743 $ 104,698,620 OPERATING EXPENSES:
Power purchased $ 14,746,135 $ ]l2,147,085 Fuel used in electric generation '8,694,459 15,969,017 Other operation expenses . 25,546,385 23,372,173 Maintenance 9,456,018 7,891,291 Depreciation and amortization (iNote 1) 14,352,886 ]i 3,2,82,518 Taxes and tax equiivalents (Note 6) . 12,691,099 11,2,07,572 Total operating expenses 8105,486,982 $ 83,869,656 Net operating revenues $ 24,426,761 $ 20,828,964 FINANCING COSTS:
Interest on bonds at coupon rates $ 19,673,195 $ 13,448,903 Amortization of bond discouiat 435,622 406,620 Amortization of bondi issue expense . 133,085 120,708 Interest on other oblligations 297,911 155,691 Interest earned on investments and deposits (6,313,813) (2,933,477)
Net financing costs . $ 14,226,000 $ 11,198,445 ALLowANGE FoR FUNDs UsED FoR CGNsTRUGTIQN (Note I) '. '.'.... (6,967,752) (3,671,377)
Financing costs less a]lowanoe fair funds used for construc-tion $ 7,258,248 $ ,
7,527,068 OTHER DEDUGTIQNs (REVBNUEs), NBT $ (290,903) $ ,
541,152 NBT RBVENUEs FoR THB YEAR $ 17,459,416 $ 12,760,744 The accompanying notes to combined financial statements are an integral part of this statement.
SALT RIVER PROJECT AGRICULTURAL,IMPROVEMENT AND POKER DISTRICT AND ITS'GENT, SALT RIVER VALLEY WATER USERS'SSOCIATION COMBINED 'STATEMENT OF SOURCES OF FUNDS FOR ADDITIONS TO UTILITY PLANT For the Years Ended Decemher 31, l923 and 1922 1973 1972 GROSS ADDITIONS,TO UTILITY PLANT $ 171,144,625 $ 89,788,071 FUNDS GENERATED FROM OPERATIONS Net revenues for the year $ 17,459,416 $ 12,760,744 Depreciation and other charges not requiring current funds ...... 16,925,011 15,196,684 Total funds generated from operations before retirement of debt and debt service . $ 34,384,427 $ 27,957,428 Less Repayments of long-term debt 7,913,157 8,070,177 Increase in segregated funds set aside for debt service . 12,011,592 5,982,608 Net funds generated from operations '........... $ 14,459,678 $ 13,904,643 FUNDS OBTAINED FROM FINANCING:
Proceeds of bond issues $ 148,507,206 $ 49,038,526 Advances from U. S. Government for rehabilitation of irrigation plant 0 ~ ~ ~ ~ ~ ~ ~ 786,569 686,050 Other advances and contributions. in aid of construction ........ 4,647,041 2,808,946 Short-term borrowing, net of repayments 19,750,000 21,500,000 Reduction (increase) in segregated funds set aside for construction 162,942 (78,519)
Reduction (increase) in temporary investments held primarily for construction (12,521,199) 8,557,705 Net funds obtained from financing $ 161,332>559 $ 82,512,708 CHANGES IN OTHER ITEMS AFFECTING FUNDS:
Decrease (increase) in fuel stocks $ (6,295,028) $ 147,372 Decrease (increase) in other assets and. liabilities, net ....,.... 1,647,416 (6,776,652)
Net change in other items . $ (4,647,612) $ (6,629,280)
FUNDS USED FOR ADDITIONS TO UTILITYPLANT $ 171,144,625 $ 89,788,071 The accompanying notes to combined financial statements are an integral part of this statement.
B-5
SALT RIVER I<RlMECT AGRICULTU14V, IMPROVEMENT AND POWER DISTRICT AND ITS AGrENIT, SALT RIVER. VALLEY WATER USERS'SSOCIATION NO'IES TO COM13H<tED F)NANCIAL STATEME1'Q'S Dcccmbcr 31, 197;3 a11<I 1972 (I) Summary of Slgnifi<cant Accounting Pollicies<
(a) Principles Underlying Combined Statements The combined financial statements include the accounts of: the Salt River Pro!'lect Agricultural Improvement and Power District and the accounts of its agent, the Salt River Valley Water Users'ssociation, together referred to as the Salt River project. All significant intercompany transactions have been eliminatedi (b) Utility Plant, Depreciation and h4aintenance The accounting records of Salit Riiver Project are maintained substantially in, accordance with the Uniform System of Accounts prescribed for electric utilities by thc Federal Power Commiission. Utility plant is stated at the historichl cbst Of construction. Construction costs include labor, materials, services purchased under contract, and allocations of indirect charges for enginccring, supervision, transportation, and administrative expenses.
An allowance for funds used to !finance construction work in progress is caipitalized as a component cost of eliectric and general plant. The cost of funds so used is deducted from net financing costs in the col<nbined statement of net revenues.
A capitalization rate of 6% has been consistently use<!l for several years. However, the amounts capitalized havei inc(cued because of substantial increases in construction, programs and construction costs.
Depreciation expense is computed on the straight-line basis over estintated useful lives of the various classes, of plar<t.
Rates in effect during the years 1973 and 1972 resulted in proviisions approximating 3.49% for 1973 and 3.46% for 19i72 on the average cost of depreciable electric plant, and 2.45% for 1973 and 3.12% for 1972 for depreciable Irrigation plant. When property representing a retirement unit is replaced, removed, d'or abandoned,,the 'cost of suclh property is credited to thc appropriate utility plant account, and such cost together with removal costs less, salvage is charged to accumulated depreciation.
The project charges to maintenance cxpensc the cost of labor, materials, and other expenses incurred in the repa!ir, restoration of condition and replacements of miinor items ot'roperty.
In 1973, the Federal Power Commission ordered companies subject, to its jurisdiction to adopt in 1974,, a method of accounting whereby the balances of contribul,ions, in aid of conttruotion will be offset against utility plant. While Salt River Project is not subjec't to this order, its manage<nent lhas expressed its intention to adopt such a method, of accounting at January 1, 1974.
(c) Deferred Charges Bond discount, premium,,and bond issue <expense are 'being amortiized over the terms of the related bond! issues. !Other deferred charges are amortized, over thc estimated useful periods of such expenditures.
(d) Employees'etirement Plan The project has a retiirement plan covering substantially all employees. Since 1968, the plan has been funded entirely from employers'ontributions and the earnings of the i'nve'ted iassets. The iestlmated unfunded past service liability based on the "entry age normal" actuarial cost method was approximately $ 10,117,000 at July 1, 1973, and will be funded'ver a amerind ending in 2001. The employers'ash contributiions to tb,is plan totaled $ :?,706,000 in 1973, and $ 2,488,000 in 1972.
(e) Revenues Meters for residential, commercial and small.industrtal customers are read <yclimlly and sales recorded when, billed.
For large industrial customers, meters are read near month cnd and billings recorded on the accrual basis. Revenues from water and irrigation operations are recorded when earns.
(2) Possession and Use of UtilityPlant::
The United States of America retains a paramount, right or claim in the Salt River Project which arises from the original construction and operation of the project's facilities as a Federal Reclamationiproject. The project's right to:the possession and use of, and to all revenues produced by, these facilities is evidenced by contractual arrangements with the iUnited States.
(3) Construction Program:
Balances shown for construction work in progress represent expenditures to date for uncompleted new facilities required to serve anticipated customer needs and consist of December 31 1973 1972 Elcctri<1 generating faciliti<p $ 161,312,356 $ 73,573,083 Transnussion and distribution 40,356,532 21,567,234 Irr!igation plant 3,873,943 4,352,343 Other construction 4,634,699 ,1,914,282 Total $ 21<),1771530 $ 101,406,942 B-6
Construction expenditures planned for 1974 approximate $ 173 million, which includes $ 100 million to bc expended in 1974 on the major construction projects described below Salt River Project, together with a participant, is constructing a 250 megawatt coal fired electric generating station near Hay'den, Colorado, at the site of an existing unit now operated by the participant. The Project owns an undivided 80% interest in this station, which is anticipated to be in service in April 1976. On January 1, 1982, upon approval of appropriate public authoritics, the participant may purchase from the project 30% of the project's interest and at that time the project and the participant would both own 50% of the station. The estimated total cost of thc station is $ 91 million, with the Project furnishing 80% of. the construction funds. Transmission of the power generated by this new unit will be handled under existing arrangements, without further construction cost to the Project.
Salt River Project is the manager of the Navajo Project, acting for itself and five other participants for thc purpose of constructing and operating three 750 megawatt coal fired. electric generating units and a related coal haul railroad in northern Arizona at an estimated cost, of $ 669 million. Due primarily to requirements for additional environmental pro-tection equipment, estimated costs have increased $ 15 million over that estimated at December 31, 1972. Total costs of environmental protection equipment are now estimated at $ 209 million. The Salt River Project owns an undivided 21.7% interest in the Navajo Project for its own use and benefit. It also owns an undivided 24.3% intcrcst in the generating. station and railroad for the use and benefit of the United States, an interest fully funded by the United States.
Testing of Unit 1 began in January, 1974, and estimated "in-service" dates for Units 1, 2 and 3 are May, 1974, 1975 and 1976, respectively.
The participants in the Navajo 'Project have also joined in the construction of related transmission systems. The Salt River Project owns an undivided 32.9% interest in the Southern Transmission System, which was complctcd in December, 1973, at a cost to the Salt River project of $ 31 million, and also owns undivided interests in the Southern and Western Transmission Systems for the use and benefit of the United States, with these interests being fully funded by the United States.
The costs related to the interests held for the use and benefit of thc United States in thc Navajo project and in the related transmission systems. are not reflected in the accounts of the Salt River project, since they arc not assets of the Salt River Project.
Salt River Project is constructing for its own use four 73 megawatt combined cycle generating units near Chandler, Arizona; The first three units will be completed in May of 1974 with the fourth unit being completed in May of 1975.
The total cost of the four units is estimated at $ 57.5 million.
Salt River project is constructing for its.own use three 68 megawatt combustion turbine generating units at peoria, Arizona. Two of the units will be completed in May of 1974 with the third being completed a year later. Estimated cost of the three units is $ 22.3 million.
(4) Environmental Ligation:
Pending lawsuits involving environmental matters could affect interests owned by Salt River Project in generating facilities in the Four Corners, Navajo, Mohave and other power projects.
~ The Chemehuevi Tribe of Indians, with others, has alleged that the. Federal Power Commission has licensing jurisdiction over thc southwest power projects and asks that the Commission order the companies which are members of such projects to show cause why they should not be required to apply for licenses, and why they should not bc rcquircd to suspend the development, planning, and construction of Four Corners, Mohave, Navajo and other projects, pending the outcome of thc Commission proceedings. The complainants appealed thc FPC's dismissal, of thc complaint.
The Circuit Court of Appeals for the District of Columbia held that the FpC does have jurisdiction to license thc use of surplus water behind United States dams if not subject to other United States jurisdiction and remanded the case to FPC for further proceedings. The FPC and utility intervenors plan to seek review of the decision by thc Supreme Court.
The project and other utilities, in Arizona public Service, et al., v. Environmental protection Agency are contesting EpA regulations which would require 70 percent SO>> removal at the Navajo and Four Corners generating stations by March 15, 1976. The petitions were filed in both the Ninth 'and Tenth Circuit Court of Appeals. Both courts stayed any further, action pending final modifications of the EPA regulations. Final regulations confirming thc 70% standard, but extending the March, 1976 date to July, 1977 are expected to be promulgated by EPA within the next month.
Management believes that the final dispositions of the above legal matters will not materially adversely affect the interest of Salt River Project.
In Lomayaktcwa, et al., v. Rogers Morton, et al., the complainants sought to invalidate a mining lease between the Hopi Tribe and Peabody Coal Company. The lease is for lands which have 49 percent of the fuel supply dedicated to the Mohave Project and',about 86 percent of the fuel supply dedicated to the Navajo Project. Thc Fcdcral District Court of Arizona has rendered judgment in favor of the United States, pcaboady Coal Company and utility intcrvcnors on their Motion to Dismiss. The plaintiffs have filed a notice of appeal to the 9th Circuit Court of Appeals. Attorneys for the District believe the ultimate decision in this case should be favorable to the District.
B-7
(5) FLOOD DAMAGE LI'IiIGATIONI Various lawsuits and clai!ms have been filcdI by property !owners with!in thc boundaries of Salt River Projects I alleging that the Project has a rcsponsibiliity in regard to flood control and a liability in regard to flood idamagei A jury decision in a trial held in the Superior Court of the State of Arizona in February, ii974, awarded punitive damages of $ 434,000 to a group of 217 clai'manta. This decision will be appealed on a number of issues and therefore, imay not be settled for some time. The ultimate liability, if any! Of Salt River Project in this suit, and in four other pending cases where claims for unspecified sums also have been advanced, is not presently determinable.
Management expects that a significant portion of the liabilities, if! any, which might result from these flood damage:
claims will be covered by insurance.
(6) PROPERTY VALUATIONLH.'IGATIONt Salt River Project makes voluntary contributions to taxing, bodies, in lieu of payment of property taxes. The Department of property Valuation of the State of Arizona filed suit against the project to increase the value'sed in-the computation of the voluntary contributions for the, years 1976I, 1971 and 1972, which would have had the e!Iestt of increasing contributions by $ 2.25 million for the three: yehrs. 'On July 11, 1973 'the 'Sup'erior COurt of AriZona, grated judgment in favor of the Salt River Project. This decision has been appealed by the Department of Property Valuate tion. The Department of property Valuation has also filed suit against the Salt River project to increase the valuation for the year ended December 31, 1973, which would increase cotttributiohs by approximately $ 400,000. This suit i is being held in abeyance,'pending disposition of the suits fotI the years I1970 thru 1972. Since all prior findings have been favorable to the Project, no resefve for a!dditional contributions Ihas been provided at December 31, 1973.
(7) LONG-TERM DEBT:
Bonds outstanding are general obligation bonds and electric system rcv!enue bonds. General obligatioti bondsl are additionally secured by a pledge of revenues from the operation of the electric system. T'hese bonds are a lien upon the real property included in the District, andi thc bonds and the interest thereon are payable from the levy of raxcs on such real property unless the net electric revenue.>, a! defined in the bond resolutio,ns, are sutlicient to meet the prin-cipal and interest payments.
Electric system revenue bonds are secured by a pledge of, and a lien on, the net rev'enues of the electric system, subject to prior liens of general obligation bonds and amounts due the United States. In alii years to date net clsictri&
revenues have bccn morc than sufilcient to meet all debt:serviice requirements.
Long.term debt outstanding at Decemiber 31, 1973, and December 31, 1972was as follows:
General Obligation Bonds Outstanding Issued I'utusc Ilttcscst Rute IIII YCCC 12/31/73 12/31/72 4I I Refunding Bonds 1944-47 398,000 $ 1,316,000 1974-75 Issue No. 4 2!% to 2% 1950 2,300,000 2,309,009 1974-77 Issue No. 5 2s4s to219 1951 4,000,000 4,250,000 1974430 Issue No. 6 2'!9% to 3Ys 1!953 9,300,000 !),700,009 1974-82 Issue No. 7 3 to 37(t 1956 7,595,000 ,8,200,009 1974-87 Issue No. 8 ,'3Q to 3Fs 1959 . 4,170,000 4,240,009 1974-87 Issue No. 9 1 to 4% 1!960 25,875,000 2!5,675,009 1974-92 Issue No. 10 1 to 1962-!65 18,245,000 19,065,009 1974-94 No. 11 3t/c to 4%
3'ssue 1965 12,070,000 I:2,270,009 1974-87 Issue No. 12 3 to 5 1968-!69 41,950,000 4',3,609,000 1974-99 Issue No. 13 4 to 5 1969 8,950,000 9,300,000 1974-99 Issue No. 14 3Vi to 6 1970-'72 174,600,000 17,'5,800,009 1974-2003 Unamortized bond discount, net. of premium being amortized (4,580,271) !4.974,9967 Total G.O. bonds outstanding $ 304,872,729 $ 311,741,004 Electric System Revenue Bonds 1973 Series A 5 to 1973 75,000,006! 1976-2010 Series B to 6'973
, 1973 75,000!,006I 1977-2011 bond discount 6'namortized (1,451,897)
Total E.S.R. bonds outstand-ing $ 148,548,103 Total bonds c!utstanding $ 453,420,832 $ 311,741,004 Obligations to U.S. Gov't for imgation plant None 1!'935-73 11,256,911 11,109,147 1974-96 Other obligations None .1.'950-68 68,223 7'9.576, 1974-79 Total long-term debt $ 464,745966 $ 322,929,727 The annual maturities of bonds and other" long-term debt outstanding as of -December 31, 1973, duc in each of the years 1974 thru 1978 are $ 89950,000; $ 9,363,006; $ 10,130,000; '$14!8351000 and $ 15,201,060, respectively.
BC8
On January 9, 1974, the District sold bonds in the principal amount of $ 90,000,000 at an effective interest rate of 5.76%. These bonds were the first installment of $ 180 million of electric system revenue bonds authorized October 15, 1973, to finance the 1974 construction program.
Interest and amortization of discount on the various issues outstanding during the year resulted in an effectiv annual rate of 4.97% for 1973. This rate approximates 5.22% over the remaining terms of the bonds, after giving effect to the bonds sold on January 9, 1974.
The debt service funds portion of segregated funds includes continuing operating reserve requirements under bond resolutions of $ 10,787,000 and $ 8,931,000 at December 31, 1973 and 1972, respectively.
I (8) LINE OF CREDIT:
The District, with the Association joining as guarantor, maintains a line of bank credit in the amount of $ 40,000,000.
The full amount available was borrowed at December 31, 1973, and at that date carried an interest rate of 5.75%.
Other bank borrowings total $ 1,250,000 at an interest rate of 4.25%. The average interest rate on these types of borrowings for the year was 4.38%.
(9) IRRIGATION AND WATER OPERATIONS:
The expenses, including depreciation, for irrigation and water operations exceeded the assessments, delivery fees, and other revenues therefrom by approximately $ 7,187,000 in 1973 and $ 10,600,000 in 1972. These amounts do not include expenditures for additions and improvements to irrigation plant and for repayment of long-term debt.
B-9